2025-06-02 - Village Board Committee of the Whole - Agenda Packet
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AGENDA
BUFFALO GROVE VILLAGE BOARD
Committee of the Whole: June 2, 2025 at 7:00 PM
Jeffrey S. Braiman Council Chambers
Fifty Raupp Blvd Buffalo Grove, IL 60089-2139
1. Call to Order
a. Pledge of Allegiance
b. Roll Call
2. Village President's Report
3. Special Business
a. Fire Department Strategic Plan Overview (Trustee Richards, Lawrence Kane)
b. FY 2025 20-Year Water Proforma (Trustee Cesario, Chris Black)
c. Public Safety Pension Funding (Trustee Cesario, Chris Black)
d. General Fund Financial Forecast - FY2026 - FY2030 (Trustee Cesario, Chris Black)
4. Public Comment
Public Comment is limited to items that are not on the regular agenda. In accordance with Section
2.02.070 of the Municipal Code, discussion on questions from the audience will be limited to 5
minutes and should be limited to concerns or comments regarding issues that are relevant to
Village Board business. All members of the public addressing the Village Board shall maintain
proper decorum and refrain from making disrespectful remarks or comments relating to
individuals. Speakers shall use every attempt to not be repetitive of points that have been made by
others. The Village Board may refer any matter of public comment to the Village Manager, Village
staff or an appropriate agency for review.
5. Executive Session
6. Adjournment
The Village Board will make every effort to accommodate all items on the agenda by 10:30 p.m.
The Board does, however, reserve the right to defer consideration of matters to another meeting
should the discussion run past 10:30 p.m.
The Village of Buffalo Grove, in compliance with the Americans with Disabilities Act, requests that
persons with disabilities who require certain accommodations to allow them to observe and/or
participate in this meeting or have questions about the accessibility of the meeting or facilities, contact
the ADA Coordinator at 847-459-2500 to allow the Village to make reasonable accommodations for
those persons.
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AGENDA ITEM SUMMARY
BUFFALO GROVE VILLAGE BOARD
Committee of the Whole: June 2, 2025
AGENDA ITEM 3.a.
Fire Department Strategic Plan Overview
Contacts
Liaison: Trustee Richards
Staff: Lawrence Kane
Staff Recommendation
Staff recommends presentation.
Summary
Staff will provide an overview of the strategic planning process taking place in the fire
department.
Strategic Alignment
Guiding Principle
Principle 1: Financially Responsible and Sound
Principle 2: Outstanding Village Services
Principle 3: Plan and Invest in the Future
Principle 4: High Performing Village Team
Principle 5: Partnership with Local Districts
Principle 6: Engages Our Residents
Principle 7: Builds Our Community
Goal
Goal 1: Maintained effective village government: fiscally responsible and providing
outstanding, responsive services
Goal 3: Strengthened Buffalo Grove community identity and pride
Goal 4: Vibrant and innovative community: leading edge
File Attachments
None
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AGENDA ITEM SUMMARY
BUFFALO GROVE VILLAGE BOARD
Committee of the Whole: June 2, 2025
AGENDA ITEM 3.b.
FY 2025 20-Year Water Proforma
Contacts
Liaison: Trustee Cesario
Staff: Chris Black
Staff Recommendation
Staff recommends presentation.
Summary
See Attached Memorandum
Strategic Alignment
Guiding Principle
Principle 1: Financially Responsible and Sound
Principle 2: Outstanding Village Services
Principle 3: Plan and Invest in the Future
Goal
Goal 1: Maintained effective village government: fiscally responsible and providing
outstanding, responsive services
File Attachments
1. COW Memo 6.2.25 Water Pro Forma
2. COW 6.2.25 Water PF Attachement
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DATE:June 2, 2025
TO:Village Manager Dane Bragg
FROM:Chris Black, Finance Director
SUBJECT:FY 2025 20-year Water Pro-Forma
BACKGROUND
In 2012, the Village developed a 20-year Water and Sewer Fund pro-forma to evaluate the water and
sewer system’s infrastructure needs. As identified in previous pro-forma, the Village’s historical rates
were not sufficient to fund water and sewer operations and capital needs.
In 2019, the Village Board directed staff to develop a formal funding strategy for the Water and Sewer
Fund that would allow needed capital improvements to occur over the next 20 years. The goal was to
develop a funding strategy to complete $150 million of water and sewer infrastructure. The strategy
could not impact the Village’s property tax levy and maintain a competitive water rate amongst other
providers within the region.
As a result, the Village Board adopted a new rate structure and fixed facility fee, effective January
2020. Furthermore, the Village implemented a new local motor fuel tax in an effort to align roadwork
with water and sewer improvements.
Accompanying this memorandum is an updated 20-year water pro-forma reflecting the new rate
structure, including a 2025 increase in the fixed facility fee. A debt issuance for fund improvements
occurred in 2020 and additional bond issues are planned for 2030 and 2033. The pro-forma shows that
Public Works is able to complete over $200 million in water and sewer capital infrastructure through
2044.
RATE AND CONSUMPTION HISTORY
The Village maintained a water and sewer rate of $1.80/1,000 gallons for twenty-three years (1983
through 2005). Funding for future infrastructure replacement was never a component of the rate
structure.
The Village was able to adequately maintain the water and sewer system without increasing rates
during the time period for several reasons. First, Developers donated approximately 53 percent of the
water and sewer system assets when the Village experienced growth in the 1980’s and 1990’s. In
addition, revenues increased due to growing water consumption and the receipt of building and
development fees. Growing revenue, combined with more limited capital needs due to the age of the
MEMORANDUM
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system, allowed the Village to fund infrastructure improvements on a pay-as-you-go basis from Water
and Sewer Fund cash reserves.
Beginning in 2003, a pattern of declining water usage started. In 2002, 1.63 billion gallons of water
were billed. In 2024, the Village billed customers for 1.13 billion gallons, a decrease of 44 percent from
2002. Billable gallons are not expected to reach those levels again, absent a significant drought or the
addition of heavy industrial uses. The following chart shows the annual billed since 2015.
The latest pro-forma uses an estimate of 1.15 billion gallons and will carry forward through the next 20
years. Although there will be an increase in total consumers over the next two decades with Link
Crossing and the Lake Cook Corridor Developments, continued conservation efforts, weather patterns,
and other impacts on water usage could partially offset that growth.
