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HomeMy WebLinkAbout18-19 Audit Report    CITY OF McHENRY, ILLINOIS ANNUAL FINANCIAL REPORT APRIL 30, 2019     CITY OF McHENRY, ILLINOIS TABLE OF CONTENTS APRIL 30, 2019 PAGE INDEPENDENT AUDITOR’S REPORT 1 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTORL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 4 REQUIRED SUPPLEMENTARY INFORMATION Management’s Discussion and Analysis 6 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 12 Statement of Activities 13 Fund Financial Statements Balance Sheet – Governmental Funds 14 Reconciliation of the Balance Sheet to the Statement of Net Position 15 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 17 Statement of Net Position – Proprietary Funds 18 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 19 Statement of Cash Flows – Proprietary Funds 20 Statement of Fiduciary Net Position – Fiduciary Funds 21 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 22 Notes to Financial Statements 23 REQUIRED SUPPLEMENTARY INFORMATION Illinois Municipal Retirement Fund – Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios 51     CITY OF McHENRY, ILLINOIS TABLE OF CONTENTS APRIL 30, 2019 PAGE REQUIRED SUPPLEMENTARY INFORMATION (Continued) Illinois Municipal Retirement Fund – Schedule of Employer Contribution 52 Police Pension Plan – Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios 53 Police Pension Plan – Schedule of Employer Contribution 54 Other Post-Employment Benefit – Schedule of Changes in the Employer’s Net OPEB Liability and Related Ratios 55 Other Post-Employment Benefit – Schedule of Employer Contribution 56 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund 57 Notes to Required Supplementary Information 59 SUPPLEMENTAL FINANCIAL INFORMATION Combining Balance Sheet – General Fund 60 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – General Fund 61 Combining Balance Sheet – Other Governmental Funds 63 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Other Governmental Funds 64 Combining Schedule of Net Position – Water and Sewer Funds 65 Combining Schedule of Revenues, Expenses, and Changes in Net Position – Water and Sewer Funds 66 Combining Schedule of Net Position – Internal Service Funds 67 Combining Schedule of Revenues, Expenses, and Changes in Net Position – Internal Service Funds 68 Combining Schedule of Net Position – Agency Funds 69 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Special Revenue Fund – Tax Increment Financing Fund 70 Summary of Federal Grants 71 Summary of State Grants 72   Page 1  INDEPENDENT AUDITOR’S REPORT To the Mayor and City Council Members City of McHenry, Illinois Report on the Financial Statements 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 City of McHenry as of and for the year ended April 30, 2019, and the related notes to the financial statements, which collectively comprise the City’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 City’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 City’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.   Page 2 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 City of McHenry as of April 30, 2019, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note 21 to the financial statements, the City implemented GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions and GASB Statement No 85, Omnibus 2017. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Schedules of Changes in the Employer’s Net Pension Liability and Related Ratios, Schedules of Employer Contribution, Schedules of Changes in the Employer’s Net OPEB Liability and Related Ratios, Schedule of Employer OPEB Contribution, and budgetary comparison information, as listed on 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 City’s basic financial statements. The supplemental information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic 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 supplemental information is fairly stated in all material respects in relation to the basic financial statements as a whole.   Page 3  Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 21, 2019 on our consideration of City of McHenry’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of McHenry’s internal control over financial reporting and compliance.  EDER, CASELLA & CO. Certified Public Accountants McHenry, Illinois October 21, 2019   Page 4 INDEPENDENT AUDITOR’S 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 Mayor and City Council Members City of McHenry, Illinois We have audited, 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, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of City of McHenry as of and for the year ended April 30, 2019, and the related notes to the financial statements which collectively comprise City of McHenry’s basic financial statements, and have issued our report thereon dated October 21, 2019. Internal Control Over Financial Reporting In planning and performing our audit, we considered City of McHenry’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 City of McHenry’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of McHenry’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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of McHenry’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   Page 5 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. 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. EDER, CASELLA & CO. Certified Public Accountants McHenry, Illinois October 21, 2019     REQUIRED SUPPLEMENTARY INFORMATION   Page 6 CITY OF McHENRY, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS April 30, 2019 As management of City of McHenry (City), we offer readers of the City’s statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended April 30, 2019. We encourage readers to consider the information presented here in conjunction with additional information found in the notes to the financial statements. FINANCIAL HIGHLIGHTS  The assets and deferred outflows of resources of the City exceed its liabilities and deferred inflows of resources at April 30, 2019 by $112,007,402 (total net position).  The City’s total net position decreased by $2,428,104 from current year activities, which includes a net position adjustment of $(5,539,557).  At April 30, 2019, the City’s governmental funds reported combined ending fund balances of $12,751,324, a decrease from current year activities of $19,434, which includes a fund balance adjustment of ($31,539).  At April 30, 2019, the unassigned fund balance for the General Fund was $7,179,532, or 30% of total General Fund expenditures.  The City’s total governmental long-term obligations increased by $2,755,105 primarily due to the scheduled payments on general obligation bonds offset by changes in the net pension and other post- employment benefit liabilities. Long-term obligations from business-type activities increased $713,216 due to additional draws on the IEPA Revolving Loan and changes in the net pension and other post- employment benefit liabilities offset by scheduled bond and loan payments. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. Both perspectives (government-wide and fund level financial statements) allow the user to address relevant questions, broaden a basis for comparison (year to year or government to government) and enhance the City’s accountability. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private business. The Statement of Net Position presents information on all the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference amongst those being reported as net position. Increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating when comparing year to year results. The Statement of Activities presents information showing how the City’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 (e.g., uncollected taxes and earned but unused vacation leave).   Page 7 Both government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general office, public safety, public works, and parks and recreation. The business-type activities of the City include a water and sewer division. The government-wide financial statements can be found on pages 12 and 13 of this report. 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 City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. 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 City’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 City maintains 12 individual governmental funds. Information is presented separately in the governmental fund Balance Sheet and in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund which is considered to be a major fund. Data from the other eleven governmental funds are combined into a single, aggregated presentation. The other eleven funds include Pageant, Audit, Recreation Center, Capital Improvements, Capital Equipment, Debt Service, Motor Fuel Tax, Developer Donations, Tax Increment Financing, and two Special Service Areas. The basic governmental fund financial statements can be found on pages 14 through 17 of this report. Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for the Water and Sewer Division. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its employee insurance, risk management, and information technology. Because these services predominately benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer functions. Internal service funds are combined into a single, aggregate presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements on pages 67 and 68 of this report. The basic proprietary fund financial statements can be found on pages 18 through 20 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the   Page 8 resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City’s fiduciary funds include the Police Pension Trust Fund and three Agency Funds. The basic fiduciary fund financial statements can be found on pages 21 and 22 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 23 through 50 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s appropriation to actual for the General Fund. Required supplementary information can be found on pages 51 through 59 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 City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $112,007,402 at April 30, 2019. By far, the largest portion of the City’s net position, 112%, reflects its net investment in capital assets (e.g., land, construction in progress, buildings, and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 4/30/2019 4/30/2018 4/30/2019 4/30/2018 4/30/2019 4/30/2018 Assets Current and Other Assets 21,294,312$ 21,840,181$ 7,860,991$ 10,393,800$ 29,155,303$ 32,233,981$ Capital Assets 91,383,064 90,340,932 78,596,880 77,685,469 169,979,944 168,026,401 Total Assets 112,677,376$ 112,181,113$ 86,457,871$ 88,079,269$ 199,135,247$ 200,260,382$ Deferred Outflows of Resources 7,151,011$ 4,046,809$ 1,336,866$ 380,278$ 8,487,877$ 4,427,087$ Liabilities Long-Term Liabilities Outstanding 41,441,373$ 33,401,822$ 39,083,518$ 38,089,977$ 80,524,891$ 71,491,799$ Other Liabilities 2,260,983 2,731,341 1,088,954 4,173,265 3,349,937 6,904,606 Total Liabilities 43,702,356$ 36,133,163$ 40,172,472$ 42,263,242$ 83,874,828$ 78,396,405$ Deferred Inflows of Resources 11,125,270$ 11,127,249$ 615,624$ 728,309$ 11,740,894$ 11,855,558$ Net Position Net Investment in Capital Assets 84,036,457$ 81,849,844$ 41,647,875$ 41,610,920$ 125,684,332$ 123,460,764$ Restricted 960,578 1,039,545 - - 960,578 1,039,545 Unrestricted (19,996,274) (13,921,879) 5,358,766 3,857,076 (14,637,508) (10,064,803) Total Net Position 65,000,761$ 68,967,510$ 47,006,641$ 45,467,996$ 112,007,402$ 114,435,506$ City of McHenry's Statement of Net Position TotalBusiness-Type ActivitiesGovernmental Activities An additional portion of the City’s net position, 1%, represents resources that are subject to external restrictions on how they may be used (e.g. Highways and Streets, Capital Projects, and Special Service Areas). The remaining balance of unrestricted net position was a deficit in the current year of $14,637,508. Governmental Activities. Governmental activities decreased the City’s net position by $3,966,749, which includes a net position adjustment of ($5,259,505). Key differences from the prior year are as follows:   Page 9 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 Revenues Program Revenues Charges for Services 6,956,885$ 6,136,199$ 6,992,168$ 7,726,595$ 13,949,053$ 13,862,794$ Operating Grants and Contributions 385,819 169,093 - - 385,819 169,093 Capital Grants and Contributions 2,324,418 1,315,386 1,388,023 - 3,712,441 1,315,386 General Revenues Property Taxes 5,477,514 5,371,369 - - 5,477,514 5,371,369 Sales Taxes 9,768,862 9,647,976 - - 9,768,862 9,647,976 Other Taxes 3,919,890 3,592,054 - - 3,919,890 3,592,054 Other 307,491 187,460 147,410 99,374 454,901 286,834 Total Revenues 29,140,879$ 26,419,537$ 8,527,601$ 7,825,969$ 37,668,480$ 34,245,506$ Expenses General Office 4,047,562$ 3,801,309$ -$ -$ 4,047,562$ 3,801,309$ Public Safety 13,021,758 12,914,929 - - 13,021,758 12,914,929 Public Works 6,947,382 7,256,545 - - 6,947,382 7,256,545 Parks and Recreation 3,560,675 3,418,406 - - 3,560,675 3,418,406 Interest and Fees 188,971 219,383 - - 188,971 219,383 Depreciation 209,683 172,178 - - 209,683 172,178 Water - - 1,967,241 1,831,093 1,967,241 1,831,093 Sewer - - 3,559,439 3,729,086 3,559,439 3,729,086 Utility Work - - 1,091,776 1,246,261 1,091,776 1,246,261 Total Expenses 27,976,031$ 27,782,750$ 6,618,456$ 6,806,440$ 34,594,487$ 34,589,190$ Increase/(Decrease) in Net Position Before Transfers 1,164,848$ (1,363,213)$ 1,909,145$ 1,019,529$ 3,073,993$ (343,684)$ Transfers 93,883 93,865 (93,883) (93,865) - - Gain/(Loss) on Sale of Capital Assets 34,025 10,789 3,435 - 37,460 10,789 Increase/(Decrease) in Net Position 1,292,756$ (1,258,559)$ 1,818,697$ 925,664$ 3,111,453$ (332,895)$ Net Position - Beginning of Year 68,967,510 70,242,707 45,467,996 44,542,332 114,435,506 114,785,039 Net Position Adjustment (5,259,505) (16,638) (280,052) - (5,539,557) (16,638) Net Position - End of Year 65,000,761$ 68,967,510$ 47,006,641$ 45,467,996$ 112,007,402$ 114,435,506$ City of McHenry's Change in Net Position Governmental Activities Business-Type Activities Total Revenues significantly increased in the current year, mainly due to a large developer donation of capital assets and increases in various types of charges for services due to increased activity. Business-Type Activities. Business-type activities increased the City’s net position by $1,538,645, which includes a net position adjustment of ($280,052). FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. At April 30, 2019, the City’s governmental funds reported combined ending fund balances of $12,751,324, a decrease of $19,434 in comparison with the prior year. Approximately 55% of this total amount constitutes unassigned fund balance, which is available for spending at the City’s discretion. Of the remaining fund balance, 37% constitutes assigned fund balance, with the remainder of the fund balance restricted to   Page 10 indicate that it is not available for new spending because it has already been committed for specific restricted purposes or is nonspendable. The General Fund is the chief operating fund of the City. At April 30, 2019, the fund balance of the General Fund was $9,171,660, of which $7,179,532 is unassigned. As a measure of the General Fund’s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fund balance represents 30% of total General Fund expenditures. The General Fund’s fund balance increased by $408,110 during the year ended April 30, 2019. Other significant highlights in the governmental funds for the year ended April 30, 2019 are outlined below:  Debt service expenses of $1,445,000 were paid to meet the debt service requirements of the City.  Four parcels of land were purchased using $295,070 cash and a note payable for $305,500.  Other governmental funds show a total decrease in fund balance of $427,544, which includes a fund balance adjustment of ($31,539). The decrease was mainly due to a significant amount of capital outlay expenses in the Capital Improvements Fund. Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Fiduciary Funds (Police Pension and Agency Funds). At April 30, 2019, the Police Pension Fund’s net position amounted to $27,153,629. Additions exceeded deductions during the year, resulting in an increase of $1,805,097 in net position. GENERAL FUND BUDGETARY HIGHLIGHTS The General Fund actual revenue exceeded budgeted revenue by $1,740,219. This difference was primarily due to more than expected revenue from royalties, licenses and permits, reimbursements and state income tax. Actual expenditures exceeded budgeted expenditures by $124,981. The difference was primarily due to higher than expected public works expense related to streets. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of April 30, 2019 amounts to $169,979,944 (net of accumulated depreciation). This investment includes land, land improvements, art and historical treasures, intangibles, construction in progress, buildings, vehicles, systems and equipment, and infrastructure. 4/30/2019 4/30/2018 4/30/2019 4/30/2018 4/30/2019 4/30/2018 Land 42,130,875$ 41,491,738$ 2,208,117$ 2,208,117$ 44,338,992$ 43,699,855$ Land Improvements 2,357,891 1,890,091 - - 2,357,891 1,890,091 Art and Historical Treasures 1,658,927 1,658,927 - - 1,658,927 1,658,927 Intangibles 300,000 300,000 - - 300,000 300,000 Construction in Progress 786,317 691,693 36,555,001 35,901,416 37,341,318 36,593,109 Buildings 12,516,371 12,901,595 499,829 560,000 13,016,200 13,461,595 Vehicles 996,915 1,135,134 879,215 942,556 1,876,130 2,077,690 Systems and Equipment 1,831,674 2,056,448 38,454,718 38,073,380 40,286,392 40,129,828 Infrastructure 28,804,094 28,215,306 - - 28,804,094 28,215,306 Total 91,383,064$ 90,340,932$ 78,596,880$ 77,685,469$ 169,979,944$ 168,026,401$ City of McHenry's Capital Assets (net of depreciation) Governmental Activities Business-Type Activities Total Major capital asset events during the year ended April 30, 2019 included the following:  Governmental activities additions of $1,652,124 to Public Works Infrastructure due to the receipt of donated storm sewer and roadway improvements from local developers.   