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2013 CAFRCOMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE VILLAGE OF BUFFALO GROVE, ILLINOIS As of and for the Year Ended December 31, 2013 Prepared by the Department of Finance and General Services Scott Anderson Director of Finance and General Services VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS As of and for the Year Ended December 31, 2013 Page(s) INTRODUCTORY SECTION Letter of Transmittal i - iv Certificate of Achievement for Excellence in Financial Reporting v Organizational Chart vi List of Elected and Appointed Officials vii FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1 - 3 REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis 4 - 18 BASIC FINANCIAL STATEMENTS Government-W ide Financial Statements Statement of Net Position 19 Statement of Activities 20 - 21 Fund Financial Statements Balance Sheet - Governmental Funds 22 - 23 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 24 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 25 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 26 Statement of Net Position - Proprietary Funds 27 - 30 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 31 - 32 Statement of Cash Flows - Proprietary Funds 33 - 36 Statement of Fiduciary Net Position - Fiduciary Funds 37 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 38 Index to Notes to Financial Statements 39 Notes to Financial Statements 40 - 84 REQUIRED SUPPLEMENTARY INFORMATION General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General 85 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2013 Page(s) REQUIRED SUPPLEMENTARY INFORMATION (cont.) Special Revenue Funds Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Motor Fuel Tax 86 Historical Pension Information Illinois Municipal Retirement Fund - Schedule of Employer's Contributions and Schedule of Funding Progress 87 Police Pension Fund - Schedule of Employer's Contributions and Schedule of Funding Progress 88 Firefighters' Pension Fund - Schedule of Employer's Contributions and Schedule of Funding Progress 89 Other Post Employment Benefits - Schedule of Employer Contributions and Schedule of Funding Progress 90 Notes to Required Supplementary Information 91 SUPPLEMENTARY INFORMATION Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds 93 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 94 - 95 Schedules of Revenues, Expenditures and Changes in Fund Balances (Deficit) - Budget and Actual Illinois Municipal Retirement - Nonmajor special revenue fund 96 Metra Parking Lot - Nonmajor special revenue fund 97 Debt Service - Nonmajor debt service fund 98 Street Maintenance - Nonmajor capital projects fund 99 Facilities Development - Nonmajor capital projects fund 100 Enterprise Funds Combining Statement of Net Position - Nonmajor Enterprise Funds 101 Combining Statement of Revenue, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds 102 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 103 Schedules of Revenues, Expenses and Changes in Fund Net Position - Budget and Actual - Non-GAAP Budgetary Basis Buffalo Grove Golf - Enterprise Fund 104 Refuse Service - Enterprise Fund 105 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2013 Page(s) SUPPLEMENTARY INFORMATION (cont.) Water & Sewerage - Enterprise Fund 106 Arboretum Golf - Enterprise Fund 107 Combining Statement of Fiduciary Net Position- Pension Trust Funds 108 Combining Statement of Changes in Fiduciary Net Position - Pension Trust Funds 109 Schedules of Changes in Fiduciary Net Position - Budget and Actual Police Pension - Pension Trust Fund 110 Firefighters' Pension - Pension Trust Fund 111 Schedule of Changes in Fiduciary Assets and Liabilities - School and Park Donations - Agency Fund 112 STATISTICAL SECTION Net Position by Component 113 - 114 Change in Net Position 115 - 118 Fund Balances of Governmental Funds 119 - 120 Change in Fund Balances of Governmental Funds 121 - 122 Assessed and Actual Value of Taxable Property 123 - 124 Property Tax Rates - Direct and Overlapping Governments 125 - 126 Principal Property Taxpayers 127 - 128 Property Tax Levy and Collections 129 - 130 Sales Tax Revenue and Number of Principal Payers - Revenue by Category 131 - 132 Direct and Overlapping Sales Tax Rates 133 Ratio of Outstanding Debt by Type 134 - 135 Ratio of General Bonded Debt Outstanding 136 Direct and Overlapping Governmental Activities Debt 137 Schedule of Legal Debt Margin 138 Demographic and Economic Statistics 139 Principal Village Employers 140 Full-Time Equivalent Employees 141 - 142 Operating Indicators 143 - 144 Capital Asset Statistics 145 - 146 VITIA ___ _ G_E _O_F -- ------ ---------- ------ ------ -- �· . " BUFFALO GROVE Department of Finance & General Services Fifty Raupp Blvd. VILLAGE OF Buffalo Grove, IL 60089-2100 Phone 847-459-2500 Fax 847-459-0332 June 24, 2014 The Honorable Jeffrey Braiman Members of the Village Board Citizens of the Village ofBuffalo Grove The Comprehensive Annual Financial Report (CAFR) of the Village of Buffalo Grove for the year ended December 31, 2013 is submitted herewith_ This report represents a comprehensive picture of the Village's financial activities during Fiscal Year 2013 and the financial condition of its various funds at December 31, 2013_ State law requires that all general-purpose local govermnents publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audit in accordance with generally accepted auditing standards by a firm of licensed certified public accountants_ Management assumes full responsibility for the completeness and reliability of all of the information presented in the report based upon a comprehensive internal control framework Because the cost of internal controls should not outweigh their benefits, the Village's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement Baker Tilly, Independent Certified Public Accountants, have issued an unmodified (clean) opinion on the Village's financial statements for the fiscal year ended December 31, 2013_ The independent auditors' report is presented at the front of the financial section of this report_ GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management's Discussion and Analysis (MD&A)_ The letter of transmittal is designated to complement the MD&A and should be read in conjunction with it The Village of Buffalo Grove's MD&A can be found immediately following the report of the independent auditors_ Profile of the Village of Buffalo Grove The Village of Buffalo Grove was incorporated March 7, 1958, and is located approximately 29 miles northwest of the downtown of the City of Chicago_ The Village resides in both Cook and Lake Counties and spans 9.2 square miles and, based on the 2010 U.S_ Census, serves a population of 41,496_ The Village of Buffalo Grove is empowered to levy a property tax on real property located within its boundaries_ It is also empowered by state statute to extend its corporate limits by annexation, which it has done from time to time_ The Village became a home rule unit by referendum on July 1, 1980, giving it additional powers to tax and regulate in ways not specifically granted, or prohibited, by the Illinois Constitution_ As a home rule entity, the Village has no tax rate or debt limits, nor is it required to conduct a referendum to authorize the issuance of debt or to increase property taxes_ The Village operates under a Council/Manager form of govermnent Policy making and legislative authority are vested with the Village Board, which consists of a President and a six member Board of Trustees_ The Village Board is responsible, for passing ordinances and resolutions, adopting the annual budget, appointing committees, and hiring the Village's Manager and Attorney_ The Village Manager is responsible for carrying out the policies, ordinances and resolutions of the Village Board, developing and presenting an annual budget, overseeing the day-to-day operations of the Village, and appointing department directors_ The Village provides a full range of services including, police and fire protection, construction and maintenance of streets and infrastructure, Village planning and zoning, water and sewer utilities, and general administrative services. The Village also operates two golf courses and a municipal commuter parking lot. To provide these services there were 218 full-time and 79 part-time/seasonal positions in the Fiscal Year 2013 annual budget. Budgetary Control and Accounting Systems The annual budget serves as the foundation for the Village's financial planning and as a management spending control document. All departments of the Village of Buffalo Grove are required to submit budget requests by a specified date each year. These requests serve as the starting point for budget development. The proposed budget is presented to the Village Board in November and adopted by resolution in December with the property tax levy. Legal spending thresholds are established through an Appropriation Ordinance. The Village Board is required to hold a public hearing on the Appropriation Ordinance and must adopt a final budget no later than December 31st of each year. The appropriated budget is prepared by fund, and department (e.g., police). Department directors may make transfers of appropriations within a department. Transfers of appropriations between fund/account groups, however, require the special approval of the Village Board. The accounts of the Village are organized on the basis of funds, each of which is considered a separate and distinct accounting entity. The operations of each fund are accounted for with a separate set of self balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. Revenues are allocated to and accounted for in individual funds based upon the purpose for which they are to be expended and the means by which spending activities are controlled. The accounting records for general governmental operations are maintained on the modified accrual basis, with revenues being recorded when available and measurable and expenditures being recorded when the material or services are received and the liability is incurred. Accounting records for the Village's enterprise funds, internal service funds, agency funds and pension trust funds are maintained on the accrual basis of accounting. Factors Affecting Financial Condition Local Economy The Village is primarily residential, with supporting commercial activity and limited industrial and manufacturing activity. There are approximately 698 licensed business operating in the Village. The majority of residents are employed in management, professional, sales and office occupations. The Village's unemployment statistics have consistently beat the national and state averages, with an unemployment rate at the end of the year at 6.6 percent besting the metro area by 2.9 percent. External economic factors at the national and state level continue to impact the Village's revenue profile and, subsequently its ability to manage operating and capital resources. • Sales taxes (municipal and home rule) totaled $7,803,749 which is an increase from the previous year's total of $7,570,917 an increase of 3.1 percent. • Utility use taxes increased from $2,510,242 to $2,629,997 or 4.8 percent. • Real estate transfer taxes generated $760,164 in 2013 versus $459,036 in 2012. Sales of commercial and industrial properties increased considerably in the current fiscal year. The Village equalized assessed valuation decreased by $98 million or 5.9 percent to $1.57 billion in the 2012 levy year. The decrease is due primarily to property reassessments. The unassigned fund balance of the General Fund will again exceed the 25 percent threshold of the subsequent year's budgeted expenditures, less transfers to pensions, which is policy established by the Village Board. 11 Fiscal Year Ended Unassigned Fund Balance Budgeted Expenditures December 31,2007 $14,872,103 $30,202,380 December 31,2008 $11,587,937 $31,021,971 December 31,2009 $ 9,005,069 $29,418,559 December 31,2010 $ 9,563,655 $29,266,181 December 31, 2011 $ 9,872,594 $29,271,054 December 31,2012 $10,302,515 $29,768,828 December 31, 2013 $12,395,113 $35,511,109* *Budget number includes employer pension costs beginning in FY 2013. Long-Term Financial Planning 49.24% 37.35% 30.61% 32.68% 33.73% 34.61% 34.90% The Village compiles a Five-Year Financial Forecast annually which provides an analysis of future revenue and expenditures. This report is completed in tandem with the start of the annual budget process. Other long-range financial plans include the five-year Capital Improvement Plan, Twenty-Year Water Fund Pro Forma, and Reserve for Capital Replacement Funding Report. The village assesses its capital needs through the Capital Improvement Plan (CIP) update. This document is a planning tool to identify short and medium term capital needs (facilities, infrastructure and roadways) and measure those demands against the village's ability to pay. For a project to be incorporated into the CIP, it must involve the creation, improvement, or acquisition of a tangible asset with an original cost of at least $25,000. Within the next five years it is anticipated that the Village will require nearly $40.2 million in capital improvements. Transportation-related projects represent a large percentage of the improvements at $25 million. Routine maintenance of existing streets accounts for $23 million of those projects. Approximately $7.3 million is allocated to improving and maintaining the water utility system. The Twenty-Year Water Fund Pro-Forma provides an overview of the Water Fund and adequacy of the current water rate to fund operating expenses and infrastructure improvements as well as generating a reserve to continue with a pay-as-you-go approach to capital budgeting. The Reserve for Capital Replacement Funding Report lists all Village owned vehicles, the service life, and its respective reserve balance. Major Initiatives The most significant economic development opportunity involves the potential redevelopment of the municipal campus and a portion of the Buffalo Grove Golf Club properties into a central business district development. On a smaller scale, the Village continues to coordinate with commercial property owners in the Dundee and Milwaukee Road corridors to affect redevelopment of vacant land and declining commercial areas. In order to address the Emerald Ash Borer infestation, the Village secured a $6 million line of credit to be used to pay for the eventual replacement of over 7,000 Village owned Ash Trees over the next several years. Awards and acknowledgments. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Village of Buffalo Grove for its comprehensive annual fmancial report (CAFR) for the fiscal year ended December 31, 2012. This was the thirty-second consecutive year that the government has received this prestigious award. In order to be awarded a Certificate of iii Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfies both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the Village also received the GFOA's Distinguished Budget Presentation Award for its annual budget document for the fiscal year beginning January I, 2013. In order to qualify for the Distinguished Budget Presentation Award, the Village's budget document had to be judged proficient as a policy document, a financial plan, an operations guide, and a communications device. The preparation of this report would not have been possible without the dedicated services of the entire staff of the Finance Department especially Deputy Finance Director Andrew Brown and Accountant Linda Miller. Credit also must be given to the Village President and Board of Trustees, and the Village Manager Dane Bragg for their assistance in planning and conducting the fiscal affairs of the Village in a responsible manner. fiL Scott D. Anderson Director of Finance/Village Treasurer lV Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Village of Buffalo Grove Illinois For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2012 Executive Director/CEO v Village of Buffalo Grove Organizational Chart Residents of Buffalo Grove Village Board Village Manager G If L p r L F L Office of the 0 ° t. D o t lce t D rt lre t Village I I Finance I Public Works pera 1ons epar men epa men M < -anager -· : . . �---�--. � .. �t;;; Fa� • r w l '�r G If C I I. Patrol I Management � Legal I S . t T h 1 .. Admm I � Engmeerlng II Operations Emergency . Buffalo Grove ' General Information . • . o ourse A 1 erv1ces ec no ogy · gency • --� � " I . . l F" r r b �IS Ire C I B "ld" Ar oretum y th S . Human Deputy entra ur · mg OU U reSSIOn . · Golf Course I . S . P d P R Resources Village Clerk U Garae:e I. .1 Mamti:!f'lance erv1ces an escue " . I � \- r= �---\ � Fire B .1d. d .11 Streets, Admin I Prevention & L u � m_g an age [ Drainage & I I Forestry Education onmg asurer Sewer Police Records Planning VILLAGE OF BUFFALO GROVE, ILLINOIS List of Elected and Appointed Officials December 31, 2013 Jeffrey S. Braiman Village President Jeffrey Berman Lester Ottenheimer Andrew Stein Board of Trustees Appointed Officials Jennifer Maltas Deputy Village Manager Steven Casstevens Chief of Police Michael Reynolds Public Works Director Darren Monico Village Engineer Geoff Tollefson Golf Course Manager Dane Bragg Village Manager vii Janet M. Sirabian Village Clerk Beverly Sussman Michael Terson Steven Trilling Scott Anderson Finance DirectorNillage Treasurer Terrence Vavra Fire Chief Arthur Malinowski Human Resource Director Robert Pfiel Village Planner Brian Sheehan Building Commissioner INDEPENDENT AUDITORS' REPORT To the Village President and Board of Trustees Village of Buffalo Grove Buffalo Grove, Illinois Report on the Financial Statements �AKER TILLY Baker Tilly Virchow Krause, LLP 130\ W 22nd St, Ste 400 Oak Brook, IL 60523-3389 tel 630 990 3 \ 31 fax 630 990 0039 bakerti\ly.com 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 the Village of Buffalo Grove, Illinois, as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the Village of Buffalo Grove'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. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the investment in joint venture and loss from joint venture, which represent 15.16 percent, 0.00 percent and 15.54 percent, respectively, of the assets, revenues and net position of the business-type activities and 19.15 percent, 0.00 percent, and 19.65 percent, respectively, of the assets, revenues and net position of the Water and Sewerage Fund. Those balances were derived from the audit of the Northwest Water Commission which was audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for investment in joint venture and loss from joint venture, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' 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 Village of Buffalo Grove'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 Village of Buffalo Grove'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. � '" UICtpenllcl't membtr ot BAKER TllLY INTERNATIONAL Page 1 To the Village President and Board of Trustees Village of Buffalo Grove Opinions In our opinion, based on our audit and the report of other auditors, 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 Village of Buffalo Grove, Illinois, as of December 31, 2013 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note III.G. to the financial statements, the 2012 financial statements have been restated to correct an error. Our opinions are not modified with respect to this matter. Other Matters The financial statements of the Village of Buffalo Grove as of December 31, 2012, prior to restatement, were audited by other auditors whose report dated June 28, 2013, expressed an unmodified opinion on those statements. As part of our audit of the 2013 financial statements, we also audited the adjustments described in Note Ill. G. that were applied to restate the 2012 financial statements in order to correct errors. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2012 financial statements of the Village of Buffalo Grove other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2012 financial statements as a whole. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information (restated for the correction described in Note III.G.) as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or 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. Page 2 To the Village President and Board of Trustees Village of Buffalo Grove Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Buffalo Grove's basic financial statements. The supplementary information (restated for the correction described in Note III.G.) as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such 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. The 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 supplementary information is fairly stated in all material respects, in relation to the basic financial statements as a whole. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Buffalo Grove's basic financial statements. The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. o�.!fb v��,LJP June 24, 2014 Page 3 - 4 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 The Village of Buffalo Grove’s Management’s Discussion and Analysis (MD&A) offers the readers of the Village of Buffalo Grove’s financial statements this narrative overview and analysis of the financial activities of the Village of Buffalo Grove for the fiscal year ended December 31, 2013. This information presented here should be considered in conjunction with additional information provided in the letter of transmittal, which is found on pages i-iv. Financial Highlights • The assets and deferred outflows of the Village exceeded its liabilities and deferred inflows at December 31, 2013 by $112.9 million (net position). The Net Position for governmental activities is $65.8 million or 58 percent of the total and business-type activities account for $47.1 million. Of this amount, $23.8 million is unrestricted and may be used to meet the Village’s ongoing obligations to residents and creditors. • The Village’s net position decreased by $4.9 million (or 4.2 percent) during the fiscal year ending December 31, 2013. The governmental net position decreased by $4.1 million and the business-type activities net position decreased by $.8 million. • As of December 31, 2013, the Village of Buffalo Grove’s General Fund reported combined ending fund balances of $20.5 million, an increase of $ 1.9 million from the prior year. Of this amount, $12.4 million was unassigned. • The Village’s general obligation debt decreased by $.9 million (or 7.7 percent). Total debt outstanding is $11.3 million. Overview of the Financial Statements The MD&A is intended to serve as an introduction to the Village’s basic financial statements. The Village of Buffalo Grove’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements The government-wide financial statements (found on pages 19-21) are designed to provide readers with a broad overview of the Village’s finances statements similar to the corporate sector in that all governmental and business- type activities are consolidated into columns that add to total for the Primary Government. The statement of net position presents information on all the Village’s assets/deferred outflows and liabilities/deferred inflows, with the difference between them reported as net position. Changing of the net position total over time can be one useful indicator in assessing the financial position of the Village. This statement combines and consolidates governmental funds’ current financial resources (short-term spendable resources) with capital assets and long-term obligations using the accrual basis of accounting and economic resources measurement focus. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event causing the change occurs, regardless of the timing of related cash flows. Revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes). Both of the government-wide financial statements distinguish functions of the Village that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all - 5 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Village include public safety (police and fire), public works, streets and sidewalks, building and zoning, and general government. Property taxes, state and home rule sales tax, shared state income tax, real estate transfer tax, prepared food and beverage tax, and utility taxes finance the majority of these services. The Business- type Activities reflect private sector type operations and include Water and Sewer Funds, Refuse Fund, Buffalo Grove Golf Course and Arboretum Golf Course. The intent is for the fees to cover the costs of operations, infrastructure replacement, and debt service expenses. 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 Village uses fund accounting to ensure and demonstrate fiscal accountability and legal compliance. All of the funds of the Village can be divided into three categories; governmental funds, proprietary funds, and fiduciary funds. Governmental Funds (see pages 22-25) are used to account for primarily the same functions reported as governmental activities in the government–wide financial statements. The focus, unlike the government-wide financial statement, is on the sources and uses of available resources (cash and cash equivalents), in order to provide a near, or short-term view of the Village’s operations. This information is useful in the evaluation of short-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 government’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 Village of Buffalo Grove maintains seven 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 and the Motor Fuel Tax Fund, which are classified as major funds. Data on the other five governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the report. Proprietary Funds (see pages 27-36) are used to report the same functions presented as business-type activities in the government-wide financial statements. The Village uses enterprise funds to account for its water and sewer utility, refuse service, and activities at the Buffalo Grove and Arboretum Golf Courses. 