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HomeMy WebLinkAbout0213_001Village of 'Iount Prospect Mount Prospect, Illinois, INTEROFFICE MEMORANDUM TO: MAYOR GERALD L FARLEY AND BOARD OF TRUSTEES BUSINESS DISTRICT DEVELOPMENT AND REDEVELOPMENT COMMISSION FROM: VILLAGE MANAGER DATE: MAY 18, 1990 SUBJECT: MONDAY EVENING'S STRATEGY SESSION ON DOWNTOWN DEVELOPMENT At 6:00 p.m., on Monday, May 21, the Business District Development and Redevelopment Commission, Village Board and staff members are to meet in the Trustees' Room. Jack Gourguecheon will be present to help facilitate the discussion. There are many policy decisions that the Board needs to explore and give direction to staff so that we would be in a position to determine whether or not the recent proposal from the owner of the Aldi's site should be encouraged. We also need policy consideration on several other parcels in the triangle area to determine if we are to move ahead on a larger parcel that we may be able to package to other developers. The meeting will start at 6:00 p.m. with sandwiches being brought in and it is hoped that we will be completed by 10:00 p.m. Please call Bobbie Wintercorn, 392-6000, no later than 2:00 p.m., on Monday with your choice of either a roast beef sandwich, sliced turkey sandwich or a Julienne salad. JOHN FULTON DI 014 JFD/rcw COMMITTEE OF THE WHOLE Minutes April 24, 1990 The meeting was called to order at 7:37 p.m. Present were Mayor Gerald L. Farley, Trustees Ralph Arthur, Timothy Corcoran, Leo Floros, and Ted Wattenberg. Trustee George Van Geem was absent at the start of the meeting but arrived at 8:50 p.m. Also present were Village Manager John Dixon, Finance Director David Jepson, Village Attorney Everette Hill, three members of the news media and seven residents, II Minutes The minutes of the Committee of the Whole meeting of April 10, 1990 were approved as presented. III g1tizens to be Heard Janet Hansen, Executive Director of the Mount Prospect Chamber of Commerce, announced that the Chamber would be sponsoring a seminar regarding implementation of the Illinois Clean Air Act on May 23, 1990. She invited the Committee members and all interested residents to attend. MMENErc-lymmm . ML"-Vrrff.-�. n Village Manager Dixon presented a revised copy of a proposed ordinance which would regulate the sale and possession of tobacco products by minors. He stated that the ordinance presented was patterned after similar ordinances that have been adopted in Schaumburg and Woodridge. Village Attorney Hill then explained the modifications that were included in the proposed ordinance. He stated that the provisions for selling tobacco to a minor were much more specific and that the Mount Prospect Ordinance also prohibited possession of tobacco by minors who were residents of the Village. The other changes that were made included a provision for restriction of sales from vending machines and an appeals process for business owners who were charged with selling tobacco to minors. The proposed ordinance provides that any vending machines that sell tobacco must be within sight of an employee of the business. Under these circumstances, the business employee would observe and in effect authorize all purchases from the machine. The appellate process would provide for a hearing before the Village Manager. If the business owner accepted the findings of the Hearing Officer the costs would be greatly reduced. Mayor Farley stated'that the ordinance was being considered because of a concern for all young people. He said that he thought that people would be better off if they avoided tobacco products, and that the proposed ordinance would be beneficial. Trustee Arthur expressed his concern over the problems in enforcing the proposed ordinance and that it was putting the full responsibility on the business owner. Trustee Corcoran expressed his concern over the Village Manager being the Hearing Officer. He stated that the Village Manager would be both the Prosecutor and the Judge under these conditions. Attorney Hill responded that it would be similar to the Liquor Control Commission where the Mayor is the Hearing Officer. Trustee Corcoran said the difference is that the Mayor does not have operational authority. He said he would prefer the Mayor being the Hearing Officer. Mayor Farley said he would agree to be the Hearing Officer, Trustee Busse stated he thought the proposed ordinance would be very difficult to enforce and a real burden on the businessman. He said he would prefer to use State Statutes. Trustee Wattenbeig stated he thought we were punishing the business community. He suggested that we give the State Law a chance. He added that Prohibition never worked and this ordinance would only add to the amount of paperwork generated by the Village. Janet Hansen stated that the current State Statute contains everything in the proposed ordinance except the restrictions on sales from vending machines and free distribution of tobacco products. She added that each business must post signs stating that it is illegal for minors to purchase tobacco and said the Chamber would volunteer to be the educational voice of the community. She concluded by saying the business owners have assured her that they will try to follow State Law. Mayor Farley said he, thought this was important for the community and that an ordinance incorporating the changes discussed by the Committee should be presented at the May 1, 1990 Village Board Meeting. V Ordinance Prohibitina Feedine o Village Manager Dixon stated that the Village has received a number of complaints from residents regarding neighbors who feed animals and birds. He added that current Village Ordinances are not specific enough and the purpose of the proposed ordinance change is to be sure that they will hold up in court. Village Attorney Hill then cited several examples where feeding animals and birds had either caused damage to a neighbor's property or were a health hazard. He added that in one serious case that was taken to Court; the Judge would not find the person guilty because our ordinance was not speciiic enough. Mr. Hill said that this ordinance will not eliminate bird feeders, but would only be in effect when it could cause damage to property or could be a health hazard. Trustee Wattenberg said he supported the change 100%. Trustee Arthur said he thought the ordinance was ridiculous. Trustee Floros said he could not support a prohibition of feeding birds. Trustee Corcoran suggested that the Village follow procedures that other municipalities are using. Mayor Farley directed that an ordinance be presented to the Village Board. Vi Discussion of Ordinance Amendinp the LiouOr Code. (Fines and C2sta) The Committee concurred with a recommendation to increase the maximum fine for a liquor license violation from $1,000 to $2,500 and to include a provision to recover the costs of a hearing. VII Discussion of Engineering Seryices for a Rate Studv on Flood Control Finance Director David Jepson explained that a Flood Control User Charge was proposed in the 90/91 budget as a means of financing a portion of the Flood Control Project, A Flood Control User Charge is an approach whereby property owners would be charged on the basis of their property's contribution to stormwater problems. The concept of a user charge for financing these types of improvements is relatively new in Illinois, but it is being used in other parts of the country, Mr. Jepson stated that because this is a unique type of user charge, he thought the Village should have a formal rate study to establish an equitable method for applying the charge. He then stated that he had contacted RJN Environmental for a proposal to conduct this study in conjunction with the study of Village Flood Problems. They have performed a number of water and sewer studies in the Chicago suburban area. Trustee Arthur supported the proposal, Trustee Floros said it could be a possible "can of worms" but that it could be an interesting way to finance the costs. ,Trustee Wattenberg said he thought we should put any flood control projects on a back -burner." Trustee Corcoran expressed his concern over how a fee would be established. He stated that he thought people in a combined sewer area should pay a higher fee than people in a separated sewer area. Mayor Farley stated that he had received many complaints on flooding and he would like to proceed. He directed that the proposal from RJN Environmental be placed on the next Village Board Agenda. 3 VIII Manager's Report Village Manager Dixon reported that the Recycling Center on South Busse Road would be closing on April 25, 1990. They were combining their facilities in Hillside, Illinois. He also reported that the Fire Department was working with Prospect High School in cooperation with SADD to present a Prom Night program. Finally, he stated that John P. Burg had been hired as Assistant Village Manager and would start on May 14, 1990. Ix Other Business Trustee Wattenberg requested that the Village actively work with Cities of Prospect Heights and Des Plaines to get the Wisconsin Central Railroad to provide passenger service to this area, Mayor Farley said the Village has been working with a Transportation Committee of the Northwest Municipal Conference and he will continue to monitor this issue. X Adjournment DCJ/sm The Committee of the Whole recessed at 9:03 p.m. to go into executive session to discuss personnel matters. M Respectfully Submitted, �- C - �� David C. Jepson, Finance Director Village of NFount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO: John Fulton Dixon, Village Manager FROM: David C. Jepson, Finance Directo DATE: May 15, 1990 SUBJECT: Insurance Report and Proposal for ongoing Risk Management Services In October 1989, the Village engaged Corporate Policyholders Counsel, Inc. (CPC). to review and evaluate the Village's self-insurance program. A number of changes had taken place in the insurance industry and consequently the Village's program had changed since its inception in 1984. The purpose of •the study was to evaluate the Village's insurance protection in relation to the risks involved. That study has been completed and a copy of CPC's report is attached. The report includes an executive summary, a detailed listing of the major exposures to loss, an appraisal of the insurance in place and the self-insurance program and a review of each individual insurance policy. The report points out that the Village's Self -Insurance Program has been effective, but that there are three areas that should be strengthened. Those areas are: 1. The Village should explore the possibility of purchasing insurance to protect the sales tax revenue received from Randhurst Mall. 2. The Village should attempt, to obtain insurance coverage for catastrophic type claims in excess of the current $6,000,000 coverage. 