FELLSMERE WATER CONTROL DISTRICT

Basic Financial Statements with
Independent Auditors’ Report

Year ended September 30, 2020

Table of Contents

Page Independent Auditors’ Report	3 - 4
Required Supplementary Information:
Management’s Discussion and Analysis	5 - 9
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position..................................................................................................	10
Statement of Activities ......................................................................................................	11
Fund Financial Statements:
Balance Sheet – Governmental Funds...............................................................................	12
Statement of Revenues, Expenditures and Changes in Fund
Balances – Governmental Funds ...................................................................................	13
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds to the Statement of Activities ..........................	14
Notes to Basic Financial Statements	15 - 30
Required Supplementary Information:
Schedule of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds
Budget and Actual – General Fund....................................................................................	32
Schedule of the District's Proportional Share of Net Pension Liability ...................................	33
Schedule of the District’s Contributions ..................................................................................	34
Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards	35 - 37
Independent Accountant’s Examination Report .......................................................................	38
Independent Auditors' Management Letter	39 - 40

KMETZ· ELWELL·GRAHAM & ASSOCIATES, PLLC
Certified Public Accountants

Independent Auditor's Report

To the Board of Supervisors Fellsmere Water Control District Fellsmere, Florida

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Fellsmere Water Control District (the District), as of and for the year ended September 30, 2020, and related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the District as of September 30, 2020, and the respective changes in financial position thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

2800 Ocean Drive	Vero Beach, Florida 32963	T: 772.231.6902	F: 772.231.4099
1575 Indian River Boulevard, Suite (240	Vero Beach, Florida 32960	T: 772.231.1440	F: 772.569.4423
www.kegacpa.com
Michael L. Kmetz, CPA, PFS	Brian J. Elwell, CPA	Patrick K. Graham, CPA, MA	Aurelius J. (Reese) Brackins, CPA	H. James Reamy, 111, CPA Andrew W. Williams, CPA	Ralph Beach, Ill, CPA, MST	James F. McGuigan, Jr., CPA	Stephanie Freetly, CPA	Jeannie Heran, CPA

Other Matters

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, budgetary comparison schedule-general revenue and pension disclosures as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements as a whole. The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The Schedule of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds Budget and Actual – General Fund is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects, in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Kmetz, Elwell, Graham, & Associates, PLLC Certified Public Accountants
Vero Beach, Florida June 2, 2021

FELLSMERE WATER CONTROL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2020

As management of the Fellsmere Water Control District (the District), we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended September 30, 2020. This overview and analysis is required by generally accepted accounting principles (GAAP) in the United States of America in Governmental Accounting Standards Board Statement No. 34 Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments (GASB 34).

FINANCIAL HIGHLIGHTS

The assets and deferred outflows of the District exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $938,674 (net position). The District’s total net position increased by
$191,986 or 26% in comparison with prior year net position.

As of the close of the current fiscal year, the District’s governmental funds reported combined ending fund balances of $1,127,928, an increase of $206,834 or 22% in comparison with the prior year balances.
$827,928 is available for spending at the government’s discretion (unassigned fund balance), and
$300,000 is assigned for contingencies.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The District’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.

Government-wide financial statements – The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the District’s assets (both short-term spendable resources and capital assets) and liabilities, with the difference between the two reported as net position. Over time, increases and decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.

The statement of activities presents information showing how the District’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods.

Both of the government-wide financial statements present functions of the District (governmental activities) that are principally supported by tax revenues. The governmental activities of the District include water control and resource management.

The government-wide financial statements include only the District. There are no component units for which the District is financially accountable.

The government-wide financial statements can be found on pages 10 and 11 of this report.

FELLSMERE WATER CONTROL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2020

Fund financial statements – A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District are governmental funds.

Governmental fund – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The District adopts an annual appropriated budget for all funds. Government accounting standards require the District to report a budgetary comparison statement for the general fund and any major special revenue or enterprise funds. A budgetary comparison statement has been provided for the general fund. The District has no major special revenue funds.

The basic governmental fund financial statements can be found on pages 12 – 13 of this report.

Notes to the financial statements – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 15 - 30 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the District, assets exceeded liabilities by $938,674 at September 30, 2020.

$56,188 (6%) of the District’s net position reflects its investment in capital assets (e.g., land, buildings, equipment and water control structures). The District uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

FELLSMERE WATER CONTROL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2020

FELLSMERE WATER CONTROL DISTRICT’S NET POSITION

The remaining portion of the District’s net position (93%) represents unrestricted net positions, which may be used to meet the government’s ongoing obligations to citizens.

	2020	2019	
Current assets	$ 1,130,897	$	921,094	
Capital assets, net	56,188	67,802	
Total Assets	1,187,085	988,896	
Deferred outflows of resources	53,137	85,562	
Current liabilities	2,969	-	
Noncurrent liabilities	192,009	274,475	
Deferred inflows of resources	106,570	53,295	
Net Position			
Net invested in capital assets	56,188	67,802	
Unrestricted, reported in: Governmental activities	
582,486	
378,886	
Designated for contingencies	300,000	300,000	
Total Net Position	$	938,674	$	746,688	
At the end of the current fiscal year, the District is able to report positive balances in both categories of net position.

FELLSMERE WATER CONTROL DISTRICT’S CHANGE IN NET POSITION

2020	2019

Revenues
General revenues:
Maintenance taxes, net of discounts	$	621,080	$	622,757	
Other	10,476	17,804	
Total revenues	631,556	640,561	
Expenses			
Aquatic weed control	77,804	61,074	
Ditch maintenance	98,996	116,292	
General and administrative	262,770	303,197	
Total expenses	439,570	480,563	
Increase in net position	191,986	159,998	
Net position, beginning of year	746,688	586,690	
Net position, end of year	$	938,674	$	746,688	

Governmental activities – The District relies heavily on general revenues (i.e., property taxes, sale of right of ways, etc.) to fund the expenses of the governmental activities. General revenues comprise 100% of total revenues.

