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2014 CAFRCOMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE VILLAGE OF BUFFALO GROVE, ILLINOIS As of and for the Year Ended December 31, 2014 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, 2014 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 - 20 Statement of Activities 21 - 22 Fund Financial Statements Balance Sheet - Governmental Funds 23 - 24 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 25 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 26 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 27 Statement of Net Position - Proprietary Funds 28 - 29 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 30 Statement of Cash Flows - Proprietary Funds 31 - 32 Statement of Fiduciary Net Position - Fiduciary Funds 33 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 34 Index to Notes to Financial Statements 35 Notes to Financial Statements 36 - 83 REQUIRED SUPPLEMENTARY INFORMATION General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General 84 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2014 Page(s) REQUIRED SUPPLEMENTARY INFORMATION (cont.) Historical Pension Information Illinois Municipal Retirement Fund - Schedule of Employer's Contributions and Schedule of Funding Progress 85 Police Pension Fund - Schedule of Employer's Contributions and Schedule of Funding Progress 86 Police Pension Fund - Schedule of Changes in the Village's Net Pension Liability and Related Ratios 87 Police Pension Fund - Schedule of Employer Contributions 88 Police Pension Fund - Schedule of Investment Returns 89 Firefighters' Pension Fund - Schedule of Employer's Contributions and Schedule of Funding Progress 90 Firefighters' Pension Fund - Schedule of Changes in the Village's Net Pension Liability and Related Ratios 91 Firefighters' Pension Fund - Schedule of Employer Contributions 92 Firefighters' Pension Fund - Schedule of Investment Returns 93 Other Post Employment Benefits - Schedule of Employer Contributions and Schedule of Funding Progress 94 Notes to Required Supplementary Information 95 SUPPLEMENTARY INFORMATION Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds 96 - 97 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 98 Schedules of Revenues, Expenditures and Changes in Fund Balances (Deficit) - Budget and Actual Motor Fuel Tax - Nonmajor special revenue fund 99 Metra Parking Lot - Nonmajor special revenue fund 100 Debt Service - Nonmajor debt service fund 101 Street Maintenance - Nonmajor capital projects fund 102 Facilities Development - Major capital projects fund 103 Enterprise Funds Combining Statement of Net Position - Nonmajor Enterprise Funds 104 Combining Statement of Revenue, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds 105 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2014 Page(s) SUPPLEMENTARY INFORMATION (cont.) Combining Statement of Cash Flows - Nonmajor Enterprise Funds 106 Schedules of Revenues, Expenses and Changes in Fund Net Position - Budget and Actual - Non-GAAP Budgetary Basis Buffalo Grove Golf - Nonmajor enterprise Fund 107 Refuse Service - Nonmajor enterprise Fund 108 Water and Sewerage - Major enterprise Fund 109 Arboretum Golf - Major enterprise Fund 110 Combining Statement of Fiduciary Net Position- Pension Trust Funds 111 Combining Statement of Changes in Fiduciary Net Position - Pension Trust Funds 112 Schedules of Changes in Fiduciary Net Position - Budget and Actual Police Pension - Pension Trust Fund 113 Firefighters' Pension - Pension Trust Fund 114 Schedule of Changes in Fiduciary Assets and Liabilities - School and Park Donations - Agency Fund 115 STATISTICAL SECTION Net Position by Component 116 - 117 Change in Net Position 118 - 121 Fund Balances of Governmental Funds 122 - 123 Change in Fund Balances of Governmental Funds 124 - 125 Assessed and Actual Value of Taxable Property 126 - 127 Property Tax Rates - Direct and Overlapping Governments 128 - 129 Principal Property Taxpayers 130 - 131 Property Tax Levy and Collections 132 - 133 Sales Tax Revenue and Number of Principal Payers - Revenue by Category 134 - 135 Direct and Overlapping Sales Tax Rates 136 Ratio of Outstanding Debt by Type 137 - 138 Ratio of General Bonded Debt Outstanding 139 Direct and Overlapping Governmental Activities Debt 140 Schedule of Legal Debt Margin 141 Demographic and Economic Statistics 142 Principal Village Employers 143 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2014 Page(s) STATISTICAL SECTION (cont.) Full-Time Equivalent Employees 144 - 145 Operating Indicators 146 - 147 Capital Asset Statistics 148 - 149 ~----G-E-OF _______________________________ •.... BUFFALO GROVE Department of Finance & General Services Fifty Raupp Blvd. VILLAGE OF Buffalo Grove, IL 60089-21 DO Phone 847-459-2500 Fax 84 7-459-0332 f July 30, 2015 The Honorable Jeffrey Braiman Members of the Village Board Citizens of the Village of Buffalo Grove The Comprehensive Annual Financial Report (CAFR) of the Village of Buffalo Grove for the year ended December 31, 2014 is submitted herewith. This report represents a comprehensive picture of the Village's financial activities during Fiscal Year 2014 and the financial condition of its various funds at December 31, 2014. State law requires that all general-purpose local governments publish 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, 2014. 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 government. 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. ii 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 2014 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 700 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 4.6 percent besting the metro area by 2.3 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 $8,455,972 which is an increase from the previous year’s total of $7,803,749 an increase of 8.3 percent. Utility use taxes increased from $2,629,997 to $2,819,427 or 7.2 percent. Real estate transfer taxes generated $790,819 in 2014 versus $760,164 in 2013.Sales of commercial and industrial properties increased considerably in the current fiscal year. The Village equalized assessed valuation decreased by $114 million or 7.5 percent to $1.48 billion in the 2013 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 non-operating transfers, which is policy established by the Village Board. iii Unassigned Budgeted Fiscal Year Ended Fund Balance Expenditures Percent December 31, 2007 $14,872,103 $30,202,380 49.24% December 31, 2008 $11,587,937 $31,021,971 37.35% December 31, 2009 $ 9,005,069 $29,418,559 30.61% December 31, 2010 $ 9,563,655 $29,266,181 32.68% December 31,2011 $ 9,872,594 $29,271,054 33.73% December 31, 2012 $10,302,515 $29,768,828 34.61% December 31, 2013 $12,395,113 $35,511,109*34.90% December 31, 2014 $13,225,644 $37,083,251 35.67% *Budget number includes employer pension costs beginning in FY 2013. Long-Term Financial Planning 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 $60.6 million in capital improvements. Transportation-related projects represent a large percentage of the improvements at $35 million. Routine maintenance of existing streets accounts for $25 million of those projects. Approximately $14.8 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-yo u-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 A Community Development Department was established in FY 2014 with the hiring of a Community Development Director. With the creation of the department the front counter operations of Village Hall have been merged to include both Community Development and Finance Department staff. A Community Development Software upgrade was implemented to enhance the level of customer service by allowing more opportunities for e-Services and electronic payments. The Village is one of five municipalities to form a Government Information Technology Consortium (GOVITC). The consolidation of services has resulted in a forty percent savings on personnel costs. 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 financial report (CAFR) for the fiscal year ended December 31, 2013. This was the thirty-second consecutive year that the government has received this prestigious award. In order to be awarded a Certificate of 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 1, 2014. 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. 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. Re pectfully submitted, Director ofFinanceNillage Treasurer IV 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, 2013 Executive Director/CEO Organizational Chart Residents of Buffalo Grove Village Board Village Manager Golf Operations Buffalo Grove Golf Course Arboretum Golf Course Police Department Patrol Investigations Youth Services Admin Police Records Fire Department Emergency Management Services Fire Suppression and Rescue Fire Prevention & Education Emergnecy Management Agency Office of the Village Manager Legal Human Resources Community Development Information Technology Finance General Services Deputy Village Clerk Village Treasurer Public Works Admin and Building Maintenance Engineering Operations Central Garage Streets, Drainage & Sewer Forestry Water vii VILLAGE OF BUFFALO GROVE, ILLINOIS List of Elected and Appointed Officials December 31, 2014 Jeffrey S. Braiman Janet M. Sirabian Village President Village Clerk Board of Trustees Jeffrey Berman Beverly Sussman Lester Ottenheimer Michael Terson Andrew Stein Steven Trilling Appointed Officials Dane Bragg Village Manager Jennifer Maltas Scott Anderson Deputy Village Manager Finance Director/Village Treasurer Steven Casstevens Terrence Vavra Chief of Police Fire Chief Michael Reynolds Arthur Malinowski Public Works Director Human Resource Director Darren Monico Robert Pfiel Village Engineer Village Planner Geoff Tollefson Brian Sheehan Golf Course Manager Building Commissioner Page 1 Baker Tilly Virchow Krause, LLP 1301 W 22nd St, Ste 400 Oak Brook, IL 60523-3389 tel 630 990 3131 fax 630 990 0039 bakertilly.com INDEPENDENT AUDITORS' REPORT To the Village President and Board of Trustees Village of Buffalo Grove Buffalo Grove, Illinois Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Buffalo Grove, Illinois, as of and for the year ended December 31, 2014, 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. W e did not audit the investment in joint venture and loss from joint venture, which represent 14.26 percent, 0.00 percent and 14.88 percent, respectively, of the assets, revenues and net position of the business-type activities and 17.85 percent, 0.00 percent, and 18.70 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. To the Village President and Board of Trustees Village of Buffalo Grove Page 2 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, 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, 2014 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 I, the Village of Buffalo Grove adopted the provisions of GASB Statement No. 67, Financial Reporting for Pension Plans -an amendment of GASB Statement No. 25,effective January 1, 2014. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information 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. W e 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. 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 as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. 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. To the Village President and Board of Trustees Village of Buffalo Grove 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. ~ !~ I)..J.r.fW.., UP July 30, 2015 Page 3 Page 4 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 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, 2014. 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, 2014 by $111.3 million (net position).The Net Position for governmental activities is $64.4 million or 58 percent of the total and business-type activities account for $46.9 million. Of this amount, $22.0 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 $1.7 million (or 1.5 percent) during the fiscal year ending December 31, 2014. The governmental net position decreased by $1.5 million and the business-type activities net position decreased by $.2 million. As of December 31, 2014, the Village of Buffalo Grove’s general fund reported combined ending fund balances of $21.4 million, an increase of $.9 million from the prior year. Of this amount, $13.2 million was unassigned. The Village’s total general obligation debt decreased by $.8 million (or 7 percent).Total general obligation debt outstanding is $10.6 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 19-22) 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 is 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 Page 5 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 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 services 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 23-26) 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 Facilities Development 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 28-34) 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 104- 110 of this report. Fiduciary Funds (see pages 33-34)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 much like that used for proprietary funds.The basic fiduciary fund financial statements can be found on pages 111- 115 of this report. Page 6 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 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 36-83 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 84-95 of this report. Government-wide Financial Analysis The assets/deferred outflows of the Village of Buffalo Grove exceeded liabilities/deferred inflows by $111.3 million as of December 31, 2014. The largest portion of the Village’s net position reflects its investment in capital assets (77.8 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 ($2.7 million) represents resources that are subject to external restrictions on how they may be used.$1.7 million is restricted for contractual construction obligations including the street project that was debt financed.The remaining balance of unrestricted net position ($22.0 million or 19.8 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 $1.7 million as a result of governmental activities decreasing by $1.5 million and business-type activities decreasing by $.2 million. The net position of the Village’s governmental fund was $64.4 million. The Village’s unrestricted net position for governmental activities that are available for day-to-day financial operations were $11.0 million compared to $12.9 million at December 31, 2013. The net position of business-type activities was $46.9 million. The business-type activities unrestricted net position decreased by $.4 million from the previous year. Page 7 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 Please refer to table below for condensed Statement of Net Position: Table 1 Village of Buffalo Grove’s Net Position As of December 31, 2014 (in millions) Governmental Business-Type Activities Activities Total 2014 2013 2014 2013 2014 2013 Current and Other Assets $43.7 $41.5 $12.6 $12.5 $56.3 $54.0 Capital Assets 55.3 56.4 36.3 35.7 91.6 92.1 Total Assets $99.0 $97.9 $48.9 $48.2 $147.9 $146.1 Deferred Outflows 0.1 0.0 0.0 0.0 0.1 0.0 Long-Term Liabilities 12.5 11.9 0.6 0.3 $13.1 $12.2 Other Liabilities 7.5 5.5 1.4 0.9 8.9 6.4 Total Liabilities $20.0 $17.4 $2.0 $1.2 $22.0 $18.6 Deferred Inflows 14.7 14.6 0.0 0.0 14.7 14.6 Net Position: Net investment in capital assets $50.7 $51.0 $35.9 $35.7 $86.6 $86.7 Restricted 2.7 2.0 0.0 0.0 2.7 2.0 Unrestricted 11.0 12.9 11.0 11.4 22.0 24.3 Total Net Position $64.4 $65.9 $46.9 $47.1 $111.3 $113.0 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 invested in capital assets, net of debt. Reduction of Capital Assets through Depreciation –which will reduce capital assets and net investment in capital assets. Page 8 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 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 increase in “Current and Other Assets” of $2.2 million is attributed to an increase in grant revenue. The Village has received funding for capital improvements from the State of Illinois Department of Commerce and Economic Opportunity. These funds are designated for street and bridge improvements,“Current and Other Assets” for business-type activities increased $0.1 million over the prior fiscal year. The excess revenue was derived from an increase in the water and sewer rate for those services. 