CITY OF COUNTRYSIDE, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT. For the Year Ended April 30, 2010

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2 COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended April 30, 2010 Prepared by The City of Countryside Finance Department

3 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Principal Officials... Organizational Chart... Certificate of Achievement for Excellence in Financial Reporting... Letter of Transmittal... i ii iii iv-vii FINANCIAL SECTION INDEPENDENT AUDITOR S REPORT GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS Management s Discussion and Analysis... MD&A 1-9 Basic Financial Statements Government-Wide Financial Statements Statement of Net Assets... 3 Statement of Activities Fund Financial Statements Governmental Funds Balance Sheet... 6 Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Assets... 7 Statement of Revenues, Expenditures and Changes in Fund Balances... 8 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Governmental Activities in the Statement of Activities... 9 Proprietary Funds Statement of Net Assets Statement of Revenues, Expenses and Changes in Net Assets Statement of Cash Flows

4 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS (Continued) Basic Financial Statements (Continued) Fund Financial Statements (Continued) Fiduciary Funds Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets Notes to Financial Statements Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund Hotel/Motel Tax Fund Business District Fund Notes to Required Supplementary Information Schedule of Funding Progress Illinois Municipal Retirement Fund Police Pension Fund Other Postemployment Benefit Plan Schedule of Employer Contributions Illinois Municipal Retirement Fund Police Pension Fund Other Postemployment Benefit Plan COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS Schedule of Revenues - Budget and Actual - General Fund Schedule of Expenditures - Budget and Actual - General Fund

5 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Continued) NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Emergency Telephone System Fund Motor Fuel Tax Fund Asset Seizure Fund PROPRIETARY FUNDS MAJOR ENTERPRISE FUNDS Schedule of Revenues, Expenses and Changes in Net Assets - Budget and Actual - Water Fund Schedule of Operating Expenses - Budget and Actual - Water Fund Schedule of Revenues, Expenses and Changes in Net Assets - Budget and Actual - Sanitary Sewer Fund Schedule of Operating Expenses - Budget and Actual - Sanitary Sewer Fund STATISTICAL SECTION Financial Trends Net Assets by Component Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Revenue Capacity Sales Tax by Category Direct and Overlapping Sales Tax Rates Property Tax Rates per $ Assessed Value and Actual Value of Taxable Property Top Ten Property Taxpayers by Equalized Assessed Valuation... 81

6 TABLE OF CONTENTS (Continued) Page(s) STATISTICAL SECTION (Continued) Debt Capacity Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Bonded Debt Schedule of Legal Debt Margin Demographic and Economic Information Demographic and Economic Information Principal Employers Operating Information Full-Time Equivalent Employees Operating Indicators Capital Asset Statistics... 90

7 CITY OF COUNTRYSIDE List of Principal Officials Year Ended April 30, 2010 City Council Mayor Robert A. Conrad Alderman Sean McDermott Karen Michalczyk Robert J. Pondelicek Michael R. Smetana Wayne Straza John Von Drasek Officials City Clerk Sharon Sweeney City Treasurer Steven W. Jasinski City Administrator Gail Paul Director of Finance Steven Drazner - i -

8 RESIDENTS CITY TREASURER MAYOR & CITY COUNCIL CITY CLERK ADVISORY BOARDS & COMMISSIONS CITY ATTORNEY CITY ADMINISTRATOR CITY ENGINEER CHIEF OF POLICE FINANCE DEPARTMENT COMMUNITY DEVELOPMENT DEPARTMENT PUBLIC WORKS DEPARTMENT RECREATION DEPARTMENT E.S.D.A. CLERK S OFFICE POLICE DEPARTMENT WATER DEPARTMENT - ii -

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10 September 10, 2010 The Honorable Mayor Robert A. Conrad, Members of the City Council, City of Countryside, Illinois The Comprehensive Annual Financial Report (CAFR) of the City of Countryside for the fiscal year ended April 30, 2010 is hereby submitted. The CAFR is prepared in accordance with the financial reporting principles and standards of the Governmental Accounting Standards Board. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and capital assets of the City. All disclosures needed to enable the reader to understand the City s financial activities have been included. The report consists of management s representations concerning the finances of the City of Countryside. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed to both protect the government s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Countryside s financial statements in conformity with accounting principles generally accepted in the United States (GAAP). Because the cost of internal controls should not outweigh its benefits, the City s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements are free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City s financial statements have been audited by Sikich LLP, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City of Countryside for the fiscal year ended April 30, 2010, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates by management, and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City s financial statements for the iv

