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HomeMy WebLinkAbout06/27/2024 FC MinutesFINANCE COMMISSION iY mnt Thn±��xsct MEETING MINUTES Thursday, June 22, 2024 Executive Conference Room — 31d Floor, Village Hall Mount Prospect, IL 60056 Call to Order The meeting was called to order at 7:01 p.m. Commission members present: Kenneth Arndt, Trisha Chokshi, Vince Grochocinski, and Don Ocwieja Commission members absent: Commissioner Edward Derfler and Pam Bazan Staff present: Director of Finance Amit Thakkar and Deputy Director of Finance Jennifer Fitzgerald Approval of Minutes a. Motion by Ken Arndt, seconded by Vince Grochocinski, to approve the minutes of the Finance Commission special meeting of March 28, 2024. Chair Chokshi called a voice vote. Motion Passed unanimously. Citizens to be Heard None IV. Old Business None V. New Business a) 2023 Annual Audit/ACFR: Commissioner Grochocinski provided an update on the annual audit and last audit committee meeting and his presentation to the Village Board. Director Thakkar provided an overall presentation of the audit. The audit committee met on June 10 to discuss the findings of the 2023 audit. The Village received a higher possible and clean audit opinion on its financial statement. The auditor did not report any material weakness in the internal control. The Village also received a Triple Crown award for its audit, budget, and PAFR. The audit highlighted that the Village reported $4.3 million in surplus for the year. The General Fund reserves stood at $52.6 million at the end of 2023, and of this amount, $43.7 million is unrestricted. The overall business -type activity fund balance is $56.2 million, of which $39.9 million is invested in capital assets and infrastructure. The Police and Fire pension fund reported a positive change in their net position. The Police Pension Fund funding ratio increased to 57.3 percent, while the same for the Fire Pension Fund is 59.0 percent. The audit committee also approved a one-year extension for the auditors (for 2025). The Finance Commission acknowledged the good work done by the Finance Staff and commended the Deputy Director of Finance, Jennifer Fitzgerald, for her good work on the audit. b) Legislative Updates: Director Thakkar mentioned that the pension is a top priority for the Village. There are 29 different pieces of legislation filed, but at this time, many of Finance Commission Page 1 of 3 1/25/2024 them are referred to the rules committee, and possibly, there may not be any action on them in the near future. Many of these legislations are increasing TIER II employees' pension benefits and reducing the years/age required to collect pensions. Staff will keep the Finance Commission updated from time to time. The Finance Commission asked about the Grocery Tax. Director Thakkar also mentioned that Governor Pritzker is about to sign legislation eliminating the 1% grocery tax, which would mean $875,000 less for the Village. They will allow all the local government to add a 1% grocery tax. The elimination is effective January 1, 2026, and the Village will reevaluate the impact before that. Suppose the Village decides to do a grocery tax. In that case, the ordinance needs to be adopted before October 1, 2025, and the Village will hold discussions with the Finance Commission and the Village Board before that. Director Thakkar also mentioned that the Elk Grove Rural Fire Protection District got approval from both the House and Senate at the State level. The Governor can sign the bill at any moment, which will trigger the Fire District's dissolution. The Village is also about to complete rehab of Station I I and will be operating out of it starting in July. c) Budget Expectations Director Thakkar discussed the CIP and Operating budget and asked for any suggestions from the Finance Commission. Commissioner Grochocinski mentioned that the Commission would like a separate budget session before the presentation with the Village Board. The Commission Chair Choksi asked if there is any action item for Grocery Tax this year, and Director Thakkar responded that it would most likely be next year. Commissioner Arndt mentioned that he would like to see an increase in the Economic Emergency Fund levels, and Director Thakkar responded that he appreciates support for the same. The staff and Commission