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Item Z05 Z.5 County �� � .�� �y,4 ' �, "tr, BOARD OF COUNTY COMMISSIONERS Mayor Michelle Coldiron,District 2 �1 nff `ll Mayor Pro Tem David Rice,District 4 -Ile Florida.Keys Craig Cates,District 1 Eddie Martinez,District 3 w � Holly Merrill Raschein,District 5 County Commission Meeting October 203, 2021 Agenda Item Number: Z.5 Agenda Item Summary #9816 BULK ITEM: Yes DEPARTMENT: Airports TIME APPROXIMATE: STAFF CONTACT: Richard Strickland(305) 809-5200 N/A AGENDA ITEM WORDING: In anticipation of the Key West International Airport issuing bonds in 2022 as part of the funding for the upcoming Concourse A Terminal and Improvements project, the Airport requests: (1) authorization to issue audited stand-alone annual Airport financial reports that will provide an enhanced level of detail and trend analysis required to meet ongoing reporting obligations to bond holders, provide required information to allow for rating agencies to rate the bonds on an annual basis, provide the basis for the Airport to report required quarterly data to the financial markets, and ensure that the Airport's financial position is available to citizens of Monroe County in a transparent and detailed manner; and (2) authorization to procure an independent audit firm in order to review the Airport's financial information as it prepares to issue bonds and audit the Airport's stand-alone annual financial reports issued for each future fiscal year while the bonds remain outstanding. ITEM BACKGROUND: Currently, the Airport's financial position is reported annually as part of Monroe County's Comprehensive Annual Financial Report (CAFR). Financial results are reported at the level of detail sufficient to meet the County's obligations. The Airport does not currently have outstanding debt; therefore, financial data presented in the County's CAFR has been sufficient. When the RFP was recently issued for the $10 million Line of Credit, there were multiple questions and requests for more details regarding the Airport's financial position as stated in the CAFR. In preparing for the transaction and then selling bonds in the financial market, the Airport will be required to provide a more detailed view of its financial position than is available in the CAFR to a variety of interested parties including rating agencies, underwriters, bond and disclosure counsel and investors who purchase the bonds. In addition, the Airport will incur an ongoing obligation to provide financial updates and disclosures regarding its financial performance throughout the life of the bonds. The updates are primarily issued in the form of quarterly financial statements, an annual audited financial report and ongoing disclosures when significant events occur between reporting periods. When the Airport issues the bonds, the financial statements themselves along with the accompanying Management's Discussion& Analysis will need to include a breakout of revenues and expenses as Packet Pg.4165 Z.5 well as detailed explanations of both operational and financial trends that is not currently included in the CAFR. The level of transparency will be greatly enhanced and additional information will be presented. The audit can be pepared by the same firm that audits the County's CAFR; in which case, the scope of the firm's current work would be expanded to include an audit and separately issued audit opinion on the Airport's financial statements, however, it is recommended that the Airport pay for and hire a separate firm to audit and issue a separate audit opinion on the Airport's Financial statements, coordinating closely with the firm auditing and preparing the County's CAFR, to include all aspects of the Airport's accounts and policies that are issued and recorded by the County on behalf of the Airport. This would include items such as payroll and pension information, accounting policies and other services for which the Airport pays the County directly and indirectly through cost allocations. PREVIOUS RELEVANT BOCC ACTION: On October 21, 2020, the BOCC approved the following items relating to the future Concourse A Terminal and Improvements program: approval to apply for PFC 419; approval to advertise an RFP for a Commercial Loan; approval to issue an RFQ for Design; approval to issue an RFP for CMAR; and approval to issue an RFQ for a Financial Advisor. CONTRACT/AGREEMENT CHANGES: n/a STAFF RECOMMENDATION: Approval. DOCUMENTATION: Sample EYW Stand Alone Annual Report FINANCIAL IMPACT: Effective Date: Expiration Date: Total Dollar Value of Contract: to be determined Total Cost to County: -0- Current Year Portion: Budgeted: Yes, Airport Operating Fund 404 Source of Funds: CPI: Indirect Costs: Estimated Ongoing Costs Not Included in above dollar amounts: Revenue Producing: If yes, amount: Grant: County Match: Insurance Required: No Packet Pg.4166 Z.5 Additional Details: REVIEWED BY: Beth Leto Completed 10/12/2021 11:21 AM Richard Strickland Completed 10/12/2021 3:33 PM Pedro Mercado Completed 10/12/2021 3:53 PM Purchasing Completed 10/12/2021 3:55 PM Budget and Finance Skipped 10/12/2021 4:40 PM Maria Slavik Completed 10/12/2021 4:41 PM Liz Yongue Completed 10/12/2021 4:53 PM Board of County Commissioners Pending 10/20/2021 9:00 AM Packet Pg.4167 Z.S.a Sample Airport Annual Financial Report For Discussion Purposes lg, Dollar Amounts are for Illustrative Purposes Only 0 2 COMPREHENSIVE ANNUAL FINANCIAL REPORT U- FORTH E FISCAL YEARS ENDED SEPTEMBER 3012020AND 2019 cv 0 LU M Packet Pg.4168 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 2020 Comprehensive nnu i Financial Report Introductory Scti n (Unaudited) Letter of Tronsmittoi We are pleased to present the Comprehensive Annual Financial Report of Key West International Airport for the fiscal years ended September 30, 2020, and 2019. This report was prepared by the Airport's management in collaboration with other Airport and County personnel.These financial statements were audited by independent certified public accountants. 