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HomeMy WebLinkAbout2018 CAFRVILLAGE OF BUFFALO GROVE, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 VILLAGE OF BUFFALO GROVE, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 Prepared by: Finance Department and General Services Scott Anderson Director of Finance Director and General Services VILLAGE OF BUFFALO GROVE, ILLINOIS TABLE OF CONTENTS 1 2 Letter of Transmittal 3 -6 7 INDEPENDENT AUDITORS' REPORT 8 -9 MANAGEMENT’S DISCUSSION AND ANALYSIS 10 -25 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 26 -27 Statement of Activities 28 -29 Fund Financial Statements Balance Sheet – Governmental Funds 30 -31 Reconciliation of Total Governmental Fund Balance to the Statement of Net Position – Governmental Activities 32 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 33 -34 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities – Governmental Activities 35 Statement of Net Position – Proprietary Funds 36 -37 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 38 -39 Statement of Cash Flows – Proprietary 40 -41 Statement of Fiduciary Net Position 42 Statement of Changes in Fiduciary Net Position 43 Notes to Financial Statements 44 -106 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Employer Contributions Illinois Municipal Retirement Fund 107 Police Pension Fund 108 Firefighters' Pension Fund 109 FINANCIAL SECTION PAGE INTRODUCTORY SECTION List of Principal Officials Organizational Chart Certificate of Achievement for Excellence in Financial Reporting VILLAGE OF BUFFALO GROVE, ILLINOIS TABLE OF CONTENTS REQUIRED SUPPLEMENTARY INFORMATION – Continued Schedule of Changes in the Employer's Net Pension Liability Illinois Municipal Retirement Fund 110 -111 Police Pension Fund 112 -113 Firefighters’ Pension Fund 114 -115 Schedule of Investment Returns Police Pension Fund 116 Firefighters’ Pension Fund 117 Schedule of Changes in the Employer's Total OPEB Liability Retiree Benefit Plan 118 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual General Fund 119 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Facilities Development - Capital Projects Fund 120 Street Maintenance - Capital Projects Fund 121 Combining Balance Sheet - Nonmajor Governmental Funds 122 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds 123 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Motor Fuel Tax - Special Revenue Fund 124 Metra Parking Lot - Special Revenue Fund 125 Debt Service Fund 126 Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual Waterworks and Sewerage - Enterprise Fund 127 -128 Arboretum Golf - Enterprise Fund 129 -130 Combing Statement of Net Position - Nonmajor Enterprise Funds 131 -132 Combining Statement of Revenues, Expenses and Changes in Net Position Nonmajor Enterprise Funds 133 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 134 Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual Buffalo Grove Golf - Enterprise Fund 135 -136 Refuse Service - Enterprise Fund 137 Combining Statement of Net Position - Internal Service Funds 138 PAGE FINANCIAL SECTION – Continued VILLAGE OF BUFFALO GROVE, ILLINOIS TABLE OF CONTENTS COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES – Continued Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds 139 Combining Statement of Cash Flows - Internal Service Funds 140 Schedule of Revenues, Expenses and Changes in Fund Balance - Budget and Actual Information Technology - Internal Service Fund 141 Central Garage - Internal Service Fund 142 Building Maintenance - Internal Service Fund 143 Combining Statement of Fiduciary Net Position - Pension Trust Funds 144 Combining Statement of Changes in Fiduciary Net Position - Pension Trust Funds 145 Schedule of Changes in Fiduciary Net Position - Budget and Actual Police Pension - Pension Trust Fund 146 Firefighter's Pension - Pension Trust Fund 147 Schedule of Changes in Assets and Liabilities School and Park Donations - Agency Fund 148 Consolidated Year-End Financial Report 149 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards 150 -151 SUPPLEMENTAL SCHEDULES Long-Term Debt Requirements General Obligation Refunding Bonds of 2010A 152 General Obligation Bonds of 2010B 153 General Obligation Bonds of 2012 154 General Obligation Bonds of 2016 155 IEPA Loan Payable of 2013 - Pump Stations Improvements 156 Installment Note Payable of 2015 157 Net Position by Component – Last Ten Fiscal Years 158 -159 Changes in Net Position – Last Ten Fiscal Years 160 -161 Fund Balances of Governmental Funds – Last Ten Fiscal Years 162 -163 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years 164 -165 Assessed Value and Actual Value of Taxable Property – Last Ten Tax Levy Years 166 -167 Direct and Overlapping Property Tax Rates – Last Ten Tax Levy Years 168 -169 STATISTICAL SECTION (Unaudited) PAGE FINANCIAL SECTION – Continued VILLAGE OF BUFFALO GROVE, ILLINOIS TABLE OF CONTENTS Principal Property Tax Payers – Current Tax Levy Year and Nine Fiscal Years Ago 170 Property Tax Levies and Collections – Last Ten Tax Levy Years 171 Taxable Sales by Category – Last Ten Calendar Years 172 -173 Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years 174 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 175 -176 Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years 177 Schedule of Direct and Overlapping Governmental Activities Debt 178 Schedule of Legal Debt Margin 179 Demographic and Economic Statistics – Last Ten Fiscal Years 180 Principal Employers – Current Fiscal Year and Nine Fiscal Years Ago 181 Full-Time Equivalent Government Employees by Function/Program – Last Ten Fiscal Years 182 -183 Operating Indicators by Function/Program – Last Ten Fiscal Years 184 -185 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years 186 -187 STATISTICAL SECTION (Unaudited) - Continued PAGE INTRODUCTORY SECTION This section includes miscellaneous data regarding the Village of Buffalo Grove, including: •List of Principal Officials •Organizational Chart •Letter of Transmittal •GFOA Certificate of Achievement for Excellence in Financial Reporting VILLAGE OF BUFFALO GROVE, ILLINOIS List of Principal Officials December 31, 2018 Beverly Sussman Janet M. Sirabian Village President Village Clerk Board of Trustees Jeffrey Berman Andrew Stein Joanne Johnson Lester Ottenheimer Eric Smith David Weidenfield 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 1 ORGANIZATIONAL CHART Residents of Buffalo Grove Village Board Village Manager Community Development Building and Zoning Environmental Health Planning and Economic Development Police Department Patrol Investigations Youth Services Police Records Fire Department Emergency Medical Services Fire Suppression and Rescue Fire Prevention &Education Emergency Management Agency Office of the Village Manager Legal Human Resources Communications Information Technology Deputy Village Clerk Finance General Services Accounting Services Village Treasurer Golf Operations Public Works Engineering Building Maintenance Central Garage Streets Forestry & Grounds Water Sewer & Drainage Page 15 of 4242 VILLAGE OF BUFFALO GROVE April 29, 2019 The Honorable Beverly Sussman Members of the Village Board Citizens of the Village of Buffalo Grove The Comprehensive Annual Financial Report (CAFR) of the Village of Buffalo Grove for the year ended December 31, 2018 is submitted herewith. This report represents a comprehensive picture of the Village’s financial activities during Fiscal Year 2018 and the financial condition of its various funds at December 31, 2018. State law requires that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audit in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Management assumes full responsibility for the completeness and reliability of all of the information presented in the report based upon a comprehensive internal control framework. Because the cost of internal controls should not outweigh their benefits, the Village’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. Lauterbach & Amen, Independent Certified Public Accountants, have issued an unmodified (clean) opinion on the Village’s financial statements for the fiscal year ended December 31, 2018. The independent auditors’ report is presented at the front of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management’s Discussion and Analysis (MD&A). The letter of transmittal is designated to complement the MD&A and should be read in conjunction with it. The Village of Buffalo Grove’s MD&A can be found immediately following the report of the independent auditors. Profile of the Village of Buffalo Grove The Village of Buffalo Grove was incorporated March 7, 1958, and is located approximately 29 miles northwest of the downtown of the City of Chicago. The Village resides in both Cook and Lake Counties and spans 9.2 square miles and, based on the 2010 U.S. Census, serves a population of 41,496. The Village of Buffalo Grove is empowered to levy a property tax on real property located within its boundaries. It is also empowered by state statute to extend its corporate limits by annexation, which it has done from time to time. The Village became a home rule unit by referendum on July 1, 1980, giving it additional powers to tax and regulate in ways not specifically granted, or prohibited, by the Illinois Constitution. As a home rule entity, the Village has no tax rate or debt limits, nor is it required to conduct a referendum to authorize the issuance of debt or to increase property taxes. The Village operates under a Council/Manager form of government. Policy making and legislative authority are vested with the Village Board, which consists of a President and a six member Board of Trustees. The Village Board is responsible for passing ordinances and resolutions, adopting the annual budget, appointing committees, and hiring the Village’s Manager and Attorney. The Village Manager is responsible for carrying out the policies, ordinances and resolutions of the Village Board, developing and presenting an annual budget, overseeing the day-to-day operations of the Village, and appointing department directors. Department of Finance & General Services Fifty Raupp Blvd. Buffalo Grove, IL. 60089-2100 Phone 847-459-2500 Fax 847-459-0332 3 The Village provides a full range of services including police and fire protection, construction and maintenance of streets and infrastructure, planning and zoning, water and sewer utilities, and general administrative services. The Village also operates two golf courses and a municipal commuter parking lot. To provide these services there were 214 full-time and 56 part-time/seasonal positions in the Fiscal Year 2018 annual budget. Budgetary Control and Accounting Systems The annual budget serves as the foundation for the Village’s financial planning and as a management spending control document. All departments of the Village of Buffalo Grove are required to submit budget requests by a specified date each year. These requests serve as the starting point for budget development. The proposed budget is presented to the Village Board in November and adopted by ordinance in December concurrently with the property tax levy. Legal spending thresholds are established through the annual budget under the budget officer method. The Village Board is required to hold a public hearing on the budget document and must adopt a final budget no later than December 31st of each year. The budget is prepared by fund, and department program. Department directors may make transfers of budget allocations within a department. Transfers of budget allocations between fund/account groups, however, require the approval of the Village Board. All budget adjustments must be approved by the Village Board to amend the legal spending thresholds. The accounts of the Village are organized on the basis of funds, each of which is considered a separate and distinct accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. Revenues are allocated to and accounted for in individual funds based upon the purpose for which they are to be expended and the means by which spending activities are controlled. The accounting records for general governmental operations are maintained on the modified accrual basis, with revenues being recorded when available and measurable and expenditures being recorded when the material or services are received and the liability is incurred. Accounting records for the Village’s enterprise funds, internal service funds, agency funds and pension trust funds are maintained on the accrual basis of accounting. Factors Affecting Financial Condition Local Economy The Village is primarily residential, with supporting commercial activity and limited industrial and manufacturing activity. There are approximately 807 licensed businesses operating in the Village. The majority of residents are employed in management, professional, sales and office occupations. The Village’s unemployment statistics have consistently beat the national and state averages, with an unemployment rate at the end of the year at 3.4 percent besting the state by 0.9 percent. External economic factors at the national and state level continue to impact the Village’s revenue profile and, subsequently its ability to manage operating and capital resources. · Property tax collections totaled $15,980,771 which is an increase from the previous year’s total of $15,510,127, an increase of 3.0 percent. · Water and Sewer collections increased from $11,060,938 in 2017 to $11,140,843 in 2018. A total increase of 0.7 percent. · Sales taxes, both state shared and home rule, generated $10,159,866 in 2018 versus $9,229,253 in 2018, an increase of 10.1 percent. The Village equalized assessed valuation increased by $46 million or 2.8 percent to $1.66 billion in the 2017 levy year. The increase is due primarily to the triennial and quadrennial assessments in Lake and Cook Counties respectively. 4 The unassigned fund balance of the General Fund will again exceed the 25 percent threshold of the subsequent year’s budgeted expenditures, less non-operating transfers, which is policy established by the Village Board. Unassigned Budgeted Fiscal Year Ended Fund Balance Expenditures Percent December 31, 2010 $ 9,563,655 $29,266,181 32.68% December 31, 2011 $ 9,872,594 $29,271,054 33.73% December 31, 2012 $10,302,515 $29,768,828 34.61% December 31, 2013 $12,395,113 $35,511,109* 34.90% December 31, 2014 $13,225,644 $37,083,251 35.67% December 31, 2015 $14,991,907 $38,165,617 39.29% December 31, 2016 $16,143,726 $39,177,439 41.21% December 31, 2017 $18,902,476 $39,477,439 47.88% December 31, 2018 $17,039,974 $40,696,116 41.87% * Budget number includes employer pension costs beginning in FY 2013. Long-Term Financial Planning The Village compiles a General Fund Five-Year Financial Forecast annually which provides an analysis of future revenue and expenditures. This report is completed in tandem with the start of the annual budget process. Other long-range financial plans include the five-year Capital Improvement Plan, Twenty-Year Water Fund Pro-Forma, and a Twenty-Year Storm Sewer Pro Forma. The Village assesses its capital needs through the Capital Improvement Plan (CIP) update. This document is a planning tool to identify short and medium term capital needs (facilities, infrastructure and roadways) and measure those demands against the Village’s ability to pay. For a project to be incorporated into the CIP, it must involve the creation, improvement, or acquisition of a tangible asset with an original cost of at least $25,000. Within the next five years it is anticipated that the Village will require nearly $48.4 million in capital improvements. Transportation-related projects represent a large percentage of the improvements at $28.3 million. Routine maintenance of existing streets accounts for $20 million of those projects. Approximately $12.9 million is allocated to improving and maintaining the water utility system. The Twenty-Year Water Fund Pro-Forma provides an overview of the Water Fund and adequacy of the current water rate to fund operating expenses and infrastructure improvements as well as generating a reserve to continue with a pay-as-you-go approach to capital budgeting. The Reserve for Capital Replacement Funding Report lists all Village owned vehicles, the service life, and its respective reserve balance. Major Initiatives In 2018, the Village of Buffalo Grove issued over 2,500 commercial and residential building permits. These permits represent a total project valuation of over $50,000,000 invested into the Buffalo Grove community. In addition to building permit activity, the following major projects were approved in 2018: Woodman’s Food Markets and Shorewood Development Group opened a 25-acre commercial development at the western corners of Deerfield Parkway and Milwaukee Avenue. The development is anchored by a 242,000 square foot Woodman’s Food Market located on the northwest corner of the intersection. Woodman’s also opened a fuel center, convenience store, quick lube and carwash on the north side of Deerfield Parkway. In conjunction with the aforementioned Woodman’s project, Shorewood Development Group is planning the Shops of Buffalo Grove. This development comprises seven acres at the southwest corner of Deerfield Road 5 6 7 FINANCIAL SECTION This section includes: • Independent Auditors’ Report • Management’s Discussion and Analysis • Basic Financial Statements • Required Supplementary Information • Combining and Individual Fund Statements and Schedules • Supplemental Schedules INDEPENDENT AUDITORS’ REPORT This section includes the opinion of the Village’s independent auditing firm. 8 INDEPENDENT AUDITORS' REPORT April 29, 2019 The Honorable Village President Members of the Board of Trustees Village of Buffalo Grove, Illinois 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, 2018, and the related notes to the financial statements, which collectively comprise the Village’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Village’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’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Buffalo Grove, Illinois, as of December 31, 2018, 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. 9 Village of Buffalo Grove, Illinois April 29, 2019 Page 2 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis as listed in the table of contents and budgetary information reported in 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Buffalo Grove, Illinois’ basic financial statements. The introductory section, combining and individual fund financial statements and budgetary comparison schedules, supplemental schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and budgetary comparison schedules and supplemental schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and budgetary comparison schedules and supplemental schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have 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 them. Lauterbach & Amen, LLP LAUTERBACH & AMEN, LLP MANAGEMENT’S DISCUSSION AND ANAYLSIS VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 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, 2018. This information presented here should be considered in conjunction with additional information provided in the letter of transmittal, which is found on pages 3 - 6. Financial Highlights · The assets and deferred outflows of the Village exceeded its liabilities and deferred inflows at December 31, 2018 by $58.0 million (net position). The Net Position for governmental activities is $9.9 million or 17.1 percent of the total, and business-type activities account for $48.1 million. Of this amount, ($29.8) million is unrestricted, the negative amount of unrestricted assets is directly related to the recognition of all retirement obligations in noncurrent liabilities, which increased to $88.6 million from $74.0 million in 2017. · The Village’s total debt decreased by $1.2 million (or 5.7 percent). Total general bonded debt outstanding is $13.1 million as of December 31, 2018. The Village retired the line of credit for the Emerald Ash Borer Project in fiscal year 2018. The General Fund transferred $5.7 million from fund balance to the Capital Projects Fund. · The Village’s net position decreased by $0.3 million (or less than one percent) during the fiscal year ending December 31, 2018. The governmental net position decreased by $1.3 million (11.3 percent) and the business-type activities net position increased by $1.0 million (2.1 percent). · As of December 31, 2018, the Village of Buffalo Grove’s General Fund reported ending fund balances of $24.6 million, a decrease of $2.4 million from the prior year. Of this amount, $17.0 million was unassigned. · Beginning net position was restated due to the Village implementing GASB Statement No. 75. 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 26 - 29) 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 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). 10 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 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 30 - 35) 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, Facilities Development, and Street Maintenance 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 36 - 41) 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 36 - 41 of this report. 11 12 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 Fiduciary Funds (see pages 42 - 43) 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 - 106 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 retiree benefit plans to its employees. Required supplementary information can be found on pages 107 - 119 of this report. Government-wide Financial Analysis The assets and deferred outflows of the Village of Buffalo Grove exceeded liabilities and deferred inflows by $58.0 million as of December 31, 2018. The largest portion of the Village’s net position reflects its net investment in capital assets ($85.9 million). 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. A portion of the Village’s net position ($1.9 million) represents resources that are subject to external restrictions on how they may be used, of that amount $1.2 million is restricted for contractual construction obligations for a road project. The remaining balance of unrestricted net position (($29.8) million) reduces total net position significantly due to GASB 68 and 75, which requires the Village to show the outstanding retirement obligations in noncurrent liabilities. The total decrease in unrestricted net position from the prior year is $4.6 million (18.3 percent). The Village’s combined net position decreased by $0.3 million as a result of governmental activities decreasing by $1.3 million and business-type activities increasing by $1.0 million. The net position of the Village’s governmental fund was $9.9 million. The Village’s unrestricted net position for governmental activities that are available for day-to-day financial operations were ($41.1) million compared to ($36.0) million at December 31, 2017. The net position of business-type activities was $48.1 million. The business type activities unrestricted net position increased by $0.5 million from the previous year. VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 Please refer to table below for condensed Statement of Net Position: 2018 2017 2018 2017 2018 2017 Assets Current / Other Assets $45.2 47.1 14.8 12.9 60.0 60.0 Capital Assets 62.3 61.9 43.5 43.8 105.8 105.7 Total Assets 107.5 109.0 58.3 56.7 165.8 165.7 Deferred Outflows 13.4 11.3 0.3 0.8 13.7 12.1 Total Assets/Deferred Outflows 120.9 120.3 58.6 57.5 179.5 177.8 Liabilities Current Liabilities 4.6 7.5 2.5 1.3 7.1 8.8 Non-Current Liabilities 81.3 65.6 7.3 8.4 88.6 74.0 Total Liabilities 85.9 73.1 9.8 9.7 95.7 82.8 Deferred Infows 25.1 28.3 0.7 0.2 25.8 28.5 Total Liabilities/ Deferred Inflows 111.0 101.4 10.5 9.9 121.5 111.3 Net Position: Net Investment in Capital Assets 49.1 53.3 36.8 36.8 85.9 90.1 Restricted 1.9 1.6 - - 1.9 1.6 Unrestricted (41.1) (36.0) 11.3 10.8 (29.8) (25.2) Total Net Position 9.9 18.9 48.1 47.6 58.0 66.5 Village of Buffalo Grove's Net Position (in Millions) Governmental Business-Type Activities Activities Total 13 14 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 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. 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 decrease in “Current and Other Assets” of $1.9 million is attributed to the $3.4 million pay off of a line of credit. The impact was lessened by increases in property taxes, $0.5 million, state sales tax, $0.4 million and home rule sales tax, $0.5 million. The Village experienced a decrease in receivables for real estate transfer taxes in 2018 due to a decrease in the housing stock available. The Village also experienced slight increases in utility and Telecommunication tax. Utility taxes were up about $0.3 million (12.0 percent), while Telecommunication was up $0.2 million (13.3 percent). Collectively Income and Use tax are up 8.3 percent, $0.4 million, year over year. The Village maintained capital improvement and asset purchases in 2018. 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: VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 2018 2017 2018 2017 2018 2017 Revenues Program Revenues Charges for Services $ 4.6 5.0 13.9 14.2 18.5 19.2 Grants / Contributions Operating 1.3 1.3 - - 1.3 1.3 Capital - 1.5 0.2 - 0.2 1.5 General Revenues Property Taxes 16.0 15.5 - - 16.0 15.5 Sales and Use Taxes 11.4 10.3 - - 11.4 10.3 Income Taxes 4.0 3.7 - - 4.0 3.7 Telecommunications Taxes 1.8 1.6 - - 1.8 1.6 Utility Taxes 2.8 2.5 - - 2.8 2.5 Property Transfer Taxes 1.0 1.3 - - 1.0 1.3 Other General Revenues 3.2 2.6 0.6 0.9 3.8 3.5 Total Revenues 46.1 45.3 14.7 15.1 60.8 60.4 Expenses General Government 7.6 6.6 - - 7.6 6.6 Public Safety 30.3 27.4 - - 30.3 27.4 Public Works 9.2 9.8 - - 9.2 9.8 Interest 0.3 0.4 - - 0.3 0.4 Water - - 10.1 9.4 10.1 9.4 Sewer - - 0.9 0.7 0.9 0.7 Golf - - 2.7 2.9 2.7 2.9 Total Expenses 47.4 44.2 13.7 13.0 61.1 57.2 Change in Net Position Before Transfers (1.3) 1.1 1.0 2.1 (0.3) 3.2 Transfers - 1.0 - (1.0) - - Change in Net Position (1.3) 2.1 1.0 1.1 (0.3) 3.2 Net Position - Beginning as Restated 11.2 16.8 47.1 46.5 58.3 63.3 Net Position - Ending 9.9 18.9 48.1 47.6 58.0 66.5 Governmental Business-Type Activities Activities Total Village of Buffalo Grove's Changes in Net Position (in Millions) 15 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 Normal Impacts Revenues Economic Condition – which can reflect a declining, stable or growing economic environment and has a substantial impact on property, sales, income, utility tax revenues as well as public spending habits for building permits, elective user fees and volumes of consumption. Increase/Decrease in the Village Approved Rates – while certain tax rates are set by statute, the Village has significant authority to impose and periodically increase/decrease rates (water, building and licensing fees, ambulance fee, etc.). Changing patterns in Intergovernmental and Grant Revenue – (both recurring and non-recurring) – certain recurring revenue (state shared revenues) may experience significant changes periodically while non-recurring (one-time) grants are less predictable and often distorting in their impact on year-to-year comparisons. Market Impact on Investment Income – the Village’s investment portfolio is structured to meet certain liabilities as they become due and the income generated is subject to market conditions that may cause the investment income to fluctuate. Expenses Changes in Authorized Personnel – changes in service demand may cause the Village to increase/decrease authorized staffing. Salary Increase (general wage adjustments and merit) – compensation adjustments to ensure the Village is able to attract and retain high level employees. Inflation – while overall inflation appears to be reasonably modest, the Village is a major consumer of certain commodities such as supplies, fuels, and parts. Some functions may experience unusual commodity-specific increases (e.g. fuel, road salt). Current Year Impacts Government Activities: Governmental activities decreased the Village’s net position by $1.3 million to $9.9 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, 2018 were $46.1 million an increase of $0.8 million or 1.8 percent. Property taxes continue to be the Village’s largest source of revenue (34.7 percent) at $16.0 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 47.8 percent of total governmental activities revenue. Property taxes increased by $0.5 million. The increase in the corporate agency tax levy collected in 2018 was 2.0 percent. The corporate levy for 2018, to be collected in 2019, is funding Police and Fire Protection. 16 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 The Police Protection levy increased $0.11 million (3.4 percent) and the Fire Protection Levy increased $0.15 million (2.8 percent). The total tax levy increased 3.0 percent in total. Sales and use tax increased by $1.1 million compared to the previous year. The growth in sales tax was 10.7 percent. Utility taxes are up $0.3 million, or 8.1 percent. The region experienced a cold extended winter, leading to more natural gas consumption than average. Income taxes continue to rebound increasing $0.3 million from FY 2017, an 8.1 percent jump. Property transfer taxes have plateaued after six years of consecutive growth due to an inadequate housing stock to meet demand, this revenue is down 23.1% or $0.3 million. Income tax and sales and use 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 $47.4 million, an increase of 7.2 percent from 2017 ($44.2 million). The largest increase was made in Public Safety expenses $2.9 million in 2018. Public Works expenses decreased by $0.6 million (6.1 percent) for a total of $9.2 million dollars. 