Page 11  $866,344 expended in prior years for the recreation center parking lot and Curran/Bull Valley Road improvements were placed in service upon the completion of the projects during the year ended April 30, 2019.  Business-type activities additions of $1,388,023 to Water & Sewer Systems and Equipment due to the receipt of donated sanitary sewer and watermain improvements from local developers. For further information, please see Note 4 on pages 30 and 31 of this report. Long-Term Debt. At April 30, 2019, the City had total bonded debt outstanding of $12,450,000, all of which is backed by the full faith and credit of the City. 4/30/2019 4/30/2018 4/30/2019 4/30/2018 4/30/2019 4/30/2018 General Obligation Bonds 6,980,000$ 8,425,000$ 5,470,000$ 5,835,000$ 12,450,000$ 14,260,000$ IEPA Revolving Loan Fund - - 31,483,345 31,507,182 31,483,345 31,507,182 Notes Payable 305,500 - - - 305,500 - Bond Premium 65,682 74,060 6,827 7,339 72,509 81,399 Bond Discount (4,575) (7,972) (11,167) (15,107) (15,742) (23,079) Total 7,346,607$ 8,491,088$ 36,949,005$ 37,334,414$ 44,295,612$ 45,825,502$ City of McHenry's Outstanding Debt Governmental Activities Business-Type Activities Total Additional information on the City’s long-term debt can be found in Note 5 on pages 31 through 33 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES The City has a diversified economy with the manufacturing and health fields being its primary base. McHenry is among the State’s fastest growing communities with the official population increasing from 16,177 in 1990 to 26,992 in 2010. In addition, the City experienced significant growth in the retail, office, and industrial space and a downtown revitalization plan has spurred residential and commercial development in the Downtown TIF District. The City’s economic conditions are as follows:  The average unemployment rate for McHenry County in 2017 was 3.4%, which is 1% lower than a year ago. This is lower than the State’s average unemployment rate of 4.3%.  Inflation in the area compares to the national consumer price index. Similar to a nationwide trend, residential growth in the City has slowed dramatically in the last few years. The number of single-family residential building permits issued by the City has decreased from 139 in 2007 to 36 in 2018. However, there have been some signs of improvement, for instance the total value of all commercial and residential improvements and new permits increased from $15.2 million in 2012 to $39.3 million in 2018. Development and adoption of the 2019/20 budget was premised on providing core municipal services while having an operationally balanced budget. Sales tax receipts and state shared revenue sources, primarily income tax receipts, are expected to increase slightly. Property tax revenues have been held flat or decreased since 2010 and EAV values have increased slightly causing the City’s tax rate to decrease from $0.739406 in 2017 to $0.699985 in 2018. In April 2019, the City Council approved the proposed fiscal year 2019/20 General Fund budget increasing the prior year’s budget by $994,941. The City increased the annual police pension contribution in order to meet actuarial requirements and personnel cost increases. Capital expenditures are funded with Fund Balance Reserves which have been built up due to cost reduction measures necessary to adopt a balanced budget in the past years as well as rebounding state shared revenues. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: City of McHenry, 333 South Green St., McHenry, Illinois, 60050.     BASIC FINANCIAL STATEMENTS Governmental Business-Type Activities Activities Total ASSETS Cash and Cash Equivalents 10,292,925$ 5,136,702$ 15,429,627$ Deposit with Paying Agent 586,955 - 586,955 Investments 767,335 1,251,429 2,018,764 Prepaid Expenses 145,726 34,954 180,680 Inventory 8,661 - 8,661 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 539,206 122,937 662,143 Accounts Receivable - Unbilled 114,640 1,189,825 1,304,465 Property Taxes 5,642,729 - 5,642,729 Accrued Interest 4,688 6,077 10,765 Due from Other Governmental Units 2,895,440 97,714 2,993,154 Grants Receivable 176,519 - 176,519 Cable Franchise Fee Receivable 114,246 - 114,246 Interest Rebate Receivable 5,242 21,353 26,595 Capital Assets Land, Construction in Progress, and Other Non-Depreciable Assets 44,876,119 38,763,118 83,639,237 Other Capital Assets, Net of Depreciation 46,506,945 39,833,762 86,340,707 TOTAL ASSETS 112,677,376$ 86,457,871$ 199,135,247$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 4,419,592$ 1,303,020$ 5,722,612$ Pension Expense/Revenue - Police Pension 2,057,432 - 2,057,432 OPEB Expense/Revenue 673,987 33,846 707,833 TOTAL DEFERRED OUTFLOWS OF RESOURCES 7,151,011$ 1,336,866$ 8,487,877$ LIABILITIES Accounts Payable and Accrued Expenses 1,413,007$ 664,511$ 2,077,518$ Security Deposits Held - 3,000 3,000 Due to Other Governmental Units 160,903 - 160,903 Due to Other Funds 45,515 (45,515) - Unearned Revenue 575,419 156,675 732,094 Accrued Interest 66,139 310,283 376,422 Non-Current Liabilities Due Within One Year 1,547,995 1,767,077 3,315,072 Due in More Than One Year 39,893,378 37,316,441 77,209,819 TOTAL LIABILITIES 43,702,356$ 40,172,472$ 83,874,828$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 5,642,729$ -$ 5,642,729$ Unavailable Revenue - State Taxes 5,234 - 5,234 Unavailable Revenue - Rent 2,400 - 2,400 Pension Expense/Revenue - IMRF 1,899,898 560,144 2,460,042 Pension Expense/Revenue - Police Pension 2,470,209 - 2,470,209 OPEB Expense/Revenue 1,104,800 55,480 1,160,280 TOTAL DEFERRED INFLOWS OF RESOURCES 11,125,270$ 615,624$ 11,740,894$ NET POSITION Net Investment in Capital Assets 84,036,457$ 41,647,875$ 125,684,332$ Restricted for: Highways and Streets 180,847 - 180,847 Capital Projects 779,711 - 779,711 Special Service Areas 20 - 20 Unrestricted/(Deficit)(19,996,274) 5,358,766 (14,637,508) TOTAL NET POSITION 65,000,761$ 47,006,641$ 112,007,402$ APRIL 30, 2019 CITY OF MCHENRY, ILLINOIS STATEMENT OF NET POSITION GOVERNMENT-WIDE FINANCIAL STATEMENTS Page 12 The Notes to Financial Statements are an integral part of this statement. Operating Capital Charges for Grants and Grants and Governmental Business-Type Expenses Services Contributions Contributions Activities Activities Total Functions/Programs Governmental Activities General Office 4,047,562$ 4,298,453$ 176,853$ 96,000$ 523,744$ -$ 523,744$ Public Safety 13,021,758 1,092,805 3,000 61,068 (11,864,885) - (11,864,885) Public Works 6,947,382 412,264 204,516 1,861,713 (4,468,889) - (4,468,889) Parks and Recreation 3,560,675 1,153,363 1,450 305,637 (2,100,225) - (2,100,225) Interest and Fees on Long-Term Debt 188,971 - - - (188,971) - (188,971) Depreciation - Unallocated 209,683 - - - (209,683) - (209,683) 27,976,031$ 6,956,885$ 385,819$ 2,324,418$ (18,308,909)$ -$ (18,308,909)$ Business-Type Activities Water 1,967,241$ 2,584,525$ -$ 577,430$ -$ 1,194,714$ 1,194,714$ Sewer 3,559,439 4,406,320 - 810,593 - 1,657,474 1,657,474 Utility Work 1,091,776 1,323 - - - (1,090,453) (1,090,453) 6,618,456$ 6,992,168$ -$ 1,388,023$ -$ 1,761,735$ 1,761,735$ Total Primary Government 34,594,487$ 13,949,053$ 385,819$ 3,712,441$ (18,308,909)$ 1,761,735$ (16,547,174)$ General Revenues Taxes Property Tax, Levied for General Purposes 5,477,514$ -$ 5,477,514$ State Sales Tax 9,768,862 - 9,768,862 State Income Tax 2,792,465 - 2,792,465 State Motor Fuel Tax 716,649 - 716,649 Other Taxes 410,776 - 410,776 Unrestricted Investment Earnings 217,195 88,714 305,909 Gain/(Loss) on Sale of Capital Assets 34,025 3,435 37,460 Miscellaneous 20,262 58,696 78,958 Special Events 70,034 - 70,034 Transfers 93,883 (93,883) - Total General Revenues and Transfers 19,601,665$ 56,962$ 19,658,627$ Change in Net Position 1,292,756$ 1,818,697$ 3,111,453$ Net Position - May 1, 2018 68,967,510 45,467,996 114,435,506 Net Position Adjustment (5,259,505) (280,052) (5,539,557) Net Position - April 30, 2019 65,000,761$ 47,006,641$ 112,007,402$ CITY OF MCHENRY, ILLINOIS GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED APRIL 30, 2019 Net (Expense) Revenue and Changes in Net PositionProgram Revenues Page 13 The Notes to Financial Statements are an integral part of this statement. Other Total General Governmental Governmental Fund Funds Funds ASSETS Cash and Cash Equivalents 7,163,053$ 2,441,904$ 9,604,957$ Deposit with Paying Agent - 586,955 586,955 Investments 181,526 577,614 759,140 Prepaid Expenses 75,438 - 75,438 Inventory - 8,661 8,661 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 533,091 5,400 538,491 Accounts Receivable - Unbilled 114,640 - 114,640 Property Taxes 4,962,485 680,244 5,642,729 Accrued Interest 776 3,877 4,653 Due from Other Governmental Units 2,835,694 59,746 2,895,440 Grants Receivable - 176,519 176,519 Cable Franchise Fee Receivable 114,246 - 114,246 TOTAL ASSETS 15,980,949$ 4,540,920$ 20,521,869$ LIABILITIES Accounts Payable and Accrued Expenses 1,196,028$ 208,496$ 1,404,524$ Due to Other Governmental Units 99,240 61,663 160,903 Due to Other Funds 49,985 - 49,985 Unearned Revenue 501,551 3,219 504,770 TOTAL LIABILITIES 1,846,804$ 273,378$ 2,120,182$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 4,962,485$ 680,244$ 5,642,729$ Unavailable Revenue - State Taxes - 5,234 5,234 Unavailable Revenue - Rent - 2,400 2,400 TOTAL DEFERRED INFLOWS OF RESOURCES 4,962,485$ 687,878$ 5,650,363$ FUND BALANCES Nonspendable 75,438$ -$ 75,438$ Restricted for: Capital Projects - 779,711 779,711 Highways and Streets - 180,847 180,847 Special Service Areas - 20 20 Assigned for: Alarm 587,406 - 587,406 Audit - 12,829 12,829 Tourism 262,481 - 262,481 Band 15,130 - 15,130 Highways and Streets - 934,965 934,965 Capital Projects 926,720 1,001,789 1,928,509 Capital Equipment - 190 190 Revolving Loan 121,296 - 121,296 Civil Defense 3,657 - 3,657 Debt Service - 367,012 367,012 Parks and Recreation - 528,174 528,174 Special Service Areas - 43 43 Unassigned 7,179,532 (225,916) 6,953,616 TOTAL FUND BALANCES 9,171,660$ 3,579,664$ 12,751,324$ TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 15,980,949$ 4,540,920$ 20,521,869$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS BALANCE SHEET GOVERNMENTAL FUNDS APRIL 30, 2019 Page 14 The Notes to Financial Statements are an integral part of this statement. Total Fund Balances - Governmental Funds 12,751,324$ Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Capital Assets, net of accumulated depreciation 91,383,064 Deferred charges and credits for debt issue discounts or premiums and other debt issue costs are not financial resources and therefore are not reported in the funds. Bond Discounts, net of related amortization 4,575 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Bonds and Notes Payable (7,285,500)$ Bond Premiums, net of related amortization (65,682) Accrued Interest on Long-Term Debt, net of receivable (60,897) Compensated Absences (606,217) OPEB Liability (5,172,944) Net Pension Liability - IMRF (5,782,645) Net Pension Liability - Police Pension (22,532,960) (41,506,845) Deferred pension and OPEB costs in governmental activities are not financial resources and therefore are not reported in the funds. Pension Deferred Outflows - Police Pension 2,057,432$ Pension Deferred Outflows - IMRF 4,419,592 Pension Deferred Inflows - Police Pension (2,470,209) Pension Deferred Inflow - IMRF (1,899,898) OPEB Deferred Outflows 673,987 OPEB Deferred Inflows (1,104,800) 1,676,104 Internal service funds are used by management to charge the cost of certain activities, such as insurance and information technology, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the government-wide Statement of Net Position (net of amount allocated to business-type activities). Internal service fund balances not included in other reconciling items above: Current Assets 771,671$ Current Liabilities (79,132) 692,539 Net Position of Governmental Activities 65,000,761$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION APRIL 30, 2019 Page 15 The Notes to Financial Statements are an integral part of this statement. Other Total General Governmental Governmental Fund Funds Funds REVENUES Local Taxes Property Tax 4,945,232$ 532,282$ 5,477,514$ Intergovernmental State Sales Tax 9,768,862 - 9,768,862 State Income Tax 2,792,465 - 2,792,465 State Replacement Tax 65,260 - 65,260 State Motor Fuel Tax - 716,649 716,649 State Pull Tab/Games Tax 883 - 883 Inter Track Wagering Tax 46,192 - 46,192 State Telecommunications Tax 123,903 - 123,903 State Grants 61,068 - 61,068 Federal Grants - 176,519 176,519 Bond Interest Rebates - 20,262 20,262 Other Local Sources Hotel/Motel Tax 174,538 - 174,538 Franchise Fees 345,056 - 345,056 Licenses and Permits 1,041,459 - 1,041,459 Fines and Forfeitures 413,137 - 413,137 Charges for Services 1,371,297 849,983 2,221,280 Interest 172,186 47,332 219,518 Miscellaneous Rent 14,646 58,339 72,985 Royalties 500,000 - 500,000 Donations 4,450 578,490 582,940 Annexation Fees 203,679 - 203,679 Reimbursements 2,282,376 23,824 2,306,200 Concessions - 62 62 Special Events 70,034 - 70,034 Other Miscellaneous 70,408 20,206 90,614 24,467,131$ 3,023,948$ 27,491,079$ EXPENDITURES Current General Office 3,907,631$ 96,523$ 4,004,154$ Public Safety 12,035,394 - 12,035,394 Public Works 3,721,153 163,445 3,884,598 Parks and Recreation 2,276,981 821,869 3,098,850 Capital Outlay 1,651,268 1,638,728 3,289,996 Debt Service Principal - 1,445,000 1,445,000 Interest and Fees - 202,718 202,718 23,592,427$ 4,368,283$ 27,960,710$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 874,704$ (1,344,335)$ (469,631)$ OTHER FINANCING SOURCES/(USES) Transfers (854,447)$ 948,330$ 93,883$ Proceeds from Note Payable 305,500 - 305,500 Sale of City Property 82,353 - 82,353 (466,594)$ 948,330$ 481,736$ NET CHANGE IN FUND BALANCES 408,110$ (396,005)$ 12,105$ FUND BALANCES - MAY 1, 2018 8,763,550 4,007,208 12,770,758 FUND BALANCE ADJUSTMENT - (31,539) (31,539) FUND BALANCES - APRIL 30, 2019 9,171,660$ 3,579,664$ 12,751,324$ FOR THE YEAR ENDED APRIL 30, 2019 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Page 16 The Notes to Financial Statements are an integral part of this statement. Net Change in Fund Balances - Total Governmental Funds 12,105$ Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeds depreciation expense in the current period. Depreciation Expense (2,998,667)$ Capital Outlays 2,347,787 (650,880) In the Statement of Activities, only the gain or loss on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the undepreciated balance of the capital assets sold. Proceeds from Sale of Capital Assets (82,353)$ Gain/(Loss) on Sale of Capital Assets 34,025 (48,328) Donated capital assets used in governmental activities are not current financial resources and therefore are not reported as revenue in the governmental funds.1,652,123 Long-term debt proceeds provide current financial resources to governmental funds and are therefore shown as revenue in the Statement of Revenues, Expenditures, and Changes in Fund Balance, but issuing debt increases long-term liabilities in the Statement of Net Position and is therefore not reported in the Statement of Activities. Note Payable Proceeds (305,500) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Accrued Interest on Long-Term Debt 12,270$ Accrued Interest Rebate (2,323) Bond Discount - Amortization (3,397) Bond Premium - Amortization 8,378 Charge on Bond Refunding - Amortization (3,504) Pension Expense (3,251,902) OPEB Expense (180,033) Compensated Absences (34,810) (3,455,321) Employer Pension and OPEB Contributions are expensed in the fund financial statements but are treated as a reduction in the Net Pension Liability on the government-wide financial statements. Pension Employer Contributions - IMRF 662,387$ Pension Employer Contributions - Police Pension 2,017,300 OPEB Employer Contributions 158,579 2,838,266 Repayment of long-term debt requires the use of current financial resources of governmental funds and is therefore shown as an expenditure in the Statement of Revenues, Expenditures, and Changes in Fund Balances, but the repayment reduces long-term liabilities in the Statement of Net Position and is therefore not reported in the Statement of Activities. Repayment of Long-Term Debt 1,445,000 Internal service funds are used by management to charge the costs of certain activities, such as insurance and information technology, to individual funds. The net revenue of the internal service funds is reported with governmental activities in the government-wide Statement of Activities (net of amount allocated to business- type activities). Change in Net Position (227,896)$ Depreciation Expense (included in Change in Net Position above)33,187 (194,709) Change in Net Position of Governmental Activities 1,292,756$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND FOR THE YEAR ENDED APRIL 30, 2019 CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES Page 17 The Notes to Financial Statements are an integral part of this statement. Business Type Governmental Activities -Activities - Enterprise Fund Internal Water and Sewer Service Funds ASSETS Current Assets Cash and Cash Equivalents 5,136,702$ 687,968$ Investments 1,251,429 8,195 Prepaid Expenses 34,954 70,288 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 122,937 715 Accounts Receivable - Unbilled 1,189,825 - Accrued Interest 6,077 35 Due from Other Governmental Units 97,714 - Due from Other Funds 45,515 4,470 Interest Rebate Receivable 21,353 - 7,906,506$ 771,671$ Non-Current Assets Capital Assets Land 2,208,117$ -$ Buildings 2,736,098 - Systems and Equipment 68,620,399 486,378 Vehicles 1,938,817 - Construction in Progress 36,555,001 - Less: Accumulated Depreciation (33,461,552) (363,556) 78,596,880$ 122,822$ TOTAL ASSETS 86,503,386$ 894,493$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 1,303,020$ 107,053$ OPEB Expense/Revenue 33,846 2,781 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,336,866$ 109,834$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses 664,511$ 8,483$ Security Deposits Held 3,000 - Unearned Revenue 156,675 70,649 Accrued Interest 310,283 - IEPA Loan Payable - Current 1,395,506 - Bonds Payable - Current 371,571 - 