The Village has an agreement in place for the resale of potable water to the Pekara and Horatio
Gardens neighborhoods with the Lake County Public Works Department. The proposed agreement
allows the Village to utilize its existing pumping and reservoir capacity to provide water to
Pekara/Horatio Gardens while providing a high-quality and reliable water source. The pro-forma
includes revenue and expenses related to the agreement beginning in the first quarter of 2025. Also, the
projected expenses and revenues of a Utility Loan Program are included in the pro forma. The
financial impact of the program on the Water and Sewer Fund is negligible.
WATER AND SEWER SYSTEM ASSETS
The utility system consists of 185 linear miles of water and sewer main. Based on actual experience in the
field, the service life of the water main infrastructure is 65 years. Over the next 20 years, it is estimated
that 24 percent of the water mains will reach the end of their useful life. As the first iterations of
infrastructure replacement have come due, the Village has engaged in extensive study of the system and
1,080,000
1,100,000
1,120,000
1,140,000
1,160,000
1,180,000
1,200,000
1,220,000
1,240,000
1,260,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Annual Gallons Billed (in thousands)
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developed a replacement program, culminating in 2020’s Infrastructure Modernization Program. The
following chart shows the pattern of construction of water main since 1929.
Sewer assets have a longer life span as the structures are not pressurized. The Village’s preferred approach
is to line existing sanitary sewer mains, thereby extending life considerably while reducing the life cycle
cost of the asset. As a general rule, sanitary sewer lining can extend the life of a gravity-fed main by 50
years.
RECENT RATE CHANGES
Fixed Facility Fee
As recommended in the water and sewer rate analysis prepared by Strand and Associates, the Village Board
implemented a new fixed facility fee per metered utility account, starting in 2020. The fixed facility fee is
a flat rate assessed to each metered account for access to the water and sewer system.
In November 2024, the Village increased the fixed facility fee rate effective beginning January 1, 2025.
Per Village Code, the fixed fee was to be evaluated every five years by utilizing the aggregate Consumer
Price Index (CPI-U) over the preceding five-year period to determine the amount the rate must be increased.
Rather than implementing a 22 percent increase based on the evaluation, the rate increases 10 percent in
2025 and 2.5 percent every year thereafter.
The fixed fees collected are used for the maintenance and replacement of the capital infrastructure for the
delivery of clean water and the removal of the wastewater. The current fee schedule is as follows:
Fixed Facility Fee Rate per month
All Single-Family Detached, Single-Family
Attached Residential/Governmental/Institutional
$19.13
Multi-Family, Commercial/Industrial Based
on Meter Size
0
20,000
40,000
60,000
80,000
100,000
19
2
8
19
5
9
19
6
3
19
6
8
19
7
1
19
7
4
19
7
7
19
8
0
19
8
3
19
8
6
19
8
9
19
9
2
19
9
5
19
9
8
20
0
1
20
0
4
20
0
7
20
1
1
20
1
5
20
1
8
20
2
1
20
2
4
Feet
Water Main Construction
(In Linear Feet)
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Water/Sewer Rate
The Village’s consumption model is driven by water rate and consumer use. The fees collected from system
users should cover operating expenses such as the cost of the water sourced from the Northwest Water
Commission as well as the cost for pumping, storage and distribution. In 2020, the Village Board approved
a one-time 11 percent increase, so revenue would keep pace with expected increases in operating
expenditures. Beginning in 2021, the rate will increase each year by 4 percent, as adopted by ordinance by
the Village Board. The current combined sewer and water rate per 1,000 gallons is $8.57.
WATER AND SEWER FUND FINANCIALS
Historically, the Water and Sewer Fund addressed infrastructure maintenance and improvement on a pay
as you go basis. Due to the relative age of the system, many system repairs and replacements are coming
due over the next 20 years based on the growth periods for the Village. Since 2012, $40.7 million in
infrastructure repairs and improvements has been spent, including $6 million in water meter replacement
costs. The meter replacement costs were funded through an installment note scheduled to be retired in 2029.
As noted, the Village Board approved two revenue streams, a fixed facility fee combined with a water/sewer
rate increase and a local motor fuel tax to fund capital improvements. These actions allow the Village to
address the first generation of major water and sewer infrastructure replacement, as well as street repair and
replacement. By combining utility and street improvements, the Village is able to comprehensively address
repairs and improvements in neighborhoods and limit disruption to residents.
In May 2020, the Board also approved the issuance of a bond totaling $26 million - $13 million for
water/sewer and $13 million for streets, to begin the Infrastructure Modernization Program. The entire
amount of the bond proceeds was exhausted on projects by the end of FY 2022. The long-term goal is to
transition from a debt and cash strategy to a cash-only strategy (pay-as-you-go) to fund all system
replacements.
From 2020 through 2024, the Village has completed $26.1 million in water and sewer capital projects. The
Village completed approximately $5.2 million in capital projects in FY 2024. The Village will utilize water
and sewer reserves from 2025 through 2029 to fund capital improvements. In 2030 and again in 2033, the
Village will need to issue additional debt to keep pace with the water and sewer improvements. The debt
could be fully supported by water and sewer user charges. All debt is scheduled to be retired by 2048.
1" meters or less $19.13
1.5" meters $24.22
2" meters $49.69
3" meters $127.45
4" meters $198.75
6” meters $219.12
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After completing the largest surge of infrastructure replacement through 2040, the Water and Sewer fund
begins to rebuild cash balances from 2040 through 2044, while also supporting over $40.6 million in capital
improvements during the same period. As a result of the Village’s careful infrastructure planning, Public
Works is able to complete over $160 million in water and sewer capital infrastructure through 2039,
consistent with the recommendations of the Strand & Associates water/sewer system study.