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 Sewerage Fund and the Arboretum Golf Fund as they are considered to be major funds. The basic proprietary fund financial statements can be found on pages 101- 107 of this report. Fiduciary Funds (see pages 37-38) are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Village’s s own programs. The accounting used for fiduciary funds is - 6 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 110- 112 of this report. Notes to the financial statement 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 40-84 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 budgetary comparison to actual for the general fund, as well as the Village’s progress in funding its obligation to provide pension and OPEB benefits to its employees. Required supplementary information can be found on pages 85-91 of this report. Government-wide Financial Analysis The assets/deferred outflows of the Village of Buffalo Grove exceeded liabilities/deferred inflows by $112.9 million as of December 31, 2013. The largest portion of the Village’s net position reflects its investment in capital assets (76.8 percent). Those capital assets include land, buildings, streets, utility infrastructure, and equipment, less any outstanding debt related to the original acquisition. The Village uses these capital assets to help facilitate service delivery to its residents; consequently, these assets are not available for future spending. Although the Village’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay the debt must be provided from other sources, since the capital assets cannot be used to reduce these liabilities. An additional portion of the Village’s net position ($2.4 million) represents resources that are subject to external restrictions on how they may be used. $1.8 million is restricted for contractual construction obligations including the annual street maintenance program. The remaining balance of unrestricted net position ($23.8 million or 21.1 percent) may be used to meet the government’s ongoing service obligations to residents and provide for payments to all creditors. At the end of the current fiscal period, the Village is able to report positive balances in all three categories of net position for the government as a whole. The Village’s combined net position decreased by $4.9 million as a result of governmental activities decreasing by $4.1 million and business-type activities decreasing by $0.8 million. The net position of the Village’s governmental funds was $65.8 million. The Village’s unrestricted net position for governmental activities that are available for day- to-day financial operations was $12.4 million compared to $11.4 million at December 31, 2012. The net position of business-type activities was $47.1 million. The business-type activities unrestricted net position increased by $.2 million from the previous year. - 7 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 Please refer to table below for condensed Statement of Net Position: Table 1 Village of Buffalo Grove’s Net Position As of December 31, 2013 (in millions) Governmental Business-Type Activities Activities Total 2013 2012 2013 2012 2013 2012 Current and Other Assets $41.5 $44.1 $12.5 $12.5 $54.0 $56.6 Capital Assets 56.3 58.5 35.7 36.8 92.0 95.3 Total Assets $97.8 $102.6 $48.2 $49.3 $146.0 $151.9 Deferred Outflows 0.1 0.1 0.1 0.1 Long-Term Liabilities 11.9 13.2 .3 0 $12.2 $13.2 Other Liabilities 5.6 5.2 0.8 1.4 6.4 6.6 Total Liabilities $17.5 $18.4 $1.1 $1.4 $18.6 $19.8 Deferred Inflows 14.6 14.4 0 0 14.6 14.4 Net Position: Net Investment in Capital Assets $51.0 $52.1 $35.7 $36.7 $86.7 $88.8 Restricted 2.4 6.3 0.0 0.0 2.4 6.3 Unrestricted 12.4 11.5 11.4 11.2 23.8 22.7 Total Net Position $65.8 $69.9 $47.1 $47.9 $112.9 $117.8 Normal Impacts There are five basic (normal) transactions that will affect the comparability of the Statement of Net Position summary presentation. Net Results of Activities – which will impact (increase/decrease) current assets and unrestricted net position. Borrowing of Capital – which will increase current assets and long term debt Spending Borrowed Proceeds on New Capital – which will reduce current assets and increase capital assets. There is a second impact, an increase in invested in capital assets and an increase in related net debt which will not change the net investment in capital assets. - 8 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 Reduction of Capital Assets through Depreciation – which will reduce capital assets and net investment in capital assets. Current Year Impacts At the end of the current fiscal year, the Village reported positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Within the governmental activities, the Village decrease in “Current and Other Assets” of $2.6 million is due to the spending of bond proceeds on the annual street maintenance program. “Current and Other Assets” for business-type activities did not change from the prior year despite the Village continuing with pay-as-you-go financing for utility system maintenance projects. The Village has adopted a philosophy of funding capital improvements to a large extent on a pay-as-you –go basis, and retires debt obligations quickly, resulting in positive net position calculations. Declines in “Capital Assets” are primarily as a result of depreciation. - 9 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 Changes in Net Position The Village’s total revenues and expenses for governmental and business-type activities are reflected in the following chart: Village of Buffalo Grove Changes in Net Position For the Years Ended December 31, 2013 and 2012 Governmental Business-Type Total Primary Activities Activities Government Revenues 2013 2012 2013 2012 2013 2012 Program Revenues Charges for Service 2.8 2.6 12.0 10.7 14.8 13.3 Grants and Contributions Operating 1.2 1.2 - - 1.2 1.2 General Revenue Property Tax 14.5 14.3 - - 14.5 14.3 Sales and Use Tax 7.8 7.6 - - 7.8 7.6 Income Tax 4.7 5.5 - - 4.7 5.5 Telecommunications Tax 1.9 2.2 - - 1.9 2.2 Utility Taxes 2.6 2.5 - - 2.6 2.5 Property Transfer Tax 0.8 0.5 - - 0.8 0.5 Other 2.7 2.4 - - 2.7 2.4 Total Revenue 39.0 38.8 12.0 10.7 51.0 49.5 Expenses Governmental Activities General Government 6.6 6.1 6.9 6.1 Public Safety 21.9 22.3 22.1 22.3 Public Works 15.1 12.0 15.3 12.0 Interest 0.4 0.4 0.4 0.4 Business Type Water and Sewer 8.1 9.0 8.1 9.0 Refuse Services 0.9 0.9 0.9 0.9 Golf 2.9 3.0 2.9 3.0 Total Expenses 44.0 40.8 11.9 12.9 55.9 53.7 Excess before transfers (5.0) (2.0) 0.1 (2.2) (4.9) (4.2) Transfers In (Out) 0.9 0.5 (0.9) (0.5) Change in Net Position (4.1) (1.5) (0.8) (2.7) (4.9) (4.2) Net position - beginning 69.9 71.4 47.9 50.6 117.8 122.0 Net position – ending 65.8 69.9 47.1 47.9 112.9 117.8 - 10 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 Normal Impacts Revenues Economic Condition – which can reflect a declining, stable or growing economic environment and has a substantial impact on property, sales, income, utility tax revenues as well as public spending habits for building permits, elective user fees and volumes of consumption Increase/Decrease in the Village Approved Rates – while certain tax rates are set by statute, the Village has significant authority to impose and periodically increase/decrease rates (water, building and licensing fees, ambulance fee, etc.) Changing patterns in Intergovernmental and Grant Revenue – (both recurring and non-recurring) – certain recurring revenue (state shared revenues) may experience significant changes periodically while non-recurring (one-time) grants are less predictable and often distorting in their impact on year-to-year comparisons. Market Impact on Investment Income – the Village’s investment portfolio is structured to meet certain liabilities as they become due and the income generated is subject to market conditions that may cause the investment income to fluctuate. Expenses Changes in Authorized Personnel – changes in service demand may cause the Village to increase/decrease authorized staffing. Salary Increase (general wage adjustments and merit) – compensation adjustments to ensure the Village is able to attract and retain high level employees. Inflation – while overall inflation appears to be reasonably modest, the Village is a major consumer of certain commodities such as supplies, fuels, and parts. Some functions may experience unusual commodity-specific increases (e.g. fuel, road salt) Current Year Impacts Government Activities: Governmental activities decreased the Village’s net position by $4.1 million to $65.8 million. Significant elements contributing to this net change are as follows; Revenues: Revenues for the Village’s governmental activities for the year ended December 31, 2013 were $39.0 million an increase of $.2 million or .5 percent. Property taxes continue to be the Village’s largest source of revenue (37.5 percent) at $14.5 million. Included within the property tax revenues are the pension levies for the Police and Firefighter Pension Funds and IMRF/Social Security Levies. The pension levies account for 40.5 percent of the property tax levy. Other taxes including sales tax, utility tax, prepared food and beverage tax, hotel tax, and real estate transfer tax total $13.1 million or 32.9 percent of total governmental activities revenue. Intergovernmental revenues, including state income tax account for 11.8 percent. The net decrease in net assets was due the expenditure of debt proceeds on the annual street maintenance project. - 11 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 Property taxes increased by $.2 million. The increase in the tax levy was due to an increase in the debt service levy due to a reduced amount of tax abatements. The debt service levy increased by 13.2 percent, while the all other components of the levy increased by 2.5 percent. Sales tax increased by $.2 million compared to the previous year. The growth in sales tax was about 2.6 percent. Utility taxes were up $.1 million as the region experienced a very cold winter as revenue collected on natural gas use was up 25 percent. Income taxes decreased by $.8 million. In FY 2012, there was a one time adjustment to income tax revenues that caused a spike in the previous year. Expenses: The cost of all governmental activities this year was $44 million resulting in an increase of 7.8 percent from the previous year ($40.8 million). Most of the increase ($.9 million) is due to public works projects including the large debt financed street maintenance program. 7.2% 3.0% 37.5% 20.2% 12.3% 5.0% 6.8% 2.0% 6.0% Village of Buffalo Grove 2013 Revenue by Source Governmental Activities Charges for Service Grants and Contributions Property Taxes Sales and Use Taxes Income Tax Telecommunications Tax Utility Taxes Property Transfer Tax 15.3% 49.5% 34.3% 0.8% Village of Buffalo Grove 2013 Expenditure by Function Governmental Activities General Government Public Safety Public Works Interest - 12 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 The Statement of Activities on pages 20-21 shows that $2.8 million was financed by those who use the services, $1.2 million was financed by operating grants and contributions, with the Village’s general revenues financing $35 million. Business-Type Activities: Business-type activities net position decreased by $.8 million. Significant changes are noted below. Revenue: Water sales increased by $1.2 million from the previous year. The average amount of water consumed in 2013 was about 6,150 gallons per month per residential household. The increase in revenue was driven by a 35 percent water rate increase. Average water consumption continues to be at historic lows due to maturing landscapes, more efficient appliances, vacant properties, and resource conservation. The two golf courses generated $2.3 million versus $2.22 million in 2012. The following graph shows a comparison of revenues and expenses for each business type activity (less depreciation and operating transfers). Expenses: Expenses from all business-type activities decreased by $1 million or 7.7 percent. Water Fund expenses decreased by $.9 million due to a smaller scope of system maintenance projects. Golf expenses decreased by $.1 million due to a staffing reorganization and the elimination of a position. Financial Analysis of the Village’s Funds As noted earlier the Village utilizes fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Funds The focus of the Village’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. The Village’s governmental funds for the year ended December 31, 2013 reflect a combined fund balance of $21.4 million on its balance sheet (pages 22-23). This represents a $3.2 million dollar decrease over the balance posted 2 4 6 8 10 Water Fund Buffalo Grove Golf Club Arboretum Golf Club Refuse Fund Village of Buffalo Grove 2013 Business-Type Activities Revenues and Expenses (in millions) Revenue Expense - 13 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 last year. All of the decrease is due to the spending of the 2012 bond issue proceeds. Of the total fund balance of $21.4 million, $11.5 million is unassigned indicating availability for future obligations. The 2013 unassigned fund balance increased by $1.5 million. The growth in the unassigned fund balance is due a combination of budget cutting initiatives that included position reductions through attrition, and better than anticipated Sales and Income Tax receipts. The remainder of fund is classified as nonspendable, restricted, committed and assigned. Nonspendable fund balance ($.08 million) represents amounts set aside for inventory. Restricted fund balance ($2 million) is allocated to debt service, capital projects and pensions. Committed fund balance ($7.3 million) is to be use for future capital replacement. Assigned fund balance ($.1 million) is set aside for expenditures at the Metra Commuter Parking Lot. The General Fund is the Village’s main operating fund and accounts for core municipal services including, public safety (police and fire), public works, building and zoning, and general administration. As such, it useful to review the liquidity of the fund by comparing the unassigned fund balance against the operating General Fund operating budget. As of December 31, 2013, the unassigned fund balance represents 36.2 percent of the operating budget. The Fund Balance of the General Fund increased by $1.9 million from December 31, 2012. A majority of the growth in the unassigned fund balance was due to a reclassification of prepaid insurance of $1.6. The remainder was generated through budget management. The General Fund’s revenues increased by $.1 million in 2013. Sales tax revenue expanded generally through inflation. The housing market started to see a significant recovery in 2013 as revenues grew by 37.5 percent as more sales are more of the traditional, non-distressed type. Telecommunications tax continued its decline at $.3 million due to customers cutting costs and reducing phone service lines. Electricity and natural gas use taxes totaled $2.6 million and are stable. Interest income continues to decline as investments mature and are invested at continued historic low rates. The low Federal Funds Rate has a significant impact on much of the General Fund’s investment portfolio. 0 2 4 6 8 10 12 14 16 Village of Buffalo Grove 2013 General Fund Revenue (in millions) 2013 2012 - 14 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 General fund expenditures increased by $1.5 million or 3.5 percent. The surplus of revenues over expenditures was $2.1 million. Adding in the Other Financing Sources (Uses), the net change to fund balance resulted in an increase of $1.9 million. The increase is due to a reduction in the amount of home rule sales tax transferred to the Motor Fuel Tax Fund ($ .7 million), stronger than anticipated tax receipts, and deferring position hiring upon retirement. During the year there were contributions of $1.2 million to pay-as-you-go financing of capital projects, $.1 million for transfers to the golf courses (unanticipated), and $.2 million for spending on capital equipment. Special Revenue Funds have a combined fund balance of $1.7 million as of December 31, 2013 down $4.5 million from December 31, 2012. The proceeds from the 2012 general obligation bonds were expended on the annual street maintenance program and accounts for almost all the decrease in the fund balance year over year. The Village historically contributes .20% of home rule sales tax revenue to the MFT Fund. This transfer was suspended in 2013. Revenues received from the state share of the motor fuel tax were $1 million. The cost of the 2013 street maintenance program was $5.7 million. The scope of each year’s identified maintenance, as determined through pavement analysis studies, has surpassed the relatively inelastic source of funding (more specifically the Motor Fuel Tax allotments). Given both the rise in the cost of maintenance and the declining revenue, the amount of street surface area repaired each year will decline. The intention of the debt issuance was to catch up with maintenance in order to maintain appropriate pavement standards and try to complete all repairs before road resurfacing turns into a compete rebuild of the pavement. All other funds had decreases in fund balance. Illinois Municipal Retirement Fund accounts for employer pension and Social Security/Medicare costs. Fund balance decreased by $140,790. The balance has been reduced to zero in anticipation of closing the fund in 2014. The Debt Service Fund has a fund balance deficit of $11,819 at the end of FY 2013 a decrease of $31,346 from the previous year. Total debts total $11.3 million and are all general obligation bonds. $1 million in debt was paid down in the current year. 0 5 10 15 20 25 General Government Public Safety Public Works Interest Village of Buffalo Grove 2013 General Fund Expenses (in millions) 2013 2012 - 15 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 The Village’s Capital Improvement Funds (Facilities and Streets) have a total fund balance deficit of $.7 million which is a decrease of $.3 million from December 31, 2012. Significant projects either completed or are in progress were the engineering study on the Weiland Road Corridor project, Dundee Road Streetscape Improvement and replacement of Emerald Ash Borer infested trees. Proprietary Funds The Village of Buffalo Grove’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The Village reports the both the Water and Sewer Fund and the Arboretum Golf Course as major proprietary funds. The Water and Sewer Fund accounts for all of the operating expenses of the municipal water system. Water is purchased wholesale from the City of Evanston through the Northwest Water Commission of which the Village is one of four members. Sanitary sewer service is provided by the Lake County Public Works Department for those property owners in Lake County. The Village acts as a billing partner to reduce administrative costs. The Metropolitan Water Reclamation District of Greater Chicago handles all the sanitary sewer treatment for Cook County residents and recovers its expenses through a property tax levy. The water and sewer utility experienced net operating incomes before contributions and transfers of $.6 million for FY 2013 as compared to net loss of $1.2 million for the prior year. A rate increase was adopted in 2013 that better aligns service charges with operating and capital expenses. In 2013, $.6 million was invested in capital improvements to improve sewer lift stations. Purchased water expense and sanitary sewer fees collected on behalf of Lake County Public Works for FY 2013 account for 59.5 percent of the total operating expense of the fund. Purchased water expense decreased by $75,667 from the prior year. Non-operating revenue (expense) decreased $16,129 due to reduced interest income as a result of lower invested balances and maturing CDs invested at lower rates and lower invested balances. The unrestricted net position of the Water and Sewer Fund at the end of the current fiscal year was $11.1 million. Of that amount $7.3 million is the Village’s equity interest in the Northwest Water Commission and $3.8 is available to cash finance any major infrastructure improvements or enhancements to the water system. The Village also reported the Arboretum Golf Course Fund as a major proprietary fund. This fund accounts for all operations of the Arboretum Golf Course. The course reported a year end unrestricted net position deficit balance of $89,574. Total revenues were $80,250 more than the previous year. The Village of Buffalo Grove owns and operates two municipal golf courses. Golf rounds are slowing returning to pre-recession levels. A total of 58,413 paid rounds were played between the two courses. General Fund Budgetary Highlights The budget is formally presented to the Village Board in November and approved in December in conjunction with the tax levy request. As the Village operates under the Appropriations Act, a public hearing is conducted after the budget is adopted for public comment on the Appropriations Ordinance. The Ordinance sets the legal spending ceiling for each fund. The budget is the day-to-day management tool to ensure fiscal accountability. - 16 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 General Fund Budgetary Highlights For the Fiscal Year Ended December 31, 2013 (in thousands) Budget Actual Revenues and Transfers: Taxes 29,741 31,214 Fines and Fees 1,261 1,498 Licenses and permits 280 294 Other Revenues 1,962 2,541 Transfers in 765 927 Total Revenues and Transfers 34,009 36,474 Expenditures and Transfers Expenditures 33,100 33,351 Transfers Out 889 1,271 Total expenditures and Transfers 33,989 34,622 Change in fund balance 20 1,852 Revenue (taxes) performed better than expected due to strong sales and income tax revenue. Actual expenditures exceeded budgeted expenditures due to unexpected, or scope modifications, of capital improvements. Capital Assets At the end of December 31, 2013, the Village had a combined total of capital assets of $92.1 million invested in a broad range of capital assets including, buildings, streets, storm sewers, and equipment. This amount represents a net decrease (including additions and deductions) of $3.2 million. Village of Buffalo Grove Capital Assets at Year End Net of Depreciation As of December 31, 2013 (in millions) Governmental Business-Type Activities Activities Total 2013 2012 2013 2012 2013 2012 Land 35.96 35.96 6.2 6.2 42.16 42.16 Construction in progress .22 .1 .37 .05 .59 .15 Land Improvements 3.18 3.03 . . 3.18 2.49 Buildings 3.13 3.67 3.18 3.70 6.31 7.37 Equipment and Vehicles 3.23 4.01 . . 3.23 4.54 Streets and storm sewers 10.63 11.73 . . 10.63 11.73 Water and Sewer Infrastructure . . 