VILLAGE OF BELLWOOD, ILLINOIS. ANNUAL FINANCIAL REPORT Year Ended December 31, 2008

Transcription

1 l ANNUAL FINANCIAL REPORT Year Ended December 31, 2008 Prepared by: Department of Finance Roy F. McCampbell Controller

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3 DECEMBER 31,2008 CONTENTS INTRODUCTORY SECTION: Officers and Officials I FINANCIAL SECTION: Independent Auditors' Report on the Financial Statements... 1 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED): Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS: Village-Wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of Governmental Funds Balance Sheet to Statement of Net Assets Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of Statements of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to Statement of Activities Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses, and Changes in Net Assets- Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Assets Statement of Changes in Plan Net Assets - Pension Trust Funds Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED): Schedule of Funding Progress - Illinois Municipal Retirement Fund Schedule of Funding Progress - Pension Trust Funds and other Post Employment Benefits Schedule of Employer Contributions - Pension Trust Funds Budgetary Comparison Schedule: Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (Budget Basis) and Actual- General Fund and Major Special Revenue Fund Notes to the RSI... 73

4 VILLAGE OF BELL WOOD, ILLINOIS DECEMBER 31,2008 CONTENTS SUPPLEMENTARY INFORMATION - COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Major Governmental Funds General Fund: Balance Sheet by Account Schedule of Revenues, Expenditures, and Changes in Fund Balances by Account Schedule of Revenues - Budget and Actual - General Account Schedule of Expenditures - Budget and Actual- General Account Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Motor Fuel Tax Fund Debt Service Fund South TIF,Fund North TIF Fund Prairie View I TIF Fund Prairie View II TIF Fund National Terminals TIF Fund Park Place TIF Fund Central Metro TIF Fund Nonmajor Governmental Funds Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Special Revenue Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Emergency 911 Fund Police Seizure Fund Garbage Disposal Fund Illinois Municipal Retirement Fund Capital Projects Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget (GAAP Basis) and Actual- Capital Improvements Fund Addison Creek Fund Addison Creek Restoration Fund CDBG Fund

5 DECEMBER 31, 2008 CONTENTS Major Proprietary Funds Schedule of Revenues, Expenses, and Changes in Net Assets - Budget and Actual Water and Sewer Fund Schedule of Expenses - Budget and Actual Water and Sewer Fund Schedule of Revenues, Expenses, and Changes in Net Assets - Budget and Actual Property Commission Fund..., Schedule of Revenues, Expenses, and Changes in Net Assets - Budget and Actual 25 th and Lake Street Properties Fund Nonmajor Proprietary Fund Schedule of Revenues, Expenses, and Changes in Net Assets - Budget and Actual Housing Enterprise Program Fund Fiduciary Funds Combining Statement of Fiduciary Net Assets - Pension Trust Funds Combining Statement of Changes in Plan Net Assets - Pension Trust Funds Schedule of Changes in Plan Net Assets - Budget and Actual: Police Pension Fund Firefighters' Pension Fund OTHER SUPPLEMENTARY INFORMATION SECTION (UNAUDITED): Net Assets by Component - Last Five Fiscal years Changes in Net Assets - Last Five Fiscal Years Fund Balances, Governmental Funds - Last Six Fiscal Years Changes in Fund Balances, Governmental Funds - Last Six Fiscal Years Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures - Last Ten Fiscal Years..., Waterworks and Sewerage Revenue Bond Coverage - Last Ten Fiscal years

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7 INTRODUCTORY SECTION

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9 OFFICERS AND OFFICIALS December 31, 2008 ELECTED OFFICIALS V illage Mayor Frank A. Pasquale Board of Trustees Michael J. Ciavattone Annie N. Delgado Edward Lezza Jr. Dr. Phylistine Murphy Ronald Nightengale M.e. Robinson Village Clerk Lena M. Moreland APPOINTED OFFICIALS Comptroller Roy F. McCampbell Treasurer Daisy Mallett Director of Public Works Manny Sifuentes Director of Community Development Tonita LeShore Director of Community Services Jesse Williams Village Attorney Robert Bush Police Chief Robert M. Collins, Jr. Fire Chief Andre Harvey Risk Management Domenic Conversa Emergency Management Mark Walsh I

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11 FINANCIAL SECTION

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13 //l Crowe HorwathTM Crowe Horwath LLP Member Horwath International INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS To the Honorable Mayor and Members of the Board of Trustees Village of Bellwood, Illinois We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Bellwood, Illinois (the Village), as of and for the year ended December 31,2008, which collectively along with the discretely presented component unit, comprise the Village's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Village's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Bellwood Public Library (the Library), which is included as a discretely presented component unit. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for such component unit, is based on the report of other auditors.!. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, and the blended component unit of the Village as of December 31,2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1.

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15 The Management's Discussion and Analysis, schedule of funding progress for pensions and other post employment benefits and employer contributions for pensions, and budgetary comparison schedule are not a required part of the basic financial statements, but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and do not express an opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village's basic financial statements. The accompanying supplementary information, including the introductory section, combining and individual fund financial statements and schedules, and the other supplementary information sections for the year ended December 31,2008, as listed in the accompanying table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules and supplementary schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and other supplementary information sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. In June, 2004, the GASB released Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions." This statement is effective for fiscal periods beginning after December 15, 2007 for phase two governments (those with total annual revenues of $10 million or more but less than $100 million). The Village has implemented this statement prospectively ($94,722 net other post employment benefit obligation at the transition date) as of their fiscal year ended December 31,2008. The statement addresses post employment benefits other than pension and establishes standards for the measurement, recognition, and display of expense, expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information (RSI) in the financial reports of state and local government employers. Oak Brook, Illinois December 10, 2009 ~Ht-L/ Crowe Horwath LLP 2.

