HomeMy WebLinkAboutPacket - 10/15/2018 - Finance and Personnel CommitteeSpecial Finance and Personnel
Committee Meeting
October 15, 2018-5:30 PM
McHenry Municipal Center —Police Training Room
333 S Green Street
McHenry, IL 60050
AGENDA
1. Call to Order.
2. Roll Call.
3. Public Comment: Persons wishing to address the Committee will be asked to
identify themselves for the record and will be asked but are not required to
provide their address. Public comment may be restricted to three -minutes for
each individual speaker. Order and decorum shall be maintained at public
meetings.
4. Motion to approve the October 1, 2018 Finance and Personnel Committee
meeting report.
5. Property Tax Levy -Discussion and Recommendation.
6. Draft Audit for Fiscal Year ending April 30, 2018-Discussion
7. Staff Reports.
8. Any Other Business.
9. Motion to adjourn the meeting.
The City of McHenry is dedicated to providing its citizens, businesses, and visitors with the highest quality of programs
and services in a customer -oriented, efficient, and fiscally responsible manner.
FINANCE AND PERSONNEL COMMITTEE
Monday, October 1, 2018
Municipal Center Classroom, 5:30 PM
Call to Order: The meeting was called to order at 5:30 p.m.
Roll Call: Deputy Clerk Meadows called the roll. Roll call: Members present: Chairman Curry,
Alderman Schaefer and Alderman Mihevc. Also in attendance: Finance Director Lynch, Human
Resource Director Campanella and Deputy Clerk Meadows.
Public Comment: None.
Motion to approve the September 10, 2018 Finance and Personnel Committee meeting report.
A Motion was made by Alderman Schaefer and seconded by Alderman Mihevc to approve the
September 10, 2018 meeting report as presented. Roll call: Vote: 3 ayes: Alderman Schaefer,
Alderman Mihevc and Alderman Curry. 0-nay, 0-abstained. Motion carried.
Items of Discussion
Property Tax
Alderman Curry noted that the continuation of the discussion regarding the Sales Tax Incentive
Policy has been postponed due to the fact that Staff has not had sufficient time to research and
develop a recommendation on this matter. The draft policy will be discussed at an upcoming
Finance and Personnel Committee meeting.
Finance Director Lynch reported that the property tax discussion is taking place tonight due to
the upcoming holiday schedule and the City Council meeting schedule changes in the month of
November. In order to comply with the Truth in Taxation Act and the public hearing notice this
year's levy amount will need to be determined and presented at the November 12th City Council
meeting. The change in the meeting schedule might necessitate an additional Finance and
Personnel meeting in October. The Committee Members agreed to meet on October 151h at 5:30
p.m. if necessary.
Finance Director Lynch provided the Committee Members with a summary of the PTELL
calculation. She reported that the CPI was calculated at a rate of 2.1% other than salary increases
which were calculated at a rate of 1.7%. The estimated limited extension is $4,737,159 which is
$118,373 higher than the previous year and after the audit adjustments for the fiscal year ending
April 30, 2018 the General Fund Balance is $7,266,368. However, the General Fund balance falls
short by $84,079 of the amount set forth in the Fund Balance and Reserve policy.
Finance Director Lynch continued on to discuss the 5 year capital improvement plan. She
reported that all department heads have been notified that there are $0 excess funds available
for capital improvements in the FY-2019/2020 budget. However, during the budget process if
there were budgeted revenues over expenses capital improvement items could be added.
Finance Director Lynch discussed the projected salary increases for both union and non -union
employees. She reported that the total estimated salary increases is $449,616. She noted that
the Police Pension actuarial report has not yet been received. However, the Police Pension Fund
investments have performed well this fiscal year.
Finance Director Lynch reported on the projected EAV which is higher this year than the previous
year. This year's projected EAV is $643,321,108 and last year's EAV was $624,662,787. Alderman
Curry asked if Staff anticipated any increases to the employees' benefits. Director Campanella
reported that insurance coverage cost is estimated to increase by 3%. However, the IMRF
benefits are anticipated to decrease by 13%. She continued on to discuss the recent
organizational restructuring. The departmental restructuring produced an increase in efficiency
and reduced salary and benefit costs.
The Committee along with Staff discussed ways in which the City could increase revenues. During
the discussion it was noted that sales tax revenues had increased. Alderman Curry reported that
historically he has not supported a property tax increase. The property tax has remained flat for
several years.
There was some discussion with respect to a Y2 sales tax increase. Alderman Curry thought that
a sale tax increase was a fairer tax than a property tax. In addition, a Y2 sale tax increase would
also impact the people living outside of the City. There was some discussion on the surrounding
communities' current sale tax percentages. The Committee Members agreed to hold a special
meeting on October 15th at 5:30 to discuss and take action on the corporate levy dollar amount.
Staff Reports
Director Campanella discussed her ongoing research with respect to salaries and wages. She
reported that she continues to investigate other surrounding communities full and part-time
overtime expenses compared to the City's overtime expenses. Director Campanella discussed the
overtime expenses associated with special events. She will continue to investigate this matter
and report back.
Any Other Business
There was no other business to discuss.
Motion to adjourn from the meeting
There being no further public business to discuss, a Motion was made by Alderman Mihevc and
seconded by Alderman Schaefer to adjourn from the public meeting at 6:45 p.m. Roll call: Vote:
3-ayes: Alderman Mihevc, Alderman Schaefer and Alderman Curry. 0-nays, 0-abstained. Motion
carried.
Respectfully submitted,
Debra Meadows, Deputy City Clerk
Reviewed and approved this day of 2018.
Alderman Curry, Chairman
Office of Finance & Accounting
Carolyn Lynch, Director
McHenry Municipal Center
333 Green Street
McHenry, Illinois 60050
Phone: (815) 363-2100
Fax: (815) 363-2119
www.ci.mchenry.il.us
DISCUSSION ITEM FINANCE &PERSONNEL COMMITTEE
DATE: October 15, 2018
TO: Chairman Curry
Members of the Finance and Personnel Committee
FROM: Carolyn Lynch, Finance Director
RE: Discussion of the Draft of the FY17/18 Audit
ATTACHMENTS: FY17/18 Draft Cover Letter
FY17/18 Draft Management Representation Letter
FY17/18 Draft Audit Report
Attached is the Draft Annual Financial Report for the year ending April 30, 2018 that was
completed by the firm of Eder, Casella, and Company. The draft document was received by staff
and will be reviewed in order for the final draft to be completed. The audit document includes
important information about the City's results for 2017/18 fiscal year and current financial
condition.
There are a few areas of the report that are important to highlight. First, the Combining Schedule
of Revenues, Expenditures, and Changes in Fund Balance —General Fund on page 57-58 includes
the year end results and the total fund balance for the General Fund. The total fund balance is
$7,266,961, which reflects a transfer to the Capital Improvements Fund of $0 as excess Fund
Balance because the required General Fund Balance is $7,350,447 (which is $83,486 higher than
the current balance) per the Fund Balance and Reserve Policy. According to the policy, the
General Fund unassigned balance should be approximately 120 days of the estimated operating
expenditures. The Capital Improvements Fund Balance is $1,051,045. The budget for fiscal year
2018-19 includes capital improvement projects totaling $773,000 which will leave only $278,045
for projects in 2019-20.
Second, the Statement of Revenues, Expenses and Changes in Net Position — Proprietary Funds
(pg. 19) show the annual operating income and expenses for the Water and Sewer Fund. The
Water and Sewer Fund has an operating income of $1,101,529, Water/Sewer rates will still need
to be annually reviewed and adjusted as operating revenues have increased due to debt service
fees for the IEPA loan (as well as increases to water and sewer rates), but operating expenses
related to this loan have not been paid yet. This highlights that there actually would be an
operating loss once debt service expenses have been incurred for the sewer plant project. Finally,
this year's report once again includes additional required information per GASB 68, Accounting
and Financial Reporting for Pensions and GASB 71, Pension Transition for Contributions Made
Subsequent to the Measurement Date (starts on page 48).
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October 8, 2018
Mr. Derik Morefield, City Administrator
City of McHenry
333 S. Green St.
McHenry, IL 60050
Dear Mr. Morefield:
Enclosed are draft copies of the audit report, TIF Compliance and Annual Statement for the
Department of Insurance of City of McHenry as of April 30, 2018. The disclosure checklist is provided
for your reference in reviewing the audit report. Do not distribute these draft copies to parties outside
of the City, since they should not be used or relied upon by City of McHenry or any third party.
Our firm has completed the technical parts of the Management's Discussion and Analysis (MD & A)
in the audit report. Your responsibility will be to read the MD & A and modify it where necessary,
paying particular attention to the areas where further explanation may be needed.
Please note the highlighted area on page 40 and 50 indicating that we need the rate of return on the
pension.
Also included is the management representation letter that should be reviewed and signed by you
and Carolyn Lynch. Please sign and date this letter and return the letter to our office as soon as
possible as we cannot release the final reports until the letter is received by us.
NOTE: . signatures on all enclosed items must be dated the same day.
Y
If the draft reports are not signed and sent back to us by October 22, 2018 we will need the following
information: rn
- Most recent YTD financial statements (balance sheet and income statement)
- Minutes for any board meetings since our last date of fieldwork (7/19/2018)
- Information on any new litigation since our last date of fieldwork (7/19/2018) or any substantial
changes on outstanding litigation, if any. 0
Upon completing your review and our discussion of the statements (if necessary), we ask that you
sign and return the draft copies to us. The final copies and any other reports necessary will be sent
to you as soon as possible.
Sincerely,
EDER, CASELLA & CO.
a
Certified Public Accountants
Enclosures
City of McHenry
333 S. Green Street
McHenry, IL 60050
Eder, Casella & Co.
5400 West Elm Street
Suite 203
McHenry, Illinois 60050
This representation letter is provided in connection with your audit of the financial statements of City
of McHenry (City), which comprise the respective financial position of the governmental activities,
the business -type activities, each major fund, and the aggregate remaining fund information as of
April 30, 2018, and the respective changes in financial position and, where applicable, cash flows for
the year then ended, and the related notes to the financial statements, for the purpose of expressing
opinions as to whether the financial statements are presented fairly, in all material respects, in
accordance with accounting principles generally accepted in the United States of America (U.S.
GAAP).
Certain representations inthis letter are described as being limited to matters that are material. Items
are considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by the omission or
misstatement. An omission or misstatement that is monetarily small in amount could be considered
material as a result of qualitative factors.
We confirm, to the best of our knowledge and belief, the following representations made to you during
your audit.
Financial Statements
1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter
dated July 2, 2018, including our responsibility for the preparation and fair presentation of the
financial statements in accordance with U.S. GAAP and for preparation of the supplementary
information in accordance with the applicable criteria.
2. The financial statements referred to above are fairly presented in conformity with U.S. GAAP
and include all properly classified funds and other financial information of the primary
government and all component units required by generally accepted accounting principles to
be included in the financial reporting entity.
3. We acknowledge our responsibility for 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.
4. We acknowledge our responsibility forthe design, implementation, and maintenance of internal
control to prevent and detect fraud.
5. Significant assumptions we used in making accounting estimates, including those measured
at fair value, are reasonable.
6. Related party relationships and transactions, including revenues, expenditures/expenses,
loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or
payable to related parties have been appropriately accounted for and disclosed in accordance
with U.S. GAAP.
7. Adjustments or disclosures have been made for all events, including instances of
noncompliance, subsequent to the date of the financial statements that would require
adjustment to or disclosure in the financial statements.
8. We are in agreement with the adjusting journal entries you have proposed, if any, and they will
be posted.
9. The effects of all known actual or possible litigation, claims, and assessments have been
accounted for and disclosed in accordance with U.S. GAAP.
10. Guarantees, whether written or oral, under which the City is contingently liable, if any, have
been properly recorded or disclosed.
Information Provided
11. We have provided you with:
a. Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the financial statements, such as records, documentation, and other
matters.
b. Additional information that you have requested from us for the purpose of the audit.
c. Unrestricted access to persons within the City from whom you determined it necessary to
obtain audit evidence.
d. Minutes of the meetings of the City Council or summaries of actions of recent meetings as
listed below:
5/1/17 —City Council
5/15/17 —City Council
8 —City Council
12. All material transactions have been recorded in the accounting records and are reflected in the
financial statements.
13. We have disclosed to you the results of our assessment of the risk that the financial statements
may be materially misstated as a result of fraud.
14. We have no knowledge of any fraud or suspected fraud that affects the City and involves:
a. Management,
b. Employees who have significant roles in internal control, or
c. Others where the fraud could have a material effect on the financial statements.
15. We have no knowledge of any allegations of fraud or suspected fraud affecting the City's
financial statements communicated by employees, former employees, regulators, or others.
16. We have no knowledge of instances of noncompliance or suspected noncompliance with
provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects should
be considered when preparing financial statements.
17. We have disclosed to you all known actual or possible litigation, claims, and assessments
whose effects should be considered when preparing the financial statements.
18. We have disclosed to you the identity of the City's related parties and all the related party
relationships and transactions of which we are aware.
Government -specific
19. There have been no communications from regulatory agencies concerning noncompliance
with, or deficiencies in, financial reporting practices.
20. We have identified to you any previous audits, attestation engagements, and other studies
related to the audit objectives and whether related recommendations have been implemented.
21. The City has no plans or intentions that may materially affect the carrying value or classification
of assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fund
balance or net position.
22. We are responsible for compliance with the laws, regulations, and provisions of contracts and
grant agreements applicable to us, including tax or debt limits and debt contracts, and legal
and contractual provisions for reporting specific activities in separate funds.
23. We have identified and disclosed to you all instances that have occurred or are likely to have
occurred, of fraud and noncompliance with provisions of laws and regulations that we believe
have a material effect on the financial statements or other financial data significant to the audit
objectives, and any other instances that warrant the attention of those charged with
governance.
M.
We have identified and disclosed to you all instances, which have occurred or are likely to have
occurred, of noncompliance with provisions of contracts and grant agreements that we believe
have a material effect on the determination of financial statement amounts or other financial
data significant to the audit objectives.
25. We have identified and disclosed to you all instances that have occurred or are likely to have
occurred, of abuse that could be quantitatively or qualitatively material to the financial
statements or other financial data significant to the audit objectives.
26. There are no violations or possible violations of budget ordinances, laws and regulations
(including those pertaining to adopting, approving, and amending budgets), provisions of
contracts and grant agreements, tax or debt limits, and any related debt covenants whose
effects should be considered for disclosure in the financial statements, or as a basis for
recording a loss contingency, or for reporting on noncompliance.