11 fiscal year ended April 30, 2010, are fairly presented in conformity with GAAP. The independent auditors report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City s MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Countryside was incorporated in It is located in Cook County, approximately 15 miles southwest of Chicago, Illinois. The City is home to a population of 5,991 residents and over 400 businesses. This strong sales tax base has allowed the City to pay for operations without the imposition of a municipal real estate tax. The City of Countryside is a home-rule community as defined by the Illinois Constitution. As a home-rule community the City may exercise any power and perform any function pertaining to its government and affairs. The City operates under a City Administrator form of government. Six Aldermen are elected from three wards for alternating four-year terms, three elected every two years. The Mayor, City Clerk and Treasurer are elected at large for four-year terms. A professional Administrator manages the daily operations and is appointed by the Mayor and approved by the City Council. The City provides many services including police protection, streets and highways, water distribution, public improvements, planning and zoning, recreation, and general administrative services. Fire services are provided by the Pleasantview Fire Protection District, a separate taxing body. The City has approximately 52 full-time employees. The financial reporting entity of the City of Countryside is comprised of all the funds of the primary government (i.e., the City of Countryside as legally defined). It has no component units. The City Council is required to adopt a final budget no later than the close of the fiscal year. Annual appropriated budgets are adopted at the fund level for all funds except the Police Pension Fund. The annual appropriated budget is legally enacted and provides for a legal level of control at the fund level. All annual appropriations lapse at fiscal year end. Local Economy The City continued to experience a slowdown in the local economy similar in nature to that experienced at the State and National level. v

12 The City heavily relies on its sales tax base to fund general corporate operations, with automobile dealerships contributing a large percentage of this revenue source. Over the past couple of years, five of the fourteen automobile dealerships within the City have closed, causing a fairly significant decline in this source of revenue. To counter some of this sales tax revenue decline, the City approved a.5% home rule sales tax increase which became effective July 1, It is expected that this rate increase will generate an estimated additional $1,000,000 per year. In addition to increasing the home rule sales tax, effective May 1, 2009, the City implemented an electric utility tax assessed based on kilowatt usage, a $.04 local gasoline tax, and a local 1.0% restaurant tax. The City estimates that the combined additional revenue generated from these new taxes should be in the range of $1.1M to $1.3M annually and on an on-going basis. As the economy improves, the revenues from many of the existing and new taxes should begin to increase as well. For many years, the City has taken pride that it had not levied a property tax. Unfortunately, as the City s other much needed revenues declined as a result of the overall economy, it became necessary to levy a property tax for the first time in December 2009 to be used to pay for debt service on the City s general obligation Series 2008 bonds. The expected collection period for this levy will be in calendar year 2010 which primarily falls into the City s next fiscal year. Long Term Financial Planning and Major Initiatives The City receives one of the highest per capita amounts of sales tax, excluding the home rule portion, compared to other municipalities in the greater Chicago area. Due to the continued poor state of the economy and the unfortunate closing of several automobile dealerships once located in the City, it may become necessary for the City to rely more heavily upon a property tax going forward. The City hired a tax increment financing (TIF) consultant and will be seeking to contract with an experienced developer in order to revitalize certain sections of the business district along LaGrange and Joliet Roads. There will be discussion to convert the business district into a TIF district in the very near future in order to capture property tax increment as equalized assessed valuations begin to increase from ongoing improvements. The collection of TIF increment would allow the City to issue and pay down outstanding debt from debt issuances used to make further improvements in the TIF district. In addition to the possible creation of a TIF district within the City s major commercial and retail area, the City continues to search for all types of Federal and State grants that would assist with various enhancements such as landscaping, lighting, signs, and infrastructure improvements. The City strives to maintain a favorable business climate and keep its taxes and fees extremely competitive compared to other communities in the Chicago area. Due to the struggling economy, the City may need to continue to research potential alternative revenues to assist in offsetting the decreased sales tax base from the loss of some key automobile dealerships and other businesses. It is a goal of the City to remain financially strong and not have to utilize its reserves even during difficult economic times such as in the present. vi

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16 GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS

17 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 The City of Countryside (the City) discussion and analysis is designed to (1) assist the reader on significant financial issues, (2) provide an overview of the City s financial activity, (3) identify changes in the City s financial position, (4) identify any material deviations from the financial plan (the approved budget), and (5) identify individual fund issues or concerns. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal as found starting on page iv of this report. FINANCIAL HIGHLIGHTS The City s net assets decreased by $16,726, or.03% from the prior fiscal year reported. The governmental net assets decreased by $190,050, or.64% and the business-type activities net assets increased by $173,324, or 1.2%. The governmental activities revenue increased by $1,344,746, or 13.9% from the prior year. The expenditures increased by $130,152, or 1.2% from the prior year. The business-type activities revenue increased by $278,632, or 8.8% from the prior year. The expenditures increased by $170,344, or 5.5% from the prior year. The total cost of all City programs increased by $300,496, or 2.2% from the prior year of $13,919,731. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City s basic financial statements. The City s basic financial statements comprise three components: (1) Government-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. USING THIS ANNUAL REPORT The financial statement s focus is on the City as a whole and on the major individual funds. Both perspectives allow the readers to address relevant questions, broaden the basis for comparison and enhance the reader s understanding of the statements. Government-wide Financial Statements The City s annual report includes two government-wide financial statements. These statements provide both long term and short term information about the City s overall status. Financial reporting at this level uses a perspective similar to that found in the private sector with its basis in full accrual accounting and elimination or reclassification of internal activities. (See independent auditor s report) MD&A - 1

18 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 The first of these government-wide statements is the Statement of Net Assets. This is the City-wide statement of financial position presenting information that includes all the City s assets and liabilities, with the difference reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator on whether the financial position of the City as a whole is improving or deteriorating. Evaluation of the overall health of the City would extend to other non-financial factors such as diversification of the taxpayer base or the condition of City infrastructure, in addition to the financial information provided in this report. The second government-wide statement is the Statement of Activities which reports how the City s net assets changed during the current fiscal year. All current year revenues and expenses are included regardless of when the cash was received or paid. An important purpose of the design of the statement of activities is to show the financial reliance of the City s distinct activities or functions on revenues provided by the City s taxpayers. Both government-wide financial statements distinguish governmental activities of the City that are principally supported by taxes and intergovernmental revenues such as grants, from business-type activities that are intended to recover all or a significant portion of their costs through user fees and charges. Governmental activities include general government, public safety, public works, and parks/recreation. Business-type activities include water and sewer operations. Fiduciary activities, such as an employee pension plan, are not included in the government-wide statements since these assets are not available to fund City programs. The government-wide financial statements are presented on pages 3-5 of this report. Fund Financial Statements A fund is an accountability unit used to maintain control over resources segregated for specific activities or objectives. The City used funds to ensure and demonstrate compliance with finance related laws and regulations. Within the basic financial statements, fund financial statements focus on the City s most significant funds, rather than the City as a whole. Major funds are separately reported, while others are combined into a single, aggregated presentation. Individual fund data for non major funds is provided in the form of combining schedules in a later section of this report. While the total column for the Enterprise Fund financial statement is the same as the business type column on the entity-wide financial statement, the Governmental Funds total column requires reconciliation because of the different measurement focus (current financial resources versus total economic resources) which is reflected following each statement. The flow of current financial resources will reflect bond proceeds and interfund transfers as other sources and uses as well as capital expenditures and bond principal payments as expenditures. The reconciliations eliminate these transactions and incorporate the capital assets and long term obligations into the governmental activities column in the City-wide statements. The fund financial statements can be found on pages 6 to 13 of this report. (See independent auditor s report) MD&A - 2

19 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 The City as Trustee The City is the trustee, or fiduciary, for its police pension plan. All of the City s fiduciary activities are reported in a separate Statement of Fiduciary Net Assets and Statement of Changes in Fiduciary Net Assets. The City excludes these activities from the City s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that assets reported in this fund are used for their intended purposes. The fiduciary financial statements can be found on pages 14 and 15 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the information provided in the City-wide and fund financial statements. The notes to the financial statements are located directly after the financial statements. Other Information In addition to the basic financial statements this report also includes certain required supplementary information related to budgetary information and the City s progress in funding its obligation to provide pension benefits to its employees. Non-major fund information can be found immediately following the required supplementary information. (See independent auditor s report) MD&A - 3

20 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 GOVERNMENT-WIDE STATEMENTS & ANALYSIS FINANCIAL ANALYSIS OF CITY AS A WHOLE The City s combined net assets decreased by $16,726, to $44,588,720 from the prior year total of $44,605,446. Statement of Net Assets The following chart reflects the condensed Statement of Net Assets: (See independent auditor s report) MD&A - 4

21 Statement of Changes in Net Assets MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 Governmental and Business-type activities are separated by functional area for both revenues and expenses. Revenues are broadly categorized by type while expenses are reported by one of the following functional areas: General Government, Public Safety, Highway & Streets, Culture and Recreation, Economic Development, Water, Sewer, and Interest on Long Term Debt. (See independent auditor s report) MD&A - 5