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17 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 (Unaudited) As management of the Village of Bellwood ("Village"), we offer readers of the Village's financial statements this narrative overview and analysis of the financial activities of the Village for the fiscal year ended December 31, Since the Management's Discussion and Analysis ("MD&A") is designed to focus on the current year's activities, resulting changes and currently known facts, it should be read in conjunction with the Village's financial statements. Comparative analysis is provided. Financial Highlights The liabilities of the Village exceeded assets at December 31, 2008 by $13,044,792. Total net assets decreased $5,534,956 from fiscal year At December 31,2008, the governmental funds reported combined fund balances of $17,491,365 of which $16,533,423 was unreserved and is available for spending at the Village's discretion. Governmental fund balances decreased $695,444 in fiscal year 2008 primarily due to increased spending for maintenance of streets and alleys. Overview of the financial statements This discussion and analysis is intended to serve as an introduction to the Village's basic financial statements. The Village's basic financial statements comprise three components: 1) village-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Village-wide Financial Statements The village-wide financial statements are designed to provide readers with a broad overview of the Village's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the Village's assets and liabilities, with the difference between the two reported as net assets. Over time increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. The statement of activities presents information showing how the Village's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The Governmental Activities reflect the Village's basic services, including administration, public safety, highways and streets and culture and recreation. Property taxes, shared state taxes and local utility taxes finance the majority of these services. The Business-Type Activities reflect private sector type operations, where the fee for service typically covers all or most of the cost of operations, including deprecia tion. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Village uses fund accounting to ensure and 3.

18 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 (Unaudited) demonstrate compliance with finance-related legal requirements. All of the funds of the Village can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the village-wide financial statements. However, unlike the village-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Because the focus of governmental funds is narrower than that of the village-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the village-wide financial statements. By doing so, readers may better understand the long-term impact of the Village's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Village maintains twenty (20) individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, the MFT Fund, the Debt Service Fund, the Prairie View I TIF Fund, the Prairie View II TIF Fund, the National Terminals TIF Fund, the Park Place TIF Fund, the Central Metro TIF Fund, the South TIF Fund, and the North TIF Fund, all of which are considered to be major funds. Information from the Village's other governmental funds is combined into a single column presentation. Individual fund information for these nonmajor governmental funds is provided elsewhere in the report. The Village maintains enterprise funds as its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the village-wide financial statements. The Village uses enterprise funds to account for its water and sewer operations, the 25 th & Lake Street Properties, the Housing Enterprise Program and to account for the property commission. Proprietary funds provide the same type of information as the village-wide financial statements. The proprietary fund financial statements provide separate information for the 25 th & Lake Street Properties, the Property Commission Fund and the Water and Sewer Fund, which are considered to be major funds of the Village. The Housing Enterprise Program is a nonmajor fund which is also presented in the proprietary fund financial statements. Fiduciary funds are used to account for resources held for the benefit of parties outside the Village. Fiduciary funds are not reflected in the village-wide financial statements because the resources of those funds are not available to support the Village's own programs. The accounting used for fiduciary funds is similar to that used by proprietary funds. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the information provided in the village-wide and fund financial statements. 4.

19 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 (Unaudited) Other Information In addition to the basic financial statements this report also includes certain required supplementary information related to budgetary information and the Village's progress in funding its obligation to provide pension benefits to its employees. Combining and individual fund information can be found immediately following the required supplementary information. Village-Wide Financial Analysis The following chart reflects the condensed statement of net assets: Governmental Business-Type Activities Activities Increase/ (Decrease) Increase/ (Decrease) Assets Current Assets $31,115,213 $33,320,642 ($2,205,429) $1,163,681 $1,242,947 ($79,266) Non-Current Assets 40,786,635 34,383,995 6,402,640 32,485,018 31,844, ,110 Total Assets 71,901,848 67,704,637 4,197,211 33,648,699 33,087, ,844 Liabilities Current Liabilities 18,940,059 19,321,705 (381,646) 3,357,418 2,289,162 1,068,256 Long-Term Liabilities 65,446,579 56,382,811 9,063,768 30,851,283 30,308, ,603 Total Liabilities 84,386,638 75,704,516 8,682,122 34,208,701 32,597,842 1,610,859 Net Assets Invested in capital assets net of related debt (17,883,509) (17,939,283) 55,774 2,487,520 1,331,224 1,156,296 Restricted Unrestricted 16,845,213 17,071,037 {11,446,4941 (7,131,633) (225,824) (4,314,8611 (3,047,522) (841,181) (2,206,341) Total Net Assets ($12,484,790) ($7,999,879) ($4,484,911 ) ($560,002) $490,043 ($1,050,045) As stated earlier, net assets may serve over time as a useful indicator of a government's financial position. The largest part of the Village's net assets reflects it's investment in capital assets (land, buildings and improvements, infrastructure and vehicles and equipment); less any related debt used to acquire those assets that are still outstanding. The Village uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Village's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. There was a decrease in net assets from governmental activities of $4,484,911. The 2008 fiscal year decrease was attributable in most part to the issuance of additional general obligation bonds to assist in 5.

