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CITY OF McHENRY, ILLINOIS
ANNUAL FINANCIAL REPORT
APRIL 30, 2020
CITY OF McHENRY, ILLINOIS
TABLE OF CONTENTS
APRIL 30, 2020
PAGE
INDEPENDENT AUDITOR’S REPORT 1
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTORL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS 4
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis 5
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 12
Statement of Activities 13
Fund Financial Statements
Balance Sheet – Governmental Funds 14
Reconciliation of the Balance Sheet to the Statement of Net
Position 15
Statement of Revenues, Expenditures, and Changes in Fund
Balances – Governmental Funds 16
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances to the Statement of Activities 17
Statement of Net Position – Proprietary Funds 18
Statement of Revenues, Expenses, and Changes in Net
Position – Proprietary Funds 19
Statement of Cash Flows – Proprietary Funds 20
Statement of Fiduciary Net Position – Fiduciary Funds 21
Statement of Changes in Fiduciary Net Position – Fiduciary Funds 22
Notes to Financial Statements 23
REQUIRED SUPPLEMENTARY INFORMATION
Illinois Municipal Retirement Fund – Schedule of Changes in the Employer’s
Net Pension Liability and Related Ratios 51
CITY OF McHENRY, ILLINOIS
TABLE OF CONTENTS
APRIL 30, 2020
PAGE
REQUIRED SUPPLEMENTARY INFORMATION (Continued)
Illinois Municipal Retirement Fund – Schedule of Employer Contribution 52
Police Pension Plan – Schedule of Changes in the Employer’s Net
Pension Liability and Related Ratios 53
Police Pension Plan – Schedule of Employer Contribution 54
Other Post-Employment Benefit – Schedule of Changes in the Employer’s
Net OPEB Liability and Related Ratios 55
Other Post-Employment Benefit – Schedule of Employer Contribution 56
Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual – General Fund 57
Notes to Required Supplementary Information 59
SUPPLEMENTAL FINANCIAL INFORMATION
Combining Balance Sheet – General Fund 60
Combining Schedule of Revenues, Expenditures, and Changes in Fund
Balances – General Fund 61
Combining Balance Sheet – Other Governmental Funds 63
Combining Schedule of Revenues, Expenditures, and Changes in Fund
Balances – Other Governmental Funds 64
Combining Schedule of Net Position – Water and Sewer Funds 65
Combining Schedule of Revenues, Expenses, and Changes in Net
Position – Water and Sewer Funds 66
Combining Schedule of Net Position – Internal Service Funds 67
Combining Schedule of Revenues, Expenses, and Changes in Net
Position – Internal Service Funds 68
Combining Schedule of Net Position – Agency Funds 69
Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual – Special Revenue Fund – Tax Increment
Financing Fund 70
Summary of Federal Grants 71
Page 1
INDEPENDENT AUDITOR’S REPORT
To the Mayor and City Council Members
City of McHenry, Illinois
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-
type activities, each major fund, and the aggregate remaining fund information of
City of McHenry
as of and for the year ended April 30, 2020, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the City’s
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of McHenry as of April 30, 2020, and
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the respective changes in financial position and, where applicable, cash flows thereof for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the required
supplementary information, as listed on the table of contents, be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements,
and other knowledge we obtained during our audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not provide
us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The supplemental information, as listed in the table of
contents, is presented for purposes of additional analysis and is not a required part of the basic financial
statements.
The supplemental information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or
to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the supplemental
information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 19, 2020 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 solely to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the effectiveness of 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 19, 2020
Page 3
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Mayor and City Council Members
City of McHenry, Illinois
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund and the aggregate remaining fund information
of
City of McHenry
as of and for the year ended April 30, 2020, and the related notes to the financial statements which
collectively comprise City of McHenry’s basic financial statements, and have issued our report thereon
dated October 19, 2020.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of McHenry’s
internal control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,
but not for the purpose of expressing an opinion on the effectiveness of City of McHenry’s internal
control. Accordingly, we do not express an opinion on the effectiveness of City of McHenry’s internal
control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the City’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 from 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
Page 4
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 City’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 City’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
EDER, CASELLA & CO.
Certified Public Accountants
McHenry, Illinois
October 19, 2020
REQUIRED SUPPLEMENTARY INFORMATION
Page 5
CITY OF McHENRY, ILLINOIS
MANAGEMENT’S DISCUSSION AND ANALYSIS
April 30, 2020
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, 2020. 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, 2020 by $112,279,139 (total net position).
The City’s total net position increased by $271,737 from current year activities.
At April 30, 2020, the City’s governmental funds reported combined ending fund balances of
$12,882,702, an increase from current year activities of $131,378.
At April 30, 2020, the unassigned fund balance for the General Fund was $6,976,978, or 29% of total
General Fund expenditures.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements.
The City’s basic financial statements comprise three components: 1) government-wide financial statements,
2) fund financial statements, and 3) notes to the financial statements. Both perspectives (government-wide
and fund level financial statements) allow the user to address relevant questions, broaden a basis for
comparison (year to year or government to government) and enhance the City’s accountability.
This report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-wide Financial Statements. The government-wide financial statements are designed to
provide readers with a broad overview of the City’s finances, in a manner similar to a private business.
The Statement of Net Position presents information on all the City’s assets, deferred outflows of resources,
liabilities, and deferred inflows of resources with the difference amongst those being reported as net position.
Increases or decreases in net position may serve as a useful indicator of whether the financial position of
the City is improving or deteriorating when comparing year to year results.
The Statement of Activities presents information showing how the City’s net position changed during the
most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused vacation leave).
Both government-wide financial statements distinguish functions of the City that are principally supported
by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to
recover all or a significant portion of their costs through user fees and charges (business-type activities).
The governmental activities of the City include general office, public safety, public works, and parks and
recreation. The business-type activities of the City include a water and sewer division.
The government-wide financial statements can be found on pages 12 and 13 of this report.
Page 6
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over
resources that have been segregated for specific activities or objectives. The City, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary
funds, and fiduciary funds.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported
as governmental activities in the government-wide financial statements. However, unlike the government-
wide financial statements, governmental fund financial statements focus on near-term inflows and outflows
of spendable resources, as well as on balances of spendable resources available at the end of the fiscal
year. Such information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements,
it is useful to compare the information presented for governmental funds with similar information presented
for governmental activities in the government-wide financial statements. By doing so, readers may better
understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund
Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund
Balances provide a reconciliation to facilitate this comparison between governmental funds and
governmental activities.
The City maintains 12 individual governmental funds. Information is presented separately in the
governmental fund Balance Sheet and in the governmental fund Statement of Revenues, Expenditures, and
Changes in Fund Balances for the General Fund which is considered to be a major fund. Data from the
other eleven governmental funds are combined into a single, aggregated presentation. The other eleven
funds include Pageant, Audit, Recreation Center, Capital Improvements, Capital Equipment, Debt Service,
Motor Fuel Tax, Developer Donations, Tax Increment Financing, and two Special Service Areas.
The basic governmental fund financial statements can be found on pages 14 through 17 of this report.
Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used
to report the same functions presented as business-type activities in the government-wide financial
statements. The City uses an enterprise fund to account for the Water and Sewer Division. Internal service
funds are an accounting device used to accumulate and allocate costs internally among the City’s various
functions. The City uses internal service funds to account for its employee insurance, risk management,
and information technology. Because these services predominately benefit governmental rather than
business-type functions, they have been included within governmental activities in the government-wide
financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information for the water and
sewer functions. Internal service funds are combined into a single, aggregate presentation in the proprietary
fund financial statements. Individual fund data for the internal service funds is provided in the form of
combining statements on pages 67 and 68 of this report.
The basic proprietary fund financial statements can be found on pages 18 through 20 of this report.
Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside
the City. Fiduciary funds are not reflected in the government-wide financial statements because the
resources of those funds are not available to support the City’s own programs. The accounting used for
fiduciary funds is much like that used for proprietary funds. The City’s fiduciary funds include the Police
Pension Trust Fund and three Agency Funds.
The basic fiduciary fund financial statements can be found on pages 21 and 22 of this report.
Page 7
Notes to the Financial Statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to the
financial statements can be found on pages 23 through 50 of this report.
Other Information. In addition to the basic financial statements and accompanying notes, this report also
presents certain required supplementary information concerning the City’s appropriation to actual for the
General Fund. Required supplementary information can be found on pages 51 through 59 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position.
In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows
of resources by $112,279,139 at April 30, 2020.
By far, the largest portion of the City’s net position, 112%, reflects its net investment in capital assets (e.g.,
land, construction in progress, buildings, and equipment); less any related debt used to acquire those assets
that is still outstanding. The City uses these capital assets to provide services to citizens; consequently,
these assets are not available for future spending. Although the City’s investment in capital assets is
reported net of related debt, it should be noted that the resources needed to repay this debt must be provided
from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
4/30/2020 4/30/2019 4/30/2020 4/30/2019 4/30/2020 4/30/2019
Assets
Current and Other Assets 21,558,407$ 21,294,312$ 9,625,741$ 7,860,991$ 31,184,148$ 29,155,303$
Capital Assets 89,464,420 91,383,064 77,451,024 78,596,880 166,915,444 169,979,944
Total Assets 111,022,827$ 112,677,376$ 87,076,765$ 86,457,871$ 198,099,592$ 199,135,247$
Deferred Outflows of Resources 8,560,289$ 7,151,011$ 1,094,478$ 1,336,866$ 9,654,767$ 8,487,877$
Liabilities
Long-Term Liabilities
Outstanding 41,978,872$ 41,441,373$ 36,972,448$ 39,083,518$ 78,951,320$ 80,524,891$
Other Liabilities 2,425,836 2,260,983 933,679 1,088,954 3,359,515 3,349,937
Total Liabilities 44,404,708$ 43,702,356$ 37,906,127$ 40,172,472$ 82,310,835$ 83,874,828$
Deferred Inflows of Resources 12,087,703$ 11,125,270$ 1,076,682$ 615,624$ 13,164,385$ 11,740,894$
Net Position
Net Investment in Capital
Assets 83,665,808$ 84,036,457$ 41,979,946$ 41,647,875$ 125,645,754$ 125,684,332$
Restricted 1,816,523 960,578 - - 1,816,523 960,578
Unrestricted (22,391,626) (19,996,274) 7,208,488 5,358,766 (15,183,138) (14,637,508)
Total Net Position 63,090,705$ 65,000,761$ 49,188,434$ 47,006,641$ 112,279,139$ 112,007,402$
City of McHenry's Statement of Net Position
TotalBusiness-Type ActivitiesGovernmental Activities
An additional portion of the City’s net position, 1.6%, represents resources that are subject to external
restrictions on how they may be used (e.g. Highways and Streets, Capital Projects, and Special Service
Areas). The remaining balance of unrestricted net position was a deficit in the current year of $15,183,138.
Governmental Activities. Governmental activities decreased the City’s net position by $1,910,056. Key
differences from the prior year are as follows:
Page 8
FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019
Revenues
Program Revenues
Charges for Services 6,270,895$ 6,956,885$ 9,225,491$ 6,992,168$ 15,496,386$ 13,949,053$
Operating Grants and Contributions 517,577 385,819 - - 517,577 385,819
Capital Grants and Contributions 694,426 2,324,418 452,750 1,388,023 1,147,176 3,712,441
General Revenues
Property Taxes 5,629,639 5,477,514 - - 5,629,639 5,477,514
Sales Taxes 10,459,369 9,768,862 - - 10,459,369 9,768,862
Other Taxes 4,209,183 3,919,890 - - 4,209,183 3,919,890
Other 226,959 307,491 84,792 147,410 311,751 454,901
Total Revenues 28,008,048$ 29,140,879$ 9,763,033$ 8,527,601$ 37,771,081$ 37,668,480$
Expenses
General Office 5,103,092$ 4,047,562$ -$ -$ 5,103,092$ 4,047,562$
Public Safety 14,176,025 13,021,758 - - 14,176,025 13,021,758
Public Works 6,359,880 6,947,382 - - 6,359,880 6,947,382
Parks and Recreation 4,025,167 3,560,675 - - 4,025,167 3,560,675
Interest and Fees 161,094 188,971 - - 161,094 188,971
Depreciation 210,024 209,683 - - 210,024 209,683
Water - - 1,947,255 1,967,241 1,947,255 1,967,241
Sewer - - 4,406,916 3,559,439 4,406,916 3,559,439
Utility Work - - 1,137,143 1,091,776 1,137,143 1,091,776
Total Expenses 30,035,282$ 27,976,031$ 7,491,314$ 6,618,456$ 37,526,596$ 34,594,487$
Increase/(Decrease) in Net Position
Before Transfers (2,027,234)$ 1,164,848$ 2,271,719$ 1,909,145$ 244,485$ 3,073,993$
Transfers 95,602 93,883 (95,602) (93,883) - -
Gain/(Loss) on Sale of Capital Assets 21,576 34,025 5,676 3,435 27,252 37,460
Increase/(Decrease) in Net Position (1,910,056)$ 1,292,756$ 2,181,793$ 1,818,697$ 271,737$ 3,111,453$
Net Position - Beginning of Year 65,000,761 68,967,510 47,006,641 45,467,996 112,007,402 114,435,506
Net Position Adjustment - (5,259,505) - (280,052) - (5,539,557)
Net Position - End of Year 63,090,705$ 65,000,761$ 49,188,434$ 47,006,641$ 112,279,139$ 112,007,402$
City of McHenry's Change in Net Position
Governmental Activities Business-Type Activities Total
Revenues slightly decreased in the current year, due to a less developer donations of capital assets and
decreases in various types of charges for services due mainly to a decrease in use of services such as the
Rec Center amid COVID concerns.
Business-Type Activities. Business-type activities increased the City’s net position by $2,181,793.
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, 2020, the City’s governmental funds reported combined ending fund balances of $12,882,702,
an increase of $131,378 in comparison with the prior year. Approximately 52% of this total amount
constitutes unassigned fund balance, which is available for spending at the City’s discretion. Of the
remaining fund balance, 33% constitutes assigned fund balance, with the remainder of the fund balance
Page 9
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, 2020, the fund balance of the General
Fund was $8,966,742, of which $6,976,978 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 29% of total General Fund expenditures.
The General Fund’s fund balance decreased by $204,918 during the year ended April 30, 2020.This was
mainly due to decreases in income tax revenue and charges for services – both likely due to COVID. There
was also less developer donations of assets in comparison to the prior year.
Other significant highlights in the governmental funds for the year ended April 30, 2020 are outlined below:
Debt service expenses of $1,722,783 were paid to meet the debt service requirements of the City.
Other governmental funds show a total increase in fund balance of $336,296.
Proprietary Funds. The City’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.
Fiduciary Funds (Police Pension and Agency Funds). At April 30, 2020, the Police Pension Fund’s net
position amounted to $27,655,974. Additions exceeded deductions during the year, resulting in an increase
of $502,345 in net position.
GENERAL FUND BUDGETARY HIGHLIGHTS
The General Fund budgeted revenue exceeded actual revenue by $190,780. This difference was primarily
due to less than expected revenue from royalties, licenses and permits, reimbursements and state income
tax. Budgeted expenditures exceeded actual expenditures by $811,341. The difference was primarily due
to lower than expected public works expense related to streets.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as
of April 30, 2020 amounts to $166,915,444 (net of accumulated depreciation). This investment includes
land, land improvements, art and historical treasures, intangibles, construction in progress, buildings,
vehicles, systems and equipment, and infrastructure.
4/30/2020 4/30/2019 4/30/2020 4/30/2019 4/30/2020 4/30/2019
Land 42,130,875$ 42,130,875$ 2,208,117$ 2,208,117$ 44,338,992$ 44,338,992$
Land Improvements 2,316,574 2,357,891 - - 2,316,574 2,357,891
Art and Historical Treasures 1,658,927 1,658,927 - - 1,658,927 1,658,927
Intangibles 300,000 300,000 - - 300,000 300,000
Construction in Progress 556,869 786,317 36,082,114 36,555,001 36,638,983 37,341,318
Buildings 12,565,265 12,516,371 440,066 499,829 13,005,331 13,016,200
Vehicles 853,768 996,915 846,065 879,215 1,699,833 1,876,130
Systems and Equipment 1,642,756 1,831,674 37,874,662 38,454,718 39,517,418 40,286,392
Infrastructure 27,439,386 28,804,094 - - 27,439,386 28,804,094
Total 89,464,420$ 91,383,064$ 77,451,024$ 78,596,880$ 166,915,444$ 169,979,944$
City of McHenry's Capital Assets (net of depreciation)
Governmental Activities Business-Type Activities Total
Major capital asset events during the year ended April 30, 2020 included the following:
Completion of the Fox Ridge Park Concession Building and Walsh Park River Walk with current year
expenses of $183,979 and $8,900, respectively.
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Continuation of Pearl Street sidewalk and lighting and Curran Road S-Curve projects in the amounts
of $164,950 and $80436, respectively.
Purchased two Ford Police Interceptors for a total cost of $81,892
An additional $290,724 was added to the Wastewater Treatment Plan Consolidation Project that is still
in Construction in Progress.
Water and Sewer contributed public improvements for watermains and sanitary sewers in the amount
of $452,750.
For further information, please see Note 4 on pages 30 and 31 of this report.
Long-Term Debt. At April 30, 2020, the City had total bonded debt outstanding of $10,590,000, all of which
is backed by the full faith and credit of the City.
4/30/2020 4/30/2019 4/30/2020 4/30/2019 4/30/2020 4/30/2019
General Obligation Bonds 5,495,000$ 6,980,000$ 5,095,000$ 5,470,000$ 10,590,000$ 12,450,000$
IEPA Revolving Loan Fund - - 30,376,988 31,483,345 30,376,988 31,483,345
Notes Payable 248,616 305,500 - - 248,616 305,500
Bond Premium 57,304 65,682 6,315 6,827 63,619 72,509
Bond Discount (2,308) (4,575) (7,227) (11,167) (9,535) (15,742)
Total 5,798,612$ 7,346,607$ 35,471,076$ 36,949,005$ 41,269,688$ 44,295,612$
City of McHenry's Outstanding Debt
Governmental Activities Business-Type Activities Total
Additional information on the City’s long-term debt can be found in Note 5 on pages 31 through 33 of this
report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
The City has a diversified economy with the manufacturing and health fields being its primary base. McHenry
is among the State’s fastest growing communities with the official population increasing from 16,177 in 1990
to 26,992 in 2010. In addition, the City experienced significant growth in the retail, office, and industrial
space and a downtown revitalization plan has spurred residential and commercial development in the
Downtown TIF District. The City’s economic conditions are as follows:
The average unemployment rate for McHenry County in 2019 was 3.3 percent, which is 0.3% lower than a
year ago. This is lower than the State’s average unemployment rate of 4 percent.
Inflation in the area compares to the national consumer price index. Similar to a nationwide trend, residential
growth in the City has slowed dramatically in the last few years. The number of single family residential
building permits issued by the City has decreased from 139 in 2007 to 72 in 2019. However, this is an
improvement as there were only 8 in 2016 and 36 in 2018 and the total value of all commercial and
residential improvements and new permits increased from $15.2 million in 2012 to $51.1 million in 2019.