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS

As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds – The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a District’s net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the District’s governmental fund (general fund) reported an ending fund balance of $1,127,928. Of this total, $827,928 constitutes unassigned fund balance, which is available for spending at the District’s discretion, and $300,000 which is assigned for contingencies.

The general fund is the only operating fund of the District. At the end of the current fiscal year, unassigned fund balance of the general fund was $827,928. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance and total fund balance exceeded expenditures by $403,206 and $703,206, respectively.

The fund balance of the District’s general fund increased by $206,834 during the year ended September 30, 2020, due to normal operations.

GENERAL FUND BUDGETARY HIGHLIGHTS

During the year, the District did not amend its annual budget and ended the most recent fiscal year with $78,081 more in actual revenue than was budgeted. The actual expenditures were some $128,753 less than the budgeted amount.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital assets – The District’s investment in capital assets for its governmental activities as of September 30, 2020 amounted to $56,188 (net of accumulated depreciation). This investment in capital assets includes land, buildings and equipment. No major capital asset additions occurred during the current year. Additional information on the District’s capital assets can be found in Notes 1 and 7 on pages 17 and 22 of this report.

Long-term debt – The District’s long-term debt consists of net pension liabilities of $192,009 as of September 30, 2020.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

The District generally receives the majority of its revenues from a property tax levied on acreage that makes up the physical boundaries of the District.

These factors were considered in preparing the District’s budget for the 2020-2021 fiscal year.

OTHER CURRENTLY KNOWN FACTS, DECISIONS, OR CONDITIONS

Climatological Review
Fortunately, the District was not impacted by any hurricanes during the fiscal year 2019-2020. Total rainfall in the District’s area was below normal for the year.

City of Fellsmere
The City of Fellsmere continues to develop strategies to improve its drainage infrastructure, including additional paving and drainage grants and developing a city-wide drainage swale plan for driveway culverts. Additionally, the City has established a Stormwater Management Utility Program to aid in funding these drainage projects.

Interstate I-95 Bridge Construction
Engineering and attorney activity continues to be expended on the non-compliance design and construction issues of the F.D.O.T. Interstate I-95 Bridge constructed across the Districts main canal. The District requires additional fill and rock rip rap slope stabilization treatment for the transition sections of the Districts realigned maintenance road. This matter remains unresolved and litigation is still on-going.

Non Ad Valorem Assessment Rate for the fiscal year 2019-2020
The Non-Ad Valorem assessment rate of $12.50 per acre for all land west of Lateral U, and the rate of $29.00 for all land east of Lateral U remained unchanged for the fiscal year 2019-2020. This rate was approved at the May 2020 Landowners Meeting.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the District’s finances for all those with an interest in the District’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Rodney Tillman, Treasurer, Fellsmere Water Control District, P.O. Box 438, Fellsmere, Florida 32948.

Fellsmere Water Control District
Statement of Net Position

September 30, 2020

Assets

Governmental	Business-type
Activities	Activities	Total

Cash, collateralized	$ 1,130,897	$	-	$ 1,130,897	
Capital assets, net	56,188	-	56,188	
Total Assets	1,187,085	-	1,187,085	
Deferred Outflows of Resources				
Deferred outflows of pension earnings	53,137	-	53,137	
Liabilities				
Accounts payable & accrued expenses	2,969	-	2,969	
Noncurrent net pension liability	192,009	-	192,009	
Total Liabilities	194,978	-	194,978	
Deferred Inflows of Resources				
Deferred inflows of pension earnings	106,570	-	106,570	
Net Position				
Net invested in capital assets	56,188	-	56,188	
Unrestricted, reported in: Governmental activities	
582,486	
-	
582,486	
Designated for contingencies	300,000	-	300,000	
Total Net Position	$	938,674	$	-	$	938,674	
See accompanying notes to the financial statements.

Fellsmere Water Control District
Statement of Activities

Year ended September 30, 2020

Program Revenues

Net (Expense) Revenue and Changes in Net Position

 
Operating		Capital		Business- Charges for	Grants and	Grants and	Governmental		type
Expenses	Services	Contributions	Contributions	Activities	Activities	Total

Governmental activities:
Aquatic weed control	$	77,804		$	-  $	-	$	-	$	(77,804)	$	-	$	(77,804)	
Ditch maintenance	98,996		-	-	-	(98,996)	-	(98,996)	
General and administrative	262,770		-	-	-	(262,770)	-	(262,770)	
Total Governmental Activities	$	439,570		$	-  $	-	$	-	(439,570)	-	(439,570)	
			
General Revenues:		
Non-Ad Valorem property taxes, net of discounts	621,080	-	621,080	
Interest income	1,871	-	1,871	
Other income	8,605	-	8,605	
Total General Revenues	631,556	-	631,556	
Change in Net Position	191,986	-	191,986	
Net Position, beginning	746,688	-	746,688

Net Position, ending

$	938,674	$

-	$	938,674

See accompanying notes to the financial statements.

-11-

Balance Sheet - Governmental Funds

September 30, 2020

General Fund
Assets	Other Governmental Funds		Total Governmental Funds	
Cash, collateralized	$ 1,130,897	$	-		$ 1,130,897	
Total Assets	$ 1,130,897	$	-		$ 1,130,897	
Liabilities							
Accounts payable & accrued expenses	$	2,969	$	-	$	2,969	
Total Liabilities		2,969		-		2,969	
Fund Balances:
Assigned for contingencies	
300,000	
-		
300,000	
Unassigned	827,928	-		827,928	
Total Fund Balances	1,127,928	-		1,127,928	
Total Liabilities and Fund Balances	$ 1,130,897	$	-		$ 1,130,897	
Total Fund Balances				$ 1,127,928	
Amounts reported for governmental activities in the					
statement of net position is different because:								
Deferred inflows and outflows of resources related to pension earnings
are not recognized in the governmental funds. However, they are recorded
in the statement of net position under full accrual accounting.	(53,433)
Long-term net pension liabilities are not due and payable in the current
period and therefore, are not reported in the funds.	(192,009)
Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the governmental funds.	56,188

Net Position of Governmental Activities	$	938,674

See accompanying notes to the financial statements.

Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds

Year ended September 30, 2020

Other	Total
General	Governmental	Governmental Fund		Funds		Funds

Revenues		
Taxes, net of discounts	$	621,080	$	-	$	621,080	
Interest income	1,871	-	1,871	
Other income	8,605	-	8,605	
Total Revenues	631,556	-	631,556	
Expenditures
Current operating: Aquatic weed control	

72,694	

-	

72,694	
Ditch maintenance	93,886	-	93,886	
General and administrative	258,142	-	258,142	
Capital outlay	-	-	-	
Total Expenditures	424,722	-	424,722	
Net Increase in Fund Balance	206,834	-	206,834	
Fund Balance, beginning of year	921,094	-	921,094	
Fund Balance, end of year	$ 1,127,928	$	-	$ 1,127,928	
See accompanying notes to the financial statements.				

Fellsmere Water Control District
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities

Year ended September 30, 2020
Net Change in Fund Balances - Governmental Funds
Amounts reported for governmental activities in the statement of activities are different because:
Some pension expenditures do not require the use of current financial resources and, therefore, are not reported as expenditures in

$	206,834

governmental funds as follows:	(3,234)
Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.
This is the amount by which depreciation expense of $11,714 exceeds
capital outlays of $0 in the period.	(11,614)

Change in Net Position of Governmental Activities
See accompanying notes to the financial statements.

$	191,986

Notes to Basic Financial Statements September 30, 2020

Note 1 – Summary of Significant Accounting Policies General Information
The Fellsmere Water Control District (the District) is an independent special district, as defined by the laws of the State of Florida, and is located in Indian River County, Florida. The District was incorporated pursuant to a decree in the Circuit Court of the Fifteenth Judicial Court, in and for St. Lucie County, Florida on April 8, 1919. The District consists of landowners who receive the benefit of water management and are assessed for the maintenance and operation of the District.

Reporting Entity
Criteria for determining if other entities are potential component units of the District which should be reported with the District's basic financial statements are identified and described in the Governmental Accounting Standards Board's (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. The reporting entity for the District includes all functions of government in which the Board of Supervisors exercises oversight responsibility. Oversight responsibility includes, but is not limited to, financial interdependency, selection of governing authority, designation of management, significant ability to influence operations and accountability for fiscal matters. As a result of applying the above reporting entity criteria, no component units exist in which the District has any oversight responsibilities which would require inclusion in the District's financial statements.

Basis of Presentation
The District's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is responsible for establishing accounting principles generally accepted in the United States of America for state and local governments through its pronouncements (Statements and Interpretations). Governments are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements. The more significant principles generally accepted in the United States of America and used by the District are discussed below.

The basic financial statements include both government-wide (reporting the District as a whole) and fund financial statements (reporting the District’s major funds). Both the government-wide and fund financial statements categorize primary activities as either governmental or business-type. The District has no business-type activities. Governmental fund financial statements include a reconciliation, with brief explanations to better identify the relationship between the government-wide statements and the statements for governmental funds. Reconciling items arise from differences in the measurement focuses and basis of accounting between the statements, and certain required eliminations.

Basic Financial Statements - Government-wide Statements
In the government-wide Statement of Net position, both the governmental and business-type activities columns, (a) are presented on a consolidated basis by column, and (b) and are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt obligations. The District’s net position is reported in two parts – invested in capital assets and unrestricted net assets. When applicable, the District first utilizes restricted resources to finance qualifying activities.

Note 1 – Summary of Significant Accounting Policies (continued)

The government-wide Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those which are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Basic Financial Statements – Fund Financial Statements
The financial transactions of the District are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, fund equity, revenues, expenditures, and other financing sources and uses. Resources are allocated to and accounted for in individual funds based on the purposes for which they are to be spent and the means by which spending activities are controlled. The District’s major governmental funds are as follows:

General Fund - Used to account for all financial resources not required to be accounted for in another fund.

Basis of Accounting
Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.

Both governmental and business-type activities in the government-wide financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred.

The governmental funds financial statements are prepared using the modified accrual basis of accounting. Under the modified accrual basis, revenues, except for certain grant revenues, are recognized when they become measurable and available. Revenues become available when they are collectable within the current period, or soon enough thereafter to be used to pay liabilities of the period. Property taxes are recorded as revenue when received; uncollected property taxes are insignificant to the overall operations of the District and therefore are not accrued. When grant terms provide that the expenditure of resources is the prime factor for determining eligibility for Federal, State, and other grant resources, revenue is recognized at the time the expenditure is made. Under the modified accrual basis of accounting, expenditures are generally recognized when the related fund liability is incurred, except unmatured interest on long-term debt, which should be recognized when due. The principal exception to this general rule is that prepaid items are generally not accrued.

Note 1 – Summary of Significant Accounting Policies (continued)

Budgetary Basis Accounting
The annual budget is adopted for the governmental funds and approved by the Board of Supervisors. Once approved, the District may amend the legally adopted budget when unexpected modifications are required in estimated revenues and appropriations. The District prepares the budget on a basis consistent with generally accepted accounting principles. Appropriations for the General Fund lapse at the end of the fiscal year. Budgetary control is established at the fund level. Expenditures in excess of appropriation in one or more funds does not constitute a violation of budgetary controls as long as total expenditures do not exceed total appropriations for the major fund.

Encumbrances
The District does not utilize encumbrance accounting.

Cash and Cash Equivalents
For purposes of statement presentation, all highly liquid investments with a maturity of three months or less when purchased are considered to be cash or cash equivalents.

Capital Assets and Depreciation
Expenditures for capital assets acquired for general District purposes are reported in the governmental activities column of the government-wide statement of net position, but are not reported in the fund financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. Donated assets are recorded at fair market value at the date of donation. The District maintains a capitalization threshold of $500. Major outlays for capital assets and improvements are capitalized as projects are completed; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset’s life are not.