22 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 Overall, the City s program revenues increased $440,920, from $5,042,153 to $5,483,073. This is further detailed as an increase of $143,568, from $1,918,459 to $2,062,027 for Governmental and an increase of $297,352, from 3,123,694 to $3,421,046 for Business-type activities. The City s Governmental Activities expenses increased $130,152, from $10,823,293 to $10,953,445 while the Business-type activities increased by $170,344 from $3,096,438 to $3,266,782. The City s total consolidated net assets decreased by $16,726, from $44,605,446 to $44,588,720. This change may be further detailed as a net asset decrease of $190,050 from Governmental Activity Funds and an increase of $173,324 from Business-type activity funds. FINANCIAL ANALYSIS OF THE CITY S FUNDS Governmental Funds As discussed, governmental funds are reported in the fund statement with the focus on short-term inflows and outflows of spendable resources. This information is useful in assessing resources available at the end of the year in comparison with upcoming financing requirements. Governmental funds reported ending fund balances of $16,084,122 as a year-end total which includes $11,961,306 unreserved/undesignated and $4,122,816 reserved. The reserved fund balance consists of amounts required to be set aside by external parties as well as capital (illiquid) assets. Major Governmental Funds The General Fund, as the City s primary operating fund and the largest source of day-to-day service delivery, ended the fiscal year with a total surplus of $325,632, thus increasing the City s general purpose fund balance. Total General Fund revenues came in at an unfavorable $670,030 under budget although some revenues such as the electric use, gasoline, and restaurant taxes as well as revenues related to local fines and building permit fees did exceed budgeted amounts. Conversely, sales taxes, grant revenue, and building inspection fees all came in significantly below budgeted expectations which more than offset those revenues exceeding budget. Although the City s General Fund revenues did not meet budgeted expectations, fund balance for the year increased due to General Fund expenditures coming in well below budget by $1,856,687. The primary reason for such a favorable expenditure variance is related to a lower than anticipated amount spent on grant supported improvements during the year. In addition, there are several favorable expenditure variances related to salary and contractual disbursements. (See independent auditor s report) MD&A - 6

23 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 Other major governmental funds include the City s Hotel/Motel Tax and Business District Funds. The fund balance of the Hotel/Motel Tax Fund decreased by $32,274, from $1,900,917 to $1,868,643 while the fund balance of the Business District Fund decreased $1,365,370, from $3,647,118 to $2,281,748. Consolidated Non-Major Governmental Funds Combined non-major fund balances totaled $1,824,353, an increase of $464,215 from the prior year of $1,360,138. Non-major funds include the City s Emergency Telephone System, Motor Fuel Tax, and Asset Seizure Funds. Proprietary/Enterprise Funds The proprietary fund statements share the same focus as the government-wide statements, reporting both short-term and long-term information about financial status. The City s proprietary funds include the Water and Sanitary Sewer Funds. These combined funds had an increase of $173,324 in net assets. The combined change in net assets was comprised of $216,408 and $43,084 as an increase and decrease in the Water and Sewer Funds, respectively. BUDGETARY HIGHLIGHTS The City adopts an annual modified accrual basis budget for each fiscal year. All departments submit funding requests to the Director of Finance and City Administrator for input during the budget process. The budget is prepared by fund, function, and activity, while budgetary reporting includes information on the prior fiscal year actuals, current year projections, and budget requests for the subsequent fiscal year. The proposed budget is presented to the City Board for review, at which time public hearings are held and the budget is then adopted. Provided below is a condensed budget and actual comparison provided for the General Fund. The detailed Schedules of Revenues, Expenditures and Changes in Fund Balance, Budget and Actual may be found on pages 53 to 71 of this report. A condensed summary of the General Fund budget to actual variances follows: (See independent auditor s report) MD&A - 7

24 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 As seen above and mentioned earlier, the General Fund was budgeted to have an annual deficit of $186,358 but ended the year with a surplus $325,632. Although the Fund s revenue, including other financing sources, did not meet expectations and came in below budget by $1,344,697, the Fund s expenditures came in under budget by an ever greater amount totaling $1,856,687. Therefore, the net variance between the annual budget and actual is a favorable $511,990 ($1,856,687 less $1,344,697). This favorable variance may be further reconciled by taking the difference in the budgeted net deficit of $(186,358) and the actual surplus of $325,632. CAPITAL ASSETS In total, the City s capital assets for governmental activities decreased by $227,850 during the fiscal year and ended the year at a net amount (cost less accumulated depreciation) of $33,310,851. This is due primarily due to a greater amount of depreciation recorded than the amount of new assets put in service. Business-type activities capital assets net of depreciation decreased by $28,435 to $16,524,081. This net decrease is due to depreciation recorded this fiscal year which was greater than the new amount of capitalized construction in progress. For greater detail, readers should refer to financial statement note disclosure 3 on pages (See independent auditor s report) MD&A - 8