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. Changes in Net Position The Village’s total revenues and expenses for governmental and business-type activities are reflected in the following chart: Page 9 Village of Buffalo Grove Changes in Net Position For the Years Ended December 31, 2014 and 2013 Governmental Business-Type Total Primary Activities Activities Government Revenues 2014 2013 2014 2013 2014 2013 Program Revenues Charges for Service 3.6 2.8 12.4 12.0 16.0 14.8 Grants and Contributions Operating 1.3 1.2 - - 1.3 1.2 General Revenue Property Tax 14.6 14.5 - - 14.6 14.5 Sales Tax 8.5 7.8 - - 8.5 7.8 Income and Use Tax 4.1 4.7 - - 4.1 4.7 Telecommunications Tax 1.7 1.9 - - 1.7 1.9 Utility Taxes 2.8 2.6 - - 2.8 2.6 Property Transfer Tax 0.8 0.8 - - 0.8 0.8 Other 2.6 3.5 0.5 - 3.1 3.5 Total Revenue 40.0 39.8 12.4 12.0 52.9 51.8 Expenses Governmental Activities General Government 5.8 6.9 5.8 6.9 Public Safety 22.9 22.1 22.9 22.1 Public Works 13.6 15.3 13.6 15.3 Interest 0.3 0.4 0.3 0.4 Business Type Water and Sewer 8.4 8.2 8.4 8.2 Refuse Services 0.8 0.9 0.8 0.9 Golf 2.8 2.9 2.8 2.9 Total Expenses 42.6 44.7 12.0 12.0 54.6 56.7 Excess before transfers and special items (2.6) (4.9) 0.9 (0.0) - (1.7) (4.9) Transfers In (Out) 1.1 0.9 (1.1) (0.9) - Special items - - - - Change in Net Position (1.5) (4.0) (0.2) (0.9) (1.7) (4.9) Net position -beginning 65.9 69.9 47.1 48.0 113.0 117.9 Net position –ending 64.4 65.9 46.9 47.1 111.3 113.0 Page 10 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 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 $1.5 million to $64.4 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, 2014 were $40.0 million an increase of $0.2 million or 0.5 percent. Property taxes continue to be the Village’s largest source of revenue (36.5 percent) at $14.6 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 39.2 percent of the property tax levy. Other taxes and intergovernmental revenue including sales tax, state income tax, utility tax, prepared food and beverage tax, hotel tax, and real estate transfer tax total $17.9 million or 44.8 percent of total governmental activities revenue. The net decrease in net position was due to the depreciation of Capital Assets. Page 11 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 Property taxes increased by $0.05 million. The increase in the corporate agency tax levy collected in 2014 was 3.5 percent or $.27 million. The Fire Protection portion of the corporate levy received the largest increase of $.12 million (44.4 percent). The total tax levy increased 0.35 percent in total with decreases in the IMRF and Debt Service levies of 2.37 percent and 16.63 percent respectively. The pensions levy increased .98 percent. Sales tax increased by $.65 million compared to the previous year. The growth in sales tax was 8.4 percent. Utility taxes are up $.19 million, or 7.2 percent. The region experienced a very cold winter, leading to higher natural gas consumption than average. Income taxes continue to decrease, down $.6 million from FY 2013 and $1.4 million since FY 2012. Property transfer taxes were the highest, $.79 million, since 2006 when that tax generated $.98 million. The Village expects the property transfer tax to continue its upward trend. Expenses: The cost of all governmental activities this year was $42.6 million resulting in a decrease of 4.5 percent from the previous year ($44.7 million).The largest reduction was made in the General Government reducing expenditures $1.1 million in 2014. Public Safety expenditures grew by $.78 million (3.5 percent), to a FY 2014 total of $22.9 million dollars. 9.0%3.3% 36.5% 21.3% 10.3% 4.3% 7.0% 2.0% 6.5% Village of Buffalo Grove 2014 Revenue by Source Governmental Activities Charges for Service Grants and Contributions Property Tax SalesTax Income and Use Tax Telecommunications Tax Utility Taxes Property Transfer Tax 13.6% 53.8% 31.9% 0.7% Village of Buffalo Grove 2014 Expenditure by Function Gvernmental Activities General Government Public Safety Public Works Interest Page 12 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 The Statement of Activities on pages 21-22 shows that $3.2 million was financed by those who use the services, $1.3 million was financed by operating and capital grants and contributions, with the Village’s general revenues financing $35.1 million. Business-Type Activities: Business-type activities net position decreased by $.2 million. Significant changes are noted below. Revenue: Water sales increased $.38 million from the previous year.The average amount of water consumed in 2014 was about 6,062 gallons per month per residential household. The increase in revenue was driven by a 4 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 in 2014, which is consistent with the 2013 revenue earnings. 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 were the same as 2013. Water Fund expenses increased by $.2 million and golf expenses decreased by $.1 million due to not filling vacant positions. 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. 0 2 4 6 8 10 12 Water Fund Refuse Fund Buffalo Grove Golf Arboretum Golf Village of Buffalo Grove 2014 Business-Type Activities Revenues and Expenses (in millions) Revenue Expenditure Page 13 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 The Village’s governmental funds for the year ended December 31, 2014 reflect a combined fund balance of $21.0 million on its balance sheet (pages 23-24). This represents a $.4 million dollar decrease over the balance posted last year. The Village grew revenues to match inflation and insurance cost, which continue to be the driving force behind the increase in expenditures on an annual basis. Of the total fund balance of $21.0 million, $10.9 million is unassigned indicating availability for future obligations. The 2014 unassigned fund balance decreased by $0.6 million. The largest contributing factor is due to an increase in facilities development and maintenance costs for Village owned buildings . The remainder of fund is classified as nonspendable, restricted, committed and assigned. Nonspendable fund balance ($.06 million) represents amounts set aside for inventory. Restricted fund balance ($2.1 million) is allocated to debt service, capital projects and pensions. Committed fund balance ($7.4 million) is to be use for future capital replacement. 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, 2014, the unassigned fund balance represents 35.7 percent of the FY 2015 operating budget (less transfers). The Fund Balance of the General Fund increased by $0.9 million from December 31, 2014. A majority of the growth was generated through budget management. The General Fund’s revenues increased by $3.2 million in 2014.Sales tax revenue expanded generally through inflation.The housing market continued to recover in 2014 as revenues were similar to the uptick the Village saw in 2013, with more of the traditional, non-distressed type of housing transactions.Property taxes increased $1.5 million, while Miscellaneous Income grew $.7 million and Other Taxes grew $.37 million. Charges for service increased 27 percent over 2013, growing by $.27 million. Interest grew 47 percent over 2013 while Fines and Fees and Licensing and Permits both decreased in 2014 from the previous year actuals. The overall growth in the General Fund of 9.14 percent is a positive indicator that the Village has been able to generate adequate revenues. The under performing revenues also give the Village an opportunity to re-evaluate those sources if there is a trend emerging or if it was related to a short term aberration. - 2 4 6 8 10 12 14 16 Village of Buffalo Grove 2014 General Fund Revenue (in millions) 2014 2013 Page 14 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 General fund expenditures increased by $3.9 million or 11.8 percent.The surplus of revenues over expenditures was $1.4 million. Adding in the Other Financing Sources (Uses), the net change to fund balance resulted in an increase of $.9 million. Public Safety Expenditures increased $.8 million, 3.62 percent, in FY 2014. Public Works and General Government were able to reduce their expenditures $.4 million and $1 million respectively. Special Revenue Funds have a combined fund balance of $1.6 million as of December 31, 2014 up $0.1 million from December 31, 2013.In 2013 general obligation bond proceeds were expended on a street maintenance program to resurface a larger number of streets than annually budgeted through the Motor Fuel Fund (MFT).The Village historically contributes .20 percent of home rule sales tax revenue to the MFT Fund.Revenues received from the state share of the motor fuel tax were $1.05 million. The cost of the 2014 street maintenance program was $2.08 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. The Street Maintenance Fund received $1.99 million in grant funds, the Village expended $1.47 million of that, and the remainder will be expended in FY 2015. The Village continues to make streets a priority spending over $2.5 million on the roadway infrastructure. The Debt Service Fund has a fund balance deficit of $25,486 at the end of FY 2014 a decrease of over $14,000 from the previous year.The Village general obligation debt totals $10.6 million.$.79 million in principal was retired in the current year. The interest paid associated with the debt retired was $311,513. Debt per capita is $251.27 as of December 31, 2014. The Village has the fourth lowest total outstanding debt amongst all the taxing bodies represented on the 2014 Lake and/or Cook County property tax bill. - 5 10 15 20 25 General Government Public Safety Public Works Interest Village of Buffalo Grove 2014 General Fund Expenditures (in millions) 2014 2013 Page 15 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 The Village’s Capital Improvement plan continued in 2014. The Village added over $2.5 million to the Water and Sewer Fund infrastructure, improved buildings by $.13 million, and added $.76 million in equipment and vehicles. An additional $.25 million of construction in progress was booked in this year to be completed in FY 2015. 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 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 income before contributions and transfers of $1.2 million for FY 2014, which represented 12.1 percent of operating revenues and was an increase of 92 percent over the previous fiscal year.A rate increase of 4 percent was applied to all usage after January 1, 2014.Sewer operations accounted for 44.2 percent, or $3.73 million of the total Water and Sewer operational expenses. Water operations accounted for less than half of that at $1.62 million (19 percent). Purchased water expense was $1.67 million, and sanitary sewer fees collected on behalf of Lake County Public Works was $3 million for FY 2014. These two pass through expenditures account for 55.3 percent of the total operating expense of the fund.Purchased water expense increased over $15,000 from the prior year. Non-operating revenue (expense) increased $18,820 due to interest income as a result of invested balances and maturing CDs in FY 2014. The unrestricted net position of the Water and Sewer Fund at the end of the current fiscal year was $10.3 million. Of that amount $7 million is the Village’s equity interest in the Northwest Water Commission and $3.3 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 asset deficit balance of $56,494.Total revenues were $3,479 more than the previous year.The Village of Buffalo Grove owns and operates two municipal golf courses.Golf rounds are slowly returning to pre-recession levels. A total of 54,689 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. Page 16 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 General Fund Budgetary Highlights For the Fiscal Year Ended December 31, 2014 (in thousands) Budget Actual Revenues and Transfers: Taxes 23,025 23,230 Intergovernmental 9,466 10,035 Fines and Fees 1,770 1,623 Licenses and permits 294 207 Other Revenues 2,112 3,212 Transfers in 828 949 Total Revenues and Transfers 37,495 39,256 Expenditures and Transfers Expenditures 35,511 36,872 Transfers Out 1,969 1,482 Total expenditures and Transfers 37,480 38,354 Change in fund balance 15 902 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 31,2014, the Village had a combined total of capital assets of $91.52 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 $.56 million. Village of Buffalo Grove Capital Assets at Year End Net of Depreciation As of December 31, 2014 (in millions) Governmental Business-Type Activities Activities Total 2014 2013 2014 2013 2014 2013 Land 35.96 35.96 6.2 6.2 42.16 42.16 Construction in progress .47 .22 -.37 .47 .59 Land Improvements 2.90 3.18 ..2.90 3.18 Buildings 2.78 3.13 2.66 3.18 5.44 6.31 Equipment and Vehicles 3.55 3.23 ..3.55 3.23 Streets and storm sewers 9.59 10.63 ..9.59 10.63 Water and Sewer Infrastructure ..27.41 25.98 27.41 25.98 Total 55.25 56.35 36.27 35.73 91.52 92.08 Page 17 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 The Governmental Activities net capital assets decreased from last year by $1.1 million (1.95 percent). For the Business-type activities, the net capital assets increased by $.54 million or (1.51 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 55-56. At year end, the Village had total bonded debt outstanding of $10.5 million as shown in the next table: Village of Buffalo Grove General Obligation Bonds As of December 31, 2014 and 2013 (in millions) Governmental Business-Type Activities Activities Total 2014 2013 2014 2013 2014 2013 General obligation bonds $10.55 $11.34 $ - $ - $10.55 $11.34 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 $251.27 and represents .72 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.F.on pages 60-62. Economic Factors and Next Year’s Budgets and Rates The Village did enter 2015 with a balanced operating budget. The budget for the fiscal year beginning January 1, 2015, is $78,737,348 a 24.8 percent increase from the previous year. The operating budget totals $39,027,194 resulting in a 4.3 percent over the previous year. Total capital spending during the year is estimated to be $16.2 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. Page 18 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2014 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 2014 tax levy (extended and collected in 2015). A tax levy was adopted for the 2015 budget that was 3 percent over the last year’s request.Half 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.The 2015 Budget will see the edition of three internal service funds. The Village created an Information Technology, Central Garage, and Building Maintenance Funds. These funds fixed and variable costs will be compiled separately and will be funded based on the amounts assessed to the other department under calculations that best derive the use of each function and its relationship to the department. A twenty year proforma was completed on the Water Fund in FY 2014 and subsequently a water and sewer rate recommendation was made, and adopted, that will increase water rates by 4 percent in 2015. 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 2015. 