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2017 CAFRCOMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE VILLAGE OF BUFFALO GROVE, ILLINOIS As of and for the Year Ended December 31, 2017 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, 2017 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 - 26 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 27 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 28 - 29 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 30 Statement of Net Position - Proprietary Funds 31 - 34 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 35 - 36 Statement of Cash Flows - Proprietary Funds 37 - 40 Statement of Fiduciary Net Position - Fiduciary Funds 41 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 42 Index to Notes to Financial Statements 43 Notes to Financial Statements 44 - 95 REQUIRED SUPPLEMENTARY INFORMATION General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General 96 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2017 Page(s) REQUIRED SUPPLEMENTARY INFORMATION (cont.) Historical Pension Information Illinois Municipal Retirement Fund - Schedule of Changes in the Village's Net Pension Liability and Related Ratios 97 Illinois Municipal Retirement Fund - Schedule of Employer Contributions 98 Police Pension Fund - Schedule of Changes in the Village's Net Pension Liability and Related Ratios 99 Police Pension Fund - Schedule of Employer Contributions 100 Police Pension Fund - Schedule of Investment Returns 101 Firefighters' Pension Fund - Schedule of Changes in the Village's Net Pension Liability and Related Ratios 102 Firefighters' Pension Fund - Schedule of Employer Contributions 103 Firefighters' Pension Fund - Schedule of Investment Returns 104 Other Post Employment Benefits - Schedule of Employer Contributions and Schedule of Funding Progress 105 Notes to Required Supplementary Information 106 SUPPLEMENTARY INFORMATION Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds 107 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 108 Schedules of Revenues, Expenditures and Changes in Fund Balances (Deficit) - Budget and Actual Motor Fuel Tax - Nonmajor special revenue fund 109 Metra Parking Lot - Nonmajor special revenue fund 110 Debt Service - Nonmajor debt service fund 111 Facilities Development - Major capital projects fund 112 Street Maintenance - Major capital projects fund 113 Enterprise Funds Combining Statement of Net Position - Nonmajor Enterprise Funds 114 Combining Statement of Revenue, Expenses and Changes in Net Position - Nonmajor Enterprise Funds 115 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 116 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2017 Page(s) SUPPLEMENTARY INFORMATION (cont.) Schedules of Revenues, Expenses and Changes in Net Position - Budget and Actual - Non-GAAP Budgetary Basis Buffalo Grove Golf - Nonmajor enterprise Fund 117 Refuse Service - Nonmajor enterprise Fund 118 Water and Sewerage - Major enterprise Fund 119 Arboretum Golf - Major enterprise Fund 120 Internal Service Funds Combining Statement of Net Position - Internal Services Funds 121 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Funds 122 Statement of Revenues, Expenses and Changes in Net Position - Budget and Actual Information Technology - Internal Service Fund 123 Central Garage - Internal Service Fund 124 Building Maintenance - Internal Service Fund 125 Combining Statement of Cash Flows - Internal Service Funds 126 Fiduciary Funds Combining Statement of Fiduciary Net Position - Pension Trust Funds 127 Combining Statement of Changes in Fiduciary Net Position - Pension Trust Funds 128 Schedules of Changes in Fiduciary Net Position - Budget and Actual Police Pension - Pension Trust Fund 129 Firefighters' Pension - Pension Trust Fund 130 Statement of Changes in Fiduciary Assets and Liabilities - School and Park Donations - Agency Fund 131 STATISTICAL SECTION Net Position by Component 132 - 133 Change in Net Position 134 - 137 Fund Balances of Governmental Funds 138 - 139 Change in Fund Balances of Governmental Funds 140 - 141 Assessed and Actual Value of Taxable Property 142 - 143 Property Tax Rates - Direct and Overlapping Governments 144 - 145 Principal Property Taxpayers 146 - 147 VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.) As of and for the Year Ended December 31, 2017 Page(s) STATISTICAL SECTION (cont.) Property Tax Levy and Collections 148 - 149 Sales Tax Revenue and Number of Principal Payers - Revenue by Category 150 - 151 Direct and Overlapping Sales Tax Rates 152 Ratio of Outstanding Debt by Type 153 - 154 Ratio of General Bonded Debt Outstanding 155 Direct and Overlapping Governmental Activities Debt 156 Schedule of Legal Debt Margin 157 Demographic and Economic Statistics 158 Principal Village Employers 159 Full-Time Equivalent Employees 160 - 161 Operating Indicators 162 - 163 Capital Asset Statistics 164 - 165 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, 2016 Executive Director/CEO vi Organizational Chart Residents of Buffalo Grove Village Board Village Manager Community Development Building and Zoning Enviromental Health Planning and Economic Development 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 Golf Operations Information Technology Finance General Services Deputy Village Clerk Village Treasurer Public Works Admin Engineering Building Maintenance Central Garage Streets, Drainage & Sewer Forestry and Grounds Water vii VILLAGE OF BUFFALO GROVE, ILLINOIS List of Elected and Appointed Officials December 31, 2017 Beverly Sussman Janet M. Sirabian Village President Village Clerk Board of Trustees Jeffrey Berman Andrew Stein Joanne Johnson Lester Ottenheimer Steve Trilling (Ceded term June 2017)David Weidenfeld Eric Smith (Appointed July 2017) Appointed Officials Dane Bragg Village Manager Jennifer Maltas Scott Anderson Deputy Village Manager Finance Director/Village Treasurer Steven Casstevens William Baker Chief of Police Fire Chief Michael Reynolds Arthur Malinowski Public Works Director Human Resource Director Darren Monico Christopher Stilling Village Engineer Director of Community Development Geoff Tollefson Brian Sheehan Golf Course Manager Building Commissioner Page 1 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, 2017, and the related notes to the financial statements, which collectively comprise the Village of Buffalo Grove's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the investment in joint venture, which represent 12.89 percent, 3.07 percent, and 15.35 percent, respectively, of the assets, revenues, and net position of the business-type activities and 15.28 percent, 3.89 percent, and 18.72 percent, respectively, of the assets, revenues, and net position of the Water and Sewerage Fund. Those statements were 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, 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 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, 2017 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. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the 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 Page 3 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. Oak Brook, Illinois June 20, 2018 - 4 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 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, 2017. 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, 2017 by $66.5 million (net position). The Net Position for governmental activities is $18.9 million or 28.5 percent of the total and business-type activities account for $47.6 million. Of this amount, $(25.2) million is unrestricted, the negative amount of unrestricted assets is directly related to the recognition of all the Villages pension obligations as noncurrent liabilities, which decreased from $87.8 million in 2016 to $75.7 million in 2017.  The Village’s net position increased by $3.2 million (or 5.0 percent) during the fiscal year ending December 31, 2017. The governmental net position increased by $2.1 million (12.8 percent) and the business-type activities net position increased by $1.1 million (2.4 percent).  As of December 31, 2017, the Village of Buffalo Grove’s general fund reported combined ending fund balances of $27.0 million, an increase of $1.9 million from the prior year. Of this amount, $18.9 million was unassigned.  The Village’s total debt decreased by $1.3 million (or 8.1 percent). Total debt outstanding is $14.4 million as of December 31, 2017. 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 and deferred outflows and liabilities and deferred inflows, with the difference between the two reported as net position. Changing of the net position total over time can be one useful indicator in assessing the financial position of the Village. This statement combines and consolidates governmental funds’ current financial resources (short-term spendable resources) with capital assets and long-term obligations using the accrual basis of accounting and economic resources measurement focus. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event causing the change occurs, regardless of the timing of related cash flows. Revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes). - 5 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 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 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, community development, 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 23-30) 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 six 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, Street Maintenance, and Facilities Development Funds, which are classified as major funds. Data on the other three 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 31-40) 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 31-40 of this report. - 6 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Fiduciary Funds (see pages 41-42) are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are reflected in the government-wide financial statement since the implementation of GASB 67 &68. The implementation was completed in fiscal year 2015. The accounting used for fiduciary funds is much like that used for proprietary funds. 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 44-95 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 96-106 of this report. Government-wide Financial Analysis The assets and deferred outflows of the Village of Buffalo Grove exceeded liabilities and deferred inflows by $66.5 million as of December 31, 2017. The largest portion of the Village’s net position reflects its net investment in capital assets (158.7 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 ($1.6 million) represents resources that are subject to external restrictions on how they may be used. $1.5 million is restricted for contractual construction obligations for a road project. The remaining balance of unrestricted net position ($(25.2) million) reduces total net position significantly due to GASB 67 and 68, which requires the Village to show the outstanding pension obligations in noncurrent liabilities. The total increase in unrestricted net position from the prior year is 0.4 million (1.6 percent). The Village’s combined net position increased by $3.2 million as a result of governmental activities increasing by $2.1 million and business-type activities increasing by $1.1 million. The net position of the Village’s governmental fund was $18.9 million. The Village’s unrestricted net position for governmental activities that are available for day-to-day financial operations were $(36.0) million compared to $(36.6) million at December 31, 2016. The net position of business-type activities was $47.6 million. The business type activities unrestricted net position decreased by $0.2 million from the previous year. - 7 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Please refer to table below for condensed Statement of Net Position: Table 1 Village of Buffalo Grove’s Net Position As of December 31, 2017 (in millions) Governmental Business-Type Activities Activities Total 2017 2016 2017 2016 2017 2016 Current and Other Assets $47.1 $46.1 $12.9 $13.1 $60.0 $59.2 Capital Assets 61.9 61.1 43.8 42.7 105.7 103.8 Total Assets 109.0 107.2 56.7 55.8 165.7 163.0 Deferred Outflows 11.3 14.4 0.8 1.0 12.1 15.4 Long-Term Liabilities 65.6 77.4 8.4 1.5 74.0 78.9 Other Liabilities 7.5 9.1 1.3 8.7 8.8 17.8 Total Liabilities 73.1 86.5 9.7 10.2 82.8 96.7 Deferred Inflows 28.3 18.3 0.2 0.1 28.5 18.4 Net Position: Net Investment in Capital Assets 53.3 51.8 36.8 35.5 90.1 87.3 Restricted 1.6 1.6 0.0 0.0 1.6 1.6 Unrestricted (36.0) (36.6) 10.8 11.0 (25.2) (25.6) Total Net Position $18.9 $16.8 $47.6 $46.5 $66.5 $63.3 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 assets. Borrowing of Capital – which will increase current assets and long-term debt. - 8 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Spending Borrowed Proceeds on New Capital – which will reduce current assets and increase capital assets. There is a second impact, an increase in invested in capital assets and an increase in related net debt which will not change the net investment in capital assets. Reduction of Capital Assets through Depreciation – which will reduce capital assets and net investment in capital assets. Current Year Impacts At the end of the current fiscal year, the Village reported positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Within the governmental activities, the Village increase in “Current and Other Assets” of $1.0 million is attributed to the $0.4 million increase in property taxes and another $0.2 million in investments. The Village experienced a decrease in receivables for income taxes in 2017 due to the State of Illinois making 14 income tax payment distributions. The Income tax receivable decreased 0.5 million in 2017. The Village also experienced slight decreases in utility and a similar increase in telecommunication tax. Utility taxes were down about $0.1 million (4.8 percent), while Telecomm was up $0.07 million (4.8 percent). The Village maintained capital improvement and asset purchases in 2017. Capital assets, government wide, increased $1.9 million (1.8 percent). The majority of additions are street, water, sewer, and storm sewer replacements. Business-type activities increased $1.1 million (2.6 percent). 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: - 9 - Village of Buffalo Grove Changes in Net Position For the Years Ended December 31, 2017 and 2016 Governmental Business-Type Total Primary Activities Activities Government Revenues 2017 2016 2017 2016 2017 2016 Program Revenues Charges for Service $5.0 $4.7 $14.2 $13.7 $19.2 $18.4 Grants and Contributions Operating 1.3 1.3 - - 1.3 1.3 Capital 1.5 - - 0.1 1.5 0.1 General Revenue Property Tax 15.5 15.0 - - 15.5 15.0 Sales and Use Tax 10.3 10.1 - - 10.3 10.1 Income Tax 3.7 4.0 - - 3.7 4.0 Telecommunications Tax 1.6 1.5 - - 1.6 1.5 Utility Taxes 2.5 2.7 - - 2.5 2.7 Property Transfer Tax 1.3 1.1 - - 1.3 1.1 Other 2.6 2.8 0.9 0.2 3.5 3.0 Total Revenue 45.3 43.2 15.1 14.0 60.4 57.2 Expenses Governmental Activities General Government 6.6 6.4 - - 6.6 6.4 Public Safety 27.4 30.5 - - 27.4 30.5 Public Works 9.8 8.1 - - 9.8 8.1 Interest 0.4 0.4 - - 0.4 0.4 Business Type Water and Sewer - - 9.4 9.0 9.4 9.0 Refuse Services - - 0.7 0.7 0.7 0.7 Golf 2.9 2.9 2.9 2.9 Total Expenses 44.2 45.4 13.0 12.6 57.2 58.0 Excess before transfers and special items 1.1 (2.2) 2.1 1.4 3.2 (0.8) Transfers In (Out) 1.0 1.1 (1.0) (1.1) - - Special items - - - - - - Change in Net Position 2.1 (1.1) 1.1 0.3 3.2 (0.8) Net position - beginning 16.8 17.9 46.5 46.2 63.3 64.1 Net position - ending $18.9 $16.8 $47.6 $46.5 $66.5 $63.3 - 10 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 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 increased the Village’s net position by $2.1 million to $18.9 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, 2017 were $45.3 million an increase of $2.1 million or 4.9 percent. Property taxes continue to be the Village’s largest source of revenue (34.2 percent) at $15.5 million. Included within the property tax revenues are the pension levies for the Police and Firefighter Pension Funds and IMRF/Social Security Levies. The pension levies account for 38.2 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 $22.0 million or 48.6 percent of total governmental activities revenue. - 11 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Property taxes increased by $0.5 million. The increase in the corporate agency tax levy collected in 2017 was 3.3 percent. The corporate levy for 2017, to be collected in 2018, is funding Police and Fire Protection. The Police Protection levy increased $0.1 million (3.3 percent) and the Fire Protection Levy increased $0.2 million (2.8 percent). The total tax levy increased 3.1 percent in total. Sales tax increased by $0.82 million compared to the previous year. The growth in sales tax was (9.6 percent). Utility taxes are down $.18 million, or 6.2 percent. The region experienced a moderate winter, leading to less natural gas consumption than average. Income taxes have begun to rebound increasing $1.3 million from FY 2014, a 31.7 percent jump. Property transfer taxes continue to trend upward with an increase of $0.1 million. Income tax, sales tax, and property transfer tax are key indicators for the Village of Buffalo Grove’s local economy and are improving year over year. Expenses: The cost of all governmental activities this year was $44.2 million a decrease of 2.6 percent from 2016 ($45.4 million). The largest reduction was made in Public Safety reducing expenses $3.1 million in 2017. Public Works expenditures grew by $1.7 million (21.0 percent) for a total of $9.8 million dollars. - 12 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Statement of Activities on pages 21-22 shows that $5.0 million in revenue was generated to finance for the services rendered by those who use them. Another $2.8 million in revenue that finances, by operating and capital grants and contributions, capital expenditures incurred, are essentially subsidies for capital improvement that is needed or would be required over time. Business-Type Activities: Business-type activities net position increased by $1.1 million. Significant changes are noted below. Revenue: Water sales increased $.8 million from the previous year. The total amount billed was $1.2 billion gallons in 2016 versus 1.24 billion in 2017. 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 $2.2 million in 2017, which is consistent with the 2016 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 increased by $0.4 million or 3.2 percent. The Water Fund expenses increased by $0.4 million due to capital maintenance. Golf expenses were consistent with 2016 at $2.9 million total. 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. - 13 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Village’s governmental funds for the year ended December 31, 2017 reflect a combined fund balance of $25.0 million on its balance sheet (pages 23-26). This represents a $2.1 million dollar increase 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 $25.0 million, $15.2 million is unassigned indicating availability for future obligations. The 2017 unassigned fund balance increased by $2.9 million. The largest contributing factor is due to a decrease in total liabilities for the general fund of over $1.7 million (58.6 percent). Nonspendable fund balance ($.13 million) represents amounts set aside for inventory and deposits. Restricted fund balance ($1.9 million) is allocated to capital projects and employee pension benefits. Committed fund balance ($7.8 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, community development, 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, 2017, the unassigned fund balance represents 44.7 percent of the FY 2018 operating budget. The Fund Balance of the General Fund increased by $2.0 million from December 31, 2017. A majority of the growth was generated through budget management. The General Fund revenues increased by $0.3 million in 2017. Fines and Fee’s increased $1.1 million (64.7 percent), while Miscellaneous Income is down $1.2 million (44.4 percent) from 2016. Sales tax reported for 2017 was up slightly ($0.02 mil) and income and use tax are down ($0.15 mil). The housing stock continues to turn over quickly in Buffalo Grove, as real estate transfer tax increased for a fifth consecutive year. The property turnover rates, and increase in sales tax are great economic indicators that show Buffalo Grove is doing well and is still showing growth and is a residential destination. While state of Illinois shared revenues, specifically those that are part of the local government distributive fund are decreasing annually, and are threatened to be reduced annually by state legislature. The Village of Buffalo Grove is focused on developing, self-sustaining revenue sources. The overall growth in the General Fund revenue 8.0%, of that, 1.7 percent ($0.25 mil) is growth in revenue, while 6.3 percent ($0.96 mil) is a reduction in expenditures from 2016. The underperforming 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. - 14 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 General fund expenditures decreased by $1.4 million or 3.6 percent. The surplus of revenues over expenditures (before other financing sources/uses) was $4.0 million. Adding in the Other Financing Sources (Uses), the net change to fund balance resulted in an increase of $2.0 million Public Safety Expenditures decreased $1.6 million, 5.8 percent, in FY 2017. Public Works and General Government each spent $0.1 million more in 2017 versus 2016. Special Revenue Funds have a combined fund balance of $(1.6) million as of December 31, 2017 consistent with December 31, 2016 balances. In 2017 the Village continued its initiative to improve local roadways by resurfacing streets, repairing bridges, and maintaining street, curb and gutter as needed. These projects were funded through Motor Fuel Tax (MFT) funds, the Capital Projects Street Maintenance fund, and grant revenues in 2017. Revenues received from the state share of the motor fuel tax were $1.1 million. The cost of the 2017 street maintenance program was $2.4 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 2016 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 expended $1.4 million which was transferred from the general fund. Some street projects tied to Grant funding are not complete as of December 31, 2017, the remainder will be expended in FY 2018. The Village continues to make streets a priority spending over the annual allotment for MFT by transferring general fund revenues to funds that build and improve roadway infrastructure. The Debt Service Fund has a fund balance of $(0.06) million at the end of FY 2017, the negative balance is a result of bond trustee fees associated with facilitating the Village’s debt service payments throughout the fiscal year. The Village does not levy these fees as part of the debt service portion of the tax levy. A transfer from the general fund will clear this balance in 2018. The Village debt totals $14.4 million and are all general obligation bonds, $1.2 million in principal was retired in the current year. The interest paid associated with the debt retired was $399,144. Debt per capita is $348.45 as of December 31, 2017. The Village has the sixth lowest total outstanding debt amongst all the taxing bodies represented on the 2017 Lake and/or Cook County property tax bill. - 15 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Village’s Capital Improvement plan continued in 2017. The Village expended over $0.9 million to the Facilities Development fund infrastructure in FY 2017. The Water and Sewer funds added $2.2 million in capital assets, while General Fund added $0.5 million in capital outlay. 