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WATER & SEWER FUND
BUDGET YEAR 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044
Beginning Cash 12,722,967 6,825,738 4,189,529 1,836,995 1,745,531 2,608,142 20,588,393 11,662,380 5,093,904 20,297,193 14,903,337 9,975,734 5,892,079 4,322,209 3,149,505 3,309,952 4,117,046 5,590,312 7,770,700 11,653,901
Water and Sewer Revenue
Sale of Water 8,412,041 8,852,122 9,209,161 9,578,512 9,960,175 10,354,150 10,772,749 11,203,659 11,646,880 12,114,725 12,594,882 13,099,662 13,629,066 14,170,781 14,737,120 15,328,082 15,943,668 16,583,877 17,248,709 17,938,165
Fixed Facility Fees 2,750,000 2,818,750 2,889,219 2,961,449 3,035,485 3,111,373 3,189,157 3,268,886 3,350,608 3,434,373 3,520,232 3,608,238 3,698,444 3,790,905 3,885,678 3,982,820 4,082,390 4,184,450 4,289,061 4,396,288
Late Charges 170,600 173,200 175,800 178,400 181,100 183,800 186,600 189,400 192,200 195,100 198,000 201,000 204,000 207,100 210,200 213,400 216,600 219,800 223,100 226,400
Village Sewer Use Fees 1,966,500 2,047,000 2,127,500 2,208,000 2,300,000 2,392,000 2,484,000 2,587,500 2,691,000 2,794,500 2,909,500 3,024,500 3,151,000 3,277,500 3,404,000 3,542,000 3,680,000 3,829,500 3,979,000 4,140,000
Series 2020 Bonds
Series 2030 Bonds 26,000,000
Series 2033 Bonds 20,000,000
Grants
Other Charges & Fees 96,742 94,444 85,959 85,606 91,616 96,919 94,444 85,959 85,606 91,616 96,919 94,444 85,959 85,606 91,616 96,919 94,444 85,959 85,959 85,606
Investment Revenue 127,230 68,260 41,900 18,370 17,460 26,080 205,880 116,620 50,940 202,970 149,030 99,760 58,920 43,220 31,500 33,100 41,170 55,900 38,850 116,540
Total Revenue 13,523,113 14,053,776 14,529,539 15,030,337 15,585,836 42,164,321 16,932,830 17,452,024 38,017,234 18,833,284 19,468,563 20,127,604 20,827,390 21,575,112 22,360,114 23,196,321 24,058,273 24,959,487 25,864,680 26,902,999
Operating Expenses
Water Department 4,806,035 4,917,309 5,014,293 5,149,406 5,242,695 5,344,209 5,443,996 5,552,106 5,698,592 5,803,507 5,916,904 6,028,839 6,149,368 6,308,549 6,426,443 6,553,110 6,678,613 6,813,015 6,954,383 7,130,783
Sewer Department 1,060,213 1,084,068 1,108,460 1,133,400 1,158,902 1,184,977 1,211,639 1,238,901 1,266,776 1,295,278 1,324,422 1,354,221 1,384,691 1,415,847 1,447,704 1,480,277 1,513,583 1,547,639 1,582,461 1,618,066
Total Operating Expenses 5,866,248 6,001,377 6,122,753 6,282,806 6,401,597 6,529,186 6,655,635 6,791,007 6,965,368 7,098,785 7,241,326 7,383,060 7,534,059 7,724,396 7,874,147 8,033,387 8,192,196 8,360,654 8,536,844 8,748,849
Capital Expenses
Capital Projects 9,600,000 7,000,000 7,000,000 5,000,000 5,000,000 14,000,000 14,000,000 12,000,000 10,000,000 10,000,000 10,000,000 10,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 7,640,325 9,000,000
Capital Equipment 231,530 243,110 255,270 268,030 281,430 295,500 310,280 325,790 342,080 359,180 377,140 396,000 415,800 436,590 458,420 481,340 505,410 518,045 557,210 518,045
Water Meter Debt Service 753,245 807,270 864,413 924,841 384,828 - - - - -
IEPA Loan 26,128 26,128 26,128 26,128 26,128 26,128 26,128 26,128 26,128
Series 2020 Debt Service 1,121,950 946,950 948,700 946,200 947,075 946,475 947,700 948,175 947,900 946,875 947,600
Series 2022 Debt Service 802,941 638,450 629,609 629,996 629,768 641,035 660,000 660,000 660,000 660,000 660,000 1,253,000 1,258,000 1,386,431 660,000 660,000 660,000 660,000 -
Series 2030 Debt Service 684,646 2,189,200 2,190,600 2,190,000 2,192,400 2,192,600 2,190,600 2,191,400 2,189,800 2,190,800 2,189,200 2,190,000 2,193,000 2,190,000 2,193,000
Series 2033 Debt Service 594,669 1,873,000 1,871,400 1,873,200 1,873,200 1,876,400 1,872,600 1,872,000 1,874,400 1,874,600 1,874,400 1,874,600
Total Capital Expenses 12,535,794 9,661,908 9,724,120 7,795,195 7,269,229 16,593,784 18,133,308 16,150,693 14,760,777 16,031,455 16,048,740 15,712,800 13,738,400 13,889,221 13,181,820 13,202,540 13,229,810 13,245,645 12,261,935 13,585,645
Operating Transfers
Water Department - Tax Abatement 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
Reimburse General Fund 838,300 846,700 855,200 863,800 872,400 881,100 889,900 898,800 907,800 916,900 926,100 935,400 944,800 954,200 963,700 973,300 983,000 992,800 1,002,700 1,012,700
Total Operating Transfers 1,018,300 1,026,700 1,035,200 1,043,800 1,052,400 1,061,100 1,069,900 1,078,800 1,087,800 1,096,900 1,106,100 1,115,400 1,124,800 1,134,200 1,143,700 1,153,300 1,163,000 1,172,800 1,182,700 960,000
Revenues over (under) Expenses (5,897,229) (2,636,209) (2,352,534) (91,464) 862,610 17,980,251 (8,926,013) (6,568,476) 15,203,288 (5,393,856) (4,927,603) (4,083,656) (1,569,869) (1,172,705) 160,447 807,094 1,473,267 2,180,387 3,883,201 3,842,312
Unreserved Ending Cash 6,825,738 4,189,529 1,836,995 1,745,531 2,608,142 20,588,393 11,662,380 5,093,904 20,297,193 14,903,337 9,975,734 5,892,079 4,322,209 3,149,505 3,309,952 4,117,046 5,590,312 7,770,700 11,653,901 17,943,401
Required Working Cash* 1,466,562 1,500,344 1,530,688 1,570,702 1,600,399 1,632,297 1,663,909 1,697,752 1,741,342 1,774,696 1,810,332 1,845,765 1,883,515 1,931,099 1,968,537 2,008,347 2,048,049 2,090,164 2,134,211 2,125,453
Est Gallons Billed (in thousands) 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000
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AGENDA ITEM SUMMARY
BUFFALO GROVE VILLAGE BOARD
Committee of the Whole: June 2, 2025
AGENDA ITEM 3.c.
Public Safety Pension Funding
Contacts
Liaison: Trustee Cesario
Staff: Chris Black
Staff Recommendation
Staff recommends presentation.