25.98 26.75 25.98 26.75 Total 56.35 58.51 35.73 36.70 92.08 95.19 - 17 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 The Governmental Activities net capital assets decreased from last year by $2.2 million (3.7 percent). For the Business-type activities, the net capital assets decreased by $1.1 million or (2.7 percent). The most significant capital activity was the continued progress on the Weiland Road Corridor Study, lift station improvements in the Water Fund, and the scheduled vehicle replacements made during the year as part of a systematic funding and replacement program for all Village-owned vehicles. Detailed information on the Village’s capital assets is included in Note III C. on pages 58-59. At year end, the Village had total bonded debt outstanding of $11.3 million as shown in the next table: Village of Buffalo Grove General Obligation Bonds As of December 31, 2012 and 2011 (in millions) Governmental Business-Type Activities Activities Total 2013 2012 2013 2012 2013 2012 General obligation bonds $11.3 $12.3 $ - $ - $11.3 $12.3 Long-Term Debt The Village maintains assigned “AAA” ratings on its general obligation bonds respectively from both Moody’s Investor Services and Standard and Poor’s Corporation. The total per capita general obligation (GO) debt for the community stands at $273.28 and represents .70 percent of the percentage of equalized assessed valuation of the Village. The Village, under its home rule authority, does not have a legal debt limit. Detailed information on the Village’s long-term debt can be found in Note III E. on pages 62-64. Economic Factors and Next Year’s Budgets and Rates The Village did enter 2014 with a balanced operating budget. The budget for the fiscal year beginning January 1, 2013, is $63,079,012 a 2.6 percent increase from the previous year. The operating budget totals $37,480,183 resulting in a 10.3 percent over the previous year. About 5 percent of the increase is due to the closing of the IMRF Fund and budgeting the revenues and expenditures in the General Fund. Total capital spending during the year is estimated to be $9.2 million. As the economy continues to stabilize and revenues begin to improve, emphasis will remain on developing innovative ways to deliver services and reduce costs. - 18 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2013 Property taxes remain the Village’s most stable revenue although the total assessed value of all taxable property is expected to decline about 5.5 percent for the 2013 tax levy (extended and collected in 2014). A tax levy was adopted for the 2014 budget that was 3 percent over the last year’s request. Have of the growth in the levy is due to match inflation. Other tax revenues, including municipal and home-rule sales tax are expected to increase due also to inflation. Much of the sales taxes are generate through restaurants, grocery stores, and building material sales. Income taxes are expected moderate to 3 percent growth. There were several new revenues added for FY 2014.Thost revenues include; special rescue billing, administrative bail fee, and a broadened scope for the impounding fees. A twenty year proforma was completed on the Water Fund in FY 2013 and subsequently a water and sewer rate recommendation was made, and adopted, that will increase water rates by 30 percent in 2014. Budgeted expenditures include general wage adjustment for non-represented employees and contractual salary adjustments which are part of labor agreements. The Village current has two represented employee groups (police and fire). Health insurance increases were minimized through the change to the Intergovernmental Professional Benefits Cooperative (IPBC). All other expenditures will be generally unchanged. There is no additional staffing recommended for FY 2014. CONTACTING THE VILLAGE’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the Village’s finances and to demonstrate the Village’s accountability for the money it receives. Questions concerning this report or requests for additional financial information should be directed to Scott Anderson, Director of Finance, Village of Buffalo Grove, 50 Raupp Boulevard, Buffalo Grove, IL 60089. VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION As of December 31, 2013 Governmental Activities Business-type Activities Totals ASSETS Cash and equivalents $13,538,671 $1,982,277 $15,520,948 Investments 6,726,765 1,589,366 8,316,131 Receivables Property taxes 14,633,082 -14,633,082 Accounts - water and sewer -1,297,677 1,297,677 Municipal sales tax 2,342,220 -2,342,220 Illinois income tax 1,696,728 -1,696,728 Motor fuel tax 85,898 -85,898 Telecommunications tax 480,900 -480,900 Food and beverage tax 83,983 -83,983 Utility tax 302,580 -302,580 Interest 7,782 2,133 9,915 Other 331,186 103,152 434,338 Inventories 82,559 42,201 124,760 Due from fiduciary funds 214,594 -214,594 Deposits 479,840 176,465 656,305 Investment in joint venture -7,314,705 7,314,705 Net pension asset 452,951 -452,951 Capital Assets Land 35,963,844 6,198,514 42,162,358 Construction in progress 222,057 366,231 588,288 Buildings 22,595,602 10,284,359 32,879,961 Land improvements 3,179,774 1,966,488 5,146,262 Equipment and vehicles 12,500,185 94,510 12,594,695 Streets and storm sewers 56,706,008 -56,706,008 Water and sewer system infrastructure -58,379,952 58,379,952 Less: Accumulated depreciation (74,815,551)(41,562,788)(116,378,339) Total Assets 97,811,658 48,235,242 146,046,900 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding 78,829 -78,829 Total Deferred Outflows of Resources 78,829 -78,829 LIABILITIES Accounts payable 1,546,825 699,953 2,246,778 Accrued wages 1,232,510 108,147 1,340,657 Development deposits 1,518,880 24,759 1,543,639 Due to fiduciary funds 3,762 -3,762 Noncurrent Liabilities Due within one year 1,198,639 -1,198,639 Due in more than one year 11,945,248 332,942 12,278,190 Total Liabilities 17,445,864 1,165,801 18,611,665 DEFERRED INFLOWS OF RESOURCES Property taxes levied for a future period 14,633,082 -14,633,082 Total Deferred Inflows of Resources 14,633,082 -14,633,082 NET POSITION Net investment in capital assets 51,011,919 35,553,648 86,565,567 Restricted for Road construction 1,568,379 -1,568,379 Capital projects 228,618 -228,618 Employee pension benefits 615,225 -615,225 Unrestricted 12,387,400 11,515,793 23,903,193 TOTAL NET POSITION $65,811,541 $47,069,441 $112,880,982 See accompanying notes to financial statements. Page 19 VILLAGE OF BUFFALO GROVE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2013 Program Revenues Functions/Programs Expenses Charges for Services Operating Grants and Contributions Governmental Activities General government $6,567,545 $1,207,504 $- Public safety 21,964,989 1,498,819 164,138 Public works 15,091,414 82,393 997,371 Interest and fiscal charges 374,511 -- Total Governmental Activities 43,998,459 2,788,716 1,161,509 Business-type Activities Water and Sewerage 8,079,364 8,692,812 - Refuse Service 902,811 1,040,878 - Arboretum Golf 1,781,192 1,178,368 - Buffalo Grove Golf 1,161,555 1,072,499 - Total Business-type Activities 11,924,922 11,984,557 - Total $55,923,381 $14,773,273 $1,161,509 General Revenues Taxes Property Sales and home rule Income and use Telecommunications taxes Utility Property transfer Other Investment income Miscellaneous Total General Revenues Transfers Change in net position NET POSITION - Beginning of Year (as restated) NET POSITION - END OF YEAR See accompanying notes to financial statements. Page 20 Net (Expenses) Revenues and Changes in Net Position Governmental Activities Business-type Activities Totals $(5,360,041)$-$(5,360,041) (20,302,032)-(20,302,032) (14,011,650)-(14,011,650) (374,511)-(374,511) (40,048,234)-(40,048,234) -613,448 613,448 -138,067 138,067 -(602,824)(602,824) -(89,056)(89,056) -59,635 59,635 (40,048,234)59,635 (39,988,599) 14,504,750 -14,504,750 7,803,749 -7,803,749 4,737,656 -4,737,656 1,943,811 -1,943,811 2,629,997 -2,629,997 760,164 -760,164 1,052,788 -1,052,788 54,522 12,455 66,977 1,506,994 -1,506,994 34,994,431 12,455 35,006,886 951,111 (951,111)- (4,102,692)(879,021)(4,981,713) 69,914,233 47,948,462 117,862,695 $65,811,541 $47,069,441 $112,880,982 See accompanying notes to financial statements. Page 21 VILLAGE OF BUFFALO GROVE BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2013 General Fund Motor Fuel Tax Nonmajor Governmental Funds Totals ASSETS Cash and equivalents $11,332,365 $2,094,603 $111,703 $13,538,671 Investments 6,726,765 --6,726,765 Receivables Property taxes 13,736,069 -897,013 14,633,082 Municipal sales tax 2,342,220 --2,342,220 Illinois income tax 1,696,728 --1,696,728 Motor fuel tax -85,898 -85,898 Telecommunication tax 480,900 --480,900 Food and beverage tax 83,983 --83,983 Utility tax 302,580 --302,580 Interest 7,782 --7,782 Other 13,935 -317,251 331,186 Due from other funds 733,163 --733,163 Due from fiduciary funds 214,594 --214,594 Inventory 82,559 --82,559 Deposits 479,840 --479,840 TOTAL ASSETS $38,233,483 $2,180,501 $1,325,967 $41,739,951 See accompanying notes to financial statements. Page 22 General Fund Motor Fuel Tax Nonmajor Governmental Funds Totals LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $641,830 $612,122 $292,873 $1,546,825 Accrued wages 1,232,028 -482 1,232,510 Development deposits 1,518,880 --1,518,880 Due to fiduciary funds 3,762 --3,762 Due to other funds --733,163 733,163 Total Liabilities 3,396,500 612,122 1,026,518 5,035,140 Deferred Inflows of Resources Property taxes levied for a future period 13,736,069 -897,013 14,633,082 Unavailable revenue - income taxes 635,708 --635,708 Total Deferred Inflows of Resources 14,371,777 -897,013 15,268,790 Fund Balances (Deficit) Nonspendable for inventory 82,559 --82,559 Nonspendable for deposits 479,840 --479,840 Restricted for road construction -1,568,379 -1,568,379 Restricted for capital project --228,618 228,618 Restricted for employee pension benefits 162,274 --162,274 Committed for capital replacement 7,345,420 --7,345,420 Assigned to parking lot operations --101,213 101,213 Unassigned (deficit)12,395,113 -(927,395)11,467,718 Total Fund Balances (deficit)20,465,206 1,568,379 (597,564)21,436,021 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $38,233,483 $2,180,501 $1,325,967 $41,739,951 See accompanying notes to financial statements. Page 23 VILLAGE OF BUFFALO GROVE RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION As of December 31, 2013 Total Fund Balances - Governmental Funds $21,436,021 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Land 35,963,844 Construction in progress 222,057 Buildings 22,595,602 Land Improvements 3,179,774 Equipment and vehicles 12,500,185 Streets and storm sewers 56,706,008 Less: Accumulated depreciation (74,815,551) Some receivables that are not currently available are reported as unavailable revenues in the fund financial statements but are recognized as revenue when earned in the government-wide statements.635,708 Deferred charge on refunding of debt is reported as a deferred outflows of resources in the statement of net position, but does not provide current financial resources.78,829 Net pension asset reported in the statement of net position does not provide current financial resources and, therefore, is not reported as an asset in the governmental funds 452,951 Some liabilities, including long-term debt, are not due and payable in the current period and therefore, are not reported in the funds. Bonds payable (11,340,000) Compensated absences (1,179,934) Net other post-employment obligation (425,400) Unamortized debt premium (198,553) NET POSITION OF GOVERNMENTAL ACTIVITIES $65,811,541 See accompanying notes to financial statements. Page 24 VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2013 General Motor Fuel Tax Nonmajor Governmental Funds Totals REVENUES Property $11,980,077 $-$2,524,673 $14,504,750 Other taxes 19,234,009 -6,356 19,240,365 Charges for services 1,009,877 -991 1,010,868 Fines and fees 1,498,819 -148,545 1,647,364 Licenses and permits 294,622 --294,622 Intergovernmental -997,371 -997,371 Interest 54,379 143 -54,522 Miscellaneous income 1,019,029 187,582 300,383 1,506,994 Total Revenues 35,090,812 1,185,096 2,980,948 39,256,856 EXPENDITURES Current General government 5,721,727 -743,909 6,465,636 Public safety 21,414,256 -391,654 21,805,910 Public works 5,839,292 5,684,477 654,936 12,178,705 Capital Outlay --1,347,276 1,347,276 Debt Service Principal --940,000 940,000 Interest --385,395 385,395 Total Expenditures 32,975,275 5,684,477 4,463,170 43,122,922 Excess (deficiency) of revenues over expenditures 2,115,537 (4,499,381)(1,482,222)(3,866,066) OTHER FINANCING SOURCES (USES) Transfers in 1,007,573 -1,111,740 2,119,313 Transfers out (1,271,961)-(162,274)(1,434,235) Total Other Financing Sources (Uses)(264,388)-949,466 685,078 Net Change in Fund Balances 1,851,149 (4,499,381)(532,756)(3,180,988) FUND BALANCES (DEFICIT) - Beginning of Year (as restated)18,614,057 6,067,760 (64,808)24,617,009 FUND BALANCES (DEFICIT) - END OF YEAR $20,465,206 $1,568,379 $(597,564)$21,436,021 See accompanying notes to financial statements. Page 25 VILLAGE OF BUFFALO GROVE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2013 Net change in fund balances - total governmental funds $(3,180,988) 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 net position the cost of these assets is capitalized and they are depreciated over their estimated useful lives and reported as depreciation expense in the statement of activities. Capital outlay is reported as an expenditure in the fund financial statements but is capitalized in the government-wide financial statements 1,347,276 Some items reported as capital outlay were not capitalized (1,054,065) Depreciation is reported in the government-wide financial statements (2,448,083) Receivables not currently available are reported as revenue when collected or currently available in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements.(312,200) Debt issued provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Principal repaid 940,000 Premiums and other items from bond issuance are reported currently in the fund statements, but amortized over the bond life in the statement of activities. Debt premium 18,050 Deferred charge on refunding (7,166) Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Compensated absences 291,348 Net other post employment benefit obligation (50,791) Net pension asset (96,103) Internal service funds are used by management to charge self insurance costs to individual funds. The change in net position of the internal service fund reported with governmental activities.450,030 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $(4,102,692) See accompanying notes to financial statements. Page 26 VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2013 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals ASSETS Current Assets Cash and equivalents $1,473,674 $850 $507,753 $1,982,277 Investments 1,589,366 --1,589,366 Receivables Accounts - water and sewer 1,297,677 --1,297,677 Interest 2,133 --2,133 Other -16,553 86,599 103,152 Inventory -14,893 27,308 42,201 Total Current Assets 4,362,850 32,296 621,660 5,016,806 Noncurrent Assets Capital Assets Land -5,219,738 978,776 6,198,514 Land improvements -1,516,051 450,437 1,966,488 Construction in progress 366,231 --366,231 Buildings and improvements -8,421,522 1,862,837 10,284,359 Machinery, equipment and furnishings --94,510 94,510 Water and sewer infrastructure 58,379,952 --58,379,952 Less: Accumulated depreciation (32,399,877)(6,970,882)(2,192,029)(41,562,788) Other Assets Deposits 176,465 --176,465 Investment in joint venture 7,314,705 --7,314,705 Total Noncurrent Assets 33,837,476 8,186,429 1,194,531 43,218,436 Total Assets 38,200,326 8,218,725 1,816,191 48,235,242 See accompanying notes to financial statements. Page 27 Governmental Activities - Internal Service Fund $- - - - - - - - - - - - - - - - - - See accompanying notes to financial statements. Page 28 VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2013 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals LIABILITIES Current Liabilities Accounts payable $673,225 $12,170 $14,558 $699,953 Accrued wages 76,273 15,431 16,443 108,147 Development deposits 24,759 --24,759 Total Current Liabilities 774,257 27,601 31,001 832,859 Noncurrent Liabilities Long-Term Debt IEPA loan payable 173,618 --173,618 Compensated absences 23,129 94,269 41,926 159,324 Total Noncurrent Liabilities 196,747 94,269 41,926 332,942 Total Liabilities 971,004 121,870 72,927 1,165,801 NET POSITION Net investment in capital assets 26,172,688 8,186,429 1,194,531 35,553,648 Unrestricted (deficit)11,056,634 (89,574)548,733 11,515,793 TOTAL NET POSITION $37,229,322 $8,096,855 $1,743,264 $47,069,441 See accompanying notes to financial statements. Page 29 Governmental Activities - Internal Service Fund $- - - - - - - - - - $- See accompanying notes to financial statements. Page 30 VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2013 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals OPERATING REVENUES Water and sewer charges $8,664,436 $-$-$8,664,436 Daily greens fee and memberships -803,223 705,447 1,508,670 Merchandise sales -54,391 65,006 119,397 Connection and recapture fees 28,376 --28,376 Cart, club, and other rentals -263,832 201,010 464,842 Driving range fees --57,012 57,012 SW ANCC user fees --1,040,878 1,040,878 Miscellaneous -56,922 44,024 100,946 Health premiums ---- Total Operating Revenues 8,692,812 1,178,368 2,113,377 11,984,557 OPERATING EXPENSES Water operations 1,591,315 --1,591,315 Sewer operations 3,746,598 --3,746,598 Water purchases 1,652,945 --1,652,945 Golf operations -1,247,399 1,071,039 2,318,438 Cost of sales - pro shop -45,137 57,733 102,870 Refuse operations --879,365 879,365 Other --23,446 23,446 Loss from joint venture 5,464 --5,464 Depreciation 1,083,042 488,656 32,783 1,604,481 Health services ---- Total Operating Expenses 8,079,364 1,781,192 2,064,366 11,924,922 Operating Income (Loss)613,448 (602,824)49,011 59,635 NONOPERATING REVENUES (EXPENSES) Interest 12,444 11 -12,455 Total Nonoperating Revenues (Expenses)12,444 11 -12,455 Income (Loss) Before Transfers 625,892 (602,813)49,011 72,090 TRANSFERS Transfers in -58,960 15,228 74,188 Transfers out (1,025,299)--(1,025,299) Total Transfers (1,025,299)58,960 15,228 (951,111) Change in Net Position (399,407)(543,853)64,239 (879,021) NET POSITION - Beginning of Year (as restated)37,628,729 8,640,708 1,679,025 47,948,462 NET POSITION - END OF YEAR $37,229,322 $8,096,855 $1,743,264 $47,069,441 See accompanying notes to financial statements. Page 31 Governmental Activities - Internal Service Fund $- - - - - - - - 430,013 430,013 - - - - - - - - - 246,016 246,016 183,997 - - 183,997 266,033 - 266,033 450,030 (450,030) $- See accompanying notes to financial statements. Page 32 VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOW S PROPRIETARY FUNDS For the Year Ended December 31, 2013 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals CASH FLOWS FROM OPERATING AC TIVITIES Received from customers $8,323,069 $1,161,815 $2,113,377 $11,598,261 Paid to suppliers for goods and services (6,465,721)(760,628)(1,523,785)(8,750,134) Paid to employees for services (959,626)(453,085)(464,506)(1,877,217) Net Cash Flows From Operating Activities 897,722 (51,898)125,086 970,910 CASH FLOWS FROM INVESTING AC TIVITIES Investments sold and matured 162,229 --162,229 Investment income 28,488 11 -28,499 Net Cash Flows From Investing Activities 190,717 11 -190,728 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating transfers (1,025,299)52,737 13,681 (958,881) Net Cash Flows From Noncapital Financing Activities (1,025,299)52,737 13,681 (958,881) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of capital assets (625,586)--(625,586) IEPA loan proceeds received 173,618 --173,618 Net Cash Flows From Capital and Related Financing Activities (451,968)--(451,968) Net Change in Cash and Cash Equivalents (388,828)850 138,767 (249,211) CASH AND CASH EQUIVALENTS - Beginning of Year 1,862,502 -368,986 2,231,488 CASH AND CASH EQUIVALENTS - END OF YEAR $1,473,674 $850 $507,753 $1,982,277 See accompanying notes to financial statements. Page 33 Governmental Activities - Internal Service Fund $430,013 (246,396) - 183,617 - - - (183,617) (183,617) - - - - - $- See accompanying notes to financial statements. Page 34 VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOW S PROPRIETARY FUNDS For the Year Ended December 31, 2013 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss)$613,448 $(602,824)$49,011 $59,635 Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation 1,083,042 488,656 32,783 1,604,481 Changes in assets and liabilities Accounts receivable (369,743)(16,553)-(386,296) Accounts payable (480,218)(3,194)10,801 (472,611) Accrued salaries 29,149 (6,872)(4,283)17,994 Deposits (1,085)--(1,085) Inventory -(5,380)(5,152)(10,532) Compensated absences 23,129 94,269 41,926 159,324 NET CASH FLOWS FROM OPERATING ACTIVITIES $897,722 $(51,898)$125,086 $970,910 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Loss on investment in joint venture $(5,464)$-$- See accompanying notes to financial statements. Page 35 Governmental Activities - Internal Service Fund $183,997 - - (380) - - - - $183,617 $- See accompanying notes to financial statements. Page 36 VILLAGE OF BUFFALO GROVE STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS As of December 31, 2013 Pension Trusts Agency Fund ASSETS Cash $4,544,861 $493,406 Investments U.S. treasuries 17,734,653 - U.S. agencies 15,299,349 - Mutual funds - other than bond funds 31,349,016 - Negotiable certificates of deposit 450,037 - Equity securities 23,153,685 - Municipal bonds 2,356,426 - Corporate bonds 3,027,218 - Receivables Interest 121,505 - Due from primary government 3,762 - Total Assets 98,040,512 493,406 LIABILITIES Accounts payable $9,748 $- Due to primary government 214,594 - Due to other governments -493,406 Total Liabilities 224,342 493,406 NET POSITION Held in trust for pension benefits (a schedule of funding progress is presented in the required supplementary information)$97,816,170 $- See accompanying notes to financial statements. Page 37 VILLAGE OF BUFFALO GROVE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Year Ended December 31, 2013 Pension Trusts AD DITIONS Contributions Employer $4,278,317 Plan members 1,061,347 Total Contributions 5,339,664 Investment income Interest 819,905 Net appreciation in fair value of investments 10,844,598 Total Investment Income 11,664,503 Less Investment expense 196,999 Net Investment Income 11,467,504 Total Additions 16,807,168 DEDUCTIONS Administration 143,393 Pension benefits and refunds 4,176,659 Total Deductions 4,320,052 Change in Net Position 12,487,116 NET POSITION - Beginning of Year (as restated)85,329,054 NET POSITION - END OF YEAR $97,816,170 See accompanying notes to financial statements. Page 38 VILLAGE OF BUFFALO GROVE INDEX TO NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE Page I Summary of Significant Accounting Policies 40 A.Reporting Entity 40 B.Government-W ide and Fund Financial Statements 41 C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation 44 D.Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position or Equity 45 1.Deposits and Investments 45 2.Receivables 47 3.Inventories 48 4.Capital Assets 48 5.Deferred Outflows of Resources 49 6.Compensated Absences 49 7.Long-Term Obligations 49 8.Deferred Inflows of Resources 9. Equity Classifications 50 II Stewardship, Compliance, and Accountability 53 A.Excess Expenditures Over Appropriations 53 B.Deficit Balances 53 III Detailed Notes on All Funds 54 A.Deposits and Investments 54 B.Receivables 57 C.Capital Assets 58 D.Interfund Receivables/Payables and Transfers 60 E.Long-Term Obligations 62 F.Lease Disclosures 64 G.Restatement of Fund Balances/Net Position 65 IV Other Information 67 A.Employees' Retirement System 67 B.Risk Management 75 C.Commitments and Contingencies 76 D.Joint Ventures 77 E.Other Postemployment Benefits 79 F.Effect of New Accounting Standards on Current-Period Financial Statements 82 G.Pledged Revenue 83 See accompanying notes to financial statements. Page 39 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Village of Buffalo Grove, Illinois (the Village) was incorporated in 1958. The Village is a home-rule municipality, under the 1970 Illinois Constitution, located in both Lake County, Illinois and Cook County, Illinois. The Village operates under a Council-Manager form of government and provides the following services as authorized by its charter: public safety (police and fire protection), sanitation (water and sewer), building and zoning, engineering, recreation, civil defense and overall administration. The accounting policies of the Village of Buffalo Grove, Illinois conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The accepted standard- setting body for establishing governmental accounting and financial reporting principles is the Governmental Accounting Standards Board (GASB). A.REPORTING ENTITY This report includes all of the funds of the Village. The reporting entity for the Village consists of the primary government and its component units. Component units are legally separate organizations for which the primary government is financially accountable or other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading. The Village has not identified any organizations that meet this criteria. The Police Pension Employees Retirement System (PPERS) is established for the Village's police employees. PPERS functions for the benefit of these employees and is governed by a five-member pension board. Two members appointed by the Village’s President, one pension beneficiary elected by the membership, and two police employees elected by the membership constitute the pension board. The Village and the PPERS participants are obligated to fund all PPERS costs based upon actuarial valuations. The State of Illinois is authorized to establish benefit levels and the Village is authorized to approve the actuarial assumptions used in the determination of contribution levels. Although it possesses many characteristics of a legally separate government, PPERS is reported as if it were part of the primary government because its sole purpose is to finance and administer the pensions of the Village’s police employees and because of the fiduciary nature of such activities. PPERS is reported as a pension trust fund and the data for the pension is included in the government's fiduciary fund financial statements. No separate annual financial report is issued for the PPERS. The Firefighters’ Pension Employees Retirement System (FPERS) is established for the Village's firefighters. FPERS functions for the benefit of these employees and is governed by a five-member pension board. Two members appointed by the Village’s President, one pension beneficiary elected by the membership; and two fire employees elected by the membership constitute the pension board. The Village and the FPERS participants are obligated to fund all FPERS costs based upon actuarial valuations. The State of Illinois is authorized to establish benefit levels and the Village is authorized to approve the actuarial assumptions used in the determination of contribution levels. Although it possesses many of the characteristics of a legally separate government, FPERS is reported as if it were part of the primary government because its sole purpose is to finance and administer the pensions of the Village’s firefighters because of the fiduciary nature of such activities. FPERS is reported as a pension trust fund and the data for the pension is included in the government's fiduciary fund financial statements. No separate annual financial report is issued for the FPERS. Page 40 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds.The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The Village does not allocate indirect expenses to functions in the statement of activities. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. Fund Financial Statements Financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts, which constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position/fund equity, revenues, and expenditures/expenses. Page 41 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) Funds are organized as major funds or nonmajor funds within the governmental and proprietary statements. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the Village or meets the following criteria: a. Total assets/deferred outflows of resources, liabilities/deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type, and b. The same element of the individual governmental or enterprise fund that met the 10% test is at least 5% of the corresponding total for all governmental and enterprise funds combined. c. In addition, any other governmental or enterprise fund that the Village believes is particularly important to financial statement users may be reported as a major fund. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The Village reports the following major governmental funds: General Fund - accounts for the Village's primary operating activities. It is used to account for and report all financial resources except those accounted for and reported in another fund. Motor Fuel Tax Fund - to account for allotment of motor fuel taxes legally restricted for road construction. The Village reports the following major enterprise funds: Water and Sewerage Utility - accounts for operations of the water and sewerage system. Arboretum Golf Fund - accounts for operations of the Arboretum golf course. All activities necessary to provide the service are accounted for in this fund including, but not limited to, administration, operations, maintenance and related debt service. The Village reports the following nonmajor governmental and enterprise funds: Special Revenue Funds - used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes (other than debt service or capital projects). Illinois Municipal Retirement Fund Metra Parking Lot Fund Page 42 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) Debt Service Fund - used to account for and report financial resources that are restricted, committed, or assigned to expenditure for the payment of general long-term debt principal, interest, and related costs. Debt Service Fund Capital Projects Funds - used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Street Maintenance Fund Facilities Development Fund Enterprise Funds - used to account for and report any activity for which a fee is charged to external uses for goods or services, and must be used for activities which meet certain debt or cost recovery criteria. Buffalo Grove Golf Fund Refuse Service Fund In addition, the Village reports the following fund types: Internal Service Fund - used to account for and report the financing of goods or services provided by one department or agency to other departments or agencies of the Village, or to other governmental units, on a cost-reimbursement basis. Health Insurance Fund Pension (and Other Employee Benefit) Trust Funds - used to account for and report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, other postemployment benefit plans, or other employee benefit plans. Police Pension Fund Firefighters' Pension Fund Agency Fund - used to account for and report assets held by the Village in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units. School and Park Donations Fund Page 43 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C.MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Government-Wide Financial Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and deferred inflows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are collected within 90 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. Property taxes are recorded in the year levied as receivables and deferred inflows. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. Intergovernmental aids and grants are recognized as revenues in the period the Village is entitled the resources and the amounts are available. Amounts owed to the Village which are not available are recorded as receivables and unavailable revenues. Amounts received before eligibility requirements (excluding time) are met are recorded as liabilities. Amounts received in advance of meeting time requirements are recorded as deferred inflows. Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, special assessments and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. Proprietary and fiduciary fund financial statements (other than agency funds) are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting, and do not have a measurement focus. Page 44 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C.MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (cont.) Fund Financial Statements (cont.) The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Water and Sewer fund are charges to customers for sales and services. Special assessments are recorded as receivables and contribution revenue when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. All Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY 1.Deposits and Investments For purposes of the statement of cash flows, the Village considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Illinois Statutes authorize the Village to make deposits/investments in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. Agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States or agreement to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, and the Illinois Funds Investment Pool. Pension funds 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, and the Illinois insurance company general and separate accounts, mutual funds meeting certain requirements, equity securities, and corporate bonds meeting certain requirements. Pension funds with net assets in excess of $10,000,000 and an appointed investment advisor may invest an additional portion of its assets in common and preferred stocks and mutual funds, that meet certain requirements. The police pension fund’s investment policy allows investments in all of the above listed accounts, but does exclude any repurchase agreements. The firefighters pension fund allows funds to be invested in any type of security authorized by the Illinois Pension Code. Page 45 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) The Village, Police and Firefighters' pensions have adopted an investment policy. That policy follows the state statute for allowable investments. Interest Rate Risk The Village's investment policy protects against fair value losses resulting from rising interest rates by diversifying its investment portfolio to prevent over-concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. The Village does not have a formal policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk The Village's investment policy applies the "prudent person" standard in managing its investment portfolio. As such, all investments are made with such judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The Village's investment policy also limits investments in commercial paper to the highest rating classifications, as established by at least two of the four major rating services, and which mature not later than 180 days from the purchase date. Such purchases may not exceed 10% of the issuer corporation's outstanding obligations. Concentration of Credit Risk The Village limits the amount that can be invested in commercial paper to one-third of the Village's total investments. Custodial Credit Risk - Deposits The Village's investment policy requires securing deposit collateral from depository institutions when deposits are in excess of FDIC limits. The amount of deposits not collateralized or insured by an agency of the federal government shall not exceed 75% of the capital stock and surplus of a banking institution. These values shall be reviewed on a quarterly basis comparing actual deposits not insured or collateralized against the capital stock and surplus measure. Values shall be taken from published regulatory agency reports required by either the Comptroller of the Currency or the Commissioner of Banks and Trust Companies. Page 46 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) If deposits are maintained with a savings and loan association, the amount of deposits not collateralized or insured shall not exceed 75% of the net worth of the institution as defined and reported to the regulatory agencies. The police and Firefighters’ Pension investment policies limit exposure to deposit custodial credit risk by requiring deposits in excess of FDIC insurable limits to be collateralized. Custodial Credit Risk - Investments The Village's investment policy requires all investments and investment collateral to be held in safekeeping by a third party custodial institution as designated by the Treasurer in the Village's name. Direct investments guaranteed by the United States or an agency of the United States do not require collateral. Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank statement balance and carrying value is due to outstanding checks and/or deposits in transit. Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allows governments within the State to pool their funds for investment purposes. Illinois Funds is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of 1940. Investments in Illinois Funds are valued at Illinois Fund’s share price, the price for which the investments could be sold. Illinois Metropolitan Investment Fund (IMET) is a not-for-profit investment trust formed pursuant to the Illinois Municipal Code and managed by a Board of Trustees elected from the participating members. IMET is not registered with the SEC as an investment company. Investments in IMET are valued at IMET's share price, the price for which the investment could be sold. See Note III. A. for further information. 2.Receivables Property taxes for levy year 2013 attaches as an enforceable lien on January 1, 2013, on property values assessed as of the same date. Taxes are levied by December following the lien date (by passage of a Tax Levy Ordinance). Page 47 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 2.Receivables (cont.) Tax bills for levy year 2012 are prepared by Cook County and issued on or about February 1, 2013 and July 1, 2013, and are payable in two installments, on or about March 1, 2013 and August 1, 2013 or within 30 days of the tax bills being issued. Tax bills for levy year 2012 are prepared by Lake County and issued on or about June 1, 2013 and August 1, 2013, and are payable in two installments, on or about July 1, 2013 and September 1, 2013 or within 30 days of the tax bills being issued. The counties collect such taxes and remits them periodically. The 2013 property tax levy is recognized as a receivable and deferred inflow in fiscal 2013. As the taxes become available to finance current expenditures, they are recognized as revenues. At December 31, 2013, the property taxes receivable and deferred inflow consisted of the estimated amount collectible from the 2013 levy. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as "due to and from other funds." Long-term interfund loans (noncurrent portion) are reported as "advances from and to other funds." Interfund receivables and payables between funds within governmental activities are eliminated in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the governmental-wide financial statements as internal balances. In the governmental fund financial statements, advances to other funds are offset equally by a nonspendable fund balance account which indicates that they do not constitute expendable available financial resources and, therefore, are not available for appropriation or by a restricted fund balance account, if the funds will ultimately be restricted when the advance is repaid. 3.Inventories Governmental fund inventories, if material, are recorded at cost based on the FIFO method using the consumption method of accounting. Inventories consist of golf pro shop merchandise and central garage fuel reserves. 4.Capital Assets Government-Wide Statements Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements. Capital assets are defined by the government as assets with an initial cost of more than $10,000 and an estimated useful life in excess of 1 year. All capital assets are valued at historical cost, or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation. Page 48 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 4.Capital Assets (cont.) Government-Wide Statements (cont.) Depreciation and amortization of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation and amortization reflected in the statement of net position. Depreciation and amortization is provided over the assets' estimated useful lives using the straight-line method. The range of estimated useful lives by type of asset is as follows: Buildings 20 Years Well and System Improvements 5 - 50 Years Furniture and Equipment 2 - 10 Years Vehicles 2 - 12 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements. 5. Deferred Outflows of Resources A deferred outflow of resources represents a consumption of net position that applies to a future period and will not be recognized as an outflow of resources (expense/expenditure) until that future time. 6.Compensated Absences Vacation pay does vest; employees may carry over vacation time equivalent of one full year's allowance. All vacation hours carried over from the previous year must be used in the current year or be subject to forfeit. Terminated employees are reimbursed for any accumulated and earned vacation pay. The amounts of such accumulated vacation benefits are not material. In the event of termination, any vested amounts due to Village employees for accumulated unused sick leave will be paid to ICMA Retirement Corporation based on the formula set forth in the Village's personnel manual. Except for those amounts for known retirements in the upcoming year, accrued amounts are generally considered to be due after one year. Amounts are reported as liabilities in the Government-wide Statement of Net Position. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits. A liability for these amounts is reported in governmental funds only if they have mature, for example, as a result of employee resignations or retirements and are payable with expendable resources. Page 49 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 7.Long-Term Obligations All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of bonds payable. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) are reported as other financing sources and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. For the government-wide statements and proprietary fund statements, bond premiums and discounts are amortized over the life of the issue using the effective interest method. Gains or losses on prior refundings are amortized over the remaining life of the old debt, or the life of the new debt, whichever is shorter. The balance at year end for premiums/discounts is shown as an increase or decrease in the liability section of the statement of net position. The balance at year end for gains/losses is shown as a deferred outflow/inflow in the statement of net position. 8.Deferred Inflows of Resources A deferred inflow of resources represents an acquisition of net position that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that future time. Page 50 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 9. Equity Classifications Government-Wide Statements Equity is classified as net position and displayed in three components: a. Net investment in capital assets - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position - Consists of net position with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position - All other net positions that do not meet the definitions of "restricted" or "net investment in capital assets." When both restricted and unrestricted resources are available for use, it is the Village's policy to use restricted resources first, then unrestricted resources as they are needed. Fund Statements Governmental fund equity is classified as fund balance and displayed as follows: a. Nonspendable - Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained intact. b. Restricted - Consists of fund balances with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. c. Committed - Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (ordinance) of the Village Board. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the Village Board that originally created the commitment. Page 51 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 9. Equity Classifications (cont.) Fund Statements (cont.) d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific purposes that are not considered restricted or committed. Fund balance may be assigned through the following; 1) The Village has adopted a financial policy authorizing the Director of Finance to assign amounts for a specific purpose. 2) All remaining positive spendable amounts in governmental funds, other than the general fund, that are neither restricted nor committed. Assignments may take place after the end of the reporting period. e. Unassigned - Includes residual positive fund balance within the general fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those purposes. Proprietary fund equity is classified the same as in the government-wide statements. The Village considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents / contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the Village would first use committed, then assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The Village has a formal minimum fund balance policy. That policy is to maintain fund balance in the General Fund to fund operations for a period of at least three months. The amount in the General Fund is adjusted annually with the adoption of the annual budget and is calculated as three months (25 percent) of General Fund expenditures (excluding transfers to fund capital projects and pensions). The balance at year end was $8,877,777, and is included in unassigned General Fund fund balance. See Note III. for further information. Page 52 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE II - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A.EXCESS EXPENDITURES OVER APPROPRIATIONS Funds Budgeted Expenditures Actual Expenditures Excess Expenditures Over Budget Motor Fuel Tax Fund $4,750,000 $5,684,477 $934,477 IMRF Fund 1,586,750 1,598,101 11,351 Metra Parking Lot Fund 168,233 192,398 24,165 Arboretum Golf Fund 1,222,310 1,292,536 70,226 The Village controls expenditures at the department level. Some individual departments experienced expenditures which exceeded appropriations. The detail of those items can be found in the Village's year- end budget to actual report. B.DEFICIT BALANCES Generally accepted accounting principles require disclosure of individual funds that have deficit balances at year end. As of December 31, 2013, the following individual funds held a deficit balance: Fund Amount Reason Debt Service $(11,819)Expenditures exceeded revenues Facilities Development (915,576)Expenditures exceeded revenues Page 53 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS A.DEPOSITS AND INVESTMENTS The Village's deposits and investments at year end were comprised of the following: Carrying Value Statement Balances Associated Risks Deposits $7,883,231 $8,766,874 Custodial Credit Risk - Deposits Money market mutual funds 4,674,633 4,674,633 Credit Risk Illinois funds 5,363,938 5,363,938 Credit Risk IMET - money market 1,591,667 1,591,667 Credit Risk IMET - 1-3 year fund 3,026,127 3,026,127 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk U.S. treasuries 17,734,653 17,734,653 Custodial Credit Risk - Investments, Interest Rate Risk U.S. agencies 16,049,792 16,049,792 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Mutual funds - other than bond funds 31,349,016 31,349,016 N/A Negotiable certificates of deposit 6,032,644 6,032,644 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Equity securities 23,153,685 23,153,685 Custodial Credit Risk - Investments, Concentration of Credit Risk Municipal bonds 2,356,426 2,356,426 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Corporate bonds 3,027,218 3,027,218 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Petty cash 2,700 -N/A Total Deposits and Investments $122,245,730 $123,126,673 Page 54 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) Reconciliation to financial statements Per statement of net position Cash and equivalents $15,520,948 Investments 8,316,131 Per statement of net position - fiduciary funds Cash - pension trusts 4,544,861 Cash - agency 493,406 U.S. treasuries 17,734,653 U.S. agencies 15,299,349 Mutual funds - other than bond funds 31,349,016 Negotiable certificates of deposits 450,037 Equity securities 23,153,685 Municipal bonds 2,356,426 Corporate bonds 3,027,218 Total Deposits and Investments $122,245,730 Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and savings accounts (including NOW accounts) and $250,000 for demand deposit accounts (interest-bearing and noninterest-bearing). In addition, if deposits are held in an institution outside of the state in which the government is located, insured amounts are further limited to a total of $250,000 for the combined amount of all deposit accounts. Custodial Credit Risk Deposits Custodial credit risk is the risk that in the event of a financial institution failure, the Village's deposits may not be returned to the Village. The Village does not have any deposits exposed to custodial credit risk. Investments For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Village will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Village does not have any investments exposed to custodial credit risk. Page 55 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. As of December 31, 2013, the Village's investments were rated as follows: Investment Type Standard & Poors Moody's Investors Services Money Market Mutual Funds AAA Not Rated Illinois Funds AAA Not Rated Illinois Metropolitan Investment Fund AAA Not Rated U.S. agencies AAA AA+ Negotiable certificates of deposit Not Rated Not Rated Municipal Bonds AA2, AA3 A, Not Rated Corporate Bonds AA2, AAA3 AA+, AA- Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the value of an investment. As of December 31, 2013, the Village's investments were as follows: Village Maturity Investment Type Fair Value Less than one year 1 - 5 years U.S. agencies $750,443 $-$750,443 Negotiable certificates of deposit 5,582,607 4,267,352 1,315,255 Totals $6,333,050 $4,267,352 $2,065,698 Page 56 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) Interest Rate Risk (cont.) Police Pension Maturity Investment Type Fair Value Less than one year 1-5 years 6-10 years More than 10 years U.S. treasuries $14,956,859 $1,263,232 $9,192,978 $4,500,649 $- U.S. agencies 3,182,479 1,507,810 493,618 1,181,051 - Negotiable certificates of deposit 97,261 97,261 --- Corporate bonds 3,027,218 489,040 1,540,445 495,475 502,258 Totals $21,263,817 $3,357,343 $11,227,041 $6,177,175 $502,258 Firefighters' Pension Maturity Investment Type Fair Value Less than one year 1-5 years 6-10 years More than 10 years US treasuries $2,777,794 $-$1,676,534 $1,101,260 $- US agencies 12,116,870 881,209 4,993,777 6,241,884 - Negotiable certificates of deposit 352,776 352,776 --- Municipal bonds 2,356,426 100,094 1,100,350 976,772 179,210 Totals $17,603,866 $1,334,079 $7,770,661 $8,319,916 $179,210 See Note I.D.1. for further information on deposit and investment policies. B.RECEIVABLES All of the receivables on the balance sheet are expected to be collected within one year. Page 57 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) C.CAPITAL ASSETS Capital asset activity for the year ended December 31, 2013, was as follows: Beginning Balance Additions Deletions Ending Balance Governmental Activities Capital assets not being depreciated/amortized Land $35,963,844 $-$-$35,963,844 Construction in progress 102,205 119,852 -222,057 Total Capital Assets Not Being Depreciated/Amortized 36,066,049 119,852 -36,185,901 Capital assets being depreciated/amortized Buildings $22,595,602 $-$-$22,595,602 Equipment and vehicles 12,880,668 173,359 553,842 12,500,185 Land improvements 3,179,774 --3,179,774 Streets 19,040,719 --19,040,719 Storm sewers 37,665,289 --37,665,289 Total Capital Assets Being Depreciated/Amortized 95,362,052 173,359 553,842 94,981,569 Total Capital Assets 131,428,101 293,211 553,842 131,167,470 Less: Accumulated depreciation/amortization for Buildings (18,922,597)(542,588)-(19,465,185) Equipment and vehicles (8,875,438)(746,559)553,842 (9,068,155) Land improvements (149,958)(63,599)-(213,557) Streets (11,374,233)(368,452)-(11,742,685) Storm sewers (33,599,084)(726,885)-(34,325,969) Total Accumulated Depreciation/Amortization (72,921,310)(2,448,083)553,842 (74,815,551) Net Capital Assets Being Depreciated/Amortized 22,440,742 (2,274,724)-20,166,018 Total Governmental Activities Capital Assets, Net of Accumulated Depreciation/Amortization $58,506,791 $(2,154,872)$-$56,351,919 Page 58 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) C.CAPITAL ASSETS (cont.) Depreciation/amortization expense was charged to functions as follows: Governmental Activities General government $237,566 Public safety 249,710 Public works 1,960,807 Total Governmental Activities Depreciation/Amortization Expense $2,448,083 Beginning Balance Additions Deletions Ending Balance Business-type Activities Capital assets not being depreciated/amortized Land $6,198,514 $-$-$6,198,514 Construction in progress 51,657 366,231 51,657 366,231 Total Capital Assets Not Being Depreciated/Amortized 6,250,171 366,231 51,657 6,564,745 Capital assets being depreciated/amortized Buildings $10,284,359 $-$-$10,284,359 Land improvements 1,966,488 --1,966,488 Equipment 94,510 --94,510 Water/Sewer infrastructure 58,068,940 311,012 -58,379,952 Total Capital Assets Being Depreciated/Amortized 70,414,297 311,012 -70,725,309 Total Capital Assets 76,664,468 677,243 51,657 77,290,054 Less: Accumulated depreciation/amortization for Buildings (6,580,474)(521,439)-(7,101,913) Land improvements (1,966,488)--(1,966,488) Equipment (94,510)--(94,510) Water/Sewer infrastructure (31,316,835)(1,083,042)-(32,399,877) Total Accumulated Depreciation/Amortization (39,958,307)(1,604,481)-(41,562,788) Net Capital Assets Being Depreciated/Amortized 30,455,990 (1,293,469)-29,162,521 Business-type Capital Assets, Net of Accumulated Depreciation/Amortization $36,706,161 $(927,238)$51,657 $35,727,266 Page 59 