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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). 815.344.1300 mchenry eCCO. 847.382.3366 Barrington 847.336.6455 gurnee www.edercasella.com 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 65 815.344.1300 mchenry ec�sico. 847.382.3366 barrington 847.336.6455 gurnee www.edercasella.com 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 II H W00 � C)W N U Q U O pF LUco ZU F=J J Q = U U Q ZQ Q W LL =LL-UZ W U W Z O_ W ll� O W W r } r W H = U :E U H W 0 LU LL O O �I O M M M M O N d) IT N LO 1� M CO O %�t Co W M U) N M CA 00 O O ti M M 1� ti CO O LO M r O Mm;t <t M O N N O M. M O LO 1� (O O (`') O C) 0) O) (M 0) C) 00 M h M LO ' O 00 O O LO 444t MO ONN W MOO rO 'q;fOO(O d1 m N LO (O LO N 44t M V h 0 00 r� V N V r� 7 LO N LO .- W 'd' O C') W M CO M O V' N <- (O � N m N CM CO qRT r V• .- O v t: 7 p O C C%j N a) LO d) N W .7-• EA 6S d? V3 f!-? fA tf4 vi U> O CA qqr 00 LO LO N N LO C)) V N O W' i L i L Clr 0) i i i L i� 1 CO LC) (0 M d1 N 00 M O O O W O M LO tO N n w M CO CDdN) coMV: N W W LO tt d N Q O Cn V> H> U). di uoi GH to Efl HJ O_M(M MM 00N N OOO of 0(O WM NM M 0 00 O m O 0 M M r � t� to M cO �O qqrW M rn C) LO M Ln O M C N In r O O M .- O M CA O ao M n O LO W LO to h O LO N N V'MO 0 N N N r0 d'C) (0 CA MM c0 N (O r tt LO cY O (O r 4* Ln N �- N <!' O O LO it (O CO M O V' N c- a- M CO V r 'd' O N N CA Q O rr v O O LO d) N M VZ `. O 00 O c- N N rh (O f/3 (H d3 d3 tfJ ff> fA 4? fJ) 0 � 0 U N m .2 L U U O C) W Ll') 47 r M O 00 (4 r� M C)) (O d' O � L M CM 0 M O 7 CL m N c N N O M LO a• N J O O N N N tO r1 h N 000 N coN N L!) N r� W > N LO f� M O, N d O r� (» m a O O tO O M W O M O O O O N st O ao r LO (A W (O V' d1 O CO N N CD 00 c CO O N d' N~ 1� W N co LO O M N r� M r� N CO O Nr m X W 69. fA (f> co 6% w N N y /1 Q CA c M y6ca C N cO 'CL W U ai Z co C)N c O > .c_ r- E M co O N O T co O C N t` dco D Q Q O (CI N > c N N (D _ _ _ N ca N N '(D •V) •N 'N c '(6 N fl. M"� c d d d U Z Z Z N N LA a O @ c n c J U N N N O c O CDE O N N 'V 0) U > N Q U >. M N LL O O ry C c W `� O a c O CL >>% Y o c O a. E N U> N U cn > E CM c` N U UEn O N (D N N _T r O (U O� c c6 •�O' (D C O N- (0 U >oc9daa : �o �cnZ) o of c� m F(6 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. 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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 @z §»S °{ �k< § /\ 5 Ioa o w [�w oRe r) �\\ oz 2\( \§\ w, w \{e 00 z uE2m =bz� zzgo uoe° ±§b\ =uo» afz OD CO j\� uSow oee� 5§»§ 2§)\ QED 0° 2/2 \ § 5 0< t e °)} oe �a c §\� �} / .| § ) / § 0 f E \ V. \ \ { e AMn w \ \) - 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