Summary
Staff will provide a presentation on public safety pensions funding status, the FY 2026
contribution, and future funding.
Strategic Alignment
Guiding Principle
Principle 1: Financially Responsible and Sound
Principle 3: Plan and Invest in the Future
Goal
Goal 1: Maintain effective village government: fiscally responsible and providing outstanding,
responsive services
File Attachments
None
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AGENDA ITEM SUMMARY
BUFFALO GROVE VILLAGE BOARD
Committee of the Whole: June 2, 2025
AGENDA ITEM 3.d.
General Fund Financial Forecast - FY2026 - FY2030
Contacts
Liaison: Trustee Cesario
Staff: Chris Black
Staff Recommendation
Staff recommends presentation.
Summary
Please see attached memorandum.
Strategic Alignment
Guiding Principle
Principle 1: Financially Responsible and Sound
Principle 2: Outstanding Village Services
Principle 3: Plan and Invest in the Future
Goal
Goal 1: Maintained effective village government: fiscally responsible and providing
outstanding, responsive services
File Attachments
1. Five Year General Fund Forecast 2026-2030
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Village of Buffalo Grove
A Financial Assessment of General Fund
Revenues and Expenditures
Village of Buffalo Grove - General Fund
Financial Forecast
FY 2026 – FY 2030
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The purpose of the Five-Year Operating Forecast is to help the Village of Buffalo Grove make informed,
operational decisions by better anticipating future revenues and expenditures. Using the forecasted data,
the Village can plan strategies for providing a consistent, appropriate level of service to the customers while
ensuring the revenues and expenditures remain in a sustainable balance. The primary objective of the
forecast is to provide the Village Board and related stakeholders with an early financial assessment and
identify significant issues that should be addressed in the budget development process. For the purposes of
constructing the forecast, operating revenues are measured against operating expenditures without
including any prior period fund balance to subsidize revenue.
The goals of the forecast are to assess the Village’s ability, over the next five years, to maintain current
service levels based on projected revenue growth, evaluate future sustainability by aligning operating
revenues and expenditures, and ensure proper funding of
infrastructure reserves. The assessment analyzes the capacity to fund
capital projects and maintain a minimum unassigned fund balance
reserve at three months of budget expenditures (25%).
It is important to stress that this forecast is not a budget. It does not
dictate expenditure decisions; rather it identifies the need to
prioritize allocations of Village resources. The forecast sets the stage
for the budget process and aids both staff and the Village Board in
establishing priorities and allocating resources appropriately.
As a governmental entity, changes in strategy that involve service
delivery should be slow and methodical. The forecast provides a
snapshot of the Village’s fiscal health based on numerous
assumptions over the next five years. The forecast is a planning tool
and should be considered fluid in its construction. As new
significant data or trends emerge the document will be revised, at
minimum, on an annual basis.
In each of the five years, revenues offset operating expenses, and the budgets are anticipated to be in
balance. However, expenses are expected to outpace average annual revenue growth by 0.8 percent per
year. After including amounts needed for reserves and capital, there is a shortfall every year in the forecast.
This illustrates the need to continue efforts to finance capital improvements, as well as operating
efficiently and review revenue sources for adequacy, efficiency, and diversification.
FORECAST METHODOLOGIES AND ASSUMPTIONS
REVENUES
The General Fund is the main operating fund and accounts for the core public services provided by the
Village including public safety (police & fire), public works, community development, as well as operations
that support core services. All major discretionary revenues such as property tax, sales tax, income tax,
telecommunication excise tax, and utility use tax are accounted for within the General Fund. The Finance
Department works with departments responsible for administering the service and/or collecting the
associated revenue to develop program revenues.
EXPENDITURES
The intent of the Five-
Year Operating Forecast
is to evaluate resource
allocations to ensure the
proper funding levels for
services, capital,
infrastructure and
maintaining reserves.
OVERVIEW AND SUMMARY
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The expenditures assumed in the forecast are based on the current service levels. No additional staffing has
been included in the estimates. Actual expenditures for 2024 and the 2025 budget amounts are the basis for
the five-year estimates. The General Fund is the primary focus of the forecast because it represents nearly
half of the total Village Budget. The second largest Village Fund is the Water and Sewer Fund, accounting
for 11.4 percent of the total budget. A twenty-year funding analysis is completed annually for that enterprise
activity.
In the absence of any known service level modifications, the forecast assumes the continuation of current
service levels and the costs projected over five years. Revenues are estimated based on anticipated growth
and do not consider increases in revenues generated by new fees or increases in fees, new development, or
charges beyond what is prescribed by current ordinance.
ECONOMIC OUTLOOK
In the development of a long-term financial forecast, the Village reviews external and internal factors that
could impact either the collection of revenue or the price of acquiring goods or providing services.
Evaluating how the regional impact of the national economy (macro) influences the local economy (micro)
is an important step in the process.
The national economy affects both state and local economies, although this impact varies by jurisdiction
and may actually have an inverse effect on a community. Some of the economic indicators the Village uses
in financial analysis include inflation, stock market returns, employment, housing starts, vehicle sales,
interest rates, and manufacturing activity.
ECONOMIC INDICATORS - NATIONAL
Inflation – The Consumer Price Index (CPI), commonly referred to as the inflation rate, measures the
average price change for a market basket of consumer goods and services. The Bureau of Labor Statistics
classifies each expenditure item in the basket into more than 200 categories catalogued into eight major
groups. The Consumer Price Index is used as the inflationary factor for specific non-personnel services.
The cost of goods sold increases with inflation, leading to additional retail sales tax revenue. As prices rise,
so will business income tax receipts. Conversely, the Village will have to pay more for goods and services.
The most recent (April 2025) Consumer Price Index is at 2.3 percent over that same month the prior year.
This is the smallest 12-month increase since February 2021 and was below the 2.4 percent in March.
Stock Market Returns – Stock market returns are a leading indicator and will change before the economy
changes. Approximately 70 percent of all Village pension funds are invested in mutual funds and/or
individual stocks. The performance of the stock market is a significant factor in determining the growth of
the property tax levy for pensions. It is assumed the pension funds will earn seven percent annually through
investment returns.
Employment – Retail and vehicle sales tend to have inverse relationships with the unemployment rate. Sales
tend to move in the opposite direction of the unemployment rate. Chronic unemployment often spills over
into the residential real estate market resulting in lost real estate transfer tax revenue.
Housing Market - This indicator provides a sense of the overall demand for housing, which can be indicative
of local housing activity. Data maintained by local realtor groups is useful in projecting the future of market
recoveries.