3 The Village should establish a consistent procedure regarding requirements for contractors doing business with the Village and contractual agreements that the Village enters into. There are a number of other less significant recommendations included in the report. When I had originally talked to CPC about reviewing our insurance program, I had also asked them about the possibility of ongoing risk management services. My concern has been that we do not have a professional risk manager on our staff, and I do not believe we should only rely on the recommendations of an insurance broker. Accordingly, I asked them for a proposal for ongoing risk management services. The proposal they have submitted includes a one-time charge to develop procedures for obtaining proper certificates of insurance from Village contractors and John Fulton Dixon Page 2 Insurance Report and Proposal for Ongoing Risk Management Services providing input on the various leases regarding Melas Park. Additionally, it includes a provision for a retainer for monitoring day-to-day insurance questions and an hourly rate for other services. I believe the proposal to help establish procedures for setting up guidelines for contractors' insurance is a good value. Also, I believe the retainer for Ongoing Risk Management Services would be beneficial to the Village. As I have mentioned on previous occasions, our insurance program has changed significantly over the past few years, and I believe this service would help us to maintain the proper level of coverage. It is my recommendation that we accept these two proposals from CPC. DCJ/sm Enc CORPORATE POLICYHOLDERS COUNSEL, INC. 1460 RENAISSANCE DRIVE, PARK RIDGE, ILLINOIS 60066 (708)298-1770 FAX: (708) 298-3458 VAj INDEPENDENT CONSULTANTS May 7, 1990 David C. Jepson Director of Finance Village of Mount Prospect 100 S. Emerson Street Mount Prospect, IL 60056 Dear Dave: ESTABLISHED 1898 This is to confirm our meeting on April 27, 1990 and provide you with a firm proposal for our ONGOING RISK MANAGEMENT SERVICES. We have divided the continuation of our services into two categories. The first category is primarily a one time activity of implementing a program for insurance requirements for contractors/service providers as well as input regarding the Melas Park leases and contracts. The second part involves monitoring your risk management program. Our proposal to provide these services is as follows. •11131 _ Wim.. ._ A We propose to set up guidelines for insurance requirements for contractors/service providers and anticipate our work to include the following. 1. Prepare a written outline of minimum insurance requirements for those the Village contracts with for various services. 2. Incorporate the guidelines into the current specifications that are being used in dealing with contractors and other service providers. 3. Instruct various Village employees to review certificates of insurance that are supplied by contractors and service providers to verify their insurance meets the minimum Village requirements. 1 VILLAGE OF Management Consultants in Risk and Insurance I RECEIVED May 7, 1990 Page 2 David C. Jepson 4. We will monitor the program and answer whatever questions may arise until Village personnel are confident of doing this activity on their own. 5. We will provide input for the various leases and agreements regarding the use of Melas Park. In order to complete this activity, our total charges will be $2,500. ONGOING RISK MANAGEMENT SERVICES We propose to provide the following risk management services on a retainer basis to the Village. 1. Monitor the day-to-day activity regarding insurance. This includes; A. Reviewing all policies and endorsements. B. Negotiate coverages including renewals. C. Continual re-evaluation of areas of self insurance and insurance. D. Monitor self insurance funding levels. E. Verify audits and approve the payment of insurance premiums. F. Act as a buffer between the Village and insurance companies regarding various insurance company recommendations. 2. We will to provide advice on unusual contracts and agreements the Village may enter into to and determine their insurance and self insurance implications. 3. We will monitor new Village services to determine their insurance and self insurance implications. 4. We also will be available to the Village to answer whatever questions the Village may have regarding its risk management, insurance and self insurance programs. May 7, 1990 David C. Jepson Page 3 We anticipate normally providing the above services on your premises and using your personnel as needed in a supporting capacity, primarily from a clerical standpoint. This does not mean that we are not available to provide advice and counsel to the Village from our offices. We anticipate spending on the average 1/2 day per month on your premises. We propose to provide these ongoing services to the Village for a flat monthly charge of $500 based on a minimum commitment from the Village of twelve months. It is difficult to determine our level of involvement but we propose to provide these services for one year and then re-evaluate the situation at that time. We are also available to monitor any claims you wish as well as the Village's safety activity. This we will do on an as needed basis at an hourly rate of $100. I believe this covers the points we discussed, how we may be of benefit to the Village and our charges for our services. If you have any questions, please let me know. We are most anxious to provide these services to the Village and are available to begin whenever you wish. Very truly yours, CORPORATE POLICYHOLDERS COUNSEL, INC. IlY' William 65iiqh6er WL:lc By: Corporate Policyholders Counsel, Inc. April 24, 1990 I W3 MW I CA • �M ' ' • ' . 1y ,l This section of your report is intended to comment on the Village's overall program of insurance and self insurance and our major recommendations for improvement. Specific details of the insurance and self insurance arrangement are included in later sections of this report. We also have a number of recommendations in the Il` IVIIDUAL POLICY REVIEW section tailoring those coverages to the Village's needs. We are of the opinion your overall program of insurance is conceptually well thought out and competitively priced. We also believe your program of self insurance to be well thought out and reasonably funded. Insurance to cover loss or damage to property owned by the Village is well arranged. The policy purchased at the beginning of this year from the Arkwright Mutual Insurance Company is about as broad as any available in today's market- place. The only significant area of self insurance involving Village owned property is for collision damage to vehicles. We are of the opinion this is a relatively small exposure and your conscious decision to self insure this area is a good one. ki OWCUrIVE SUMMARY - Continued On the other hand, the Village is exposed to a multi-million dollar loss as a result of damage to or destruction of properties that produce tax revenues to the Village. Of primary concern, is destruction of the Randhurst Mall due to fire, explosion or some other casualty. It is our understanding sales tax revenues are approximately $2,500,000 from the Mall and property tax revenues approximately $300,000 per year. We believe insurance is readily available and the Village should explore the possibility of purchasing such coverage to continue the income of tax revenues should a catastrophe occur at the Mall. No other single property in the Village produces such significant tax revenues. Much of the Village's protection for the cost of suits brought against the Village by members of the public alleging injury through some fault of the Village is provided by funded self insurance and HELP (an inter -governmental self insurance pool for the funding of liability claims in excess of $1,000,000. The pool will provide $5,000,000 of funds in any one year excess of $1,000,000 per incident). Insurance has been purchased on a selective basis to minimize the Village's self insured areas. For example, insurance has been purchased to cover claims arising out of the use of automobiles, police department activities and your emergency medical technicians. We agree with the Village's position to periodically explore the availability and cost of insurance for third party claims and purchase such when 4 EXE lTrIVE SUMMARY - Continued the price is deemed reasonable. Details of the current insurance arrangements are included later in this report. Basically, through self insurance, insurance and HELP, funding is available to cover losses in the magnitude of $6,000,000 per year. We are of the opinion you are well prepared to smooth the financial impact of anticipated losses, however, an unanticipated catastrophe claim could result in a financial burden to the Community. We are recommending you explore various avenues so funding is available for catastrophic type claims up to $20,000,000. Just last year, a Cook County Circuit Court Jury awarded $16,000,000 in damages to a youth who was paralyzed from the neck down as a result of a bicycle accident in Palatine. Palatine's share of the award exceeded $10,000,000. Claims arising out of injury to your employees in the course of their employment are also self insured. The Village is responsible for the first $250,000 of each incident. Insurance is purchased for any amount in excess of $250,000 the Village may be required by statute to pay an injured employee. The Village has never had workers compensation claims total $250,000 in any one year, let alone in any one incident. Your workers compensation losses have averaged $102,000 per year for the past 9 years. The highest loss year was $168,000 (1984). The estimated fully insured premium for the current year is $470,00. If current losses total $200,000, the total cost of the self insured program (losses $200,000, re - 5 EXECU`rWE SUMMARY - Continued insurance $33,000 and claims handling service $15,000) will be $248,000 or a savings to the Village of over $220,000 compared to a fully insured program. The self insurance for workers compensation should continue. As long as efforts are directed at maintaining a safe place to work, employee injuries will be kept at a minimum and so will the costs associated with payments as a result of employee injuries. Because of the extensive amounts of self insurance, it is extremely important claims and claim payments be kept to a minimum. This should include requiring those who provide services and products to the Village to carry adequate amounts of insurance. If they don't, the Village may be required to pay claims that are actually caused by contractors. For example, the Village will be required to pay the workers compensation claims of any employees of any contractor while working for the Village if the contractor doesn't purchase workers compensation insurance. Claims brought ,by members of the public against an uninsured or underinsured contractor working for the Village may ultimately require payment by the Village. In our review of various Village procedures regarding the awarding of contracts, we did not find a consistent approach for insurance requirements of contractors. We are recommending a formal program be instituted requiring minimum insurance requirements for contractors and that contractors not be permitted to begin work 6 EXEC UTNE SUMMARY - Continued untill adequate certificates of insurance are provided to the Village. This should go a long way in keeping the loss experience of others out of the Village's self insurance program. In conclusion, we agree with the Village's decision to selectively self insure potential claims where the probability of loss is low and it is financially practical to do so. On the other hand, we also agree with the Village's decision to selectively purchase insurance, based upon cost and availability for those types of claims that may have a high probability of.loss and a high severity. Insurance should be purchased where it is impractical to self insure and resultant potential losses could cause a financial hardship to the Community by way of increased taxes. 