20 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 (Unaudited) financing the construction of a new Metra commuter train station in the North TIF which will include retail shops and adjacent parking facilities. There was a decrease in net assets from business-type activities of $1,050,045 for the fiscal year ended December 31, 2008 attributable in most part to increases in current liabilities for debt payments due in the next fiscal year. The following chart reflects the condensed statement of activities: Governmental Business-Type Activities Activities Increase/ Increase/ (Decrease) (Decrease) Revenues Fees, Fines and Charges for Service $4,945,035 $4,584,472 $360,563 $7,294,479 $7,027,979 $266,500 Operating Grants and Contributions 647, ,105 (37,430) Capital Grants and Contributions 83,733 94,953 (11,220) General Revenues Property Taxes 14,777,023 13,368,441 1,408,582 Other Taxes 7,103,819 6,906, ,221 Other General Revenue 5,268,680 1,441,758 3,826,922 8,416 86,851 (78,435) Total Revenues 32,825,965 27,081,327 5,744,638 7,302,895 7,114, ,065 Expenses General Government. 14,907,893 19,062,242 (4,154,349) Public Safety Police 7,626,657 7,413, ,738 Fire 3,330,284 2,488, ,766 Other Public Safety 1,613,730 1,715,805 (102,075) Highways and Streets 5,278,805 5,838,226 (559,421) Garbage Disposal 1,062,510 1,187,521 (125,011) Welfare 10,392 11,151 (759) Civil Defense 87, ,489 (48,365) Interest on Debt 2,751,135 3,178,576 (427,441) Water and Sewer 4,269,313 4,074, ,789 Property Commission 1,101, , ,884 25th & Lake Street Properties 3,319,998 3,454,994 (134,996) Enterprise Housing Program 304,433 74, ,410 Total Expenses 36,668,530 41,031,447 (4,362,917) 8,995,286 8,551, ,087 Excess (deficiency) before transfers (3,842,565) (13,950,120) 10,107,555 (1,692,495) (1,436,369) (256,022 Transfers (642,346) (641,076} (1,270) 642, ,076 1,270 Change in Net Assets (4,484,911) (14,591,196) 10,106,285 (1,050,045) (795,293) (254,752) Net assets, beginning of Year (7,999,879) 6,591,317 (14,591,196) 490,043 1,285,336 (795,293)) Net assets, End of year ($12,484,790) ($7,999,879) ($4,484,911) ($560,002) $490,043 ($1,050,045) 6.

21 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 (Unaudited) Revenue increases from governmental activities were largely due to higher property taxes and increased fines generated from traffic signal enforcement cameras ill the Village. Business-type revenues increased due to higher water and sewer usage charges. General government expenses were lower with reduced spending in the Village TIF Districts while awaiting new development agreements to be completed. Debt service charges were down due to lower interest payments compared to the previous year. With regard to business-type expenses, the increase in water and sewer spending was largely because of higher costs for water purchased from Chicago. Village owned rental properties also experienced increases in maintenance costs and depreciation charges. Financial Analysis of the Village's Funds Governmental Funds As noted earlier, the Village of Bellwood uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The focus of the Village's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing financing requirements. Unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the fiscal year ended December 31, 2008 the Village's governmental fund balances totaled $17,491,365, a decrease of $695,444 from last year. The decline in fund balances was largely due to increased spending for maintenance of streets and alleys. The General Fund is the primary operating fund of the Village. During the year ended December 31, 2008 expenses exceeded revenues by $1,657,798. The deficit was mainly due to increased spending for personnel and benefit costs; Proprietary Funds 2008 fiscal year expenses exceeded revenues in the Village owned property funds by a combined total of $1,692,391. This resulted from decreases in rental income combined with higher costs for maintenance and depreciation. General Fund Budgetary Highlights The fiscal year 2008 budget was adopted in December 2007 and amended in October The amended budget included higher expected revenue from taxes and traffic related fines as well as increased capital equipment expenditures. Total General Fund expenses were more than budget by $854,989 due to higher costs for health insurance claims and for property and liability insurance. 7.

22 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 (Unaudited) Capital Asset and Debt Administration Capital Assets (Net of Depreciation) Land Land Improvements Buildings Machinery and Equipment Infrastructure Accumulated Depreciation Balance 2007 $875, ,637 3,784,191 8,016,089 40,157,605 {22,070,049} Governmental Activities Net Increase/ Balance (Decrease) 2008 $1,725,391 $2,601, ,637 5,470,858 9,255, ,272 8,347,361 40,157,605 {2,120,572} {24,190,621} Business-Type Activities Balance Net Increase/ Balance 2007 (Decrease) 2008 $1,377,780 $2,100,000 $3,477,780 88,857 88,857 28,479, ,351 29,150, ,036 42, ,806 9,201, ,834 9,512,881 {5,730,746} (1,457,373} (7,188,119} Total Net Capital Assets $31,160,089 $5,406,949 $36,567,038 $33,880,422 $1,668,582 $35,549,004 Governmental activities: The Village purchased $7,196,249 in land and buildings for future economic development. Business-type activities: development. The Village purchased land costing $2,100,000 for future economic More detailed information on the Village's capital assets can be found in Note 4 of the basic financial statements. Debt Administration Governmental Business-Type Activities Activities Balance Net Increase/ Balance Balance Net Increase/ Balance 2007 (Decrease) (Decrease) 2008 Bonds Payable $48,683,839 $7,127,646 $55,811,485 $5,613,192 ($358,013) $5,255,179 Capital Leases Payable 172,578 (68,670) 103,908 G.O. Notes Payable 930,000 (95,000) 835,000 Loan Payable 386,652 8, ,242 1,897,938 (802,450) 1,095,488 Note Payable, Series ,800,000 3,800,000 Note Payable, Series ,600,000 1,600,000 Promissory Note Payable 900, ,000 Compensated Absences Payable 391,039 14, ,060 10,796 10,796 Economic Development Notes 24,000,000 24,000,000 Economic Development Notes 2,000,000 2,000,000 Total Debt $55,264,108 $8,586,587 $63,850,695 $31,521,926 $839,537 $32,361,463 8.