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, 2014 Governmental Activities Business-type Activities Totals ASSETS Cash and equivalents $16,512,132 $3,204,444 $19,716,576 Investments 6,350,989 705,228 7,056,217 Receivables Property taxes 14,721,612 -14,721,612 Accounts - water and sewer -1,386,979 1,386,979 Municipal sales tax 2,635,378 -2,635,378 Illinois income tax 1,055,361 -1,055,361 Motor fuel tax 104,497 -104,497 Telecommunications tax 388,560 -388,560 Food and beverage tax 71,912 -71,912 Utility tax 283,524 -283,524 Interest 7,782 312 8,094 Other 50,590 201,542 252,132 Inventories 101,191 38,961 140,152 Due from fiduciary funds 214,594 -214,594 Other 259,200 -259,200 Deposits 472,621 173,810 646,431 Investment in joint venture -6,982,235 6,982,235 Net pension asset 615,057 -615,057 Internal balances 16,000 (16,000)- Capital Assets Land 35,963,844 6,198,514 42,162,358 Construction in progress 472,361 -472,361 Buildings 22,722,897 10,284,359 33,007,256 Land improvements 3,179,774 1,966,488 5,146,262 Equipment and vehicles 12,954,041 94,510 13,048,551 Streets and storm sewers 56,706,008 -56,706,008 Water and sewer system infrastructure -60,899,559 60,899,559 Less: Accumulated depreciation (76,735,943)(43,167,408)(119,903,351) Total Assets 99,123,982 48,953,533 148,077,515 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding 71,663 -71,663 Total Deferred Outflows of Resources 71,663 -71,663 LIABILITIES Accounts payable 2,334,306 1,293,232 3,627,538 Accrued wages 1,155,255 90,388 1,245,643 Development deposits 1,097,056 44,137 1,141,193 Due to fiduciary funds 10,708 -10,708 Short term notes payable 2,400,000 -2,400,000 Other -12,337 12,337 Unearned revenue 517,827 -517,827 Noncurrent Liabilities Due within one year 608,817 30,848 639,665 Due in more than one year 11,924,272 543,915 12,468,187 Total Liabilities 20,048,241 2,014,857 22,063,098 See accompanying notes to financial statements. Page 19 VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION As of December 31, 2014 Governmental Activities Business-type Activities Totals DEFERRED INFLOWS OF RESOURCES Property taxes levied for a future period $14,721,612 $-$14,721,612 Total Deferred Inflows of Resources 14,721,612 -14,721,612 NET POSITION Net investment in capital assets 50,712,982 35,871,503 86,584,485 Restricted for Road construction 1,673,788 -1,673,788 Capital projects 228,618 -228,618 Employee pension benefits 698,782 -698,782 Parking lot operations 62,922 -62,922 Unrestricted 11,048,700 11,067,173 22,115,873 TOTAL NET POSITION $64,425,792 $46,938,676 $111,364,468 See accompanying notes to financial statements. Page 20 VILLAGE OF BUFFALO GROVE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 Program Revenues Functions/Programs Expenses Charges for Services Operating Grants and Contributions Governmental Activities General government $5,843,623 $1,901,996 $- Public safety 22,920,180 1,623,171 239,483 Public works 13,553,093 88,665 1,045,913 Interest and fiscal charges 302,781 -- Total Governmental Activities 42,619,677 3,613,832 1,285,396 Business-type Activities Water and Sewerage 8,435,463 9,076,261 - Refuse Service 803,039 1,044,442 - Arboretum Golf 1,599,948 1,181,847 - Buffalo Grove Golf 1,139,129 1,075,647 - Total Business-type Activities 11,977,579 12,378,197 - Total $54,597,256 $15,992,029 $1,285,396 General Revenues Taxes Property Home rule sales Telecommunications taxes Utility Property transfer Other Intergovernmental State sales tax Income and use Other Investment income Gain on sale of assets Miscellaneous Total General Revenues Transfers Change in net position NET POSITION - Beginning of Year NET POSITION - END OF YEAR See accompanying notes to financial statements. Page 21 Net (Expenses) Revenues and Changes in Net Position Governmental Activities Business-type Activities Totals $(3,941,627)$-$(3,941,627) (21,057,526)-(21,057,526) (12,418,515)-(12,418,515) (302,781)-(302,781) (37,720,449)-(37,720,449) -640,798 640,798 -241,403 241,403 -(418,101)(418,101) -(63,482)(63,482) -400,618 400,618 (37,720,449)400,618 (37,319,831) 14,554,564 -14,554,564 3,345,953 -3,345,953 1,679,653 -1,679,653 2,819,427 -2,819,427 790,819 -790,819 929,126 -929,126 5,110,019 -5,110,019 4,104,736 -4,104,736 184,705 -184,705 107,765 18,820 126,585 488 -488 1,636,721 520,521 2,157,242 35,263,976 539,341 35,803,317 1,070,724 (1,070,724)- (1,385,749)(130,765)(1,516,514) 65,811,541 47,069,441 112,880,982 $64,425,792 $46,938,676 $111,364,468 See accompanying notes to financial statements. Page 22 VILLAGE OF BUFFALO GROVE BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2014 General Fund Facilities Development Nonmajor Governmental Funds Totals ASSETS Cash and equivalents $13,442,182 $379,621 $2,690,329 $16,512,132 Investments 6,350,989 --6,350,989 Receivables Property taxes 14,116,799 -604,813 14,721,612 Municipal sales tax 2,635,378 --2,635,378 Illinois income tax 1,055,361 --1,055,361 Motor fuel tax --104,497 104,497 Telecommunication tax 388,560 --388,560 Food and beverage tax 71,912 --71,912 Utility tax 283,524 --283,524 Interest 7,782 --7,782 Other 50,590 --50,590 Due from other funds 41,486 --41,486 Due from fiduciary funds 214,594 --214,594 Inventory 101,191 --101,191 Other assets 259,200 --259,200 Deposits 472,621 --472,621 TOTAL ASSETS $39,492,169 $379,621 $3,399,639 $43,271,429 See accompanying notes to financial statements. Page 23 General Fund Facilities Development Nonmajor Governmental Funds Totals LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $1,744,204 $278,431 $311,671 $2,334,306 Accrued wages 1,155,255 --1,155,255 Development deposits 1,097,056 --1,097,056 Due to fiduciary funds 10,708 --10,708 Due to other funds --25,486 25,486 Short-term notes payable -2,400,000 -2,400,000 Unearned revenue --517,827 517,827 Total Liabilities 4,007,223 2,678,431 854,984 7,540,638 Deferred Inflows of Resources Property taxes levied for a future period 14,116,799 -604,813 14,721,612 Total Deferred Inflows of Resources 14,116,799 -604,813 14,721,612 Fund Balances (Deficit) Nonspendable for inventory 101,191 --101,191 Nonspendable for deposits 472,621 --472,621 Restricted for road construction --1,673,788 1,673,788 Restricted for capital project --228,618 228,618 Restricted for employee pension benefits 130,435 --130,435 Restricted for parking lot operations --62,922 62,922 Committed for capital replacement 7,438,256 --7,438,256 Unassigned (deficit)13,225,644 (2,298,810)(25,486)10,901,348 Total Fund Balances (deficit)21,368,147 (2,298,810)1,939,842 21,009,179 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $39,492,169 $379,621 $3,399,639 $43,271,429 See accompanying notes to financial statements. Page 24 VILLAGE OF BUFFALO GROVE RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION As of December 31, 2014 Total Fund Balances - Governmental Funds $21,009,179 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 472,361 Buildings 22,722,897 Land Improvements 3,179,774 Equipment and vehicles 12,954,041 Streets and storm sewers 56,706,008 Less: Accumulated depreciation (76,735,943) A deferred charge on refunding represents a consumption of net position that applies to a future period and, therefore, is not reported in the funds.71,663 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 615,057 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 (10,550,000) Compensated absences (1,246,389) Net other post-employment obligation (509,487) Unamortized debt premium (180,503) Net pension obligation (46,710) NET POSITION OF GOVERNMENTAL ACTIVITIES $64,425,792 See accompanying notes to financial statements. Page 25 VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 General Facilities Development Nonmajor Governmental Funds Totals REVENUES Property $13,664,597 $-$889,967 $14,554,564 Other taxes 9,564,978 --9,564,978 Charges for services 1,370,682 -1,097 1,371,779 Fines and fees 1,623,171 -180,146 1,803,317 Licenses and permits 207,312 --207,312 Intergovernmental 10,035,168 -1,045,913 11,081,081 Interest 107,703 -62 107,765 Miscellaneous income 1,732,464 -375,164 2,107,628 Total Revenues 38,306,075 -2,492,349 40,798,424 EXPENDITURES Current General government 5,303,015 -219,534 5,522,549 Public safety 22,773,535 --22,773,535 Public works 8,794,977 -2,083,301 10,878,278 Capital Outlay -2,018,451 -2,018,451 Debt Service Principal --790,000 790,000 Interest --313,665 313,665 Total Expenditures 36,871,527 2,018,451 3,406,500 42,296,478 Excess (deficiency) of revenues over expenditures 1,434,548 (2,018,451)(914,151)(1,498,054) OTHER FINANCING SOURCES (USES) Sales of fixed assets 488 --488 Transfers in 949,469 635,217 967,602 2,552,288 Transfers out (1,481,564)--(1,481,564) Total Other Financing Sources (Uses)(531,607)635,217 967,602 1,071,212 Net Change in Fund Balances 902,941 (1,383,234)53,451 (426,842) FUND BALANCES (DEFICIT) - Beginning of Year 20,465,206 (915,576)1,886,391 21,436,021 FUND BALANCES (DEFICIT) - END OF YEAR $21,368,147 $(2,298,810)$1,939,842 $21,009,179 See accompanying notes to financial statements. Page 26 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, 2014 Net change in fund balances - total governmental funds $(426,842) 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 3,485,624 Some items reported as capital outlay were not capitalized (2,346,145) Depreciation is reported in the government-wide financial statements (2,228,416) 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.(635,708) 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 790,000 Governmental funds report debt premiums and discounts as other financing sources (uses) or expenditures. However, in the statement of net position, these are reported as additions to or deductions from long-term debt. These are allocated over the period the debt is outstanding in the statement of activities and are reported as interest expense Debt premium 18,050 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 (66,455) Net other post employment benefit obligation (84,087) Net pension asset 162,106 Net pension obligation (46,710) Amortization of deferred charge on refunding (7,166) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $(1,385,749) See accompanying notes to financial statements. Page 27 VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2014 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals ASSETS Current Assets Cash and equivalents $2,422,837 $33,151 $748,456 $3,204,444 Investments 705,228 --705,228 Receivables Accounts - water and sewer 1,386,979 --1,386,979 Interest 312 --312 Other 37,284 24,344 139,914 201,542 Inventory -18,026 20,935 38,961 Total Current Assets 4,552,640 75,521 909,305 5,537,466 Noncurrent Assets Capital Assets Land -5,219,738 978,776 6,198,514 Land improvements -1,516,051 450,437 1,966,488 Buildings and improvements -8,421,522 1,862,837 10,284,359 Machinery, equipment and furnishings --94,510 94,510 Water and sewer infrastructure 60,899,559 --60,899,559 Less: Accumulated depreciation (33,483,057)(7,459,538)(2,224,813)(43,167,408) Other Assets Deposits 173,810 --173,810 Investment in joint venture 6,982,235 --6,982,235 Total Noncurrent Assets 34,572,547 7,697,773 1,161,747 43,432,067 Total Assets 39,125,187 7,773,294 2,071,052 48,969,533 See accompanying notes to financial statements. Page 28 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals LIABILITIES Current Liabilities Accounts payable $1,250,582 $16,593 $26,057 $1,293,232 Accrued wages 54,346 15,563 20,479 90,388 Other --12,337 12,337 Development deposits 44,137 --44,137 Due to other funds 9,000 3,000 4,000 16,000 IEPA loan payable 17,033 --17,033 Compensated absences 1,914 7,679 4,222 13,815 Total Current Liabilities 1,377,012 42,835 67,095 1,486,942 Noncurrent Liabilities Long-Term Debt Compensated absences 22,222 89,180 49,027 160,429 IEPA loan payable 383,486 --383,486 Total Noncurrent Liabilities 405,708 89,180 49,027 543,915 Total Liabilities 1,782,720 132,015 116,122 2,030,857 NET POSITION Net investment in capital assets 27,011,983 7,697,773 1,161,747 35,871,503 Unrestricted (deficit)10,330,484 (56,494)793,183 11,067,173 TOTAL NET POSITION $37,342,467 $7,641,279 $1,954,930 $46,938,676 See accompanying notes to financial statements. Page 29 VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2014 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals OPERATING REVENUES Water and sewer charges $9,043,561 $-$-$9,043,561 Daily greens fee and memberships -813,629 693,435 1,507,064 Merchandise sales -55,671 68,496 124,167 Connection and recapture fees 32,700 --32,700 Cart, club, and other rentals -247,220 230,406 477,626 Driving range fees --61,338 61,338 SW ANCC user fees --1,044,442 1,044,442 Miscellaneous 520,521 65,327 21,972 607,820 Total Operating Revenues 9,596,782 1,181,847 2,120,089 12,898,718 OPERATING EXPENSES Water operations 1,623,156 --1,623,156 Sewer operations 3,728,417 --3,728,417 Water purchases 1,668,240 --1,668,240 Golf operations -1,071,624 1,054,531 2,126,155 Cost of sales - pro shop -39,668 51,814 91,482 Refuse operations --803,039 803,039 Loss from joint venture 332,470 --332,470 Depreciation 1,083,180 488,656 32,784 1,604,620 Total Operating Expenses 8,435,463 1,599,948 1,942,168 11,977,579 Operating Income (Loss)1,161,319 (418,101)177,921 921,139 NONOPERATING REVENUES (EXPENSES) Interest 18,820 --18,820 Total Nonoperating Revenues (Expenses)18,820 --18,820 Income (Loss) Before Transfers 1,180,139 (418,101)177,921 939,959 TRANSFERS Transfers in --78,745 78,745 Transfers out (1,066,994)(37,475)(45,000)(1,149,469) Total Transfers (1,066,994)(37,475)33,745 (1,070,724) Change in Net Position 113,145 (455,576)211,666 (130,765) NET POSITION - Beginning of Year 37,229,322 8,096,855 1,743,264 47,069,441 NET POSITION - END OF YEAR $37,342,467 $7,641,279 $1,954,930 $46,938,676 See accompanying notes to financial statements. Page 30 VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOW S PROPRIETARY FUNDS For the Year Ended December 31, 2014 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals CASH FLOWS FROM OPERATING AC TIVITIES Received from customers $9,510,135 $1,174,056 $2,066,774 $12,750,965 Paid to suppliers for goods and services (5,504,079)(502,877)(1,351,597)(7,358,553) Paid to employees for services (939,919)(604,403)(512,219)(2,056,541) Net Cash Flows From Operating Activities 3,066,137 66,776 202,958 3,335,871 CASH FLOWS FROM INVESTING AC TIVITIES Investments sold and matured 885,000 --885,000 Investment income 19,779 --19,779 Loss on investment (37,284)--(37,284) Net Cash Flows From Investing Activities 867,495 --867,495 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in (out)(1,057,994)(34,475)37,745 (1,054,724) Net Cash Flows From Noncapital Financing Activities (1,057,994)(34,475)37,745 (1,054,724) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of capital assets (2,153,376)--(2,153,376) IEPA loan proceeds received 233,689 --233,689 IEPA loan paid (6,788)--(6,788) Net Cash Flows From Capital and Related Financing Activities (1,926,475)--(1,926,475) Net Change in Cash and Cash Equivalents 949,163 32,301 240,703 1,222,167 CASH AND CASH EQUIVALENTS - Beginning of Year 1,473,674 850 507,753 1,982,277 CASH AND CASH EQUIVALENTS - END OF YEAR $2,422,837 $33,151 $748,456 $3,204,444 See accompanying notes to financial statements. Page 31 VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOW S PROPRIETARY FUNDS For the Year Ended December 31, 2014 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)$1,161,319 $(418,101)$177,921 $921,139 Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation 1,083,180 488,656 32,784 1,604,620 Loss on joint venture 332,470 --332,470 Changes in assets and liabilities Accounts receivable (89,302)(7,791)(53,315)(150,408) Accounts payable 577,357 4,423 23,836 605,616 Accrued salaries (21,927)132 4,036 (17,759) Deposits 22,033 --22,033 Inventory -(3,133)6,373 3,240 Compensated absences 1,007 2,590 -3,597 OPEB --11,323 11,323 NET CASH FLOWS FROM OPERATING ACTIVITIES $3,066,137 $66,776 $202,958 $3,335,871 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None See accompanying notes to financial statements. Page 32 VILLAGE OF BUFFALO GROVE STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS As of December 31, 2014 Pension Trusts Agency Fund ASSETS Cash $3,371,657 $408,569 Investments U.S. treasuries 15,776,210 - U.S. agencies 20,098,008 - Mutual funds - other than bond funds 33,221,887 - Equity securities 26,281,476 - Municipal bonds 3,169,927 - Corporate bonds 3,627,482 - Receivables Interest 153,210 - Prepaid items 775 - Due from primary government 10,708 - Total Assets 105,711,340 408,569 LIABILITIES Accounts payable 85,576 36,932 Due to primary government 214,594 - Due to other governments -371,637 Total Liabilities 300,170 408,569 NET POSITION Held in trust for pension benefits $105,411,170 $- See accompanying notes to financial statements. Page 33 VILLAGE OF BUFFALO GROVE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Year Ended December 31, 2014 Pension Trusts AD DITIONS Contributions Employer $4,252,602 Plan members 1,156,707 Total Contributions 5,409,309 Investment income Interest 2,405,539 Net appreciation in fair value of investments 4,918,762 Total Investment Income 7,324,301 Less Investment expense 371,898 Net Investment Income 6,952,403 Total Additions 12,361,712 DEDUCTIONS Administration 75,711 Pension benefits and refunds 4,691,001 Total Deductions 4,766,712 Change in Net Position 7,595,000 NET POSITION - Beginning of Year 97,816,170 NET POSITION - END OF YEAR $105,411,170 See accompanying notes to financial statements. Page 34 VILLAGE OF BUFFALO GROVE INDEX TO NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE Page I Summary of Significant Accounting Policies 36 A.Reporting Entity 36 B.Government-W ide and Fund Financial Statements 37 C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation 40 D.Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position or Equity 41 1.Deposits and Investments 41 2.Receivables 45 3.Inventories 46 4.Capital Assets 46 5.Deferred Outflows of Resources 47 6.Compensated Absences 47 7.Long-Term Obligations 47 8.Deferred Inflows of Resources 48 9. Equity Classifications 48 II Stewardship, Compliance, and Accountability 50 A.Excess Expenditures Over Appropriations 50 B.Deficit Balances 50 III Detailed Notes on All Funds 51 A.Deposits and Investments 51 B.Receivables 55 C.Capital Assets 56 D.Interfund Receivables/Payables and Transfers 58 E.Short-Term Debt Activity 59 F.Long-Term Obligations 60 G.Lease Disclosures 63 IV Other Information 63 A.Employees' Retirement System 63 B.Risk Management 74 C.Commitments and Contingencies 75 D.Joint Ventures 76 E.Other Postemployment Benefits 78 F.Subsequent Events 81 G.Effect of New Accounting Standards on Current-Period Financial Statements 81 H.Pledged Revenue 82 See accompanying notes to financial statements. Page 35 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 36 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS In June 2012, the GASB issued statement No. 67 - Financial Reporting for Pension Plans - an amendment of GASB Statement No. 25. This statement establishes accounting and financial reporting standards for the activities of pension plans that are administered through trusts and meet certain criteria. This statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures as they related to pension plans that are administered through trusts or equivalent arrangements that meet certain requirements. This standard was implemented January 1, 2014. 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 Village 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 balance, revenues, and expenditures/expenses. Page 37 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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. Facilities Development Fund - 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. The Village reports the following major enterprise funds: Water and Sewerage Fund - 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. Page 38 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) 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). Motor Fuel Tax Fund Metra Parking Lot Fund 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 Fund - 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 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: Pension 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. 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 39 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 requirements) 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 40 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 41 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) The police pension fund's investment policy, in accordance with Illinois Statutes, establishes the following target allocation across asset classes: Asset Class Target Long-Term Expected Real Rate of Return Cash 2%(0.25)% Fixed income 33%2.04% Large cap domestic equities 52%5.35% Small cap domestic equities 5%6.56% International equities 5%5.85% Real estate 3%5.92% Illinois Compiled Statues (ILCS) limit the police pension fund's investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. The blended asset class is comprised of all other asset classes to allow for rebalancing the portfolio. The long-term expected rate of return on the police pension fund's investments was determined using a building block method. The best-estimate of future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real rates of return for each major asset class included in the police pension fund's target asset allocation are listed in the table above. The firefighters' pension fund's investment policy, in accordance with Illinois Statutes, establishes the following target allocation across asset classes: Page 42 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) Asset Class Target Long-Term Expected Real Rate of Return U.S. treasury bills/notes/bonds 15%2.10% U.S. government agency securities (non-MBS)17.5%2.10% U.S. government agency securities - callable 10%2.10% U.S. government agency securities (MBS)2.5%2.10% Taxable municipal securities 5%2.10% U.S. large company stocks 35%6.90% U.S. small company stocks 10%8.50% International stocks 5%7.60% Illinois Compiled Statues (ILCS) limit the firefighters' pension fund's investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. The blended asset class is comprised of all other asset classes to allow for rebalancing the portfolio. The long-term expected rate of return on the firefighters' pension fund's investments was determined using an asset allocation study conducted by the firefighters' pension fund's investment management consultant in 2014 in which best-estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real rates of return for each major asset class included in the firefighters' pension fund's target asset allocation are listed in the table above 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. Page 43 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) 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. 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. Page 44 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) 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 2014 attaches as an enforceable lien on January 1, 2014, 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). Tax bills for levy year 2013 are prepared by Cook County and issued on or about February 1, 2014 and July 1, 2014, and are payable in two installments, on or about March 1, 2014 and August 1, 2014 or within 30 days of the tax bills being issued. Tax bills for levy year 2013 are prepared by Lake County and issued on or about June 1, 2014 and August 1, 2014, and are payable in two installments, on or about July 1, 2014 and September 1, 2014 or within 30 days of the tax bills being issued. The counties collect such taxes and remits them periodically. The 2014 property tax levy is recognized as a receivable and deferred inflow in fiscal 2014. As the taxes become available to finance current expenditures, they are recognized as revenues. At December 31, 2014, the property taxes receivable and deferred inflow consisted of the estimated amount collectible from the 2014 levy. Page 45 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 2.Receivables (cont.) 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. 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 Page 46 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 4.Capital Assets (cont.) 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/fund balance 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. 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. The balance at year end is shown as an increase or decrease in the liability section of the statement of net position. Page 47 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 8.Deferred Inflows of Resources A deferred inflow of resources represents an acquisition of net position/fund balance that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that future time. 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 balances are 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. Page 48 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED INFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) Fund Statements (cont.) 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. 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 $9,270,813, and is included in unassigned General Fund fund balance. Page 49 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE II - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A.EXCESS EXPENDITURES OVER APPROPRIATIONS Funds Budgeted Expenditures Actual Expenditures Excess Expenditures Over Budget General $35,511,109 $36,871,527 $1,360,418 Police Pension 2,626,881 2,780,935 154,054 Firefighters' Pension 1,813,831 1,985,777 171,946 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, 2014, the following individual funds held a deficit balance: Fund Amount Reason Debt Service $(25,486)Expenditures exceeded revenues Facilities Development (2,298,810)Expenditures exceeded revenues Page 50 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $10,685,395 $10,609,976 Custodial Credit Risk - Deposits Money market mutual funds 5,746,009 5,746,009 Credit Risk Illinois funds 4,183,469 4,183,469 Credit Risk IMET - money market 1,669,191 1,669,191 Credit Risk IMET - 1-3 year fund 4,202,735 4,202,735 Credit Risk, Custodial Credit Risk - Investments, Interest Rate Risk U.S. treasuries 15,776,210 15,776,210 Custodial Credit Risk - Investments, Interest Rate Risk U.S. agencies 22,094,113 22,094,113 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Mutual funds - other than bond funds 33,221,887 33,221,887 N/A Negotiable certificates of deposit 2,067,415 2,067,415 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Equity securities 26,281,476 26,281,476 Custodial Credit Risk - Investments, Concentration of Credit Risk Municipal bonds 3,169,927 3,169,927 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Corporate bonds 3,627,482 3,627,482 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Petty cash 2,700 -N/A Total Deposits and Investments $132,728,009 $132,649,890 Page 51 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $19,716,576 Investments 7,056,217 Per statement of net position - fiduciary funds Cash - pension trusts 3,371,657 Cash - agency 408,569 U.S. treasuries 15,776,210 U.S. agencies 20,098,008 Mutual funds - other than bond funds 33,221,887 Equity securities 26,281,476 Municipal bonds 3,169,927 Corporate bonds 3,627,482 Total Deposits and Investments $132,728,009 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. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Page 52 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) Credit Risk (cont.) As of December 31, 2014, 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 A to AAA, Not Rated A2 to Aaa, Not Rated Corporate Bonds A to AA+A2 to Aa3 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, 2014, the Village's investments were as follows: Village Maturity Investment Type Fair Value Less than one year 1 - 5 years U.S. agencies $1,996,105 $-$1,996,105 Negotiable certificates of deposit 2,067,415 1,817,927 249,488 Totals $4,063,520 $1,817,927 $2,245,593 Page 53 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $12,981,154 $4,991,405 $4,132,177 $3,857,572 $- U.S. agencies 4,935,024 -2,572,512 1,962,281 400,231 Corporate bonds 3,627,482 -2,870,997 519,697 236,788 Totals $21,543,660 $4,991,405 $9,575,686 $6,339,550 $637,019 Firefighters' Pension Maturity Investment Type Fair Value Less than one year 1-5 years 6-10 years More than 10 years US treasuries $2,795,056 $80,650 $1,944,277 $770,129 $- US agencies 15,162,984 691,839 5,813,113 8,658,032 - Municipal bonds 3,169,927 175,921 1,200,455 1,322,439 471,112 Totals $21,127,967 $948,410 $8,957,845 $10,750,600 $471,112 Page 54 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) Money-Weighted Rate of Return Police Pension Fund For the year ended December 31, 2014, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 6.96%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Firefighters' Pension Fund For the year ended December 31, 2014, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 7.08%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. 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 55 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) C.CAPITAL ASSETS Capital asset activity for the year ended December 31, 2014, 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 222,057 250,304 -472,361 Total Capital Assets Not Being depreciated/ amortized 36,185,901 250,304 -36,436,205 Capital assets being depreciated/amortized Buildings 22,595,602 127,295 -22,722,897 Equipment and vehicles 12,500,185 761,880 308,024 12,954,041 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 94,981,569 889,175 308,024 95,562,720 Total Capital Assets 131,167,470 1,139,479 308,024 131,998,925 Less: Accumulated depreciation/ amortization for Buildings (19,465,185)(477,850)-(19,943,035) Equipment and vehicles (9,068,155)(642,411)308,024 (9,402,542) Land improvements (213,557)(63,599)-(277,156) Streets (11,742,685)(368,452)-(12,111,137) Storm sewers (34,325,969)(676,104)-(35,002,073) Total Accumulated depreciation/ amortization (74,815,551)(2,228,416)308,024 (76,735,943) Net Capital Assets Being Depreciated/Amortized 20,166,018 (1,339,241)-18,826,777 Total Governmental Activities Capital Assets, Net of Accumulated Depreciation/Amortization $56,351,919 $(1,088,937)$-$55,262,982 Page 56 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $237,388 Public safety 197,782 Public works 1,793,246 Total Governmental Activities Depreciation/Amortization Expense $2,228,416 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 366,231 -366,231 - Total Capital Assets Not Being depreciated/ amortized 6,564,745 -366,231 6,198,514 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 58,379,952 2,519,607 -60,899,559 Total Capital Assets Being Depreciated/Amortized 70,725,309 2,519,607 -73,244,916 Total Capital Assets 77,290,054 2,519,607 366,231 79,443,430 Less: Accumulated depreciation/ amortization for Buildings (7,101,913)(521,440)-(7,623,353) Land improvements (1,966,488)--(1,966,488) Equipment (94,510)--(94,510) Water/Sewer infrastructure (32,399,877)(1,083,180)-(33,483,057) Total Accumulated depreciation/ amortization (41,562,788)(1,604,620)-(43,167,408) Net Capital Assets Being Depreciated/Amortized 112,288,097 914,987 -30,077,508 Business-type Capital Assets, Net of Accumulated depreciation/ amortization $118,852,842 $914,987 $366,231 $36,276,022 Page 57 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 Water and Sewerage $9,000 General Arboretum Golf 3,000 General Nonmajor Business Type 4,000 General Nonmajor Governmental 25,486 Total - Fund Financial Statements 41,486 Less: Fund eliminations (25,486) Total Internal Balances - Government-W ide Statement of Net Position $16,000 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. Page 58 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 General Water and Sewerage $866,994 To fund administrative expenses and capital reserve General Arboretum Golf 37,475 To fund capital reserve General Nonmajor Business Type 45,000 To fund capital reserve Nonmajor Governmental General 1,402,819 To fund projects Nonmajor Governmental Water and Sewerage 200,000 To fund debt service Nonmajor Business Type General 78,745 To eliminate negative cash Total - Fund Financial Statements 2,631,033 Less: Fund eliminations (1,560,309) Total Transfers - Government-W ide Statement of Activities $1,070,724 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. E.SHORT-TERM DEBT ACTIVITY The Village issues short-term debt for funding costs related to the Emerald Ash Borer reforestation as well as water system and street improvements.. Short-term debt activity for the year ended December 31, 2014, was as follows: Beginning Balance Issued Redeemed Ending Balance Line of credit $-$2,400,000 $-$2,400,000 Totals $-$2,400,000 $-$2,400,000 Page 59 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) F.LONG-TERM OBLIGATIONS Long-term obligations activity for the year ended December 31, 2014, was as follows: Beginning Balance Increases Decreases Ending Balance Amounts Due Within One Year Governmental Activities Bonds Payable General obligation debt $11,340,000 $-$790,000 $10,550,000 $510,000 Premium 198,553 -18,050 180,503 - Sub-totals 11,538,553 -808,050 10,730,503 510,000 Other Liabilities Vested compensated absences 1,179,934 165,272 98,817 1,246,389 98,817 Other postemployment benefits 425,400 84,087 -509,487 - Net pension obligation -46,710 -46,710 - Total Other Liabilities 1,605,334 296,069 98,817 1,802,586 98,817 Total Governmental Activities Long-Term Liabilities $13,143,887 $296,069 $906,867 $12,533,089 $608,817 Business-type Activities Bonds and Notes Payable IEPA loan payable $173,618 $233,689 $6,788 $400,519 $17,033 Sub-totals 173,618 233,689 6,788 400,519 17,033 Other Liabilities Vested compensated absences 159,324 14,920 -174,244 13,815 Total Other Liabilities 159,324 14,920 -174,244 13,815 Total Business-type Activities Long-Term Liabilities $332,942 $248,609 $6,788 $574,763 $30,848 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 60 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) F.