Development and adoption of the 2020/21 budget was premised on providing core municipal services while
having an operationally balanced budget. With the recent developments of the pandemic closing many
businesses throughout the City, it is expected that Sales tax receipts and state shared revenue sources,
primarily income tax receipts, will not reach budgeted amounts. 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 0.699985 in 2018 to 0.658494 in 2019.
In April 2020, the City Council approved the proposed fiscal year 2020/21 General Fund budget increasing
the prior year’s budget by $889,655. These increases were primarily due to the increased annual police
pension contribution in order to meet actuarial requirements and increased personnel costs. In the last few
years, capital expenditures have been funded with Fund Balance Reserves which have been built up due
to cost reduction measures necessary to adopt a balanced budget in the past years as well as rebounding
Page 11
state shared revenues. While this budget was passed unchanged, City staff has already identified $925,000
in operating expenses that will not be implemented in fiscal year 2020/21 due to the anticipated decreases
to key revenues like Sales and Income taxes. Also, all capital expenses that do not have identified revenue
sources and have not been started already have been put on hold until City staff can determine better
estimates of the financial situation in the upcoming years.
REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the
City’s finances for all those with an interest in the City’s finances. Questions concerning any of the
information provided in this report or requests for additional financial information should be addressed to:
City of McHenry, 333 South Green St., McHenry, Illinois, 60050.
BASIC FINANCIAL STATEMENTS
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Cash Equivalents 11,236,500$ 6,858,054$ 18,094,554$
Deposit with Paying Agent 33,185 - 33,185
Investments 770,784 1,258,544 2,029,328
Prepaid Expenses 127,930 34,784 162,714
Inventory 110,000 - 110,000
Receivables (Net of Allowance for Estimated
Uncollectible Amounts)
Accounts Receivable - Billed 618,503 108,819 727,322
Accounts Receivable - Unbilled 90,556 1,253,248 1,343,804
Property Taxes 5,716,304 - 5,716,304
Accrued Interest 3,316 8,867 12,183
Due from Other Governmental Units 2,706,324 97,714 2,804,038
Due from Other Funds 14,789 (14,474) 315
Grants Receivable 11,053 - 11,053
Cable Franchise Fee Receivable 116,447 - 116,447
Interest Rebate Receivable 2,716 20,185 22,901
Capital Assets
Land, Construction in Progress, and Other
Non-Depreciable Assets 44,646,671 38,290,231 82,936,902
Other Capital Assets, Net of Depreciation 44,817,749 39,160,793 83,978,542
TOTAL ASSETS 111,022,827$ 87,076,765$ 198,099,592$
DEFERRED OUTFLOWS OF RESOURCES
Pension Expense/Revenue - IMRF 3,538,631$ 1,042,614$ 4,581,245$
Pension Expense/Revenue - Police Pension 3,988,332 - 3,988,332
OPEB Expense/Revenue 1,033,326 51,864 1,085,190
TOTAL DEFERRED OUTFLOWS OF RESOURCES 8,560,289$ 1,094,478$ 9,654,767$
LIABILITIES
Accounts Payable and Accrued Expenses 1,572,261$ 508,225$ 2,080,486$
Security Deposits Held - 3,000 3,000
Due to Other Governmental Units 563,442 - 563,442
Unearned Revenue 237,687 126,675 364,362
Accrued Interest 52,446 295,779 348,225
Non-Current Liabilities
Due Within One Year 1,015,015 1,703,154 2,718,169
Due in More Than One Year 40,963,857 35,269,294 76,233,151
TOTAL LIABILITIES 44,404,708$ 37,906,127$ 82,310,835$
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes 5,716,304$ -$ 5,716,304$
Unavailable Revenue - State Taxes 1,302 - 1,302
Unavailable Revenue - Rent 2,400 - 2,400
Pension Expense/Revenue - IMRF 3,474,732 1,023,787 4,498,519
Pension Expense/Revenue - Police Pension 1,839,105 - 1,839,105
OPEB Expense/Revenue 1,053,860 52,895 1,106,755
TOTAL DEFERRED INFLOWS OF RESOURCES 12,087,703$ 1,076,682$ 13,164,385$
NET POSITION
Net Investment in Capital Assets 83,665,808$ 41,979,946$ 125,645,754$
Restricted for:
Highways and Streets 490,191 - 490,191
Capital Projects 1,001,829 - 1,001,829
Special Service Areas 21 - 21
Tax Increment Financing 324,482 - 324,482
Unrestricted/(Deficit)(22,391,626) 7,208,488 (15,183,138)
TOTAL NET POSITION 63,090,705$ 49,188,434$ 112,279,139$
APRIL 30, 2020
CITY OF MCHENRY, ILLINOIS
STATEMENT OF NET POSITION
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Page 12
The Notes to Financial Statements are an integral part of this statement.
Operating Capital
Charges for Grants and Grants and Governmental Business-Type
Expenses Services Contributions Contributions Activities Activities Total
Functions/Programs
Governmental Activities
General Office 5,103,092$ 4,052,229$ 517,077$ -$ (533,786)$ -$ (533,786)$
Public Safety 14,176,025 896,237 - - (13,279,788) - (13,279,788)
Public Works 6,359,880 573,266 - 106,806 (5,679,808) - (5,679,808)
Parks and Recreation 4,025,167 749,163 500 587,620 (2,687,884) - (2,687,884)
Interest and Fees on Long-Term Debt 161,094 - - - (161,094) - (161,094)
Depreciation - Unallocated 210,024 - - - (210,024) - (210,024)
30,035,282$ 6,270,895$ 517,577$ 694,426$ (22,552,384)$ -$ (22,552,384)$
Business-Type Activities
Water 1,947,255$ 3,011,927$ -$ 412,500$ -$ 1,477,172$ 1,477,172$
Sewer 4,406,916 6,213,371 - 40,250 - 1,846,705 1,846,705
Utility Work 1,137,143 193 - - - (1,136,950) (1,136,950)
7,491,314$ 9,225,491$ -$ 452,750$ -$ 2,186,927$ 2,186,927$
Total Primary Government 37,526,596$ 15,496,386$ 517,577$ 1,147,176$ (22,552,384)$ 2,186,927$ (20,365,457)$
General Revenues
Taxes
Property Tax, Levied for General Purposes 5,629,639$ -$ 5,629,639$
State Sales Tax 10,459,369 - 10,459,369
State Income Tax 2,655,608 - 2,655,608
State Motor Fuel Tax 1,007,795 - 1,007,795
Other Taxes 545,780 - 545,780
Unrestricted Investment Earnings 203,114 84,792 287,906
Gain/(Loss) on Sale of Capital Assets 21,576 5,676 27,252
Miscellaneous 22,345 - 22,345
Special Events 1,500 - 1,500
Transfers 95,602 (95,602) -
Total General Revenues and Transfers 20,642,328$ (5,134)$ 20,637,194$
Change in Net Position (1,910,056)$ 2,181,793$ 271,737$
Net Position - May 1, 2019 65,000,761 47,006,641 112,007,402
Net Position - April 30, 2020 63,090,705$ 49,188,434$ 112,279,139$
CITY OF MCHENRY, ILLINOIS
GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED APRIL 30, 2020
Net (Expense) Revenue and
Changes in Net PositionProgram Revenues
Page 13
The Notes to Financial Statements are an integral part of this statement.
Other Total
General Governmental Governmental
Fund Funds Funds
ASSETS
Cash and Cash Equivalents 6,988,004$ 3,631,175$ 10,619,179$
Deposit with Paying Agent - 33,185 33,185
Investments 182,341 580,211 762,552
Prepaid Expenses 56,914 - 56,914
Inventory - 110,000 110,000
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed 612,291 5,400 617,691
Accounts Receivable - Unbilled 82,841 3,730 86,571
Property Taxes 4,963,507 752,797 5,716,304
Accrued Interest 1,691 1,602 3,293
Due from Other Governmental Units 2,584,397 121,927 2,706,324
Due from Other Funds - 315 315
Grants Receivable - 11,053 11,053
Cable Franchise Fee Receivable 116,447 - 116,447
TOTAL ASSETS 15,588,433$ 5,251,395$ 20,839,828$
LIABILITIES
Accounts Payable and Accrued Expenses 1,407,640$ 99,619$ 1,507,259$
Due to Other Governmental Units 75,419 488,023 563,442
Due to Other Funds 10,104 (8,706) 1,398
Unearned Revenue 165,021 - 165,021
TOTAL LIABILITIES 1,658,184$ 578,936$ 2,237,120$
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes 4,963,507$ 752,797$ 5,716,304$
Unavailable Revenue - State Taxes - 1,302 1,302
Unavailable Revenue - Rent - 2,400 2,400
TOTAL DEFERRED INFLOWS OF RESOURCES 4,963,507$ 756,499$ 5,720,006$
FUND BALANCES
Nonspendable 56,914$ -$ 56,914$
Restricted for:
Capital Projects - 1,001,829 1,001,829
Highways and Streets - 490,191 490,191
Special Service Areas - 21 21
Tax Increment Financing - 324,482 324,482
Assigned for:
Alarm 725,658 - 725,658
Audit - 8,247 8,247
Tourism 228,269 - 228,269
Band 12,582 - 12,582
Highways and Streets - 951,603 951,603
Capital Projects 682,757 964,395 1,647,152
Revolving Loan 277,748 - 277,748
Civil Defense 5,836 - 5,836
Debt Service - 4,963 4,963
Parks and Recreation - 421,911 421,911
Special Service Areas - 62 62
Unassigned 6,976,978 (251,744) 6,725,234
TOTAL FUND BALANCES 8,966,742$ 3,915,960$ 12,882,702$
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES 15,588,433$ 5,251,395$ 20,839,828$
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
BALANCE SHEET
GOVERNMENTAL FUNDS
APRIL 30, 2020
Page 14
The Notes to Financial Statements are an integral part of this statement.
Total Fund Balances - Governmental Funds 12,882,702$
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 89,464,420
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 2,308
Some liabilities are not due and payable in the current period and therefore
are not reported in the funds.
Bonds and Notes Payable (5,743,616)$
Bond Premiums, net of related amortization (57,304)
Accrued Interest on Long-Term Debt, net of receivable (49,730)
Compensated Absences (588,305)
OPEB Liability (5,618,660)
Net Pension Liability - IMRF (3,485,974)
Net Pension Liability - Police Pension (26,487,321)
(42,030,910)
Deferred pension and OPEB costs in governmental activities are not financial
resources and therefore are not reported in the funds.
Pension Deferred Outflows - Police Pension 3,988,332$
Pension Deferred Outflows - IMRF 3,538,631
Pension Deferred Inflows - Police Pension (1,839,105)
Pension Deferred Inflow - IMRF (3,474,732)
OPEB Deferred Outflows 1,033,326
OPEB Deferred Inflows (1,053,860)
2,192,592
Internal service funds are used by management to charge the cost of certain
activities, such as insurance and information technology, to individual funds.
The assets and liabilities of the internal service funds are included in
governmental activities in the government-wide Statement of Net Position
(net of amount allocated to business-type activities). Internal service fund
balances not included in other reconciling items above:
Current Assets 717,261$
Current Liabilities (137,668)
579,593
Net Position of Governmental Activities 63,090,705$
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION
APRIL 30, 2020
Page 15
The Notes to Financial Statements are an integral part of this statement.
Other Total
General Governmental Governmental
Fund Funds Funds
REVENUES
Local Taxes
Property Tax 4,950,913$ 678,726$ 5,629,639$
Intergovernmental
State Sales Tax 10,459,369 - 10,459,369
State Income Tax 2,655,608 - 2,655,608
State Replacement Tax 83,626 - 83,626
State Motor Fuel Tax - 1,007,795 1,007,795
State Pull Tab/Games Tax 930 - 930
Inter Track Wagering Tax 40,725 - 40,725
State Telecommunications Tax 260,750 - 260,750
Federal Grants - 106,806 106,806
Bond Interest Rebates - 14,002 14,002
Other Local Sources
Hotel/Motel Tax 159,749 - 159,749
Franchise Fees 352,679 - 352,679
Licenses and Permits 791,117 - 791,117
Fines and Forfeitures 409,239 - 409,239
Charges for Services 1,278,880 602,288 1,881,168
Interest 160,478 45,162 205,640
Miscellaneous
Rent 18,489 45,042 63,531
Royalties 200,000 - 200,000
Donations 640 1,059,196 1,059,836
Annexation Fees 367,181 - 367,181
Reimbursements 2,031,734 104,572 2,136,306
Special Events 1,500 - 1,500
Other Miscellaneous 88,940 26,095 115,035
24,312,547$ 3,689,684$ 28,002,231$
EXPENDITURES
Current
General Office 4,149,454$ 190,757$ 4,340,211$
Public Safety 12,452,129 - 12,452,129
Public Works 3,648,851 145,415 3,794,266
Parks and Recreation 2,384,512 1,169,582 3,554,094
Capital Outlay 1,060,049 1,081,931 2,141,980
Debt Service
Principal 56,884 1,485,000 1,541,884
Interest and Fees 10,336 170,563 180,899
23,762,215$ 4,243,248$ 28,005,463$
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 550,332$ (553,564)$ (3,232)$
OTHER FINANCING SOURCES/(USES)
Transfers (794,258)$ 889,860$ 95,602$
Sale of City Property 39,008 - 39,008
(755,250)$ 889,860$ 134,610$
NET CHANGE IN FUND BALANCES (204,918)$ 336,296$ 131,378$
FUND BALANCES - MAY 1, 2019 9,171,660 3,579,664 12,751,324
FUND BALANCES - APRIL 30, 2020 8,966,742$ 3,915,960$ 12,882,702$
FOR THE YEAR ENDED APRIL 30, 2020
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
Page 16
The Notes to Financial Statements are an integral part of this statement.
Net Change in Fund Balances - Total Governmental Funds 131,378$
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
capital outlay exceeds depreciation expense in the current period.
Depreciation Expense (2,973,096)$
Capital Outlays 1,027,571
(1,945,525)
In the Statement of Activities, only the gain or loss on the sale of capital assets
is reported, whereas in the governmental funds, the proceeds from the sale
increase financial resources. Thus, the change in net position differs from the
change in fund balance by the undepreciated balance of the capital assets sold.
Proceeds from Sale of Capital Assets (30,665)$
Gain/(Loss) on Sale of Capital Assets 21,576
(9,089)
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and therefore are not reported as expenditures in
governmental funds.
Accrued Interest on Long-Term Debt 13,693$
Accrued Interest Rebate (2,526)
Bond Discount - Amortization (2,267)
Bond Premium - Amortization 8,378
Pension Expense (4,279,447)
OPEB Expense (189,712)
Compensated Absences 15,828
(4,436,053)
Employer Pension and OPEB Contributions are expensed in the fund financial
statements but are treated as a reduction in the Net Pension Liability on the
government-wide financial statements.
Pension Employer Contributions - IMRF 649,335$
Pension Employer Contributions - Police Pension 2,077,704
OPEB Employer Contributions 154,275
2,881,314
Repayment of long-term debt requires the use of current financial resources of
governmental funds and is therefore shown as an expenditure in the Statement
of Revenues, Expenditures, and Changes in Fund Balances, but the repayment
reduces long-term liabilities in the Statement of Net Position and is therefore not
reported in the Statement of Activities.
Repayment of Long-Term Debt 1,541,884
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 (114,655)$
Pension Expense (included in Pension Expense Above)18,799
OPEB Expense (included in OPEB Expense Above)715
Pension Employer Contributions (included in OPEB Employer Contributions Above)(13,956)
OPEB Employer Contributions (included in OPEB Employer Contributions Above)(580)
Depreciation Expense (included in Change in Net Position above)35,712
(73,965)
Change in Net Position of Governmental Activities (1,910,056)$
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
FOR THE YEAR ENDED APRIL 30, 2020
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
Page 17
The Notes to Financial Statements are an integral part of this statement.
Business Type Governmental
Activities -Activities -
Enterprise Fund Internal
Water and Sewer Service Funds
ASSETS
Current Assets
Cash and Cash Equivalents 6,858,054$ 617,321$
Investments 1,258,544 8,232
Prepaid Expenses 34,784 71,016
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed 108,819 812
Accounts Receivable - Unbilled 1,253,248 3,985
Accrued Interest 8,867 23
Due from Other Governmental Units 97,714 -
Due from Other Funds 11,508 15,872
Interest Rebate Receivable 20,185 -
9,651,723$ 717,261$
Non-Current Assets
Capital Assets
Land 2,208,117$ -$
Buildings 2,736,098 -
Systems and Equipment 69,697,138 522,348
Vehicles 1,945,749 -
Construction in Progress 36,082,114 -
Less: Accumulated Depreciation (35,218,192) (399,268)
77,451,024$ 123,080$
TOTAL ASSETS 87,102,747$ 840,341$
DEFERRED OUTFLOWS OF RESOURCES
Pension Expense/Revenue - IMRF 1,042,614$ 78,226$
OPEB Expense/Revenue 51,864 3,890
TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,094,478$ 82,116$
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Expenses 508,225$ 65,002$
Security Deposits Held 3,000 -
Due to Other Funds 25,982 -
Unearned Revenue 126,675 72,666
Accrued Interest 295,779 -
IEPA Loan Payable - Current 1,421,583 -
Bonds Payable - Current 281,571 -
2,662,815$ 137,668$
Non-Current Liabilities
Compensated Absences 109,263$ 4,665$
IMRF Net Pension Liability 1,109,952 130,512
Total OPEB Liability 282,155 23,174
IEPA Loan Payable (Net of Current Portion Shown Above)28,955,405 -
Bonds Payable (Net of Current Portion Shown Above)4,812,519 -
35,269,294$ 158,351$
TOTAL LIABILITIES 37,932,109$ 296,019$
DEFERRED INFLOWS OF RESOURCES
Pension Expense/Revenue - IMRF 1,023,787$ 76,814$
OPEB Expense/Revenue 52,895 3,970
TOTAL DEFERRED INFLOWS OF RESOURCES 1,076,682$ 80,784$
NET POSITION
Net Investment in Capital Assets 41,979,946$ 123,080$
Unrestricted/(Deficit)7,208,488 422,574
TOTAL NET POSITION 49,188,434$ 545,654$
APRIL 30, 2020
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
Page 18
The Notes to Financial Statements are an integral part of this statement.
Business Type Governmental
Activities -Activities -
Enterprise Fund Internal
Water and Sewer Service Funds
OPERATING REVENUES
Charges for Services
Customer Fees 6,035,725$ -$
Capital Fees 398,512 -
Debt Service Fees 2,624,955 -
Penalties 122,130 -
Water Meter Sales 37,425 -
Other 6,744 -
Internal Service Funds - 4,588,052
9,225,491$ 4,588,052$
OPERATING EXPENSES
Water Department
Personnel Salaries 500,616$ -$
Miscellaneous Personnel Expenses 215,273 -
Other Operating Expenses 704,003 -
Depreciation 552,474 -
Sewer Department
Personnel Salaries 701,957 -
Miscellaneous Personnel Expenses 355,504 -
Other Operating Expenses 1,425,915 -
Depreciation 1,235,399 -
Utility Work Department
Personnel Salaries 618,327 -
Miscellaneous Personnel Expenses 318,891 -
Other Operating Expenses 199,925 -
Internal Service Funds
Personnel Salaries - 132,462
Miscellaneous Personnel Expenses - 3,297,347
Other Operating Expenses - 1,238,715
Depreciation - 35,712
6,828,284$ 4,704,236$
OPERATING INCOME/(LOSS)2,397,207$ (116,184)$
NON-OPERATING REVENUE/(EXPENSE)
Interest Income 84,792$ 1,529$
Rental Income 64,745 -
Interest Rebate Income 55,863 -
Interest and Fees (780,209) -
Amortization (3,429) -
Gain/(Loss) on Sale of Fixed Asset 5,676 -
Donated Public Improvements - Water 412,500 -
Donated Public Improvements - Sewer 40,250 -
(119,812)$ 1,529$
INCOME/(LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS 2,277,395$ (114,655)$
TRANSFERS (TO)/FROM OTHER FUNDS (95,602) -
CHANGE IN NET POSITION 2,181,793$ (114,655)$
NET POSITION - MAY 1, 2019 47,006,641 660,309
NET POSITION - APRIL 30, 2020 49,188,434$ 545,654$
FOR THE YEAR ENDED APRIL 30, 2020
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
Page 19
The Notes to Financial Statements are an integral part of this statement.
