HomeMy WebLinkAbout2020 First Quarter Financial Review5/15/2020
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5.1 2020 First Quarter Financial Review
Each Year the Finance Department prepares and presents a quarterly review to the Village Board. The quarterly
review process allows the Finance Department to provide updates about the financial activities from the most recently
ended quarter. The review also includes the review of the audited/unaudited financials from the most recently -ended
fiscal year. The financial review process also provides a venue to update the Village Board about any GASB and
legislative updates impacting the financial health of the Village.
The attached report includes 2019 Unaudited Financial Results, Fund and Cash Balance Analysis, Police and Firt.
Actuarial Reports data,, Q-1 Revenue and Expenditure Analysis, COVID-19 Financial Impact, Contingency Plan,,
Collateralization Changes for the Village Funds as well as proposed changes to the Village Fund Balance Policy. All
these items are summarized below:
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Unaudited Revenues for FY 2019 outperformed the Budget mainly due to higher investment earnings for Police
and Fire Pension Funds. General Fund revenues outperformed by 16.6 million. Sales Tax outperformed by $2.2
million, Income Tax by $515,,000, and Use Tax by $300,,000.
Unaudited Expenditures for FY 2019 totaled at $144.8 million. General Fund expenses were 98.3 percent of the
approved budget.
Account Fund Balance:
The Accounting Fund Balance at the end of the year was $23.0 million (after reduced by $3.4 million for Levee 37
Project Committed Fund Balance), of which $16.2 million is represented in liquid funds and represents the actual
Spendable and readily available Fund Balance. The Accounting Fund Balance is at 36.6 percent of the annual budget,
while the Spendable Fund Balance is 25.7 percent of the annual budget.
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Ql-2020 revenues totaled at $23.1 million. The Ql-2020 revenues are $214,,214 or 0.92 percent less
compared to Q1-2019. Reduction in property tax collection, as well as reduced investment earnings and License
& Permit Fees, are contributing to the reduction in revenues.
Ql-2020 expenditures are totaled at $34.3 million. The Ql-2020 expenditures are $12.9 million higher
compared to Q1-2019. An increase in capital project spending is the main reason for the higher expenses.
Capital project spending includes Police and Fire Headquarters as well as for the Maple Street Parking Deck
Projecttotaling $11.8 million.
COVID-19 will have an estimated impact of $5.6 million on Village revenues. The General Fund impact is
estimated at $3.8 million. Significant revenue losses are estimated for Sales Tax, Use Tax, Income Tax,, Food
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& Beverage Tax., and other revenue sources.
Staff has proposed an expense reduction plan to address the anticipated loss in revenue. The plan is based on
the Contingency Plan defined in the annual budget. The plan includes the postponement of the capital projects
(CIP) totaling $3.4 million and the operating budget items totaling $3.6 million. The various capital projects
and the operating budget items are discussed in the material attached herewith.
The review includes an informational item from PMA Investments, as liquid funds at the PMA Investments will
be in the I -Prime fund instead of an SDA account with Citibank.
IP Morgan Chase bank deposits are secured with US Treasuries, which is a costly form of collateral ization. Staff
propose the use of a Letter of Credit (LCs) from the Federal Home Loan Bank instead of US Treasuries. The use
of US Treasuries to collateralize Funds over the FHLB Letter of Credit is costing Village in fees and lost interest
totaling $50,000.
Fund Balance Policy:
Staff proposes revisions to the Fund Balance Policy. The current Fund Balance Policy recommends the fund balance at
20 to 30 percent of the annual budget and aims to keep the fund balance at 25 percent of the annual budget. The
unassigned fund balance includes non -liquid assets. The Village carries, on an average., an accounts receivable
totaling $7.0 million on the balance sheet. The liquid/spendable fund balance at 25 percent will require the Village to
maintain an accounting fund balance at 33 percent. Staff proposes to revise the fund balance to a 25 to 40 percent
range with an aim at a 33 percent fund balance of the annual budget. In addition,, staff proposes transfers to Rainy
Day/Stabilization Fund in case the fund balance crosses 40 percent threshold of the annual budget. Utilization of the
Rainy Day/Stabilization Fund balance will be reserved for pension smoothing, maintaining core services and staffing
level in the time distress, and for capital projects. This fund balance policy change will be reviewed by the Finance
Commission at their June meeting.
Alternatives
1. Discuss the second quarter review with the Village Board.
2. Action at the discretion of the Village Board.
Staff Recommendation
This report is for information and discussion purposes. The recommended collateral ization of Village funds and
revisions to the Fund Balance Policy will be presented to the Finance Commission before returning to the Village Board
for final action.
Q12020 Review - 05072020(l).pdf (1,180 KB) Ql-2020 REVIEW - 05072020 Final.pdf (1,512 KB)
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