25 MANAGEMENT S DISCUSSION & ANALYSIS APRIL 30, 2010 DEBT ADMINISTRATION The City s most recent debt issuance was a taxable general obligation bond series during the prior fiscal year ended April 30, Outstanding general obligation debt, excluding compensated absence liabilities, as of April 30, 2010 is as follows: Further explanations of the City s long term debt are presented in the notes to financial statements on pages 31 to 33. BOND RATINGS The City s general obligation bonds have an underlying rating of A1 by Moody s Investor Rating Service. In addition, Moody s Investor Service, Inc. assigned the City a rating of Aaa for bonds issued in conjunction with a bond insurance policy. FUTURE EVENTS Management is not aware of any currently known facts, decisions, or conditions that would have a significant impact on the City s financial position (net assets) or results of operations (revenues, expenses, and other changes in net assets). CONTACTING THE CITY S FINANCIAL MANAGEMENT This financial report is designed to provide a general overview of the City s finances, comply with finance-related laws and regulations, provide transparency to the public, and demonstrate the City s commitment for financial accountability. If you have any questions about this report or would like to request additional information, please contact the City of Countryside Director of Finance, Steven Drazner by writing to: City of Countryside, 5550 East Avenue, Countryside, Illinois or via sdrazner@countryside-il.org. (See independent auditor s report) MD&A - 9

26 STATEMENT OF NET ASSETS April 30, 2010 Governmental Business-Type Activities Activities Total ASSETS Cash and investments $ 14,380,986 $ 3,180,468 $ 17,561,454 Receivables Property taxes 1,474,359-1,474,359 Accounts 258, , ,600 Intergovernmental 2,393,373-2,393,373 Interest 30, ,531 Prepaid expense 14,138-14,138 Deposits 10,000-10,000 Inventory 2,577-2,577 Deferred charges 377,342 54, ,015 Net pension asset 259, ,523 Capital assets not being depreciated 23,634, ,631 24,412,139 Capital assets being depreciated, net 9,676,343 15,746,450 25,422,793 Total assets 52,512,157 20,101,345 72,613,502 LIABILITIES Accounts payable 461, , ,000 Accrued payroll 184,186 10, ,665 Accrued interest 418,255 73, ,266 Deposits payable 360,250 23, ,531 Retainage payable - 105, ,731 Unearned revenue 1,474,809 34,782 1,509,591 Long-term liabilities Due within one year 986, ,541 1,198,419 Due in more than one year 19,206,363 4,213,216 23,419,579 Total liabilities 23,091,815 4,932,967 28,024,782 NET ASSETS Invested in capital assets, net of related debt 16,299,994 12,120,955 28,420,949 Restricted for Public safety 1,184,368-1,184,368 Highways and streets 639, ,985 Economic development 2,281,748-2,281,748 Unrestricted 9,014,247 3,047,423 12,061,670 TOTAL NET ASSETS $ 29,420,342 $ 15,168,378 $ 44,588,720 See accompanying notes to financial statements

27 STATEMENT OF ACTIVITIES For the Year Ended April 30, 2010 Program Revenues Operating Capital Charges Grants and Grants and FUNCTIONS/PROGRAMS Expenses for Services Contributions Contributions PRIMARY GOVERNMENT Governmental Activities General government $ 3,310,496 $ 644,979 $ - $ - Public safety 4,524, , , ,876 Highways and streets 1,455, ,914 86,008 Culture and recreation 209, , Economic development 167, Interest 1,285, Total governmental activities 10,953,445 1,325, , ,884 Business-Type Activities Water 3,195,026 3,394, Sanitary sewer 71,756 26, Total business-type activities 3,266,782 3,421, TOTAL PRIMARY GOVERNMENT $ 14,220,227 $ 4,746,297 $ 449,892 $ 286,

28 Net (Expense) Revenue and Change in Net Assets Primary Government Governmental Business-Type Activities Activities Total $ (2,665,517) $ - $ (2,665,517) (3,503,232) - (3,503,232) (1,215,897) - (1,215,897) (53,686) - (53,686) (167,719) - (167,719) (1,285,367) - (1,285,367) (8,891,418) - (8,891,418) - 199, ,857 - (45,593) (45,593) - 154, ,264 (8,891,418) 154,264 (8,737,154) General Revenues Taxes Property 67,301-67,301 Personal property replacement 4,531-4,531 Income 475, ,828 Sales 4,837,762-4,837,762 Home rule sales 1,577,843-1,577,843 Hotel/motel 265, ,410 Electric use 421, ,264 Vehicle fuel 379, ,954 Eating and drinking 386, ,077 Telecommunications 60,604-60,604 Other tax 239, ,868 Investment income 138,732 19, ,792 Miscellaneous 54,809-54,809 Total 8,909,983 19,060 8,929,043 CHANGE IN NET ASSETS 18, , ,889 NET ASSETS, MAY 1 29,610,392 14,995,054 44,605,446 Prior period adjustment (208,615) - (208,615) NET ASSETS, MAY 1, RESTATED 29,401,777 14,995,054 44,396,831 NET ASSETS, APRIL 30 $ 29,420,342 $ 15,168,378 $ 44,588,720 See accompanying notes to financial statements