Business Type Governmental
Activities -Activities -
Enterprise Fund Internal
Water and Sewer Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers 9,146,186$ -$
Receipts from Employees for Services - 467,706
Receipts from Other Funds for Services - 4,118,281
Payments to Suppliers for Goods and Services (1,932,173) (4,413,635)
Payments to Employees for Services (1,730,100) (130,495)
Payments to Other Funds for Services (1,147,652) (78,038)
Internal Activity - Payments (to)/from Other Funds 34,007 -
Net Cash Provided/(Used) by Operating Activities 4,370,268$ (36,181)$
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Transfers (to)/from Other Funds (95,602)$ -$
Net Cash Provided/(Used) by Non-Capital Financing Activities (95,602)$ -$
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from the Sale of Capital Assets 5,676$ -$
Purchase of Capital Assets (189,266) (35,970)
Interest Paid on Capital Debt, Net of Rebate (738,850) -
Principal Paid on Capital Debt (1,770,506) -
Other Receipts/(Payments)64,745 -
Net Cash Provided/(Used) by Capital and Related Financing Activities (2,628,201)$ (35,970)$
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on Cash and Cash Equivalents and Investments 74,887$ 1,504$
Net Cash Provided/(Used) by Investing Activities 74,887$ 1,504$
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,721,352$ (70,647)$
CASH AND CASH EQUIVALENTS BALANCE - MAY 1, 2019
(INCLUDING RESTRICTED CASH AND OVERDRAFTS)5,136,702 687,968
CASH AND CASH EQUIVALENTS BALANCE - APRIL 30, 2020
(INCLUDING RESTRICTED CASH AND OVERDRAFTS)6,858,054$ 617,321$
RECONCILIATION OF OPERATING INCOME/(LOSS) TO NET
CASH PROVIDED/(USED) BY OPERATING ACTIVITIES
Operating Income/(Loss)2,397,207$ (116,184)$
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation Expense 1,787,873 35,712
Change in assets, liabilities and deferred amounts:
Receivables, net (14,130) (15,484)
Prepaid Expenses 170 (728)
Accounts Payable and Other Payables 180,450 54,435
Unearned Revenue (30,000) 2,017
Pension Liabilities (677,130) (55,705)
OPEB Liabilities 22,382 1,832
Deferred Pension Expenses/Revenues 724,049 59,621
Deferred OPEB Expenses/Revenue (20,603) (1,697)
Net Cash Provided/(Used) by Operating Activities 4,370,268$ (36,181)$
NONCASH CAPITAL FINANCING ACTIVITIES
IEPA Loan Draws 289,149$ -$
FOR THE YEAR ENDED APRIL 30, 2020
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
Page 20
The Notes to Financial Statements are an integral part of this statement.
POLICE
PENSION AGENCY
TRUST FUND FUNDS
ASSETS
Cash and Cash Equivalents 1,011,586$ 27,151$
Investments 26,564,939 -
Receivables (Net of Allowance for Estimated Uncollectible Amounts)
Accounts Receivable - 2,284
Accrued Interest 79,764 -
TOTAL ASSETS 27,656,289$ 29,435$
LIABILITIES
Accounts Payable -$ 22,605$
Due to Audit Fund 315 -
Due to Depositors - 6,830
TOTAL LIABILITIES 315$ 29,435$
NET POSITION - RESTRICTED FOR PENSION BENEFITS 27,655,974$
CITY OF MCHENRY, ILLINOIS
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
APRIL 30, 2020
FUND FINANCIAL STATEMENTS
Page 21
The Notes to Financial Statements are an integral part of this statement.
POLICE
PENSION
TRUST FUND
ADDITIONS
Contributions
Employer 2,077,704$
Plan Members 500,202
Total Contributions 2,577,906$
Investment Income
Interest and Dividends 1,470,313$
Gain/(Loss) on Sale of Investments 114,273
Net Increase/(Decrease) in Fair Value of Investments (1,334,825)
249,761$
Less: Investment Management Fees 56,546
Net Investment Income 193,215$
TOTAL ADDITIONS 2,771,121$
DEDUCTIONS
Benefits 2,143,518$
Refunds of Contributions 81,837
Administrative Expenses 43,421
TOTAL DEDUCTIONS 2,268,776$
NET INCREASE/(DECREASE)502,345$
NET POSITION - RESTRICTED FOR PENSION BENEFITS - MAY 1, 2019 27,153,629
NET POSITION - RESTRICTED FOR PENSION BENEFITS - APRIL 30, 2020 27,655,974$
CITY OF MCHENRY, ILLINOIS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED APRIL 30, 2020
FUND FINANCIAL STATEMENTS
Page 22
The Notes to Financial Statements are an integral part of this statement.
Page 23
CITY OF McHENRY, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
City of McHenry, Illinois’ (City) financial statements are prepared in accordance with generally accepted
accounting principles (GAAP) as applied to local governmental units. The Governmental Accounting
Standards Board (GASB) is the accepted standard-setting body for establishing governmental
accounting and financial reporting principles. The most significant accounting policies used by the City
are discussed below.
A. Reporting Entity
The accompanying financial statements comply with the provisions of GASB statements, in that the
financial statements include all organizations, activities, and functions that comprise the City. Component
units are legally separate entities for which the City (the primary entity) is financially accountable.
Financial accountability is defined as the ability to appoint a voting majority of the organization’s
governing body and either (1) the City’s ability to impose its will over the organization or (2) the potential
that the organization will provide a financial benefit to, or impose a financial burden on, the City. Using
these criteria, the City has determined that the Police Pension Fund meets the above criteria. The Police
Pension Fund is blended into the City’s primary government financial statements as a fiduciary fund
although it remains a separate legal entity. In addition, the City is not included as a component unit in
any other governmental reporting entity as defined by GASB pronouncements.
B. Basic Financial Statements – Government-Wide Statements
The City’s basic financial statements include both government-wide (reporting the City as a whole) and
fund (reporting the City’s major funds) financial statements. Both the government-wide and fund financial
statements categorize primary activities as either governmental or business-type. The City’s general
office, public safety, public works, and parks and recreation services are classified as governmental
activities. The City’s water and sewer services are classified as business-type activities.
In the government-wide Statement of Net Position, both the governmental and business-type activities
columns (a) are presented on a consolidated basis by column, and (b) are reported on a full accrual,
economic resource basis, which recognizes all long-term assets and receivables as well as long-term
debt and obligations. The City’s net position is reported in three parts – net investment in capital assets;
restricted net position; and unrestricted net position. The City first utilizes restricted resources to finance
qualifying activities.
The government-wide Statement of Activities reports both the gross and net cost of each of the City’s
functions and business-type activities. The functions are also supported by general government
revenues (property taxes, sales taxes, unrestricted investment earnings, etc.). The Statement of
Activities reduces gross expenses (including depreciation) by related program revenues, operating and
capital grants. Program revenues must be directly associated with the function (public safety, public
works, parks and recreation, etc.) or a business-type activity. Program revenues include charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment. Program revenues also include grants and contributions that
are restricted to meeting the operational or capital requirements of a particular function or segment.
Operating grants include operating-specific and discretionary (either operating or capital) grants while
the capital grants column reflects capital-specific grants.
The net costs (by function or business-type activity) are normally covered by general revenue (property
taxes, sales taxes, unrestricted investment earnings, etc.).
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 24
The City does not allocate indirect costs.
This government-wide focus is more on the sustainability of the City as an entity and the change in the
City’s net position resulting from the current year’s activities.
C. Basic Financial Statements – Fund Financial Statements
The financial transactions of the City are reported in individual funds in the fund financial statements.
Each fund is accounted for by providing a separate set of self-balancing accounts that comprise its
assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The various funds are
reported by generic classification within the financial statements.
The emphasis in fund financial statements is on the major funds in either the governmental or business-
type activities categories. Nonmajor funds by category are summarized into a single column. GASB
Statement No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues or
expenditures/expenses of either fund category or the governmental and enterprise combined) for the
determination of major funds.
The following fund types are used by the City:
1. Governmental Funds
The focus of the governmental funds’ measurement (in the fund statements) is upon determination of
financial position and changes in financial position (sources, uses, and balances of financial resources)
rather than upon net income. The City reports these governmental funds and fund types:
General Fund – The General Fund is the general operating fund of the City. It is used to account for all
financial resources except those required to be accounted for in another fund. The Annexation, Alarm
Board, Band, Civil Defense, Revolving Loan, Tourism, and Employee Flex Funds are included in this
fund.
Special Revenue Funds – The Special Revenue Funds are used to account for the proceeds of specific
revenue sources that are legally restricted to expenditures for specified purposes.
Debt Service Fund – The Debt Service Fund is used to account for the accumulation of funds for the
periodic payment of principal, interest, and related fees on general long-term debt.
Capital Projects Funds – The Capital Projects Funds are used to account for financial resources to be
used for the acquisition or construction of major capital facilities (other than those financed by business-
type/proprietary funds).
The activities reported in these funds are reported as governmental activities in the government-wide
financial statements.
2. Proprietary Fund Types
The focus of proprietary fund measurement is upon determination of operating income, changes in net
position, financial position, and cash flows. The generally accepted accounting principles applicable are
those similar to businesses in the private sector. The City reports the following proprietary fund types:
Enterprise Funds – Enterprise Funds are required to be used to account for operations for which a fee is
charged to external users for goods or services and the activity is financed with debt that is solely secured
by a pledge of the net revenues. The activities reported in these funds are reported as business-type
activities in the government-wide financial statements.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 25
Internal Service Funds – Internal Service Funds are used to account for the financing of goods or services
provided by an activity to other departments or funds of the City on a cost-reimbursement basis. Because
the principal users of the internal services are the City’s governmental activities, the financial statement
of the Internal Service Fund is consolidated into the governmental column when presented in the
government-wide financial statements.
3. Fiduciary Fund Types
Fiduciary Funds are used to report assets held in a trustee or agency capacity for others and therefore
are not available to support City programs. The reporting focus is on net position and changes in net
position and is reported using accounting principles similar to proprietary funds.
The City’s Fiduciary Funds are presented in the Fiduciary Fund financial statements by type (pension
and agency). Since by definition these assets are being held for the benefit of a third party (pension
participants, developers, etc.) and cannot be used to address activities or obligations of the City, these
funds are not incorporated into the government-wide statements.
D. Basis of Accounting
Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in
the accounts and reported in the financial statements. It relates to the timing of the measurements made
regardless of the measurement focus applied.
1. Accrual
Both governmental and business-type activities in the government-wide financial statements and the
proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting.
Property tax revenues are recognized in the period for which levied. Other nonexchange revenues,
including intergovernmental revenues and grants, are reported when all eligibility requirements are met.
Fees and charges and other exchange revenues are recognized when earned and expenses are
recognized when incurred.
2. Modified Accrual
The governmental fund financial statements are presented on the modified accrual basis of accounting.
Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e.,
both measurable and available. “Available” means collectible within the current period or within 60 days
after year-end. Property tax revenues are recognized in the period for which levied provided they are
also available. Intergovernmental revenues and grants are recognized when all eligibility requirements
are met and the revenues are available. Expenditures are recognized when the related liability is
incurred. Exceptions to this general rule include principal and interest on general obligation long-term
debt and employee vacation and sick leave, which are recognized when due and payable.
E. Cash and Cash Equivalents and Investments
Separate bank accounts are not maintained for all of the City’s funds. Instead, the funds maintain their
uninvested cash balances in common checking accounts, with accounting records being maintained to
show the portion of the common bank account balances attributable to each participating fund.
Occasionally certain of the funds participating in the common bank accounts will incur overdrafts (deficits)
in the accounts. Such overdrafts in effect constitute cash borrowed from other City funds and are,
therefore, interfund loans that have not been authorized by City Board action.
The following funds incurred deficit balances at April 30, 2020:
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 26
Debt Service Fund 87,188$
SSA#6 Huntersville Fund 179,115
Capital Equipment Fund 52,421
318,724$
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 $80,039 and all other allowances for other accounts receivable is $571,237.
G. Prepaid Expenses
Prepaid expenses are for payments made by the City in the current year for goods and services received
in the subsequent fiscal year.
H. Inventories
Inventories consist of the cost of unused salt for the roads. The salt inventory as of April 30, 2020 is
$110,000.
I. Interfund Activity
Interfund activity is reported either as loans, services provided, reimbursements or transfers. Loans are
reported as interfund receivables and payables as appropriate and are subject to elimination upon
consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues
and expenditures/expenses.
Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces
its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers
between governmental or between proprietary funds are netted as part of the reconciliation to the
government-wide financial statements.
J. Capital Assets
Capital assets purchased or acquired with an original cost of $5,000 or more, and $10,000 or more for
construction projects, are reported at historical cost or estimated historical cost. Contributed assets are
reported at fair market value as of the date of donation. Additions, improvements and other capital outlays
that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and
maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line half-
year basis over the following estimated useful lives:
Vehicles 5-15 years
Systems and Equipment 5-40 years
Building and Improvements 5-62 years
Infrastructure 10-40 years
GASB Statement No. 34 required the City to report and depreciate new infrastructure assets effective as
of May 1, 2003. Infrastructure assets include roads, bridges, underground pipe (other than related to
utilities), traffic signals, etc. These infrastructure assets constitute the largest asset class of the City.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 27
K. Deferred Outflows and Inflows of Resources
In addition to assets and liabilities, the Balance Sheets and Statements of Net Position will sometimes
report separate sections for deferred outflows of resources and deferred inflows of resources. Deferred
outflows of resources represent a consumption of net position that applies to a future period and so will
not be recognized as an outflow of resource until then. Deferred inflows of resources represent an
acquisition of net position that applies to a future period and so will not be recognized as an inflow of
resource until that time.
L. Compensated Absences
The City accrues accumulated unpaid vacation and associated employee-related costs when earned (or
estimated to be earned) by the employee. The noncurrent portion (the amount estimated to be used in
subsequent fiscal years) for governmental funds is reported only as a general long-term debt obligation
in the government-wide Statement of Net Position and represents a reconciling item between the fund
and government-wide presentations. In accordance with the provisions of Statement of Financial
Accounting Standards No. 43, “Accounting for Compensated Absences”, no liability is recorded for
nonvesting accumulating rights to receive sick pay benefits.
M. Long-Term Obligations
In the government-wide financial statements and proprietary fund financial statements, long-term debt
and other long-term obligations are reported as liabilities in the applicable governmental activities or
business-type activities and proprietary fund Statement of Net Position. Bond premiums and discounts
are amortized over the life of the bonds on a straight-line basis, rather than expensed in the current year.
Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are
reported as debt service expenditures in the year they occur.
In the fund financial statements, governmental funds recognize bond premiums and discounts, as well
as bond issuance costs, during the current period. The face amount of debt issued is reported as other
financing sources. Premiums received on debt issuances are reported as other financing sources while
discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not
withheld from the actual debt proceeds received, are reported as debt service expenditures.
N. Government-Wide and Proprietary Fund Net Position
Government-wide and proprietary fund net position is divided into three components:
1. Net investment in capital assets – consists of the historical cost of capital assets less accumulated
depreciation and less any debt that remains outstanding that was used to finance those assets.
2. Restricted net position – consists of net position that is restricted by the City’s creditors (for example,
through debt covenants), by the state enabling legislation (through restrictions on shared revenues),
by grantors (both federal and state), and by other contributors.
3. Unrestricted – all other net position is reported in this category.
O. Governmental Fund Balances
Governmental fund balances are divided between nonspendable and spendable.
Nonspendable fund balances are balances that cannot be spent because they are not expected to be
converted to cash or they are legally or contractually required to remain intact.
The spendable fund balances are arranged in a hierarchy based on spending constraints.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 28
1. Restricted – Restricted fund balances are restricted when constraints are placed on the use by
either (a) external creditors, grantors, contributors, or laws or regulations of other governments or
(b) law through constitutional provisions or enabling legislation.
2. Committed – Committed fund balances are amounts that can only be used for specific purposes as
a result of constraints of the City Council. Committed amounts cannot be used for any other
purpose unless the City Council removes those constraints by taking the same type of action (e.g.
legislation, resolution, ordinance). Committed fund balances differ from restricted balances
because the constraints on their use do not come from outside parties, constitutional provisions, or
enabling legislation.
3. Assigned – Assigned fund balances are amounts that are constrained by the City’s intent to be used
for specific purposes but are neither restricted nor committed. Intent is expressed by an appointed
body (e.g. a budget or finance committee) or official to which the Board of Trustees has delegated
the authority to assign, modify or rescind amounts to be used for specific purposes. Pursuant to
resolution #R-12-019 by the City Council, the Finance Director has been delegated this authority,
with the advice and consent of the Finance and Personnel Committee.
Assigned fund balances also include (a) all remaining amounts that are reported in governmental
funds (other than the General Fund) that are not classified as nonspendable, restricted or
committed, and (b) amounts in the General Fund that are intended to be used for a specific purpose.
Specific amounts that are not restricted or committed in a special revenue fund are assigned for
purposes in accordance with the nature of their fund type. Assignment within the General Fund
conveys that the intended use of those amounts is for a specific purpose that is narrower than the
general purpose of the City itself. All assigned fund balances are the residual amounts of the fund.
4. Unassigned – Unassigned fund balance is the residual classification for the General Fund. This
classification represents the General Fund balance that has not been assigned to other funds, and
that has not been restricted, committed, or assigned to specific purposes within the General Fund.
This classification is also used to represent negative fund balances in other funds.
The City permits funds to be expended in the following order: Restricted, Committed, Assigned and
Unassigned.
P. Minimum Fund Balance
The City has adopted a formal minimum fund balance policy. For the General, Recreation Center, and
Information Technology Funds, fund balance will be maintained at 120 days of estimated operating
expenditures. If the balance falls below this minimum a plan will be developed to return to the minimum
balance within a reasonable period of time. Funds in excess of the minimum may be considered for the
funding of one-time, nonrecurring expenditures, assigned for future capital activities or used for the
funding of other long-term obligations.
Q. Property Tax Calendar and Revenues
The City’s property tax is levied each calendar year on all taxable real property located in the City’s district
on or before the last Tuesday in December. The 2019 levy was passed by the Board on
December 16, 2019. Property taxes attach as an enforceable lien on property as of January 1 of the
calendar year they are for and are payable in two installments early in June and early in September of
the following calendar year. The City receives significant distributions of tax receipts approximately one
month after these dates.
