VILLAGE OF PINGREE GROVE, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT

Transcription

1 VILLAGE OF PINGREE GROVE, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED APRIL 30, 2018

2 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED APRIL 30, 2018 Prepared by: Finance Department

3 TABLE OF CONTENTS PAGE INTRODUCTORY SECTION List of Principal Officials... i Organizational Chart... ii Transmittal Letter... iii - vi Certificate of Achievement for Excellence in Financial Reporting... vii FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT MANAGEMENT S DISCUSSION AND ANALYSIS... MD&A 1-12 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Balance Sheet Governmental Funds Reconciliation of Total Governmental Fund Balance to Net Position of Governmental Activities... 9 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities...12 Statement of Net Position Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds...15 Statement of Cash Flows Proprietary Funds...16 Statement of Fiduciary Net Position...17 Notes to Financial Statements

4 TABLE OF CONTENTS PAGE FINANCIAL SECTION Continued REQUIRED SUPPLEMENTARY INFORMATION Schedule of Employer Contributions Illinois Municipal Retirement Fund...46 Schedule of Changes in the Employer s Net Pension Liability Illinois Municipal Retirement Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund...49 OTHER SUPPLEMENTARY INFORMATION Schedule of Revenues Budget and Actual General Fund Schedule of Expenditures Budget and Actual General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Capital Improvement Capital Projects Fund...57 Schedule of Expenditures Budget and Actual Capital Improvement Capital Projects Fund...58 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Special Service Area #4 Capital Projects Fund...59 Combining Balance Sheet Nonmajor Governmental Funds...60 Combining Statement of Revenues, Expenditures and Changes in Fund Balance Nonmajor Governmental Funds...61 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Motor Fuel Special Revenue Fund...62 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Tax Increment Financing Bell-Harris Special Revenue Fund...63 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Special Service Area #9 Capital Projects Fund...64 Schedule of Revenues, Expenses and Changes in Net Position Budget and Actual Water and Sewer Enterprise Fund...65 Schedule of Operating Expenses Budget and Actual Water and Sewer Enterprise Fund Combining Statement of Changes in Assets and Liabilities Special Service Areas Agency Fund...69

5 TABLE OF CONTENTS PAGE STATISTICAL SECTION (Unaudited) Net Position by Component Last Ten Fiscal Years Changes in Net Position Last Ten Fiscal Years Fund Balances of Governmental Funds Last Ten Fiscal Years Changes in Fund Balances for Governmental Funds Last Ten Fiscal Years Assessed Value and Actual Value of Taxable Property Last Ten Fiscal Years Direct and Overlapping Property Tax Rates Last Ten Fiscal Years Principal Property Tax Payers Current Fiscal Year and Nine Fiscal Years Ago...82 Property Tax Levies and Collections Last Ten Fiscal Years...83 Ratios of Outstanding Debt by Type Last Ten Fiscal Years Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years...86 Schedule of Direct and Overlapping Governmental Activities Debt...87 Schedule of Legal Debt Margin Last Ten Fiscal Years Pledged-Revenue Coverage Last Ten Fiscal Years...90 Demographic and Economic Statistics Last Ten Fiscal Years...91 Principal Employers Current Fiscal Year and Nine Fiscal Years Ago...92 Full-Time Equivalent Village Government Employees by Function Last Ten Fiscal Years...93 Operating Indicators by Function/Program Last Ten Fiscal Years Capital Asset Statistics by Function/Program Last Ten Fiscal Years...96

6 INTRODUCTORY SECTION This section includes miscellaneous data regarding the Village of Pingree Grove, Illinois including the List of Principal Officials, Organizational Chart, Transmittal Letter, and Certificate of Achievement for Excellence in Financial Reporting.