7 Village of Mount Prospect — Mount Prospect, Illinois INTEROFFICE MEMORANOUM TO: John Fulton Dixon, village Manager FROM: David C. Jepson, Finance Director DATE; May 15, 1990 SUBJECT: Police and Fire Pension Fund Actuarial Valuation Reports The Village is required by both Illinois Statutes and Generally Accepted Accounting Principles to obtain a full actuarial study for the police and Fire Pension Funds at leant every. -other year. An actuarial study is the process "hereby specific information regarding retirees, current employees and plan assets are evaluated to determine the accrued liability of each fond and the contribution required from the village to ensure that monies will be available to pay benefits. The results or the actuarial study are contained in on Actuarial Valuation Report (AvR) which is similar to an audit report or the financial statements. Copies of the AvR's as of May 1, 1989 of the Police and Fire Pension Funds which were prepared by Miller, Mason & Dickenson, Inc. aro attached. The reports actually include two different methods for determining the accrued liabilities of each fund. The first m*tm,u is the "Entry Age Normal Cost Method" and the second is u "unit Credit CvaL Method." The entry age normal method veca u level percentage of contribution for each employee depending on the ago when the employee starts work. The accrued liability is then determined by accumulating the vcuaont value of these costs up to the valuation date. The "nit credit method is a measure of the present value of pension benefits earned to date, adjusted for effects of projected salary increases. The basic difference between the two methods is that the entry age normal method assumes the same percentage for an employee each year, whereon, the unit credit method uaoa a lower percentage during the early years and a higher percentage over the latter years. The unit credit method is the method the Village is required to use to comply with Generally xccenteu Accounting Principles. Following is a comparison of the results deter- mined by the unit credit method for may `, 1989 with the previous two years: ' Accrued Liabilities m Net Assets funded Police Pension Fund 5/1/89 $17,545,769 $11,019,*48 122.9% 5/1/88 12,56*,350 11,695,647. 107.4 5/1/87 11,572,929 10,841,939 106.7 Fire Pension Fund 5/1/89 $15,602,280 $11,704,857 133.3% 5/1/88 14~442,292 12,278,716 117.6 5/1/87 13,291,300 11,282,888 117.8 John Fulton Dixon peno Z Police and Fire Pension Fund Actuarial Valuation Reports As u comparison, the Entry Age Normal matxnd shows the Police Pension Fund funded at 119.1m and the Fire Pension Fund at 129.9% as of May 1, 1989. The level or funding achieved has a positive effect for the Village on the amount. of the Village's contribution. The contribution amount is made up or two com- ponents: normal cost and the amount needed to amortize any unfunded accrued liability over the next 31 years (by 2020). Because the Village is more than 100� funded, a credit is applied for the over funning. The contribution requirement for the 1989/90 fiscal year is calculated as follows: Total Normal Cost Employee Contribution Employer Normal Coot Overfunding Credit Interest Contribution Required Police Pension Fire Pension Fund Fund $433,749 $497,699 <206,320> $227,42'9 T290,367 <177,225> <293,259> 4,016 < 231> $6,873~603 69.0% The actual contribution or the Village for 1989/90 was $101 293 for the Police Pension Fund and $50,000 for the Fire Pension Fund. The latest report or the Illinois Department of Insurance o^ovo the average level or funding for the 302 Police Pension Funds in Illinois to be 72% and for the 238 Fire Pension Fund to be 74'.. The Actuarial Valuation Reports contain a wmelux of information regarding the plan members and the actuarial information used. l would like to cull your attention to the last two pages which contain a variety of trend information for the last seven years. The Village also recently rmoewou an analysis of the actuarial valuation of the Village's account with the Illinois Municipal Retirement Fund, Although the Village's lMRF contribution is significantly higher than the contribution to the Police anr Fire rumuu, the level or funding is nvt as favorable. The results for the zmat three calendar years are listed below: Net Accrued % Village Year� Assetsi_. -Liability Funded {Contribution� /989 $4,742,654 $6,873~603 69.0% $371,952 198e 4,414,042 6,310,156 70.0 315,887 1987 3,824,458 5,527,979 69.2 299,709 John Fulton Dixon p=@e 3 Police and Fire Pension Fund Actuarial Valuation Reports There are a number of reasons why the level or rung for our INRr Account is not as favorable as for the Village's Police and Fire Pension Funds. The primary roamuoe are that actual contributions in prior years were lower than they should have been and because, the actuarial assumptions are somewhat different. However, I believe it does help to point out the strong financial position of the Village's Police and Fire Pension ruouo. Enc Actuarial Valuation Report VILLAGE OF MOUNT PROSPECT POLICE PENSION FUND As of May 1, 1989 Ar MM&D VILLAGE OF MOUNT PROSPECT Police Pension Fund Actuarial Valuation as of May 1, 1989 Prepared By: Miller, Mason & Dickenson, Inc. 123 N. Wacker Drive Chicago, Illinois GOGOG (3I2) 701-4800 VILLAGE OF MOUNT PROSPECT Police Pension Fund Actuarial Valuation as of May 1, 1989 Prepared By: Miller, Mason & Dickenson, Inc. 123 N. Wacker Drive Chicago, Illinois 60606 (312) 701-4800 VILLAGE OF MOUNT PROSPECT Police Pension Fund Actuarial Valuation as of May 1, 1989 CONTENTS SECTION FOREWORD I POLICE PENSION FUND VALUATION RESULTS A. Normal Cost 3 B. Unfunded Accrued Liability 4 C. Determination of Annual Contribution 5 D. Projection of Benefit Payments 6 E. Census Data 7 F. Asset Data 9 G. Summary of Principal Plan Provisions 11 II ACTUARIAL ASSUMPTIONS AND METHODS A. Actuarial Assumptions Used in Valuation 15 B. Illustration of Assumptions Used in Valuation for Member Hired at Age 25 16 C. Actuarial Method 17 III FINANCIAL DISCLOSURES A. Plan Description 19 B. Summary of Significant Accounting Policies And Plan Asset Matters 20 C. Funding Status and Progress 21 D. Actuarially Determined Contribution 22 Requirements and Contribution Made E. Trend Information 23 Foreword Miller, Mason & Dickenson, Inc. was retained by the Village of Mount Prospect to perform an independent study of the Police Pension Fund. The study develops a contribution which would meet the requirements of State statutes and fund the plan according to generally accepted actuarial methods. The minimum contribution will pay off the unfunded accrued liability by the year 2020, as required by the State. The minimum contribution for the fiscal year May 1, 1989 through April 30, 1990 is as follows: Minimum Contribution E 54,220 (2.4% of salaries) This contribution is net of contributions expected to be made by the active policemen during the fiscal year. As of May 1, 1989 the actuarial assumption relating to expected salary increases in future years was changed from 5.25% to 5.5%. The change was made to better reflect anticipated plan experience. The results shown in this report are based upon: 1. Employee census data submitted by the Village 2. Financial data submitted by the Village 3. Actuarial assumptions which I believe are reasonable and adequate 4. Generally accepted actuarial methods I certify that the results so obtained are accurate and correct to the best of my knowledge. MILLER, MASON & DICKENSON, INC. DateJ A. Reschke, A.S.A. ce President Section [ POLICE PENSION FUND VALUATION RESULTS -2- VILLAGE OF MOUNT PROSPECT POLICE PENSION FUND A. NorMal Cost As of May 1. 1989 l. Normal Cost for a' Retirement Benefits h. Death Benefits C. Disability Benefits d' Withdrawal Benefits e. Total f. Total as % of Payroll 2. Expected Salary Deductions 3, Employer Normal Cost: (l) - (2) 4. Valuation Payroll Valuation Date _5/l/89 $ 358,681 35,831 36,244 2,993 433,749 $ 2$6,32O $ 227,429 $2,2$2,442* *Valuation payroll equals the actual pay reported of $2,172,981 increased by the assumed salary increase rate of 5.5%. -3- VILLAGE OF MOUNT PROSPECT POLICE PENSION FUND '4- B. Unfunded Accrued Liability As of May 1, 1989 Valuation Date _5/IZ89 l. Number of Participants a. Actives GU b' Retirees 18 C. Disabled Retirees 2 d' Beneficiaries 3 a' Terminated with Deferred Benefits 0 f' Total 83 2. Accrued Liability; u' Active i' Retirement Benefits $ 5,913,284 ii. Death Benefits 284,046 iii. Disability Benefits 284,569 ix. Withdrawal Benefits ) v. Sub -total $ 6,406,664 b, Retirees 4,224,129 C. Disabled Retirees 467,743 d' Beneficiaries 214,843 u. Terminated with Deferred Benefits f. Total $11,373,379 3' Valuation Assets $13,543,769 4. Unfunded Accrued Liability %'f - 3' $(2"172,390) S. Funding Percentage: (3)/(2'f') 119.1% The accrued liability as of May l, 1989 includes an increase of $1,850 due to the change as of July l, 1988 in the computation of benefits for a police officer who terminates with less than 20 years of service. In addition, an increase of $109,072 in the accrued liability is at- tributable to a change in the salary scale assumption from 5,25% to 5.5%, '4- VILLAGE OF MOUNT PROSPECT POLICE PENSION FUND C. OeterMination of Annual Contribulion for 1989 l. Employer Normal Cost at 5/1/89 2. Annual payment to amortize the unfunded accrued liability