Public domain (infrastructure) general fixed assets consisting of certain improvements other than building have not been capitalized in the past. As a phase 3 government with revenues less than $10 million, the District has elected not to retroactively report these assets. As required, the District has elected, effective October 1, 2003, to capitalize all current and future costs.
Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives: Buildings	10-40 years
Improvements	7-10 years
Equipment	3-7 years

Accrued Liabilities and Long-term Obligations
All payables, accrued liabilities and long-term obligations are reported in the government-wide financial statements. In general, payables and accrued liabilities that will be paid from governmental funds are reported on the governmental fund financial statements regardless of whether they will be liquidated with current resources. Payments made within sixty days after year end are considered to have been made with current available financial resources. Other long-term obligations that will be paid from governmental funds are not recognized as a liability in the fund financial statements until due.

Note 1 – Summary of Significant Accounting Policies (continued)

Compensated Absences
Vacation expenditures are recognized when payments are made to the employees. Employees are entitled to vacation after one year of employment. Any vacation earned but not taken by the employee’s anniversary date is forfeited by the employee unless an extension is granted by the Board of Supervisors, thus no liability is recorded. Sick leave is available to all employees after one year of continuous service, earned at a rate of 1 ¼ days per month up to a maximum of 15 days per year. Unused sick leave shall accumulate from year to year to a maximum of 60 days. Accumulated sick leave is not paid upon termination; thus no liability is recorded

Expenditures
On the accrual basis of accounting, expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of costs, such as depreciation and amortization, are not recognized in governmental funds.

Property Taxes
The District is authorized by Section 298.54, Florida Statutes to levy property taxes of $12.50 per acre for all land west of Lateral U, and $29.00 per acre for all land east of Lateral U on property located within the District. The property assessment and tax collection functions are performed by appropriate officials of County government. Commissions are paid to the County for these appraisal and collection services.

Property tax revenues recognized for the 2019-20 fiscal year were levied on January 1, 2019. Virtually all unpaid taxes are collected via the sale of tax certificates prior to fiscal year end. Therefore, there were no significant tax receivables at year-end.

Key dates in the property tax cycle (latest date where appropriate) are as follow:

Revenues for Fiscal Year Ended September 30, 2020

Lien date	January 1, 2019

Property taxes levied	October 31, 2019

Beginning of fiscal year for which taxes have been levied		October 1, 2019 Tax bills rendered	November 1, 2019
Property taxes payable:
Maximum discount	November 30, 2019
Delinquent	April 1, 2020

Tax certificates sold on unpaid property taxes	May 31, 2020

Note 1 – Summary of Significant Accounting Policies (continued)

Interfund Activity
Loans between governmental funds are reported as interfund receivables or payables as appropriate and are subject to elimination upon consolidation. Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds. During the year ended September 30, 2020, the District made no interfund transfers.

Extraordinary and Special Items
Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events that are within the control of the Board of Supervisors and that are either unusual in nature or infrequent in occurrence. Neither type of transaction occurred during the year ended September 30, 2020.

Fund Balance
The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the District is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:

Nonspendable – This classification includes amounts that cannot be spent because they are either
(a) not in spendable form or (b) are legally or contractually required to be maintained intact. The District did not have any nonspendable resources as of September 30, 2020.

Restricted – This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. The District did not have any restricted resources as of September 30, 2020.

Committed – This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Supervisors. These amounts cannot be used for any other purpose unless the Board of Supervisors removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. The District did not have any committed resources as of September 30, 2020.

Assigned – This classification includes amounts that are constrained by the District’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the District or by an official or body to which the District delegates the authority. The District had $300,000 assigned for contingencies as of September 30, 2020.

Unassigned – This classification includes the residual fund balance for the General Fund.

Note 1 – Summary of Significant Accounting Policies (continued)

Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District has one item that qualifies for reporting in this category for the year ended September 30, 2020, deferred outflows of pension earnings.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item that qualifies for reporting in this category for the year ended September 30, 2020, deferred inflows of pension earnings.

Net Position Flow Assumption
Sometimes the District will fund outlays for a particular purpose from both restricted and unrestricted resources. In order to calculate the amounts to report as restricted- net position and unrestricted- net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted - net position to have been depleted before unrestricted-net position is applied.

Fund Balance Flow Assumptions
Sometimes the District will fund outlays for a particular purpose from both restricted and unrestricted resources (total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.

GASB No. 68 and No. 71 Implementation
In fiscal year 2015, the District implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. These statements replace the requirements of GASB Statement No. 27, Accounting for Pensions by State and Local Government Employers, and Statement No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arranges that meet certain criteria. GASB Statement No. 71 addresses the issue of the transition provisions in Statement No. 68.

Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Subsequent Events
Subsequent events have been evaluated through June 2, 2021, which is the date the financial statements were available to be issued.

Note 2 – Cash and Investments

Florida statutes require state and local governmental units to deposit monies with financial institutions classified as "qualified public depositories", a multiple financial institution pool whereby groups of securities pledged by the various financial institutions provide common collateral for their deposits of public funds. This pool is provided as additional insurance to the federal depository insurance and allows for additional assessments against the member institutions, providing full insurance for public deposits. Further, Florida Statutes limit such investment and deposit accounts in “qualified public depositories” to savings accounts, demand deposit accounts, certificates of deposits and direct obligations of the U.S. Treasury and other federal agencies or entities.

Deposits
At year-end, the carrying amount of the District’s cash and cash equivalents were $1,130,897 and the bank balances were $1,146,303. Of the bank balances, $250,000 was covered by federal depository insurance, and $896,303 was covered by collateral held in escrow by the bank’s trust department, under the “qualified public depository” rules as previously stated.

Note 3 – Long-Term Liabilities

Long-term liabilities consist of net pension liabilities of $192,009. Additional information on the District’s net pension liabilities can be found in Note 8 on pages 25 and 28.

Note 4 – Risk Management Programs

Workers' compensation coverage is provided by the District. Employees of the District are covered by purchased health insurance. The District contributes monthly for each employee to the plan, and employees at their option authorize payroll withholdings to pay for dependents. Employees authorize payroll withholdings and are responsible for all premiums.

General liability, professional liability, and property coverages are being provided through purchased commercial insurance with minimum deductibles for each line of coverage. Commercial coverage has not been exceeded.