17 18 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 The Statement of Activities on pages 28 - 29 shows that $4.6 million in revenue was generated to finance the services rendered by the user fees. Another 1.3 million in revenue was generated by operating and capital grants and other contributions that was expended for capital improvement. Business-Type Activities: Business-type activities net position increased by $1.0 million. Significant changes are noted below. Revenue: Water sales decreased $.3 million from the previous year. The total amount pumped was $1.28 billion gallons in 2017 versus 1.27 billion in 2018. The utility increased revenue with a 4 percent water rate increase. The decrease in water consumed was due to above average rain fall in 2018 and conservation efforts. Average water consumption continues to be at historic lows due to maturing landscapes, more efficient appliances, and resource conservation. The two golf courses generated $2.0 million in 2018, which is consistent with the 2017 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 $0.7 million or 5.4 percent. The Water Fund expenses increased by $0.7 million due to capital maintenance. Golf expenses were reduced in 2018 to $2.7 million in total, or decrease of 6.9 percent. 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. 19 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 The Village’s governmental funds for the year ended December 31, 2018 reflect a combined fund balance of $25.6 million on its balance sheet (pages 30 - 31). This represents a $0.7 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 $25.6 million, $16.8 million is unassigned indicating availability for future obligations. The 2018 unassigned fund balance increased by $1.6 million. The largest contributing factor is due to a decrease in total liabilities for the facilities development fund of over $3.4 million (92.9 percent). The liability retired was the line of credit for the Emerald Ash Borer Tree Replacements Village-wide. Nonspendable fund balance ($0.13 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 ($6.8 million) is to be used 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, 2018, the unassigned fund balance represents 41.5 percent of the FY 2019 operating budget. The Fund Balance of the General Fund decreased by $2.4 million for the fiscal year ended December 31, 2018. A majority of the fund balanced was used to retire the $3.4 million line of credit for facilities development, if that cost was not absorbed by the General Fund fund balance, the fund would have grown an additional $1.5 million, consistent with prior years. General Fund revenues increased by $2.2 million in 2018. Fines and Fees had flat growth reporting $2.8 million, while Miscellaneous Income is up $0.4 million (26.7 percent) from 2017. Sales tax reported for 2018 was up 10.2 percent ($0.9 million) and income and use tax followed suit increasing 8.1 percent and 18.1 percent, respectively ($0.3 million and $0.25 million). The housing stock continues to turn over in Buffalo Grove, but the stock cannot keep up with demand as real estate transfer tax decreased for the first time in five years. The property turnover rates, and increase in sales tax are great economic indicators that show Buffalo Grove is still growing and is a residential destination. State of Illinois shared revenues, specifically those that are part of the local government distributive fund, rebounded in 2018. It should be noted that these revenues tend to be threatened to be reduced annually by the state legislature. The Village of Buffalo Grove is focused on developing self-sustaining revenue sources. VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 The overall growth in the General Fund revenue was 5.3 percent, while expenditures grew 9.8 percent ($3.7 million) in 2018. 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. The surplus of revenues over expenditures (before other financing sources/uses) was $2.4 million. Adding in the Other Financing Sources (Uses), the net change to fund balance resulted in a decrease of $2.4 million. Public Safety Expenditures increased $0.9 million, 3.5 percent, in FY 2018. Public Works increased 29.8 percent ($1.7 million) and General Government spent $1.0 million more in 2018 versus 2017. Special Revenue Funds have a combined fund balance of $1.3 million as of December 31, 2018. In 2018 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 2018. Revenues received from the state share of the motor fuel tax were $1.1 million. The cost of the 2018 street maintenance program was $1.7 million. The scope of each year’s identified maintenance, as determined through pavement analysis studies, has surpassed the relatively inelastic source of funding (more specifically the Motor Fuel Tax allotments). Given both the rise in the cost of maintenance and the declining revenue, the amount of street surface area repaired each year will decline. The intention of the 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 $1.7 million which was transferred from the general fund. Some street projects tied to Grant funding are not complete as of December 31, 2018, the remainder will be expended in FY 2019. 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 $0.0 million at the end of FY 2018, The Village debt totals $13.05 million, all general obligation bonds, and retired $1.3 million in principal in the current year. The interest paid associated with the debt retired was $367,694. Debt per capita is $324.18 as of December 31, 2018. The Village has the sixth lowest total outstanding debt amongst all the taxing bodies represented on the 2018 Lake and/or Cook County property tax bill. 20 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 The Village’s Capital Improvement plan continued in 2018. The Village expended over $0.7 million to the Facilities Development fund infrastructure in FY 2018. 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 that 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 $1.2 million for FY 2018, a decrease of $1.0 million (54.5 percent) from the prior fiscal year. A rate increase of 4 percent was applied to all usage after January 1, 2018. Sewer operations accounted for 45.5 percent, or $4.5 million of the total Water and Sewer operational expenditures. Water operations accounted for $3.8 million (35.4 percent) and capital outlay for both systems totaling $1.5 million (19.1 percent). The purchase of water accounted for 17.1 percent, or $1.7 million. Sanitary sewer fees collected on behalf of Lake County Public Works was $3.2 million for FY 2018. These two pass through expenditures account for 49.5 percent of the total operating expense of the fund. Non-operating revenue (expense) increased $0.124 million due to investment income and capital contributions. The unrestricted net position of the Water and Sewer Fund at the end of the current fiscal year was $10.1 million. Of that amount $7.6 million is the Village’s equity interest in the Northwest Water Commission and $2.5 million is available to cash finance any major infrastructure improvements or enhancements to the water system. The installment note to pay down the water meter replacement project is $6.0 million, or 62.5 percent, of the total liabilities to the water and sewer enterprise. The note is paid off by the increased margin of water metering accuracy. The Village of Buffalo Grove owns and operates two municipal golf courses. 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 $0.9 million. Total revenues were down $0.13 million from 2017. The Buffalo Grove Golf Course generated $1.01 million in operating revenue while incurring $1.05 million in operating expenses. The majority of the transfer in ($0.85 million) is from the capital reserve fund for building improvements made in FY 2017. A total of 48,770 paid rounds were played between the two courses in 2018. 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, for public comment is conducted, before the budget is adopted. The budget document sets the legal spending ceiling for each fund and serves as the day-to-day management tool to ensure fiscal accountability. 21 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 Final Budget Actual Revenues and Transfers: Taxes $35,947 37,014 2,923 2,821 311 344 2,246 3,568 877 2,614 Total Revenues and Transfers 42,304 46,361 Expenditures and Transfers 40,696 41,317 1,597 7,484 42,293 48,801 Change in fund balance 11 (2,440) General Fund Budgetary Highlights For the Fiscal Year Ended December 31, 2018 (in thousands) Total expenditures and Transfers Fines and Fees Licenses and perm Other Revenues Transfers in Expenditures Transfers Out 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, 2018, the Village had a combined total of capital assets of $105.8 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 $0.1 million. 22 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 2018 2017 2018 2017 2018 2017 Land $38.1 37.6 6.2 6.2 44.3 43.8 Construction in Progress 0.1 0.1 0.8 - 0.9 0.1 Buildings 3.9 3.7 2.0 1.5 5.9 5.2 Equipment and Vehicles 5.7 5.4 - - 5.7 5.4 Land Improvements 2.7 2.8 - - 2.7 2.8 Streets and Storm Sewers 11.8 12.3 - - 11.8 12.3 Water and Sewer Infrastructure - - 34.8 35.8 34.8 35.8 62.3 61.9 43.8 43.5 106.1 105.4 Village of Buffalo Grove Capital Assets at Year End (in millions) Governmental Business-Type Activities Activities Total The Governmental Activities net capital assets increased from last year by $0.4 million (0.6 percent). For the Business- type activities, the net capital assets decreased by $0.3 million or (0.7percent). 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 on pages 69 -70. Long-Term Debt At year end, the Village had total bonded debt outstanding of $19.7 million as shown in the next table: 2018 2017 2018 2017 2018 2017 General Obligation Bonds $13.1 14.4 - - 13.1 14.4 IEPA Loans - - 0.3 0.3 0.3 0.3 Installment Contracts Payable - - 6.3 6.6 6.3 6.6 13.1 14.4 6.6 6.9 19.7 21.3 Village of Buffalo Grove Long-Term Debt (in millions) Governmental Business-Type Activities Activities Total 23 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2018 The Village maintains assigned “AAA” ratings on its general obligation bonds from Standard and Poor’s Corporation. Moody’s Investor Services rates the Village of Buffalo Grove as “AA1”. The total per capita general obligation (GO) debt for the community stands at $324.18 and represents 0.98 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 on pages 71 - 78. Economic Factors and Next Year’s Budgets and Rates The Village entered 2019 with a balanced operating budget. The budget for the fiscal year beginning January 1, 2019, is $78,044,191 a 3.5 percent increase from the previous year. The operating budget totals $44,478,558 resulting in a 5.2 percent increase over the previous year. Total capital spending during the year is estimated to be $8.7 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. Property taxes remain the Village’s most stable revenue although the total assessed value of all taxable property is expected to increase about 1.0 percent for the 2018 tax levy (extended and collected in 2019). A tax levy was adopted for the 2019 budget that was 3.0 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 are not abated the levy increase would be an additional 4.01 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 2018 and subsequently a water and sewer rate recommendation was made, and adopted, that will increase water rates by 4 percent in 2018. 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 currently has two represented employee groups (police and fire). Health insurance increases are minimized by the economies of scale provided by the Village’s membership in the Intergovernmental Personnel 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 2019. 24 VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 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 or Andrew Brown, Deputy Director of Finance, Village of Buffalo Grove, 50 Raupp Boulevard, Buffalo Grove, IL 60089. 25 • Government-Wide Financial Statements • Fund Financial Statements Governmental Funds Proprietary Funds Fiduciary Funds BASIC FINANCIAL STATEMENTS The basic financial Statements include integrated sets of financial statements as required by the GASB. The sets of statements include: In addition, the notes to the financial statements are included to provide information that is essential to a user’s understanding of the basic financial statements. VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Net Position December 31, 2018 Business-Type Activities Totals Current Assets Cash and Cash Equivalents $ 22,115,506 5,274,179 27,389,685 Receivables - Net of Allowances 22,940,939 1,981,678 24,922,617 Internal Balances 23,030 (23,030) - Prepaids/Inventories 132,134 38,586 170,720 Total Current Assets 45,211,609 7,271,413 52,483,022 Noncurrent Assets Capital Assets Nondepreciable 38,222,668 6,198,514 44,421,182 Depreciable 103,936,774 88,037,858 191,974,632 Accumulated Depreciation (79,822,345) (50,732,975) (130,555,320) 62,337,097 43,503,397 105,840,494 Other Assets Investment in Joint Venture - 7,619,017 7,619,017 Total Noncurrent Assets 62,337,097 51,122,414 113,459,511 Total Assets 107,548,706 58,393,827 165,942,533 Deferred Items - IMRF 1,713,412 275,033 1,988,445 Deferred Items - Police Pension 6,589,531 - 6,589,531 Deferred Items - Firefighters' Pension 5,033,885 - 5,033,885 Unamortized Loss on Refunding 33,443 - 33,443 Total Deferred Outflows of Resources 13,370,271 275,033 13,645,304 Total Assets and Deferred Outflows of Resources 120,918,977 58,668,860 179,587,837 Governmental Activities ASSETS DEFERRED OUTFLOWS OF RESOURCES The notes to the financial statements are an integral part of this statement. 26 Business-Type Activities Totals Current Liabilities Accounts Payable $ 2,116,852 2,013,579 4,130,431 Accrued Payroll 681,404 39,625 721,029 Deposits Payable 284,546 51,198 335,744 Other Payables - 28,996 28,996 Compensated Absences Payable 352,732 13,075 365,807 Current Portion of Long-Term Debt 1,210,000 358,713 1,568,713 Total Current Liabilities 4,645,534 2,505,186 7,150,720 Noncurrent Liabilities Compensated Absences Payable 1,410,930 52,302 1,463,232 Net Pension Liability - IMRF 2,810,347 451,109 3,261,456 Net Pension Liability - Police Pension 34,601,965 - 34,601,965 Net Pension Liability - Firefighters' Pension 21,913,076 - 21,913,076 Total OPEB Liability - RBP 8,492,912 513,199 9,006,111 General Obligation Bonds Payable - Net 12,033,707 - 12,033,707 IEPA Loan Payable - 311,332 311,332 Installment Note Payable - 6,001,817 6,001,817 Total Noncurrent Liabilities 81,262,937 7,329,759 88,592,696 Total Liabilities 85,908,471 9,834,945 95,743,416 Property Taxes 16,474,730 - 16,474,730 Deferred Items - IMRF 4,151,401 666,371 4,817,772 Deferred Items - Police Pension 2,837,214 - 2,837,214 Deferred Items - Firefighters' Pension 1,020,810 - 1,020,810 Deferred Items - RBP 655,049 39,582 694,631 Total Deferred Inflows of Resources 25,139,204 705,953 25,845,157 Total Liabilities and Deferred Inflows of Resources 111,047,675 10,540,898 121,588,573 Net Investment in Capital Assets 49,126,833 36,831,535 85,958,368 Restricted - Employee Pension Benefits 391,469 - 391,469 Restricted - Public Safety 215,942 - 215,942 Restricted - Motor Fuel Tax 1,204,977 - 1,204,977 Restricted - Metra Parking Lot 97,463 - 97,463 Unrestricted (41,165,382)11,296,427 (29,868,955) Total Net Position 9,871,302 48,127,962 57,999,264 NET POSITION LIABILITIES Activities Governmental DEFERRED INFLOWS OF RESOURCES The notes to the financial statements are an integral part of this statement. 27 VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Activities For the Fiscal Year Ended December 31, 2018 Charges Operating Capital for Grants/ Grants/ Services Contributions Contributions Governmental Activities General Government $ 7,576,163 1,748,555 - - Public Safety 30,266,207 1,686,390 247,206 - Public Works 9,173,584 1,134,383 1,062,118 - Interest on Long-Term Debt 363,925 - - - Total Governmental Activities 47,379,879 4,569,328 1,309,324 - Business-Type Activities Water and Sewerage 10,078,594 10,832,782 - 250,622 Arboretum Golf 1,612,622 1,027,846 - - Buffalo Grove Golf 1,135,413 1,014,901 - - Refuse Service 868,794 1,053,759 - - Total Business-Type Activities 13,695,423 13,929,288 - 250,622 Total Primary Government 61,075,302 18,498,616 1,309,324 250,622 General Revenues Taxes Property Home Rule Sales Tax Telecommunications Tax Utiltiy Tax Property Transfer Tax Other Taxes Intergovernmental - Unrestricted State Income Tax Sales Tax Local Use Tax Replacement Tax Other Taxes Interest Miscellaneous Transfers - Internal Activity Change in Net Position Net Position - Beginning as Restated Net Position - Ending Expenses Program Revenues The notes to the financial statements are an integral part of this statement. 28 Governmental Business-Type Activities Activities Totals (5,827,608)- (5,827,608) (28,332,611)- (28,332,611) (6,977,083)- (6,977,083) (363,925)- (363,925) (41,501,227)- (41,501,227) - 1,004,810 1,004,810 - (584,776) (584,776) - (120,512) (120,512) - 184,965 184,965 - 484,487 484,487 (41,501,227) 484,487 (41,016,740) 15,980,771 - 15,980,771 4,141,413 - 4,141,413 1,761,326 - 1,761,326 2,805,912 - 2,805,912 969,039 - 969,039 817,269 - 817,269 4,002,862 - 4,002,862 6,018,453 - 6,018,453 1,218,965 - 1,218,965 22,256 - 22,256 247,972 - 247,972 292,340 359,371 651,711 1,884,579 242,058 2,126,637 53,715 (53,715)- 40,216,872 547,714 40,764,586 (1,284,355) 1,032,201 (252,154) 11,155,657 47,095,761 58,251,418 9,871,302 48,127,962 57,999,264 Net (Expenses)/Revenues Primary Government The notes to the financial statements are an integral part of this statement. 29 VILLAGE OF BUFFALO GROVE, ILLINOIS Balance Sheet - Governmental Funds December 31, 2018 Cash and Investments $ 20,118,877 Receivables - Net of Allowances Taxes 20,534,825 Accrued Interest 7,782 Other 1,419,678 Due from Other Funds 564,171 Inventories 87,480 Prepaids 44,654 Total Assets 42,777,467 Accounts Payable 1,513,457 Accrued Payroll 646,869 Deposits Payable 284,546 Due to Other Funds 123,629 Total Liabilities 2,568,501 Property Taxes 15,602,211 Total Liabilities and Deferred Inflows of Resources 18,170,712 Nonspendable 132,134 Restricted 607,411 Committed 6,827,236 Unassigned 17,039,974 Total Fund Balances 24,606,755 Total Liabilities, Deferred Inflows of Resources and Fund Balances 42,777,467 FUND BALANCES General ASSETS LIABILITIES DEFERRED INFLOWS OF RESOURCES The notes to the financial statements are an integral part of this statement. 30 Facilities Street Development Maintenance Nonmajor Totals - 167,914 1,313,542 21,600,333 - - 872,519 21,407,344 - - - 7,782 - 16,007 90,128 1,525,813 - - - 564,171 - - - 87,480 - - - 44,654 - 183,921 2,276,189 45,237,577 100,221 130,402 489 1,744,569 - - - 646,869 - - - 284,546 139,211 82,347 100,741 445,928 239,432 212,749 101,230 3,121,912 - - 872,519 16,474,730 239,432 212,749 973,749 19,596,642 - - - 132,134 - - 1,302,440 1,909,851 - - - 6,827,236 (239,432)(28,828)- 16,771,714 (239,432)(28,828)1,302,440 25,640,935 - 183,921 2,276,189 45,237,577 Capital Projects The notes to the financial statements are an integral part of this statement. 31 VILLAGE OF BUFFALO GROVE, ILLINOIS Reconciliation of Total Governmental Fund Balance to Net Position - Governmental Activities December 31, 2018 Total Governmental Fund Balances $ 25,640,935 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds.62,337,097 Deferred outflows (inflows) of resources related to the pensions not reported in the funds. Deferred Items - IMRF (2,137,335) Deferred Items - Police Pension 3,752,317 Deferred Items - Firefighters' Pension 4,013,075 Deferred Items - RBP (614,497) Internal service funds are used by the Village to charge the costs of vehicle and equipment management and employee compensated absences to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the Statement of Net Position (1,200,413) Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Compensated Absences Payable (1,763,662) Net Pension Liability - IMRF (2,463,773) Net Pension Liability - Police Pension (34,601,965) Net Pension Liability - Firefighters' Pension (21,913,076) Total OPEB Liability - RBP (7,967,137) General Obligation Bonds Payable - Net (13,243,707) Unamortized Loss on Refunding 33,443 Net Position of Governmental Activities 9,871,302 The notes to the financial statements are an integral part of this statement. 32 VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds For the Fiscal Year Ended December 31, 2018 Revenues Taxes $ 25,451,803 Intergovernmental 11,561,617 Charges for Services 1,392,159 Licenses and Permits 344,389 Fines and Forfeitures 2,820,773 Interest 292,340 Miscellaneous 1,884,579 Total Revenues 43,747,660 Expenditures Current General Government 6,586,178 Public Safety 26,732,460 Public Works 7,445,965 Capital Outlay 552,603 Debt Service Principal Retirement - Interest and Fiscal Charges - Total Expenditures 41,317,206 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,430,454 Other Financing Sources (Uses) Transfers In 2,613,543 Transfers Out (7,483,638) (4,870,095) Net Change in Fund Balances (2,439,641) Fund Balances - Beginning 27,046,396 Fund Balances - Ending 24,606,755 General The notes to the financial statements are an integral part of this statement. 33 Facilities Street Development Maintenance Nonmajor Totals - - 1,023,927 26,475,730 - - 1,062,118 12,623,735 - - 208,104 1,600,263 - - - 344,389 - - - 2,820,773 - - - 292,340 - - - 1,884,579 - - 2,294,149 46,041,809 - - 217,964 6,804,142 - - - 26,732,460 - 1,397,501 (133,103)8,710,363 656,928 292,741 - 1,502,272 - - 1,315,000 1,315,000 - - 370,202 370,202 656,928 1,690,242 1,770,063 45,434,439 (656,928)(1,690,242)524,086 607,370 4,043,693 1,690,243 721,008 9,068,487 - - (1,512,000)(8,995,638) 4,043,693 1,690,243 (790,992)72,849 3,386,765 1 (266,906)680,219 (3,626,197)(28,829)1,569,346 24,960,716 (239,432)(28,828)1,302,440 25,640,935 Capital Projects The notes to the financial statements are an integral part of this statement. 34 VILLAGE OF BUFFALO GROVE, ILLINOIS Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities - Governmental Activities For the Fiscal Year Ended December 31, 2018 Net Change in Fund Balances - Total Governmental Funds $ 680,219 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital Outlays 2,093,378 Capital Contributions 574,545 Depreciation Expense (2,187,760) Disposals - Cost (564,631) Disposals - Accumulated Depreciation 521,818 The net effect of deferred outflows (inflows) of resources related to the pensions not reported in the funds. Change in Deferred Items - IMRF (4,885,122) Change in Deferred Items - Police Pension 5,664,680 Change in Deferred Items - Firefighters'' Pension 6,208,325 Change in Deferred Items - RBP (614,497) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal on long-term debt consumes the current financial resources of the governmental funds. (Additions) to Compensated Absences Payable (107,108) Deductions to Net Pension Liability - IMRF 4,308,975 (Additions) to Net Pension Liability - Police Pension (7,431,154) (Additions) to Net Pension Liability - Firefighters' Pension (7,347,443) Deductions to Total OPEB Liability - RBP 480,146 Retirement of Debt 1,315,000 Amortization of Bond Premium 22,999 Amortization of Loss on Refunding (16,722) Internal service funds are used by the Village to charge the costs of vehicle and equipment management and employee compensated absences to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities.(3) Changes in Net Position of Governmental Activities (1,284,355) The notes to the financial statements are an integral part of this statement. 35 VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Net Position - Proprietary Funds December 31, 2018 Governmental Activities Arboretum Internal Golf Nonmajor Totals Service Current Assets Cash and Investments $3,784,617 871,254 618,308 5,274,179 515,173 Receivables - Net of Allowances Accounts 1,671,325 - - 1,671,325 - Accrued Interest 312 - - 312 - Other 308,037 176 1,828 310,041 - Due from Other Funds 15,976 41,532 22,844 80,352 21,021 Inventories - 19,974 18,612 38,586 - Total Current Assets 5,780,267 932,936 661,592 7,374,795 536,194 Noncurrent Assets Capital Assets Nondepreciable - 5,219,738 978,776 6,198,514 - Depreciable 74,810,803 9,990,847 3,236,208 88,037,858 - Accumulated Depreciation (39,054,447)(9,268,763)(2,409,765)(50,732,975)- 35,756,356 5,941,822 1,805,219 43,503,397 - Other Assets Investment in Joint Venture 7,619,017 - - 7,619,017 - Total Noncurrent Assets 43,375,373 5,941,822 1,805,219 51,122,414 - Total Assets 49,155,640 6,874,758 2,466,811 58,497,209 536,194 Deferred Items - IMRF 208,842 17,264 48,927 275,033 211,300 Total Assets and Deferred Outflows of Resources 49,364,482 6,892,022 2,515,738 58,772,242 747,494 DEFERRED OUTFLOWS OF RESOURCES Business-Type Activities - Enterprise ASSETS Water and Sewerage The notes to the financial statements are an integral part of this statement. 36 Governmental Activities Arboretum Internal Golf Nonmajor Totals Service Current Liabilities Accounts Payable $1,984,738 14,677 14,164 2,013,579 435,397 Accrued Payroll 33,536 1,741 4,348 39,625 34,535 Deposits Payable 44,453 - 6,745 51,198 - Due to Other Funds 96,382 3,000 4,000 103,382 53,120 Other Payables - 7,913 21,083 28,996 - Compensated Absences Payable 12,673 - 402 13,075 - IEPA Loan Payable 18,661 - - 18,661 - Installment Note Payable 340,052 - - 340,052 - Total Current Liabilities 2,530,495 27,331 50,742 2,608,568 523,052 Noncurrent Liabilities Compensated Absences Payable 50,694 - 1,608 52,302 - Net Pension Liability - IMRF 342,543 28,316 80,250 451,109 346,574 Total OPEB Liability - RBP 434,054 - 79,145 513,199 525,775 IEPA Loan Payable 311,332 - - 311,332 - Installment Note Payable 6,001,817 - - 6,001,817 - Total Noncurrent Liabilities 7,140,440 28,316 161,003 7,329,759 872,349 Total Liabilities 9,670,935 55,647 211,745 9,938,327 1,395,401 Deferred Items - IMRF 505,999 41,828 118,544 666,371 511,954 Deferred Items - RBP 33,478 - 6,104 39,582 40,552 Total Deferred Inflows of Resources 539,477 41,828 124,648 705,953 552,506 Total Liabilities and Deferred Inflows of Resources 10,210,412 97,475 336,393 10,644,280 1,947,907 Net Investment in Capital Assets 29,084,494 5,941,822 1,805,219 36,831,535 - Unrestricted 10,069,576 852,725 374,126 11,296,427 (1,200,413) Total Net Position 39,154,070 6,794,547 2,179,345 48,127,962 (1,200,413) Total Liabilities, Deferred Inflows of Resources, and Net Position 49,364,482 6,892,022 2,515,738 58,772,242 747,494 DEFERRED INFLOWS OF RESOURCES LIABILITIES NET POSITION Business-Type Activities - Enterprise Water and Sewerage The notes to the financial statements are an integral part of this statement. 37 VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds For the Fiscal Year Ended December 31, 2018 Operating Revenues Charges for Services $ 10,832,782 Interfund Services - Miscellaneous 242,058 Total Operating Revenues 11,074,840 Operating Expenses Operations 8,341,538 Captial Outlay - Depreciation 1,575,465 Total Operating Expenses 9,917,003 Operating Income (Loss) 1,157,837 Nonoperating Revenues (Expenses) Interest Income 359,371 Interest Expense (161,591) 197,780 Income (Loss) Before Contribuions and Transfers 1,355,617 Capital Contributions 250,622 Transfers In - Transfers Out (1,037,644) (787,022) Change in Net Position 568,595 Net Position - Beginning 38,585,475 Net Position - Ending 39,154,070 Sewerage Water and The notes to the financial statements are an integral part of this statement. 38 Governmental Activities Arboretum Internal Golf Nonmajor Totals Service 1,027,846 2,068,660 13,929,288 - - - - 4,665,829 - - 242,058 - 1,027,846 2,068,660 14,171,346 4,665,829 1,180,890 1,913,749 11,436,177 4,646,698 - 5,660 5,660 - 431,732 84,798 2,091,995 - 1,612,622 2,004,207 13,533,832 4,646,698 (584,776)64,453 637,514 19,131 - - 359,371 - - - (161,591)- - - 197,780 - (584,776)64,453 835,294 19,131 - - 250,622 - 631,382 1,033,147 1,664,529 44,165 (10,000)(670,600)(1,718,244)(63,299) 621,382 362,547 196,907 (19,134) 36,606 427,000 1,032,201 (3) 6,757,941 1,752,345 47,095,761 (1,200,410) 6,794,547 2,179,345 48,127,962 (1,200,413) Business-Type Activities - Enterprise The notes to the financial statements are an integral part of this statement. 39 VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Cash Flows - Proprietary Funds For the Fiscal Year Ended December 31, 2018 Cash Flows from Operating Activities Receipts from Customers and Users $11,087,832 Interfund Services Provided - Payments to Suppliers (6,801,337) Payments to Employees (921,513) 3,364,982 Cash Flows from Capital and Related Financing Activities Purchase of Capital Assets (1,535,903) Principal Retirement (314,770) Interest Expense (161,591) (2,012,264) Cash Flows from Noncapital Financing Activities Transfers In - Transfers Out (1,037,644) (1,037,644) Cash Flows from Investing Activities Interest Income 359,371 Net Change in Cash and Cash Equivalents 674,445 Cash and Cash Equivalents - Beginning 3,110,172 Cash and Cash Equivalents - Ending 3,784,617 Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities Operating Income 1,157,837 Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization Expense 1,575,465 Other Income (Expense)- (Increase) Decrease in Current Assets 12,992 Increase (Decrease) in Current Liabilities 618,688 Net Cash Provided by Operating Activities 3,364,982 Sewerage Water and Business-Type Activities - Enterprise The notes to the financial statements are an integral part of this statement. 40 Governmental Activities Arboretum Internal Golf Nonmajor Totals Service 1,049,633 2,259,684 14,397,149 - - - - 4,665,829 (1,109,081)(297,022)(8,207,440)(3,550,819) (142,885)(2,570,375)(3,634,773)(926,404) (202,333)(607,713)2,554,936 188,606 - (19,810)(1,555,713)- - - (314,770)- - - (161,591)- - (19,810)(2,032,074)- 631,382 1,033,147 1,664,529 44,165 (10,000)(670,600)(1,718,244)(63,299) 621,382 362,547 (53,715)(19,134) - - 359,371 - 419,049 (264,976)828,518 169,472 452,205 883,284 4,445,661 345,701 871,254 618,308 5,274,179 515,173 (584,776)64,453 637,514 19,131 431,732 84,798 2,091,995 - - - - 9,779 21,787 191,024 225,803 (21,021) (71,076)(947,988)(400,376)180,717 (202,333)(607,713)2,554,936 188,606 Business-Type Activities - Enterprise The notes to the financial statements are an integral part of this statement. 