over 31 years 3' Interest on (l) and (2) for one year 4. Total contribution due from Village: (1)+(2)+(3) G. Valuation Payroll 6. Contribution as % of Payroll -5- $ 227,429 $ (177,225) $ 4,016 $ 54,220 $2,292,442 VILLAGE OF MOUNT PROSPECT POLICE PENSION FUND D. PROJECTION OF BENEFIT PAYMENTS Year Ended Benefits Expected April 30 to be Pa' 1989 $408,000 1990 $451,000 1991 $468,000 1992 $492,000 1993 $526,000 The following assumptions were made: 1. Mortality according to the UP -1984 table set forward one year. 2. Active members assumed to retire according to the rates shown in Section II. 3. Benefits, except those to surviving spouses, assumed to increase each year by 3% of the initial benefit awarded if age is 55 or over. E. CENSUS DATA The data submitted on active policemen is summarized as follows: Number of active police 60 Average age 37 Average length of service 12 Average age at entry into force 26 Total valuation payroll $2,292,442 Average payroll $38,207 Average accumulated contributions $24,871 Inactive data: Retirees: Number 18 Annual Benefits $340,592 Disabled Retirees: Number 2 Annual Benefits $39,832 Beneficiaries: Number 3 Annual Benefits $31,140 Deferred Vested: Number 0 Annual Benefits 0 -7- Attained Age 20-24 25-29 03 34 35-39 40-44 45-49 50-54 55-59 60-64 Total Average Pay Distribution Of Membership By Age, Service And Average Annual Base Pay as of May 1, 1989 Completed Years Of Service Average L2 10-14 15-19 20-24 25-29 30 + Total Pay 1 10 4 5 1 2 10 2 1 13 11 11 18 7 0 0 $28,520 $37,665 $40,855 $42,142 $42,774 $ 0 $ 0 Average age: 37.5 Average service: 12.0 -8- 1 12 15 6 12 10 _3 1 0 60 $38,207 $26,119 $29,459 $37,087 $42,230 $43,281 4259 $40,136 3759 S0 $38,207 VILLAGE OF MOUNT PROSPECT POLICE PENSION FUND F. ASSET DATA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED APRIL 30, 1989 ACTUAL OPERATING REVENUES: Taxes (Receivable) $ 62,789 Investment Income 1,112,880 Salary deductions 23,1335 Total operating revenues $ 1,378,804 OPERATING EXPENSES: Administrative expense $ 6,044 Benefit payments 373,464 Refunds 17,877 Total operating expenses $ 397,385 NET INCOME $ 981,419 FUND BALANCE AT BEGINNING OF THE YEAR $12,564,350 FUND BALANCE AT END OF YEAR $13,545,769 Rate of return for the year 8.9% -9- STATEMENT OF PLAN ASSETS: Cush Investments in Banks/Savings and Loan Government Securities Insurance Company Contracts Taxes Receivable Accrued Interest Due from Village -l0- $ 0 $'0% 1,388,385 10'2% I1,94li003 88.2% 1021456 , 0 U% ' 28°588 0'2% 86,037 0'8% 5,360 �0.0% $13,545,768 100.0% Summary of G. STATE OF ILLINOIS PQLICE PENSION FUND Municipalities 500,000 and Under Member -- Any member of the police force except those l.Employed as part-time policemen, special policemen, night watchmen, temporary employees, traffic guards or auxiliary police, clerks or civilian employees. 2. Who fail to make the required contributions. Creditable Service -- Time as a member of the police force excluding furlough without pay in excess of 30 days, but including leaves of absence for illness or accident and periods of disability for which no disability payments were received. Military service counted if member pays required contributions, but only to a maximum of 5 years unless prior to 7/1/73. Norma] Retirement Pension -- on or after age 50 and completion of 20 years of Creditable Service. A monthly benefit equal to l' SO% of annual salary for the rank held for l year prior to retirement or on last day of service, whichever is greater; plus 2, 2% of such salary for each year of service in excess of 20 to amaximum of 10; Dlus� 3. l% of such salary for each year of service in excess of 30, The maxi- mum percentage of salary is 75% and no monthly benefit will be less than $400. Mandatory Retirement Pension -- after completion of 8 years (but less than 20) of Creditable Service, a monthly benefit of 2 1/2% of annual salary for the rank held for l year prior to retirement or on last day of service, whichever is greater for each year of Creditable Service' Non -Mandatory Retirement Pension -- After completion of 8 but less than 20 years of Creditable Service, a monthly pension commencing at age 60 equal to 2 1/2% of annual salary for the rank held for 1 year prior to retirement or on last day of service, whichever is greater. -D- Return to Employment -- If a retired member returns to employment and again retires, his pension shall be increased if he had returned to work for at least 5 years and made the required contributions. Pension Allowance Increase -- For non -d sabled retirements a 3% (simple) increase on the later of the 1st of the month following the anniversary of retirement or first of the month following attainment of age 55. For those members who retire prior to age 55 a COLA adjustment of 3% is accumulated to age 55 when it will commence payment. For disabled retirees: Same as non -disabled retirements but with age 60 the starting point and the increases are effective each January. Rights on Death -- Upon the death of a retired member or a member (whether active or not) with at least 20 years of Creditable Service, his pension shall be paid to the surviving spouse, or to dependent children (because of age or because of physical or mental disability regardless of age), or to surviving dependent parents. Minimum of $400. Disability in Line of Duty -- A life annuity of 65% of salary for rank at date of suspension of duty or retirement. Minimum Pension is $400. Disability Not on Duty -- A life annuity of 50% of salary for rank at date of suspension of duty or retirement. Minimum Pension is $400. peath in Line of Duty --A life annuity of 50% of salary for rank at date of suspension of duty or retirement. Minimum Pension is $400. Death in Service, -- Same as Death in Line of Duty, but must have served 10 years. Minimum Pension is $400. Effect of Marriage -- If marries after retirement, benefits not payable after death. Benefits to surviving spouse not payable after remarriage. Benefits to children not payable after marriage. Refunds of ContribUtions -- At death prior to completion of 10 years of ser- vice, contributions returned without interest to widow. If leaves no widow, regardless of length of service, excess of contributions without interest over benefits paid to heirs or estate. If member separates from service prior to completion of 20 years of service, contributions refunded upon request. -12- Member Contributions -- 7/01/09 - 7/22/43 7/23/43 - 7/19/49 7/20/49 - 7/16/59 7/17/59 - 6/30/71 7/01/71 - 6/30/75 7/01/75 - 12/31/86 1% of salary (maximum $1.00/month until 7/01/21, then $2.00/month unt i 1 7/01/27) 3% of salary 5% of salary 7% of salary 7 1/2% of salary 8 1/2% of salary 1/01/87 - 9% of salary Salary is the annual salary including longevity for rank held, excluding overtime pay, holiday pay, bonus pay and merit pay or any other cash benefit over and above legislated salary. Reserve -- Unfunded accrued liabilities to be funded over a period of no less than 40 years commencing January 1, 1980. -13- Section II Actuarial Assumptions and Methods -14- Mortality Rate Interest Withdrawal Retirement for Age Salary Index Expenses and Contingencies Assets Disability UP -1984 Mortality Table set forward l 8.0% per annum net of expenses. 25% of SarasonT-3. A table of retirement percentages accounting for the tendency toward early retirement as follows: Percentage of Active Group Age Assumed to Retire 5$ 25% 51 28 52 15 53 9 54 g 55 26 56 20 57 lG SB 13 59 10 60 lO 61 lS 62 20 63 25 64 30 65 lOO 5.5% increase per annum; change from prior year's assumption of 5'85% No Loading has been included' Valued at amortized cost. 80% of the Society of Actuaries 1977 Disability Table B. Illustration of Assumptions Used in Valuation for Member Hired at Age 25 (Percent of Remaining Active Members) * No withdrawals assumed after age 47 -16- Mortality Rate Withdrawal Disability Retirement Acme Prior to Retirement Rate* Rate Rate 25 0.11% 1.22 0.079 26 0.11 1.17 0.07 27 0.11 1.12 0.07 28 0.11 .95 0.07 29 0.11 .89 0.07 30 0.11 .83 0.08 31 0.12 .76 0.08 32 0.12 .69 0.08 33 0.13 .63 0.08 34 0.14 .56 0.08 35 0.15 .50 0.10 36 0.16 .44 0.10 37 0.18 .37 0.10 38 0.19 .32 0.10 39 0.21 .26 0.10 40 0.23 .21 0.18 41 0.26 .16 0.18 42 0.28 .12 0.18 43 0.31 .08 0.18 44 0.34 .05 0.18 45 0.38 .03 0.32 46 0.42 .02 0.32 47 0.46 .01 0.32 48 0.51 0.32 49 0.56 0.32 50 0.62 0.56 25.00% 51 0.69 0.56 20.00 52 0.75 0.56 15.00 53 0.83 0.56 9.00 54 0.90 0.56 9.00 55 0.99 0.97 25.00 56 1.08 0.97 20.00 57 1.19 0.97 15.00 58 1.30 0.97 13.00 59 1.42 0.97 10.00 60 1.55 1.26 10.00 61 1.70 1.26 15.00 62 1.87 1.26 20.00 63 2.05 1.26 25.00 64 2.26 1.26 30.00 65 2.49 100.00 * No withdrawals assumed after age 47 -16- Entry Age Normal Cost Method This method determines a normal cost which is the level percentage of earnings which should be contributed each year, starting in the first year of employment, in order to pay for the promised benefits. The accrued liability is the present value of all the normal costs which should have been paid up to the valuation date. The unfunded accrued liability is the difference between the accrued liability and the assets in the fund. To the extent there is a difference, it is paid off over a set period of years just as a conventional mortgage is paid off. Gains and losses arise because experience varies from the assumed. Such gains and losses are reflected in the accrued liability. -17- Section III Financial Disclosures VILLAGE OF MOUNT PROSPECT NOTES TO FINANCIAL STATEMENTS POLICE PENSION FUND A. PLAN DESCRIPTION The Village contributes to the Village of Mount Prospect Police Pension Fund, a defined benefit single -employer pension trust fund. Although this is a single -employer pension plan, the defined benefits as well as the employee and employer contribution levels are mandated by Illinois State Statutes (Chapter 108 1/2 - Pensions -Article 3) and may be amended only by the Illinois legislature. The Village's Police payroll for the Plan Year ending on April 30, 1989 was $2,172,931. Members in the Police Pension Fund include all members of the police force with exceptions for non -regular duty policemen and those members who fail to make the required contributions. Members may retire at age 50 with 20. or more years of Creditable Service with a monthly pension equal to: 1. 50% of annual salary for the rank held for 1 year prior to retirement or at retirement, whichever is greater plus 2. 2% of such salary for each year of service in excess of 20 to a maximum of 10; plus 3. 