23 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2008 (Unaudited) In fiscal year 2008 the Village issued $7,905,000 in general obligation bonds for economic development in the North TIF. Refer to Page 5 of this document for more information. The Village retired a total of $2,032,817 in bonds and loans through cash payments of principal in The Village of Bellwood is not subject to the legal debt limitation of 8.625% of Equalized Assed Value (EAV) as set by the State of Illinois because it is a home rule community. Further information on the Village's long-term debt can be found on Note 5 of the basic financial statements. Economic Factors Events in the national, state, and local economies affect the Village of Bellwood's ability to provide municipal services. Negative revenue trends earlier in this decade required the village to tap into reserve balances to maintain the level of municipal services to citizens and businesses. Municipal expenses are dominated by the services of Police, Fire, and Public Works. The Village is presently negotiating with several developers to provide new growth in Bellwood. Four new TIF districts have been established. Factors bearing directly on economic development projects include the slow down in the real estate markets and restrictions in the credit markets. Contacting the Village's Financial Management This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the Village's finances. Questions concerning this report or requests for additional financial information should be directed to: Village Comptroller Village of Bellwood 3200 Washington Boulevard Bellwood, Illinois,

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25 STATEMENT OF NET ASSETS December 31, 2008 STATEMENT 1 Primary Government Governmental Business-Type Component Activities Activities Total Unit ASSETS Cash and investments $ 14,387,551 $ 249,509 $ 14,637,060 $ 1,393,709 Receivables: Accounts receivable 363, , ,314 1,108,156 Property taxes receivable 14,519,852 14,519,852 Replacement taxes receivable 66,540 66,540 Intergovernmental receivable 1,166,645 1,166,645 Deposits 7,380 93, ,451 Interest receivables 2,650 2,650 Other receivables 269, , ,333 Inventories 11,296 72,439 83,735 Prepaid items 279,334 10, ,259 35,521 Due from component unit 4,092 4,092 Due from fiduciary funds 36,963 36,963 19,159 Internal balances 3,195,009 (3,195,009) Deferred charges 1,024, ,023 1,155,611 Capital assets not being depreciated 2,601,007 3,477,780 6,078,787 50,065 Capital assets being depreciated, net 33,966,031 32,071,224 66,037, ,297 Total assets 71,901,848 33,648, ,550,547 3,237,907 LlABILmES AND NET ASSETS Liabilities Accounts payable 1,793, ,053 2,750,822 19,141 Claims payable 140, ,138 Salaries payable 207,541 4, ,365 19,163 Other payables 64, , ,970 Deferred property tax revenue 14,191,455 14,191,455 Deferred revenue 65,437 65,437 Due to other governmental units 20,479 20,479 Due to fiduciary funds 179, ,305 Interest payable 179, , ,169 Long-telm obligations, due within one year: Bonds payable 706, ,000 1,126,000 Capital leases payable 78,764 78,764 G.O. notes payable 1,000,000 1,000,000 Economic development notes payable 1,025,000 1,025,000 Loans payable 190,963 54, ,347 Compensated absences payable 187,430 10, ,226 35,571 Long-term obligations, due in more than one year: Net pension obligation 3,664,319 3,664,319 OPEB obligation 94,722 94,722 Bonds payable 55,105,485 4,835,179 59,940,664 Capital leases payable 25,144 25,144 G.O. notes payable 735, ,000 Economic development notes payable 5,400,000 24,975,000 30,375,000 Loans payable 204,279 1,041,104 1,245,383 Compensated absences payable 217, ,630 Total liabilities 84,386,638 34,208, ,595,339 73,875 Net assets Invested in capital assets, net of related debt (17,883,509) 2,487,520 (15,395,989) 700,265 Restricted for: Capital projects 16,357,427 16,357,427 Debt service 487, ,786 Unrestricted net assets (11,446,494) (3,047,522) (14,494,016) 2,463,767 Total net assets $ (12,484,790) $ (560,002) $ (13,044,792) $ 3,164,032 The accompanying notes to the financial statements are an integral part of this statement. 10.

26 STATEMENT 2 STATEMENT OF ACTNITIES Year Ended December 31, 2008 ProgJ;am Revenues Fees, Fines, and Operating Capital Primary GOVernment Net (ExEense) Revenue and Changes in Net Assets Charges for Grants and Grants and Governmental Business-Type Functions / erogj;arns Expenses Services Contributions Contributions Activities Activities Total Component Unit Primary government: Governmental activities: General government $ 14,907,893 $ 1,599,252 $ 20,184 $ 83,733 $ (13,204,724) $ (13,204,724) Public safety Police 7,626,657 1,653,977 34,283 (5,938,397) (5,938,397) Fire 3,330,284 1,102 55,811 (3,273;371) (3,273,371) Other public safety 1,613, ,056 (1,344,674) (1,344,674) Highways and sh"eets 5,278,805 18, ,397 (4,722,760) (4,722,760) Garbage disposal 1,062,510 1,403, , ,490 Welfare 10,392 (10,392) (10,392) Civil defense 87,124 (87,124) (87,124) Interest on debt 2,751,135 (2,751,135) (2,751,135) Total governmental activities 36,668,530 4,945, ,675 83,733 (30,992,087) (30,992,087) Business-type activities: Water and sewer 4,269,313 4,566,484 $ 297, ,171 Property commission 1,101, ,427 (725,115) (725,115) 25th & Lake street properties 3,319,998 2,351,568 (968,430) (968,430) Enterprise housing program 304,433 (304,433) (304,433) Total business-type activities 8,995,286 7,294,479 (1,700,802') (1,700,807) Total primary government $ 45,663,816 $ 12,239,514 $ 647,675 $ 83,733 (30,992,087) (1,700,802') (32,692,894 ) Component Unit: Library $ 1,138,800 $ 27,913 $ 24,862 $ $ (1,086,025) General revenues: Taxes: Property taxes 14,777,023 14,777,023 1,022,012 Replacement taxes 636, ,181 45,264 Income tax 1,941,788 1,941,788 Sales tax 2,35l,471 2,351,471 Utility tax 1,943,797 1,943,797 Other taxes 230, ,582 Inves tment earnings 215,985 8, ,401 22,460 Other general revenues 5,052,695 5,052,695 11,861 Transfers (642,346) 642,346 Total general revenues and transfers 26,507, ,762 27,157,938 1,101,597 Change in net assets (4,484,911) (1,050,045) (5,534,956) 15,572 Net assets, beginning of year (7,999,879) 490,043 (7;509,836) 3,148,460 Net assets, end of year $ (12,484,790) $ ~560,002) $ (13,044,792) $ 3,164,032 The accompanying notes to the financial statements are an integral part of this statement. 11.