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, 2014 General Obligation Bonds Series 2010A 5/6/2013 12/31/2020 2.0-4.0%$5,160,000 $2,130,000 General Obligation Bonds Series 2010B 5/6/2013 12/31/2025 2.5-3.85%2,600,000 2,420,000 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 $10,550,000 Debt service requirements to maturity are as follows: Governmental Activities General Obligation Debt Years Principal Interest 2015 $510,000 $294,813 2016 525,000 282,063 2017 545,000 266,313 2018 665,000 249,463 2019 680,000 225,888 2020-2024 3,395,000 806,225 2025-2029 3,480,000 362,435 2030 750,000 20,625 Totals $10,550,000 $2,507,825 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 $407,307 as of December 31, 2014. Business-type Activities IEPA Loan Payable Date of Issue Final Maturity Interest Rates Original Indebtedness Balance December 31, 2014 IEPA Loan Payable 11/20/2013 12/1/2033 2.295%$407,307 $400,519 Total Business-type Activities IEPA Loan Payable $400,519 Page 61 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) F.LONG-TERM OBLIGATIONS (cont.) Debt service requirements to maturity are as follows: Business-type Activities IEPA Loan Payable Years Principal Interest 2015 $17,033 $9,095 2016 17,426 8,702 2017 17,828 8,299 2018 18,240 7,888 2019 18,661 7,467 2020-2024 99,967 30,671 2025-2029 112,050 18,589 2030-2033 99,314 5,196 Totals $400,519 $95,907 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. 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, 2014, $2,240,000 of bonds outstanding are considered defeased. Page 62 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) G. 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, 2014 are as follows: Years Amount 2015 $119,354 2016 121,741 2017 124,176 2018 126,660 2019 129,193 2020-2024 685,773 2025-2029 96,353 Totals $1,403,250 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. Page 63 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) 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 2014 was 13.70% of annual covered payroll. For 2014, the Village's annual required contribution rate was 13.70%.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. At December 31, 2014, the Police Pension membership consisted of: Retirees and beneficiaries currently receiving benefits 42 Inactive plan members entitled to but not yet receiving benefits 6 Active plan members 63 Total 111 Page 64 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Police Pension (cont.) 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. 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, 2014, the Village's contribution was 35.26% 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. Page 65 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Firefighters' Pension (cont.) At December 31, 2014, the Firefighters' Pension Plan membership consisted of: Retirees and beneficiaries currently receiving benefits 32 Inactive plan members entitled to but not yet receiving benefits 1 Active plan members 55 Total 88 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, 2014, 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, 2014, the Village's contribution was 41.44% 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 66 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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. Net Pension Obligation (Asset) The following is the net pension obligation (asset) calculation from the December 31, 2014 actuarial reports: Police Pension Firefighters' Pension Annual required contribution $2,256,676 $1,884,815 Interest on net pension obligation (17,910)(22,931) Adjustment to annual required contribution 17,071 15,631 Annual pension cost 2,255,837 1,877,515 Contributions made (2,083,758)(2,164,990) Change in net pension obligation (asset)172,079 (287,475) Net pension obligation (asset), beginning of year (125,369)(327,582) Net pension obligation (asset), end of year $46,710 $(615,057) Page 67 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Actuarial Assumptions - Annual Required Contribution The annual required contribution for the current year above was determined by an actuarial valuation performed as of December 31, 2014 using the following actuarial methods and assumptions: Illinois Municipal Retirement Police Pension Firefighters' Pension Actuarial valuation date December 31, 2014 December 31, 2013 December 31, 2014 Contribution rates: Employer 13.70%35.26%41.44% Employee 4.50%9.91%9.46% Annual required contribution $1,122,808 $2,256,676 $1,884,815 Contributions made $1,122,808 $2,083,758 $2,164,990 Actuarial cost method Entry-age normal Entry-age normal Entry-age normal Asset valuation method 5 year smoothed market Market Market Amortization method Level percentage of payroll, closed Level percentage of payroll Level percentage of payroll Amortization period 29 years 20 years 26 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% Page 68 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) 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 $1,122,808 $2,255,837 $1,877,515 2012 1,150,122 2,358,938 2,015,481 2011 1,097,798 2,192,541 1,997,207 Contributions made 2013 $1,122,808 $2,083,758 $2,164,990 2012 1,150,122 2,228,448 2,049,868 2011 1,097,798 2,192,860 2,026,799 Percentage of APC contributed 2013 100.00%92.37%115.30% 2012 100.00%94.47%101.70% 2011 100.00%100.01%101.50% Net pension (asset) obligation 2013 $-$46,710 $(615,057) 2012 -(125,369)(327,582) 2011 -(255,859)(293,195) Page 69 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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, 2014 December 31, 2013 December 31, 2014 Actuarial Valuation of Assets (a)$19,946,917 $51,386,690 $49,152,862 Actuarial Accrued Liability (AAL) - Entry Age (b)$27,915,740 $75,940,018 $65,477,594 Unfunded AAL (UAAL) (b - a)$7,968,823 $24,553,328 $16,324,732 Funded Ratio (a/b)%71.45 %67.67 %75.07 Covered Payroll (c)8,195,678 5,908,959 5,224,950 UAAL as a Percentage of Covered Payroll ((b-a)/c)%97.23 %415.53 %312.44 Net Pension Liability Police Pension Firefighters' Pension Total pension liability $81,341,993 $65,477,594 Plan fiduciary net position 56,254,452 49,156,718 Village's net pension liability 25,087,541 16,320,876 Plan fiduciary net position as a percentage of the total pension liability 69.16%75.07% The schedule of changes in the employer's net position liability and related ratios, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information related to the funded status of the Police Pension Fund and Firefighters' Pension Fund. Page 70 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Actuarial Assumptions - Total Pension Liability The total pension liability for the current year above was determined by an actuarial valuation performed as of December 31, 2014, using the following actuarial methods and assumptions: Police Pension Firefighters' Pension Actuarial Valuation Date December 31, 2014 December 31, 2014 Actuarial cost method Entry-age normal Entry-age normal Asset valuation method Market Market Actuarial assumptions: Projected salary increases 4.00%5.00% Inflation 3.00%3.00% Interest rate 7.00%7.00% Cost-of-living adjustments 3.00%2.00% - 3.00% Police pension mortality rates were based on L&A Illinois Police table. Firefighter pension mortality rates were based on the RP-2000 CHBCA Mortality Table (BCA, +1M, -4F, 2x>105). The actuarial assumptions used in the December 31, 2014 valuation were based on the results of an actuarial experience study conducted by the Illinois Department of Insurance dated September 26, 2012. Page 71 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Discount Rate Police Pension Plan The discount rate used to measure the total pension liability for the Police Pension Plan was 7.00%, the same as the prior valuation. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that Village contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Police Pension Fund's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefits payments to determine the total pension liability. Firefighter's Pension Plan The discount rate used to measure the total pension liability for the Firefighters' Pension Plan was 7.00%, the same as the prior valuation. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that Village contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Firefighters' Pension Fund's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Discount Rate Sensitivity The following is a sensitivity analysis of the net pension liability to changes in the discount rate. The table below presents the pension liability calculated using the current discount rate as well as what the net pension liability would be if it were to be calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate: 1% Decrease Current Discount Rate 1% Increase Police Pension Fund: Discount rate 6.00%7.00%8.00% Net pension liability $36,069,374 $25,087,541 $15,984,655 Firefighters' Pension Fund: Discount rate 6.00%7.00%8.00% Net pension liability $25,191,973 $16,320,876 $8,948,191 Total net pension liability $61,261,347 $41,408,417 $24,932,846 Page 72 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $3,063,640 $308,017 $3,371,657 Investments U.S. treasuries 12,981,154 2,795,056 15,776,210 U.S. agencies 4,935,023 15,162,985 20,098,008 Mutual funds - other than bond funds 5,590,226 27,631,661 33,221,887 Equity securities 26,281,476 -26,281,476 Municipal bonds -3,169,927 3,169,927 Corporate bonds 3,627,482 -3,627,482 Receivables Interest 39,162 114,048 153,210 Prepaid items 775 -775 Due from primary government 3,092 7,616 10,708 Total Assets 56,522,030 49,189,310 105,711,340 Liabilities Accounts payable 52,984 32,592 85,576 Due to primary government 214,594 -214,594 Total Liabilities 267,578 32,592 300,170 Net Position Held in trust for pension benefits $56,254,452 $49,156,718 $105,411,170 Page 73 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $2,083,758 $2,168,844 $4,252,602 Plan members 654,693 502,014 1,156,707 Total Contributions 2,738,451 2,670,858 5,409,309 Investment Income Net appreciation in fair value of investments 3,526,700 1,392,062 4,918,762 Interest 454,322 1,951,217 2,405,539 Total Investment income 3,981,022 3,343,279 7,324,301 Less investment income 224,535 147,363 371,898 Net investment income 3,756,487 3,195,916 6,952,403 Total Additions 6,494,938 5,866,774 12,361,712 Deductions Administration 33,343 42,368 75,711 Pension benefits and refunds 2,747,592 1,943,409 4,691,001 Total Deductions 2,780,935 1,985,777 4,766,712 Net change in net position 3,714,003 3,880,997 7,595,000 Net position, beginning of year 52,540,449 45,275,721 97,816,170 Net position, end of year $56,254,452 $49,156,718 $105,411,170 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 74 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 75 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $803,039 to SW ANCC for the year ended December 31, 2014. Page 76 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 77 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $1,688,240 to NW WC for the year ended December 31, 2014. The Village's equity interest in NW WC was $6,982,235 at December 31, 2014. 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 2014, the Village contributed $218,831 to the Plan. Plan members receiving benefits contributed $387,219 through their required contribution of $614 per month for retiree only coverage and $1,241 per month for retiree and spouse coverage. Page 78 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 $300,421 Interest on net OPEB obligation 14,984 Adjustment to annual required contribution (12,487) Annual OPEB cost 302,918 Contributions made (218,831) Increase in net OPEB obligation (asset)84,087 Net OPEB Obligation (Asset) - Beginning of Year 425,400 Net OPEB Obligation (Asset) - End of Year $509,487 Page 79 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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 2014 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, 2012 $272,474 80.30%$374,609 December 31, 2013 269,622 81.16%425,400 December 31, 2014 302,918 72.24%509,487 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 80 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 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, 2014, was 30 years. F.SUBSEQUENT EVENTS Subsequent to the fiscal year end, the Village entered into a material contract. The Board approved a $3,991,832 contractual agreement with Siemens Industry, Inc. for performance contracting services. Specifically, the Village is using performance contracting to assist with the water meter replacement project, SCADA improvements, and street lighting improvements. G.EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved the following: Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 Statement No. 71, Pension - Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB 68. GASB Statement No. 72, Fair Value Measurement and Application. GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. When they become effective, application of these standards may restate portions of these financial statements. Page 81 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) H.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 $492,271.There was no municipal sales taxes due to the local retailer as of December 31, 2014. 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. For the seventh tax year, 50% of that year's incremental municipal sales tax will be distributed to the local retailer. Page 82 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV - OTHER INFORMATION (cont.) 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 $101,051. There was no municipal sales taxes due to the local retailer as of December 31, 2014. Page 83 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, 2014 Original and Final Budget Actual Variance with Final Budget REVENUES Charges for services $1,039,684 $1,370,682 $330,998 Licenses and permits 294,450 207,312 (87,138) Fines and fees 1,770,275 1,623,171 (147,104) Property 13,696,988 13,664,597 (32,391) Other taxes 9,328,006 9,564,978 236,972 Intergovernmental 9,465,544 10,035,168 569,624 Interest 78,000 107,703 29,703 Miscellaneous income 994,550 1,732,464 737,914 Total Revenues 36,667,497 38,306,075 1,638,578 EXPENDITURES Current: General government 5,387,773 5,303,015 84,758 Public safety 22,725,689 22,773,535 (47,846) Public works 7,397,647 8,794,977 (1,397,330) Total Expenditures 35,511,109 36,871,527 (1,360,418) Excess of revenues over expenditures 1,156,388 1,434,548 278,160 OTHER FINANCING SOURCES (USES) Sales of fixed assets -488 488 Transfers in 827,500 949,469 121,969 Transfers out (1,969,074)(1,481,564)487,510 Total Other Financing Sources (Uses)(1,141,574)(531,607)609,967 Net Change in Fund Balance $14,814 902,941 $888,127 FUND BALANCE - Beginning of Year 20,465,206 FUND BALANCE - END OF YEAR $21,368,147 See independent auditors' report and accompanying notes to required supplementary information. Page 84 VILLAGE OF BUFFALO GROVE ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF EMPLOYER'S CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2014 Fiscal Year End Annual Required Contribution (ARC) Percentage of ARC Contributed Net Pension Obligation 12/31/2014 $1,122,808 100.00%$- 12/31/2013 1,150,122 100.00%- 12/31/2012 1,097,798 100.00%- 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 12/31/2014 $19,946,917 $27,915,740 $7,968,823 71.45%$8,195,678 97.23% 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 19,002,171 27,343,323 8,341,152 69.49%8,610,969 96.87% 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 12/31/2014 Actuarial cost method Entry Age normal Amortization method Level percentage of pay, closed Remaining amortization period 29 years Asset valuation method Market Actuarial assumptions: Investment rate of return 7.5% Projected salary increases 0.4 to 10% Inflation factor 4.00% Cost of living adjustments 3.00% See independent auditors' report and accompanying notes to required supplementary information. Page 85 VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF EMPLOYER'S CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2014 Fiscal Year End Annual Required Contribution (ARC) Percentage of ARC Contributed Net Pension Obligation (Asset) 12/31/2014 $2,256,676 92.37%$46,710 12/31/2013 2,359,777 94.47%(125,369) 12/31/2012 2,198,690 100.01%(255,859) 12/31/2011 2,145,917 102.60%(255,540) 12/31/2010 2,038,612 101.20%(194,812) 12/31/2009 1,754,664 98.20%(166,984) 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 $51,386,690 $75,940,018 $24,553,328 67.67%$5,908,959 415.53% 12/31/2012 49,179,091 71,703,956 22,524,865 68.59%5,752,633 391.56% 12/31/2011 45,414,255 73,221,793 27,807,538 62.02%5,963,940 466.26% 12/31/2010 41,427,183 68,989,180 27,561,997 60.05%5,923,012 465.34% 12/31/2009 36,896,831 61,278,367 24,381,536 60.21%5,998,088 406.49% 12/31/2008 33,736,413 57,812,420 24,076,007 58.35%5,831,457 412.86% The information presented in the above required supplementary schedule