1% of such salary for each year of service in excess of 30. The maximum percentage of salary is 75% and no monthly benefit will be less than $400. The Police Pension Fund also provides death and disability benefits. These benefit provisions and all other requirements are established by State statute. Village policemen are required to contribute W. of their annual salary to the Police Pension Fund. The Village is required to contribute the remaining amounts necessary to fund the Police Pension Fund, using the actuarial basis as determined by the State or an independent Actuarial Consulting Firm. -19- B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANO PLAN ASSET MATTERS Basis of Accounting: The Village of Mount Prospect has prepared the financial information using the accrual basis of accounting. Policemen and Village contributions are recognized as revenues in the period in which employee services are performed. Method Used to Value Investments: The Village of*Mount Prospect has plan assets invested with insurance companies, Savings and Loan Associations and the U.S. Government. Fixed-income securities are reported at amortized cost. With discounts or premium amortized using the effective interest rate method, subject to market declines judged to be other than temporary (lower of cost or market). Investment income is recognized as earned. Gains and losses on sales and exchanges of fixed-income securities are recognized on the transaction date. Equity securities are reported at cost subject to adjustment for market declines judged to be other than temporary (lower of cost or market). Approximately 88% of the assets are invested in United States Government obligations. Significant Investments: None, The amount shown below as the "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step -rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the Police Pension Fund on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparison among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine the contribution to the Police Pension Fund. The pension benefit obligation was computed as part of an actuarial valuation performed as of May 1, 1989. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets of 8.00 percent a year compounded annually, (b) projected salary increases due to inflation of 4.0 percent a year compounded annually, (c) projected salary increases due to longevity of 1.5 percent a year compounded annually, and (d) 3 percent per year post-retirement benefit increases. Total- unfunded pension benefit obligation (surplus) applicable to the Village's employees was $(2,526,321) at April 30, 1989 as follows: Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits $ 4,906,715 Current accumulated employee contributions including allocated investment earnings $ 1,492,257 Employer -financed benefits - vested $ 3,426,554 - nonvested 1,193,922 Total pension benefit obligation $11,019,448 Net assets available for benefits, at cost $13,545,769 Unfunded pension benefit obligation $(2,526,321) Current year changes in the benefit provisions resulted in an increase in the pension benefit obligation (PBO) of $ 605 and a change in the salary scale assumption to 5.5% resulted in an increase in the PBO of $157,518 as compared to the amount of the PBO calculated irrespective of such changes. -21- The system's fundi mmlh� provides for actuarially determined periodic contributions—° policy for individual ^ increase gradually over time so that sufficient assets ~-- — rates-- will be available to pay benefits when due. The contribution rate for normal cost is determined using the Entry Age Normal actuarial funding method. The system uses a level dollar amount to amortize the unfunded liability by the year 2020 as required by State statute' iused to the actuarially ''— significant actuarial determined contribution requirement are the same as those used to compute the pension benefit obligation as described in item (C) above. Actuarial Valuation Date Actuarially Determined Employer Contribution Requirement As a Dollar Amount Normal Cost Amortization of Unfunded Actuarial Accrued Liability As a % of Valuation Payroll Normal Cost Amortization of Unfunded Actuarial Accrued Liability Contribution Made For 1988 As a Dollar Amount Employer Employee As a % of l&OD Payroll Employer Employee Police Pension May 1, 1989 E. TREND „INFORMA.TION - POLICE PENSION FUND Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. We have initiated a table to provide ten-year trend information of the Village's comprehensive annual financial report, For the year ended 4/30/89, available assets were sufficient to fund 122.9 percent of the pension benefit obligation. Unfunded pension benefit obligation represented (116.3) percent of the annual payroll for employees covered by the Village of Mount Prospect for 1989. Showing unfunded pension benefit obligation as a percentage of annual covered payroll approximately adjusts for the effects of inflation for analysis purposes. POLICE PENSION FUND Required Supplementary Information Analysis of Funding Progress Analysis of the dollar amounts of net assets available for benefits, pension benefit obligation, and unfunded pension benefit obligation in isolation can be misleading. Expressing the net assets available for benefits as a percentage of the pension benefit obligation provides one indication of the Village's funding status on a going -concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the Pension Fund. Trends in unfunded pension benefit obligation and annual covered payroll are both affected by inflation. Expressing the unfunded pension benefit obligation as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Village's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the Pension Fund. -23- (6) Unfunded Pension (4) Benefit (1) Unfunded Obligation as Net (2) (3) Pension (5) a Percentage Assets Pension Percentage Benefit Annual of Covered Fiscal Available Benefit Funded (1) / (2) Obligation (v? Covered PRaro L Payroll 5) Year End for ()enefits Oblioation c_()) —(4-)--1 1989 $13,545,769 12,564,350 $11,019,448 11,695,647 122.9% 107.4% $(2,526,621) (868,703) $2,172,931 2,176,487 (116.3%) (39.9%) 1988 1987 11,572,929 10,841,939 106.7% (730,990) 2,071,868 (35.3%) 1986 8,670,470 1985 7,504,949 1984 6,599,614 1983 5,680,124 Analysis of the dollar amounts of net assets available for benefits, pension benefit obligation, and unfunded pension benefit obligation in isolation can be misleading. Expressing the net assets available for benefits as a percentage of the pension benefit obligation provides one indication of the Village's funding status on a going -concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the Pension Fund. Trends in unfunded pension benefit obligation and annual covered payroll are both affected by inflation. Expressing the unfunded pension benefit obligation as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Village's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the Pension Fund. -23- VILLAGE OF MOUNT PROSPECT POLICE PENSION FUND Required Supplementary Information Revenues by Source and Expenses by Type Fiscal Employee Revenues by Employer Sgurce Investment Year End Contributions Contributions Income Total 1989 $203,135 $ 62,789 $1,112,880 $1,378,804 1988 189,568 113,499 1,052,275 1,355,342 1987 174,597 140,428 2,908,416 3,223,441 1986 160,442 216,072 1,055,869 1,432,383 1985 144,503 226,210 779,803 1,151,516 1984 138,859 369,896 643,467 1,152,222 1983 125,578 400,185 628,330 1,154,093 by TyRe Fiscal Administrative Year Endeeefitgt, Expenses_ Refunds Total 1989 $373,464 $ 6,044 $ 17,877 $ 397,385 1988 318,594 7,403 37,924 363,921 1987 292,653 6,376 21,904 320,983 1986 254,478 471 11,913 266,862 1985 220,788 65 25,328 246,181 1984 216,557 6,248 9,927 232,732 1983 188,964 10,429 7,281 206,674 -24- Actuarial Valuation Report VILLAGiE OF MOUNT PROSPECT FIREMEN'►S PENSION FUND► As of May 1, 1989 VILLAGE OF MOUNT PROSPECT Firemen's Pension Fund Actuarial Valuation as of May 1, 1989 Prepared By: Miller, Mason & Dickenson, Inc. 123 N. Wacker Drive Chicago, Illinois 60606 SECTION FOREWORD VILLAGE OF MOUNT PROSPECT Firemen's Pension Fund Actuarial Valuation as of May 1, 1989 CONTENTS PAGE NO. I FIREMEN'S PENSION FUND VALUATION RESULTS A. Normal Cost 3 B. Unfunded Accrued Liability 4 C. Determination of Annual Contribution 5 D. Projection of Benefit Payments 6 E. Census Data 7 F. Asset Data . 9 C. Summary of Principle Plan Provisions ll [l ACTUARIAL ASSUMPTIONS AND METHODS A. Actuarial Assumptions Used in Valuation 16 B. Illustration of Assumptions Used in Valuation for Member Hired at Age 25 17 C. Actuarial Method 18 l III FINANCIAL DISCLOSURES A. Plan Description 20 B. Summary of Significant Accounting Policies And Plan Asset Matters 21 C. Funding Status and Progress 22 D. Actuarially Determined Contribution 23 Requirements and Contribution Made E. Trend Information 24 Foreword Miller, Mason & Dickenson, Inc. was retained by the Village of Mount Prospect to perform an independent study of the Firemen's Pension Fund. The purpose of the study was to develop a contribution which would meet the requirements of State statutes and fund the plan in accordance with generally accepted actuarial methods. For the fiscal year May 1, 1989 through April 30, 1990, the minimum contribution required from the Village is $0 (0.00% of salaries). This figure takes into account expected deductions from the members' salaries. As of May 1, 1989 the actuarial assumption relating to expected salary increases in future years was changed from 5.25% to 5.5%. The change was made to better reflect anticipated plan experience. The results shown in this report are based upon: 1. Employee census data submitted by the Village 2. Financial data submitted by the Village 3. Actuarial assumptions which I believe are reasonable and adequate, and 4. Generally accepted actuarial methods I certify that the results so obtained are accurate and correct to the best of my knowledge. MILLER, MASON & DICKENSON, INC. JoA. Reschke, A.S.A. Vi President Date -1- Section I Firemen's Pension Fund Valuation Results VILLAGE OF MOUNT PROSPECT FIREMEN'S PENSION FUND A. NORMAL COST AS OF MAY l, 1089 Valuation Date -3- 5/1/89 �. Normal Cost for: a' Retirement Benefits $ 419,859 b' Death Benefits 31,I79 C. Disability Benefits 44,021 d. Withdrawal Benefit 2,640 p. Total $ 497.699 f, Total as % of Payroll 19.814 2. Mandated Normal Cost of 17'5% of Payroll $ 439,794 3. Expected Salary Deductions $ 287,332 4. Employer Normal Cost: greater of (l) (e) or (2), less (3) $ 290,367 S, Valuation Payroll $2,513,1I0 *Valuation l equals the 1983 actual pay reported of $2,382,095 increased by the assumed salary increase rate of 5.5%. -3- VILLAGE OF MOUNT PROSPECT FIREMEN'S PENSION FUND B. UNFUNDED ACCRUED LIABILITY AS OF MAY 1, 1989 Valuation Date 3. Valuation Assets $15,602,280 4. Unfunded Accrued Liability: (2f)-(3) $(3,594,701) 5. Funding Percentage: (3)/(2.f.) 129.9% The accrued liability as of May 1, 1989 includes an increase of $111,459 attributable to the