Note 5 – Economic Dependency

Approximately $148,000 in tax revenue was received from Fellsmere Joint Venture, a large agricultural concern and major landowner within the District.

Note 6 – Designated for Contingencies

A portion of the governmental activities/general fund has been earmarked by the Board of Supervisors for the purpose of acquisition of future assets and any contingency expenditures, which may arise. A total of
$300,000 has been budgeted for such contingencies.

Note 7 – Capital Assets

Capital asset activity for governmental activities for the year ended September 30, 2020, was as follows:

Balance	Balance
September 30,	September 30,
2019	Additions	Deletions	2020
Capital assets not being depreciated:

Land	$	13,871	$	-	$	-	$	13,871	
Total capital assets not being depreciated	
13,871	
-	-	13,871	
Other capital assets:			
Buildings	202,069	-	-	202,069	
Improvements	15,225	-	-	15,225	
Equipment	617,180	-	(396,200)	220,980	
Total other capital assets, at historical cost	
834,474	
-	(396,200)	
438,274	
Less accumulated depreciation for:				
Buildings	(156,112)	(5,014)	-	(161,126)	
Improvements	(15,086)	(140)	-	(15,226)	
Equipment	(609,345)	(6,460)	396,200	(219,605)	
Total accumulated depreciation	(780,543)	(11,614)	*	396,200	(395,957)	
Other capital assets, net	53,931	(11,614)	-	42,317	
Governmental activities capital assets, net	$	67,802	$ (11,614)	$	-	$	56,188	

* Depreciation expense was charged to governmental functions as follows:

Aquatic weed control	$	5,110	
Ditch maintenance	5,110	
General and administrative	1,394	
	$	11,614	

Note 8 - Retirement Plans

Florida Retirement System Retirement Plan
The District’s employees participate in the Florida System Retirement Plan (the Plan), which is a conditionally qualified plan under Section 401(a) of the Internal Revenue Code. The Plan is a cost sharing public employee retirement system with one exception: All risks and costs are not shared by the District, but are the liability of the State of Florida. The Plan is funded through contributions by the District and the District has no legal obligation for paying benefits.

Generally, membership is mandatory for all employees. The District is required to contribute 6.54% for employees and 22.34% for senior management (percentage in effect at September 30, 2019) of the employees’/managements’ gross earnings, less merit pay and bonuses. Effective July 1, 2011, employees are required to contribute 3% of gross earnings. The District made the required contribution, amounting to
$15,468.

General Information - All of the District’s employees participate in the Florida Retirement System (FRS). As provided by Chapters 121 and 112, Florida Statutes, the FRS provides two cost sharing, multiple employer defined benefit plans administered by the Florida Department of Management Services, Division of Retirement, including the FRS Pension Plan (“Pension Plan”) and the Retiree Health Insurance Subsidy (“HIS Plan”). Under Section 121.4501, Florida Statutes, the FRS also provides a defined contribution plan (“Investment Plan”) alternative to the FRS Pension Plan, which is administered by the State Board of Administration (“SBA”). As a general rule, membership in the FRS is compulsory for all employees working in a regularly established position for a state agency, county government, district school board, state university, community college, or a participating city or special district within the State of Florida. The FRS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefits are established by Chapter 121, Florida Statutes, and Chapter 60S, Florida Administrative Code. Amendments to the law can be made only by an act of the Florida State Legislature.

The State of Florida annually issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The latest available report may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida 32315-9000, for from the Web site:
https://frs.fl.gov/forms/2018-19_CAFR.pdf.

FRS
Plan Description - The Pension Plan is a cost-sharing multiple-employer defined benefit pension plan, with a Deferred Retirement Option Program (“DROP”) for eligible employees.

Benefits Provided - Benefits under the Pension Plan are computed on the basis of age, average final compensation, and service credit.

Note 8 - Retirement Plans (continued)

For Pension Plan members enrolled before July 1, 2011:

Regular class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Vested members with less than 30 years of service may retire before age 62 and receive reduced retirement benefits.

Senior Management Service class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation based on the five highest years of salary for each year of credited service

For Plan members enrolled on or after July 1, 2011:

The vesting requirement is extended to eight years of credited service for all these members and increasing normal retirement to age 65 or 33 years of service regardless of age for Regular and Senior Management Service. Also, the final average compensation for all these members will be based on the eight highest years of salary.

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the Pension Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of- living adjustment is three percent per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost- of-living adjustment is a proportion of three percent determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by three percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

In addition to the above benefits, the DROP program allows eligible members to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. There are no required contributions by DROP participants.

Contributions - Effective July 1, 2011, all enrolled members of the FRS, other than DROP participants, are required to contribute three percent of their salary to the FRS. In addition to member contributions, governmental employers are required to make contributions to the FRS based on state-wide contribution rates established by the Florida Legislature. These rates are updated as of July 1 of each year. The employer contribution rates by job class for the periods from October 1, 2019 through June 30, 2020 and from July 1, 2020 through September 30, 2020, respectively, were as follows: Regular 6.54% and 6.75; Senior
Management Service 22.34% and 23.69%; and DROP participants 12.37 and 12.94%.

The District’s contributions, including employee contributions, to the FRS totaled $18,246 for the fiscal year ended September 30, 2020.

Note 8 - Retirement Plans (continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At September 30, 2020 the District reported a liability of $152,044 for its proportionate share of the Pension Plan’s net pension liability. The net pension liability was measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2020. The District’s proportionate share of the net pension liability was based on the District’s 2019-2020 fiscal year contributions relative to the 2019-2020 fiscal year contributions of all participating members. At June 30, 2020, the District's proportionate share was
.000351%, which was a decrease of .0003% from its proportionate share measured as of June 30, 2019.