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28 BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2008 Major Governmental Funds ASSETS Cash and investments Receivables: Accounts receivable Property taxes receivable Replacement taxes receivable Intergovernmental receivable Deposits Interest receivable Other receivables Inventories Prepaid items Due from other funds Due from component unit Due from fiduciary funds Debt General MFT Service Fund Fund Fund $ - $ - $ 232,534 $ 11,658,250 2,472,235 66,540 1,067,604 99,041 7,380 2, ,326 30,000 6, ,334 26,664,997 3,112, ,991 4,092 36,963 South TIF Fund 3,692, ,460,696 North TIF Fund $ 7,842, ,998,519 Total assets $ 39,921,266 $ 3,241,174 $ 3,641,760 $ 5,153,206 $ 10,840,782 LIABILITIES AND FUND BALANCES Lia bili ties Accounts payable Claims payable Salaries payable Other pay abies Due to other funds Deferred property tax revenue Deferred revenue Due to other governmental units Due to fiduciary funds Total liabilities $ 944,725 $ 182,109 $ 63,080 $ 140, ,961 23,671,302 3,101, ,670 11,400,398 2,414, ,481 19, ,305 36,782,469 3,283,452 3,095,686 51,875 51,875 $ 70,423 23, , ,946 Fund balances Reserved for: Prepaids Inventories Debt service Umeserved, as reported in: General fund Special revenue funds Debt service funds Capital projects funds Total fund balances 279,334 6,662 2,852,801 (42,278) 546,074 3,138,797 (42,278) 546,074 5,101,331 5,101,331 9,975,836 9,975,836 Total liabilities and fund balances $ 39,921,266 $ 3,241,174 $ 3,641,760 $ 5,153,206 $ 10,840,782 The accompanying notes to the financial statements are an integral part of this statement. 12.

29 BALANCE SHEET GOVERNMENT AL FUNDS December 31, 2008 STATEMENT 3 Major Governmental Funds Prairie View I TIF Fund Prairie View II National Terminals Park Place Central Metro TIF TIF TIF TIF Fund Fund Fund Fund Other Governmental Funds Total $ 164,108 $ 31,548 $ 14,356 $ 703,282 $ 1,031,551 $ 675,793 $ 14,387, , ,937 1,538, , , ,367 89,605 4,634 1,519, ,564 14,519,852 66,540 1,166,645 7,380 2, ,346 11, ,334 38,687,295 4,092 36,963 $ 164,108 $ 31,548 $ 229,293 $ 2,241,534 $ 1,295,635 $ 3,042,202 $ 69,802,508 $ 42,870 $ 41,755 $ 233,387 $ 38,693 $ 24,109 2,398,586 1,817 $ 100,743 1,580 41,077 4,930, ,121 1,320 $ 1,793, , ,541 64,689 35,492,286 14,191, ,481 20, ,305 42,870 41, ,387 2,437,279 25,926 5,451,498 52,311, ,238 4, ,334 11, ,312 (10;207) (4,094) {195,745) 1,269,709 1,725,877 {4,139,80~ 2,852,801 1,683,599 (14,301) 12,011, ,238 (10,207) (4,094) (195,745) 1,269,709 (2,409,296) 17,491,365 $ 164,108 $ 31,548 $ 229,293 $ 2,241,534 $ 1,295,635 $ 3,042,202 $ 69,802,508 The accompanying notes to the financial statements are an integral part of this statement. 13.

30 RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET ASSETS December 31,2008 STATEMENT 4 Total fund balances - governmental funds $ 17,491,365 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds: Capital assets Accumulated depreciation Net capital assets 60,757,659 (24,190,621) 36,567,038 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds: Sales taxes receivable Other taxes receivable Utility taxes receivable Total long-term assets 129,084 32,162 60, ,481 Costs related to the issuance of long-term debt are recorded as expenditures when incurred in govemmental funds but are capitalized and amortized over the life of the debt issue in the statement of net assets. 1,024,588 Net pension obligation and other post employment benefits are reported in the statement of net assets but is not a current financial resource and, therefore, is not reported in governmental funds. Police and Fire Pension obligation OPEB obligation (3,664,319) (94,722) (3,759,041) Some liabilities reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as liabilities in governmental funds. These liabili ties consist of : General obligation bonds payable, net Capital leases payable G.O. notes payable Economic development notes payable Loans payable Interest payable Compensated absences payable Total long-term liabilities (55,811,485) (103,908) (1,735,000) (5,400,000) (395,242) (179,526) (405,060) (64,030,221) Net assets of governmental activities $ (12,484,790) The accompanying notes to the financial statements are an integral part of this statement. 14.