7 List of Principal Officials April 30, 2018 Title Name Term Expires Village President Steve Wiedmeyer May, 2019 Trustee Robert Spieker May, 2019 Trustee Brian Paszkiewicz May, 2019 Trustee Bernard Thomas May, 2019 Trustee Patricia Dulkoski May, 2021 Trustee Joseph Hirschbein May, 2021 Trustee Amber Kubiak May, 2021 Village Attorney, Dean Frieders Village Clerk, Dawn R. Grivetti Finance Director, Karen Plaza Public Works Director, Pat Doherty i

8 VILLAGE OF PINGREE GROVE ORGANIZATIONAL CHART RESIDENTS OF PINGREE GROVE VILLAGE PRESIDENT BOARD OF TRUSTEES ADVISORY COMMISSIONS AND COMMITTEES VILLAGE DEPARTMEMTS PROFESSIONAL SERVICES PLANNING & ZONING COMMISSION VILLAGE CLERK ATTORNEY LIQUOR COMMISSION FINANCE BUILDING INSPECTOR EVENTS COMMITTEE POLICE ENGINEER PARKS COMMITTEE PUBLIC WORKS PLANNER As of 4/30/2018 ii

9 October 4, 2018 To The Village President, Members of the Village Board of Trustees, and the Citizens of the Village of Pingree Grove: The Comprehensive Annual Financial Report (CAFR) for the Village of Pingree Grove, for the year ending April 30, 2018 is hereby submitted. The CAFR is the management s annual report to its taxpayers, governing board, oversight bodies, investors and creditors. Village Management is responsible for all financial transactions for the Village of Pingree Grove and for the contents of this Comprehensive Annual Financial Report. We believe the data, as presented, is accurate in all material aspects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the Village. All disclosures necessary to enable the reader to gain an understanding of the Village of Pingree Grove financial activities have been included. The Comprehensive Annual Financial Report consists of the Village s representations concerning the finances of the Village. 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 has continued to focus on the internal controls that are designed to protect the Village s assets from loss, theft or misuse and to compile sufficiently reliable information for the preparation of the Village s financial statements in conformity with GAAP. Because the cost of a control should not exceed the benefits to be derived, the objective is to provide reasonable, rather than absolute assurance, that the financial statements are free of any material misstatements. Management continues to revise processes, implement internal controls, and establish new financial policies that allow us to successfully address the prior years accounting issues and meet the required deadline for the issuance of this fiscal year s report. Management asserts that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. iii

10 Fiscal Management Annually the Village adopts a budget that defines its legal spending authority. In January the Departments are given budgetary information, and in February the departments submit their requests to the Finance Director who prepares a budget by fund, department, function and activity. The budget is presented to the Village Board for review. The Village Board holds a public hearing and makes adjustments to the requested budgeted amounts. The Village s budget is approved by the Village Board by May 1 st. State statutes require an annual audit by independent Certified Public Accountants. The Village of Pingree Grove selected the accounting firm of Lauterbach & Amen, LLP to conduct the annual audit. The auditor's report on the general-purpose financial statements and combining and individual fund statements and schedules is included in the financial section of this report. Fiscal Report Lauterbach & Amen, LLP has concluded that there was a reasonable basis for rendering an unmodified opinion that the Village of Pingree Grove s financial statements for the fiscal year ended April 30, 2018, are presented fairly, in conformity with GAAP. The independent auditor s report is located at the front 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 is meant to be read in conjunction with it. The Village s MD&A can be found immediately following the report of the independent auditors. Local Economy ECONOMIC CONDITION AND OUTLOOK The Village of Pingree Grove was incorporated in The Village is a non-home rule community governed by a Village President (Mayor) and a six member Board of Trustees, elected for overlapping four-year terms. The Board now appoints a Police Chief, Finance Director, Public Works Director, Attorney, Building Code Official and Engineer. The Village of Pingree Grove is located in Kane County, Illinois and lies approximately 48 miles northwest of the City of Chicago. The Village of Pingree Grove covers an area of approximately 5.35 square miles. Located within commuting distance of Chicago and its suburbs, the Village of Pingree Grove has experienced an increase in equalized assessed valuation as a result of continued new residential construction. During the next fiscal year the growth is expected to continue. According to the 2010 Census, the Village of Pingree Grove has a population of 4,532. It is estimated that the population now exceeds 8,000. This population increase will also impact the need to establish a police pension as defined by state law after the next census in iv