For the fiscal year ended September 30, 2020, the District recognized pension expense of 16,760. In addition, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows	Deferred Inflows
Description	of Resources	of Resources

Differences between expected and
actual experience	$	5,824	$	2
Change of assumptions	27,525	-
Net difference between projected and actual
earnings on pension plan investments	9,053	-
Changes in proportion and differences between district pension plan contributions
and proportionate share of contributions	391	83,865
District pension plan contributions subsequent
to the measurement date	3,239	-	
Total	$	46,032	$	83,867	

The deferred outflows of resources related to the Pension Plan, totaling $3,239 resulting from District contributions to the Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2020.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Pension Plan will be recognized in pension expense as follows:

Fiscal Year Ending September 30:		
2021	$	(6,418)	
2022	(6,418)	
2023	(6,418)	
2024	(6,418)	
2025	(6,418)	
Thereafter	$	(8,984)	

Note 8 - Retirement Plans (continued)

Actuarial Assumptions - The total pension liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumption, applied to all period included in the measurement:

Inflation	2.40 %
Salary Increases	 3.25%, average, including inflation Investment Rate of Return	6.80%, net of pension plan investment
expense, including inflation

Mortality rates were based on the PUB2010 base table varies by member category and sex, projected generationally with Scale MP-2018 details in valuation report.

The actuarial assumptions used in the June 30, 2020, valuation were based on the results of an actuarial experience study for the period July 1, 2013 through June 30, 2018.

The long-term expected rate of return on Pension Plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions and includes an adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table:

Compound

Asset Class	
Target Allocation (1)	Annual Arithmetic Return	Annual (Geometric) Return	
Standard Deviation	
Cash	1.0%	2.2%	2.2%	1.2%	
Fixed Income	19.0%	3.0%	2.9%	3.5%	
Global Equity	54.2%	8.0%	6.7%	17.1%	
Real Estate	10.3%	6.4%	5.8%	11.7%	
Private Equity	11.1%	10.8%	8.1%	25.7%	
Strategic Investments	4.4%	5.5%	5.3%	6.9%	
Total	100.0%

Assumed Inflation - Mean	2.4%	1.7%
(1) As outlined in the Pension Plan's investment policy

Discount Rate - The discount rate used to measure the total pension liability was 6.80%. The Pension Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculation the total pension liability is equal to the long-term expected rate of return.

Note 8 - Retirement Plans (continued)

Sensitivity of the District’s Proportionate Share of the Net Position Liability to Changes in the Discount Rate - The following represents the District’s proportionate share of the net pension liability calculated using the discount rate of 6.80%, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (5.80%) or one percentage point higher (7.80%) than the current rate:

	1% Decrease
(5.80%)	Current (6.80%)	1% Increase
(7.80%)	
District's proportionate share of the net pension liability	
$	242,789	
$	152,044	
$	76,254	
Pension Plan Fiduciary Net Position - Detailed information regarding the Pension Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State-Administered Systems Comprehensive Annual Financial Report.

HIS Plan
Plan Description - The HIS Plan is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may be amended by the Florida legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Florida Department of Management Services, Division of Retirement.

Benefits Provided - For the fiscal year ended September 30, 2020, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month. To be eligible to receive these benefits, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which may include Medicare.

Contributions - The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended September 30, 2020, the HIS contribution for the period was 1.66%. The District contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or cancelled.

The District’s contributions to the HIS Plan totaled $1,942 for the fiscal year ended September 30, 2020.

Note 8 - Retirement Plans (continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At September 30, 2020, the District reported a liability of $39,965 for its proportionate share of the HIS Plan’s net pension liability. The net pension liability was measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2020. The District’s proportionate share of the net pension liability was based on the District’s 2019-20 fiscal year contributions relative to the 2019-2020 fiscal year contributions of all participating members. At September 30, 2020, the District's proportionate share was .000327%, which was a decrease of .000013% from its proportionate share measured as of September 30, 2019.

For the fiscal year ended September 30, 2020, the District recognized pension expense of $1,942 In addition, the District reported deferred outflows of resources and deferred in flows of resources related to pensions from the following sources:

Description	Deferred Outflows of Resources	Deferred Inflows of Resources	
Differences between expected and actual experience	$	1,635	$	31	
Change of assumptions	4,297	2,324	
Net difference between projected and actual earnings on HIS plan investments	
32	
-	
Changes in proportion and differences between district HIS plan contributions and proportionate
share of contributions	703	20,348
District HIS plan contributions subsequent
to the measurement date	438	-	
Total	$	7,105	$	22,703	

The deferred outflows of resources related to the HIS Plan, totaling $438 from District contributions to the HIS Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the HIS Plan will be recognized in pension expense as follows:

Fiscal Years Ending September 30:	Amount

2021	$ (2,227)	
2022	(2,227)	
2023	(2,227)	
2024	(2,227)	
2025	(2,227)	
Thereafter	$ (4,901)	

Note 8 - Retirement Plans (continued)

Actuarial Assumptions - The total pension liability in the July 1, 2020, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation	2.40 %
Salary Increases	3.25%, average, including inflation
Municipal Bond Rate	2.21 %

Mortality rates were based on the Generational RUP-2010 with Projection Scale MP-2018 tables.

The information for the Health Insurance Subsidy was developed as of June 30, 2020 measurement date, based on an Actuarial Valuation Date of June 30, 2020.

Discount Rate - The discount rate used to measure the total pension liability was 2.21%. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the HIS Plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.

Sensitivity of the District’s Proportionate Share of the Net Position Liability to Changes in the Discount Rate - The following represents the District’s proportionate share of the net pension liability calculated using the discount rate of 2.21%, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (1.21%) or one percentage point higher (3.21%) than the current rate:

	1% Decrease
(1.21%)	Current (2.21%)	1% Increase
(3.21%)	
District's proportionate share of the net pension liability	
$	46,198	
$	39,965	
$	34,864	
HIS Plan Fiduciary Net Position - Detailed information regarding the HIS Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State-Administered Systems Comprehensive Annual Financial Report.

Investment Plan
The SBA administers the defined contribution plan officially titled the FRS Investment Plan. The investment Plan is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report.

Note 8 - Retirement Plans (continued)

For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the Pension Plan is transferred to the Investment Plan, the member must have the years of service required for Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five-year period, the employee will regain control over their account. If the employee does not return within the five-year period, the employee will forfeit the accumulated account balance. For the fiscal year ended September 30, 2020, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the District.