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32 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Year Ended December 31, 2008 Major Governmental Funds Debt General MFT Service South TIF North TIF Fund Fund Fund Fund Fund Revenues Taxes Property taxes $ 10,459,020 $ - $ 2,330,077 $ 325,350 $ 347,090 Local taxes 4,339,739 Intergovernmental revenues 2,577, ,397 Licenses and permits 868,649 Fines and forfeitures 2,089,591 Charges for services 24,370 17,648 Interest revenue 45,680 8,410 59,535 59,445 Grant revenue 110,278 Miscellaneous revenue 929,499 21,000 Total revenues 21,444, ,455 2,330, , ,535 Expenditures Current: General government 9,829, ,651 3,520,616 Public safety Police 6,995,003 Fire 2,910,045 Other public safety 1,389,744 Highways and streets 1,785,694 3,072,637 Garbage disposal Welfare 10,392 Civil defense 58,239 Debt service - principal retired 103, ,050 Debt service - interest and charges 19,498 1,265, , ,550 Total expenditures 23,102,451 3,072,637 2,144,999 1,145,589 3,971,166 Excess (Deficiency) of revenues over (under) expenditures (1,657,798) (2,509,182) 185,078 (760,704) (3,543,631) Other financing sources (uses) Transfers in 1,052, ,520 Bond/Note Proceeds 1,600,000 7,905,000 Loan proceeds 163,318 Capital lease proceeds 34,585 Discount on bonds (142,290) Transfers out {577,520) (642,346) Total other financing sources (uses) 2,850,863 (577,520) {64,826) 7,762,710 Net change in fund balances 1,193,065 (3,086,702) 120,252 (760,704) 4,219,079 Fund balances at beginning of year 1,945,732 3,044, ,822 5,862,035 5,756,757 Fund balances at end of year $ 3,138,797 $ (42,278) $ 546,074 $ 5,101,331 $ 9,975,836 The accompanying notes to the financial statements are an integral part of this statement. 15.

33 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Year Ended December 31, 2008 STATEMENT 5 Major Governmental Funds Prairie View I Prairie View II National Terminals Park Place Central Metro Other TIF Fund TIF Fund TIF Fund TIF Fund TIF Fund Governmental Funds $ 65,724 $ 51,648 $ , $ 128,544 9,655 $ 297,123 32,180 $ 538, ,582 2,675 1,403, ,733 25,378 $ 14,776,836 4,570,321 3,115, ,649 2,092,266 1,445, , , , ,-,9_0_5 51, , , ,303 2,285,328 28,254,516 4,000 4,000 4, , ,568 1,334,830 16,569,913 30,000 15,000 25,740 53, ,386 69, , ,986 1,049,012 6,995,003 2,910,045 1,613,730 4,858,331 1,049,012 10,392 58,239 1,027,983 2,775,579 59,740 72, , , ,346 2,607,828 37,868,227 6,165 (20,717) (4,000) (527,379) (459,043) (322,500) (9,613,711) (1,052,960) 1,630,480 9,505, ,318 34,585 (142,290) {2,272,826) (1,052,960) 8,918,267 6,165 (20,717) (4,000) (527,379) (459,043) (1,375,460) (695,444) 115,073 10,510 {94) 331,634 1,728,752 (1,033,836) 18,186,809 $ 121,238 $ {10,20J $ (4,094) $ {195,745) $ 1,269,709 $ (2,409,296) $ 17,491,365 The accompanying notes to the financial statements are an integral part of this statement. 16.

34 RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO STATEMENT OF ACTMTIES Year Ended December 31, 2008 STATEMENT 6 Net change in total fund balances $ (695,444) Amounts reported for governmental activities in the statement of activities are different because: Some revenues were not collected for several months after the close of the fiscal year and, therefore, were not considered to be "available" and are not reported as revenue in the governmental funds. The change from fiscal year 2007 to 2008 consists of: Sales taxes received from the state of Illinois Utility taxes Total change in deferred revenues (11,627) (32,844) (44,471) In governmental funds, long-term debt is considered an other financing source, but in the statement of net assets, debt is reported as a liability. In the current period the following proceeds were received: Bond/Note proceeds Loan proceeds Capital lease proceeds (9,505,000) (163,318) (34,585) (9,702,903) The issuance of long-term debt resulted in bond issuance costs and discounts that were reported as changes in current financial resources in the governmental funds. However, these amounts have been deferred and amortized in the statement of net assets. Deferred bond issuance costs Deferred amount on refunding Discount on bonds Total amortiza tion costs (19,109) (30,734) 133,088 83,245 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported in the governmental funds. Increase in net pension 0 bligation Increase in OPEB obligation Increase in compensated absences Decrease in accrued interest on debt Total expenses of non-current resources (475,971) (94,722) (14,021) 24,444 (560,270) Governmental funds report purchases of capital assets as expenditures, while governmental activities report depreciation expense to allocate those expenditures over the life of the assets. Capital outlay Contribution Depreciation Capital expenditures in excess of depreciation 2,911,601 4,615,920 (2,120,572) 5,406,949 Repayment of principal on long-term debt is an expenditure in the governmental funds, but the repayment reduces long-term debt payable in the statement of net assets. Bonds payable retirement Ca pitalleases retirement Note retirement Loans retirement Total principal expense 675, ,255 95, ,728 1,027,983 Change in net assets of governmental activities $ (4,484,911 ) The accompanying notes to the financial statements are an integral part of this statement. 17.

35 STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31,2008 STATEMENT 7 Enterprise Funds Major Funds Enterprise Total Property Water and 25th & Lake Housing Enterprise Commission Sewer Street Pro12erties Program Funds ASSETS Cash and investments $ - $ - $ - $ 249,509 $ 249,509 Receivables: Accounts receivable 553, ,750 Other receivable 35, , ,987 Deposits 91,134 1,937 93,071 Inventories 72,439 72,439 Prepaids 10,925 10,925 Due from other funds 1,411,958 7,260,998 4,583,097 13,256,053 Deferred charges 131, ,023 Capital assets not being depreciated 1,377,780 2,100,000 3,477,780 Capital assets being depreciated, net 5,985,743 6,271,418 19,278, ,945 32,071,224 Total assets 8,901,835 14,289,628 26,122, ,454 50,099,761 LIABILITIES AND NET ASSETS Liabilities Accounts payable 808, ,319 12, ,053 Salaries payable 4,824 4,824 Other payables 313, ,281 Deferred revenue 65,437 65,437 Due to other funds 10,579,351 2,924,973 2,044, ,401 16,451,062 Interest payable 18, , ,643 Long-term obligations, due within one year: Bonds payable 420, ,000 Economic development note payable 1,025,000 1,025,000 Loans payable 54,384 54,384 Compensated absences payable 10,796 10,796 Long-term obligations, due in more than one year: Bonds payable 4,835,179 4,835,179 Economic development note payable 24,975,000 24,975,000 Loans payable 1,041,104 1,041,104 Total liabilities 11,388,156 9,510,978 28,858, ,401 50,659,763 Net assets Invested in capital assets, net of related debt 7,363,523 (254,121) (4,621,882) 2,487,520 Umestricted net assets (9,849,844) 5,032,771 1,886,498 (116,947) (3,047,522) Total net assets $ (2,486,321) $ 4,778,650 $ (2,735,384) $ (116,947) $ (560,002) The accompanying notes to the financial statements are an integral part of this statement. 18.