was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation can be found in the notes to basic financial statements. Valuation date 12/31/2013 Actuarial cost method Entry Age normal Amortization method Level percentage of pay, closed Remaining amortization period 20 Asset valuation method Market Actuarial assumptions: Investment rate of return 7.00% Projected salary increases 5.00-20.00% Inflation factor 3.00% Cost of living adjustments 3.00% See independent auditors' report and accompanying notes to required supplementary information. Page 86 Page 87 2014 Total pension liability Service cost 1,415,171$ Interest Changes of benefit terms 5,318,732 Benefit payments, including refunds of member contributions (2,747,592) Net change in total pension liability 3,986,311 Total pension liability - beginning 77,355,682 Total pension liability - ending (a)81,341,993$ Plan fiduciary net position Employer contributions 2,083,758$ Employee contributions 654,693 Net investment income 3,756,487 Benefit payments, including refunds of member contriutions (2,747,592) Administration (33,343) Net change in plan fiduciary net position 3,714,003 Plan fiduciary net position - beginning 52,540,449 Plan fiduciary net position - ending (b)56,254,452$ Village's net pension liability - ending (a) - (b)25,087,541$ Plan fiduciary net position as a percentage of the total pension liability 69.16% Covered-employee payroll 5,984,178$ Village's net pension liability as a percentage of covered- employee payroll 419.23% Notes to Schedule: See independent auditors' report and accompanying notes to required supplementary information. The Village implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOS As of and for the Year Ended December 31, 2014 Page 88 2014 Actuarially determined contribution 2,359,777$ Contributions in relation to the actuarially determined contribution 2,083,758 Cotnribution deficiency (excess)276,019$ Covered-employee payroll 5,984,178$ Contributions as a percentage of covered- employee payroll 34.82% Notes to Schedule: Valuation date: December 31, 2014 Methods and assumptions used to determine contribution rates: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Mortality See independent auditors' report and accompanying notes to required supplementary information. Mortality rates were based on L&A Illinois Police table. Level percentage of payroll, closed 30 years Market Value 3.00% 5% to 20%, average, including inflation 7.00%, net of pension plan investment expense, including inflation Entry-age VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the Year Ended December 31, 2014 The Plan implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not Page 89 2014 Annual money-weighted rate of return, net of investment expense 7.00% Notes to Schedule: See independent auditors' report and accompanying notes to required supplementary information. The Village implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF INVESTMENT RETURNS As of December 31, 2014 VILLAGE OF BUFFALO GROVE FIREFIGHTERS' PENSION FUND SCHEDULE OF EMPLOYER'S CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2014 Fiscal Year End Annual Required Contribution (ARC) Percentage of ARC Contributed Net Pension Obligation (Asset) 12/31/2014 $1,884,815 114.86%$(615,057) 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) 12/31/2010 1,905,833 100.70%(195,836) 12/31/2009 1,506,343 104.90%(179,741) 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 12/31/2014 $49,152,862 $65,477,594 $16,324,732 75.07%$5,224,950 312.44% 12/31/2013 45,275,721 62,459,374 17,183,653 72.49%5,057,260 339.78% 12/31/2012 40,108,736 59,592,083 19,483,347 67.31%5,289,831 368.32% 12/31/2011 35,572,790 58,315,678 22,742,888 61.00%5,076,411 448.01% 12/31/2010 33,498,856 52,883,349 19,384,493 63.34%5,486,606 353.31% 12/31/2009 29,149,597 46,895,213 17,745,616 62.16%5,429,462 326.84% The information presented in the above required supplementary schedule was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation can be found in the notes to basic financial statements. Valuation date 12/31/2014 Actuarial cost method Entry Age normal Amortization method Level percentage of pay, closed Remaining amortization period 26 Asset valuation method Market Actuarial assumptions: Investment rate of return 7.00% Projected salary increases 5.00% Inflation factor 3.00% Cost of living adjustments 2.00% - 3.00% See independent auditors' report and accompanying notes to required supplementary information. Page 90 Page 91 2014 Total pension liability Service cost 1,378,069$ Interest Changes of benefit terms 4,304,137 Differences between expected and actual experience 218,159 Changes of assumptions (938,734) Benefit payments, including refunds of member contributions (1,943,411) Net change in total pension liability 3,018,220 Total pension liability - beginning 62,459,374 Total pension liability - ending (a)65,477,594$ Plan fiduciary net position Employer contributions 2,168,844$ Employee contributions 502,014 Net investment income 3,195,916 Benefit payments, including refunds of member contriutions (1,943,409) Administration (42,368) Net change in plan fiduciary net position 3,880,997 Plan fiduciary net position - beginning 45,275,721 Plan fiduciary net position - ending (b)49,156,718$ Village's net pension liability - ending (a) - (b)16,320,876$ Plan fiduciary net position as a percentage of the total pension liability 75.07% Covered-employee payroll 5,224,950$ Village's net pension liability as a percentage of covered- employee payroll 312.36% Notes to Schedule: See independent auditors' report and accompanying notes to required supplementary information. The Village implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. VILLAGE OF BUFFALO GROVE FIREFIGHTERS PENSION FUND SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOS As of and for the Year Ended December 31, 2014 Page 92 2014 Actuarially determined contribution 1,884,815$ Contributions in relation to the actuarially determined contribution 2,168,844 Cotnribution deficiency (excess)(284,029)$ Covered-employee payroll 5,224,950$ Contributions as a percentage of covered- employee payroll 41.51% Notes to Schedule: Valuation date: December 31, 2014 Methods and assumptions used to determine contribution rates: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Mortality See independent auditors' report and accompanying notes to required supplementary information. VILLAGE OF BUFFALO GROVE FIREFIGHTERS PENSION FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the Year Ended December 31, 2014 The Plan implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. 3.00% 7.00%, net of pension plan investment expense, including inflation Mortality rates were based on the RP-2000 Mortality Table Entry-age Level percentage of payroll, closed 26 years Market Value 5%, average, including inflation Page 93 2014 Annual money-weighted rate of return, net of investment expense 7.08% Notes to Schedule: See independent auditors' report and accompanying notes to required supplementary information. The Village implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. VILLAGE OF BUFFALO GROVE FIREFIGHTERS PENSION FUND SCHEDULE OF INVESTMENT RETURNS As of December 31, 2014 VILLAGE OF BUFFALO GROVE OTHER POST EMPLOYMENT BENEFITS SCHEDULE OF EMPLOYER CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2014 Year Ended Annual Required Contribution Percentage Contributed 12/31/14 $300,421 72.84 % 12/31/13 267,125 81.92 12/31/12 267,125 81.92 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 94 VILLAGE OF BUFFALO GROVE NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2014 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 95 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, 2014 Motor Fuel Tax Metra Parking Lot Debt Service Street Maintenance ASSETS Cash $1,756,143 $68,554 $-$865,632 Receivables Property taxes --604,813 - Motor fuel tax 104,497 --- TOTAL ASSETS $1,860,640 $68,554 $604,813 $865,632 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $186,852 $5,632 $-$119,187 Due to other funds --25,486 - Unearned revenue ---517,827 Total Liabilities 186,852 5,632 25,486 637,014 Deferred Inflows of Resources Property taxes levied for a future period --604,813 - Total Deferred Inflows of Resources --604,813 - Fund Balances (Deficit) Restricted for capital project ---228,618 Restricted for parking lot operations -62,922 -- Restricted for road construction 1,673,788 --- Unassigned --(25,486)- Total Fund Balances (deficit)1,673,788 62,922 (25,486)228,618 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $1,860,640 $68,554 $604,813 $865,632 Page 96 Total Nonmajor Governmental Funds $2,690,329 604,813 104,497 $3,399,639 $311,671 25,486 517,827 854,984 604,813 604,813 228,618 62,922 1,673,788 (25,486) 1,939,842 $3,399,639 Page 97 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 Motor Fuel Tax Metra Parking Lot Debt Service Street Maintenance Total Nonmajor Governmental Funds REVENUES Property $-$-$889,967 $-$889,967 Intergovernmental 1,045,913 ---1,045,913 Miscellaneous income 375,164 ---375,164 Interest 31 -31 -62 Charges for services -1,097 --1,097 Fines and fees -180,146 --180,146 Total Revenues 1,421,108 181,243 889,998 -2,492,349 EXPENDITURES Current General government -219,534 --219,534 Capital improvement 2,083,301 ---2,083,301 Debt Service Principal --790,000 -790,000 Interest --313,665 -313,665 Total Expenditures 2,083,301 219,534 1,103,665 -3,406,500 Excess (deficiency) of revenues over expenditures (662,193)(38,291)(213,667)-(914,151) OTHER FINANCING SOURCES (USES) Transfers in 767,602 -200,000 -967,602 Total Other Financing Sources (Uses)767,602 -200,000 -967,602 Net Change in Fund Balances 105,409 (38,291)(13,667)-53,451 FUND BALANCES (DEFICIT) - Beginning of Year 1,568,379 101,213 (11,819)228,618 1,886,391 FUND BALANCES (DEFICIT) - END OF YEAR $1,673,788 $62,922 $(25,486)$228,618 $1,939,842 Page 98 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, 2014 Original and Final Budget Actual Variance with Final Budget REVENUES Intergovernmental $1,000,000 $1,045,913 $45,913 Interest -31 31 Miscellaneous income 187,582 375,164 187,582 Total Revenues 1,187,582 1,421,108 233,526 EXPENDITURES Current: Public works 2,250,000 2,083,301 166,699 Total Expenditures 2,250,000 2,083,301 166,699 Excess (deficiency) of revenues over (under) expenditures (1,062,418)(662,193)400,225 OTHER FINANCING SOURCES (USES) Transfers in 629,670 767,602 137,932 Total Other Financing Sources (Uses)629,670 767,602 137,932 Net Change in Fund Balance $(432,748)105,409 $538,157 FUND BALANCE - Beginning of Year 1,568,379 FUND BALANCE - END OF YEAR $1,673,788 Page 99 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, 2014 Original and Final Budget Actual Variance with Final Budget REVENUES Charges for services $1,100 $1,097 $(3) Fines and fees 175,000 180,146 5,146 Total Revenues 176,100 181,243 5,143 EXPENDITURES Current: General government 221,418 219,534 1,884 Total Expenditures 221,418 219,534 1,884 Net Change in Fund Balance $(45,318)(38,291)$7,027 FUND BALANCE - Beginning of Year 101,213 FUND BALANCE - END OF YEAR $62,922 Page 100 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, 2014 Original and Final Budget Actual Variance with Final Budget REVENUES Property $901,513 $889,967 $(11,546) Interest -31 31 Total Revenues 901,513 889,998 (11,515) EXPENDITURES Debt Service Principal 790,000 790,000 - Interest 316,013 313,665 2,348 Total Expenditures 1,106,013 1,103,665 2,348 Excess (deficiency) of revenues over (under) expenditures (204,500)(213,667)(9,167) OTHER FINANCING SOURCES Transfers in 180,000 200,000 20,000 Total Other Financing Sources 180,000 200,000 20,000 Net Change in Fund Balance $(24,500)(13,667)$10,833 FUND BALANCE (DEFICIT) - Beginning of Year (11,819) FUND BALANCE (DEFICIT) - END OF YEAR $(25,486) Page 101 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, 2014 Original and Final Budget Actual Variance with Final Budget REVENUES Total Revenues $-$-$- EXPENDITURES Capital Outlay 113,000 -113,000 Total Expenditures 113,000 -113,000 Excess (deficiency) of revenues over (under) expenditures (113,000)-113,000 OTHER FINANCING SOURCES Transfers in 113,000 -(113,000) Total Other Financing Sources 113,000 -(113,000) Net Change in Fund Balance $--$- FUND BALANCE - Beginning of Year 228,618 FUND BALANCE - END OF YEAR $228,618 Page 102 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - FACILITIES DEVELOPMENT - MAJOR CAPITAL PROJECTS FUND For the Year Ended December 31, 2014 Original and Final Budget Actual Variance with Final Budget REVENUES Total Revenues $-$-$- EXPENDITURES Capital Outlay 2,163,404 2,018,451 144,953 Total Expenditures 2,163,404 2,018,451 144,953 Excess (deficiency) of revenues over (under) expenditures (2,163,404)(2,018,451)144,953 OTHER FINANCING SOURCES Transfers in 1,163,404 635,217 (528,187) Total Other Financing Sources 1,163,404 635,217 (528,187) Net Change in Fund Balance $(1,000,000)(1,383,234)$(383,234) FUND BALANCE (DEFICIT) - Beginning of Year (915,576) FUND BALANCE (DEFICIT) - END OF YEAR $(2,298,810) Page 103 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS As of December 31, 2014 Buffalo Grove Golf Refuse Service Total Nonmajor Enterprise Funds ASSETS Current Assets Cash and equivalents $-$748,456 $748,456 Receivables Other 53,315 86,599 139,914 Inventory 20,935 -20,935 Total Current Assets 74,250 835,055 909,305 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 (2,224,813)-(2,224,813) Total Noncurrent Assets 1,161,747 -1,161,747 Total Assets 1,235,997 835,055 2,071,052 LIABILITIES Current Liabilities Accounts payable 26,057 -26,057 Accrued wages 20,479 -20,479 Due to other funds 4,000 -4,000 Other 12,337 -12,337 Compensated absences 4,222 -4,222 Total Current Liabilities 67,095 -67,095 Noncurrent Liabilities Long-Term Debt Compensated absences 49,027 -49,027 Total Noncurrent Liabilities 49,027 -49,027 Total Liabilities 116,122 -116,122 NET POSITION Net investment in capital assets 1,161,747 -1,161,747 Unrestricted (deficit)(41,872)835,055 793,183 TOTAL NET POSITION $1,119,875 $835,055 $1,954,930 Page 104 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2014 Buffalo Grove Golf Refuse Service Total Nonmajor Enterprise Funds OPERATING REVENUES Daily greens fee and memberships $693,435 $-$693,435 Merchandise sales 68,496 -68,496 Cart, club, and other rentals 230,406 -230,406 Driving range fees 61,338 -61,338 SW ANCC user fees -1,044,442 1,044,442 Miscellaneous 21,972 -21,972 Total Operating Revenues 1,075,647 1,044,442 2,120,089 OPERATING EXPENSES Golf operations 1,054,531 -1,054,531 Cost of sales - pro shop 51,814 -51,814 Refuse operations -803,039 803,039 Depreciation 32,784 -32,784 Total Operating Expenses 1,139,129 803,039 1,942,168 Operating Income (Loss)(63,482)241,403 177,921 TRANSFERS Transfers in 78,745 -78,745 Transfers out (45,000)-(45,000) Total Transfers 33,745 -33,745 Change in Net Position (29,737)241,403 211,666 NET POSITION - Beginning of Year 1,149,612 593,652 1,743,264 NET POSITION - END OF YEAR $1,119,875 $835,055 $1,954,930 Page 105 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CASH FLOW S NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2014 Buffalo Grove Golf Refuse Service Totals CASH FLOWS FROM OPERATING ACTIVITIES Received from customers $1,022,332 $1,044,442 $2,066,774 Paid to suppliers for goods and services (548,558)(803,039)(1,351,597) Paid to employees for services (512,219)-(512,219) Net Cash Flows From Operating Activities (38,445)241,403 202,958 CASH FLOWS FROM NONCAPITAL FINANCING AC TIVITIES Transfers in (out)37,745 -37,745 Net Cash Flows From Noncapital Financing Activities 37,745 -37,745 Net Change in Cash and Cash Equivalents (700)241,403 240,703 CASH AND CASH EQUIVALENTS - Beginning of Year 700 507,053 507,753 CASH AND CASH EQUIVALENTS - END OF YEAR $-$748,456 $748,456 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss)$(63,482)$241,403 $177,921 Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation 32,784 -32,784 Changes in assets and liabilities Inventory 6,373 -6,373 Accounts payable 23,836 -23,836 Accrued wages 4,036 -4,036 Accounts receivable (53,315)-(53,315) OPEB 11,323 -11,323 NET CASH FLOWS FROM OPERATING AC TIVITIES $(38,445)$241,403 $202,958 NONCASH CAPITAL AND RELATED FINANCING AC TIVITIES None Page 106 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, 2014 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Daily greens fee and memberships $749,000 $693,435 $(55,565) Merchandise sales 74,000 68,496 (5,504) Cart, club, and other rentals 241,000 230,406 (10,594) Driving range fees 60,000 61,338 1,338 Miscellaneous 15,100 21,972 