11 Data Regarding Major Industry Affecting the Local Economy The largest employer in Pingree Grove is the Cambridge Lakes Charter School. The major businesses located in the Village of Pingree Grove are: Minuteman International, a manufacturer of industrial cleaning equipment and supplies; Elgin Die Mold, a contract die mold manufacturer; the Cambridge Lakes Community Center; MAS Supply, a manufacturer of custom kitchen cabinets; Kindred at Home, providing home health services; The Outpost, a bar/restaurant; and Lazar Brothers BP Gas and Mini Mart. Economic Condition and Outlook The Village s past fiscal year has continued to experience variable economic conditions resulting in no significant increases in anticipated revenue sources. The Village continues to issue new construction building permits at a consistent level. While the Village is pleased with the number of building permits, the Village continues to be fiscally conservative in the revenue projections for next fiscal year due to restrictions in state funding. The increase in building impacts water and sewer services which is causing the Village to review it service rates to ensure these services are self-sustaining. Overall, the Village has maintained a steady course in keeping expenses down and holding at current revenue sources. With increasing population, the Village continues to research revenue enhancements and cost containments in order to meet future obligations of Village operations. For the Year MAJOR INITIATIVES In Fiscal Year 2018, the Village achieved the following goals: Completed a water and sewer rate study: Engineering for road improvements on State Route 72 and Richard J. Brown Boulevard; Finalized plans for a Municipal Center to locate all Village services within the Village; Continue to welcome new businesses to the Village Site One and Niko s Tavern. For the Future Major projects planned for Fiscal Year 2019 include: Annexation of the Pioneer Landing development on Route 47; 10 th Amendment to the Cambridge Lakes Annexation Agreement; Continued commercial development; Water and sewer treatment facilities plan; Construction of road improvements on State Route 72 and Richard J. Brown Boulevard; Construction of the Municipal Center and Salt Storage facility. v

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14 FINANCIAL SECTION This section includes: Independent Auditors Report Management s Discussion and Analysis Basic Financial Statements Required Supplementary Information Combining and Individual Fund Financial Statements and Schedules

15 INDEPENDENT AUDITORS REPORT This section includes the opinion of the Village s independent auditing firm.

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17 Village of Pingree Grove, Illinois October 4, 2018 Page 2 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis as listed in the table of contents and budgetary information reported in the required supplementary information as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Pingree Grove, Illinois basic financial statements. The introductory section, combining and individual fund financial statements and budgetary comparison schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual fund financial statements and budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and budgetary comparison schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. LAUTERBACH & AMEN, LLP 2

18 MANAGEMENT S DISCUSSION AND ANALYSIS

19 Management s Discussion and Analysis April 30, 2018 Our discussion and analysis of the Village of Pingree Grove s (Village) financial performance provides an overview of the Village s financial activities for the fiscal year ended April 30, Please read it in conjunction with the transmittal letter which begins on page iii and the Village s financial statements, which begin on page 3. FINANCIAL HIGHLIGHTS The Village s net position increased as a result of this year s operations. Net position of the governmental activities increased by $424,342 or 2.6 percent and net position of business-type activities decreased by $78,575, or less than one percent. During the year, government-wide revenues totaled $6,628,943, while expenses totaled $6,283,176, resulting in an increase to net position of $345,767. The Village s net position totaled $50,531,409 on April 30, 2018, which includes $39,588,145 net investment in capital assets, $1,130,096 subject to external restrictions, and $9,813,168 unrestricted net position that may be used to meet the ongoing obligations to citizens and creditors. The General Fund reported a surplus in the current year of $256,914, which includes an increase in revenues of $577,195 compared to prior year, resulting in ending fund balance of $2,501,637, an increase of 11.4 percent. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities (on pages 3-6) provide information about the activities of the Village as a whole and present a longer-term view of the Village s finances. Fund financial statements begin on page 7. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the Village s operations in more detail than the government-wide statements by providing information about the Village s most significant funds. The remaining statements provide financial information about activities for which the Village acts solely as a trustee or agent for the benefit of those outside of the government. Government-Wide Financial Statements The government-wide financial statements provide readers with a broad overview of the Village s finances, in a matter similar to a private-sector business. The government wide financial statements can be found on pages 3-6 of this report. The Statement of Net Position reports information on all of the Village s assets/deferred outflows and liabilities/deferred inflows, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. Consideration of other nonfinancial factors, such as changes in the Village s property tax base and the condition of the Village s infrastructure, is needed to assess the overall health of the Village. MD&A 1

20 Management s Discussion and Analysis April 30, 2018 USING THIS ANNUAL REPORT Continued Government-Wide Financial Statements Continued The Statement of Activities presents information showing how the government s net position changed during the most recent fiscal year. All changes in net position 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 (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the Village that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). The governmental activities of the Village include general government, public safety, and highways and streets. The business-type activities of the Village include water and sewer operations. 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, like other local governments, uses fund accounting to ensure and 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 Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, 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. Such information may be useful in evaluating the Village s near-term financing requirements. MD&A 2