Interest rates – The interest rate impacts the Village’s revenues in several ways. The availability and cost
of capital directly affect business expansion and retail purchases. As credit is extended and/or rates are
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lowered, revolving purchases may increase, thereby increasing development plans and retail sales and, by
extension, sales tax and business licenses revenues. Second, the village’s investment income will be
affected by interest rates.
Manufacturing activity – If a Village has a large manufacturing sector, the ISM (Institute of Supply
Management Index) becomes a significant factor in revenue analysis and forecasting. Manufacturers
respond to the demand for their products by increasing production and building up inventories to meet the
demand. The increased production often requires new workers, which lowers unemployment figures and
can stimulate the local economy.
ECONOMIC INDICATORS - LOCAL
Although national economic indicators do have some trickle-down impact on the Village Budget, there are
regional and local economic factors that have a direct influence over revenues and expenditures. Some of
those factors that have been considered moving into the next five-year update include:
•Impact of the Real Estate Market and Assessed Valuations. Assessed values for taxable property
continue with positive growth. For the 2023 Levy (Collected 2024), total assessed value increased
4.98 percent. Lake County values increased by 5.49 percent while Cook County property values
increased by 3.19 percent. With data being available solely for Lake County, the anticipated
increase for the 2024 levy (Collected 2025) is 6.58 percent. See the chart below to see the ten-
year, combined county history of equalized assessed values.
•State of Illinois Legislation. As the State of Illinois has experience financial difficulties over the
last decade, staff continues to monitor legislative discussions that could have a direct financial
impact on Village revenues. The most recent threat to municipal revenues was a law approved
last year by the General Assembly eliminating the statewide grocery tax starting January 1, 2026.
Earlier this year, the Village exercised its authority to impose a local grocery tax effective when
the statewide tax is eliminated.
•Impact of Employer Pension Costs. The tax levies for the three pension systems account for 37.7
percent of the property tax levy. Additional pressure on the tax levy to support growing pension
costs will impact the ability to increase taxes for core services. Bond rating agencies continue to
site pension obligations as a downward pressure on the Village’s ability to maintain the Aaa rating
with S&P.
•Health Care Inflation. After wages, health care costs are the single largest expenditure category in
the fund and the Village continually reviews the structure of the plan to limit the amount of growth
0
500
1,000
1,500
2,000
2,500
2015 2016 2018 2019 2020 2021 2022 2023 2024
Equalized Assessed Value - Lake and Cook Counties
2015 - 2024
Mi
l
l
i
o
n
s
Page 15 of 28
on an annual basis. The Village is a member of the Intergovernmental Personnel Benefits
Cooperative (IPBC). This insurance pool helps to dilute risk and helps to leverage purchasing
power.
•Commercial/Retail Development. The economy’s impact on existing sales tax generators as well
as development or redevelopment of Dundee, Milwaukee Road corridors and Lake Cook Corridors
continues to be an important cog in economic development. The village has seen several new
projects completed such as the NCH Office Building and the $150 million Clove Development,
which is near completion in Lake Cook TIF. With the formation of the Dundee Road TIF, the
Bison Crossing development, which includes a Tesla sales and service center that opened in April
and luxury residential and commercial outlots.
•Infrastructure. The ability to keep pace with the maintenance needs of Village owned assets
continues to be a significant financial challenge. The Village owns and maintains $343 million in
capital assets, excluding depreciation, across all activities.
Page 16 of 28
Listed below is the five-year update to the General Fund Forecast. The remainder of the report will describe
the methodologies used to develop both revenues and expenditures.
GENERAL FUND FIVE-YEAR FORECAST – OPERATING
Revenue 2025 2026 2027 2028 2029 Growth
Property Taxes
17,115,900
17,458,218
17,807,382
18,163,530
18,526,801 1.02
Income & Use Taxes
8,459,800
8,671,295
8,888,077
9,110,279
9,338,036 1.025
State Sales Tax
9,464,500
9,701,113
9,943,640
10,192,231
10,447,037 1.025
Home Rule Sales Tax
6,928,300
7,066,866
7,208,203
7,352,367
7,499,415 1.02
Real Estate Transfer Tax
1,009,800
1,029,996
1,050,596
1,071,608
1,093,040 1.02
Telecommunications Tax
720,000
720,000
720,000
720,000
720,000 1.00
Prepared Food and Beverage Tax
918,000
936,360
955,087
974,189
993,673 1.02
Utility Tax-Electric/Natural Gas
2,650,000
2,650,000
2,650,000
2,650,000
2,650,000 1.00
Licenses
411,400
411,400
411,400
411,400
411,400 1.00
Building Revenue & Fees
1,275,400
1,288,154
1,301,036
1,314,046
1,327,186 1.01
Intergovernmental Revenue-Local
383,600
391,272
399,097
407,079
415,221 1.02
Fines & Fees-Police & Fire
2,476,645
2,501,411
2,526,426
2,551,690
2,577,207 1.01
Storm Water Management Fees
1,140,000
1,140,000
1,140,000
1,140,000
1,140,000 1.00
Operating Transfers
838,300
855,066
872,167
889,611
907,403 1.02
Cable Franchise Fees
735,000
735,000
735,000
735,000
735,000 1.00
Miscellaneous Revenue
1,450,700
1,465,207
1,479,859
1,494,658
1,509,604 1.01
Total Revenues
55,977,345
57,021,358
58,087,971
59,177,688
60,291,023
Annual Increase 1.9%1.9%1.9%1.9%1.9%
Expenditure 2025 2026 2027 2028 2029 Growth
Personal Services 25,704,563 26,475,699 27,269,970 28,088,070 28,930,712 1.03
Personal Benefits 12,506,747 12,881,950 13,268,408 13,666,460 14,076,454 1.03
Operating Expenses 4,057,200 4,138,344 4,221,111 4,305,533 4,391,644 1.02
Insurance & Legal Services 1,817,545 1,890,246 1,965,856 2,044,490 2,126,270 1.04
Commodities 390,371 400,131 410,134 420,387 430,897 1.025
Maintenance & Repairs 3,894,995 3,992,370 4,092,179 4,194,483 4,299,346 1.025
All Other Expenses 4,684,122 4,730,964 4,778,273 4,778,273 4,826,056 1.01
Total Expenditures 53,055,543 54,509,703 56,005,932 57,497,697 59,081,378
Page 17 of 28
Operating Surplus/Shortfall)
2,921,802
2,511,655
2,082,040
1,679,991
1,209,645
Annual Increase 2.7%2.7%2.7%2.7%2.8%
FORECAST STRUCTURE
The forecast provides three levels of analysis. The first level (above) is to show the General Fund’s ability
to meet day-to-day expenditures. The highlighted row design (Operating Surplus/Deficit) is an indicator of
whether anticipated revenues support operating expenditures. In all five years of the forecast, revenues will
support current services. This is a measure of short-term sustainability. The second level of the analysis
includes transfers for capital projects and infrastructure reserves.