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 interest and transfers of $2.2 million for FY 2017, an increase of $0.4 million (22.2 percent) over the prior fiscal year. A rate increase of 4 percent was applied to all usage after January 1, 2017. Sewer operations accounted for 45.2 percent, or $4.2 million of the total Water and Sewer operational expenditures. Water operations accounted for almost half of that at $1.9 million (20.4 percent). Purchased water expense was $1.7 million, and sanitary sewer fees collected on behalf of Lake County Public Works was $3.2 million for FY 2017. These two pass through expenditures account for 52.7 percent of the total operating expense of the fund. Purchased water expense increased over $3,000 from the prior year. Non-operating revenue (expense) increased $0.3 million due to investment income. The unrestricted net position of the Water and Sewer Fund at the end of the current fiscal year was $10.5 million. Of that amount $7.3 million is the Village’s equity interest in the Northwest Water Commission and $3.1 million is available to cash finance any major infrastructure improvements or enhancements to the water system. The Village also reported the Arboretum Golf Course Fund as a major proprietary fund. This fund accounts for all operations of the Arboretum Golf Course. The course reported a year end unrestricted net position balance of $384,388. Total revenues were down $0.04 million from 2016. The Village of Buffalo Grove owns and operates two municipal golf courses. Golf rounds are returning to pre-recession levels. A total of 51,138 paid rounds were played between the two courses in 2017. 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 Budget Officer Act, a public hearing is conducted, before the budget is adopted, for public comment. The budget document sets the legal spending ceiling for each fund and serves as the day-to-day management tool to ensure fiscal accountability. - 16 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 General Fund Budgetary Highlights For the Fiscal Year Ended December 31, 2017 (in thousands) Budget Actual Revenues and Transfers: Taxes $35,772 $34,964 Fines and Fees 2,593 4,597 Licenses and permits 286 330 Other Revenues 2,458 1,640 Transfers in 901 1,161 Total Revenues and Transfers 42,010 42,693 Expenditures and Transfers Expenditures 39,477 37,531 Transfers Out 2,525 3,168 Total expenditures and Transfers 42,002 40,699 Change in fund balance $8 $1,994 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, 2017, the Village had a combined total of capital assets of $105.7 million invested in a broad range of capital assets including, buildings, streets, storm sewers, and equipment. This amount represents a net increase (including additions and deductions) of $1.9 million. Village of Buffalo Grove Capital Assets at Year End Net of Depreciation As of December 31, 2017 (in millions) Governmental Business-Type Activities Activities Total 2017 2016 2017 2016 2017 2016 Land $37.60 $36.90 $6.20 $6.20 $43.80 $43.10 Construction in progress 0.05 1.44 0.84 0.05 0.89 1.49 Land Improvements 2.77 2.83 . . 2.77 2.83 Buildings 3.71 3.34 2.05 1.71 5.76 5.05 Equipment and Vehicles 5.45 4.24 . . 5.45 4.24 Streets and storm sewers 12.31 12.30 . . 12.31 12.30 Water and Sewer Infrastructure . . 34.70 34.80 34.70 34.80 Total $61.89 $61.05 $43.79 $42.76 $105.68 $103.81 - 17 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Governmental Activities net capital assets increased from last year by $0.8 million (1.4 percent). For the Business-type activities, the net capital assets increased by $1.0 million or (2.4 percent). The capital activity for the Village of Buffalo Grove was mostly in facilities, road, sewer and water. The amounts added to the asset classes was offset by accumulated depreciation and not shown in the table above. The noticeable increase is in vehicles and equipment as the Village has purchased significant assets for operation in Fire and public works. Detailed information on the Village’s capital assets is included in Note 3 section C on pages 64-65. At year end, the Village had total bonded debt outstanding of $14.37 million as shown in the next table: Village of Buffalo Grove General Obligation Bonds As of December 31, 2017 and 2016 (in millions) Governmental Business-Type Activities Activities Total 2017 2016 2017 2016 2017 2016 General obligation bonds $14.37 $15.64 $ - $ - $14.37 $15.64 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 $348.45 and represents .86 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 3 section F on pages 68-71. Economic Factors and Next Year’s Budgets and Rates The Village entered 2018 with a balanced operating budget. The budget for the fiscal year beginning January 1, 2018, is $75,432,884 a 0.4 percent increase from the previous year. The operating budget totals $42,292,439 resulting in a 0.7 percent increase over the previous year. Total capital spending during the year is estimated to be $8.0 million. Continued emphasis will remain on developing innovative ways to deliver services and reduce costs while actively working to improve sales tax collections through economic development. - 18 - VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Property taxes remain the Village’s most stable revenue although the total assessed value of all taxable property is expected to increase about 3.1 percent for the 2017 tax levy (extended and collected in 2018). A tax levy was adopted for the 2018 budget that was 3.1 percent over the last year’s request. The growth in the levy is tied to two items growth in the public safety operations and public safety pensions. The Village mitigated an additional $0.7 million in levied taxes through two abatements of the 2012 and 2016 bonds. If these amounts hit the tax rolls the levy increase would be an additional 3.91 percent higher. The Village will use operating funds to pay the bond payable amount not covered through the tax levy. A twenty year proforma was completed on the Water Fund in FY 2017 and subsequently a water and sewer rate recommendation was made, and adopted, that will increase water rates by 4 percent in 2017. A Storm Water Management User Fee was introduced in the FY 2016 budget. This new user fees will offset the costs related to maintaining, repairing and developing an infrastructure reserve for future system needs. This revenue stream has resulted in an additional $1.2 million to the General Fund that is funding new and replacement storm sewer infrastructure. 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). The Village also eliminated its richest health care plan which is estimated to save the Village $0.2 million in 2018, or about 5 percent. The plan change became effective January 1, 2018. All other expenditures will be generally unchanged. There is no additional staffing recommended for FY 2018. 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, 2017 Governmental Activities Business-type Activities Totals ASSETS Cash and equivalents $21,622,188 $3,943,746 $25,565,934 Investments 3,194,004 501,915 3,695,919 Receivables Property taxes 16,077,644 -16,077,644 Accounts - water and sewer -1,676,752 1,676,752 Municipal sales tax 2,890,293 -2,890,293 Illinois income tax 643,738 -643,738 Motor fuel tax 91,692 -91,692 Telecommunications tax 360,266 -360,266 Food and beverage tax 62,101 -62,101 Utility tax 225,597 -225,597 Interest 7,782 312 8,094 Other 829,236 297,458 1,126,694 Inventories 96,997 35,112 132,109 Due from fiduciary funds 84,629 -84,629 Deposits 35,846 -35,846 Investment in joint venture -7,310,956 7,310,956 Internal balances 837,811 (837,811)- Capital Assets Land 37,599,977 6,198,514 43,798,491 Construction in progress 58,723 840,718 899,441 Buildings 24,834,125 11,170,610 36,004,735 Land improvements 3,242,060 1,966,488 5,208,548 Equipment and vehicles 12,198,773 70,150 12,268,923 Streets and storm sewers 62,122,492 -62,122,492 Water and sewer system infrastructure -72,183,557 72,183,557 Less: Accumulated depreciation (78,156,403)(48,640,980)(126,797,383) Total Assets 108,959,571 56,717,497 165,677,068 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding 50,165 -50,165 Deferred outflows of resources related to pensions 11,273,090 838,085 12,111,175 Total Deferred Outflows of Resources 11,323,255 838,085 12,161,340 LIABILITIES Accounts payable 1,481,801 908,387 2,390,188 Accrued wages 655,225 45,558 700,783 State withholding taxes payable 53,987 -53,987 Development deposits 403,263 51,198 454,461 Due to fiduciary funds 23,822 -23,822 Short term notes payable 3,400,000 -3,400,000 Other -22,202 22,202 Noncurrent Liabilities Due within one year 1,440,419 325,631 1,766,050 Due in more than one year 65,629,972 8,352,830 73,982,802 Total Liabilities 73,088,489 9,705,806 82,794,295 See accompanying notes to financial statements. Page 19 VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION As of December 31, 2017 Governmental Activities Business-type Activities Totals DEFERRED INFLOWS OF RESOURCES Property taxes levied for a future period $16,077,644 $-$16,077,644 Deferred inflows of resources related to pensions 12,191,670 209,889 12,401,559 Total Deferred Inflows of Resources 28,269,314 209,889 28,479,203 NET POSITION Net investment in capital assets 53,318,041 36,802,425 90,120,466 Restricted for Road construction 1,509,756 -1,509,756 Parking lot operations 119,323 -119,323 Unrestricted (36,022,097)10,837,462 (25,184,635) TOTAL NET POSITION $18,925,023 $47,639,887 $66,564,910 See accompanying notes to financial statements. Page 20 VILLAGE OF BUFFALO GROVE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2017 Program Revenues Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities General government $6,642,798 $2,148,760 $-$- Public safety 27,384,964 1,687,759 213,181 - Public works 9,764,874 1,209,784 1,058,421 1,478,015 Interest and fiscal charges 384,073 --- Total Governmental Activities 44,176,709 5,046,303 1,271,602 1,478,015 Business-type Activities Water and Sewerage 9,454,554 11,060,938 -- Refuse Service 705,393 970,268 -- Arboretum Golf 1,661,490 1,157,819 -- Buffalo Grove Golf 1,227,383 1,043,641 -- Total Business-type Activities 13,048,820 14,232,666 -- Total $57,225,529 $19,278,969 $1,271,602 $1,478,015 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 $(4,494,038)$-$(4,494,038) (25,484,024)-(25,484,024) (6,018,654)-(6,018,654) (384,073)-(384,073) (36,380,789)-(36,380,789) -1,606,384 1,606,384 -264,875 264,875 -(503,671)(503,671) -(183,742)(183,742) -1,183,846 1,183,846 (36,380,789)1,183,846 (35,196,943) 15,510,127 -15,510,127 3,625,234 -3,625,234 1,586,128 -1,586,128 2,532,662 -2,532,662 1,256,919 -1,256,919 853,763 -853,763 5,604,020 -5,604,020 4,843,251 -4,843,251 166,044 -166,044 153,816 492,132 645,948 8,758 -8,758 1,409,537 393,328 1,802,865 37,550,259 885,460 38,435,719 958,315 (958,315)- 2,127,785 1,110,991 3,238,776 16,797,238 46,528,896 63,326,134 $18,925,023 $47,639,887 $66,564,910 See accompanying notes to financial statements. Page 22 VILLAGE OF BUFFALO GROVE BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2017 General Fund Facilities Development Street Maintenance Nonmajor Governmental Funds ASSETS Cash and equivalents $19,698,053 $40,281 $-$1,538,153 Investments 3,194,004 --- Receivables Property taxes 15,047,380 --1,030,264 Municipal sales tax 2,890,293 --- Illinois income tax 643,738 --- Motor fuel tax ---91,692 Telecommunication tax 360,266 --- Food and beverage tax 62,101 --- Utility tax 225,597 --- Interest 7,782 --- Other 688,504 -140,732 - Due from other funds 1,234,016 --- Due from fiduciary funds 84,629 --- Inventory 96,997 --- Deposits 35,846 --- TOTAL ASSETS $44,269,206 $40,281 $140,732 $2,660,109 See accompanying notes to financial statements. Page 23 Totals $21,276,487 3,194,004 16,077,644 2,890,293 643,738 91,692 360,266 62,101 225,597 7,782 829,236 1,234,016 84,629 96,997 35,846 $47,110,328 See accompanying notes to financial statements. Page 24 VILLAGE OF BUFFALO GROVE BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2017 General Fund Facilities Development Street Maintenance Nonmajor Governmental Funds LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $1,009,928 $127,267 $87,214 $766 Accrued wages 622,636 --- Development deposits 403,263 --- Due to fiduciary funds 23,822 --- Due to other funds 61,794 139,211 82,347 59,733 Payroll deductions payable 53,987 --- Short-term notes payable -3,400,000 -- Total Liabilities 2,175,430 3,666,478 169,561 60,499 Deferred Inflows of Resources Property taxes levied for a future period 15,047,380 --1,030,264 Total Deferred Inflows of Resources 15,047,380 --1,030,264 Fund Balances (Deficit) Nonspendable for inventory 96,997 --- Nonspendable for deposits 35,846 --- Restricted for road construction ---1,509,756 Restricted for employee pension benefits 252,729 --- Restricted for parking lot operations ---119,323 Committed for capital replacement 7,758,348 --- Unassigned (deficit)18,902,476 (3,626,197)(28,829)(59,733) Total Fund Balances (deficit)27,046,396 (3,626,197)(28,829)1,569,346 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $44,269,206 $40,281 $140,732 $2,660,109 See accompanying notes to financial statements. Page 25 Totals $1,225,175 622,636 403,263 23,822 343,085 53,987 3,400,000 6,071,968 16,077,644 16,077,644 96,997 35,846 1,509,756 252,729 119,323 7,758,348 15,187,717 24,960,716 $47,110,328 See accompanying notes to financial statements. Page 26 VILLAGE OF BUFFALO GROVE RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION As of December 31, 2017 Total Fund Balances - Governmental Funds $24,960,716 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 37,599,977 Construction in progress 58,723 Buildings 24,834,125 Land Improvements 3,242,060 Equipment and vehicles 12,198,773 Streets and storm sewers 62,122,492 Less: Accumulated depreciation (78,156,403) 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.50,165 Deferred outflows of resources related to pensions do not relate to current financial resources and are not reported in the Governmental Funds Balance Sheet.11,273,090 Less amount reported in internal service funds below.(588,660) Deferred inflows of resources related to pensions do not relate to current financial resources and are not reported in the Governmental Funds Balance Sheet.(12,191,670) Less amount reported in internal service funds below.147,424 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 (14,365,000) Compensated absences (1,656,554) Net other post-employment obligation (1,235,386) Unamortized debt premium (216,706) Net pension liability (49,596,745) Less amount reported in internal service funds below.1,087,553 The net position of the internal service funds are included in the governmental activities in the Statement of Net Position (642,951) NET POSITION OF GOVERNMENTAL ACTIVITIES $18,925,023 See accompanying notes to financial statements. Page 27 VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2017 General Facilities Development Street Maintenance Nonmajor Governmental Funds REVENUES Property taxes $14,495,834 $-$-$1,014,293 Other taxes 9,816,523 --- Charges for services 1,762,740 --1,242 Fines and fees 2,834,073 --209,380 Licenses and permits 330,475 --- Intergovernmental 10,651,498 --1,058,421 Interest 153,816 --- Miscellaneous income 1,456,876 --- Total Revenues 41,501,835 --2,283,336 EXPENDITURES Current General government 5,613,970 --160,778 Public safety 25,776,184 --- Public works 5,653,339 -1,360,429 1,088,120 Capital Outlay 487,066 875,147 -- Debt Service Principal ---1,275,000 Interest ---401,609 Total Expenditures 37,530,559 875,147 1,360,429 2,925,507 Excess (deficiency) of revenues over expenditures 3,971,276 (875,147)(1,360,429)(642,171) OTHER FINANCING SOURCES (USES) Sales of capital assets 28,758 --- Transfers in 1,161,846 875,147 1,537,950 630,000 Transfers out (3,168,426)--(24,000) Total Other Financing Sources (Uses)(1,977,822)875,147 1,537,950 606,000 Net Change in Fund Balances 1,993,454 -177,521 (36,171) FUND BALANCES (DEFICIT) - Beginning of Year 25,052,942 (3,626,197)(206,350)1,605,517 FUND BALANCES (DEFICIT) - END OF YEAR $27,046,396 $(3,626,197)$(28,829)$1,569,346 See accompanying notes to financial statements. Page 28 Totals $15,510,127 9,816,523 1,763,982 3,043,453 330,475 11,709,919 153,816 1,456,876 43,785,171 5,774,748 25,776,184 8,101,888 1,362,213 1,275,000 401,609 42,691,642 1,093,529 28,758 4,204,943 (3,192,426) 1,041,275 2,134,804 22,825,912 $24,960,716 See accompanying notes to financial statements. Page 29 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, 2017 Net change in fund balances - total governmental funds $2,134,804 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.3,123,963 Depreciation is reported in the government-wide financial statements.(2,042,910) Net effect of certain miscellaneous adjustments to capital assets.(228,858) 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 1,275,000 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. Amortization of bond premium 24,702 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 (138,276) Net other post employment benefit obligation (265,648) Net pension liability 10,837,239 Deferred outflows of resources due to pensions (3,076,177) Deferred inflows of resources due to pensions (9,509,680) Amortization of deferred charge on refunding (7,166) Less amount reported in internal service funds below.151,306 Internal service funds are used by management to charge information technology, central garage, and building maintenance costs to individual funds. The change in net position of the internal service funds is reported with governmental activities.