41 VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Fiduciary Net Position December 31, 2018 Agency Cash and Cash Equivalents $ 2,006,914 57,192 Investments U.S. Treasury Obligations 9,587,015 - U.S. Agency Obligations 23,916,237 - Corporate Bonds 9,448,946 - State and Local Obligations 3,233,269 - Mutual Funds 41,054,340 - Equity Securities 32,940,520 - Receivables - Net of Allowance Accrued Interest 262,508 - Due from Other Funds 22,256 - Prepaids 1,141 - Total Assets 122,473,146 57,192 Accounts Payable 104,694 - Due to Other Funds 85,370 - Due to Other Governments - 57,192 Total Liabilities 190,064 57,192 Net Position Restricted for Pensions 122,283,082 NET POSITION Trust Pension ASSETS LIABILITIES The notes to the financial statements are an integral part of this statement. 42 VILLAGE OF BUFFALO GROVE, ILLINOIS Statement of Changes in Fiduciary Net Position For the Fiscal Year Ended December 31, 2018 Additions Contributions - Employer $4,566,600 Contributions - Plan Members 1,236,764 Total Contributions 5,803,364 Investment Earnings Interest Earned 649,054 Net Change in Fair Value (5,898,856) (5,249,802) Less Investment Expenses (394,554) Net Investment Income (5,644,356) Total Additions 159,008 Deductions Administration 126,183 Benefits and Refunds 6,744,691 Total Deductions 6,870,874 Change in Fiduciary Net Position (6,711,866) Net Position Restricted for Pensions Beginning 128,994,948 Ending 122,283,082 Pension Trust The notes to the financial statements are an integral part of this statement. 43 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Village of Buffalo Grove, Illinois (the Village) incorporated in 1958, 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 public safety (police and fire protection), sanitation (water and sewer), building and zoning, engineering, recreation, civil defense and overall administration. The government-wide financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The more significant of the Village’s accounting policies established in GAAP and used by the Village are described below. REPORTING ENTITY The Village’s financial reporting entity comprises the following: Primary Government: Village of Buffalo Grove In determining the financial reporting entity, the Village complies with the provisions of GASB Statement No. 61, “The Financial Reporting Omnibus – an Amendment of GASB Statements No. 14 and No. 34,” and includes all component units that have a significant operational or financial relationship with the Village. Based upon the criteria set forth in the GASB Statement No. 61, there are no component units included in the reporting entity. Police Pension Employees Retirement System The Village’s sworn police employees participate in the Police Pension Employees Retirement System (PPERS). 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 elected pension beneficiary and two elected police employees constitute the pension board. The participants are required to contribute a percentage of salary as established by state statute and the Village is obligated to fund all remaining 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 is legally separate from the Village, the PPERS is reported as if it were part of the primary government because its sole purpose is to provide retirement benefits for the Village’s police employees. The PPERS is reported as a fiduciary fund, and specifically a pension trust fund, due to the fiduciary responsibility exercised over the PPERS. 44 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued REPORTING ENTITY – Continued Firefighters’ Pension Employees Retirement System The Village’s sworn firefighters participate in the Firefighters’ Pension Employees Retirement System (FPERS). FPERS functions for the benefit of those employees and is governed by a five-member pension board, with two members appointed by the Village President, two elected from active participants of the Fund, and one elected from the retired members of the Fund. The participants are required to contribute a percentage of salary as established by state statute and the Village is obligated to fund all remaining 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 is legally separate from the Village, the FPERS is reported as if it were part of the primary government because its sole purpose is to provide retirement benefits for the Village’s sworn firefighters. The FPERS is reported as a fiduciary fund, and specifically a pension trust fund, due to the fiduciary responsibility exercised over the FPERS. Government-Wide Statements The Village’s basic financial statements include both government-wide (reporting the Village as a whole) and fund financial statements (reporting the Village’s major funds). Both the government-wide and fund financial statements categorize primary activities as either governmental or business type. The Village’s police and fire safety, public works, and general administrative services are classified as governmental activities. The Village’s water and sewerage, arboretum golf, Buffalo Grove golf, and refuse services are classified as business-type activities. In the government-wide Statement of Net Position, both the governmental and business-type activities columns are: (a) presented on a consolidated basis by column, and (b) reported on a full accrual, economic resource basis, which recognizes all long-term assets/deferred outflows and receivables as well as long-term debt/deferred inflows and obligations. The Village’s net position is reported in three parts: net investment in capital assets; restricted; and unrestricted. The Village first utilizes restricted resources to finance qualifying activities. The government-wide Statement of Activities reports both the gross and net cost of each of the Village’s functions and business-type activities (general government, police and fire safety, public works, etc.). The functions are supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, which include 1) charges to customers or applicants who purchase, use, or directly benefit from foods, 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. 45 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued BASIS OF PRESENTATION – Continued Government-Wide Statements – Continued The net costs (by function or business-type activity) are normally covered by general revenue (property tax, sales tax, intergovernmental revenues, interest income, etc.). The Village does not allocate indirect costs. An administrative service fee is charged by the General Fund to the other operating funds that is eliminated like a reimbursement (reducing the revenue and expense in the General Fund) to recover the direct costs of General Fund services provided (finance, personnel, purchasing, legal, technology management, etc.). This government-wide focus is more on the sustainability of the Village as an entity and the change in the Village’s net position resulting from the current year’s activities. Fund Financial Statements The financial transactions of the Village are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets/deferred outflows, liabilities/deferred inflows, fund equity, revenues and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. The emphasis in fund financial statements is on the major funds in either the governmental or business-type activities categories. GASB Statement No. 34 sets forth minimum criteria (percentage of the assets/deferred outflows, liabilities/deferred inflows, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds. The Village electively added funds, as major funds, which either have debt outstanding or a specific or community focus. The nonmajor funds are combined in a column in the fund financial statements. A fund is considered major if it is the primary operating fund of the Village or meets the following criteria: Total assets/deferred outflows, liabilities/deferred inflows, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and Total assets/deferred outflows, liabilities/deferred inflows, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. 46 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued BASIS OF PRESENTATION – Continued Fund Financial Statements – Continued The various funds are reported by generic classification within the financial statements. The following fund types are used by the Village: Governmental Funds The focus of the governmental funds’ measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The following is a description of the governmental funds of the Village: General Fund is the general operating fund of the Village. It is used to account for all financial resources except those required to be accounted for in another fund. The General Fund is a major fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The Village maintains two nonmajor special revenue funds. Debt Service Funds are used to account for the accumulation of funds for the periodic payment of principal and interest on general long-term debt. The Debt Service Fund is treated as a nonmajor fund. Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by business-type/proprietary funds). The Facilities Development Fund, a major fund, is used to account for and reports financial resources that are restricted, committed or assigned to expenditures for acquisition, construction, improvement, repair, and replacement of the Village’s capital facilities. The Street Maintenance Fund, also a major fund, is used to account for and reports financial resources that are restricted, committed or assigned to expenditures for acquisition, construction, improvement, repair, and replacement of the Village’s roadways. Proprietary Funds The focus of proprietary fund measurement is upon determination of operating income, changes in net position, financial position, and cash flows. The generally accepted accounting principles applicable are those similar to businesses in the private sector. The following is a description of the proprietary funds of the Village: 47 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued BASIS OF PRESENTATION – Continued Fund Financial Statements – Continued Proprietary Funds – Continued Enterprise Funds are required to account for operations for which a fee is charged to external users for goods or services and the activity (a) is financed with debt that is solely secured by a pledge of the net revenues, (b) has third party requirements that the cost of providing services, including capital costs, be recovered with fees and charges or (c) establishes fees and charges based on a pricing policy designed to recover similar costs. The Village maintains four enterprise funds. The Water and Sewerage Fund, a major fund, is used to account for the revenue and expenses related to the operation of the water and sewerage system. The Arboretum Golf Fund, also a major fund, is used to account for the revenues and expenses related to the operation of the golf course. Internal Service Funds are used to account for the financing of goods or services provided by an activity to other departments, funds or component units of the Village on a cost-reimbursement basis. The Village maintains three internal services funds. The Information Technology Fund is used to account for all costs associated with providing technology services to all departments for the operation of the Village. The Central Garage Fund is used to account for the activity necessary to operate and maintain the Village’s automotive fleet. User departments are charged a proportionate share determined by the number and types of vehicles in each department. The Building Maintenance Fund is used to account for providing a clean, healthy, and safe working environment in Village facilities, meeting area’s and public area’s. The Village’s internal service funds are presented in the proprietary fund financial statements. Because the principal users of the internal services are the Village’s governmental activities, the financial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. To the extent possible, the cost of these services is reported in the appropriate functional activity (general government, police and fire safety, public works, etc.). 48 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued BASIS OF PRESENTATION – Continued Fund Financial Statements – Continued Fiduciary Funds Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore are not available to support Village programs. The reporting focus is on net position and changes in net position and is reported using accounting principles similar to proprietary funds. Pension Trust Funds are used to account for assets held in a trustee capacity for pension benefit payments. The Police Pension Fund accounts for the accumulation of resources to pay retirement and other related benefits for sworn members of the Village’s police force. The Firefighters’ Pension Fund accounts for the accumulation of resources to pay retirement and other related benefits for sworn members of the Village’s Fire Department. Agency Funds are used to account for assets held by the Village in a purely custodial capacity. The School and Park Donations Fund is used to account for the activity related to property development and contributions as designated by title 19 – funding for other taxing district impacts. The Village’s fiduciary funds are presented in the fiduciary fund financial statements by type (pension trust and agency). Since by definition these assets are being held for the benefit of a third party (other local governments, private parties, pension participants, etc.) and cannot be used to address activities or obligations of the Village, these funds are not incorporated into the government-wide statements. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING Measurement focus is a term used to describe “which” transactions are recorded within the various financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus applied. Measurement Focus On the government-wide Statement of Net Position and the Statement of Activities, both governmental and business-type activities are presented using the economic resources measurement focus as defined below. In the fund financial statements, the “current financial resources” measurement focus or the “economic resources” measurement focus is used as appropriate. 49 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued MEASUREMENT FOCUS AND BASIS OF ACCOUNTING – Continued Measurement Focus – Continued All governmental funds utilize a “current financial resources” measurement focus. Only current financial assets/deferred outflows and liabilities/deferred inflows are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. All proprietary and pension trust funds utilize an “economic resources” measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. All assets/deferred outflows and liabilities/deferred inflows (whether current or noncurrent) associated with their activities are reported. Proprietary and pension trust fund equity is classified as net position. Agency funds are not involved in the measurement of results of operations; therefore, measurement focus is not applicable to them. Basis of Accounting In the government-wide Statement of Net Position and Statement of Activities, both governmental and business-type activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability/deferred inflow is incurred or economic asset used. Revenues, expenses, gains, losses, assets/deferred outflows, and liabilities/deferred inflows resulting from exchange and exchange-like transactions are recognized when the exchange takes place. In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or within sixty days after year-end. The Village recognizes property taxes when they become both measurable and available in accordance with GASB Codification Section P70. A sixty-day availability period is used for revenue recognition for all other governmental fund revenues. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for general obligation bond principal and interest which are recognized when due. In applying the susceptible to accrual concept under the modified accrual basis, those revenues susceptible to accrual are property taxes, sales and use taxes, franchise taxes, licenses, interest revenue, and charges for services. All other revenues are not susceptible to accrual because generally they are not measurable until received in cash. 50 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued MEASUREMENT FOCUS AND BASIS OF ACCOUNTING – Continued Basis of Accounting – Continued All proprietary, pension trust and agency funds utilize 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. 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 Village’s enterprise funds and of the Village’s internal service funds are charges to customers for sales and services. The Village also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service 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. ASSETS/DEFERRED OUTFLOWS, LIABILITIES/DEFERRED INFLOWS, AND NET POSITION OR EQUITY Cash and Investments For the purpose of the Statement of Net Position, cash and cash equivalents are considered to be cash on hand, demand deposits, and cash with fiscal agent. For the purpose of the proprietary funds “Statement of Cash Flows,” cash and cash equivalents are considered to be cash on hand, demand deposits, cash with fiscal agent, and all highly liquid investments with an original maturity of three months or less. Investments are generally reported at fair value. Short-term investments are reported at cost, which approximates fair value. For investments, 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. Receivables In the government-wide financial statements, receivables consist of all revenues earned at year-end and not yet received. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Major receivables balances for governmental activities include property taxes, sales and use taxes, franchise taxes, and grants. Business-type activities report charges for services as their major receivables. 51 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued ASSETS/DEFERRED OUTFLOWS, LIABILITIES/DEFERRED INFLOWS, AND NET POSITION OR EQUITY – Continued Interfund Receivables, Payables and Activity Interfund activity is reported as loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Internal service fund services provided and used are not eliminated in the process of consolidation. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. Prepaids/Inventories Prepaids/inventories are valued at cost, which approximates market, using the first-in/first-out (FIFO) method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaids in both the government-wide and fund financial statements. The costs of governmental fund-type prepaids/inventories are recorded as expenditures when consumed rather than when purchased. Capital Assets Capital assets purchased or acquired with an original cost of $10,000 or more (depending on asset class) are reported at historical cost or estimated historical cost. Contributed assets are reported at acquisition value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. General capital assets are long-lived assets of the Village as a whole. When purchased, such assets are recorded as expenditures in the governmental funds and capitalized. Infrastructure such as streets, traffic signals and signs are capitalized. The valuation basis for general capital assets are historical cost, or where historical cost is not available, estimated historical cost based on replacement costs. Capital assets in the proprietary funds are capitalized in the fund in which they are utilized. The valuation bases for proprietary fund capital assets are the same as those used for the general capital assets. Donated capital assets are recorded at acquisition value on the date donated. 52 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued ASSETS/DEFERRED OUTFLOWS, LIABILITIES/DEFERRED INFLOWS, AND NET POSITION OR EQUITY – Continued Capital Assets – Continued Depreciation on all assets is computed and recorded using the straight-line method of depreciation over the following estimated useful lives: Buildings 20 Years Equipment and Vehicles 2 – 10 Years Land Improvements 5 – 50 Years Streets 5 – 50 Years Storm Sewers 5 – 50 Years Infrastructure 5 – 50 Years Deferred Outflows/Inflows of Resources Deferred outflow/inflow of resources represents an acquisition/reduction of net position that applies to a future period and therefore will not be recognized as an outflow of resources (expense)/inflow of resources (revenue) until that future time. Compensated Absences The Village accrues accumulated unpaid vacation and associated employee-related costs when earned (or estimated to be earned) by the employee. In accordance with GASB Statement No. 16, no liability is recorded for nonvesting accumulation rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulated sick leave that is estimated to be taken as “terminal leave” prior to retirement. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as expenses at the time of issuance. 53 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued ASSETS/DEFERRED OUTFLOWS, LIABILITIES/DEFERRED INFLOWS, AND NET POSITION OR EQUITY – Continued Long-Term Obligations – Continued In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Net Position In the government-wide financial statements, equity is classified as net position and displayed in three components: Net Investment in Capital Assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted – Consists of net position with constraints placed on the 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 legislations. Unrestricted – All other net position balances that do not meet the definition of “restricted” or “net investment in capital assets.” NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY 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 the 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. 54 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY – Continued BUDGETARY INFORMATION – Continued 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 re-appropriated 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. EXCESS OF ACTUAL EXPENDITURES/EXPENSES OVER BUDGET IN INDIVIDUAL FUND The following fund had an excess of actual expenditures/expenses, exclusive of depreciation, over budget as of the date of this report: Fund General $ 227,745 Excess 55 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY – Continued DEFICIT FUND BALANCE/NET POSITION The following fund had deficit fund balance/net position as of the date of this report: Fund Facilities Development $ 239,432 Street Maintenance 28,828 Central Garage 659,581 Building Maintenance 541,622 Deficit NOTE 3 – DETAIL NOTES ON ALL FUNDS DEPOSITS AND INVESTMENTS The Village maintains a cash and investment pool that is available for use by all funds except the pension trust funds. Each fund type's portion of this pool is displayed on the financial statements as "cash and investments." In addition, investments are separately held by several of the Village’s funds. The deposits and investments of the pension trust funds are held separately from those of other funds. Permitted Deposits and Investments – Statutes authorize the Village to make deposits/invest in commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. Agencies, obligations of States and their political subdivisions, credit union shares, repurchase agreements, commercial paper rated within the three highest classifications by at least two standard rating services, Illinois Funds and the Illinois Metropolitan Investment Fund. The Illinois Funds is an investment pool managed by the Illinois Public Treasurer’s Office 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. Investments in Illinois Funds are valued at the share price, the price for which the investment could be sold. The Illinois Metropolitan Investment Fund (IMET) is a non-for-profit investment trust formed pursuant to the Illinois Municipal Code. IMET is 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 the share price, the price for which the investment could be sold. 56 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued The deposits and investments of the Pension Funds are held separately from those of other Village funds. Statutes authorize the Pension Fund to make deposits/invest in interest bearing direct obligations of the United States of America; obligations that are fully guaranteed or insured as to the payment of principal and interest by the United States of America; bonds, notes, debentures, or similar obligations of agencies of the United States of America; savings accounts or certificates of deposit issued by banks or savings and loan associations chartered by the United States of America or by the State of Illinois, to the extent that the deposits are insured by the agencies or instrumentalities of the federal government; credit unions, to the extent that the deposits are insured by the agencies or instrumentalities of the federal government; State of Illinois bonds; pooled accounts managed by the Illinois Funds Market Fund (formerly known as IPTIP, Illinois Public Treasurer’s Investment Pool), or by banks, their subsidiaries or holding companies, in accordance with the laws of the State of Illinois; bonds or tax anticipation warrants of any county, township, or municipal corporation of the State of Illinois; direct obligations of the State of Israel; money market mutual funds managed by investment companies that are registered under the Federal Investment Company Act of 1940 and the Illinois Securities Law of 1953 and are diversified, open-ended management investment companies, provided the portfolio is limited to specified restrictions; general accounts of life insurance companies; and separate accounts of life insurance companies and mutual funds, the mutual funds must meet specific restrictions, provided the investment in separate accounts and mutual funds does not exceed ten percent of the Pension Fund’s plan net position; and corporate bonds managed through an investment advisor, rated as investment grade by one of the two largest rating services at the time of purchase. Pension Funds with plan net position of $2.5 million or more may invest up to forty-five percent of plan net position in separate accounts of life insurance companies and mutual funds. Pension Funds with plan net position of at least $5 million that have appointed an investment advisor, may through that investment advisor invest up to forty-five percent of the plan net position in common and preferred stocks that meet specific restrictions. In addition, Pension Funds with plan net position of at least $10 million that have appointed an investment advisor, may invest up to fifty percent of its net position in common and preferred stocks and mutual funds that meet specific restrictions effective July 1, 2011 and up to fifty-five percent effective July 1, 2012. Village – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk Deposits. At year-end, the carrying amount of the Village’s deposits for governmental and business- type activities totaled $12,042,458 and the bank balances totaled $12,153,880. 57 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Village – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk – Continued Investments. The Village has the following investment fair values and maturities: Fair Less Than More Than Investment Type Value 1 1 to 5 6 to 10 10 U.S. Treasury Obligations $ 1,724,224 812,316 911,908 - - U.S. Agency Obligations 2,051,078 228,836 1,822,242 - - State and Local Obligations 477,836 - 477,836 - - Illinois Funds 3,660,694 3,660,694 - - - IMET 7,433,395 2,702,997 4,730,398 - - 15,347,227 7,404,843 7,942,384 - - Investment Maturities (in Years) The Village has the following recurring fair value measurements as of December 31, 2018: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Investments by Fair Value Level (Level 1) (Level 2) (Level 3) Debt Securities U.S. Treasury Obligations $ 1,724,224 1,724,224 - - U.S. Agency Obligations 2,051,078 - 2,051,078 - State and Local Obligations 477,836 - 477,836 - 4,253,138 1,724,224 2,528,914 - Investments Measured at the Net Asset Value (NAV) Illinois Funds 3,660,694 IMET 7,433,395 11,094,089 Total Investments Measured at Fair Value 15,347,227 Fair Value Measurements Using Totals 58 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Village – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk – Continued Investments - Continued. Debt Securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. 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. The Village’s investments in the Illinois Funds and the IMET Fund have an average maturity of less than one year to three years. Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Village’s investment policy applies the “prudent person” standard in managing its investment portfolio. As such, all investments are made with such judgement 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. At year- end, the Village’s investment in the Illinois Funds was rated AAAm by Standard & Poor’s. The Illinois Metropolitan Investment Trust Convenience Fund is not rated and the Illinois Metropolitan Investment Trust 1-3 Year Fund is rated Aaa by Moody’s. The ratings on the Village’s investments in the U.S. agency obligations and state and local obligations are not available. Custodial Credit Risk. In the case of deposits, this is the risk that in the event of a bank failure, the Village’s deposits may not be returned to it. 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. 59 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Village – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk – Continued Custodial Credit Risk – Continued. 