36 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS Year Ended December 31, 2008 STATEMENT 8 Enterprise Funds Major Funds Enterprise Total Property Water and 25th & Lake Housing Enterprise Commission Sewer Street Prol2erties Program Funds Operating revenues Charges for services $ 226,395 $ 4,304,871 $ 2,351,568 $ - $ 6,882,834 M~cellaneousrevenue 150, , ,541 Total operating revenues 376,427 4,304,871 2,351, ,509 7,294,375 Operating expenses Source and supply 1,533,502 1,533,502 Power and pumping 128, ,019 Purification expense 9,506 9,506 Trans~sion and d~tribution 997, ,760 Accounting and collections 453, ,906 Administrative expense 129, ,877 Sewer operations 164, ,183 Property maintenance 916, ,720 25th & Lake street maintenance 1,030,441 1,030,441 Enterprise housing program expense 290, ,939 Depreciation 154, ,238 1,103,308 13,494 1,465,877 Total operating expenses 1,071,557 3,610,991 2,133, ,433 7,120,730 Operating income (loss) (695,130) 693, ,819 (42,924) 173,645 Nonoperating income (expenses) Interest income 1,206 7,210 8,416 Amortization (55,659) (55,659) Interest expense (29,985) {602,559) (1,186,249) (1,818,793) Total nonoperating income (expenses) {29,985) {657,012) (1,179,039) (1,866,036) Income (Loss) before transfers (725,115) 36,868 {961,220) (42,924) (1,692,391) Transfers Transfers in 642, ,346 Total transfers 642, ,346 Change in net assets (725,115) 679,214 (961,220) (42,924) (1,050,045) Net assets at beginning of year {l,761,206) 4,099,436 {1,774,164) (74,023) 490,043 Net assets at end of year $ (2,486,321) $ 4,778,650 $ (2,735,384) $ {116,94Z) $ (560,002) The accomapnying notes to the financial statements are an intergral part of this statement. 19.

37 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended December 31, 2008 STATEMENT 9 En terprise Funds Major Funds Enterprise Total Property Water and 25th & Lake Housing Enterprise Commission Sewer Street Prol2erties Program Funds Cash flows from operating activities: Cash received from customers $ 341,207 $ 4,306,519 $ 2,541,296 $ 261,509 $ 7,450,531 Cash payments for goods and services (501,803) (2,872,417) (1,101,108) (290,939) (4,766,267) Cash payments to employees for services (600,339) (600,339) Net cash provided by (used in) operating activities (160,596) 833,763 1,440,188 (29,430) 2,083,925 Cash flows from noncapital financing activities: Interfund borrowing 1,865,800 (140,870) 1,997,811 3,000 3,725,741 In terfund lending (64,300) (2,646,641) (2,710,941) Transfers in 642, ,346 Net cash provided by (used in) noncapital financing activities 1,801, ,476 (648,830) 3,000 1,657,146 Cash flows from capital and related financing activities: Purchase of capital assets (978,894) (331,504) (2,100,000) 275,939 (3,134,459) Principal paid on debt (749,400) (466,722) 2,000, ,878 Interest paid on debt (29,985) (603,793) (698,568) (1,332,346) Interest earned 1,206 7,210 8,416 Net cash used in capital and related financing activities (1,758,279) (1,400,813) (791,358) 275,939 (3,674,511) Net increase (decrease) in cash (117,375) (65,574) 249,509 66,560 Cash and cash equivalents, beginning of year 117,375 65, ,949 Cash and cash equivalents, end of year $ - $ $ - $ 249,509 $ 249,509 Reconciliation of operating income to net cash used in operating activities: Operating income (loss) $ (695,130) $ 693,880 $ 217,819 $ (42,924) $ 173,645 Adjustment to reconcile opera ling income to net cash used in operating activities: Deprecia tion 154, ,238 1,103,308 13,494 1,465,877 (Increase) Decrease in accounts receivable (90,392) 1, , ,880 (Increase) Decrease in prepaid asset 54,500 4,667 59,167 (Decrease) increase in accounts payable 470,089 (161,249) (75,334) 233,506 Increase in salaries payable (14,068) (14,068) Decrease in inventory (519) (519) Increase in deferred revenue 65,437 65,437 Total adjustments 534, ,883 1,222,369 13,494 1,910,280 Net cash provided by (used in) operating activities $ (160,596) $ 833,763 $ 1,440,188 $ (29,430) $ 2,083,925 The accompanying notes to the financial statements are an integral part of this statement. 20.

38 STATEMENT 10 STATEMENT OF FIDUCIARY NET ASSETS December 31, 2008 ASSETS Cash Investments Government securities Municipal obligations Mutual funds Certificate of Deposits Total investments Interest receivable Other receivables Due from the Village Total assets Pension Trust Funds $ 1,001,602 23,935,860 3,288,188 9,336, ,907 36,661, ,213 17,205 94,437 38,044,332 LIABILITIES Due to Village Total liabilities 13,472 13,472 NET ASSETS Held in trust for pension benefits $ 38,030,860 The accompanying notes to the financial statements are an integral part of this statement. 21.