27. As part of your audit, you prepared the financial statements and related notes. We
acknowledge our responsibility as it relates to those nonaudit services, including that we
assume all management responsibilities; oversee the services by designating an individual,
preferably within senior management, who possesses suitable skill, knowledge, or experience;
evaluate the adequacy and results of the services performed; and accept responsibility for the
results of the services. We have reviewed, approved, and accepted responsibility for those
financial statements and related notes.
28. The City has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral.
29. The City has complied with all aspects of contractual agreements that would have a material
effect on the financial statements in the event of noncompliance.
30. The financial statements include all component units as well as joint ventures with an equity
interest, and properly disclose all other joint ventures and other related organizations.
31. The financial statements properly classify all funds and activities in accordance with GASB
Statement No. 34.
32. All funds that meet the quantitative criteria in GASBS Nos. 34 and 37 for presentation as major
are identified and presented as such and all other funds that are presented as major are
particularly important to financial statement users.
33. Components of net position (net investment in capital assets; restricted; and unrestricted) and
classifications of fund balance (nonspendableI restricted, committed, assigned, and
unassigned) are properly classified and, if applicable, approved.
34. Investments, derivative instruments, and land and other real estate held by endowments are
properly valued.
35. Provisions for uncollectible receivables have been properly identified and recorded.
36. Expenses have been appropriately classified in or allocated to functions and programs in the
Statement of Activities, and allocations have been made on a reasonable basis.
37. Revenues are appropriately classified in the Statement of Activities within program revenues,
general revenues, contributions to term or permanent endowments, or contributions to
permanent fund principal.
38. Interfund, internal, and intra-entity activity and balances have been appropriately classified and
reported.
39. Deposits and investment securities and derivative instruments are properly classified as to risk
and are properly disclosed.
40. Capital assets, including infrastructure and intangible assets, are properly capitalized, reported,
and, if applicable, depreciated.
41. We are not aware of any current or anticipated losses in excess of our insurance coverage
for which we would be financially liable.
42. The City meets the GASB-established requirements for accounting for eligible infrastructure
assets using the modified approach.
43. We have appropriately disclosed the City's policy regarding whether to first apply restricted or
unrestricted resources when an expense is incurred for purposes for which both restricted and
unrestricted net position is available and have determined that net position is properly
recognized under the policy.
44. We are following our established accounting policy regarding which resources (that is,
restricted, committed, assigned, or unassigned) are considered to be spent first for
expenditures for which more than one resource classification is available. That policy
determines the fund balance classifications for financial reporting purposes.
45. We acknowledge our responsibility for the required supplementary information (RSI). The RSI
is measured and presented within prescribed guidelines and the methods of measurement and
presentation have not changed from those used in the prior period. We have disclosed to you
any significant assumptions and interpretations underlying the measurement and presentation
of the RSI.
46. With respect to the supplemental financial information we acknowledge our responsibility for
presenting the supplemental financial information in accordance with accounting principles
generally accepted in the United States of America, and we believe the supplemental financial
information, including its form and content, is fairly presented in accordance with accounting
principles generally accepted in the United States of America. The methods of measurement
and presentation of the supplemental financial information have not changed from those used
in the prior period, and we have disclosed to you any significant assumptions or interpretations
underlying the measurement and presentation of the supplemental information.
47. We agree with the findings of specialists in evaluating the City's accrued pension liability and
OPEB liabilities and have adequately considered the qualifications of the specialists in
determining the amounts and disclosures used in the financial statements and underlying
accounting records. We did not give or cause any instructions to be given to specialists with
respect to the values or amounts derived in an attempt to bias their work, and we are not
otherwise aware of any matters that have had an impact on the independence or objectivity of
the specialists.
48. We believe that the actuarial assumptions and methods used to measure pension and OPEB
liabilities and costs for financial accounting purposes are appropriate in the circumstances.
49. In regard to the preparation of the financial statements (including the IDOI report) services
performed by you, we have:
a. Assumed all management responsibilities.
b. Designated an individual who has suitable skill, knowledge, or experience to oversee the
services.
c. Evaluated the adequacy and results of the services performed.
d. Accepted responsibility for the results of the services.
Signed:
Title:
Signed:
Title:
Date: Date:
815,344,1300 mchenry
eCCO. 847.382.3366 barrington
847.336,6455 gurnee
www.edercasella.com
CITY OF
30, 2018
I (We) have reviewed the attached draft
copy. I (We} find it to be correct and
take responsibility for the report. Please
issue the final report.
Signed
Date
CITY OF MCHENRY, ILLINOIS
TABLE OF CONTENTS
APRIL 30, 2018
INDEPENDENT AUDITOR'S REPORT
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
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis
BASIC FINANCIAL STATEMENTS
Government -Wide Financial Statements
Statement of Net Position
Statement of Activities
Fund Financial Statements
Balance Sheet —Govern
Reconciliation of
Position
Statement of R
Balances
Reconciliation of
Changes in
ent of Net
and Changes in Fund
f Revenues, Expenditures, and
to the Statement of Activities
Statement of Net Position —Proprietary Funds
Statement of Revenues, Expenses, and Changes in Net
Position —Proprietary Funds
Statement of Cash Flows —Proprietary Funds
Statement of Fiduciary Net Position —Fiduciary Funds
Statement of Changes in Fiduciary Net Position —Fiduciary Funds
Notes to Financial Statements
REQUIRED SUPPLEMENTARY INFORMATION
Illinois Municipal Retirement Fund —Schedule of Changes in the Employer's
Net Pension Liability and Related Ratios
IJtL�I
i
0
13
17
18
19
20
21
22
23
CITY OF McHENRY, ILLINOIS
TABLE OF CONTENTS
APRIL 30, 2018
REQUIRED SUPPLEMENTARY INFORMATION (Continued)
Illinois Municipal Retirement Fund —Schedule of Employer Contribution
Police Pension Plan —Schedule of Changes in the Employer's Net
Pension Liability and Related Ratios
Police Pension Plan —Schedule of Employer Contribution
Retiree Insurance Plan —Schedule of Funding Progress
Schedule of Revenues, Expenditures, and Changes in Fund Balances —
Budget and Actual — General Fund
Notes to Required Supplementary Information
SUPPLEMENTAL FINANCIAL INFORMATION
Combining Balance Sheet —General Fund
Combining Schedule of Revenues,
Balances — General Fund
Combining Balance
Combining Schedule of
Balances —Other.
Combining Schedule
Combining Schedule c
Position —Water
in Fund
itures, and Changes in Fund
Water and Sewer Funds
nses, and Changes in Net
Combining Schedule of Net Position —Internal Service Funds
Combining Schedule of Revenues, Expenses, and Changes in Net
Position —Internal Service Funds
Combining Schedule of Net Position —Agency Funds
Schedule of Revenues, Expenditures, and Changes in Fund Balances —
Budget and Actual —Special Revenue Fund —Tax-Increment
Financing Fund
Summary of Federal Grants
PAGE
50
51
52
53
55
56
57
59
61
C:1ra
63
65
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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, 2018, and the r, t o ;s to the financial statements,
which collectively comprise the City's basic financial s "" a listed in the table of contents. (D
Management's Responsibility for the Financial Sta nts
Management is responsible for the preparatio d fa► esenta on of these financial
statements in accordance with accounting prin ' erall , 4 epted in the United States of
America; this includes the design, implement a an tena of internal control relevant
to the preparation and fair presentation of Ix nc " t ` nts that are free from material
misstatement, whether due to fraud orr,
Auditor's Responsibility LJ
Our responsibility is to expre s on a financial statements based on our audit. We
conducted our audit in accg ance audi standards generally accepted in the United
States of America and the ndards cable to financial audits contained in Government (D
Auditing Standards, issued a Com er General of the United States. Those standards
require that we plan and pe y it to obtain reasonable assurance about whether the
financial statements are free fro rial 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 1
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 City of McHenry as of April 30, 20181
and the respective changes in financial position and, where applicable, cash flows thereof for the
earthen ended in accordance with accounting principles generally accepted in the United States
A America.
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, Schedule of Funding Progress,
and budgetary comparison information on pages 6 through 11 and 48 through 55 be presented
to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governme al nting Standards Board, who
considers it to be an essential part of financial rep or the basic financial statements
in an appropriate operational, economic, or historic have applied certain limited
procedures to the required supplementary informati;; acco a ith auditing standards
generally accepted in the United States of America, w sisteV ines of management
about the methods of preparing the information a comp ; the in rmation for consistency
with management's responses to our inquires basic: ncial statements, and other
knowledge we obtained during our audit of th ` sic f f al sta - ents. We do not express an
opinion or provide any assurance on the i ma ' b e the limited procedures do not
provide us with sufficient evidence to exlO5s n a . ion ovide any assurance.
Other Information
Our audit was conducted fo ose rming opinions on the financial statements that
collectively comprise the s basi anti tatements. The supplemental information, as
listed in the table of content present r purposes of additional analysis and is not a required
part of the basic financial st "u ents.
The supplemental information iiIN esponsibility 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
A 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October xx, 2018 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
Page 2
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 xx, 2018
Page 3
815.344.1300 mchenry
eCCO. 847.382.3366 barrington
847.336.6455 gurnee
www.edercasello.com
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
A 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
as of and for the year ended April 30, 2018, and the
which collectively comprise City of McHenry's basic fi
report thereon dated October xx, 2018.
Internal Control Over Financial Reporting
In planning and performing
financial reporting (internal I
the circumstances for the pi
not for the purpose of expre:
control. Accordingly, we do
internal control.
our audit,
financial statements
end have issued our
d F - d Cit. McHenry's internal control over
au procedures that are appropriate in
I ions on the financial statements, but
the effectiveness of City of McHenry's internal
pion on the effectiveness of City of McHenry's
A deficiency in internal con � xists w he design or operation of a control does not allow
management or employees, al course of performing their assigned functions, to
prevent, or detect and correct, ements 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
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.
McHenry, Illinois
October xx, 2018
nts
Page 5
CITY OF MCHENRY, ILLINOIS
MANAGEMENT'S DISCUSSION AND ANALYSIS
April 30, 2018
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, 2018. 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, 2018 by $114,435,506 (total net position).
• The City's total net position decreased by $349,533 from current year activities, which includes a net
position adjustment of $(16,638).
• At April 30, 2018, the City's governmental funds repo ed combined ending fund balances of
$12,770,758, a decrease from current year activities o
• At April 30, 2018, the unassigned fund balance for Ge and was $7,168,374, or 33 percent
of total General Fund expenditures.
• The City's total general long-term debt decreased 05129 rily due to the scheduled
payments on general obligation bonds offset by c F es in et pension liabilities. Long-term debt
from business -type activities increased $8,22 to a nal draws on the IEPA Revolving
Loan offset by scheduled payments.
OVERVIEW OF THE FINANCIAL STATEM
This discussion and analysis is in r _ d to
The City's basic financial statements g r
2) fund financial statements, and 3
and fund level financial statem ) allo
comparison (year to year or gov ment to
as an fiction to the City's basic financial statements.
e ; e components: 1) government -wide financial statements,
the cial statements. Both perspectives (government -wide
e us o address relevant questions, broaden a basis for
nment) and enhance the City's accountability.
This report also contains others Y 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 of 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).
Both of the 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 01 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 of 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
it is useful to compare the information presented for govern E
for governmental activities in the government -wide financ
understand the long-term impact of the City's near -term in
Balance Sheet and the governmental fund Statement of
Balances provide a reconciliation to facilitate this co
governmental activities.
The City maintains 12 individual governmental = r
governmental fund Balance Sheet and in the gover e
Changes in Fund Balances for the General F , i,
other eleven governmental funds are comb' ; into a
funds include Pageant, Audit, Re ion r, Capi
Motor Fuel Tax, Developer Donatio x In ent I
The basic governmental fund
the government -wide financial statements,
fu s with similar information presented
s. By doing so, readers may better
ions. Both the governmental fund
es, nditures, and Changes in Fund
icon bE overnmental funds and
orma ` Pis presented separately in the
n tement of Revenues, Expenditures, and
co ed to be a major fund. Data from the
le ggregated presentation. The other eleven
vements, Capital Equipment, Debt Service,
cing, and two Special Service Areas.
be found on pages 14 through 17 of this report.
Proprietary Funds. The City mar: 'ns two - °' nt types of proprietary funds. Enterprise funds are used
to report the same functions pr ted business -type activities in the government -wide financial
statements. The City uses an enterp 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 63 and 64 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
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.
Page 7
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 47 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 48 through 55 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 $114,435,506 at April 30, 2018.
By far, the largest portion of the City's net position, 119 percent, 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 ca It s is to provide services to citizens;
consequently, these assets are not available for future sp go ough the City's investment in capital
assets is reported net of related debt, it should be noted t th es needed to repay this debt must
be provided from other sources, since the capital assets ` - selve not be used to liquidate these
liabilities.
Assets
Current and Other Assets
Capital Capital Assets
Total Assets
Deferred Outflows of Resources
Liabilities
Long -Term Liabilities
Outstanding
Other Liabilities
Total Liabilities
Deferred Inflows of Resources
Net Position
Net Investment in Capital
Assets
Restricted
Unrestricted
Total Net Position
City of McHenry's Staterf Net
Ty
ental Activities
GovernmB .,, ' N ' ies Total
4/30/2018 4/30/2017 4/ 1 4/ 0/2017 4/30/2018 4/30/2017
$ 21,840,181 $ 2 ,981 ,393, 6,617,840 $ 32,233,981 $ 291432,821
90,34,n - 32 82,025 6 9 72,262,917 168,026,401 164,144,942
$ 112218 $ <17,006 $ Y,e• ,269 $ 783880,757 $ 2001260,382 $ 1931577,763
$ 43046,8. 5,0 $ 380,278 $ 377,159 $ 4,427,087 $ 5,3951247
$ 33,4 22 $ 3 - ` 94 $ 38,089,977 $ 29,864,059 $ 71,491,799 $ 67,269,353
2,73 _:, � 28,751 4,173,265 4,806,470 6,904,606 8,235,221
$ 36,1333,834,045 $ 42,263,242 $ 34,670,529 $ 78,396,405 $ 752504,574
$ 11,127,249 $ 8,638,342 $ 728,309 $ 452055 $ 11,855,558 $ 816831397
$ 81,849,844 $ 81,966,064 $ 41,610,920 $ 43,831,503 $ 123,460,764 $ 125,797,567
1,039,545 1,061,746 - - 1,039,545 1,061,746
(13,921,879) (1277859103) 3,857,076 710,829 (10,064,803) (12,0741274)
$ 68,9671510 $ 70,242,707 $ 45,467,996 $ 44,542,332 $ 114,435,506 $ 1149785,039Moo—
An additional portion of the City's net position, 1 percent, represents resources that are subject to external
restrictions on how they may be used (e.g. Highways and Streets, Capital Projects, Special Service Areas
and Tax Increment Financing). The remaining balance of unrestricted net position was a deficit in the current
year of $9,233,790.