21 Management s Discussion and Analysis April 30, 2018 USING THIS ANNUAL REPORT Continued Fund Financial Statements Continued Governmental Funds Continued Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government 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 the comparison between governmental funds and governmental activities. The Village maintains eight 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, Capital Improvements, Special Service Area #2, Special Service Area #4, and Special Service Area #7 Funds, all of which are considered major funds. Data from the other three governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The Village adopts an annual appropriated budget for all of the governmental funds, except the Special Service Area #2 and Special Service Area #7 Funds. A budgetary comparison schedule for the remaining funds has been provided to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 7-12 of this report. Proprietary Funds The Village maintains one proprietary fund type: enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Village utilizes enterprise funds to account for its water and sewer operations. Proprietary fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water and Sewer Fund, which is considered to be a major fund of the Village. The basic proprietary fund financial statements can be found on pages of this report. MD&A 3

22 Management s Discussion and Analysis April 30, 2018 USING THIS ANNUAL REPORT Continued Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Village s own programs. The accounting use for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on page 17 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Village s I.M.R.F. employee pension obligation and the budgetary comparison schedule for the General Fund. Required supplementary information can be found on pages of this report. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages of this report. MD&A 4

23 Management s Discussion and Analysis April 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position may serve over time as a useful indicator of a government s financial position. The following tables show that in the case of the Village, assets/deferred outflows exceeded liabilities/deferred inflows by $50,531,409. Net Position Governmental Business-Type Activities Activities Total Current and Other Assets $ 10,233,034 6,582,235 5,183,740 4,030,643 15,416,774 10,612,878 Capital Assets 12,651,058 12,702,540 30,023,664 31,121,595 42,674,722 43,824,135 Total Assets 22,884,092 19,284,775 35,207,404 35,152,238 58,091,496 54,437,013 Deferred Outflows 165, ,109 60, , ,109 Total Assets/Deferred Outflows 23,049,822 19,573,884 35,267,866 35,152,238 58,317,688 54,726,122 Long-Term Debt 4,736,285 2,091,207 1,153,226 1,052,728 5,889,511 3,143,935 Other Liabilities 670, , , , , ,141 Total Liabilities 5,406,877 2,505,045 1,387,170 1,232,031 6,794,047 3,737,076 Deferred Inflows 953, ,404 39, , ,404 Total Liabilities/Deferred Inflows 6,360,045 3,308,449 1,426,234 1,232,031 7,786,279 4,540,480 Net Position Net Investment in Capital Assets 10,706,664 11,098,281 28,881,481 29,990,510 39,588,145 41,088,791 Restricted 1,130, , ,130, ,101 Unrestricted 4,853,017 4,254,053 4,960,151 3,929,697 9,813,168 8,183,750 Total Net Position 16,689,777 16,265,435 33,841,632 33,920,207 50,531,409 50,185,642 A large portion of the Village s net position, $39,588,145 or 78.3 percent, reflects its investment in capital assets (for example, land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is 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. An additional portion, $1,130,096 or 2.2 percent, of the Village s net position represents resources that are subject to external restrictions on how they may be used. The remaining 19.5 percent, or $9,813,168, represents unrestricted net position and may be used to meet the government s ongoing obligations to citizens and creditors. MD&A 5

24 Management s Discussion and Analysis April 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS Continued Changes in Net Position Governmental Business-Type Activities Activities Total Revenues Program Revenues Charges for Services General Government $ 955, , , ,826 Public Safety 84,020 64, ,020 64,305 Water and Sewer - - 2,758,873 2,702,868 2,758,873 2,702,868 Capital Grants/Contrib. 150, , , ,870 General Revenues Property Taxes 845, , , ,766 Municipal Utility Taxes 379, , , ,582 Replacement Taxes Use Taxes 119, , , ,029 Sales Taxes 200, , , ,143 Income Taxes 412, , , ,524 Other General Revenues 713, ,921 8,685 3, , ,672 Total Revenues 3,861,385 2,714,188 2,767,558 2,706,619 6,628,943 5,420,807 Expenses General Government 1,688,955 2,663, ,688,955 2,663,117 Public Safety 1,014,855 1,023, ,014,855 1,023,274 Highways and Streets 652,691 1,311, ,691 1,311,048 Interest on Long-Term Debt 80,542 36, ,542 36,127 Water and Sewer - - 2,846,133 2,030,266 2,846,133 2,030,266 Total Expenses 3,437,043 5,033,566 2,846,133 2,030,266 6,283,176 7,063,832 Changes in Net Position Prior to Transfers 424,342 (2,319,378) (78,575) 676, ,767 (1,643,025) Transfers - 473,252 - (473,252) - - Change in Net Position 424,342 (1,846,126) (78,575) 203, ,767 (1,643,025) Net Position-Beginning 16,265,435 18,111,561 33,920,207 33,717,106 50,185,642 51,828,667 Net Position-Ending 16,689,777 16,265,435 33,841,632 33,920,207 50,531,409 50,185,642 MD&A 6