29 GOVERNMENTAL FUNDS BALANCE SHEET April 30, 2010 Hotel/Motel Business Nonmajor Total General Tax District Governmental Governmental ASSETS Cash and investments $ 8,456,976 $ 1,833,497 $ 2,279,854 $ 1,810,659 $ 14,380,986 Receivables Property taxes 1,474, ,474,359 Accounts 236,423 22, ,718 Intergovernmental 2,346, ,434 2,393,373 Interest 29, ,290 Prepaid items 1,645 12, ,138 Deposits ,000-10,000 Inventory 2, ,577 Due from other funds 22, ,460 TOTAL ASSETS $ 12,571,311 $ 1,868,643 $ 2,289,854 $ 1,857,093 $ 18,586,901 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 442,688 $ - $ 8,106 $ 10,280 $ 461,074 Accrued payroll 184, ,186 Deposits payable 360, ,250 Deferred revenue 1,474, ,474,809 Due to other funds ,460 22,460 Total liabilities 2,461,933-8,106 32,740 2,502,779 FUND BALANCES Reserved for inventories 2, ,577 Reserved for prepaid items 1,645 12, ,138 Reserved for public safety ,184,368 1,184,368 Reserved for highways and streets , ,985 Reserved for economic development - - 2,281,748-2,281,748 Unreserved Undesignated - general fund 10,105, ,105,156 Undesignated - special revenue funds - 1,856, ,856,150 Total fund balances 10,109,378 1,868,643 2,281,748 1,824,353 16,084,122 TOTAL LIABILITIES AND FUND BALANCES $ 12,571,311 $ 1,868,643 $ 2,289,854 $ 1,857,093 $ 18,586,901 See accompanying notes to financial statements

30 RECONCILIATION OF FUND BALANCES OF GOVERNMENTAL FUNDS TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF NET ASSETS April 30, 2010 FUND BALANCES OF GOVERNMENTAL FUNDS $ 16,084,122 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 governmental funds 33,310,851 Interest payable is not due and payable in the current period and, therefore, is not reported in the governmental funds (418,255) Bond issuance costs and premiums/discounts on bonds are expensed in governmental funds but capitalized and amortized in the statement of net assets Unamortized bond issuance costs 60,893 Unamortized bond discount 316,449 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds General obligation bonds (19,435,000) Compensated absences payable (672,999) Net pension asset (obligation) 259,523 Net other postemployment benefit obligation (85,242) NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 29,420,342 See accompanying notes to financial statements

31 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended April 30, 2010 Hotel/Motel Business Nonmajor Total General Tax District Governmental Governmental REVENUES Property taxes $ 67,301 $ - $ - $ - $ 67,301 Sales taxes 6,415, ,415,605 Other local taxes 1,334, , ,600,185 Intergovernmental 834, ,960 1,428,187 Licenses and permits 511, ,472 Charges for services 227, ,393 Fines and penalties 366, ,405 Investment income 86,761 7,281 35,208 9, ,732 Miscellaneous 98,606 32, ,722 Total revenues 9,942, ,807 35, ,442 10,886,002 EXPENDITURES Current General government 3,144, , ,281,603 Public safety 4,389, ,227 4,528,265 Highways and streets 1,381, ,381,501 Culture and recreation 147, ,791 Economic development , ,719 Debt service Principal 725, ,000 Interest and fees 54,394-1,232,859-1,287,253 Total expenditures 9,842, ,081 1,400, ,227 11,519,132 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 100, ,726 (1,365,370) 464,215 (633,130) OTHER FINANCING SOURCES (USES) Transfers in 200, ,000 Transfers (out) - (200,000) - - (200,000) Sale of capital assets 25, ,333 Total other financing sources (uses) 225,333 (200,000) ,333 NET CHANGE IN FUND BALANCES 325,632 (32,274) (1,365,370) 464,215 (607,797) FUND BALANCES, MAY 1 9,783,746 1,900,917 3,647,118 1,360,138 16,691,919 FUND BALANCES, APRIL 30 $ 10,109,378 $ 1,868,643 $ 2,281,748 $ 1,824,353 $ 16,084,122 See accompanying notes to financial statements