R. Defining Operating Revenues and Expenses
The City’s proprietary funds distinguish between operating and nonoperating revenues and expenses.
Operating revenues and expenses of the City’s Water and Sewer Fund consist of charges for services
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 29
(including tap fees for the water function and systems development charges for the sewer function) and
the costs of providing those services, including depreciation and excluding interest cost. All other revenue
and expenses are reported as nonoperating.
S. Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 2 - DEPOSITS AND INVESTMENTS
Deposits with financial institutions are fully insured or collateralized by securities held in the City’s name.
The City is allowed to invest in securities as authorized by the Illinois Compiled Statutes, Chapter 30, Act
235/Articles 2 and 6, and Chapter 40, Act 5/Article 3 – Pensions.
Investments
As of April 30, 2020, the City had the following investments and maturities:
Investments Fair Value Less Than 1 1-5 5-10 More Than 10
External Investment Pools 13,803,476$ 13,803,476$ -$ -$ -$
Investment Maturities (in Years)
The fair value of investments in the External Investment Pools is the same as the value of pool shares.
The External Investment Pools are not SEC-registered but have regulatory oversight through the State
of Illinois.
Interest Rate Risk. The City will minimize the risk that the market value of securities in the portfolio will
fall due to changes in general interest rates, by:
Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing
operations, thereby avoiding the need to sell securities on the open market prior to maturity.
Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar
investment pools.
Credit Risk. The City minimizes credit risk, the risk of loss due to the failure of the security issuer or
backer, by:
Limiting investments to the safest type of securities.
Pre-qualifying the financial institutions, brokers/dealers, intermediaries, and advisers with which the
City will do business.
Diversifying the investment portfolio so that potential losses on individual securities will be
minimized.
As of April 30, 2020, the City’s investments were rated as follows:
Investments Credit Rating Rating Source
Illinois Funds Investment Pool AAAm Standard and Poor's
Concentration of Credit Risk. The City places no specific limit on the amount the City may invest in any
one issuer. There are currently no investments in any one organization that represent 5% or more of the
City’s total investments.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 30
NOTE 3 - FAIR VALUE MEASUREMENT
The City categorizes its fair value measurements within the fair value hierarchy established by generally
accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair
value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs
are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City has
the following recurring fair value measurements, which includes Pension Fund investments, as of
April 30, 2020:
Investments by fair value level 4/30/2020
Certificates of Deposit 2,032,997$ -$ 2,032,997$
Debt Securities:
U.S. Treasury securities 365,992$ 365,992$ -$
Corporate bonds 6,005,135 - 6,005,135
Municipal Issues 174,400 - 174,400
Total Debt Securities 6,545,527$ 365,992$ 6,179,535$
Equity Securities:
Foreign Issues 3,011,790$ 3,011,790$ -$
Total Equity Securities 3,011,790$ 3,011,790$ -$
Mutual Funds 17,007,622$ 17,007,622$ -$
Total Investments by fair value level 28,597,936$ 20,385,404$ 8,212,532$
Quoted Prices in Active Markets
for Identical Assets (Level 1)
Significant Other
Observable Inputs (Level 2)
Fair Value Measurements Using:
Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted
in active markets for those securities. Debt securities and certificates of deposit classified in Level 2 of
the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value
securities based on the securities ‘relationship to benchmark quoted prices’
NOTE 4 - CAPITAL ASSETS
Capital asset activity for the year ended April 30, 2020 was as follows:
Balance Balance
May 1, 2019 Increases Decreases April 30, 2020
Governmental Activities
Capital Assets not being depreciated
Land 42,130,875$ -$ -$ 42,130,875$
Art and Historical Treasures 1,658,927 - - 1,658,927
Intangibles 300,000 - - 300,000
Construction in Progress 786,317 610,230 839,678 556,869
Total Capital Assets not being depreciated 44,876,119$ 610,230$ 839,678$ 44,646,671$
Other Capital Assets
Land Improvements 6,198,829$ 178,446$ -$ 6,377,275$
Buildings 17,631,954 451,338 - 18,083,292
Vehicles 3,948,281 110,902 128,287 3,930,896
Equipment 4,357,724 101,484 11,565 4,447,643
Infrastructure 76,003,324 450,821 - 76,454,145
Total Other Capital Assets at Historical Cost 108,140,112$ 1,292,991$ 139,852$ 109,293,251$
Less Accumulated Depreciation for:
Land Improvements 3,840,938$ 219,763$ -$ 4,060,701$
Buildings 5,115,583 402,444 - 5,518,027
Vehicles 2,951,366 244,958 119,196 3,077,128
Equipment 2,526,050 290,402 11,565 2,804,887
Infrastructure 47,199,230 1,815,529 - 49,014,759
Total Accumulated Depreciation 61,633,167$ 2,973,096$ 130,761$ 64,475,502$
Other Capital Assets, Net 46,506,945$ (1,680,105)$ 9,091$ 44,817,749$
Governmental Activities Capital Assets, Net 91,383,064$ (1,069,875)$ 848,769$ 89,464,420$
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 31
Balance Balance
May 1, 2019 Increases Decreases April 30, 2020
Business-Type Activities
Capital Assets not being depreciated
Land 2,208,117$ -$ -$ 2,208,117$
Construction in Progress 36,555,001 380,838 853,725 36,082,114
Total Capital Assets not being depreciated 38,763,118$ 380,838$ 853,725$ 38,290,231$
Other Capital Assets
Buildings 2,736,098$ -$ -$ 2,736,098$
Vehicles 1,938,817 38,165 31,233 1,945,749
Systems and Equipment 68,620,399 1,076,739 - 69,697,138
Total Other Capital Assets at Historical Cost 73,295,314$ 1,114,904$ 31,233$ 74,378,985$
Less Accumulated Depreciation for:
Buildings 2,236,269$ 59,763$ -$ 2,296,032$
Vehicles 1,059,602 71,315 31,233 1,099,684
Systems and Equipment 30,165,681 1,656,795 - 31,822,476
Total Accumulated Depreciation 33,461,552$ 1,787,873$ 31,233$ 35,218,192$
Other Capital Assets, Net 39,833,762$ (672,969)$ -$ 39,160,793$
Business-Type Activities Capital Assets, Net 78,596,880$ (292,131)$ 853,725$ 77,451,024$
Depreciation expense was charged to functions as follows:
Governmental Activities
Public Safety 266,629$
Public Works 2,064,308
Parks and Recreation 432,135
Unallocated 210,024
Total Governmental Activities Depreciation Expense 2,973,096$
Business-Type Activities
Water 552,474$
Sewer 1,235,399
Total Business-Type Activities Depreciation Expense 1,787,873$
NOTE 5 - LONG-TERM LIABILITY ACTIVITY
Long-term liability activity for the year ended April 30, 2020 was as follows:
Amounts
Balance Balance Due Within
May 1, 2019 Additions Retirements April 30, 2020 One Year
Governmental Activities
Bonds and Notes Payable
General Obligation Bonds 6,980,000$ -$ 1,485,000$ 5,495,000$ 950,000$
Unamortized Bond Discount (4,575) - (2,267) (2,308) (2,308)
Unamortized Bond Premium 65,682 - 8,378 57,304 8,378
Note Payable 305,500 - 56,884 248,616 58,945
Total Bonds and Notes Payable 7,346,607$ -$ 1,547,995$ 5,798,612$ 1,015,015$
Other Long-Term Liabilities
Compensated Absences 606,217$ -$ 17,912$ 588,305$ -$
IMRF Net Pension Liability 5,782,645 808,459 3,105,130 3,485,974 -
Police Pension Net Pension Liability 22,532,960 3,954,361 - 26,487,321 -
Total OPEB Liability 5,172,944 599,992 154,276 5,618,660 -
Total Other Long-Term Liabilities 34,094,766$ 5,362,812$ 3,277,318$ 36,180,260$ -$
Governmental Activities Long-
Term Obligations 41,441,373$ 5,362,812$ 4,825,313$ 41,978,872$ 1,015,015$
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 32
Amounts
Balance Balance Due Within
May 1, 2019 Additions Retirements April 30, 2020 One Year
Business-Type Activities
Bonds and Notes Payable
General Obligation Bonds 5,470,000$ -$ 375,000$ 5,095,000$ 385,000$
IEPA Revolving Loan Fund 31,483,345 289,149 1,395,506 30,376,988 1,421,583
Unamortized Bond Discount (11,167) - (3,940) (7,227) (3,941)
Unamortized Bond Premium 6,827 - 512 6,315 512
Total Bonds and Notes Payable 36,949,005$ 289,149$ 1,767,078$ 35,471,076$ 1,803,154$
Other Long-Term Liabilities
Compensated Absences 87,658$ 21,606$ -$ 109,264$ -$
IMRF Net Pension Liability 1,787,082 238,203 915,332 1,109,953 -
Total OPEB Liability 259,773 30,125 7,743 282,155 -
Total Other Long-Term Liabilities 2,134,513$ 289,934$ 923,075$ 1,501,372$ -$
Business-Type Activities
Long-Term Obligations 39,083,518$ 579,083$ 2,690,153$ 36,972,448$ 1,803,154$
Bonds and notes payable consisted of the following at April 30, 2020:
Maturity Interest Face Carrying
Date Rate Amount Amount
Governmental Activities
General Obligation Bonds 2010B 12/15/2020 1.40% - 4.40% 3,510,000$ 390,000$
General Obligation Bonds 2012 12/15/2027 2.00% - 2.50% 850,000 490,000
General Obligation Refunding Bonds 2013 5/1/2019 0.40% - 1.30% 1,965,000 -
General Obligation Bonds 2013 5/1/2027 0.40% - 2.75% 415,000 260,000
General Obligation Bonds 2015 12/15/2035 2.00% - 3.25% 6,375,000 4,355,000
Note Payable 2/20/2024 3.50% 305,500 248,616
4 parcels of land pledged as collateral to this loan
Total 13,420,500$ 5,743,616$
Business-Type Activities
General Obligation Bonds 2010C 12/15/2029 1.00% - 5.25% 5,665,000$ 3,500,000$
General Obligation Bonds 2012 12/15/2032 2.00% - 2.80% 2,250,000 1,595,000
IEPA Revolving Loan Fund 12/30/2037 1.86% 31,507,182 30,376,988
Total 39,422,182$ 35,471,988$
At April 30, 2020 the annual debt service requirements to service all long-term debt attributable to
governmental activities are:
Year Ending April 30 Principal Interest Total Rebate
2021 1,008,896$ 145,743$ 1,154,639$ 7,722$
2022 631,029 115,220 746,249 -
2023 648,214 101,605 749,819 -
2024 660,477 87,612 748,089 -
2025 - 2029 1,970,000 253,866 2,223,866 -
2030 - 2034 570,000 94,812 664,812 -
2035 - 2036 255,000 12,512 267,512 -
5,743,616$ 811,370$ 6,554,986$ 7,722$
At April 30, 2020 the annual debt service requirements to service all long-term debt attributable to
business-type activities are:
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 33
Year Ending April 30 Principal Interest Total Rebate
2021 1,806,583$ 698,131$ 2,504,714$ 57,383$
2022 1,853,148 662,805 2,515,953 53,743
2023 1,890,208 625,746 2,515,954 49,490
2024 1,937,775 587,919 2,525,694 45,096
2025 - 2029 10,405,741 2,311,911 12,717,652 140,544
2030 - 2034 9,711,399 1,211,474 10,922,873 7,809
2035 - 2038 7,867,134 320,564 8,187,698 -
35,471,988$ 6,418,550$ 41,890,538$ 354,065$
Industrial Development Revenue Bonds, Series 2016A and 2016B
During fiscal year 2017, the City issued Industrial Development Revenue Bonds on behalf of Fabrik
Industries. The bonds are not obligations of the City; therefore, the City does not record the assets or
liabilities resulting from the bond issuance as its primary function is to arrange financing between Fabrik
and the bond holders. All funds are controlled by the trustee of the bonds (American Community Bank &
Trust). The original issues of the bonds aggregated to $7,500,000, and at April 30, 2020 the outstanding
balance on the bonds was $1,888,872.
NOTE 6 - RESTRICTED EQUITY
The following amounts are restricted equity balances at April 30, 2020:
Restricted Restricted
Restricted for Net Position Fund Balance
Governmental Activities/Governmental Funds
Highways and Streets 490,191$ 490,191$
Capital Projects 1,001,829 1,001,829
Tax Increment Financing 324,482 324,482
Special Service Areas 21 21
1,816,523$ 1,816,523$
NOTE 7 - DESIGNATED NET POSITION
City management has designated certain Water and Sewer Fund revenues to be used only for debt
service. The amount designated at April 30, 2020 was $4,758,140.
NOTE 8 - DEFICIT FUND BALANCE
At April 30, 2020 a deficit fund balance existed in the following funds:
Capital Equipment Fund 28,750
SSA#6 Huntersville Fund 179,115
207,865$
NOTE 9 - PROPERTY TAXES
Property taxes receivable and unavailable revenue recorded in these financial statements, in the amount
of $5,716,304, are from the 2019 tax levy. The unavailable revenue is 100% of the 2019 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 2020. The
City has determined that 100% of the amounts collected for the 2018 levy ($5,629,639) are allocable for
use in fiscal year 2020 and, therefore, are recorded in these financial statements as property taxes
revenue. A summary of the assessed valuation, rates, and extensions for the years 2019, 2018, and
2017 follows:
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 34
Tax Year
Assessed Valuation
Rates Extensions Rates Extensions Rates Extensions
General 0.0499 349,728$ 0.0756 499,047$ 0.0899 561,765$
Police Protection 0.0781 547,964 0.0830 547,962 0.0877 547,960
Insurance 0.0713 500,000 0.0758 499,997 0.0800 499,999
Retirement 0.0569 399,199 0.0605 399,199 0.0639 399,197
Social Security 0.0804 563,745 0.0854 563,752 0.0902 563,746
Audit 0.0038 26,430 0.0040 26,433 0.0042 26,429
Police Pension 0.3182 2,231,744 0.3156 2,082,424 0.3233 2,019,704
Total Taxes Extended 0.6585 4,618,810$ 0.7000 4,618,814$ 0.7394 4,618,800$
Road and Bridge
(from Townships) - 371,126$ - 370,104$ - 359,432$
Special Service Area #4A - 16,123$ - 16,847$ - 16,847$
Tax Increment Financing - 710,181$ - 636,500$ - 489,962$
2017
$624,662,787
2019
$701,420,237
2018
$659,844,715
NOTE 10 - EXCESS OF EXPENDITURES OVER BUDGET
For the year ended April 30, 2020, the following governmental funds had expenditures that exceeded the
budget:
Fund Budget Actual
Pageant 1,900$ 3,825$ 1,925$
Audit 40,011 43,645 3,634
Developer Donations 687,700 837,078 149,378
TIF 88,000 188,648 100,648
Capital Equipment 28,850 29,010 160
Excess of Actual
Over Budget
NOTE 11 - ILLINOIS MUNICIPAL RETIREMENT FUND
A. Plan Description
The City’s defined benefit pension plan for regular employees provides retirement and disability benefits,
post-retirement increases, and death benefits to plan members and beneficiaries. The City’s plan is
managed by the Illinois Municipal Retirement Fund (IMRF), the administrator of a multi-employer public
pension fund. A summary of IMRF’s pension benefits is provided in the “Benefits Provided” section of
this document. Details of all benefits are available from IMRF. Benefit provisions are established by
statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly
available Comprehensive Annual Financial Report that includes financial statements, detailed information
about the pension plan’s fiduciary net position, and required supplementary information. The report is
available for download at www.imrf.org.
B. Benefits Provided
IMRF has three benefit plans. The vast majority of IMRF members participate in the Regular Plan (RP).
The Sheriff’s Law Enforcement Personnel (SLEP) plan is for sheriffs, deputy sheriffs, and selected police
chiefs. Counties could adopt the Elected County Official (ECO) plan for officials elected prior to
August 8, 2011 (the ECO plan was closed to new participants after that date).
All three IMRF benefit plans have two tiers. Employees hired before January 1, 2011 are eligible for Tier
1 benefits. Tier 1 employees are vested for pension benefits when they have at least eight years of
qualifying service credit. Tier 1 employees who retire at age 55 (at reduced benefits) or after age 60
(at full benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly
for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit,
plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 35
Final rate of earnings is the highest total earnings during any consecutive 48 months within the last ten
years of service, divided by 48. Under Tier 1, the pension is increased by 3% of the original amount on
January 1 every year after retirement.
Employees hired on or after January 1, 2011 are eligible for Tier 2 benefits. For Tier 2 employees,
pension benefits vest after ten years of service. Participating employees who retire at age 62 (at reduced
benefits) or after age 67 (at full benefits) with ten years of service are entitled to an annual retirement
benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the
first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of
75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96
consecutive months within the last ten years of service, divided by 96. Under Tier 2, the pension is
increased on January 1 every year after retirement, upon reaching age 67, by the lesser of:
3% of the original pension amount, or
1/2 of the increase in the Consumer Price Index of the original pension amount.
C. Employees Covered by Benefit Terms
All appointed employees of a participating employer who are employed in a position normally requiring
600 hours (1,000 hours for certain employees hired after 1981) or more of work in a year are required
to participate. As of December 31, 2019, the following employees were covered by the benefit terms:
Retirees and beneficiaries currently receiving benefits 87
Inactive plan members entitled to but not yet receiving benefits 49
Active plan members 105
Total 241
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 2019 was 10.32%. For the fiscal year ended June 30, 2020, the City
contributed $840,620 to the plan. The City also contributes for disability benefits, death benefits, and
supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability
and death benefits are set by IMRF’s Board of Trustees, while the supplemental retirement benefits rate
is set by statute.
E. Net Pension Liability
The components of the net pension liability of the IMRF actuarial valuation performed as of
December 31, 2019, and a measurement date as of December 31, 2019, calculated in accordance with
GASB Statement No. 68, were as follows:
Total Pension Liability 41,507,305$
IMRF Fiduciary Net Position 36,911,378
City's Net Pension Liability 4,595,927
IMRF Fiduciary Net Position as a Percentage
of the Total Pension Liability 88.93%
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.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 36
F. Actuarial Assumptions
The total pension liability above was determined by an actuarial valuation performed as of
December 31, 2019 using the following actuarial methods and assumptions:
Assumptions
Inflation 2.50%
Salary Increases 3.35% - 14.25% including inflation
Interest Rate 7.25%
Asset Valuation Method Market Value of Assets
Projected Retirement Age Experience-based Table of Rates, specific to the type of eligibility condition, last updated
for the 2017 valuation according to an experience study from years 2014 to 2016
For non-disabled retirees, an IMRF specific mortality table was used with fully generational projection
scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Blue Collar
Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled
retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base
year 2015). The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table
applying the same adjustments that were applied for non-disabled lives. For active members, an IMRF
specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The
IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to
match current IMRF experience.