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. At year-end, the entire amount of the bank balance of deposits was covered by collateral, federal depository or equivalent insurance. For an investment, this 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. It is the policy of the Village to require 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. The Village’s investments in the Illinois Funds and the IMET Fund are not subject to custodial credit risk. Concentration Risk. This is the risk of loss attributed to the magnitude of the Village’s investment in a single issuer. The Village limits the amount that can be invested in commercial paper to one-third of the Village’s total investments. At year-end, the Village does not have any investments over 5 percent of the total cash and investment portfolio (other than investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments). Police Pension Fund – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk Deposits. At year-end, the carrying amount of the Fund’s deposits totaled $1,964,436 and the bank balances totaled $1,975,707. Investments. The Fund has the following investment fair values and maturities: Fair Less Than More Than Investment Type Value 1 1 to 5 6 to 10 10 U.S. Treasury Obligations $ 7,058,765 99,247 4,353,437 709,863 1,896,218 U.S. Agency Obligations 5,979,169 1,537,427 2,703,522 1,132,784 605,436 Corporate Bonds 9,448,946 1,836,470 6,530,692 1,081,784 - 22,486,880 3,473,144 13,587,651 2,924,431 2,501,654 Investment Maturities (in Years) 60 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued The Fund has the following recurring fair value measurements as of December 31, 2018: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Investments by Fair Value Level (Level 1) (Level 2) (Level 3) Debt Securities U.S. Treasury Obligations $ 7,058,765 7,058,765 - - U.S. Agency Obligations 5,979,169 - 5,979,169 - Corporate Bonds 9,448,946 - 9,448,946 - Equity Securities Mutual Funds 6,871,831 6,871,831 - - Mutual Funds 32,940,520 32,940,520 - - Total Investments Measured at Fair Value 62,299,231 46,871,116 15,428,115 - Totals Fair Value Measurements Using Debt Securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Interest Rate Risk. The Fund’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 Fund 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. 61 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Police Pension Fund – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk – Continued Credit Risk. The Fund’s investment policy applies the “prudent person” standard in managing its investment portfolio. As such, all investments are made with such judgement 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 Fund’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. At year-end, the Fund’s investments in U.S. agency obligations were not rated and investments in corporate bonds were rated Baa1 to A1 by Moody’s. Custodial Credit Risk. The Fund’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. At year-end, the entire amount of the bank balance of deposits was covered by collateral, federal depository or equivalent insurance. For an investment, this is the risk that in the event of the failure of the counterparty, the Fund will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. It is the policy of the Fund to require all investments and investment collateral to be held in safekeeping by a third-party custodial institution as designated by the Treasurer in the Fund’s name. Direct investments guaranteed by the United States or an agency of the United States do not require collateral. Concentration Risk. The Fund limits the amount that can be invested in commercial paper to one-third of the Fund’s total investments. In addition to the securities and fair values listed above, the Fund also has $6,871,831 invested in mutual funds and $32,940,520 invested in equity securities. At year-end, the Fund does not have any investments over 5 percent of net plan assets available for retirement benefits (other than investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments). 62 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Police Pension Fund – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk – Continued Concentration Risk – Continued. The Fund’s investment policy in accordance with Illinois Compiled Statutes (ILCS) establishes the following target allocation across asset classes: Long-Term Expected Real Asset Class Target Rate of Return Fixed Income 33.00% 1.25% - 3.50% Large Cap Domestic Equities 52.00%3.25% Small Cap Domestic Equities 5.00%4.00% International Equities 5.00%4.75% Real Estate 3.00%4.25% Cash and Cash Equivalents 2.00%0.00% Illinois Compiled Statutes (ILCS) limit the 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 long-term expected rate of return on the Fund’s investments was determined using an asset allocation study conducted by the Fund’s investment management consultant in January of 2019 in which best-estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding the expected inflation. Best estimates or arithmetic real rates of return for each major asset class included in the Fund’s target asset allocation as of December 31, 2018, are listed in the table above. Rate of Return For the year ended December 31, 2018, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was (4.09%). The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. 63 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 64 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Firefighters’ Pension Fund – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk Deposits. At year-end, the carrying amount of the Fund’s deposits totaled $42,478 and the bank balances totaled $51,001. Investments. The Fund has the following investment fair values and maturities: Fair Less Than More Than Investment Type Value 1 1 to 5 6 to 10 10 U.S. Treasury Obligations $2,528,250 496,523 1,824,164 207,563 - U.S. Agency Obligations 17,937,068 98,963 8,139,439 9,698,666 - State and Local Obligations 3,233,269 450,192 1,684,359 1,028,476 70,242 23,698,587 1,045,678 11,647,962 10,934,705 70,242 Investment Maturities (in Years) The Fund has the following recurring fair value measurements as of December 31, 2018: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Investments by Fair Value Level (Level 1)(Level 2)(Level 3) Debt Securities U.S. Treasury Obligations $2,528,250 2,528,250 - - U.S. Agency Obligations 17,937,068 - 17,937,068 - State and Local Obligations 3,233,269 - 3,233,269 - Equity Securities Mutual Funds 34,182,509 34,182,509 - - Total Investments Measured at Fair Value 57,881,096 36,710,759 21,170,337 - Fair Value Measurements Using Totals Debt Securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Firefighters’ Pension Fund – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk – Continued Interest Rate Risk. The Fund’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 Fund 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 Fund’s investment policy applies the “prudent person” standard in managing its investment portfolio. As such, all investments are made with such judgement 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 Fund’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. At year-end, the Fund’s investments in U.S. agency obligations were not rated and investments in state and local obligations were not rated or rated Aaa to Aa1 by Moody’s. Custodial Credit Risk. The Fund’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. At year-end, the entire amount of the bank balance of deposits was covered by collateral, federal depository or equivalent insurance. For an investment, this is the risk that in the event of the failure of the counterparty, the Fund will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. It is the policy of the Fund to require all investments and investment collateral to be held in safekeeping by a third-party custodial institution as designated by the Treasurer in the Fund’s name. Direct investments guaranteed by the United States or an agency of the United States do not require collateral. 65 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued DEPOSITS AND INVESTMENTS – Continued Firefighters’ Pension Fund – Interest Rate Risk, Credit Risk, Custodial Credit Risk and Concentration Risk – Continued Concentration Risk. The Fund limits the amount that can be invested in commercial paper to one-third of the Fund’s total investments. In addition to the securities and fair values listed above, the Fund also has $34,182,509 invested in mutual funds. At year-end, the Fund does not have any investments over 5 percent of net plan assets available for retirement benefits (other than investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments). The Fund’s investment policy in accordance with Illinois Compiled Statutes (ILCS) establishes the following target allocation across asset classes: Long-Term Expected Real Asset Class Target Rate of Return Fixed Income 40.00%1.50% Large Cap Domestic Equities 42.00%6.70% Small Cap Domestic Equities 12.00%8.60% International Equities 6.00%6.50% Cash and Cash Equivalents 0.00%0.00% Illinois Compiled Statutes (ILCS) limit the 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 long-term expected rate of return on the Fund’s investments was determined using an asset allocation study conducted by the Fund’s investment management consultant in January of 2019 in which best-estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding the expected inflation. Best estimates or arithmetic real rates of return for each major asset class included in the Fund’s target asset allocation as of December 31, 2018, are listed in the table above. Rate of Return For the year ended December 31, 2018, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was (4.77%). The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. 66 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued PROPERTY TAXES Property taxes for 2017 attach as an enforceable lien on January 1, on property values assessed as of the same date. Taxes are levied by December of the subsequent fiscal year (by passage of a Tax Levy Ordinance). Tax bills are prepared by Lake County and are payable in two installments, on or about July 1 and September 1 during the following year. The County collects such taxes and remits them periodically. The allowance for uncollectible taxes has been stated at 1% of the tax levy to reflect actual collection experience. INTERFUND BALANCES Interfund balances are advances in anticipation of receipts to cover temporary cash shortages. The composition of interfund balances as of the date of this report, is as follows: Receivable Fund Payable Fund General Facilities Development $ 139,211 General Street Maintenance 82,347 General Nonmajor Governmental 100,741 General Water and Sewerage 96,382 General Arboretum Golf 3,000 General Nonmajor Business-Type 4,000 General Central Garage 29,942 General Building Maintenance 23,178 General Police Pension 85,370 Water and Sewerage General 15,976 Arboretum Golf General 41,532 Nonmajor Business-Type General 22,844 Central Garage General 10,692 Building Maintenance General 10,329 Police Pension General 11,128 Firefighters' Pension General 11,128 687,800 Amount 67 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued INTERFUND TRANSFERS Interfund transfers for the year consisted of the following: Transfer In Transfer Out General Nonmajor Governmental $ 1,512,000 (3) General Water and Sewerage 857,644 (3) General Arboretum Golf 10,000 (3) General Nonmajor Business-Type 70,600 (3) General Nonmajor Business-Type 100,000 (3) General Central Garage 37,067 (3) General Building Maintenance 26,232 (3) Facilities Development General 4,043,693 (1) Street Maintenance General 1,690,243 (1) Nonmajor Governmental General 41,008 (1) Nonmajor Governmental Water and Sewerage 180,000 (2) Nonmajor Governmental Nonmajor Business-Type 500,000 (2) Arboretum Golf General 631,382 (1) Nonmajor Business-Type General 1,033,147 (1) Central Garage General 27,796 (1) Building Maintenance General 16,369 (1) 10,777,181 Amount Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the Debt Service Fund as debt service payments become due, and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 68 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued CAPITAL ASSETS Governmental Activities Governmental capital asset activity for the year was as follows: Ending Increases Decreases Balances Nondepreciable Capital Assets Land $ 37,599,977 560,202 - 38,160,179 Construction in Progress 58,723 62,489 58,723 62,489 37,658,700 622,691 58,723 38,222,668 Depreciable Capital Assets Buildings 24,834,125 623,300 - 25,457,425 Equipment and Vehicles 12,198,773 1,350,610 564,631 12,984,752 Land Improvements 3,242,060 - - 3,242,060 Streets 23,676,764 105,295 - 23,782,059 Storm Sewers 38,445,728 24,750 - 38,470,478 102,397,450 2,103,955 564,631 103,936,774 Less Accumulated Depreciation Buildings 21,125,552 420,432 - 21,545,984 Equipment and Vehicles 6,749,247 1,022,467 521,818 7,249,896 Land Improvements 471,692 64,845 - 536,537 Streets 13,373,886 437,796 - 13,811,682 Storm Sewers 36,436,026 242,220 - 36,678,246 78,156,403 2,187,760 521,818 79,822,345 Net Depreciable Capital Assets 24,241,047 (83,805) 42,813 24,114,429 Net Capital Assets 61,899,747 538,886 101,536 62,337,097 Beginning Balances Depreciation expense was charged to governmental activities as follows: General Government $ 64,989 Public Safety 711,113 Public Works 1,411,658 2,187,760 69 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued CAPITAL ASSETS – Continued Business-Type Activities Business-type capital asset activity for the year was as follows: Ending Increases Decreases Balances Nondepreciable Capital Assets Land $ 6,198,514 - - 6,198,514 Construction in Progress 840,718 - 840,718 - 7,039,232 - 840,718 6,198,514 Depreciable Capital Assets Buildings 11,170,610 - - 11,170,610 Equipment and Vehicles 70,150 - - 70,150 Land Improvements 1,966,488 19,810 - 1,986,298 Infrastructure 72,183,557 2,627,243 - 74,810,800 85,390,805 2,647,053 - 88,037,858 Less Accumulated Depreciation Buildings 9,123,891 516,200 - 9,640,091 Equipment and Vehicles 70,150 - - 70,150 Land Improvements 1,967,961 330 - 1,968,291 Infrastructure 37,478,978 1,575,465 - 39,054,443 48,640,980 2,091,995 - 50,732,975 Net Depreciable Capital Assets 36,749,825 555,058 - 37,304,883 Net Capital Assets 43,789,057 555,058 840,718 43,503,397 Beginning Balances Depreciation expense was charged to business-type activities as follows: Water and Sewerage $ 1,575,465 Arboretum Golf 431,732 Buffalo Grove Golf 84,798 2,091,995 70 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued LONG-TERM DEBT General Obligation Bonds The Village issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for governmental activities. General obligation bonds are direct obligations and pledge the full faith and credit of the Village. General obligation bonds currently outstanding are as follows: Fund Debt Ending Issue Retired by Issuances Retirements Balances Debt Service $ 1,125,000 - 360,000 765,000 Debt Service 1,845,000 - 205,000 1,640,000 Debt Service 6,000,000 - 100,000 5,900,000 Debt Service 5,395,000 - 650,000 4,745,000 14,365,000 - 1,315,000 13,050,000 Beginning Balances $5,160,000 General Obligation Refunding Bonds of 2010A - Due in annual installments of $325,000 to $620,000 plus interest at 2.00% to 4.00% through December 30, 2020. $2,600,000 General Obligation Bonds of 2010B - Due in annual installments of $180,000 to $260,000 plus interest at 2.50% to 3.85% through December 30, 2025. $6,000,000 General Obligation Bonds of 2012 - Due in annual installments of $100,0000 to $750,000 plus interest at 2.00% to 2.75% through June 30, 2030. $6,125,000 General Obligation Bonds of 2016 - Due in annual installments of $300,000 to $730,000 plus interest at 2.00% to 3.00% through December 30, 2031. 71 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued LONG-TERM DEBT – Continued IEPA Loans Payable The Village has entered into loan agreements with the IEPA to provide low interest financing for pump station improvements. IEPA loans currently outstanding are as follows: Fund Debt Ending Retired by Issuances Retirements Balances Water and Sewerage $ 348,233 - 18,240 329,993 Issue $6,638,399 IEPA Loan Payable of 2013 -Pump Stations Improvements -Due in semi- annual installments of $6,788 to $12,916, plus interest at 2.295%, through December 1, 2033. Beginning Balances Installment Contract Payable The Village also issues installment contracts payable to provide funds for the purchase of capital assets. Installment contracts currently outstanding are as follows: Fund Debt Ending Retired by Issuances Retirements Balances Water and Sewerage $ 6,638,399 - 296,530 6,341,869 Issue Installment Note Payable dated March 27, 2015, due in quarterly installments of $21,449 to $227,680, plus interest at 2.35% through June 1, 2029. Beginning Balances 72 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS LONG-TERM DEBT – Continued Long-Term Liability Activity Changes in long-term liabilities during the fiscal year were as follows: Amounts Ending Due within Additions Deductions Balances One Year Governmental Activities Compensated Absences $ 1,656,554 214,216 107,108 1,763,662 352,732 Net Pension Liability - IMRF Governmental Activities 6,772,748 - 4,308,975 2,463,773 - Internal Service Funds 1,087,553 - 740,979 346,574 - Net Pension Liability - Police 27,170,811 7,431,154 - 34,601,965 - Net Pension Liability - Firefighters' 14,565,633 7,347,443 - 21,913,076 - Total OPEB Liability - RBP Governmental Activities 8,447,283 - 480,146 7,967,137 - Internal Service Funds 557,462 - 31,687 525,775 - General Obligation Bonds 14,365,000 - 1,315,000 13,050,000 1,210,000 Plus: Unamortized Premium 216,706 - 22,999 193,707 - 74,839,750 14,992,813 7,006,894 82,825,669 1,562,732 Business-Type Activities Compensated Absences 143,458 78,081 156,162 65,377 13,075 Net Pension Liability - IMRF 1,548,371 - 1,097,262 451,109 - Total OPEB Liability - RBP 544,126 - 30,927 513,199 - IEPA Loans Payable 348,233 - 18,240 329,993 18,661 Installment Note Payable 6,638,399 - 296,530 6,341,869 340,052 9,222,587 78,081 1,599,121 7,701,547 371,788 Beginning Balances Type of Debt as Restated For the governmental activities, payments on the compensated absences, the net pension liabilities and the total OPEB liability are made by the General Fund. Payments on general obligation bonds are being liquidated by the Debt Service Fund. Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. 73 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued LONG-TERM DEBT – Continued Long-Term Liability Activity Additionally, for the business-type activities, the compensated absences are being liquidated by the Water and Sewerage Fund and the Buffalo Grove Golf Fund. The net pension liability is being liquidated by the Water and Sewerage Fund, the Arboretum Golf Fund and the Buffalo Grove Golf Fund. The IEPA Loans Payable and Installment Note Payable are being liquidated by the Water and Sewerage Fund. Debt Service Requirements to Maturity The annual debt service requirements to maturity, including principal and interest, are as follows: Principal Interest Principal Interest Principal Interest 2019 $ 1,210,000 331,119 18,661 7,467 340,052 146,338 2020 1,285,000 296,369 19,092 7,036 386,802 137,921 2021 940,000 259,469 19,532 6,596 436,970 128,372 2022 965,000 237,181 19,983 6,145 490,763 117,611 2023 990,000 214,121 20,444 5,684 548,394 105,549 2024 1,015,000 190,241 20,916 5,212 610,091 92,095 2025 1,055,000 165,566 21,399 4,729 676,096 77,149 2026 980,000 139,069 21,893 4,235 746,659 60,610 2027 985,000 117,844 22,398 3,730 822,046 42,367 2028 1,045,000 95,288 22,915 3,213 902,537 22,304 2029 1,100,000 70,025 23,444 2,684 381,459 337,058 2030 1,110,000 42,525 23,985 2,143 - - 2031 370,000 11,100 24,539 1,589 - - 2032 - - 25,105 1,023 - - 2033 - - 25,687 441 - - 13,050,000 2,169,917 329,993 61,927 6,341,869 1,267,374 Fiscal Bonds Loan Payable Year Totals Installment Note Payable Business-Type ActivitiesGovernmental Activities General Obligation IEPA 74 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued LONG-TERM DEBT – Continued Operating Leases The Village has commitments with non-Village entities to lease certain property. Future minimum rental commitments are as follows: Fiscal Year 2019 $129,193 2020 131,777 2021 134,412 2022 137,101 2023 139,843 2024 142,640 2025 96,353 911,319 Total Payments Lease Legal Debt Margin Article VII, Section 6(k) of the 1970 Illinois Constitution governs the computation of legal debt margin. “The General Assembly may limit by law the amount and require referendum approval of debt to the incurred by home rule municipalities, payable from ad valorem property tax receipts, only in excess of the following percentages of the assessed value of its taxable property…(2) if its population is more than 25,000 and less than 500,000 an aggregate of one percent: indebtedness which is outstanding on the effective date (July 1, 1971) of this constitution or which is thereafter approved by referendum…shall not be included in the foregoing percentage amounts.” To date the Illinois General Assembly has set no limits for home rule municipalities. The Village is a home rule municipality. 75 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued LONG-TERM DEBT – Continued Tax Abatements The Village has entered into a tax abatement agreement with Woodman’s Food Market, Inc. as an incentive to stimulate economic development. The abatement is authorized through a Development Agreement passed by the Village Board in Ordinance 2016-067 on December 19, 2018. Woodman’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 Woodman’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. Woodman’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. The Village's incentive payments for the year ended December 31, 2018 were $0. The Village 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 20, 2000 and has since been amended with Village Ordinance 2003-18 on March 3, 2003 and 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 6o 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. The Village's incentive payments for the year ended December 31, 2018 were $1,308,426. The Village 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, LLC 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, LLC with a tax abatement of 100 percent of the municipal sales tax in year one of the agreement, this percentage decreases 10 percent per year until year seven of the agreement. The amount of municipal sales tax abated to LAB Development, LLC could not exceed $500,000 over the seven-year term. The amended agreement extended the abatements to LAB Development, LLC under new terms. LAB Development, 76 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued LONG-TERM DEBT – Continued Tax Abatements – Continued LLC 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 year 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 the will remit $187,500 to the Village within ninety days. If LAB Development, LLC 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. The Village's incentive payments for the year ended December 31, 2018 were $214,558. The Village 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 home rule 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 fist sales tax year, 100 percent 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 90 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the third sales tax year 80 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fourth sales tax year 70 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fifth sales tax year 60 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the sixth sales tax year 50 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the seventh sales tax year 50 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. The entire distribution cannot 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 ceases the business with seven years or generate less than $1,000 in sales tax in any sales tax year, Zonatherm shall reimburse the Village 100 percent of the municipal sales tax payments received. The Village's incentive payments for the year ended December 31, 2018 were $0. 77 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued LONG-TERM DEBT – Continued Tax Abatements – Continued 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, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for annual taxable sales greater than $40,000,000. For the second sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the third sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the fourth sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the fifth sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the sixth sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the 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 85 percent of the total home rule sales tax distributed. Should Bits relocate or cease business after two years of this agreement than Bits agrees to reimburse the Village 75 percent of the total home rules sales tax payments received. Should Bits relocate or cease business after three years of this agreement than Bits agrees to reimburse the Village 55 percent of the total home rules sales tax payments received. Should Bits relocate or cease business after four years of this agreement than Bits agrees to reimburse the Village 40 percent of the total home rules sales tax payments received. Should Bits relocate or cease business after five years of this agreement than Bits agrees to reimburse the Village 35 percent of the total home rules sales tax payments received. The Village's incentive payments for the year ended December 31, 2018 were $0. 78 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued NET POSITION/FUND BALANCE Net Position Restatements Beginning net position was restated due to the implementation of GASB Statement No. 75. The following is a summary of the net position as originally reported and as restated: Net Position As Restated (Decrease) Governmental Activities $ 18,925,023 11,155,657 (7,769,366) Business-Type Activites 47,639,887 47,095,761 (544,126) Water and Sewerage 39,045,687 38,585,475 (460,212) Buffalo Grove Golf 866,376 782,462 (83,914) Central Garage (375,764) (659,578) (283,814) Building Maintenance (267,977) (541,622) (273,645) As Reported Fund Balance Classifications The following is a schedule of fund balance classifications for the governmental funds as of the date of this report: Facilities Street Development Maintenance Nonmajor Totals Fund Balances Nonspendable Inventories $87,480 - - - 87,480 Prepaids 44,654 - - - 44,654 132,134 - - - 132,134 Restricted Employee Pension Benefits 391,469 - - - 391,469 Federal Seizure Funds 194,798 - - - 194,798 State Seizure Funds 21,144 - - - 21,144 Motor Fuel Tax - - - 1,204,977 1,204,977 Metra Parking Lot - - - 97,463 97,463 607,411 - - 1,302,440 1,909,851 Committed Capital Projects 6,827,236 - - - 6,827,236 Unassigned 17,039,974 (239,432) (28,828) - 16,771,714 Total Fund Balances 24,606,755 (239,432) (28,828) 1,302,440 25,640,935 General Capital Projects 79 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued NET POSITION/FUND BALANCE – Continued Fund Balance Classifications – Continued In the governmental fund financial statements, the Village considers restricted amounts to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available. The Village first utilizes committed, then assigned and then unassigned fund balance when an expenditure is incurred for purposes for which all three unrestricted fund balances are available. Nonspendable Fund Balance. Consists of resources that cannot be spent because they are either: a) not in a spendable form; or b) legally or contractually required to be maintained intact. Restricted Fund Balance. Consists of resources that are restricted to specific purposes, that is, when constraints placed on the use of resources are either: a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. Committed Fund Balance. Consists of resources constrained (issuance of an ordinance) to specific purposes by the government itself, using its highest level of decision-making authority, the Village Board; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest-level action to remove or change the constraint. Assigned Fund Balance. Consists of amounts that are constrained by the Village Board intent to be used for specific purposes but are neither restricted nor committed. Intent is expressed by the Village Board itself or by a body or official to which the Village Board has delegated the authority to assign amounts to be used for specific purposes. The Village’s’ highest level of decision-making authority is the Village Board, who is authorized to assign amounts to a specific purpose. Unassigned Fund Balance. Consists of residual net resources of a fund that has not been restricted, committed, or assigned within the General Fund and deficit fund balances of other governmental funds. Minimum Fund Balance Policy. The Village’s fund balance policy for the General Fund requires committed fund balance to be maintained at a minimum of 25% of budgeted operating expenditures. 80 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued NET POSITION/FUND BALANCE – Continued Net Position Classifications Net investment in capital assets was comprised of the following as of December 31, 2018: Governmental Activities Capital Assets - Net of Accumulated Depreciation $ 62,337,097 Plus: Unamortized Loss on Refunding 33,443 Less Capital Related Debt: General Obligation Bonds (13,050,000) Unamortized Premium (193,707) Net Investment in Capital Assets 49,126,833 Business-Type Activities Capital Assets - Net of Accumulated Depreciation 43,503,397 Less Capital Related Debt: IEPA Loans Payable (329,993) Installment Note Payable (6,341,869) Net Investment in Capital Assets 36,831,535 81 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION RISK MANAGEMENT The Village is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters; and injuries to the Village’s employees. The Village has purchased insurance from private insurance companies. Risks covered included certain types of liabilities and bonds. Premiums have been displayed as expenditures/expenses in appropriate funds. There were no significant changes in insurance coverages from the prior year and settlements did not exceed insurance coverage in any of the past three fiscal years. CONTINGENT LIABILITIES Litigation The Village is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the Village’s attorney, the resolution of these matters will not have a material adverse effect on the financial condition of the Village. Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Village expects such amounts, if any, to be immaterial. JOINT VENTURES Northwest Water Commission (NWWC) The Village is a member of the Northwest Water Commission (NWWC) which consists of four municipalities. NWWC 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). NWWC 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 four members of NWWC and their percentage shares as of April 30, 2018 are as follows: Percent Share Village of Arlington Heights 36.43 % Village of Buffalo Grove 17.06 Village of Palatine 29.10 Village of Wheeling 17.41 100.00 % 82 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued JOINT VENTURES – Continued Northwest Water Commission (NWWC) – Continued These percentage shares are based upon formula contained in the water supply agreement and are subject to change in future years based on consumption by the municipalities. The members form a contiguous geographic service area which is located northwest of downtown Chicago. Under the NWWC Agreement, additional members may join NWWC upon the approval of each member. NWWC 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 NWWC are appointed by the Board of Commissioners. The Board of Commissioners determines the general policy of NWWC, makes all appropriations, approves contracts for sale or purchase of water, adopts by-laws, rules and regulations, and exercises such powers and performs such duties as may be prescribed in the NWWC Agreement or the by-laws. Summary of financial positions as of April 30, 2018: Current Assets $24,118,325 Current Liabilities $ 7,307,098 Noncurrent Assets Noncurrent Liabilities 6,887,761 Capital Assets 34,729,717 Total Liabilities 14,194,859 Total Assets 58,848,042 Net Position 44,653,183 Summary of revenues, expenses and changes in net position for the year ended April 30, 2018: Operating Revenues $ 12,568,791 Operating Expenses 10,827,241 Operating Income 1,741,550 Nonoperating Revenue (Expenses)63,911 Change in Net Position 1,805,461 Net Position - Beginning 42,847,722 Net Position - Ending 44,653,183 83 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued JOINT VENTURES – Continued Northwest Water Commission (NWWC) – Continued Complete financial statements can be obtained from the Northwest Water Commission, 1525 North Wolf Road, Des Plaines, Illinois 60015. NWWC’s bonds are revenue obligations. They are limited obligations of NWWC with a claim for payment solely from and secured by a pledge of the revenues of the system and amounts in various funds and accounts established by NWWC resolutions. The bonds are not a debt of any member. NWWC has no power to levy taxes. Revenues of the system consist of: (a) all receipts derived from Water Supply Contracts or any other contract for the supply of water; (b) all income derived from the investment of monies; and (c) all income, fees, water service charges, and all rates, rents and receipts derived by NWWC from the ownership and operation of the system and the sale of water. JAWA covenants to establish fees and charges sufficient to provide revenues to meet all its requirements. N/WWC has entered into Water Supply Contracts with the four-member municipalities for a term of 40 years, extending to 2030. The Water Supply Contracts are irrevocable and may not be terminated or amended except as provided in the Water Supply 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. NWWC 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 NWWC through the year 2030. 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 NWWC of its obligations under this Contract. The payments required to be made by the Village under this Contract are required to be made solely from revenues to be derived by the Village from the operation of the Village’s system. Members are not prohibited by the Contract from using other available funds to make payments required under the Contract. This 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 Agreement from revenues of the Waterworks and Sewerage System shall be payable from the operation and maintenance account of the Water and Sewerage Fund. In accordance with the joint venture agreement, the Village remitted $1,722,150 to NWWC for the year ended April 30, 2018. All payments were paid from the Water and Sewerage Fund. The Village’s share of net position of NWWC was $7,619,017 at April 30, 2018. 84 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued JOINT VENTURES – Continued Solid Waste Agency of Northern Cook County (SWANCC) The Village is a member of the Solid Waste Agency of Northern Cook County (SWANCC) which consists of twenty-three municipalities. SWANCC is a municipal corporation and public body politic established pursuant to the Constitution Act of the State of Illinois and the Intergovernmental Cooperation Act of the State of Illinois, as amended. SWANCC is empowered to plan, construct, finance, operate, and maintain a solid waste disposal system to serve its members. SWANCC is governed by a Board of Directors which consists of one appointed representative from each member municipality. Each Director has an equal vote. The officers of SWANCC are appointed by the Board of Directors. The Board of Directors determines the general policy of SWANCC, makes all appropriations, approves contracts, adopts resolutions providing for the issuance of bonds or notes by SWANCC, adopts by- laws, rules and regulations, and exercises such powers and performs such duties as may be prescribed in the SWANCC agreement or the by-laws. Separate audited financial statements are available at 77 W Hintz Road, Suite 200, Wheeling, Illinois 60090. SWANCC’s bonds are revenue obligations. They are limited obligations of SWANCC, with a claim for payment solely from and secured by a pledge of the revenues of the system, and amounts in various funds and accounts established by SWANCC resolutions. SWANCC has no power to levy taxes. Revenues of the system consist of: (a) all receipts derived from Solid Waste Disposal Contracts or any other contracts for the disposal of waste; (b) all income derived from the investment of monies; and (c) all income, fees, service charges, and all grants, rents, and receipts derived by SWANCC from the ownership and operation of the system. SWANCC covenants to establish fees and charges sufficient to provide revenues to meet all its requirements. SWANCC has entered into Solid Waste 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 obligation of the Village to make all payments as required by this Contract is unconditional and irrevocable, without regard to performance or nonperformance by SWANCC of its obligations under this Contract. 85 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued JOINT VENTURES – Continued Solid Waste Agency of Northern Cook County (SWANCC) – Continued The payments required to be made by the Village under this Contract are required to be made solely from revenues to be derived by the Village from the operation of the Municipal Waste System Fund. The Village is not prohibited by the Contract from using any other funds to make the payments required by the Contract. The Contract shall not constitute an indebtedness of the Village within the meaning of nay statutory or constitutional limitation. In accordance with the joint venture agreement, the Village remitted $782,195 to SWANCC for the year ended December 31, 2018, which is recorded in the Village’s Refuse Service Fund. EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS The Village contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund (IMRF), a defined benefit agent multiple-employer public employee retirement system and the Police Pension Plan which is a single-employer pension plan, and the Firefighters’ Pension Plan which is a single-employer pension plan. A separate report is issued for the Police Pension Plan and Firefighters’ Pension Plan and may be obtained by writing to the Village at 50 Raupp Boulevard, Buffalo Grove, Illinois 60089. IMRF issues a publicly available financial report that includes financial statements and required supplementary information for the plan as a whole, but not by individual employer. That report may be obtained online at www.imrf.org. The benefits, benefit levels, employee contributions, and employer contributions are governed by Illinois Compiled Statutes (ILCS) and can only be amended by the Illinois General Assembly. The Village recognized aggerate pension expense for the three plans as follows: IMRF $ 1,723,371 Police Pension 4,435,106 Firefighters' Pension 3,037,086 9,195,563 Illinois Municipal Retirement Fund (IMRF) Plan Descriptions Plan Administration. All employees (other than those covered by the Police Pension Plan and the Firefighters’ Pension Plan) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. The plan is accounted for on the economic resources measurement focus and the accrual basis of accounting. Employer and employee contributions are recognized when earned in the year that the contributions are required, benefits and refunds are recognized as an expense and liability when due and payable. 86 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Illinois Municipal Retirement Fund (IMRF) – Continued Plan Descriptions – Continued Benefits Provided. IMRF has three benefit plans. The vast majority of IMRF members participate in the Regular Plan (RP). The Sheriff’s Law Enforcement Personnel (SLEP) plan is for sheriffs, deputy sheriffs, and selected police chiefs. Counties could adopt the Elected County Official (ECO) plan for officials elected prior to August 8, 2011 (the ECO plan was closed to new participants after that date). IMRF provides two tiers of pension benefits. Employees hired before January 1, 2011, are eligible for Tier 1 benefits. Tier 1 employees are vested for pension benefits when they have at least eight years of qualifying service credit. Tier 1 employees who retire at age 55 (at reduced benefits) or after age 60 (at full benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any consecutive 48 months within the last 10 years of service, divided by 48. Under Tier 1, the pension is increased by 3% of the original amount on January 1 every year after retirement. Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating employees who retire at age 62 (at reduced benefits) or after age 67 (at full benefits) with ten years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last 10 years of service, divided by 96. Under Tier 2, the pension is increased on January 1 every year after retirement, upon reaching age 67, by the lesser of: • 3% of the original pension amount, or • 1/2 of the increase in the Consumer Price Index of the original pension amount. 87 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Illinois Municipal Retirement Fund (IMRF) – Continued Plan Descriptions – Continued Plan Membership. As of December 31, 2017, the measurement date, the following employees were covered by the benefit terms: Inactive Plan Members Currently Receiving Benefits 106 Inactive Plan Members Entitled to but not yet Receiving Benefits53 Active Plan Members 98 Total 257 Contributions. As set by statute, the Village’s Regular Plan Members are required to contribute 4.5% of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. For the year-ended December 31, 2018, the Village’s contribution was 13.91% of covered payroll. Net Pension Liability. The Village’s net pension liability was measured as of December 31, 2017. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. 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 Actuarial Assumptions Interest Rate 7.50% Salary Increases 3.39% to 14.25% Cost of Living Adjustments 2.50% Inflation 2.50% 88 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Illinois Municipal Retirement Fund (IMRF) – Continued Plan Descriptions – Continued Actuarial Assumptions – Continued. For non-disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same adjustment that were applied for non-disabled lives. For active members, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return to the target asset allocation percentage and adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Long-Term Expected Real Asset Class Target Rate of Return Fixed Income 28.00%3.00% Domestic Equities 37.00%6.85% International Equities 18.00%6.75% Real Estate 9.00%5.75% Blended 7.00% 2.65% - 7.35% Cash and Cash Equivalents 1.00%2.25% 89 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Illinois Municipal Retirement Fund (IMRF) – Continued Discount Rate The discount rate used to measure the total pension liability was 7.50%, 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 the actuarially determined contribution rates and the member rate. Based on those assumptions, the IMRF’s fiduciary net position was projected to be available to make all project future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all period of projected benefit payments 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 the pension liability/(asset) of the Village calculated using the discount rate as well as what the Village’s net pension liability/(asset) would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate: Current Discount Rate (7.50%) Net Pension Liability/(Asset)$ 10,954,671 3,261,456 (3,052,120) 1% Decrease 1% Increase (6.50%)(8.50%) 90 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Illinois Municipal Retirement Fund (IMRF) – Continued Changes in the Net Pension Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A) (B) (A) - (B) Balances at December 31, 2016 $ 60,017,497 50,608,825 9,408,672 Changes for the Year: Service Cost 858,070 - 858,070 Interest on the Total Pension Liability 4,434,597 - 4,434,597 Changes of Benefit Terms - - - Difference Between Expected and Actual Experience of the Total Pension Liability 40,460 - 40,460 Changes of Assumptions - - - Contributions - Employer - 1,164,635 (1,164,635) Contributions - Employees - 377,312 (377,312) Net Investment Income (1,963,662) 8,949,122 (10,912,784) Benefit Payments, including Refunds of Employee Contributions (2,637,150) (2,637,150)- Other (Net Transfer)- (974,388) 974,388 Net Changes 732,315 6,879,531 (6,147,216) Balances at December 31, 2017 60,749,812 57,488,356 3,261,456 91 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Illinois Municipal Retirement Fund (IMRF) – Continued Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions For the year ended December 31, 2018, the Village recognized pension expense of $1,723,371. At December 31, 2018, the Village reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Inflows of Resources Totals Difference Between Expected and Actual Experience $ 468,677 (648,628) (179,951) Change in Assumptions 294,184 (1,617,122) (1,322,938) Net Difference Between Projected and Actual Earnings on Pension Plan Investments - (2,552,022) (2,552,022) Total Pension Expense to be Recognized in Future Periods 762,861 (4,817,772) (4,054,911) Pension Contributions Made Subsequent to the Measurement Date 1,225,584 - 1,225,584 Total Deferred Amounts Related to IMRF 1,988,445 (4,817,772) (2,829,327) Deferred Outflows of Resources Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Net Deferred Fiscal (Inflows) Year of Resources 2019 $ (495,027) 2020 (885,893) 2021 (1,519,943) 2022 (1,154,048) 2023 - Thereafter - Total (4,054,911) 92 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Police Pension Plan Plan Descriptions Plan Administration. The Police Pension Plan is a single-employer defined benefit pension plan that covers all sworn police personnel. The defined benefits and employee and minimum employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/3-1) and may be amended only by the Illinois legislature. The Village accounts for the Fund as a pension trust fund. The Fund is governed by a five-member pension board. Two members of the Board are appointed by the Village President, one member is elected by pension beneficiaries and two members are elected by active police employees. Plan Membership. At December 31, 2018, the measurement date, membership consisted of the following: Inactive Plan Members Currently Receiving Benefits 51 Inactive Plan Members Entitled to but not yet Receiving Benefits 3 Active Plan Members 62 Total 116 Benefits Provided. The following is a summary of the Police Pension Plan as provided for in Illinois State Statutes. The Police Pension Plan provides retirement benefits through two tiers of benefits as well as death and disability benefits. Covered employees hired before January 1, 2011 (Tier 1), attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit of ½ of the salary attached to the rank held on the last day of service, or for one year prior to the last day, whichever is greater. The annual benefit shall be increased by 2.5 percent of such salary for each additional year of service over 20 years up to 30 years, to a maximum of 75 percent of such salary. Employees with at least eight years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit 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 be paid upon reaching the age of at least 55 years, by 3 percent of the original pension and 3 percent compounded annually thereafter. Covered employees hired on or after January 1, 2011 (Tier 2), attaining the age of 55 or older with 10 or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the police officer during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Police officer salary for the pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3 percent compounded. 93 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Police Pension Plan – Continued Plan Descriptions – Continued Benefits Provided – Continued. The annual benefit shall be increased by 2.5 percent of such a salary for each additional year of service over 20 years up to 30 years to a maximum of 75 percent of such salary. Employees with at least 10 years may retire at or after age 50 and receive a reduced benefit (i.e., ½ percent for each month under 55). The monthly benefit of a Tier 2 police officer shall be increased annually at age 60 on the January 1st after the police officer retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3 percent or ½ of the change in the Consumer Price Index for the proceeding calendar year. 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 plan and the administrative costs as actuarially determined by an enrolled actuary. However, effective January 1, 2011, ILCS requires the Village to contribute a minimum amount annually calculated using the projected unit credit actuarial cost method that will result in the funding of 90% of the past service cost by the year 2040. For the year-ended December 31, 2018, the Village’s contribution was 39.61% of covered payroll. Concentrations. At year end, the Pension Plan does not have any investments (other than investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments) in any one organization that represent 5 percent or more of net position available for benefits. Actuarial Assumptions The total pension liability was determined by an actuarial valuation performed, as of December 31, 2018, using the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Asset Valuation Method Market Actuarial Assumptions Interest Rate 7.00% Salary Increases 4.00% - 8.67% Cost of Living Adjustments 2.50% Inflation 2.50% 94 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Police Pension Plan – Continued Actuarial Assumptions – Continued Mortality rates were based on the RP-2014 adjusted for Plan Status, Collar, and Illinois Public Pension Data, as appropriate. Discount Rate The discount rate used to measure the total pension liability 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 the actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund’s fiduciary net position was projected to be available to make all project future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all period 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 as well as what the Village’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate: Current Discount Rate (7.00%) Net Pension Liability $ 49,030,160 34,601,965 22,863,459 1% Decrease 1% Increase (6.00%) (8.00%) 95 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Police Pension Plan – Continued Changes in the Net Pension Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A) (B) (A) - (B) Balances at December 31, 2017 $ 94,603,289 67,432,478 27,170,811 Changes for the Year: Service Cost 1,628,794 - 1,628,794 Interest on the Total Pension Liability 6,489,094 - 6,489,094 Difference Between Expected and Actual Experience of the Total Pension Liability (92,557)- (92,557) Contributions - Employer - 2,668,632 (2,668,632) Contributions - Employees - 674,488 (674,488) Contributions - Other - 28,742 (28,742) Net Investment Income - (2,726,612) 2,726,612 Benefit Payments, including Refunds of Employee Contributions (3,803,918) (3,803,918)- Administrative Expense - (51,073) 51,073 Net Changes 4,221,413 (3,209,741) 7,431,154 Balances at December 31, 2018 98,824,702 64,222,737 34,601,965 96 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Police Pension Plan – Continued Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions For the year ended December 31, 2018, the Village recognized pension expense of $4,435,106. At December 31, 2018, the Village reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Totals Difference Between Expected and Actual Experience $ 481,213 (427,865) 53,348 Change in Assumptions 1,695,281 (2,409,349) (714,068) Net Difference Between Projected and Actual Earnings on Pension Plan Investments 4,413,037 - 4,413,037 Total Deferred Amounts Related to Police Pension 6,589,531 (2,837,214) 3,752,317 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Fiscal Year 2019 $ 1,672,737 2020 922,895 2021 270,986 2022 947,506 2023 (57,260) Thereafter (4,547) Total 3,752,317 Net Deferred Outflows/ (Inflows) of Resources 97 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Firefighters’ Pension Plan Plan Descriptions Plan Administration. The Firefighters’ Pension Plan is a single-employer defined benefit pension plan that covers all sworn firefighter personnel. The defined benefits and employee and minimum employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/4-1) and may be amended only by the Illinois legislature. The Village accounts for the Fund as a pension trust fund. The Fund is governed by a five-member pension board. Two members of the Board are appointed by the Village President, one member is elected by pension beneficiaries and two members are elected by active fire employees. Plan Membership. At December 31, 2018, the measurement date, membership consisted of the following: Inactive Plan Members Currently Receiving Benefits 37 Inactive Plan Members Entitled to but not yet Receiving Benefits 1 Active Plan Members 56 Total 94 Benefits Provided. The following is a summary of the Firefighters’ Pension Plan as provided for in Illinois State Statutes. The Firefighters’ Pension Plan provides retirement benefits through two tiers of benefits as well as death and disability benefits. Covered employees hired before January 1, 2011 (Tier 1), attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit of ½ of the salary attached to the rank held on the last day of service, or for one year prior to the last day, whichever is greater. The annual benefit shall be increased by 2.5 percent of such salary for each additional year of service over 20 years up to 30 years, to a maximum of 75 percent of such salary. Employees with at least eight years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit 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 be paid upon reaching the age of at least 55 years, by 3 percent of the original pension and 3percent compounded annually thereafter. 98 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Firefighters’ Pension Plan – Continued Plan Descriptions – Continued Benefits Provided – Continued. Covered employees hired on or after January 1, 2011 (Tier 2), attaining the age of 55 or older with 10 or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the firefighter during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Firefighters’ salary for the pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3 percent compounded. The annual benefit shall be increased by 2.5 percent of such a salary for each additional year of service over 20 years up to 30 years to a maximum of 75 percent of such salary. Employees with at least 10 years may retire at or after age 50 and receive a reduced benefit (i.e., ½ percent for each month under 55). The monthly benefit of a Tier 2 firefighter shall be increased annually at age 60 on the January 1st after the firefighter retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3 percent or ½ of the change in the Consumer Price Index for the proceeding calendar year. Contributions. Covered employees are required to contribute 9.455% of their base salary to the Firefighters’ 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 plan and the administrative costs as actuarially determined by an enrolled actuary. However, effective January 1, 2011, ILCS requires the Village to contribute a minimum amount annually calculated using the projected unit credit actuarial cost method that will result in the funding of 90% of the past service cost by the year 2040. For the year-ended December 31, 2018, the Village’s contribution was 32.52% of covered payroll. Concentrations. At year end, the Pension Plan does not have any investments (other than investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments) in any one organization that represent 5 percent or more of net position available for benefits. 99 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Firefighters’ Pension Plan – Continued Actuarial Assumptions The total pension liability was determined by an actuarial valuation performed, as of December 31, 2018, using the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Asset Valuation Method Market Actuarial Assumptions Interest Rate 7.00% Salary Increases 4.00% - 9.73% Cost of Living Adjustments 2.50% Inflation 2.50% Mortality rates were based on the RP2014 base rates with blue collar adjustment projected to the valuation date with scale MP2016. Discount Rate The discount rate used to measure the total pension liability 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 the actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund’s fiduciary net position was projected to be available to make all project future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all period of projected benefit payments to determine the total pension liability. 100 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Firefighters’ Pension Plan – Continued 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 as well as what the Village’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate: Current Discount Rate (7.00%) Net Pension Liability $ 34,001,505 21,913,076 12,092,876 1% Decrease 1% Increase (6.00%) (8.00%) Changes in the Net Pension Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A) (B) (A) - (B) Balances at December 31, 2017 $ 76,128,103 61,562,470 14,565,633 Changes for the Year: Service Cost 1,325,255 - 1,325,255 Interest on the Total Pension Liability 5,226,040 - 5,226,040 Changes of Benefit Terms - - - Difference Between Expected and Actual Experience of the Total Pension Liability 234,796 - 234,796 Changes of Assumptions - - - Contributions - Employer - 1,897,968 (1,897,968) Contributions - Employees - 533,534 (533,534) Net Investment Income - (2,917,744) 2,917,744 Benefit Payments, including Refunds of Employee Contributions (2,940,773) (2,940,773)- Administrative Expense - (75,110) 75,110 Net Changes 3,845,318 (3,502,125) 7,347,443 Balances at December 31, 2018 79,973,421 58,060,345 21,913,076 101 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued EMPLOYEE RETIREMENT SYSTEM – DEFINED BENEFIT PENSION PLANS – Continued Firefighters’ Pension Plan – Continued Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions For the year ended December 31, 2018, the Village recognized pension expense of $3,037,086. At December 31, 2018, the Village reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Totals Difference Between Expected and Actual Experience $ 362,536 (643,816) (281,280) Change in Assumptions 589,249 (376,994) 212,255 Net Difference Between Projected and Actual Earnings on Pension Plan Investments 4,082,100 - 4,082,100 Total Deferred Amounts Related to Firefighters' Pension 5,033,885 (1,020,810) 4,013,075 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Fiscal Year 2019 $ 1,233,131 2020 675,940 2021 651,267 2022 1,414,522 2023 (31,967) Thereafter 70,182 Total 4,013,075 Net Deferred Outflows/ (Inflows) of Resources 102 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued OTHER POST-EMPLOYMENT BENEFITS General Information about the OPEB Plan Plan Description. The Village’s defined benefit OPEB plan, Village of Buffalo Grove Retiree Benefits Plan (RBP), provides OPEB for all permanent full-time general and public safety employees of the Village. RBP is a single-employer defined benefit OPEB plan administered by the Village. Article 11 of the State Compiled Statutes grants the authority to establish and amend the benefit terms and financing requirements to the Village Board. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement 75. Benefits Provided. RBP offers medical, prescription, vision, dental, life insurance coverage to retirees. Retirees pay full cost of coverage. Coverage ends at age 65 or once retirees are eligible for Medicare. Plan Membership. As of December 31, 2018, the measurement date, the following employees were covered by the benefit terms: Inactive Plan Members Currently Receiving Benefits 41 Inactive Plan Members Entitled to but not yet Receiving Benefits - Active Plan Members 207 Total 248 Total OPEB Liability The Village’s total OPEB liability was measured as of December 31, 2018, and was determined by an actuarial valuation as of that date. Actuarial assumptions and other inputs. The total OPEB liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: 103 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued OTHER POST-EMPLOYMENT BENEFITS – Continued Total OPEB Liability – Continued Actuarial assumptions and other inputs - Continued. Inflation 2.50% Salary Increases 3.00% Discount Rate 4.10% Healthcare Cost Trend Rates Retirees' Share of Benefit-Related Costs 100% of Benefit-Related Costs 5.50% for 2019,decreasing to an ultimate rate of 5.00% for 2024 and later years The discount rate was based on a combination of the expected long-term rate of return on plan investments and the municipal bond rate. Mortality rates were based on the sex distinct raw rates as developed in the RP-2014 study, with blue collar adjustment. These rates are improved generationally using MP-2017 improvement rates. Change in the Total OPEB Liability Balance at December 31, 2017 $ 9,548,871 Changes for the Year: Service Cost 298,851 Interest on the Total Pension Liability 321,987 Changes of Benefit Terms - Difference Between Expected and Actual Experience - Changes of Assumptions or Other Inputs (774,109) Benefit Payments (389,489) Net Changes (542,760) Balance at December 31, 2018 9,006,111 Total OPEB Liability 104 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 105 NOTE 4 – OTHER INFORMATION – Continued OTHER POST-EMPLOYMENT BENEFITS – Continued Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following is a sensitivity analysis of the total OPEB liability to changes in the discount rate. The table below presents the OPEB liability of the Village calculated using the discount rate as well as what the Village’s total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate: Current Discount Rate 1% Increase (4.10%)(5.10%) Total OPEB Liability $10,227,917 9,006,111 8,011,323 1% Decrease (3.10%) Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates The following is a sensitivity analysis of the total OPEB liability to changes in the healthcare cost trend rates. The table below presents the OPEB liability of the Village calculated using the discount rate as well as what the Village’s total OPEB liability would be if it were calculated using healthcare trend rates that are one percentage point lower or one percentage point higher than the current rates: Healthcare Cost Trend Rates (5.50%(6.50% decreasing to decreasing to 5.00%)6.00%) Total OPEB Liability $77,985,351 9,006,111 10,529,355 4.00%) (4.50% decreasing to VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2018 NOTE 4 – OTHER INFORMATION – Continued OTHER POST-EMPLOYMENT BENEFITS – Continued OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2018, the Village recognized OPEB expense of $541,360. At December 31, 2018, the Village reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Inflows of Resources Totals Difference Between Expected and Actual Experience $- - - Change in Assumptions - (694,631) (694,631) Net Difference Between Projected and Actual Earnings on Pension Plan Investments - - - Total Deferred Amounts Related to OPEB - (694,631) (694,631) Deferred Outflows of Resources Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Net Deferred Fiscal (Inflows) Year of Resources 2019 $ (79,478) 2020 (79,478) 2021 (79,478) 2022 (79,478) 2023 (79,478) Thereafter (297,241) Total (694,631) 106 • Schedule of Employer Contributions Illinois Municipal Retirement Fund Police Pension Fund Firefighters' Pension Fund • Schedule of Changes in the Employer’s Net Pension Liability Illinois Municipal Retirement Fund Police Pension Fund Firefighters' Pension Fund • Schedule of Investment Returns Police Pension Fund Firefighters' Pension Fund • Schedule of Changes in the Employer's Total OPEB Liability Retiree Benefit Plan • Budgetary Comparison Schedule General Fund Notes to the Required Supplementary Information REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information includes financial information and disclosures that are required by the GASB but are not considered a part of the basic financial statements. Such information includes: Budgetary Information –Budgets are adopted on a basis consistent with generally accepted accounting principles. VILLAGE OF BUFFALO GROVE, ILLINOIS Illinois Municipal Retirement Fund Required Supplementary Information Schedule of Employer Contributions December 31, 2018 Contributions as Fiscal a Percentage of Year Covered Payroll 2014 $ 1,020,544 $ 1,071,994 $ 51,450 $ 7,802,324 13.74% 2015 1,093,142 1,093,142 - 8,157,772 13.40% 2016 1,112,901 1,112,901 - 8,023,803 13.87% 2017 1,164,635 1,164,635 - 8,384,700 13.89% 2018 1,225,584 1,225,584 - 8,810,810 13.91% Notes to the Required Supplementary Information: Actuarial Cost Method Entry Age Normal Amortization Method Level % Pay (Closed) Remaining Amortization Period 26 Years Asset Valuation Method 5-Year Smoothed Market Inflation 2.75% Salary Increases 3.75% - 14.50% Investment Rate of Return 7.50% Retirement Age See the Notes to the Financial Statements Mortality Contributions in Relation to the Actuarially Determined Contribution Covered Payroll Actuarially Determined Contribution Contribution Excess/ (Deficiency) Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. An IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012). 107 VILLAGE OF BUFFALO GROVE, ILLINOIS Police Pension Fund Required Supplementary Information Schedule of Employer Contributions December 31, 2018 Contributions as Fiscal a Percentage of Year Covered Payroll 2014 $ 2,359,777 $ 2,083,758 $ (276,019) $ 5,984,178 34.82% 2015 2,256,676 2,284,315 27,639 6,056,962 37.71% 2016 2,407,865 2,430,017 22,152 6,406,672 37.93% 2017 2,538,183 2,641,453 103,270 6,565,793 40.23% 2018 2,673,256 2,668,632 (4,624) 6,738,022 39.61% Notes to the Required Supplementary Information: Actuarial Cost Method Entry Age Normal Amortization Method Level % Pay (Closed) Remaining Amortization Period 24 Years Asset Valuation Method 5-Year Smoothed Market Inflation 2.50% Salary Increases 4.00% - 8.67% Investment Rate of Return 7.00% Retirement Age 50-60 Mortality Contributions in Relation to the Actuarially Payroll Covered Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. Contribution Determined Excess/ Contribution (Deficiency) Actuarially Determined Contribution RP 2014 Study, with Blue Collar Adjustment and improved gereationally using MP-2016 Improvement Rates 108 VILLAGE OF BUFFALO GROVE, ILLINOIS Firefighters' Pension Fund Required Supplementary Information Schedule of Employer Contributions December 31, 2018 Contributions as Fiscal a Percentage of Year Covered Payroll 2014 $ 1,884,815 $ 2,168,844 $ 284,029 $ 5,224,950 41.51% 2015 1,848,990 2,202,138 353,148 5,308,713 41.48% 2016 1,728,496 2,166,040 437,544 5,390,509 40.18% 2017 1,862,674 1,864,498 1,824 5,585,881 33.38% 2018 1,897,942 1,897,968 26 5,836,466 32.52% Notes to the Required Supplementary Information: Actuarial Cost Method Entry Age Normal Amortization Method Level % Pay (Closed) Remaining Amortization Period 24 Years Asset Valuation Method 5-Year Smoothed Market Inflation 2.50% Salary Increases 4.00% - 9.73% Investment Rate of Return 7.00% Retirement Age 50-65 Mortality Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. Determined Determined Excess/ Covered Contribution Contribution (Deficiency) Payroll RP 2014 Study, with Blue Collar Adjustment and improved gereationally using MP-2016 Improvement Rates Contributions in Relation to Actuarially the Actuarially Contribution 109 VILLAGE OF BUFFALO GROVE, ILLINOIS Illinois Municipal Retirement Fund Required Supplementary Information Schedule of Changes in the Employer's Net Pension Liability December 31, 2018 See Following Page VILLAGE OF BUFFALO GROVE, ILLINOIS Illinois Municipal Retirement Fund Required Supplementary Information Schedule of Changes in the Employer's Net Pension Liability December 31, 2018 Total Pension Liability Service Cost $964,574 Interest 3,808,085 Differences Between Expected and Actual Experience (1,126,970) Change of Assumptions 1,736,515 Benefit Payments, Including Refunds of Member Contributions (2,148,231) Net Change in Total Pension Liability 3,233,973 Total Pension Liability - Beginning 51,366,296 Total Pension Liability - Ending 54,600,269 Plan Fiduciary Net Position Contributions - Employer $1,071,994 Contributions - Members 369,278 Net Investment Income 2,892,087 Benefit Payments, Including Refunds of Member Contributions (2,148,231) Other (Net Transfer)(1,146,370) Net Change in Plan Fiduciary Net Position 1,038,758 Plan Net Position - Beginning 47,764,745 Plan Net Position - Ending 48,803,503 Employer's Net Pension Liability $5,796,766 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 89.38% Covered Payroll $8,195,678 Employer's Net Pension Liability as a Percentage of Covered Payroll 70.73% Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. 12/31/14 110 12/31/15 12/31/16 12/31/17 860,654 871,953 858,070 4,031,299 4,310,485 4,434,597 1,338,146 (921,372) 40,460 145,117 (220,386) (1,963,662) (2,416,367) (2,582,301) (2,637,150) 3,958,849 1,458,379 732,315 54,600,269 58,559,118 60,017,497 58,559,118 60,017,497 60,749,812 1,093,142 1,112,901 1,164,635 402,168 428,936 377,312 241,715 3,350,903 8,949,122 (2,416,367) (2,582,301) (2,637,150) 520,582 (346,357) (974,388) (158,760) 1,964,082 6,879,531 48,803,503 48,644,743 50,608,825 48,644,743 50,608,825 57,488,356 9,914,375 9,408,672 3,261,456 83.07%84.32%94.63% 8,157,772 8,023,803 8,384,700 121.53%117.26%38.90% 111 VILLAGE OF BUFFALO GROVE, ILLINOIS Police Pension Fund Required Supplementary Information Schedule of Changes in the Employer's Net Pension Liability December 31, 2018 Total Pension Liability Service Cost $ 1,415,171 Interest 5,318,732 Differences Between Expected and Actual Experience - Change of Assumptions - Benefit Payments, Including Refunds of Member Contributions (2,747,592) Net Change in Total Pension Liability 3,986,311 Total Pension Liability - Beginning 77,355,682 Total Pension Liability - Ending 81,341,993 Plan Fiduciary Net Position Contributions - Employer $ 2,083,758 Contributions - Members 654,693 Contributions - Other - Net Investment Income 3,756,487 Benefit Payments, Including Refunds of Member Contributions (2,747,592) Administrative Expense (33,343) Net Change in Plan Fiduciary Net Position 3,714,003 Plan Net Position - Beginning 52,540,449 Plan Net Position - Ending 56,254,452 Employer's Net Pension Liability 25,087,541 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 69.16% Covered Payroll $ 5,984,178 Employer's Net Pension Liability as a Percentage of Covered Payroll 419.23% 2014 Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. 112 2015 2016 2017 2018 1,386,660 1,534,051 1,637,139 1,628,794 5,438,273 5,861,687 6,171,179 6,489,094 (1,015,708) 358,140 353,405 (92,557) 4,811,344 170,816 (3,590,403) - (2,969,657) (3,283,543) (3,602,086) (3,803,918) 7,650,912 4,641,151 969,234 4,221,413 81,341,993 88,992,905 93,634,056 94,603,290 88,992,905 93,634,056 94,603,290 98,824,703 2,284,315 2,430,017 2,524,306 2,668,632 669,077 622,198 627,548 674,488 - - 117,147 28,742 186,635 3,418,114 8,300,527 (2,726,612) (2,969,657) (3,283,543) (3,602,086) (3,803,918) (39,870) (43,969) (62,732) (51,073) 130,500 3,142,817 7,904,710 (3,209,741) 56,254,452 56,384,952 59,527,769 67,432,479 56,384,952 59,527,769 67,432,479 64,222,738 32,607,953 34,106,287 27,170,811 34,601,965 63.36%63.57%71.28%64.99% 6,056,962 6,406,672 6,565,793 6,738,022 538.35%532.36%413.82%513.53% 113 VILLAGE OF BUFFALO GROVE, ILLINOIS Firefighters' Pension Fund Required Supplementary Information Schedule of Changes in the Employer's Net Pension Liability December 31, 2018 Total Pension Liability Service Cost $ 1,378,069 Interest 4,304,137 Differences Between Expected and Actual Experience 218,159 Change of Assumptions (938,734) Benefit Payments, Including Refunds of Member Contributions (1,943,411) Net Change in Total Pension Liability 3,018,220 Total Pension Liability - Beginning 62,459,374 Total Pension Liability - Ending 65,477,594 Plan Fiduciary Net Position Contributions - Employer $ 2,168,844 Contributions - Members 502,014 Contributions - Other - Net Investment Income 3,195,916 Benefit Payments, Including Refunds of Member Contributions (1,943,409) Administrative Expense (42,368) Net Change in Plan Fiduciary Net Position 3,880,997 Plan Net Position - Beginning 45,275,721 Plan Net Position - Ending 49,156,718 Employer's Net Pension Liability 16,320,876 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 75.07% Covered Payroll $ 5,224,950 Employer's Net Pension Liability as a Percentage of Covered Payroll 312.36% 2014 Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. 114 2015 2016 2017 2018 1,179,270 1,260,242 1,348,459 1,325,255 4,508,473 4,757,916 4,961,838 5,226,040 (1,080,688) (133,067) 204,895 234,796 1,139,953 (588,791) - - (2,141,668) (2,225,410) (2,540,912) (2,940,773) 3,605,340 3,070,890 3,974,280 3,845,318 65,477,594 69,082,934 72,153,824 76,128,104 69,082,934 72,153,824 76,128,104 79,973,422 2,202,138 2,166,040 1,863,911 1,897,968 524,714 516,422 520,184 533,534 - - 588 - 654,625 3,415,513 7,601,179 (2,917,744) (2,141,668) (2,225,410) (2,540,912) (2,940,773) (48,363) (42,284) (60,924) (75,110) 1,191,446 3,830,281 7,384,026 (3,502,125) 49,156,718 50,348,164 54,178,445 61,562,471 50,348,164 54,178,445 61,562,471 58,060,346 18,734,770 17,975,379 14,565,633 21,913,076 72.88%75.09%80.87%72.60% 5,308,713 5,390,509 5,585,881 5,836,466 352.91%333.46%260.76%375.45% 115 VILLAGE OF BUFFALO GROVE, ILLINOIS Police Pension Fund Required Supplementary Information Schedule of Investment Returns December 31, 2018 Annual Money- Weighted Rate of Return, Net Fiscal of Investment Year Expense 2014 7.00% 2015 0.67% 2016 5.71% 2017 14.38% 2018 (4.09%) Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. 116 VILLAGE OF BUFFALO GROVE, ILLINOIS Firefighters' Pension Fund Required Supplementary Information Schedule of Investment Returns December 31, 2018 Annual Money- Weighted Rate of Return, Net Fiscal of Investment Year Expense 2014 7.08% 2015 1.32% 2016 6.78% 2017 14.05% 2018 (4.77%) Note: This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. 117 VILLAGE OF BUFFALO GROVE, ILLINOIS Retiree Benefit Plan Required Supplementary Information Schedule of Changes in the Employer's Total OPEB Liability December 31, 2018 Total OPEB Liability Service Cost $298,851 Interest 321,987 Changes in Benefit Terms - Differences Between Expected and Actual Experience - Change of Assumptions or Other Inputs (774,109) Benefit Payments (389,489) Net Change in Total OPEB Liability (542,760) Total OPEB Liability - Beginning 9,548,871 Total OPEB Liability - Ending 9,006,111 Covered Payroll $21,900,270 Total OPEB Liability as a Percentage of Covered Payroll 41.12% Notes: Fiscal Year HMO PPO 2019 5.50%6.00% 2020 5.50%6.00% 2021 5.00%5.50% 2022 5.00%5.50% 2023 5.00%5.00% 2024 5.00%5.00% Ultimate 5.00%5.00% 2018 This schedule is intended to show information for ten years. Information for additional years will be displayed as it becomes available. Changes of Benefit Terms. There was no change in the retirees' share of health insurance premiums. Changes of Assumptions.Changes of assumptions and other inputs reflect the effects of changes in the trend rate each period. The following are the trend rates used in each period: In 2018, there was no change in the healthcare trend rates from the prior year. 118 VILLAGE OF BUFFALO GROVE, ILLINOIS General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Revenues Property Taxes $14,933,253 14,933,253 14,956,844 Other Taxes 9,886,470 9,886,470 10,494,959 Intergovernmental 10,856,511 10,856,511 11,561,617 Charges for Services 1,455,897 1,455,897 1,392,159 Licenses and Permits 311,865 311,865 344,389 Fines and Forfeitures 2,871,789 2,871,789 2,820,773 Interest 141,300 141,300 292,340 Miscellaneous 970,350 970,350 1,884,579 Total Revenues 41,427,435 41,427,435 43,747,660 Expenditures Current General Government 5,975,992 6,139,337 6,586,178 Public Safety 27,652,356 27,652,356 26,732,460 Public Works 6,994,268 6,994,268 7,445,965 Capital Outlay 303,500 303,500 552,603 Total Expenditures 40,926,116 41,089,461 41,317,206 Excess (Deficiency) of Revenues Over (Under) Expenditures 501,319 337,974 2,430,454 Other Financing Sources (Uses) Transfers In 877,000 877,000 2,613,543 Transfers Out (1,366,601)(1,366,601)(7,483,638) (489,601)(489,601)(4,870,095) Net Change in Fund Balance 11,718 (151,627)(2,439,641) Fund Balance - Beginning 27,046,396 Fund Balance - Ending 24,606,755 Budget Original 119 Such statements and schedules include: • Budgetary Comparison Schedules – Major Governmental Funds • Combining Statements – Nonmajor Governmental Funds • Budgetary Comparison Schedules – Nonmajor Governmental Funds • Budgetary Comparison Schedules – Major Enterprise Funds • Combining Statements – Nonmajor Enterprise Funds • Budgetary Comparison Schedules – Nonmajor Enterprise Funds • Combining Statements – Internal Service Funds • Budgetary Comparison Schedules – Internal Service Funds • Combining Statements – Pension Trust Funds • Budgetary Comparison Schedules – Pension Trust Funds • Schedule of Changes in Assets and Liabilities – Agency Fund OTHER SUPPLEMENTARY INFORMATION Other supplementary information includes financial statements and schedules not required by the GASB, nor a part of the basic financial statements, but are presented for purposes of additional analysis. DEBT SERVICE FUND Motor Fuel Tax Fund Metra Parking Lot Fund The Capital Projects Funds are used to account for all resources used for the acquisition of capital assets except those financed by Proprietary Funds. Facilities Development Fund The Facilities Development Fund is used to account for and reports financial resources that are restricted, committed or assigned to expenditures for acquisition, construction, improvement, repair, and replacement of the Village’s capital facilities. Street Maintenance Fund COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES GENERAL FUND The General Fund is used to account for all financial resources except those required to be accounted for in another fund. SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than fiduciary funds or capital projects funds) that are legally restricted to expenditure for specified purposes. The Motor Fuel Tax Fund is used to account for expenditures related to approved motor fuel tax projects and revenue from the state gasoline tax as collected and distributed by the State of Illinois. The Metra Parking Lot fund is used to account for revenue generated and costs incurred from the operation of the Metra parking lot operated by the Village. CAPITAL PROJECTS FUNDS The Street Maintenance Fund is used to account for and reports financial resources that are restricted, committed or assigned to expenditures for acquisition, construction, improvement, repair, and replacement of the Village’s roadways. The Debt Service Fund is used to account for monies restricted, committed or assigned to pay for principal and interest payments on the Village’s debt obligations. The Buffalo Grove Golf Fund is used to account for revenue and expenses associated with operating the Villages golf course. INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies other governmental unit, or to other governmental units, on a cost- reimbursement basis. Information Technology Fund COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Water and Sewerage Fund The Water and Sewerage Fund is used to account for the revenue and expenses related to the operation of the water and sewerage system. ENTERPRISE FUNDS Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises where the intent is that costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where it has been decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purpose. Refuse Service Fund The Refuse Fund is used to account for refuse services contracted by the Village for the benefit of its citizens by a private entity. The fund is financed by the fees charged to residents by the private entity and remitted back to the Village of Buffalo Grove. Arboretum Golf Fund The Arboretum Fund is used to account for the revenues and expenses related to the operation of the Arboretum golf course. Buffalo Grove Golf Fund The Technology Fund is used to account for all costs associated with providing technology services to all departments in the Village. This fund accounts for global technology costs, shared, and/or exclusive department specific hardware, software, and other technology needs. Costs are assessed to each department by combining the cost of all direct and indirect/shared services as incurred. The indirect/shared costs are charged back per the user base of service(s). AGENCY FUND School and Park Donations Fund The School and Park Donations Fund is used to account for the activity related to property development and contributions as designated by title 19 – funding for other taxing district impacts. Firefighter's Pension Fund Police Pension Fund The Police Pension Fund is used to account for the resources necessary to provide retirement and disability pension benefits to full-time sworn police personnel. Although this is a single-employer pension plan, the defined benefits and employer and employee contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/3-1) and may be amended only by the Illinois legislature. Financing is provided by the Village contributions, employee payroll withholdings, and investment income. The Firefighters’Pension Fund is used to account for the accumulation of resources to be used for retirement annuity payments to employees on the fire department at appropriate amounts and times in the future. Resources are contributed by employees at rates fixed by law and by the Village at amounts determined by an annual actuarial study. FINANCIAL STATEMENTS AND SCHEDULES INTERNAL SERVICE FUNDS – Continued TRUST AND AGENCY FUNDS PENSION TRUST FUNDS Central Garage Fund Building Maintenance Fund The Building Maintenance Fund is used to account for providing a clean, healthy, and safe working environment in Village facilities, meeting area’s and public area’s. The Central Garage Fund is used to account for the activities required to operate and maintain the Village’s automotive fleet. Department charges are derived from the work order process; which documents the type of work performed and cost(s) associated with the work. COMBINING AND INDIVIDUAL FUND VILLAGE OF BUFFALO GROVE, ILLINOIS Facilities Development - Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Revenues Miscellaneous $875,195 875,195 - Expenditures Capital Outlay 1,576,963 1,576,963 656,928 Excess (Deficiency) of Revenues Over (Under) Expenditures (701,768)(701,768)(656,928) Other Financing Sources Transfers In 701,768 701,768 4,043,693 Net Change in Fund Balance - - 3,386,765 Fund Balance - Beginning (3,626,197) Fund Balance - Ending (239,432) Original Budget 120 VILLAGE OF BUFFALO GROVE, ILLINOIS Street Maintenance - Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Revenues Miscellaneous $- - - Expenditures Current Public Works - 1,397,502 1,397,501 Capital Outlay 360,000 360,000 292,741 Total Expenditures 360,000 1,757,502 1,690,242 Excess (Deficiency) of Revenues Over (Under) Expenditures (360,000)(1,757,502)(1,690,242) Other Financing Sources Transfers In 360,000 360,000 1,690,243 Net Change in Fund Balance - (1,397,502)1 Fund Balance - Beginning (28,829) Fund Balance - Ending (28,828) Original Budget 121 VILLAGE OF BUFFALO GROVE, ILLINOIS Nonmajor Governmental Funds Combining Balance Sheet December 31, 2018 Metra Debt Parking Lot Service Totals Cash and Investments $ 1,114,849 97,952 100,741 1,313,542 Receivables - Net of Allowances Property Taxes - - 872,519 872,519 Other 90,128 - - 90,128 Total Assets 1,204,977 97,952 973,260 2,276,189 Accounts Payable - 489 - 489 Due to Other Funds - - 100,741 100,741 Total Liabilities - 489 100,741 101,230 Property Taxes - - 872,519 872,519 Total Liabilities and Deferred Inflows of Resources - 489 973,260 973,749 Restricted 1,204,977 97,463 - 1,302,440 Total Liabilities and Fund Balances 1,204,977 97,952 973,260 2,276,189 Special Revenue DEFERRED INFLOWS OF RESOURCES FUND BALANCES Motor Fuel Tax ASSETS LIABILITIES 122 VILLAGE OF BUFFALO GROVE, ILLINOIS Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended December 31, 2018 Metra Debt Parking Lot Service Totals Revenues Taxes $- - 1,023,927 1,023,927 Intergovernmental 1,062,118 - - 1,062,118 Charges for Services - 208,104 - 208,104 Total Revenues 1,062,118 208,104 1,023,927 2,294,149 Expenditures Current General Government - 217,964 - 217,964 Public Works (133,103)- - (133,103) Debt Service Principal Retirement - - 1,315,000 1,315,000 Interest and Fiscal Charges - - 370,202 370,202 Total Expenditures (133,103)217,964 1,685,202 1,770,063 Excess (Deficiency) of Revenues Over (Under) Expenditures 1,195,221 (9,860)(661,275)524,086 Other Financing Sources (Uses) Transfers In - - 721,008 721,008 Transfers Out (1,500,000)(12,000)- (1,512,000) (1,500,000)(12,000)721,008 (790,992) Net Change in Fund Balances (304,779)(21,860)59,733 (266,906) Fund Balances - Beginning 1,509,756 119,323 (59,733)1,569,346 Fund Balances - Ending 1,204,977 97,463 - 1,302,440 Motor Fuel Tax Special Revenue 123 VILLAGE OF BUFFALO GROVE, ILLINOIS Motor Fuel Tax - Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Revenues Intergovernmental Motor Fuel Tax $ 1,000,000 1,000,000 1,062,118 Expenditures Current Public Works 1,000,000 270,841 (133,103) Excess (Deficiency) of Revenues Over (Under) Expenditures - 729,159 1,195,221 Other Financing (Uses) Transfers Out - (1,500,000) (1,500,000) Net Change in Fund Balance - (770,841) (304,779) Fund Balance - Beginning 1,509,756 Fund Balance - Ending 1,204,977 Original Budget 124 VILLAGE OF BUFFALO GROVE, ILLINOIS Metra Parking Lot - Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Revenues Charges for Services $1,200 1,200 920 Fines and Fees 207,000 207,000 207,184 Total Revenues 208,200 208,200 208,104 Expenditures Current General Government 314,150 314,150 217,964 Excess (Deficiency) of Revenues Over (Under) Expenditures (105,950)(105,950)(9,860) Other Financing (Uses) Transfers Out (12,000)(12,000)(12,000) Net Change in Fund Balance (117,950)(117,950)(21,860) Fund Balance - Beginning 119,323 Fund Balance - Ending 97,463 Budget Original 125 VILLAGE OF BUFFALO GROVE, ILLINOIS Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Revenues Taxes Property Taxes $1,178,693 1,178,693 1,023,927 Expenditures Debt Service Principal Retirement 1,315,000 1,315,000 1,315,000 Interest and Fiscal Charges 372,694 372,694 370,202 Total Expenditures 1,687,694 1,687,694 1,685,202 Excess (Deficiency) of Revenues Over (Under) Expenditures (509,001)(509,001)(661,275) Other Financing Sources Transfers In 504,000 504,000 721,008 Net Change in Fund Balance (5,001)(5,001)59,733 Fund Balance - Beginning (59,733) Fund Balance - Ending - Budget Original 126 VILLAGE OF BUFFALO GROVE, ILLINOIS Water and Sewerage - Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Operating Revenues Charges for Services Water and Sewer Charges $ 11,582,889 11,582,889 10,607,327 Connection and Recapture Fees 106,000 106,000 225,455 Miscellaneous - - 242,058 Total Operating Revenues 11,688,889 11,688,889 11,074,840 Operating Expenses Operations Water 3,521,822 3,521,822 2,123,528 Sewer 5,406,824 5,406,824 4,495,860 Water Purchases 1,700,000 1,700,000 1,722,150 Capital Outlay - - 1,535,903 Total Operating Expenses 10,628,646 10,628,646 9,877,441 Operating Income (Loss)1,060,243 1,060,243 1,197,399 Nonoperating Revenue (Expenses) Interest Income 16,500 16,500 359,371 Interest Expense (153,703) (153,703) (161,591) (137,203) (137,203) 197,780 Income (Loss) Before Contributions and Transfers 923,040 923,040 1,395,179 Capital Contributions - - 250,622 Transfers Out (945,000) (945,000) (1,037,644) (945,000) (945,000) (787,022) Income Before GAAP Adjustments (21,960) (21,960) 608,157 Beginning Net Position - Budgetary Basis (1,784,788) Ending Net Position - Budgetary Basis (1,176,631) Original Budget 127 VILLAGE OF BUFFALO GROVE, ILLINOIS Water and Sewerage - Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Continued For the Fiscal Year Ended December 31, 2018 Final Budget Actual Income (Loss) Before GAAP Adjustments $ (21,960) (21,960) 608,157 GAAP Adjustments Capitalized Assets - - 1,535,903 Depreciation - - (1,575,465) - - (39,562) Change in Net Position 923,040 923,040 568,595 Net Position - Beginning as Restated 38,585,475 Net Position - Ending 39,154,070 Original Budget 128 VILLAGE OF BUFFALO GROVE, ILLINOIS Arboretum Golf - Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Operating Revenues Charges for Services Daily Greens Fee and Membership $824,000 824,000 640,213 Merchandise Sales 55,620 55,620 46,709 Cart, Club and Other Rentals 244,450 244,450 212,413 Miscellaneous 139,250 139,250 128,511 Total Operating Revenues 1,263,320 1,263,320 1,027,846 Operating Expenses Operations Golf Operations 1,446,244 1,446,244 1,140,828 Cost of Sales - Pro Shop 45,000 45,000 40,062 Total Operating Expenses 1,491,244 1,491,244 1,180,890 Income (Loss) Before Transfers (227,924)(227,924)(153,044) Transfers In 227,647 361,060 631,382 Transfers Out - - (10,000) 227,647 361,060 621,382 Income (Loss) Before GAAP Adjustments (277)133,136 468,338 Beginning Net Position - Budgetary Basis 368,217 Ending Net Position - Budgetary Basis 836,555 Original Budget 129 VILLAGE OF BUFFALO GROVE, ILLINOIS Arboretum Golf - Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Continued For the Fiscal Year Ended December 31, 2018 Final Budget Actual Income (Loss) Before GAAP Adjustments $(277)133,136 468,338 GAAP Adjustments Depreciation - (133,136)(431,732) Change in Net Position (277)- 36,606 Net Position - Beginning 6,757,941 Net Position - Ending 6,794,547 Original Budget 130 VILLAGE OF BUFFALO GROVE, ILLINOIS Nonmajor Enterprise Funds Combining Statement of Net Position December 31, 2018 Refuse Service Totals ASSETS Current Assets Cash and Investments $63,460 554,848 618,308 Receivables - Net of Allowances Other 1,828 - 1,828 Due from Other Funds 22,844 - 22,844 Inventories 18,612 - 18,612 Total Current Assets 106,744 554,848 661,592 Noncurrent Assets Capital Assets Nondepreciable 978,776 - 978,776 Depreciable 3,236,208 - 3,236,208 Accumulated Depreciation (2,409,765)- (2,409,765) Total