change in the salary scale assumption from 5.25% to 5.5%. IZ 5189 1. Number of Participants a. Actives 64 b. Retirees 8 C. Disabled Retirees 8 d. Beneficiaries 3 e. Terminated with Deferred Benefits 1 f. Total 84 2. Accrued Liability: a. Active i. Retirement Benefits $ 6,935,618 ii. Death Benefits 213,746 iii. Disability Benefits 339,347 iv. Withdrawal Benefits (1.2,480) v. Subtotal $ 7,476,231 b. Retirees 2,376,460 C. Disabled Retirees 1,775,718 d. Beneficiaries 272,545 e. Terminated with Deferred Benefits 106.625 f. Total $124007,579 3. Valuation Assets $15,602,280 4. Unfunded Accrued Liability: (2f)-(3) $(3,594,701) 5. Funding Percentage: (3)/(2.f.) 129.9% The accrued liability as of May 1, 1989 includes an increase of $111,459 attributable to the change in the salary scale assumption from 5.25% to 5.5%. IZ VILLAGE OF MOUNT PROSPECT FIREMEN'S PENSION FUND C. DETERMINATION OF ANNUAL CONTRIBUTION FOR 1989 I. Employer Normal Cost @ 5/1/89 $290.367 2' Annual payment to fund the unfunded accrued liability over 31 years (293,259) 3, Interest on (I) and (2) for one year (23I) 4. Required contribution: (1)+(2)+(3) U 5' Contribution as % of payroll 0% '5- Q, PROJECTION OF FIT PAYMENTS Year Ended Benefits Expected April 30 _ _t9be Paid 1989 $394,000 1990 $452,000 1991 $479,000 1992 $496,000 1993 $529,000 The following assumptions were made: 1. Mortality according to the UP -1984 table set forward one year. 2. Active members assumed to retire according to the rates shown in Section II. 3. Benefits, except those to surviving spouses, assumed to increase each year by 3% if participant's age is 55 or over. -6- E. CENSUS DATA The data submitted on active firemen is summarized as follows: Number of active firemen 64 Average age 40 Average length of service 13 Average age at entry into force 28 Total valuation payroll $2,513,110 Average annual base salary $39,267 Average accumulated contributions $23,538 Inactive data: Retirees: Number 8 Annual Benefits $177,367 Disabled: Number 8 Annual Benefits $161,780 Beneficiaries: Number 3 Annual Benefits $28,697 Deferred Vested: Number 1 Annual Benefits $24,624 -7- Distribution of Membership by Age, Service and Average Annual Base Pay as of May 1, 1989 Attained Age 20-24 0=4 1 Completed Years of Service 5=9 10-14 15-19 20-24 25-29 Average 30 + Total 1 Pay $34,030 25-29 11 11 $32,081 30-34 6 2 2 10 $35,915 35-39 2 6 3 11 540,429 40-44 2 8 10 $40,346 45-49 3 6 2 11 $43,562 50-54 4 3 1 8 $44,041 55-59 2 2 $43,679 60-64 Total 18 4 13 21 5 3 64 $39,267 Average $32,716 $40,385 $39,193 $42,715 $44,459 $44,622 $39,267 Pay Average age: 39.6 Average service: 12.6 -8- F. ASSET DATA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED APRIL 30, 1989 ACTUAL OPERATING REVENUES: Taxes $ 0 Interest 1,302,458 Salary deductions 198,790 Other income 0 Total operating revenues $ 1,501,248 OPERATING EXPENSES: Administrative Expenses $ 7,653 Benefit payments 333,607 Refunds 0 Total operating expenses $ 341,260 NET INCOME $ 1,159,988 FUND BALANCE AT BEGINNING OF THE YEAR $14,442,292 FUND BALANCE AT END OF YEAR $15,602,280 zzzzzzzzzz Rate of return for the year 9.0% -9- Statement of Plan Assets: Cash $ 0 0.0% Investment in Banks and Savings and Loans 1,669,679 10.7% Government Securities 13,722,555 88.0% Insurance Company Contracts 102,456 0.61% Taxes Receivable 0 0.090 Accrued Interest 107,590 0.7% Due from Municipality 0 0.0% $15,602,280 100.09° -10- SUMMARY OF G. STATE OF ILLINOIS FIREMEN'S PENSIQN FUND Municipalities $00,000 and Ander Municipality -- Village of Mount Prospect Member -- Any fireman appointed prior to 5/16/70 and any other fireman who 1. is appointed on or after his 18th birthday but prior to his 35th birthday; 2. makes written application to be a Member within 3 months of this appointment; 3. is found to be medically fit. The age requirement does not apply to firemen appointed immediately after 5 years of volunteer status. Creditable Service -- Time as a fireman excluding furloughs without pay in excess of 30 days, but including leaves of absence for illness or accident and periods of disability for which no disability payments are received. Military Service counted if member pays required contributions, but only to a maximum of 5 years unless prior to 7/1/73. Time does not count as Creditable Service unless the Member has made the required contributions. Volunteer service included whether or not paid. Normal Retirement Pension. -- On or after age 50 and completion of 20 years of Creditable Service. A monthly benefit equal to 1. 50% of annual salary for the rank held at time of retirement; plus 2. 2% of such salary for each year of service in excess of 20 to a maximum Of 10; plus 3. 1% of such salary for each year of service in excess of 30. The maximum percentage of salary is 75%. The minimum pension is $400. -11- Non-MandaJory Rgtirement Pensi( -- After completion of 10 but less than 20 years of Creditable Service, a monthly pension commencing at age 60 equal to the following percentage of annual salary for the rank held at retirement. 10 l5'0% ll 17.6 12 2O^4 13 23.4 14 2G�G 15 30'0 lG 33.6 D 37'4 18 41.4 19 45.6 Return to Employment — If u retired member returns to employment and again retires, his pension shall be increased if he had returned to work for at least 3 years and made the required contributions. Pension Allowance Increase -- 3% compound increase on the later of the Ist of the month following the anniversary of retirement or the 1st of the month following the 55th birthday, and on each succeeding January lst. For those members who retire prior to age SS a COLA adjustment of 3% (simple) is accumulated to age 55 when it will commence payment. Disability in Line of Duty -- A life annuity of 65% of salary for rank at date of suspension of duty or retirement' Minimum pension is $400' Disability Not on Out -- A life annuity of 50% of salary for rank at date of —�suspension of duty or retirement, if at least 7 years of Creditable Service' The minimum pension is $400. annuityDisability-Occupational Disease -- An f 65% of salary if (l) at least s years of service and (u) disabled by reason or heart disease, cancer, tuberculosis or any disease nfthe lungs or respiratory tract resulting from service as a fireman. Payable until the earlier of compulsory retirement age or recovery. May also receive $20 amonth per unmarried child under age 18, but total monthly payments cannot exceed 75% of salary. The minimum pension is $400. -l2- Disability Pension Option -- A Member disabled prior to completing 20 years of service is eligible for the 3% annual increases in pension upon attainment of age 50, if his years of service and years of disablement total 20 years. A member disabled after completing 20 years of service may, upon reaching age 50, apply for Normal Retirement Pension based on his years of service and the salary attached to the rank held by him on the date of his election. Rights on Death -- Upon the death of a retired member with at least 20 years of service or a disabled retired member or an active member, the following benefits are payable: 1. to a widow while unmarried, 40% of salary ($400 minimum); 2. to the guardian or parent of minor children, 20% of salary for each child until such child attains age 18; 3. to a dependent father or mother, 18% of salary for each such dependent if the deceased leaves no widow or minor children under age 18. The total benefits payable after death shall not exceed 75% of salary. Benefits to dependent children may continue beyond age 18 if physical or mental disablement is certified. Effect of Marriage -- If marries after retirement, benefits not payable after death. Benefits to surviving spouse not payable after remarriage. Benefits to children not payable after marriage or attainment of age 18. The 75% limitation applies to survivors of a member who had a least 20 years of service and was eligible to receive a benefit, or who died as a result of illness or accident, or who died while receiving a disability pension. Otherwise, the limitation is 50%. Refunds of Contributions -- 1. Upon death if no widow, minor children or dependent father or mother, contributions less any prior pension payments returned to estate. 2. Upon resignation or discharge prior to 20 years of service. -13- Member Contributions -- 7/11/19 - 6/30/31 7/1/31 - 7/23/47 7/24/47 - 6/30/71 7/1/71 - 12/31/75 1/1/76 - 12/31/86 1/1/88 - 1% of salary 2% of salary if population is 100,000 or greater 5% of salary 5 1/2% of salary 7 3/495 of salary 8 1/4% of salary Salary is the 'annual salary including longevity for rank held, excluding overtime pay, holiday pay, bonus pay and merit pay or any other cash benefit over and above legislated salary. State Funding m -- 1. A reserve at least equal to 17 1/2% of the salaries to be paid to firemen during the ensuing year. 2. The unfunded accrued liabilities, as determined as of January 1, 1980 or later, to be fully funded over 40 years from that date. SEE Section 11 Actuarial Assumptions and Methods -15- ' Mortality Rate Interest Withdrawal Retirement for Age Salary Index Expenses and Contingencies Assets Disability OP -1984 Mortality Table set forward l 8.0% per annum net of expenses. 25% of the 5arasun T-3 A table of retirement percentages accounting for the tendency toward early retirement as follows: 5'5% increase per annum; change from prior year assumption of 5.25%. No Loading has been included. Valued at amortized cost. 98% of 1977 Society of Actuaries B. ILLUSTRATION OF ASSUMPTIONS USED IN VALUATION FOR MEMBER Hired at Age 25 (Percent of Remaining Active Members) * No withdrawals assumed after age 47 Im Mortality Rate Withdrawal Disability Retirement Aqe Prior to Retirement Rate* Rate Rate 25 0.11% 1.22 0.07% 26 0.11 1.17 0.07 27 0.11 1.12 0.07 28 0.11 .95 0.07 29 0.11 .89 0.07 30 0.11 .83 0.08 31 0.12 .76 0.08 32 0.12 .69 0.08 33 0.13 .63 0.08 34 0.14 .56 0.08 35 0.15 ..50 0.10 36 0.16 .44 0.10 37 0.18 .37 0.10 38 0.19 .32 0.10 39 0.21 .26 0.10 40 0.23 .21 0.18 41 0.26 .16 0.18 42 0.28 .12 0.18 43 0.31 .08 0.18 44 0.34 .05 0.18 45 0.38 .03 0.32 46 0.42 .02 0.32 47 0.46 .01 0.32 48 0.51 0.32 49 0.56 0.32 50 0.62 0.56 25.00% 51 0.69 0.56 20.00 52 0.75 0.56 15.00 53 0.83 0.56 9.00 54 0.90 0.56 9.00 55 0.99 0.97 25.00 56 1.08 0.97 20.00 57 1.19 0.97 15.00 58 1.30 0.97 13.00 59 1.42 0.97 10.00 60 1.55 1.26 10.00 61 1.70 1.26 15.00 62 1.87 1.26 20.00 63 2.05 1.26 25.00 64 2.26 1.26 30.00 65 2.49 100.00 * No withdrawals assumed after age 47 Im C. ACTUARIAL ME Entry Age Normal Cost Method This method determines a normal cost which is the level percentage of earnings which should be contributed each year, starting in the first year of employment, in order to pay for the promised benefits. The accrued liability is the present value of all the normal costs which should have been paid up to the valuation date. The unfunded accrued liability is the difference between the accrued liability and the assets in the fund. To the extent there is a difference, it is paid off over a set period of years just as a conventional mortgage is paid off. Gains and losses arise because experience varies from the assumed. Such gains and losses are reflected in the accrued liability. -18- Section III Financial Disclosures BVII VILLAGE OF MOUNT PROSPECT NOTES TO FINANCIAL STATEMENTS FIREMEN'S PENSION FUND A. Plan Description The Village contributes to the Village of Mount Prospect Firemen's Pension Fund, a single -employer pension trust fund. Although this is a single - employer pension plan, the defined benefits as well as the employee and employer contribution levels are mandated by Illinois State Statutes (Chapter 108 1/2 - Pension - Article 4) and may, be amended only by the Illinois legislature. The Village's Firemen's payroll for the year ended April 30, 1989 was $2,382,095. Members of the Firemen's Pension Fund may retire at age 50 with 20 or more years of Creditable Service with a monthly pension equal to: 1 50% of annual salary for the rank at retirement; plus 2. 