(150,514) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $2,127,785 See accompanying notes to financial statements. Page 30 VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2017 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals ASSETS Current Assets Cash and equivalents $2,608,257 $452,205 $883,284 $3,943,746 Investments 501,915 --501,915 Receivables Accounts - water and sewer 1,676,752 --1,676,752 Interest 312 --312 Other 208,855 176 88,427 297,458 Due from other funds -41,532 20,262 61,794 Inventory -14,146 20,966 35,112 Total Current Assets 4,996,091 508,059 1,012,939 6,517,089 Noncurrent Assets Capital Assets Land -5,219,738 978,776 6,198,514 Land improvements -1,516,051 450,437 1,966,488 Construction in progress 840,718 --840,718 Buildings and improvements -8,474,799 2,695,811 11,170,610 Machinery, equipment and furnishings --70,150 70,150 Water and sewer infrastructure 72,183,557 --72,183,557 Less: Accumulated depreciation (37,478,978)(8,837,035)(2,324,967)(48,640,980) Other Assets Investment in joint venture 7,310,956 --7,310,956 Total Noncurrent Assets 42,856,253 6,373,553 1,870,207 51,100,013 Total Assets 47,852,344 6,881,612 2,883,146 57,617,102 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions 639,626 44,879 153,580 838,085 Total Deferred Outflows of Resources 639,626 44,879 153,580 838,085 See accompanying notes to financial statements. Page 31 Governmental Activities - Internal Service Funds $345,701 - - - - - - 345,701 - - - - - - - - - 345,701 588,660 588,660 See accompanying notes to financial statements. Page 32 VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2017 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals LIABILITIES Current Liabilities Accounts payable 875,663 23,432 9,292 908,387 Accrued wages 38,491 1,368 5,699 45,558 Other -1,119 21,083 22,202 Development deposits 44,453 -6,745 51,198 Due to other funds 96,382 48,476 754,747 899,605 IEPA loan payable 18,240 --18,240 Compensated absences 4,751 -6,110 10,861 Installment note payable - current 296,530 --296,530 Total Current Liabilities 1,374,510 74,395 803,676 2,252,581 Noncurrent Liabilities Long-Term Debt Compensated absences 58,007 -74,590 132,597 IEPA loan payable 329,993 --329,993 Net pension liability 1,181,716 82,916 283,739 1,548,371 Installment note payable - long term 6,341,869 --6,341,869 Total Noncurrent Liabilities 7,911,585 82,916 358,329 8,352,830 Total Liabilities 9,286,095 157,311 1,162,005 10,605,411 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 160,188 11,239 38,462 209,889 Total Deferred Inflows of Resources 160,188 11,239 38,462 209,889 NET POSITION Net investment in capital assets 28,558,665 6,373,553 1,870,207 36,802,425 Unrestricted (deficit)10,487,022 384,388 (33,948)10,837,462 TOTAL NET POSITION $39,045,687 $6,757,941 $1,836,259 $47,639,887 See accompanying notes to financial statements. Page 33 Governmental Activities - Internal Service Funds 256,626 32,589 - - 53,120 - - - 342,335 - - 1,087,553 - 1,087,553 1,429,888 147,424 147,424 - (642,951) $(642,951) See accompanying notes to financial statements. Page 34 VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2017 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals OPERATING REVENUES Water and sewer charges $10,450,138 $-$-$10,450,138 Daily greens fee and memberships -739,962 692,104 1,432,066 Merchandise sales -56,654 64,171 120,825 Connection and recapture fees 610,800 --610,800 Cart, club, and other rentals -217,676 210,358 428,034 Driving range fees --68,478 68,478 SW ANCC user fees --970,268 970,268 Miscellaneous 393,328 143,527 8,530 545,385 Internal service contributions ---- Total Operating Revenues 11,454,266 1,157,819 2,013,909 14,625,994 OPERATING EXPENSES Water operations 1,881,149 --1,881,149 Sewer operations 4,170,934 --4,170,934 Water purchases 1,710,503 --1,710,503 Golf operations -1,187,267 1,123,539 2,310,806 Cost of sales - pro shop -42,491 44,898 87,389 Refuse operations --705,393 705,393 Depreciation 1,523,581 431,732 58,946 2,014,259 Internal service fund expenses ---- Total Operating Expenses 9,286,167 1,661,490 1,932,776 12,880,433 Operating Income (Loss)2,168,099 (503,671)81,133 1,745,561 NONOPERATING REVENUES (EXPENSES) Interest revenue 492,132 --492,132 Interest expense (168,387)--(168,387) Total Nonoperating Revenues (Expenses)323,745 --323,745 Income (Loss) Before Transfers 2,491,844 (503,671)81,133 2,069,306 TRANSFERS Transfers in -548,833 206,496 755,329 Transfers out (1,037,644)(55,400)(620,600)(1,713,644) Total Transfers (1,037,644)493,433 (414,104)(958,315) Change in Net Position 1,454,200 (10,238)(332,971)1,110,991 NET POSITION (DEFICIT) - Beginning of Year 37,591,487 6,768,179 2,169,230 46,528,896 NET POSITION (DEFICIT) - END OF YEAR $39,045,687 $6,757,941 $1,836,259 $47,639,887 See accompanying notes to financial statements. Page 35 Governmental Activities - Internal Service Funds $- - - - - - - - 4,008,431 4,008,431 - - - - - - - 4,104,743 4,104,743 (96,312) - - - (96,312) - (54,202) (54,202) (150,514) (492,437) $(642,951) See accompanying notes to financial statements. Page 36 VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOW S PROPRIETARY FUNDS For the Year Ended December 31, 2017 Business-type Activities - Enterprise Funds Water and Sewerage Arboretum Golf Nonmajor Enterprise Funds Totals CASH FLOWS FROM OPERATING AC TIVITIES Received from customers $11,369,462 $1,157,819 $2,087,385 $14,614,666 Received from interfund charges ---- Paid to suppliers for goods and services (6,266,670)(1,052,300)(1,610,017)(8,928,987) Paid to employees for services (1,326,418)(152,120)(387,912)(1,866,450) Net Cash Flows From Operating Activities 3,776,374 (46,601)89,456 3,819,229 CASH FLOWS FROM INVESTING AC TIVITIES Interest income 30,993 --30,993 Net Cash Flows From Investing Activities 30,993 --30,993 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in -548,833 206,496 755,329 Transfers (out)(992,876)(50,027)128,123 (914,780) Net Cash Flows From Noncapital Financing Activities (992,876)498,806 334,619 (159,451) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of capital assets (2,228,568)-(820,170)(3,048,738) Water installment note principal paid (256,048)--(256,048) Water installment note interest paid (160,088)--(160,088) IEPA loan principal paid (17,828)--(17,828) IEPA loan interest paid (8,299)--(8,299) Net Cash Flows From Capital and Related Financing Activities (2,670,831)-(820,170)(3,491,001) Net Change in Cash and Cash Equivalents 143,660 452,205 (396,095)199,770 CASH AND CASH EQUIVALENTS - Beginning of Year 2,464,597 -1,279,379 3,743,976 CASH AND CASH EQUIVALENTS - END OF YEAR $2,608,257 $452,205 $883,284 $3,943,746 See accompanying notes to financial statements. Page 37 Governmental Activities - Internal Service Funds $- 4,008,431 (2,584,486) (1,345,701) 78,244 - - - (11,274) (11,274) - - - - - - 66,970 278,731 $345,701 See accompanying notes to financial statements. Page 38 VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOW S PROPRIETARY FUNDS For the Year Ended December 31, 2017 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)$2,168,099 $(503,671)$81,133 $1,745,561 Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation 1,523,581 431,732 58,946 2,014,259 Changes in assets and liabilities Accounts receivable (84,804)-73,476 (11,328) Accounts payable (44,383)15,507 (77,640)(106,516) Accrued salaries 7,081 (124)462 7,419 Deposits 316 -(93,255)(92,939) Inventory -(283)(1,511)(1,794) Compensated absences (1,467)-7,623 6,156 Deferred outflows - pensions 108,616 14,213 40,772 163,601 Deferred inflows - pensions 84,449 5,258 18,789 108,496 Net pension liability 14,886 (9,233)(19,339)(13,686) NET CASH FLOWS FROM OPERATING ACTIVITIES $3,776,374 $(46,601)$89,456 $3,819,229 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None See accompanying notes to financial statements. Page 39 Governmental Activities - Internal Service Funds $(96,312) - - 23,492 (242) - - - 160,618 71,580 (80,892) $78,244 See accompanying notes to financial statements. Page 40 VILLAGE OF BUFFALO GROVE STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS As of December 31, 2017 Pension Trusts Agency Fund ASSETS Cash $1,700,221 $280,049 Investments U.S. treasuries 12,101,993 - U.S. agencies 23,557,303 - Mutual funds - other than bond funds 45,300,374 - Equity securities 35,799,495 - Municipal bonds 3,339,025 - Corporate bonds 7,134,387 - Receivables Interest 228,842 - Prepaid items 1,138 - Due from primary government 23,822 - Total Assets 129,186,600 280,049 LIABILITIES Accounts payable 107,023 - Due to primary government 84,629 - Due to other governments -280,049 Total Liabilities 191,652 280,049 NET POSITION Restricted for pensions $128,994,948 $- See accompanying notes to financial statements. Page 41 VILLAGE OF BUFFALO GROVE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Year Ended December 31, 2017 Pension Trusts AD DITIONS Contributions Employer $4,388,217 Plan members 1,296,295 Total Contributions 5,684,512 Investment income Interest 806,418 Net appreciation in fair value of investments 15,444,107 Total Investment Income 16,250,525 Less Investment expense 379,295 Net Investment Income 15,871,230 Total Additions 21,555,742 DEDUCTIONS Administration 124,008 Pension benefits and refunds 6,143,000 Total Deductions 6,267,008 Change in Net Position 15,288,734 NET POSITION - Beginning of Year 113,706,214 NET POSITION - END OF YEAR $128,994,948 See accompanying notes to financial statements. Page 42 VILLAGE OF BUFFALO GROVE INDEX TO NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE Page I Summary of Significant Accounting Policies 44 A.Reporting Entity 44 B.Government-W ide and Fund Financial Statements 45 C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation 47 D.Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position or Equity 49 1.Deposits and Investments 49 2.Receivables 52 3.Inventories and Prepaid Items 53 4.Capital Assets 53 5.Deferred Outflows of Resources 54 6.Compensated Absences 54 7.Long-Term Obligations 54 8.Deferred Inflows of Resources 55 9. Equity Classifications 55 II Stewardship, Compliance, and Accountability 57 A.Excess Expenses Over Appropriations 57 B.Deficit Balances 57 III Detailed Notes on All Funds 58 A.Deposits and Investments 58 B.Receivables 63 C.Capital Assets 64 D.Interfund Receivables/Payables and Transfers 66 E.Short-Term Debt Activity 68 F.Long-Term Obligations 68 G.Lease Disclosures 72 IV Other Information 72 A.Employees' Retirement System 72 B.Risk Management 86 C.Commitments and Contingencies 86 D.Joint Ventures 87 E.Other Postemployment Benefits 89 F.Tax Abatement 92 G.Effect of New Accounting Standards on Current-Period Financial Statements 95 Page 43 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 44 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds.The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. 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. 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. Page 45 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 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. Street Maintenance 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. 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. 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 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 Page 46 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) In addition, the Village reports the following fund types: Internal Service Funds - used to account for and report the financing of goods or services provided by one department or agency to other departments or agencies of the Village, or to other governmental units, on a cost-reimbursement basis. Information Technology Fund Central Garage Fund Building Maintenance Fund 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 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. The interfund services provided and used are not eliminated in the process of consolidation. Page 47 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C.MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (cont.) 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. 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, deferred outflows of resources, liabilities, and deferred inflows of resources 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. Page 48 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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. 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%0.00% Fixed income 33%4.50% Large cap domestic equities 52%4.75% Small cap domestic equities 5%5.00% International equities 5%5.50% Real estate 3%3.75% 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. Page 49 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) 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: Asset Class Target Long-Term Expected Real Rate of Return U.S. treasury bills/notes/bonds 15%1.25% U.S. government agency securities (non-MBS)17.5%1.25% U.S. government agency securities - callable 10%1.25% U.S. government agency securities (MBS)2.5%1.25% Taxable municipal securities 5%1.25% U.S. large company stocks 35%6.45% U.S. small company stocks 10%8.45% International stocks 5%6.75% 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 2017 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. Page 50 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) Interest Rate Risk The Village's investment policy protects against fair value losses resulting from rising interest rates by diversifying its investment portfolio to prevent over-concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. The Village does not have a formal policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk The Village's investment policy applies the "prudent person" standard in managing its investment portfolio. As such, all investments are made with such judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The Village's investment policy also limits investments in commercial paper to the highest rating classifications, as established by at least two of the four major rating services, and which mature not later than 180 days from the purchase date. Such purchases may not exceed 10% of the issuer corporation's outstanding obligations. Concentration of Credit Risk The Village limits the amount that can be invested in commercial paper to one-third of the Village's total investments. Custodial Credit Risk - Deposits The Village's investment policy requires securing deposit collateral from depository institutions when deposits are in excess of FDIC limits. The amount of deposits not collateralized or insured by an agency of the federal government shall not exceed 75% of the capital stock and surplus of a banking institution. These values shall be reviewed on a quarterly basis comparing actual deposits not insured or collateralized against the capital stock and surplus measure. Values shall be taken from published regulatory agency reports required by either the Comptroller of the Currency or the Commissioner of Banks and Trust Companies. 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. Page 51 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 1.Deposits and Investments (cont.) Custodial Credit Risk - Investments The Village's investment policy requires all investments and investment collateral to be held in safekeeping by a third party custodial institution as designated by the Treasurer in the Village's name. Direct investments guaranteed by the United States or an agency of the United States do not require collateral. Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank statement balance and carrying value is due to outstanding checks and/or deposits in transit. Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allows governments within the State to pool their funds for investment purposes. Illinois Funds is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of 1940. Investments in Illinois Funds are valued at Illinois Fund’s share price, the price for which the investments could be sold. Illinois Metropolitan Investment Fund (IMET) is a not-for-profit investment trust formed pursuant to the Illinois Municipal Code and managed by a Board of Trustees elected from the participating members. IMET is not registered with the SEC as an investment company. Investments in IMET are valued at IMET's share price, the price for which the investment could be sold. Investment in IMET's 1-3 year fund may be redeemed with 5 business days' notice. See Note III. A. for further information. 2.Receivables Property taxes for levy year 2017 attaches as an enforceable lien on January 1, 2017, 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 2016 are prepared by Cook County and issued on or about February 1, 2017 and July 1, 2017, and are payable in two installments, on or about March 1, 2017 and August 1, 2017 or within 30 days of the tax bills being issued. Page 52 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 2.Receivables (cont.) Tax bills for levy year 2016 are prepared by Lake County and issued on or about June 1, 2017 and August 1, 2017, and are payable in two installments, on or about July 1, 2017 and September 1, 2017 or within 30 days of the tax bills being issued. The counties collect such taxes and remits them periodically. The 2017 property tax levy is recognized as a receivable and deferred inflow in fiscal 2017. As the taxes become available to finance current expenditures, they are recognized as revenues. At December 31, 2017, the property taxes receivable and related deferred inflows consisted of the estimated amount collectible from the 2017 levy. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as "due to and from other funds." Long-term interfund loans (noncurrent portion) are reported as "advances from and to other funds." Interfund receivables and payables between funds within governmental activities are eliminated in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the governmental-wide financial statements as internal balances. In the governmental fund financial statements, advances to other funds are offset equally by a nonspendable fund balance account which indicates that they do not constitute expendable available financial resources and, therefore, are not available for appropriation or by a restricted fund balance account, if the funds will ultimately be restricted when the advance is repaid. 3.Inventories and Prepaid Items 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. The cost of inventory is recorded as expenditures/expenses when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items are recorded as expenditures/expenses when consumed rather than when purchased. 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 acquisition value. Page 53 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 4.Capital Assets (cont.) Government-Wide Statements (cont.) Depreciation and amortization of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation and amortization reflected in the statement of net position. Depreciation and amortization is provided over the assets' estimated useful lives using the straight-line method. The range of estimated useful lives by type of asset is as follows: Buildings 20 Years Well and System Improvements 5 - 50 Years Furniture and Equipment 2 - 10 Years Vehicles 2 - 12 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements. 5. Deferred Outflows of Resources A deferred outflow of resources represents a consumption of net position/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. Page 54 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 7.Long-Term Obligations All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of bonds payable. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) are reported as other financing sources and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. For the government-wide statements and proprietary fund statements, bond premiums and discounts are amortized over the life of the issue using the effective interest method. The balance at year end is shown as an increase or decrease in the liability section of the statement of net position. 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. Page 55 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D.ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.) 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. 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 do not meet the criteria to be classified as restricted or committed. The Village has adopted a financial policy authorizing the Director of Finance to assign amounts for a specific purpose. 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 $9,794,360, and is included in unassigned General Fund fund balance. Page 56 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE II - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A.EXCESS EXPENSES OVER APPROPRIATIONS Fund Budgeted Expenses Actual Expenses Excess Expenses Over Budget Water and Sewerage $10,554,592 $12,525,155 $1,970,563 The Village controls expenditures/expenses at the department level. Some individual departments experienced expenditures/expenses 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, 2017, the following individual funds held a deficit balance: Funds Amount Reason Debt Service $(59,733)Expenditures exceeded revenues Facilities Development (3,626,197)Expenditures exceeded revenues Street Maintenance (28,829)Expenditures exceeded revenues Central Garage (375,764)Expenses exceeded revenues Building Maintenance (267,977)Expenses exceeded revenues Page 57 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 $12,502,419 $12,970,915 Custodial Credit Risk - Deposits Money market mutual funds 1,930,778 1,930,778 Credit Risk Illinois Funds 6,269,408 6,269,408 Credit Risk IMET - money market 2,168,742 2,168,742 Credit Risk IMET - 1-3 year fund 4,672,157 4,672,157 Credit Risk, Custodial Credit Risk - Investments, Interest Rate Risk U.S. treasuries 12,101,993 12,101,993 Custodial Credit Risk - Investments, Interest Rate Risk U.S. agencies 26,023,224 25,773,350 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Mutual funds - other than bond funds 45,300,374 45,300,374 N/A Equity securities 35,799,495 35,799,495 Custodial Credit Risk - Investments, Concentration of Credit Risk Municipal bonds 4,569,023 4,569,023 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Corporate bonds 7,134,387 7,134,387 Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Petty cash 2,700 -N/A Total Deposits and Investments $158,474,700 $158,690,622 Page 58 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 $25,565,934 Investments 3,695,919 Per statement of net position - fiduciary funds Cash - pension trusts 1,700,221 Cash - agency 280,049 U.S. treasuries 12,101,993 U.S. agencies 23,557,303 Mutual funds - other than bond funds 45,300,374 Equity securities 35,799,495 Municipal bonds 3,339,025 Corporate bonds 7,134,387 Total Deposits and Investments $158,474,700 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. The Village categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Page 59 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) The valuation methods for recurring fair value measurements are as follows: As of December 31, 2017, the Village's investments were measured using the market valuation method and valuation inputs as follows: Village December 31, 2017 Investment Type Level 1 Level 2 Level 3 Total U.S. agencies $-$2,465,921 $-$2,465,921 Municipal bonds -1,229,998 -1,229,998 Total $-$3,695,919 $-$3,695,919 Police Pension December 31, 2017 Investment Type Level 1 Level 2 Level 3 Total U.S. treasuries $-$8,987,785 $-$8,987,785 U.S. agencies -6,727,187 -6,727,187 Corporate bonds -7,134,387 -7,134,387 Equity securities 35,799,495 --35,799,495 Mutual funds - other than bond funds 7,748,746 --7,748,746 Total $43,548,241 $22,849,359 $-$66,397,600 Firefighters' Pension December 31, 2017 Investment Type Level 1 Level 2 Level 3 Total U.S. treasuries $-$3,114,208 $-$3,114,208 U.S. agencies -16,830,116 -16,830,116 Municipal bonds -3,339,025 -3,339,025 Mutual funds - other than bond funds 37,551,628 --37,551,628 Total $37,551,628 $23,283,349 $-$60,834,977 Page 60 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) 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. As of December 31, 2017, the Village's investments were rated as follows: Investment Type Standard & Poors Moody's Investors Services Money market mutual funds Not Rated Not Rated Illinois Funds AAA Not Rated Illinois Metropolitan Investment Fund AAA Not Rated U.S. agencies Not Rated, AA+ to AAA Not Rated, Aaa Municipal bonds Not Rated, A to AAA Not Rated, A3 to Aaa Corporate bonds Not Rated, A- to AAA Not Rated, A3 to Aaa Page 61 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) A.DEPOSITS AND INVESTMENTS (cont.) 