will evaluate its level each year after the annual audit. Discussion continued on various items and property taxes. Director Thakkar mentioned that the Park District and SD 57 both are going for the referendum, and there may be an expectation from the Village to ease the property tax burden where possible. VI. Any Other Business VII. Chairperson's Report VIII. Finance Director's Report Director Thakkar discussed the monthly financial report and requested to reach out to him if there are any questions or concerns. IX. Next Meeting: No meeting in July. Staff mentioned that they would reach out if a meeting is needed for any item. X. Adiournment: Motion by Commissioner Grochocinski, seconded by Commissioner Arndt, to adjourn the meeting. Chair Chokshi called a voice vote. Finance Commission Page 2 of 3 1/25/2024 The motion was carried unanimously. The meeting adjourned at 8:01 p.m. Minutes Prepared by: Amit Thakkar (Director of Finance) Jennifer Fitzgerald (Deputy Director of Finance) Finance Commission Page 3 of 3 1/25/2024 Village of Mount Prospect Finance Department Quarterly Financial Review For the Quarter Ended June 30, 2024 Prepared By: Amit Thakkar, CPA Director of Finance The Finance Department prepares and presents a review of the financial activities for the most recently ended quarter. This report summarizes the financial activities of the Village of Mount Prospect for the second quarter of the fiscal year 2024. The report begins with the major highlights, followed by an analysis of revenues, expenditures, and fund balance for the second quarter. The report also contains an analysis of financial statements for the Police and Fire Pension Funds. The report provides a general economic outlook for the local and national outlook where possible and provides a few special items of interest and updates. a) The Village completed its strategic planning workshops in Q2-2024. The plan is a crucial guide for the Village's action plan and budgeting (Capital and Operating) decisions. b) The Village also concluded its annual audit in June 2024 and received the highest possible (unqualified) opinion on its financial statement. The Village's General Fund reported an accounting surplus of $4.3 million for 2023 and a total fund balance of $52.6 million. During 2023, the Village funded certain items from the 2022 surplus of $13.4 million. However, for accounting purposes, these items are treated as yearly expenditures. The Village reported an accounting surplus of $4.3 million after these expenditures. The actual time -constrained surplus for 2023 is $14.8 million. c) The Village collected $32.3 million in revenues during Q2-2024, a decrease of $10.2 million over the same period last year, mainly due to timing issues with the property tax payment. The YTD revenues stand at $62.5 million, while at the same time last year, the Village recognized $64.4 million in revenues. In Q2-2023, the Village transferred $6.5 million to the Economic Emergency Fund. This transfer has occurred in Q3-2024 for the current year. Except for this transfer, the Village collected $4.6 million, 8.0 percent higher than the previous year. d) The inflation numbers have improved. However, the Federal Government has not lowered interest rates. The higher interest rates have resulted in a higher amount of investment income. The Village earned $3.3 million in interest income through June 2024. e) The Village incurred expenditures totaling $33.8 million during Q2-2024, a decrease of $5.2 million over the same period last year. As explained for revenues, an inter -fund transfer from the General Fund to the Economic Emergency Fund has resulted in higher reported expenditures for Q2-2023. This transfer will be reported in Q3 for the current fiscal year. The year-to-date expenditures total $60.7 million for the current fiscal year. f) As of June 30, 2024, the Village's General Fund unassigned fund balance stood at $44.2 million, or 48 percent of the annual expenditures. g) The Police Pension Fund reported a positive $4.8 million change in its net position, and the Fire Pension Fund reported a positive $3.7 million change. The Village of Mount Prospect maintains a sufficient liquid cash balance at various banking and investment institutions for the smooth operation of the Village's day-to-day activities. The remainder of the