2,901,546$ 79,132$ Non-Current Liabilities Compensated Absences 87,658$ 6,749$ IMRF Net Pension Liability 1,787,082 186,217 Total OPEB Liability 259,773 21,342 IEPA Loan Payable (Net of Current Portion Shown Above)30,087,839 - Bonds Payable (Net of Current Portion Shown Above)5,094,089 - 37,316,441$ 214,308$ TOTAL LIABILITIES 40,217,987$ 293,440$ DEFERRED INFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 560,144$ 46,020$ OPEB Expense/Revenue 55,480 4,558 TOTAL DEFERRED INFLOWS OF RESOURCES 615,624$ 50,578$ NET POSITION Net Investment in Capital Assets 41,647,875$ 122,822$ Unrestricted/(Deficit)5,358,766 537,487 TOTAL NET POSITION 47,006,641$ 660,309$ APRIL 30, 2019 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF NET POSITION PROPRIETARY FUNDS Page 18 The Notes to Financial Statements are an integral part of this statement. Business Type Governmental Activities -Activities - Enterprise Fund Internal Water and Sewer Service Funds OPERATING REVENUES Charges for Services Customer Fees 5,275,533$ -$ Capital Fees 396,783 - Debt Service Fees 2,615,897 - Penalties 151,313 - Water Meter Sales 25,075 - Other 6,474 - Internal Service Funds - 4,474,918 8,471,075$ 4,474,918$ OPERATING EXPENSES Water Department Personnel Salaries 478,315$ -$ Miscellaneous Personnel Expenses 214,130 - Other Operating Expenses 742,494 - Depreciation 532,302 - Sewer Department Personnel Salaries 645,519 - Miscellaneous Personnel Expenses 329,488 - Other Operating Expenses 1,344,641 - Depreciation 1,239,791 - Utility Work Department Personnel Salaries 605,615 - Miscellaneous Personnel Expenses 270,728 - Other Operating Expenses 215,433 - Internal Service Funds Personnel Salaries - 145,423 Miscellaneous Personnel Expenses - 3,268,304 Other Operating Expenses - 1,257,795 Depreciation - 33,187 6,618,456$ 4,704,709$ OPERATING INCOME/(LOSS)1,852,619$ (229,791)$ NON-OPERATING REVENUE/(EXPENSE) Interest Income 88,714$ 1,895$ Rental Income 76,465 - Interest Rebate Income 58,696 - Interest and Fees (1,551,943) - Amortization (3,429) - Gain/(Loss) on Sale of Fixed Asset 3,435 - Donated Public Improvements - Water 577,430 - Donated Public Improvements -Sewer 810,593 - 59,961$ 1,895$ INCOME/(LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 1,912,580$ (227,896)$ TRANSFERS (TO)/FROM OTHER FUNDS (93,883) - CHANGE IN NET POSITION 1,818,697$ (227,896)$ NET POSITION - MAY 1, 2018 45,467,996 911,236 NET POSITION ADJUSTMENT (280,052) (23,031) NET POSITION - APRIL 30, 2019 47,006,641$ 660,309$ FOR THE YEAR ENDED APRIL 30, 2019 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS Page 19 The Notes to Financial Statements are an integral part of this statement. Business Type Governmental Activities -Activities - Enterprise Fund Internal Water and Sewer Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers 9,283,167$ -$ Receipts from Employees for Services - 472,523 Receipts from Other Funds for Services - 4,013,679 Payments to Suppliers for Goods and Services (2,820,807) (4,482,674) Payments to Employees for Services (1,690,808) (141,627) Payments to Other Funds for Services (1,128,301) (32,911) Internal Activity - Payments (to)/from Other Funds (30,527) - Net Cash Provided/(Used) by Operating Activities 3,612,724$ (171,010)$ CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers (to)/from Other Funds (93,883)$ -$ Net Cash Provided/(Used) by Non-Capital Financing Activities (93,883)$ -$ CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from the Sale of Capital Assets 3,435$ -$ Purchase of Capital Assets (30,075) (32,734) Interest Paid on Capital Debt, Net of Rebate (1,267,124) - Principal Paid on Capital Debt (1,653,966) - Other Receipts/(Payments)(21,249) - Net Cash Provided/(Used) by Capital and Related Financing Activities (2,968,979)$ (32,734)$ CASH FLOWS FROM INVESTING ACTIVITIES Interest on Cash and Cash Equivalents and Investments 80,757$ 1,870$ Net Cash Provided/(Used) by Investing Activities 80,757$ 1,870$ NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 630,619$ (201,874)$ CASH AND CASH EQUIVALENTS BALANCE - MAY 1, 2018 (INCLUDING RESTRICTED CASH AND OVERDRAFTS)4,506,083 889,842 CASH AND CASH EQUIVALENTS BALANCE - APRIL 30, 2019 (INCLUDING RESTRICTED CASH AND OVERDRAFTS)5,136,702$ 687,968$ RECONCILIATION OF OPERATING INCOME/(LOSS) TO NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES Operating Income/(Loss)1,852,619$ (229,791)$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Expense 1,772,093 33,187 Change in assets, liabilities and deferred amounts: Receivables, net 812,465 3,145 Prepaid Expenses (5,457) 12,642 Accounts Payable and Other Payables (832,718) 1,908 Unearned Revenue - 6,995 Pension Liabilities 1,103,547 89,207 OPEB Liabilities (20,552) (1,689) Deferred Pension Expenses/Revenues (1,090,907) (88,391) Deferred OPEB Expenses/Revenue 21,634 1,777 Net Cash Provided/(Used) by Operating Activities 3,612,724$ (171,010)$ NONCASH CAPITAL FINANCING ACTIVITIES IEPA Loan Draws 1,265,130$ -$ FOR THE YEAR ENDED APRIL 30, 2019 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Page 20 The Notes to Financial Statements are an integral part of this statement. POLICE PENSION AGENCY TRUST FUND FUNDS ASSETS Cash and Cash Equivalents 1,080,008$ 43,062$ Investments 26,015,227 - Accrued Interest 87,176 - TOTAL ASSETS 27,182,411$ 43,062$ LIABILITIES Accounts Payable -$ 12,948$ Benefits Payable 28,782 - Due to Depositors - 30,114 TOTAL LIABILITIES 28,782$ 43,062$ NET POSITION - RESTRICTED FOR PENSION BENEFITS 27,153,629$ CITY OF MCHENRY, ILLINOIS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS APRIL 30, 2019 FUND FINANCIAL STATEMENTS Page 21 The Notes to Financial Statements are an integral part of this statement. POLICE PENSION TRUST FUND ADDITIONS Contributions Employer 2,017,300$ Plan Members 428,598 Total Contributions 2,445,898$ Investment Income Interest and Dividends 1,390,114$ Gain/(Loss) on Sale of Investments (11,055) Net Increase/(Decrease) in Fair Value of Investments 96,344 1,475,403$ Less: Investment Management Fees 21,410 Net Investment Income 1,453,993$ TOTAL ADDITIONS 3,899,891$ DEDUCTIONS Benefits 2,028,470$ Refunds of Contributions 48,561 Administrative Expenses 17,763 TOTAL DEDUCTIONS 2,094,794$ NET INCREASE/(DECREASE)1,805,097$ NET POSITION - RESTRICTED FOR PENSION BENEFITS - MAY 1, 2018 25,348,532 NET POSITION - RESTRICTED FOR PENSION BENEFITS - APRIL 30, 2019 27,153,629$ CITY OF MCHENRY, ILLINOIS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED APRIL 30, 2019 FUND FINANCIAL STATEMENTS Page 22 The Notes to Financial Statements are an integral part of this statement.   Page 23  CITY OF McHENRY, ILLINOIS NOTES TO FINANCIAL STATEMENTS APRIL 30, 2019 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES City of McHenry, Illinois’ (City) financial statements are prepared in accordance with generally accepted accounting principles (GAAP) as applied to local governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The most significant accounting policies used by the City are discussed below. A. Reporting Entity The accompanying financial statements comply with the provisions of GASB statements, in that the financial statements include all organizations, activities, and functions that comprise the City. Component units are legally separate entities for which the City (the primary entity) is financially accountable. Financial accountability is defined as the ability to appoint a voting majority of the organization’s governing body and either (1) the City’s ability to impose its will over the organization or (2) the potential that the organization will provide a financial benefit to, or impose a financial burden on, the City. Using these criteria, the City has determined that the Police Pension Fund meets the above criteria. The Police Pension Fund is blended into the City’s primary government financial statements as a fiduciary fund although it remains a separate legal entity. In addition, the City is not included as a component unit in any other governmental reporting entity as defined by GASB pronouncements. B. Basic Financial Statements – Government-Wide Statements The City’s basic financial statements include both government-wide (reporting the City as a whole) and fund (reporting the City’s major funds) financial statements. Both the government-wide and fund financial statements categorize primary activities as either governmental or business-type. The City’s general office, public safety, public works, and parks and recreation services are classified as governmental activities. The City’s water and sewer services are classified as business-type activities. 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) are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City’s net position is reported in three parts – net investment in capital assets; restricted net position; and unrestricted net position. The City first utilizes restricted resources to finance qualifying activities. The government-wide Statement of Activities reports both the gross and net cost of each of the City’s functions and business-type activities. The functions are also supported by general government revenues (property taxes, sales taxes, unrestricted investment earnings, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (public safety, public works, parks and recreation, etc.) or a business-type activity. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. The net costs (by function or business-type activity) are normally covered by general revenue (property taxes, sales taxes, unrestricted investment earnings, etc.). NOTES TO FINANCIAL STATEMENTS (Continued)   Page 24  The City does not allocate indirect costs. This government-wide focus is more on the sustainability of the City as an entity and the change in the City’s net position resulting from the current year’s activities. C. Basic Financial Statements – Fund Financial Statements The financial transactions of the City 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 comprise its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The various funds are reported by generic classification within the financial statements. The emphasis in fund financial statements is on the major funds in either the governmental or business- type activities categories. Nonmajor funds by category are summarized into a single column. GASB Statement No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds. The following fund types are used by the City: 1. Governmental Funds The focus of the governmental funds’ measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The City reports these governmental funds and fund types: General Fund – The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The Annexation, Alarm Board, Band, Civil Defense, Revolving Loan, Tourism, and Employee Flex Funds are included in this fund. Special Revenue Funds – The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Debt Service Fund – The Debt Service Fund is used to account for the accumulation of funds for the periodic payment of principal, interest, and related fees on general long-term debt. Capital Projects Funds – The Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by business- type/proprietary funds). The activities reported in these funds are reported as governmental activities in the government-wide financial statements. 2. Proprietary Fund Types The focus of proprietary fund measurement is upon determination of operating income, changes in net position, financial position, and cash flows. The generally accepted accounting principles applicable are those similar to businesses in the private sector. The City reports the following proprietary fund types: Enterprise Funds – Enterprise Funds are required to be used to account for operations for which a fee is charged to external users for goods or services and the activity is financed with debt that is solely secured by a pledge of the net revenues. The activities reported in these funds are reported as business-type activities in the government-wide financial statements. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 25  Internal Service Funds – Internal Service Funds are used to account for the financing of goods or services provided by an activity to other departments or funds of the City on a cost-reimbursement basis. Because the principal users of the internal services are the City’s governmental activities, the financial statement of the Internal Service Fund is consolidated into the governmental column when presented in the government-wide financial statements. 3. Fiduciary Fund Types Fiduciary Funds are used to report assets held in a trustee or agency capacity for others and therefore are not available to support City programs. The reporting focus is on net position and changes in net position and is reported using accounting principles similar to proprietary funds. The City’s Fiduciary Funds are presented in the Fiduciary Fund financial statements by type (pension and agency). Since by definition these assets are being held for the benefit of a third party (pension participants, developers, etc.) and cannot be used to address activities or obligations of the City, these funds are not incorporated into the government-wide statements. D. Basis of Accounting Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made regardless of the measurement focus applied. 1. Accrual Both governmental and business-type activities in the government-wide financial statements and the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Property tax revenues are recognized in the period for which levied. Other nonexchange revenues, including intergovernmental revenues and grants, are reported when all eligibility requirements are met. Fees and charges and other exchange revenues are recognized when earned and expenses are recognized when incurred. 2. Modified Accrual The governmental fund financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or within 60 days after year-end. Property tax revenues are recognized in the period for which levied provided they are also available. Intergovernmental revenues and grants are recognized when all eligibility requirements are met and the revenues are available. Expenditures are recognized when the related liability is incurred. Exceptions to this general rule include principal and interest on general obligation long-term debt and employee vacation and sick leave, which are recognized when due and payable. E. Cash and Cash Equivalents and Investments Separate bank accounts are not maintained for all of the City’s funds. Instead, the funds maintain their uninvested cash balances in common checking accounts, with accounting records being maintained to show the portion of the common bank account balances attributable to each participating fund. Occasionally certain of the funds participating in the common bank accounts will incur overdrafts (deficits) in the accounts. Such overdrafts in effect constitute cash borrowed from other City funds and are, therefore, interfund loans that have not been authorized by City Board action. The following funds incurred deficit balances at April 30, 2019: NOTES TO FINANCIAL STATEMENTS (Continued)   Page 26  Debt Service Fund 235,902$ SSA#4 Lakewood Fund 338 SSA#6 Huntersville Fund 179,115 Tax Increment Financing Fund 45,619 Capital Equipment Fund 23,411 484,385$ Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with an original maturity of three months or less from the date of acquisition. Investments are stated at fair value. Fair value is determined by quoted market prices. Gains or losses on the sale of investments are recognized as they are incurred. F. Receivables Receivables are reported net of estimated uncollectible amounts. No property tax receivable allowance is recorded as the City receives approximately 100% of the amount levied. The allowance for water and sewer accounts receivable is $71,041 and all other allowances for other accounts receivable is $535,492. G. Prepaid Expenses Prepaid expenses are for payments made by the City in the current year for goods and services received in the subsequent fiscal year. H. Inventories Inventories consist of the cost of unused salt for the roads. The salt inventory as of April 30, 2019 is $8,661. I. Interfund Activity Interfund activity is reported either as loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or between proprietary funds are netted as part of the reconciliation to the government-wide financial statements. J. Capital Assets Capital assets purchased or acquired with an original cost of $5,000 or more, and $10,000 or more for construction projects, are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date of donation. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line half- year basis over the following estimated useful lives: Vehicles 5-15 years Systems and Equipment 5-40 years Building and Improvements 5-62 years Infrastructure 10-40 years GASB Statement No. 34 required the City to report and depreciate new infrastructure assets effective as of May 1, 2003. Infrastructure assets include roads, bridges, underground pipe (other than related to utilities), traffic signals, etc. These infrastructure assets constitute the largest asset class of the City. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 27  K. Deferred Outflows and Inflows of Resources In addition to assets and liabilities, the Balance Sheets and Statements of Net Position will sometimes report separate sections for deferred outflows of resources and deferred inflows of resources. Deferred outflows of resources represent a consumption of net position that applies to a future period and so will not be recognized as an outflow of resource until then. Deferred inflows of resources represent an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resource until that time. L. Compensated Absences The City accrues accumulated unpaid vacation and associated employee-related costs when earned (or estimated to be earned) by the employee. The noncurrent portion (the amount estimated to be used in subsequent fiscal years) for governmental funds is reported only as a general long-term debt obligation in the government-wide Statement of Net Position and represents a reconciling item between the fund and government-wide presentations. In accordance with the provisions of Statement of Financial Accounting Standards No. 43, “Accounting for Compensated Absences”, no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. M. Long-Term Obligations In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or business-type activities and proprietary fund Statement of Net Position. Bond premiums and discounts are amortized over the life of the bonds on a straight-line basis, rather than expensed in the current year. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as debt service expenditures in the year they occur. In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. N. Government-Wide and Proprietary Fund Net Position Government-wide and proprietary fund net position is divided into three components: 1. Net investment in capital assets – consists of the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets. 2. Restricted net position – consists of net position that is restricted by the City’s creditors (for example, through debt covenants), by the state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors. 3. Unrestricted – all other net position is reported in this category. O. Governmental Fund Balances Governmental fund balances are divided between nonspendable and spendable. Nonspendable fund balances are balances that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. The spendable fund balances are arranged in a hierarchy based on spending constraints. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 28  1. Restricted – Restricted fund balances are restricted when constraints are placed on the use by either (a) external creditors, grantors, contributors, or laws or regulations of other governments or (b) law through constitutional provisions or enabling legislation. 2. Committed – Committed fund balances are amounts that can only be used for specific purposes as a result of constraints of the City Council. Committed amounts cannot be used for any other purpose unless the City Council removes those constraints by taking the same type of action (e.g. legislation, resolution, ordinance). Committed fund balances differ from restricted balances because the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation. 3. Assigned – Assigned fund balances are amounts that are constrained by the City’s intent to be used for specific purposes but are neither restricted nor committed. Intent is expressed by an appointed body (e.g. a budget or finance committee) or official to which the Board of Trustees has delegated the authority to assign, modify or rescind amounts to be used for specific purposes. Pursuant to resolution #R-12-019 by the City Council, the Finance Director has been delegated this authority, with the advice and consent of the Finance and Personnel Committee. Assigned fund balances also include (a) all remaining amounts that are reported in governmental funds (other than the General Fund) that are not classified as nonspendable, restricted or committed, and (b) amounts in the General Fund that are intended to be used for a specific purpose. Specific amounts that are not restricted or committed in a special revenue fund are assigned for purposes in accordance with the nature of their fund type. Assignment within the General Fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purpose of the City itself. All assigned fund balances are the residual amounts of the fund. 4. Unassigned – Unassigned fund balance is the residual classification for the General Fund. This classification represents the General Fund balance that has not been assigned to other funds, and that has not been restricted, committed, or assigned to specific purposes within the General Fund. This classification is also used to represent negative fund balances in other funds. The City permits funds to be expended in the following order: Restricted, Committed, Assigned and Unassigned. P. Minimum Fund Balance The City has adopted a formal minimum fund balance policy. For the General, Recreation Center, and Information Technology Funds, fund balance will be maintained at 120 days of estimated operating expenditures. If the balance falls below this minimum a plan will be developed to return to the minimum balance within a reasonable period of time. Funds in excess of the minimum may be considered for the funding of one-time, nonrecurring expenditures, assigned for future capital activities or used for the funding of other long-term obligations. Q. Property Tax Calendar and Revenues The City’s property tax is levied each calendar year on all taxable real property located in the City’s district on or before the last Tuesday in December. The 2018 levy was passed by the Board on December 3, 2018. Property taxes attach as an enforceable lien on property as of January 1 of the calendar year they are for and are payable in two installments early in June and early in September of the following calendar year. The City receives significant distributions of tax receipts approximately one month after these dates. R. Defining Operating Revenues and Expenses The City’s proprietary funds distinguish between operating and nonoperating revenues and expenses. Operating revenues and expenses of the City’s Water and Sewer Fund consist of charges for services NOTES TO FINANCIAL STATEMENTS (Continued)   Page 29  (including tap fees for the water function and systems development charges for the sewer function) and the costs of providing those services, including depreciation and excluding interest cost. All other revenue and expenses are reported as nonoperating. S. Estimates The preparation of 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. NOTE 2 - DEPOSITS AND INVESTMENTS Deposits with financial institutions are fully insured or collateralized by securities held in the City’s name. The City is allowed to invest in securities as authorized by the Illinois Compiled Statutes, Chapter 30, Act 235/Articles 2 and 6, and Chapter 40, Act 5/Article 3 – Pensions. Investments As of April 30, 2019, the City had the following investments and maturities: Investments Fair Value Less Than 1 1-5 5-10 More Than 10 External Investment Pools 10,250,358$ 10,250,358$ -$ -$ -$ Investment Maturities (in Years) The fair value of investments in the External Investment Pools is the same as the value of pool shares. The External Investment Pools are not SEC-registered but have regulatory oversight through the State of Illinois. Interest Rate Risk. The City will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by:  Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity.  Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools. Credit Risk. The City minimizes credit risk, the risk of loss due to the failure of the security issuer or backer, by:  Limiting investments to the safest type of securities.  Pre-qualifying the financial institutions, brokers/dealers, intermediaries, and advisers with which the City will do business.  Diversifying the investment portfolio so that potential losses on individual securities will be minimized. As of April 30, 2019, the City’s investments were rated as follows: Investments Credit Rating Rating Source Illinois Funds Investment Pool AAAm Standard and Poor's Concentration of Credit Risk. The City places no specific limit on the amount the City may invest in any one issuer. There are currently no investments in any one organization that represent 5% or more of the City’s total investments. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 30  NOTE 3 - FAIR VALUE MEASUREMENT The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City has the following recurring fair value measurements, which includes Pension Fund investments, as of April 30, 2019: Investments by fair value level 4/30/2019 Certificates of Deposit 2,018,763$ -$ 2,018,763$ Debt Securities: U.S. Treasury securities 1,213,455 1,213,455 - Corporate bonds 6,277,246 - 6,277,246 Government securities 295,086 - 295,086 Municipal Issues 767,848 - 767,848 Total Debt Securities 8,553,635$ 1,213,455$ 7,340,180$ Equity Securities: Foreign Issues 551,710$ 551,710$ -$ Total Equity Securities 551,710$ 551,710$ -$ Mutual Funds 16,909,882$ 16,909,882$ -$ Total Investments by fair value level 28,033,990$ 18,675,047$ 9,358,943$ Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Fair Value Measurements Using: Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. NOTE 4 - CAPITAL ASSETS Capital asset activity for the year ended April 30, 2019 was as follows: Balance Net Position Balance May 1, 2018 Adjustment Increases Decreases April 30, 2019 Governmental Activities Capital Assets not being depreciated Land 41,491,738$ -$ 639,137$ -$ 42,130,875$ Art and Historical Treasures 1,658,927 - - - 1,658,927 Intangibles 300,000 - - - 300,000 Construction in Progress 691,693 - 1,126,585 1,031,961 786,317 Total Capital Assets not being depreciated 44,142,358$ -$ 1,765,722$ 1,031,961$ 44,876,119$ Other Capital Assets Land Improvements 5,513,729$ -$ 685,100$ -$ 6,198,829$ Buildings 17,621,006 - 10,948 - 17,631,954 Vehicles 3,948,868 - 184,837 185,424 3,948,281 Equipment 4,296,507 - 61,217 - 4,357,724 Infrastructure 73,646,543 - 2,356,781 - 76,003,324 Total Other Capital Assets at Historical Cost 105,026,653$ -$ 3,298,883$ 185,424$ 108,140,112$ Less Accumulated Depreciation for: Land Improvements 3,623,638$ -$ 217,300$ -$ 3,840,938$ Buildings 4,719,411 - 396,172 - 5,115,583 Vehicles 2,813,734 - 274,728 137,096 2,951,366 Equipment 2,240,059 - 285,991 - 2,526,050 Infrastructure 45,431,237 (56,483) 1,824,476 - 47,199,230 Total Accumulated Depreciation 58,828,079$ (56,483)$ 2,998,667$ 137,096$ 61,633,167$ Other Capital Assets, Net 46,198,574$ 56,483$ 300,216$ 48,328$ 46,506,945$ Governmental Activities Capital Assets, Net 90,340,932$ 56,483$ 2,065,938$ 1,080,289$ 91,383,064$ NOTES TO FINANCIAL STATEMENTS (Continued)   Page 31  Balance Net Position Balance May 1, 2018 Adjustment Increases Decreases April 30, 2019 Business-Type Activities Capital Assets not being depreciated Land 2,208,117$ -$ -$ -$ 2,208,117$ Construction in Progress 35,901,416 - 653,585 - 36,555,001 Total Capital Assets not being depreciated 38,109,533$ -$ 653,585$ -$ 38,763,118$ Other Capital Assets Buildings 2,736,098$ -$ -$ -$ 2,736,098$ Vehicles 1,929,107 - 29,500 19,790 1,938,817 Systems and Equipment 66,620,255 - 2,000,144 - 68,620,399 Total Other Capital Assets at Historical Cost 71,285,460$ -$ 2,029,644$ 19,790$ 73,295,314$ Less Accumulated Depreciation for: Buildings 2,176,098$ -$ 60,171$ -$ 2,236,269$ Vehicles 986,551 - 92,841 19,790 1,059,602 Systems and Equipment 28,546,875 (275) 1,619,081 - 30,165,681 Total Accumulated Depreciation 31,709,524$ (275)$ 1,772,093$ 19,790$ 33,461,552$ Other Capital Assets, Net 39,575,936$ 275$ 257,551$ -$ 39,833,762$ Business-Type Activities Capital Assets, Net 77,685,469$ 275$ 911,136$ -$ 78,596,880$ Depreciation expense was charged to functions as follows: Governmental Activities Public Safety 273,922$ Public Works 2,100,402 Parks and Recreation 414,660 Unallocated 209,683 Total Governmental Activities Depreciation Expense 2,998,667$ Business-Type Activities Water 532,302$ Sewer 1,239,791 Total Business-Type Activities Depreciation Expense 1,772,093$ NOTE 5 - LONG-TERM LIABILITY ACTIVITY Long-term liability activity for the year ended April 30, 2019 was as follows: Amounts Balance Balance Due Within May 1, 2018 Additions Retirements April 30, 2019 One Year Governmental Activities Bonds and Notes Payable General Obligation Bonds 8,425,000$ -$ 1,445,000$ 6,980,000$ 1,485,000$ Unamortized Bond Discount (7,972) - (3,397) (4,575) (2,267) Unamortized Bond Premium 74,060 - 8,378 65,682 8,378 Note Payable - 305,500 - 305,500 56,884 Total Bonds and Notes Payable 8,491,088$ 305,500$ 1,449,981$ 7,346,607$ 1,547,995$ Other Long-Term Liabilities Compensated Absences 568,514$ 37,703$ -$ 606,217$ -$ IMRF Net Pension Liability 2,004,143 4,487,640 709,138 5,782,645 - Police Pension Net Pension Liability 22,040,308 4,392,594 3,899,942 22,532,960 - Total OPEB Liability 5,582,215 854,766 1,264,037 5,172,944 - Total Other Long-Term Liabilities 30,195,180$ 9,772,703$ 5,873,117$ 34,094,766$ -$ Governmental Activities Long- Term Obligations 38,686,268$ 10,078,203$ 7,323,098$ 41,441,373$ 1,547,995$ NOTES TO FINANCIAL STATEMENTS (Continued)   Page 32  Amounts Balance Balance Due Within May 1, 2018 Additions Retirements April 30, 2019 One Year Business-Type Activities Bonds and Notes Payable General Obligation Bonds 5,835,000$ -$ 365,000$ 5,470,000$ 375,000$ IEPA Revolving Loan Fund 31,507,182 1,265,130 1,288,967 31,483,345 1,395,506 Unamortized Bond Discount (15,107) - (3,940) (11,167) (3,941) Unamortized Bond Premium 7,339 - 512 6,827 512 Total Bonds and Notes Payable 37,334,414$ 1,265,130$ 1,650,539$ 36,949,005$ 1,767,077$ Other Long-Term Liabilities Compensated Absences 72,028$ 15,630$ -$ 87,658$ -$ IMRF Net Pension Liability 683,535 1,312,621 209,074 1,787,082 - Total OPEB Liability 280,325 42,924 63,476 259,773 - Total Other Long-Term Liabilities 1,035,888$ 1,371,175$ 272,550$ 2,134,513$ -$ Business-Type Activities Long-Term Obligations 38,370,302$ 2,636,305$ 1,923,089$ 39,083,518$ 1,767,077$ Bonds and notes payable consisted of the following at April 30, 2019: Maturity Interest Face Carrying Date Rate Amount Amount Governmental Activities General Obligation Bonds 2010B 12/15/2020 1.40% - 4.40% 3,510,000$ 770,000$ General Obligation Bonds 2012 12/15/2027 2.00% - 2.50% 850,000 545,000 General Obligation Refunding Bonds 2013 5/1/2019 0.40% - 1.30% 1,965,000 550,000 General Obligation Bonds 2013 5/1/2027 0.40% - 2.75% 415,000 290,000 General Obligation Bonds 2015 12/15/2035 2.00% - 3.25% 6,375,000 4,825,000 Note Payable 2/20/2024 3.50% 305,500 305,500 4 parcels of land pledged as collateral to this loan Total 13,420,500$ 7,285,500$ Business-Type Activities General Obligation Bonds 2010C 12/15/2029 1.00% - 5.25% 5,665,000$ 3,775,000$ General Obligation Bonds 2012 12/15/2032 2.00% - 2.80% 2,250,000 1,695,000 IEPA Revolving Loan Fund 12/30/2037 1.86% 31,507,182 31,483,345 Total 39,422,182$ 36,953,345$ At April 30, 2019 the annual debt service requirements to service all long-term debt attributable to governmental activities are: Year Ending April 30 Principal Interest Total Rebate 2020 1,541,884$ 178,300$ 1,720,184$ 14,904$ 2021 1,008,896 145,743 1,154,639 7,722 2022 631,029 115,220 746,249 - 2023 648,214 101,605 749,819 - 2024 660,477 87,612 748,089 - 2025 - 2029 1,970,000 253,866 2,223,866 - 2030 - 2034 570,000 94,812 664,812 - 2035 - 2039 255,000 12,512 267,512 - 7,285,500$ 989,670$ 8,275,170$ 22,626$ NOTES TO FINANCIAL STATEMENTS (Continued)   Page 33  At April 30, 2019 the annual debt service requirements to service all long-term debt attributable to business-type activities are: Year Ending April 30 Principal Interest Total Rebate 2020 1,770,506$ 734,659$ 2,505,165$ 58,420$ 2021 1,806,583 698,131 2,504,714 57,383 2022 1,853,148 662,805 2,515,953 53,743 2023 1,890,208 625,746 2,515,954 49,490 2024 1,937,775 587,919 2,525,694 45,096 2025 - 2029 10,405,741 2,311,911 12,717,652 140,544 2030 - 2034 9,711,399 1,211,474 10,922,873 7,809 2035 - 2039 7,577,985 320,564 7,898,549 - 36,953,345$ 7,153,209$ 44,106,554$ 412,485$ Industrial Development Revenue Bonds, Series 2016A and 2016B During fiscal year 2017, the City issued Industrial Development Revenue Bonds on behalf of Fabrik Industries. The bonds are not obligations of the City; therefore, the City does not record the assets or liabilities resulting from the bond issuance as its primary function is to arrange financing between Fabrik and the bond holders. All funds are controlled by the trustee of the bonds (American Community Bank & Trust). The original issues of the bonds aggregated to $7,500,000, and at April 30, 2019 the outstanding balance on the bonds was $2,203,570. NOTE 6 - RESTRICTED EQUITY The following amounts are restricted equity balances at April 30, 2019: Restricted Restricted Restricted for Net Position Fund Balance Governmental Activities/Governmental Funds Highways and Streets 180,847$ 180,847$ Capital Projects 779,711 779,711 Special Service Areas 20 20 960,578$ 960,578$ NOTE 7 - DESIGNATED NET POSITION City management has designated certain Water and Sewer Fund revenues to be used only for debt service. The amount designated at April 30, 2019 was $4,562,265 NOTE 8 - DEFICIT FUND BALANCE At April 30, 2019 a deficit fund balance existed in the following funds: Pageant Fund 1,182$ Tax Increment Financing Fund 45,619 SSA#6 Huntersville Fund 179,115 225,916$ NOTE 9 - NET POSITION/FUND BALANCE ADJUSTMENT During the year, the City made the following net position/fund balance adjustments: NOTES TO FINANCIAL STATEMENTS (Continued)   Page 34  Governmental Funds Fund Balance Proprietary Funds Fund Balance Motor Fuel Tax Fund Water & Sewer Fund Adjustment to capture 2018 salt expense Adjustment related to incorrect prior year in prior year (31,539)$ depreciation expense 273$ Adjustment to record beginning OPEB liability balance in relation to GASB 75 implementation (280,325) (280,052)$ IT Fund Adjustment to record beginning OPEB liability balance in relation to GASB 75 implementation (23,031)$ Governmental Activities Net Position Business-Type Activities Fund Balance Water & Sewer Fund Adjustment to record beginning OPEB liability Adjustment related to incorrect prior year balance in relation to GASB 75 implementation (5,284,446)$ depreciation expense 273$ Adjustment to capture 2018 salt expense Adjustment to record beginning OPEB liability in prior year (31,539) balance in relation to GASB 75 implementation (280,325) Adjustment related to incorrect prior year (280,052)$ depreciation expense 56,480 (5,259,505)$ NOTE 10 - PROPERTY TAXES Property taxes receivable and unavailable revenue recorded in these financial statements, in the amount of $5,642,729, are from the 2018 tax levy. The unavailable revenue is 100% of the 2018 tax levy. These taxes are unavailable as none of the taxes are collected before the end of the fiscal year and the City does not consider the amounts to be available and does not budget for their use in fiscal year 2019. The City has determined that 100% of the amounts collected for the 2017 levy ($5,477,514) are allocable for use in fiscal year 2019 and, therefore, are recorded in these financial statements as property taxes revenue. A summary of the assessed valuation, rates, and extensions for the years 2018, 2017, and 2016 follows: Tax Year Assessed Valuation Rates Extensions Rates Extensions Rates Extensions General 0.0756 499,047$ 0.0899 561,765$ 0.1201 707,252$ Police Protection 0.0830 547,962 0.0877 547,960 0.0931 547,963 Insurance 0.0758 499,997 0.0800 499,999 0.0849 500,000 Retirement 0.0605 399,199 0.0639 399,197 0.0678 399,199 Social Security 0.0854 563,752 0.0902 563,746 0.0958 563,751 Audit 0.0040 26,433 0.0042 26,429 0.0045 26,430 Police Pension 0.3156 2,082,424 0.3233 2,019,704 0.3184 1,874,222 Total Taxes Extended 0.7000 4,618,814$ 0.7394 4,618,800$ 0.7846 4,618,817$ Road and Bridge (from Townships) - 370,104$ - 359,432$ - 369,787$ Special Service Area #1A - -$ - -$ - -$ Special Service Area #4A - 16,847$ - 16,847$ - 16,847$ Tax Increment Financing - 636,500$ - 489,962$ - 380,344$ 2016 $588,650,542 2018 $659,844,715 2017 $624,662,787 NOTE 11 - EXCESS OF EXPENDITURES OVER BUDGET For the year ended April 30, 2019, the following governmental funds had expenditures that exceeded the budget: Fund Budget Actual General $ 23,467,446 $ 23,592,427 124,981$ Pageant 1,200 2,420 1,220 Recreation Center 1,011,554 1,049,492 37,938 Motor Fuel Tax 367,000 370,445 3,445 Information Technology 638,521 710,210 71,689 Excess of Actual Over Budget NOTES TO FINANCIAL STATEMENTS (Continued)   Page 35  NOTE 12 - ILLINOIS MUNICIPAL RETIREMENT FUND A. Plan Description The City’s defined benefit pension plan for regular employees provides retirement and disability benefits, post-retirement increases, and death benefits to plan members and beneficiaries. The City’s plan is managed by the Illinois Municipal Retirement Fund (IMRF), the administrator of a multi-employer public pension fund. A summary of IMRF’s pension benefits is provided in the “Benefits Provided” section of this document. Details of all benefits are available from IMRF. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available Comprehensive Annual Financial Report that includes financial statements, detailed information about the pension plan’s fiduciary net position, and required supplementary information. The report is available for download at www.imrf.org. B. Benefits Provided IMRF has three benefit plans. The vast majority of IMRF members participate in the Regular Plan (RP). The Sheriff’s Law Enforcement Personnel (SLEP) plan is for sheriffs, deputy sheriffs, and selected police chiefs. Counties could adopt the Elected County Official (ECO) plan for officials elected prior to August 8, 2011 (the ECO plan was closed to new participants after that date). All three IMRF benefit plans have two tiers. Employees hired before January 1, 2011 are eligible for Tier 1 benefits. Tier 1 employees are vested for pension benefits when they have at least eight years of qualifying service credit. Tier 1 employees who retire at age 55 (at reduced benefits) or after age 60 (at full benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75P of their final rate of earnings. Final rate of earnings is the highest total earnings during any consecutive 48 months within the last ten years of service, divided by 48. Under Tier 1, the pension is increased by 3% of the original amount on January 1 every year after retirement. Employees hired on or after January 1, 2011 are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating employees who retire at age 62 (at reduced benefits) or after age 67 (at full benefits) with ten years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last ten years of service, divided by 96. Under Tier 2, the pension is increased on January 1 every year after retirement, upon reaching age 67, by the lesser of:  3% of the original pension amount, or  1/2 of the increase in the Consumer Price Index of the original pension amount. C. Employees Covered by Benefit Terms All appointed employees of a participating employer who are employed in a position normally requiring 600 hours (1,000 hours for certain employees hired after 1981) or more of work in a year are required to participate. As of December 31, 2018, the following employees were covered by the benefit terms: Retirees and beneficiaries currently receiving benefits 83 Inactive plan members entitled to but not yet receiving benefits 42 Active plan members 105 Total 230 NOTES TO FINANCIAL STATEMENTS (Continued)   Page 36  D. Contributions As set by statute, the City’s Regular Plan Members are required to contribute 4.5% of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. The City’s annual contribution rate for calendar year 2018 was 12.18%. For the fiscal year ended April 30, 2019, the City contributed $881,033 to the plan. The City also contributes for disability benefits, death benefits, and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by IMRF’s Board of Trustees, while the supplemental retirement benefits rate is set by statute. E. Net Pension Liability The components of the net pension liability of the IMRF actuarial valuation performed as of December 31, 2018, and a measurement date as of December 31, 2018, calculated in accordance with GASB Statement No. 68, were as follows: Total Pension Liability 39,034,861$ IMRF Fiduciary Net Position 31,465,134 City's Net Pension Liability 7,569,727 IMRF Fiduciary Net Position as a Percentage of the Total Pension Liability 80.61% See the Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios in the Required Supplementary Information following the notes to the financial statements for additional information related to the funded status of the Plan. F. Actuarial Assumptions The total pension liability above was determined by an actuarial valuation performed as of December 31, 2018 using the following actuarial methods and assumptions: Assumptions Inflation 2.50% Salary Increases 3.39 - 14.25% including inflation Interest Rate 7.25% Asset Valuation Method Market Value of Assets Projected Retirement Age Experience-based Table of Rates, specific to the type of eligibility condition, last updated for the 2017 valuation according to an experience study from years 2014 to 2016 For non-disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same adjustments that were applied for non-disabled lives. For active members, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 37  G. Long-Term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return to the target asset allocation percentage and adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table as of December 31, 2018: Asset Class Target Allocation Projected Return Equities 37.00% 7.15% International Equities 18.00% 7.25% Fixed Income 28.00% 3.75% Real Estate 9.00% 6.25% Alternatives 7.00% Private Equity 8.50% Hedge Funds 5.50% Commodities 3.20% Cash 1.00% 2.50% 100.00% H. Single Discount Rate The projection of cash flow used to determine this Single Discount Rate assumed that the plan members’ contributions will be made at the current contribution rate, and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. The Single Discount Rate reflects: 1. The long-term expected rate of return on pension plan investments (during the period in which the fiduciary net position is projected to be sufficient to pay benefits), and 2. The tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating (which is published by the Federal Reserve) as of the measurement date (to the extent that the contributions for use with the long-term expected rate of return are not met). For the purpose of this discount rate, the expected rate of return on pension plan investments is 7.25%; the municipal bond rate is 3.71%; and resulting single discount rate is 7.25%. I. Changes in Net Pension Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A) (B) (A)-(B) Balances at December 31, 2017 35,615,648$ 32,927,971$ 2,687,677$ Changes for the year: Service Cost 740,595$ -$ 740,595$ Interest on the Total Pension Liability 2,641,076 - 2,641,076 Differences Between Expected and Actual Experience of the Total Pension Liability 381,201 - 381,201 Changes of Assumptions 1,199,530 - 1,199,530 Contributions - Employer - 918,212 (918,212) Contributions - Employee - 340,841 (340,841) Net Investment Income - (1,672,533) 1,672,533 Benefit Payments, including Refunds of Employee Contributions (1,543,189) (1,543,189) - Other (Net Transfer) - 493,832 (493,832) Net Changes 3,419,213$ (1,462,837)$ 4,882,050$ Balances at December 31, 2018 39,034,861$ 31,465,134$ 7,569,727$ NOTES TO FINANCIAL STATEMENTS (Continued)   Page 38  J. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the plan’s net pension liability, calculated using a Single Discount Rate of 7.25%, as well as what the plan’s net pension liability would be if it were calculated using a single Discount Rate that is 1% lower or 1% higher than the current rate: Current 1% Decrease Discount Rate 1% Increase 6.25% 7.25% 8.25% Net Pension Liability 13,039,152$ 7,569,727$ 3,101,661$ K. Pension Expense/(Income) and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended April 30, 2019, the City recognized pension expense/(income) of $941,966. At April 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Outflows of Inflows of Net Outflows Expense in Future Periods Resources Resources of Resources Differences between expected and actual experience 738,114$ 41,965$ 696,149$ Changes of assumptions 985,193 769,228 215,965 Net difference between projected and actual earnings on pension plan investments 3,755,578 1,648,850 2,106,728 Total deferred amounts to be recognized in pension expense in future periods 5,478,885$ 2,460,043$ 3,018,842$ Pension contributions made subsequent to the measurement date 243,726 - 243,726 Total deferred amounts related to pensions 5,722,611$ 2,460,043$ 3,262,568$ The deferred outflows of resources related to pensions resulting from the City’s contributions in fiscal year 2019 subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ended April 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Net Deferred Year Ending Outflows of December 31 Resources 2019 872,427$ 2020 480,670 2021 477,463 2022 1,087,971 2023 100,311 Thereafter - 3,018,842$ NOTE 13 - POLICE PENSION PLAN A. Plan Administration Full-time police sworn personnel of the City are covered by The Police Pension Fund of the City (Plan). Although this is a single-member pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statues (40 IL CS 5/3-1) and may be amended only by the Illinois legislature. The City accounts for the Plan as a pension trust fund. The Pension Board administers the Plan and the Illinois Department of Insurance is the oversight agency. The Board consists of five elected or appointed members. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 39  B. Plan Membership At May 30, 2018, the date of the latest actuarial valuation, Plan participation consisted of: Retirees and beneficiaries receiving benefits 30 Terminated plan members entitled to but not yet receiving benefits 3 Active plan members 45 Total 78 C. Benefits Provided The Plan provides retirement, disability, and death benefits to Plan members and their beneficiaries. Chapter 40-Pensions-Act 5/Article 3 of the Illinois Compiled Statutes assigns the authority to establish and amend the benefit provisions of the Plan to the Illinois legislature. D. Contributions Employees are required by Illinois Compiled Statutes (ILCS) to contribute 9.91% of their base salary to the Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to contribute the remaining amounts necessary to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Plan. For the year ended April 30, 2019 the City’s contribution was 46.65% of covered payroll. E. Investment Policy ILCS limit the Plan’s investments to those allowable by ILCS and require the Plan’s Board of Trustees to adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The Plan’s investment policy authorizes the Plan to make deposits/invest in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States or agreements to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, investment grade corporate bonds and Illinois Funds. The Plan may also invest in certain non-U.S. obligations, Illinois municipal corporations tax anticipation warrants, veteran’s loans, obligations of the State of Illinois and its political subdivisions, Illinois insurance company general and separate accounts, mutual funds and corporate equity securities. The Plan’s investment policy in accordance with ILCS establishes the following target allocation across asset classes: Long-Term Expected Asset Class Target Real Rate of Return Fixed Income 33% 1.46% Domestic Equities 30% 7.17% International Equities 13% 0.21% Real Estate Equities 7% 7.78% Blended Equities 15% 6.96% Cash and Securities 2% 0.33% ILCS limits the Plan’s investments in equities to 65% of total assets of the fund. Securities in any one company should not exceed 5% of the total fund. The blended asset class is comprised of all other asset classes to allow for rebalancing the portfolio. The Estimated Annual Inflation Rate (CPI) assumption used is 2.5%. The long-term expected rate of return on the Plan’s investments was determined using an asset allocation study conducted by the Plan’s investment management firm in December of 2014 in NOTES TO FINANCIAL STATEMENTS (Continued)   Page 40  which best estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real rates of return excluding inflation for each major asset class included in the Plan’s target asset allocation as of December 31, 2014 are listed in the table above. F. Investment Valuations All Investments in the Plan are stated at fair value and are recorded as of the trade date. Fair value is based on quoted market prices at April 30, 2019 for debt securities, equity securities, and mutual funds. G. Investment Concentrations There are no significant investments (other than U.S. Government guaranteed obligations) in any one organization that represent 5.0% or more of the Plan’s investments. H. Investment Rate of Return For the year ended April 30, 2019, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 5.73%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. I. Deposits with Financial Institutions Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Plan’s deposits may not be returned to it. The Plan’s investment policy requires all bank balances to be covered by federal depository insurance. J. Interest Rate Risk The following table presents the investments and maturities of the Plan’s debt securities as of April 30, 2019: Investments Fair Value Less Than 1 1-5 5-10 More Than 10 External Investment Pools 218,592$ 218,592$ -$ -$ -$ Foreign Issues 551,710 203,142 348,568 - - US Treasury 1,213,455 - - 179,107 1,034,348 Federal Home Loan Banks 295,086 - 295,086 - - Municipal Bonds 767,848 589,253 - 178,595 - Corporate Bonds 6,277,246 5,116,689 939,817 96,819 123,921 Mutual Funds 16,909,882 16,909,882 - - - Total 26,233,819$ 23,037,558$ 1,583,471$ 454,521$ 1,158,269$ Investment Maturities (in Years) In accordance with its investment policy, the Plan limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Plan. K. Credit Risk The Plan limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United States Government, NOTES TO FINANCIAL STATEMENTS (Continued)   Page 41  securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed by the United States Government, and investment grade corporate bonds rated by at least one of the two largest rating services at the time of purchase. If subsequently downgraded below investment grade, the bonds must be liquidated by the manager from the portfolio within 90 days after being downgraded. However, certain fixed income securities are not rated. As of April 30, 2019, the Plan’s investments were rated as follows: Credit Rating Rating Source Illinois Funds Investment Pool AAAm Standard and Poor's US Treasury Bond Aaa Moody's US Treasury Notes Aaa Moody's Federal Home Loan Banks AA+ Standard and Poor's Foreign Issues Barclays Bank Plc A Standard and Poor's Foreign Issues Barclays Bank Plc A Standard and Poor's Foreign Issues Barrick Australia Finance BBB Standard and Poor's Corporate Bonds American Express Credit A- Standard and Poor's Corporate Bonds Apple Inc AA+ Standard and Poor's Corporate Bonds Capital One Bank USA Na BBB+ Standard and Poor's Corporate Bonds Capital One Na BBB+ Standard and Poor's Corporate Bonds Citigroup Inc BBB+ Standard and Poor's Corporate Bonds Compass Bank BBB+ Standard and Poor's Corporate Bonds Constellation Brands Inc BBB Standard and Poor's Corporate Bonds Cvs Caremark Corp BBB Standard and Poor's Corporate Bonds First Tennessee Bank BBB Standard and Poor's Corporate Bonds Ford Motor Credit Co LLC BBB Standard and Poor's Corporate Bonds Fortune Brands Home SE BBB+ Standard and Poor's Corporate Bonds General Elec Cap Corp BBB+ Standard and Poor's Corporate Bonds General Motors Finl Co BBB Standard and Poor's Corporate Bonds Goldman Sachs Bank USA A+ and BBB+ Standard and Poor's Corporate Bonds Intl Lease Finance Corp BBB- Standard and Poor's Corporate Bonds Kinder Morgan Ener Part BBB Standard and Poor's Corporate Bonds Kraft Foods Group Inc BBB Standard and Poor's Corporate Bonds Microsoft Corp AAA Standard and Poor's Corporate Bonds Morgan Stanley BBB+ Standard and Poor's Corporate Bonds Sempra Energy BBB+ Standard and Poor's Corporate Bonds Williams Partners LP BBB Standard and Poor's Mutual Funds Not Rated N/A Municipal Bonds La Salle Cnty Sch Dist 141 Ottawa AA Standard and Poor's Municipal Bonds Moline Ref Ser G A1 Moody's Municipal Bonds Carol Stream Park Dist Cabs Ser A A2 Moody's Municipal Bonds Decatur II Build America Bonds A2 Moody's Municipal Bonds Illinois ST Build America Bonds BBB- Standard and Poor's Investments L. Net Pension Liability The components of the net pension liability of the Plan as of April 30, 2019, calculated in accordance with GASB Statement No. 68, were as follows: Total Pension Liability 49,686,589$ Plan Fiduciary Net Position 27,153,629 City's Net Pension Liability 22,532,960 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 54.65% See the Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios in the Required Supplementary Information for additional information related to the funded status of the Plan. M. Actuarial Assumptions NOTES TO FINANCIAL STATEMENTS (Continued)   Page 42  The total pension liability above was determined by an actuarial valuation performed as of April 30, 2019 using the following actuarial methods and assumptions: Actuarial Valuation Date May 1, 2018 Actuarial Cost Method Entry Age Normal (Level %) Assumptions Inflation 2.50% Salary Increases 4.00% - 10.27% Investment Rate of Return 7.00% Asset Valuation Method Market Value Mortality rates were based on the RP-2014 Mortality Table (BCHA) projected to 2017 using improvement scale MP-2016. The other non-economic actuarial assumptions used in the May 30, 2018 valuation were based on a review of assumptions in the L&A 2016 study for Illinois Police Officers. N. Discount Rate The discount rate used to measure the total pension liability was 7%. The discount rate used in the determination of the Total Pension Liability is based on a combination of the expected long-term rate of return on plan investments and the municipal bond rate. Cash flow projections were used to determine the extent which the plan’s future net position will be able to cover future benefit payments. To the extent future benefit payments are covered by the plan’s projected net position, the expected rate of return on plan investments is used to determine the portion of the net pension liability associated with those payments. To the extent future benefit payments are not covered by the plan’s projected net position, the municipal bond rate is used to determine the portion of the net pension liability associated with those payments. O. Changes in the Net Pension Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A) (B) (A)-(B) Balances at April 30, 2018 47,388,840$ 25,348,532$ 22,040,308$ Changes for the year: Service Cost 964,573$ -$ 964,573$ Interest on the Total Pension Liability 3,244,523 - 3,244,523 Differences Between Expected and Actual Experience 165,685 - 165,685 Contributions - Employer - 2,017,300 (2,017,300) Contributions - Employee - 427,378 (427,378) Contributions - Other 1,221 (1,221) Net Investment Income - 1,454,043 (1,454,043) Benefit Payments, including Refunds of Employee Contributions (2,077,032) (2,077,032) - Administrative Expense - (17,813) 17,813 Net Changes 2,297,749$ 1,805,097$ 492,652$ Balances at April 30, 2019 49,686,589$ 27,153,629$ 22,532,960$ P. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the plan’s net pension liability, calculated using a Single Discount Rate of 7.00%, as well as what the plan’s net pension liability would be if it were calculated using a single Discount Rate that is 1% lower or 1% higher: NOTES TO FINANCIAL STATEMENTS (Continued)   Page 43  Current 1% Decrease Discount Rate 1% Increase 6.00% 7.00% 8.00% Net Pension Liability 28,964,580$ 22,532,960$ 15,163,797$ Q. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended April 30, 2019, the City recognized pension expense of $2,542,040. At April 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Outflows of Inflows of Net Outflows Expense in Future Periods Resources Resources of Resources Differences between expected and actual experience 145,698$ 1,037,637$ (891,939)$ Assumption changes 1,283,903 824,998 458,905 Net difference between projected and actual earnings on pension investments 627,831 607,574 20,257 Total deferred amounts to be recognized in pension expense in future periods 2,057,432$ 2,470,209$ (412,777)$ Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Net Deferred Year Ending Outflows of April 30 Resources 2020 530,411$ 2021 44,382 2022 (334,902) 2023 (211,037) 2024 (277,562) Thereafter (164,069) (412,777)$ NOTE 14 - POST EMPLOYMENT BENEFIT COMMITMENTS A. Retiree Insurance Plan Plan Overview In addition to the retirement plan described in Notes 12 and 13, the City provides post-employment benefits other than pensions (“OPEB”) to employees who meet certain criteria. The Plan, a single- employer defined benefit plan, provides the following coverage: Medical Coverage Employees may continue coverage into retirement on the City medical plans if they pay the entire premium. Coverage is also available for eligible dependents on a pay-all basis. Coverage may continue when Medicare eligibility is reached. Coverage for dependents can continue upon the death of the retiree given that contributions continue. Full-time Sworn Police employees that suffer a catastrophic injury or are killed in the line of duty receive free lifetime coverage for the employee, their spouse, and each dependent child under the Public Safety Employee Benefits Act. The Plan does not issue a stand-alone financial report. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 44  Eligibility Employees of the City are eligible for retiree health benefits as listed below: IMRF Employees Regular Plan Tier 1 (Enrolled in IMRF Prior to January 1, 2011) - At least 55 years old and at least 8 years of credited service (reduced pension) - At least 60 years old and at least 8 years of credited service (full pension) Regular Plan Tier 2 (Enrolled in IMRF On or After January 1, 2011) - At least 62 years old and at least 10 years of credited service (reduced pension) - At least 67 years old and at least 10 years of credited service (full pension) Police Officers Hired on or Before January 1, 2011 - At least 50 years old and at least 20 years of credited service (full benefit) - At least 60 years old and at least 8 years of credited service (reduced benefit) Hired After January 1, 2011 - At least 55 years old and at least 10 years of credited service (full benefit) - At least 50 years old and at least 10 years of credited service (reduced benefit) Membership in the plan consisted of the following at May 1, 2018, the date of the latest actuarial valuation: Active Employees 110 Inactive Employees Entitled to but not yet Receiving Benefits 0 Inactive Employees Currently Receiving Benefits 16 Total 126 Contribution The required contribution is based on projected pay-as-you-go financing requirements. Employees are not required to contribute to the plan. Total OPEB Liability The City’s total OPEB liability was measured as of April 30, 2019, and the total OPEB liability was determined by an actuarial valuation as of May 1, 2018. Actuarial Assumptions The total OPEB liability in the May 1, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Actuarial Method Entry Age Normal Discount rate 3.21% Salary Rate Increase 4.00% Expected long-term investment rate of return N/A NOTES TO FINANCIAL STATEMENTS (Continued)   Page 45  Health Care Trend Pre- Medicare Pre- Medicare Period BCBS HMO BCBS PPO PPO - HRA BCBS HMO Period BCBS HMO BCBS PPO PPO - HRA BCBS HMO (1) Known rate IY18-IY19 0% (1)0% (1)0% (1)0% (1)FY19-FY20 2.33% 2.33% 2.33% 2.33% IY19-IY20 7.00% 7.00% 7.00% 7.00% FY20-FY21 6.92% 6.92% 6.92% 6.92% IY20-IY21 6.75% 6.75% 6.75% 6.75% FY21-FY22 6.67% 6.67% 6.67% 6.67% IY21-IY22 6.50% 6.50% 6.50% 6.50% FY22-FY23 6.42% 6.42% 6.42% 6.42% IY22-IY23 6.25% 6.25% 6.25% 6.25% FY23-FY24 6.17% 6.17% 6.17% 6.17% IY23-IY24 6.00% 6.00% 6.00% 6.00% FY24-FY25 5.92% 5.92% 5.92% 5.92% IY24-IY25 5.75% 5.75% 5.75% 5.75% FY25-FY26 5.67% 5.67% 5.67% 5.67% IY25-IY26 5.50% 5.50% 5.50% 5.50% FY26-FY27 5.42% 5.42% 5.42% 5.42% IY26-IY27 5.25% 5.25% 5.25% 5.25% FY27-FY28 5.17% 5.17% 5.17% 5.17% IY27-IY28 5.00% 5.00% 5.00% 5.00% FY28-FY29 5.00% 5.00% 5.00% 5.00% Subsequent 5.00% 5.00% 5.00% 5.00% Subsequent 5.00% 5.00% 5.00% 5.00% Medicare Eligible Insurance Year Trends Medicare Eligible Fiscal Year Trends Retiree Contribution Trend Same as Health Care Trend Mortality RP-2014 Combined Annuitant Mortality Table for males and females. The Mortality Table reflects recent rates developed by the Society of Actuaries. Disability Rates IMRF Employees: Rates from the December 31, 2017 IMRF Actuarial Valuation Report Starting Per Capita Costs Retiree Spouse BCBS HMO 10,083$ 11,369$ BCBS PPO 12,941 14,593 PPO-HRA 10,757 12,130 Retiree Contributions Retiree Spouse BCBS HMO 7,662$ 8,640$ BCBS PPO 9,834 11,089 PPO-HRA 8,174 9,218 Election at Retirement 10% of active employees are assumed to elect coverage at retirement Marital Status 70% of active employees are assumed to be married and elect spousal coverage upon retirement. Males are assumed to be three years older than females. Police Employees: Rates from the City of McHenry Police Pension Fund Actuarial Valuation for the Year Beginning May 1, 2018 There is no long-term expected rate of return on OPEB plan investments because the City does not have a trust dedicated exclusively to the payment of OPEB benefits. Discount Rate The City does not have a dedicated trust to pay retiree healthcare benefits. Per GASB 75, the discount rate should be a yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale). A rate of 3.21% is used, which is the S&P Municipal Bond 20-Year High-Grade Rate Index as of April 30, 2019. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 46  Changes in the Total OPEB Liability Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a) - (b) Balances at April 30, 2018 5,862,540$ -$ 5,862,540$ Changes for the year: Service Cost 32,964$ -$ 32,964$ Interest on Total OPEB Liability 209,775 - 209,775 Actuarial Experience (1,070,724) - (1,070,724) Assumption Changes 417,482 - 417,482 Benefit Payments (167,232) - (167,232) Other Changes 147,912 - 147,912 Net Changes (429,823)$ -$ (429,823)$ Balances at April 30, 2019 5,432,717$ -$ 5,432,717$ Increase/(Decrease) Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage-point lower or 1 percentage-point higher than the current discount rate: 1% Increase Valuation Rate 1% Decrease 4,078,269$ 5,432,717$ 7,582,546$ Plan's Total OPEB Liability/(Asset) Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower or 1 percentage-point higher than the current healthcare cost trend rates: Healthcare Cost 1% Increase Valuation Rate 1% Decrease 7,535,275$ 5,432,717$ 4,070,588$ Plan's Total OPEB Liability/(Asset) OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the fiscal year ended April 30, 2019, the City recognized OPEB expense of $189,858. At April 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Net Inflows of Resources Resources of Resources Differences Between Expected and Actual Experience -$ 958,677$ (958,677)$ Changes of Assumptions 707,832 201,604 506,228 Total 707,832$ 1,160,281$ (452,449)$ Changes in total OPEB liability related to the difference in actual and expected experience, or changes in assumptions regarding future events, are recognized in OPEB expense over the expected remaining service life of all employees (9.56 years, active and retired) in the postretirement plan. NOTES TO FINANCIAL STATEMENTS (Continued)   Page 47  Amounts reported as deferred outflows of resources related to OPEB will be recognized as future OPEB expense as follows: Year ending April 30 Net Inflows of Resources 2020 (52,881)$ 2021 (52,881) 2022 (52,881) 2023 (52,881) 2024 (52,881) 2025-2029 (188,044) (452,449)$ B. Social Security All employees are covered under Social Security. The City paid the total required contribution for the current fiscal year. NOTE 15 - INTERFUND BALANCES AND TRANSFERS Interfund balances at April 30, 2019 consisted of the following: Due From Due To Amount General Fund Water and Sewer Fund 49,985$ Water Sewer Fund Internal Service Funds 4,470 The above interfund balances resulted from a time lag between the dates that (1) revenue was collected and remitted to the appropriate funds and (2) expenditures were incurred and reimbursed between funds. Interfund transfers for the year ended April 30, 2019 consisted of the following: Transfer From Transfer To Amount Water Sewer Fund Nonmajor Governmental Funds 93,883$ General Fund Nonmajor Governmental Funds 854,447 Transfers are used to (1) move revenues from the fund that is required to collect them to the fund that is required to expend them, and (2) move receipts restricted to debt service from the funds collecting the receipts to the Debt Service Fund as debt service payments become due. NOTE 16 - RISK MANAGEMENT The City is exposed to various risks related to torts; theft of, damage to, and destruction of assets; errors and omissions; and injuries to employees. The City is a member of the McHenry County Municipal Risk Management Agency (MCMRMA), a public entity risk pool through which property, general liability, automobile liability, crime, excess property, excess liability, and boiler and machinery coverage is provided in excess of specified limits for the members, acting as a single insurable unit. The relationship between the City and MCMRMA is governed by a contract and by-laws that have been adopted by resolution of each unit’s governing body. The City is contractually obligated to make all annual and supplementary contributions for MCMRMA, to report claims on a timely basis, cooperate with MCMRMA, its claims administrator and attorneys in claims investigation and settlement, and to follow risk management procedures as outlined by MCMRMA. Members have a contractual obligation to fund any deficit of MCMRMA attributable to a membership year during which they were a member. MCMRMA is responsible for administering the self-insurance program and purchasing excess insurance according to the direction of the Board of Directors. MCMRMA also provides its members with risk management services, including the defense of and settlement of claims, and establishes reasonable and necessary NOTES TO FINANCIAL STATEMENTS (Continued)   Page 48  loss of reduction and prevention procedures to be followed by the members. During fiscal year 2019 there was no significant reduction in insurance coverage for any category. There have been no settlement amounts that have exceeded insurance coverage. The City is insured under a retrospectively-rated policy for workers’ compensation coverage. Whereas, the initial premium may be adjusted based on actual experience. Adjustments in premiums are recorded when paid or received. During the year ended April 30, 2019, there were no significant adjustments in premiums based on actual experience. NOTE 17 - CONSTRUCTION COMMITMENTS At any point in time the City is involved in numerous construction contracts. For the governmental activities, there were contract commitments in place for various road projects totaling $1,163,300 and Boone Creek Dredging for $416,000. For the Water and Sewer Fund there were outstanding costs for the waste water treatment plant consolidation totaling $299,150. NOTE 18 - CONTINGENCIES There is no outstanding litigation which may have a materially adverse effect on the City’s financial position. NOTE 19 - LEGAL DEBT LIMITATION The Illinois Compiled Statutes limits the amount of indebtedness to 8.625% of the most recent available equalized assessed valuation (EAV) of the City. 2018 EAV 659,844,715$ X 8.625% Debt Margin 56,911,607$ Current Debt 7,285,500 Remaining Debt Margin 49,626,107$ NOTE 20 - TAX ABATEMENT AGREEMENTS The City negotiates property and sales tax abatement agreements on an individual basis. All abatement agreements are entered into under the authority of the Mayor, City Clerk, and City Council. The City has tax abatement agreements with six entities as of April 30, 2019 as follows: Name of Eligibility Criteria Amount of Taxes Abatement Type of Taxes and Mechanism Abated During Agreement Abated of Abatement the Fiscal Year Gary Lang Business District Development Agreement Sales taxes First $450,000 in sales tax revenues generated within the Business District Property are retained by the City, 100% of the sales tax revenue generated within the Business District Property between $450,000 and $750,000 annually shall be rebated to Gary Lang, 60% of sales tax revenue generated within the Business District Property above $750,000 shall be rebated to Gary Lang. The total rebate for the year cannot exceed 55% of the total annual sales tax revenue generated with the Business District Property. The total rebate payments cannot exceed $8,441,377.04 or 20 years. 503,598$ NOTES TO FINANCIAL STATEMENTS (Continued)   Page 49  Name of Eligibility Criteria Amount of Taxes Abatement Type of Taxes and Mechanism Abated During Agreement Abated of Abatement the Fiscal Year 1110 N Green LLC Redevelopment Agreement TIF property taxes Rebate 100% of the TIF Increment assessed up to $624,028.65,982$ McHenry Commons Shopping Center Economic Incentive Agreement Sales taxes Rebate 100% of base sales tax received by the State attributable to the gross sales generated at the Hobby Lobby Store. The total rebate payments cannot exceed $677,500 or 20 years. 28,705$ CVS Pharmacy Economic Incentive Agreement Sales taxes Rebate 50% of sales tax revenues generated by CVS Pharmacy in calendar years 2016 through 2020 and 25% of sales tax revenues generated by CVS Pharmacy in calendar years 2021 through 2025. The total rebate payments cannot exceed $175,000. 43,477$ Central Big R Stores Inc. Economic Incentive Agreement Sales taxes Rebate 100% of base sales tax received by the State attributable to the gross sales generated at the Big R Store. The total rebate payments cannot exceed $400,000 and end December 31, 2020. 79,281$ 3017 Route 120 & Northwest Suburban Auto Group Economic Incentive Agreement Sales taxes Rebate 50% of base sales tax in calendar years 2017 through 2021 and 25% of base sales tax in calendar years 2022 through 2026 received by the State attributable to the gross sales generated at Northwest Suburban Auto Group. The total rebate payments cannot exceed $150,000. 30,655$ McHenry Donuts, Inc. Economic Incentive Agreement Sales taxes Rebate 100% of Non-Home Rule Sales taxes in 2017 through 2026 up to $62,500.9,707$ Sunnyside Auto Finance Company Economic Incentive Agreement Sales taxes Rebate percentage during years 2017-2019 75% above $66,212. Years 2020-2027 50% above $66,212. Years 2028- 2036 25% above $66,212. Not to exceed $300,000. 22,310$ Curt Ames DBA Chain O'Lakes Brewing Company Redevelopment Agreement TIF Property Taxes Rebate 100% of the TIF Increment assessed up to $17,585. 