After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump- sum distribution, leave the funds invested for future distribution, or any combination of these options. Disability coverage is provided; the member may either transfer the account balance to the Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the Pension Plan, or remain in the Investment Plan and rely upon that account balance for retirement income.

The District’s Investment Plan pension expense totaled approximately $2,000 for the fiscal year ended September 30, 2020.

REQUIRED SUPPLEMENTARY INFORMATION

Fellsmere Water Control District
Schedule of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Budget and Actual - General Fund
Year ended September 30, 2020

	Budgeted Amounts	

Actual	Variance with
Amounts	Final Budget
GAAP	Favorable

Taxes, net of discounts	$	553,475	$	553,475	$	621,080	$	67,605	
Interest	-	-	1,871	1,871	
Other income	-	-	8,605	8,605	

Original	Final	Basis	(Unfavorable)

Revenues

Total Revenues	553,475	553,475		631,556		78,081	
Expenditures
Aquatic Weed Control:
Contractual services	

78,532	

78,532		

47,175		

31,357	
Materials and other supplies	24,950	24,950		4,527		20,423	
Chemicals	28,000	28,000		20,992		7,008	
Total Aquatic Weed Control	131,482	131,482		72,694		58,788	
Ditch Maintenance:
Salaries and wages	
49,000	
49,000		
49,552		
(552)	
Employee benefits	19,400	19,400		32,944		(13,544)	
Materials and other supplies	67,500	67,500		11,390		56,110	
Total Ditch Maintenance	135,900	135,900		93,886		42,014	
General and Administrative:
Salaries and wages	
70,000	
70,000		
67,462		
2,538	
Employee benefits	51,683	51,683		53,508		(1,825)	
Legal and professional	85,000	85,000		66,056		18,944	
Insurance	20,000	20,000		10,186		9,814	
Other	59,410	59,410		60,930		(1,520)	
Total General and Administrative	286,093	286,093		258,142		27,951	
Capital Outlay	-	-		-		-	
Total Expenditures	553,475	553,475		424,722		128,753	
Net Change in Fund Balance	$	-	$	-	$	206,834		$	206,834	
Fund Balance, beginning of year	921,094			
Fund Balance, end of year	
$ 1,127,928			
See accompanying notes to the financial statements.				

Fellsmere Water Control District
Schedule of the District's Proportional Share of Net Pension Liability Last 10 Fiscal Years

Florida Retirement System (FRS)	2020	2019	2018	2017	2016	2015	2014	
District's proportion of the net pension liability	
0.000350805%	
0.000649780%	
0.000765289%	
0.000804640%	
0.000808675%	
0.000829633%	
0.000776953%	
District's proportionate share of the net pension liability	
$	152,044	
$	223,769	
$	230,509	
$	238,089	
$	204,191	
$	107,158	
$	47,406	
District's Covered-employee Payroll	$	117,014	$	138,562	$	181,026	$	178,678	$	179,621	$	170,686	$	165,597	
District's proportionate share of the net pension liability as a
percentage of its covered employee
payroll	129.94%	

161.49%	

133.20%	

133.20%	

113.68%	

62.78%	

28.63%	
Plan fiduciary net position as a percentage of the total pension
liability	78.85%	

82.61%	

84.26%	

83.89%	

84.88%	

92.00%	

96.09%	

Health Insurance Subsidy (HIS)	2020	2019	2018	2017	2016	2015	2014	
District's proportion of the net pension liability	
0.000327315%	
0.000453776%	
0.000541571%	
0.000567942%	
0.000553896%	
0.000570182%	
0.000577992%	
District's proportionate share of the net pension liability	
$	39,965	
$	50,773	
$	57,320	
$	60,727	
$	64,564	
$	58,150	
$	54,044	
District's Covered-employee Payroll	$	117,014	$	138,562	$	181,026	$	178,678	$	179,621	$	170,686	$	165,597	
District's proportionate share of the net pension liability as a
percentage of its covered employee
payroll	34.15%	

36.64%	

31.66%	

33.99%	

35.94%	

34.07%	

32.64%	
Plan fiduciary net position as a percentage of the total pension
liability	3.00%	

2.63%	

2.15%	

1.64%	

0.97%	

0.50%	

0.99%	

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Fellsmere Water Control District Schedule of the District Contributions Last 10 Fiscal Years

Florida Retirement System (FRS)	2020	2019	2018	2017	2016	2015	2014	
Contractually required contribution	$ 13,526	$ 13,842	$ 22,616	$ 21,193	$ 20,434	$ 19,244	$ 17,864	
Contributions in relation to the								
contractually required contribution	(13,526)	(13,842)	(22,616)	(21,193)	(20,434)	(19,244)	(17,864)	
Contribution deficiency (excess)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	
District's covered-employee payroll	$ 117,014	$ 138,562	$ 181,026	$ 178,378	$ 179,621	$ 170,686	$ 165,597	
Contributions as a percentage of
covered employee payroll	11.56%	
9.99%	
12.49%	
11.88%	
11.38%	
11.27%	
10.79%	

Health Insurance Subsidy (HIS)	2020	2019	2018	2017	2016	2015	2014

Contractually required contribution	$	1,942	$	2,300	$	3,005	$  2,966	$	2,982	$	3,133	$  2,607	
Contributions in relation to the
contractually required contribution	(1,942)	
(2,300)	
(3,005)	
(2,966)	
(2,982)	
(3,133)	
(2,607)	
Contribution deficiency (excess)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	
District's covered-employee payroll	$ 117,014	$ 138,562	$ 181,026	$ 178,378	$ 179,621	$ 170,686	$ 165,597	
Contributions as a percentage of
covered employee payroll	1.66%	
1.66%	
1.66%	
1.66%	
1.66%	
1.84%	
1.57%	

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KMETZ·ELWELL·GRAHAM & ASSOCIATES, PLLC
Certified Public Accountants

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

To the Board of Supervisors Fellsmere Water Control District Fellsmere, Florida

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Fellsmere Water Control District (the District), as of and for the year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the District's basic financial statements and have issued our report thereon dated June 2, 2021.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered Fellsmere Water Control District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Fellsmere Water Control District's internal control. Accordingly, we do not express an opinion on the effectiveness of Fellsmere Water Control District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described below as items that we consider to be significant deficiencies.