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) D.INTERFUND RECEIVABLES/PAYABLES AND TRANSFERS Interfund Receivables/Payables The following is a schedule of interfund receivables and payables including any overdrafts on pooled cash and investment accounts: Receivable Fund Payable Fund Amount General Nonmajor Governmental $733,163 Total - Fund Financial Statements 733,163 Less: Fund eliminations (733,163) Total Internal Balances - Government-W ide Statement of Net Position $- All amounts are due within one year. The principal purpose of these interfunds is due to negative cash balances in certain funds and other cash related transactions. All remaining balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. For the statement of net position, interfund balances which are owed within the governmental activities or business-type activities are netted and eliminated. Page 60 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) D.INTERFUND RECEIVABLES/PAYABLES AND TRANSFERS (cont.) Transfers The following is a schedule of interfund transfers: Fund Transferred To Fund Transferred From Amount Principal Purpose Internal Service General $266,033 To close the Health Insurance fund Nonmajor Governmental General 931,740 To fund projects and debt service General Nonmajor Governmental 162,274 To close the IMRF fund General Water and Sewerage 845,299 Administrative expenses and funding of capital reserve Nonmajor Governmental Water and Sewerage 180,000 To fund debt service Arboretum Golf General 58,960 To eliminate negative cash Nonmajor Enterprise General 15,228 To eliminate negative cash Total - Fund Financial Statements 2,459,534 Less: Fund eliminations (1,508,423) Total Transfers - Government-W ide Statement of Activities $951,111 Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. For the statement of activities, interfund transfers within the governmental activities or business-type activities are netted and eliminated. Page 61 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) E.LONG-TERM OBLIGATIONS Long-term obligations activity for the year ended December 31, 2013, was as follows: Beginning Balance Increases Decreases Ending Balance Amounts Due Within One Year Governmental Activities Bonds Payable General obligation debt $12,280,000 $-$940,000 $11,340,000 $790,000 Premium 216,603 -18,050 198,553 - Sub-totals 12,496,603 -958,050 11,538,553 790,000 Other Liabilities Vested compensated absences 1,471,282 117,291 408,639 1,179,934 408,639 Other postemployment benefits 374,609 269,622 218,831 425,400 - Total Other Liabilities 1,845,891 386,913 627,470 1,605,334 408,639 Total Governmental Activities Long-Term Liabilities $14,342,494 $386,913 $1,585,520 $13,143,887 $1,198,639 Business-type Activities Bonds and Notes Payable IEPA loan payable $-$173,618 $-$173,618 $- Sub-totals -173,618 -173,618 - Other Liabilities Vested compensated absences -159,324 -159,324 - Total Other Liabilities -159,324 -159,324 - Total Business-type Activities Long-Term Liabilities $-$332,942 $-$332,942 $- General Obligation Debt All general obligation bonds payable are backed by the full faith and credit of the Village. Bonds in the governmental funds will be retired by future property tax levies or tax increments accumulated by the debt service fund. Page 62 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) E.LONG-TERM OBLIGATIONS (cont.) General Obligation Debt (cont.) Governmental Activities General Obligation Debt Date of Issue Final Maturity Interest Rates Original Indebtedness Balance December 31, 2013 General Obligation Bonds Series 2010A 5/6/2013 12/31/2020 2.0-4.0%$5,160,000 $2,740,000 General Obligation Bonds Series 2010B 5/6/2013 12/31/2025 2.5-3.85%2,600,000 2,600,000 General Obligation Bonds Series 2012 8/27/2012 6/30/2030 2.0-2.75%6,000,000 6,000,000 Total Governmental Activities - General Obligation Debt $11,340,000 Debt service requirements to maturity are as follows: Governmental Activities General Obligation Debt Years Principal Interest 2014 $790,000 $311,513 2015 510,000 294,813 2016 525,000 282,063 2017 545,000 266,313 2018 665,000 249,463 2019-2023 3,375,000 906,803 2024-2028 3,430,000 448,370 2029-2030 1,500,000 60,000 Totals $11,340,000 $2,819,338 IEPA Loan Payable The Village borrowed funds from the Illinois Environmental Protection Agency (IEPA) for the design, construction, and installation of various architectural, mechanical and electrical improvements to the Village's four existing pump stations. Under loan agreement #L17-4103, the Village can borrow up to $710,000 and has borrowed $173,618 as of December 31, 2013. The loan bears an interest rate of 2.295% per annum with a final maturity on June 1, 2033. The Village paid no principal during fiscal year 2013 and a debt service schedule has not yet been completed for the loan. Other Debt Information In the governmental activities, the Village's obligation for compensated absences and other postemployment benefits will be repaid from the General Fund. Page 63 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) E.LONG-TERM OBLIGATIONS (cont.) Prior-Year Defeasance of Debt In prior years, the Village defeased certain general obligation and other bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the Village's financial statements. At December 31, 2013, $2,855,000 of bonds outstanding are considered defeased. F. LEASE DISCLOSURES Lessee - Operating Leases The Village has commitments with non-Village entities to lease certain property. Future minimum rental commitments as of December 31, 2013 are as follows: Years Amount 2014 $117,014 2015 119,354 2016 121,741 2017 124,176 2018 126,660 2019-2023 672,326 2024-2028 238,993 Totals $1,520,264 Page 64 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) G.RESTATEMENT OF FUND BALANCES/NET POSITION Net position has been restated to correct an error in the accrual of the employer contribution receivables in the Police and Firefighters' Pension funds for the year ended December 31, 2012. The Village had recorded a receivable in the Police Pension Fund and the Firefighters' Pension Fund for the Village's contribution of the pension portion of the 2012 property tax levy. However, contributions were not due to the pension trust funds until such time as the taxes were collected. As the Village made no collections on the 2012 levy until 2013, no amount was due to the pension trust funds. The Village also recorded a corresponding payable within governmental activities. As a result, the employer contribution receivable, employer contribution revenue, governmental activities payable and net position were misstated as of December 31, 2012 in the Police Pension Fund, Firefighters' Pension Fund and governmental activities. Additionally, fund balances and net position have been restated to correct an error in the amount recorded relating to the Village's participation in the Intergovernmental Risk Management Agency (IRMA). In prior years, the Village was recording a prepaid item in excess of the amount it was a entitled to receive as a return of contribution related to its pool participation contract. The calculations to restate net position/fund balance and the changes in net position/fund balance are as follows: Police Pension Fund Police Pension net position - December 31, 2012 (as reported)$48,504,076 Less:Employer contributions receivable recorded in error (1,769,840) Net position - December 31, 2012 (as restated) $46,734,236 Firefighters' Pension Fund Firefighters' Pension net position - December 31, 2012 (as reported)$40,113,896 Less:Employer contributions receivable recorded in error (1,519,078) Net position - December 31, 2012 (as restated) $38,594,818 Pension Trust Funds Pension Trust net position - December 31, 2012 (as reported)$88,617,972 Less:Employer contributions receivable recorded in error (3,288,918) Net position - December 31, 2012 (as restated)$85,329,054 Page 65 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) G.RESTATEMENT OF FUND BALANCES/NET POSITION (cont.) Governmental Activities net position - December 31, 2012 (as reported)$67,732,297 Add:Employer contributions payable recorded in error 3,288,918 Less:Prepaid expenditure recorded in error (1,106,982) Net position - December 31, 2012 (as restated)$69,914,233 Net income of the prior year would have been increased (decreased) by $(458,959) Business Type Activities net position - December 31, 2012 (as reported)$48,357,870 Less:Prepaid expenditure recorded in error (409,408) Net position - December 31, 2012 (as restated)$47,948,462 Net income of the prior year would have been increased (decreased) by $(228,656) General Fund fund balance - December 31, 2012 (as reported)$19,721,039 Add:Prepaid expenditure recorded in error (1,106,982) Fund balance - December 31, 2012 (as restated)$18,614,057 Net income of the prior year would have been increased (decreased) by $(458,959) Water and Sewerage Fund net position - December 31, 2012 (as reported)$38,038,137 Add:Prepaid expenditure recorded in error (409,408) Net Position - December 31, 2012 (as restated)$37,628,729 Net income of the prior year would have been increased (decreased) by $(228,656) Page 66 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION A.EMPLOYEES' RETIREMENT SYSTEM Plan Descriptions The Village contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund (IMRF), an agent-multiple-employer public employee retirement system; the Police Pension Plan which is a single-employer pension plan; and the Firefighters' Pension Plan which is a single-employer pension plan. The benefits, benefits levels, employee contributions and employer contributions for the plans are governed by Illinois Compiled Statutes and can only be amended by the Illinois General Assembly. The Police Pension Plan and the Firefighters' Pension Plan do not issue separate reports on the pension plans. IMRF does issue a publicly available report that includes financial statements and supplementary information for the plan as a whole, but not for individual employers. That report can be obtained from IMRF, 2211 York Road, Suite 500, Oak Brook, Illinois 60523. Illinois Municipal Retirement Fund All employees hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. Public Act 96-0889 created a second tier for IMRF’s Regular Plan. Effective January 1, 2011, IMRF assigns a benefit tier to a member when he or she is enrolled in IMRF. The tier is determined by the member’s first IMRF participation date. If the member first participated in IMRF before January 1, 2011, they participate in Regular Tier 1. If the member first participated in IMRF on or after January 1, 2011, they participate in Regular Tier 2. For Regular Tier 1, pension benefits vest after eight years of service. Participating members who retire at or after age 60 with 8 years of service are entitled to an annual retirement benefit, payable monthly for life in an amount equal to 1 2/3% of their final rate (average of the highest 48 consecutive months earnings during the last 10 years) of earnings for each year of credited service up to 15 years and 2% for each year thereafter. For Regular Tier 2, pension benefits vest after ten years of service. Participating members who retire at or after age 67 with 10 years of service, or age 62 with 35 years of service are entitled to an annual retirement benefit as described above. IMRF also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute. Participating members are required to contribute 4.5% of their annual salary to IMRF. The Village's contribution rate for 2013 was 13.69% of annual covered payroll. For 2013, the Village's annual required contribution rate was 13.69%.The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrual liability for benefits. Police Pension Police sworn personnel are covered by the Police Pension Plan, which is a defined benefit single- employer pension plan. Although this is a single employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois State Statutes (Chapter 40 ILCS 5/3) and may be amended only by the Illinois legislature. The Village accounts for the plan as a pension trust fund. Page 67 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Police Pension (cont.) At December 31, 2013, the Police Pension membership consisted of: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 40 Current employees: Vested 47 Non vested 19 Total 106 As provided for in the Illinois Compiled Statutes, the Police Pension Fund provides retirement benefits as well as death and disability benefits to employees grouped into two tiers. Tier 1 is for employees hired prior to January 1, 2011 and Tier 2 is for employees hired after that date. The following is a summary of the Police Pension Fund as provided for in Illinois Compiled Statutes. Tier 1 - Covered employees attaining the age of 50 or more with 20 or more years of creditable service are entitled to receive an annual retirement benefit of one half of the salary attached to the rank on the last day of service, or for one year prior to the last day, whichever is greater. The pension shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least 8 years but less than 20 years of credited service may retire at or after age 60 and receive a reduced retirement benefit. The monthly pension of a police officer who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and paid upon reaching at least the age 55, by 3% of the original pension and 3% compounded annually thereafter. Tier 2 - Covered employees attaining the age of 55 or more with 10 or more years of creditable service are entitled to receive a monthly pension of 2.5% of the final average salary for each year of creditable service. The salary is initially capped at $106,800 but increases annually thereafter and is limited to 75% of final average salary. Employees with 10 or more years of creditable service may retire at or after age 50 and receive a reduced retirement benefit. The monthly pension of a police officer shall be increased annually on the January 1 occurring either on or after the attainment of age 60 or the first anniversary of the pension start date, whichever is later. Each annual increase shall be calculated at 3% or one-half the annual unadjusted percentage increase in the CPI, whichever is less. Page 68 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Police Pension (cont.) Covered employees are required to contribute 9.91% of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The Village is required to contribute the remaining amounts necessary to finance the plans as actuarially determined by an enrolled actuary. Effective January 1, 2011 the Village’s contributions must accumulate to the point where the past service cost for the Police Pension Plan is 90% funded by the year 2040. For the year ended December 31, 2013, the Village's contribution was 38.12% of covered payroll. The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrual liability for benefits. Firefighters' Pension Fire sworn personnel are covered by the Firefighters' Pension Plan, which is a defined benefit single- employer pension plan. Although this is a single employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois State Statutes (Chapter 40 ILCS 5/3) and may be amended only by the Illinois legislature. The Village accounts for the plan as a pension trust fund. At December 31, 2013, the Firefighters' Pension Plan membership consisted of: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 33 Current employees: Vested 35 Non vested 21 Total 89 Page 69 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Firefighters' Pension (cont.) As provided for in the Illinois Compiled Statutes, the Firefighters' Pension Fund provides retirement benefits as well as death and disability benefits to employees grouped into two tiers. Tier 1 is for employees hired prior to January 1, 2011 and Tier 2 is for employees hired after that date. The following is a summary of the Firefighters' Pension Fund as provided for in Illinois Compiled Statutes. Tier 1 - Covered employees attaining the age of 50 or more with 20 or more years of creditable service are entitled to receive a monthly retirement benefit of one half of the monthly salary attached to the rank held in the fire service at the date of retirement. The monthly pension shall be increased by one twelfth of 2.5% of such monthly salary for each additional month over 20 years of service through 30 years of service to a maximum of 75% of such monthly salary. Employees with at least 10 years but less than 20 years of credited service may retire at or after age 60 and receive a reduced retirement benefit. The monthly pension of a firefighter who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and paid upon reaching at least the age 55, by 3% of the original pension and 3% compounded annually thereafter. Tier 2 - Covered employees attaining the age of 55 or more with 10 or more years of creditable service are entitled to receive a monthly pension of 2.5% of the final average salary for each year of creditable service. The salary is initially capped at $106,800 but increases annually thereafter and is limited to 75% of final average salary. Employees with 10 or more years of creditable service may retire at or after age 50 and receive a reduced retirement benefit. The monthly pension of a firefighter shall be increased annually on the January 1 occurring either on or after the attainment of age 60 or the first anniversary of the pension start date, whichever is later. Each annual increase shall be calculated at 3% or one-half the annual unadjusted percentage increase in the CPI, whichever is less. Participants contribute a fixed percentage of their base salary to the plans. At December 31, 2013, the contribution percentage was 9.455%. If a participant leaves covered employment with less than 20 years of service, accumulated participant contributions may be refunded without accumulated interest. The Village is required to contribute the remaining amounts necessary to finance the plans as actuarially determined by an enrolled actuary. Effective January 1, 2011 the Village’s contributions must accumulate to the point where the past service cost for the Firefighters' Pension Plan is 90% funded by the year 2040. For the year ended December 31, 2013, the Village's contribution was 40.53% of covered payroll. The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrual liability for benefits. Page 70 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Summary of Significant Accounting Policies Police and Firefighters' Pension Plans Basis of Accounting. The financial statements of the pension fund are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which contributions are due. The Village’s contributions are recognized when due and a formal commitment to provide the contributions are made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Method Used to Value Investments. Plan investments are reported at fair value. Short-term investments are reported at cost, which approximated fair value. Investments that do not have an established market are reported at estimated fair values. Annual Pension Cost The Village's annual required contribution for the current year and related information for each plan is as follows: Illinois Municipal Retirement Police Pension Firefighters' Pension Actuarial valuation date December 31, 2013 December 31, 2012 December 31, 2013 Contribution rates: Employer 13.69%38.12%40.53% Employee 4.50%9.91%9.46% Annual required contribution $1,150,122 $2,359,777 $2,022,397 Contributions made $1,150,122 $2,228,448 $2,049,868 Actuarial cost method Entry-age normal Entry-age normal Entry-age normal Asset valuation method 5 year smoothed market 5 year smoothed market value 5 year smoothed market value Amortization method Level percentage of payroll, closed Level percentage of payroll, closed Level percentage of payroll, closed Amortization period 23 years 21 years 27 years Actuarial assumptions: Investment rate of return 7.50% Compounded annually 7.00% Compounded annually 7.00% Compounded annually Projected salary increases .4 to 10%5 to 20%5.00% Inflation rate included 4.00%3.00%3.00% Cost-of-living adjustments 3.00%3.00%2.00% - 3.00% Page 71 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Net Pension Obligation (Asset) The following is the net pension obligation (asset) calculation from the actuarial report: Net Pension Obligation (Asset): Police Pension Firefighters' Pension Annual required contribution $2,359,777 $2,022,397 Interest on net pension obligation (17,910)(20,524) Adjustment to annual required contribution 17,071 13,608 Annual pension cost 2,358,938 2,015,481 Contributions made (2,228,448)(2,049,868) Change in net pension obligation 130,490 (34,387) Net pension obligation (asset), beginning of year (255,859)(293,195) Net pension obligation (asset), end of year $(125,369)$(327,582) Trend Information Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Fiscal Year Illinois Municipal Retirement Police Pension Firefighters' Pension Annual pension cost (APC)2013 $1,150,122 $2,358,938 $2,015,481 2012 1,097,798 2,192,541 1,997,207 2011 1,080,295 2,140,865 1,965,831 Contributions made 2013 $1,150,122 $2,228,448 $2,049,868 2012 1,097,798 2,192,860 2,026,799 2011 1,080,295 2,200,809 2,034,635 Percentage of APC contributed 2013 100.00%94.47%101.70% 2012 100.00%100.01%101.50% 2011 100.00%102.80%103.50% Net pension obligation (asset)2013 $-$(125,369)$(372,582) 2012 -(255,859)(293,195) 2011 -(255,540)(264,103) Page 72 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Funded Status and Funding Progress The Village's actuarial value of plan assets for the current year and related information is as follows: Illinois Municipal Retirement Police Pension Firefighters' Pension Actuarial Valuation Date December 31, 2013 December 31, 2012 December 31, 2013 Actuarial Valuation of Assets (a)$20,710,515 $49,179,091 $45,275,721 Actuarial Accrued Liability (AAL) - Entry Age (b)$28,049,241 $71,703,956 $62,459,374 Unfunded AAL (UAAL) (b - a)$7,338,726 $22,524,865 $17,183,653 Funded Ratio (a/b)%73.84 %68.59 %72.49 Covered Payroll (c)8,401,181 5,752,633 5,057,260 UAAL as a Percentage of Covered Payroll ((b-a)/c)%87.35 %391.56 %339.78 Page 73 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) PENSION SEGMENT INFORMATION Fiduciary Net Position Pension Trust Police Pension Firefighters' Pension Total Assets Cash $4,069,752 $475,109 $4,544,861 Investments Certificates of deposit 14,956,859 2,777,794 17,734,653 U.S. agencies 3,182,479 12,116,870 15,299,349 Mutual funds - other than bond funds 4,228,945 27,120,071 31,349,016 Negotiable certificates of deposit 97,261 352,776 450,037 Equity securities 23,153,685 -23,153,685 Municipal bonds -2,356,426 2,356,426 Corporate bonds 3,027,218 -3,027,218 Receivables Interest 42,544 78,961 121,505 Due from primary government -3,762 3,762 Total Assets 52,758,743 45,281,769 98,040,512 Liabilities Accounts payable 3,700 6,048 9,748 Due to primary government 214,594 -214,594 Total Liabilities 218,294 6,048 224,342 Net Position Held in trust for pension benefits $52,540,449 $45,275,721 $97,816,170 Page 74 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Changes in Plan Net Position Pension Trust Police Pension Firefighters' Pension Total Additions Contributions Employer $2,228,448 $2,049,869 $4,278,317 Plan members 568,267 493,080 1,061,347 Total Contributions 2,796,715 2,542,949 5,339,664 Investment Income Net appreciation in fair value of investments 5,287,875 5,556,723 10,844,598 Interest 406,363 413,542 819,905 Total Investment income 5,694,238 5,970,265 11,664,503 Less investment income 47,220 149,779 196,999 Net investment income 5,647,018 5,820,486 11,467,504 Total Additions 8,443,733 8,363,435 16,807,168 Deductions Administration 143,393 -143,393 Pension benefits and refunds 2,494,127 1,682,532 4,176,659 Total Deductions 2,637,520 1,682,532 4,320,052 Net change in net position 5,806,213 6,680,903 12,487,116 Net position, beginning of year (as restated)46,734,236 38,594,818 85,329,054 Net position, end of year $52,540,449 $45,275,721 $97,816,170 B.RISK MANAGEMENT The Village is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; and health care of its employees. The Village participates in a public entity risk pool called the Intergovernmental Risk Management Agency (IRMA) to provide coverage for losses from torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters; and injuries to the Village's employees. The Village purchases commercial insurance coverage for health and related benefits. Prior to fiscal year 2012, the Village was self insured and accounted for related activities in an internal service fund. All outstanding claims from fiscal year 2012 and prior were settled during 2012 and the internal service fund was closed as of December 31, 2013. Page 75 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) B.RISK MANAGEMENT (cont.) Public Entity Risk Pool IRMA The Village participates in the Intergovernmental Risk Management Agency (IRMA). IRMA is an organization of municipalities and special districts in Northeastern Illinois that have formed an association under the Illinois Intergovernmental Co-operations Statute to pool their risk management needs. The agency administers a mix of self-insurance and commercial insurance coverages; property/casualty and workers’ compensation claim administration/litigation management services; unemployment claim administration; extensive risk management/loss control consulting and training programs; and a risk information system and financial reporting service for its members. The Village’s payments to IRMA are displayed on the financial statements as expenditures/expenses in appropriate funds. Each member assumes the first $2,500 of each occurrence, and IRMA has a mix of self-insurance and commercial insurance at various amounts above that level. Each member appoints one delegate, along with an alternate delegate, to represent the member