HomeMy WebLinkAbout05/16/1996 FC MinutesFINANCE COMMISSION
Minutes of the Meeting
May 16, 1996
Call to Order
'JUN 13 1996
The meeting was called to order at 7:00 p.m. Those present included Chairman Richard Bachhuber,
Commission Members John Engel, Joe Etchingham, Vince Grochocinski, Newt Hallman, John
Korn, Jim Morrison and Tom Pekras. Also present were Finance Director David Jepson, and
Assistant Finance Director Carol Widmer. Commission member Ann Smilanic arrived at 8:00 p.m.
II Finance Director's R=
Mr. Jepson advised the members of the Finance Commission that the Planning staff is in the process
of reviewing both the Village Hall and the Senior Center properties as well as adjoining parcels.
Recommendations and plans for redevelopment of the two properties are expected to be completed
within the next two to three months. At that time both the Village's long-term needs and financial
aspects of the proposal will be included in the report. The Finance Commission will be kept
informed as information becomes available.
Mr. Jepson circulated a copy of the Government Finance Officers' Association (GFOA) notification
of the Distinguished Budget Presentation Award for the Village's 1996 Budget. The Village has
received the distinguished budget award for the fourth consecutive year. Each budget in the
program is evaluated by three finance professionals and their ratings and comments are attached to
the notification letter. In order to receive the award the budget document must meet program
criteria as a policy document, an operations guide, as a financial plan, and as a communications
device.
III Evaluation of the Village's Financial Condition
Mr. Jepson reported that because of the unusual eight-month fiscal year from May 1 to
December 31, 1995, the operating statements which record revenue and expenditures are not
comparable to prior operating statements which reflect a twelve-month May 1 to April 30 fiscal
year. However, the Balance Sheet as of December 31, 1995 can be used to evaluate financial
condition because a balance sheet provides information as of a specific date and not for a period of
time.
The balance sheet found in Schedule 1 of the May 9, 1996 memo regarding the Village's Financial
Condition shows three fund types: Governmental Funds, Proprietary Funds and Fiduciary Funds.
The governmental funds use modified accrual accounting and the General Fund is an example of a
governmental fund. Proprietary Funds and Fiduciary Funds use full accrual accounting. Modified
accrual statements generally report "net current assets" or available -spending resources" while full
accrual statements report total assets and liabilities.
Schedule 2 in the memo details the actual available fund balances as of December 31, 1995, the
1996 budget revenues and expenditures and the estimated fund balance as of December 31, 1996.
The schedule also has a column indicating the target fund balance as of December 31, 1996.
Available Fund Balances are an important planning tool as they represent monies available to start
the next fiscal year.
Mr. Jepson explained the purpose of the various fund groups and the basis for determining the target
fund balances. The estimated fund balance for the General Fund is projected to be $3.86 million
or approximately $600,000 greater than the targeted fund balance of $3.27 million. The larger than
targeted fund balance is the result of higher revenues and lower expenditures than were expected
in the eight-month fiscal year. The recommended fund balance represents about two months of
expenditures and is the minimum that should be maintained.
The Special Revenue Funds are established to account for "earmarked" monies or monies that must
be expended for a specific purpose. One example is the Motor Fuel Tax Fund. The resurfacing
program is paid for by these monies and the target balance of $500,000 provides working capital
to make project payments on a timely basis.
The Debt Service Funds are used to pay principal and interest on Village debt. The targeted fund
balances for Debt Service Funds that are financed by property taxes represent interest payments for
the next year and for other debt service funds the targeted balances are 50 % of the total debt service
funds for the next year.
The Capital Projects Fund is established to account for the proceeds of bond sales and are restricted
to the specific purpose for which the bonds were sold. The recommended balances represent the
balance of uncommitted funds and will be expended for the project.
The Enterprise Funds are used to account for the Water and Sewer Fund and the Parking System
Revenue Fund. The recommended fund balance represents about five months' operating
expenditures and provides for contingencies and capital improvements.
The Vehicle Maintenance Fund, Vehicle replacement Fund, and Risk Management Fund are similar
to the Enterprise Funds in nature and basis of accounting. However, they provide services to other
Village departments. Over time the objective for the Vehicle Replacement Fund is that the fund
balance will equal the accumulated depreciation. The Vehicle Maintenance Fund was established
May 1, 1995 and is being used to provide vehicle maintenance services for all Village vehicles
except Fire Department vehicles.
The Police and Fire Pension Funds can only be used for pension purposes. Therefore, the estimated
fund balances in these funds are also shown as the recommended target balance.
Mr. Jepson concluded his presentation by stating that the estimated available fund balances on
December 31, 1996 will be $15,527,670 compared to target fund balances of $12,882,000 when
pension fund balances are excluded from the total. The total does help to indicate a sound financial
condition for the Village.
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IV Adjournment
The meeting was adjourned at 9:30 p.m. There will not be a meeting in June. The next meeting
is scheduled for July 25, 1996.
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Respectfully submitted
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Carol L. Widmer, Assistant Finance Director