6,872 Total Operating Revenues 1,139,100 1,075,647 (63,453) OPERATING EXPENSES Golf operations 1,156,349 1,054,531 (101,818) Cost of sales - pro shop 45,000 51,814 6,814 Total Operating Expenses 1,201,349 1,106,345 (95,004) Operating Income (Loss) - Non-GAAP Budgetary Basis (62,249)(30,698)31,551 TRANSFERS Transfers in 63,000 78,745 15,745 Transfers out -(45,000)(45,000) Net Transfers 63,000 33,745 (29,255) Change in net position - Non-GAAP Budgetary Basis $751 $3,047 $2,296 Page 107 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, 2014 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES SW ANCC user fees $1,020,000 $1,044,442 $24,442 Total Operating Revenues 1,020,000 1,044,442 24,442 OPERATING EXPENSES Refuse operations 936,000 803,039 (132,961) Total Operating Expenses 936,000 803,039 (132,961) Operating Income - Non-GAAP Budgetary Basis $84,000 $241,403 $157,403 Page 108 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, 2014 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Water and sewer charges $10,012,774 $9,043,561 $(969,213) Connection and recapture fees 27,000 32,700 5,700 Intergovernmental - grants 437,388 -(437,388) Miscellaneous 1,000,000 520,521 (479,479) Total Operating Revenues 11,477,162 9,596,782 (1,880,380) OPERATING EXPENSES Water operations 4,575,488 1,623,156 (2,952,332) Sewer operations 4,442,340 3,728,417 (713,923) Water purchases 1,822,005 1,668,240 (153,765) Add: Capital assets capitalized -2,153,376 2,153,376 Total Operating Expenses 10,839,833 9,173,189 (1,666,644) Operating Income (Loss) - Non-GAAP Budgetary Basis 637,329 423,593 (213,736) NON-OPERATING REVENUES Interest 17,250 18,820 1,570 Total Non-Operating Revenues 17,250 18,820 1,570 Net Income (Loss) Before Transfers - Non- GAAP Budgetary Basis 654,579 442,413 (212,166) TRANSFERS Transfers out (945,000)(1,066,994)(121,994) Net Transfers (945,000)(1,066,994)(121,994) Change in net position - Non-GAAP Budgetary Basis $(290,421)$(624,581)$(334,160) Page 109 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, 2014 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Daily greens fee and memberships $800,500 $813,629 $13,129 Merchandise sales 54,000 55,671 1,671 Cart, club, and other rentals 238,300 247,220 8,920 Miscellaneous 65,600 65,327 (273) Total Operating Revenues 1,158,400 1,181,847 23,447 OPERATING EXPENSES Golf operations 1,115,100 1,071,624 (43,476) Cost of sales - pro shop 40,000 39,668 (332) Total Operating Expenses 1,155,100 1,111,292 (43,808) Operating (Loss) - Non-GAAP Budgetary Basis 3,300 70,555 67,255 NON-OPERATING REVENUES Net (Loss) Before Transfers - Non-GAAP Budgetary Basis 3,300 70,555 67,255 TRANSFERS Transfers out -(37,475)(37,475) Net Transfers -(37,475)(37,475) Change in net position - Non-GAAP Budgetary Basis $3,300 $33,080 $29,780 Page 110 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUNDS As of December 31, 2014 Police Pension Firefighters' Pension Totals ASSETS Cash $3,063,640 $308,017 $3,371,657 Investments U.S. treasuries 12,981,154 2,795,056 15,776,210 U.S. agencies 4,935,023 15,162,985 20,098,008 Mutual funds - other than bond funds 5,590,226 27,631,661 33,221,887 Equity securities 26,281,476 -26,281,476 Municipal bonds -3,169,927 3,169,927 Corporate bonds 3,627,482 -3,627,482 Receivables Interest 39,162 114,048 153,210 Prepaid items 775 -775 Due from primary government 3,092 7,616 10,708 Total Assets 56,522,030 49,189,310 105,711,340 LIABILITIES Accounts payable 52,984 32,592 85,576 Due to primary government 214,594 -214,594 Total Liabilities 267,578 32,592 300,170 NET POSITION Held in trust for pension benefits $56,254,452 $49,156,718 $105,411,170 Page 111 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUNDS For the Year Ended December 31, 2014 Police Pension Firefighters' Pension Total AD DITIONS Contributions Employer $2,083,758 $2,168,844 $4,252,602 Plan members 654,693 502,014 1,156,707 Total Contributions 2,738,451 2,670,858 5,409,309 Investment income Interest 454,322 1,951,217 2,405,539 Net appreciation in fair value of investments 3,526,700 1,392,062 4,918,762 Total Investment Income 3,981,022 3,343,279 7,324,301 Less Investment expense 224,535 147,363 371,898 Net Investment Income 3,756,487 3,195,916 6,952,403 Total Additions 6,494,938 5,866,774 12,361,712 DEDUCTIONS Pension benefits and refunds 2,747,592 1,943,409 4,691,001 Administration 33,343 42,368 75,711 Total Deductions 2,780,935 1,985,777 4,766,712 Change in Net Position 3,714,003 3,880,997 7,595,000 NET POSITION - Beginning of Year 52,540,449 45,275,721 97,816,170 NET POSITION, END OF YEAR $56,254,452 $49,156,718 $105,411,170 Page 112 VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUAL For the Year Ended December 31, 2014 Original and Final Budget Actual Variance with Final Budget Additions Contributions Employer $2,088,000 $2,083,758 $4,242 Plan members 565,000 654,693 (89,693) Total contributions 2,653,000 2,738,451 (85,451) Investment Income Interest -454,322 (454,322) Net appreciation in fair value of investments 1,786,846 3,526,700 (1,739,854) Total investment income 1,786,846 3,981,022 (2,194,176) Less Investment expense 115,000 224,535 (109,535) Net investment income 1,671,846 3,756,487 (2,084,641) Total additions 4,324,846 6,494,938 (2,170,092) Deductions Pension benefits and refunds 2,591,881 2,747,592 (155,711) Administration 35,000 33,343 1,657 Total deductions 2,626,881 2,780,935 (154,054) Change in net position $1,697,965 3,714,003 $(2,016,038) Net position, beginning of year 52,540,449 Net position, end of year $56,254,452 Page 113 VILLAGE OF BUFFALO GROVE FIREFIGHTERS' PENSION FUND SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUAL For the Year Ended December 31, 2014 Original and Final Budget Actual Variance and Final Budget Additions Contributions Employer $2,174,632 $2,168,844 $5,788 Plan members 494,995 502,014 (7,019) Total contributions 2,669,627 2,670,858 (1,231) Investment Income Interest 1,735,050 1,951,217 (216,167) Net appreciation in fair value of investments -1,392,062 (1,392,062) Total investment income 1,735,050 3,343,279 (1,608,229) Less Investment expense 50,000 147,363 (97,363) Net investment income 1,685,050 3,195,916 (1,510,866) Total additions 4,354,677 5,866,774 (1,512,097) Deductions Pension benefits and refunds 1,743,831 1,943,409 (199,578) Administration 70,000 42,368 27,632 Total deductions 1,813,831 1,985,777 (171,946) Change in net position $2,540,846 3,880,997 $(1,340,151) Net position, beginning of year 45,275,721 Net position, end of year $49,156,718 Page 114 Page 115 VILLAGE OF BUFFALO GROVE AGENCY FUND SCHOOL AND PARK DONATIONS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION For the Year Ended December 31, 2014 Balances Balances January 1 Additions Deletions December 31 Assets Cash & Cash Equivalents 493,406$ 52,626$ 137,463$ 408,569$ Liabilities Due to Other Governments 493,406$ 52,626$ 137,463$ 408,569$ Statistical Section Contents Page Financial Trends 116 - 125 Revenue Capacity 126 - 136 Debt Capacity 137 - 141 Demographic and Economic Information 142 - 145 Operating Information 146 - 149 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 116 VILLAGE OF BUFFALO GROVE, ILLINOIS Net Position by Component Last Ten Fiscal Years Fiscal Years 2014 2013 2012**2011 Governmental Activities Net Investment in Capital Assets 50,712,982$ 51,011,919$ 52,096,183$ 53,362,147$ Restricted 2,664,110 2,412,222 6,268,039 1,918,263 Unrestricted 11,048,700 12,387,400 11,550,011 13,429,876 Total Governmental Activities Net Position 64,425,792$ 65,811,541$ 69,914,233$ 68,710,286$ Business-type Activities Net Investment in Capital Assets 35,871,503$ 35,553,648$ 36,706,161$ 37,807,146$ Unrestricted 11,067,173 11,515,793 11,242,301 12,989,124 Total Business-type Activities Net Position 46,938,676$ 47,069,441$ 47,948,462$ 50,796,270$ Primary Government Net Investment in Capital Assets 86,584,485$ 86,565,567$ 88,802,344$ 91,169,293$ Restricted 2,664,110 2,412,222 6,268,039 1,918,263 Unrestricted 22,115,873 23,903,193 22,792,312 26,419,000 Total Primary Government Net Position 111,364,468$ 112,880,982$ 117,862,695$ 119,506,556$ *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 117 2010 2009 2008 2007*2007 2006 53,742,519$ 54,563,385$ 53,551,265$ 53,702,484$ 53,726,929$ 53,188,591$ 956,803 140,712 80,438 33,167 1,294,897 1,425,988 15,738,272 16,590,052 23,259,339 27,184,985 35,512,486 37,786,827 70,437,594$ 71,294,149$ 76,891,042$ 80,920,636$ 90,534,312$ 92,401,406$ 38,410,966$ 39,808,889$ 41,374,269$ 42,667,740$ 42,667,526$ 43,646,133$ 14,644,341 15,011,209 17,003,316 17,509,194 18,553,703 18,300,838 53,055,307$ 54,820,098$ 58,377,585$ 60,176,934$ 61,221,229$ 61,946,971$ 92,153,485$ 94,372,274$ 94,925,534$ 96,370,224$ 96,394,455$ 96,834,724$ 956,803 140,712 80,438 33,167 1,294,897 1,425,988 30,382,613 31,601,261 40,262,655 44,694,179 54,066,189 56,087,665 123,492,901$ 126,114,247$ 135,268,627$ 141,097,570$ 151,755,541$ 154,348,377$ Page 118 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position Last Ten Fiscal Years Fiscal Years 2014 2013 2012**2011 Expenses Governmental Activities General Government 5,843,623$ 6,567,545$ 6,101,008$ 5,010,274$ Public Safety 22,920,180 21,964,989 22,344,117 22,657,643 Public Works 13,553,093 15,091,414 12,026,911 11,106,433 Interest 302,781 374,511 384,180 248,539 Total Governmental Activities Expenses 42,619,677$ 43,998,459$ 40,856,216$ 39,022,889$ Business-type Activities Water & Sewer 8,435,463 8,079,364 8,931,336 8,753,149 Refuse Service 803,039 902,811 874,366 935,365 Golf Courses 2,739,077 2,942,747 2,991,170 3,057,912 Total Business-type Activities Expenditures 11,977,579 11,924,922 12,796,872 12,746,426 Total Primary Government Expenses 54,597,256$ 55,923,381$ 53,653,088$ 51,769,315$ Program Revenue Governmental Activities Charges for Services General Government 1,901,996$ 1,207,504$ 1,226,552$ 1,240,547$ Public Safety 1,623,171 1,498,819 1,283,956 1,404,308 Public Works 88,665 82,393 118,547 86,421 Operating Grants and Contributions 1,285,396 1,161,509 1,178,442 1,230,387 Total Governmental Activities Program Revenues 4,899,228 3,950,225 3,807,497 3,961,663 Business-type activities Charges for Services Water & Sewer 9,076,261 8,692,812 7,464,870 7,782,000 Refuse Service 1,044,442 1,040,878 1,050,386 1,036,872 Golf Courses 2,257,494 1,178,368 2,221,714 2,175,418 Operating Grants and Contributions - 1,072,499 - - Capital Grants and Contributions - - - - Total Business-type Activities Program Revenues 12,378,197 11,984,557 10,736,970 10,994,290 Total Primary Government Revenues 17,277,425$ 15,934,782$ 14,544,467$ 14,955,953$ Net (Expense) Revenue Governmental Activities (37,720,449)$ (40,048,234)$ (37,048,719)$ (35,061,226)$ Business-type Activities 400,618 59,635 (2,059,902) (1,752,136) Total Primary Government Net Expense (37,319,831)$ (39,988,599)$ (39,108,621)$ (36,813,362)$ *Transitional fiscal year May 1, 2007 through December 31, 2007 ** Auditors restated 2012, from 2011 and earlier have not been adjusted. Page 119 2010 2009 2008 2007*2007 2006 4,769,874$ 6,182,475$ 5,705,497$ 4,019,032$ 4,686,330$ 4,582,741$ 22,312,910 22,753,590 21,115,737 15,324,061 18,951,546 18,137,721 11,081,374 10,421,659 13,222,026 8,232,685 12,479,424 11,441,440 194,655 334,142 379,501 216,379 529,858 1,217,883 38,358,813$ 39,691,866$ 40,422,761$ 27,792,157$ 36,647,158$ 35,379,785$ 9,865,981 9,519,169 8,684,651 5,165,701 7,256,639 7,168,405 942,757 944,392 1,017,164 777,716 1,024,248 956,915 3,043,367 3,118,647 3,423,903 2,637,072 3,102,770 3,333,644 13,852,105 13,582,208 13,125,718 8,580,489 11,383,657 11,458,964 52,210,918$ 53,274,074$ 53,548,479$ 36,372,646$ 48,030,815$ 46,838,749$ 1,195,928$ 977,464$ 1,211,188$ 1,139,242$ 1,880,714$ 2,048,850$ 1,419,761 1,563,236 1,514,666 1,050,920 1,525,943 1,553,949 71,606 50,709 94,670 94,670 - - 1,253,103 1,349,044 1,307,895 950,383 1,532,557 - 3,940,398 3,940,453 4,128,419 3,235,215 4,939,214 3,602,799 9,091,520 8,008,360 7,538,534 4,799,193 6,694,051 7,688,143 1,041,661 1,004,431 923,207 704,841 991,140 990,113 2,088,106 2,320,247 2,356,962 2,141,860 2,323,919 2,567,759 - - - - - 1,444,395 - - 133,599 497,875 450,000 1,867,859 12,221,287 11,333,038 10,952,302 8,143,769 10,459,110 14,558,269 16,161,685$ 15,273,491$ 15,080,721$ 11,378,984$ 15,398,324$ 18,161,068$ (34,418,415)$ (35,751,413)$ (36,294,342)$ (24,556,942)$ (31,707,944)$ (31,776,986)$ (1,630,818) (2,249,170) (2,173,416) (436,720) (924,547) 3,099,305 (36,049,233)$ (38,000,583)$ (38,467,758)$ (24,993,662)$ (32,632,491)$ (28,677,681)$ Page 120 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position (Cont.) Last Ten Fiscal Years Fiscal Years 2014 2013 2012 General Revenues and Other Changes in Net Position Governmental Activities Taxes Property 14,554,564$ 14,504,750$ 14,330,407$ Sales and Home Rule 8,455,972 7,803,749 7,570,915 Income and Use 4,104,736 4,737,656 5,462,111 Telecommunications 1,679,653 1,943,811 2,200,809 Utility 2,819,427 2,629,997 2,510,242 Property Transfer 790,819 760,164 459,036 Other 1,113,831 1,052,788 1,070,409 Investment Earnings 107,765 54,522 132,436 Miscellaneous 1,636,721 1,506,994 1,239,906 Transfers 1,070,724 951,111 635,500 Gain on sale of assets 488 - - Proceeds from Insurance pool - - - Total Government Activities 36,334,700 35,945,542 35,611,771 Business-type Activities Property - - - Investment Earnings 18,820 12,455 27,087 Miscellaneous 520,521 - 1,259 Transfers (1,070,724) (951,111) (635,500) Total Business-type Activities (531,383) (938,656) (607,154) Total Primary Government 35,803,317$ 35,006,886$ 35,004,617$ Change in Net Position Governmental Activities (1,385,749)$ (4,102,692)$ (1,436,948)$ Business-type Activities (130,765) (879,021) (2,667,056) Total Primary Government Change in Net Position (1,516,514)$ (4,981,713)$ (4,104,004)$ Data Source Audited Financial Statements Page 121 2011 2010 2009 2008 2007*2007 2006 14,458,248$ 13,657,589$ 12,504,508$ 12,058,815$ 706,749$ 10,214,926$ 11,622,088$ 6,984,134 7,309,800 7,196,969 8,436,647 5,741,981 8,619,267 8,800,041 3,714,864 4,165,248 3,601,619 4,646,776 2,725,204 4,280,237 3,855,616 2,134,462 2,183,190 2,345,249 2,417,496 1,967,348 2,436,233 2,230,092 2,567,091 2,393,340 - - - - - 629,376 545,515 670,762 590,596 600,379 980,213 1,346,946 1,044,164 1,017,612 1,006,249 1,076,929 247,827 273,335 293,990 133,059 250,290 490,881 810,982 958,715 1,636,589 1,109,664 1,495,155 1,822,276 1,403,283 2,081,112 1,254,948 855,100 1,126,625 553,000 217,000 935,000 80,230 899,950 544,950 784,625 - - - - - - - - - - - - - 925,867 33,713,553 33,561,860 30,154,520 32,199,583 15,103,101 29,840,850 32,095,554 - - - - - 166,007 82,989 41,100 (46,666) (374,632) 267,263 292,375 445,766 363,044 4,999 2,133 1,315 187,034 - 131,982 - (553,000) (217) (935,000) (80,230) (899,950) (544,950) (784,625) (506,901) (44,750) (1,308,317) 374,067 (607,575) 198,805 (338,592) 33,206,652$ 33,517,110$ 28,846,203$ 32,573,650$ 14,495,526$ 30,039,655$ 31,756,962$ (1,347,673)$ (856,555)$ (5,596,893)$ (4,094,759)$ (9,453,841)$ (1,867,094)$ 318,568$ (2,259,037) (1,675,568) (3,557,487) (1,799,349) (1,044,295) (725,742) 2,760,713 (3,606,710)$ (2,532,123)$ (9,154,380)$ (5,894,108)$ (10,498,136)$ (2,592,836)$ 3,079,281$ Page 122 VILLAGE OF BUFFALO GROVE, ILLINOIS Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years 2014 2013 2012** General Fund Non Spendable 573,812$ 562,399$ 518,437$ Restricted 130,435 162,274 - Committed 7,438,256 7,345,420 7,335,685 Unassigned 13,225,644 12,395,113 10,759,935 Reserved - - - Unreserved - - - Total General Fund 21,368,147 20,465,206 18,614,057 All other Governmental Funds Restricted 1,965,328 1,796,997 6,112,703 Committed - - - Assigned - 101,213 144,075 Unassigned (2,324,296) (927,395) (253,826) Reserved - - - Unreserved - - - Unreserved, Reported in Special Revenue Funds - - - Capital Projects Funds - - - Total All other Governmental Funds (358,968) 970,815 6,002,952 Total Governmental Funds 21,009,179$ 21,436,021$ 24,617,009$ *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 123 2011 2010 2009 2008 2007*2007 2006 1,031,936$ -$ -$ -$ -$ -$ -$ - - - - - - - 7,948,344 - - - - - - 9,871,895 - - - - - - - 1,138,273 1,248,428 1,536,571 1,846,137 1,846,137 1,787,884 - 17,763,849 18,307,270 22,444,819 27,556,199 27,556,199 27,252,660 18,852,175 18,902,122 19,555,698 23,981,390 29,402,336 29,402,336 29,040,544 1,918,263 - - - - - - - - - - - - 146,116 - - - - - - (234,206) - - - - - - - - - - - - - - 20,271 (12,970) 33,167 486,946 486,946 499,743 - 2,124,937 1,252,015 1,239,501 1,942,258 1,942,258 1,813,406 - 927,626 903,315 1,911,178 2,436,815 2,436,815 3,888,047 1,830,173 3,072,834 2,142,360 3,183,846 4,866,019 