cash assets are invested in multiple interest-earning accounts and investment options in accordance with the Village's Investment Policy. As of April 1, 2024, the beginning Cash and Cash Equivalents totaled $123.2 million. During the second quarter, the Village collected cash receipts totaling $27.2 million. The investment income for the month totaled $1.6 million. The payroll cost for the quarter was $5.6 million, and accounts payable were paid in the amount of $23.2 million. The inter -fund activity increased the cash position by $530, while other disbursements totaled $2,051,285. As of June 30, 2024, the Village's Cash and Cash Equivalents totaled $122.3 million. Balance at June 30, 2024 $ 122,2727,334 Total Cash and Investments Investments $ 14,976,047 131,144,4613 - 27,172,735 145.061 1,745,0661 (1„1627„000) - 530 (2'3,151,, 01), (5,647,590) (2,051,2615) 13„930,000 136,212„242 As of June 30, the Village has a total of $13.9 million invested in long-term investment options, including U.S. Treasuries, AAA+ rated money market Funds, and FDIC -insured CDs. The Cash, Cash Equivalents, and Investments totaled $136.2 million as of June 30, 2024. The table below summarizes the Cash and Cash Equivalents by Fund type as of June 30, 2024. FLInd Details Airnor11'1t General FLInd Cash and Cash Special f .evenrie Funds EgUiValellts Balance at April 1. 2024 $ 123,1607,436 Cash receipts 27,172,736 Investment. income 1,6997,„200 Transfers from investments to cash - Transfers to investirnents from cash 1,102.,000 Interfund activity 630 Disbrirsernents: Accorints payable (23.161„701( Payroll (6,647,,,690( Other (2,051,205) Balance at June 30, 2024 $ 122,2727,334 Total Cash and Investments Investments $ 14,976,047 131,144,4613 - 27,172,735 145.061 1,745,0661 (1„1627„000) - 530 (2'3,151,, 01), (5,647,590) (2,051,2615) 13„930,000 136,212„242 As of June 30, the Village has a total of $13.9 million invested in long-term investment options, including U.S. Treasuries, AAA+ rated money market Funds, and FDIC -insured CDs. The Cash, Cash Equivalents, and Investments totaled $136.2 million as of June 30, 2024. The table below summarizes the Cash and Cash Equivalents by Fund type as of June 30, 2024. FLInd Details Airnor11'1t General FLInd 63,004®66,6r Special f .evenrie Funds 17,„064„2'64 Debt Service Funds 1.760®260 Capital Projects Funds 18,,003.906 Enterprise Funds 21,790,®990 Internal Service Funds 9,060.109 Total Cash and Cash EgUivalent,s $ 122,272..334 In addition to the funds summarized above, the Village of Mount Prospect has $1.3 million in Escrow Accounts under the umbrella of Other Trust and Agency Funds. iiV a) Revenues The below data summarizes the revenue recognized by the Village through June 2024. Property Taxes 22,022,359 13,0D5,979 59.1% 10,953,174 2,052,8,04 1,8.7% Ot�herTaxes 14,1589,01nG 4,788,662 32.6% 4,4819,516 300,1415 6„7% Intergovernmental Revenue 57,179,236 17,093,461 29.9% 16,433,592 659,869 4.0% Licenses, Permits & Fees 2,037,000 957,1150 49.5% 1,272,060 (284,9101) -22.4% Charges Igor Services 42,240,404 20,201, 8,06 47.8% 20,342,393 (1413,5815) -0„7% Nines & Forfeits 470,955 276,792 58.8% 265,444 11,348 4„3% III in v e st�m e int III in co m e 1,818,245 3,345,509 184VIa 2,439,479 9,015,029 37.1% Ot�her Financing Sources 14,779,0130 - D.V/a 15,543,301 (6,543,301), -100.O% OtJher Revenue 2,8,54,944 2,29,0,833 8,13.2% 1,4915,386 794,447 53.1% Rei1mbursements 337,0130 559,1564 1515.1% 238,1520 321,044 134.5% Totall Revenues 1591429,143 621549P865 39.5% K47219,15F (1,923P100) -3.0% The above amounts do not represent all revenues to be recognized for the period under review. Certain state taxes, such as sales tax, home rule sales tax, and a few other taxes, will be received by the Village in July 2024 and later. The table below summarizes major governmental revenue sources with their respective year-to-date amounts for 2024 and 2023. (The amount excludes water/sewer/refuse service charges.) 