Noncurrent Assets 1,805,219 - 1,805,219 Total Assets 1,911,963 554,848 2,466,811 Deferred Items - IMRF 48,927 - 48,927 Total Assets and Deferred Outflows of Resources 1,960,890 554,848 2,515,738 Buffalo Grove Golf DEFERRED OUTFLOWS OF RESOURCES 131 Refuse Service Totals LIABILITIES Current Liabilities Accounts Payable $14,164 - 14,164 Accrued Payroll 4,348 - 4,348 Deposit Payable 6,745 - 6,745 Due to Other Funds 4,000 - 4,000 Other Payables 21,083 - 21,083 Compensated Absences Payable 402 - 402 Total Current Liabilities 50,742 - 50,742 Noncurrent Liabilities Compensated Absences Payable 1,608 - 1,608 Net Pension Liability - IMRF 80,250 - 80,250 Total OPEB Liability - RBP 79,145 - 79,145 Total Noncurrent Liabilities 161,003 - 161,003 Total Liabilities 211,745 - 211,745 Deferred Items - IMRF 118,544 - 118,544 Deferred Items - RBP 6,104 - 6,104 Total Deferred Inflows of Resources 124,648 - 124,648 Total Liabilities and Deferred Inflow of Resources 336,393 - 336,393 Net Investment in Capital Assets 1,805,219 - 1,805,219 Unrestricted (180,722)554,848 374,126 Total Net Position 1,624,497 554,848 2,179,345 Total Liabilities, Deferred Inflows of Resources, and Net Position 1,960,890 554,848 2,515,738 NET POSITION DEFERRED INFLOWS OF RESOURCES Buffalo Grove Golf 132 VILLAGE OF BUFFALO GROVE, ILLINOIS Nonmajor Enterprise Funds Combining Statement of Revenues, Expenses and Changes in Net Position For the Fiscal Year Ended December 31, 2018 Refuse Service Totals Operating Revenues Charges for Services $1,014,901 1,053,759 2,068,660 Operating Expenses Operations Golf Operations 997,167 - 997,167 Cost of Sales - Pro Shop 47,788 - 47,788 Refuse - 868,794 868,794 Capital Outlay 5,660 - 5,660 Depreciation 84,798 - 84,798 Total Operating Expenses 1,135,413 868,794 2,004,207 Income (Loss) Before Transfers (120,512)184,965 64,453 Transfers In 1,033,147 - 1,033,147 Transfers Out (70,600)(600,000)(670,600) 962,547 (600,000)362,547 Change in Net Position 842,035 (415,035)427,000 Net Position - Beginning 782,462 969,883 1,752,345 Net Position - Ending 1,624,497 554,848 2,179,345 Buffalo Grove Golf 133 VILLAGE OF BUFFALO GROVE, ILLINOIS Nonmajor Enterprise Funds Combining Statement of Cash Flows For the Fiscal Year Ended December 31, 2018 Refuse Service Totals Cash Flows from Operating Activities Receipts from Customers and Users $1,119,326 1,140,358 2,259,684 Payments to Employees (297,022)- (297,022) Payments to Suppliers (1,701,581)(868,794)(2,570,375) (879,277)271,564 (607,713) Cash Flows from Capital and Related Financing Activities Purchase of Capital Assets (19,810)- (19,810) Cash Flows from Noncapital Financing Activities Transfers In 1,033,147 - 1,033,147 Transfers Out (70,600)(600,000)(670,600) 962,547 (600,000)362,547 Net Change in Cash and Cash Equivalents 63,460 (328,436)(264,976) Cash and Cash Equivalents - Beginning - 883,284 883,284 Cash and Cash Equivalents - Ending 63,460 554,848 618,308 Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities Operating Income (Loss)(120,512)184,965 64,453 Adjustments to Reconcile Operating Income to Net Income to Net Cash Provided by (Used in) Operating Activities Depreciation and Amortization Expense 84,798 - 84,798 (Increase) Decrease in Current Assets 104,425 86,599 191,024 Increase (Decrease) in Current Liabilities (947,988)- (947,988) Net Cash Provided by Operating Activities (879,277)271,564 (607,713) Buffalo Grove Golf 134 VILLAGE OF BUFFALO GROVE, ILLINOIS Buffalo Grove Golf - Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Operating Revenues Charges for Services Daily Greens Fee and Membership $716,500 716,500 622,534 Merchandise Sales 73,030 73,030 65,925 Cart, Club and Other Rentals 262,650 262,650 227,148 Driving Range Fees 62,000 62,000 62,071 Miscellaneous 17,200 17,200 37,223 Total Operating Revenues 1,131,380 1,131,380 1,014,901 Operating Expenses Operations Golf Operations 1,067,688 1,067,688 997,167 Cost of Sales - Pro Shop 50,000 50,000 47,788 Capital Outlay 90,600 95,600 25,470 Total Operating Expenses 1,208,288 1,213,288 1,070,425 Income (Loss) Before Transfers (76,908)(81,908)(55,524) Transfers In 77,186 166,984 1,033,147 Transfers Out - - (70,600) 77,186 166,984 962,547 Income (Loss) Before GAAP Adjustments 278 85,076 907,023 Beginning Net Position - Budgetary Basis (1,704) Ending Net Position - Budgetary Basis 905,319 Original Budget 135 VILLAGE OF BUFFALO GROVE, ILLINOIS Buffalo Grove Golf - Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Continued For the Fiscal Year Ended December 31, 2018 Final Budget Actual Income (Loss) Before GAAP Adjustments $278 85,076 907,023 GAAP Adjustments Capitalized Assets - - 19,810 Depreciation - (84,798)(84,798) - (84,798)(64,988) Change in Net Position 278 278 842,035 Net Position - Beginning as Restated 782,462 Net Position - Ending 1,624,497 Original Budget 136 VILLAGE OF BUFFALO GROVE, ILLINOIS Refuse Service - Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Operating Revenues Charges for Services SWANCC User Fees $1,080,000 1,080,000 1,053,759 Operating Expenses Operations Refuse 1,060,000 1,060,000 868,794 Income (Loss) Before Transfers 20,000 20,000 184,965 Transfers Out (600,000)(600,000)(600,000) Change in Net Position (580,000)(580,000)(415,035) Net Position - Beginning 969,883 Net Position - Ending 554,848 Original Budget 137 VILLAGE OF BUFFALO GROVE, ILLINOIS Internal Service Funds Combining Statement of Net Position December 31, 2018 Central Building Garage Maintenance Totals Current Assets Cash and Investments $90,702 88,473 335,998 515,173 Due from Other Funds - 10,692 10,329 21,021 Total Current Assets 90,702 99,165 346,327 536,194 Deferred Items - IMRF - 122,865 88,435 211,300 Total Assets and Deferred Outflows of Resources 90,702 222,030 434,762 747,494 LIABILITIES Current Liabilities Accounts Payable 89,912 44,089 301,396 435,397 Accrued Payroll - 20,040 14,495 34,535 Due to Other Funds - 29,942 23,178 53,120 Total Current Liabilities 89,912 94,071 339,069 523,052 Noncurrent Liabilities Net Pension Liability - IMRF - 201,523 145,051 346,574 Total OPEB Liability - RBP - 267,684 258,091 525,775 Total Noncurrent Liabilities - 469,207 403,142 872,349 Total Liabilities 89,912 563,278 742,211 1,395,401 Deferred Items - IMRF - 297,687 214,267 511,954 Deferred Items - RBP - 20,646 19,906 40,552 Total Deferred Inflows of Resources - 318,333 234,173 552,506 Total Liabilities and Deferred Inflows of Resources 89,912 881,611 976,384 1,947,907 Unrestricted 790 (659,581)(541,622)(1,200,413) Total Liabilities, Deferred Inflows of Resources, and Net Position 90,702 222,030 434,762 747,494 Information ASSETS NET POSITION Technology DEFERRED OUTFLOWS OF RESOURCES DEFERRED INFLOWS OF RESOURCES 138 VILLAGE OF BUFFALO GROVE, ILLINOIS Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Net Position For the Fiscal Year Ended December 31, 2018 Central Building Garage Maintenance Totals Operating Revenues Interfund Services $1,443,027 1,582,678 1,640,124 4,665,829 Operating Expenses Operations Information Technology 1,443,027 - - 1,443,027 Central Garage - 1,573,410 - 1,573,410 Building Maintenance - - 1,630,261 1,630,261 Total Operating Expenses 1,443,027 1,573,410 1,630,261 4,646,698 Income Before Transfers - 9,268 9,863 19,131 Transfers In - 27,796 16,369 44,165 Transfers Out - (37,067)(26,232)(63,299) - (9,271)(9,863)(19,134) Change in Net Position - (3)- (3) Net Position - Beginning as Restated 790 (659,578)(541,622)(1,200,410) Net Position - Ending 790 (659,581)(541,622)(1,200,413) Information Technology 139 VILLAGE OF BUFFALO GROVE, ILLINOIS Internal Service Funds Combining Statement of Cash Flows For the Fiscal Year Ended December 31, 2018 Central Building Garage Maintenance Totals Cash Flows from Operating Activities Interfund Services Provided $1,443,027 1,582,678 1,640,124 4,665,829 Payments to Suppliers (1,454,305)(1,042,289)(1,054,225)(3,550,819) Payments to Employees - (533,040)(393,364)(926,404) (11,278)7,349 192,535 188,606 Cash Flows from Noncapital Financing Activities Transfers In - 27,796 16,369 44,165 Transfers Out - (37,067)(26,232)(63,299) - (9,271)(9,863)(19,134) Net Change in Cash and Cash Equivalents (11,278)(1,922)182,672 169,472 Cash and Cash Equivalents - Beginning 101,980 90,395 153,326 345,701 Cash and Cash Equivalents - Ending 90,702 88,473 335,998 515,173 Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities Operating Income - 9,268 9,863 19,131 Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities Other Income (Expense)- 10,607 (828)9,779 (Increase) Decrease in Current Assets - (10,692)(10,329)(21,021) Increase (Decrease) in Current Liabilities (11,278)(1,834)193,829 180,717 Net Cash Provided by Operating Activities (11,278)7,349 192,535 188,606 Technology Information 140 VILLAGE OF BUFFALO GROVE, ILLINOIS Information Technology - Internal Service Fund Schedule of Revenues, Expenses and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Operating Revenues Interfund Services $1,409,555 1,488,450 1,443,027 Operating Expenses Operations Information Technology 1,409,555 1,488,450 1,443,027 Change in Net Position - - - Net Position - Beginning 790 Net Position - Ending 790 Original Budget 141 VILLAGE OF BUFFALO GROVE, ILLINOIS Central Garage - Internal Service Fund Schedule of Revenues, Expenses and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Operating Revenues Interfund Services $ 1,652,632 1,652,632 1,582,678 Operating Expenses Operations Central Garage 1,652,632 1,652,632 1,573,410 Income Before Transfers - - 9,268 Transfers In - - 27,796 Transfers Out - - (37,067) - - (9,271) Change in Net Position - - (3) Net Position - Beginning as Restated (659,578) Net Position - Ending (659,581) Original Budget 142 VILLAGE OF BUFFALO GROVE, ILLINOIS Building Maintenance - Internal Service Fund Schedule of Revenues, Expenses and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Operating Revenues Interfund Services $1,577,570 1,640,124 1,640,124 Operating Expenses Operations Building Maintenance 1,577,570 1,640,124 1,630,261 Income Before Transfers - - 9,863 Transfers In - - 16,369 Transfers Out - - (26,232) - - (9,863) Change in Net Position - - - Net Position - Beginning as Restated (541,622) Net Position - Ending (541,622) Original Budget 143 VILLAGE OF BUFFALO GROVE, ILLINOIS Pension Trust Funds Combining Statement of Fiduciary Net Position December 31, 2018 Firefighters' Pension Totals Cash and Cash Equivalents $ 1,964,436 42,478 2,006,914 Investments U.S. Treasury Obligations 7,058,765 2,528,250 9,587,015 U.S. Agency Obligations 5,979,169 17,937,068 23,916,237 Corporate Bonds 9,448,946 - 9,448,946 State and Local Obligations - 3,233,269 3,233,269 Mutual Funds 6,871,831 34,182,509 41,054,340 Equity Securities 32,940,520 - 32,940,520 Receivables - Net of Allowance Accrued Interest 99,070 163,438 262,508 Due from Other Funds 11,128 11,128 22,256 Prepaids 1,141 - 1,141 Total Assets 64,375,006 58,098,140 122,473,146 Accounts Payable 66,899 37,795 104,694 Due to Other Funds 85,370 - 85,370 Total Liabilities 152,269 37,795 190,064 Net Position Restricted for Pensions 64,222,737 58,060,345 122,283,082 Pension ASSETS LIABILITIES NET POSITION Police 144 VILLAGE OF BUFFALO GROVE, ILLINOIS Pension Trust Funds Combining Statement of Changes in Fiduciary Net Position For the Fiscal Year Ended December 31, 2018 Police Firefighters' Pension Pension Totals Additions Contributions - Employer $2,668,632 1,897,968 4,566,600 Contributions - Plan Members 703,230 533,534 1,236,764 Total Contributions 3,371,862 2,431,502 5,803,364 Investment Income Interest Earned 322,241 326,813 649,054 Net Change in Fair Value (2,808,598)(3,090,258)(5,898,856) (2,486,357)(2,763,445)(5,249,802) Less Investment Expenses (240,255)(154,299)(394,554) Net Investment Income (2,726,612)(2,917,744)(5,644,356) Total Additions 645,250 (486,242)159,008 Deductions Administration 51,073 75,110 126,183 Benefits and Refunds 3,803,918 2,940,773 6,744,691 Total Deductions 3,854,991 3,015,883 6,870,874 Change in Fiduciary Net Position (3,209,741)(3,502,125)(6,711,866) Net Position Restricted for Pensions Beginning 67,432,478 61,562,470 128,994,948 Ending 64,222,737 58,060,345 122,283,082 145 VILLAGE OF BUFFALO GROVE, ILLINOIS Police Pension - Pension Trust Fund Schedule of Changes in Fiduciary Net Position - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Additions Contributions - Employer $2,679,813 2,679,813 2,668,632 Contributions - Plan Members 702,000 702,000 703,230 Total Contributions 3,381,813 3,381,813 3,371,862 Investment Income Interest Earned 300,000 300,000 322,241 Net Change in Fair Value 3,100,000 3,100,000 (2,808,598) 3,400,000 3,400,000 (2,486,357) Less Investment Expenses (250,000)(250,000)(240,255) Net Investment Income 3,150,000 3,150,000 (2,726,612) Total Additions 6,531,813 6,531,813 645,250 Deductions Administration 65,000 65,000 51,073 Benefits and Refunds 3,950,000 3,950,000 3,803,918 Total Deductions 4,015,000 4,015,000 3,854,991 Change in Fiduciary Net Position 2,516,813 2,516,813 (3,209,741) Net Position Restricted for Pensions Beginning 67,432,478 Ending 64,222,737 Budget Original 146 VILLAGE OF BUFFALO GROVE, ILLINOIS Firefighters' Pension - Pension Trust Fund Schedule of Changes in Fiduciary Net Position - Budget and Actual For the Fiscal Year Ended December 31, 2018 Final Budget Actual Additions Contributions - Employer $1,904,498 1,904,498 1,897,968 Contributions - Plan Members 575,000 575,000 533,534 Total Contributions 2,479,498 2,479,498 2,431,502 Investment Income Interest Earned 350,000 350,000 326,813 Net Change in Fair Value 3,050,000 3,050,000 (3,090,258) 3,400,000 3,400,000 (2,763,445) Less Investment Expenses (150,000)(150,000)(154,299) Net Investment Income 3,250,000 3,250,000 (2,917,744) Total Additions 5,729,498 5,729,498 (486,242) Deductions Administration 65,000 65,000 75,110 Benefits and Refunds 2,983,000 2,983,000 2,940,773 Total Deductions 3,048,000 3,048,000 3,015,883 Change in Fiduciary Net Position 2,681,498 2,681,498 (3,502,125) Net Position Restricted for Pensions Beginning 61,562,470 Ending 58,060,345 Original Budget 147 VILLAGE OF BUFFALO GROVE, ILLINOIS School and Park Donations - Agency Fund Schedule of Changes in Assets and Liabilities For the Fiscal Year Ended December 31, 2018 Ending Additions Deductions Balance Cash and Investments $280,049 57,192 280,049 57,192 LIABILITIES Due to Other Governments 280,049 57,192 280,049 57,192 ASSETS Beginning Balance 148 VILLAGE OF BUFFALO GROVE, ILLINOIS Consolidated Year-End Financial Report December 31, 2018 CSFA # Program Name State Federal Other Totals 494-00-1488 Motor Fuel Tax Program $ 1,500,000 - - 1,500,000 494-10-0343 State and Community Highway Safety/National Priority Safety Programs 42,110 - - 42,110 532-60-0378 Section 319(h) - Nonpoint Source Pollution Control Financial Assistanc Program - 170,205 - 170,205 Other Grant Programs and Activities - 104,501 45,568 150,069 All Other Costs Not Allocated - - 59,235,550 59,235,550 Totals 1,542,110 274,706 59,281,118 61,097,934 149 150 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAL AUDITING STANDARDS April 29, 2019 The Honorable Village President Members of the Board of Trustees Village of Buffalo Grove, Illinois We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Buffalo Grove (Village), Illinois, as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the Village’s basic financial statements, and have issued our report thereon dated April 29, 2019. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Village’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village’s internal control. According, we do not express an opinion on the effectiveness of the Village’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Village’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 151 Village of Buffalo Grove, Illinois April 29, 2019 Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Village’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Village’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Lauterbach & Amen, LLP LAUTERBACH & AMEN, LLP SUPPLEMENTAL SCHEDULES VILLAGE OF BUFFALO GROVE, ILLINOIS Long-Term Debt Requirements General Obligation Refunding Bonds of 2010A December 31, 2018 Date of Issue April 4, 2010 Date of Maturity December 30, 2020 Authorized Issue $5,160,000 Denomination of Bonds $5,000 Interest Rate 2.00% - 4.00% Interest Dates June 30 and December 30 Principal Maturity Date December 30 Payable at Amalgamated Bank of Chicago CURRENT AND LONG-TERM PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Year Interest Totals Jun. 30 Amount Dec. 30 Amount 2019 $370,000 30,600 400,600 2019 15,300 2019 15,300 2020 395,000 15,800 410,800 2020 7,900 2020 7,900 765,000 46,400 811,400 23,200 23,200 Requirements Interest Due on Principal 152 VILLAGE OF BUFFALO GROVE, ILLINOIS Long-Term Debt Requirements General Obligation Bonds of 2010B December 31, 2018 Date of Issue April 6, 2010 Date of Maturity December 30, 2025 Authorized Issue $2,600,000 Denomination of Bonds $5,000 Interest Rates 2.50% - 3.85% Interest Dates June 30 and December 30 Principal Maturity Date December 30 Payable at Amalgamated Bank of Chicago CURRENT AND LONG-TERM PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Year Interest Totals Jun. 30 Amount Dec. 30 Amount 2019 $210,000 59,763 269,763 2019 29,881 2019 29,882 2020 220,000 52,413 272,413 2020 26,206 2020 26,207 2021 225,000 44,713 269,713 2021 22,356 2021 22,357 2022 235,000 36,725 271,725 2022 18,362 2022 18,363 2023 240,000 28,265 268,265 2023 14,132 2023 14,133 2024 250,000 19,385 269,385 2024 9,692 2024 9,693 2025 260,000 10,010 270,010 2025 5,005 2025 5,005 1,640,000 251,274 1,891,274 125,634 125,640 Requirements Interest Due on Principal 153 VILLAGE OF BUFFALO GROVE, ILLINOIS Long-Term Debt Requirements General Obligation Bonds of 2012 December 31, 2018 Date of Issue August 27, 2012 Date of Maturity June 30, 2030 Authorized Issue $6,000,000 Denomination of Bonds $5,000 Interest Rates 2.00% - 2.75% Interest Dates June 30 and December 30 Principal Maturity Date December 30 Payable at Amalgamated Bank of Chicago CURRENT AND LONG-TERM PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Year Interest Totals Jun. 30 Amount Dec. 30 Amount 2019 $100,000 135,525 235,525 2019 67,762 2019 67,763 2020 100,000 133,525 233,525 2020 66,762 2020 66,763 2021 415,000 131,525 546,525 2021 65,762 2021 65,763 2022 425,000 123,225 548,225 2022 61,612 2022 61,613 2023 440,000 114,725 554,725 2023 57,362 2023 57,363 2024 450,000 105,925 555,925 2024 52,962 2024 52,963 2025 470,000 96,925 566,925 2025 48,462 2025 48,463 2026 650,000 86,938 736,938 2026 43,469 2026 43,469 2027 650,000 72,313 722,313 2027 36,156 2027 36,157 2028 700,000 56,875 756,875 2028 28,437 2028 28,438 2029 750,000 39,375 789,375 2029 19,687 2029 19,688 2030 750,000 20,625 770,625 2030 10,312 2030 10,313 5,900,000 1,117,501 7,017,501 558,745 558,756 Requirements Interest Due on Principal 154 VILLAGE OF BUFFALO GROVE, ILLINOIS Long-Term Debt Requirements General Obligation Bonds of 2016 December 31, 2018 Date of Issue May 3, 2016 Date of Maturity December 30, 2031 Authorized Issue $6,125,000 Denomination of Bonds $5,000 Interest Rates 2.00% - 3.00% Interest Dates June 30 and December 30 Principal Maturity Date December 30 Payable at Amalgamated Bank of Chicago CURRENT AND LONG-TERM PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Year Interest Totals Jun. 30 Amount Dec. 30 Amount 2019 $530,000 105,231 635,231 2019 52,615 2019 52,616 2020 570,000 94,631 664,631 2020 47,315 2020 47,316 2021 300,000 83,231 383,231 2021 41,615 2021 41,616 2022 305,000 77,231 382,231 2022 38,615 2022 38,616 2023 310,000 71,131 381,131 2023 35,565 2023 35,566 2024 315,000 64,931 379,931 2024 32,465 2024 32,466 2025 325,000 58,631 383,631 2025 29,315 2025 29,316 2026 330,000 52,131 382,131 2026 26,065 2026 26,066 2027 335,000 45,531 380,531 2027 22,765 2027 22,766 2028 345,000 38,413 383,413 2028 19,206 2028 19,207 2029 350,000 30,650 380,650 2029 15,325 2029 15,325 2030 360,000 21,900 381,900 2030 10,950 2030 10,950 2031 370,000 11,100 381,100 2031 5,550 2031 5,550 4,745,000 754,742 5,499,742 377,366 377,376 Requirements Interest Due on Principal 155 VILLAGE OF BUFFALO GROVE, ILLINOIS Long-Term Debt Requirements IEPA Loan Payable of 2013 - Pump Stations Improvements December 31, 2018 Date of Issue November 20, 2013 Date of Maturity December 1, 2033 Authorized Issue $407,307 Interest Rate 2.295% Interest Dates June 1 and December 1 Principal Maturity Date December 1 Payable at Illinois Environmental Protection Agency Fiscal Year Interest Totals 2019 $ 18,661 7,467 26,128 2020 19,092 7,036 26,128 2021 19,532 6,596 26,128 2022 19,983 6,145 26,128 2023 20,444 5,684 26,128 2024 20,916 5,212 26,128 2025 21,399 4,729 26,128 2026 21,893 4,235 26,128 2027 22,398 3,730 26,128 2028 22,915 3,213 26,128 2029 23,444 2,684 26,128 2030 23,985 2,143 26,128 2031 24,539 1,589 26,128 2032 25,105 1,023 26,128 2033 25,687 441 26,128 329,993 61,927 391,920 CURRENT AND LONG-TERM PRINCIPAL AND INTEREST REQUIREMENTS Principal 156 VILLAGE OF BUFFALO GROVE, ILLINOIS Long-Term Debt Requirements Installment Note Payable of 2015 December 31, 2018 Date of Issue March 27, 2015 Date of Maturity June 1, 2029 Original Contract $6,970,999 Interest Rate 2.35% Interest Dates Quarterly Principal Maturity Date Quarterly Payable at U.S. Bank National Association Fiscal Year Interest Totals 2019 $340,052 146,338 486,390 2020 386,802 137,921 524,723 2021 436,970 128,372 565,342 2022 490,763 117,611 608,374 2023 548,394 105,549 653,943 2024 610,091 92,095 702,186 2025 676,096 77,149 753,245 2026 746,659 60,610 807,269 2027 822,046 42,367 864,413 2028 902,537 22,304 924,841 2029 381,459 337,058 718,517 6,341,869 1,267,374 7,609,243 CURRENT AND LONG-TERM PRINCIPAL AND INTEREST REQUIREMENTS Principal 157 These schedules contain service and infrastructure data to help the reader understand how the information in the Village’s financial report relates to the services the Village provides and the activities it performs. Operating Information Revenue Capacity These schedules contain information to help the reader assess the Village’s most significant local revenue Debt Capacity 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 in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Village’s financial activities take place. These schedules contain trend information to help the reader understand how the Village’s financial performance and well-being have changed over time. STATISTICAL SECTION (Unaudited) This part of the 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 financial health. Financial Trends VILLAGE OF BUFFALO GROVE, ILLINOIS Net Position by Component - Last Ten Fiscal Years* 2010 2011 2012** Governmental Activities Net Investment in Capital Assets $ 54,563,385 53,742,519 53,362,147 52,096,183 Restricted 140,712 956,803 1,918,263 6,268,039 Unrestricted 16,590,052 15,738,272 13,429,876 11,550,011 Total Governmental Activities Net Position 71,294,149 70,437,594 68,710,286 69,914,233 Business-Type Activities Net Investment in Capital Assets 39,808,889 38,410,966 37,807,146 36,706,161 Unrestricted 15,011,209 14,644,341 12,989,124 11,242,301 Total Business-Type Activities Net Position 54,820,098 53,055,307 50,796,270 47,948,462 Primary Government Net Investment in Capital Assets 94,372,274 92,153,485 91,169,293 88,802,344 Restricted 140,712 956,803 1,918,263 6,268,039 Unrestricted 31,601,261 30,382,613 26,419,000 22,792,312 Total Primary Government Net Position 126,114,247 123,492,901 119,506,556 117,862,695 * Accrual Basis of Accounting ** Auditors restated 2012, from 2011 and earlier have not been adjusted. Data Source: Audited Financial Statements December 31, 2018 (Unaudited) 2009 *** Beginning in 2015, the Village implemented GASB 68 which resulted in the inclusion of net pension liability. 158 2013 2014 2015*** 2016 2017 2018 51,011,919 50,712,982 50,609,420 51,756,933 53,318,041 49,126,833 2,412,222 2,664,110 1,974,115 1,632,934 1,629,079 1,909,851 12,387,400 11,048,700 (34,637,401) (36,592,629) (36,022,097) (41,165,382) 65,811,541 64,425,792 17,946,134 16,797,238 18,925,023 9,871,302 35,553,648 35,871,503 38,372,943 35,494,070 36,802,425 36,831,535 11,515,793 11,067,173 7,770,059 11,034,826 10,837,462 11,296,427 47,069,441 46,938,676 46,143,002 46,528,896 47,639,887 48,127,962 86,565,567 86,584,485 88,982,363 87,251,003 90,120,466 85,958,368 2,412,222 2,664,110 1,974,115 1,632,934 1,629,079 1,909,851 23,903,193 22,115,873 (26,867,342) (25,557,803) (25,184,635) (29,868,955) 112,880,982 111,364,468 64,089,136 63,326,134 66,564,910 57,999,264 159 VI L L A G E O F B U F F A L O G R O V E , I L L I N O I S Ch a n g e s i n N e t P o s i t i o n - L a s t T e n F i s c a l Y e a r s * 20 1 0 2 0 1 1 2 0 1 2 * * 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 Ex pen s e s Go v e r n m e n t a l A c t i v i t i e s Ge n e r a l G o v e r n m e n t $ 6 , 1 8 2 , 4 7 5 4 , 7 6 9 , 8 7 4 5 , 0 1 0 , 2 7 4 6 , 1 0 1 , 0 0 8 6 , 5 6 7 , 5 4 5 5 , 8 4 3 , 6 2 3 5 , 8 8 5 , 8 1 1 6 , 4 4 1 , 7 0 7 6 , 6 4 2 , 7 9 8 7 , 5 7 6 , 1 6 3 Pu b l i c S a f e t y 22 , 7 5 3 , 5 9 0 2 2 , 3 1 2 , 9 1 0 2 2 , 6 5 7 , 6 4 3 2 2 , 3 4 4 , 1 1 7 2 1 , 9 6 4 , 9 8 9 2 2 , 9 2 0 , 1 8 0 2 7 , 2 5 6 , 7 3 7 3 0 , 5 2 8 , 1 2 7 2 7 , 3 8 4 , 9 6 4 3 0 , 2 6 6 , 2 0 7 Pu b l i c W o r k s 1 0 , 4 2 1 , 6 5 9 1 1 , 0 8 1 , 3 7 4 1 1 , 1 0 6 , 4 3 3 1 2 , 0 2 6 , 9 1 1 1 5 , 0 9 1 , 4 1 4 1 3 , 5 5 3 , 0 9 3 1 1 , 5 5 1 , 6 0 6 8 , 0 7 8 , 8 7 4 9 , 7 6 4 , 8 7 4 9 , 1 7 3 , 5 8 4 In t e r e s t o n L o n g-T e r m D e b t 33 4 , 1 4 2 1 9 4 , 6 5 5 2 4 8 , 5 3 9 3 8 4 , 1 8 0 3 7 4 , 5 1 1 3 0 2 , 7 8 1 2 8 5 , 8 6 3 3 5 6 , 7 9 9 3 8 4 , 0 7 3 3 6 3 , 9 2 5 To t a l G o v e r n m e n t a l Ac t i v i t i e s E x pen s e s 39 , 6 9 1 , 8 6 6 3 8 , 3 5 8 , 8 1 3 3 9 , 0 2 2 , 8 8 9 4 0 , 8 5 6 , 2 1 6 4 3 , 9 9 8 , 4 5 9 4 2 , 6 1 9 , 6 7 7 4 4 , 9 8 0 , 0 1 7 4 5 , 4 0 5 , 5 0 7 4 4 , 1 7 6 , 7 0 9 4 7 , 3 7 9 , 8 7 9 Bu s i n e s s - T yp e A c t i v i t i e s Wa t e r & S e w e r 9, 5 1 9 , 1 6 9 9, 8 6 5 , 9 8 1 8 , 7 5 3 , 1 4 9 8 , 9 3 1 , 3 3 6 8 , 0 7 9 , 3 6 4 8 , 4 3 5 , 4 6 3 8 , 5 6 1 , 2 4 8 9 , 0 0 1 , 6 3 2 9 , 4 5 4 , 5 5 4 1 0 , 0 7 8 , 5 9 4 Re f u s e S e r v i c e 94 4 , 3 9 2 9 4 2 , 7 5 7 9 3 5 , 3 6 5 8 7 4 , 3 6 6 9 0 2 , 8 1 1 8 0 3 , 0 3 9 7 0 2 , 1 0 6 7 0 3 , 5 6 5 7 0 5 , 3 9 3 8 6 8 , 7 9 4 Go l f C o u r s e s 3, 1 1 8 , 6 4 7 3, 0 4 3 , 3 6 7 3 , 0 5 7 , 9 1 2 2 , 9 9 1 , 1 7 0 2 , 9 4 2 , 7 4 7 2 , 7 3 9 , 0 7 7 3 , 2 8 8 , 8 8 2 2 , 8 8 6 , 4 0 4 2 , 8 8 8 , 8 7 3 2 , 7 4 8 , 0 3 5 To t a l B u s i n e s s - T yp e Ac t i v i t i e s E x pen s e s 13 , 5 8 2 , 2 0 8 1 3 , 8 5 2 , 1 0 5 1 2 , 7 4 6 , 4 2 6 1 2 , 7 9 6 , 8 7 2 1 1 , 9 2 4 , 9 2 2 1 1 , 9 7 7 , 5 7 9 1 2 , 5 5 2 , 2 3 6 1 2 , 5 9 1 , 6 0 1 1 3 , 0 4 8 , 8 2 0 1 3 , 6 9 5 , 4 2 3 To t a l P r i m a r y Go v e r n m e n t E x pen s e s 53 , 2 7 4 , 0 7 4 5 2 , 2 1 0 , 9 1 8 5 1 , 7 6 9 , 3 1 5 5 3 , 6 5 3 , 0 8 8 5 5 , 9 2 3 , 3 8 1 5 4 , 5 9 7 , 2 5 6 5 7 , 5 3 2 , 2 5 3 5 7 , 9 9 7 , 1 0 8 5 7 , 2 2 5 , 5 2 9 6 1 , 0 7 5 , 3 0 2 Pr o gra m R e v e n u e s Go v e r n m e n t a l A c t i v i t i e s Ch a r ges f o r S e r v i c e s Ge n e r a l G o v e r n m e n t 97 7 , 4 6 4 1 , 1 9 5 , 9 2 8 1 , 2 4 0 , 5 4 7 1 , 2 2 6 , 5 5 2 1 , 2 0 7 , 5 0 4 1 , 9 0 1 , 9 9 6 1 , 6 2 4 , 1 3 4 1 , 8 5 5 , 5 0 6 2 , 1 4 8 , 7 6 0 1 , 7 4 8 , 5 5 5 Pu b l i c S a f e t y 1, 5 6 3 , 2 3 6 1, 4 1 9 , 7 6 1 1 , 4 0 4 , 3 0 8 1 , 2 8 3 , 9 5 6 1 , 4 9 8 , 8 1 9 1 , 6 2 3 , 1 7 1 1 , 7 4 5 , 5 8 0 1 , 7 1 8 , 6 4 7 1 , 6 8 7 , 7 5 9 1 , 6 8 6 , 3 9 0 Pu b l i c W o r k s 5 0 , 7 0 9 7 1 , 6 0 6 8 6 , 4 2 1 1 1 8 , 5 4 7 8 2 , 3 9 3 8 8 , 6 6 5 6 1 , 1 9 4 1 , 1 5 1 , 5 9 4 1 , 2 0 9 , 7 8 4 1 , 1 3 4 , 3 8 3 Oper a t i n g G r a n t s / C o n t r i b u t i o n s 1, 3 4 9 , 0 4 4 1, 2 5 3 , 1 0 3 1 , 2 3 0 , 3 8 7 1 , 1 7 8 , 4 4 2 1 , 1 6 1 , 5 0 9 1 , 2 8 5 , 3 9 6 1 , 2 2 9 , 0 2 8 1 , 2 8 1 , 7 3 2 1 , 2 7 1 , 6 0 2 1 , 3 0 9 , 3 2 4 Ca pit a l G r a n t s / C o n t r i b u t i o n s - - - - - - - - 1 , 4 7 8 , 0 1 5 - To t a l G o v e r n m e n t a l A c t i v i t i e s Pr o g r a m R e v e n u e s 3, 9 4 0 , 4 5 3 3, 9 4 0 , 3 9 8 3 , 9 6 1 , 6 6 3 3 , 8 0 7 , 4 9 7 3 , 9 5 0 , 2 2 5 4 , 8 9 9 , 2 2 8 4 , 6 5 9 , 9 3 6 6 , 0 0 7 , 4 7 9 7 , 7 9 5 , 9 2 0 5 , 8 7 8 , 6 5 2 Bu s i n e s s - T yp e A c t i v i t i e s Ch a r ges f o r S e r v i c e s Wa t e r & S e w e r 8, 0 0 8 , 3 6 0 9, 0 9 1 , 5 2 0 7 , 7 8 2 , 0 0 0 7 , 4 6 4 , 8 7 0 8 , 6 9 2 , 8 1 2 9 , 0 7 6 , 2 6 1 9 , 4 9 5 , 6 9 1 1 0 , 3 0 4 , 6 3 8 1 1 , 0 6 0 , 9 3 8 1 0 , 8 3 2 , 7 8 2 Re f u s e S e r v i c e 1, 0 0 4 , 4 3 1 1, 0 4 1 , 6 6 1 1 , 0 3 6 , 8 7 2 1 , 0 5 0 , 3 8 6 1 , 0 4 0 , 8 7 8 1 , 0 4 4 , 4 4 2 1 , 0 3 9 , 8 7 6 1 , 1 3 5 , 7 4 8 9 7 0 , 2 6 8 1 , 0 5 3 , 7 5 9 Go l f C o u r s e s 2, 3 2 0 , 2 4 7 2, 0 8 8 , 1 0 6 2 , 1 7 5 , 4 1 8 2 , 2 2 1 , 7 1 4 1 , 1 7 8 , 3 6 8 2 , 2 5 7 , 4 9 4 2 , 3 3 5 , 9 2 8 2 , 2 4 0 , 8 6 8 2 , 2 0 1 , 4 6 0 2 , 0 4 2 , 7 4 7 Oper a t i n g G r a n t s / C o n t r i b u t i o n s - - - - 1 , 0 7 2 , 4 9 9 - - - - Ca pit a l G r a n t s / C o n t r i b u t i o n s - - - - - - - 94 , 3 2 6 - 2 5 0 , 6 2 2 To t a l B u s i n e s s - T yp e A c t i v i t i e s P r o gra m R e v e n u e s 11 , 3 3 3 , 0 3 8 1 2 , 2 2 1 , 2 8 7 1 0 , 9 9 4 , 2 9 0 1 0 , 7 3 6 , 9 7 0 1 1 , 9 8 4 , 5 5 7 1 2 , 3 7 8 , 1 9 7 1 2 , 8 7 1 , 4 9 5 1 3 , 7 7 5 , 5 8 0 1 4 , 2 3 2 , 6 6 6 1 4 , 1 7 9 , 9 1 0 To t a l P r i m a r y G o v e r n m e n t P r o gra m R e v e n u e s 15 , 2 7 3 , 4 9 1 1 6 , 1 6 1 , 6 8 5 1 4 , 9 5 5 , 9 5 3 1 4 , 5 4 4 , 4 6 7 1 5 , 9 3 4 , 7 8 2 1 7 , 2 7 7 , 4 2 5 1 7 , 5 3 1 , 4 3 1 1 9 , 7 8 3 , 0 5 9 2 2 , 0 2 8 , 5 8 6 2 0 , 0 5 8 , 5 6 2 De c e m b e r 3 1 , 2 0 1 8 ( U n a u d i t e d ) 20 0 9 16 0 20 1 8 Ne t (Ex pen s e ) R e v e n u e Go v e r n m e n t a l A c t i v i t i e s $ (35 , 7 5 1 , 4 1 3 ) (34 , 4 1 8 , 4 1 5 ) (35 , 0 6 1 , 2 2 6 ) (37 , 0 4 8 , 7 1 9 ) (40 , 0 4 8 , 2 3 4 ) (37 , 7 2 0 , 4 4 9 ) (40 , 3 2 0 , 0 8 1 ) (39 , 3 9 8 , 0 2 8 ) (36 , 3 8 0 , 7 8 9 ) (41 , 5 0 1 , 2 2 7 ) Bu s i n e s s - T yp e A c t i v i t i e s (2, 2 4 9 , 1 7 0 ) (1, 6 3 0 , 8 1 8 ) (1, 7 5 2 , 1 3 6 ) (2, 0 5 9 , 9 0 2 ) 59 , 6 3 5 4 0 0 , 6 1 8 3 1 9 , 2 5 9 1 , 1 8 3 , 