G. Long-Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which best-estimate ranges of expected future real rates of return (expected returns, net
of pension plan investment expense, and inflation) are developed for each major asset class. These
ranges are combined to produce the long-term expected rate of return by weighting the expected future
real rates of return to the target asset allocation percentage and adding expected inflation. The target
allocation and best estimates of geometric real rates of return for each major asset class are summarized
in the following table as of December 31, 2019:
Asset Class
Target
Allocation
Projected
Return
Equities 37.00% 5.75%
International Equities 18.00% 6.50%
Fixed Income 28.00% 3.25%
Real Estate 9.00% 5.20%
Alternatives 7.00%
Private Equity 7.60%
Hedge Funds N/A
Commodities 3.60%
Cash 1.00% 1.85%
100.00%
H. Single Discount Rate
The projection of cash flow used to determine this Single Discount Rate assumed that the plan members’
contributions will be made at the current contribution rate, and that employer contributions will be made
at rates equal to the difference between actuarially determined contribution rates and the member rate.
The Single Discount Rate reflects:
1. The long-term expected rate of return on pension plan investments (during the period in which the
fiduciary net position is projected to be sufficient to pay benefits), and
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 37
2. The tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an
average AA credit rating (which is published by the Federal Reserve) as of the measurement date
(to the extent that the contributions for use with the long-term expected rate of return are not met).
For the purpose of this discount rate, the expected rate of return on pension plan investments is 7.25%;
the municipal bond rate is 2.75%; and resulting single discount rate is 7.25%.
I. Changes in Net Pension Liability
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(A) (B) (A)-(B)
Balances at December 31, 2018 39,034,861$ 31,465,134$ 7,569,727$
Changes for the year:
Service Cost 781,612$ -$ 781,612$
Interest on the Total Pension Liability 2,796,732 - 2,796,732
Differences Between Expected and Actual
Experience of the Total Pension Liability 594,214 - 594,214
Contributions - Employer - 787,631 (787,631)
Contributions - Employee - 344,894 (344,894)
Net Investment Income - 5,817,683 (5,817,683)
Benefit Payments, including Refunds
of Employee Contributions (1,700,114) (1,700,114) -
Other (Net Transfer) - 196,150 (196,150)
Net Changes 2,472,444$ 5,446,244$ (2,973,800)$
Balances at December 31, 2019 41,507,305$ 36,911,378$ 4,595,927$
J. Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the plan’s net pension liability, calculated using a Single Discount Rate of 7.25%,
as well as what the plan’s net pension liability would be if it were calculated using a single Discount Rate
that is 1% lower or 1% higher than the current rate:
Current
1% Decrease Discount Rate 1% Increase
6.25% 7.25% 8.25%
Net Pension Liability 10,321,481$ 4,595,927$ (95,536)$
K. Pension Expense/(Income) and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions
For the year ended June 30, 2020, the City recognized pension expense/(income) of $1,046,662. At
June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related
to pensions from the following sources:
Outflows of Inflows of Net Outflows
Expense in Future Periods Resources Resources of Resources
Differences between expected and actual experience 1,010,761$ 23,260$ 987,501$
Changes of assumptions 751,977 536,085 215,892
Net difference between projected and actual
earnings on pension plan investments 2,521,792 3,939,174 (1,417,382)
Total deferred amounts to be recognized in
pension expense in future periods 4,284,530$ 4,498,519$ (213,989)$
Pension contributions made subsequent to
the measurement date 296,715 - 296,715
Total deferred amounts related to pensions 4,581,245$ 4,498,519$ 82,726$ $296,715 reported as deferred outflows of resources related to pensions resulting from the City’s
contributions subsequent to the measurement date will be recognized as a reduction of the net pension
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 38
liability in the next reporting year. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to pensions will be recognized in pension expense as follows:
Net Deferred
Year Ending Outflows of
December 31 Resources
2020 (114,637)$
2021 (117,844)
2022 492,664
2023 (494,996)
2024 20,824
Thereafter -
(213,989)$
NOTE 12 - POLICE PENSION PLAN
A. Plan Administration
Full-time police sworn personnel of the City are covered by The Police Pension Fund of the City (Plan).
Although this is a single-member pension plan, the defined benefits and employee and employer
contribution levels are governed by Illinois Compiled Statues (40 IL CS 5/3-1) and may be amended only
by the Illinois legislature. The City accounts for the Plan as a pension trust fund.
The Pension Board administers the Plan and the Illinois Department of Insurance is the oversight agency.
The Board consists of five elected or appointed members.
B. Plan Membership
At May 1, 2019, the date of the latest actuarial valuation, Plan participation consisted of:
Retirees and beneficiaries receiving benefits 31
Terminated plan members entitled to but not yet receiving benefits 3
Active plan members 47
Total 81
C. Benefits Provided
The Plan provides retirement, disability, and death benefits to Plan members and their beneficiaries.
Chapter 40-Pensions-Act 5/Article 3 of the Illinois Compiled Statutes assigns the authority to establish
and amend the benefit provisions of the Plan to the Illinois legislature.
D. Contributions
Employees are required by Illinois Compiled Statutes (ILCS) to contribute 9.91% of their base salary to
the Plan. If an employee leaves covered employment with less than 20 years of service, accumulated
employee contributions may be refunded without accumulated interest. The City is required to contribute
the remaining amounts necessary to finance the plan and the administrative costs as actuarially
determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund
90% of the past service cost for the Plan. For the year ended April 30, 2020 the City’s contribution was
46.98% of covered payroll.
E. Investment Policy
ILCS limit the Plan’s investments to those allowable by ILCS and require the Plan’s Board of Trustees to
adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The
Plan’s investment policy authorizes the Plan to make deposits/invest in insured commercial banks,
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 39
savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union
shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States
or agreements to repurchase these same obligations, repurchase agreements, short-term commercial
paper rated within the three highest classifications by at least two standard rating services, investment
grade corporate bonds and Illinois Funds. The Plan may also invest in certain non-U.S. obligations,
Illinois municipal corporations tax anticipation warrants, veteran’s loans, obligations of the State of Illinois
and its political subdivisions, Illinois insurance company general and separate accounts, mutual funds
and corporate equity securities.
The Plan’s investment policy in accordance with ILCS establishes the following target allocation across
asset classes:
Long-Term Expected
Asset Class Target Real Rate of Return
Fixed Income 33% 1.46%
Domestic Equities 30% 7.17%
International Equities 13% 0.21%
Real Estate Equities 7% 7.78%
Blended Equities 15% 6.96%
Cash and Securities 2% 0.33%
ILCS limits the Plan’s investments in equities to 65% of total assets of the fund. Securities in any one
company should not exceed 5% of the total fund. The blended asset class is comprised of all other asset
classes to allow for rebalancing the portfolio. The Estimated Annual Inflation Rate (CPI) assumption
used is 2.5%. The long-term expected rate of return on the Plan’s investments was determined using an
asset allocation study conducted by the Plan’s investment management firm in December of 2014 in
which best estimate ranges of expected future real rates of return (net of pension plan investment
expense and inflation) were developed for each major asset class. These ranges were combined to
produce the long-term expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real
rates of return excluding inflation for each major asset class included in the Plan’s target asset allocation
as of April 30, 2020 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, 2020 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, 2020, the annual money-weighted rate of return on pension plan
investments, net of pension plan investment expense, was -.48%. The money-weighted rate of return
expresses investment performance, net of investment expense, adjusted for the changing amounts
actually invested.
I. Deposits with Financial Institutions
Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure,
the Plan’s deposits may not be returned to it. The Plan’s investment policy requires all bank balances to
be covered by federal depository insurance.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 40
J. Interest Rate Risk
The following table presents the investments and maturities of the Plan’s debt securities as of
April 30, 2020:
Investments Fair Value Less Than 1 1-5 5-10 More Than 10
External Investment Pools 424,785$ 424,785$ -$ -$ -$
Foreign Issues 3,011,790 2,260,186 751,604 - -
US Treasury 365,992 - - - 365,992
Municipal Bonds 174,400 - - 174,400 -
Corporate Bonds 6,005,135 4,894,049 1,003,156 107,930 -
Mutual Funds 17,007,622 17,007,622 - - -
Total 26,989,724$ 24,586,642$ 1,754,760$ 282,330$ 365,992$
Investment Maturities (in Years)
In accordance with its investment policy, the Plan limits its exposure to interest rate risk by structuring
the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for
expected current cash flows. The investment policy does not limit the maximum maturity length of
investments in the Plan.
K. Credit Risk
The Plan limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par
value upon maturity, by primarily investing in obligations guaranteed by the United States Government,
securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed
by the United States Government, and investment grade corporate bonds rated by at least one of the two
largest rating services at the time of purchase. If subsequently downgraded below investment grade, the
bonds must be liquidated by the manager from the portfolio within 90 days after being downgraded.
However, certain fixed income securities are not rated. As of April 30, 2020, the Plan’s investments were
rated as follows:
Credit Rating Rating Source
US Treasury Bond Not Rated
US Treasury Bond Not Rated
Municipal Bonds Decatur II Build America Bonds A2 Moody's
Corporate Bonds American Honda Finance A Standard and Poor's
Corporate Bonds Boeing Co BBB- Standard and Poor's
Corporate Bonds Dupont De Nemours Inc BBB+ Standard and Poor's
Corporate Bonds First Horizon National BBB- Standard and Poor's
Corporate Bonds Ford Motor Credit Co LLC Bb+ Standard and Poor's
Corporate Bonds Ford Motor Credit Co LLC Bb+ Standard and Poor's
Corporate Bonds Fortune Brands Home SE BBB+ Standard and Poor's
Corporate Bonds General Elec Cap Corp BBB+ Standard and Poor's
Corporate Bonds General Elec Cap Corp BBB+ Standard and Poor's
Corporate Bonds General Motors Finl Co BBB Standard and Poor's
Corporate Bonds General Motors Finl Co BBB Standard and Poor's
Corporate Bonds Goldman Sachs Bank USA A+ Standard and Poor's
Corporate Bonds Goldman Sachs Group Inc BBB+ Standard and Poor's
Corporate Bonds Goldman Sachs Group Inc BBB+ Standard and Poor's
Corporate Bonds Goldman Sachs Group Inc BBB+ Standard and Poor's
Corporate Bonds Hp Enterprise Co BBB Standard and Poor's
Corporate Bonds Hsbc USA Inc A- Standard and Poor's
Corporate Bonds Microsoft Corp AAA Standard and Poor's
Corporate Bonds Morgan Stanley BBB+ Standard and Poor's
Corporate Bonds Walgreens Boots Alliance BBB Standard and Poor's
Corporate Bonds Wells Fargo Co Sr Glbl T Stp 22 A- Standard and Poor's
Foreign Issues Barclays Bank Plc A Standard and Poor's
Investments
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 41
Credit Rating Rating Source
Foreign Issues Barclays Bank Plc A Standard and Poor's
Foreign Issues Barclays Bank Plc A Standard and Poor's
Foreign Issues Barclays Plc BBB Standard and Poor's
Foreign Issues Deutsche Bank Ny BBB- Standard and Poor's
Foreign Issues Deutsche Bank Ny BBB- Standard and Poor's
Foreign Issues Deutsche Bank Ny BBB- Standard and Poor's
Foreign Issues Ge Capital Intl Funding BBB+ Standard and Poor's
Foreign Issues Santander Uk Group Hldgs BBB Standard and Poor's
Mutual Funds Washington Mutual Not Rated
Mutual Funds Capital World Growth and Income Not Rated
Mutual Funds Smallcap World Not Rated
Mutual Funds Amcap Not Rated
Mutual Funds New World NEWFX Not Rated
Investments
L. Net Pension Liability
The components of the net pension liability of the Plan as of April 30, 2020, calculated in accordance with
GASB Statement No. 68, were as follows:
Total Pension Liability 54,143,186$
Plan Fiduciary Net Position 27,655,865
City's Net Pension Liability 26,487,321
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 51.08%
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, 2020
using the following actuarial methods and assumptions:
Actuarial Valuation Date May 1, 2019
Actuarial Cost Method Entry Age Normal (Level %)
Assumptions
Inflation 2.25%
Salary Increases 3.75% - 10.02%
Investment Rate of Return 7.00%
Asset Valuation Method Market Value
Mortality rates were based on the PubS-2019(A). The other non-economic actuarial assumptions used
in the May 1, 2020 valuation were based on a review of assumptions in the L&A 2020 study for Illinois
Police Officers.
Active Mortality follows the Sex Distinct Raw Rates as developed in the PubS-2010(A) Study. Mortality
improvement uses MP-2019 Improvement Rates applied on a fully generational basis.
Retiree Mortality follows the L&A Assumption Study for Police 2020. These rates are experience weighted
with the Sex District Raw Rates as developed in the PubS-2010(A) Study improved to 2017 using MP-
2019 Improvement Rates. These rates are then improved fully generationally using MP-2019
Improvement Rates.
Disabled Mortality follows the Sex Distinct Raw Rates as developed in the PubS-2019 Study for disabled
participants. Mortality improvement uses MP-2019 Improvement Rates applied on a fully generational
basis.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 42
Spouse Mortality follows the Sex Distinct Raw Rates as developed in the PubS-2010(A) Study for
contingent survivors. For all rates not provided there (ages 45 and younger) the PubG-2010 Study for
general employees was used. Mortality improvement uses MP-2019 Improvement Rates applied on a
fully generational basis.
Other actuarial assumption (demographic) rates are based on a review of the L&A Assumption Study for
Police 2020.
N. Discount Rate
The discount rate used to measure the total pension liability was 7%. The discount rate used in the
determination of the Total Pension Liability is based on a combination of the expected long-term rate of
return on plan investments and the municipal bond rate.
Cash flow projections were used to determine the extent which the plan’s future net position will be able
to cover future benefit payments. To the extent future benefit payments are covered by the plan’s
projected net position, the expected rate of return on plan investments is used to determine the portion
of the net pension liability associated with those payments. To the extent future benefit payments are not
covered by the plan’s projected net position, the municipal bond rate is used to determine the portion of
the net pension liability associated with those payments.
O. Changes in the Net Pension Liability
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(A) (B) (A)-(B)
Balances at April 30, 2019 49,686,589$ 27,153,629$ 22,532,960$
Changes for the year:
Service Cost 1,020,016$ -$ 1,020,016$
Interest on the Total Pension Liability 3,400,174 - 3,400,174
Changes of Benefit Terms 267,927 - 267,927
Differences Between Expected and Actual
Experience 953,997 - 953,997
Changes of Assumptions 1,039,838 - 1,039,838
Contributions - Employer - 2,077,704 (2,077,704)
Contributions - Employee - 500,202 (500,202)
Net Investment Income - 249,889 (249,889)
Benefit Payments, including Refunds
of Employee Contributions (2,225,355) (2,225,355) -
Administrative Expense - (100,204) 100,204
Net Changes 4,456,597$ 502,236$ 3,954,361$
Balances at April 30, 2020 54,143,186$ 27,655,865$ 26,487,321$
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:
Current
1% Decrease Discount Rate 1% Increase
6.00% 7.00% 8.00%
Net Pension Liability 35,377,535$ 26,487,321$ 19,405,703$
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 43
Q. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended April 30, 2020, the City recognized pension expense of $3,470,061. At April 30, 2020,
the City reported deferred outflows of resources and deferred inflows of resources related to pensions
from the following sources:
Outflows of Inflows of Net Outflows
Expense in Future Periods Resources Resources of Resources
Differences between expected and actual experience 970,053$ 793,124$ 176,929$
Assumption changes 1,490,939 680,261 810,678
Net difference between projected and
actual earnings on pension investments 1,527,340 365,720 1,161,620
Total deferred amounts to be recognized in
pension expense in future periods 3,988,332$ 1,839,105$ 2,149,227$
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized in pension expense as follows:
Net Deferred
Year Ending Outflows of
April 30 Resources
2021 605,499$
2022 226,215
2023 350,080
2024 283,552
2025 40,421
Thereafter 643,460
2,149,227$
NOTE 13 - POST EMPLOYMENT BENEFIT COMMITMENTS
A. Retiree Insurance Plan
Plan Overview
In addition to the retirement plan described in Notes 11 and 12, the City provides post-employment
benefits other than pensions (“OPEB”) to employees who meet certain criteria. The Plan, a single-
employer defined benefit plan, provides the following coverage:
Medical Coverage
Employees may continue coverage into retirement on the City medical plans if they pay the entire premium. Coverage is also
available for eligible dependents on a pay-all basis. Coverage may continue when Medicare eligibility is reached. Coverage for
dependents can continue upon the death of the retiree given that contributions continue.
Full-time sworn Police employees that suffer a catastrophic injury or are killed in the line of duty receive free lifetime coverage for
the employee, their spouse, and each dependent child under the Public Safety Employee Benefits Act.
The Plan does not issue a stand-alone financial report.
Eligibility
Employees of the City are eligible for retiree health benefits as listed below:
IMRF Employees
Regular Plan Tier 1 (Enrolled in IMRF Prior to January 1, 2011)
- At least 55 years old and at least 8 years of credited service (reduced pension)
- At least 60 years old and at least 8 years of credited service (full pension)
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 44
IMRF Employees (Continued)
Regular Plan Tier 2 (Enrolled in IMRF On or After January 1, 2011)
- At least 62 years old and at least 10 years of credited service (reduced pension)
- At least 67 years old and at least 10 years of credited service (full pension)
Police Officers
Hired on or Before January 1, 2011
- At least 50 years old and at least 20 years of credited service (full benefit)
- At least 60 years old and at least 8 years of credited service (reduced benefit)
Hired After January 1, 2011
- At least 55 years old and at least 10 years of credited service (full benefit)
- At least 50 years old and at least 10 years of credited service (reduced benefit)
Membership in the plan consisted of the following at May 1, 2019, the date of the latest actuarial valuation:
Active employees 110
Inactive employees entitled to but not yet receiving benefits -
Inactive employees currently receiving benefits 16
Total 126
Contribution
The required contribution is based on projected pay-as-you-go financing requirements. Employees are
not required to contribute to the plan.
Total OPEB Liability
The City’s total OPEB liability was measured as of April 30, 2020, and the total OPEB liability was
determined by an actuarial valuation as of May 1, 2019.
Actuarial Assumptions
The total OPEB liability in the May 1, 2019 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Actuarial Method Entry Age Normal
Discount rate 2.85%
Salary Rate Increase 4.00%
Expected long-term
investment rate of return N/A Health Care Trend
Pre-
Medicare
Pre-
Medicare
Period
BCBS
HMO
BCBS
PPO
PPO -
HRA
BCBS
HMO Period
BCBS
HMO
BCBS
PPO
PPO -
HRA
BCBS
HMO
(1) Known rate IY18-IY19
0% (1)0% (1)0% (1)0% (1)FY19-FY20 2.33% 2.33% 2.33% 2.33%
IY19-IY20 7.00% 7.00% 7.00% 7.00% FY20-FY21 6.92% 6.92% 6.92% 6.92%
IY20-IY21 6.75% 6.75% 6.75% 6.75% FY21-FY22 6.67% 6.67% 6.67% 6.67%
IY21-IY22 6.50% 6.50% 6.50% 6.50% FY22-FY23 6.42% 6.42% 6.42% 6.42%
IY22-IY23 6.25% 6.25% 6.25% 6.25% FY23-FY24 6.17% 6.17% 6.17% 6.17%
IY23-IY24 6.00% 6.00% 6.00% 6.00% FY24-FY25 5.92% 5.92% 5.92% 5.92%
IY24-IY25 5.75% 5.75% 5.75% 5.75% FY25-FY26 5.67% 5.67% 5.67% 5.67%
IY25-IY26 5.50% 5.50% 5.50% 5.50% FY26-FY27 5.42% 5.42% 5.42% 5.42%
IY26-IY27 5.25% 5.25% 5.25% 5.25% FY27-FY28 5.17% 5.17% 5.17% 5.17%
IY27-IY28 5.00% 5.00% 5.00% 5.00% FY28-FY29 5.00% 5.00% 5.00% 5.00%
Subsequent 5.00% 5.00% 5.00% 5.00% Subsequent 5.00% 5.00% 5.00% 5.00%
Medicare Eligible
Insurance Year Trends
Medicare Eligible
Fiscal Year Trends
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 45
Retiree Contribution Trend Same as Health Care Trend
Mortality RP-2014 Combined Annuitant Mortality Table for males and females.