Long term sustainability is measured through the Village’s ability to invest in infrastructure including
funding reserves for vehicles, buildings, equipment, technology, streets (with state and local motor fuel
taxes and grants), and projects in the Capital Improvement Plan. All projects submitted for inclusion in the
FY 2025 – FY 2029 CIP have been added to this report. After including these transfers, the cumulative
fund shortfall at the end of FY 2029 is estimated to be nearly $169.8 million.
GENERAL FUND FIVE-YEAR FORECAST – OPERATING WITH CAPITAL
Revenue 2025 2026 2027 2028 2029 Growth
Property Taxes
17,115,900
17,458,218
17,807,382
18,163,530
18,526,801 1.02
Income & Use Taxes
8,459,800
8,671,295
8,888,077
9,110,279
9,338,036 1.025
State Sales Tax
9,464,500
9,701,113
9,943,640
10,192,231
10,447,037 1.025
Home Rule Sales Tax
6,928,300
7,066,866
7,208,203
7,352,367
7,499,415 1.02
Real Estate Transfer Tax
1,009,800
1,029,996
1,050,596
1,071,608
1,093,040 1.02
Telecommunications Tax
720,000
720,000
720,000
720,000
720,000 1.00
Prepared Food and Beverage
Tax
918,000
936,360
955,087
974,189
993,673 1.02
Utility Tax-Electric/Natural Gas
2,650,000
2,650,000
2,650,000
2,650,000
2,650,000 1.00
Licenses
411,400
411,400
411,400
411,400
411,400 1.00
Building Revenue & Fees
1,275,400
1,288,154
1,301,036
1,314,046
1,327,186 1.01
Intergovernmental Revenue-
Local
383,600
391,272
399,097
407,079
415,221 1.02
Fines & Fees-Police & Fire
2,476,645
2,501,411
2,526,426
2,551,690
2,577,207 1.01
Storm Water Management Fees
1,140,000
1,140,000
1,140,000
1,140,000
1,140,000 1.00
Operating Transfers
838,300
855,066
872,167
889,611
907,403 1.02
Cable Franchise Fees
735,000
735,000
735,000
735,000
735,000 1.00
Miscellaneous Revenue
1,450,700
1,465,207
1,479,859
1,494,658
1,509,604 1.01
Total Revenues
55,977,345
57,021,358
58,087,971
59,177,688
60,291,023
Page 18 of 28
Annual Increase 1.9%1.9%1.9%1.9%1.9%
Expenditure 2025 2026 2027 2028 2029 Growth
Personal Services 25,704,563 26,475,699 27,269,970 28,088,070 28,930,712 1.03
Personal Benefits 12,506,747 12,881,950 13,268,408 13,666,460 14,076,454 1.03
Operating Expenses 4,057,200 4,138,344 4,221,111 4,305,533 4,391,644 1.02
Insurance & Legal Services 1,817,545 1,890,246 1,965,856 2,044,490 2,126,270 1.04
Commodities 390,371 400,131 410,134 420,387 430,897 1.025
Maintenance & Repairs 3,894,995 3,992,370 4,092,179 4,194,483 4,299,346 1.025
All Other Expenses 4,684,122 4,730,964 4,778,273 4,778,273 4,826,056 1.01
Total Expenditures 53,055,543 54,509,703 56,005,932 57,497,697 59,081,378
Operating Surplus/Shortfall)
2,921,802
2,511,655
2,082,040
1,679,991
1,209,645
Annual Increase 2.7%2.7%2.7%2.7%2.8%
Capital Items & Reserves 2025 2026 2027 2028 2029
Capital - Vehicles 1,792,000 2,531,000 2,032,000 2,378,000 1,380,000
Capital - Facilities 13,560,000 9,436,700 17,056,750 8,010,000 180,000
Capital - Technology 535,617 1,006,898 568,810 560,818 537,925
Capital - Stormwater 7,100,000 655,000 655,000 100,000 750,000
Street Program 27,080,094 10,530,000 14,740,000 13,700,000 12,450,000
Capital Reserve Funding 2,176,623 2,895,731 2,895,731 2,895,731 2,895,731
Total Capital 52,244,334 27,055,329 37,948,291 27,644,549 18,193,656
Total Fund Excess/(Shortfall)(48,984,635)(24,104,142)(35,412,767)(25,544,432)(16,493,842)
The current budgeting strategy is to contribute to capital reserve programs in order to remain on a pay-as-
you-go basis of capital asset financing. If reserve amounts are depleted, or inadequately funded, staff will
need to consider debt financing for future expenditures. The village has added a significant amount to
capital reserves due to strong revenue performance over the last four fiscal years.
Over the next five years it is anticipated that $169.8 million funding is needed, above the current forecasted
amounts in the General Fund. However, the Village Board has addressed infrastructure funding needs
through by the approval of increased water/sewer rates, a local motor fuel tax, and adult use cannabis tax.
In addition, the Village utilized American Rescue Plan Funds for infrastructure improvements. In 2020,
the Village successfully issued $24 million in general obligation bonds fund infrastructure improvements.
In 2025, an additional $25.4 million in bonds were issued to fund street improvements and the construction
of Fire Stations 25 and 26. Bond issues are planned for 2030 and 2033 to fund future improvements.
RESERVES
The General Fund Reserve Policy sets forth a minimum unassigned reserve level of 25 percent of the
subsequent year’s budget, excluding transfers to fund capital projects. The preferred balance per policy is
30 percent. Unassigned fund balance above the 30 percent threshold may be allocated to a reserve for
revenue stabilization.