0 The letter of transmittal is designed to complement and should be read in conjunction with Management's Discussion and Analysis (MD&A).The MD&A, which immediately follows the 76 U Independent Auditor's Report, provides an introduction, overview, and analysis of the Airport financial statements. Responsibility for the accuracy, completeness, and fairness of the presentation and disclosures included in this report rests with management.To the best of our knowledge, this report is accurate in all material respects and designed to fairly present the financial position and results of Airport operations. Bockground >- The Key West International Airport (the Airport or EYW) is organized as a department of Monroe County, Florida. The Airport is headed by a Senior Director of Airports who reports directly to the County Administrator. In addition, the senior management team further consists of one Assistant Director of Airports and two Deputy Directors. The Airport is an enterprise fund of the County. Enterprise funds are defined as government-owned businesses or business-type activities that are authorized to issue their own revenue bonds. An o enterprise fund is established to account for operations that are financed and operated in a manner similar to businesses,where fees are charged to external parties to cover the costs of providing goods and services. An enterprise fund uses the accrual basis of accounting, and accordingly, revenues are recognized when earned and expenses are recognized as incurred. >- Description of the Airport M The Airport is located in the City of Key West in Monroe County, Florida. The Airport sits on approximately 334 acres and has one runway at just over 5,000 feet long. The Airport's passenger terminal complex consists of two buildings with the original terminal on the lower level serving arriving passengers and connecting to the departure gates. The newer building on the upper-level houses ticketing, check-in and the security checkpoint. Parking is available adjacent to the landside terminal in a parking garage. Additional passenger services include car rental facilities and ground transportation. A new Concourse A will enhance passenger experience with construction expected to begin in 2022 and completion in 2024. The new Concourse will have six jet bridge configured gates and new hold rooms, new concessions, a new security checkpoint and new bag claim area. c L Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4169 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Metro Arco The Florida Keys and Monroe County is the primary metro area served by the Airport. Monroe County is situated approximately 150 miles southwest of Miami and is connected to the mainland via U.S. Highway 1. The Keys are a popular domestic and international tourism destination containing the largest national marine sanctuary and the only living coral barrier reef in the continental United States. The region is largely dependent on tourism and the hospitality industries. COVID-1.9 Pondemic 0 0. In 2020, an outbreak of a new strain of coronavirus spread globally, including the United States. In response to the COVID-19 Pandemic (COVID-19),the U.S. government and other governments around 76 the world issued travel restrictions and warnings.The U.S. government currently has in place mandatory face mask requirements traveling through U.S. airports. The Airport is following these requirements. In March 2020, the United States responded to the economic impact of COVID-19 by executing the Coronavirus Aids, Relief and Economic Security(CARES)Act stimulus package. The Airport was awarded 0. $21.8 million in CARES Act funds. The Airport is primarily applying the funds to stabilize operating , income by covering operating expenses with $4 million being used to fund expansion of the General Aviation parking area. In December 2020, in response to the slow economic recovery due to COVID-19, the United States executed the Coronavirus Response and Relief Supplemental Appropriation (CRRSA) Act.The Airport received two awards totaling$3.6 million of which $106,585 is to provide rent relief to concessionaires. Additional Federal stimulus funds of approximately$6.3 million was awarded to the Airport under the American Rescue Plan Act (ARPA). Approximately$.5 million is to provide rent relief to concessionaires. Both the CRRSA and ARPA funds are currently programmed to cover operating expenses. Scheduled Possenger Service As of September 30, 2020, the following airlines provide scheduled passenger service to 24 destinations: American Airlines Delta Airlines United Airlines m JetBlue Airlines Allegiant Airlines Silver Airways Airline Use and Leone Agreement The Airport recently completed negotiations with the airlines for a new 5-year lease agreement to commence on October 1, 2021. To date, all of the six serving airlines have executed the new agreement. The new lease agreement includes provisions for the airlines' use and occupancy of the new Concourse A. No further approvals of this project are needed from the airlines. C� C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4170 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Airline Rates, Fees and Charges The Airport uses a commercial compensatory rate setting methodology. The cost of airlines operating at EYW is represented by Cost per Enplaned Passenger or CPE. The Airport's CPE for the past three years is included below. 2020 $13.32 2019 $9.28 _ 2018 $10.11 EYW estimates 2021 and 2022 CPE to be $8.90 and $8.85, respectively due to an expected increase in passenger traffic. 76 U CPE is total airline revenues per total enplaned passengers. The numbers above reflect an average across all air carriers. Individual airlines may have a CPE higher or lower than the average based on their individual operating models. 0 The overall CPE has trended downward as a result of management's efforts to control costs and increase air service. The effect of COVID-19 has directly impacted passenger traffic levels which drove up the CPE for 2020. Airport management continued to reduce costs and apply federal stimulus funds to minimize the impact on airline operating costs. >- Cash Management The Airport's cash is under the control of the County Clerk's Office who invests the funds pursuant to 76 the County's Investment Policy. As of September 30, 2020, and 2019, cash and investments totaled $5.2 million and $2.8 million, respectively. Current investment vehicles include those as authorized by Florida Statute 218.415. 