HomeMy WebLinkAbout09/21/1989 FC minutesFINANCE COMMISSION
MINUTES OF THE MEETING
September 21, 1989
I Chairman Richard Bachhuber called the meeting to order at 7:30 p.m. Commission
members in attendance were John Engel, Ann Smilanic, Tom Pekras, John Mussar,
Newt Hallman and Vince Grochocinski. Also present. were Trustee Mark Busse,
Finance Director Dave Jepson, Assistant Finance Director Don Mazza and
Accounting Manager Carol Widmer.
II The minutes of the August 31, 19B9 meeting were accepted as presented.
III Mr. Bachhuber reported from the Village Board meeting on September 12, 1989
that the Board had agreed to one more study on the Water Tank question on
whether to paint the existing structure or to replace the existing tank with a
new one at a different location. Commission members did have the minutes of
that Board meeting presented to them prior to Thursday's meeting.
IV M,-. Bachhuber t .+n a --.,:3d Mr. Jepson to begin with the major item on the agenda,
the Village's Comprehensive Annual Financial Report (CAFR).
Mr. Jepson suggested that instead of trying to go through the CAFR (audit as
often referred to), the Commission review the highlights of the report
including the transmittal letter, footnotes and statistical section. The
Comprehensive Annual Financial Report is just what its name implies, much more
detail than an audit used to provide.
The CAFR is used by staff and management. as well as by rating agencies and
potential investors. The Government Finance Officers Association began its
Certificate of Achievement Program to recognize those units of government that
make the effort to meet the special requirements of a CAFR. The Village has
held the Certificate of Achievement for the past five years. Prior to the
program's establishment, governmental financ-lal reporting varied from city to
city and state to state. The GFOA, through the CAFR program is attempting to
standardize the basic reporting of financial condition. The GFOA strongly
supports the Government Accounting Standards Board in its efforts to accomplish
the same goals.
The CAFR consists of three basic parts:
1. The Introductory Section contains letter of transmittal, principal
officials, and organization chart.
2. The Financial Section contains the Auditor's report, General Purpose
Financial Statements, Combining statements and schedules of individual
funds and account groups and supplemental data.
3. The Statistical Section contains charts and schedules of fiscal data
and trend information.
Generally a person could look at the Combined Balance Sheet and then go to the
Statistical Section for more detailed information.
Ms. Smilanic asked why the Library was shown in the statements. Mr. Jepson
replied that the Mount Prospect Public Library is a city library, not a
district. The Village thus is required to levy the taxes for the library and
even has instructed the County Treasurer to wire the tax revenues to the
Library's own bank account. The library has a separate Board of Trustees and
is in all sense of the word, independent of the Village. Also included in the
Financial Statements are the two pension funds administered by the Village -
Police and Fire. This group then makes up the "reporting entity."
The Commission then discussed the Village's bond rating with Mr. Jepson. The
Village has an "Aa" rating by Moody's Investors Service. This is a very
healthy rating with only "Aa+" and "Aaa" being above that. Only two munici-
palities have the Aaa rating - Evanston and Lake Forest. Schaumburg has an Aa+
rating. The higher the rating the more confidence investors have in repayment
of principal. This in turn causes a lower interest rate to be assigned.
The Village is a home rule municipality and has no bonding limitations. It
issues General Obligation Bonds exclusively because they carry a lower interest
rate backed by the full faith and credit of the Village where a revenue bond is
dependent on revenues through water and sewer or parking rates for example.
General Obligation bonds generally carry a lower rate than revenue bonds.
Mr. Jepson discussed the accounting change in reporting Special Service Area
debt as well as general obligation debt retirement from enterprise fund
revenues. The Special Service Area debt now is reporting in an agency fund
(not a committment by the Village) and the enterprise fund debt in the enter-
prise funds. Debt Service, Capital Projects and Enterprise Funds have been
affected by the changes in SSA #5 and the 1987B G.O. Bond Series.
General Governmental Functions include streets, police, fire, social agencies,
administration and debt service as well as activities in special revenue funds.
Funding for these functions comes from taxes, fees, permits, intergovernmental
(i.e. State of Illinois income tax), fines and interest income. Total revenues
were up 1.697 million or 940' from 87-88. Leading the way were Sales Tax, up
$665,000, other taxes, including the new Food & Beverage Tax and Real Estate
Transfer Tax, up $293,000 and License and Permits, up $247,000. The past year
was the highest period of building activity in the Village's history - contri-
buting to the increase in permits.
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Ms. Smilanic asked what portion of the Village's sales tax revenue was attribu-
table to Randhurst. Mr. Jepson replied that the Village received approximately
$2.2 million from Randhurst.
Expenditures for general governmental functions totaled $19,204,902 against
revenues of $20,002,625. Besides .the obvious police, fire and street
functions, there are welfare (social agencies and the CDBG block grant
program), culture and recreation (including the Mount Prospect Public Library)
and miscellaneous (including IMRF).
Property Taxes continue to be the largest single revenue source for the
Village. Equalized Assessed Valuation totaled $590,778,708, up 4.390' over 1987.
Next year both Wheeling and Elk Grove Township parcels will be reassessed.
These reassessments are likely to be high, especially in Wheeling Township
because there will be five years in between reassessments, not the usual four.
Debt Administration includes $7,351,265 of net general obligation debt
excluding special service areas which totals $660,812. Of the balance,
enterprise funds will contribute $2,990,000 for debt retirement in the future.
Capital Projects Funds contributed $4,154,634 for public improvements, $37,233
for property acquisition, and $857,695 for equipment and equipment replacement.
Water and Sewer System Although the Waterworks and Sewerage Fund showed a
net loss of $85,072, the fund continues to be strong. The net loss is due to
the non-operating losses of the JAWA joint venture which totaled $268,070,
mostly non-operating. The Village supplies water to approximately 700 of the
Village with Citizens Utilities Company supplying the balance of customers.
Sewer service is provided by the Metropolitan Water Reclamation District of
Greater Chicago.
The Commission then discussed the annual meter reading program and Northern
Illinois Gas' project of joint meter reading in Lombard. It was agreed that
the project was interesting and had merit but it was too soon to tell how
effective it could be for Mount Prospect.
Employee Pensions The Police Pension Fund and the Firemen's Pension Fund are
each single employee plans administered by their own trustees. Police officers
contribute 90 of their base salaries and Firemen contribute 8.2590'. The Village
is required to contribute the remaining amounts so that the funds are fully
funded by 2020. Both pension funds in the Village of Mount Prospect are fully
funded at April 30, 1989.
The balance of Village employees who are eligible are members of the Illinois
Municipal Retirement Fund. Employees contribute 4.590' of their salaries while
the Village contributes 8.890' presently.
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Cash Management and Investments The Village operates its portfolio management
under an investment policy adopted in 1985. Earnings from the portfolio
(including pension funds) totaled $3,517,437, up $189,990 from the 87/88 fiscal
year. This accounts for approximately 11% of the Village revenue. Of the over
$41,000,000 portfolio, only $200,000 is uninsured or uncollateralized. This
represents guaranteed investment contracts of insurance companies licensed in
Illinois. The balance is either an obligation of the U. S. Government or are
collateralized according to Village policy.
As time was approaching 10:00 p.m., Mr. Jepson urged the Commission to examine
the rest of the CAFR as it provides much information that will enable them to
better see the Village's financial operation and budget process.
V Adjournment was at 10:05 p.m.
Respectfully Submitted
Don Mazza
Assistant Finance Director
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