25 Management s Discussion and Analysis April 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS Continued Net position of the Village s governmental activities increased by 2.6 percent ($16,265,435 in 2017 compared to $16,689,777 in 2018). Unrestricted net position, the part of net position that can be used to finance day-to-day operations without constraints, totaled $4,853,017 at April 30, Net position of business-type activities decreased by 0.2 percent ($33,920,207 in 2017 compared to $33,841,632 in 2017). Governmental Activities Revenues for governmental activities totaled $3,861,385, while the cost of all governmental functions totaled $3,437,043. This results in a surplus of $424,342. The Village saw revenues increase $1,147,197, or 42.3 percent due to increases in other general revenues and charges for services. The expenses for governmental activities decreased $1,596,523 or 31.7 percent due to decreased expenses in general government activities and highways and streets. The following table graphically depicts the major revenue sources of the Village. It depicts very clearly the reliance of charges for services, property taxes, and income taxes to fund governmental activities. It also clearly identifies the less significant percentage the Village receives from municipal utility taxes and sales taxes. Revenues by Source - Governmental Activities Use Taxes, 3% Other General Revenues, 18% Charges for Services, 27% Income Taxes, 11% Municipal Utility Taxes, 10% Sales Taxes, 5% Property Taxes, 22% Capital Grants/Contrib., 4% MD&A 7

26 Management s Discussion and Analysis April 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS Continued Governmental Activities Continued The Expenses and Program Revenues Table identifies those governmental functions where program expenses greatly exceed revenues. $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Expenses and Program Revenues - Governmental Activities Revenues General Government Public Safety Highways and Streets Expenses Interest on Long- Term Debt Business-Type Activities Business-Type activities posted total revenues of $2,767,558, while the cost of all business-type activities totaled $2,846,133, which includes non-cash depreciation expense of $1,388,364. This results in an decrease of $78,575. Expenses and Program Revenues - Business- Type Activities Revenues $2,860,000 $2,840,000 $2,820,000 $2,800,000 $2,780,000 $2,760,000 $2,740,000 $2,720,000 $2,700,000 Water and Sewer The above graph compares program revenues to expenses for utility operations. MD&A 8 Expenses

27 Management s Discussion and Analysis April 30, 2018 FINANCIAL ANALYSIS OF THE GOVERNMENT S FUNDS As noted earlier, the Village uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental Funds The focus of the Village s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. The Village s governmental funds reported combining ending fund balances of $8,963,975, which is $3,449,635, or 62.6 percent, higher than last year s total of $5,514,340. Of the $8,963,975 total, $7,807,902, or 87.1 percent, of the fund balance constitutes unrestricted fund balance. The General Fund reported a surplus in fund balance for the year of $256,914, an increase of 11.4 percent. This is due primarily to revenues increasing $577,195 over the prior year, particularly in licenses and permits, which increased $348,736. The General Fund is the chief operating fund of the Village. At April 30, 2018, unassigned fund balance in the General Fund was $2,475,660, which represents 99.0 percent of the total fund balance. As a measure of the General Fund s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fund balance in the General Fund represents approximately percent of total General Fund expenditures. In the prior fiscal year, this percentage was 84.1 percent. The Capital Improvements Fund reported a surplus for the year of $2,975,726. This was due to the Village issuing debt in the amount of $3,148,511, which will be used to fund future capital prjects. The Special Service Area #2, Fund reported a surplus in fund balance of $1,034 as a result of decreased expenditures in the special service area. The Special Service Area #4 Funs reported a surplus in fund balance of $129,883 as a result of increased property tax revenues in the special service area. The Special Service Area #7 Fund reported a surplus in fund balance of $5,903 as a result of increased revenues in the special service area. MD&A 9