0 Accounting and Internal Control The Airport follows accounting principles generally accepted in the United States of America applicable to governmental unit enterprise funds. Accordingly, the financial statements are prepared on the >- accrual basis of accounting in accordance with these accounting principles. In developing and evaluating the Airport's accounting system, consideration has been given to the adequacy of internal controls.The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles.The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived, and (2)the evaluation of costs and benefits require estimates and judgments by management. We believe that the Airport's process of internal control adequately safeguards assets and provides reasonable assurance that financial transactions are recorded properly. CY C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4171 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Acknowledgements The preparation of this report in a timely and efficient manner is the result of, in large part,the dedicated service and professionalism of the Airport's accounting staff. We thank all members of the Airport who contributed to the preparation of the report. Respectfully submitted, 0 Richard Strickland Beth Leto 76 Senior Director of Airports Deputy Director, Finance &Admin 0 cv 0 76 0 M d C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4172 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Monroe County...A Board of CountyCommissioners MAYOR DISTRICT 2 MICHELLE COLDIRON DISTRICT 1 DISTRICT 3 0 0. Craig Gates Eddie Martinez DISTRICT 4 DISTRICT 5 00 David Rice Holly Merrill Raschein COUNTY ADMINISTRATOR . . Roman Gastesi 0 CLERK OF THE CIRCUIT COURT AND COMPTROLLER Kevin Madok, CPA 0 0 KEY WEST INTERNATIONAL AIRPORT m Richard Strickland Senior Director of Airports Erick D'Leon Assistant Director of Airports Beth Leto Deputy Director, Airport Finance &Admin Luis Garay Deputy Director, Airport Operations &Security 0 Lf C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4173 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL PEP P"f September 30, 2020 and 2019 Key WestInternational Airport Organizational Chart 0 m 0 LU Qc . C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes es D Bar Amounts are for Illustrative Purposes es Only Packet Pg.4174 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Independent Auditor's Report Audit Committee Monroe County, Florida We have audited the accompanying financial statements of the Monroe County, Florida Key West International Airport (the Airport), an enterprise fund of Monroe County, Florida (the County), as of and for the years ended September 30, 2020, and 2019 and the related notes to the financial statements, which collectively comprise the Airport's basic financial statements as listed in the table of contents. 0 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 an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 76 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 judgement, 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. M We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Airport as of September 30, 2020, and 2019, and the respective changes in financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. r C Samp�e Airport Annual Hnanda'l Report C For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4175 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Emphasis of Matters As discussed in Note 1,the financial statements of the Airport are intended to present the financial position and the changes in financial position and cash flows of only those portions of the business-type activities of the County that are attributable to the transactions of the Airport. They do not purport to, and do not, present fairly the financial position of the County as of September 30, 2020, and 2019, the changes in its financial position, or,where applicable, its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information 76 U Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, pension and other postemployment information 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 historic 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 W to our inquiries, the basic financial statements and others knowledge we obtained during our audit of the basic financial statements. We do not express 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 0 Our audits were conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Airport's basic financial statements. The information as listed in the table of contents under"Introductory Section" and "Other Information Section" is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has 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 it. M OC C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4176 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Management's Discussion and Analysis (Unaudited) The following discussion and analysis of the financial performance and activities of the Airport provides an introduction and understanding of the basic financial statements of the Airport as of and for the twelve months ended September 30, 2020, and 2019. This discussion has been prepared by management and should be read in conjunction with the financial statements and the notes thereto, which follow this section. Financial Highlights Operating revenue at the Airport totaled $9.1 million, a decrease of$0.5 million, or 5.3%,for the year 76 ended September 30, 2020, as compared to the year ended September 30, 2019. Airline revenue totaled $4.3 million, a decrease of$0.7 million, or 12.3%, driven by a decrease in activity because of reduced airline operations which were directly impacted by COVID-19. Non-airline revenue totaled $4.8 million, an increase of$0.1 million, or 2.1%, primarily due to an increase in operating grants. Operating expenses, exclusive of depreciation and amortization, totaled $8.7 million for the twelve- month period ended September 30, 2020, an increase of$0.4 million, or 4.9%, as compared to the twelve-month period ended September 30, 2019.The increase compared to the prior year was primarily >_ driven by a $0.6 million increase in personnel costs. �-- 0 COVID-19 Pandemic 76 The outbreak of a new strain of coronavirus spread across the globe, including the United States. As a result of the COVID-19 Pandemic(COVID-19), the U.S.government and governments of other countries issued travel restrictions and warnings for numerous