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, 2017, the Village's investments were as follows: Village Maturity Investment Type Fair Value Less than one year 1 - 5 years U.S. agencies $2,465,921 $752,602 $1,713,320 Municipal bonds 1,229,998 930,190 299,807 Totals $3,695,919 $1,682,792 $2,013,127 Police Pension Maturity Investment Type Fair Value Less than one year 1-5 years 6-10 years More than 10 years U.S. treasuries $8,987,785 $2,911,506 $4,066,924 $-$2,009,355 U.S. agencies 6,727,187 1,411,120 4,549,327 191,328 575,412 Corporate bonds 7,134,387 204,434 5,944,694 985,259 - Totals $22,849,359 $4,527,060 $14,560,945 $1,176,587 $2,584,767 Firefighters' Pension Maturity Investment Type Fair Value Less than one year 1-5 years 6-10 years More than 10 years U.S. treasuries $3,114,208 $921,271 $1,965,406 $227,531 $- U.S. agencies 16,830,116 98,417 3,742,577 11,934,837 1,054,285 Municipal bonds 3,339,025 300,889 1,631,478 1,177,755 228,903 Totals $23,283,349 $1,320,577 $7,339,461 $13,340,123 $1,283,188 Page 62 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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, 2017, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 14.38%. 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, 2017, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 14.05%. 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 63 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) C.CAPITAL ASSETS Capital asset activity for the year ended December 31, 2017, was as follows: Beginning Balance Additions Deletions Ending Balance Governmental Activities Capital assets not being depreciated Land $36,896,667 $703,310 $-$37,599,977 Construction in progress 1,443,830 58,723 1,443,830 58,723 Total Capital Assets Not Being depreciated 38,340,497 762,033 1,443,830 37,658,700 Capital assets being depreciated Buildings 24,224,501 609,624 -24,834,125 Equipment and vehicles 11,477,792 2,136,663 1,415,682 12,198,773 Land improvements 3,242,060 --3,242,060 Streets 23,013,290 867,548 204,074 23,676,764 Storm sewers 38,278,587 191,925 24,784 38,445,728 Total Capital Assets Being Depreciated 100,236,230 3,805,760 1,644,540 102,397,450 Total Capital Assets 138,576,727 4,567,793 3,088,370 140,056,150 Less: Accumulated depreciation for Buildings (20,884,061)(241,491)-(21,125,552) Equipment and vehicles (7,243,731)(921,198)1,415,682 (6,749,247) Land improvements (406,847)(64,845)-(471,692) Streets (12,930,111)(443,775)-(13,373,886) Storm sewers (36,064,425)(371,601)-(36,436,026) Total Accumulated depreciation (77,529,175)(2,042,910)1,415,682 (78,156,403) Net Capital Assets Being Depreciated 22,707,055 1,762,850 228,858 24,241,047 Total Governmental Activities Capital Assets, Net of Accumulated Depreciation $61,047,552 $2,524,883 $1,672,688 $61,899,747 Page 64 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) C.CAPITAL ASSETS (cont.) Depreciation expense was charged to functions as follows: Governmental Activities General government $62,970 Public safety 665,678 Public works 1,314,262 Total Governmental Activities Depreciation Expense $2,042,910 Beginning Balance Additions Deletions Ending Balance Business-type Activities Capital assets not being depreciated Land $6,198,514 $-$-$6,198,514 Construction in progress 50,114 803,408 12,804 840,718 Total Capital Assets Not Being depreciated 6,248,628 803,408 12,804 7,039,232 Capital assets being depreciated Buildings 10,337,636 832,974 -11,170,610 Land improvements 1,966,488 --1,966,488 Equipment 94,510 -24,360 70,150 Water/Sewer infrastructure 70,758,397 1,425,160 -72,183,557 Total Capital Assets Being Depreciated 83,157,031 2,258,134 24,360 85,390,805 Total Capital Assets 89,405,659 3,061,542 37,164 92,430,037 Less: Accumulated depreciation for Buildings (8,633,213)(490,678)-(9,123,891) Land improvements (1,967,961)--(1,967,961) Equipment (94,510)-24,360 (70,150) Water/Sewer infrastructure (35,955,397)(1,523,581)-(37,478,978) Total Accumulated depreciation (46,651,081)(2,014,259)24,360 (48,640,980) Net Capital Assets Being Depreciated 36,505,950 243,875 -36,749,825 Business-type Capital Assets, Net of Accumulated depreciation $42,754,578 $1,047,283 $12,804 $43,789,057 Page 65 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 $96,382 General Arboretum Golf 48,476 General Nonmajor Business Type 754,747 General Internal Service 53,120 General Street Maintenance 82,347 General Facilities Development 139,211 General Nonmajor Governmental 59,733 Arboretum Golf General 41,532 Nonmajor Business Type General 20,262 Total - Fund Financial Statements 1,295,810 Less: Government-wide eliminations (457,999) Total Internal Balances - Government-W ide Statement of Net Position $837,811 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 66 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 $857,644 To fund administrative, operating, and maintenance expenses General Arboretum Golf 55,400 Administrative expenses General Nonmajor Governmental 24,000 Administrative expenses General Nonmajor Business Type 170,600 Administrative expenses General Internal Service Funds 54,202 Funding of capital reserve Facilities Development General 875,147 Funding of capital projects Street Maintenance General 1,537,950 Funding of capital projects Arboretum Golf General 548,833 Administrative expenses Nonmajor Business Type General 206,496 Administrative expenses Nonmajor Governmental Water and Sewerage 180,000 To fund debt service Nonmajor Governmental Nonmajor Business Type 450,000 To fund debt service Total - Fund Financial Statements 4,960,272 Less: Fund eliminations (4,001,957) Total Transfers - Government-W ide Statement of Activities $958,315 Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. For the statement of activities, interfund transfers within the governmental activities or business-type activities are netted and eliminated. Page 67 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) E.SHORT-TERM DEBT ACTIVITY The Village issued short-term debt for funding costs related to the Emerald Ash Borer reforestation. Short-term debt activity for the year ended December 31, 2017, was as follows: Beginning Balance Issued Redeemed Ending Balance Line of credit $3,400,000 $-$-$3,400,000 Totals $3,400,000 $-$-$3,400,000 F.LONG-TERM OBLIGATIONS Long-term obligations activity for the year ended December 31, 2017, was as follows: Beginning Balance Increases Decreases Ending Balance Amounts Due Within One Year Governmental Activities Bonds Payable General obligation debt $15,640,000 $-$1,275,000 $14,365,000 $1,315,000 Premium 241,408 -24,702 216,706 - Sub-totals 15,881,408 -1,299,702 14,581,706 1,315,000 Other Liabilities Vested compensated absences 1,518,278 263,695 125,419 1,656,554 125,419 Other postemployment benefits 969,738 650,328 384,680 1,235,386 - Net pension liability 60,433,984 12,003,730 22,840,969 49,596,745 - Total Other Liabilities 62,922,000 12,917,753 23,351,068 52,488,685 125,419 Total Governmental Activities Long-Term Liabilities $78,803,408 $12,917,753 $24,650,770 $67,070,391 $1,440,419 Business-type Activities Loans and Notes Payable IEPA loan payable $366,061 $-$17,828 $348,233 $18,240 Water installment note 6,894,447 -256,048 6,638,399 296,530 Sub-totals 7,260,508 -273,876 6,986,632 314,770 Other Liabilities Vested compensated absences 137,302 17,017 10,861 143,458 10,861 Net pension liability 1,562,057 258,411 272,097 1,548,371 - Total Other Liabilities 1,699,359 275,428 282,958 1,691,829 10,861 Total Business-type Activities Long-Term Liabilities $8,959,867 $275,428 $556,834 $8,678,461 $325,631 Page 68 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) F.LONG-TERM OBLIGATIONS (cont.) 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. Governmental Activities General Obligation Debt Date of Issue Final Maturity Interest Rates Original Indebtedness Balance December 31, 2017 General Obligation Bonds Series 2010A 4/6/2010 12/31/2020 2.0-4.0%$5,160,000 $1,125,000 General Obligation Bonds Series 2010B 4/6/2010 12/31/2025 2.5-3.85%2,600,000 1,845,000 General Obligation Bonds Series 2012 8/27/2012 6/30/2030 2.0-2.75%6,000,000 6,000,000 General Obligation Bonds Series 2016 5/3/2016 12/30/2031 2.0 - 3.0%6,125,000 5,395,000 Total Governmental Activities - General Obligation Debt $14,365,000 Debt service requirements to maturity are as follows: Governmental Activities General Obligation Debt Years Principal Interest 2018 $1,315,000 $367,694 2019 1,210,000 331,119 2020 1,285,000 296,369 2021 940,000 259,469 2022 965,000 237,181 2023-2027 5,025,000 826,841 2028-2031 3,625,000 218,938 Totals $14,365,000 $2,537,611 Page 69 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) F.LONG-TERM OBLIGATIONS (cont.) 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, 2017. Business-type Activities IEPA Loan Payable Date of Issue Final Maturity Interest Rates Original Indebtedness Balance December 31, 2017 IEPA Loan Payable 11/20/2013 12/1/2033 2.295%$407,307 $348,233 Total Business-type Activities IEPA Loan Payable $348,233 Debt service requirements to maturity are as follows: Business-type Activities IEPA Loan Payable Years Principal Interest 2018 $18,240 $7,888 2019 18,661 7,467 2020 19,092 7,036 2021 19,532 6,595 2022 19,983 6,595 2023-2027 107,051 26,003 2028-2032 119,989 13,357 2033 25,685 1,465 Totals $348,233 $76,406 Page 70 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE III - DETAILED NOTES ON ALL FUNDS (cont.) F.LONG-TERM OBLIGATIONS (cont.) Water Installment Note In fiscal year 2015, the Village entered into an installment note agreement with U.S. Bankcorp to fund its water meter project. The Village receives installment proceeds as water meters are purchased or work is performed on the project. U.S. Bankcorp (seller of the installment note) placed $6,970,999 into escrow on the closing date of the agreement. As of December 31, 2017, the Village had received all of the installment note proceeds. Business-type Activities Water Installment Note Date of Issue Final Maturity Interest Rates Original Indebtedness Balance December 31, 2017 Water Installment Note 3/27/2015 6/1/2029 2.350%$6,970,999 $6,638,399 Total Business-type Activities Incentive Agreements $6,638,399 Debt service requirements to maturity are as follows: Business-type Activities Water Installment Note Years Principal Interest 2018 $296,530 $153,703 2019 340,052 146,338 2020 386,802 137,921 2021 436,970 128,372 2022 490,763 117,611 2023-2027 3,403,287 377,770 2028-2029 1,283,995 25,674 Totals $6,638,399 $1,087,389 Other Debt Information In the governmental activities, the Village's obligation for compensated absences, other postemployment benefits, and net pension liability 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, 2017, $1,210,000 of bonds outstanding are considered defeased. Page 71 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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, 2017 are as follows: Years Amount 2018 $126,660 2019 129,193 2020 131,777 2021 134,412 2022 137,101 2023-2025 378,836 Totals $1,037,979 NOTE IV - OTHER INFORMATION A.EMPLOYEES' RETIREMENT SYSTEM The Village contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund (IMRF), an agent-multiple-employer public employee retirement system; the Police Pension Plan which is a single-employer pension plan; and the Firefighters' Pension Plan which is a single-employer pension plan. The benefits, benefits levels, employee contributions and employer contributions for the plans are governed by Illinois Compiled Statutes and can only be amended by the Illinois General Assembly. The Police Pension Plan and the Firefighters' Pension Plan do not issue separate reports on the pension plans. IMRF does issue a publicly available report that includes financial statements and supplementary information for the plan as a whole, but not for individual employers. That report can be obtained from IMRF, 2211 York Road, Suite 500, Oak Brook, Illinois 60523. Illinois Municipal Retirement Fund Plan description.All employees (other than those covered by the Police and Firefighters' Pension plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. IMRF has a two tier plan. Members who first participated in IMRF or an Illinois Reciprocal System prior to January 1, 2011 participate in Tier 1. All other members participate in Tier 2. For Tier 1 participants, pension benefits vest after 8 years of service. Participating members who retire at age 55 (at reduced benefits) or after age 60 (at full benefits) 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 of earnings (average of the highest 48 consecutive months' earnings during the last 10 years) for credited service up to 15 years and 3% for each year thereafter. Page 72 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 participants, pension benefits vest after 10 years of service. Participating members who retire at age 62 (at reduced benefits) or after age 67 (at full benefits) with 10 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 of earnings for the first 15 years of service credit, plus 2% for each year of service after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last 10 years of service, divided by 96. Under Tier 2, the pension is increased every year after retirement, upon reaching age 67, by the lesser of 3% of the original pension amount or 1/2 of the increase in the Consumer Price Index of the original pension amount. Plan membership. At December 31, 2016, the measurement date, membership in the plan was as follows: Retirees and beneficiaries 104 Inactive, non-retired members 54 Active members 95 Total 253 Contributions. As set by statute, Village employees participating in IMRF are required to contribute 4.50% of their annual covered salary. The statute requires the Village to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. The Village’s actuarially determined contribution rate for calendar year 2016 was 13.87% of annual covered payroll for IMRF. The Village also contributes for disability benefits, death benefits and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by the IMRF Board of Trustees, while the supplemental retirement benefits rate is set by statute. Net Pension Liability/(Asset). The net pension liability/(asset) was measured as of December 31, 2016, and the total pension liability used to calculate the net pension liability/(asset) was determined by an actuarial valuation as of that date. Summary of Significant Accounting Policies. For purposes of measuring the net pension liability/(asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of IMRF and additions to/deductions from IMRF fiduciary net position have been determined on the same basis as they are reported by IMRF. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Page 73 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Actuarial Assumptions. The total pension liability for IMRF was determined by actuarial valuations performed as of December 31, 2016 using the following actuarial methods and assumptions: Actuarial cost method Entry Age Normal Asset valuation method Market Value Actuarial assumptions Investment Rate of Return 7.50% Inflation 3.50% Salary increases 3.75% to 14.50%, including inflation Price inflation 2.75% Mortality. For non-disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012). The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP- 2014 (base year 2012). The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same adjustment that were applied for non-disabled lives. For active members, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. Long-Term Expected Real Rate of Return. The long-term expected rate of return on pension plan investments was determined using an asset allocation study 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 the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table: Projected Returns/Risks Asset Class Target Allocation One Year Arithmetic Ten Year Geometric Equities 38.00%8.30%6.85% International equities 17.00%8.45%6.75% Fixed income 27.00%3.05%3.00% Real estate 8.00%6.90%5.75% Alternatives 9.00% Private equity 12.45%7.35% Hedge funds 5.35%5.25% Commodities 4.25%2.65% Cash equivalents 1.00%2.25%2.25% Page 74 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Discount rate.The discount rate used to measure the total pension liability for IMRF was 7.50%. The discount rate calculated using the December 31, 2015 measurement date was 7.47%. 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 rate and the member rate. Based on those assumptions, the 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 investments was applied to all periods of projected benefits to determine the total pension liability. Discount rate sensitivity. The following is a sensitivity analysis of the net pension liability/(asset) to changes in the discount rate. The table below presents net pension liability/(asset) of the Village calculated using the discount rate of 7.50% as well as what the net pension liability/(asset) would be if it were to be calculated using a discount rate that is 1 percentage point lower (6.50%) or 1 percentage point higher (8.50%) than the current rate: 1% Decrease Current Discount Rate 1% Increase Total pension liability $67,952,083 $60,017,497 $53,529,451 Plan fiduciary net pension 50,608,825 50,608,825 50,608,825 Net pension liability/(asset)$17,343,258 $9,408,672 $2,920,626 Changes in net pension liability/(asset). The changes in net pension liability/(asset)for the calendar year ended December 31, 2016 were as follows: Increase (Decrease) Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability/(Asset) (a) - (b) Balances at December 31, 2015 $58,559,118 $48,644,743 $9,914,375 Service cost 871,953 -871,953 Interest on total pension liability 4,310,485 -4,310,485 Differences between expected and actual experience of the total pension liability (921,372)-(921,372) Change of assumptions (220,386)-(220,386) Benefit payments, including refunds of employee contributions (2,582,301)(2,582,301)- Contributions - employer -1,112,901 (1,112,901) Contributions - employee -428,936 (428,936) Net investment income -3,350,903 (3,350,903) Other (net transfer)-(346,357)346,357 Balances at December 31, 2016 $60,017,497 $50,608,825 $9,408,672 Plan fiduciary net position as a percentage of the total pension liability %84.32 Page 75 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Pension expense and deferred outflows of resources and deferred inflows of resources related to pensions.For the year ended December 31, 2017, the Village recognized pension expense of $2,552,674. The Village reported deferred outflows and inflows of resources related to pension from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $737,892 $1,106,770 Assumption changes 699,183 168,618 Net difference between projected and actual earnings on pension plan investments 2,486,783 - Contributions subsequent to the measurement date 1,168,759 - Total $5,092,617 $1,275,388 The amount reported as deferred outflows resulting from contributions subsequent to the measurement date in the above table will be recognized as a reduction in the net pension liability/(asset) for the year ending . The remaining amounts reported as deferred outflows and inflows of resources related to pensions ($2,648,470) will be recognized in pension expense as follows: Year Ending December 31,Village 2016 $1,049,165 2017 1,005,029 2018 614,163 2019 (19,887) Total $2,648,470 Police Pension Plan description. 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. As provided for in the Illinois Compiled Statutes, the Plan 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. Page 76 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) 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 of 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. Plan membership. At December 31, 2017, the Police Pension membership consisted of: Retirees and beneficiaries 48 Inactive, non-retired members 3 Active members 63 Total 114 Page 77 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Contributions. 