on the Board of Directors. The Village does not exercise any control over the activities of IRMA beyond its representation on the Board of Directors. Initial contributions are determined each year based on the individual member’s eligible revenue as defined in the bylaws of IRMA and experience modification factors based on past member loss experience. Members have a contractual obligation to fund any deficit of IRMA attributable to any membership year during which they were a member. Supplemental contributions may be required to fund these deficits. C.COMMITMENTS AND CONTINGENCIES Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments are only reported in governmental funds if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. Northwest Water Commission (NWWC) The Village's water purchase contract with the Northwest W ater Commission provides that each member is liable for its proportionate share of any costs arising from defaults in payment obligations by other members. Solid Waste Agency of Northern Cook County (SWANCC) The Village's contract with the Solid W aste Agency of Northern Cook County provides that each member is liable for its proportionate share of any costs arising from defaults in payment obligations by other members. Page 76 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) D.JOINT VENTURES Solid Waste Agency of Northern Cook County (SWANCC) The Village is a member of the Solid W aste Agency of Northern Cook County (the Agency), which consists of 23 municipalities. The Agency is a municipal corporation and public body politic and corporate established pursuant to the Constitution of the State of Illinois and the Intergovernmental Cooperation Act of the State of Illinois, as amended (the Act). The Agency is empowered under the Act to plan, construct, finance, operate and maintain a solid waste disposal system to serve its members. The Agency is governed by a Board of Directors, which consists of one appointed Mayor or President from each member municipality. Each Director has an equal vote. The officers of the Agency are appointed by the Board of Directors. The Board of Directors determines the general policy of the Agency, makes all appropriations, approves contracts, adopts resolutions providing for the issuance of bonds or notes by the Agency, adopts by-laws, rules and regulations, and exercises such powers and performs such duties as may be prescribed in the Agency Agreement or the by-laws. The Executive Committee of the Agency consists of seven members elected by the Board of Directors. Each member is entitled to one vote on the Executive Committee. The Executive Committee may take any action not specifically reserved to the Board of Directors by the Act, the Agency Agreement or the Bylaws. The Agency covenants to establish fees and charges sufficient to provide revenues to meet all its requirements. The Agency has entered into Solid W aste Disposal Contracts with the member municipalities. The Contracts are irrevocable and may not be terminated or amended except as provided in the Contract. Each member is obligated, on a "take or pay" basis, to purchase or in any event to pay for a minimum annual cost of the System. The minimum annual cost includes operation and maintenance of the System as well as project costs. The obligation of the Village to make all payments as required by this Contract is unconditional and irrevocable, without regard to performance or nonperformance by the Agency of its obligations under this Contract. The payments required to be made by the Village under this Contract shall be required to be made solely from revenues to be derived by the Village from the operation of the Village's System. The Village is not prohibited by the Contract from using any other available funds to make the payments required by the Contract. The Contract shall not constitute an indebtedness of the Village within the meaning of any statutory or constitutional limitation. In accordance with the joint venture agreement, the Village remitted $879,365 to SW ANCC for the year ended December 31, 2013. Page 77 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) D.JOINT VENTURES (cont.) The Village has committed to make payments to the Solid W aste Agency of Northern Cook County. The Village has committed to pay approximately $1,000,000 annually. This amount has been calculated using the Village's current allocation percentage of 6.37%. In future years, this allocation percentage will be subject to change. Complete financial statements for SW ANCC can be obtained from the Agency's administrative office at 2700 Patriot Boulevard, Suite 110, Glenview, Illinois 60026. Northwest Water Commission (NWWC) The Village is a member of the Northwest W ater Commission (the Commission), which consists of four municipalities. The Commission is a municipal corporation and public body politic and corporate established pursuant to the Constitution of the State of Illinois and the Intergovernmental Cooperation Act of the State of Illinois, as amended (the Act). The Commission is empowered under the Act to plan, construct, improve, extend, acquire, finance, operate and maintain a water supply system to serve its members and other potential water purchasers. The members form a contiguous geographic service area which is located northwest of downtown Chicago. Under the Commission Agreement, additional members may join the Commission upon the approval of each member. The Commission is governed by a Board of Commissioners, which consists of one Village Manager from each member municipality. Each Commissioner has an equal vote. The officers of the Commission are appointed by the Board of Commissioners. The Board of Commissioners determines the general policy of the Commission, makes all appropriations, approves contracts for sale or purchase of water, adopts resolutions providing for the issuance of bonds or notes by the Commission, adopts by laws, rules and regulations, and exercises such powers and performs such duties as may be prescribed in the Commission Agreement or the by-laws. The Commission has entered into W ater Supply Contracts with the four member municipalities for a term of 40 years, extending to 2025. The Contracts are irrevocable and may not be terminated or amended except as provided in the Contract. Each member is obligated, on a "take or pay" basis, to purchase or in any event to pay for a minimum annual quantity of water. The Commission has entered into an agreement with the City of Evanston under which the City has agreed to sell quantities of lake water sufficient to supply the projected water needs of the Commission through the year 2025. The obligation of the Village to make all payments as required by this Contract is unconditional and irrevocable, without regard to performance or nonperformance by the Commission of its obligations under this Contract. Page 78 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) D.JOINT VENTURES (cont.) The payments required to be made by the Village under this Contract shall be required to be made solely from revenues to be derived by the Village from the operation of the Village's System. The Village is not prohibited by the Contract from using any other available funds to make the payments required by the contract. The Contract shall not constitute an indebtedness of the Village within the meaning of any statutory or constitutional limitation. The obligation of the Village to make payments required by this Contract from revenues of the Village's System shall be payable from the operation and maintenance account of the Village's W ater and Sewerage Fund and from all other accounts of the Village's W ater and Sewerage Fund in which there are available funds. In accordance with the joint venture agreement, the Village remitted $1,652,946 to NW WC for the year ended December 31, 2013. The Village's equity interest in NW WC was $7,314,705 at December 31, 2013. The Village's net investment and its share of the operating results of NW WC are recorded in the Village's W ater and Sewerage Fund. The Village has committed to retire a portion of the outstanding debt of the Northwest W ater Commission of approximately $3 million. These amounts have been calculated using the Village's current allocation percentage of 18.45%. In future years, this allocation percentage will be subject to change. Complete financial statements for NW WC can be obtained from the Commission's administrative office at 1525 North W olf Road, Des Plaines, Illinois 60016. E.OTHER POSTEMPLOYMENT BENEFITS The Village administers a single-employer defined benefit healthcare plan. The (the Village of Buffalo Grove Group Health Plan (the plan) provides health insurance contributions for eligible retirees and their spouses through the Village’s group health insurance plan, which covers both active and retired members. Benefit provisions are established through personnel policy guidelines and state that eligible retirees and their spouses receive healthcare insurance to age 65 at established contribution rates. The plan does not issue a publicly available financial report. Contribution requirements are established through personnel policy guidelines and may be amended by the action of the governing body.The plan may be amended by the Village Board and is detailed in the "Plan Document and Summary Plan Description." The required contribution is based on projected pay-as- you-go financing requirements. For fiscal year 2013, the Village contributed $218,831 to the Plan. Plan members receiving benefits contributed $403,223 through their required contribution of $614 per month for retiree only coverage and $1,241 per month for retiree and spouse coverage. Page 79 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) E.OTHER POSTEMPLOYMENT BENEFITS (cont.) The Village’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Village’s annual OPEB cost for the year, the amount actually contributed to plan, and changes in the Village’s net OPEB obligation to the Retiree Health Plan: Annual required contribution $267,125 Interest on net OPEB obligation 14,984 Adjustment to annual required contribution (12,487) Annual OPEB cost 269,622 Contributions made (218,831) Increase in net OPEB obligation (asset)50,791 Net OPEB Obligation (Asset) - Beginning of Year 374,609 Net OPEB Obligation (Asset) - End of Year $425,400 Page 80 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) E.OTHER POSTEMPLOYMENT BENEFITS (cont.) The Village's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 and the two preceding years were as follows: Fiscal Year Ended Annual OPEB Cost Percentage of Annual OPEB Cost Contributed Net OPEB Obligation December 31, 2011 $126,877 53.80%$320,966 December 31, 2012 272,474 80.30%374,609 December 31, 2013 269,622 81.16%425,400 The funded status of the plan as of December 31, 2013, the most recent actuarial valuation date, was as follows: Actuarial accrued liability (AAL)$4,545,910 Actuarial value of plan assets - Unfunded Actuarial Accrued Liability (UAAL)$4,545,910 Funded ratio (actuarial value of plan assets/AAL)-% Covered payroll (active plan members)$19,787,930 UAAL as a percentage of covered payroll 23% Actuarial valuations of an ongoing plan involve estimates for the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce short- term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Page 81 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) E.OTHER POSTEMPLOYMENT BENEFITS (cont.) In the December 31, 2013 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions include a 4.00% investment rate of return and an annual healthcare cost trend rate of 7.50% initially, reduced by decrements to an ultimate rate of 5.50% after 4 years. Both rates include a 3.00% inflation assumption. The actuarial value of Retiree Health Plan assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a three-year period. The plan’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The amortization period at December 31, 2013, was 30 years. F.EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved the following: Statement No. 67, Financial Reporting for Pension Plans - an amendment of GASB Statement No. 25 Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 Statement No. 69, Government Combinations and Disposals of Government Operations Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees When they become effective, application of these standards may restate portions of these financial statements. Page 82 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) G.PLEDGED REVENUE The Village has pledged a portion of future sales tax revenues to local retailers. In order to increase its competitiveness in the marketplace by establishing a single-order acceptance point for all its credit sales, the local retailers entered into a municipal sales tax incentive agreement with the Village, where the Village will pay to the retailers, a portion of the municipal component of the sales tax revenue generated by the retailers from credit sales as provided in the agreement. The first agreement commenced November 2000 (first sales tax year), was amended in March 2003 and August 2009, and terminates in calendar year 2020. The terms of the agreement indicate that beginning in November 2000, the Village and the retailer shall distribute on a monthly basis, the municipal sales taxes resulting from taxable credit sales with single-order acceptance at the retailer's property and received by the Village in the following amounts: For the first sales tax year through calendar year 2010, 80% to the retailer and 20% to the Village, in addition to any interest accrued on such amounts. For calendar years 2012 through 2020, 75% to the retailer and 25% to the Village; and Amended in August 2009 to reflect that for calendar years 2010 through 2020, 60% to the retailer and 40% to the Village. Notwithstanding the terms stated above, the minimum municipal sales taxes to be retained by the Village shall be as follows: No less than $500,000 annually beginning with calendar years 2011 through 2020; and Amended in August 2009, the minimum sales tax cap was eliminated. In the event that the municipal sales taxes retained by the Village fell below the minimum amount noted above, the Village was to document the difference and invoice the retailer for the said amount, which shall be paid within 30 days of receipt. The total municipal sales taxes remitted to the local retailer was $356,547. Municipal sales taxes totaling $82,592 was due to the local retailer as of December 31, 2013, and is included in accounts payable on the Statement of Net Position and Governmental Funds Balance Sheet. The second agreement commenced March 2011. The terms of the agreement indicate that beginning in March 2011, the Village and the retailer shall distribute on a monthly basis, the municipal sales taxes resulting from taxable credit sales with single-order acceptance at the retailer's property and received by the Village in the following amounts: For the first sales tax year, 100% of that year's incremental municipal sales tax, declining 10% each year until the sixth sales tax year. Page 83 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2013 NOTE IV - OTHER INFORMATION (cont.) For the seventh tax year, 50% of that year's incremental municipal sales tax will be distributed to the local retailer. The Village will continue the municipal tax payments for seven years through the term of the agreement or for an incentive of $500,000, whichever comes first. If the local retailer ceases its business on the premises within seven years of the commencement date of the agreement, the local retailer must reimburse the Village 100% of the payments received within 90 days of cessation of the business. Should the local retailer relocate or conduct less than $10,000 in sales tax in an annual period for two consecutive years, the local retailer must reimburse the Village 100% of the municipal tax payments received within 90 days of written demand from the Village. The total municipal sales taxes remitted to the local retailer was $142,570. There was no municipal sales taxes due to the local retailer as of December 31, 2013. Page 84 R E Q U I R E D S U P P L E M E N T A R Y I N F O R M A T I O N VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL For the year ended December 31, 2013 Original and Final Budget Actual Variance with Final Budget REVENUES Charges for services $913,737 $1,009,877 $96,140 Licenses and permits 280,095 294,622 14,527 Fines and fees 1,261,750 1,498,819 237,069 Property 11,826,377 11,980,077 153,700 Other taxes 17,915,002 19,234,009 1,319,007 Interest 103,300 54,379 (48,921) Miscellaneous income 944,290 1,019,029 74,739 Total Revenues 33,244,551 35,090,812 1,846,261 EXPENDITURES Current: General government 5,330,914 5,721,727 (390,813) Public safety 21,435,325 21,414,256 21,069 Public works 6,334,522 5,839,292 495,230 Total Expenditures 33,100,761 32,975,275 125,486 Excess of revenues over expenditures 143,790 2,115,537 1,971,747 OTHER FINANCING SOURCES (USES) Transfers in 765,000 1,007,573 242,573 Transfers out (889,154)(1,271,961)(382,807) Total Other Financing Sources (Uses)(124,154)(264,388)(140,234) Net Change in Fund Balance $19,636 1,851,149 $1,831,513 FUND BALANCE - Beginning of Year (as restated)18,614,057 FUND BALANCE - END OF YEAR $20,465,206 See independent auditors' report and accompanying notes to required supplementary information. Page 85 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - MOTOR FUEL TAX For the Year Ended December 31, 2013 Original and Final Budget Actual Variance with Final Budget REVENUES Intergovernmental $1,000,000 $997,371 $(2,629) Interest -143 143 Miscellaneous income 187,582 187,582 - Total Revenues 1,187,582 1,185,096 (2,486) EXPENDITURES Current: Public works 4,750,000 5,684,477 (934,477) Total Expenditures 4,750,000 5,684,477 (934,477) Net Change in Fund Balance $(3,562,418)(4,499,381)$(936,963) FUND BALANCE - Beginning of Year 6,067,760 FUND BALANCE - END OF YEAR $1,568,379 See independent auditors' report and accompanying notes to required supplementary information. Page 86 VILLAGE OF BUFFALO GROVE ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF EMPLOYER'S CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2013 Fiscal Year End Annual Required Contribution (ARC) Percentage of ARC Contributed Net Pension Obligation 12/31/2013 $1,150,122 100.00%$- 12/31/2012 1,097,798 100.00%- 12/31/2011 1,080,295 100.00%- Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll 12/31/2013 $20,710,515 $28,049,241 $7,338,726 73.84%$8,401,181 87.35% 12/31/2012 20,181,453 27,990,982 7,809,529 72.10%8,431,628 92.62% 12/31/2011 20,488,691 28,250,245 7,761,554 72.53%8,361,416 92.83% 12/31/2010 20,093,313 27,438,537 7,345,224 73.23%8,434,588 87.08% 12/31/2009 19,976,965 27,343,323 7,366,358 73.06%8,610,969 85.55% 12/31/2008 19,002,171 25,777,985 6,775,814 73.71%8,663,075 78.21% The information presented in the above required supplementary schedule was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation can be found in the notes to basic financial statements. Valuation date 12/31/2013 Actuarial cost method Entry Age normal Amortization method Level percentage of pay, closed Remaining amortization period 30 years Asset valuation method Market Actuarial assumptions: Investment rate of return 7.5% Projected salary increases .4 to 10% Inflation factor 4.00% Cost of living adjustments 3.00% See independent auditors' report and accompanying notes to required supplementary information. Page 87 VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF EMPLOYER'S CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2013 Fiscal Year End Annual Required Contribution (ARC) Percentage of ARC Contributed Net Pension Obligation (Asset) 12/31/2013 $2,359,777 94.47%$(125,369) 12/31/2012 2,198,690 100.01%(255,859) 12/31/2011 2,145,917 102.80%(255,540) Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll 12/31/2012 $49,179,091 $71,703,956 $22,524,865 68.59%$5,752,633 391.56% 12/31/2011 45,414,255 73,221,793 27,807,538 62.02%5,963,940 466.26% 12/31/2010 41,427,183 68,989,180 27,561,997 60.05%5,923,012 465.34% 12/31/2009 36,896,831 61,278,367 24,381,536 60.21%5,998,088 406.49% 12/31/2008 33,736,413 57,812,420 24,076,007 58.35%5,831,457 412.86% 12/31/2007 34,503,602 54,297,346 19,793,744 63.55%5,580,751 354.68% The information presented in the above required supplementary schedule was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation can be found in the notes to basic financial statements. Valuation date 12/31/2012 Actuarial cost method Entry Age normal Amortization method Level percentage of pay, closed Remaining amortization period 21 Asset valuation method Market Actuarial assumptions: Investment rate of return 7.00% Projected salary increases 5.00-20.00% Inflation factor 3.00% Cost of living adjustments 3.00% See independent auditors' report and accompanying notes to required supplementary information. Page 88 VILLAGE OF BUFFALO GROVE FIREFIGHTERS' PENSION FUND SCHEDULE OF EMPLOYER'S CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2013 Fiscal Year End Annual Required Contribution (ARC) Percentage of ARC Contributed Net Pension Obligation (Asset) 12/31/2013 $2,022,397 101.36%$(327,582) 12/31/2012 2,003,757 101.10%(293,195) 12/31/2011 1,970,913 103.20%(264,103) Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll 12/31/2013 $45,275,721 $62,459,374 $17,183,653 72.49%$5,057,260 339.78% 12/31/2012 40,108,736 59,592,083 19,483,347 67.31%5,289,831 368.32% 12/31/2011 35,572,790 58,315,678 22,742,888 61.00%5,076,411 448.01% 12/31/2010 33,498,856 52,883,349 19,384,493 63.34%5,486,606 353.31% 12/31/2009 29,149,597 46,895,213 17,745,616 62.16%5,429,462 326.84% 12/31/2008 24,553,284 42,711,057 18,157,773 57.49%5,208,553 348.61% The information presented in the above required supplementary schedule was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation can be found in the notes to basic financial statements. Valuation date 12/31/2013 Actuarial cost method Entry Age normal Amortization method Level percentage of pay, closed Remaining amortization period 27 Asset valuation method Market Actuarial assumptions: Investment rate of return 7.00% Projected salary increases 5.00% Inflation factor 3.00% Cost of living adjustments 2.00% - 3.00% See independent auditors' report and accompanying notes to required supplementary information. Page 89 VILLAGE OF BUFFALO GROVE OTHER POST EMPLOYMENT BENEFITS SCHEDULE OF EMPLOYER CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2013 Year Ended Annual Required Contribution Percentage Contributed 12/31/13 $267,125 81.92 % 12/31/12 267,125 81.92 12/31/11 122,505 55.70 Actuarial Valuation Date Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) - Entry Age (b) Unfunded AAL (UAAL) (b-a) Funded Ratio (a/b) Covered Payroll (c) UAAL as a Percentage of Covered Payroll ((b-a)/c) 12/31/13 $-$4,545,910 $4,545,910 0.00%$19,787,930 22.97% 12/31/11 -4,375,822 4,375,822 0.00%18,846,443 23.22% 12/31/09 -2,108,079 2,108,079 0.00%19,764,651 10.67% Change in Assumptions The change in Village's unfunded actuarial accrued OPEB liability is due to several factors, including: The investment rate of return and projected salary increases assumptions have been reduced to 4.00% from 5.00%. The healthcare inflation rate assumption has been reduced to 7.50% from 8.00% (initial) and to 5.50% from 6.00% (ultimate). See independent auditors' report and accompanying notes to required supplementary information. Page 90 VILLAGE OF BUFFALO GROVE NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2013 BUDGETARY INFORMATION The budget data included in the financial statements represent the Village's program budget and the appropriations represent the Village's legal expenditure limit. Budgets are adopted for General, Special Revenue, Debt Service, Capital Projects, Proprietary, and Pension Trust Funds. The Internal Service Fund did not adopt a budget. All governmental fund-type budgets and pension trust fund-type budgets are adopted on a basis consistent with GAAP. Proprietary funds are adopted on a basis other than GAAP in that depreciation expense, income from the joint venture, and contributions from developers are not budgeted, and principal payments on long-term debt (if any) are budgeted. The Village Board of Trustees follows these procedures in establishing the budgetary and appropriations data reflected in the financial statements: (1)The Village Manager submits to the Board a proposed program budget for the fiscal year commencing January 1. The program budget includes proposed expenditures and the means of financing them. (2)Appropriation ordinance public hearings are conducted by the Village to obtain taxpayer comments, and the ordinance is subsequently adopted by the Board. (3)The program budget is legally enacted through a resolution adopted by the Board. (4) Any expenditures that exceed the total appropriations at the fund level must be approved by the Board of Trustees. The Village Manager is authorized to transfer budgeted amounts between departments within any fund. However, any modifications to the legally adopted appropriation ordinance may not exceed expenditure limits, at the fund level, mandated by the appropriation ordinance without approval by the Board. Appropriations, which are not expended by year-end, lapse and must be reappropriated in the following year for the expenditure to be made. The Village does not employ the encumbrance method of accounting to reserve net position for subsequent year expenditures. See independent auditors' report. Page 91 S U P P L E M E N T A R Y I N F O R M A T I O N VILLAGE OF BUFFALO GROVE COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS As of December 31, 2013 Illinois Municipal Retirement Fund Metra Parking Lot Debt Service Street Maintenance ASSETS Cash $-$111,703 $-$- Receivables Property taxes --897,013 - Other ---317,251 TOTAL