countries.Various government agencies and others warned against travel and large group events, and numerous states issued stay-home orders curtailing o non-essential travel. As a result of the impact of COVID-19, as of September 30, 2020, the Airport experienced reductions of 39.9%and 26.0% in year-to-date total passengers and total landings, respectively. However, given the Airport's position as an outdoor tourist destination, passenger traffic decreased less than the average for all U.S. airports. M CARES Act On March 27, 2020, the United States executed the Coronavirus Aid, Relief and Economic Security (CARES)Act stimulus package. Under the CARES Act, the Federal Aviation Administration (FAA) awarded funds to airports based on enplanements and other metrics related to cash reserves and debt service. < Funding received through the CARES Act is intended to prevent, prepare for, and respond to the impacts of COVID-19. As of September 30, 2020,the Airport received $21.5 million in CARES Act funding. The Airport will use$17 million of the funding to cover operating expenses and $4 million for the West Overflow Apron Parking project. 6 C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4177 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Overview of the Financial Statements The Airport's financial statements consist of its statements of net position, statements of revenues, expenses, and changes in net position, statements of cash flows, and notes to the financial statements. The statements of net position present information on the Airport's assets, deferred outflows of resources, liabilities, deferred inflows of resources and net position.The statements of revenues, expenses, and changes in net position present information showing how the Airport's net position changed during the year. All changes in net position are reported when the underlying event giving rise to the change occurs, regardless of the timing of the cash flows.Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods.The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the financial statements. 76 This report also includes required supplementary information for the Airport's pension information, other postemployment benefit plan and other information presented for the purposes of additional analysis. 0 Summary of Revenues, FExpens s and Changes in Net Position cv The following is a summary of the revenues, expenses, and changes in net position for the years ended September 30, 2020, and 2019 ($ in thousands): >' 2020/2019 2020/2019 2020 2019 change %change Operating revenue $9,132 $9,640 $ (508) (5.3%) Less: operating expenses 8,670 8,264 406 4.9% Operating income before 462 1,376 (914) (66.4%) depreciation and amortization Less: depreciation and amortization 3,200 2,429 771 31.7% o Operating (loss) income (2,738) (1,685) 160.0% (1,053) Add: nonoperating revenues 7,107 1,757 5,350 304.5% Less: nonoperating expenses - (36) (36) 100.0% >- Add: capital grants and contributions 121595 6,327 6,268 99.1% Increase in net position 16,964 6,995 9,969 142.5% M Net position, beginning of year 94,426 87,430 6,996 8.0% Net position, end of year 111,390 94,426 16,964 18.0% c C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4178 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Summary of Operating Revenues The following is a summary of operating revenues for the years ended September 30, 2020, and 2019 ($ in thousands): 2020/2019 2020/2019 2020 2019 change %change Operating revenue _ Airline revenue Facility rentals $2,412 $2,547 $ (135) (5.3%) Landing fees 1,937 2,410 (473) (19.6%) Total airline revenue 4,349 4,957 (608) (12.3%) _ Non-airline revenue Parking 291 386 (95) (24.6%) Concessions 576 868 (292) (33.6%) Terminal rentals 1,027 1,084 (57) (5.3%) Car rental 1,366 1,482 (116) (7.8%) Ground transportation 298 315 (17) (5.4%) Other sales and charges 11 12 (1) (8.3%) cv Operating grants 1,214 537 (677) 126.1% Total non-airline revenue 4,783 4,683 (100) (2.1%) >' Total operating revenue 9,132 9,640 (508) (5.3%) 76 202012019 The Airport's activities changed as described below for the year ended September 30, 2020, as compared to 2019: Percentage 2020 2019 change Passengers 442,304 735,531 (39.9%) >- Enplanements 225,736 367,765 (38.6%) m Aircraft landings 4,616 6,241 (26.0%) 0. M Total airline revenues at the Airport were$4.3 million, a decrease of$0.6 million, or 12.3%, for the year ended September 30, 2020, as compared to the year ended December 31, 2019. Landing fee revenue decreased by$0.5 million, or 19.6%, due to a decline in airline operations as a result of COVID-19. Landing fee revenue is based on costs associated with the airfield. Samp�e Airport Annual Hnanda'l Report C For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4179 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Total non-airline revenues at the Airport were$4.8 million, a decrease of$0.1 million, or 2.1%,for the year ended September 30, 2020, as compared to the year ended September 30, 2019.The decrease was primarily due to a 39.9%decrease in overall passengers as a result of COVID-19. This decrease was partially offset by an increase of$0.7 million in operating grants. Summary of Operating Expenses The following is a summary of operating expenses before depreciation and amortization for the years _ ended September 30, 2020, and 2019 ($ in thousands): 0 2020/2019 2020/2019 0 2020 2019 change %change Personnel $3,990 $3,394 $ 596 17.6% Contractual services 840 1,104 (264) (23.9%) Repair and maintenance projects 344 331 13 3.9% Supplies and materials 106 99 7 7.1% Sheriff MCSO security services 2,409 2,402 7 0.0% _0. Other expenses 981 934 47 5.0% Total operating expenses $8,670 $8,264 $ 406 4.9% cV Operating expenses, exclusive of depreciation and amortization, were$8.7 million for the year ended September 30, 2020, an increase of$0.4 million, or 4.9%, as compared to the same period in 2019.The primary driver of the increase was a $0.6 million increase in personnel costs largely due adding two positions, an Assistant Director of Airports and an Executive Administrator, and salary adjustments implemented as the result of a market compensation study. Nonoperoting revenues and Expenses, Capitol Grants and Capitol Contributions 0 Total nonoperating revenues increased by$5.4 million, primarily attributable to the$21.5 