39 STATEMENT 11 STATEMENT OF CHANGES IN PLAN NET ASSETS PENSION TRUST FUNDS Year ended December 31,2008 Pension Trust Funds ADDITIONS Contributions Employer $ 2,510,513 Plan members 656,870 Total contributions 3,167,383 Investment earnings Interest revenue (811,456) Less interest expense {116,930) Net investment income {928,386) Miscellaneous income 1,021 Total additions 2,240,018 DEDUCTIONS Administra tion 53,818 Benefits and refunds 4,041,974 Total deductions 4,095,792 Net change in plan net assets (1,855,774) Plan net assets at beginning of year 39,886,634 Plan net assets at end of year $ 38,030,860 The accompanying notes to the financial statements are an integral part of this statement. 22.

40 VILLAGE OF BELL WOOD, ILUNOIS NOTES TO THE FINANCIAL STATEMENTS December 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Village of Bellwood, Illinois (the Village) was incorporated in The Village operates under a Mayor-Trustee form of government and provides services that include police, fire, water utility, sewer utility, street maintenance, health and environment, community development, and general administrative services. The accounting policies of the Village conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to local governmental units. The following is a summary of the significant policies. Reporting Entity: The Village has adopted the provisions of the Governmental Accounting Standards Board (GASB) Statements No. 14, The Financial Reporting Entity, and No. 39, Determining "Whether Certain Organizations Are Component Units, under which these basic financial statements include all organizations, activities, functions, and component units for which the Village is financially accountable. Financial accountability is defined as the appointment of a voting majority of the component unit's board and either (1) the Village's ability to impose its will over the component unit or (2) the possibility that the component unit will provide a financial benefit to or impose a financial burden with the Village. In conformity with GAAP, the Village's police and firefighters' pension funds have been included as component units in the Village's basic financial statements. Although they are separate legal entities, these funds exist to provide pension benefits for the Village's police officers and firefighters. Thus, their financial information has been blended within the Village's basic financial statements as fiduciary funds. During the current fiscal year, the Village's Police Pension Fund changed its fiscal year from April 30 to December 31. The financial information included in this financial statements represent activity from May 1,2007 through December 31,2008 for the Police Pension Fund. The Bellwood Public Library (the Library) provided library services to the residents of the Village of Bellwood. The members of the board are elected by the public. However, the Library is fiscally dependent upon the Village because the Village'S board approves the Library's budget and tax levies and must approve any debt issuances. As required by GAAP, financial data of the Library should be discretely presented in the component unit column in the basic financial statements to emphasize that it is separate from the Village. To obtain a copy of the Bellwood Public Library separately issued financial statements, contact the Bellwood Public library's administrative offices at 600 Bohland Avenue, Bellwood, Illinois (Continued) 23.

41 NOTES TO THE FINANCIAL STATEMENTS December 31,2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation - Fund Accounting: The Village's basic financial statements consist of Villagewide statements, including a statement of net assets and a statement of activities, and fund financial statements, which provide a more detailed level of financial information. The Village-wide focus is more on the sustainability of the Village as an entity and the change in aggregate financial position resulting from activities of the fiscal period. Village-Wide Financial Statements - The statement of net assets and the statement of activities display information about the Village as a whole. In the Village-wide statement of net assets, both the governmental and business-type activities columns are presented on a consolidated basis by column. These statements include the financial activities of the Village, except for fiduciary activities. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Village-wide statement of activities reflects both the direct expenses and net cost of each function of the Village's governmental activities and business-type activities. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include charges paid by the recipient for the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program, and interest earned on grants that is required to be used to support a particular program. Revenues, which are not classified as program revenues, are presented as general revenues of the Village, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each government function or business segment is self-financing or draws from the general revenues of the Village. Fund Financial Statements - The financial transactions of the Village are recorded in individual funds. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Separate statements for each fund category - governmental, proprietary, and fiduciary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and presented as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. (Continued) 24.

42 NOTES TO THE FINANCIAL STATEMENTS December 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus and Basis of Accounting: Village-Wide Financial Statements - The Village-wide financial statements and fund financial statements for proprietary and fiduciary funds are reported using the economic resources measurement focus and the accrual basis of accounting. The economic resources measurement focus means that all assets and liabilities (whether current or non-current) are included on the balance sheet and the operating statements present increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized when earned, if measurable, and expenses are recognized as incurred, regardless of the timing of related cash flows. In accordance with GASB Statement No. 20, Accounting and Financial Reportingfor Proprietary Funds and Other Governmental Entities that Use Proprietary Fund Accounting, the Village applies all GASB pronouncements and all Financial Accounting Standards Board (F ASB) Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins issued on or before November 30, 1989, unless they conflict with GASB pronouncements. The Village has reported three categories of program revenues in the statement of activities: (1) charges for services, (2) program-specific operating grants and contributions, and (3) programspecific capital grants and contributions. Program revenues are derived directly from the program itself or from external sources, such as the State of Illinois; they reduce the net cost of each function to be financed from the Village's general revenues. For identifying the function to which a program revenue pertains, the determining factor for charges for services is which function generates the revenue. For grants and contributions, the determining factor is the function to which the revenues are restricted. Eliminations have been made in the statement of net assets to remove the "grossing up" effect on assets and liabilities within the governmental and business-type activities columns for amounts reported in the individual funds as interfund receivables and payables. Similarly, transfers between funds have been eliminated in the statement of activities. Amounts reported in the governmental or proprietary funds as receivable from or payable to fiduciary funds have been reclassified in the statement of net assets as accounts receivable or payable to external parties. Fund Financial Statements - Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Revenues accrued at the end of the year include charges for services, licenses and permits, fines and forfeitures, intergovernmental revenues, investment earnings, property taxes, sales taxes, and income taxes. Nonexchange transactions, in which the Village receives value without directly giving equal value in return, include taxes, grants, and donations. All other revenue items are considered to be (Continued) 25.