Governmental Activities. Governmental activities decreased the City's net position by $1,258,559. Key
differences from the prior year are as follows:
Revenues
Program Revenues
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
General Revenues
Property Taxes
Sales Taxes
Other Taxes
Other
Total Revenues
Expenses
General Office
Public Safety
Public Works
Parks and Recreation
Interest and Fees
Depreciation
Water
Sewer
Utility Work
Total Expenses
Increase/(Decrease) in Net Position
Before Transfers
Transfers
Gain/(Loss) on Sale of Capital Assets
Lease Buyout Income
Increase/(Decrease) in Net Position
Net Position - Beginning of Year
Net Position Adjustment (Note 9)
Net Position - End of Year
City of McHenry's Change in Net Position
Governmental Activities Business -Type Activities
FY 2018 FY 2017 FY 2018 FY 2017
Total
FY 2018 FY 2017
$ 6,136,199 $
5,301,971 $ 7,726,595 $ 7,036,215 $
13,862,794 $
12,338,186
169,093
158,633
1699093
158,633
11315,386
497,741
11315,386
497,741
5,371,369 5,468,839 5,371,369 5,468,839
91647,976 9,207,577 91647,976 92207,577
3,592,054 3,703,619 32592,054 33703,619
187,460 86,744 9%374 793877 286,834 166,621
$ 26,419,537 $ 242425,124 $ 7,825,969 $ 7,116,092 $ 34,245,506 $ 31,541,216
3,801,309
12,914,929
7,256,545
3,418,406
219,383
172,178
$ 27,782,750 $
(1,363,213) $
93,865
10,789
The most significant change in red
charges for services accounts and
center.
3,633,276
11,907,267
7,817,731
3,090,667
2473792
130t360
$ 3,801,309 $
3,633,276
12,914,929
11,907,267
7,2561545
71817,731
31418,406
3,090,667
219,383
247,792
172,178
130,360
11831,093
1,894,528
3,729,086
3,638,720
1,2461261
989,500
$ 34$89,190 $
33134%841
$ (343,684) $ (1,808,625)
-
10,789
21,831
510,587
928,137
925,664 $
11011,848 $
(332,895) $
(8583657)
44,542,332
43,945,523
114,785,039
116,055,330
(4152039)
(16,638)
(411,634)
45,467,996 $
44,542,332 $
114,435,506 $
1149785,039
current year was a general overall increase in the various
imbursement receipts from the county for the new dispatch
Business -Type Activities. Business -type activities increased the City's net position by $925,664.
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, 2018, the City's governmental funds reported combined ending fund balances of $12,770,758,
a decrease of $450,948 in comparison with the prior year. Approximately 52 percent of this total amount
constitutes unassigned fund balance, which is available for spending at the City's discretion. Of the
remaining fund balance, 39 percent constitutes assigned fund balance, with the remainder of the fund
balance restricted to 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, 2018, the fund balance of the General
Fund was $8,763,550, of which $7,168,374 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 33 percent of total General Fund expenditures.
The General Fund's fund balance increased by $164,248 during the year ended April 301 2018.
Other significant highlights in the governmental funds for the year ended April 307 2018 are outlined below:
• Debt service expenses of $1,420,000 were paid to meet the debt service requirements of the City.
• The expansion and renovation of the police administration and dispatch center was completed.
• Other governmental funds show a total decrease in fund balance of $615,196. 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 provid t a e type of information found in the
government -wide financial statements, but in more detail.
Fiduciary Funds (Police Pension and Agency Funds).
position amounted to $25,348,532. Additions exceeded d
of $2,573,366 in net position.
GENERAL FUND BUDGETARY HIGHLIGHTS
The General Fund actual revenue exceeded gE
due to more than expected revenues sta es
exceeded budgeted expenditures 246,
CAPITAL ASSET AND DEBT A
30, ,the Police Pension Fund's net
durin , ar, resulting in an increase
19,595. This difference was primarily
s and permits. Actual expenditures
Capital Assets. The City's inve � ent in c assets for its governmental and business -type activities as
of April 30, 2018 amounts to $1 026,401 of accumulated depreciation). This investment includes
land, land improvements, art an toric reasures, intangibles, construction in progress, buildings,
vehicles, systems and equipment, a „, s ructure.
City of McHenry's Capital Assets (net of depreciation)
Governmental Activities Business -Type Activities Total
4/30/2018 4/30/2017 4/30/2018 4/30/2017 4/30/2018 4/30/2017
Land $ 417491,738 $ 412306,863 $ 22208,117 $ 2,208,117 $ 43,699,855 $ 43,5140980
Land Improvements 11890,091 19718,019 - - 12890,091 11718,019
Art and Historical Treasures 11658,927 11658,927 - - 1,658,927 1,658,927
Intangibles 3002000 300,000 - - 300,000 300,000
Construction in Progress 691,693 6,863,207 352901,416 29,696,060 361593,109 36,5592267
Buildings 12,901,595 6,6851109 560,000 6202577 13,461,595 79305,686
Vehicles 1,1353134 11212,638 942,556 737,626 21077,690 1,950,264
Systems and Equipment 2,056,448 21040,925 3830732380 39,000,537 40,129,828 41,041,462
Infrastructure 289215,306 30,0962337 - - 281215,306 300096,337
Total $ 90,340,932 $ 91,882,025 $ 77,6851469 $ 72,2621917 $ 168,026,401 $ 164,1441942
Major capital asset events during the year ended April 30, 2018 included the following:
• Additions of $4,919,059 to Parks and Recreation Buildings due to the completion of the Recreation
Center project. Of this amount, $4,911,Ora was expended and added to Construction in Progress in
prior years.
Page 10
• Additions of $7,457,945 to Construction in Progress of the business -type activities was from the
continuation of the sewer consolidation project from the prior year.
For further information, please see Note 4 on pages 30 and 31 of this report.
Long -Term Debt. At April 30, 2018, the City had total bonded debt outstanding of $14,260,000, all of which
is backed by the full faith and credit of the City.
City of McHenry's Outstanding Debt
Governmental Activities Business -Type Activities Total
4/30/2018 4/30/2017 4/30/2018 4/30/2017 4/30/2018 4/30/2017
General Obligation Bonds $ 81425,000 $ 91845,000 $ 51835,000 $ 6,1851000 $ 14,260,000 $ 16,030,000
IEPA Revolving Loan Fund - - 31,507,182 22,257,610 31,507,182 227257,610
Bond Premium 74,060 82,439 71339 71851 81,399 90,290
Bond Discount (71972) (11,478) (15)107) (19,047) (23,079) (30,525)
Total $ 81491,088 $ 91915,961 $ 37,334,414 $ 28,431,414 $ 45,8251502 $ 38,347,375
Additional information on the City's long-term debt can be
report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City has a diversified economy with the manui
is among the State's fastest growing communities
to 26,992 in 2010. In addition, the City experie
space and a downtown revitalization plan
Downtown TIF District. The City's economich .,
The average unemployment ra
a year ago. This is lower than
Inflation in the area compar
residential growth in the City
residential building permits is
there have been some signs of
improvements and new permits
5 on pages 31 through 33 of this
s being its primary base. McHenry
�n increasing from 16,177 in 1990
in the retail, office, and industrial
commercial development in the
ant � ` 17 was 4.5 percent, which is unchanged from
e unemployment rate of 5.0 pelcent.
ions nsumer price index. Similar to a nationwide trend,
atically in the last few years. The number of single family
as decreased from 126 in 2007 to 15 in 2017. However,
t, for instance the total value of all commercial and residential
from $15.2 million in 2012 to $31.3 million in 2017.
Development and adoption of the 2018/19 budget was premised on providing core municipal services in an
environment of revenues limited by a slowly recovering economy. 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 $0.784639 in 2016 to $0.739406 in 2017.
In April 2018, the City Council approved the proposed fiscal year 2019 General Fund budget increasing the
prior year's budget by $218,868. The City increased the annual police pension contribution in order to meet
actuarial requirements and personnel cost increases. Cost reduction measures necessary to adopt a
balanced budget in the past years as well as rebounding state shared revenues has left the City in a better
financial position.
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.
Page 11
FINANCIAL
CITY OF MCHENRY, ILLINOIS
GOVERNMENT -WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION
APRIL 30, 2018
Governmental Business -Type
Activities Activities Total
ASSETS
Cash and Cash Equivalents $ 111144,487 $ 61922,654 $ 18,067,141
Deposit with Paying Agent 574,780 - 574,780
Investments 767,335 1,244,497 2,011,832
Prepaid Expenses 189,782 29,497 21%279
Inventory 78,036 - 78,036
Receivables (Net of Allowance for Estimated
Uncollectible Amounts)
Accounts Receivable - Billed 530,057 983,424 11513,481
Accounts Receivable - Unbilled 109,648 1,1711430 112819078
Property Taxes 51485,041 - 51485,041
Accrued Interest 966 51057 61023
Due from Other Governmental Units 2,7822269 - 21782,269
Due from Other Funds 31596 14,988 18,584
Due from Police Pension - - -
Grants Receivable 301842 - 30,842
Reimbursements Receivable 24,24 - 24,242
Cable Franchise Fee Receivable V 5 - 111,534
Interest Rebate Receivable 66 22,253 29,819
Capital Assets
Land, Construction in Progress, and Other
Non -Depreciable Assets 441, 110 533 82,251,891
Other Capital Assets, Net of Depreciation 46 ? 6 85,7741510
TOTAL ASSETS $ 112,181 if r $ 88;269 $ 2001260,382
DEFERRED OUTFLOWS OF RESOURCES
Unamortized Charge on Bond Refunding 4 $ - $ 3,504
Pension Expense/Revenue - IMRF 2, 380,278 11702,959
Pension Expense/Revenue - Police Pension � /20 6 - 21720,624
TOTAL DEFERRED OUTFLOWS OF RESOURCES _ R$ 4, 6 $ 380t278 $ 4,427,087
LIABILITIES
Accounts Payable and Accrued
Overdrafts
Security Deposits Held
Due to Other Governmental Unil
Due to Other Funds
Unearned Revenue
Accrued Interest
Total OPEB Obligation
Non -Current Liabilities
Due Within One Year
Due in More Than One Year
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue -Property Taxes
Unavailable Revenue - State Taxes
Unavailable Revenue - Rent
Pension Expense/Revenue - IMRF
Pension Expense/Revenue - Police Pension
TOTAL DEFERRED INFLOWS OF RESOURCES
NET POSITION
Net Investment in Capital Assets
Restricted for:
Highways and Streets
Capital Projects
Special Service Areas
Tax Increment Financing
Unrestricted/(Deficit)
$ "'P308,496
732,689
65,183
17,603
528,962
78,408
297,769
12449,981
312654,072
$ 36,133,163
$ 5,485,041
5,297
2,400
2,533,198
31101,313
$ 11,127,249
232,573
716,322
16
90,634
(131921,879)
$ 1,481,878 $
2,790,374
2,416,571
3,149,260
3,000
3,000
65,183
981
18,584
186,675
715,637
84,160
162,568
-
297,769
1,621,436 3,071,417
36,468,541 68,122,613
$ 42,263,242 $ 781396,405
$ 5485041
- 5,297
- 2,400
728,309 3,2611507
31101,313
$ 728,309 $ 111855,558
$ 41,610,920 $ 123,460,764
- 232,573
- 716,322
- 16
90,634
3,857,076 (10,0641803)
TOTAL NET POSITION $ 68,967,510 $ 45,467,996 $ 1141435,506
The Notes to Financial Statements are an integral part of this statement.
Page 12
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CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
BALANCE SHEET
GOVERNMENTALFUNDS
APRIL 30, 2018
Other Total
General Governmental Governmental
Fund Funds Funds
ASSETS
Cash and Cash Equivalents $ 6,651,314 $ 3,5539887 $ 109205,201
Deposit with Paying Agent - 574,780 5749780
Investments 181,526 577,614 759,140
Prepaid Expenses 106,852 - 106,852
Inventory - 78,036 78,036
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed 486,256 38,877 5252133
Accounts Receivable - Unbilled 108,511 1,057 109,568
Property Taxes 4,951 t803 533,238 5,485,041
Accrued Interest 229 727 956
Due from Other Governmental Units 21704,806 77,463 21782,269
Due from Other Funds 270 - 270
Reimbursements Receivable 24,242 24,242
Grants Receivable 302842 30,842
Cable Franchise Fee Receivable 111,5 , - 1111534
TOTAL ASSETS
LIABILITIES
Accounts Payable <
Overdrafts
Due to Other Govei
Due to Other Fund!
Unearned Revenue
TOTAL LIABILITIES
DEFERRED INFLOV
Unavailable Reveni
Unavailable Reveni
Unavailable Reveni
TOTAL DEFERRED
FUND BALANCES
Nonspendable
Restricted for:
Capital Projects
Highways and Streets
Special Service Areas
Tax Increment Financing
Assigned for:
Alarm
Audit
Tourism
Band
Highways and Streets
Capital Projects
Capital Equipment
Revolving Loan
Debt Service
Parks and Recreation
Special Service Areas
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
1,633
$ 942,620
$ 533,238
5,297
2,400
$ 540,935
716,322
- 232,573
16
90,634
458,453
498,716
161983
407t032
1191140
7,168,374
$ 8,763,550
13,579
947,620
1,407,060
120
357,440
760,053
30
(518,239)
$ 4,0071208
20793864
$ ,,
$ 1,299,029
683,245
65,183
17,603
465,308
$ 21530,368
$ 5,485,041
5,297
2,400
$ 5,4921738
$ 94,852
716,322
232,573
16
90,634
458,453
13,579
498,716
16,983
947,620
1,814,092
120
119,140
357,440
760,053
30
6,650,135
$ 121770,758
$ 15,303,101 $ 51490,763 $ 20,7931864
The Notes to Financial Statements are an integral part of this statement.
Page 14
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION
APRIL 30, 2018
Total Fund Balances -Governmental Funds
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
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
Unamortized Charge on Bond Refunding
Some liabilities are not due and payable in the current period
are not reported in the funds.