28 Management s Discussion and Analysis April 30, 2018 FINANCIAL ANALYSIS OF THE GOVERNMENT S FUNDS Continued Proprietary Funds The Village s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The Village reports the Water and Sewer as a major proprietary fund, which accounts for all of the operations of the municipal water and sewer system. The spread between purchase and sale rates is intended to finance the operations of the utility system, including labor costs, supplies, and infrastructure maintenance. The Village intends to run the fund at a breakeven rate. Periodically, there will be an annual surplus or draw down due to timing of capital projects. The deficit in the Water and Sewer Fund during the current fiscal year was $78,575. Depreciation expense accounts for $1,388,364 of the total fund s operating expenses of $2,824,428, or 49.2 percent. GENERAL FUND BUDGETARY HIGHLIGHTS The General Fund actual revenues for the year totaled $2,724,934 compared to budgeted revenues of $2,135,448. The Village saw increases in sales taxes, municipal utility taxes, franchise fees, sales tax, and income tax due to the continued modest economic upturn. These increases contributed to the surplus of revenues for the year. The General Fund actual expenditures for the year were $140,932 higher than budgeted ($2,268,020 actual compared to $2,127,088 budgeted). This was primarily due higher than expected engineering costs in the central services division. MD&A 10

29 Management s Discussion and Analysis April 30, 2018 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The Village s investment in capital assets for its governmental and business type activities as of April 30, 2018, was $42,674,722 (net of accumulated depreciation). This investment in capital assets includes land, buildings, equipment, and water and sewer system improvements. Capital Assets - Net of Depreciation Governmental Business-type Activities Activities Total Land $ 372, ,341 11,834,312 11,834,312 12,206,653 12,206,653 Construction in Progress 430, ,379 - Buildings 2,236,838 2,382,283 7,906,191 8,496,678 10,143,029 10,878,961 Machinery and Equipment 146, ,943 88, ,696 88,840 Water Distribution System - - 6,866,783 7,328,096 6,866,783 7,328,096 Sewer System - - 3,167,435 3,373,669 3,167,435 3,373,669 Infrastructure 9,464,747 9,947, ,464,747 9,947,916 Total 12,651,058 12,702,540 30,023,664 31,121,595 42,674,722 43,824,135 There were $892,024 of capital asset additions in the current year. Construction in Progress $ 430,379 Machinery and Equipment 461, ,024 Additional information on the Village s capital assets can be found in note 3 on pages of this report. MD&A 11

30 Management s Discussion and Analysis April 30, 2018 CAPITAL ASSETS AND DEBT ADMINISTRATION Continued Debt Administration At year-end, the Village had total outstanding debt of $5,739,394. The following is a comparative statement of outstanding debt: Long-Term Debt Outstanding Governmental Business-type Activities Activities Total Debt Certificates $ 1,474,382 1,604, ,474,382 1,604,259 General Obligation Bonds 3,030, ,030,000 - Installment Contracts 92,829-92, ,658 - IEPA Loan Payable - - 1,049,354 1,131,085 1,049,354 1,131,085 Total 4,597,211 1,604,259 1,142,183 1,131,085 5,739,394 2,735,344 The Village s issued general obligation bonds of $3,030,000 in this fiscal year to help fund future capital projects. State statutes limit the amount of general obligation debt a non-home rule governmental entity may issue to percent of its total assessed valuation. The current debt limit for the Village is $16,424,455. Additional information on the Village s long-term debt can be found in Note 3 on pages of this report. ECONOMIC FACTORS AND NEXT YEAR S BUDGET AND RATES The Village s elected and appointed officials considered many factors when setting the fiscal year 2019 budget, including tax rates, and fees that will be charged for its various activities. One of those factors is the economy. The Village is faced with a similar economic environment as many of the other local municipalities are faced with, including inflation, unemployment rates, and a slow residential housing market. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Village of Pingree Grove s finances for all those with an interest in the government s finances. Questions concerning any of the information provided in this report or requests for additional information should be directed to Office of the Finance Director, 14N042 Reinking Rd., Pingree Grove, Illinois MD&A 12

31 BASIC FINANCIAL STATEMENTS The basic financial Statements include integrated sets of financial statements as required by the GASB. The sets of statements include: Government-Wide Financial Statements Fund Financial Statements Governmental Funds Proprietary Fund Fiduciary Funds In addition, the notes to the financial statements are included to provide information that is essential to a user s understanding of the basic financial statements.