4,866,019 6,201,196 20,682,348$ 21,974,956$ 21,698,058$ 27,165,236$ 34,268,355$ 34,268,355$ 35,241,740$ Page 124 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years 2014***2013 2012**2011 Revenues Property Taxes 14,554,564$ 14,504,750$ 14,330,407$ 14,458,248$ Other Taxes 9,564,978 19,240,365 18,325,614 17,074,091 Licenses and Permits 207,312 294,622 275,434 280,139 Intergovernmental 11,081,081 997,371 1,011,949 1,060,719 Fines and Forfeitures 1,803,317 1,647,364 1,283,956 1,404,308 Charges for Services 1,371,779 1,010,868 1,236,158 1,216,497 Investment Income 107,765 54,522 132,457 133,196 Miscellaneous 2,107,628 1,506,994 1,239,861 1,442,617 Total Revenue 40,798,424 39,256,856 37,835,836 37,069,815 Expenditure Current General Government 5,522,549 6,465,636 5,556,101 5,509,433 Public Safety 22,773,535 21,805,910 21,791,218 22,008,351 Public Works 10,878,278 12,178,705 9,865,723 8,256,079 Capital Outlay 2,018,451 1,347,276 1,561,904 1,510,924 Debt Service Principal 790,000 940,000 920,000 1,055,000 Interest 313,665 385,395 285,420 248,539 Other Charges - - - - Total Expenditures 42,296,478 43,122,922 39,980,366 38,588,326 Excess (Deficiency) of Revenues over Expenditures (1,498,054) (3,866,066) (2,144,530) (1,518,511) Other Financing Sources (Uses) Transfers In 2,552,288 2,119,313 2,621,132 1,891,354 Transfers Out (1,481,564) (1,434,235) (1,985,632) (1,338,354) Sales of fixed assets 488 Auction Proceeds - - 45 52,538 Bond Issued - - 6,000,000 - Premium on Issuance of Debt - - 91,669 - Transfer to Escrow Agent - - - - Total Other Financing Sources (Uses)1,071,212 685,078 6,727,214 605,538 Net Change in Fund Balance (426,842) (3,180,988) 4,582,684 (912,973) Debt Service as a Percentage of Non-Capital Expenditures 2.68%3.17%3.14%3.52% *Transitional fiscal year May 1, 2007 through December 31, 2007 ** Auditors restated 2012, from 2011 and earlier have not been adjusted. *** Beginning in 2014, state shared revenues have been recorded as intergovernmental revenues. Page 125 2010 2009 2008 2007*2007 2006 13,657,589$ 12,504,508$ 12,058,815$ 5,797,846$ 10,402,764$ 11,245,966$ 17,614,705 14,806,744 17,168,444 11,282,739 16,589,285 16,526,685 278,164 276,857 278,965 245,148 825,691 836,279 1,096,794 1,106,234 1,134,407 815,669 1,253,319 3,110,490 1,419,761 1,559,190 1,514,666 1,050,918 1,525,943 1,553,949 1,145,679 970,537 1,200,381 1,028,810 1,334,260 1,414,337 249,396 490,881 790,244 911,444 1,562,291 1,094,843 1,720,640 1,444,610 2,081,112 1,254,948 855,101 1,126,625 37,182,728 33,159,561 36,227,034 22,387,522 34,348,654 36,909,174 4,979,904 5,596,822 5,458,962 3,455,213 4,955,659 4,276,374 21,802,732 20,882,745 20,499,004 14,211,380 18,185,545 17,521,978 8,704,005 10,337,090 10,792,931 7,225,387 9,319,231 8,011,071 3,157,156 1,245,940 1,286,175 502,701 1,945,053 2,285,510 980,000 1,165,000 1,150,000 1,312,381 1,234,765 6,020,700 194,655 334,142 379,501 424,220 476,736 1,440,436 127,930 - - - - - 39,946,382 39,561,739 39,566,573 27,131,282 36,116,989 39,556,069 (2,763,654) (6,402,178) (3,339,539) (4,743,760) (1,768,335) (2,646,895) 2,153,190 2,909,382 4,121,451 3,064,166 3,453,845 3,586,075 (1,936,190) (1,974,382) (4,041,221) (2,164,216) (2,658,895) (2,895,578) 103,565 - - - - - 7,760,000 - - - - - 178,229 - - - - - (5,218,242) - - - - - 3,040,552 935,000 80,230 899,950 794,950 690,497 276,898 (5,467,178) (3,259,309) (3,843,810) (973,385) (1,956,398) 3.19%3.91%4.00%6.52%5.01%20.02% Page 126 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 2014 *1,120,788,463$ * 294,457,084$ * 9,119,150$ * 696,091$ 2013 1,115,221,955 292,225,583 9,050,042 618,433 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 *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 127 Estimated Estimated Total Assessed Total Direct Actual Taxable Actual Taxable Value Tax Rate Value Value (%) * 1,425,060,788$ * 1.0411 * 4,275,182,364$ *33.333% 1,417,116,013 1.0280 4,251,348,039 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% Page 128 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 2014 2013 2012 2011 2010 2009 Lake County Village of Buffalo Grove 0.993 0.983 0.929 0.852 0.797 0.750 County, including Forest Preserve 0.893 0.881 0.820 0.755 0.703 0.664 Combined School Districts (102, 125, 532)7.164 7.068 6.779 6.158 5.610 5.301 Buffalo Grove Park District 0.553 0.537 0.511 0.452 0.425 0.351 Vernon Area Public Library 0.317 0.311 0.441 0.385 0.315 0.301 All Other (3)0.113 0.105 0.106 0.092 0.102 0.094 Total (4)10.033 9.885 9.586 8.694 7.952 7.461 Percentage Change Year -to-Year 1.50%3.12%10.26%9.33%6.58%5.04% Cook County Village of Buffalo Grove N/A N/A 1.030 0.886 0.810 0.691 County, including Forest Preserve N/A N/A 0.594 0.520 0.474 0.464 Metropolitan Water Reclamation District of Greater Chicago N/A N/A 0.370 0.320 0.274 0.261 Combined School Districts (21, 214, 512)N/A N/A 6.917 6.565 5.792 5.103 Buffalo Grove Park District N/A N/A 0.557 0.479 0.439 0.371 Indian Trails Public Library District N/A N/A 0.463 0.393 0.347 0.307 All Other (3)N/A N/A 0.187 0.107 0.071 0.068 Total (5)N/A N/A 10.118 9.270 8.207 7.265 Percentage Change Year -to-Year N/A 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 129 2008 2007 2006 0.665 0.649 0.633 0.652 0.645 0.654 5.102 5.066 5.318 0.370 0.380 0.403 0.222 0.219 0.317 0.092 0.092 0.094 7.103 7.051 7.419 0.74%-4.96%3.08% 0.670 0.729 0.731 0.466 0.499 0.557 0.252 0.263 0.284 5.004 5.035 5.613 0.376 0.416 0.455 0.308 0.297 0.320 0.067 0.079 0.080 7.143 7.318 8.040 -2.39%-8.98%1.71% Page 130 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Property Taxpayers Current Fiscal Year and Nine Years Ago 2014 Percentage of Total Village Equalized Taxable Assessed Assessed Taxpayer Valuation Rank Valuation Chevy Chase Business Park Ltd 22,706,965$ 1 1.59% Penobscot Management LLC(3)10,986,298 2 0.771% Hamilton Partners(1)10,187,546 3 0.715% Millbrook 9,032,568 4 0.634% Rexam Consumer Plastics, Inc.8,472,433 5 0.595% MFREVF-Windbrooke LP 8,261,833 6 0.580% Riverwalk South LLC(2)8,206,726 7 0.576% Aptakisic Creek Corporate Park, LLC 7,831,429 8 0.550% Arthur J. Rogers and Company (4)7,625,134 9 0.535% Riverwalk II LLC 7,400,417 10 0.519% Amli at Chevy Chase, LP First Chicago Property Strathmore Square LaSalle Bank Note: Every effort was made to seek out and report the largest taxpayers. However, moany 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 (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 131 2005 Percentage of Total Village Equalized Equalized Assessed Assessed Valuation Rank Valuation 14,062,584 3 0.87% 8,639,779 7 0.537% 16,767,946 1 1.043% 9,903,025 5 0.616% 9,975,524 4 0.620% 8,701,972 6 0.541% 14,459,056 2 0.899% 7,308,089 8 0.454% 6,878,960 9 0.428% 6,659,430 10 0.414% Page 132 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 2013 11,413,067$ 11,172,745$ 97.89%3,424,515$ 3,381,819$ 98.75% 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% 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 133 Village Total Percentage Collected of Levy 14,554,564$ 98.09% 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% Page 134 VILLAGE OF BUFFALO GROVE, ILLINOIS Sales Tax Revenue and Number of Principal Payers Revenue By Category Last Ten Calendar Years Calendar Year 2014 2013 2012 2011 General Merchandise 9,098$ 10,105$ *17,526$ 18,514$ Food 1,080,556 1,133,605 1,193,312 1,244,667 Drinking and Eating Places 1,023,545 1,025,547 997,738 921,617 Apparel 104,229 120,210 130,163 129,402 Furniture, Households and radio 356,095 463,678 *437,774 378,836 Lumber, Building and Hardware 1,666,708 1,236,689 812,434 534,413 Automotive Filling Stations 947,278 857,713 954,996 853,864 Drugs and Miscellaneous Retail 2,349,469 1,915,937 1,847,550 1,982,824 Agriculture and All Other 1,693,506 1,572,248 1,347,303 1,193,620 Manufacturers 270,063 285,848 334,442 378,326 9,500,547$ 8,621,580$ 8,073,238$ 7,636,083$ Total Number of Payers 974 972 966 1,286 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 135 2010 2009 2008 2007 2006 3,901$ 4,637$ 5,819$ 3,793$ 1,346$ 1,362,170 1,357,378 1,415,835 1,371,195 1,340,177 933,212 941,804 906,628 874,307 924,738 128,663 112,951 104,376 110,386 67,072 415,396 223,008 521,316 422,342 530,825 402,483 716,935 1,379,764 2,181,496 3,326,323 959,870 1,222,500 1,177,121 1,715,400 1,581,217 1,431,121 1,432,484 1,285,513 1,237,894 1,206,917 1,062,978 1,257,806 2,082,955 1,777,144 1,755,277 379,893 399,141 390,034 338,494 438,024 7,079,687$ 7,668,644$ 9,269,361$ 10,032,451$ 11,171,916$ 997 975 1,002 1,196 1,311 1.00%1.00%1.00%1.00%1.00% 1.00%1.00%1.00%1.00%1.00% Page 136 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 2014 1.00%6.50% 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% *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: Illinois Department of Revenue Page 137 VILLAGE OF BUFFALO GROVE, ILLINOIS Ratio of Outstanding Debt by Type Last Ten Years Ratio of Governmental Activities Total Outstanding Debt to General General Total Equalized Year Obligation Obligation IEPA Primary Assessed Ended Bonds Bonds Loan Government Valuation 12/31/2014 10,730,503$ -$ 174,244$ 10,904,747$ 0.72% 12/31/2013 11,340,000 - 159,324 11,499,324 0.78% 12/31/2012 12,280,000 - - 12,280,000 0.80% 12/31/2011 7,200,000 - - 7,200,000 0.43% 12/31/2010 8,255,000 - - 8,255,000 0.47% 12/31/2009 6,575,000 - - 6,575,000 0.35% 12/31/2008 7,740,000 - - 7,740,000 0.41% *12/31/2007 8,890,000 - 8,890,000 0.49% 4/30/2007 10,202,381 174,768 - 10,377,149 0.62% 4/30/2006 11,437,146 345,003 - 11,782,149 0.73% *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. Business-type Activities Page 138 Debt Total Outstanding Outstanding as a Percentage Debt of Personal Per Capita (1)Income 251.27$ 0.54% 271.43 0.61% 289.64 0.65% 171.79 0.39% 198.93 0.45% 156.62 0.36% 183.54 0.44% 209.47 0.51% 243.80 0.60% 274.96 0.69% Page 139 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) 2014 10,730,503$ -$ 10,730,503$ 0.72%251.27$ 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 *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 140 VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Governmental Activities Debt As of December 31, 2014 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 40,805,000$ 17.78%7,255,129$ Kildeeer Countryside Community Consolidated #96 720,000 38.38%276,336 Aptakisic-Tripp Community Consolidated #102 3,780,000 76.12%2,877,336 Lincolnshire-Half Day District #103 2,515,000 11.78%296,267 Adlai E. Stevenson H.S. District # 125 14,355,000 37.10%5,325,705 Wheeling Township H.S. District #214 58,210,000 3.76%2,188,696 Harper Community College #512 170,935,000 1.68%2,871,708 College of Lake County #532 73,135,000 5.31%3,883,469 Total School Districts 364,455,000 24,974,646 Other Than School Districts Lake County 103,460,000 5.04%5,214,384 Lake County Forest Preserve 274,450,000 5.04%13,832,280 Cook County 3,466,835,000 0.22%7,627,037 Cook County Forest Preserve 172,535,000 0.22%379,577 Metropolitan Water Reclamation District 2,642,374,005 0.23%6,077,460 Buffalo Grove Park District 18,290,000 96.12%17,580,348 Wheeling Park District 12,770,000 8.27%1,056,079 Total Other than School Districts 6,690,714,005 51,767,165 Total Overlapping Debt 7,055,169,005 76,741,811 Total Village of Buffalo Grove Direct Debt 10,730,503 100.00%10,550,000 Total Direct and Overlapping Debt 7,065,719,005$ 87,291,811$ *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 141 VILLAGE OF BUFFALO GROVE, ILLINOIS Schedule of Legal Debt Margin December 31, 2014 Under the 1970 Illinois Constitution, there is no legal limit for home rule municipalities except as set by the General Assembly. Page 142 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 2014 41,987 E 1,425,060,788$ 33,941 1,939,085,621$ 46,183 E 5.7% 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% 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 143 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Village Employers Current Year and Nine Years Ago 2014 2005 Percent Percent of Total of Total Village Village Employer Employees Rank Population Employees Rank Population Siemens Building Technologies 1,800 1 4.29%1,500 2 3.49% I.S.I.1,200 2 2.86% Caremark, LLC*900 3 2.15% ABS Consulting 550 4 1.31% Rexam*552 5 1.32% Harris Bank*371 6 0.88% Plexus Corporation 370 7 0.88% Assembled Products 300 8 0.71% SMS-NA, LLC*354 9 0.85% Fed Ex Express*345 10 0.82% 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% Data Source: * Most recent data 2013 Village Records - Earliest available Data Source: Village Records - Earliest available Page 144 VILLAGE OF BUFFALO GROVE, ILLINOIS Full-Time Equivalent Employees Last Ten Years Function/Program 2014 2013 2012 2011 General Government Administration Village Managers Office 7.5 5.5 4.5 4.0 Planning 1.5 1.5 1.5 1.5 Information Technology 3.0 3.5 3.5 3.5 Finance 10.0 9.5 8.5 8.5 Building and Zoning 9.5 10.0 10.0 10.0 Public Safety Police Full-Time Police Officers 63.0 64.0 69.0 69.0 Community Service Officers 3.0 3.0 3.0 3.0 Civilians 15.0 17.0 16.5 17.5 Fire Full-time Firefighters/Paramedics 58.0 58.0 62.0 62.0 Civilians 1.5 3.5 3.5 6.0 Public Works Public Works Administration 6.0 5.0 11.0 11.0 Streets/Forestry 18.5 18.5 20.0 20.0 Water/Sewer 9.0 8.0 13.0 13.0 Central garage 5.5 5.5 5.5 5.5 Building Maintenance 6.0 4.0 4.0 4.0 Recreation Administration 19.5 18.0 13.5 13.5 Grounds Maintenance 11.5 16.0 15.0 15.0 248.0 250.5 264.0 267.0 Recreation Seasonal 49.0 24.5 34.0 34.0 *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: Village Finance Department Page 145 2010 2009 2008 2007*2007 2006 4.0 4.5 5.0 5.0 4.5 4.5 1.5 1.5 1.5 1.5 1.5 1.5 3.5 3.5 3.5 3.5 3.5 3.0 8.5 9.0 9.5 9.5 9.5 9.5 10.0 10.0 10.5 10.5 10.5 10.5 69.0 71.0 71.0 71.0 70.0 70.0 3.0 3.0 3.0 3.0 3.0 3.0 17.5 20.5 21.5 21.5 22.5 22.0 62.0 62.0 62.0 61.0 62.0 62.0 6.0 6.0 6.0 6.0 6.0 5.0 12.0 12.0 14.5 14.5 14.5 15.5 20.0 20.0 20.0 20.0 20.0 19.0 13.0 13.0 14.0 14.0 14.0 13.0 5.5 5.5 5.0 5.0 4.0 5.0 4.0 4.0 4.0 4.0 4.0 4.0 13.5 13.5 13.5 13.5 13.5 13.5 15.0 15.0 15.0 15.0 15.0 15.0 268.0 274.0 279.5 278.5 278.0 276.0 34.0 34.0 34.0 34.0 34.0 34.0 Page 146 VILLAGE OF BUFFALO GROVE, ILLINOIS Operating Indicators Last Ten Fiscal Years Function/Program 2014 2013 2012 2011 General Government Building and Zoning Building Permits Issued 2,833 2,651 2,206 1,930 Building Inspections Conducted 7,074 7,456 15,858 9,661 Property Maintenance Inspections Conducted 3,172 3,288 5,828 3,462 Public Safety Police Physical Arrests 886 759 671 820 Parking Violations 3,634 2,984 3,341 2,031 Traffic Violations 8,349 13,171 10,826 11,867 DUI Arrests 154 124 107 164 Vehicle Crashes 1,429 1,507 1,260 1,396 Fire Ambulance Calls/EMS 3,385 2,613 2,789 2,568 Service Calls 1,245 483 487 1,053 Fire Calls 821 865 698 737 Auto Aid/Mutual Aid 1,063 654 680 676 Public Works Streets Street Resurfacing (Miles)3.28 10.84 5.51 2.90 Parks and Recreation Park Sites 46 46 46 46 Golf Course - Combined Golf Rounds Played - Paid 54,689 53,639 59,937 56,918 Water New Connections (Tap-ons)9 27 15 12 Average Daily consumption (1)3.58 3.70 3.92 4.09 Peak Daily consumption (1)5.40 6.20 7.93 7.84 (1) - Millions of Gallons *Transitional fiscal year May 1, 2007 through December 31, 2007 N/A - Not Available Data Source: Various Village Departments Page 147 2010 2009 2008 2007*2007 2006 1,959 1,922 1,746 1,695 1,282 2,011 7,088 6,633 5,054 21,383 13,416 14,744 3,158 2,348 2,159 2,962 3,448 4,530 981 989 1,085 2,143 N/A 2,489 2,062 3,267 3,451 4,721 N/A 4,751 11,999 11,373 15,795 12,010 N/A 12,010 222 267 337 482 N/A 457 1,391 1,414 1,786 1,555 N/A 1,692 2,743 2,553 2,590 2,943 2,583 2,668 610 718 751 678 684 614 735 774 881 858 788 810 654 672 689 379 406 315 3.00 4.94 4.94 8.23 8.30 8.25 46 46 46 46 46 46 52,740 59,723 58,097 60,258 61,005 60,678 50 7 25 33 98 6 4.30 4.21 4.09 4.35 4.61 5.09 7.30 7.29 7.03 8.39 8.88 9.79 Page 148 VILLAGE OF BUFFALO GROVE, ILLINOIS Capital Asset Statistics Last Ten Fiscal Years Function/Program 2014 2013 2012 2011 Public Safety Police Stations 1 1 1 1 Patrol Units 29 28 34 36 Fire Stations 3 3 3 3 Fire Apparatus 20 21 21 21 Public Works Streets Street (Miles)118.20 117.70 117.70 117.70 Streetlights 2,786 2,778 2,778 2,778 Water Water Mains 180.90 180.30 180.25 180.25 Fire Hydrants 2,487 2,477 2,475 2,475 Wastewater Sanitary Sewers 139.80 139.30 139.27 139.27 *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: Various Village Departments Page 149 2010 2009 2008 2007*2007 2006 1 1 1 1 1 1 36 36 36 36 35 35 3 3 3 3 3 3 21 21 20 20 20 20 117.70 117.70 117.50 117.50 117.50 117.50 2,745 2,743 2,714 2,614 2,374 2,374 179.83 179.82 180.63 179.57 178.36 178.36 2,475 2,474 2,474 2,468 2,449 2,449 139.27 139.27 139.24 139.12 138.72 138.72