Bonds and Notes Payable
Bond Premiums, net of related amortization
Accrued Interest on Long -Term Debt, net of
Compensated Absences
OPEB Liability
Net Pension Liability - IMRF
Net Pension Liability - Police Pension
Deferred pension costs in governrr
and therefore are not reported in
Pension Expense/Revenue
Pension Expense/Revenue
financial resources
Internal service funds are used by mana�nto 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
Current Liabilities
Net Position of Governmental Activities
$ 7,972
3.504
$ 425,000)
(74,060)
(70,842)
(568,514)
(297,769)
(21004,143)
(22,040,308)
$ (1,210,517)
(380,689)
$ 1,038,751
(122,565)
0
12,770,758
90,340,932
11,476
(33,480,636)
(1,591,206)
$ 68,967,510
Page 15
The Notes to Financial Statements are an integral part of this statement.
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
FOR THE YEAR ENDED APRIL 30, 2018
REVENUES
Local Taxes
Property Tax
Intergovernmental
State Sales Tax
State Income Tax
State Replacement Tax
State Motor Fuel Tax
State Pull Tab/Games Tax
Inter Track Wagering Tax
State Telecommunications Tax
State Grants
Federal Grants
Bond Interest Rebates
Other Local Sources
Hotel/Motel Tax
Franchise Fees
Licenses and Permits
Fines and Forfeitures
Charges for Services
Interest
Miscellaneous
Rent
Royalties
Donations
Annexation Fees
Reimbursements
Concessions
Special Events
Other Miscellaneous
EXPENDITURES
Current
General Office
Public Safety
Public Works
Parks and Recreation
Capital Outlay
Debt Service
Principal
Interest and Fees
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES/(USES)
Transfers
Sale of City Property
NET CHANGE IN FUND BALANCES
FUND BALANCES -MAY 1, 2017
FUND BALANCES -APRIL 30, 2018
General
Fund
$ 4,947,811
9,647,976
2,4567160
59,769
886
49,872
1291378
3,714,784
11,865,357
3,7049599
2,295,029
355,482
Other
Governmental
Funds
$ 423,558
721,054
23,936
26,083
116,249
684,124
2,5041638
Total
Governmental
Funds
$ 5,371,369
9,647,976
2,4562160
59,769
721,054
886
49,872
1291378
32,243
26,083
174,935
344,775
884,814
424,614
2,011,120
114,056
70,755
63,058
441,685
26,251
31131,216
421
49,521
189,726
$ 261421,737
$ 3,806,707
11,865,357
31820,848
21979,153
2,860,120
- 1,4202000 1,4201000
- 231,829 231,829
$ 21,935,251 $ 5,048,763 $ 26,984,014
$ 1,0021003 $ (1,564,280) $ (562,277)
$ (855,219) $ 949,084 $ 93,865
17,464 - 17,464
$ (837,755) $ 949,084 $ 111,329
$ 164,248 $ (615,196)
8,599,302 4,622,404
$ (450,948)
13,221,706
$ 8,7631550 $ 41007,208 1 12,7701758
The Notes to Financial Statements are an integral part of this statement.
Page 16
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED APRIL 30, 2018
Net Change in Fund Balances -Total Governmental Funds
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
Capital Outlays
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 as is sold.
Proceeds from
Sale
of
Capital
Assets
Gain/(Loss) on
Sale
of
Capital
Assets
Donated capital
assets used in governmental
activities
are not
resources and
therefore are not reported as
revenue
in
the g
Some expenses reported in the Statement of Activities do
current financial resources and therefore are not report
governmental funds.
Accrued Interest on Long -Term Debt
Accrued Interest Rebate
Bond Discount - Amortization
Bond Premium -Amortization
Charge on Bond Refunding - Amo
Pension Expense
OPEB Expense
Compensated Absences
Employer Pension Contributions area
are treated as a reduction in the Net
financial statements.
fund financial statements but
ty on the government -wide
Repayment oflong-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
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
Depreciation Expense (included in Change in Net Position above)
Change in Net Position of Governmental Activities
$ (2,979,710)
1,441,797
$ 11,397
(2,200)
(31506)
81379
(31824)
(31197,667)
(101,819)
(54,619)
$ 36,098
36,898
0
(450,948)
(1,537,913)
(6,675)
10,411
(3,343,859)
2,577,429
1,420,000
72,996
$ (1,258,559)
Page 17
The Notes to Financial Statements are an integral part of this statement.
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
APRIL 30, 2018
ASSETS
Current Assets
Cash and Cash Equivalents
Investments
Prepaid Expenses
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable" Billed
Accounts Receivable - Unbilled
Accrued Interest
Due from Other Funds
Interest Rebate Receivable
Restrict
Capital
Land
Buildi
Syste
Vehic
Cons
Less:
TOTAL AS
DEFERRE
Pension
TOTAL DE
LIABILITIE
Current t
Accour
Overdr
Securil
Due to
Unearr
Accruea mteresr
IEPA Loan Payable -Current
Bonds Payable -Current
Non -Current Liabilities
Compensated Absences
IMRF Net Pension Liability
IEPA Loan Payable (Net of Current Portion Shown Above)
Bonds Payable (Net of Current Portion Shown Above)
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Pension Expense/Revenue -IMRF
TOTAL DEFERRED INFLOWS OF RESOURCES
NET POSITION
Net Investment in Capital Assets
Restricted for:
Unrestricted/(Deficit)
TOTAL NET POSITION
Business Type
Activities -
Enterprise Fund
Water and Sewer
$ 6,922,654
11244,497
29,497
983,424
11171,430
5,057
14,988
22,253
$ 10,393,800
1,259,865
361,571
$ 597947701
$ 72,028
683,535
30,247,317
5,465,661
$ 36,468,541
$ 42,263,242
$ 728,309
$ 728,309
$ 41,610,920
3,857,076
$ 45,467,996
Governmental
Activities -
Internal
Service Funds
$ 939,286
8,195
82,930
4,924
80
10
3,326
$ 11038,751
(330,369)
$ 123,275
$ 1,162,026
$
29,894
$
29,894
$
9,467
49,444
63,654
$
122,565
$
3,857
97,010
$
1009867
$
223,432
$
57,252
$
57,252
$
123,275
787,961
$
9119236
The Notes to Financial Statements are an integral part of this statement.
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED APRIL 30, 2018
OPERATING REVENUES
Charges for Services
Customer Fees
Capital Fees
Debt Service Fees
Penalties
Water Meter Sales
Other
Internal Service Funds
OPERATING EXPENSES
Water Department
Personnel Salaries
Miscellaneous Personnel Expenses
Other Operating Expenses
Depreciation
Sewer Department
Personnel Salaries
Miscellaneous Personnel Expenses
Other Operating Expenses
Depreciation
Utility Work Department
Personnel Salaries
Miscellaneous Personnel enses
Other Operating Expense
Internal Service Funds
Personnel Salaries
Miscellaneous Personnel ns
Other Operating Expens
Depreciation
OPERATING INCOME/(LOSS)
NON -OPERATING REVENUE/(EXPENSE)
Interest Income
Rental Income
Interest Rebate Income
Interest and Fees
Amortization
INCOME/(LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS
TRANSFERS (TO)/FROM OTHER FUNDS
CHANGE IN NET POSITION
NET POSITION -MAY 1, 2017
NET POSITION ADJUSTMENT (Note 9)
Business Type
Activities -
Enterprise Fund
Water and Sewer
$ 51174,539
392,229
21169,731
143,075
17,025
11,634
$ 7,9081233
$ 6,806,440
$ 1,101,793
$ 38,492
53,313
60,882
(231,522)
(3,429)
$ (82,264)
$ 11019,529
(93, 865)
$ 925,664
44,542,332
Governmental
Activities -
Internal
Service Funds
4,554,761
$ 4,5541761
0
134,393
3,354,781
994,953
36,898
$ 4,521,025
$
33,736
$
2,362
$
2,362
$
36,098
$
36,098
884,858
(91720)
NET POSITION -APRIL 30, 2018 $ 451467,996 $ 911,236
The Notes to Financial Statements are an integral part of this statement.
Page 19
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED APRIL 30, 2018
Business Type
Activities -
Enterprise Fund
Water and Sewer
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers $ 61907,213
Receipts from Employees for Services -
Receipts from Other Funds for Services -
Payments to Suppliers for Goods and Services (52301,989)
Payments to Employees for Services (11697,795)
Payments to Other Funds for Services (11087,652)
Internal Activity - Payments (to)/from Other Funds 87,910
Net Cash Provided/(Used) by Operating Activities $ (120923313)
CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES
Transfers (to)/from Other Funds $ (93,865)
Net Cash Provided/(Used) by Non -Capital Financing Activities (93,865)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIV S
Purchase of Capital Assets $ 21093,897
Interest Paid on Capital Debt, Net of Rebate 78)
Principal Paid on Capital Debt 1000)
Other Receipts/(Payments) 53,313
Net Cash Provided/(Used) by Capital and Related Financing q - 116233132
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on Cash and Cash Equivalents and Investm r s 33,327
Net Cash Provided/(Used) by Investing Activities $ 33,327
NET INCREASE/(DECREASE) IN CA D C QUIVALE $ 470,281
CASH AND CASH EQUIVALENTS BALA k AY 7
(INCLUDING RESTRICTED CASH A w • F 41035,802
CASH AND CASH EQUIVALENTS B NCE - AP . 0, 2018
(INCLUDING RESTRICTEDCASH� OVERD r ) $ 4,506,083
RECONCILIATION OF OPERATING IN TO NET
CASH PROVIDED/(USED) BY OPERATIN ' (TIES
Operating Income/(Loss) $ 11101,793
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation Expense 1,733,123
Change in assets, liabilities and deferred amounts:
Receivables, net (882,245)
Prepaid Expenses (11699)
Accounts Payable and Other Payables (33039,910)
Unearned Revenue -
Pension Liabilities (683,510)
Deferred Pension Expenses/Revenues 680,135
Net Cash Provided/(Used) by Operating Activities $ (11092,313)
Governmental
Activities -
Internal
Service Funds
467,573
79508
(4,1771323)
(1421041)
(30,875)
$ 204,842
$ 2,338
$ 2,338
$ 207,180
682,662
o
$ 33,736
36,897
(3,966)
164, 398
(26,900)
960
(53,659)
533376
$ 204,842
NONCASH CAPITAL FINANCING ACTIVITIES
IEPA Loan Draws $ 91249,572 $ -
The Notes to Financial Statements are an integral part of this statement.
Page 20
CITY OF MCHENRYI ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
APRIL 30, 2018
POLICE
PENSION
TRUSTFUND
ASSETS
Cash and Cash Equivalents $ 530t835
Investments 24,733,244
Receivables (Net of Allowance for Estimated Uncollectible Amounts)
Accounts Receivable
Accrued Interest 84,453
TOTAL ASSETS $ 25,348,532
LIABILITIES
Accounts Payable
Due to General Fund
Due to Depositors
Due to McHenry Character Counts
TOTAL LIABILITIES
NET POSITION -RESTRICTED
AGENCY
FUNDS
$ 733
36,626
$ 37,359
- 6,733
- 5,085
- $ 37,359
Page 21
The Notes to Financial Statements are an integral part of this statement.
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED APRIL 30, 2018
ADDITIONS
Contributions
Employer
Plan Members
Total Contributions
Investment Income
Interest and Dividends
Gain/(Loss) on Sale of Investments
Net Increase/(Decrease) in Fair Value of Investments
Less: Investment Management Fees
Net Investment Income
TOTAL ADDITIONS
DEDUCTIONS
Benefits
Administrative Expenses
TOTAL DEDUCTIONS
NET INCREASE/(DECREAS
NET POSITION -REST
BENEFITS -MAY 1, 2017
NET POSITION -RESTRICTED FOR PENSION BENEFITS - APRIL 30, 2018
POLICE
PENSION
TRUST FUND
$ 1,868,798
4091415
$ 21278,213
$ 1,185,358
(64,765)
17126,528
$ 212471121
21,162
$ 21225,959
$ 4,504,172
$ 1,911,914
18,892
$ 11930,806
$ 2,573,366
22, 775,166
$ 25,348,532
Page 22
The Notes to Financial Statements are an integral part of this statement.
CITY OF MCHENRYI ILLINOIS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2018
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 appoints voting majority of the organization's
governing body and either (1) the City's ability to impose it wi he organization or (2) the potential
that the organization will provide a financial benefit to, o os nancial burden on, the City. Using
these criteria, the City has determined that the Police Pe n is the above criteria. The Police
Pension Fund is blended into the City's primary govern inane tat ments as a fiduciary fund
although it remains a separate legal entity. In addition, t is not d as a component unit in
any other governmental reporting entity as defined by ,gASB p ncemeits.
B. Basic Financial Statements — Go
The City's basic financial statements it
fund (reporting the City's major fu s) fi
statements categorize primary ie
office, public safety, public works,
activities. The City's water and s
�o me a (reporting the City as a whole) and
government -wide and fund financial
go ntal or business -type. The City's general
recreation services are classified as governmental
classified as business -type activities.
In the government -wide State ` t of Netsboth the governmental and business -type activities
columns (a) are presented on nsolida asis by column, and (b) are reported on a full accrual,
economic resource basis, which all long-term assets and receivables as well as long-term
debt and obligations. The City's net n 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.).
Page 23
NOTES TO FINANCIAL STATEMENTS (Continued)
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:
Governmental Funds
The focus of the governmental funds' measurement
financial position and changes in financial positionjS
rather than upon net income. The City reports th a
General Fund —The General Fund is the
financial resources except those quirec
Board, Band, Civil Defense, Re g L
fund.
Special Revenue Funds —The
revenue sources that are legal
Debt Service Fund —The Dek
periodic payment of principal, i
ne s) is upon determination of
balances of financial resources)
s and fund types:
f the City. It is used to account for all
in another fund. The Annexation, Alarm
mployee Flex Funds are included in this
ids are used to account for the proceeds of specific
itures for specified purposes.
used to account for the accumulation of funds for the
t 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.
Page 24
NOTES TO FINANCIAL STATEMENTS (Continued)
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 Is 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 revenu �� r res/expenses are recognized in
the accounts and reported in the financial statements. It r to th g of the measurements made
regardless of the measurement focus applied.
1. Accrual
Both governmental and business -type
proprietary and fiduciary fund financial
Property tax revenues are reco ized
including intergovernmental rev a
Fees and charges and other exc
recognized when incurred.
2. Modified Accrual
s ;a the v � nt-wide financial statements and the
pres on the accrual basis of accounting.
period w levied. Other nonexchange revenues,
rts, are d when all eligibility requirements are met.
es are recognized when earned and expenses are
The governmental fund financial are presented on the modified accrual basis of accounting.