32 Statement of Net Position April 30, 2018 See Following Page

33 Statement of Net Position April 30, 2018 Governmental Activities Business-Type Activities Totals ASSETS Current Assets Cash and Investments $ 8,995,958 4,726,759 13,722,717 Receivables - Net of Allowances 1,200, ,878 1,647,602 Due from Other Governments 10,375-10,375 Prepaids 25,977 10,103 36,080 Total Current Assets 10,233,034 5,183,740 15,416,774 Noncurrent Assets Capital Assets Nondepreciable 802,720 11,834,312 12,637,032 Depreciable 18,561,923 32,678,442 51,240,365 19,364,643 44,512,754 63,877,397 Accumulated Depreciation (6,713,585) (14,489,090) (21,202,675) Total Noncurrent Assets 12,651,058 30,023,664 42,674,722 Total Assets 22,884,092 35,207,404 58,091,496 DEFERRED OUTFLOWS OF RESOURCES Deferred Items - IMRF 165,730 60, ,192 Total Assets and Deferred Outflows of Resources 23,049,822 35,267,866 58,317,688 The notes to the financial statements are an integral part of this statement. 3

34 Governmental Activities Business-Type Activities Totals LIABILITIES Current Liabilities Accounts Payable $ 368, , ,310 Accrued Salaries Payable 20,270 6,715 26,985 Deposits Payable 34,633-34,633 Accrued Interest Payable 20,444 8,303 28,747 Current Portion of Long-Term Debt 227, , ,861 Total Current Liabilities 670, , ,536 Noncurrent Liabilities Compensated Absences Payable 50,691 5,778 56,469 Net Pension Liability - IMRF 302, , ,392 Debt Certificates Payable 1,341,679-1,341,679 General Obligation Bonds 2,970,000-2,970,000 Installment Contract Payable 71,025 71, ,050 IEPA Loan Payable - 965, ,921 Total Noncurrent Liabilities 4,736,285 1,153,226 5,889,511 Total Liabilities 5,406,877 1,387,170 6,794,047 DEFERRED INFLOWS OF RESOURCES Deferred Items - IMRF 107,077 39, ,141 Property Taxes 846, ,091 Total Deferred Inflows of Resources 953,168 39, ,232 Total Liabilities and Deferred Inflows of Resources 6,360,045 1,426,234 7,786,279 NET POSITION Net Investment in Capital Assets 10,706,664 28,881,481 39,588,145 Restricted Property Tax Levies Special Service Areas 299, ,208 Tax Increment Financing 23,031-23,031 Highways and Streets 807, ,857 Unrestricted 4,853,017 4,960,151 9,813,168 Total Net Position 16,689,777 33,841,632 50,531,409 The notes to the financial statements are an integral part of this statement. 4

35 Statement of Activities For the Fiscal Year Ended April 30, 2018 Expenses Program Revenues Charges Capital for Grants/ Services Contributions Governmental Activities General Government $ 1,688, ,175 - Public Safety 1,014,855 84,020 - Highways and Streets 652, ,535 Interest on Long-Term Debt 80, Total Governmental Activities 3,437,043 1,039, ,535 Business-Type Activities Water and Sewer 2,846,133 2,758,873 - Total Primary Government 6,283,176 3,798, ,535 General Revenues Taxes Property Taxes Municipal Utility Taxes Use Taxes Intergovernmental - Unrestricted Sales Taxes Income Taxes Replacement Taxes Interest Income Miscellaneous Change in Net Position Net Position - Beginning Net Position - Ending The notes to the financial statements are an integral part of this statement. 5

36 Net (Expenses)/Revenues Primary Government Governmental Business-Type Activities Activities Totals (733,780) - (733,780) (930,835) - (930,835) (502,156) - (502,156) (80,542) - (80,542) (2,247,313) - (2,247,313) - (87,260) (87,260) (2,247,313) (87,260) (2,334,573) 845, , , , , , , , , , ,346 8, , , ,499 2,671,655 8,685 2,680, ,342 (78,575) 345,767 16,265,435 33,920,207 50,185,642 16,689,777 33,841,632 50,531,409 The notes to the financial statements are an integral part of this statement. 6