32 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF ACTIVITIES For the Year Ended April 30, 2010 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ (607,797) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures; however, they are capitalized and depreciated in the statement of activities 399,132 Contributions of capital assets are reported only in the statement of activities 86,008 The repayment of long-term debt is reported as an expenditure when due in governmental funds but as a reduction of principal outstanding in the statement of activities 725,000 Governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities (13,476) Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Depreciation (659,458) Loss on disposal of capital assets (16,458) Increase (decrease) in joint venture (37,074) Change in compensated absences 208,055 Change in net pension asset 4,513 Change in net other postemployment benefit obligation (85,242) Change in interest payable 15,362 CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 18,565 See accompanying notes to financial statements

33 PROPRIETARY FUNDS STATEMENT OF NET ASSETS April 30, 2010 Business-Type Activities Sanitary Water Sewer Total CURRENT ASSETS Cash and investments $ 2,729,665 $ 450,803 $ 3,180,468 Receivables Accounts 338,666 3, ,882 Interest Total current assets 3,068, ,019 3,522,591 NONCURRENT ASSETS Deferred charges 54,673-54,673 Capital assets Nondepreciable 777, ,631 Depreciable, net of accumulated depreciation 14,617,908 1,128,542 15,746,450 Total capital assets 15,395,539 1,128,542 16,524,081 Total noncurrent assets 15,450,212 1,128,542 16,578,754 Total assets 18,518,784 1,582,561 20,101,345 CURRENT LIABILITIES Accounts payable 260, ,926 Accrued payroll 10, ,479 Accrued interest 73,011-73,011 Unearned revenue 34,782-34,782 Deposits payable 23,281-23,281 Retainage payable 105, ,731 Compensated absences 6,541-6,541 Current portion of bonds payable 205, ,000 Total current liabilities 719, ,751 LONG-TERM LIABILITIES Net other postemployment benefit obligation 3,216-3,216 Bonds payable 4,210,000-4,210,000 Total long-term liabilities 4,213,216-4,213,216 Total liabilities 4,932, ,932,967 NET ASSETS Invested in capital assets, net of related debt 10,992,413 1,128,542 12,120,955 Unrestricted 2,593, ,641 3,047,423 TOTAL NET ASSETS $ 13,586,195 $ 1,582,183 $ 15,168,378 See accompanying notes to financial statements

34 PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the Year Ended April 30, 2010 Business-Type Activities Sanitary Water Sewer Total OPERATING REVENUES Charges for services $ 3,244,476 $ 24,871 $ 3,269,347 Fines and forfeitures 56,259 1,292 57,551 Other revenue 94,148-94,148 Total operating revenues 3,394,883 26,163 3,421,046 OPERATING EXPENSES Cost of sales and services 2,041,119 2,339 2,043,458 Administration 218,413 8, ,584 Benefits 94,631 3,097 97,728 Depreciation 657,649 58, ,798 Total operating expenses 3,011,812 71,756 3,083,568 OPERATING INCOME (LOSS) 383,071 (45,593) 337,478 NONOPERATING REVENUES (EXPENSES) Investment income 16,551 2,509 19,060 Interest expense (179,748) - (179,748) Bond amortization expense (3,466) - (3,466) Total nonoperating revenues (expenses) (166,663) 2,509 (164,154) CHANGE IN NET ASSETS 216,408 (43,084) 173,324 NET ASSETS, MAY 1 13,369,787 1,625,267 14,995,054 NET ASSETS, APRIL 30 $ 13,586,195 $ 1,582,183 $ 15,168,378 See accompanying notes to financial statements

35 PROPRIETARY FUNDS STATEMENT OF CASH FLOWS For the Year Ended April 30, 2010 Business-Type Activities Sanitary Water Sewer Total CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 3,221,738 $ 26,282 $ 3,248,020 Receipts from miscellaneous revenue 98,270-98,270 Payments to suppliers (1,953,875) (2,965) (1,956,840) Payments to employees (306,597) (10,890) (317,487) Net cash from operating activities 1,059,536 12,427 1,071,963 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES None Net cash from noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of capital assets (687,363) - (687,363) Principal paid (200,000) - (200,000) Interest paid (182,978) - (182,978) Net cash from capital and related financing activities (1,070,341) - (1,070,341) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 16,311 2,508 18,819 Net cash from investing activities 16,311 2,508 18,819 NET INCREASE IN CASH AND CASH EQUIVALENTS 5,506 14,935 20,441 CASH AND CASH EQUIVALENTS, MAY 1 2,724, ,868 3,160,027 CASH AND CASH EQUIVALENTS, APRIL 30 $ 2,729,665 $ 450,803 $ 3,180,468 (This statement is continued on the following page.)