Under the modified accrual basis of a ting, 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, 2018:
Page 25
NOTES TO FINANCIAL STATEMENTS (Continued)
Pageant Fund
Debt Service Fund
SSA#4 Lakewood Fund
SSA#6 Huntersville Fund
Tax Increment Financing Fund
Capital Equipment Fund
$ 229
233,250
354
179,115
246,886
23,411
$ 683,245
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 $68,875 and all other allowancesf,
.Pgy other accounts receivable is $426,603.
G. Prepaid Expenses
Prepaid expenses are for payments made by the City in
in the subsequent fiscal year.
H. Inventories
Inventories consist of the cost of unused salt fo
$78, 036. Al
Inte►fund Activity
Interfund activity is reported either
reported as interfund receivabl
consolidation. Services provid
and expenditures/expenses.
goods and services received
inventory as of April 30, 2018 is
ces provided, reimbursements or transfers. Loans are
s appropriate and are subject to elimination upon
t , arket or near market rates, are treated as revenues
Reimbursements are when one cu cost, charges the appropriate benefiting fund and reduces
its related cost as a reimbursement. er 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.
Page 26
NOTES TO FINANCIAL STATEMENTS (Continued)
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 Compensate sences", no liability is recorded for
nonvesting accumulating rights to receive sick pay benefits Ab
M. Long -Term Obligations
In the government -wide financial statements and propri
and other long-term obligations are reported as liabil
business -type activities and proprietary fund State
are amortized over the life of the bonds on a strai - ine
Bonds payable are reported net of the applicabl nc
reported as debt service expenditures in th r e
In the fund financial statements, ernrr
N. Government -Wide and
d fina `� tements, long-term debt
in plica governmental activities or
et Po Bond premiums and discounts
rathe " wan expensed in the current year,
r discount. Bond issuance costs are
funds
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.
Page 27
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
L 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
funds (other than the General Fund) that are j
committed, and (b) amounts in the General Fund thSpecific amounts that are not restricted or commipurposes in accordance with the nature of their fconveys that the intended use of those amounts is
general purpose of the City itself. All assigned
4. Unassigned —Unassigned fund balance is
classification represents the General Fund I
that has not been restricted, committe
This classification is also used tc remPent
P. Minimum Fund Balance
that are reported in governmental
as nonspendable, restricted or
1 to be used for a specific purpose.
�' revenue fund are assigned for
> within the General Fund
e-
p that is narrower than the
the residual amounts of the fund.
resi lassi��tion for the General Fund. This
nc a not been assigned to other funds, and
to is purposes within the General Fund.
e fu balances in other funds.
order: Restricted, Committed, Assigned and
The City has adopted a formal m� balance policy. For the General, Recreation Center, and
Information Technology Funds fun ce 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 taxis levied each calendar year on all taxable real property located in the City's district
on or before the last Tuesday in December. The 2017 levy was passed by the Board on December 4,
2017. 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 City7s Water and Sewer Fund consist of charges for services
NOTES TO FINANCIAL STATEMENTS (Continued)
(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, 2018, the City had the following
Investments Fair Value Less Than 1
External Investment Pools $ 1ultiv,993 $ 10,730,993
The fair value of investments in the External I
The External Investment Pools are not SEC-r
of Illinois.
Interest Rate Risk. The City wil
fall due to changes in general in
• Structuring the investmen c rtfolio
operations, thereby avoid the nE
fth
erne as the value of pool shares.
story oversight through the State
tha � �. Pt'arket value of securities in the portFolio will
purities mature to meet cash requirements for ongoing
securities on the open market prior to maturity.
• Investing operating funds p 'A rter-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, 2018, 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.
Page 29
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 2018:
Investments by fair value level
Debt Securities:
U.S. Treasury securities
Corporate bonds
Government securities
Municipal Issues
Total Debt Securities
Equity Securities:
Foreign Issues
Total Equity Securities
Mutual Funds
Total Investments by fair value level
4/30/2018
$ 1,725,797
524622866
288,192
875,167
$ 81352,022
$ 623,937
$ 623,937
$ 15,757,285
$ 24,733,244
Debt and equity securities classified in Level 1 of
in active markets for those securities.
NOTE 4 - CAPITAL ASSETS
Capital asset activity for the
Governmental Activities
Capital Assets not being depreciated
Land
Art and Historical Treasures
Intangibles
Construction in Progress
Total Capital Assets not being depreciated
Other Capital Assets
Land Improvements
Buildings
Vehicles
Equipment
Infrastructure
Total Other Capital Assets at Historical Cost
Less Accumulated Depreciation for:
Land Improvements
Buildings
Vehicles
Equipment
Infrastructure
Total Accumulated Depreciation
Other Capital Assets, Net
Governmental Activities Capital Assets, Net
Fair Value Measurements
ive Markets Signif
Quoted Prices in Acticant Other
for Identical Assets (Level 1) Observable Inputs (Level 2)
$ 1,725,797
5,462,866
2882192
875,167
$ 6,626,225
$ 61626,225
are valued using prices quoted
i�
Balance
Decreases April 30, 2018
- $ 41,491,738
- 1,658,927
3009000
6,863,207
- 647,606
6,819,120
6919693
$ 50,128,997 $
- $ 832,481
$ 6,819,120
$
44,1421358
$ 5,106,360 407,369 51513,729
11,098,089 - 6,522,917 - 17,621,006
31820,611 - 208,796 80,539 37948,868
3,996,740 - 299,767 - 41296,507
73,6462543 - - - 73,646,543
$ 97,6681343 $ - $ 71438,849 $ 802539 $ 105,026,653
$
3,388,341
235,297
31623,638
4,412,980
-
306,431
-
4,719,411
2,607,973
-
279,625
73,864
2,813,734
1,955,815
61918
277,326
-
21240,059
431550,206
-
1,881,031
-
45,4317237
$
55,915,315
$
61918
$
21979,710
$
73,864
$
58,828,079
$
41,753,028
$
(61918)
$
4145%139
$
61675
$
46,198,574
$
91,882,025
$
(67918)
$
5/2912620
$
618259795
$
90,340,932
Page 30
NOTES TO FINANCIAL STATEMENTS (Continued)
Business
-Type Activities
Capital Assets not being depreciated
Land
Construction in Progress
Total Capital Assets not being depreciated
Other Capital Assets
Buildings
Vehicles
Systems and Equipment
Total Other Capital Assets at Historical Cost
Less Accumulated Depreciation for:
Buildings
Vehicles
Systems and Equipment
Total Accumulated Depreciation
Other Capital Assets, Net
Business -Type Activities Capital Assets, Net
Balance Net Position Balance
May 1, 2017 Adjustment Increases Decreases April 30, 2018
29,6961060 - 7,588,519 1/3839163 35,9011416
$ 31,9042177 $ - $ 715889519 $ 11383,163 $ 389109,533
1,635,605 - 293,502 - 11929,107
65,963,438 - 656,817 - 66,6202255
$ 702335,141 $ - $ 950,319 $ - $ 71,285,460
897,979
-
88,572
-
986,551
261962,901
-
11583,974
-
289546,875
$
29,976,401
$ - $
1,733,123
$
- $
31,709,524
$
40,3581740
$ - $
(782,804)
$
- $
39,575,936
$
72,2621917
$ $ �618051715
$
123833163 $
772685,469
.,�..�.
Depreciation expense was charged to functions as
Governmental Activities
Public Safety
Public Works
Parks and Recreation
Unallocated
W
Total Governmental Activities Depreciation Expense
Business -Type Activities
Water
Sewer
Total Business -Type Activities Depreciation
NOTE 5 - LONG-TERM
Long-term liability activity for the
Governmental Activities
Bonds and Notes Payable
General Obligation Bonds
Unamortized Bond Discount
Unamortized Bond Premium
Total Bonds and Notes Payable
Other Long -Term Liabilities
Compensated Absences
IMRF Net Pension Liability
Police Pension Net Pension Liability
Total Other Long -Term Liabilities
Governmental Activities Long -
Term Obligations
1
rZ.3
$ 1,733,123
30, 2018 was as follows:
Balance
May 1, 2017 Additions
Retirements
$ 9,845,000 $ - $ 1,420,000
Amounts
Balance Due Within
April 30, 2018 One Year
$ 8,425,000 $ 1,445,000
82,439 - 81379 74,060 81378
$ 9,9151961 $ - $ 1142073 $ 8A911088 $ 1A492981
$ 511,537
4,312,686
$ 56,977 $
790,921
3,099,464
568,514 $ -
2, 004,143 -
223469,160
4,088,746
4,517,598
22,040,308 -
$ 24,6121965 $ -
$ 7,617,062
$ 4,936,644
$ 27,293,383
$ 37,209,344 $ 41936,644 $ 9,0411935 $ 33,1042053 $ 1,449,981
Page 31
NOTES TO FINANCIAL STATEMENTS (Continued)
Business
-Type Activities
Bonds and Notes Payable
General Obligation Bonds
IEPA Revolving Loan Fund
Unamortized Bond Discount
Unamortized Bond Premium
Total Bonds and Notes Payable
Other Long -Term Liabilities
Compensated Absences
IMRF Net Pension Liability
Total Other Long -Term Liabilities
Business -Type Activities
Long -Term Obligations
Amounts
Balance Balance Due Within
May 1, 2017 Additions Retirements April 30, 2018 One Year
$ 6,1851000 $ - $ 350,000 $ 5,8352000 $ 3650000
221257,610 9,249,572 - 31,507,182 1,25%865
(19,047) - (31940) (15,107) (31941)
71851 - 512 72339 512
$ 282431,414 $ %2491572 $ 346,572 $ 37,334,414 $ 1,621,436
$ 65,600 $ 61428 $ - $ 72,028 $ -
1,367,045 204,283 887,793 683,535 -
$ 1,432,645 $ 210,711 $ 887,793 $ 755,563 $ -
$ 29,864,059 $ 9,460,283 $ 1,234,365 $ 38,089,977 $ 1,621,436
Bonds and notes payable consisted of the following at
Maturity
Date
Governmental Activities
General
Obligation
Bonds
2010B
12/15/2020
General
Obligation
Bonds
2012
12/15/2027
General
Obligation
Refunding Bonds 2013
5/1/2019
General
Obligation
Bonds
2013
5/1/2027
General
Obligation
Bonds
2015
12/1512Q
Total
Business -Type Activities
General Obligation Bonds 2010C
General Obligation Bonds 2012
IEPA Revolving Loan Fund
Total
At April 30, 2018 the annual de
governmental activities are:
Year Ending April 30
Principal
2019
$ 1,445,000
2020
11485,000
2021
9502000
2022
570,000
2023
5851000
2024 - 2028
21460,000
2029 - 2033
555,000
2034 - 2038
3757000
$ 8,425,000
1
1.86%
Carrying
Amount
3,510,0(i�'" $ 1,140,000
50,000 600,000
ti51000 1,090,000
415,000 315,000
6,3751000 5,280,000
$ 13,1151000 $ 81425,000
$ 5,665,000
2,250,000
31,507,182
$ 392422,182
$ 4,040,000
1,795,000
311507,182
$ 37,342,182
requirements to service all long-term debt attributable to
At April 30, 2018 the annual debt sery
Page 32
NOTES TO FINANCIAL STATEMENTS (Continued)
Year Ending April 30
2019
2020
2021
2022
2023
2024 - 2028
2029 - 2033
2034 - 2038
Principal
$ 19624,865
1,715,719
11750,772
1,796,294
118329292
9,853,760
%750,581
9,017,899
$ 37,342,182
Interest
$ 806,514
770,343
733,801
695,878
655,629
2,615,459
11389,992
467,668
$ 8,1351284
Total Rebate
$ 2,431,379
2,486,062
21484,573
23492,172
2,487,921
12,4699219
11,140,573
9,485,567
$ 45,477,466
Industrial Development Revenue Bonds, Series 2016A and 20168
$ 63,672
58,420
57,383
53,743
49,490
170,389
23,060
$ 476,157
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, 2018 the outstanding
balance on the bonds was $2,389,026.
NOTE 6 - RESTRICTED EQUITY
The following amounts are restricted equity balances at
Restricted for
Governmental Activities/Governmental Funds
Highways and Streets
Capital Projects
Tax Increment Financing
Special Service Areas
NOTE 7 - DESIGNATED NET
City management has design
service. The amount designatl
NOTE 8 - DEFICIT FUND
:r and Sewer Fund
8 was $1,198,020.
revenues to be used only for debt
At Aprif 30, 2018 a deficit fund balance existed in the following funds:
Pageant Fund $ 1,429
Tax Increment Financing Fund 247,061
SSA#6 Huntersville Fund 179J15
$ 427,605
NOTE 9 - NET POSITION/FUND BALANCE ADJUSTMENT
During the year, the City made the following net position/fund balance adjustments:
Governmental Activities
Adjustment to record 2017 licensing
agreement paid in December 2017
Adjustment to record prior year
depreciation expense
et Poson
N
Governmental Funds - IT Fund
Adjustment to record 2017 licensing
$ (91720) agreement paid in December 2017
(6,918)
$ (16,638)
Fund Balance
$ (9,720)
Page 33
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 10 - PROPERTY TAXES
Property taxes receivable and unavailable revenue recorded in these financial statements, in the amount
of $5,485,041, are from the 2017 tax levy. The unavailable revenue is 100% of the 2017 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 2018. The
City has determined that 100% of the amounts collected for the 2016 levy ($5,371,369) are allocable for
use in fiscal year 2018 and, therefore, are recorded in these financial statements as property taxes
revenue. A summary of the assessed valuation, rates, and extensions for the years 2017, 2016, and
2015 follows:
Tax Year
Assessed Valuation
2017
$624,662,787
2016
$5881650,542
Rates
Extensions
Rates
General
0.0899
$
561,765
0,1201
Police Protection
0,0877
547,960
0.0931
Insurance
0,0800
499,999
0.0849
Retirement
0.0639
399,197
0,0678
Social Security
0,0902
5637746
0.0958
Audit
0.0042
26,429
0,0045
Police Pension
0.3233
2101 %703
0,3184
Total Taxes Extended
0,7394
$
4,618,800
0,7846
Road and Bridge
(from Townships)
-
$
35%432
-
Special Service Area #1A
-
$
-
-
Special Service Area #4A
-
$
16,847
Tax Increment Financing
-
$
489,962
NOTE 11 - EXCESS OF EXPENDITURVER
For the year ended April 30, 2018,
budget.