2% of such salary for each year of service in excess of 20 to a maximum of 10; plus 3 1% of such salary for each year of service in excess of 30. The maximum percentage of salary is 75% and no monthly benefit will be less than $400. The Firemen's Pension Fund also provides death and disability benefits. These benefit provisions and all other requirements are established by State statute and Village ordinance. Village firemen are required to contribute 8.25% of their annual salary to the Firemen's Pension Fund. The Village is required to contribute the remaining amounts necessary to fund the Firemen's Pension Fund, using the actuarial basis as determined by the State or an independent Actuarial Consulting Firm. -20- B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS Basis of Accounting: The Village of Mount Prospect has prepared the financial information using the accrual basis of accounting. Policemen and Village contributions are recognized as revenues in the period in which services by firemen are performed. Method ValueInvestments: The Village of Mount Prospect has plan assets invested with various Insurance Companies, Savings and Loan Associations, and the U.S. Government. Fixed-income securities are reported at amortized cost with discounts or premiums amortized using the effective interest rate method, subject to market declines judged to be other than temporary (lower of cost or market). Investment income is recognized as earned. Gains and losses on sales and exchanges of fixed-income securities are recognized on the transaction date. Equity securities are reported at cost subject to adjustment for market declines judged to be other than temporary (lower of cost or market). Approximately 88% of the assets are invested in United States Government obligations. Significant Investments: The following are investments (other than U.S. Government and U.S. Government -guaranteed obligations) in any one organiza- tion that represent 5% or more of net assets available for benefits: None -21- C. FUNDING STATUS AND PROGRESS The amount shown below as the "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step -rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the Firemen's Pension Fund on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparison among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine the contribution to the Firemen's Pension Fund. The pension benefit obligation was computed as part of an actuarial valuation performed as of May 1, 1989. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets of 8.00 percent a year compounded annually, (b) projected salary increases due to inflation of 4.0 percent a year compounded annually, (c) projected salary increases due to longevity of 1.5 percent a year compounded annually, and (d) 3 percent per year post-retirement benefit increases. Total unfunded pension benefit obligation applicable to Village's firemen at April 30, 1989, is as follows: Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits $ 4,531,348 Current accumulated employee contributions including allocated investment earnings $ 1,506,440 Employer -financed benefits - vested - nonvested $ 4,279,574 1,387,495 Total pension benefit obligation $11,704,857 Net assets available for benefits, at cost $15,602,280 Unfunded pension benefit obligation (surplus) $(3,897,423) Current year changes in the salary scale assumption to 5.5% from the prior year's assumption of 5.25% resulted in an increase in the pension benefit obligation (PBO) of $164,786 as compared to the amount of the PBO calculated irrespective of such changes. -22- 4 � * �' III • • � N M *Y Y IyA • .. .. , .� •• The system's funding policy provides for actuarially determined periodic contributions at rates that, for individual firemen, increase gradually over time so that sufficient assets will be available to pay benefits when due. The contribution rate for normal cost is determined using the Entry Age Normal actuarial funding method. The system uses a level dollar amount to amortize the unfunded liability by the year 2020 as required by State statute. The significant actuarial assumptions used to compute the actuarially determined contribution requirement are the same as those used to compute the pension benefit obligation as described in item (C) above. Actuarial Valuation Date May 1, 1989 Actuarially Determined Contribution Requirement -Employer As a Dollar Amount Normal Cost S 313,596 Amortization of Unfunded Actuarial Accrued Liability $(316,720) Total 0 As a % of Valuation Payroll Normal Cost 12.5% Amortization of Unfunded Actuarial Accrued Liability 12.6 % Total 0.0% Contribution Made For 1988 As a Dollar Amount Employer 0 Employee 128,79Q $198,790 As of % of 1988 Payroll Employer 0.0% Employee 8.3% 8.3% -23- TREND INFORMATION Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. We have initiated a table to provide ten-year trend information of the Village's comprehensive annual financial report. For the year ended 4/30/89, available assets were sufficient to fund 133.3 percent of the pension benefit obligation. Unfunded pension benefit obligation represented (163.6) percent of the annual payroll for employees covered by the Village of Mount Prospect for 1989. Showing unfunded pension benefit obligation as a percentage of annual covered payroll approximately adjusts for the effects of inflation for analysis purposes. FIREMEN'S PENSION FUND Required Supplementary Information Analysis of Funding Progress (1) Net (2) Assets Pension Fiscal Available Benefit Year End for Benefits Obligation 1989 $15,602,280 1988 14,442,292 1987 13,291,300 1986 10,227,234 1985 9,101,238 1984 8,043,404 1983 6,832,106 (6) Unfunded Pension (4) Benefit Unfunded Obligation as (3) Pension (5) a Percentage Percentage Benefit Annual of Covered Funded Obligation Covered Payroll $11,704,857 133.3% 12,278,716 117.6% 11,282,888 117.8% $(3,897,423) $2,382,095 (163.6%) (2,163,576) 2,278,762 ( 94.9%) (2,008,412) 2,139,898 ( 93.9%) Analysis of the dollar amounts of net assets available for benefits, pension benefit obligation, and unfunded pension benefit obligation in isolation can be misleading. Expressing the net assets available for benefits as a percentage of the pension benefit obligation provides one indication of the Village's funding status on a going -concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the Pension Fund. Trends in unfunded pension benefit obligation and annual covered payroll are both affected by inflation. Expressing the unfunded pension benefit obligation as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Village's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the Pension Fund. -24- VILLAGE OF MOUNT PROSPECT FIREMEN'S PENSION FUND Required Supplementary Information Revenues by Source and Expenses by Type Contributions were made in accordance with actuarially determined contribution requirements. -25- RevewnjP,.,,, by Source Fiscal Employee Employer Investment Year End Contributions Contributions Income Total 1989 $198,790 $ 0 $1,302,458 $1,501,248 1988 186,639 0 1,219,038 1,405,677 1987 167,004 0 3,096,825 3,263,830 1986 159,414 0 1,108,839 1,268,253 1985 154,811 11,852 957,110 1,123,773 1984 149,248 337,740 788,375 1,275,363 1983 143,321 511,648 671,292 1,326,261 Expenses by TyRe Fiscal Administrative Year End Benefits Expenses Refunds Total 1989 $333,607 $ 7,653 $ 0 $ 341,260 1988 246,148 6,626 1,911 254,685 1987 192,042 7,568 153 199,763 1986 99,030 300 42,927 142,257 1985 65,219 720 0 65,939 1984 47,470 2,669 13,926 64,065 1983 46,024 147 0 46,171 Contributions were made in accordance with actuarially determined contribution requirements. -25- MAYOR GERALD L FARLEY rRUMrEEs RALPH W ARTHUR MARK W. BUSSE TIMOTHY J. CORCORAN LEO KOROS GEORGE R. VAN GEEM THEODORE J. WATTENBERG Village of Mount Prospect VILLAM! MARIAM JOHN FULTON DIXON VILLAGE CLERK 100 S. Emerson Mount Prospect, Illinois 60056 CAROL A, FIELDS Phone: 706 / 392-6000 Fax: 706 / 392-6022 AGENDA ZONING BOARD OF APPEALS Regular Meeting Thursday, May 24, 1990 8:00 P. M. Senior Citizen Center 50 South Emerson Street ZIA!3�V-", Slabea Magnus, 1120 North Brentwood Lam A variation is requested from Section 21.601A so that a fence may be constructed along the front property line, in the side yard of the house. The Zoning Board of Appeals is final in this case. M A variation is requested from Section 14.102.B.2 to allow a two foot side yard setback instead of five feet as required by Code in order to construct a garage. Village Board action will be required for this case. ZRA-35-Vwft John A, EEggL 517 South Elmhurst Road A variation is requested from Section 21.60I.A so that a six foot fence may be constructed instead of five feet as required by Code. The Zoning Board of Appeals will be final in this case. ZBA--,Vt:Y-A Erich and Vllma Blum, 100.6 NaWaTa A variation is requested from Section 21.601A1 so that a 3 1/2 foot fence may be constructed in a front yard around a patio. The Zoning Board of Appeals will be final in this case. 14DA-'31-y:M Ma b3ampejo LUD r4gan Wayaly The petitioner is requesting a variation from Section 14.1102.13 to allow 57% impervious lot surface coverage instead of 45% as allowed by Code in order to construct a wood deck. Village Board action will be required for this case. Zoning Board of Appeals Agenda Page 2 VA "Q MWOWIMN The applicants are requesting a special use amending the Planned Unit Development to allow construction of garages. The following variations are also requested: 1. Section 14.2503.8 to allow 504 parking spaces instead of 739 spaces required by Code. 2. Section 14.2503.6 to allow a 9 1/2 foot side yard instead of 10 feet as required by Code. Village Board action will be required for all requests. ZBA--ZS-A--M Villagg ofEme ount M - P -rospegt, 100 S , rson Street This case was continued from the April 26 and May 10 Zoning Board of Appeals meetings. The following Text Amendments are proposed. 