2800 Ocean Drive	Vero Beach, Florida 32963	T: 772.231.6902	F: 772.231.4099
1575 Indian River Boulevard, Suite C240	Vero Beach, Florida 32960	T: 772.231.1440	F: 772.569.4423
www.kegacpa.com
Michael L. Kmetz, CPA, PFS	Brian J. Elwell, CPA	Patrick K. Graham, CPA, MA	Aurelius J. (Reese) Brackins, CPA	H. James Reamy, 111, CPA Andrew W. Williams, CPA	Ralph Beach, 111, CPA, MST	James F. McGuigan, Jr., CPA	Stephanie Freetly, CPA	Jeannie Heran, CPA

Finding number 2020-001 Segregation of Duties
The limited size of the District’s staff does not allow for proper segregation of duties in each phase of operations. This is not unusual in an organization of this size. Although segregation of duties is necessary for optimum efficiency in internal controls, management does not believe it is cost beneficial for the District. The high degree of involvement by the Board of Supervisors in the financial process also provides a degree of compensating control for this weakness.

Management Response

The District has an office staff consisting of one person. The limited size of the staff does not allow for proper segregation of duties in each phase of operations. After this original finding by the auditors, the Board has increased their degree of participation in the financial process. The Board requires one signature of a Supervisor on all checks as well as the Superintendent, and as required by Chapter 298, the District pays all expenses through a warrant system signed by the President of the Board. Fellsmere Water Control District operates on a very limited budget making it impossible to reorganize the accounting functions to separate incompatible tasks by hiring at least one more full time equivalent accounting person. In order to hire someone, the District would need to have sustainable resources available to afford the expense of an additional employee. The Board understands the need to consider this as a prudent expense given all of the circumstances, but at this time does not feel it can justify the raising of assessments to achieve this goal.

Due to the limited size of the staff and funding limitations, segregation of duties will continue to be a deficiency. The Board of Supervisors will continue to participate to a high degree in the financial process, which will compensate to some extent for the inherent control deficiency.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Fellsmere Water Control District’s Response to Findings

Fellsmere Water Control District’s response to the findings identified in our audit is described above. Fellsmere Water Control District’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly and, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Kmetz, Elwell, Graham & Associates, PLLC Certified Public Accountants
Vero Beach, Florida June 2, 2021

Certified Public Accountants

Independent Accountant's Examination Report

To the Board of Supervisors Fellsmere Water Control District Fellsmere, Florida

We have examined the Fellsmere Water Control District's (the "District") compliance with Section 218.415, Florida Statutes, Local Government Investment Policies for the year ended September 30, 2020. Management is responsible for the District's compliance with those requirements. Our responsibility is to express an opinion on the District's compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures as we consider necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the District's compliance with specified requirements.

In our opinion, the Fellsmere Water Control District complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2020.

Kmetz, Elwell, Graham & Associates, PLLC Certified Public Accountants
Vero Beach, Florida

June 2, 2021

2800 Ocean Drive	Vero Beach, Florida 32963	T: 772.231.6902	F: 772.231.4099
1575 Indian River Boulevard, Suite (240	Vero Beach, Florida 32960	T: 772.231.1440	F: 772.569.4423
www.kegacpa.com
Michael L. Kmetz, CPA, PFS	Brian J. Elwell, CPA	Patrick K. Graham, CPA, MA	Aurelius J. (Reese) Brackins, CPA	H. James Reamy, 111, CPA Andrew W. Williams, CPA	Ralph Beach, 111, CPA, MST	James F. McGuigan, Jr., CPA	Stephanie Freetly, CPA	Jeannie Heran, CPA

Certined Public Accountants

Independent Auditors' Management Letter

To the Board of Supervisors Fellsmere Water Control District Fellsmere, Florida

Report on the Financial Statements

We have audited the basic financial statements of the Fellsmere Water Control District, as of and for the year ended fiscal September 30, 2020, and have issued our report thereon dated June 2, 2021.

Auditor's Responsibility

We have conducted our audit in accordance with auditing standards generally accepted in the United States of America; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and Chapter 10.550, Rules of the Auditor General.

Other Reports and Schedule

We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards, and Independent Accountant's Report on an examination conducted in accordance with A/CPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in that report, if any, which are dated June 2, 2021, should be considered in conjunction with this management letter.

Prior Audit Findings

Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. The segregation of duties reportable condition noted in the prior two years has not been corrected.

Fiscal year 2017 - 2018
Fiscal year 2018 - 2019
Fiscal year 2019 - 2020

Finding# 2018-1
Finding# 2019 -1
Finding# 2020 -1

Financial Condition and Management

Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether or not Fellsmere Water Control District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the Fellsmere Water Control District did not meet any of the conditions described in Section 218.503(1), Florida Statutes.	
2800 Ocean Drive	Vero Beach, Florida 32963	T: 772.231.6902	F: 772.231.4099
1575 Indian River Boulevard, Suite C240	Vero Beach, Florida 32960	T: 772.231.1440	F: 772.569.4423
www.kegacpa.com
Michael L. Kmetz, CPA, PFS	Bri<)n J. Elwell, CPA	Patrick K. Graham, CPA, MA	Aurelius J. (Reese) Brackins, CPA	H. James Reamy, Ill, CPA Andrew W. Williams, CPA	Ralph Beach, 111, CPA, MST	James F. McGuigan, Jr., CPA	Stephanie Freetly, CPA	Jeannie Heran, CPA

To the Board of Supervisors Fellsmere Water Control District Fellsmere, Florida

Pursuant to the Section 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the Fellsmere Water Control district. It is management’s responsibility to monitor the Fellsmere Water Control District’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.

Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

Additional Matters

Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings.

Purpose of the Letter

Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Board of Supervisors, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.

Kmetz, Elwell, Graham & Associates, PLLC Certified Public Accountants
Vero Beach, Florida June 2, 2021

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