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. The Village's actuarially determined contribution rate for the fiscal year ending December 31, 2017 was 39.84% of annual covered payroll. Net Pension Liability/(Asset). The net pension liability/(asset) was measured as of December 31, 2017, and the total pension liability used to calculate the net pension liability/(asset) was determined by an annual actuarial valuation as of that date. Summary of Significant Accounting Policies. The financial statements of the Police Pension Plan 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. 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. Actuarial Assumptions. The total pension liability was determined by an actuarial valuation performed as of December 31, 2017 using the following actuarial methods and assumptions: Actuarial cost method Entry Age Normal Asset valuation method Market Value Actuarial assumptions Interest rate 7.00% Inflation 2.50% Projected salary increases 3.50% Cost-of-living adjustments 2.50% Mortality rates were based on the L&A 2016 Illinois Police Mortality Table. The actuarial assumptions were based on the results of an actuarial experience study conducted by Lauterbach & Amen, LLP in 2016. Page 78 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Discount rate. The discount rate used to measure the total pension liability for the Police Pension Plan was 7.00%. The discount rate calculated using the December 31, 2016 measurement date was 6.72%. 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 Plan’s fiduciary net position was projected not to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on Plan investments of 7.00% was blended with the index rate of 3.44% for tax exempt 20-year general obligation municipal bonds with an average AA credit rating as of December 31, 2017 to arrive at a discount rate of 7.00% used to determine the total pension liability. The plan's projected net position is expected to cover future benefit payments in full for the current employees in the 2017 to 2097 projection period. 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 of the Village calculated using the discount rate of 7.00% 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 (6.00%) or 1 percentage point higher (8.00%) than the current rate: 1% Decrease Current Discount Rate 1% Increase Total pension liability $108,463,029 $94,603,289 $83,330,936 Plan fiduciary net position 67,432,478 67,432,478 67,432,478 Net pension liability $41,030,551 $27,170,811 $15,898,458 Page 79 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Changes in net pension liability/(asset).The Village's changes in net pension liability/(asset) for the calendar year ended December 31, 2017 was as follows: Increase (Decrease) Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability/Asset (a) - (b) Balances at December 31, 2016 $93,634,056 $59,527,769 $34,106,287 Service cost 1,637,139 -1,637,139 Interest on total pension liability 6,171,178 -6,171,178 Differences between expected and actual experience of the total pension liability 353,405 -353,405 Change of assumptions (3,590,403)-(3,590,403) Benefit payments, including refunds of employee contributions (3,602,086)(3,602,086)- Contributions - employer -2,524,306 (2,524,306) Contributions - employee -744,694 (744,694) Net investment income -8,300,527 (8,300,527) Administration -(62,732)62,732 Balances at December 31, 2017 $94,603,289 $67,432,478 $27,170,811 Plan fiduciary net position as a percentage of the total pension liability 71.28% Pension expense and deferred outflows of resources and deferred inflows of resources related to pensions.For the year ended December 31, 2017, the Village recognized pension expense of $3,174,678. The Village reported deferred outflows and inflows of resources related to pension from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $618,581 $517,433 Assumption changes 2,493,113 2,999,876 Net difference between projected and actual earnings on pension plan investments 1,811,201 3,317,949 Total $4,922,895 $6,835,258 Page 80 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) The amounts reported as deferred outflows and inflows of resources related to pensions ($1,912,363) will be recognized in pension expense as follows: Year Ending December 31,Amount 2018 $201,413 2019 201,410 2020 (548,432) 2021 (1,200,341) 2022 (523,821) Thereafter (42,592) Total $(1,912,363) Firefighters' Pension Plan description. 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. As provided for in the Illinois Compiled Statutes, the Firefighters' Pension Plan 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 Plan 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 of 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. Page 81 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Plan membership. At December 31, 2017, the Firefighters' Pension Plan membership consisted of: Retirees and beneficiaries 35 Inactive, non-retired members 1 Active members 55 Total 91 Contributions. Participants contribute a fixed percentage of their base salary to the plans. At December 31, 2017, 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. The Village's actuarially determined contribution rate for the fiscal year ending December 31, 2017 was 33.42% of annual covered payroll. Net pension liability/(asset). The net pension liability/(asset) was measured as of December 31, 2017, and the total pension liability used to calculate the net pension liability/(asset) was determined by an annual actuarial valuation as of that date. Summary of significant accounting policies. The financial statements of the Firefighters' Pension Plan 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. 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. Actuarial assumptions. The total pension liability was determined by an actuarial valuation performed as of December 31, 2017 using the following actuarial methods and assumptions: Actuarial cost method Entry Age Normal Asset valuation method Market Value Actuarial assumptions Interest rate 7.00% Inflation 2.50% Projected salary increases 3.50% Cost-of-living adjustments 2.50% Page 82 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Mortality rates were based on the L&A 2016 Illinois Firefighters' Mortality Table. The actuarial assumptions were based on the results of an actuarial experience study conducted by Lauterbach & Amen, LLP in 2016. Discount rate. 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 Plan’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 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 of the Village calculated using the discount rate of 7.00% 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 (6.00%) or 1 percentage point higher (8.00%) than the current rate: 1% Decrease Current Discount Rate 1% Increase Total pension liability $87,718,573 $76,128,103 $66,722,493 Plan fiduciary net position 61,562,470 61,562,470 61,562,470 Net pension liability $26,156,103 $14,565,633 $5,160,023 Page 83 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) Changes in net pension liability/(asset).The Village's changes in net pension liability/(asset) for the calendar year ended December 31, 2017 was as follows: Increase (Decrease) Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability/Asset (a) - (b) Balances at December 31, 2016 $72,153,825 $54,178,445 $17,975,380 Service cost 1,348,459 -1,348,459 Interest on total pension liability 4,961,836 -4,961,836 Differences between expected and actual experience of the total pension liability 204,895 -204,895 Benefit payments, including refunds of employee contributions (2,540,912)(2,540,912)- Contributions - employer -1,863,911 (1,863,911) Contributions - employee -520,771 (520,771) Net investment income -7,601,179 (7,601,179) Administration -(60,924)60,924 Balances at December 31, 2017 $76,128,103 $61,562,470 $14,565,633 Plan fiduciary net position as a percentage of the total net position 80.87% Pension expense and deferred outflows of resources and deferred inflows of resources related to pensions.For the year ended December 31, 2017, the Village recognized pension expense of $1,829,339. The Village reported deferred outflows and inflows of resources related to pension from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $180,327 $790,290 Assumption changes 726,925 447,593 Net difference between projected and actual earnings on pension plan investments 1,188,411 3,053,030 Total $2,095,663 $4,290,913 Page 84 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) A.EMPLOYEES' RETIREMENT SYSTEM (cont.) The amounts reported as deferred outflows and inflows of resources related to pensions ($2,195,250) will be recognized in pension expense as follows: Year Ending December 31,Amount 2018 $(236,217) 2019 (236,221) 2020 (793,412) 2021 (818,085) 2022 (54,829) Thereafter (56,486) Total $(2,195,250) PENSION SEGMENT INFORMATION Fiduciary Net Position Pension Trust Police Pension Firefighters' Pension Total Assets Cash $1,093,838 $606,383 $1,700,221 Investments U.S. treasuries 8,987,785 3,114,208 12,101,993 U.S. agencies 6,727,187 16,830,116 23,557,303 Mutual funds - other than bond funds 7,748,746 37,551,628 45,300,374 Equity securities 35,799,495 -35,799,495 Municipal bonds -3,339,025 3,339,025 Corporate bonds 7,134,387 -7,134,387 Receivables Interest 79,452 149,390 228,842 Prepaid items 1,138 -1,138 Due from primary government 11,911 11,911 23,822 Total Assets 67,583,939 61,602,661 129,186,600 Liabilities Accounts payable 66,832 40,191 107,023 Due to primary government 84,629 -84,629 Total Liabilities 151,461 40,191 191,652 Net Position Held in trust for pension benefits $67,432,478 $61,562,470 $128,994,948 Page 85 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 $2,524,306 $1,863,911 $4,388,217 Plan members 749,965 546,330 1,296,295 Total Contributions 3,274,271 2,410,241 5,684,512 Investment Income Net appreciation in fair value of investments 8,314,479 7,129,628 15,444,107 Interest 214,240 592,178 806,418 Total Investment income 8,528,719 7,721,806 16,250,525 Less investment income 233,109 146,186 379,295 Net investment income 8,295,610 7,575,620 15,871,230 Total Additions 11,569,881 9,985,861 21,555,742 Deductions Administration 63,085 60,923 124,008 Pension benefits and refunds 3,602,087 2,540,913 6,143,000 Total Deductions 3,665,172 2,601,836 6,267,008 Net change in net position 7,904,709 7,384,025 15,288,734 Net position, beginning of year 59,527,769 54,178,445 113,706,214 Net position, end of year $67,432,478 $61,562,470 $128,994,948 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. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. 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. Page 86 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 $703,565 to SW ANCC for the year ended December 31, 2017. Page 87 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 88 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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 $1,710,503 to NW WC for the year ended December 31, 2017. The Village's equity interest in NW WC was $7,310,956 at December 31, 2017. 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 (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 cover 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 2017, the Village contributed $384,680 to the Plan. Page 89 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 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). 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 $648,712 Interest on net OPEB obligation 33,941 Adjustment to annual required contribution (32,325) Annual OPEB cost 650,328 Contributions made (384,680) Increase in net OPEB obligation (asset)265,648 Net OPEB Obligation (Asset) - Beginning of Year 969,738 Net OPEB Obligation (Asset) - End of Year $1,235,386 The Village's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 were as follows: Fiscal Year Ended Annual OPEB Cost Percentage of Annual OPEB Cost Contributed Net OPEB Obligation December 31, 2015 $302,918 72.24%$758,973 December 31, 2016 633,942 66.75%969,738 December 31, 2017 650,328 59.15%1,235,386 Page 90 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) E.OTHER POSTEMPLOYMENT BENEFITS (cont.) The funded status of the plan as of December 31, 2017, the most recent actuarial valuation date, was as follows: Actuarial accrued liability (AAL)$10,256,824 Actuarial value of plan assets - Unfunded Actuarial Accrued Liability (UAAL)$10,256,824 Funded ratio (actuarial value of plan assets/AAL)-% Covered payroll (active plan members)$17,961,975 UAAL as a percentage of covered payroll 57% 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. In the December 31, 2017 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 6.50% initially, reduced by decrements to an ultimate rate of 5.00% after 7 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, 2017, was 30 years. Page 91 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) F.TAX ABATEMENT Tax abatements are a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments. The Village is disclosing all abatement agreements individually. The Village of Buffalo Grove has entered into a tax abatement agreement with W oodman’s Food Market, Inc. as an incentive to stimulate economic development. The abatement is authorized through a Development Improvement Agreement passed by the Village board in Ordinance 2016-067 on December 19th, 2016. W oodman’s will be financially responsible for constructing all necessary offsite roadway and intersection improvements as required by the Village, County, or State along the public roadways along the perimeter of the property. The offsite improvements are estimated to be $4,000,000. The Village will reimburse W oodman’s, an amount not to exceed $4,000,000 for the roadway improvements and an additional payment of $3,000,000 for a combined total of $7,000,000. In order to promote and assist Woodman’s with the project, the Village agrees to share certain sales tax received that corresponds to the new sales tax revenue generated from the retail sales of the project. The sales tax allowable is limited to the sales tax associated with grocery, general merchandise, and products only. W oodman’s must acquire or otherwise be authorized to use the premise in Buffalo Grove, construct and operate the business, and construct the offsite roadway improvements to be eligible for the incentives. Incentive payments as of December 31, 2017 were $0. The Village of Buffalo Grove has entered into a tax abatement agreement with Edward Hines Lumber Co. as an incentive to stimulate economic development. The abatement is authorized through Village Ordinance 2000-67 on November 20th, 2000 and has since been amended with Village Ordinance 2003- 18 on March 3, 2003, Ordinance 2009-47 on August 3, 2009. Edward Hines Lumber Co. shall maintain a single order-acceptance point policy for all Credit Sales and shall not relocate the single order-acceptance point outside of the Village unless it violates or contravenes any state or federal law or court decision/determination. The Village will remit 60 percent of the Municipal Sales tax resulting from the Credit Sales received by the Village to Edward Hines Lumber Co. The Village will keep the remaining 40 percent. Incentive payments as of December 31, 2017 were $1,395,403. Page 92 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) F.TAX ABATEMENT (cont.) The Village of Buffalo Grove has entered into a tax abatement agreement with LAB Development, LLC as an incentive to stimulate economic development. The abatement is authorized through Village Ordinance 2011-14 on March 21, 2011 and has since been amended with Village Ordinance 2016-032 on May 10, 2016. LAB Development, LLC shall conduct its business in Buffalo Grove, maintain a single order- acceptance point on premise. The amendment to the original agreement in 2016 requires LAB Development to extend their current lease at the premise in Buffalo Grove and expand the operation from 61,416 square feet to 124,605 square feet. The lease extension must be no less than 8.5 years, commencing January 1, 2016. The original agreement provided LAB Development with a tax abatement of 100% of the Municipal Sales Tax in year one of the agreement, this percentage decreases 10% per year until year seven of the agreement. The amount of Municipal Sales tax abated to LAB Development could not exceed $500,000 over the seven year term. The amended agreement extended the abatements to LAB Development under new terms. LAB is entitled to 80 percent of the base Municipal Sales Tax above $162,207 in year one. The percentage per year decreases 10 percent until year five, from year five to eight and a half the percentage is fixed at 50 percent. The base Municipal Sales tax amount of $162,207 is fixed for the term of the contract and prorated for the half year in 2024. The amount of Municipal Sales Tax to be abated is not to exceed $2,600,000 over the life of the amended agreement. If LAB Development, LLC relocates or ceases business operations on the premise within five years of the commencement date of the amended contract they shall reimburse the Village 100 percent of the Municipal Sales Tax payments to the Village within ninety days. If LAB Development, LLC relocates or ceases business operations on the premise after the fifth year they will remit $750,000 to the Village within ninety days. If LAB Development, LLC relocates or ceases business operations on the premise after the sixth year they will remit $375,000 to the Village within ninety days. If LAB Development, LLC relocates or ceases business operations on the premise after the seventh year they will remit $187,500 to the Village within ninety days. If LAB Development conducts less than $30,000,000 of taxable sales at the premise in any given year of the contract they shall not receive more than 50 percent of the Municipal Sales Tax increment for that year. Incentive payments as of December 31, 2017 were $273,220. Page 93 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) F.TAX ABATEMENT (cont.) The Village of Buffalo Grove has entered into a tax abatement agreement with Zonatherm. In order to encourage Zonatherm to maintain its business operation in the Village, and to assist with their project in the Village, the Village agrees to share sales tax received by the Village using a formula which corresponds to new sales tax generated by Zonatherm over a finite period of time. For the first sales tax year, one-hundred percent (100%) of that year’s incremental municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the second sales tax year ninety percent (90%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the third sales tax year eighty percent (80%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fourth sales tax year seventy percent (70%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fifth sales tax year sixty percent (60%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the sixth sales tax year fifty percent (50%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the seventh sales tax year fifty percent (50%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. The entire distribution can not exceed $500,000 in aggregate. This agreement will end upon the completion of the seventh year or the $500,000 cap. In the event that Zonatherm cease the business within seven years or generate less than $1,000 in sales tax in any sales tax year, Zonatherm shall reimburse the Village one-hundred percent (100%) of the municipal sales tax payments received. Incentive payments as of December 31, 2017 were $0. In order to encourage Bits to relocate its business operation to the Village of Buffalo Grove, and to assist with their project in the Village, the Village agrees to share a portion of its home rule sales tax received by the Village using a formula which corresponds to new sales tax revenue generated by the business over a finite period of time. For the first sales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. For the second sales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. For the third sales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. For the fourth sales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. For the fifth sales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. For the sixth sales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. Should Bits relocate or cease its business within the first two years of the agreement Bits shall reimburse the Village eighty-five percent (85%) of the total home rule sales tax distributed. Should Bits relocate or cease its business after two years of this agreement than Bits agrees to reimburse the Village seventy percent (70%) of the total home rule sales tax payments received. Should Bits relocate or cease its business after three years of this agreement than Bits agrees to reimburse the Village seventy percent (55%) of the total home rule sales tax payments received. Should Bits relocate or cease its business after four years of this agreement than Bits agrees to reimburse the Village seventy percent (40%) of the total home rule sales tax payments received. Page 94 VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE IV - OTHER INFORMATION (cont.) F.TAX ABATEMENT (cont.) Should Bits relocate or cease its business after five years of this agreement than Bits agrees to reimburse the Village seventy percent (35%) of the total home rule sales tax payments received. Incentive payments as of December 31, 2017 were $0. G.EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved the following: Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions Statement No. 80, Blending Requirements for Certain