The Mortality Table reflects recent rates developed by the Society of Actuaries.
Disability Rates IMRF Employees: Rates from the December 31, 2017 IMRF Actuarial Valuation Report
Starting Per Capita Costs Retiree Spouse
BCBS HMO 10,083$ 11,369$
BCBS PPO 12,941 14,593
PPO-HRA 10,757 12,130
Retiree Contributions Retiree Spouse
BCBS HMO 7,662$ 8,640$
BCBS PPO 9,834 11,089
PPO-HRA 8,174 9,218
Election at Retirement 10% of active employees are assumed to elect coverage at retirement
Marital Status 70% of active employees are assumed to be married and elect spousal coverage upon
retirement. Males are assumed to be three years older than females.
Police Employees: Rates from the City of McHenry Police Pension Fund Actuarial Valuation for the Year Beginning
May 1, 2018
There is no long-term expected rate of return on OPEB plan investments because the City does not have
a trust dedicated exclusively to the payment of OPEB benefits.
Discount Rate
The City does not have a dedicated trust to pay retiree healthcare benefits. Per GASB 75, the discount
rate should be a yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an
average rating of AA/Aa or higher (or equivalent quality on another rating scale).
A rate of 2.85% is used, which is the S&P Municipal Bond 20-Year High-Grade Rate Index as of
April 30, 2020.
Changes in the Total OPEB Liability
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
(a) (b) (a) - (b)
Balances at April 30, 2019 5,432,717$ -$ 5,432,717$
Changes for the year:
Service Cost 36,378$ -$ 36,378$
Interest on Total OPEB Liability 171,790 - 171,790
Assumption Changes 513,575 - 513,575
Benefit Payments (162,019) - (162,019)
Other Changes (91,626) - (91,626)
Net Changes 468,098$ -$ 468,098$
Balances at April 30, 2020 5,900,815$ -$ 5,900,815$
Increase/(Decrease)
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using a discount rate that is 1 percentage-point lower or 1 percentage-point
higher than the current discount rate:
1% Increase Valuation Rate 1% Decrease
4,427,171$ 5,900,815$ 8,184,084$
Plan's Total OPEB Liability/(Asset)
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 46
Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower or 1
percentage-point higher than the current healthcare cost trend rates:
Healthcare Cost
1% Increase Valuation Rate 1% Decrease
8,126,109$ 5,900,815$ 4,422,614$
Plan's Total OPEB Liability/(Asset)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
OPEB
For the fiscal year ended April 30, 2020, the City recognized OPEB expense of $199,233. At
April 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related
to OPEB from the following sources:
Deferred Outflows Deferred Inflows of Net Inflows
of Resources Resources of Resources
Differences Between Expected and Actual Experience -$ 846,630$ (846,630)$
Changes of Assumptions 1,085,190 260,125 825,065
Total 1,085,190$ 1,106,755$ (21,565)$
Changes in total OPEB liability related to the difference in actual and expected experience, or changes
in assumptions regarding future events, are recognized in OPEB expense over the expected remaining
service life of all employees (9.6 years, active and retired) in the postretirement plan.
Amounts reported as deferred outflows of resources related to OPEB will be recognized as future
OPEB expense as follows:
Year ending April 30
Net Inflows of
Resources
2021 (8,936)$
2022 (8,936)
2023 (8,936)
2024 (8,936)
2025 (8,936)
2026-2029 23,115
(21,565)$
B. Social Security
All employees are covered under Social Security. The City paid the total required contribution for the
current fiscal year.
NOTE 14 - INTERFUND BALANCES AND TRANSFERS
Interfund balances at April 30, 2020 consisted of the following:
Due To Amount
General Fund Water and Sewer Fund 10,104$
Water and Sewer Fund Nonmajor Government Fund 8,706
Police Pension Fund Nonmajor Government Fund 315
Water and Sewer Fund Internal Service Fund 15,872
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 47
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, 2020 consisted of the following:
Transfer From Transfer To Amount
Water and Sewer Fund Nonmajor Governmental Funds 95,602$
General Fund Nonmajor Governmental Funds 794,258
Transfers are used to (1) move revenues from the fund that is required to collect them to the fund that is
required to expend them, and (2) move receipts restricted to debt service from the funds collecting the
receipts to the Debt Service Fund as debt service payments become due.
NOTE 15 - RISK MANAGEMENT
The City is exposed to various risks related to torts; theft of, damage to, and destruction of assets; errors
and omissions; and injuries to employees. The City is a member of the McHenry County Municipal Risk
Management Agency (MCMRMA), a public entity risk pool through which property, general liability,
automobile liability, crime, excess property, excess liability, and boiler and machinery coverage is
provided in excess of specified limits for the members, acting as a single insurable unit.
The relationship between the City and MCMRMA is governed by a contract and by-laws that have been
adopted by resolution of each unit’s governing body. The City is contractually obligated to make all
annual and supplementary contributions for MCMRMA, to report claims on a timely basis, cooperate with
MCMRMA, its claims administrator and attorneys in claims investigation and settlement, and to follow
risk management procedures as outlined by MCMRMA. Members have a contractual obligation to fund
any deficit of MCMRMA attributable to a membership year during which they were a member. MCMRMA
is responsible for administering the self-insurance program and purchasing excess insurance according
to the direction of the Board of Directors. MCMRMA also provides its members with risk management
services, including the defense of and settlement of claims, and establishes reasonable and necessary
loss of reduction and prevention procedures to be followed by the members. During fiscal year 2020
there was no significant reduction in insurance coverage for any category.
There have been no settlement amounts that have exceeded insurance coverage. The City is insured
under a retrospectively-rated policy for workers’ compensation coverage. Whereas, the initial premium
may be adjusted based on actual experience. Adjustments in premiums are recorded when paid or
received. During the year ended April 30, 2020, there were no significant adjustments in premiums based
on actual experience.
NOTE 16 - 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 as of April 30, 2020 totaling
$183,482. Beginning in May 2020 the City has a contract commitment in place for various road projects
for $538,045 and its Police Department Phase 2 improvements of $182,008. For the Water and Sewer
Fund as of April 30, 2020, a change order in the amount of $421,130 was entered into in May 2020
concerning the Wastewater Treatment Plant project.
NOTE 17 - CONTINGENCIES
There is no outstanding litigation which may have a materially adverse effect on the City’s financial
position.
NOTE 18 - LEGAL DEBT LIMITATION
The Illinois Compiled Statutes limits the amount of indebtedness to 8.625% of the most recent available
equalized assessed valuation (EAV) of the City.
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 48
2019 EAV 701,420,237$
X8.625%
Debt Margin 60,497,495$
Current Debt 5,743,616
Remaining Debt Margin 54,753,879$
NOTE 19 - TAX ABATEMENT AGREEMENTS
The City negotiates property and sales tax abatement agreements on an individual basis. All abatement
agreements are entered into under the authority of the Mayor, City Clerk, and City Council. The City has
tax abatement agreements with various entities as of April 30, 2020 as follows:
Name of Eligibility Criteria Amount of Taxes
Abatement Type of Taxes and Mechanism Abated During
Agreement Abated of Abatement the Fiscal Year
Gary Lang Business
District Development
Agreement
Sales taxes
First $450,000 in sales tax revenues generated within the
Business District Property are retained by the City, 100% of
the sales tax revenue generated within the Business District
Property between $450,000 and $750,000 annually shall be
rebated to Gary Lang, 60% of sales tax revenue generated
within the Business District Property above $750,000 shall
be rebated to Gary Lang. The total rebate for the year
cannot exceed 55% of the total annual sales tax revenue
generated with the Business District Property. The total
rebate payments cannot exceed $8,441,377.04 or 20 years.
546,996$
1110 N Green LLC
Redevelopment
Agreement
TIF property
taxes
Rebate 100% of the TIF Increment assessed up to
$624,028.134,134$
McHenry Commons
Shopping Center
Economic Incentive
Agreement
Sales taxes
Rebate 100% of base sales tax received by the State
attributable to the gross sales generated at the Hobby
Lobby Store. The total rebate payments cannot exceed
$677,500 or 20 years.
30,126$
CVS Pharmacy
Economic Incentive
Agreement
Sales taxes
Rebate 50% of sales tax revenues generated by CVS
Pharmacy in calendar years 2016 through 2020 and 25% of
sales tax revenues generated by CVS Pharmacy in
calendar years 2021 through 2025. The total rebate
payments cannot exceed $175,000.
59,889$
Tea Olive, I LLC Sales taxes
Rebate 100% of base sales tax received by the State
attributable to the gross sales generated at the Big R Store.
The total rebate payments cannot exceed $400,000 and
end December 31, 2020.
67,752$
3017 Route 120 &
Northwest Suburban
Auto Group
Economic Incentive
Agreement
Sales taxes
Rebate 50% of base sales tax in calendar years 2017
through 2021 and 25% of base sales tax in calendar years
2022 through 2026 received by the State attributable to the
gross sales generated at Northwest Suburban Auto Group.
The total rebate payments cannot exceed $150,000.
41,653$
McHenry Donuts,
Inc. Economic
Incentive Agreement
Sales taxes Rebate 100% of Non-Home Rule Sales taxes in 2017
through 2026 up to $62,500.10,388$
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 49
Name of Eligibility Criteria Amount of Taxes
Abatement Type of Taxes and Mechanism Abated During
Agreement Abated of Abatement the Fiscal Year
Sunnyside Auto
Finance Company
Economic Incentive
Agreement
Sales taxes
Rebate percentage during years 2017-2019 75% above
$66,212. Years 2020-2027 50% above $66,212. Years 2028-
2036 25% above $66,212. Not to exceed $300,000.
25,807$
Curt Ames DBA
Chain O'Lakes
Brewing Company
Redevelopment
Agreement
TIF Property
Taxes Rebate 100% of the TIF Increment assessed up to $17,585. 1,462$
Seth Wagner and
Associates Real
Estate Company
Property Tax
Abatement
Agreement
Property Taxes
Abate real estate taxes levied against the subject property
each year that the taxing body's property taxes exceed the
dollar amount from the 2014 base property tax year
($3,458.64) through December 31, 2026.
5,897$
Boone Creek
Crossing LLC
Redevelopment
Agreement
TIF Property
Taxes
Rebate 100% of the TIF Increment assessed up to $25,000
7,691$
Graham Enterprise
Inc Economic
Incentive Agreement
Sales taxes
Rebate 50% of base and home rule sales tax received
above $1,666.67 per month by the State attributable to the
gross sales generated at McHenry BP sites at 5301 Bull
Valley Road and 5520 W. Elm Street. The total rebate
payments cannot exceed $1,000,000 and end December
31,2039. These rebates do not begin until buildings are
torn down at 5301 Bull Valley Road, 5520 W. Elm St, and
4410 W. Elm St; and a new building is built at 5301 Bully
Valley Road.
13,177$
BPI, Break Parts Inc
LLC Property Tax
Abatement
Agreement
Property Taxes 10-year 100% abatement over and above the 2018 taxes
commencing with the 2019 tax bill payable in 2020 through
the 2028 tax bill payable in 2029.
-$
RR McHenry LLC
Economic Incentive
Agreement
Sales taxes
Rebate 50% of base and home rule sales tax received by
the State attributable to the property at the NW corner of IL
Route 120 and Chapel Hill Road, excluding the Riverside
Chocolate Factory parcel. The total rebate payments
cannot exceed $1,000,000 and end after the 20th Sales Tax
Incentive Year.
-$
NOTE 20 - SUBSEQUENT EVENTS
Prior to the date of this report, the COVID-19 outbreak in the United States has created disruptions in
various governments and will continue to impact these organizations. While the disruption is currently
expected to be temporary, there is considerable uncertainty around the duration of time. The extent of
the impact on the City is uncertain and cannot be reasonably estimated at this time. The City has received
$1.1 million in CARES Act funding in October 2020.
In addition to this, on December 18, 2019, Governor JB Pritzker signed SB1300. The law, a Public Act
(P.A.), 101-0610, represents the culmination of more than a decade of work by the Illinois Municipal
League (IML). The law consolidates the assets of the state’s more than 650 downstate and suburban
public safety pension funds into two consolidated investment funds, one for police officers (Article 3) and
one for firefighters (Article 4), which will improve investment returns, eliminate unnecessary and
redundant administrative costs, ensure more money is available to fund pension benefits and reduce the
burden on local taxpayers. The law was effective as of January 1, 2020. All pension fund assets, currently
NOTES TO FINANCIAL STATEMENTS (Continued)
Page 50
reported within the fiduciary fund statements of the Plan, will be transferred to Firefighter’s pension
investment fund no later than 30 months after the effective date of the transitions. This is likely to change
the reporting of the Fund as a fiduciary fund in future reporting periods.
REQUIRED SUPPLEMENTARY INFORMATION
4/30/2020*4/30/2019*4/30/2018*4/30/2017*4/30/2016*
TOTAL PENSION LIABILITY
Service Cost 781,612$ 740,595$ 707,796$ 704,466$ 652,882$
Interest on Total Pension Liability 2,796,732 2,641,076 2,542,116 2,419,748 2,286,008
Differences Between Expected and Actual Experience 594,214 381,201 646,124 (98,080) 86,269
Changes of Assumptions - 1,199,530 (1,124,675) (136,959) 44,481
Benefit Payments, Including Refunds of Member Contributions (1,700,114) (1,543,189) (1,393,390) (1,384,293) (1,144,016)
Net Change in Total Pension Liability 2,472,444$ 3,419,213$ 1,377,971$ 1,504,882$ 1,925,624$
Total Pension Liability - Beginning 39,034,861 35,615,648 34,237,677 32,732,795 30,807,171
Total Pension Liability - Ending 41,507,305$ 39,034,861$ 35,615,648$ 34,237,677$ 32,732,795$
PLAN FIDUCIARY NET POSITION
Contributions - Employer 787,631$ 918,212$ 915,963$ 844,878$ 801,851$
Contributions - Member 344,894 340,841 328,547 366,710 277,350
Net Investment Income 5,817,683 (1,672,533) 4,871,136 1,840,322 133,288
Benefit Payments, Including Refunds of Member Contributions (1,700,114) (1,543,189) (1,393,390) (1,384,293) (1,144,016)
Administrative Expenses 196,150 493,832 (352,231) 293,436 (161,598)
Net Change in Plan Fiduciary Net Position 5,446,244$ (1,462,837)$ 4,370,025$ 1,961,053$ (93,125)$
Plan Net Position - Beginning 31,465,134 32,927,971 28,557,946 26,596,893 26,690,018
Plan Net Position - Ending 36,911,378$ 31,465,134$ 32,927,971$ 28,557,946$ 26,596,893$
City's Net Pension Liability 4,595,927$ 7,569,727$ 2,687,677$ 5,679,731$ 6,135,902$
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 88.93%80.61%92.45%83.41%81.25%
Covered-Valuation Payroll 7,718,418$ 7,538,685$ 7,241,274$ 6,362,027$ 6,163,340$
Employer's Net Pension Liability as a Percentage
of Covered-Valuation Payroll 59.54%100.41%37.12%89.28%99.55%
* This information presented is based on the actuarial valuation performed as of the December 31 year end prior to the fiscal year end listed above.
This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those
years for which information is available.
CITY OF MCHENRY, ILLINOIS
ILLINOIS MUNICIPAL RETIREMENT FUND
SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION
LIABILITY AND RELATED RATIOS
APRIL 30, 2020
Page 51
See Accompanying Independent Auditor's Report
4/30/2020*4/30/2019*4/30/2018*4/30/2017*4/30/2016*
Actuarially-Determined Contribution 796,541$ 918,212$ 908,056$ 844,877$ 801,851$
Contributions in Relation to Actuarially-Determined Contribution 787,631 918,212 915,963 844,878 801,851
Contribution Deficiency/(Excess)8,910$ -$ (7,907)$ (1)$ -$
Covered Payroll 7,780,883$ 7,594,095$ 7,469,026$ 6,362,027$ 6,163,340$
Contributions as a Percentage of Covered Payroll 10.12%12.09%12.26%13.28%13.01%
Notes to Schedule:
Mortality:For non-disabled retirees,an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012).The IMRF specific rates were
developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience.For disabled retirees,an IMRF specific mortality table was
used with fully generational projection scale MP-2014 (base year 2012).The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same
adjustments that were applied for non-disabled lives.For active members,an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012).
The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience.
*Based on Valuation Assumptions used in the December 31, 2017 actuarial valuation; note two year lag between valuation and rate setting.
This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those years
for which information is available.
CITY OF MCHENRY, ILLINOIS
ILLINOIS MUNICIPAL RETIREMENT FUND
SCHEDULE OF EMPLOYER CONTRIBUTION
LAST TEN FISCAL YEARS
Actuarial Method and Assumptions Used on the Calculation of the 2019 Contribution Rate *
Actuarially determined contribution rates are calculated as of December 31 each year, which are 12 months prior to the beginning of the fiscal year in which contributions are reported.
Remaining Amortization Period: 24-year closed period
Price Inflation: 2.50%, approximate; No explicit price inflation assumption is used in this valuation.
Retirement Age:Experience-based table of rates that are specific to the type of eligibility condition;last updated for the 2017 valuation pursuant to an experience study of the period
2014 to 2016.