415- State Taxes 15,476,570, 15,237,886 1,238,584 8.1% 400- Property Tax 13,005,979 113,953,2013, 2,052,779 18.7% 45,15- linterest Income 2,221,754 1,510,013 711,741 47.1% 402 - Use Taxes 1,791,329 1,521,050 270,239 17.8% 403 - Home Rulle Salles Tax 1,709,346, 1,565,941 143,405 9.2% 401 - Ut ii III !It y Ta x 1,059,013,13, 1,158,969 (99,939) -8.5% 449- Service Charge 914,027 1,272,244 1358,217) -28.2% 4109 - BuslIness LIceinses; & IRernmiit.s 583,858 5,61,287 2 2,5 70 4.0% 41,6- Personal Property Repllacement­Fax 407,813 728,613 �320,8,00� -44.0% 4101 - INonbusllIness LIcenses & IRerirmmliIts 403,3102 7101,773 3107,471 -43.3% Total Revenues, 39P583X7 35p230,016 3,352,991 9.5% The year-to-date collection for 2024 totaled $62.5 million, a decrease of $1.9 million over the same period last year. The decrease in the reported revenue is mainly attributed to the timing issues with the inter -fund transfers (between the General Fund and the Economic Emergency Fund). Except for inter -fund transfers, the revenue collection is higher by $4.6 million or 8 percent over last year. The top 10 revenue sources for the Village totaled $38.5 million in year-to-date revenues. They accounted for 62 percent of the total governmental revenues (excluding water/sewer/refuse charges and inter -fund transfers). Property Taxes: The Village's total levy for the year is $19,469,004. The total property tax budget, including TIF revenues, is $22.0 million. The Village has collected $13.0 million in property taxes so far for the tax year 2023. Based on the currently available information, the Village is set to receive $4.4 million in the TIF increment for its Prospect & Main TIF and $798,000 in the TIF increment for the South Mount Prospect TIF. The total expected property tax collection for the year is $24.7 million against the budget of $22.0 million. M Other Taxes: The category of Other Taxes includes all the taxes enacted per local ordinances, including Home Rule Sales Tax, Hotel/Motel, Food and Beverage, Municipal Motor Fuel Tax, Utility Taxes, etc. As the State collects some of these taxes, there is a three-month lag between the actual sales and the tax remittance. In addition, all the local economic activities for Q2-2024 are reported in Q3-2023. The YTD tax collection under this category totals $4.8 million, trending higher by $300,146 or 6.7 percent compared to the previous year. Most revenue lines under Other Taxes are tracking higher than the previous year, except Utility Taxes. Due to a mild winter, the Utility tax line is trending lower by $99,939. The YTD collection for gas tax is $286,581, which was $378,944 last year. The Village also collected $657,358 in food & beverage taxes and $500,969 in real estate transfer taxes through June 2024. These line items are trending higher by $116,262 and $103,434, respectively, compared to last year. The Village also reported $1.7 million in home rule sales tax under this category. The amount represents three months' revenue (from January to March) reported during April and June. The home rule sales tax is trending higher by $143,405, or 9.2 percent, compared to 2023. Intergovernmental Revenue: This category includes all the State shared taxes, including State Sales Tax, Income Tax, Use Tax, Motor Fuel Tax, and Grants. The Village is vigilantly tracking all intergovernmental revenues. As most of these taxes are collected by the State, there is a three- month lag between the actual sales and the tax remittance. The year-to-date collection totals $17.1 million and is trending higher by $659,869 or 4.0% compared to 2023. Intergovernmental revenues represent the single most significant category for the Village and represent 27.0 percent of the total Village revenue sources. The state sales tax alone accounts for 23.0 percent of the total Village revenue and 78 percent of the total intergovernmental revenue. The YTD sales tax revenue (Jan to March) received through June 2024 totaled $9.0 million, an increase of $887,523 or 10.9 percent over the 2023 year-to-date amount. The YTD income tax collection through June 2024 totaled $5.4 million, an increase of $391,574 or 7.9 percent over the 2023 collections. Licenses & Permits: The Village has collected $987,160 in License and Permit Fees through June 2024. This amount is trending lower by $284,901, or 22.4%, compared to last year's collection at the same time. The lower collection represents a lower construction and development activity level than last year. Charges for Services: The Village has received $20.2 million in charges for services through June 2024. This amount represents 47.8% of the annual budgeted amount for the category and is trending marginally lower by $140,586 compared to last