ASSETS $-$111,703 $897,013 $317,251 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $-$10,008 $200 $75,369 Accrued wages -482 -- Due to other funds --11,619 13,264 Total Liabilities -10,490 11,819 88,633 Deferred Inflows of Resources Property taxes levied for a future period --897,013 - Total Deferred Inflows of Resources --897,013 - Fund Balances (Deficit) Restricted for capital project ---228,618 Assigned to parking lot operations -101,213 -- Unassigned (deficit)--(11,819)- Total Fund Balances (deficit)-101,213 (11,819)228,618 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $-$111,703 $897,013 $317,251 Page 92 Facilities Development Total Nonmajor Governmental Funds $-$111,703 -897,013 -317,251 $-$1,325,967 $207,296 $292,873 -482 708,280 733,163 915,576 1,026,518 -897,013 -897,013 -228,618 -101,213 (915,576)(927,395) (915,576)(597,564) $-$1,325,967 Page 93 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2013 Illinois Municipal Retirement Fund Metra Parking Lot Debt Service Street Maintenance Facilities Development REVENUES Property $1,613,229 $-$911,444 $-$- Other taxes 6,356 ---- Miscellaneous income ---299,818 565 Charges for services -991 --- Fines and fees -148,545 --- Total Revenues 1,619,585 149,536 911,444 299,818 565 EXPENDITURES Current General government 551,511 192,398 --- Public safety 391,654 ---- Public works 654,936 ---- Capital Outlay ---71,200 1,276,076 Debt Service Principal --940,000 -- Interest --385,395 -- Total Expenditures 1,598,101 192,398 1,325,395 71,200 1,276,076 Excess (deficiency) of revenues over expenditures 21,484 (42,862)(413,951)228,618 (1,275,511) OTHER FINANCING SOURCES (USES) Transfers in --382,605 409,162 319,973 Transfers out (162,274)---- Total Other Financing Sources (Uses)(162,274)-382,605 409,162 319,973 Net Change in Fund Balances (140,790)(42,862)(31,346)637,780 (955,538) FUND BALANCES (DEFICIT) - Beginning of Year 140,790 144,075 19,527 (409,162)39,962 FUND BALANCES (DEFICIT) - END OF YEAR $-$101,213 $(11,819)$228,618 $(915,576) Page 94 Total Nonmajor Governmental Funds $2,524,673 6,356 300,383 991 148,545 2,980,948 743,909 391,654 654,936 1,347,276 940,000 385,395 4,463,170 (1,482,222) 1,111,740 (162,274) 949,466 (532,756) (64,808) $(597,564) Page 95 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - ILLINOIS MUNICIPAL RETIREMENT FUND - NONMAJOR SPECIAL REVENUE FUND For the Year Ended December 31, 2013 Original and Final Budget Actual Variance with Final Budget REVENUES Property $1,600,793 $1,613,229 $12,436 Other taxes -6,356 6,356 Total Revenues 1,600,793 1,619,585 18,792 EXPENDITURES Current: General government 425,465 551,511 (126,046) Public safety 904,189 391,654 512,535 Public works 257,096 654,936 (397,840) Total Expenditures 1,586,750 1,598,101 (11,351) Excess of revenues over expenditures 14,043 21,484 7,441 OTHER FINANCING SOURCES (USES) Transfers out -(162,274)(162,274) Total Other Financing Sources (Uses)-(162,274)(162,274) Net Change in Fund Balance $14,043 (140,790)$(154,833) FUND BALANCE - Beginning of Year 140,790 FUND BALANCE - END OF YEAR $- Page 96 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - METRA PARKING LOT - NONMAJOR SPECIAL REVENUE FUND For the Year Ended December 31, 2013 Original and Final Budget Actual Variance with Final Budget REVENUES Charges for services $1,320 $991 $(329) Fines and fees 158,000 148,545 (9,455) Total Revenues 159,320 149,536 (9,784) EXPENDITURES Current: General government 168,233 192,398 (24,165) Total Expenditures 168,233 192,398 (24,165) Net Change in Fund Balance $(8,913)(42,862)$(33,949) FUND BALANCE - Beginning of Year 144,075 FUND BALANCE - END OF YEAR $101,213 Page 97 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - DEBT SERVICE - NONMAJOR DEBT SERVICE FUND For the Year Ended December 31, 2013 Original and Final Budget Actual Variance with Final Budget REVENUES Property $938,696 $911,444 $(27,252) Total Revenues 938,696 911,444 (27,252) EXPENDITURES Debt Service Principal 940,000 940,000 - Interest 402,000 385,395 16,605 Total Expenditures 1,342,000 1,325,395 16,605 Excess (deficiency) of revenues over (under) expenditures (403,304)(413,951)(10,647) OTHER FINANCING SOURCES Transfers in 400,000 382,605 (17,395) Total Other Financing Sources 400,000 382,605 (17,395) Net Change in Fund Balance $(3,304)(31,346)$(28,042) FUND BALANCE - Beginning of Year 19,527 FUND BALANCE (DEFICIT) - END OF YEAR $(11,819) Page 98 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - STREET MAINTENANCE - NONMAJOR CAPITAL PROJECTS FUND For the Year Ended December 31, 2013 Original and Final Budget Actual Variance with Final Budget REVENUES Miscellaneous income $-$299,818 $299,818 Total Revenues -299,818 299,818 EXPENDITURES Capital Outlay 100,452 71,200 29,252 Total Expenditures 100,452 71,200 29,252 Excess (deficiency) of revenues over (under) expenditures (100,452)228,618 329,070 OTHER FINANCING SOURCES Transfers in -409,162 409,162 Total Other Financing Sources -409,162 409,162 Net Change in Fund Balance $(100,452)637,780 $738,232 FUND BALANCE (DEFICIT) - Beginning of Year (409,162) FUND BALANCE - END OF YEAR $228,618 Page 99 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - FACILITIES DEVELOPMENT - NONMAJOR CAPITAL PROJECTS FUND For the Year Ended December 31, 2013 Original and Final Budget Actual Variance with Final Budget REVENUES Miscellaneous income $1,000,000 $565 $(999,435) Total Revenues 1,000,000 565 (999,435) EXPENDITURES Capital Outlay 1,586,097 1,276,076 310,021 Total Expenditures 1,586,097 1,276,076 310,021 Excess (deficiency) of revenues over (under) expenditures (586,097)(1,275,511)(689,414) OTHER FINANCING SOURCES (USES) Transfers in 586,097 319,973 (266,124) Total Other Financing Sources (Uses)586,097 319,973 (266,124) Net Change in Fund Balance $-(955,538)$(955,538) FUND BALANCE - Beginning of Year 39,962 FUND BALANCE (DEFICIT) - END OF YEAR $(915,576) Page 100 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS As of December 31, 2013 Buffalo Grove Golf Refuse Service Total Nonmajor Enterprise Funds ASSETS Current Assets Cash and equivalents $700 $507,053 $507,753 Receivables Other -86,599 86,599 Inventory 27,308 -27,308 Total Current Assets 28,008 593,652 621,660 Noncurrent Assets Capital Assets Land 978,776 -978,776 Land improvements 450,437 -450,437 Buildings and improvements 1,862,837 -1,862,837 Machinery, equipment and furnishings 94,510 -94,510 Less: Accumulated depreciation (2,192,029)-(2,192,029) Total Noncurrent Assets 1,194,531 -1,194,531 Total Assets 1,222,539 593,652 1,816,191 LIABILITIES Current Liabilities Accounts payable 14,558 -14,558 Accrued wages 16,443 -16,443 Total Current Liabilities 31,001 -31,001 Noncurrent Liabilities Long-Term Debt Compensated absences 41,926 -41,926 Total Noncurrent Liabilities 41,926 -41,926 Total Liabilities 72,927 -72,927 NET POSITION Net investment in capital assets 1,194,531 -1,194,531 Unrestricted (deficit)(44,919)593,652 548,733 TOTAL NET POSITION $1,149,612 $593,652 $1,743,264 Page 101 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2013 Buffalo Grove Golf Refuse Service Total Nonmajor Enterprise Funds OPERATING REVENUES Daily greens fee and memberships $705,447 $-$705,447 Merchandise sales 65,006 -65,006 Cart, club, and other rentals 201,010 -201,010 Driving range fees 57,012 -57,012 SW ANCC user fees -1,040,878 1,040,878 Miscellaneous 44,024 -44,024 Total Operating Revenues 1,072,499 1,040,878 2,113,377 OPERATING EXPENSES Golf operations 1,071,039 -1,071,039 Cost of sales - pro shop 57,733 -57,733 Refuse operations -879,365 879,365 Other -23,446 23,446 Depreciation 32,783 -32,783 Total Operating Expenses 1,161,555 902,811 2,064,366 Operating Income (Loss)(89,056)138,067 49,011 TRANSFERS Transfers in 15,228 -15,228 Total Transfers 15,228 -15,228 Change in Net Position (73,828)138,067 64,239 NET POSITION - Beginning of Year 1,223,440 455,585 1,679,025 NET POSITION - END OF YEAR $1,149,612 $593,652 $1,743,264 Page 102 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CASH FLOW S NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2013 Buffalo Grove Golf Refuse Service Totals CASH FLOWS FROM OPERATING ACTIVITIES Received from customers $1,072,499 $1,040,878 $2,113,377 Paid to suppliers for goods and services (620,974)(902,811)(1,523,785) Paid to employees for services (464,506)-(464,506) Net Cash Flows From Operating Activities (12,981)138,067 125,086 CASH FLOWS FROM NONCAPITAL FINANCING AC TIVITIES Operating transfers 13,681 -13,681 Net Cash Flows From Noncapital Financing Activities 13,681 -13,681 Net Change in Cash and Cash Equivalents 700 138,067 138,767 CASH AND CASH EQUIVALENTS - Beginning of Year -368,986 368,986 CASH AND CASH EQUIVALENTS - END OF YEAR $700 $507,053 $507,753 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss)$(89,056)$138,067 $49,011 Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation 32,783 -32,783 Changes in assets and liabilities Inventory (5,152)-(5,152) Accounts payable 10,801 -10,801 Accrued wages (4,283)-(4,283) Compensated absences 41,926 -41,926 NET CASH FLOWS FROM OPERATING AC TIVITIES $(12,981)$138,067 $125,086 NONCASH CAPITAL AND RELATED FINANCING AC TIVITIES None Page 103 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL - NON-GAAP BUDGETARY BASIS BUFFALO GROVE GOLF - NONMAJOR ENTERPRISE FUND For the Year Ended December 31, 2013 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Daily greens fee and memberships $805,000 $705,447 $(99,553) Merchandise sales 77,000 65,006 (11,994) Cart, club, and other rentals 249,000 201,010 (47,990) Driving range fees 65,000 57,012 (7,988) Miscellaneous 15,200 44,024 28,824 Total Operating Revenues 1,211,200 1,072,499 (138,701) OPERATING EXPENSES Golf operations 1,166,068 1,071,039 (95,029) Cost of sales - pro shop 45,000 57,733 12,733 Total Operating Expenses 1,211,068 1,128,772 (82,296) Operating Income (Loss) - Non-GAAP Budgetary Basis 132 (56,273)(56,405) TRANSFERS Transfers in -15,228 15,228 Net Transfers -15,228 15,228 Change in net position - Non-GAAP Budgetary Basis $132 $(41,045)$(41,177) Page 104 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL - NON-GAAP BUDGETARY BASIS REFUSE SERVICE NONMAJOR ENTERPRISE FUND For the Year Ended December 31, 2013 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES SW ANCC user fees $1,041,217 $1,040,878 $(339) Total Operating Revenues 1,041,217 1,040,878 (339) OPERATING EXPENSES Refuse operations 934,285 879,365 (54,920) Other -23,446 23,446 Total Operating Expenses 934,285 902,811 (31,474) Operating Income - Non-GAAP Budgetary Basis $106,932 $138,067 $31,135 Page 105 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL - NON-GAAP BUDGETARY BASIS WATER AND SEW ERAGE - MAJOR ENTERPRISE FUND For the Year Ended December 31, 2013 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Water and sewer charges $9,029,750 $8,664,436 $(365,314) Connection and recapture fees 27,000 28,376 1,376 Intergovernmental 437,388 -(437,388) Total Operating Revenues 9,494,138 8,692,812 (801,326) OPERATING EXPENSES Water operations 2,820,556 1,591,315 (1,229,241) Sewer operations 4,919,898 3,746,598 (1,173,300) Water purchases 1,822,168 1,652,945 (169,223) Add: Capital assets capitalized -625,586 625,586 Total Operating Expenses 9,562,622 7,616,444 (1,946,178) Operating Income (Loss) - Non-GAAP Budgetary Basis (68,484)1,076,368 1,144,852 NON-OPERATING REVENUES Interest 25,450 12,444 (13,006) Total Non-Operating Revenues 25,450 12,444 (13,006) Net Income (Loss) Before Transfers - Non- GAAP Budgetary Basis (43,034)1,088,812 1,131,846 TRANSFERS Transfers out (945,000)(1,025,299)(80,299) Net Transfers (945,000)(1,025,299)(80,299) Change in net position - Non-GAAP Budgetary Basis $(988,034)$63,513 $1,051,547 Page 106 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL - NON-GAAP BUDGETARY BASIS ARBORETUM GOLF - MAJOR ENTERPRISE FUND For the Year Ended December 31, 2013 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Daily greens fee and memberships $815,000 $803,223 $(11,777) Merchandise sales 64,800 54,391 (10,409) Cart, club, and other rentals 258,250 263,832 5,582 Miscellaneous 60,200 56,922 (3,278) Total Operating Revenues 1,198,250 1,178,368 (19,882) OPERATING EXPENSES Golf operations 1,177,310 1,247,399 70,089 Cost of sales - pro shop 45,000 45,137 137 Total Operating Expenses 1,222,310 1,292,536 70,226 Operating (Loss) - Non-GAAP Budgetary Basis (24,060)(114,168)(90,108) NON-OPERATING REVENUES Interest -11 11 Total Non-Operating Revenues -11 11 Net (Loss) Before Transfers - Non-GAAP Budgetary Basis (24,060)(114,157)(90,097) TRANSFERS Transfers in 24,060 58,960 34,900 Net Transfers 24,060 58,960 34,900 Change in net position - Non-GAAP Budgetary Basis $-$(55,197)$(55,197) Page 107 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUNDS As of December 31, 2013 Police Pension Firefighters' Pension Totals ASSETS Cash $4,069,752 $475,109 $4,544,861 Investments U.S. treasuries 14,956,859 2,777,794 17,734,653 U.S. agencies 3,182,479 12,116,870 15,299,349 Mutual funds - other than bond funds 4,228,945 27,120,071 31,349,016 Negotiable certificates of deposit 97,261 352,776 450,037 Equity securities 23,153,685 -23,153,685 Municipal bonds -2,356,426 2,356,426 Corporate bonds 3,027,218 -3,027,218 Receivables Interest 42,544 78,961 121,505 Due from primary government -3,762 3,762 Total Assets 52,758,743 45,281,769 98,040,512 LIABILITIES Accounts payable 3,700 6,048 9,748 Due to primary government 214,594 -214,594 Total Liabilities 218,294 6,048 224,342 NET POSITION Held in trust for pension benefits $52,540,449 $45,275,721 $97,816,170 Page 108 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUNDS For the Year Ended December 31, 2013 Police Pension Firefighters' Pension Total AD DITIONS Contributions Employer $2,228,448 $2,049,869 $4,278,317 Plan members 568,267 493,080 1,061,347 Total Contributions 2,796,715 2,542,949 5,339,664 Investment income Interest 406,363 413,542 819,905 Net appreciation in fair value of investments 5,287,875 5,556,723 10,844,598 Total Investment Income 5,694,238 5,970,265 11,664,503 Less Investment expense 47,220 149,779 196,999 Net Investment Income 5,647,018 5,820,486 11,467,504 Total Additions 8,443,733 8,363,435 16,807,168 DEDUCTIONS Pension benefits and refunds 2,494,127 1,682,532 4,176,659 Administration 143,393 -143,393 Total Deductions 2,637,520 1,682,532 4,320,052 Change in Net Position 5,806,213 6,680,903 12,487,116 NET POSITION - Beginning of Year (as restated)46,734,236 38,594,818 85,329,054 NET POSITION, END OF YEAR $52,540,449 $45,275,721 $97,816,170 Page 109 VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL For the year ended December 31, 2013 2013 Original and Final Budget Actual Variance with Final Budget Additions Contributions Employer $2,198,690 $2,228,448 $(29,758) Plan members 589,102 568,267 20,835 Total contributions 2,787,792 2,796,715 (8,923) Investment Income Interest 36,000 406,363 (370,363) Net appreciation in fair value of investments 1,200,000 5,287,875 (4,087,875) Total investment income 1,236,000 5,694,238 (4,458,238) Less Investment expense 32,000 47,220 (15,220) Net investment income 1,204,000 5,647,018 (4,443,018) Total additions 3,991,792 8,443,733 (4,451,941) Deductions Pension benefits and refunds 2,247,015 2,494,127 (247,112) Administration 110,000 143,393 (33,393) Total deductions 2,357,015 2,637,520 (280,505) Change in net position $1,634,777 5,806,213 $(4,171,436) Net position, beginning of year (as restated)46,734,236 Net position, end of year $52,540,449 Page 110 VILLAGE OF BUFFALO GROVE FIREFIGHTERS' PENSION FUND SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL For the year ended December 31, 2013 2013 Original and Final Budget Actual Variance and Final Budget Additions Contributions Employer $2,103,943 $2,049,869 $54,074 Plan members 512,230 493,080 19,150 Total contributions 2,616,173 2,542,949 73,224 Investment Income Interest 1,145,270 413,542 731,728 Net appreciation in fair value of investments -5,556,723 (5,556,723) Total investment income 1,145,270 5,970,265 (4,824,995) Less Investment expense 113,000 149,779 (36,779) Net investment income 1,032,270 5,820,486 (4,788,216) Total additions 3,648,443 8,363,435 (4,714,992) Deductions Pension benefits and refunds 1,561,069 1,682,532 (121,463) Total deductions 1,561,069 1,682,532 (121,463) Change in net position $2,087,374 6,680,903 $(4,593,529) Net position, beginning of year (as restated)38,594,818 Net position, end of year $45,275,721 Page 111 Page 112 VILLAGE OF BUFFALO GROVE AGENCY FUND SCHOOL AND PARK DONATIONS SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION Balances Balances January 1 Additions Deletions December 31 Assets Cash & Cash Equivalents 600,595$ 26,353$ 133,542$ 493,406$ Liabilities Due to Other Governments 600,595$ 26,353$ 133,542$ 493,406$ Statistical Section Contents Page Financial Trends 113 - 122 Revenue Capacity 123 - 1336 Debt Capacity 134 - 138 Demographic and Economic Information 139 - 142 Operating Information 143 - 146 This portion of the Village of Buffalo Grove's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Village's overall economic condition. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. These schedules contain trend information to help the reader understand how the Village's financial performance and well-being have changed over time. These schedules contain information to help the reader assess the factors affecting the Village's ability to generate its property and sales taxes. These schedules present information to help the reader assess the affordability of the Village's current levels of outstanding debt and the Village's ability to issue additional debt. These schedules offer demographic and economic indicators to help the reader understand the environment within which the Village's financial activities take place and to help make comparisons over time and other governments. These schedules contain information about the Village's operations and resources to help the reader understand how the Village's financial information relates to the services the Village provides and the activities it performs. Page 113 VILLAGE OF BUFFALO GROVE, ILLINOIS Net Position by Component Last Ten Fiscal Years Fiscal Years 2013 2012**2011 2010 Governmental Activities Net Investment in Capital Assets 51,011,919$ 52,096,183$ 53,362,147$ 53,742,519$ Restricted 2,412,222 6,268,039 1,918,263 956,803 Unrestricted 12,387,400 11,550,011 13,429,876 15,738,272 Total Governmental Activities Net Position 65,811,541$ 69,914,233$ 68,710,286$ 70,437,594$ Business-type Activities Net Investment in Capital Assets 35,553,648$ 36,706,161$ 37,807,146$ 38,410,966$ Restricted - - - - Unrestricted 11,515,793 11,242,301 12,989,124 14,644,341 Total Business-type Activities Net Position 47,069,441$ 47,948,462$ 50,796,270$ 53,055,307$ Primary Government Net Investment in Capital Assets 86,565,567$ 88,802,344$ 91,169,293$ 92,153,485$ Restricted 2,412,222 6,268,039 1,918,263 956,803 Unrestricted 23,903,193 22,792,312 26,419,000 30,382,613 Total Primary Government Net Position 112,880,982$ 117,862,695$ 119,506,556$ 123,492,901$ *Transitional fiscal year May 1, 2007 through December 31, 2007 ** Auditors restated 2012, from 2011 and earlier have not been adjusted. Data Source Audited Financial Statements Page 114 2009 2008 2007*2007 2006 2005 54,563,385$ 53,551,265$ 53,702,484$ 53,726,929$ 53,188,591$ 49,264,115$ 140,712 80,438 33,167 1,294,897 1,425,988 4,955,378 16,590,052 23,259,339 27,184,985 35,512,486 37,786,827 34,551,091 71,294,149$ 76,891,042$ 80,920,636$ 90,534,312$ 92,401,406$ 88,770,584$ 39,808,889$ 41,374,269$ 42,667,740$ 42,667,526$ 43,646,133$ 44,123,414$ - - - - - - 15,011,209 17,003,316 17,509,194 18,553,703 18,300,838 18,375,098 54,820,098$ 58,377,585$ 60,176,934$ 61,221,229$ 61,946,971$ 62,498,512$ 94,372,274$ 94,925,534$ 96,370,224$ 96,394,455$ 96,834,724$ 93,387,529$ 140,712 80,438 33,167 1,294,897 1,425,988 4,955,378 31,601,261 40,262,655 44,694,179 54,066,189 56,087,665 52,926,189 126,114,247$ 135,268,627$ 141,097,570$ 151,755,541$ 154,348,377$ 151,269,096$ Page 115 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position Last Ten Fiscal Years Fiscal Years 2013 2012**2011 2010 Expenses Governmental Activities General Government 6,567,545$ 6,101,008$ 5,010,274$ 4,769,874$ Public Safety 21,964,989 22,344,117 22,657,643 22,312,910 Public Works 15,091,414 12,026,911 11,106,433 11,081,374 Interest 374,511 384,180 248,539 194,655 Total Governmental Activities Expenses 43,998,459$ 40,856,216$ 39,022,889$ 38,358,813$ Business-type Activities Water & Sewer 8,079,364 8,931,336 8,753,149 9,865,981 Refuse Service 902,811 874,366 935,365 942,757 Golf Courses 2,942,747 2,991,170 3,057,912 3,043,367 Total Business-type Activities Expenditures 11,924,922 12,796,872 12,746,426 13,852,105 Total Primary Government Expenses 55,923,381$ 53,653,088$ 51,769,315$ 52,210,918$ Program Revenue Governmental Activities Charges for Services General Government 1,207,504$ 1,226,552$ 1,240,547$ 1,195,928$ Public Safety 1,498,819 1,283,956 1,404,308 1,419,761 Public Works 82,393 118,547 86,421 71,606 Operating Grants and Contributions 1,161,509 1,178,442 1,230,387 1,253,103 Total Governmental Activities Program Revenues 3,950,225 3,807,497 3,961,663 3,940,398 Business-type activities Charges for Services Water & Sewer 8,692,812 7,464,870 7,782,000 9,091,520 Refuse Service 1,040,878 1,050,386 1,036,872 1,041,661 Golf Courses 1,178,368 2,221,714 2,175,418 2,088,106 Operating Grants and Contributions 1,072,499 - - - Capital Grants and Contributions - - - - Total Business-type Activities Program Revenues 11,984,557 10,736,970 10,994,290 12,221,287 Total Primary Government Revenues 15,934,782$ 14,544,467$ 14,955,953$ 16,161,685$ Net (Expense) Revenue Governmental Activities (40,048,234)$ (37,048,719)$ (35,061,226)$ (34,418,415)$ Business-type Activities 59,635 (2,059,902) (1,752,136) (1,630,818) Total Primary Government Net Expense (39,988,599)$ (39,108,621)$ (36,813,362)$ (36,049,233)$ *Transitional fiscal year May 1, 2007 through December 31, 2007 ** Auditors restated 2012, from 2011 and earlier have not been adjusted. Page 116 2009 2008 2007*2007 2006 2005 6,182,475$ 5,705,497$ 4,019,032$ 4,686,330$ 4,582,741$ 4,701,408$ 22,753,590 21,115,737 15,324,061 18,951,546 18,137,721 16,822,265 10,421,659 13,222,026 8,232,685 12,479,424 11,441,440 9,523,240 334,142 379,501 216,379 529,858 1,217,883 994,708 39,691,866$ 40,422,761$ 27,792,157$ 36,647,158$ 35,379,785$ 32,041,621$ 9,519,169 8,684,651 5,165,701 7,256,639 7,168,405 6,780,153 944,392 1,017,164 777,716 1,024,248 956,915 971,980 3,118,647 3,423,903 2,637,072 3,102,770 3,333,644 3,101,134 13,582,208 13,125,718 8,580,489 11,383,657 11,458,964 10,853,267 53,274,074$ 53,548,479$ 36,372,646$ 48,030,815$ 46,838,749$ 42,894,888$ 977,464$ 1,211,188$ 1,139,242$ 1,880,714$ 2,048,850$ 1,683,585$ 1,563,236 1,514,666 1,050,920 1,525,943 1,553,949 1,476,845 50,709 94,670 94,670 - - - 1,349,044 1,307,895 950,383 1,532,557 - - 3,940,453 4,128,419 3,235,215 4,939,214 3,602,799 3,160,430 8,008,360 7,538,534 4,799,193 6,694,051 7,688,143 6,279,172 1,004,431 923,207 704,841 991,140 990,113 975,290 2,320,247 2,356,962 2,141,860 2,323,919 2,567,759 2,637,717 - - - - 1,444,395 1,915,746 - 133,599 497,875 450,000 1,867,859 760,726 11,333,038 10,952,302 8,143,769 10,459,110 14,558,269 12,568,651 15,273,491$ 15,080,721$ 11,378,984$ 15,398,324$ 18,161,068$ 15,729,081$ (35,751,413)$ (36,294,342)$ (24,556,942)$ (31,707,944)$ (31,776,986)$ (28,881,191)$ (2,249,170) (2,173,416) (436,720) (924,547) 3,099,305 1,715,384 (38,000,583)$ (38,467,758)$ (24,993,662)$ (32,632,491)$ (28,677,681)$ (27,165,807)$ Page 117 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position (Cont.) Last Ten Fiscal Years Fiscal Years 2013 2012 2011 General Revenues and Other Changes in Net Position Governmental Activities Taxes Property 14,504,750$ 14,330,407$ 14,458,248$ Sales and Home Rule 7,803,749 7,570,915 6,984,134 Income and Use 4,737,656 5,462,111 3,714,864 Telecommunications 1,943,811 2,200,809 2,134,462 Utility 2,629,997 2,510,242.00 2,567,091 Property Transfer 760,164 459,036 629,376 Other 1,052,788 1,070,409 1,044,164 Investment Earnings 54,522 132,436 133,059 Miscellaneous 1,506,994 1,239,906 1,495,155 Transfers 951,111 635,500 553,000 Proceeds from Insurance pool - - - Total Government Activities 35,945,542 35,611,771 33,713,553 Business-type Activities Property - - - Investment Earnings 12,455 27,087 41,100 Miscellaneous - 1,259 4,999 Transfers (951,111) (635,500) (553,000) Total Business-type Activities (938,656) (607,154) (506,901) Total Primary Government 35,006,886$ 35,004,617$ 33,206,652$ Change in Net Position Governmental Activities (4,102,692)$ (1,436,948)$ (1,347,673)$ Business-type Activities (879,021) (2,667,056) (2,259,037) Total Primary Government Change in Net Position (4,981,713)$ (4,104,004)$ (3,606,710)$ Data Source Audited Financial Statements Page 118 2010 2009 2008 2007*2007 2006 2005 13,657,589$ 12,504,508$ 12,058,815$ 706,749$ 10,214,926$ 11,622,088$ 10,868,824$ 7,309,800 7,196,969 8,436,647 5,741,981 8,619,267 8,800,041 7,960,163 4,165,248 3,601,619 4,646,776 2,725,204 4,280,237 3,855,616 3,433,471 2,183,190 2,345,249 2,417,496 1,967,348 2,436,233 2,230,092 2,442,641 2,393,340 - - - - - - 545,515 670,762 590,596 600,379 980,213 1,346,946 1,212,292 1,017,612 1,006,249 1,076,929 247,827 273,335 293,990 291,839 250,290 490,881 810,982 958,715 1,636,589 1,109,664 599,072 1,822,276 1,403,283 2,081,112 1,254,948 855,100 1,126,625 1,058,732 217,000 935,000 80,230 899,950 544,950 784,625 414,760 - - - - - 925,867 - 33,561,860 30,154,520 32,199,583 15,103,101 29,840,850 32,095,554 28,281,794 - - - - 166,007 82,989 122,832 (46,666) (374,632) 267,263 292,375 445,766 363,044 175,347 2,133 1,315 187,034 - 131,982 - - (217) (935,000) (80,230) (899,950) (544,950) (784,625) (414,760) (44,750) (1,308,317) 374,067 (607,575) 198,805 (338,592) (116,581) 33,517,110$ 28,846,203$ 32,573,650$ 14,495,526$ 