Extensions
$ 707,252
5479963
500,000
399,199
2015
$545,123,709
Rates Extensions
0.2201 $ 11200,074
0.1005 547,964
0.0917 499,998
0.0732 399,194
0.1034 563,745
0.0048 26,428
Q.2796 11524,248
35 $ 41761,651
$ 16,847
- $ 322,158
I funds had expenditures that exceeded the
Excess of Actual
Fund Budge . Ace__ e, Over Budget
General $ 21,7641 $ 21 5;251 $ 171,094
Audit 41,71 2,535 820
Capital Improvement 11386,649 9529J84 1423535
Retained Personnel 73,000 102,056 29,056
Developer Donations 4982256 573,953 75,697
Pageant 11100 1,166 66
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.
Page 34
NOTES TO FINANCIAL STATEMENTS (Continued)
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 75% 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 eligil
pension benefits vest after ten years of service. Participal
benefits) or after age 67 (at full benefits) with ten years,
benefit, payable monthly for life, in an amount equal
first 15 years of service credit, plus 2% for each year of
75% of their final rate of earnings. Final rate of Frpon
consecutive months within the last ten years ofncreased on January 1 every year after retireme
• 3% of the original pension amount, or
• 1/2 of the increase in the A .ume
C. Employees Covered by
fc� 'e benefits. For Tier 2 employees,
e es who retire at age 62 (at reduced
entitled to an annual retirement
2/3% a final rate of earnings for the
rN redit years to a maximum of
is ighes otal earnings during any 96
vide 96. Under Tier 2, the pension is
Ong a 71 by the lesser of:
ginal pension amount.
All appointed employees of a icipatin �; loy�°r who are employed in a position normally requiring
600 hours (1,000 hours for ce employ fired after 1981) or more of work in a year are required
to participate. As of December 167 u. following employees were covered by the benefit terms:
Retirees and beneficiaries currently receiving benefits 77
Inactive plan members entitled to but not yet receiving benefits 41
Active plan members 108
Total 226
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 2017 was 12.54%. For the fiscal year ended April 30, 2018, the City
contributed $928,313 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.
Page 35
NOTES TO FINANCIAL STATEMENTS (Continued)
E. Net Pension Liability
The components of the net pension liability of the IMRF as of December 31, 2017, calculated in
accordance with GASB Statement No. 68, were as follows:
Total Pension Liability $ 35,615,648
IMRF Fiduciary Net Position 32,927,971
City's Net Pension Liability 22687,677
IMRF Fiduciary Net Position as a Percentage
of the Total Pension Liability 92.45%
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 a
December 31, 2017 using the following actuarial method c
Assumptions
Inflation
Salary Increases
Interest Rate
Asset Valuation Method
Projected Retirement Age
2.50%
3.39-14.25% inclu
7
Market
Experience -based Tab f C$
eligibility condition, pdate
accord' to an a ce study
i7'iTa
arial valuation performed as of
"type of
valuation
to 2016
For non -disabled retirees, an IM'<ecifirt ality tame was used with fully generational projection
scale MP-2017 (base year 2015). F s rates were developed from the RP-2014 Blue Collar
Health Annuitant Mortality Ta ith tme o match current IMRF experience. For disabled
retirees, an IMRF specific mort table w ed with fully generational projection scale MP-2017 (base
year 2015). The IMRF-specifi tes wer eloped from the RP-2014 Disabled Retirees Mortality
Table, applying the same adjust th re applied for non -disabled lives. For active members, an
IMRF specific mortality table was us ully 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.
G. Long -Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using abuilding-
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, 2017:
Page 36
NOTES TO FINANCIAL STATEMENTS (Continued)
Target
Projected
Asset Class
Allocation
Return
Equities
37.00%
6.85%
International Equities
18.00%
6.75%
Fixed Income
28.00%
3.00%
Real Estate
9.00%
5.75%
Alternatives
7.00%
Private Equity 7.35%
Hedge Funds 5.05%
Commodities 2.65%
Cash 1.00% 2.25%
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 determine uti
contribon rates and the member rate.
The Single Discount Rate reflects:
1. The long-term expected rate of return on pension K
fiduciary net position is projected to be sufficient to
2. The tax-exempt municipal bond rate based on an it
average AA credit rating (which is published b
(to the extent that the contributions for use wa,E e
For the purpose of this discount rate, the ex . to
the municipal bond rate is 3.31 %; and result sing
I. Changes in Net Pension
Balances at December 31, 2016
Changes for the year:
Service Cost
Interest on the Total Pension Liability
Differences Between Expected and Actual
Experience of the Total Pension Liability
Changes of Assumptions
Contributions - Employer
Contributions - Employee
Net Investment Income
Benefit Payments, including Refunds
of Employee Contributions
Other (Net Transfer)
Net Changes
2,542,116
646,124
(1,124,675)
(11393,390)
$ 1,37T971
(during the period in which the
g N aI obligation bonds with an
rve) as of the measurement date
ected rate of return are not met).
pension plan investments is 7.50%;
is 7.50%.
Plan Fiduciary
Net Position
(B)
$ 28,557,946
Net Pension
Liability
(A)-(B)
$ 5,679,731
$ - $ 707,796
- 2,542,116
- 646,124
- (1,124,675)
915,963 (915,963)
328,547 (328,547)
4,871,136 (4,8712136)
(12393,390)
(352,231)
$ 42370,025
352,231
$ (2,992,054)
Balances at December 31, 2017 $ 35,615,648 $ 327927,971 $ 22687,677
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
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 9/6higher:
Page 37
NOTES TO FINANCIAL STATEMENTS (Continued)
Current
1 % Lower Discount Rate 1 % Higher
6.50% 7.50% 8.50%
Net Pension Liability/(Asset) $ 7,626,091 $ 2,687,677 $ (1,349,981)
K. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended December 311 2017 the City recognized pension expense of $896,888. At
April 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related
to pensions from the following sources:
Expense in Future Periods
Differences between expected and actual
experience
Changes of assumptions
Net difference between projected and actual
earnings on pension plan investments
Total deferred amounts to be recognized in
pension expense in future periods
Pension contributions made subsequent to
the measurement date
Total deferred amounts related to pensions
Outflows of Inflows of Net Outflows
Resources Resources of Resources
$ 563,802 $ 60,670
18,879 1,002,371
839,372
$ 1,422,053
Amounts reported as deferred outflows of re:
pensions will be recognized in pension expense
Net Deferred
Year Ending
Outflows of
December 31
Resources
2018
$ (253,654)
2019
(253,654)
2020
(645,413)
2021
(648,620)
2022
(382113)
Thereafter
-
$ (1,839,454)
NOTE 13 - POLICE PENSION PLAN
A. Plan Administration
$ 503,132
(983,492)
(1,359,094)
$ (1,839,454)
of resources related to
Full-time police sworn personnel of the City are covered by The Police Pension Fund of the City (Plan).
Although this is asingle-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.
B. Plan Membership
Membership in the Plan consisted of the following at May 1, 2017, the most recent actuarial valuation
date:
NOTES TO FINANCIAL STATEMENTS (Continued)
Retirees and beneficiaries receiving benefits 30
Terminated plan members entitled to but not yet receiving benefits 2
Active plan members 47
Total 79
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, 201 kheyhas until the year 2040 to fund
90% of the past service cost for the Plan. For the year e d2018 the City's contribution was
43.54% of covered payroll.
E. Investment Policy
ILCS limit the Plan's investments to those allowable
adopt an investment policy which can be amend
Plan's investment policy authorizes the Plant aN
savings and loan institutions, obligations of,
shares, money market mutual funds with p'ilos of
or agreements to repurchase t sa ligation
paper rated within the three high lassi e ns by
grade corporate bonds and Illinoi s. T Ian
Illinois municipal corporations t tic wa <. s
and its political subdivisions, II is insur co pa
and corporate equity securities.
The Plan's investment policy in
Asset Class
Fixed Income
Domestic Equities
International Equities
Real Estate Equities
Mended Equities
Cash and Securities
an ire the Plan's Board of Trustees to
ority of the Board of Trustees. The
s/invest in insured commercial banks,
su U.S. agencies, insured credit union
uritie sued or guaranteed by the United States
11 ase agreements, short-term commercial
ast two standard rating services, investment
may also invest in certain non-U.S. obligations,
veteran's loans, obligations of the State of Illinois
iy general and separate accounts, mutual funds
ith ILCS establishes
Long -Term
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 which best estimate
ranges of expected future real rates of return (net of pension plan investment expense and inflation) were
Page 39
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 2018 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, 2018, the annual moi
investments, net of pension plan investment expense,
expresses investment performance, net of investment
actually invested.
Deposits with Financial Institutions
Custodial credit risk for deposits with financial in
the Plan's deposits may not be returned to i
be covered by federal depositorysuran.
J. Interest Rate Risk
The following table presents
April 30, 2018:
Investments
External Investment Pools
Foreign Issues
US Treasury
Federal Home Loan Banks
Municipal Bonds
Corporate Bonds
Mutual Funds
623,937
11725,797
2882192
875,167
5,465, 866
15,757,284
rate of return on pension plan
e money -weighted rate of return
ed for the changing amounts
that in the event of a bank's failure,
policy requires all bank balances to
maturities of the Plan's debt securities as of
Investment Maturities (in Years)
Less Than 1 1-5 5-10 More Than 10
$ 29,109
623,937 - - -
5309143 169,568 1, 026, 086
288,192 -
488,794 386,373 - -
3,6351598 1,619,716 92,047 118,505
15,757,284 - - -
Total $ 241765,352 $ 20,534,722 $ 2,8241424 $ 261,615 $ 1,144,591
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,
securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed
Page 40
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 2018, the Plan's investments were
rated as follows:
Investments Credit Rating Rating Source
Illinois Funds Investment Pool AAAm Standard and Poor's
US Treasury IPS Aaa Moody's
US Treasury Bond Aaa Moody's
US Treasury Notes Aaa Moody's
Federal Home Loan Banks AA+ Standard and Poor's
Foreign Issues - Bank of Canada A Standard and Poor's
Foreign Issues - Sumitomo Mitsui Banking A Standard and Poor's
Foreign Issues - Westpac Banking Corp AA- 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 - Associates Corp North America BBB+ Standard and Poor's
Corporate Bonds - Bank of America A- Standard and Poor's
Corporate Bonds - Capital One Bank USA Na BBB+ an rd and Poor's
Corporate Bonds - Capital One NA BBB- rd and Poor's
Corporate Bonds - Citigroup Inc BB and Poor's
Corporate Bonds - CVS Health Corp BB tan d Poor's
Corporate Bonds - Ford Motor Credit BBB Standar Po 's
Corporate Bonds - General Elec Cap Corp A andard a
Corporate Bonds - General Motors Fini Co I and and oor's
Corporate Bonds - Goldman Sachs St and Poor's
Corporate Bonds - Goldman Sachs Group Inc BBB+. Stannd Poor's
Corporate Bonds - McKesson Corp BB tandard and Poor's
Corporate Bonds - Microsoft Corp dard and Poor's
Corporate Bonds - Morgan Stanley + S andard and Poor's
Corporate Bonds - Santander Holdings US , + Standard and Poor's
Corporate Bonds - Sovereign Bank Standard and Poor's
Corporate Bonds - Time Warner BBB Standard and Poor's
Corporate Bonds - 21st Century Fox Americ BBB+ Standard and Poor's
Mutual Funds of Rated N/A
Municipal Bonds - La Salle County IL Sc t 141 Otta AA Standard and Poor's
Municipal Bonds - Moline IL Refunding S G Al Moody's
Municipal Bonds - Carol Stream IL Park Di A2 Moody's
Municipal Bonds - Hanover Park IL Park Dis Baa2 Moody's
Municipal Bonds - IL St Pension BBB1 Standard and Poor's
L. Net Pension Liability
The components of the net pension liability of the Plan as of April 30, 2018, calculated in accordance with
GASB Statement No. 68, were as follows:
Total Pension Liability $ 47,3882840
Plan Fiduciary Net Position 25,348,532
City's Net Pension Liability 22,040,308
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 53,49%
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
The total pension liability above was determined by an actuarial valuation performed as of April 30, 2018
using the following actuarial methods and assumptions:
Page 41
NOTES TO FINANCIAL STATEMENTS (Continued)
Actuarial Valuation Date
Actuarial Cost Method
Assumptions
Inflation
Salary Increases
Investment Rate of Return
Asset Valuation Method
May 1, 2017
Entry Age Normal (Level %)
2.50%
4.00%-10,27%
7.00%
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 April 30, 2017 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
to cover future benefit payments. To the extent future
projected net position, the expected rate of return on pla
of the net pension liability associated with those payment
covered by the plan's projected net position, the municip
the net pension liability associated with those payme
Changes for the year:
Service Cost
Interest on the Total Pension Liability
Differences Between Expected and A
Experience
Contributions - Employer
Contributions - Employee
Net Investment Income
Benefit Payments, including Refunds
of Employee Contributions
Administrative Expense
Net Changes
Balances at April 30, 2018
00,1
13,601)
(1,911,914)
$ 2,144,514
$ 47,388,840
�n's future net position will be able
ments are covered by the plan's
isised to determine the portion
T benefit payments are not
isu o determine the portion of
'Ian Fib __Y Net Pension
Net ition Liability
(A)-(B)
221775,166 $ 22,46%160
- $ 969843
,
- 3,100,186
- (13,601)
1,868,798 (1,868,798)
4099415 (409,415)
2,2251784 (21225,784)
(1,911,914)
(18,717)
$ 2,5731366
$ 252348,532
$
18,717
(428,852)
$ 222040,308
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:
Net Pension Liability
Current
1 %Decrease Discount Rate 1 %Increase
6.00% 7.00% 8.00%
$ 29,576,382 $ 22,040,308 $ 15,989,635
Page 42
NOTES TO FINANCIAL STATEMENTS (Continued)
Q. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended April 30, 2018, the City recognized pension expense of $2,516,802. At April 30, 2018,
the City reported deferred outflows of resources and deferred inflows of resources related to pensions
from the following sources:
Expense in Future Periods
Outflows of Inflows of Net Outflows
1,997,183 969,735 1,027,448
723,441 849,428 (125,987)
Total deferred amounts to be recognized in
pension expense in future periods $ 2,720,624 $ 31101,313 $ (380,689)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized in pension expense as follows:
Year Ending
April 30
2019
2020
2021
2022
2023
Thereafter
Net Deferred
Outflows of
Resources
(42,134)
(421,418)
(297,549)
(507,381)
$ (380,689)
NOTE 14 - POST EM
A.