million received under the CARES Act.The increase was offset by a decrease in Passenger Facility Charges (PFC) and investment income.The decrease in PFC revenue is the result of reductions in passenger traffic due to COVID-19. The reduction in investment income is driven by decreases in cash and investment >- balances. In 2020 and 2019, capital grants totaled $13.1 million and $7.1 million, respectively. Long-Terra Debt � The Airport does not have long-term debt. Capital Assets As of September 30, 2020, and 2019,the Airport had $77.8 million and $78.0 million, respectively, in total capital assets, net of accumulated depreciation. Samp�e Airport Annual Hnanda'l Report C For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4180 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 The Airport's capital program includes$55 million for the expansion and improvement of Concourse A with design expected to begin in 2021. Passenger Facility Charges (PFCs) In 1992, the PFC program authorized the imposition of a fee of$3.00 per enplaned passenger and the use of this funding for approved projects, with certain qualifying airports permitted to charge a maximum PFC of$4.50. EYW is authorized to collect$4.50, the revenues from which are to be used for qualified costs of the Airport, including associated debt service and approved capital projects. Customer Facility Charges (CFCs) 76 The authorization to collect CFCs is currently included in the Airport's agreement with its car rental companies; however,collection has not yet been implemented. The Airport plans to implement the fee as it undertakes future projects to improve the car rental facilities. 0 Budgetary Highlights cv ($in thousands) r 2020 2020 %Over >- Budget Actual Under -- 0 Operating revenues $9,168 $9,132 (0.004%) Total operating expenses $9,168 $8,670 (0.05%) Total operating income $ - $ 462 - 0 This financial report is designed to provide a general overview of the Airport's finances for all those with an interest. Questions concerning any of the information presented in this report or requests for additional information should be addressed to the Key West International Airport, ATTN: Sr. Director of Airports, 3491 South Roosevelt Boulevard, Key West, Florida 33040; telephone (305) 809-5200. (Y Samp�e Airport Annual Hnancia'l Report C C For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4181 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 2020 Comprehensive al Financial Report Financial Statements Statements of Net Position September 30, 2020, and 2019 2020 2019 Assets Current Assets Cash and cash equivalents $1,364,533 $566,498 Investments 3,817,159 2,271,130 Accounts receivable, net of allowances 739,181 666,207 Due from other funds 284,494 229,472 Accrued interest receivable 36 5,408 _ Due from other Governmental Units 4,081,536 658,380 Total current assets 10,286,939 4,397,095 Noncurrent Assets Restricted cash and cash equivalents 5,019,638 8,031,612 Restricted accrued interest receivable 214,118 323,995 Land and other nondepreciable assets 18,288,927 3,315,081 Capital assets, net of accum depreciation 77,847,327 77,999,300 Total noncurrent assets 101,370,010 89,669,988 Total assets 111,656,949 Deferred outflows of resources Related to pensions 1,500,523 1,273,523 Related to OPEB 244,300 61,418 Total deferred outflows of resources 1,744,823 1,334,941 0 Liabilities Current liabilities Accounts payable 2,574,055 844,039 Retainage payable 623,046 42,380 Accrued wages and benefits payable 33,267 102,777 Due to other funds - - m Due to other governmental units 18,463 17,373 Compensated absences payable 91,906 63,711 Unearned revenues 37,961 - Deposits in escrow 8,000 8,000 Total current liabilities 3,386,698 1,078,280 Noncurrent Liabilities Bonds payable - - Compensated absences payable 367,625 254,842 Net pension liability 4,638,959 3,679,576 Net OPEB liability 557,000 550,000 d Total noncurrent liabilities 5,563,584 4,484,418 c Total liabilities 8,950,282 5,562,698 < c Samp�e Airport Annual Hnanda'l Report For Mscursion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4182 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Deferred inflows of resources Related to pensions 123,210 302,167 Related to OPEB 244,000 33,148 Total deferred inflows of resources 367,310 335,315 Net Position Investment in capital assets 96,136,254 86,235,952 _ Restricted for PFCs 5,233,756 8,355,607 Unrestricted 10,019,122 (165,977) Total net position $111,389,132 $94,425,582 0 cv 0 76 0 M Lf Samp�e Airport Annual Hnanda'l Report C C For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4183 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Statements of Revenues, Expenses and Changes in Net Position Years ended September 30, 2020, and 2019 2020 2019 OPERATING REVENUES: Airline Rents $2,000,995 $2,112,497 Landing Fees 1,936,703 2,410,120 Airline Security 411,378 434,301 _ Terminal Rents 1,026,984 1,084,211 Concessions 575,557 867,643 Parking 290,968 385,619 0. Car rental 1,365,394 1,482,677 Ground Transportation 298,414 315,044 Other sales and charges 11,231 11,744 Operating Grants 1,214,012 536,625 — Total Operating Revenues 9,131,636 9,640,481 OPERATING EXPENSES: Personnel Costs 3,990,131 3,394,307 N Contractual Services 840,274 1,104,174 Repair and Maintenance Projects 344,163 330,564 >" Supplies and Materials 106,362 99,169 Sheriff MCSO Security Services 2,408,568 2,402,040 Other Expenses 980,476 933,843 Total Operating Expenses 8,669,974 8,264,097 OPERATING INCOME(LOSS) BEFORE 461,662 1,376,384 DEPRECIATION/AMORTIZATION Less: Depreciation and Amortization 3,200,064 2,428,693 Operating Income (Loss) (2,738,402) (1,052,309) NON-OPERATING REVENUES(EXPENSES) CARES, CRSSA, ARPA Federal Stimulus Funds 5,295,800 - >- Passenger Facility Charges 1,681,104 1,470,078 Investment Income 130,450 286,889 Interest Expense - - Other Revenues (Expenses), net - (36,042) Total Non-Operating Revenue (Expenses) 7,107,354 1,720,925 m INCOME(LOSS) BEFORE CONTRIBUTIONS 4,368,952 668,616 AND TRANSFERS Federal Capital Grants and Contributions 12,274,388 6,810,759 FDOT Capital Grants and Contributions 800,588 314,899 Transfers to/from Other Funds (480,378) (483,366) QC Total Capital Contributions and Transfers 12,594,598 6,327,393 c C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amounts are for Illustrative Purposes Only Packet