year's collection. Investment Income: The Village has earned $3.3 million in investment income through June 2024. It is currently earning anywhere from 4.0% to 5.4% on its liquid investments. The Village's investments are in compliance with its Investment Policy, and due to high federal rates, the Village is earning a higher investment income. The overall investment income is higher by $906,029, or 37.1 percent, compared to last year. Other Categories: All other revenue categories have collectively generated $3.1 million through June 2024. The amount mainly includes $276,792 in fines and forfeitures, $2.3 million in other revenues, and $559,664 in reimbursements. b) Expenditures The below data recaps the expenditures incurred through June 2024. 10 IPubllNc Represelnt,atJon 70,8,,940 263,747 37„2;% 2,35,,639 28,058 1,1,.9`Ya 20 Viilll1111a5,e Admmiiniistratiimn 6,206,145 2,259,818 36„9% 2,1.83,050 106,768 4„9% 30lRinalnce 2,574,094 1,007,638 39„1% 965,187 42,450 4„4`Ya 40 Comnmmunlity Develllopmnent 5,425,453 2,252,553 41.,5% 1,912,999 339,534 1.7„8;`Ya 50 Human Seruces 1,902,8,02 7010,319 36„8`la 663,,11.2 37,207 5„6% 60lPolliilce 25,086,548 12,147,11,5 48„4% 101,457,672 1„689,443 1.6„2`Ya 70lRre 24,802,876 10,795,440 43,.5% 9,38,4,645 1,410,792 15„Wo 80 IRudilNc'works 79,218,309 22,35+0,1,27 28„3% 22,,1,51„,798 22.8,32:9 1,,, % 0011on-D:epartmmentalll 34,902,797 8,814,878 25„3% 14,251„806 (5,436,929) -3S",1% Total Expenditures 18018301,9!64 601651663 33.5% 62,201x,962 (1,5541299) -2.5 The above amounts do not include the expenditures for the Pension Funds, as they are separate entities. The above amounts are unaudited and subject to change with accrual/audit adjustments. personnel) 60,911,462 29,384,005 48„2% 26,677,273 3,306,732 1.2„7% Contractual) Serviices 40,367,860 17,616,060 43„6% 16,939,585 676,475 4„0% Cohnmodllt,Iies&,Suprplikes 2,688,,649 1„1.85,731 44,1,% 1„183,,785 1„947 G..2% Caprilitall lllmmprovemments 49,839,803 8„81a,818 1.7„7% 8„883,,10s5 ('72„ 28,7) -0.8,96 Debt Seroce 9,392,309 2,181,958 23„2% 2„206,540 (24,582) -1.1% Other Expenditures 17,630,881 1„473,092 8,.4% 6,,915,675 15,442„58,3) -783% Total Expenditures, 180!,830!,964 601,651,663 33.5'% 621205,962 (1„554,2991) -2.5 Personnel Costs: The year-to-date expenditures for Personnel Costs, including benefits, are $29.4 million or 48.2 percent of the annual budget for the category. The amount is trending higher by $3.3 million compared to 2023. The overtime expense through June 2024 totals $1.2 million, while at the same time last year, the overtime expense totaled $1.1 million. The Village executed $2.0 million in pension contribution payments from the Pension Stabilization Fund in June 2024. That has resulted in a higher amount of expenditure recognition compared to last year. Services: This category covers most contractual services, including some large line items, such as JAWA water purchases, budgeted and grant -funded engineering studies, and other contracts. The year-to-date expenditure is $17.6 million, which equates to 43.6 percent of the annual budgeted amount for the category. The expenditure amount is trending higher by $676,475, mainly due to inflationary and timing issues. Supplies: Through June 2024, the village spent $1.2 million in supplies, totaling 44.1 percent of the approved budget and marginally trending higher by $1,947 compared to 2023. Capital Improvements: The Village originally budgeted $35.4 million in approved capital improvement projects for 2024. The Village has amended its budget to carry forward $13.8 million worth of projects from 2023 to 2024. At this time, many projects are in the pipeline and are awarded. Major expenditures under this category will be recognized and paid in the fall and later. Debt Service: Per the established debt service schedules, the Village's bond payments are due on June 1 and December 1. The Village processes these debt service payments a few days before due dates and 6 has sufficient funds on hand to execute them. The Village has incurred and paid $2.2 million in interest expenditures through June 2024. Other Expenditure: The Other Expenditure category includes all other expenditures not categorized above. The category budget includes $14.8 million in inter -fund transfers and $2.9 million in other expenditures. The YTD expenditure in this category