Retiree Insurance Plan
Plan Overview
The City provides post-employme r �s other than pensions ("OPEB") to employees who meet
certain criteria. All employees who wor for the City and receive a pension from the City through IMRF
or a Police Pension may continue coverage into retirement if they pay the entire premium. Coverage
may continue when Medicare eligibility is reached. Coverage for dependents can also continue upon
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.
Membership in the Plan consisted of the following as of May 2016, the most recent valuation date.
Actives fully eligible to retire
Actives not yet fully eligible to retire
Retirees
Funding Policy
14
83
15
Total 112
The required contribution is based on projected pay-as-you-go financing requirements.
Page 43
NOTES TO FINANCIAL STATEMENTS (Continued)
Annual OPEB Cost and Net OPEB Obligation
The City's annual OPEB cost (expense) is calculated based on annual required contributions (ARC) of
the City, an amount determined on an actuarially determined basis in accordance with the parameters of
GASB Statement No. 45. The ARC represents a level funding that, if paid on an ongoing basis, is
projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period
of 30 years. The following shows the components of the City's annual OPEB cost for the year, the amount
actually contributed to the plan, and the changes in the City's net OPEB obligation to the plan:
Annual required contribution $ 212,390
Interest on net OPEB obligation 71837
ARC Adjustment (69998)
Annual OPEB cost (expense) $ 213,229
Estimated contributions made 111,410
Increase/(decrease) in net OPEB obligation $ 101,819
Total OPEB (asset)/obligation - beginning of year 1953950
Total OPEB (asset)/obligation - end of year $ 297,769
The City's annual OPEB cost, the percentage of annual O
OPEB obligation for the year are as follows:
Year Ended
4/30/2018
4/30/2017
4/30/2016
OPEB Cost
$ 213,229
212,762
2122390
Funded Status and Funding Progress
The Schedule of Funding Prog
notes to the financial statements,
of plan assets is increasing or de
contributed to the plan, and the net
Supplementary Information following the
tren information about whether the actuarial value
relative to the actuarial accrued liability for benefits.
Actuarial valuations involve es es of t ,"slue of reported amounts and assumptions about the
probability of events far into the xamples include assumptions about future employment,
mortality and the healthcare cost tren ctuarially determined amounts are subject to continual revision
as results are compared to past expectations and new estimates are made about the future.
The following includes actuarial assumptions and methods:
Actuarial Cost Method
Amortization Method
Remaining Amortization Period
Asset Valuation Method
Discount Rate
Projected Salary Increases
Healthcare Inflation Rates
BCBS HMO -Pre Medicare
BCBS HMO -Medicare Eligible
BCBS PPO-Pre Medicare
PPO HRA-Pre Medicare
Ultimate Health Care Cost Trend Rate
Percentage of Active Employees Assumed to Elect Benefit
Employer Provided Benefit
Mortality Table
Entry Age Normal
Level Percentage of Projected Payroll
30 Years
N/A
4%
Implicit: 20% of premium to age 65
12/31/14 IMRF Actuarial Valuation Report
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 2018 consisted of the following:
Due From
Due To
Amount
General Fund
Water and
Sewer Fund $
5,922
General Fund
Nonmajor
Governmental Funds
14,988
Water Sewer Fund
Nonmajor
Governmental Funds
270
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, 2018 consisted of the following:
Transfer From Transfer To m
General Fund Nonmajor Governmental Funds 6,1
Nonmajor Governmental Funds General Fund 1
Water and Sewer Fund Nonmajor Governmental Funds 05,953
Nonmajor Governmental Funds Water and Sewer Fund 847
Transfers are used to (1) move revenues from the req to collect them to the fund that is
required to expend them, (2) move receipts restric to d ice f m the funds collecting the receipts
to the Debt Service Fund as debt service pa a be a nd, (3) assign General Fund balance
in excess of 120 days of receipts to the Ca ` Imo : ent nd to be used for capital projects.
NOTE 16 - RISK MANAGEME
The City is exposed to various ri to t <" heft of, damage to, and destruction of assets; errors
and omissions; and injuries to loyees. `' a Ci Is a member of the McHenry County Municipal Risk
Management Agency (MCMR a publ tity risk pool through which property, general liability,
automobile liability, crime, exc rope V excess liability, and boiler and machinery coverage is
provided in excess of specified li embers, 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
loss of reduction and prevention procedures to be followed by the members. During fiscal year 2018
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 aretrospectively-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, 2018, there were no significant adjustments in premiums based
on actual experience.
NOTES TO FINANCIAL STATEMENTS (Continued)
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 $1,569,500 and
Lakeland Park Drainage Improvements for $610,000. For the Water and Sewer Fund there were
outstanding costs for the waste water treatment plant consolidation totaling $363,758, sanitary sewer
rehabilitation projects for $40,000, water meter replacement of $225,000, and well inspections of
$30, 000.
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 ind
equalized assessed valuation (EAV) of the City.
2017 EAV
1:1
Debt Margin
Current Debt
Remaining Debt Margin
$ 624,662,787
8.625%
$ 53,877,165
8,425,000
$ 45,452,165
NOTE 20 - TAX ABATEMENT AGREEM
The City negotiates property an
agreements are entered into urn
tax abatement agreements with
Name of
Abatement
Agreement
Gary Lang Business
District Development
Agreement
1110 N Green LLC
Redevelopment
Agreement
McHenry Commons
Shopping Center
Economic Incentive
Agreement
Type of Ta
Abated
to 8.625% of the most recent available
_�,� � .-dents on an individual basis.
Mayor, City Clerk, and City Council
30, 2018 as follows:
$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
Sales taxes 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.
TIP
property Rebate 100% of the TIF Increment assessed up to
taxes $624,028.
Rebate 100% of base sales tax received by the State
Sales taxes attributable to the gross sales generated at the Hobby
Lobby Store. The total rebate payments cannot exceed
$677,500 or 20 years.
All abatement
The City has
Amount
of Taxes
Abated During
the Fiscal Year
$ 507,375
59,740
28,610
NOTES TO FINANCIAL STATEMENTS (Continued)
Name of Eligibility Criteria
Abatement Type of Taxes and Mechanism
Agreement Abated of Abatement
Rebate 50% of sales tax revenues generated by CVS
CVS Pharmacy Pharmacy in calendar years 2016 through 2020 and 25% of
Economic Incentive Sales taxes sales tax revenues generated by CVS Pharmacy in
Agreement calendar years 2021 through 2025. The total rebate
payments cannot exceed $175,000.
Central Big R Stores Rebate 100% of base sales tax received by the State
Inc. Economic Sales taxes attributable to the gross sales generated at the Big R Store.
Incentive Agreement The total rebate payments cannot exceed $400,000 and
end December 31, 2020.
3017 Route 120 &
Northwest Suburban
Auto Group
Economic Incentive
Agreement
McHenry Donuts,
Inc. Economic
Incentive Agreement
Sunnyside Auto
Finance Company
Economic Incentive
Agreement
Curt Ames DBA
Chain O'Lakes
Brewing Company
Redevelopment
Agreement
Seth Wagner and
Associates Real
Estate Company
Property Tax
Abatement
Agreement
TIF Property
Taxes
Property T
assessed up to $17,585.
xes levied against the subject property
taxing body's property taxes exceed the
from the 2014 base property tax year
34) through December 31, 2026.
Amount of Taxes
Abated During
the Fiscal Year
0
37,001
78,619
43,331
2,578
23,850
385
155
Page 47
CITY OF MCHENRY, ILLINOIS
ILLINOIS MUNICIPAL RETIREMENT FUND
SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION
LIABILITY AND RELATED RATIOS
APRIL 30, 2018
TOTAL PENSION LIABILITY
Service Cost
Interest on Total Pension Liability
Differences Between Expected and Actual Experience
Changes of Assumptions
Benefit Payments, Including Refunds of Member Contributions
Net Change in Total Pension Liability
Total Pension Liability -Beginning
Total Pension Liability -Ending
PLAN FIDUCIARY NET POSITION
Contributions - Employer
Contributions - Member
Net Investment Income
Benefit Payments, Including Refunds of Member Contributions
Administrative Expenses
Net Change in Plan Fiduciary Net Position
Plan Net Position -Beginning
Plan Net Position -Ending
City's Net Pension Liability
Plan Fiduciary Net Position as a
of the Total Pension Liability
Covered -Valuation Payroll
Employer's Net Pension Liability
of Covered -Valuation Payroll
4/30/2018� 4/30/2017* 4/30/2016'
$ 707,796 $
704,466 $
652,882
215429116
21419,748
21286,008
646,124
(98,080)
86,269
(11124,675)
(136,959)
44,481
(11393,390)
(11384,293)
(11144,016)
$ 11377,971
$
11504,882
$
11925,624
34,237,677 32,732,795 30,807,171
$ 35,615,648 $ 34,237,677 $ 32,732,795
915,963 $ 844,878 $ 801,851
8,547 366,710 277,350
71,136 1,840, 322 133,288
390) (12384,293) (19144,016)
31 293,436 (161,598)
4,37Tft,,44 1,961,053 $ (93,125)
26,596,893 26,690,018
$ 28,557,946 $ 26,596,893
7,677 $ 5,679,731 $ 6,135,902
92.45% 83.41 % 81.25%
$ 7,241,274 $ 6,362,027 $ 6,163,340
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.
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
ILLINOIS MUNICIPAL RETIREMENT FUND
SCHEDULE OF EMPLOYER CONTRIBUTION
LAST TEN FISCAL YEARS
Actuarially -Determined Contribution
Contributions in Relation to Actuarially -Determined Contribution
Contribution Deficiency/(Excess)
Covered Payroll
Contributions as a Percentage of Covered Payroll
4/30/2018*
4/30/2017*
4/30/2016*
$ 908,056
$ 8449877
$ 801,851
915, 963 844, 878 801, 851
$ 7,469,026
12.26%
$ 6,362,027
Notes to Schedule:
Actuarial Method and Assumptions Used on the Calculation of the 2017 Contribution Rate *
Actuarially determined contribution rates are calculated as of December 31 each
year in which contributions are reported.
Actuarial Cost Method: Aggregate entry age =normal
Amortization Method: Level percentage of payroll, closed
Remaining Amortization Period: 26-year closed period
Asset Valuation Method: 5-year smoothed market; 20% corridor
Wage Growth: 3.5%
Price Inflation: 2.75%, approximate; No explicit price inflation
Salary Increases: 3.75% to 14.50%, including inflation
Investment Rate of Return: 7.50%
Retirement Age: Experience -based table of r
to an experience study of the period 2011-201
Mortality: RP-2014 Blue Collar Healthy Moi
mortality table was used with fully generatio
2014 Disabled Retirees Mortality Table, apn
specific mortality table was used with fully
from the RP-2014 Employee Mortality Table w
*Based on Valuation Assumptions used in
settinn.
13.28%
$ 6,163, 340
12 months
are prior to the beginning of the fiscal
condition; last updated for the 2014 valuation pursuant
# match current IMRF experience. For disabled lives, an IMRF specific
IP- _ base year 2012). The IMRF-specific rates were developed from the RP-
�tment that were applied for non -disabled lives. For active members, an IMRF-
scale MP-2014 (base year 2012). The IMRF specific rates were developed
atch current IMRF experience.
1, 2015 actuarial valuation; note two year lag between valuation and rate
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.
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
POLICE PENSION PLAN
SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION
LIABILITY AND RELATED RATIOS
APRIL 30, 2018
TOTAL PENSION LIABILITY
Service Cost
Interest
Differences Between Expected and Actual Experience
Changes in Assumptions
Benefit Payments, Including Refunds of Member Contributions
Net Change in Total Pension Liability
Total Pension Liability -Beginning
Total Pension Liability -Ending
PLAN FIDUCIARY NET POSITION
Contributions - Employer
Contributions - Member
Net Investment Income
Benefit Payments, Including Refunds of Member Contributions
Administrative Expenses
Net Change in Plan Fiduciary Net Position
Plan Net Position -Beginning
Plan Net Position -Ending
City's Net Pension Liability
Plan Fiduciary Net Position as a PercE
of the Total Pension Liability
Covered -Employee Payroll
Employer's Net Pension Liability as a
of Covered -Employee Payroll
Annual Money -Weighted Rate of Retu
Net of Investment Expenses
This schedule is presented to illustrat
presented for those years for which information is available.
4/30l2018
$ 9699843
3,100,186
(13,601)
(1,911,914)
$ 2,144,514
4/30/2017 4/30/2016 4/30/201
$ 906,395
3,130,927
(1,315,850)
(11259,209)
(11890,931)
$ (428,668)
$ 948,282
2,940,204
(531,862)
4,137,023
(2,046,745)
$ 5,446,902
$ 876,654
2,804,198
(300,710)
391,028
(1,868,756)
$ 1,902,414
45,244,326 45,672,994 40,226,092 38,323,678
$ 47,388,840 $ 45,244,326 $ 45,672,994 $ 40,226,092
$ 1,868,798
409,415
2,225,784
(11911,91
$ 1,521,914
397,515
21041,694
(11890,931)
$ 1,386,205
513,111
(228,847)
(29046,745)
(29,539)
$ (405,815)
�46,138 21,151,953
2, $ 201746,138
2,469,160 $ 24,9262856
50,34% 45,42%
4,082,315 $ 3,880,748
550.40% 642.32%
2017 2016
5,60% -1.53%
$ 1,295,101
381,363
1,101,915
(1,868,756)
(36,845)
$
872,778
20,279,175
$ 21,151,953
$ 19,074,139
52,58%
$ 3,791,467
503,08%
2015
5,41 %
er, until a full ten-year trend is compiled, information is
Page 50
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
POLICE PENSION PLAN
SCHEDULE OF EMPLOYER CONTRIBUTION
LAST TEN FISCAL YEARS
Actuarially -Determined Contribution
Contributions in Relation to Actuarially -Determined Contribution
Contribution Deficiency/(Excess)
Covered -Employee Payroll
4/30/2018
4/30/2017
4/30/2016
4/30/2015
$ 11874,219
$ 11524,244
$ 1,3871374
$ 11295,577
1,868,798
1,521, 914
1,386,205
1,2951101
$ 5,421
$ 21330
$ 1,169
$ 476
$ 41291,809
$ 49082,315
$ 3,880,748
$ 3,791,467
Contributions as a Percentage of Covered -Employee Payroll 43.54% 37.28% 35.72% 34.16%
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.