It is important to maintain a strong reserve level for several reasons, (1) it provides more time to react and
respond to revenue threats created by economic conditions, (2) it helps to better withstand any unfunded
legislative mandates that will create additional expenditure obligations without corresponding revenue, and
(3) to fund unforeseen infrastructure/capital asset costs. Spending down of prior period reserve balances
allow the Village time to reallocate resources within the budget and restructure service levels to react to the
Page 19 of 28
fiscal environment. After drawing down on the balance to respond to emergency conditions, it is important
to rebuild those reserves in order to remain flexible to respond to the next threat. Fund balance should never
be used to support day-to-day operations. Absent an unforeseen economic crisis, the use of reserves to
support operating expenditures represents a budget that is structurally unbalanced.
The estimated General Fund balance unassigned reserve at the end of FY 2024 is $18.57 million or 35
percent of the FY 2024 operating budget. The Village also has designated an additional $1,270,000 for
revenue stabilization.
GENERAL FUND REVENUES
Approximately 83 percent of all General Fund revenue is generated from seven revenue sources including
property tax, combined sales tax including prepared food and beverage, income and use tax,
telecommunications tax, utility (natural gas & electricity) use tax and real estate transfer tax.
Almost half of the Village’s major revenue sources are elastic. Elastic revenues are those sources that tend
to fluctuate with the economy. A balance between elastic and inelastic revenue is desired as a hedge against
market volatility. General Fund revenues considered to be elastic include sales and use taxes, income
taxes, real estate transfer tax, building revenue and fees, and investment income. The property tax is an
example of a non-elastic source of revenue as collections are stable and predictable.
The Village continues to seek to be less reliant upon state-shared revenues (income, base sales, and
telecommunication taxes) and align core services with taxes/fees under local home rule control.
PROPERTY TAX
There are three components to the Village’s property tax levy. The first component is the Corporate Levy.
This levy helps to fund public safety (police and fire) operations. The growth in the corporate levy is tied
to inflation. The second component is the Debt Service Levy. This levy covers the principal and interest
payment on outstanding debt issuances. The last component is the special purpose/pension levies.
The tax levies for the three pension funds (police, Firefighters and IMRF) are calculated by independent
actuaries. The levies are structured to cover the normal cost of the pension, an amortized annual amount of
the unfunded actuarial liability, and the interest cost on that liability. Unfunded liability grows when
actuarial assumptions are not met (interest rate) or when legislative changes (Springfield) are enacted that
enhance benefits. Those legislative changes produce unfunded liabilities.
Each year the Village determines its levy amount. Since debt service payments are mandatory as are pension
contributions, the amount of control the Village has over the tax levy is limited to the Corporate Levy.
Future ability to raise property tax revenue to support General Fund operations is challenging as the
corporate levy must compete for tax dollars with pension and debt service levies.
See the chart below to see where property tax dollars are allocated
Property Tax Dollar Distribution
Page 20 of 28
The levy request is then applied to the equalized assessed value of all property within the Village to
determine a tax rate. Assuming the same tax levy amount, if the property values go up the rate goes down
and conversely the rate goes up if the values decline.
The total equalized assessed value of property in Buffalo Grove is estimated to be $2,038,066,007
representing a 6.58 percent increase from the previous year. The Lake County portion of the Village’s EAV
increases 7.58 percent year over year.
Equalized Assessed Valuation
Corporate
Levy -Public
Safety 53.6%
Pension Levies, 44.5%
Debt Service, 2.0%
Page 21 of 28
SALES TAX
The growth for both the base (2.5%) and home-rule sales taxes (2.5%) is below the current level of inflation.
Combined, this is the second largest revenue source for the Village. The base sales tax revenue is directly
related to the dollar value of sales made within the Village. Home rule sales tax applies to the same
transactions as the base sales tax except in the following transactions, food for human consumption off the
premises where sold (groceries), prescription and non-prescription medicines and tangible personal
property that is titled with an agency of the State of Illinois. The assumption for the five-year analysis is
that the retail mix will remain substantially similar to what is present today.
Base Sales Tax
Home Rule Sales Tax
0
500
1,000
1,500
2,000
2,500
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Cook County Total EAV Lake Couty
Equalized Assessed Valuation - Lake and Cook Counties
2015 - 2024
Mi
l
l
i
o
n
s
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Page 22 of 28
The Village’s strives to diversify its retail tax base so that no one sector is overly exposed to economic
fluctuations. The following chart reflects the Illinois Department of Revenue Standard Industry Codes (SIC)
for sales tax remitted to the Village.
Retail Sales Tax by Sector
INCOME TAX
The Illinois Income Tax is imposed on every individual, corporation, trust, and estate earning or receiving
income. The tax is calculated by multiplying net income by a flat rate. The current rate is 4.95 percent of
net income. The rate was 3.75 percent beginning January 1, 2015, to December 31, 2017. The formula for
distribution for local governments was 10 percent of the revenue, allocated on a per capita basis, when the
rate was 3 percent. When the state rate increased to the current rate, the increase was not included in the
distribution, making the effective per capita distribution to municipalities slightly above six percent.
The Village’s unemployment rate as of April 2025 is 3.3 percent, which bests the state of Illinois
(4.5 percent) and the U.S. (3.9 percent). Income receipts performed very well in 2024 and for the
first four months of 2025 due to low unemployment and strong corporate profits.
$6,200,000
$6,400,000
$6,600,000
$6,800,000
$7,000,000
$7,200,000
$7,400,000
$7,600,000
$7,800,000
$8,000,000
$8,200,000
$8,400,000
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
General Merchandise
1%Food
20%
Drinking and
Eating Places
Apparel
1%
Furniture,HH, & Radio
9%
Lumber, Bldg.,
Hardware
17%
Automotive & Filling
Stations
5%
Drugs & Misc. Retail
19%
Agriculture &
All Others
20%
Manufacturers
1%
Page 23 of 28
Income Tax
PREPARED FOOD AND BEVERAGE TAX
This tax (1%) was adopted in 2008 and is levied on the purchase of prepared food for immediate
consumption and the sale of liquor. Similar to sales tax, inflationary growth is the primary reason for
revenue increases. The source is projected to increase by two percent annually. There are approximately
100 establishments that charge and remit this tax to the Village.
TELECOMMUNICATIONS TAX
This tax levied at 6 percent on all types of telecommunications except for digital subscriber lines (DSL)
purchased, used, or sold by a provider of internet service (effective July 1, 2008). The exemption of DSL
service has made a significant impact on collections. Recent legislation has also mandated that data
packages no longer be bundled with all other telecommunications billing for the sake of taxation. Those
services have been exempted. This revenue source is down 18.5 percent in FY 2022 from $1.3 million in
FY 2019. The forecast calls for no change over the remainder of the plan.