Component Units - an Amendment of GASB Statement No. 14 Statement No. 81, Irrevocable Split-Interest Agreements Statement No. 83, Certain Asset Retirement Obligations Statement No. 84, Fiduciary Activities Statement No. 85, Omnibus 2017 Statement No. 86, Certain Debt Extinguishment Issues Statement No. 87, Leases Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements When they become effective, application of these standards may restate portions of these financial statements. Page 95 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, 2017 Budgeted Amounts Original Final Actual Variance with Final Budget REVENUES Property taxes $14,504,881 $14,504,881 $14,495,834 $(9,047) Other taxes 9,963,240 9,963,240 9,816,523 (146,717) Charges for services 1,222,773 1,222,773 1,762,740 539,967 Fines and fees 2,802,778 2,802,778 2,834,073 31,295 Licenses and permits 286,140 286,140 330,475 44,335 Intergovernmental 11,304,167 11,304,167 10,651,498 (652,669) Interest 65,800 65,800 153,816 88,016 Miscellaneous income 959,450 959,450 1,456,876 497,426 Total Revenues 41,109,229 41,109,229 41,501,835 392,606 EXPENDITURES Current: General government 5,770,665 5,896,084 5,613,970 282,114 Public safety 26,973,138 26,973,138 25,776,184 1,196,954 Public works 6,733,636 6,733,636 5,653,339 1,080,297 Capital Outlay --487,066 (487,066) Total Expenditures 39,477,439 39,602,858 37,530,559 2,072,299 Excess of revenues over expenditures 1,631,790 1,506,371 3,971,276 2,464,905 OTHER FINANCING SOURCES (USES) Sales of capital assets --28,758 28,758 Transfers in 901,000 901,000 1,161,846 260,846 Transfers out (2,524,956)(2,524,956)(3,168,426)(643,470) Total Other Financing Sources (Uses)(1,623,956)(1,623,956)(1,977,822)(353,866) Net Change in Fund Balance $7,834 $(117,585)1,993,454 $2,111,039 FUND BALANCE - Beginning of Year 25,052,942 FUND BALANCE - END OF YEAR $27,046,396 See independent auditors' report and accompanying notes to required supplementary information. Page 96 VILLAGE OF BUFFALO GROVE ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY For the past three fiscal years 2017 2016 2015 Total pension liability Service cost 871,953$ 860,654$ 964,574$ Interest 4,310,485 4,031,299 3,808,085 Differences between expected and actual experience (921,372) 1,338,146 (1,126,970) Changes of assumptions (220,386) 145,117 1,736,515 Benefit payments, including refunds of member contributions (2,582,301) (2,416,367) (2,148,231) Net change in total pension liability 1,458,379 3,958,849 3,233,973 Total pension liability - beginning 58,559,118 54,600,269 51,366,296 Total pension liability - ending (a)60,017,497$ 58,559,118$ 54,600,269$ Plan fiduciary net position Employer contributions 1,112,901$ 1,093,142$ 1,071,994$ Employee contributions 428,936 402,168 369,278 Net investment income 3,350,903 241,715 2,892,087 Benefit payments, including refunds of member contributions (2,582,301) (2,416,367) (2,148,231) Other (net transfer) (346,357) 520,582 (1,146,370) Net change in plan fiduciary net position 1,964,082 (158,760) 1,038,758 Plan fiduciary net position - beginning 48,644,743 48,803,503 47,764,745 Plan fiduciary net position - ending (b)50,608,825$ 48,644,743$ 48,803,503$ Employer's net pension liability - ending (a) - (b)9,408,672$ 9,914,375$ 5,796,766$ Plan fiduciary net position as a percentage of the total pension liability 84.32% 83.07% 89.38% Covered-employee payroll 8,023,803$ 8,157,772$ 8,195,678$ Employer's net pension liability as a percentage of covered- employee payroll 117.26% 121.53% 70.73% Notes to Schedule: Actuary valuations are as of December 31st, which is 6 months prior to the end of the fiscal year. The District implemented GASB Statement No. 68 in fiscal year 2015. Information prior to fiscal year 2015 is not available. See independent report and accompanying notes to required supplementary information Page 97 VILLAGE OF BUFFALO GROVE ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the past three fiscal years 2017 2016 2015 Actuarially determined contribution 1,164,635$ 1,112,901$ 1,093,141$ Contributions in relation to the actuarially determined contribution (1,164,635) (1,112,901) (1,093,142) Contribution deficiency (excess) -$ -$ (1)$ Covered-employee payroll 8,384,700$ 8,023,803$ 8,157,772$ Contributions as a percentage of covered- employee payroll 13.89% 13.87% 13.40% Notes to Schedule: Valuation date: Methods and assumptions used to determine contribution rates: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation 2.75% Salary increases Investment rate of return 7.50% Retirement Age Mortality Other information: There were no benefit changes during the year. RP-2014 Employee Mortality Table, adjusted to match current IMRF experience 3.75% to 14.50%, including inflation Experience-based table of rates that are specific to the type of eligibility condition Actuarially determined contribution rates are calculated as of December 31 each year, one year prior to the end of the fiscal year in which contributions are reported. The Village implemented GASB Statement No. 68 in fiscal year 2015. Information prior to fiscal year 2015 is not available. Aggregate entry age normal Level percentage of payroll, closed 26 Years 5-Year Smoothed Market, 20% corridor See independent report and accompanying notes to required supplementary information Page 98 2017 2016 2015 2014 Total pension liability Service cost 1,637,139$ 1,534,051$ 1,386,660$ 1,415,171$ Interest 6,171,178 5,861,687 5,438,273 5,318,732 Differences between expected and actual experience 353,405 358,140 (1,015,708) - Changes of assumptions (3,590,403) 170,816 4,811,344 - Benefit payments, including refunds of member contributions (3,602,086) (3,283,543) (2,969,657) (2,747,592) Net change in total pension liability 969,233 4,641,151 7,650,912 3,986,311 Total pension liability - beginning 93,634,056 88,992,905 81,341,993 77,355,682 Total pension liability - ending (a)94,603,289$ 93,634,056$ 88,992,905$ 81,341,993$ Plan fiduciary net position Employer contributions 2,524,306$ 2,430,017$ 2,284,315$ 2,083,758$ Employee contributions 627,548 622,198 669,077 654,693 Other contributions 117,147 - - - Net investment income 8,300,527 3,418,114 186,635 3,756,487 Benefit payments, including refunds of member contributions (3,602,086) (3,283,543) (2,969,657) (2,747,592) Administration (62,732) (43,969) (39,870) (33,343) Net change in plan fiduciary net position 7,904,710 3,142,817 130,500 3,714,003 Plan fiduciary net position - beginning 59,527,769 56,384,952 56,254,452 52,540,449 Plan fiduciary net position - ending (b)67,432,479$ 59,527,769$ 56,384,952$ 56,254,452$ Village's net pension liability - ending (a) - (b)27,170,810$ 34,106,287$ 32,607,953$ 25,087,541$ Plan fiduciary net position as a percentage of the total pension liability 71.28% 63.57% 63.36% 69.16% Covered-employee payroll 6,565,793$ 6,406,672$ 6,056,962$ 5,984,178$ Village's net pension liability as a percentage of covered- employee payroll 413.82% 532.36% 538.35% 419.23% Notes to Schedule: The Pension 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, 2017 Last Four Fiscal Years See independent auditors' report and accompanying notes to required supplementary information. Page 99 VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the Year Ended December 31, 2017 Last Four Fiscal Years 2017 2016 2015 2014 Actuarially determined contribution 2,538,183$ 2,407,865$ 2,256,676$ 2,359,777$ Contributions in relation to the actuarially determined contribution 2,641,453 2,430,017 2,284,315 2,083,758 Contribution deficiency (excess) (103,270)$ (22,152)$ (27,639)$ 276,019$ Covered-employee payroll 6,565,793$ 6,406,672$ 6,056,962$ 5,984,178$ Contributions as a percentage of covered- employee payroll 40.23% 37.93% 37.71% 34.82% Notes to Schedule: The Plan implemented GASB Statement No. 67 in fiscal year 2014. Information Valuation date: January 1, 2017 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age Amortization method Remaining amortization period 24 years Asset valuation method Inflation 2.50% Salary increases Investment rate of return 7.00%, net of pension plan investment expense, including inflation Mortality Mortality rates were based on L&A 2016 Illinois Police table 4.00% to 8.67%, average, including inflation Market Value Level percentage of payroll, closed See independent auditors' report and accompanying notes to required supplementary information. Page 100 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 14.38% 5.71% 0.67% 7.00% Notes to Schedule: The Pension implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. Last Four Fiscal Years VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF INVESTMENT RETURNS As of December 31, 2017 See independent auditors' report and accompanying notes to required supplementary information. Page 101 2017 2016 2015 2014 Total pension liability Service cost 1,348,459$ 1,260,242$ 1,179,270$ 1,378,069$ Interest 4,961,836 4,757,916 4,508,473 4,304,137 Differences between expected and actual experience 204,895 (133,067) (1,080,688) 218,159 Changes of assumptions - (588,791) 1,139,953 (938,734) Benefit payments, including refunds of member contributions (2,540,912) (2,225,410) (2,141,668) (1,943,411) Net change in total pension liability 3,974,278 3,070,890 3,605,340 3,018,220 Total pension liability - beginning 72,153,824 69,082,934 65,477,594 62,459,374 Total pension liability - ending (a)76,128,102$ 72,153,824$ 69,082,934$ 65,477,594$ Plan fiduciary net position Employer contributions 1,863,911$ 2,166,040$ 2,202,138$ 2,168,844$ Employee contributions 520,184 516,422 524,714 502,014 Other contributions 588 - - - Net investment income 7,601,179 3,415,513 654,625 3,195,916 Benefit payments, including refunds of member contributions (2,540,912) (2,225,410) (2,141,668) (1,943,409) Administration (60,924) (42,284) (48,363) (42,368) Net change in plan fiduciary net position 7,384,026 3,830,281 1,191,446 3,880,997 Plan fiduciary net position - beginning 54,178,445 50,348,164 49,156,718 45,275,721 Plan fiduciary net position - ending (b)61,562,471$ 54,178,445$ 50,348,164$ 49,156,718$ Village's net pension liability - ending (a) - (b)14,565,631$ 17,975,379$ 18,734,770$ 16,320,876$ Plan fiduciary net position as a percentage of the total pension liability 80.87% 75.09% 72.88% 75.07% Covered-employee payroll 5,585,881$ 5,390,509$ 5,308,713$ 5,224,950$ Village's net pension liability as a percentage of covered- employee payroll 260.76% 333.46% 352.91% 312.36% Notes to Schedule: The Pension 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 Last Four Fiscal Years See independent auditors' report and accompanying notes to required supplementary information. Page 102 VILLAGE OF BUFFALO GROVE FIREFIGHTERS PENSION FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the Year Ended December 31, 2017 Last Four Fiscal Years 2017 2016 2015 2014 Actuarially determined contribution 1,862,674$ 1,728,496$ 1,848,990$ 1,884,815$ Contributions in relation to the actuarially determined contribution 1,864,498 2,166,040 2,202,138 2,168,844 Contribution deficiency (excess) (1,824)$ (437,544)$ (353,148)$ (284,029)$ Covered-employee payroll 5,585,881$ 5,390,509$ 5,308,713$ 5,224,950$ Contributions as a percentage of covered- employee payroll 33.38% 40.18% 41.48% 41.51% Notes to Schedule: Valuation date: January 1, 2017 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 The Plan implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. Mortality rates were based on the L&A 2016 Illinois Firefighters Table. 7.00%, net of pension plan investment expense, Entry-age Level percentage of payroll, closed 24 years Market Value 4.00% to 9.73%, average, including inflation 2.50% See independent auditors' report and accompanying notes to required supplementary information. Page 103 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 14.05% 6.78% 1.32% 7.08% Notes to Schedule: The Pension implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available. Last Four Fiscal Years VILLAGE OF BUFFALO GROVE FIREFIGHTERS PENSION FUND SCHEDULE OF INVESTMENT RETURNS As of December 31, 2017 See independent auditors' report and accompanying notes to required supplementary information. Page 104 VILLAGE OF BUFFALO GROVE OTHER POST EMPLOYMENT BENEFITS SCHEDULE OF EMPLOYER CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2017 Year Ended Annual Required Contribution Percentage Contributed 12/31/17 $648,712 59.30 % 12/31/16 628,882 67.29 12/31/15 604,694 59.30 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) 12/31/17 $-$10,256,824 $10,256,824 0.00%$17,961,975 57.10% 12/31/15 -9,333,479 9,333,479 0.00%19,951,806 46.78% 12/31/13 -4,545,910 4,545,910 0.00%19,787,930 22.97% See independent auditors' report and accompanying notes to required supplementary information. Page 105 VILLAGE OF BUFFALO GROVE NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2017 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, Pension Trust Funds and Internal Service Funds. All governmental fund-type budgets, pension trust fund-type budgets and internal service 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 106 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, 2017 Motor Fuel Tax Metra Parking Lot Debt Service Total Nonmajor Governmental Funds ASSETS Cash $1,418,064 $120,089 $-$1,538,153 Receivables Property taxes --1,030,264 1,030,264 Motor fuel tax 91,692 --91,692 TOTAL ASSETS $1,509,756 $120,089 $1,030,264 $2,660,109 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $-$766 $-$766 Due to other funds --59,733 59,733 Total Liabilities -766 59,733 60,499 Deferred Inflows of Resources Property taxes levied for a future period --1,030,264 1,030,264 Total Deferred Inflows of Resources --1,030,264 1,030,264 Fund Balances Restricted for parking lot operations -119,323 -119,323 Restricted for road construction 1,509,756 --1,509,756 Unassigned --(59,733)(59,733) Total Fund Balances 1,509,756 119,323 (59,733)1,569,346 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $1,509,756 $120,089 $1,030,264 $2,660,109 Page 107 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2017 Motor Fuel Tax Metra Parking Lot Debt Service Total Nonmajor Governmental Funds REVENUES Property taxes $-$-$1,014,293 $1,014,293 Intergovernmental 1,058,421 --1,058,421 Charges for services -1,242 -1,242 Fines and fees -209,380 -209,380 Total Revenues 1,058,421 210,622 1,014,293 2,283,336 EXPENDITURES Current General government -160,778 -160,778 Public works 1,088,120 --1,088,120 Debt Service Principal --1,275,000 1,275,000 Interest --401,609 401,609 Total Expenditures 1,088,120 160,778 1,676,609 2,925,507 Excess (deficiency) of revenues over expenditures (29,699)49,844 (662,316)(642,171) OTHER FINANCING SOURCES (USES) Transfers in --630,000 630,000 Transfers out -(24,000)-(24,000) Total Other Financing Sources (Uses)-(24,000)630,000 606,000 Net Change in Fund Balances (29,699)25,844 (32,316)(36,171) FUND BALANCES - Beginning of Year 1,539,455 93,479 (27,417)1,605,517 FUND BALANCES (DEFICIT) - END OF YEAR $1,509,756 $119,323 $(59,733)$1,569,346 Page 108 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - MOTOR FUEL TAX - NONMAJOR SPECIAL REVENUE FUND For the Year Ended December 31, 2017 Original and Final Budget Actual Variance with Final Budget REVENUES Intergovernmental $1,000,000 $1,058,421 $58,421 Total Revenues 1,000,000 1,058,421 58,421 EXPENDITURES Current: Public works 1,500,000 1,088,120 411,880 Total Expenditures 1,500,000 1,088,120 411,880 Net Change in Fund Balance $(500,000)(29,699)$470,301 FUND BALANCE - Beginning of Year 1,539,455 FUND BALANCE - END OF YEAR $1,509,756 Page 109 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, 2017 Original and Final Budget Actual Variance with Final Budget REVENUES Charges for services $1,200 $1,242 $42 Fines and fees 210,000 209,380 (620) Total Revenues 211,200 210,622 (578) EXPENDITURES Current: General government 187,021 160,778 26,243 Total Expenditures 187,021 160,778 26,243 Excess (deficiency) of revenues over (under) expenditures 24,179 49,844 25,665 OTHER FINANCING SOURCES (USES) Transfers out (24,000)(24,000)- Total Other Financing Sources (Uses)(24,000)(24,000)- Net Change in Fund Balance $179 25,844 $25,665 FUND BALANCE - Beginning of Year 93,479 FUND BALANCE - END OF YEAR $119,323 Page 110 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, 2017 Original and Final Budget Actual Variance with Final Budget REVENUES Property taxes $1,169,895 $1,014,293 $(155,602) Total Revenues 1,169,895 1,014,293 (155,602) EXPENDITURES Debt Service Principal 1,275,000 1,275,000 - Interest 404,144 401,609 2,535 Total Expenditures 1,679,144 1,676,609 2,535 Excess (deficiency) of revenues over (under) expenditures (509,249)(662,316)(153,067) OTHER FINANCING SOURCES Transfers in 504,000 630,000 126,000 Total Other Financing Sources 504,000 630,000 126,000 Net Change in Fund Balance $(5,249)(32,316)$(27,067) FUND BALANCE (DEFICIT) - Beginning of Year (27,417) FUND BALANCE (DEFICIT) - END OF YEAR $(59,733) Page 111 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, 2017 Original and Final Budget Actual Variance with Final Budget REVENUES Miscellaneous income $565,000 $-$(565,000) Total Revenues 565,000 -(565,000) EXPENDITURES Capital Outlay 1,974,723 875,147 1,099,576 Total Expenditures 1,974,723 875,147 1,099,576 Excess (deficiency) of revenues over (under) expenditures (1,409,723)(875,147)534,576 OTHER FINANCING SOURCES Transfers in 1,875,303 875,147 (1,000,156) Total Other Financing Sources 1,875,303 875,147 (1,000,156) Net Change in Fund Balance $465,580 -$(465,580) FUND BALANCE (DEFICIT) - Beginning of Year (3,626,197) FUND BALANCE (DEFICIT) - END OF YEAR $(3,626,197) Page 112 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - STREET MAINTENANCE - MAJOR CAPITAL PROJECTS FUND For the Year Ended December 31, 2017 Budgeted Amounts Original Final Actual Variance with Final Budget REVENUES Total Revenues $-$-$-$- EXPENDITURES Public works --1,360,429 (1,360,429) Capital Outlay 350,000 1,501,161 -1,501,161 Total Expenditures 350,000 1,501,161 1,360,429 140,732 Excess (deficiency) of revenues over (under) expenditures (350,000)(1,501,161)(1,360,429)140,732 OTHER FINANCING SOURCES Transfers in 1,537,950 1,537,950 1,537,950 - Total Other Financing Sources 1,537,950 1,537,950 1,537,950 - Net Change in Fund Balance $1,187,950 $36,789 177,521 $140,732 FUND BALANCE (DEFICIT) - Beginning of Year (206,350) FUND BALANCE (DEFICIT) - END OF YEAR $(28,829) Page 113 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS As of December 31, 2017 Buffalo Grove Golf Refuse Service Total Nonmajor Enterprise Funds ASSETS Current Assets Cash and equivalents $-$883,284 $883,284 Receivables Other 1,828 86,599 88,427 Due from other funds 20,262 -20,262 Inventory 20,966 -20,966 Total Current Assets 43,056 969,883 1,012,939 Noncurrent Assets Capital Assets Land 978,776 -978,776 Land improvements 450,437 -450,437 Buildings and improvements 2,695,811 -2,695,811 Machinery, equipment and furnishings 70,150 -70,150 Less: Accumulated depreciation (2,324,967)-(2,324,967) Total Noncurrent Assets 1,870,207 -1,870,207 Total Assets 1,913,263 969,883 2,883,146 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions 153,580 -153,580 Total Deferred Outflows of Resources 153,580 -153,580 LIABILITIES Current Liabilities Accounts payable 9,292 -9,292 Accrued wages 5,699 -5,699 Due to other funds 754,747 -754,747 Other 21,083 -21,083 Compensated absences 6,110 -6,110 Development deposits 6,745 -6,745 Total Current Liabilities 803,676 -803,676 Noncurrent Liabilities Long-Term Debt Compensated absences 74,590 -74,590 Net pension liability 283,739 -283,739 Total Noncurrent Liabilities 358,329 -358,329 Total Liabilities 1,162,005 -1,162,005 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 38,462 -38,462 Total Deferred Inflows of Resources 38,462 -38,462 NET POSITION Net investment in capital assets 1,870,207 -1,870,207 Unrestricted (deficit)(1,003,831)969,883 (33,948) TOTAL NET POSITION $866,376 $969,883 $1,836,259 Page 114 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2017 Buffalo Grove Golf Refuse Service Total Nonmajor Enterprise Funds OPERATING REVENUES Daily greens fee and memberships $692,104 $-$692,104 Merchandise sales 64,171 -64,171 Cart, club, and other rentals 210,358 -210,358 Driving range fees 68,478 -68,478 SW ANCC user fees -970,268 970,268 Miscellaneous 8,530 -8,530 Total Operating Revenues 1,043,641 970,268 2,013,909 OPERATING EXPENSES Golf operations 1,123,539 -1,123,539 Cost of sales - pro shop 44,898 -44,898 Refuse operations -705,393 705,393 Depreciation 58,946 -58,946 Total Operating Expenses 1,227,383 705,393 1,932,776 Operating Income (Loss)(183,742)264,875 81,133 TRANSFERS Transfers in 206,496 -206,496 Transfers out (70,600)(550,000)(620,600) Total Transfers 135,896 (550,000)(414,104) Change in Net Position (47,846)(285,125)(332,971) NET POSITION - Beginning of Year 914,222 1,255,008 2,169,230 NET POSITION - END OF YEAR $866,376 $969,883 $1,836,259 Page 115 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CASH FLOW S NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2017 Buffalo Grove Golf Refuse Service Totals CASH FLOWS FROM OPERATING ACTIVITIES Received from customers $1,043,641 $1,043,744 $2,087,385 Paid to suppliers for goods and services (831,148)(778,869)(1,610,017) Paid to employees for services (387,912)-(387,912) Net Cash Flows From Operating Activities (175,419)264,875 89,456 CASH FLOWS FROM NONCAPITAL FINANCING AC TIVITIES Transfers in 206,496 -206,496 Transfers (out)678,123 (550,000)128,123 Net Cash Flows From Noncapital Financing Activities 884,619 (550,000)334,619 