30,039,655$ 31,756,962$ 28,165,213$ (856,555)$ (5,596,893)$ (4,094,759)$ (9,453,841)$ (1,867,094)$ 318,568$ (599,397)$ (1,675,568) (3,557,487) (1,799,349) (1,044,295) (725,742) 2,760,713 1,598,803 (2,532,123)$ (9,154,380)$ (5,894,108)$ (10,498,136)$ (2,592,836)$ 3,079,281$ 999,406$ Page 119 VILLAGE OF BUFFALO GROVE, ILLINOIS Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years 2013 2012**2011 2010 General Fund Non Spendable 562,399$ 518,437$ 1,031,936$ -$ Restricted 162,274 - - - Committed 7,345,420 7,335,685 7,948,344 - Assigned - - - - Unassigned 12,395,113 10,759,935 9,871,895 - Reserved - - - 1,138,273 Unreserved - - - 17,763,849 Total General Fund 20,465,206 18,614,057 18,852,175 18,902,122 All other Governmental Funds Non Spendable Restricted 1,796,997 6,112,703 1,918,263 - Committed - - - Assigned 101,213 144,075 146,116 - Unassigned (927,395) (253,826) (234,206) - Reserved - - - - Unreserved - - - 20,271 Unreserved, Reported in Special Revenue Funds - - - 2,124,937 Capital Projects Funds - - - 927,626 Total All other Governmental Funds 970,815 6,002,952 1,830,173 3,072,834 Total Governmental Funds 21,436,021$ 24,617,009$ 20,682,348$ 21,974,956$ *Transitional fiscal year May 1, 2007 through December 31, 2007 ** Auditors restated 2012, from 2011 and earlier have not been adjusted. Data Source Audited Financial Statements Page 120 2009 2008 2007*2007 2006 2005 2004 -$ -$ -$ -$ -$ -$ -$ - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,248,428 1,536,571 1,846,137 1,846,137 1,787,884 1,524,130 1,339,393 18,307,270 22,444,819 27,556,199 27,556,199 27,252,660 23,935,055 23,556,556 19,555,698 23,981,390 29,402,336 29,402,336 29,040,544 25,459,185 24,895,949 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (12,970) 33,167 486,946 486,946 499,743 4,543,605 4,311,770 1,252,015 1,239,501 1,942,258 1,942,258 1,813,406 1,496,628 953,672 903,315 1,911,178 2,436,815 2,436,815 3,888,047 3,928,552 3,618,540 2,142,360 3,183,846 4,866,019 4,866,019 6,201,196 9,968,785 8,883,982 21,698,058$ 27,165,236$ 34,268,355$ 34,268,355$ 35,241,740$ 35,427,970$ 33,779,931$ Page 121 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years 2013 2012**2011 2010 Revenues Property Taxes 14,504,750$ 14,330,407$ 14,458,248$ 13,657,589$ Other Taxes 19,240,365 18,325,614 17,074,091 17,614,705 Licenses and Permits 294,622 275,434 280,139 278,164 Intergovernmental 997,371 1,011,949 1,060,719 1,096,794 Fines and Forfeitures 1,647,364 1,283,956 1,404,308 1,419,761 Charges for Services 1,010,868 1,236,158 1,216,497 1,145,679 Investment Income 54,522 132,457 133,196 249,396 Miscellaneous 1,506,994 1,239,861 1,442,617 1,720,640 Total Revenue 39,256,856 37,835,836 37,069,815 37,182,728 Expenditure Current General Government 6,465,636 5,556,101 5,509,433 4,979,904 Public Safety 21,805,910 21,791,218 22,008,351 21,802,732 Public Works 12,178,705 9,865,723 8,256,079 8,704,005 Capital Outlay 1,347,276 1,561,904 1,510,924 3,157,156 Debt Service Principal 940,000 920,000 1,055,000 980,000 Interest 385,395 285,420 248,539 194,655 Other Charges - - - 127,930 Total Expenditures 43,122,922 39,980,366 38,588,326 39,946,382 Excess (Deficiency) of Revenues over Expenditures (3,866,066) (2,144,530) (1,518,511) (2,763,654) Other Financing Sources (Uses) Transfers In 2,119,313 2,621,132 1,891,354 2,153,190 Transfers Out (1,434,235) (1,985,632) (1,338,354) (1,936,190) Auction Proceeds - 45 52,538 103,565 Bond Issued - 6,000,000 - 7,760,000 Premium on Issuance of Debt - 91,669 - 178,229 Transfer to Escrow Agent - - - (5,218,242) Total Other Financing Sources (Uses)685,078 6,727,214 605,538 3,040,552 Net Change in Fund Balance (3,180,988) 4,582,684 (912,973) 276,898 Debt Service as a Percentage of Non-Capital Expenditures 3.17%3.14%3.52%3.19% *Transitional fiscal year May 1, 2007 through December 31, 2007 ** Auditors restated 2012, from 2011 and earlier have not been adjusted. Page 122 2009 2008 2007*2007 2006 2005 2004 12,504,508$ 12,058,815$ 5,797,846$ 10,402,764$ 11,245,966$ 11,715,601$ 12,463,170$ 14,806,744 17,168,444 11,282,739 16,589,285 16,526,685 15,340,405 13,483,796 276,857 278,965 245,148 825,691 836,279 860,838 764,834 1,106,234 1,134,407 815,669 1,253,319 3,110,490 2,283,034 1,218,020 1,559,190 1,514,666 1,050,918 1,525,943 1,553,949 1,476,845 1,200,967 970,537 1,200,381 1,028,810 1,334,260 1,414,337 822,748 1,386,951 490,881 790,244 911,444 1,562,291 1,094,843 599,072 430,943 1,444,610 2,081,112 1,254,948 855,101 1,126,625 1,058,732 902,824 33,159,561 36,227,034 22,387,522 34,348,654 36,909,174 34,157,275 31,851,505 5,596,822 5,458,962 3,455,213 4,955,659 4,276,374 4,326,708 4,044,058 20,882,745 20,499,004 14,211,380 18,185,545 17,521,978 16,390,156 16,411,219 10,337,090 10,792,931 7,225,387 9,319,231 8,011,071 7,189,290 6,783,338 1,245,940 1,286,175 502,701 1,945,053 2,285,510 750,020 1,498,844 1,165,000 1,150,000 1,312,381 1,234,765 6,020,700 3,362,814 3,521,160 334,142 379,501 424,220 476,736 1,440,436 905,008 998,046 - - - - - - - 39,561,739 39,566,573 27,131,282 36,116,989 39,556,069 32,923,996 33,256,665 (6,402,178) (3,339,539) (4,743,760) (1,768,335) (2,646,895) 1,233,279 (1,405,160) 2,909,382 4,121,451 3,064,166 3,453,845 3,586,075 2,770,109 9,503,218 (1,974,382) (4,041,221) (2,164,216) (2,658,895) (2,895,578) (2,355,349) (2,879,098) - - - - - - - - - - - - - 2,600,000 - - - - - - - - - - - - - - 935,000 80,230 899,950 794,950 690,497 414,760 9,224,120 (5,467,178) (3,259,309) (3,843,810) (973,385) (1,956,398) 1,648,039 7,818,960 3.91%4.00%6.52%5.01%20.02%13.26%14.23% Page 123 VILLAGE OF BUFFALO GROVE, ILLINOIS Assessed Value and Actual Value of Taxable Property Last Ten Levy Years Tax Levy Residential Commercial Industrial Other Year Property Property Property Property 2013 *1,158,989,010$ *287,503,706$ *8,929,361$ *618,433$ 2012 1,223,424,081 296,910,564 10,221,534 617,198 2011 1,338,206,375 315,118,343 10,706,904 832,216 2010 1,435,137,071 325,603,742 12,723,472 636,502 2009 1,535,445,605 346,125,532 14,583,031 628,346 2008 1,510,235,133 353,063,176 17,166,096 630,017 2007 1,454,038,913 339,683,354 16,474,758 624,450 2006 1,338,444,546 322,892,024 15,268,492 617,345 2005 1,276,516,807 318,031,796 13,102,464 613,726 2004 1,155,398,804 325,308,649 11,332,296 738,791 *Cook County property class and assessed valuation is an estimate. Cook County information not yet available. Note: Total Direct Tax Rate is weighted for both Cook and Lake Counties Data Source Office of Cook County Clerk Office of Lake County Clerks Page 124 Estimated Estimated Total Assessed Total Direct Actual Taxable Actual Taxable Value Tax Rate Value Value (%) *1,456,040,510$ *0.9962 *4,368,121,530$ *33.333% 1,531,173,377 0.9187 4,593,520,131 33.333% 1,664,431,364 0.8594 4,993,294,092 33.333% 1,774,100,787 0.7999 5,322,302,361 33.333% 1,896,782,514 0.7359 5,690,347,542 33.333% 1,881,094,422 0.6661 5,643,283,266 33.333% 1,810,821,475 0.6668 5,432,464,425 33.333% 1,677,222,407 0.6536 5,031,667,221 33.333% 1,608,264,793 0.6330 4,824,794,379 33.333% 1,492,778,540 0.6421 4,478,335,620 33.333% Page 125 VILLAGE OF BUFFALO GROVE, ILLINOIS Property Tax Rates - Direct and Overlapping Governments Last Ten Levy Years Comparative Tax Rates (Per $100 Assessed and Equalized Valuation) Tax Levy Year 2013 2012 2011 2010 2009 Lake County Village of Buffalo Grove 0.983 0.929 0.852 0.797 0.750 County, including Forest Preserve 0.881 0.820 0.755 0.703 0.664 Combined School Districts (102, 125, 532)7.068 6.779 6.158 5.610 5.301 Buffalo Grove Park District 0.537 0.511 0.452 0.425 0.351 Vernon Area Public Library 0.311 0.441 0.385 0.315 0.301 All Other (3)0.105 0.106 0.092 0.102 0.094 Total (4)9.885 9.586 8.694 7.952 7.461 Percentage Change Year -to-Year 3.12%10.26%9.33%6.58%5.04% Cook County Village of Buffalo Grove N/A 1.030 0.886 0.810 0.691 County, including Forest Preserve N/A 0.594 0.520 0.474 0.464 Metropolitan Water Reclamation District of Greater Chicago N/A 0.370 0.320 0.274 0.261 Combined School Districts (21, 214, 512)N/A 6.917 6.565 5.792 5.103 Buffalo Grove Park District N/A 0.557 0.479 0.439 0.371 Indian Trails Public Library District N/A 0.463 0.393 0.347 0.307 All Other (3)N/A 0.187 0.107 0.071 0.068 Total (5)N/A 10.118 9.270 8.207 7.265 Percentage Change Year -to-Year N/A 9.15%12.95%12.97%1.71% Notes: (1) Taxes Levied on a calendar year basis for collection in the subsequent year. (2) The Village is a home rule unit under the 1970 Illinois State Constitution and, as such, has no statutory tax rate limitations. (3) Includes Road and Bridge and General Assistance for the Township herein. (4) Representative tax rates for other government units are from Vernon Township Tax Code 16- 92, which represents the largest portion of the Village's 2013 EAV. (5) Representative tax rates for other government units are from Cook County Tax Code 38077, which represents the largest portion of the Village's 2012 EAV within Cook County. N/A - Not Yet Available Data Source Cook County Tax Extension Lake County Tax Extension Page 126 2008 2007 2006 2005 2004 0.665 0.649 0.633 0.608 0.603 0.652 0.645 0.654 0.664 0.684 5.102 5.066 5.318 5.234 5.300 0.370 0.380 0.403 0.375 0.349 0.222 0.219 0.317 0.223 0.325 0.092 0.092 0.094 0.093 0.120 7.103 7.051 7.419 7.197 7.381 0.74%-4.96%3.08%-2.49%2.13% 0.670 0.729 0.731 0.726 0.785 0.466 0.499 0.557 0.607 0.662 0.252 0.263 0.284 0.315 0.347 5.004 5.035 5.613 5.434 5.359 0.376 0.416 0.455 0.435 0.457 0.308 0.297 0.320 0.312 0.323 0.067 0.079 0.080 0.076 0.064 7.143 7.318 8.040 7.905 7.997 -2.39%-8.98%1.71%-1.15%-7.76% Page 127 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Property Taxpayers Current Fiscal Year and Nine Years Ago 2013 Percentage of Total Village Equalized Taxable Assessed Assessed Taxpayer Valuation Rank Valuation Chevy Chase Business Park Ltd 20,464,998$ 1 1.406% Hamilton Partners(1)10,137,535 2 0.696% Millbrook 9,215,125 3 0.633% Penobscot Management LLC(3)8,467,934 4 0.582% Riverwalk South LLC(2)8,223,173 5 0.565% Arthur J. Rogers and Company (4)7,793,556 6 0.535% Aptakisic Creek Corporate Park, LLC 7,743,800 7 0.532% Remax Consumer Plastics, Inc.7,471,298 8 0.513% MFREVF-Windbrooke LP 7,415,247 9 0.509% Riverwalk II LLC 5,913,136 10 0.406% Manufacturers Life Insurance Co Amli at Chevy Chase, LP Inland Real Estate Corp First Chicago Property Note: Every effort was made to seek out and report the largest taxpayers. However, many of the taxpayers contain multiple parcels, and it is possible that some parcels and their valuations have been overlooked. (1) Previously HP Riverwalk II, LLC (2) Previously Marack and Associates (3) Previously The Wheatlands LLC (4) Previously American National Bank and Trust of Chicago Data Source: Office of the County Clerk of Cook Office of the County Clerk of Lake Page 128 2004 Percentage of Total Village Equalized Equalized Assessed Assessed Valuation Rank Valuation 19,242,441 2 1.289% 13,562,526 4 0.909% 9,410,748 6 0.630% 12,832,799 5 0.860% 21,669,426 1 1.452% 6,561,702 9 0.440% 6,818,815 8 0.457% 15,726,277 3 1.053% 7,646,255 7 0.512% 6,237,739 10 0.418% Page 129 VILLAGE OF BUFFALO GROVE, ILLINOIS Property Tax Levy and Collections Last Ten Fiscal Years Lake County Cook County Collected within the Collected within the Fiscal Year After the Levy Fiscal Year After the Levy Levy Tax Percentage Tax Percentage Year Levied Amount of Levy Levied Amount of Levy 2012 11,183,780$ 11,105,274 99.30%3,449,572 3,399,477 98.55% 2011 11,026,478 11,019,638 99.94%3,279,285 3,225,824 98.37% 2010 10,911,629 10,902,757 99.92%3,280,083 3,203,676 97.67% 2009 10,826,999 10,818,398 99.92%3,131,059 2,992,768 95.58% 2008 9,648,296 9,639,444 99.91%2,882,493 2,902,223 100.68% 2007 9,137,324 9,133,824 99.96%2,937,238 2,871,428 97.76% 2006 8,389,127 8,383,359 99.93%2,572,578 2,538,174 98.66% 2005 7,690,488 7,692,967 100.03%2,492,952 2,454,868 98.47% 2004 7,068,040 7,063,323 99.93%2,516,966 2,465,488 97.95% 2003 6,833,964 6,833,112 99.99%2,277,392 2,259,270 99.20% Note: Property Assessed at 33 1/3%of actual value Property is assessed on the following basis: Cook County - Triennial; Lake County Quadrennial (minimum) Collection of prior year taxes are immaterial Data Source: Office of the County Clerk Page 130 Village Total Percentage Collected of Levy 14,504,751 99.12% 14,245,462 99.58% 14,106,433 99.40% 13,811,166 98.95% 12,541,667 100.09% 12,005,252 99.43% 10,921,533 99.63% 10,147,835 99.65% 9,528,811 99.41% 9,092,382 99.79% Page 131 VILLAGE OF BUFFALO GROVE, ILLINOIS Sales Tax Revenue and Number of Principal Payers Revenue By Category Last Ten Calendar Years Calendar Year 2013 2012 2011 2010 General Merchandise 10,105$ *17,526$ 18,514$ 3,901$ Food 1,133,605 1,193,312 1,244,667 1,362,170 Drinking and Eating Places 1,025,547 997,738 921,617 933,212 Apparel 120,210 130,163 129,402 128,663 Furniture, Households and radio 463,678 *437,774 378,836 415,396 Lumber, Building and Hardware 1,236,689 812,434 534,413 402,483 Automotive Filling Stations 857,713 954,996 853,864 959,870 Drugs and Miscellaneous Retail 1,915,937 1,847,550 1,982,824 1,431,121 Agriculture and All Other 1,572,248 1,347,303 1,193,620 1,062,978 Manufacturers 285,848 334,442 378,326 379,893 8,621,580$ 8,073,238$ 7,636,083$ 7,079,687$ Total Number of Payers 972 966 1,286 997 Village Direct Sales Tax rate 1.00%1.00%1.00%1.00% Village Home Rule Tax rate 1.00%1.00%1.00%1.00% Note: Blank Categories have less than four taxpayers; therefore, no data is shown to protect the confidentiality of individual taxpayers. * Excludes values for taxpayers in Cook County. Data Source: Office of the County Clerk of Cook Office of the County Clerk of Lake Illinois Department of Revenue Page 132 2009 2008 2007 2006 2005 2004 4,637$ 5,819$ 3,793$ 1,346$ 1,662$ 4,614$ 1,357,378 1,415,835 1,371,195 1,340,177 1,360,403 1,256,331 941,804 906,628 874,307 924,738 932,646 833,941 112,951 104,376 110,386 67,072 100,045 81,888 223,008 521,316 422,342 530,825 534,243 456,248 716,935 1,379,764 2,181,496 3,326,323 3,666,077 3,279,174 1,222,500 1,177,121 1,715,400 1,581,217 1,459,577 1,266,367 1,432,484 1,285,513 1,237,894 1,206,917 1,088,992 929,343 1,257,806 2,082,955 1,777,144 1,755,277 1,744,041 1,258,957 399,141 390,034 338,494 438,024 502,410 498,294 7,668,644$ 9,269,361$ 10,032,451$ 11,171,916$ 11,390,096$ 9,865,157$ 975 1,002 1,196 1,311 1,271 1,189 1.00%1.00%1.00%1.00%1.00%1.00% 1.00%1.00%1.00%1.00%1.00%0.50% Page 133 VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Sales Tax Rates Last Ten Fiscal years State of Village Illinois Fiscal Direct Sales Tax Year Rate Rate 2013 1.00%6.50% 2012 1.00%6.50% 2011 1.00%6.50% 2010 1.00%6.50% 2009 1.00%6.50% 2008 1.00%6.50% *2007 1.00%6.50% 2007 1.00%6.50% 2006 1.00%6.50% 2005 1.00%6.50% 2004 1.00%6.50% *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: Illinois Department of Revenue Page 134 VILLAGE OF BUFFALO GROVE, ILLINOIS Ratio of Outstanding Debt by Type Last Ten Years Governmental Activities Tax General Increment Special General Year Obligation Financing Service Area Obligation Revenue Ended Bonds Bonds Bonds Bonds Bonds 12/31/2013 11,340,000$ -$ -$ -$ -$ 12/31/2012 12,280,000 - - - - 12/31/2011 7,200,000 - - - - 12/31/2010 8,255,000 - - - - 12/31/2009 6,575,000 - - - - 12/31/2008 7,740,000 - - - - *12/31/2007 8,890,000 - - - 4/30/2007 10,202,381 - - 174,768 - 4/30/2006 11,437,146 - - 345,003 - 4/30/2005 12,597,846 3,400,000 1,460,000 689,303 - 4/30/2004 13,530,660 4,150,000 3,140,000 1,034,647 - *Transitional fiscal year May 1, 2007 through December 31, 2007 December 31, 2007 represents an eight-month period. Notes: Details of the Village's outstanding debt can be found in the Notes to the Financial Statements. (1) See the Schedule of Demographic and Economic Statistics for equalized assessed valuation of property, personal income, and population data. Page 135 Ratio of Total Outstanding Debt Debt to Total Outstanding Total Equalized Outstanding as a Percentage Primary Assessed Debt of Personal Government Valuation Per Capita (1)Income 11,340,000$ 0.78%271.43$ 0.60% 12,280,000 0.80%289.64 0.65% 7,200,000 0.43%171.79 0.39% 8,255,000 0.47%198.93 0.45% 6,575,000 0.35%156.62 0.36% 7,740,000 0.41%183.54 0.44% 8,890,000 0.49%209.47 0.51% 10,377,149 0.62%243.80 0.60% 11,782,149 0.73%274.96 0.69% 18,147,149 1.22%420.12 1.08% 21,855,307 1.57%508.70 1.28% Page 136 VILLAGE OF BUFFALO GROVE, ILLINOIS Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years Ratio of Total Amounts Outstanding Available Debt to Total General in Debt Equalized Outstanding Fiscal Obligation Service Assessed Debt Year Bonds Fund Total Valuation Per Capita (1) 2013 11,340,000$ -$ 11,340,000$ 0.78%271.43$ 2012 12,280,000 19,527 12,260,473 0.80%289.64 2011 7,200,000 12,543 7,187,457 0.43%171.49 2010 8,255,000 20,271 8,234,729 0.46%198.45 2009 6,575,000 (12,970) 6,587,970 0.35%156.93 2008 7,740,000 33,167 7,706,833 0.41%182.76 2007*8,890,000 98,332 8,791,668 0.49%207.16 2007 10,202,381 486,946 9,715,435 0.58%228.25 2006 11,780,000 499,743 11,280,257 0.70%263.24 2005 12,597,846 - 12,597,846 0.84%291.65 2004 14,565,307 - 14,565,307 1.05%339.02 *Transitional fiscal year May 1, 2007 through December 31, 2007 Notes: Details of the Village's outstanding debt can be found in the Notes to the Financial Statements. (1) See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property for property value data. Page 137 VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Governmental Activities Debt As of December 31, 2013 Percentage of Village of Debt Applicable Buffalo Grove Gross to the Village of Share Debt Buffalo Grove*of Debt Overlapping Debt School Districts Cook County School District #21 44,265,000$ 17.31%7,662,272$ Kildeeer Countryside Community Consolidated #96 1,015,000 38.98%395,647 Aptakisic-Tripp Community Consolidated #102 4,160,000 76.35%3,176,160 Lincolnshire-Half Day District #103 5,020,000 11.60%582,320 Adlai E. Stevenson H.S. District # 125 17,735,000 37.22%6,600,967 Wheeling Township H.S. District #214 62,535,000 3.87%2,420,105 Harper Community College #512 175,310,000 1.77%3,102,987 College of Lake County #532 52,385,000 5.23%2,739,736 Total School Districts 362,425,000 26,680,193 Other Than School Districts Lake County 110,575,000 4.96%5,484,520 Lake County Forest Preserve 289,835,000 4.96%14,375,816 Cook County 3,616,435,000 0.25%9,041,088 Cook County Forest Preserve 187,950,000 0.25%469,875 Metropolitan Water Reclamation District 2,168,368,889 0.25%5,420,922 Buffalo Grove Park District 15,810,000 95.55%15,106,455 Wheeling Park District 10,200,000 6.93%706,860 Total Other than School Districts 6,399,173,889 50,605,536 Total Overlapping Debt 6,761,598,889 77,285,728 Total Village of Buffalo Grove Direct Debt 11,340,000 100.00%11,340,000 Total Direct and Overlapping Debt 6,772,938,889$ 88,625,728$ *Determined by ratio of assessed valuation of property subject to taxation in the Village of Buffalo Grove to valuation of property subject to overlapping unit Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Village. This schedule estimates the portion of outstanding debt of those overlapping governments that is borne by the residents and businesses of the Village of Buffalo Grove. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Page 138 VILLAGE OF BUFFALO GROVE, ILLINOIS Schedule of Legal Debt Margin December 31, 2013 Under the 1970 Illinois Constitution, there is no legal limit for home rule municipalities except as set by the General Assembly. Page 139 VILLAGE OF BUFFALO GROVE, ILLINOIS Demographic and Economic Statistics Last Ten Years Equalized Per Capita Fiscal Assessed Personal Personal Per Capita Unemployment Year Population Valuation EAV Income Income Rate 2013 41,778 E 1,456,040,510$ 34,852 1,882,391,346$ 45,057 1 6.8% 2012 42,330 E 1,531,173,377 36,172 1,891,582,681 44,687 E 7.1% 2011 41,911 E 1,664,431,364 39,713 1,854,311,029 44,244 E 7.6% 2010 41,496 A 1,774,100,787 42,754 1,817,773,776 43,806 3 8.4% 2009 41,980 E 1,896,782,514 45,138 1,802,196,362 42,930 E 7.8% 2008 42,170 E 1,881,094,422 44,607 1,774,145,979 42,071 E 4.8% *2007 42,440 E 1,810,821,475 42,668 1,749,795,121 41,230 E 3.7% 2007 42,564 E 1,677,222,407 39,405 1,719,809,470 40,405 E 3.2% 2006 42,851 E 1,608,264,793 37,532 1,696,777,664 39,597 E 3.2% 2005 43,195 A 1,492,778,540 34,559 1,676,191,104 38,805 2 3.8% 2004 42,963 A 1,393,418,384 32,433 1,709,669,622 39,794 E 4.2% A - Actual 1- US Census E - Estimate 2- Northern Illinois University Estimate 3 - American Community Survey 3 Year Estimates *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: U.S. Department of Labor, Bureau of Labor Statistics U.S. Census Bureau Page 140 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Village Employers Current Year and Nine Years Ago 2013 2004 Percent Percent of Total of Total Village Village Employer Employees Rank Population Employees Rank Population Siemens Building Technologies 1,800 1 4.31%1,500 2 3.49% Rexam Mild Manufacturing 1,450 2 3.47% I.S.I.1,200 3 2.87% ABS Consulting 550 4 1.32% Plexus Corporation 370 5 0.89% GSF-USA, Inc.250 6 0.60% Dell 225 7 0.54% Amerisource Bergen Technology G 200 8 0.48% Crosscom National, LLC 200 9 0.48% Leica Microsystems, Inc.200 10 0.48% International Profit Associates, Inc.1,900 1 4.42% Federal Building Services, Inc.1,100 3 2.56% Eastek International Corporation 850 4 1.98% Precise Technology 800 5 1.86% Kay and Associates, Inc.700 6 1.63% R.G. Ray Corporation 350 7 0.81% ASAP Software Express 225 8 0.52% Bran-Zan Co.210 9 0.49% Wes-Tech Automation Systems 200 10 0.47% (1) prior to 2005 - Courtesy Corporation Data Source: Village Records - Earliest available Page 141 VILLAGE OF BUFFALO GROVE, ILLINOIS Full-Time Equivalent Employees Last Ten Years Function/Program 2013 2012 2011 2010 General Government Administration Village Managers Office 5.5 4.5 4.0 4.0 Planning 1.5 1.5 1.5 1.5 Information Technology 3.5 3.5 3.5 3.5 Finance 9.5 8.5 8.5 8.5 Building and Zoning 10.0 10.0 10.0 10.0 Public Safety Police Full-Time Police Officers 64.0 69.0 69.0 69.0 Community Service Officers 3.0 3.0 3.0 3.0 Civilians 17.0 16.5 17.5 17.5 Fire Full-time Firefighters/Paramedics 58.0 62.0 62.0 62.0 Civilians 3.5 3.5 6.0 6.0 Public Works Public Works Administration 5.0 11.0 11.0 12.0 Streets/Forestry 18.5 20.0 20.0 20.0 Water/Sewer 8.0 13.0 13.0 13.0 Central garage 5.5 5.5 5.5 5.5 Building Maintenance 4.0 4.0 4.0 4.0 Recreation Administration 18.0 13.5 13.5 13.5 Grounds Maintenance 16.0 15.0 15.0 15.0 250.5 264.0 267.0 268.0 Recreation Seasonal 24.5 34.0 34.0 34.0 *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: Village Finance Department Page 142 2009 2008 2007*2007 2006 2005 2004 4.5 5.0 5.0 4.5 4.5 4.5 4.5 1.5 1.5 1.5 1.5 1.5 2.0 2.0 3.5 3.5 3.5 3.5 3.0 3.0 3.0 9.0 9.5 9.5 9.5 9.5 9.5 10.0 10.0 10.5 10.5 10.5 10.5 10.5 10.5 71.0 71.0 71.0 70.0 70.0 71.0 70.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 20.5 21.5 21.5 22.5 22.0 22.5 22.0 62.0 62.0 61.0 62.0 62.0 62.0 62.0 6.0 6.0 6.0 6.0 5.0 5.0 5.0 12.0 14.5 14.5 14.5 15.5 15.5 15.5 20.0 20.0 20.0 20.0 19.0 20.0 21.0 13.0 14.0 14.0 14.0 13.0 10.0 11.0 5.5 5.0 5.0 4.0 5.0 5.0 5.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 13.5 13.5 13.5 13.5 13.5 13.5 13.5 15.0 15.0 15.0 15.0 15.0 15.0 15.0 274.0 279.5 278.5 278.0 276.0 276.0 277.0 34.0 34.0 34.0 34.0 34.0 34.0 34.0 Page 143 VILLAGE OF BUFFALO GROVE, ILLINOIS Operating Indicators Last Ten Fiscal Years Function/Program 2013 2012 2011 2010 General Government Building and Zoning Building Permits Issued 2,651 2,206 1,930 1,959 Building Inspections Conducted 7,456 15,858 9,661 7,088 Property Maintenance Inspections Conducted 3,288 5,828 3,462 3,158 Public Safety Police Physical Arrests 759 671 820 981 Parking Violations 2,984 3,341 2,031 2,062 Traffic Violations 13,171 10,826 11,867 11,999 DUI Arrests 124 107 164 222 Vehicle Crashes 1,507 1,260 1,396 1,391 Fire Ambulance Calls/EMS 2,613 2,789 2,568 2,743 Service Calls 483 487 1,053 610 Fire Calls 865 698 737 735 Auto Aid/Mutual Aid 654 680 676 654 Public Works Streets Street Resurfacing (Miles)10.84 5.51 2.90 3.00 Parks and Recreation Park Sites 46 46 46 46 Golf Course - Combined Golf Rounds Played - Paid 53,639 59,937 56,918 52,740 Water New Connections (Tap-ons)27 15 12 50 Average Daily consumption (1)3.70 3.92 4.09 4.30 Peak Daily consumption (1)6.20 7.93 7.84 7.30 (1) - Millions of Gallons *Transitional fiscal year May 1, 2007 through December 31, 2007 N/A - Not Available Data Source: Various Village Departments Page 144 2009 2008 2007*2007 2006 2005 2004 1,922 1,746 1,695 1,282 2,011 1,843 2,099 6,633 5,054 21,383 13,416 14,744 12,058 11,597 2,348 2,159 2,962 3,448 4,530 3,260 3,057 989 1,085 2,143 N/A 2,489 2,609 2,673 3,267 3,451 4,721 N/A 4,751 5,598 4,990 11,373 15,795 12,010 N/A 12,010 12,312 10,181 267 337 482 N/A 457 440 452 1,414 1,786 1,555 N/A 1,692 1,719 1,842 2,553 2,590 2,943 2,583 2,668 2,610 2,622 718 751 678 684 614 645 682 774 881 858 788 810 810 788 672 689 379 406 315 360 403 4.94 4.94 8.23 8.30 8.25 8.59 6.95 46 46 46 46 46 46 46 59,723 58,097 60,258 61,005 60,678 61,937 60,275 7 25 33 98 6 16 66 4.21 4.09 4.35 4.61 5.09 4.67 4.73 7.29 7.03 8.39 8.88 9.79 8.58 9.02 Page 145 VILLAGE OF BUFFALO GROVE, ILLINOIS Capital Asset Statistics Last Ten Fiscal Years Function/Program 2013 2012 2011 2010 Public Safety Police Stations 1 1 1 1 Patrol Units 28 34 36 36 Fire Stations 3 3 3 3 Fire Apparatus 21 21 21 21 Public Works Streets Street (Miles)117.70 117.70 117.70 117.70 Streetlights 2,778 2,778 2,778 2,745 Water Water Mains 180.30 180.25 180.25 179.83 Fire Hydrants 2,477 2,475 2,475 2,475 Wastewater Sanitary Sewers 139.30 139.27 139.27 139.27 *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: Various Village Departments Page 146 2009 2008 2007*2007 2006 2005 2004 1 1 1 1 1 1 1 36 36 36 35 35 35 35 3 3 3 3 3 3 3 21 20 20 20 20 20 20 117.70 117.50 117.50 117.50 117.50 117.50 117.50 2,743 2,714 2,614 2,374 2,374 2,374 2,374 179.82 180.63 179.57 178.36 178.36 178.36 178.36 2,474 2,474 2,468 2,449 2,449 2,449 2,449 139.27 139.24 139.12 138.72 138.72 138.72 138.72