938$ Seth Wagner and Associates Real Estate Company Property Tax Abatement Agreement Property Taxes Abate real estate taxes levied against the subject property each year that the taxing body's property taxes exceed the dollar amount from the 2014 base property tax year ($3,458.64) through December 31, 2026. 6,340$ Boone Creek Crossing LLC Redevelopment Agreement TIF Property Taxes Rebate 100% of the TIF Increment assessed up to $25,000 -$ NOTES TO FINANCIAL STATEMENTS (Continued)   Page 50  Name of Eligibility Criteria Amount of Taxes Abatement Type of Taxes and Mechanism Abated During Agreement Abated of Abatement the Fiscal Year Graham Enterprise Inc Economic Incentive Agreement Sales taxes Rebate 50%of base and home rulesales tax received above $1,666.67 per month by the State attributable to the gross sales generated at McHenry BP sites at 5301 Bull Valley Road and 5520 W. Elm Street. The total rebate payments cannot exceed $1,000,000 and end December 31,2039. These rebates do not begin until buildings are torn down at 5301 Bull Valley Road, 5520 W. Elm St, and 4410 W. Elm St; and a new building is built at 5301 Bully Valley Road. -$ BPI, Break Parts Inc LLC Property Tax Abatement Agreement Property Taxes 10-year 100% abatement over and above the 2018 taxes commencing with the 2019 tax bill payable in 2020 through the 2028 tax bill payable in 2029. -$ RR McHenry LLC Economic Incentive Agreement Sales taxes Rebate 50% of base and home rule sales tax received by the State attributable to the property at the NW corner of IL Route 120 and Chapel Hill Road, excluding the Riverside Chocolate Factory parcel. The total rebate payments cannot exceed $1,000,000 and end after the 20th Sales Tax Incentive Year. -$ NOTE 21 - CHANGE IN ACCOUNTING PRINCIPLE Effective for the year ended April 30, 2019, the City has implemented GASB Statement No 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred. This standard is effective for reporting periods beginning after December 15, 2019. However, the City has chosen to early implement GASB Statement No. 89 for the period ended April 30, 2019. Effective for the year ended April 30, 2019, the City has implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions and GASB Statement No. 85, Omnibus 2017. These Statements establish financial reporting standards for postemployment benefits other than pension agreements offered by the City. These statements also require additional disclosures about the postemployment benefits other than pensions offered by the City. See Note 14 for additional information. As a result of the City’s implementation of GASB Statement No. 75, adjustments were made to net position as outlined in Note 9.   REQUIRED SUPPLEMENTARY INFORMATION 4/30/2019*4/30/2018*4/30/2017*4/30/2016* TOTAL PENSION LIABILITY Service Cost 740,595$ 707,796$ 704,466$ 652,882$ Interest on Total Pension Liability 2,641,076 2,542,116 2,419,748 2,286,008 Differences Between Expected and Actual Experience 381,201 646,124 (98,080) 86,269 Changes of Assumptions 1,199,530 (1,124,675) (136,959) 44,481 Benefit Payments, Including Refunds of Member Contributions (1,543,189) (1,393,390) (1,384,293) (1,144,016) Net Change in Total Pension Liability 3,419,213$ 1,377,971$ 1,504,882$ 1,925,624$ Total Pension Liability - Beginning 35,615,648 34,237,677 32,732,795 30,807,171 Total Pension Liability - Ending 39,034,861$ 35,615,648$ 34,237,677$ 32,732,795$ PLAN FIDUCIARY NET POSITION Contributions - Employer 918,212$ 915,963$ 844,878$ 801,851$ Contributions - Member 340,841 328,547 366,710 277,350 Net Investment Income (1,672,533) 4,871,136 1,840,322 133,288 Benefit Payments, Including Refunds of Member Contributions (1,543,189) (1,393,390) (1,384,293) (1,144,016) Administrative Expenses 493,832 (352,231) 293,436 (161,598) Net Change in Plan Fiduciary Net Position (1,462,837)$ 4,370,025$ 1,961,053$ (93,125)$ Plan Net Position - Beginning 32,927,971 28,557,946 26,596,893 26,690,018 Plan Net Position - Ending 31,465,134$ 32,927,971$ 28,557,946$ 26,596,893$ City's Net Pension Liability 7,569,727$ 2,687,677$ 5,679,731$ 6,135,902$ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 80.61%92.45%83.41%81.25% Covered-Valuation Payroll 7,538,685$ 7,241,274$ 6,362,027$ 6,163,340$ Employer's Net Pension Liability as a Percentage of Covered-Valuation Payroll 100.41%37.12%89.28%99.55% * This information presented is based on the actuarial valuation performed as of the December 31 year end prior to the fiscal year end listed above. This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those years for which information is available. CITY OF MCHENRY, ILLINOIS ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS APRIL 30, 2019 Page 51 See Accompanying Independent Auditor's Report 4/30/2019*4/30/2018*4/30/2017*4/30/2016* Actuarially-Determined Contribution 918,212$ 908,056$ 844,877$ 801,851$ Contributions in Relation to Actuarially-Determined Contribution 918,212 915,963 844,878 801,851 Contribution Deficiency/(Excess)-$ (7,907)$ (1)$ -$ Covered Payroll 7,594,095$ 7,469,026$ 6,362,027$ 6,163,340$ Contributions as a Percentage of Covered Payroll 12.09%12.26%13.28%13.01% Notes to Schedule: Actuarially determined contribution rates are calculated as of December 31 each year,which are 12 months prior to the beginning of the fiscal year in which contributions are reported. Remaining Amortization Period: 25-year closed period Price Inflation: 2.75%, approximate; No explicit price inflation assumption is used in this valuation. Retirement Age:Experience-based table of rates that are specific to the type of eligibility condition;last updated for the 2014 valuation pursuant to an experience study of the period 2011-2013. Actuarial Cost Method: Aggregate entry age = normal Amortization Method: Level percentage of payroll, closed Asset Valuation Method: 5-year smoothed market; 20% corridor Wage Growth: 3.5% CITY OF MCHENRY, ILLINOIS ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF EMPLOYER CONTRIBUTION LAST TEN FISCAL YEARS Actuarial Method and Assumptions Used on the Calculation of the 2018 Contribution Rate * Salary Increases: 3.75% to 14.50%, including inflation Investment Rate of Return: 7.50% Mortality:For non-disabled retirees,an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012).The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience.For disabled retirees,an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012).The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same adjustments that were applied for non-disabled lives.For active members,an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012).The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. *Based on Valuation Assumptions used in the December 31, 2016 actuarial valuation; note two year lag between valuation and rate setting. This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those years for which information is available. Page 52 See Accompanying Independent Auditor's Report 4/30/2019 4/30/2018 4/30/2017 4/30/2016 4/30/2015 TOTAL PENSION LIABILITY Service Cost 964,573$ 969,843$ 906,395$ 948,282$ 876,654$ Interest 3,244,523 3,100,186 3,130,927 2,940,204 2,804,198 Differences Between Expected and Actual Experience 165,685 (13,601) (1,315,850) (531,862) (300,710) Changes in Assumptions - - (1,259,209) 4,137,023 391,028 Benefit Payments, Including Refunds of Member Contributions (2,077,032) (1,911,914) (1,890,931) (2,046,745) (1,868,756) Net Change in Total Pension Liability 2,297,749$ 2,144,514$ (428,668)$ 5,446,902$ 1,902,414$ Total Pension Liability - Beginning 47,388,840 45,244,326 45,672,994 40,226,092 38,323,678 Total Pension Liability - Ending 49,686,589$ 47,388,840$ 45,244,326$ 45,672,994$ 40,226,092$ PLAN FIDUCIARY NET POSITION Contributions - Employer 2,017,300$ 1,868,798$ 1,521,914$ 1,386,205$ 1,295,101$ Contributions - Member 427,378 409,415 397,515 513,111 381,363 Contributions - Other 1,221 - - - - Net Investment Income 1,454,043 2,225,784 2,041,694 (228,847) 1,101,915 Benefit Payments, Including Refunds of Member Contributions (2,077,032) (1,911,914) (1,890,931) (2,046,745) (1,868,756) Administrative Expenses (17,813) (18,717) (41,164) (29,539) (36,845) Net Change in Plan Fiduciary Net Position 1,805,097$ 2,573,366$ 2,029,028$ (405,815)$ 872,778$ Plan Net Position - Beginning 25,348,532 22,775,166 20,746,138 21,151,953 20,279,175 Plan Net Position - Ending 27,153,629$ 25,348,532$ 22,775,166$ 20,746,138$ 21,151,953$ City's Net Pension Liability 22,532,960$ 22,040,308$ 22,469,160$ 24,926,856$ 19,074,139$ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 54.65%53.49%50.34%45.42%52.58% Covered-Employee Payroll 4,224,124$ 4,204,784$ 4,082,315$ 3,880,748$ 3,791,467$ Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 533.44%524.17%550.40%642.32%503.08% 2019 2018 2017 2016 2015 Annual Money-Weighted Rate of Return, Net of Investment Expenses 5.73%9.60%5.60%-1.53%5.41% This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those years for which information is available. CITY OF MCHENRY, ILLINOIS POLICE PENSION PLAN SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS APRIL 30, 2019 Page 53 See Accompanying Independent Auditor's Report 4/30/2019 4/30/2018 4/30/2017 4/30/2016 4/30/2015 Actuarially-Determined Contribution 2,019,703$ 1,874,219$ 1,524,244$ 1,387,374$ 1,295,577$ Contributions in Relation to Actuarially-Determined Contribution 2,017,300 1,868,798 1,521,914 1,386,205 1,295,101 Contribution Deficiency/(Excess)2,403$ 5,421$ 2,330$ 1,169$ 476$ Covered-Employee Payroll 4,324,167$ 4,291,809$ 4,082,315$ 3,880,748$ 3,791,467$ Contributions as a Percentage of Covered-Employee Payroll 46.65%43.54%37.28%35.72%34.16% CITY OF MCHENRY, ILLINOIS POLICE PENSION PLAN SCHEDULE OF EMPLOYER CONTRIBUTION LAST TEN FISCAL YEARS This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those years for which information is available. Page 54 See Accompanying Independent Auditor's Report 4/30/2019 TOTAL OPEB LIABILITY Service Cost 32,964$ Interest 209,775 Differences Between Expected and Actual Experience (1,070,724) Benefit Payments (167,232) Changes in Assumptions 417,482 Other Changes 147,912 Net Change in Total OPEB Liability (429,823)$ Total OPEB Liability - Beginning 5,862,540 Total OPEB Liability - Ending 5,432,717$ OPEB PLAN FIDUCIARY NET POSITION Contributions - Employer -$ Contributions - Member - Contributions - Other - Net Investment Income - Benefit Payments - Administrative Expense - Net Change in OPEB Plan Net Position -$ OPEB Plan Net Position - Beginning - OPEB Net Position - Ending -$ District's Net OPEB Plan Liability 5,432,717$ OPEB Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability 0.00% Covered-Employee Payroll 8,796,233$ Employer's Net OPEB Liability as a Percentage of Covered-Valuation Payroll 61.76% This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled, information is presented for those years for which information is available. CITY OF MCHENRY OTHER POST-EMPLOYMENT BENEFIT SCHEDULE OF CHANGES IN THE EMPLOYER'S NET OPEB LIABILITY AND RELATED RATIOS APRIL 30, 2019 Page 55 See Accompanying Independent Auditor's Report 4/30/2019 Actuarially-Determined Contribution N/A Contributions in Relation to Actuarially-Determined Contribution - Contribution Deficiency/(Excess)N/A Covered-Employee Payroll 8,796,233$ Contributions as a Percentage of Covered-Employee Payroll 0.00% Notes to Schedule: This schedule is presented to illustrate the requirement to show information for ten years.However, until a full ten-year trend is compiled,information is presented for those years for which information is available. CITY OF MCHENRY OTHER POST-EMPLOYMENT BENEFIT SCHEDULE OF EMPLOYER CONTRIBUTION APRIL 30, 2019 There is no ADC or employer contribution in relation to the ADC,as the total OPEB liabilities are currently an unfunded obligation. Page 56 See Accompanying Independent Auditor's Report Actual Original Final Amounts REVENUES Local Taxes Property Tax 4,942,359$ 4,942,359$ 4,945,232$ Intergovernmental State Sales Tax 9,672,507 9,672,507 9,768,862 State Income Tax 2,585,834 2,585,834 2,792,465 State Replacement Tax 70,000 70,000 65,260 State Pull Tab/Games Tax 1,000 1,000 883 Inter Track Wagering Tax 52,000 52,000 46,192 State Telecommunications Tax 135,000 135,000 123,903 State Grants - - 61,068 Other Local Sources Hotel/Motel Tax 175,500 175,500 174,538 Franchise Fees 345,000 345,000 345,056 Licenses and Permits 780,000 780,000 1,041,459 Fines and Forfeitures 443,300 443,300 413,137 Charges for Services 1,287,634 1,287,634 1,371,297 Interest 37,850 37,850 172,186 Miscellaneous Rent 20,000 20,000 14,646 Royalties 65,000 65,000 500,000 Donations 10,000 10,000 4,450 Annexation Fees 20,000 20,000 203,679 Reimbursements 1,985,606 2,050,928 2,282,376 Special Events - - 70,034 Other Miscellaneous 33,000 33,000 70,408 Total Revenues 22,661,590$ 22,726,912$ 24,467,131$ EXPENDITURES Current General Office Administration 953,102$ 974,102$ 1,318,613$ Elected Officials 100,179 102,039 82,854 Community Development 717,913 786,495 697,129 Finance Department 1,235,825 1,245,114 1,304,715 Human Resources 163,743 164,783 156,439 Economic Development 330,289 337,181 347,881 3,501,051$ 3,609,714$ 3,907,631$ Public Safety Police Commission 6,953$ 6,953$ 10,282$ Police Department 9,659,665 9,659,665 9,653,036 Dispatch Center 2,482,908 2,482,908 2,372,076 12,149,526$ 12,149,526$ 12,035,394$ Public Works Administration 449,515$ 449,515$ 455,968$ Street Department 3,051,644 3,096,492 3,265,185 3,501,159$ 3,546,007$ 3,721,153$ Parks and Recreation Parks and Recreation 2,276,912$ 2,280,575$ 2,276,981$ 2,276,912$ 2,280,575$ 2,276,981$ Budgeted Amounts CITY OF MCHENRY, ILLINOIS FOR THE YEAR ENDED APRIL 30, 2019 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Page 57 See Accompanying Independent Auditor's Report Actual Original Final Amounts Budgeted Amounts CITY OF MCHENRY, ILLINOIS FOR THE YEAR ENDED APRIL 30, 2019 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL EXPENDITURES (Continued) Capital Outlay Public Safety Police Department 19,650$ 144,124$ 211,045$ Public Works Street Department 1,406,500 1,406,500 808,554 Parks and Recreation Parks and Recreation - - 31,099 Unallocated - 331,000 600,570 1,426,150$ 1,881,624$ 1,651,268$ Total Expenditures 22,854,798$ 23,467,446$ 23,592,427$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES (193,208)$ (740,534)$ 874,704$ OTHER FINANCING SOURCES/(USES) Transfers (772,493)$ (772,493)$ (854,447)$ Proceeds from Note Payable - - 305,500 Sale of City Property 10,000 10,000 82,353 (762,493)$ (762,493)$ (466,594)$ NET CHANGE IN FUND BALANCE (955,701)$ (1,503,027)$ 408,110$ FUND BALANCE - MAY 1, 2018 8,763,550 FUND BALANCE - APRIL 30, 2019 9,171,660$ Page 58 See Accompanying Independent Auditor's Report   Page 59 CITY OF MCHENRY, ILLINOIS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION APRIL 30, 2019 NOTE 1 - BUDGET Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual budgets are adopted for all funds except agency funds. All annual budgets lapse at fiscal year-end. Budgeted expenditures are controlled at the departmental level with the City Administrator’s oversight. All transfers and any revision that changes the total expenditures not contemplated of any fund must be approved by the City Council. All budget amendments must be approved by the City Council. The budget was approved on April 30, 2018 and was amended June 4, 2018, July 10, 2018, July 23, 2018, August 6, 2018, November 12, 2018, and December 17, 2018. NOTE 2 - EXCESS OF EXPENDITURES OVER BUDGET For the year ended April 30, 2019, the following fund presented as Required Supplementary Information had expenditures that exceeded budget: Fund Budget Actual General $ 23,467,446 $ 23,592,427 124,981$ Excess of Actual Over Budget   SUPPLEMENTAL FINANCIAL INFORMATION Civil Revolving Total General Annexation Alarm Board Band Defense Loan Tourism General Fund Fund Fund Fund Fund Fund Fund Fund ASSETS Cash and Cash Equivalents 5,174,039$ 999,375$ 598,549$ 13,554$ 3,657$ 112,661$ 261,218$ 7,163,053$ Investments 139,881 20,049 - 1,569 - 3,647 16,380 181,526 Prepaid Expenses 75,438 - - - - - - 75,438 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 481,317 6,450 6,987 - - 38,337 - 533,091 Accounts Receivable - Unbilled 66,999 - 34,560 - - - 13,081 114,640 Property Taxes 4,962,485 - - - - - - 4,962,485 Accrued Interest 597 86 - 7 - 16 70 776 Due from Other Governmental Units 2,835,694 - - - - - - 2,835,694 Cable Franchise Fee Receivable 114,246 - - - - - - 114,246 TOTAL ASSETS 13,850,696$ 1,025,960$ 640,096$ 15,130$ 3,657$ 154,661$ 290,749$ 15,980,949$ LIABILITIES Accounts Payable and Accrued Expenses 1,081,705$ -$ 52,690$ -$ -$ 33,365$ 28,268$ 1,196,028$ Due to Other Governmental Units - 99,240 - - - - - 99,240 Due to Other Funds 49,985 - - - - - - 49,985 Unearned Revenue 501,551 - - - - - - 501,551 TOTAL LIABILITIES 1,633,241$ 99,240$ 52,690$ -$ -$ 33,365$ 28,268$ 1,846,804$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 4,962,485$ -$ -$ -$ -$ -$ -$ 4,962,485$ TOTAL DEFERRED INFLOWS OF RESOURCES 4,962,485$ -$ -$ -$ -$ -$ -$ 4,962,485$ FUND BALANCES Nonspendable 75,438$ -$ -$ -$ -$ -$ -$ 75,438$ Assigned for: Alarm - - 587,406 - - - - 587,406 Tourism - - - - - - 262,481 262,481 Band - - - 15,130 - - - 15,130 Capital Projects - 926,720 - - - - - 926,720 Revolving Loan - - - - - 121,296 - 121,296 Civil Defense - - - - 3,657 - - 3,657 Unassigned 7,179,532 - - - - - - 7,179,532 TOTAL FUND BALANCES 7,254,970$ 926,720$ 587,406$ 15,130$ 3,657$ 121,296$ 262,481$ 9,171,660$ TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 13,850,696$ 1,025,960$ 640,096$ 15,130$ 3,657$ 154,661$ 290,749$ 15,980,949$ CITY OF MCHENRY, ILLINOIS COMBINING BALANCE SHEET - GENERAL FUND APRIL 30, 2019 Page 60 See Accompanying Independent Auditor's Report Alarm Civil Revolving Total Annexation Board Band Defense Loan Tourism General General Fund Fund Fund Fund Fund Fund Fund Fund REVENUES Local Taxes Property Tax 4,945,232$ -$ -$ -$ -$ -$ -$ 4,945,232$ Intergovernmental State Sales Tax 9,768,862 - - - - - - 9,768,862 State Income Tax 2,792,465 - - - - - - 2,792,465 State Replacement Tax 65,260 - - - - - - 65,260 State Pull Tab/Games Tax 883 - - - - - - 883 Inter Track Wagering Tax 46,192 - - - - - - 46,192 State Telecommunications Tax 123,903 - - - - - - 123,903 State Grants 61,068 - - - - - - 61,068 Other Local Sources Hotel/Motel Tax - - - - 2 - 174,536 174,538 Franchise Fees 345,056 - - - - - - 345,056 Licenses and Permits 1,041,459 - - - - - - 1,041,459 Fines and Forfeitures 413,137 - - - - - - 413,137 Charges for Services 1,166,073 - 205,224 - - - - 1,371,297 Interest 165,030 1,269 2,060 32 - 2,156 1,639 172,186 Miscellaneous Rent 14,646 - - - - - - 14,646 Royalties - 500,000 - - - - - 500,000 Donations 4,450 - - - - - - 4,450 Annexation Fees - 203,679 - - - - - 203,679 Reimbursements 2,282,376 - - - - - - 2,282,376 Special Events - - - - - - 70,034 70,034 Other Miscellaneous 70,408 - - - - - - 70,408 Total Revenues 23,306,500$ 704,948$ 207,284$ 32$ 2$ 2,156$ 246,209$ 24,467,131$ EXPENDITURES Current General Office Administration 1,079,979$ 150,260$ -$ -$ -$ -$ 88,374$ 1,318,613$ Elected Officials 82,854 - - - - - - 82,854 Community Development 697,129 - - - - - - 697,129 Finance Department 1,304,715 - - - - - - 1,304,715 Human Resources 156,439 - - - - - - 156,439 Economic Development 347,881 - - - - - - 347,881 3,668,997$ 150,260$ -$ -$ -$ -$ 88,374$ 3,907,631$ Public Safety Police Commission 10,282$ -$ -$ -$ -$ -$ -$ 10,282$ Police Department 9,574,095 - 78,331 - 610 - - 9,653,036 Dispatch Center 2,372,076 - - - - - - 2,372,076 11,956,453$ -$ 78,331$ -$ 610$ -$ -$ 12,035,394$ Public Works Administration 455,968$ -$ -$ -$ -$ -$ -$ 455,968$ Street Department 3,265,185 - - - - - - 3,265,185 3,721,153$ -$ -$ -$ -$ -$ -$ 3,721,153$ Parks and Recreation Parks and Recreation 2,263,096$ -$ -$ 13,885$ -$ -$ -$ 2,276,981$ 2,263,096$ -$ -$ 13,885$ -$ -$ -$ 2,276,981$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GENERAL FUND FOR THE YEAR ENDED APRIL 30, 2019 Page 61 See Accompanying Independent Auditor's Report Alarm Civil Revolving Total Annexation Board Band Defense Loan Tourism General General Fund Fund Fund Fund Fund Fund Fund Fund CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GENERAL FUND FOR THE YEAR ENDED APRIL 30, 2019 EXPENDITURES (Continued) Capital Outlay Public Safety Police Department 211,045$ -$ -$ -$ -$ -$ -$ 211,045$ Public Works Street Department 808,554 - - - - - - 808,554 Parks and Recreation Parks and Recreation 31,099 - - - - - - 31,099 Unallocated - - - - - - 600,570 600,570 1,050,698$ -$ -$ -$ -$ -$ 600,570$ 1,651,268$ Total Expenditures 22,660,397$ 150,260$ 78,331$ 13,885$ 610$ -$ 688,944$ 23,592,427$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 646,103$ 554,688$ 128,953$ (13,853)$ (608)$ 2,156$ (442,735)$ 874,704$ OTHER FINANCING SOURCES/(USES) Transfers (740,447)$ (35,000)$ -$ 12,000$ 8,000$ -$ (99,000)$ (854,447)$ Loan Proceeds - - - - - - 305,500 305,500 Sale of City Property 82,353 - - - - - - 82,353 (658,094)$ (35,000)$ -$ 12,000$ 8,000$ -$ 206,500$ (466,594)$ NET CHANGE IN FUND BALANCE (11,991)$ 519,688$ 128,953$ (1,853)$ 7,392$ 2,156$ (236,235)$ 408,110$ FUND BALANCE - MAY 1, 2018 7,266,961 407,032 458,453 16,983 (3,735) 119,140 498,716 8,763,550 FUND BALANCE - APRIL 30, 2019 7,254,970$ 926,720$ 587,406$ 15,130$ 3,657$ 121,296$ 262,481$ 9,171,660$ Page 62 See Accompanying Independent Auditor's Report Special Special Service Service Total Recreation Capital Capital Debt Motor Developer Area #4 -Area #6 -Other Pageant Audit Center Improvements Equipment Service Fuel Tax Donations TIF Lakewood Huntersville Governmental Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Funds ASSETS Cash and Cash Equivalents 1,818$ 12,330$ 181,723$ 347,879$ -$ -$ 1,052,639$ 1,329,900$ -$ -$ -$ 2,926,289$ Deposit with Paying Agent - - - - - 586,955 - - - - - 586,955 Investments - 497 374,477 99,097 23,501 16,208 - 63,435 - 399 - 577,614 Inventory - - - - - - 8,661 - - - - 8,661 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed - - - - - - - 5,400 - - - 5,400 Property Taxes - 26,433 - - - - - - 636,964 16,847 - 680,244 Accrued Interest - 2 1,599 1,834 100 69 - 271 - 2 - 3,877 Due from Other Governmental Units - - - - - - 59,746 - - - - 59,746 Grants Receivable - - - 173,817 - - - 2,702 - - - 176,519 TOTAL ASSETS 1,818$ 39,262$ 557,799$ 622,627$ 23,601$ 603,232$ 1,121,046$ 1,401,708$ 636,964$ 17,248$ -$ 5,025,305$ LIABILITIES Accounts Payable and Accrued Expenses 150$ -$ 29,256$ 42,499$ -$ 318$ -$ 136,273$ -$ -$ -$ 208,496$ Overdrafts - - - - 23,411 235,902 - - 45,619 338 179,115 484,385 Due to Other Governmental Units - - - - - - - 61,663 - - - 61,663 Unearned Revenue - Fees 2,850 - 369 - - - - - - - - 3,219 TOTAL LIABILITIES 3,000$ -$ 29,625$ 42,499$ 23,411$ 236,220$ -$ 197,936$ 45,619$ 338$ 179,115$ 757,763$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes -$ 26,433$ -$ -$ -$ -$ -$ -$ 636,964$ 16,847$ -$ 680,244$ Unavailable Revenue - State Taxes - - - - - - 5,234 - - - - 5,234 Unavailable Revenue - Rent - - - - - - 2,400 - - - 2,400 TOTAL DEFERRED INFLOWS OF RESOURCES -$ 26,433$ -$ -$ -$ -$ 5,234$ 2,400$ 636,964$ 16,847$ -$ 687,878$ FUND BALANCES Restricted for: Capital Projects -$ -$ -$ -$ -$ -$ -$ 779,711$ -$ -$ -$ 779,711$ Special Service Areas - - - - - - - - - 20 - 20 Highways and Streets - - - - - - 180,847 - - - - 180,847 Assigned for: Audit - 12,829 - - - - - - - - - 12,829 Highways and Streets - - - - - - 934,965 - - - - 934,965 Capital Projects - - - 580,128 - - - 421,661 - - - 1,001,789 Capital Equipment - - - - 190 - - - - - - 190 Parks and Recreation - - 528,174 - - - - - - - - 528,174 Debt Service - - - - - 367,012 - - - - - 367,012 Special Service Areas - - - - - - - - - 43 - 43 Unassigned (1,182) - - - - - - - (45,619) - (179,115) (225,916) TOTAL FUND BALANCES (1,182)$ 12,829$ 528,174$ 580,128$ 190$ 367,012$ 1,115,812$ 1,201,372$ (45,619)$ 63$ (179,115)$ 3,579,664$ TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 1,818$ 39,262$ 557,799$ 622,627$ 23,601$ 603,232$ 1,121,046$ 1,401,708$ 636,964$ 17,248$ -$ 5,025,305$ CITY OF MCHENRY, ILLINOIS COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS APRIL 30, 2019 Page 63 See Accompanying Independent Auditor's Report Special Special Service Service Total Recreation Capital Capital Debt Motor Developer Area #4 -Area #6 -Other Pageant Audit Center Improvements Equipment Service Fuel Tax Donations TIF Lakewood Huntersville Governmental Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Funds REVENUES Local Taxes Property Tax -$ 26,397$ -$ -$ -$ -$ -$ -$ 489,034$ 16,851$ -$ 532,282$ Intergovernmental State Motor Fuel Tax - - - - - - 716,649 - - - - 716,649 Federal Grants - - - 173,817 - - - 2,702 - - - 176,519 Bond Interest Rebates - - - - - 20,262 - - - - - 20,262 Other Local Sources Charges for Services - - 849,983 - - - - - - - - 849,983 Interest 1 36 2,294 18,569 70 284 18,884 7,143 38 13 - 47,332 Miscellaneous Rent - - 17,376 - - - - 40,963 - - - 58,339 Concessions - - 62 - - - - - - - - 62 Donations - - - - - - - 578,490 - - - 578,490 Reimbursements - - - 22,824 - - - - 1,000 - - 23,824 Other Miscellaneous 2,666 - - - - - - 17,540 - - - 20,206 2,667$ 26,433$ 869,715$ 215,210$ 70$ 20,546$ 735,533$ 646,838$ 490,072$ 16,864$ -$ 3,023,948$ EXPENDITURES Current General Office 2,420$ 27,183$ -$ -$ -$ -$ -$ -$ 66,920$ -$ -$ 96,523$ Public Works - - - - - - 163,445 - - - - 163,445 Parks and Recreation - - 633,061 - - - - 188,808 - - - 821,869 Capital Outlay - - 416,431 686,127 - - 207,000 328,995 175 - - 1,638,728 Debt Service Principal - - - - - 1,445,000 - - - - - 1,445,000 Interest and Fees - - - - - 202,718 - - - - - 202,718 2,420$ 27,183$ 1,049,492$ 686,127$ -$ 1,647,718$ 370,445$ 517,803$ 67,095$ -$ -$ 4,368,283$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 247$ (750)$ (179,777)$ (470,917)$ 70$ (1,627,172)$ 365,088$ 129,035$ 422,977$ 16,864$ -$ (1,344,335)$ OTHER FINANCING SOURCES/(USES) Transfers - - (52,102) - - 1,636,744 (397,930) - (221,535) (16,847) - 948,330 NET CHANGE IN FUND BALANCES 247$ (750)$ (231,879)$ (470,917)$ 70$ 9,572$ (32,842)$ 129,035$ 201,442$ 17$ -$ (396,005)$ FUND BALANCES - MAY 1, 2018 (1,429) 13,579 760,053 1,051,045 120 357,440 1,180,193 1,072,337 (247,061) 46 (179,115) 4,007,208 FUND BALANCE ADJUSTMENT (Note 9)- - - - - (31,539) - - - - (31,539) FUND BALANCES - APRIL 30, 2019 (1,182)$ 12,829$ 528,174$ 580,128$ 190$ 367,012$ 1,115,812$ 1,201,372$ (45,619)$ 63$ (179,115)$ 3,579,664$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED APRIL 30, 2019 Page 64 See Accompanying Independent Auditor's Report Capital Utility Marina Total Water/Sewer Development Improvements Operations Water and Fund Fund Fund Fund Sewer Funds ASSETS Current Assets Cash and Cash Equivalents 4,585,030$ 1,340,731$ -$ 363,479$ 6,289,240$ Deposit with Paying Agent Investments 419,667 254,562 479,149 98,051 1,251,429 Prepaid Expenses 34,954 - - - 34,954 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 122,937 - - - 122,937 Accounts Receivable - Unbilled 1,189,825 - - - 1,189,825 Accrued Interest 2,822 1,478 1,238 539 6,077 Due from Other Governmental Units 97,714 - - - 97,714 Due from Other Funds 971 44,544 - - 45,515 Interest Rebate Receivable 21,353 - - - 21,353 6,475,273$ 1,641,315$ 480,387$ 462,069$ 9,059,044$ Non-Current Assets Capital Assets Land 2,208,117$ -$ -$ -$ 2,208,117$ Buildings 2,736,098 - - - 2,736,098 Systems and Equipment 68,620,399 - - - 68,620,399 Vehicles 1,938,817 - - - 1,938,817 Construction in Progress 31,670,530 - 4,884,471 - 36,555,001 Less: Accumulated Depreciation (33,461,552) - - - (33,461,552) 73,712,409$ -$ 4,884,471$ -$ 78,596,880$ TOTAL ASSETS 80,187,682$ 1,641,315$ 5,364,858$ 462,069$ 87,655,924$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 1,303,020$ -$ -$ -$ 1,303,020$ OPEB Expense/Revenue 33,846 - - - 33,846 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,336,866$ -$ -$ -$ 1,336,866$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses 489,511$ -$ 175,000$ -$ 664,511$ Overdraft - - 1,152,538 - 1,152,538 Security Deposits Held - 3,000 - - 3,000 Unearned Revenue 156,675 - - - 156,675 Accrued Interest 310,283 - - - 310,283 IEPA Loan Payable - Current 1,395,506 - - - 1,395,506 Bonds Payable - Current 371,571 - - - 371,571 2,723,546$ 3,000$ 1,327,538$ -$ 4,054,084$ Non-Current Liabilities Compensated Absences 87,658$ -$ -$ -$ 87,658$ IMRF Net Pension Liability 1,787,082 - - - 1,787,082 Total OPEB Liability 259,773 - - - 259,773 IEPA Loan Payable (Net of Current Portion Shown Above)30,087,839 - - - 30,087,839 Bonds Payable (Net of Current Portion Shown Above)5,094,089 - - - 5,094,089 37,316,441$ -$ -$ -$ 37,316,441$ TOTAL LIABILITIES 40,039,987$ 3,000$ 1,327,538$ -$ 41,370,525$ DEFERRED INFLOWS OF RESOURCES Pension Revenue/Expense - IMRF 560,144$ -$ -$ -$ 560,144$ OPEB Revenue/Expense 55,480 - - - 55,480 TOTAL DEFERRED INFLOWS OF RESOURCES 615,624$ -$ -$ -$ 615,624$ NET POSITION Net Investment in Capital Assets 36,763,404$ -$ 4,884,471$ -$ 41,647,875$ Unrestricted/(Deficit)4,105,533 1,638,315 (847,151) 462,069 5,358,766 TOTAL NET POSITION 40,868,937$ 1,638,315$ 4,037,320$ 462,069$ 47,006,641$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF NET POSITION WATER AND SEWER FUNDS APRIL 30, 2019 Page 65 See Accompanying Independent Auditor's Report Capital Utility Marina Total Water/Sewer Development Improvements Operations Water and Fund Fund Fund Fund Sewer Funds OPERATING REVENUES Charges for Services Customer Fees 4,851,140$ 424,393$ -$ -$ 5,275,533$ Capital Fees 396,783 - - - 396,783 Debt Service Fees 2,615,897 - - - 2,615,897 Penalties 151,313 - - - 151,313 Water Meter Sales 25,075 - - - 25,075 Other 6,474 - - - 6,474 8,046,682$ 424,393$ -$ -$ 8,471,075$ OPERATING EXPENSES Water Department Personnel Salaries 478,315$ -$ -$ -$ 478,315$ Miscellaneous Personnel Expenses 214,130 - - - 214,130 Other Operating Expenses 742,494 - - - 742,494 Depreciation 532,302 - - - 532,302 Sewer Department Personnel Salaries 645,519 - - - 645,519 Miscellaneous Personnel Expenses 329,488 - - - 329,488 Other Operating Expenses 1,313,990 - - 30,651 1,344,641 Depreciation 1,239,791 - - - 1,239,791 Utility Work Department Personnel Salaries 605,615 - - - 605,615 Miscellaneous Personnel Expenses 270,728 - - - 270,728 Other Operating Expenses 215,433 - - - 215,433 6,587,805$ -$ -$ 30,651$ 6,618,456$ OPERATING INCOME/(LOSS)1,458,877$ 424,393$ -$ (30,651)$ 1,852,619$ NON-OPERATING REVENUE/(EXPENSE) Interest Income 57,410$ 1,862$ 28,763$ 679$ 88,714$ Rental Income 30,000 - - 46,465 76,465 Interest Rebate Income 58,696 - - - 58,696 Interest and Fees (1,551,943) - - - (1,551,943) Amortization (3,429) - - - (3,429) Gain/(Loss) on Sale of Fixed Asset 3,435 - - - 3,435 Donated Public Improvements - Water 577,430 - - - 577,430 Donated Public Improvements -Sewer 810,593 - - - 810,593 (17,808)$ 1,862$ 28,763$ 47,144$ 59,961$ INCOME/(LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 1,441,069$ 426,255$ 28,763$ 16,493$ 1,912,580$ TRANSFERS (TO)/FROM OTHER FUNDS (110,730) - 16,847 - (93,883) CHANGE IN NET POSITION 1,330,339$ 426,255$ 45,610$ 16,493$ 1,818,697$ NET POSITION - MAY 1, 2018 39,818,650 1,212,060 3,991,710 445,576 45,467,996 NET POSITION ADJUSTMENT (Note 9)(280,052) - - - (280,052) NET POSITION - APRIL 30, 2019 40,868,937$ 1,638,315$ 4,037,320$ 462,069$ 47,006,641$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION WATER AND SEWER FUNDS FOR THE YEAR ENDED APRIL 30, 2019 Page 66 See Accompanying Independent Auditor's Report Employee Risk Information Total Insurance Management Technology Internal Service Fund Fund Fund Funds ASSETS Current Assets Cash and Cash Equivalents -$ 643,951$ 131,127$ 775,078$ Investments - - 8,195 8,195 Prepaid Expenses 70,288 - - 70,288 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 715 - - 715 Accrued Interest - - 35 35 Due from Other Funds 4,470 - - 4,470 75,473$ 643,951$ 139,357$ 858,781$ Non-Current Assets Capital Assets Systems and Equipment -$ -$ 486,378$ 486,378$ Less: Accumulated Depreciation - - (363,556) (363,556) -$ -$ 122,822$ 122,822$ TOTAL ASSETS 75,473$ 643,951$ 262,179$ 981,603$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF -$ -$ 107,053$ 107,053$ OPEB Expense / Revenue - - 2,781 2,781 TOTAL DEFERRED OUTFLOWS OF RESOURCES -$ -$ 109,834$ 109,834$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses 65$ 65$ 8,353$ 8,483$ Overdrafts 87,110 - - 87,110 Unearned Revenue 70,649 - - 70,649 157,824$ 65$ 8,353$ 166,242$ Non-Current Liabilities Compensated Absences -$ -$ 6,749$ 6,749$ IMRF Net Pension Liability - - 186,217 186,217 Total OPEB Liability - - 21,342 21,342 -$ -$ 214,308$ 214,308$ TOTAL LIABILITIES 157,824$ 65$ 222,661$ 380,550$ DEFERRED INFLOWS OF RESOURCES Pension Revenue/Expense - IMRF -$ -$ 46,020$ 46,020$ OPEB Revenue/Expense - - 4,558 4,558 DEFERRED INFLOWS OF RESOURCES -$ -$ 50,578$ 50,578$ NET POSITION Net Investment in Capital Assets -$ -$ 122,822$ 122,822$ Unrestricted/(Deficit)(82,351) 643,886 (24,048) 537,487 TOTAL NET POSITION (82,351)$ 643,886$ 98,774$ 660,309$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF NET POSITION INTERNAL SERVICE FUNDS APRIL 30, 2019 Page 67 See Accompanying Independent Auditor's Report Employee Risk Information Total Insurance Management Technology Internal Service Fund Fund Fund Funds OPERATING REVENUES Charges for Services 3,146,328$ 695,175$ 633,415$ 4,474,918$ 3,146,328$ 695,175$ 633,415$ 4,474,918$ OPERATING EXPENSES Personnel Salaries -$ -$ 145,423$ 145,423$ Miscellaneous Personnel Expenses 3,205,456 - 62,848 3,268,304 Other Operating Expenses 776 788,267 468,752 1,257,795 Depreciation - - 33,187 33,187 3,206,232$ 788,267$ 710,210$ 4,704,709$ OPERATING INCOME/(LOSS)(59,904)$ (93,092)$ (76,795)$ (229,791)$ NON-OPERATING REVENUE/(EXPENSE) Interest Income 497 1,121 277 1,895 CHANGE IN NET POSITION (59,407)$ (91,971)$ (76,518)$ (227,896)$ NET POSITION - MAY 1, 2018 (22,944) 735,857 198,323 911,236 NET POSITION ADJUSTMENT (Note 8)- - (23,031) (23,031) NET POSITION - APRIL 30, 2019 (82,351)$ 643,886$ 98,774$ 660,309$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED APRIL 30, 2019 Page 68 See Accompanying Independent Auditor's Report Retained Developmental Personnel Total Escrow Escrow Agency Fund Fund Funds ASSETS Current Assets Cash and Cash Equivalents 30,114$ 12,948$ 43,062$ TOTAL ASSETS 30,114$ 12,948$ 43,062$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses -$ 12,948$ 12,948$ Due to Depositors 30,114 - 30,114 TOTAL LIABILITIES 30,114$ 12,948$ 43,062$ TOTAL NET POSITION -$ -$ -$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF NET POSITION AGENCY FUNDS APRIL 30, 2019 Page 69 See Accompanying Independent Auditor's Report Budgeted Amounts Original Actual and Final Final Amounts REVENUES Local Taxes Property Tax 400,000$ 400,000$ 489,034$ Intergovernmental Other Local Sources Interest - - 38 Miscellaneous Reimbursements 1,000 1,000 1,000 Total Revenues 401,000$ 401,000$ 490,072$ EXPENDITURES Current General Office 62,000$ 62,000$ 66,920$ Capital Outlay 20,000$ 20,000$ 175$ Total Expenditures 82,000$ 82,000$ 67,095$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 319,000$ 319,000$ 422,977$ OTHER FINANCING SOURCES/(USES) Transfers (221,535) (221,535) (221,535) NET CHANGE IN FUND BALANCE 97,465$ 97,465$ 201,442$ FUND BALANCE - MAY 1, 2018 (247,061) FUND BALANCE - APRIL 30, 2019 (45,619)$ CITY OF MCHENRY, ILLINOIS FOR THE YEAR ENDED APRIL 30, 2019 SPECIAL REVENUE FUND - TAX INCREMENT FINANCING FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Page 70 See Accompanying Independent Auditor's Report REVENUE REVENUE FEDERAL GRANTOR/PROGRAM RECOGNIZED EXPENSES RECOGNIZED EXPENSES GRANT GRANT PASS-THROUGH GRANTOR OR AWARD 5/1/2018 to 5/1/2018 to INCEPTION TO INCEPTION TO RECEIVABLE UNEARNED PROGRAM TITLE AMOUNT 4/30/2019 4/30/2019 4/30/2019 4/30/2019 4/30/2019 4/30/2019 Federal Highway Administration/Illinois Department of Transportation Illinois Transportation Enhancements Program N/A 176,519$ 176,519$ 314,318$ 314,318$ 176,519$ -$ Total Federal Financial Assistance 176,519$ 176,519$ 314,318$ 314,318$ 176,519$ -$ CITY OF McHENRY, ILLINOIS SUMMARY OF FEDERAL GRANTS FOR THE YEAR ENDED APRIL 30, 2019 Page 71 Unaudited REVENUE REVENUE PROGRAM RECOGNIZED EXPENSES RECOGNIZED EXPENSES GRANT GRANT OR AWARD 5/1/2018 TO 5/1/2018 TO INCEPTION TO INCEPTION TO RECEIVABLE UNEARNED AMOUNT 4/30/2019 4/30/2019 4/30/2019 4/30/2019 4/30/2019 4/30/2019 Illinois Law Enforcement Training Standards Board Camera Grant 67,500$ 61,068$ 61,068$ 61,068$ 61,068$ -$ -$ CITY OF McHENRY, ILLINOIS SUMMARY OF STATE GRANTS FOR THE YEAR ENDED APRIL 30, 2019 Page 72 Unaudited