36 PROPRIETARY FUNDS STATEMENT OF CASH FLOWS (Continued) For the Year Ended April 30, 2010 Business-Type Activities Sanitary Water Sewer Total RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) $ 383,071 $ (45,593) $ 337,478 Depreciation 657,649 58, ,798 Adjustments to reconcile operating income (loss) to net cash from operating activities Changes in assets and liabilities Accounts receivable (78,997) 119 (78,878) Accounts payable 87,244 (626) 86,618 Accrued payroll and compensated absences 3, ,609 Net other postemployment benefit obligation 3,216-3,216 Deposits payable 3,109-3,109 Unearned revenue 1,013-1,013 NET CASH FROM OPERATING ACTIVITIES $ 1,059,536 $ 12,427 $ 1,071,963 See accompanying notes to financial statements

37 PENSION TRUST FUND STATEMENT OF FIDUCIARY NET ASSETS April 30, 2010 ASSETS Cash and short-term investments $ 29 Investments Certificates of deposit 271,387 U.S. Government and agency securities 6,008,612 Insurance company contracts 4,089,749 Equity mutual funds 2,785,498 Money market mutual funds 1,224,672 Accrued interest receivable 10,950 Total assets 14,390,897 LIABILITIES None - Total liabilities - NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $ 14,390,897 See accompanying notes to financial statements

38 PENSION TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS For the Year Ended April 30, 2010 ADDITIONS Contributions Employer $ 858,430 Plan members 188,960 Total contributions 1,047,390 Investment income Interest 2,289,172 Net depreciation in fair value of investments (228,860) Total investment income 2,060,312 Less investment expense (125) Net investment income 2,060,187 Total additions 3,107,577 DEDUCTIONS Benefits 814,511 Refunds 27,964 Administrative 33,087 Total deductions 875,562 NET INCREASE (DECREASE) 2,232,015 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS May 1 12,158,882 April 30 $ 14,390,897 See accompanying notes to financial statements

39 NOTES TO FINANCIAL STATEMENTS April 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Countryside, Illinois (the City) have been prepared in conformity with accounting principles generally accepted in the United States of America, as applied to government units (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City s accounting policies are described below. a. Reporting Entity The City has defined its reporting entity in accordance with GASB Statement No. 14. Financial accountability is defined as the appointment of a voting majority of the component unit s board, and either (1) the City 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 on the City. The Police Pension Fund is a legally separate organization from the City and has its own governing board. However, although legally separate, the Police Pension Fund is reported as if it is part of the City, because it is fiscally dependent on the City and administered exclusively for the benefit of the City s police personnel. b. Fund Accounting The accounts of the City are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. Funds are classified into the following categories: governmental, proprietary and fiduciary. Governmental funds are used to account for all or most of a city s general activities, including the collection and disbursement of earmarked monies (special revenue funds), the acquisition or construction of general capital assets (capital projects funds) and the servicing of general long-term debt (debt service fund). The General Fund is used to account for all activities of the general government not accounted for in some other fund

40 NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) b. Fund Accounting (Continued) Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments or agencies primarily within the City (internal service funds). Pursuant to GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds, the City has chosen to apply all GASB pronouncements as well as those pronouncements of the Financial Accounting Standards Board (FASB) issued on or before November 30, 1989 to account for enterprise funds. Fiduciary funds are used to account for assets held on behalf of outside parties, including other governments or on behalf of other funds within the City. When these assets are held under the terms of a formal trust agreement a pension fund is used. c. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the City. The effect of material interfund activity has been eliminated from these statements. Interfund services provided and used are not eliminated on 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 statement of activities demonstrates the degree to which the direct expenses of a given function, segment or program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function and (2) grants and shared revenues that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements

41 NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Government-Wide and Fund Financial Statements (Continued) The City reports the following major governmental fund: The General Fund is the general operating fund of the City. It is used to account for all financial resources of the general government, except those required to be accounted for in another fund. The Hotel/Motel Tax Fund is used to account for the disbursements of the City s hotel/motel tax revenues. The Business District Fund is used to account for bond proceeds and other revenues and expenditures associated with economic development within the business district established by the City Council. The City reports the following major proprietary fund: The Water Fund accounts for the operating activities of the City s water utilities services. The Sanitary Sewer Fund accounts for the operating activities of the City s sanitary sewer services. Additionally, the City reports the following funds: A pension fund is used to account for the Police Pension activities. d. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues and additions are recorded when earned and expenses and deductions are recorded when a liability is incurred. Property taxes are recognized as revenues in the year for which they are levied (i.e., intended to finance). Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Operating revenues/expenses include all revenues/expenses directly related to providing water, sewer and parking services. Incidental revenues/expenses related to these services are reported as nonoperating. 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