1. Amend Section 14.2602 Rules and Definitions of a Yard, letters E. & J. to better list and define permitted obstructions in side and front yard. 2. Amend Sections: 14.1002.D.2, 14.1102.D.2, 14.1202.D.2,14.1302.D.2, 14.1402.D.2, 14.1503.D.2, 14.1702.D.2, 14.1802.D.2, 14.1902.D.2, 14.2002.D.2, 14.2102.D.2 and 14.2202.D.2 to better list and define permitted obstructions in the required yards. 3. Add Sections 14.606.1), 14.705.1), 14.806.E to set up a prohibition on refiling of any public hearing request within one year of denial of the original application. Village Board action will be required in this case. In all cases where the Zoning Board of Appeals is final, a fifteen (15) day period is provided for anyone wishing to appeal their decision. No permit will be issued until this period has elapsed. FINANCE COMMISSION Minutes of the Meeting April 26, 1990 I Call to Order The meeting was called to order at 7:30 p.m. Commission members in attendance were Richard Bachhuber, Paul Davies, John Engel, Vince Grochocinski, Newt Hallman, Jim Morrison, John Musser and Ann Smilanic. Also present were Finance Director David Jepson, Assistant Finance Director Carol Widmer, and William Leinheiser of Corporate Policyholders Counsel, Inc. II Approval of Minutes The minutes of the March 21, 1990 meeting were accepted as presented. III Village'g Insgrancl I!rogram David Jepson introduced William Leinheiser of Corporate Policyholders Counsel, Inc. (CPC). Corporate Policyholders Counsel, an independent insurance consulting firm, was retained by the Village to examine the Village's insurance program. Mr. Leinheiser reviewed a report of the Property and Liability Insurance and Self -Insurance Program of the Village of Mount Prospect which was prepared by his firm. Mr. Leinheiser explained that he first familiarized himself with the operations, services, and facilities of the Village. He then reviewed the Village's loss history for the past eight years, the Village's insurance history, and the Village's philosophy on risk management and insurance. Also, he examined various contracts and agreements and the insurance policies currently in force. The study contains an Executive Summary which highlights and summarizes several areas of the Village's overall program of insurance and self- insurance elf-insurance and includes specific recommendations for improvement. Progerty gn!J Ligbility Insurgnce The first item in the summary concerned the property insurance policy from Arkwright Mutual Insurance Company. The policy gives the Village replacement coverage and is about as broad as any available in today's marketplace. Mr. Leinheiser stated that the Village's, coverage in this area is well arranged. Another phase of the Village's Self -Insurance Program is protection against claims brought against the Village by members of the public alleging injury through some fault of the Village. Coverage for these claims is provided by a combination of self -funding and HELP (an inter - governmental self- insurance pool which provides coverage for liability claims in excess of $1,000,000). The pool will provide $5,000,000 of funds in any one year in excess of $1,000,000 per incident. Other insurance has been purchased on a selective basis to minimize the Village's self-insured exposure. CPC believes the $6,000,000 coverage is not enough and suggests the Village should either buy insurance, increase HELP coverage, or that HELP should buy excess coverage for all members. CPC recommends that the Village should have coverage for catastrophic type claims up to $20,000,000. Another potential area of exposure for the Village is for claims arising from those who provide services and products to the Village. CPC suggests that the Village require those companies and individuals to carry adequate amounts of insurance. They recommend a formal program be instituted requiring specific levels of insurance protection for contractors and that contractors not be permitted to begin work until adequate certificates of insurance are provided to the Village. Loss of Revenue One area of concern was the Village's possible loss as a result of damage to or destruction of properties that produce tax revenues to the Village. Of primary concern is a catastrophe at Randhurst Mall due to fire, explosion or some other casualty. CPC recommends that the Village purchase business interruption insurance for this possibility. Worker's Compensation The Village's Worker's Compensation Program is also self-insured. The Village is responsible for the first $250,000 of each incident with excess insurance purchased for any amount in excess of $250,000. Mr. Leinheiser pointed out that the Village has never had workers compensation claims total $250,000 in any one year, let alone in any one incident. He then gave an example of the savings the Village has realized by being self-insured. If current losses total $200,000, the total cost of the worker's comp self- insured program (losses $200,000, reinsurance $33,000 and claims handling service $15,000) will be $248,000 or a savings to the Village of over $220,000 compared to a fully insured program. In conclusion, Mr. Leinheiser reported that the Village's overall program of insurance is conceptually well thought out and competitively priced. Also, the Village's Self -Insurance Fund should be adequate to cover unanticipated losses. Commissioner Bachhuber asked what action the Village would take to implement the recommendations in the report. Mr. Jepson stated that we will seek proposals for the additional insurance that was recommended and has asked CPC for a proposal for ongoing Risk Management Services. The Commissioners thanked Mr. Leinheiser for the report he presented. 2 IV Review of 1990Z91 Budget Changes Finance Director David Jepson reviewed the changes to the 1990/91 budget which have been approved by the Village Board. Revenues In the General Fund, total revenues are expected to decrease from $20,479,500 to $19,489,500, a reduction of $990,000. One of the significant changes to revenues is the elimination of the Elk Grove Rural Fire Protection District Service Charge of $850,000. The Village has filed an appeal to the decision which invalidated the agreement, but it is not expected that anything will be resolved in this fiscal year. A recycling grant of $137,500 was also eliminated from the budget, as well as a reduction in estimates for sales tax revenue ($180,000) and the state income tax surcharge ($250,000). Noteworthy increases in revenues included an additional $325,000 due to the increase from $1 to $3 per $1,000 of the real estate transfer tax and a reimbursement of the $400,000 for the Schoenbeck Road Project. Total Village revenue shows an increase from $41,095,630 to $41,540,630, for an overall increase of $445,000. In addition to revenues for Village purposes, Library revenues of $2,546,920 have been added to the 90/91 budget. Expenditures Revised expenditures for 1990/91 are expected to be $40,404,385, an increase of $324,760 over the original amount of $40,079,625. Mr. Jepson pointed out that it is difficult to compare the total budget amounts because some budget items do not represent actual expenditures and some items represent duplications. For example, in the Police and Fire Pension Funds, the total amount budgeted as revenue is also budgeted as an expenditure but much of the amount will not be expended. In both the Risk Management Funds and the Motor Pool Funds, the amount each department contributes to those funds is counted as an expenditure in the respective department budgets and also in these funds. In effect the amounts are counted twice. The same holds true in the Bond Proceeds Fund. When these amounts are excluded from the 90/91 budget, the adjusted total for 1990/91 shows a decrease from $31,296,125 to $31,072,885, for a true reduction of $223,240. V Finance Director's Report David Jepson reviewed the Actuarial Valuation Reports prepared by Miller, Mason & Dickenson, Inc. for the Firemen's Pension Fund and the Police Pension Fund. These reports are as of May 1, 1989. The Forward in the report is similar to the audit opinion the Village receives in the Annual Audit each year. The reports indicate that both pension funds are funded over the 1008 level (133.38 for Fire and 122.98 for Police). The recommended funding requirement for 1989/90 is zero for the Fire Pension Fund and $54,220 for the Police Pension Fund. Mr. Jepson stated that no property tax had been levied for the Fire Pension Fund from 1984 - 1988. Miller Mason's reports also include trend information which gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. In the Fire Pension Fund, the percentage funded is 133.33 and for the Police Pension Fund the percentage funded is 122.93. Although both pension funds have assets in excess of current requirements, the 1990 tax levy includes $100,000 for the Police Pension Fund and $50,000 for the Fire Pension Fund. Commissioner Smilanic asked how the costs of the Flood Control Program were going to be allocated to property owners, Mr. Jepson stated that the Village has contracted with RJN Environmental to perform a rate study for I the Village. It is expected that the rate study will establish an equitable method for allocating costs. VI Adjournment CW/sm It was agreed that the meeting scheduled for May 31, 1990 would be cancelled and the next meeting will be June 28, 1990. The meeting was adjourned at 9:37 p.m. Respectfully Submitted, Carol Widmer, Assistant Finance Director 4 Phone: 706 / 392-8000 Fax: 708 / 352-8022 AGENDA BUSINESS DISTRICT DEVELOPMENT AND REDEVELOPMENT COMMISSION Regular Meeting Wednesday, May 23, 1990 Trustee's Room Village Hall 7:30 P.M. I. CALL TO ORDER 11. ROLL CALL MAYOR APPROVAL OF MINUTES GERALD L FARLEY I A TRUSTEES A. Downtown Development Strategy RALPH W ARTHUR NEW BUSINESS MARK W BUSSE A. Facade Program Update TIMOTHY J. CORCORAN ADJOURNMENT . LEO FLOROS GEORGE R. VAN DEEM THEODORE J. WATTENBERG Village of Mount Prospect VILLAGE MANAGER JOHN FULTON DIXON V 11LLAGE CLERK 100 S. Emerson Mount Prospect, Illinois 60056 CAROL A FIELDS Phone: 706 / 392-8000 Fax: 708 / 352-8022 AGENDA BUSINESS DISTRICT DEVELOPMENT AND REDEVELOPMENT COMMISSION Regular Meeting Wednesday, May 23, 1990 Trustee's Room Village Hall 7:30 P.M. I. CALL TO ORDER 11. ROLL CALL III. APPROVAL OF MINUTES IV. OLD BUSINESS A. Downtown Development Strategy V. NEW BUSINESS A. Facade Program Update Vi. ADJOURNMENT