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (820,170)-(820,170) Net Cash Flows From Capital and Related Financing Activities (820,170)-(820,170) Net Change in Cash and Cash Equivalents (110,970)(285,125)(396,095) CASH AND CASH EQUIVALENTS - Beginning of Year 110,970 1,168,409 1,279,379 CASH AND CASH EQUIVALENTS - END OF YEAR $-$883,284 $883,284 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss)$(183,742)$264,875 $81,133 Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation 58,946 -58,946 Changes in assets and liabilities Inventory (1,511)-(1,511) Accounts payable (4,164)(73,476)(77,640) Accrued wages 462 -462 Accounts receivable -73,476 73,476 Compensated absences 7,623 -7,623 Deferred outflows - pensions 40,772 -40,772 Deferred inflows - pensions 18,789 -18,789 Net pension liability (19,339)-(19,339) Deposits (93,255)-(93,255) NET CASH FLOWS FROM OPERATING AC TIVITIES $(175,419)$264,875 $89,456 NONCASH CAPITAL AND RELATED FINANCING AC TIVITIES None Page 116 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, 2017 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Daily greens fee and memberships $713,000 $692,104 $(20,896) Merchandise sales 70,850 64,171 (6,679) Cart, club, and other rentals 236,850 210,358 (26,492) Driving range fees 62,000 68,478 6,478 Miscellaneous 15,500 8,530 (6,970) Total Operating Revenues 1,098,200 1,043,641 (54,559) OPERATING EXPENSES Golf operations 1,669,385 1,123,539 545,846 Cost of sales - pro shop 50,000 44,898 5,102 Add: Capital assets capitalized -12,804 (12,804) Total Operating Expenses 1,719,385 1,181,241 538,144 Operating Income (Loss) - Non-GAAP Budgetary Basis (621,185)(137,600)483,585 TRANSFERS Transfers in 103,185 206,496 103,311 Transfers out -(70,600)(70,600) Net Transfers 103,185 135,896 32,711 Change in net position - Non-GAAP Budgetary Basis $(518,000)$(1,704)$516,296 Page 117 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, 2017 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES SW ANCC user fees $1,045,000 $970,268 $(74,732) Total Operating Revenues 1,045,000 970,268 (74,732) OPERATING EXPENSES Refuse operations 760,000 705,393 54,607 Total Operating Expenses 760,000 705,393 54,607 Operating Income - Non-GAAP Budgetary Basis 285,000 264,875 (20,125) TRANSFERS Transfers out (550,000)(550,000)- Net Transfers (550,000)(550,000)- Change in net position - Non-GAAP Budgetary Basis $(265,000)$(285,125)$(20,125) Page 118 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, 2017 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Water and sewer charges $11,385,243 $10,450,138 $(935,105) Connection and recapture fees 53,500 610,800 557,300 Miscellaneous -393,328 393,328 Total Operating Revenues 11,438,743 11,454,266 15,523 OPERATING EXPENSES Water operations 3,473,500 1,881,149 1,592,351 Sewer operations 5,381,092 4,170,934 1,210,158 Water purchases 1,700,000 1,710,503 (10,503) Add: Capital assets capitalized -4,762,569 (4,762,569) Total Operating Expenses 10,554,592 12,525,155 (1,970,563) Operating Income (Loss) - Non-GAAP Budgetary Basis 884,151 (1,070,889)(1,955,040) NON-OPERATING REVENUES (EXPENSES) Interest revenue 7,800 492,132 484,332 Interest expense (160,088)(168,387)(8,299) Total Non-Operating Revenues (Expenses)(152,288)323,745 476,033 Net Income (Loss) Before Transfers - Non- GAAP Budgetary Basis 731,863 (747,144)(1,479,007) TRANSFERS Transfers out (945,000)(1,037,644)(92,644) Net Transfers (945,000)(1,037,644)(92,644) Change in net position - Non-GAAP Budgetary Basis $(213,137)$(1,784,788)$(1,571,651) Page 119 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, 2017 Budgeted Amounts Original Final Actual Variance with Final Budget OPERATING REVENUES Daily greens fee and memberships $822,000 $822,000 $739,962 $82,038 Merchandise sales 55,620 55,620 56,654 (1,034) Cart, club, and other rentals 248,940 248,940 217,676 31,264 Miscellaneous 142,200 142,200 143,527 (1,327) Total Operating Revenues 1,268,760 1,268,760 1,157,819 (110,941) OPERATING EXPENSES Golf operations 1,849,960 1,418,228 1,187,267 230,961 Cost of sales - pro shop 47,000 47,000 42,491 4,509 Add: Capital assets capitalized --53,277 (53,277) Total Operating Expenses 1,896,960 1,465,228 1,283,035 182,193 Operating (Loss) - Non-GAAP Budgetary Basis (628,200)(196,468)(125,216)71,252 TRANSFERS Transfers in 196,468 548,833 548,833 - Transfers out --(55,400)(55,400) Net Transfers 196,468 548,833 493,433 (55,400) Change in net position - Non- GAAP Budgetary Basis $(431,732)$352,365 $368,217 $15,852 Page 120 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS As of December 31, 2017 Information Technology Central Garage Building Maintenance Totals ASSETS Current Assets Cash $101,980 $90,395 $153,326 $345,701 Total Current Assets 101,980 90,395 153,326 345,701 Total Assets 101,980 90,395 153,326 345,701 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions -337,223 251,437 588,660 Total Deferred Outflows of Resources -337,223 251,437 588,660 LIABILITIES Current Liabilities Accounts payable 101,190 47,465 107,971 256,626 Accrued wages -18,498 14,091 32,589 Due to other funds -29,942 23,178 53,120 Total Current Liabilities 101,190 95,905 145,240 342,335 Noncurrent Liabilities Net pension liability -623,022 464,531 1,087,553 Total Noncurrent Liabilities -623,022 464,531 1,087,553 Total Liabilities 101,190 718,927 609,771 1,429,888 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions -84,455 62,969 147,424 NET POSITION Unrestricted (deficit)790 (375,764)(267,977)(642,951) TOTAL NET POSITION $790 $(375,764)$(267,977)$(642,951) Page 121 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended December 31, 2017 Information Technology Central Garage Building Maintenance Totals OPERATING REVENUES Internal service contributions $1,196,410 $1,553,271 $1,258,750 $4,008,431 Total Operating Revenues 1,196,410 1,553,271 1,258,750 4,008,431 OPERATING EXPENSES Information technology 1,195,620 --1,195,620 Central garage -1,602,902 -1,602,902 Building maintenance --1,306,221 1,306,221 Total Operating Expenses 1,195,620 1,602,902 1,306,221 4,104,743 Operating Income (Loss)790 (49,631)(47,471)(96,312) Income (Loss) Before Transfers 790 (49,631)(47,471)(96,312) TRANSFERS Transfers out -(35,075)(19,127)(54,202) Total Transfers -(35,075)(19,127)(54,202) Change in net position 790 (84,706)(66,598)(150,514) NET POSITION (DEFICIT) - Beginning of Year -(291,058)(201,379)(492,437) NET POSITION (DEFICIT) - END OF YEAR $790 $(375,764)$(267,977)$(642,951) Page 122 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL INFORMATION TECHNOLOGY - INTERNAL SERVICE FUND For the Year Ended December 31, 2017 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Internal service contributions $1,351,359 $1,196,410 $(154,949) Total Operating Revenues 1,351,359 1,196,410 (154,949) OPERATING EXPENSES Information technology 1,351,359 1,195,620 155,739 Total Operating Expenses 1,351,359 1,195,620 155,739 Operating Income -790 790 TRANSFERS Change in net position $-$790 $790 Page 123 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL CENTRAL GARAGE - INTERNAL SERVICE FUND For the Year Ended December 31, 2017 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Internal service contributions $1,756,782 $1,553,271 $(203,511) Total Operating Revenues 1,756,782 1,553,271 (203,511) OPERATING EXPENSES Central garage 1,756,782 1,602,902 153,880 Total Operating Expenses 1,756,782 1,602,902 153,880 Operating Income -(49,631)(49,631) TRANSFERS Transfers out -(35,075)(35,075) Total Transfers -(35,075)(35,075) Change in net position $-$(84,706)$(84,706) Page 124 VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL BUILDING MAINTENANCE - INTERNAL SERVICE FUND For the Year Ended December 31, 2017 Original And Final Budget Actual Variance with Final Budget OPERATING REVENUES Internal service contributions $1,462,984 $1,258,750 $(204,234) Total Operating Revenues 1,462,984 1,258,750 (204,234) OPERATING EXPENSES Building maintenance 1,462,984 1,306,221 156,763 Total Operating Expenses 1,462,984 1,306,221 156,763 Operating Income -(47,471)(47,471) TRANSFERS Transfers out -(19,127)(19,127) Total Transfers -(19,127)(19,127) Change in net position $-$(66,598)$(66,598) Page 125 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CASH FLOW S INTERNAL SERVICE FUNDS For the Year Ended December 31, 2017 Information Technology Central Garage Building Maintenance Totals CASH FLOWS FROM OPERATING AC TIVITIES Received from interfund charges $1,196,410 $1,553,271 $1,258,750 $4,008,431 Paid to suppliers for goods and services (1,194,830)(767,062)(622,594)(2,584,486) Paid to employees for services (344)(749,715)(595,642)(1,345,701) Net Cash Flows From Operating Activities 1,236 36,494 40,514 78,244 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers (out)-(10,735)(539)(11,274) Net Cash Flows From Noncapital Financing Activities -(10,735)(539)(11,274) Net Change in Cash and Cash Equivalents 1,236 25,759 39,975 66,970 CASH AND CASH EQUIVALENTS - Beginning of Year 100,744 64,636 113,351 278,731 CASH AND CASH EQUIVALENTS - END OF YEAR $101,980 $90,395 $153,326 $345,701 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss)$790 $(49,631)$(47,471)$(96,312) Changes in assets and liabilities Accounts payable 790 (2,595)25,297 23,492 Accrued wages (344)4,013 (3,911)(242) Deferred outflows - pensions -94,997 65,621 160,618 Deferred inflows - pensions -40,704 30,876 71,580 Net pension liability -(50,994)(29,898)(80,892) NET CASH FLOWS FROM OPERATING ACTIVITIES $1,236 $36,494 $40,514 $78,244 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None Page 126 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUNDS As of December 31, 2017 Police Pension Firefighters' Pension Totals ASSETS Cash $1,093,838 $606,383 $1,700,221 Investments U.S. treasuries 8,987,785 3,114,208 12,101,993 U.S. agencies 6,727,187 16,830,116 23,557,303 Mutual funds - other than bond funds 7,748,746 37,551,628 45,300,374 Equity securities 35,799,495 -35,799,495 Municipal bonds -3,339,025 3,339,025 Corporate bonds 7,134,387 -7,134,387 Receivables Interest 79,452 149,390 228,842 Prepaid items 1,138 -1,138 Due from primary government 11,911 11,911 23,822 Total Assets 67,583,939 61,602,661 129,186,600 LIABILITIES Accounts payable 66,832 40,191 107,023 Due to primary government 84,629 -84,629 Total Liabilities 151,461 40,191 191,652 NET POSITION Restricted for pensions $67,432,478 $61,562,470 $128,994,948 Page 127 VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUNDS For the Year Ended December 31, 2017 Police Pension Firefighters' Pension Total AD DITIONS Contributions Employer $2,524,306 $1,863,911 $4,388,217 Plan members 749,965 546,330 1,296,295 Total Contributions 3,274,271 2,410,241 5,684,512 Investment income Interest 214,240 592,178 806,418 Net appreciation in fair value of investments 8,314,479 7,129,628 15,444,107 Total Investment Income 8,528,719 7,721,806 16,250,525 Less Investment expense 233,109 146,186 379,295 Net Investment Income 8,295,610 7,575,620 15,871,230 Total Additions 11,569,881 9,985,861 21,555,742 DEDUCTIONS Pension benefits and refunds 3,602,087 2,540,913 6,143,000 Administration 63,085 60,923 124,008 Total Deductions 3,665,172 2,601,836 6,267,008 Change in Net Position 7,904,709 7,384,025 15,288,734 NET POSITION - Beginning of Year 59,527,769 54,178,445 113,706,214 NET POSITION, END OF YEAR $67,432,478 $61,562,470 $128,994,948 Page 128 VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUAL For the Year Ended December 31, 2017 Original and Final Budget Actual Variance with Final Budget Additions Contributions Employer $2,525,647 $2,524,306 $(1,341) Plan members 682,740 749,965 67,225 Total contributions 3,208,387 3,274,271 65,884 Investment Income Interest 300,000 214,240 (85,760) Net appreciation in fair value of investments 2,850,000 8,314,479 5,464,479 Total investment income 3,150,000 8,528,719 5,378,719 Less Investment expense 250,000 233,109 16,891 Net investment income 2,900,000 8,295,610 5,395,610 Total additions 6,108,387 11,569,881 5,461,494 Deductions Pension benefits and refunds 3,650,000 3,602,087 47,913 Administration 45,000 63,085 (18,085) Total deductions 3,695,000 3,665,172 29,828 Change in net position $2,413,387 7,904,709 $5,491,322 Net position, beginning of year 59,527,769 Net position, end of year $67,432,478 Page 129 VILLAGE OF BUFFALO GROVE FIREFIGHTERS' PENSION FUND SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUAL For the Year Ended December 31, 2017 Original Budget Final Budget Actual Variance with Final Budget Additions Contributions Employer $1,862,674 $1,862,674 $1,863,911 $1,237 Plan members 559,488 559,488 546,330 (13,158) Total contributions 2,422,162 2,422,162 2,410,241 (11,921) Investment Income Interest 450,000 450,000 592,178 142,178 Net appreciation in fair value of investments 1,750,000 1,750,000 7,129,628 5,379,628 Total investment income 2,200,000 2,200,000 7,721,806 5,521,806 Less Investment expense 150,000 150,000 146,186 3,814 Net investment income 2,050,000 2,050,000 7,575,620 5,525,620 Total additions 4,472,162 4,472,162 9,985,861 5,513,699 Deductions Pension benefits and refunds 2,532,912 2,622,443 2,540,913 81,530 Administration 50,000 50,000 60,923 (10,923) Total deductions 2,582,912 2,672,443 2,601,836 70,607 Change in net position $1,889,250 $1,799,719 7,384,025 $5,584,306 Net position, beginning of year 54,178,445 Net position, end of year $61,562,470 Page 130 VILLAGE OF BUFFALO GROVE STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES SCHOOL AND PARK DONATIONS - AGENCY FUND For the Year Ended December 31, 2017 Balances Balances January 1 Additions Deletions December 31 Assets Cash & Cash Equivalents 253,494$ 94,437$ 67,882$ 280,049$ Liabilities Due to Other Governments 253,494$ 94,437$ 67,882$ 280,049$ Page 131 Statistical Section Contents Page Financial Trends 132 - 141 Revenue Capacity 142 - 152 Debt Capacity 153 - 157 Demographic and Economic Information 158 - 161 Operating Information 162 - 165 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. VILLAGE OF BUFFALO GROVE, ILLINOIS Net Position by Component Last Ten Fiscal Years Fiscal Years 2017 2016 2015 2014 Governmental Activities Net Investment in Capital Assets 53,318,041$ 51,756,933$ 50,609,420$ 50,712,982$ Restricted 1,629,079 1,632,934 1,974,115 2,664,110 Unrestricted (36,022,097) (36,592,629) (34,637,401) 11,048,700 Total Governmental Activities Net Position 18,925,023$ 16,797,238$ 17,946,134$ 64,425,792$ Business-type Activities Net Investment in Capital Assets 36,802,425$ 35,494,070$ 38,372,943$ 35,871,503$ Unrestricted 10,837,462 11,034,826 7,770,059 11,067,173 Total Business-type Activities Net Position 47,639,887$ 46,528,896$ 46,143,002$ 46,938,676$ Primary Government Net Investment in Capital Assets 90,120,466$ 87,251,003$ 88,982,363$ 86,584,485$ Restricted 1,629,079 1,632,934 1,974,115 2,664,110 Unrestricted (25,184,635) (25,557,803) (26,867,342) 22,115,873 Total Primary Government Net Position 66,564,910$ 63,326,134$ 64,089,136$ 111,364,468$ * Auditors restated 2012, from 2011 and earlier have not been adjusted. **Beginning in 2015, the Village implemented GASB 68 which resulted in the inclusion of a net pension liability. Data Source Audited Financial Statements Page 132 2013 2012*2011 2010 2009 2008 51,011,919$ 52,096,183$ 53,362,147$ 53,742,519$ 54,563,385$ 53,551,265$ 2,412,222 6,268,039 1,918,263 956,803 140,712 80,438 12,387,400 11,550,011 13,429,876 15,738,272 16,590,052 23,259,339 65,811,541$ 69,914,233$ 68,710,286$ 70,437,594$ 71,294,149$ 76,891,042$ 35,553,648$ 36,706,161$ 37,807,146$ 38,410,966$ 39,808,889$ 41,374,269$ 11,515,793 11,242,301 12,989,124 14,644,341 15,011,209 17,003,316 47,069,441$ 47,948,462$ 50,796,270$ 53,055,307$ 54,820,098$ 58,377,585$ 86,565,567$ 88,802,344$ 91,169,293$ 92,153,485$ 94,372,274$ 94,925,534$ 2,412,222 6,268,039 1,918,263 956,803 140,712 80,438 23,903,193 22,792,312 26,419,000 30,382,613 31,601,261 40,262,655 112,880,982$ 117,862,695$ 119,506,556$ 123,492,901$ 126,114,247$ 135,268,627$ Page 133 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position Last Ten Fiscal Years Fiscal Years 2017 2016 2015 2014 Expenses Governmental Activities General Government 6,642,798$ 6,441,707$ 5,885,811$ 5,843,623$ Public Safety 27,384,964 30,528,127 27,256,737 22,920,180 Public Works 9,764,874 8,078,874 11,551,606 13,553,093 Interest 384,073 356,799 285,863 302,781 Total Governmental Activities Expenses 44,176,709$ 45,405,507$ 44,980,017$ 42,619,677$ Business-type Activities Water & Sewer 9,454,554 9,001,632 8,561,248 8,435,463 Refuse Service 705,393 703,565 702,106 803,039 Golf Courses 2,888,873 2,886,404 3,288,882 2,739,077 Total Business-type Activities Expenditures 13,048,820 12,591,601 12,552,236 11,977,579 Total Primary Government Expenses 57,225,529$ 57,997,108$ 57,532,253$ 54,597,256$ Program Revenue Governmental Activities Charges for Services General Government 2,148,760$ 1,855,506$ 1,624,134$ 1,901,996$ Public Safety 1,687,759 1,718,647 1,745,580 1,623,171 Public Works 1,209,784 1,151,594 61,194 88,665 Operating Grants and Contributions 1,271,602 1,281,732 1,229,028 1,285,396 Capital Grants and Contributions 1,478,015 - - - Total Governmental Activities Program Revenues 7,795,920 6,007,479 4,659,936 4,899,228 Business-type activities Charges for Services Water & Sewer 11,060,938 10,304,638 9,495,691 9,076,261 Refuse Service 970,268 1,135,748 1,039,876 1,044,442 Golf Courses 2,201,460 2,240,868 2,335,928 2,257,494 Operating Grants and Contributions - - - - Capital Grants and Contributions - 94,326 - - Total Business-type Activities Program Revenues 14,232,666 13,775,580 12,871,495 12,378,197 Total Primary Government Revenues 22,028,586$ 19,783,059$ 17,531,431$ 17,277,425$ Net (Expense) Revenue Governmental Activities (36,380,789)$ (39,398,028)$ (40,320,081)$ (37,720,449)$ Business-type Activities 1,183,846 1,183,979 319,259 400,618 Total Primary Government Net Expense (35,196,943)$ (38,214,049)$ (40,000,822)$ (37,319,831)$ * Auditors restated 2012, from 2011 and earlier have not been adjusted. Page 134 2013 2012*2011 2010 2009 2008 6,567,545$ 6,101,008$ 5,010,274$ 4,769,874$ 6,182,475$ 5,705,497$ 21,964,989 22,344,117 22,657,643 22,312,910 22,753,590 21,115,737 15,091,414 12,026,911 11,106,433 11,081,374 10,421,659 13,222,026 374,511 384,180 248,539 194,655 334,142 379,501 43,998,459$ 40,856,216$ 39,022,889$ 38,358,813$ 39,691,866$ 40,422,761$ 8,079,364 8,931,336 8,753,149 9,865,981 9,519,169 8,684,651 902,811 874,366 935,365 942,757 944,392 1,017,164 2,942,747 2,991,170 3,057,912 3,043,367 3,118,647 3,423,903 11,924,922 12,796,872 12,746,426 13,852,105 13,582,208 13,125,718 55,923,381$ 53,653,088$ 51,769,315$ 52,210,918$ 53,274,074$ 53,548,479$ 1,207,504$ 1,226,552$ 1,240,547$ 1,195,928$ 977,464$ 1,211,188$ 1,498,819 1,283,956 1,404,308 1,419,761 1,563,236 1,514,666 82,393 118,547 86,421 71,606 50,709 94,670 1,161,509 1,178,442 1,230,387 1,253,103 1,349,044 1,307,895 - - - - - - 3,950,225 3,807,497 3,961,663 3,940,398 3,940,453 4,128,419 8,692,812 7,464,870 7,782,000 9,091,520 8,008,360 7,538,534 1,040,878 1,050,386 1,036,872 1,041,661 1,004,431 923,207 1,178,368 2,221,714 2,175,418 2,088,106 2,320,247 2,356,962 1,072,499 - - - - - - - - - - 133,599 11,984,557 10,736,970 10,994,290 12,221,287 11,333,038 10,952,302 15,934,782$ 14,544,467$ 14,955,953$ 16,161,685$ 15,273,491$ 15,080,721$ (40,048,234)$ (37,048,719)$ (35,061,226)$ (34,418,415)$ (35,751,413)$ (36,294,342)$ 59,635 (2,059,902) (1,752,136) (1,630,818) (2,249,170) (2,173,416) (39,988,599)$ (39,108,621)$ (36,813,362)$ (36,049,233)$ (38,000,583)$ (38,467,758)$ Page 135 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position (Cont.) Last Ten Fiscal Years Fiscal Years 2017 2016 2015 2014 General Revenues and Other Changes in Net Position Governmental Activities Taxes Property 15,510,127$ 15,034,583$ 14,742,622$ 14,554,564$ Sales and Home Rule 9,229,254 9,095,471 9,274,777 8,455,972 Income and Use 4,843,251 4,994,426 5,409,875 4,104,736 Telecommunications 1,586,128 1,513,254 1,644,309 1,679,653 Utility 2,532,662 2,659,554 2,643,642 2,819,427 Property Transfer 1,256,919 1,115,360 904,311 790,819 Other 1,019,807 1,110,503 1,092,554 1,113,831 Investment Earnings 153,816 65,600 25,061 107,765 Miscellaneous 1,409,537 1,596,806 1,458,118 1,636,721 Transfers 958,315 1,062,190 749,027 1,070,724 Gain on sale of assets 8,758 1,385 1,601 488 Total Government Activities 38,508,574 38,249,132 37,945,897 36,334,700 Business-type Activities Investment Earnings 492,132$ 14,159$ 10,112$ 18,820$ Miscellaneous 393,328 249,946 5,737 520,521 Transfers (958,315) (1,062,190) (749,027) (1,070,724) Total Business-type Activities (72,855) (798,085) (733,178) (531,383) Total Primary Government 38,435,719$ 37,451,047$ 37,212,719$ 35,803,317$ Change in Net Position Governmental Activities 2,127,785$ (1,148,896)$ (2,374,184)$ (1,385,749)$ Business-type Activities 1,110,991 385,894 (413,919) (130,765) Total Primary Government Change in Net Position 3,238,776$ (763,002)$ (2,788,103)$ (1,516,514)$ Data Source Audited Financial Statements Page 136 2013 2012 2011 2010 2009 2008 14,504,750$ 14,330,407$ 14,458,248$ 13,657,589$ 12,504,508$ 12,058,815$ 7,803,749 7,570,915 6,984,134 7,309,800 7,196,969 8,436,647 4,737,656 5,462,111 3,714,864 4,165,248 3,601,619 4,646,776 1,943,811 2,200,809 2,134,462 2,183,190 2,345,249 2,417,496 2,629,997 2,510,242 2,567,091 2,393,340 - - 760,164 459,036 629,376 545,515 670,762 590,596 1,052,788 1,070,409 1,044,164 1,017,612 1,006,249 1,076,929 54,522 132,436 133,059 250,290 490,881 810,982 1,506,994 1,239,906 1,495,155 1,822,276 1,403,283 2,081,112 951,111 635,500 553,000 217,000 935,000 80,230 - - - - - - 35,945,542 35,611,771 33,713,553 