See Accompanying Independent Auditor's Report
Page 51
CITY OF MCHENRY, ILLINOIS
RETIREE INSURANCE PLAN
SCHEDULE OF FUNDING PROGRESS
April 30, 2018
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability (AAL) AAL Funded Covered of Covered
Valuation Assets -Entry Age (UAAL) Ratio Payroll Payroll
Date (a) (b) (b-a) (a/b) (c) ((b-a)/c)
4/30/2018 $ - $ - $ - - $ - -
4/30/2017 - - - - - -
4/30/2016 - 51023,256 510239256 0% 71322,297 69%
See Accompanying Independent Auditor's Report
Page 52
CITY OF MCHENRY, ILLINOIS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
GENERALFUND
FOR THE YEAR ENDED APRIL 30, 2018
REVENUES
Local Taxes
Property Tax
Intergovernmental
State Sales Tax
State Income Tax
State Replacement Tax
State Pull Tab/Games Tax
Inter Track Wagering Tax
State Telecommunications Tax
Federal Grants
Other Local Sources
Hotel/Motel Tax
Franchise Fees
Licenses and Permits
Fines and Forfeitures
Charges for Services
Interest
Miscellaneous
Rent
Royalties
Donations
Annexation Fees
Reimbursements
Special Events
Other Miscellaneous
Total Revenues
EXPENDITURES
Current
General Office
Administration
Elected Officials
Community Development
Finance Department
Public Safety
Police Commission
Police Department
Dispatch Center
Public Works
Administration
Street Department
Building and Grounds
Parks and Recreation
Parks and Recreation
Budgeted Amounts Actual
Original Final Amounts
$ 4,967,359
9,124, 742
2,726,192
65,000
1,000
60,000
140,000
it
1
yi,-rv-r,�vv
100,986
849,988
11207,647
$ 3,6231501
$ 6,953
9,372,924
21471,052
$ 11,850,929
$ 446,466
3,001,082
$ 31447,548
$ 21273,055
$ 2,273,055
$ 4,967,359
9,124,742
2,7261192
65,000
1,000
60,000
1401000
155,250
325,000
733,500
24,165
75,000
10,000
80,000
2,0251674
33,000
$ 22,317,659
$ 1,489,880
102,846
849,988
11207,647
$ 31650,361
$ 6,953
9,442,878
21552,884
$ 12,002,715
$ 446,466
3,001,082
$ 31447,548
$ 21273,055
$ 2,273,055
$ 4,947,811
9,647,976
2,4561160
59,769
886
49,872
129, 378
8,307
174,935
1775
8841814
424,614
1,3141578
851915
19,191
63,058
17,279
26,251
2,077,405
49,521
154,759
$ 221937,254
$ 1,494,704
99,318
838,886
1,281,876
$ 3,714,784
$ 4,550
9,364,173
21496,634
$ 11,8653357
$ 442,871
3,261,728
$ 31704,599
$ 2,295,029
$ 2,295,029
Page 53
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
GENERALFUND
FOR THE YEAR ENDED APRIL 30, 2018
Budgeted Amounts Actual
Original Final Amounts
EXPENDITURES (Continued)
Capital Outlay
General Office
Administration $ - $ 299,528 $ 236,951
Community Development - - 50
Public Safety
Police Department 14,400 14,400 83,662
Public Works
Street Department - - 29,350
Parks and Recreation
Parks and Recreation - - 51469
$ 14140 ., $ 313,928 $ 3553482
Debt Service
Principal $ P50 1,550 $ -
$ 10550 $ -
Total Expenditures $ 2112 , $ ,157 $ 210935,251
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES/(USES)
Transfers
Sale of City Property
NET CHANGE IN FUND
FUND BALANCE -MAY 1, 2017
FUND BALANCE -APRIL 30, 2018
(1,153,056)
44512
$ (2,197,440)
10,000
$ (2,187,440)
$ (1,558,938)
10,444,512
$ 1,002,003
$ (855,219)
17,464
$ (8372755)
$ 164,248
8,599,302
$ 9,291,456 $ 8,885,574 $ 8,763,550
Page 54
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
APRIL 30, 2018
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 July 3, 2017 and was amended October 2, 2017, October 16, 2017,
December 4, 2018, February 5, 2018, March 5, 2018, and March 19, 2018.
NOTE 2 - EXCESS OF EXPEP'niTi ���e nv�c Q� �nr_c-r
For the year ended April 30, 20
had expenditures that exceede
Fund Budge
General $ 21,6$`•
applementary Information
Page 55
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CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF NET POSITION
WATER AND SEWER FUNDS
APRIL 30, 2018
ASSETS
Current Assets
Cash and Cash Equivalents
Deposit with Paying Agent
Investments
Prepaid Expenses
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed
Accounts Receivable - Unbilled
Accrued Interest
Due from Other Funds
Interest Rebate Receivable
Non -Current Assets
Capital Assets
Land
Buildings
Systems and Equipment
Vehicles
Construction in Progress
Less: Accumulated Depreciation
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES
Pension Expense/Revenue -IMRF
TOTAL DEFERRED OUTFLOWS OF
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Ex
Overdraft
Security Deposits Held
Due to Other Funds
Unearned Revenue
Accrued Interest
IEPA Loan Payable - Current
Bonds Payable - Current
Non -Current Liabilities
Compensated Absences
IMRF Net Pension Liability
IEPA Loan Payable (Net of Current Portion Shown Above)
Bonds Payable (Net of Current Portion Shown Above)
MMA MX
Id]I1111IIIiM
DEFERRED INFLOWS OF RESOURCES
Pension Revenue/Expense -IMRF
TOTAL DEFERRED INFLOWS OF RESOURCES
NET POSITION
Net Investment in Capital Assets
Unrestricted/(Deficit)
TOTAL NET POSITION
Capital
Utility
Marina
Total
Water/Sewer Development
Improvements
Operations
Water and
Fund Fund
Fund
Fund
Sewer Funds
$ 4,329,667 $ 945,894
416,540
29,497
253.028
$ 1,298,964 $ 348,129 $ 6,922,654
477,442 97,487 1,244,497
29,497
983,424 - - - 983,424
1,171,430 - - - 1,171,430
2,204 11150 1,279 424 5,057
14,988 - - 14,988
22,253 - - - 222253
$ 6,955,015 $ 1,2159060 $ 1,777,685 $ 446,040 $ 10,393,800
756 $ 446,040 $ 88,079,269
,939 $ - $ 251,475 $ 464 $ 1,481,878
- - 2,416,571 - 2,416,571
- 3,000 - - 3,000
981 - - - 981
1862675 - - - 186,675
84,160 - - - 84,160
1,259,865 - - - 1,259,865
3612571 - - - 361,571
$ 3,123,191 $ 3,000 $ 2,668,046 $ 464 $ 5,794,701
$ 72,028 $ - it - $ - $ 72,028
683,535 - - - 683,535
30,247,317 - - - 30,247,317
5/4653661 - - - 53465,661
$ 36,468,541 $ - $ - $ - $ 36,468,541
$ 39,591,732 $ 31000 $ 2,668,046 $ 464 $ 42,263,242
$
728,309
728,309
$ 36,728,849 4,8821071 $ - $ 41,610,920
3,089,801 1,212,060 (890,361) 445,576 3,857,076
$ 399818,650 $ 1,212,060 $ 3,991,710 $ 445,576 $ 45,4671996
Page 61
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
WATER AND SEWER FUNDS
FOR THE YEAR ENDED APRIL 30, 2018
OPERATING REVENUES
Charges for Services
Customer Fees
Capital Fees
Debt Service Fees
Penalties
Water Meter Sales
Other
OPERATING EXPENSES
Water Department
Personnel Salaries
Miscellaneous Personnel Expenses
Other Operating Expenses
Depreciation
Sewer Department
Personnel Salaries
Miscellaneous Personnel Expenses
Other Operating Expenses
Depreciation
Utility Work Department
Personnel Salaries
Miscellaneous Personnel Expenses
Other Operating Expenses
OPERATING INCOME!(LOSS)
NON -OPERATING REVEN
Interest Income
Rental Income
Interest Rebate Income
Interest and Fees
Amortization
Capital Utility Marina
Water/Sewer Development Improvements Operations
Fund Fund Fund Fund
Total
Water and
Sewer Funds
$ 4,763,276 $ 411,263
392,229 - - - 392,229
2,1691731 - - - 21169,731
143,075 - - - 143,075
17,025 - - - 17,025
11,634 - - - 11,634
$ 71496,970 $ 411,263 $ - $ - $ 71908,233
460,185
2091760
81933
5121215
2093760
648,933
512,215
- - 665,620
314,284
32,288 135282274
- - 11220,908
- - 586,942
- - 259,908
- - 3993411
$ - $ 32,288 $ 61806,440
(32,288) $ 11101,793
$ ,276 $ 1,117 $ 15,685 $ 414 $ 38,492
00 - - 23,313 53,313
1882 - - - 603882
11522) - - - (231,522)
(31429) - - - (3,429)
$ (122,793) $ 1,117 $ 15,685 $ 23,727 $ (82,264)
INCOME/(LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS $ 600,025 $ 412,380 $ 15,685 $ (8,561) $ 1,019,529
TRANSFERS (TO)/FROM OTHER FUNDS (110,712) - 16,847 - (93,865)
CHANGE IN NET POSITION $ 489,313 $ 412,380 $ 32,532 $ (8,561) $ 925,664
NET POSITION - MAY 19 2017 393329,337 799,680 31959,178 4540137 44,542,332
NET POSITION -APRIL 30, 2018 $ 39,818,650 $ 12212,060 $ 31991,710 $ 445,576 $ 45,467,996
See Accompanying Independent Auditor's Report
Page 62
ASSETS
Current Assets
Cash and Cash Equivalents
Investments
Prepaid Expenses
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed
Accounts Receivable - Unbilled
Accrued Interest
Due from Other Funds
Non -Current Assets
Capital Assets
Systems and Equipment
Less: Accumulated Depreciati
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESC
Pension Expense/Revenue -IMRF
TOTAL DEFERRED OUTFLOWS O
LIABILITIES
Current Liabilities
Accounts Payable and Accrued
Overdrafts
Unearned Revenue
Non -Current Liabilities
Compensated Absences
IMRF Net Pension Liability
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Pension Revenue/Expense -IMRF
DEFERRED INFLOWS OF RESOURCES
NET POSITION
Net Investment in Capital Assets
U nrestri (;ted/(Deficit)
TOTAL NET POSITION
CITY OF MCHENRYI ILLINOIS
COMBINING SCHEDULE OF NET POSITION
INTERNAL SERVICE FUNDS
APRIL 30, 2018
Employee Risk Information Total
Insurance Management Technology Internal Service
Fund Fund Fund Funds
$ 18,566 $ 737,392 $ 183,328 $ 939,286
81195 81195
63,487 - 191443 82,930
4,924 - - 4,924
80 - 80
10 10
3,326 - - 3,326
$ 90,303 $ 737,472 $ 210,976 $ 11038,751
$ 453,644 $ 453,644
(330,369) (330,369)
$ 123,275 $ 123,275
$ 334, 251 $ 1,162, 026
$
29,894
$
29,894
$
29,894
$
29,894
$ 7,703 $ 9,467
- 49,444
63,654
$ 71703 $ 122,565
$ 31857 $ 31857
97,010 97,010
$ 100,867 $ 100,867
$ 113,247 $ 1,615 $ 108,570 $ 223,432
$ - $ - $ 1233275 $ 123,275
(22,944) 735,857 75,048 787,961
$ (221944) $ 735,857 $ 198,323 $ 911,236
Page 63
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED APRIL 30, 2018
OPERATING REVENUES
Charges for Services
OPERATING EXPENSES
Personnel Salaries
Miscellaneous Personnel Expenses
Other Operating Expenses
Depreciation
OPERATING INCOME/(LOSS)
NON -OPERATING REVENUE/(EXPENSE)
Interest Income
INCOME/(LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS
CHANGE IN NET POSITION
NET POSITION -MAY 1, 2017
NET POSITION ADJUSTMENT (Note ;
NET POSITION -APRIL 30, 2018
Employee
Insurance
Fund
Risk
Management
Fund
Information
Technology
Fund
Total
Internal Service
Funds
$ 3,323,499 $ 695,175 $ 536,087 $ 4,554,761
$ 31323,499 $ 695,175 $ 536,087 $ 41554,761
31290,869 - 63,912 31354,781
31247 7059440 286,266 994,953
36,898 36,898
$ 37294,116 $ 705,440 $ 521,469 $ 41521,025
1
29,
14,618 $ 33,736
457 2,362
15,075 $ 36,098
15,075 36,098
192,968 884,858
(22=944Z $ 735,857 $ 198,323 $ 911,236
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF NET POSITION
AGENCY FUNDS
APRIL 30, 2018
ASSETS
Current Assets
Cash and Cash Equivalents
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable
TOTALASSETS
LIABILITIES
Current Liabilities
Cash Overdraft
Accounts Payable and Accrued Expenses
Due to Depositors
Due to McHenry Character Counts
TOTAL LIABILITIES
TOTAL NET POSITION
McHenry
Character
Counts
Fund
$ 5,085
Developmental
Escrow
Fund
$ 6,733
Retained
Personnel Total
Escrow Agency
Fund Funds
$ 742 $ 12,560
- - 36,626 36,626
$ 51085 $ 61733 $ 37,368 $ 49,186
5,085
$ 5,085 <
$ 11,827
25,541
6,733
5,085
$ 49,186
Page 65
See Accompanying Independent Auditor's Report
CITY OF MCHENRY, ILLINOIS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
SPECIAL REVENUE FUND - TAX INCREMENT FINANCING FUND
FOR THE YEAR ENDED APRIL 30, 2018
Budgeted
Amounts
Original
and Final
REVENUES
Local Taxes
Property Tax $ 325,000
Other Local Sources
Reimbursements 1,000
Total Revenues $ 326,000
EXPENDITURES
Current
General Office $ 62,000
Capital Outlay $
Total Expenditures
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES $
OTHER FINANCING SOURCES/(USES)
Transfers
NET CHANGE IN FUND BALANCE
FUND BALANCE -MAY 1, 2017
FUND BALANCE - APRIL 30, 2018
Final
$ 325,000
1,000
$ 3263000
Actual
Amounts
$ 380,359
1,000
$ 3819359
$ 62,000 $ 60,301
$ 20,000
$ (220,235)
,765 $ 23,765
(338,694) (338,694)
$ (314,929) $ (314,929)
$ 69,491
$ 311,868
(220, 235)
$ (220,235)
(338,694)
Page 66
See Accompanying Independent Auditor's Report
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