Actuarial Cost Method: Aggregate entry age = normal
Amortization Method: Level percentage of payroll, closed
Asset Valuation Method: 5-year smoothed market; 20% corridor
Wage Growth: 3.25%
Salary Increases: 3.35% to 14.25%, including inflation
Investment Rate of Return: 7.50%
Page 52
See Accompanying Independent Auditor's Report
4/30/2020 4/30/2019 4/30/2018 4/30/2017 4/30/2016 4/30/2015
TOTAL PENSION LIABILITY
Service Cost 1,020,016$ 964,573$ 969,843$ 906,395$ 948,282$ 876,654$
Interest 3,400,174 3,244,523 3,100,186 3,130,927 2,940,204 2,804,198
Changes in Benefit Terms 267,927 - - - - -
Differences Between Expected and Actual Experience 953,997 165,685 (13,601) (1,315,850) (531,862) (300,710)
Changes in Assumptions 1,039,838 - - (1,259,209) 4,137,023 391,028
Benefit Payments, Including Refunds of Member Contributions (2,225,355) (2,077,032) (1,911,914) (1,890,931) (2,046,745) (1,868,756)
Net Change in Total Pension Liability 4,456,597$ 2,297,749$ 2,144,514$ (428,668)$ 5,446,902$ 1,902,414$
Total Pension Liability - Beginning 49,686,589 47,388,840 45,244,326 45,672,994 40,226,092 38,323,678
Total Pension Liability - Ending 54,143,186$ 49,686,589$ 47,388,840$ 45,244,326$ 45,672,994$ 40,226,092$
PLAN FIDUCIARY NET POSITION
Contributions - Employer 2,077,704$ 2,017,300$ 1,868,798$ 1,521,914$ 1,386,205$ 1,295,101$
Contributions - Member 500,202 427,378 409,415 397,515 513,111 381,363
Contributions - Other - 1,221 - - - -
Net Investment Income 249,889 1,454,043 2,225,784 2,041,694 (228,847) 1,101,915
Benefit Payments, Including Refunds of Member Contributions (2,225,355) (2,077,032) (1,911,914) (1,890,931) (2,046,745) (1,868,756)
Administrative Expenses (100,204) (17,813) (18,717) (41,164) (29,539) (36,845)
Net Change in Plan Fiduciary Net Position 502,236$ 1,805,097$ 2,573,366$ 2,029,028$ (405,815)$ 872,778$
Plan Net Position - Beginning 27,153,629 25,348,532 22,775,166 20,746,138 21,151,953 20,279,175
Plan Net Position - Ending 27,655,865$ 27,153,629$ 25,348,532$ 22,775,166$ 20,746,138$ 21,151,953$
City's Net Pension Liability 26,487,321$ 22,532,960$ 22,040,308$ 22,469,160$ 24,926,856$ 19,074,139$
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 51.08%54.65%53.49%50.34%45.42%52.58%
Covered-Employee Payroll 4,444,767$ 4,224,124$ 4,204,784$ 4,082,315$ 3,880,748$ 3,791,467$
Employer's Net Pension Liability as a Percentage
of Covered-Employee Payroll 595.92%533.44%524.17%550.40%642.32%503.08%
2020 2019 2018 2017 2016 2015
Annual Money-Weighted Rate of Return,
Net of Investment Expenses -0.48%5.73%9.60%5.60%-1.53%5.41%
This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those years for which
information is available.
CITY OF MCHENRY, ILLINOIS
POLICE PENSION PLAN
SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION
LIABILITY AND RELATED RATIOS
APRIL 30, 2020
Page 53
See Accompanying Independent Auditor's Report
4/30/2020 4/30/2019 4/30/2018 4/30/2017 4/30/2016 4/30/2015
Actuarially-Determined Contribution 2,082,421$ 2,019,703$ 1,874,219$ 1,524,244$ 1,387,374$ 1,295,577$
Contributions in Relation to Actuarially-Determined Contribution 2,077,704 2,017,300 1,868,798 1,521,914 1,386,205 1,295,101
Contribution Deficiency/(Excess)4,717$ 2,403$ 5,421$ 2,330$ 1,169$ 476$
Covered-Employee Payroll 4,422,539$ 4,324,167$ 4,291,809$ 4,082,315$ 3,880,748$ 3,791,467$
Contributions as a Percentage of Covered-Employee Payroll 46.98%46.65%43.54%37.28%35.72%34.16%
Notes to Schedule:
This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those
years for which information is available.
Amortization Method: Level percentage of payroll, closed
Termination Rates: 100% of L&A 2016 Illinois Police Termination Rates
Disability Rates: 100% of L&A 2016 Illinois Police Disability Rates
*Based on Valuation Assumptions used in the May 1, 2018 actuarial valuation
Investment Rate of Return: 7.00%
Retirement Age: 100% of L&A 2016 Illinois Police Retirement Rates Capped at Age 65
Remaining Amortization Period: 22-year closed period
Asset Valuation Method: 5-year smoothed market; 20% corridor
Wage Growth: 3.00%
Price Inflation: 2.50%, approximate; No explicit price inflation assumption is used in this valuation.
Salary Increases: 4.00% to 10.27%, including inflation
Actuarial Method and Assumptions Used on the Calculation of the 2019 Contribution Rate *
Actuarial Cost Method: Aggregate entry age = normal
CITY OF MCHENRY, ILLINOIS
POLICE PENSION PLAN
SCHEDULE OF EMPLOYER CONTRIBUTION
LAST TEN FISCAL YEARS
This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is compiled,information is presented for those years for which
information is available.
Page 54
See Accompanying Independent Auditor's Report
4/30/2020 4/30/2019
TOTAL OPEB LIABILITY
Service Cost 36,378$ 32,964$
Interest 171,790 209,775
Differences Between Expected and Actual Experience - (1,070,724)
Benefit Payments (162,019) (167,232)
Changes in Assumptions 513,575 417,482
Other Changes (91,626) 147,912
Net Change in Total OPEB Liability 468,098$ (429,823)$
Total OPEB Liability - Beginning 5,432,717 5,862,540
Total OPEB Liability - Ending 5,900,815$ 5,432,717$
OPEB PLAN FIDUCIARY NET POSITION
Contributions - Employer -$ -$
Contributions - Member - -
Contributions - Other - -
Net Investment Income - -
Benefit Payments - -
Administrative Expense - -
Net Change in OPEB Plan Net Position -$ -$
OPEB Plan Net Position - Beginning - -
OPEB Net Position - Ending -$ -$
City's Net OPEB Plan Liability 5,900,815$ 5,432,717$
OPEB Plan Fiduciary Net Position as a Percentage
of the Total OPEB Liability 0.00%0.00%
Covered-Employee Payroll 8,796,233$ 8,796,233$
Employer's Net OPEB Liability as a Percentage
of Covered-Valuation Payroll 67.08%61.76%
This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year trend is
compiled, information is presented for those years for which information is available.
CITY OF MCHENRY
OTHER POST-EMPLOYMENT BENEFIT
SCHEDULE OF CHANGES IN THE EMPLOYER'S NET OPEB
LIABILITY AND RELATED RATIOS
APRIL 30, 2020
Page 55
See Accompanying Independent Auditor's Report
4/30/2020 4/30/2019
Actuarially-Determined Contribution N/A N/A
Contributions in Relation to Actuarially-Determined Contribution - -
Contribution Deficiency/(Excess)N/A N/A
Covered-Employee Payroll 8,796,233$ 8,796,233$
Contributions as a Percentage of Covered-Employee Payroll 0.00%0.00%
Notes to Schedule:
This schedule is presented to illustrate the requirement to show information for ten years.However,until a full ten-year
trend is compiled, information is presented for those years for which information is available.
CITY OF MCHENRY
OTHER POST-EMPLOYMENT BENEFIT
SCHEDULE OF EMPLOYER CONTRIBUTION
APRIL 30, 2020
There is no ADC or employer contribution in relation to the ADC,as the total OPEB liabilities are currently an unfunded
obligation.
Page 56
See Accompanying Independent Auditor's Report
Actual
Original Final Amounts
REVENUES
Local Taxes
Property Tax 4,942,359$ 4,942,359$ 4,950,913$
Intergovernmental
State Sales Tax 10,666,375 10,666,375 10,459,369
State Income Tax 2,719,444 2,719,444 2,655,608
State Replacement Tax 65,000 65,000 83,626
State Pull Tab/Games Tax 1,000 1,000 930
Inter Track Wagering Tax 49,000 49,000 40,725
State Telecommunications Tax 285,000 285,000 260,750
State Grants 189,200 189,200 -
Other Local Sources
Hotel/Motel Tax 176,500 176,500 159,749
Franchise Fees 320,000 320,000 352,679
Licenses and Permits 780,000 780,000 791,117
Fines and Forfeitures 399,000 399,000 409,239
Charges for Services 1,346,587 1,346,587 1,278,880
Interest 122,900 122,900 160,478
Miscellaneous
Rent 20,000 20,000 18,489
Royalties 200,000 200,000 200,000
Donations 10,000 10,000 640
Annexation Fees 120,000 120,000 367,181
Reimbursements 1,995,962 1,995,962 2,031,734
Special Events - - 1,500
Other Miscellaneous 95,000 95,000 88,940
Total Revenues 24,503,327$ 24,503,327$ 24,312,547$
EXPENDITURES
Current
General Office
Administration 1,048,998$ 1,095,998$ 1,343,061$
Elected Officials 94,100 94,100 70,812
Community Development 921,054 921,054 826,583
Finance Department 1,345,236 1,345,236 1,404,765
Human Resources 258,431 258,431 227,733
Economic Development 288,054 288,054 276,500
3,955,873$ 4,002,873$ 4,149,454$
Public Safety
Police Commission 6,953$ 6,953$ 5,999$
Police Department 10,194,104 10,194,104 9,999,196
Dispatch Center 2,552,387 2,552,387 2,446,934
12,753,444$ 12,753,444$ 12,452,129$
Public Works
Administration 442,829$ 442,829$ 408,989$
Street Department 3,247,055 3,247,055 3,239,862
3,689,884$ 3,689,884$ 3,648,851$
Parks and Recreation
Parks and Recreation 2,351,070$ 2,351,070$ 2,384,512$
2,351,070$ 2,351,070$ 2,384,512$
Budgeted Amounts
CITY OF MCHENRY, ILLINOIS
FOR THE YEAR ENDED APRIL 30, 2020
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
Page 57
See Accompanying Independent Auditor's Report
Actual
Original Final Amounts
Budgeted Amounts
CITY OF MCHENRY, ILLINOIS
FOR THE YEAR ENDED APRIL 30, 2020
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
EXPENDITURES (Continued)
Capital Outlay
General Office
Administration 101,500$ 205,479$ 888,747$
Public Safety
Police Department 34,575 84,306 112,294
Public Works
Street Department 1,406,500 1,406,500 21,909
Parks and Recreation
Parks and Recreation 80,000 80,000 37,099
1,622,575$ 1,776,285$ 1,060,049$
Total Expenditures 24,372,846$ 24,573,556$ 23,762,215$
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 130,481$ (70,229)$ 550,332$
OTHER FINANCING SOURCES/(USES)
Transfers (794,258)$ (794,258)$ (794,258)$
Sale of City Property 10,000 10,000 39,008
(784,258)$ (784,258)$ (755,250)$
NET CHANGE IN FUND BALANCE (653,777)$ (854,487)$ (204,918)$
FUND BALANCE - MAY 1, 2019 9,171,660
FUND BALANCE - APRIL 30, 2020 8,966,742$
Page 58
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Page 59
CITY OF MCHENRY, ILLINOIS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
APRIL 30, 2020
NOTE 1 - BUDGET
Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual
budgets are adopted for all funds except agency funds. All annual budgets lapse at fiscal year-end.
Budgeted expenditures are controlled at the departmental level with the City Administrator’s oversight.
All transfers and any revision that changes the total expenditures not contemplated of any fund must be
approved by the City Council. All budget amendments must be approved by the City Council.
The budget was approved on April 29, 2019 and was amended May 20, 2019, July 15, 2019,
August 19, 2019, and January 6, 2020.
NOTE 2 - EXCESS OF EXPENDITURES OVER BUDGET
For the year ended April 30, 2020, no fund presented as Required Supplementary Information had
expenditures that exceeded budget.
SUPPLEMENTAL FINANCIAL INFORMATION
Civil Revolving Total
General Annexation Alarm Board Band Defense Loan Tourism General
Fund Fund Fund Fund Fund Fund Fund Fund
ASSETS
Cash and Cash Equivalents 5,372,074$ 529,356$ 726,506$ 11,002$ 5,836$ 117,886$ 225,344$ 6,988,004$
Investments 140,510 20,139 - 1,576 - 3,663 16,453 182,341
Prepaid Expenses 56,914 - - - - - - 56,914
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed 210,670 206,450 16,678 - - 178,493 - 612,291
Accounts Receivable - Unbilled 45,210 - 35,381 - - - 2,250 82,841
Property Taxes 4,963,507 - - - - - - 4,963,507
Accrued Interest 388 56 - 4 - 1,198 45 1,691
Due from Other Governmental Units 2,584,397 - - - - - - 2,584,397
Cable Franchise Fee Receivable 116,447 - - - - - - 116,447
TOTAL ASSETS 13,490,117$ 756,001$ 778,565$ 12,582$ 5,836$ 301,240$ 244,092$ 15,588,433$
LIABILITIES
Accounts Payable and Accrued Expenses 1,315,418$ -$ 52,907$ -$ -$ 23,492$ 15,823$ 1,407,640$
Due to Other Governmental Units - 75,419 - - - - - 75,419
Due to Other Funds 12,279 (2,175) - - - - - 10,104
Unearned Revenue 165,021 - - - - - - 165,021
TOTAL LIABILITIES 1,492,718$ 73,244$ 52,907$ -$ -$ 23,492$ 15,823$ 1,658,184$
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes 4,963,507$ -$ -$ -$ -$ -$ -$ 4,963,507$
TOTAL DEFERRED INFLOWS OF RESOURCES 4,963,507$ -$ -$ -$ -$ -$ -$ 4,963,507$
FUND BALANCES
Nonspendable 56,914$ -$ -$ -$ -$ -$ -$ 56,914$
Assigned for:
Alarm - - 725,658 - - - - 725,658
Tourism - - - - - - 228,269 228,269
Band - - - 12,582 - - - 12,582
Capital Projects - 682,757 - - - - - 682,757
Revolving Loan - - - - - 277,748 - 277,748
Civil Defense - - - - 5,836 - - 5,836
Unassigned 6,976,978 - - - - - - 6,976,978
TOTAL FUND BALANCES 7,033,892$ 682,757$ 725,658$ 12,582$ 5,836$ 277,748$ 228,269$ 8,966,742$
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES 13,490,117$ 756,001$ 778,565$ 12,582$ 5,836$ 301,240$ 244,092$ 15,588,433$
CITY OF MCHENRY, ILLINOIS
COMBINING BALANCE SHEET - GENERAL FUND
APRIL 30, 2020
Page 60
See Accompanying Independent Auditor's Report
Alarm Civil Revolving Total
Annexation Board Band Defense Loan Tourism General
General Fund Fund Fund Fund Fund Fund Fund Fund
REVENUES
Local Taxes
Property Tax 4,950,913$ -$ -$ -$ -$ -$ -$ 4,950,913$
Intergovernmental
State Sales Tax 10,459,369 - - - - - - 10,459,369
State Income Tax 2,655,608 - - - - - - 2,655,608
State Replacement Tax 83,626 - - - - - - 83,626
State Pull Tab/Games Tax 930 - - - - - - 930
Inter Track Wagering Tax 40,725 - - - - - - 40,725
State Telecommunications Tax 260,750 - - - - - - 260,750
Other Local Sources
Hotel/Motel Tax - - - - - - 159,749 159,749
Franchise Fees 352,679 - - - - - - 352,679
Licenses and Permits 791,117 - - - - - - 791,117
Fines and Forfeitures 409,239 - - - - - - 409,239
Charges for Services 1,068,494 - 210,386 - - - - 1,278,880
Interest 152,343 2,662 2,490 25 12 1,452 1,494 160,478
Miscellaneous
Rent 18,489 - - - - - - 18,489
Royalties - 200,000 - - - - - 200,000
Donations 640 - - - - - - 640
Annexation Fees - 367,181 - - - - - 367,181
Reimbursements 2,031,734 - - - - - - 2,031,734
Special Events - - - - - - 1,500 1,500
Other Miscellaneous 88,940 - - - - - - 88,940
Total Revenues 23,365,596$ 569,843$ 212,876$ 25$ 12$ 1,452$ 162,743$ 24,312,547$
EXPENDITURES
Current
General Office
Administration 1,033,520$ 278,806$ -$ -$ -$ -$ 30,735$ 1,343,061$
Elected Officials 70,812 - - - - - - 70,812
Community Development 826,583 - - - - - - 826,583
Finance Department 1,404,765 - - - - - - 1,404,765
Human Resources 227,733 - - - - - - 227,733
Economic Development 276,500 - - - - - - 276,500
3,839,913$ 278,806$ -$ -$ -$ -$ 30,735$ 4,149,454$
Public Safety
Police Commission 5,999$ -$ -$ -$ -$ -$ -$ 5,999$
Police Department 9,920,739 - 74,624 - 3,833 - - 9,999,196
Dispatch Center 2,446,934 - - - - - - 2,446,934
12,373,672$ -$ 74,624$ -$ 3,833$ -$ -$ 12,452,129$
Public Works
Administration 408,989$ -$ -$ -$ -$ -$ -$ 408,989$
Street Department 3,239,862 - - - - - - 3,239,862
3,648,851$ -$ -$ -$ -$ -$ -$ 3,648,851$
Parks and Recreation
Parks and Recreation 2,369,939$ -$ -$ 14,573$ -$ -$ -$ 2,384,512$
2,369,939$ -$ -$ 14,573$ -$ -$ -$ 2,384,512$
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GENERAL FUND
FOR THE YEAR ENDED APRIL 30, 2020
Page 61
See Accompanying Independent Auditor's Report
Alarm Civil Revolving Total
Annexation Board Band Defense Loan Tourism General
General Fund Fund Fund Fund Fund Fund Fund Fund
CITY OF MCHENRY, ILLINOIS
FUND FINANCIAL STATEMENTS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GENERAL FUND
FOR THE YEAR ENDED APRIL 30, 2020
EXPENDITURES (Continued)
Capital Outlay
General Office
Administration 888,747$ -$ -$ -$ -$ -$ -$ 888,747$
Public Safety
Police Department 112,294 - - - - - - 112,294
Public Works
Street Department 21,909 - - - - - - 21,909
Parks and Recreation
Parks and Recreation 37,099 - - - - - - 37,099
1,060,049$ -$ -$ -$ -$ -$ -$ 1,060,049$
Debt Service
Principal -$ -$ -$ -$ -$ -$ 56,884$ 56,884$
Interest and Fees - - - - - - 10,336 10,336
-$ -$ -$ -$ -$ -$ 67,220$ 67,220$
Total Expenditures 23,292,424$ 278,806$ 74,624$ 14,573$ 3,833$ -$ 97,955$ 23,762,215$