totaled $1.5 million, mainly in redevelopment agreement incentives through the Prospect & Main TIF. d) Fund Balance Analysis: The fund balance is an essential tool for checking the fiscal health of any governmental organization. The data below summarizes the Village's monthly unassigned/unrestricted General fund reserves. The fund balance data is unaudited. Revenues - Unaudited 57„613,435 2,156,,31,7 3,907,956 9,293,982 5,413 ,376 5,281,137 5,056,722 32„22.5,255 Expenses - Unaudited (79,12 ,452.) (3,DC3,92.6) (6,,52.6,,423) (7,474,99,6) (4,432,961) (4,,63,9�,595) (5,20019132.1) (31,6.96,1112.) Net M,onthdy SrurpNLiis/(De1ifi t) 4,3Il3,993, 1917.1514 (3. Cd19.„557 1,,S1S,9971„;C 66,415 1,641,454 539,173, As at Generalll Fund Budget 49'°,� 47% 43% 45% 47'% 49% 49% 43% A.s'. of Generalli Fund Budget., 35% 1% 49% 45% 7/a 43+F5 443a,' 4$ The above fund balance analysis is not audited and is subject to change. The unrestricted fund balance as of June 2024 is estimated at $44.2 million. Not all revenues and expenditures for the fiscal period are recognized, and the above amount will change as and when yearend accruals and adjustments are added. In 2023, the Village revised its Fund Balance Policy, and the new target is set to maintain the fund balance between 30 to 50 percent. Besides that, a new Economic Emergency Fund was established, and a transfer of $6.5 million was executed as initial funding from the General Fund reserves. In May 2023, this planned transfer was executed and deposited in the Economic Emergency Fund. This balance was invested in an AAA -rated I -prime account. The Village Board recently authorized a second installment of the Economic Emergency Fund funding. This funding is executed in July 2024 and will be reported in future monthly reports. The Economic Emergency Fund reported a fund balance of $6,871,970, initial funding of $6.5 million, and an interest income of $371,970. (Revenues 6,521,524 3,5µ792 88,374 8,7,879 28~999 30,109 29,293 E.xpendiiltures - - - - - - - Net Monthly 5urp'lus Defii'dt 61521524 85,792 8%374 87,8791 29,9991 30P 1019, 29,2903 7 e) Police and Fire Pension Funds: Revenues, Contributions - V iii lI I age - Employees Total Controbutuions Investament IlIncome Iinterest &. Diiiviiidends Net Change in IEaiiir Value Total Illnvestment Illncome (Less IlInvestment Expenses Net Illnvestment Illncome Total Revenues Expenditures Administration Pension Benefits .(Refunds Pension Benefits (Refunds Total IPension Benefits & Refunds Total Expenditures Beginning (Net IPosition 3,367,613 3,1.,84,1.21 538,020 452„1.5'2 3,905,633 3,636,273 20,780 5,33,,583 4,483,6020 3,280,958 4,774,400 3,914,541 (25,324) (38,929) 4,749,075 3,875,61.2 8,654,709, 7,511„885 2:9,605 31„922 3,801,384 3,739,475 3,801,384 3,739,475 3,830,989, 89,960,809, 3,771„397 78, 76,1.,, 753 Both above -listed pension funds experienced a positive investment income during the first half of the year. The Police Pension Fund reported a positive investment income of $4.7 million, while the same is $3.9 million for the Fire Pension Fund. Both the pension funds reported significant decline in the investment income during the 2022 and the funding ratio (based on the market value of the portfolio) dropped from 70.0 percent to 54.0 percent. In 2023, some of those unrealized investment losses were recouped and the same has been continued during first half of 2024. The employer's contribution includes levy collected through June 2024, and $1.0 million in the additional contributions from the Village funds to each of the above pension funds. As of June 30, 2024, the net position of the Police Pension Fund is $94.8 million, while the same is $82.5 million for the Fire Pension Fund. f) Other Items: a. During the second quarter of 2024, the Village issued 323 real estate transfer tax stamps, of which 133 were exempt and 190 were non-exempt. During the quarter under review, the Village collected $237,276 in real estate transfer taxes. The average selling price for real estate was $414,947. At the same time last year (Q2-2023), the Village sold 345 transfer tax stamps, of which 132 were exempt and 213 were non-exempt. In the same quarter last year, the Village collected real estate transfer taxes of $273,663, and the average selling price was $428,431. Respectfully Submitted, Amit Thakkar Director of Finance 9