Pg.4184 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 201 CHANGE IN NET POSITION 16,963,550 6,996,009 TOTAL NET POSITION -OCTOBER 1 94,425,582 87,429,573 TOTAL NET POSTION -SEPTEMBER 30 $111,389,132 $94,425,582 0 0 cv 0 c cu r C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes es D Bar Amounts are for Illustrative Purposes es Only Packet Pg.4185 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Statements of Cash Flows Years Ended September 30, 2020, and 2019 2020 2019 Cash flows from operating activities: Cash received for services $7,981,259 $8,422,698 Payments to suppliers (3,381,642) (10,473,352) Payments to employees (3,330,167) (2,882,449) _ Other operating revenue 16,603 8,130 Cash received from (paid to) other sources (3,477,068) 1,475,282 Net cash provided by(used in) operating (2,191,015) (3,449,691) activities Cash flows from noncapital financing activities: Operating grants 6,509,812 536,625 2- Transfers from other funds - - Transfers to other funds (480,378) (483,366) Net cash provided by(used in) noncapital 6,029,434 53,259 cv financing activities Cash flows from capital and related financing activities: Proceeds from issuance of debt - - Principal paid on bonds - - Interest paid on bonds - - Capital grant receipts 13,385,178 8,595,736 Acquisition of capital assets (18,021,937) (3,226,322) Net cash provided by(used in) capital and (4,636,759) 5,369,414 0 related financing activities Cash flows from investing activities: Purchases of investments (2,845,836) (3,676,017) >- Proceeds from sales and maturities of 1,299,807 2,888,551 investments Investment income 130,450 286,889 Net cash provided by(used in) investment (1,415,579) (500,577) activities Net increase(decrease) in cash and cash (2,213,919) 1,472,405 equivalents Cash and cash equivalents, October 1 8,598,090 7,125,705 Cash and cash equivalents, September 30 $6,384,171 $8,598,090 OC Samp�e Airport Annual Hnanda'l Report C C For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4186 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating (loss) income (4,964,893) (6,825,404) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 3,200,064 2,428,693 Changes in assets and liabilities: Receivables, net of allowances 36,903 (20,488) Due from other governmental units (3,423,156) 1,563,202 Due from other funds (55,002) (85,261) Interest receivable 5,372 (3,614) _ Accounts payable 1,730,016 267,268 Retainage payable 580,666 (634,360) Accrued wages and benefits (69,510) 1,438 Due to other governmental units 1,090 (2,659) Compensated absences 140,978 48,482 0. Unearned revenue 37961 (648,926) Net pension liability 959:383 229,358 Net OPEB liability 7,000 81,000 Deferred outflows (409,882) 189,566 >- Deferred inflows 31,995 (37,986) Net cash provided by operating activities ($2,191,015) ($3,449,691) Cash reconciliation: Unrestricted 1,364,533 566,498 Restricted 5,019,638 8,031,612 Total $6,384,171 $8,598,110 0 0. M 6 c C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4187 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 Notes to Financial Statements 1) Organization and Reporting Entity Monroe County, Florida is a Non-Charter County established as provided by Article VIII Section 1 of the Florida Constitution and Section 125 of the Florida Statutes.The Board of County Commissioners (the "Board"), composed of five members, is the legislative body for the County and, as such, budgets and _ provides funding used by the separate Constitutional Offices with the exception of fees collected by the Clerk of the Circuit Court &Comptroller("Clerk") and the Tax Collector. Under the direction of the Clerk, the Monroe County Finance Department maintains the accounting system for the Board's operations, but excludes those of the Clerk, Property Appraiser, Sheriff, Supervisor of Elections, and Tax Collector, 76 each of who maintains their own accounting system. Monroe County, Florida owns, operates, and maintains certain airport facilities.These facilities include Key West International Airport (the Airport).The Airport is operated as the Department of Airports, with a Senior Director of Airport appointed by and reporting to the County Administrator. ) Summary of Significant Accounting Policies a) Basis of Accounting The Airport is an enterprise fund of the County and, as such, is an integral part of the County. An enterprise fund is established to account for an activity that is financed with debt secured solely by a pledge of net revenues from fees and charges of the activity or when laws and regulations require that the activity's costs of providing services, including capital costs (such as depreciation or capital debt service), be recovered with fees and charges rather than with taxes or similar revenues.The pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service). 0 The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). As an enterprise fund, the Airport uses the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized as incurred (flow of economic resources measurement focus). >- b) Cash and Cash Equivalents M The Airport's cash balances are pooled with the cash from other County funds for investment purposes. Earnings from such investments are allocated to the respective funds based on applicable cash participation by each fund.The investment pools are managed such that all participating funds have the ability to deposit and withdraw cash as if they were demand deposit accounts.Therefore, all balances representing participants' equity in the investment pools are classified as cash equivalents for purposes of these statements. For investments, held separately from the pools, highly liquid (including restricted assets)with an original or remaining maturity of 90 days or less are considered cash equivalents. C Samp�e Airport Annual Hnanda'l Report C For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4188 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 c) Investments Florida Statute 218.415 authorizes local governments to invest its funds pursuant to a written investment plan, which allows investment of surplus funds in the following: 1. U.S.Treasury&Government Guaranteed - U.S.Treasury obligations, and obligations the principal and interest of which are backed or guaranteed by the full faith and credit of the U.S. Government. 