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 73,172$ 291,037$ 138,252$ (14,548)$ (3,821)$ 1,452$ 64,788$ 550,332$
OTHER FINANCING SOURCES/(USES)
Transfers (333,258)$ (535,000)$ -$ 12,000$ 6,000$ 155,000$ (99,000)$ (794,258)$
Sale of City Property 39,008 - - - - - - 39,008
(294,250)$ (535,000)$ -$ 12,000$ 6,000$ 155,000$ (99,000)$ (755,250)$
NET CHANGE IN FUND BALANCE (221,078)$ (243,963)$ 138,252$ (2,548)$ 2,179$ 156,452$ (34,212)$ (204,918)$
FUND BALANCE - MAY 1, 2019 7,254,970 926,720 587,406 15,130 3,657 121,296 262,481 9,171,660
FUND BALANCE - APRIL 30, 2020 7,033,892$ 682,757$ 725,658$ 12,582$ 5,836$ 277,748$ 228,269$ 8,966,742$
Page 62
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Special Special
Service Service Total
Recreation Capital Capital Debt Motor Developer Area #4 -Area #6 -Other
Pageant Audit Center Improvements Equipment Service Fuel Tax Donations TIF Lakewood Huntersville Governmental
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Funds
ASSETS
Cash and Cash Equivalents 1,858$ 6,693$ 66,151$ 371,654$ -$ -$ 1,248,850$ 1,965,314$ 288,294$ 1,085$ -$ 3,949,899$
Deposit with Paying Agent - - - - - 33,185 - - - - - 33,185
Investments - 499 376,161 99,543 23,606 16,281 - 63,720 - 401 - 580,211
Inventory - - - - - - 110,000 - - - - 110,000
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed - - - - - - - 5,400 - - - 5,400
Accounts Receivable - Unbilled - - 3,730 - - - - - - - - 3,730
Property Taxes - 26,430 - - - - - - 710,244 16,123 - 752,797
Accrued Interest - 1 1,039 275 65 45 - 176 - 1 - 1,602
Due from Other Governmental Units - - - - - - 121,927 - - - - 121,927
Due from Other Funds - 1,054 - - 42,640 (33,269) - - - - 10,425
Grants Receivable - - - 8,351 - - - 2,702 - - - 11,053
TOTAL ASSETS 1,858$ 34,677$ 447,081$ 479,823$ 23,671$ 92,151$ 1,447,508$ 2,037,312$ 998,538$ 17,610$ -$ 5,580,229$
LIABILITIES
Accounts Payable and Accrued Expenses -$ -$ 27,028$ 1,540$ -$ -$ 4,412$ 58,948$ 7,691$ -$ -$ 99,619$
Overdrafts - - - - 52,421 87,188 - - - 179,115 318,724
Due to Other Governmental Units - - - - - - 488,023 - - - 488,023
Due to Other Funds - - - - - - - - - 1,404 - 1,404
TOTAL LIABILITIES -$ -$ 27,028$ 1,540$ 52,421$ 87,188$ 4,412$ 546,971$ 7,691$ 1,404$ 179,115$ 907,770$
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes -$ 26,430$ -$ -$ -$ -$ -$ -$ 710,244$ 16,123$ -$ 752,797$
Unavailable Revenue - State Taxes - - - - - - 1,302 - - - - 1,302
Unavailable Revenue - Rent - - - - - - 2,400 - - - 2,400
TOTAL DEFERRED INFLOWS OF RESOURCES -$ 26,430$ -$ -$ -$ -$ 1,302$ 2,400$ 710,244$ 16,123$ -$ 756,499$
FUND BALANCES
Restricted for:
Capital Projects -$ -$ -$ -$ -$ -$ -$ 1,001,829$ -$ -$ -$ 1,001,829$
Special Service Areas - - - - - - - - - 21 - 21
Tax Increment Financing - - - - - - - - 324,482 - - 324,482
Highways and Streets - - - - - - 490,191 - - - - 490,191
Assigned for:
Audit - 8,247 - - - - - - - - - 8,247
Highways and Streets - - - - - - 951,603 - - - - 951,603
Capital Projects - - - 478,283 - - - 486,112 - - - 964,395
Parks and Recreation 1,858 - 420,053 - - - - - - - - 421,911
Debt Service - - - - - 4,963 - - - - - 4,963
Special Service Areas - - - - - - - - - 62 - 62
Unassigned - - - - (28,750) - - - (43,879) - (179,115) (251,744)
TOTAL FUND BALANCES 1,858$ 8,247$ 420,053$ 478,283$ (28,750)$ 4,963$ 1,441,794$ 1,487,941$ 280,603$ 83$ (179,115)$ 3,915,960$
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES 1,858$ 34,677$ 447,081$ 479,823$ 23,671$ 92,151$ 1,447,508$ 2,037,312$ 998,538$ 17,610$ -$ 5,580,229$
CITY OF MCHENRY, ILLINOIS
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
APRIL 30, 2020
Page 63
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Special Special
Service Service Total
Recreation Capital Capital Debt Motor Developer Area #4 -Area #6 -Other
Pageant Audit Center Improvements Equipment Service Fuel Tax Donations TIF Lakewood Huntersville Governmental
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Funds
REVENUES
Local Taxes
Property Tax -$ 26,374$ -$ -$ -$ -$ -$ -$ 635,504$ 16,848$ -$ 678,726$
Intergovernmental
State Motor Fuel Tax - - - - - - 1,007,795 - - - - 1,007,795
Federal Grants - - - 1,539 - - 105,267 - - - - 106,806
Bond Interest Rebates - - - - - 14,002 - - - - - 14,002
Charges for Services - 12,653 589,635 - - - - - - - - 602,288
Interest 5 36 2,366 16,922 70 438 16,638 7,928 740 19 - 45,162
Miscellaneous
Rent - - 7,579 - - - - 37,463 - - - 45,042
Donations - - - - - - - 1,059,196 - - - 1,059,196
Reimbursements - - - 3,211 - - - - 101,361 - - 104,572
Other Miscellaneous 6,860 - 175 - - - - 19,060 - - - 26,095
6,865$ 39,063$ 599,755$ 21,672$ 70$ 14,440$ 1,129,700$ 1,123,647$ 737,605$ 16,867$ -$ 3,689,684$
EXPENDITURES
Current
General Office 3,825$ 43,645$ -$ -$ -$ -$ -$ -$ 143,287$ -$ -$ 190,757$
Public Works - - - - - - 145,415 - - - - 145,415
Parks and Recreation - - 640,912 - - - - 528,670 - - - 1,169,582
Capital Outlay - - 16,561 423,517 29,010 - 259,074 308,408 45,361 - - 1,081,931
Debt Service
Principal - - - - - 1,485,000 - - - - - 1,485,000
Interest and Fees - - - - - 170,563 - - - - - 170,563
3,825$ 43,645$ 657,473$ 423,517$ 29,010$ 1,655,563$ 404,489$ 837,078$ 188,648$ -$ -$ 4,243,248$
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 3,040$ (4,582)$ (57,718)$ (401,845)$ (28,940)$ (1,641,123)$ 725,211$ 286,569$ 548,957$ 16,867$ -$ (553,564)$
OTHER FINANCING SOURCES/(USES)
Transfers - - (50,403) 300,000 - 1,279,074 (399,229) - (222,735) (16,847) - 889,860
NET CHANGE IN FUND BALANCES 3,040$ (4,582)$ (108,121)$ (101,845)$ (28,940)$ (362,049)$ 325,982$ 286,569$ 326,222$ 20$ -$ 336,296$
FUND BALANCES - MAY 1, 2019 (1,182) 12,829 528,174 580,128 190 367,012 1,115,812 1,201,372 (45,619) 63 (179,115) 3,579,664
FUND BALANCES - APRIL 30, 2020 1,858$ 8,247$ 420,053$ 478,283$ (28,750)$ 4,963$ 1,441,794$ 1,487,941$ 280,603$ 83$ (179,115)$ 3,915,960$
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED APRIL 30, 2020
Page 64
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Capital Utility Marina Total
Water/Sewer Development Improvements Operations Water and
Fund Fund Fund Fund Sewer Funds
ASSETS
Current Assets
Cash and Cash Equivalents 5,144,675$ 2,456,347$ -$ 371,013$ 7,972,035$
Investments 422,982 256,264 480,626 98,672 1,258,544
Prepaid Expenses 34,784 - - - 34,784
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed 108,819 - - - 108,819
Accounts Receivable - Unbilled 1,253,248 - - - 1,253,248
Accrued Interest 4,284 2,052 1,786 745 8,867
Due from Other Governmental Units 97,714 - - - 97,714
Due from Other Funds (35,172) 45,276 1,404 - 11,508
Interest Rebate Receivable 20,185 - - - 20,185
7,051,519$ 2,759,939$ 483,816$ 470,430$ 10,765,704$
Non-Current Assets
Capital Assets
Land 2,208,117$ -$ -$ -$ 2,208,117$
Buildings 2,736,098 - - - 2,736,098
Systems and Equipment 69,697,138 - - - 69,697,138
Vehicles 1,945,749 - - - 1,945,749
Construction in Progress 31,196,068 - 4,886,046 - 36,082,114
Less: Accumulated Depreciation (35,218,192) - - - (35,218,192)
72,564,978$ -$ 4,886,046$ -$ 77,451,024$
TOTAL ASSETS 79,616,497$ 2,759,939$ 5,369,862$ 470,430$ 88,216,728$
DEFERRED OUTFLOWS OF RESOURCES
Pension Expense/Revenue - IMRF 1,042,614$ -$ -$ -$ 1,042,614$
OPEB Expense/Revenue 51,864 - - - 51,864
TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,094,478$ -$ -$ -$ 1,094,478$
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Expenses 333,225$ -$ 175,000$ -$ 508,225$
Overdraft - - 1,113,981 - 1,113,981
Security Deposits Held - 3,000 - - 3,000
Due to Other Funds 25,982 - - - 25,982
Unearned Revenue 126,675 - - - 126,675
Accrued Interest 295,779 - - - 295,779
IEPA Loan Payable - Current 1,421,583 - - - 1,421,583
Bonds Payable - Current 281,571 - - - 281,571
2,484,815$ 3,000$ 1,288,981$ -$ 3,776,796$
Non-Current Liabilities
Compensated Absences 109,263$ -$ -$ -$ 109,263$
IMRF Net Pension Liability 1,109,952 - - - 1,109,952
Total OPEB Liability 282,155 - - - 282,155
IEPA Loan Payable (Net of Current Portion Shown Above)28,955,405 - - - 28,955,405
Bonds Payable (Net of Current Portion Shown Above)4,812,519 - - - 4,812,519
35,269,294$ -$ -$ -$ 35,269,294$
TOTAL LIABILITIES 37,754,109$ 3,000$ 1,288,981$ -$ 39,046,090$
DEFERRED INFLOWS OF RESOURCES
Pension Revenue/Expense - IMRF 1,023,787$ -$ -$ -$ 1,023,787$
OPEB Revenue/Expense 52,895 - - - 52,895
TOTAL DEFERRED INFLOWS OF RESOURCES 1,076,682$ -$ -$ -$ 1,076,682$
NET POSITION
Net Investment in Capital Assets 37,093,900$ -$ 4,886,046$ -$ 41,979,946$
Unrestricted/(Deficit)4,786,284 2,756,939 (805,165) 470,430 7,208,488
TOTAL NET POSITION 41,880,184$ 2,756,939$ 4,080,881$ 470,430$ 49,188,434$
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF NET POSITION
WATER AND SEWER FUNDS
APRIL 30, 2020
Page 65
See Accompanying Independent Auditor's Report
Capital Utility Marina Total
Water/Sewer Development Improvements Operations Water and
Fund Fund Fund Fund Sewer Funds
OPERATING REVENUES
Charges for Services
Customer Fees 4,919,377$ 1,116,348$ -$ -$ 6,035,725$
Capital Fees 398,512 - - - 398,512
Debt Service Fees 2,624,955 - - - 2,624,955
Penalties 122,130 - - - 122,130
Water Meter Sales 37,425 - - - 37,425
Other 6,744 - - - 6,744
8,109,143$ 1,116,348$ -$ -$ 9,225,491$
OPERATING EXPENSES
Water Department
Personnel Salaries 500,616$ -$ -$ -$ 500,616$
Miscellaneous Personnel Expenses 215,273 - - - 215,273
Other Operating Expenses 704,003 - - - 704,003
Depreciation 552,474 - - - 552,474
Sewer Department
Personnel Salaries 701,957 - - - 701,957
Miscellaneous Personnel Expenses 355,504 - - - 355,504
Other Operating Expenses 1,398,704 - - 27,211 1,425,915
Depreciation 1,235,399 - - - 1,235,399
Utility Work Department
Personnel Salaries 618,327 - - - 618,327
Miscellaneous Personnel Expenses 318,891 - - - 318,891
Other Operating Expenses 199,925 - - - 199,925
6,801,073$ -$ -$ 27,211$ 6,828,284$
OPERATING INCOME/(LOSS)1,308,070$ 1,116,348$ -$ (27,211)$ 2,397,207$
NON-OPERATING REVENUE/(EXPENSE)
Interest Income 54,975$ 2,276$ 26,714$ 827$ 84,792$
Rental Income 30,000 - - 34,745 64,745
Interest Rebate Income 55,863 - - - 55,863
Interest and Fees (780,209) - - - (780,209)
Amortization (3,429) - - - (3,429)
Gain/(Loss) on Sale of Fixed Asset 5,676 - - - 5,676
Donated Public Improvements - Water 412,500 - - - 412,500
Donated Public Improvements -Sewer 40,250 - - - 40,250
(184,374)$ 2,276$ 26,714$ 35,572$ (119,812)$
INCOME/(LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS 1,123,696$ 1,118,624$ 26,714$ 8,361$ 2,277,395$
TRANSFERS (TO)/FROM OTHER FUNDS (112,449) - 16,847 - (95,602)
CHANGE IN NET POSITION 1,011,247$ 1,118,624$ 43,561$ 8,361$ 2,181,793$
NET POSITION - MAY 1, 2019 40,868,937 1,638,315 4,037,320 462,069 47,006,641
NET POSITION - APRIL 30, 2020 41,880,184$ 2,756,939$ 4,080,881$ 470,430$ 49,188,434$
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
WATER AND SEWER FUNDS
FOR THE YEAR ENDED APRIL 30, 2020
Page 66
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Employee Risk Information Total
Insurance Management Technology Internal Service
Fund Fund Fund Funds
ASSETS
Current Assets
Cash and Cash Equivalents -$ 484,680$ 218,113$ 702,793$
Investments - - 8,232 8,232
Prepaid Expenses 71,016 - - 71,016
Receivables (Net of Allowance for
Estimated Uncollectible Amounts)
Accounts Receivable - Billed 812 - - 812
Accounts Receivable - Unbilled - 3,985 - 3,985
Accrued Interest - - 23 23
Due from Other Funds 582 12,633 2,657 15,872
72,410$ 501,298$ 229,025$ 802,733$
Non-Current Assets
Capital Assets
Systems and Equipment -$ -$ 522,348$ 522,348$
Less: Accumulated Depreciation - - (399,268) (399,268)
-$ -$ 123,080$ 123,080$
TOTAL ASSETS 72,410$ 501,298$ 352,105$ 925,813$
DEFERRED OUTFLOWS OF RESOURCES
Pension Expense/Revenue - IMRF -$ -$ 78,226$ 78,226$
OPEB Expense / Revenue - - 3,890 3,890
TOTAL DEFERRED OUTFLOWS OF RESOURCES -$ -$ 82,116$ 82,116$
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Expenses 52$ 1,139$ 63,811$ 65,002$
Overdrafts 85,472 - - 85,472
Unearned Revenue 72,666 - - 72,666
158,190$ 1,139$ 63,811$ 223,140$
Non-Current Liabilities
Compensated Absences -$ -$ 4,665$ 4,665$
IMRF Net Pension Liability - - 130,512 130,512
Total OPEB Liability - - 23,174 23,174
-$ -$ 158,351$ 158,351$
TOTAL LIABILITIES 158,190$ 1,139$ 222,162$ 381,491$
DEFERRED INFLOWS OF RESOURCES
Pension Revenue/Expense - IMRF -$ -$ 76,814$ 76,814$
OPEB Revenue/Expense - - 3,970 3,970
DEFERRED INFLOWS OF RESOURCES -$ -$ 80,784$ 80,784$
NET POSITION
Net Investment in Capital Assets -$ -$ 123,080$ 123,080$
Unrestricted/(Deficit)(85,780) 500,159 8,195 422,574
TOTAL NET POSITION (85,780)$ 500,159$ 131,275$ 545,654$
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF NET POSITION
INTERNAL SERVICE FUNDS
APRIL 30, 2020
Page 67
See Accompanying Independent Auditor's Report
Employee Risk Information Total
Insurance Management Technology Internal Service
Fund Fund Fund Funds
OPERATING REVENUES
Charges for Services 3,227,822$ 695,175$ 665,055$ 4,588,052$
3,227,822$ 695,175$ 665,055$ 4,588,052$
OPERATING EXPENSES
Personnel Salaries -$ -$ 132,462$ 132,462$
Miscellaneous Personnel Expenses 3,230,948 - 66,399 3,297,347
Other Operating Expenses 866 839,486 398,363 1,238,715
Depreciation - - 35,712 35,712
3,231,814$ 839,486$ 632,936$ 4,704,236$
OPERATING INCOME/(LOSS)(3,992)$ (144,311)$ 32,119$ (116,184)$
NON-OPERATING REVENUE/(EXPENSE)
Interest Income 563 584 382 1,529
CHANGE IN NET POSITION (3,429)$ (143,727)$ 32,501$ (114,655)$
NET POSITION - MAY 1, 2019 (82,351) 643,886 98,774 660,309
NET POSITION - APRIL 30, 2020 (85,780)$ 500,159$ 131,275$ 545,654$
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED APRIL 30, 2020
Page 68
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Retained
Developmental Personnel Total
Escrow Escrow Agency
Fund Fund Funds
ASSETS
Current Assets
Cash and Cash Equivalents 6,830$ 20,321$ 27,151$
Accounts Receivable - 2,284 2,284
TOTAL ASSETS 6,830$ 22,605$ 29,435$
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Expenses -$ 22,605$ 22,605$
Due to Depositors 6,830 - 6,830
TOTAL LIABILITIES 6,830$ 22,605$ 29,435$
TOTAL NET POSITION -$ -$ -$
CITY OF MCHENRY, ILLINOIS
COMBINING SCHEDULE OF NET POSITION
AGENCY FUNDS
APRIL 30, 2020
Page 69
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Budgeted
Amounts
Original Actual
and Final Final Amounts
REVENUES
Local Taxes
Property Tax 500,000$ 500,000$ 635,504$
Other Local Sources
Interest - - 740
Miscellaneous
Reimbursements 1,000 1,000 101,361
Total Revenues 501,000$ 501,000$ 737,605$
EXPENDITURES
Current
General Office 68,000$ 68,000$ 143,287$
Capital Outlay 20,000$ 20,000$ 45,361$
Total Expenditures 88,000$ 88,000$ 188,648$
EXCESS OR (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 413,000$ 413,000$ 548,957$
OTHER FINANCING SOURCES/(USES)
Transfers (222,735) (222,735) (222,735)
NET CHANGE IN FUND BALANCE 190,265$ 190,265$ 326,222$
FUND BALANCE - MAY 1, 2019 (45,619)
FUND BALANCE - APRIL 30, 2020 280,603$
CITY OF MCHENRY, ILLINOIS
FOR THE YEAR ENDED APRIL 30, 2020
SPECIAL REVENUE FUND - TAX INCREMENT FINANCING FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
Page 70
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REVENUE REVENUE
FEDERAL GRANTOR/PROGRAM RECOGNIZED EXPENSES RECOGNIZED EXPENSES GRANT GRANT
PASS-THROUGH GRANTOR OR AWARD 5/1/2019 to 5/1/2019 to INCEPTION TO INCEPTION TO RECEIVABLE UNEARNED
PROGRAM TITLE AMOUNT 4/30/2020 4/30/2020 4/30/2020 4/30/2020 4/30/2020 4/30/2020
Federal Highway Administration/Illinois Department of Transportation
Illinois Transportation Enhancements Program N/A 106,806$ 106,806$ 310,335$ 310,335$ 52,925$ -$
Total Federal Financial Assistance 106,806$ 106,806$ 310,335$ 310,335$ 52,925$ -$
CITY OF McHENRY, ILLINOIS
SUMMARY OF FEDERAL GRANTS
FOR THE YEAR ENDED APRIL 30, 2020
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Unaudited