9 7 9 1 , 1 8 3 , 8 4 6 4 8 4 , 4 8 7 To t a l P r i m a r y G o v e r n m e n t Ne t (Ex pen s e ) R e v e n u e (38 , 0 0 0 , 5 8 3 ) (36 , 0 4 9 , 2 3 3 ) (36 , 8 1 3 , 3 6 2 ) (39 , 1 0 8 , 6 2 1 ) (39 , 9 8 8 , 5 9 9 ) (37 , 3 1 9 , 8 3 1 ) (40 , 0 0 0 , 8 2 2 ) (38 , 2 1 4 , 0 4 9 ) (35 , 1 9 6 , 9 4 3 ) (41 , 0 1 6 , 7 4 0 ) Ge n e r a l R e v e n u e s a n d O t h e r C h a n ges i n N e t P o s i t i o n Go v e r n m e n t a l A c t i v i t i e s Ta x e s Pr o per t y 12 , 5 0 4 , 5 0 8 1 3 , 6 5 7 , 5 8 9 1 4 , 4 5 8 , 2 4 8 1 4 , 3 3 0 , 4 0 7 1 4 , 5 0 4 , 7 5 0 1 4 , 5 5 4 , 5 6 4 1 4 , 7 4 2 , 6 2 2 1 5 , 0 3 4 , 5 8 3 1 5 , 5 1 0 , 1 2 7 1 5 , 9 8 0 , 7 7 1 Sa l e s a n d H o m e R u l e 7, 1 9 6 , 9 6 9 7, 3 0 9 , 8 0 0 6 , 9 8 4 , 1 3 4 7 , 5 7 0 , 9 1 5 7 , 8 0 3 , 7 4 9 8 , 4 5 5 , 9 7 2 9 , 2 7 4 , 7 7 7 9 , 0 9 5 , 4 7 1 9 , 2 2 9 , 2 5 4 1 0 , 1 5 9 , 8 6 6 In c o m e a n d U s e 3, 6 0 1 , 6 1 9 4, 1 6 5 , 2 4 8 3 , 7 1 4 , 8 6 4 5 , 4 6 2 , 1 1 1 4 , 7 3 7 , 6 5 6 4 , 1 0 4 , 7 3 6 5 , 4 0 9 , 8 7 5 4 , 9 9 4 , 4 2 6 4 , 8 4 3 , 2 5 1 5 , 2 2 1 , 8 2 7 Te l e c o m m u n i c a t i o n s 2, 3 4 5 , 2 4 9 2, 1 8 3 , 1 9 0 2 , 1 3 4 , 4 6 2 2 , 2 0 0 , 8 0 9 1 , 9 4 3 , 8 1 1 1 , 6 7 9 , 6 5 3 1 , 6 4 4 , 3 0 9 1 , 5 1 3 , 2 5 4 1 , 5 8 6 , 1 2 8 1 , 7 6 1 , 3 2 6 Ut i l i t y - 2 , 3 9 3 , 3 4 0 2, 5 6 7 , 0 9 1 2 , 5 1 0 , 2 4 2 2 , 6 2 9 , 9 9 7 2 , 8 1 9 , 4 2 7 2 , 6 4 3 , 6 4 2 2 , 6 5 9 , 5 5 4 2 , 5 3 2 , 6 6 2 2 , 8 0 5 , 9 1 2 Pr o per t y T r a n s f e r 67 0 , 7 6 2 5 4 5 , 5 1 5 6 2 9 , 3 7 6 4 5 9 , 0 3 6 7 6 0 , 1 6 4 7 9 0 , 8 1 9 9 0 4 , 3 1 1 1 , 1 1 5 , 3 6 0 1 , 2 5 6 , 9 1 9 9 6 9 , 0 3 9 Ot h e r 1, 0 0 6 , 2 4 9 1, 0 1 7 , 6 1 2 1 , 0 4 4 , 1 6 4 1 , 0 7 0 , 4 0 9 1 , 0 5 2 , 7 8 8 1 , 1 1 3 , 8 3 1 1 , 0 9 2 , 5 5 4 1 , 1 1 0 , 5 0 3 1 , 0 1 9 , 8 0 7 1 , 0 8 7 , 4 9 7 In v e s t m e n t E a r n i n gs 49 0 , 8 8 1 2 5 0 , 2 9 0 1 3 3 , 0 5 9 1 3 2 , 4 3 6 5 4 , 5 2 2 1 0 7 , 7 6 5 2 5 , 0 6 1 6 5 , 6 0 0 1 5 3 , 8 1 6 2 9 2 , 3 4 0 Mi s c e l l a n e o u s 1, 4 0 3 , 2 8 3 1, 8 2 2 , 2 7 6 1 , 4 9 5 , 1 5 5 1 , 2 3 9 , 9 0 6 1 , 5 0 6 , 9 9 4 1 , 6 3 6 , 7 2 1 1 , 4 5 8 , 1 1 8 1 , 5 9 6 , 8 0 6 1 , 4 0 9 , 5 3 7 1 , 8 8 4 , 5 7 9 Tr a n s f e r s 9 3 5 , 0 0 0 2 1 7 , 0 0 0 5 5 3 , 0 0 0 6 3 5 , 5 0 0 9 5 1 , 1 1 1 1 , 0 7 0 , 7 2 4 7 4 9 , 0 2 7 1 , 0 6 2 , 1 9 0 9 5 8 , 3 1 5 5 3 , 7 1 5 Ga i n o n s a l e s o f a s s e t s - - - - - 48 8 1, 6 0 1 1, 3 8 5 8, 7 5 8 To t a l G o v e r n m e n t a l A c t i v i t i e s Ge n e r a l R e v e n u e s 30 , 1 5 4 , 5 2 0 3 3 , 5 6 1 , 8 6 0 3 3 , 7 1 3 , 5 5 3 3 5 , 6 1 1 , 7 7 1 3 5 , 9 4 5 , 5 4 2 3 6 , 3 3 4 , 7 0 0 3 7 , 9 4 5 , 8 9 7 3 8 , 2 4 9 , 1 3 2 3 8 , 5 0 8 , 5 7 4 4 0 , 2 1 6 , 8 7 2 Bu s i n e s s - T yp e A c t i v i t i e s In v e s t m e n t E a r n i n gs (37 4 , 6 3 2 ) (46 , 6 6 6 ) 41 , 1 0 0 2 7 , 0 8 7 1 2 , 4 5 5 1 8 , 8 2 0 1 0 , 1 1 2 1 4 , 1 5 9 4 9 2 , 1 3 2 3 5 9 , 3 7 1 Mi s c e l l a n e o u s 1, 3 1 5 2 , 1 3 3 4 , 9 9 9 1 , 2 5 9 - 5 2 0 , 5 2 1 5, 7 3 7 24 9 , 9 4 6 39 3 , 3 2 8 24 2 , 0 5 8 Tr a n s f e r s (93 5 , 0 0 0 ) (21 7 ) (55 3 , 0 0 0 ) (63 5 , 5 0 0 ) (95 1 , 1 1 1 ) (1, 0 7 0 , 7 2 4 ) (74 9 , 0 2 7 ) (1, 0 6 2 , 1 9 0 ) (95 8 , 3 1 5 ) (53 , 7 1 5 ) To t a l B u s i n e s s - T yp e A c t i v i t i e s Ge n e r a l R e v e n u e s (1, 3 0 8 , 3 1 7 ) (44 , 7 5 0 ) (50 6 , 9 0 1 ) (60 7 , 1 5 4 ) (93 8 , 6 5 6 ) (53 1 , 3 8 3 ) (73 3 , 1 7 8 ) (79 8 , 0 8 5 ) (72 , 8 5 5 ) 54 7 , 7 1 4 To t a l P r i m a r y G o v e r n m e n t Ge n e r a l R e v e n u e s 28 , 8 4 6 , 2 0 3 3 3 , 5 1 7 , 1 1 0 3 3 , 2 0 6 , 6 5 2 3 5 , 0 0 4 , 6 1 7 3 5 , 0 0 6 , 8 8 6 3 5 , 8 0 3 , 3 1 7 3 7 , 2 1 2 , 7 1 9 3 7 , 4 5 1 , 0 4 7 3 8 , 4 3 5 , 7 1 9 4 0 , 7 6 4 , 5 8 6 Ch a n ges i n N e t P o s i t i o n Go v e r n m e n t a l A c t i v i t i e s (5, 5 9 6 , 8 9 3 ) (85 6 , 5 5 5 ) (1, 3 4 7 , 6 7 3 ) (1, 4 3 6 , 9 4 8 ) (4, 1 0 2 , 6 9 2 ) (1, 3 8 5 , 7 4 9 ) (2, 3 7 4 , 1 8 4 ) (1, 1 4 8 , 8 9 6 ) 2, 1 2 7 , 7 8 5 (1, 2 8 4 , 3 5 5 ) Bu s i n e s s - T yp e A c t i v i t i e s (3, 5 5 7 , 4 8 7 ) (1, 6 7 5 , 5 6 8 ) (2, 2 5 9 , 0 3 7 ) (2, 6 6 7 , 0 5 6 ) (87 9 , 0 2 1 ) (13 0 , 7 6 5 ) (41 3 , 9 1 9 ) 38 5 , 8 9 4 1 , 1 1 0 , 9 9 1 1 , 0 3 2 , 2 0 1 To t a l P r i m a r y G o v e r n m e n t Ch a n ges i n N e t P o s i t i o n (9, 1 5 4 , 3 8 0 ) (2, 5 3 2 , 1 2 3 ) (3, 6 0 6 , 7 1 0 ) (4, 1 0 4 , 0 0 4 ) (4, 9 8 1 , 7 1 3 ) (1, 5 1 6 , 5 1 4 ) (2, 7 8 8 , 1 0 3 ) (76 3 , 0 0 2 ) 3, 2 3 8 , 7 7 6 (25 2 , 1 5 4 ) * A c c r u a l B a s i s o f A c c o u n t i n g ** A u d i t o r s r e s t a t e d 2 0 1 2 , f r o m 2 0 1 1 a n d e a r l i e r h a v e n o t b e e n a d jus t e d Da t a S o u r c e : A u d i t e d F i n a n c i a l S t a t e m e n t s 20 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 20 1 2 * * 20 0 9 2 0 1 0 2 0 1 1 16 1 VILLAGE OF BUFFALO GROVE, ILLINOIS Fund Balances of Governmental Funds - Last Ten Fiscal Years* 2010 2011 2012** General Fund Nonspendable $- - 1,031,936 518,437 Restricted - - - - Committed - - 7,948,344 7,335,685 Unassigned - - 9,871,895 10,759,935 Reserved 1,248,428 1,138,273 - - Unreserved 18,307,270 17,763,849 - - Total General Fund 19,555,698 18,902,122 18,852,175 18,614,057 All Other Governmental Funds Restricted - - 1,918,263 6,112,703 Assigned - - 146,116 144,075 Unassigned - - (234,206) (253,826) Unreserved (12,970) 20,271 - - Unreserved, Reported in, Special Revenue Funds 1,252,015 2,124,937 - - Capital Projects Funds 903,315 927,626 - - Total All Other Governmental Funds 2,142,360 3,072,834 1,830,173 6,002,952 Total Governmental Funds 21,698,058 21,974,956 20,682,348 24,617,009 * Accrual Basis of Accounting **Auditors restated 2012, from 2011 and earlier have not been adjusted. Data Source: Audited Financial Statements December 31, 2018 (Unaudited) 2009 162 2013 2014 2015 2016 2017 2018 562,399 573,812 551,242 167,957 132,843 132,134 162,274 130,435 223,622 229,953 252,729 607,411 7,345,420 7,438,256 7,532,123 8,511,306 7,758,348 6,827,236 12,395,113 13,225,644 14,991,907 16,143,726 18,902,476 17,039,974 - - - - - - - - - - - - 20,465,206 21,368,147 23,298,894 25,052,942 27,046,396 24,606,755 1,796,997 1,965,328 1,974,115 1,632,934 1,629,079 1,302,440 101,213 - - - - - (927,395) (2,324,296) (3,707,560) (3,859,964) (3,714,759) (268,260) - - - - - - - - - - - - - - - - - - 970,815 (358,968) (1,733,445) (2,227,030) (2,085,680) 1,034,180 21,436,021 21,009,179 21,565,449 22,825,912 24,960,716 25,640,935 163 VILLAGE OF BUFFALO GROVE, ILLINOIS Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years* 2009 2010 2011 2012** Revenues Propety Taxes $12,504,508 13,657,589 14,458,248 14,330,407 Other Taxes 14,806,744 17,614,705 17,074,091 18,325,614 Licenses and Permits 276,857 278,164 280,139 275,434 Intergovernmental 1,106,234 1,096,794 1,060,719 1,011,949 Fines and Forteitures 1,559,190 1,419,761 1,404,308 1,283,956 Charges for Services 970,537 1,145,679 1,216,497 1,236,158 Investment Income 490,881 249,396 133,196 132,457 Miscellaneous 1,444,610 1,720,640 1,442,617 1,239,861 Total Revenues 33,159,561 37,182,728 37,069,815 37,835,836 Expenditures Current General Government 5,596,822 4,979,904 5,509,433 5,556,101 Public Safety 20,882,745 21,802,732 22,008,351 21,791,218 Public Works 10,337,090 8,704,005 8,256,079 9,865,723 Capital Outlay 1,245,940 3,157,156 1,510,924 1,561,904 Debt Service Principal 1,165,000 980,000 1,055,000 920,000 Interest 334,142 194,655 248,539 285,420 Other Charges - 127,930 - - Total Expenditures 39,561,739 39,946,382 38,588,326 39,980,366 Excess (Deficiency) of Revenues Over (Under) Expenditures (6,402,178) (2,763,654) (1,518,511) (2,144,530) Other Financing Sources (Uses) Transfers In 2,909,382 2,153,190 1,891,354 2,621,132 Transfers Out (1,974,382) (1,936,190) (1,338,354) (1,985,632) Sales of Capital Assets - - - - Auction Proceeds - 103,565 52,538 45 Bond Issued - 7,760,000 - 6,000,000 Premium of Issuance of Debt - 178,229 - 91,669 Transfer to Escrow Agent - (5,218,242) - - Total Other Financing Sources (Uses)935,000 3,040,552 605,538 6,727,214 Net Change in Fund Balances (5,467,178) 276,898 (912,973) 4,582,684 Debt Service as a Percentage of Noncapital Expenditures 3.91%3.19%3.52%3.14% * Accrual Basis of Accounting **Auditors restated 2012, from 2011 and earlier have not been adjusted. ***Beginning in 2014, state shared revenues have been recorded as intergovernmental revenues. Data Source: Village Records December 31, 2018 (Unaudited) 164 2013 2014***2015 2016 2017 2018 14,504,750 14,554,564 14,742,622 15,034,583 15,510,127 15,980,771 19,240,365 9,564,978 9,712,718 9,701,271 9,816,523 10,494,959 294,622 207,312 1,330,769 326,177 1,763,982 344,389 997,371 11,081,081 1,931,512 11,843,812 3,043,453 12,623,735 1,647,364 1,803,317 350,042 3,025,628 330,475 2,820,773 1,010,868 1,371,779 12,271,219 1,504,400 11,709,919 1,600,263 54,522 107,765 25,061 65,600 153,816 292,340 1,506,994 2,107,628 1,404,841 1,610,746 1,456,876 1,884,579 39,256,856 40,798,424 41,768,784 43,112,217 43,785,171 46,041,809 6,465,636 5,522,549 5,084,772 5,693,142 5,774,748 6,804,142 21,805,910 22,773,535 25,237,115 27,407,019 25,776,184 26,732,460 12,178,705 10,878,278 8,092,735 6,978,307 8,101,888 8,710,363 1,347,276 2,018,451 2,828,194 8,252,604 1,362,213 1,502,272 940,000 790,000 510,000 525,000 1,275,000 1,315,000 385,395 313,665 296,747 371,456 401,609 370,202 - - - - - - 43,122,922 42,296,478 42,049,563 49,227,528 42,691,642 45,434,439 (3,866,066) (1,498,054) (280,779) (6,115,311) 1,093,529 607,370 2,119,313 2,552,288 3,521,760 3,402,595 4,204,943 9,068,487 (1,434,235) (1,481,564) (2,686,312) (2,253,984) (3,192,426) (8,995,638) - 488 1,601 1,385 28,758 - - - - - - - - - - 6,125,000 - - - - - 100,778 - - - - - - - - 685,078 1,071,212 837,049 7,375,774 1,041,275 72,849 (3,180,988) (426,842) 556,270 1,260,463 2,134,804 680,219 3.17%2.68%2.06%2.19%4.24%3.89% 165 VILLAGE OF BUFFALO GROVE, ILLINOIS Assessed Value and Actual Value of Taxable Property - Last Ten Tax Levy Years Tax Levy Year 2009 $1,535,445,605 $346,125,532 $14,583,031 $628,346 2010 1,435,137,071 325,603,742 12,723,472 636,502 2011 1,338,206,375 315,118,343 10,706,904 832,216 2012 1,223,424,081 296,910,564 10,221,534 617,198 2013 1,115,221,955 292,225,583 9,050,042 618,433 2014 1,120,788,463 294,457,084 9,119,150 696,091 2015 1,181,620,776 290,063,933 3,377,285 631,771 2016 1,299,550,777 310,452,203 3,611,330 636,718 2017 1,336,606,286 318,894,119 3,900,196 628,731 2018 1,347,695,708 *334,731,537 *4,684,958 *653,520 * Note: Total Direct Tax Rate is weighted for both Cook and Lake Counties. Data Source: Office of the County Clerk/Office of the Lake County Clerk * Cook County property class and assessed valuation is an estimate. Cook County information not yet available. December 31, 2018 (Unaudited) Property Property Property Property Residential Commercial Industrial Other 166 Estimated Estimated Actual Taxable Actual Taxable Value Value % $1,896,782,514 $5,690,347,542 0.7500 33.333% 1,774,100,787 5,322,302,361 0.7970 33.333% 1,664,863,838 4,994,591,514 0.8520 33.333% 1,531,173,377 4,593,520,131 0.9290 33.333% 1,417,116,013 4,251,348,039 0.9830 33.333% 1,425,060,788 4,275,182,364 0.9930 33.333% 1,475,693,765 4,427,081,295 0.9550 33.333% 1,614,251,028 4,842,753,084 0.9210 33.333% 1,660,029,332 4,980,087,996 0.9080 33.333% 1,687,765,723 *5,063,297,169 0.9070 33.333% Value Value Estimated Total Assessed Actual Taxable 167 VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Property Tax Rates - Last Ten Tax LevyYears 2009 2010 2011 Direct Rate Lake County Village of Buffalo Grove 0.750 0.797 0.852 Cook County Village of Buffalo Grove 0.691 0.810 0.886 Total 1.441 1.607 1.738 Overlapping Rate Lake County County, including Forest Preserve 0.664 0.703 0.755 Combined School Districts (102, 125, 532)5.301 5.610 6.158 Buffalo Grove Park District 0.351 0.425 0.452 Vernon Area Public Library 0.301 0.315 0.385 All Other (1)0.094 0.102 0.092 Cook County County, including Forest Preserve 0.464 0.474 0.520 Metropolitan Water Reclamation District of Greater Chicago 0.261 0.274 0.320 Combined School Districts (21, 214, 512)5.103 5.792 6.565 Buffalo Grove Park District 0.371 0.439 0.479 Indian Trails Public Library District 0.307 0.347 0.393 All other (2)0.068 0.071 0.107 Total (3)13.285 14.552 16.226 Notes: Taxes Levied on a calendar year basis for collection in the subsequent year. (1) Includes Road and Bridge and General Assistance for the Township herein. N/A - Not Available Data Source: Cook County Tax Extension/Lake County Tax Extension The Village is home rule unit under the 1970 Illinois State Constitution and, as such, has no statutory tax rate limitations. (2) Includes Northwest Mosquito Abatement, Consolidated Elections, Road and Bridge, and General Assistance for the Township herein. (3) 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. 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. December 31, 2018 (Unaudited) 168 2012 2013 2014 2015 2016 2017 2018 0.929 0.983 0.993 0.955 0.921 0.908 0.907 1.030 1.211 1.235 1.316 1.138 0.969 1.210 1.959 2.194 2.228 2.271 2.059 1.877 2.117 0.820 0.881 0.893 0.871 0.825 0.809 0.794 6.779 7.068 7.164 7.034 6.680 6.634 6.665 0.511 0.537 0.553 0.517 0.492 0.482 0.480 0.441 0.311 0.317 0.308 0.293 0.291 0.294 0.106 0.105 0.113 0.110 0.104 0.099 0.096 0.594 0.125 0.126 0.621 0.596 0.558 N/A 0.370 0.417 0.430 0.426 0.406 0.402 N/A 6.917 8.053 8.657 8.989 7.909 8.010 N/A 0.557 0.658 0.677 0.714 0.606 0.641 N/A 0.463 0.504 0.529 0.534 0.476 0.481 N/A 0.187 0.129 0.094 0.130 0.073 0.108 N/A 17.745 18.788 19.553 20.254 18.460 18.515 8.328 169 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Property Tax Payers - Current Year and Nine Years Ago Percentage Percentage of Total Village of Total Village Taxable Taxable Assessed Assessed Taxpayer Rank Value Rank Value Chevy Chase Busniess Park Ltd $21,759,899 1 1.31%$18,960,235 2 1.01% Hamilton Partners (1)12,147,043 2 0.73%12,986,131 3 0.69% Penobscot Management LLC (3)9,436,975 3 0.57%9,405,158 5 0.50% Buffalo Grove STE 106 9,168,128 4 55.00% Millbrook 9,167,002 5 0.55%11,978,786 4 0.64% Leider lane Investors LLC 8,630,563 6 0.52% Arthur J. Rogers and Co (4)8,229,224 7 0.50%9,012,393 7 0.48% BRI 1862 Riverwalk LLC (5)8,145,927 8 0.49% Riverwalk South LLC (2)7,819,608 9 0.47%9,241,551 6 0.49% Resource Real Estate Inc 6,589,815 10 0.40% Amli at Chevy Chase LP 22,307,549 1 1.19% Remax Consumer Plastics Inc 7,355,354 8 0.39% Strathmore Square 6,895,030 9 0.37% NTL Shopping Plaza 6,587,600 10 0.35% 101,094,184 60.54%114,729,787 6.11% Data Source: Office of the County Clerk of Cook/Office of the County Clerk of Lake Value Value 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. December 31, 2018 (Unaudited) 2018 2009 Taxable Taxable Assessed Assessed 170 VI L L A G E O F B U F F A L O G R O V E , I L L I N O I S Pr o p e r t y T a x L e v i e s a n d C o l l e c t i o n s - L a s t T e n F i s c a l Y e a r s De c e m b e r 3 1 , 2 0 1 8 ( U n a u d i t e d ) Ta x Le v y Pe r c e n t a g e Pe r c e n t a g e Pe r c e n t a g e Ye a r of L e v y of L e v y of L e v y 20 0 8 $ 9, 6 4 8 , 2 9 6 $ 9, 6 3 9 , 4 4 4 99 . 9 1 % $ 2, 8 8 2 , 4 9 3 $ 2, 9 0 2 , 2 2 3 10 0 . 6 8 % $ 12 , 5 4 1 , 6 6 7 10 0 . 0 9 % 20 0 9 10 , 8 2 6 , 9 9 9 10 , 8 1 8 , 3 9 8 99 . 9 2 % 3, 1 3 1 , 0 5 9 2, 9 9 2 , 7 6 8 95 . 5 8 % 13 , 8 1 1 , 1 6 6 98 . 9 5 % 20 1 0 10 , 9 1 1 , 6 2 9 10 , 9 0 2 , 7 5 7 99 . 9 2 % 3, 2 8 0 , 0 8 3 3, 2 0 3 , 6 7 6 97 . 6 7 % 14 , 1 0 6 , 4 3 3 99 . 4 0 % 20 1 1 11 , 0 2 6 , 4 7 8 11 , 0 1 9 , 6 3 8 99 . 9 4 % 3, 2 7 9 , 2 8 5 3, 2 2 5 , 8 2 4 98 . 3 7 % 14 , 2 4 5 , 4 6 2 99 . 5 8 % 20 1 2 11 , 1 8 3 , 7 8 0 11 , 1 0 5 , 2 7 4 99 . 3 0 % 3, 4 4 9 , 5 7 2 3, 3 9 9 , 4 7 7 98 . 5 5 % 14 , 5 0 4 , 7 5 1 99 . 1 2 % 20 1 3 11 , 4 1 3 , 0 6 7 11 , 1 7 2 , 7 4 5 97 . 8 9 % 3, 4 2 4 , 5 1 5 3, 3 8 1 , 8 1 9 98 . 7 5 % 14 , 5 5 4 , 5 6 4 98 . 0 9 % 20 1 4 11 , 3 3 9 , 3 2 6 11 , 3 2 2 , 0 8 7 99 . 8 5 % 3, 5 0 0 , 8 0 0 3, 4 0 9 , 4 5 8 97 . 3 9 % 14 , 7 3 1 , 5 4 5 99 . 2 7 % 20 1 5 11 , 6 7 8 , 7 4 2 11 , 4 2 6 , 1 1 5 97 . 8 4 % 3, 5 1 4 , 1 0 6 3, 6 0 8 , 4 6 8 10 2 . 6 9 % 15 , 0 3 4 , 5 8 3 98 . 9 6 % 20 1 6 11 , 7 8 3 , 0 4 7 11 , 7 6 1 , 3 6 5 99 . 8 2 % 3, 8 1 1 , 2 2 8 3, 7 4 8 , 7 6 3 98 . 3 6 % 15 , 5 1 0 , 1 2 8 99 . 4 6 % 20 1 7 12 , 0 5 5 , 1 3 0 12 , 0 5 5 , 1 3 0 10 0 . 0 0 % 4, 0 2 2 , 6 2 7 3, 9 1 6 , 4 5 3 97 . 3 6 % 15 , 9 7 1 , 5 8 3 99 . 3 4 % Da t a S o u r c e : O f f i c e o f t h e C o u n t y C l e r k o f C o o k / O f f i c e o f t h e C o u n t y C l e r k o f L a k e Co o k C o u n t y th e F i s c a l th e F i s c a l Ta x e s Co l l e c t e d w i t h i n t h e Ta x e s Co l l e c t e d w i t h i n t h e Le v i e d f o r Fi s c a l Y e a r o f t h e L e v y Le v i e d f o r Fi s c a l Y e a r o f t h e L e v y Vi l l a g e T o t a l La k e C o u n t y Ye a r Am o u n t Ye a r Am o u n t Am o u n t 17 1 VILLAGE OF BUFFALO GROVE, ILLINOIS Taxable Sales by Category - Last Ten Calendar Years 2010 2011 General Merchandise $ 4,637 3,901 18,514 Food 1,357,378 1,362,170 1,244,667 Drinking and Eating Places 941,804 933,212 921,617 Apparel 112,951 128,663 129,402 Furniture, Households and radio 223,008 415,396 378,836 Lumber, Building and Hardware 716,935 402,483 534,413 Automobile and Filling Stations 1,222,500 959,870 853,864 Drugs and Misc. Retail 1,432,484 1,431,121 1,982,824 Agriculture and All Others 1,257,806 1,062,978 1,193,620 Manufacturers 399,141 379,893 378,326 Totals 7,668,644 7,079,687 7,636,083 Total Number of Taxpayers 975 997 1,286 Village Direct Sales Tax rate 1.00% 1.00% 1.00% Village Home Rule Tax rate 1.00% 1.00% 1.00% *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 2009 Note: Blank Categories have less than four taxpayers; therefore, no data is shown to protect the confidentiality of the individual taxpayers. December 31, 2018 (Unaudited) 172 2012 2013 2014 2015 2016 2017 2018 17,526 10,105 9,098 66,228 86,125 - - 1,193,312 1,133,605 1,080,556 1,552,983 1,481,195 1,557,474 1,836,131 997,738 1,025,547 1,023,545 1,062,206 1,118,330 1,107,878 1,133,048 130,163 120,210 104,229 94,538 92,409 68,075 66,797 437,774 463,678 * 356,095 521,007 369,583 380,907 1,250,788 812,434 1,236,689 1,666,708 1,879,818 2,074,008 2,357,551 2,202,029 954,996 857,713 947,278 918,216 867,250 1,007,356 1,068,115 1,847,550 1,915,937 2,349,469 1,790,381 1,986,578 1,568,024 1,536,061 1,347,303 1,572,248 1,693,506 2,313,502 2,231,299 2,573,323 2,470,229 334,442 285,848 270,063 351,808 220,927 200,727 180,646 8,073,238 8,621,580 9,500,547 10,550,687 10,527,704 10,821,315 11,743,844 966 972 974 1,043 1,022 1,036 1,036 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 173 State of Village Village Illinois Fiscal Direct Home Rule Sales Tax Year Rate Rate Rate 2009 1.00%1.00%6.50% 2010 1.00%1.00%6.50% 2011 1.00%1.00%6.50% 2012 1.00%1.00%6.50% 2013 1.00%1.00%6.50% 2014 1.00%1.00%6.50% 2015 1.00%1.00%6.50% 2016 1.00%1.00%6.50% 2017 1.00%1.00%6.50% 2018 1.00%1.00%6.50% Data Source: Illinois Department of Revenue VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years December 31, 2018 (Unaudited) 174 VILLAGE OF BUFFALO GROVE, ILLINOIS Ratios of Outstanding Debt By Type - Last Ten Fiscal Years Fiscal Year 2009 $6,575,000 $- $- $- 2010 8,255,000 - - - 2011 7,200,000 - - - 2012 12,280,000 - - - 2013 11,340,000 - 173,618 - 2014 10,730,503 - 400,519 - 2015 10,202,453 - 383,487 1,193,599 2016 15,881,408 - 366,060 6,894,447 2017 14,581,706 - 348,233 6,638,399 2018 13,243,707 - 329,993 6,341,869 Notes: Details of the Village's outstanding debt can be found in the Notes to Financial Statements. Obligation Obligation IEPA Installment General (1) See the Schedule of Demographic and Economic Statistics forequalized assessed valuation of propery, personal income, and population data. December 31, 2018 (Unaudited) General Activities Bonds Bonds Loan Note Governmental Business-Type Activities 175 Ratio of Total Outstanding Debt Debt to Total Outstanding Equalized Outstanding as a Percentage Assessed Debt of Personal Valuation Per Capita (1)Income $6,575,000 0.12%156.62 0.36% 8,255,000 0.16%198.93 0.45% 7,200,000 0.14%171.79 0.39% 12,280,000 0.27%290.10 0.65% 11,513,618 0.27%275.59 0.61% 11,131,022 0.26%265.11 0.57% 11,779,539 0.27%283.82 0.61% 23,141,915 0.48%557.64 1.19% 21,568,338 0.43%523.17 1.11% 19,915,569 0.39%487.49 0.98% Government Notes: Details of the Village's outstanding debt can be found in the Notes to Financial Statements. Total Primary 176 Percentage of Total Taxable Less: Amounts Assessed Fiscal Available in Value of Per Year Debt Service Total Property (1)Capita (2) 2009 $6,575,000 $- $6,575,000 0.12%$156.62 2010 8,255,000 - 8,255,000 0.16%198.93 2011 7,200,000 - 7,200,000 0.14%171.79 2012 12,280,000 - 12,280,000 0.27%290.10 2013 11,340,000 - 11,340,000 0.27%271.43 2014 10,730,503 - 10,730,503 0.25%255.57 2015 10,202,453 - 10,202,453 0.23%245.82 2016 15,881,408 - 15,881,408 0.33%382.68 2017 14,581,706 - 14,581,706 0.29%353.70 2018 13,243,707 - 13,243,707 0.26%324.18 (1) See the Schedule of Assessed Value and Actual Value of Taxable Property for property value data. (2) See the Schedule of Demographic and Economic Statistics for population data. Note: Details of the Village's outstanding debt can be found in the Notes to the Financial Statements. Data Source: Village Records Bonds December 31, 2018 (Unaudited) VILLAGE OF BUFFALO GROVE, ILLINOIS Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years General Obligation 177 VILLAGE OF BUFFALO GROVE, ILLINOIS Schedule of Direct and Overlapping Governmental Activities Debt Percentage of Debt Applicable Governmental Unit to Village (1) Village $13,243,707 100.00%$13,243,707 Overlapping Debt School Districts Cook County School District #21 69,085,000 18.37%12,690,915 Kildeer Countryside Community Consolidated #96 - 38.45%- Aptakisic-Tripp Community Consolidated #102 17,445,000 76.70%13,380,315 Lincolnshire-Half Day District #103 5,740,000 12.08%693,392 Adlai E. Stevenson H.S. District #125 48,380,000 37.35%18,069,930 Wheeling Township H.S. District #214 35,285,000 3.85%1,358,473 Harper Community College #512 117,785,000 1.74%2,049,459 College of Lake County #532 58,465,000 5.37%3,139,571 Total of School Districts 352,185,000 51,382,054 Other than School Districts Lake County 174,530,000 5.10%8,901,030 Lake County Forest Preserve 240,155,000 5.10%12,247,905 Cook County 2,950,121,750 0.22%6,490,268 Cook County Forest Preserve 142,360,000 0.22%313,192 Metropolitan Water Reclamation District 2,348,253,000 0.22%5,166,157 Buffalo Grove Park District 13,190,000 96.06%12,670,314 Wheeling Park District 12,995,000 7.52%977,224 Total Other than School Districts 5,881,604,750 46,766,089 Total Direct and Overlapping Debt 5,894,848,457 93,532,179 Data Source: Cook County Tax Extension Department Note: Overlapping governments are those that coincide,at least in part, with the geographic boudries 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 a debt, of each overlapping government. December 31, 2018 (Unaudited) Village's Share of Gross Debt Debt (1) Determined by ratio of assessed valuation of property subject to taxation in the Village to valuation of property subject to taxation in overlapping unit. 178 VILLAGE OF BUFFALO GROVE, ILLINOIS Schedule of Legal Debt Margin The Village is a home rule municipality. Article VII, Section 6(k) of the 1970 Illinois constitution governs computation of legal debt margin. To date the General Assembly has set no limits for home rule municipalities. The General Assembly may limit by law the amount and require referendum approval of debt to be incurred by some home rule municipalities, payable from ad valorem property tax receipts, only in excess of the following percentages of the assessed value of its taxable property...(2)if its population is more than 25,000 and less than 500,000 an aggregate of one percent: indebtedness which is outstanding on the effective date (July 1, 1971) of this constitution or which is thereafter approved by referendum...shall not be included in the foregoing percentage amounts. December 31, 2018 (Unaudited) 179 VILLAGE OF BUFFALO GROVE, ILLINOIS Demographic and Economic Statistics - Last Ten Fiscal Years December 31, 2018 (Unaudited) Per Equalized Capita Fiscal Assessed Personal Personal Per Capita Unemployment Year Population Valuation EAV Income Income Rate 2009 41,980 E $1,896,782,514 $45,183 1,802,196,362 42,930 E 7.8% 2010 41,496 A 1,774,100,787 42,754 1,817,773,776 43,806 (2) 8.4% 2011 41,911 E 1,664,431,364 39,713 1,854,311,029 44,244 E 7.6% 2012 42,330 E 1,531,173,377 36,172 1,891,582,681 44,687 E 7.1% 2013 41,778 E 1,456,040,510 34,852 1,882,391,346 45,057 (1) 6.8% 2014 41,987 E 1,425,060,788 33,941 1,939,085,621 46,183 E 5.7% 2015 41,503 E 1,475,693,765 35,556 1,930,595,051 46,517 (1) 4.2% 2016 41,500 E 1,614,251,028 38,898 1,949,794,500 46,983 (3) 4.3% 2017 41,226 E 1,662,450,463 40,325 1,938,570,198 47,023 (3) 5.7% 2018 40,853 E 1,687,765,723 41,313 2,041,301,851 49,967 (3) 3.3% A- Acutal (1) - US Census Website E - Estimate (2) - American Community Survey 3 Year Estimates (3) - Illinois Department of Employment Security Data Source: U.S. Department of Labor, Bureau of Labor Statistics, U.S. Census Bureau 180 VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Employers - Current Year and Nine Years Ago Percentage Percentage of Total of Total Village Village Employer Rank Employment Rank Employment Siemens Building Technologies 1,800 1 4.41%1,030 1 2.31% I.S.I.1,200 2 2.94% ESS 550 3 1.35% Plexus Corp 370 4 0.91%400 5 0.90% Veritas Document Solutions 300 5 0.73% Village of Buffalo Grove 230 6 0.56%245 10 0.55% ARxIUM 200 7 0.49% Vapor Bus International 200 8 0.49% Leica Microsystems Inc.200 9 0.49% Crosscom National LLC 170 10 0.42% All State Insurance 996 2 2.24% Rexam 756 3 1.70% Dominick's Finer Foods 483 4 1.09% Harris Trust & Savings Bank 350 6 0.79% Eagle Test Systems 266 7 0.60% Federal Express 250 8 0.56% Baxter Global Technical Services 250 9 0.56% 5,220 12.78%5,026 11.30% Data Source: Sources: 2018 Illinois Manufacturing Directory 2018 Illinois Services Directory and a selective telephone survey Employees Employees December 31, 2018 (Unaudited) 2018 2009 181 VILLAGE OF BUFFALO GROVE, ILLINOIS Full-Time Equivalent Village Government Employees by Function - Last Ten Fiscal Years 2010 2011 General Government Administration Village Managers Office 4.5 4.0 4.0 Information Technology 3.5 3.5 3.5 Finance 9.0 8.5 8.5 Community Development 10.0 10.0 10.0 Planning 1.5 1.5 1.5 Public Safety Police Full-Time Police Officers 71.0 69.0 69.0 Community Service Officers 3.0 3.0 3.0 Civilians 20.5 17.5 17.5 Fire Full-time Firefighters/Paramedics 62.0 62.0 62.0 Civilians 6.0 6.0 6.0 Public Works Public Works Administration 12.0 12.0 11.0 Streets/Forestry 20.0 20.0 20.0 Water/Sewer 13.0 13.0 13.0 Central garage 5.5 5.5 5.5 Building Maintenance 4.0 4.0 4.0 Recreation Administration 13.5 13.5 13.5 Grounds Maintenance 15.0 15.0 15.0 Total 274.0 268.0 267.0 Recreation Seasonal 34.0 34.0 34.0 Data Source: Village Finance Department December 31, 2018 (Unaudited) 2009 182 2012 2013 2014 2015 2016 2017 2018 4.5 5.5 7.5 6.0 5.0 5.5 5.5 3.5 3.5 3.0 - - - - 8.5 9.5 10.0 8.0 9.0 9.0 9.0 10.0 10.0 9.5 12.0 12.0 14.0 15.0 1.5 1.5 1.5 - - - - 69.0 64.0 63.0 63.0 63.0 61.0 61.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 16.5 17.0 15.0 15.0 15.5 16.0 16.0 62.0 58.0 58.0 59.0 59.0 58.0 59.0 3.5 3.5 1.5 1.0 1.0 4.5 5.0 11.0 5.0 6.0 6.0 6.0 12.0 11.5 20.0 18.5 18.5 20.0 20.0 20.0 20.0 13.0 8.0 9.0 10.0 9.0 12.0 12.0 5.5 5.5 5.5 5.5 5.5 5.5 5.5 4.0 4.0 6.0 6.0 6.0 4.5 4.5 13.5 18.0 19.5 19.5 4.0 4.0 4.0 15.0 16.0 11.5 11.5 - - - 264.0 250.5 248.0 245.5 218.0 228.0 230.0 34.0 30.0 30.0 30.0 30.0 30.0 30.0 183 VILLAGE OF BUFFALO GROVE, ILLINOIS Operating Indicators by Function/Program - Last Ten Fiscal Years 2009 2010 2011 General Government Building and Zoning Building Permits Issued 1,922 1,959 1,930 Building Inspections Conducted 6,633 7,088 9,661 Property Maintenance Inspections Conducted 2,348 3,158 3,462 Public Safety Police Physical Arrests 989 981 820 Parking Violations 3,264 2,062 2,031 Traffic Violations 11,373 11,999 11,867 DUI Arrests 267 222 164 Vehicle Crashes 1,414 1,391 1,396 Fire Ambulance Calls/EMS 2,553 2,743 2,568 Service Calls 718 610 1,053 Fire Calls 774 735 737 Auto Aid/Mutual Aid 672 654 676 Public Works Streets Street Resurfacing (Miles)4.94 3.00 2.90 Parks and Recreation Park Sites 46 46 46 Golf Course - Combined Golf Rounds Played - Paid 59,723 52,740 56,918 Water New Connections (Tap ons)7 50 12 Average Daily consumption (1)4.21 4.30 4.09 Peak Daily consumption (1)7.29 7.30 7.84 (1) - Millions of Gallons N/A - Not Available Data Source: Various Village Departments December 31, 2018 (Unaudited) 184 2012 2013 2014 2015 2016 2017 2018 2,206 2,651 2,833 2,582 2,957 2,567 2,502 15,858 7,456 7,074 11,625 9,053 6,692 6,817 5,828 3,288 3,172 1,894 2,160 1,954 1,902 671 759 886 809 521 441 452 3,341 2,984 3,634 3,766 5,754 6,781 5,748 10,826 13,171 8,349 7,969 6,054 5,310 6,054 107 124 154 97 74 87 85 1,260 1,507 1,429 363 1,473 1,294 1,353 2,789 2,613 3,385 3,123 3,160 3,201 3,145 487 483 1,245 340 309 293 309 698 865 821 1,585 1,279 1,082 1,257 680 654 1,063 1,055 987 1,045 967 5.51 10.84 3.28 2.45 11.40 2.76 0.97 46 46 46 46 46 46 46 59,937 53,639 54,689 68,602 53,599 51,138 48,770 15 27 9 23 19 3 23 3.92 3.70 3.58 3.39 3.60 3.23 3.49 7.93 6.20 5.40 5.14 5.54 5.98 5.69 185 VILLAGE OF BUFFALO GROVE, ILLINOIS Capital Asset Statistics by Function/Program - Last Ten Fiscal Years 2009 2010 2011 Public Safety Police Stations 1 1 1 Patrol Units 36 36 36 Fire Stations 3 3 3 Fire Apparatus 21 21 21 Public Works Streets 117.70 117.70 117.70 Street (Miles)2,743 2,745 2,778 Streetlights Water Water Mains 179.82 179.83 180.25 Fire Hydrants 2,474 2,475 2,474 Wastewater Sanitary Sewers 139.27 139.27 139.27 Data Source: Various Village Departments December 31, 2018 (Unaudited) 186 2012 2013 2014 2015 2016 2017 2018 1 1 1 1 1 1 1 34 28 29 30 29 31 30 3 3 3 3 3 3 3 21 21 20 20 20 20 20 117.70 117.70 118.20 118.20 118.22 114.02 114.02 2,778 2,778 2,786 2,789 2,789 2,790 2,755 180.25 180.30 180.90 181.14 181.31 181.97 185.99 2,475 2,477 2,487 2,493 2,501 2,514 2,507 139.27 139.30 139.80 139.92 139.92 139.96 141.60 187