2. Federal Agency/Government Sponsored Enterprise ("GSE") - Debt obligations, participations or other instruments issued or fully guaranteed by any U.S. Federal agency, instrumentality or GSE. 3. Supranationals—U.S. dollar denominated debt obligations of a multilateral organization of governments where the U.S. is a shareholder and voting member. 76 4. Corporates—U.S. dollar denominated corporate notes, bonds, or other debt obligations issued or guaranteed by a domestic corporation, financial institution, non-profit, or other entity. 5. Municipals—Obligations, including both taxable and tax-exempt, issued or guaranteed by any State, territory, or possession of the U.S., political subdivision, public corporation, authority, agency board, instrumentality or other unit of local government of any State or territory. 6. Agency Mortgage Backed Securities ("MBS") - MBS are backed by residential, multi-family or >- commercial mortgages, that are issued or fully guaranteed as to principal and interest by a U.S. Federal W agency or government sponsored enterprise, including but not limited to pass-throughs, collateralized mortgage obligations and real estate mortgage investment conduits. 7. Asset-Backed Securities ("ABS") -ABS whose underlying collateral consists of loans, leases, or receivables, including but not limited to auto loans/leases, credit card receivables, student loans, equipment loans/leases, or home-equity loans. 0 8. Non-Negotiable Certificate of Deposit and Savings Accounts - Non-negotiable interest bearing time certificates of deposit, or savings accounts in banks organized under the laws of the State of Florida or in national banks organized under the laws of the United States and doing business in Florida, provided that any such deposits are secured by the Florida Security for Public Deposits Act, Chapter 280, Florida Statutes. 9. Commercial Paper—U.S. dollar denominated commercial paper issued or guaranteed by a domestic corporation, company, financial institution, trust or other entity, only unsecured debt permitted. 10. Bankers' Acceptances—Bankers' acceptances issued, drawn on, or guaranteed by a U.S. bank or U.S. branch of a foreign bank. 11. Repurchase Agreements—Repurchase agreements that meet specific requirements listed in Monroe County Resolution 032-2019. 12. Money Market Funds—Shares in open-end and no-load money market mutual funds, provided such funds are registered under the Investment Company Act of 1940 and operate in accordance with Rule 2a-7. < c Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4189 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 13. Intergovernmental Investment Pools— Intergovernmental Investment Pools that are authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section 163.01, Florida Statutes. All investments are stated at fair value or at amortized cost, which approximates fair value. d) Capital Assets Capital assets of the Airport include property, buildings, equipment, and infrastructure assets (e.g. runways,terminal buildings, roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems). Constructed or purchased assets are recorded at historical or estimated historical cost at the time of purchase. Donated assets are recorded at estimated acquisition value at the date of donation. Costs of maintenance and repairs that do not add to the value of assets or extend their useful lives are not capitalized. The Airport maintains a $1,000 threshold for additions to equipment with an estimated useful life in excess of two years. Buildings are capitalized when the value is$15,000 or greater. Public domain and infrastructure assets represent major expenditures. Additions and improvements for roads, water, sewer, landfill, and drainage infrastructure are capitalized when the cost amounts to $250,000. Depreciation has been provided using the straight-line method.The estimated useful lives of the various >- classes of depreciable capital assets are as follows: W 0 Life Years Buildings 10-50 Equipment 5-10 Intangible Assets 10-15 Infrastructure 10-50 Public Domain Infrastructure 20-50 Capacity Rights 99 e) Compensated Absences Payable County policy permits employees to accumulate a limited amount of annual and sick leave,which will be . paid to employees upon termination of employment. An expense and a liability for compensated absences and the salary-related payments are recorded as the leave is earned. f) Advance Rent Advance rent is recorded when rental payments are received by the Airport, for periods subsequent to the reporting period and prior to when the Airport has a legal right claim to the payments as revenue. Included in advance rent are customer credits and deposits. C� Samp�e Airport Annual Hnanda'l Report C� C C For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4190 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 g) Pensions and Other Postemployment Benefits(OPEB) Deferred Inflows of Resources represents an acquisition of net position that applies to a future period and therefore will not be recognized as an inflow of resources until that time.The County has four items that qualify for reporting in this category: (1) Unavailable revenues; (2)Advances from Other Governments; (3) Pension-related items; and (4) Other Post-Employment Benefits.The advances from other governments are grants received in advance of meeting the timing requirements for revenue recognition in governmental funds. The Airport reports deferred inflows for pension related items and other post-employment benefit items as actuarially determined. h) Net Position Net position is classified as net investment in capital assets; restricted and unrestricted. Restricted net 76 position indicates constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through state statute. i) Restricted and Unrestricted Resources Uses of restricted and unrestricted resources are made on a case-by-case basis by management depending on overall requirements. Generally, management applies restricted resources and then unrestricted resources when both restricted and unrestricted resources are available to pay an expense. >- Restricted assets include those assets created by resolutions adopted by the County for the Airport's W Passenger Facility Charges and Customs Service Operations.Total restricted assets as of September 30, 2020, are as follows: 76 Cash and Cash Equivalents Accounts Receivable Total $5,019,638 $214,118 $5,233,756 0 j) Operating Revenues and Expenses The statements of revenues, expenses, and changes in net position distinguish operating revenues and expenses from nonoperating activity and capital contributions. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the Airport's principal ongoing operations.The principal operating revenues of the Airport are charges to airline tenants for facility rentals, landing fees and parking. Operating expenses include the cost of providing services, administrative costs, and depreciation on capital assets. .. k) Nonoperating Revenues and Expenses All revenues and expenses not meeting the above definition of operating revenues and expenses are reported as nonoperating revenues and expenses or capital contributions. Such items include Passenger Facility Charges (PFCs), interest expense, and investment income. Also included is the CARES Act funding. ry C� Samp�e Airport Annual Hnanda'l Report C C For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4191 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 1) Governmental Grants The Airport periodically receives grant revenues from federal agencies, Florida State DOT and other entities,which are either for capital projects or operating purposes. Revenue is considered earned as the related approved capital outlays or expenses are incurred by the Airport. Revenues from capital grants are reported as capital contributions on the statements of revenues, expenses, and changes in net position, and revenues from operating grants are reported as operating revenues. m) Rates and Charges .� The Airport establishes annually, airline facility rentals, landing fees, and other charges sufficient to recover the costs of operations (excluding certain debt service payments), maintenance, and debt service related to the airfield and the space rented by the airlines. The rates and charges are adjusted 76 annually and become effective on October V of each fiscal year. The rates and charges may also be adjusted by the Airport if it any time, the fiscal year end estimate is expected to vary by more than 10% from the established rates. Any differences between amounts collected from and actual costs allocated to the airlines' leased space are credited or billed to the airlines. n) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in >- the United States of America requires management to make estimates and assumptions that affect the W reported amounts of assets, deferred outflows, liabilities, and deferred inflows at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. 3) Cash and Cash Equivolents The County maintains a cash and investment pool available for use by all funds except those whose cash o and investments must be segregated due to bond covenants or other legal restrictions. Credit Risk and Concentration of Credit Risk—The Board approved and adopted its Investment Policy ("Policy') in January 2019.The Policy outlines permitted investments, and establishes limitations on >- portfolio composition, by both investment type and by issuer, in order to control concentration of credit risk. M Under the Policy,the Clerk has the option to further restrict investment percentages from time to time based on market conditions, risk, and diversification strategies.The percentage allocation requirements for investment types and issuers are calculated based on the original cost at the time of purchase of each investment. Custodial Credit Risk—The Policy requires bank deposits to be secured as provided by Chapter 280, Florida Statutes.This law requires local governments to deposit funds only in financial institutions designated as qualified public depositories by the Chief Financial Officer of the State of Florida. Demand and time deposits are fully insured by the Federal Deposit Insurance Corporation for the first$250,000 d at each institution and the remaining balances are insured 100% by the State of Florida collateral pool, a C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4192 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 multiple institution pool with the ability to assess its members for collateral shortfalls if a member institution fails. Interest Rate Risk—The Policy limits the investment of three months of operating expenditures to 24 months.The Policy limits the investment of noncurrent operating funds to 5.50 years. 4) Accounts Receivoble Accounts receivable, in the accompanying financial statements, are shown net of the allowance for doubtful accounts.The accounts receivable and the allowance balances are as follows: 0 Service Provided Accounts Receivable Allowance for Accounts Receivable, _ Uncollectible Accounts net Rent, misc. $742,938 $3,757 $739,181 0 5) Postemployment Heolthcore Benefits other than Pensions Plan Description—The Board administers a single-employer defined benefits healthcare plan (the "Plan"). Section 112.0801, Florida Statutes, requires the County to provide retirees and their eligible dependents with the option to participate in the Plan if the County provides health insurance to its active employees and their eligible dependents.The Plan provides medical coverage, prescription drug benefits, and life insurance to both active and eligible retired employees.The Plan does not issue a o publicly available financial report. No assets are accumulated in a trust that meets the criteria as set forth in GASB Statement No. 75. 76 The Board may amend the plan design, with changes to the benefits, premiums and/or levels of participant contribution at any time. In an open session, on at least an annual basis and prior to the annual enrollment process,the Board approves the rates for the coming calendar year for the retiree o and County contributions. 6) Pension Plan U) The County's employees participate in the 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. Lf Amendments to the law can be made only by an act of the Florida State Legislature. C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4193 Z.S.a COMPREHENSIVE ANNUAL FINANCIAL REPORT September 30, 2020 and 2019 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. 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. 0 0 cv 0 0 M C� C C Samp�e Airport Annual Hnanda'l Report For Mscussion Purposes D Bar Amount are for Illustrative Purposes Only Packet Pg.4194