33,561,860 30,154,520 32,199,583 12,455$ 27,087$ 41,100$ (46,666)$ (374,632)$ 267,263$ - 1,259 4,999 2,133 1,315 187,034 (951,111) (635,500) (553,000) (217) (935,000) (80,230) (938,656) (607,154) (506,901) (44,750) (1,308,317) 374,067 35,006,886$ 35,004,617$ 33,206,652$ 33,517,110$ 28,846,203$ 32,573,650$ (4,102,692)$ (1,436,948)$ (1,347,673)$ (856,555)$ (5,596,893)$ (4,094,759)$ (879,021) (2,667,056) (2,259,037) (1,675,568) (3,557,487) (1,799,349) (4,981,713)$ (4,104,004)$ (3,606,710)$ (2,532,123)$ (9,154,380)$ (5,894,108)$ Page 137 VILLAGE OF BUFFALO GROVE, ILLINOIS Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years 2017 2016 2015 2014 General Fund Nonspendable 132,843$ 167,957$ 551,242$ 573,812$ Restricted 252,729 229,953 223,622 130,435 Committed 7,758,348 8,511,306 7,532,123 7,438,256 Unassigned 18,902,476 16,143,726 14,991,907 13,225,644 Reserved - - - - Unreserved - - - - Total General Fund 27,046,396 25,052,942 23,298,894 21,368,147 All other Governmental Funds Restricted 1,629,079 1,632,934 1,974,115 1,965,328 Assigned - - - - Unassigned (3,714,759) (3,859,964) (3,707,560) (2,324,296) Unreserved - - - - Unreserved, Reported in Special Revenue Funds - - - - Capital Projects Funds - - - - Total All other Governmental Funds (2,085,680) (2,227,030) (1,733,445) (358,968) Total Governmental Funds 24,960,716$ 22,825,912$ 21,565,449$ 21,009,179$ * Auditors restated 2012, from 2011 and earlier have not been adjusted. Data Source Audited Financial Statements Page 138 2013 2012*2011 2010 2009 2008 562,399$ 518,437$ 1,031,936$ -$ -$ -$ 162,274 - - - - - 7,345,420 7,335,685 7,948,344 - - - 12,395,113 10,759,935 9,871,895 - - - - - - 1,138,273 1,248,428 1,536,571 - - - 17,763,849 18,307,270 22,444,819 20,465,206 18,614,057 18,852,175 18,902,122 19,555,698 23,981,390 1,796,997 6,112,703 1,918,263 - - - 101,213 144,075 146,116 - - - (927,395) (253,826) (234,206) - - - - - - 20,271 (12,970) 33,167 - - - 2,124,937 1,252,015 1,239,501 - - - 927,626 903,315 1,911,178 970,815 6,002,952 1,830,173 3,072,834 2,142,360 3,183,846 21,436,021$ 24,617,009$ 20,682,348$ 21,974,956$ 21,698,058$ 27,165,236$ Page 139 VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years 2017 2016 2015 2014*** Revenues Property Taxes 15,510,127$ 15,034,583$ 14,742,622$ 14,554,564$ Other Taxes 9,816,523 9,701,271 9,712,718 9,564,978 Licenses and Permits 1,763,982 326,177 1,330,769 207,312 Intergovernmental 3,043,453 11,843,812 1,931,512 11,081,081 Fines and Forfeitures 330,475 3,025,628 350,042 1,803,317 Charges for Services 11,709,919 1,504,400 12,271,219 1,371,779 Investment Income 153,816 65,600 25,061 107,765 Miscellaneous 1,456,876 1,610,746 1,404,841 2,107,628 Total Revenue 43,785,171 43,112,217 41,768,784 40,798,424 Expenditure Current General Government 5,774,748$ 5,693,142$ 5,084,772$ 5,522,549 Public Safety 25,776,184 27,407,019 25,237,115 22,773,535 Public Works 8,101,888 6,978,307 8,092,735 10,878,278 Capital Outlay 1,362,213 8,252,604 2,828,194 2,018,451 Debt Service Principal 1,275,000 525,000 510,000 790,000 Interest 401,609 371,456 296,747 313,665 Other Charges - - - - Total Expenditures 42,691,642 49,227,528 42,049,563 42,296,478 Excess (Deficiency) of Revenues over Expenditures 1,093,529 (6,115,311) (280,779) (1,498,054) Other Financing Sources (Uses) Transfers In 4,204,943$ 3,402,595$ 3,521,760$ 2,552,288 Transfers Out (3,192,426) (2,253,984) (2,686,312) (1,481,564) Sales of capital assets 28,758 1,385 1,601 488 Auction Proceeds - - - - Bond Issued - 6,125,000 - - Premium on Issuance of Debt - 100,778 - - Transfer to Escrow Agent - - - - Total Other Financing Sources (Uses) 1,041,275 7,375,774 837,049 1,071,212 Net Change in Fund Balance 2,134,804$ 1,260,463$ 556,270$ (426,842) Debt Service as a Percentage of Non-Capital Expenditures 4.24% 2.19% 2.06% 2.68% *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 140 2013 2012**2011 2010 2009 2008 14,504,750$ 14,330,407$ 14,458,248$ 13,657,589$ 12,504,508$ 12,058,815$ 19,240,365 18,325,614 17,074,091 17,614,705 14,806,744 17,168,444 294,622 275,434 280,139 278,164 276,857 278,965 997,371 1,011,949 1,060,719 1,096,794 1,106,234 1,134,407 1,647,364 1,283,956 1,404,308 1,419,761 1,559,190 1,514,666 1,010,868 1,236,158 1,216,497 1,145,679 970,537 1,200,381 54,522 132,457 133,196 249,396 490,881 790,244 1,506,994 1,239,861 1,442,617 1,720,640 1,444,610 2,081,112 39,256,856 37,835,836 37,069,815 37,182,728 33,159,561 36,227,034 6,465,636 5,556,101 5,509,433 4,979,904 5,596,822 5,458,962 21,805,910 21,791,218 22,008,351 21,802,732 20,882,745 20,499,004 12,178,705 9,865,723 8,256,079 8,704,005 10,337,090 10,792,931 1,347,276 1,561,904 1,510,924 3,157,156 1,245,940 1,286,175 940,000 920,000 1,055,000 980,000 1,165,000 1,150,000 385,395 285,420 248,539 194,655 334,142 379,501 - - - 127,930 - - 43,122,922 39,980,366 38,588,326 39,946,382 39,561,739 39,566,573 (3,866,066) (2,144,530) (1,518,511) (2,763,654) (6,402,178) (3,339,539) 2,119,313 2,621,132 1,891,354 2,153,190 2,909,382 4,121,451 (1,434,235) (1,985,632) (1,338,354) (1,936,190) (1,974,382) (4,041,221) - 45 52,538 103,565 - - - 6,000,000 - 7,760,000 - - - 91,669 - 178,229 - - - - - (5,218,242) - - 685,078 6,727,214 605,538 3,040,552 935,000 80,230 (3,180,988) 4,582,684 (912,973) 276,898 (5,467,178) (3,259,309) 3.17% 3.14% 3.52% 3.19% 3.91% 4.00% Page 141 VILLAGE OF BUFFALO GROVE, ILLINOIS Assessed and Actual Value of Taxable Property Last Ten Levy Years Tax Levy Residential Commercial Industrial Other Year Property Property Property Property 2017 * 1,342,197,928$ * 315,723,608$ * 3,900,196$ * 628,731$ 2016 1,249,925,407 302,093,041 3,611,330 636,718 2015 1,191,523,466 297,951,249 3,377,285 631,771 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 *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 142 Estimated Estimated Total Assessed Total Direct Actual Taxable Actual Taxable Value Tax Rate Value Value (%) * 1,662,450,463$ * 0.9545 * 4,987,351,389$ * 33.333% 1,556,266,496 1.0363 4,668,799,488 33.333% 1,493,483,771 1.0110 4,480,451,313 33.333% 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% Page 143 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 2017 2016 2015 2014 2013 Lake County Village of Buffalo Grove 0.908 0.921 0.955 0.993 0.983 County, including Forest Preserve 0.809 0.825 0.871 0.893 0.881 Combined School Districts (102, 125, 532) 6.634 6.680 7.034 7.164 7.068 Buffalo Grove Park District 0.482 0.492 0.517 0.553 0.537 Vernon Area Public Library 0.291 0.293 0.308 0.317 0.311 All Other (3) 0.099 0.104 0.110 0.113 0.105 Total (5) 9.223 9.315 9.794 10.033 9.885 -0.99%-4.90%-2.38%1.50%3.12% Cook County Village of Buffalo Grove N/A 1.138 1.316 1.235 1.211 County, including Forest Preserve N/A 0.596 0.621 0.126 0.125 Metropolitan Water Reclamation District of Greater Chicago N/A 0.406 0.426 0.430 0.417 Combined School Districts (21, 214, 512) N/A 7.909 8.989 8.657 8.053 Buffalo Grove Park District N/A 0.606 0.714 0.677 0.658 Indian Trails Public Library District N/A 0.476 0.534 0.529 0.504 All Other (4) N/A 0.073 0.130 0.094 0.129 Total (6) N/A 11.204 12.730 11.748 11.097 Percentage Change Year -to-Year N/A -11.99%8.36%5.86%9.68% Notes: 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. N/A - Not Yet Available Data Source Cook County Tax Extension Lake County Tax Extension (6) Representative tax rates for other government units are from Cook County Tax Code 38077, which represents the largest portion of the Village's 2016 EAV within Cook County. (4) Includes Northwest Mosquito Abatement, Consolidated Elections, Road and Bridge, and General Assistance for the Township herein. (5) Representative tax rates for other government units are from Vernon Township Tax Code 16- 92, which the largest portion of the Village's 2017 EAV. Page 144 2012 2011 2010 2009 2008 0.929 0.852 0.797 0.750 0.665 0.820 0.755 0.703 0.664 0.652 6.779 6.158 5.610 5.301 5.102 0.511 0.452 0.425 0.351 0.370 0.441 0.385 0.315 0.301 0.222 0.106 0.092 0.102 0.094 0.092 9.586 8.694 7.952 7.461 7.103 10.26%9.33%6.58%5.04%-1.31% 1.030 0.886 0.810 0.691 0.670 0.594 0.520 0.474 0.464 0.466 0.370 0.320 0.274 0.261 0.252 6.917 6.565 5.792 5.103 5.004 0.557 0.479 0.439 0.371 0.376 0.463 0.393 0.347 0.307 0.308 0.187 0.107 0.071 0.068 0.067 10.118 9.270 8.207 7.265 7.143 9.15%12.95%12.97%1.71%-9.64% Page 145 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Property Taxpayers Current Fiscal Year and Eight Years Ago 2017 Percentage of Total Village Equalized Taxable Assessed Assessed Taxpayer Valuation Rank Valuation Chevy Chase Business Park Ltd $21,759,899 1 1.309% Hamilton Partners(1) 11,468,682 2 0.690% Penobscot Management LLC(3) 9,436,975 3 0.568% Millbrook 9,167,002 4 0.551% Buffalo Grove STE 106 8,674,553 5 0.522% Leider Lane Investors LLC 8,630,563 6 0.519% Arthur J. Rogers and Company (4) 8,229,224 7 0.495% BRI 1862 Riverwalk LLC (5) 8,145,927 8 0.490% Riverwalk South LLC(2) 7,819,608 9 0.470% Resource Real Estate Inc 6,589,815 10 0.396% Amli at Chevy Chase, LP - - Remax Consumers Plastics, Inc - - Inland Wooland LLC - - NTL Shopping Plaza Inc - - $99,922,248 6.010% (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 (5) Previously Riverwalk II LLC Data Source: Office of the County Clerk of Cook Office of the County Clerk of Lake Note: Every effort was made to seek out and report the largest taxpayers. However, many of the taxpayers contain multiple parcels, and it is possible that some parcels and their valuations have been overlooked. Page 146 2009 Percentage of Total Village Equalized Equalized Assessed Assessed Valuation Rank Valuation $18,960,235 2 1.010% 12,986,131 3 0.690% 9,405,158 5 0.500% 11,978,786 4 0.640% - 0.000% - 0.000% 9,012,393 7 0.480% - 0.000% 9,241,551 6 0.490% - 0.000% 22,307,549 1 1.190% 7,355,354 8 0.390% 6,895,030 9 0.370% 6,587,600 10 0.350% $114,729,787 6.110% Page 147 VILLAGE OF BUFFALO GROVE, ILLINOIS Property Tax Levy and Collections Last Ten Fiscal Years Lake County Cook County Collected within the Collected within the Fiscal Year After the Levy Fiscal Year After the Levy Levy Tax Percentage Tax Percentage Year Levied Amount of Levy Levied Amount of Levy 2016 11,783,047$ 11,761,365$ 99.82% 3,811,228$ 3,748,763$ 98.36% 2015 11,678,742 11,426,115 97.84% 3,514,106 3,608,468 102.69% 2014 11,339,326 11,322,087 99.85% 3,500,800 3,409,452 97.39% 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% Data Source: Office of the County Clerk Page 148 Village Total Percentage Collected of Levy 15,510,127$ 99.46% 15,034,583 98.96% 14,731,539 99.27% 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% Page 149 VILLAGE OF BUFFALO GROVE, ILLINOIS Sales Tax Revenue and Number of Principal Payers Revenue By Category Last Ten Calendar Years 2017 2016 2015 2014 General Merchandise -$ 86,125$ 66,228$ * 9,098$ Food 1,557,474 1,481,195 1,552,983 1,080,556 Drinking and Eating Places 1,107,878 1,118,330 1,062,206 1,023,545 Apparel 68,075 92,409 94,538 104,229 Furniture, Households and radio 380,907 369,583 521,007 356,095 Lumber, Building and Hardware 2,357,551 2,074,008 1,879,818 1,666,708 Automotive Filling Stations 1,007,356 867,250 918,216 947,278 Drugs and Miscellaneous Retail 1,568,024 1,986,578 1,790,381 2,349,469 Agriculture and All Other 2,573,323 2,231,299 2,313,502 1,693,506 Manufacturers 200,727 220,927 351,808 270,063 10,958,408$ 10,550,687$ 10,550,687$ 9,500,547$ Total Number of Payers 1,036 1,022 1,043 974 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 150 Calendar Year 2013 2012 2011 2010 2009 2008 10,105$ 17,526$ 18,514$ 3,901$ 4,637$ 5,819$ 1,133,605 1,193,312 1,244,667 1,362,170 1,357,378 1,415,835 1,025,547 997,738 921,617 933,212 941,804 906,628 120,210 130,163 129,402 128,663 112,951 104,376 463,678 *437,774 378,836 415,396 223,008 521,316 1,236,689 812,434 534,413 402,483 716,935 1,379,764 857,713 954,996 853,864 959,870 1,222,500 1,177,121 1,915,937 1,847,550 1,982,824 1,431,121 1,432,484 1,285,513 1,572,248 1,347,303 1,193,620 1,062,978 1,257,806 2,082,955 285,848 334,442 378,326 379,893 399,141 390,034 8,621,580$ 8,073,238$ 7,636,083$ 7,079,687$ 7,668,644$ 9,269,361$ 972 966 1,286 997 975 1,002 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Page 151 VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Sales Tax Rates Last Ten Fiscal years State of Village Village Illinois Fiscal Direct Home Rule Sales Tax Year Rate Rate Rate 2017 1.00% 1.00% 6.50% 2016 1.00% 1.00% 6.50% 2015 1.00% 1.00% 6.50% 2014 1.00% 1.00% 6.50% 2013 1.00% 1.00% 6.50% 2012 1.00% 1.00% 6.50% 2011 1.00% 1.00% 6.50% 2010 1.00% 1.00% 6.50% 2009 1.00% 1.00% 6.50% 2008 1.00% 1.00% 6.50% *Transitional fiscal year May 1, 2007 through December 31, 2007 Data Source: Illinois Department of Revenue Page 152 VILLAGE OF BUFFALO GROVE, ILLINOIS Ratio of Outstanding Debt by Type Last Ten Years Governmental Activities General General Total Year Obligation Obligation IEPA Installment Primary Ended Bonds Bonds Loan Note Government 12/31/2017 14,581,706$ -$ 348,233$ 6,638,399$ 21,568,338$ 12/31/2016 15,881,408 - 366,060 6,894,447 23,141,915 12/31/2015 10,202,453 - 383,487 1,193,599 11,779,539 12/31/2014 10,730,503 - 400,519 - 11,131,022 12/31/2013 11,340,000 - 173,618 - 11,513,618 12/31/2012 12,280,000 - - - 12,280,000 12/31/2011 7,200,000 - - - 7,200,000 12/31/2010 8,255,000 - - - 8,255,000 12/31/2009 6,575,000 - - - 6,575,000 12/31/2008 7,740,000 - - - 7,740,000 *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 153 Ratio of Total Outstanding Debt Debt to Total Outstanding Equalized Outstanding as a Percentage Assessed Debt of Personal Valuation Per Capita (1)Income 0.43% 523.17 1.11% 0.50% 557.64 1.19% 0.26% 283.82 0.61% 0.26% 265.11 0.57% 0.27% 275.59 0.61% 0.27% 290.10 0.65% 0.14% 171.79 0.39% 0.16% 198.93 0.45% 0.12% 156.62 0.36% 0.14% 183.54 0.44% Page 154 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) 2017 14,581,706$ -$ 14,581,706$ 0.29% 353.70 2016 15,881,408 - 15,881,408 0.34% 382.68 2015 10,202,453 - 10,202,453 0.23% 245.82 2014 10,730,503 - 10,730,503 0.25% 255.57 2013 11,340,000 - 11,340,000 0.27% 271.43 2012 12,280,000 19,527 12,260,473 0.27% 289.64 2011 7,200,000 12,543 7,187,457 0.14% 171.49 2010 8,255,000 20,271 8,234,729 0.15% 198.45 2009 6,575,000 (12,970) 6,587,970 0.12% 156.93 2008 7,740,000 33,167 7,706,833 0.14% 182.76 *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 155 VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Governmental Activities Debt As of December 31, 2017 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 30,255,000$ 18.68% 5,650,897$ Kildeeer Countryside Community Consolidated #96 - 38.30% - Aptakisic-Tripp Community Consolidated #102 17,870,000 76.70% 13,706,920 Lincolnshire-Half Day District #103 6,010,000 12.08% 726,127 Adlai E. Stevenson H.S. District # 125 3,455,000 37.35% 1,290,393 Wheeling Township H.S. District #214 39,325,000 3.92% 1,541,928 Harper Community College #512 126,895,000 2.03% 2,571,993 College of Lake County #532 30,895,000 5.37% 1,659,542 Total School Districts 254,705,000 27,147,800 Other Than School Districts Lake County 180,270,000 5.10% 9,201,540 Lake County Forest Preserve 255,895,000 5.10% 13,061,674 Cook County 3,085,186,750 0.23% 7,203,864 Cook County Forest Preserve 149,290,000 0.23% 348,590 Metropolitan Water Reclamation District 2,377,123,381 0.24% 5,658,246 Buffalo Grove Park District 14,100,000 97.62% 13,764,265 Wheeling Park District 8,995,000 7.65% 688,248 Total Other than School Districts 6,070,860,131 49,926,427 Total Overlapping Debt 6,325,565,131 77,074,227 Total Village of Buffalo Grove Direct Debt 14,581,706 100.00% 14,581,706 Total Direct and Overlapping Debt 6,340,146,837$ 91,655,933$ *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 156 VILLAGE OF BUFFALO GROVE, ILLINOIS Schedule of Legal Debt Margin December 31, 2017 Under the 1970 Illinois Constitution, there is no legal limit for home rule municipalities except as set by the General Assembly. Page 157 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 2017 41,226 1 1,662,450,463$ 40,325 1,938,570,198$ 47,023 4 5.7% 2016 41,500 E 1,614,251,028 38,898 1,949,794,500 46,983 4 4.3% 2015 41,503 E 1,475,693,765 35,985 1,930,595,051 46,517 1 4.2% 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% A - Actual 1- US Census Website E - Estimate 2- Northern Illinois University Estimate 3 - American Community Survey 3 Year Estimates 4- Illinois Department of Employment Security *Transitional fiscal year May 1, 2007 through December 31, 2007 ** Estimate for Cook County EAV Data Source: U.S. Department of Labor, Bureau of Labor Statistics U.S. Census Bureau Page 158 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Village Employers Current Year and Nine Years Ago 2017 2008 Percent Percent of Total of Total Village Village Employer Employees Rank Population Employees Rank Population Siemens Building Technologies 1,800 1 4.37% 1,030 1 2.31% I.S.I. 1,200 2 2.91% ESS 550 3 1.33% Plexus Corporation 370 4 0.90% 400 5 0.90% Veritas Document Solutions 300 5 0.73% ARxIUM, Inc (1) 200 6 0.49% Vapor Bus Direct 200 7 0.49% Leica Microsystems, Inc 200 8 0.49% Crosscom National LLC 170 9 0.41% Eagle Test Systems, Inc 150 10 0.36% 266 7 0.60% MNJ Technologies 150 10 0.36% The Salem Group. Inc. 150 10 0.36% Wes-Tech Automation Solutions, LLC 150 10 0.36% Allstate Insurance Company 996 2 2.24% Rexam 756 3 1.70% Dominicks Finer Foods (3 locations) 483 4 1.09% Harris Trust & Savings Bank 350 6 0.79% Federal Express 250 8 0.56% Baxter Global Technical Services 250 9 0.56% Village of Buffalo Grove 245 10 0.55% Data Source: Sources: 2018 Illinois Manufacturing Directory 2018 Illinois Services Directory and a selective telephone survey (1) Previously Intelligent Hospital Solutions Page 159 VILLAGE OF BUFFALO GROVE, ILLINOIS Full-Time Equivalent Employees Last Ten Years Function/Program 2017 2016 2015 2014 General Government Administration Village Managers Office 5.5 5.0 6.0 7.5 Planning - - - 1.5 Information Technology - - - 3.0 Finance 9.0 9.0 8.0 10.0 Building and Zoning 14.0 12.0 12.0 9.5 Public Safety Police Full-Time Police Officers 61.0 63.0 63.0 63.0 Community Service Officers 2.0 3.0 3.0 3.0 Civilians 16.0 15.5 15.0 15.0 Fire Full-time Firefighters/Paramedics 58.0 59.0 59.0 58.0 Civilians 4.5 1.0 1.0 1.5 Public Works Public Works Administration 12.0 6.0 6.0 6.0 Streets/Forestry 20.0 20.0 20.0 18.5 Water/Sewer 12.0 9.0 10.0 9.0 Central garage 5.5 5.5 5.5 5.5 Building Maintenance 4.5 6.0 6.0 6.0 Recreation Administration 2.0 3.0 19.5 19.5 Grounds Maintenance - - 11.5 11.5 226.0 217.0 245.5 248.0 Recreation Seasonal 25.0 24.5 24.5 24.5 Data Source: Village Finance Department Page 160 2013 2012 2011 2010 2009 2008 5.5 4.5 4.0 4.0 4.5 5.0 1.5 1.5 1.5 1.5 1.5 1.5 3.5 3.5 3.5 3.5 3.5 3.5 9.5 8.5 8.5 8.5 9.0 9.5 10.0 10.0 10.0 10.0 10.0 10.5 64.0 69.0 69.0 69.0 71.0 71.0 3.0 3.0 3.0 3.0 3.0 3.0 17.0 16.5 17.5 17.5 20.5 21.5 58.0 62.0 62.0 62.0 62.0 62.0 3.5 3.5 6.0 6.0 6.0 6.0 5.0 11.0 11.0 12.0 12.0 14.5 18.5 20.0 20.0 20.0 20.0 20.0 8.0 13.0 13.0 13.0 13.0 14.0 5.5 5.5 5.5 5.5 5.5 5.0 4.0 4.0 4.0 4.0 4.0 4.0 18.0 13.5 13.5 13.5 13.5 13.5 16.0 15.0 15.0 15.0 15.0 15.0 250.5 264.0 267.0 268.0 274.0 279.5 24.5 34.0 34.0 34.0 34.0 34.0 Page 161 VILLAGE OF BUFFALO GROVE, ILLINOIS Operating Indicators Last Ten Fiscal Years Function/Program 2017 2016 2015 2014 General Government Building and Zoning Building Permits Issued 2,567 2,957 2,582 2,833 Building Inspections Conducted 6,692 9,053 11,625 7,074 Property Maintenance Inspections Conducted 1,954 2,160 1,894 3,172 Public Safety Police Physical Arrests 441 521 809 886 Parking Violations 6,781 5,754 3,766 3,634 Traffic Violations 5,310 6,054 7,969 8,349 DUI Arrests 87 74 97 154 Vehicle Crashes 1,294 1,473 363 1,429 Fire Ambulance Calls/EMS 3,201 3,160 3,123 3,385 Service Calls 293 309 340 1,245 Fire Calls 1,082 1,279 1,585 821 Auto Aid/Mutual Aid 1,045 987 1,055 1,063 Public Works Streets Street Resurfacing (Miles) 2.76 11.40 2.45 3.28 Parks and Recreation Park Sites 46 46 46 46 Golf Course - Combined Golf Rounds Played - Paid 51,138 53,599 68,602 54,689 Water New Connections (Tap-ons) 3 19 23 9 Average Daily consumption (1) 3.23 3.60 3.39 3.58 Peak Daily consumption (1) 5.98 5.54 5.14 5.40 (1) - Millions of Gallons N/A - Not Available Data Source: Various Village Departments Page 162 2013 2012 2011 2010 2009 2008 2,651 2,206 1,930 1,959 1,922 1,746 7,456 15,858 9,661 7,088 6,633 5,054 3,288 5,828 3,462 3,158 2,348 2,159 759 671 820 981 989 1,085 2,984 3,341 2,031 2,062 3,267 3,451 13,171 10,826 11,867 11,999 11,373 15,795 124 107 164 222 267 337 1,507 1,260 1,396 1,391 1,414 1,786 2,613 2,789 2,568 2,743 2,553 2,590 483 487 1,053 610 718 751 865 698 737 735 774 881 654 680 676 654 672 689 10.84 5.51 2.90 3.00 4.94 4.94 46 46 46 46 46 46 53,639 59,937 56,918 52,740 59,723 58,097 27 15 12 50 7 25 3.70 3.92 4.09 4.30 4.21 4.09 6.20 7.93 7.84 7.30 7.29 7.03 Page 163 VILLAGE OF BUFFALO GROVE, ILLINOIS Capital Asset Statistics Last Ten Fiscal Years Function/Program 2017 2016 2015 2014 Public Safety Police Stations 1 1 1 1 Patrol Units 31 29 30 29 Fire Stations 3 3 3 3 Fire Apparatus 20 20 20 20 Public Works Streets Street (Miles) 114.02 118.22 118.20 118.20 Streetlights 2,790 2,789 2,789 2,786 Water Water Mains 181.97 181.31 181.14 180.90 Fire Hydrants 2,514 2,501 2,493 2,487 Wastewater Sanitary Sewers 139.96 139.92 139.92 139.80 Data Source: Various Village Departments Page 164 2013 2012 2011 2010 2009 2008 1 1 1 1 1 1 28 34 36 36 36 36 3 3 3 3 3 3 21 21 21 21 21 20 117.70 117.70 117.70 117.70 117.70 117.50 2,778 2,778 2,778 2,745 2,743 2,714 180.30 180.25 180.25 179.83 179.82 180.63 2,477 2,475 2,475 2,475 2,474 2,474 139.30 139.27 139.27 139.27 139.27 139.24 Page 165