UTILITY USE TAX (NATURAL GAS & ELECTRICITY)
Natural gas and electricity charges are based on consumption and will fluctuate with seasonal demands.
The Village is charging the highest statutory rate. There is no consumption growth projected over the next
five years. Any new growth will be predicated on adding square footage to houses or buildings and offset
by more energy efficient construction and mechanical systems.
REAL ESTATE TRANSFER TAX
Real estate transfer tax is collected at the rate of $3 per $1,000 of sales consideration. Sales recovered from
FY 2012, when the market reached a low point, through FY 2018. In FY 2022, tax receipts totaled $2.0
million due to the strong real estate market, which resulted in a high volume of sales and increasing sales
prices. Revenue declined to $1.01 million in 2024 with the slowing of the real estate market.
Real Estate Transfer Tax
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Page 24 of 28
EXPENDITURE REVIEW
The average annual increase in operating expenditures over the next five years is 2.7 percent. In each of the
next five years, wages and benefits account for about 64 percent of all operating expenditures. The next
largest expenditure account group is for all other expenses (9 percent). For FY 2025 the distribution of
General Fund expenditures is shown in the table below.
EXPENDITURE DISTRIBUTION
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Page 25 of 28
PERSONAL SERVICES
Wages are anticipated to increase by a factor of three percent each year. The wage forecast anticipates the
general wage increase plus merit-based pay range adjustments. The forecast does assume retirements with
a replacement hired at a lower starting salary.
Over half of the workforce is covered by collective bargaining agreements and the Village has less
flexibility when addressing wages within the police and fire departments.
The budgeted full-time staffing is 217 employees. For all positions, the ratio of municipal employees per
1,000 residents is 5.0 compared to a ratio of 7.8/1,000 in 2010.
A major initiative in FY 2015 was to establish a pay for performance system that will allow employees to
move through their pay ranges. A merit wage pool was included in the FY 2025 Budget and managed by
the Human Resources Department. The ability to advance employees through their pay range based
upon performance is critical in maintaining an effective and motivated workforce.
PERSONAL B ENEFITS
The largest single expenditure within Personal Benefits is for health insurance. The Village is a member of
the Intergovernmental Professional Benefits Cooperative (IPBC). As a member of IPBC, the Village is
better able to stabilize medical costs through risk pooling and provide for a mechanism to help establish
positive cash flow and rebuild reserves. The forecast calls for three percent growth each year in annual
premium expense.
The employees’ contribution is set at 15 percent of the premium in FY 2025. Continued efforts will be
made to maintain costs. A renewed emphasis on wellness programs and evaluating data will be critical in
the next few years to help stabilize experience.
Employer pension costs have been assigned to each operating department budget. The intent of the
accounting was to better represent the true cost of providing a specific service. Public safety pension
Personal Services
43%
Personal Benefits
21%
Operating Expenses
7%
Insurance & Legal
3%
Commodities
1%
Maintenance &
Repairs
7%
All Other Expenses
9%
Capital Reserve
Transfers
5%
Capital Improvement
Plan
4%
Page 26 of 28
obligations are anticipated to be $5.8 million in 2025 or 10.4 percent of General Fund operating
expenditures.
INSURANCE
Within the Insurance category is the premium paid for general liability and workers’ compensation
coverage. In FY 2016, the Village moved from the Intergovernmental Risk Management Pool (IRMA) for
general liability and workers’ compensation coverage to establish a risk premium structure that is more
commensurate with the Village’s service profile and asset values.
The Village is a founding member of the Suburban Liability Insurance Pool or SLIP. The purpose of SLIP
is to share risk with similarly sized, full-service communities and mitigate increases in premium costs and
develop economies of scale for administrative services.
COMMODITIES
The single largest expenditure within the Commodity account group is for purchase of salt for the snow and
ice control program. The forecast calls for increases of 2.5 percent per annum. Staff continue to seek
innovative ways to reduce commodity costs, such as bulk electric procurement, and utilizing centralized
purchasing to leverage the Village’s buying power.
MAINTENANCE & REPAIR
Expenditure growth in this account group is estimated to be 2.5 percent per year. Included in these
expenditures are costs related to the maintenance and repair of sidewalks and bike paths, street patching,
streetlights, building facilities, vehicles and parkway trees. Included in these costs are Internal Service
Fund charges for Central Garage and Building Maintenance expenditures.
GENERAL FUND CAPITAL RESERVES
Capital Reserves
Included in the transfers are $9.6 million for vehicles, technology, storm water and building
reserves for the General Fund over the next five years. If the Village intends to continue with a
pay-as-you-go approach to acquiring vehicles, supporting technology infrastructure and repairing
facilities, then these transfers should be programmed.
It should be noted that the reserve amount for facilities is the minimum to address various
maintenance needs and does not provide funding for major repairs including roof replacements,
purchase of mechanical systems and/or functional remodeling.
Capital Projects
There is $194.3 million in capital projects included in the five-year forecast. The projects are taken
from the current Capital Improvement Plan (CIP) and the details of those projects are included in
the FY 2025 annual budget. The amount of the capital reserve funding is not sufficient to meet the
needs of certain CIP program areas.
FINANCIAL RESULTS
Operating Budget
Page 27 of 28
In each of the five years, revenues offset operating expenses, and the budgets are anticipated to be
in balance. This statement should be viewed with caution as revenues are expected to grow on
average 1.9 percent per year while operating expenditures outpace average annual revenue growth
by 0.8 percent per year or 2.7 percent.
Impact of Transfers and Capital Projects
After including amounts necessary for reserves and capital, there is a shortfall every year in the
forecast. The shortfall is created by a desire to cash finance most capital projects. This is
anticipated and adjustments can be made to address funding levels. It is important to note that
reducing amounts spent on capital should not be viewed as budget cuts (or savings) rather is a
conscious decision to defer spending to future years. The liability still exists. Reserve spending
should be viewed in the same light.
While efforts will continue to focus on how to deliver the same high level of services at lower unit
costs, staff recognize that revenues will also need to be reviewed. Every opportunity to expand the
sales tax base should continue to be considered. Staff must ensure that revenues are reviewed for
adequacy (fees), efficiency (collections), and efficacy (diversified). New revenue sources should
be researched, discussed, and if warranted, presented to the Village Board for consideration.
This report will be used as a guide for the development of the FY 2026 Budget and will help shape
the discussion about how the Village adapts to the current and future financial landscape. Staff
seek further input from the Village Board on the operating forecast.
Page 28 of 28