37 Balance Sheet - Governmental Funds April 30, 2018 General Capital Improvements ASSETS Cash and Investments $ 2,369,683 5,489,610 Receivables - Net of Allowances Taxes 627,461 - Accounts 168,526 - Due from Other Governments - - Prepaids 25,977 - Total Assets 3,191,647 5,489,610 LIABILITIES Accounts Payable 193, ,368 Accrued Salaries 20,270 - Deposits Payable 34,633 - Total Liabilities 248, ,368 DEFERRED INFLOWS OF RESOURCES Property Taxes 441,354 - Total Liabilities and Deferred Inflows of Resources 690, ,368 FUND BALANCES Nonspendable 25,977 - Restricted - - Committed - 5,332,242 Unassigned 2,475,660 - Total Fund Balances 2,501,637 5,332,242 Total Liabilities, Deferred Inflows of Resources and Fund Balances 3,191,647 5,489,610 The notes to the financial statements are an integral part of this statement. 7

38 Capital Projects Special Special Special Service Service Service Area No. 2 Area No. 4 Area No. 7 Nonmajor Totals 11, ,959 18, ,578 8,995, ,998-46,739 1,032, , ,375 10, ,977 11, ,957 18, ,692 10,233,034-5,632-11, , , ,633-5,632-11, , ,998-46, , ,630-58,051 1,269, ,977 11, ,327 18, ,641 1,130, ,332, ,475,660 11, ,327 18, ,641 8,963,975 11, ,957 18, ,692 10,233,034 The notes to the financial statements are an integral part of this statement. 8

39 Reconciliation of Total Governmental Fund Balance to Net Position of Governmental Activities April 30, 2018 Total Governmental Fund Balances $ 8,963,975 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. 12,651,058 Deferred outflows (inflows) of resources related to the pensions not reported in the funds. Deferred Items - IMRF 58,653 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Compensated Absences Payable (63,364) Net Pension Liability - IMRF (302,890) Debt Certificates Payable (1,474,382) General Obligation Bonds Payable (3,030,000) Installment Contracts Payable (92,829) Accrued Interest Payable (20,444) Net Position of Governmental Activities 16,689,777 The notes to the financial statements are an integral part of this statement. 9

40 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds For the Fiscal Year Ended April 30, 2018 See Following Page

41 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds For the Fiscal Year Ended April 30, 2018 General Capital Improvements Revenues Taxes $ 897,910 - Intergovernmental 613,471 34,819 Licenses and Permits 849,321 - Fines and Forfeits 84,020 - Charges for Services 105,854 - Interest 61,334 22,304 Miscellaneous 113, ,375 Total Revenues 2,724, ,498 Expenditures Current General Government 1,119,872 - Public Safety 1,014,855 - Highways and Streets 133,293 - Capital Outlay - 669,740 Debt Service Principal Retirement - 155,559 Interest and Fiscal Charges - 62,984 Total Expenditures 2,268, ,283 Excess (Deficiency) of Revenues Over (Under) Expenditures 456,914 (372,785) Other Financing Sources (Uses) Bond Proceeds - 3,148,511 Transfers In - 200,000 Transfers Out (200,000) - (200,000) 3,348,511 Net Change in Fund Balances 256,914 2,975,726 Fund Balances - Beginning 2,244,723 2,356,516 Fund Balances - Ending 2,501,637 5,332,242 The notes to the financial statements are an integral part of this statement. 10

42 Capital Projects Special Special Special Service Service Service Area No. 2 Area No. 4 Area No. 7 Nonmajor Totals - 367,632-78,797 1,344, , , , , , ,482 93,346 21,100-28, ,499 21, ,632 28, ,995 3,861,385 20, ,749 22,228 52,591 1,452, ,014, , , , , , ,984 20, ,749 22, ,820 3,560,261 1, ,883 5,903 80, , ,148, , (200,000) ,148,511 1, ,883 5,903 80,175 3,449,635 10, ,444 12, ,466 5,514,340 11, ,327 18, ,641 8,963,975 The notes to the financial statements are an integral part of this statement. 11

43 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended April 30, 2018 Net Change in Fund Balances - Total Governmental Funds $ 3,449,635 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital Outlays 601,591 Depreciation Expense (653,073) The net effect of deferred outflows (inflows) of resources related to the pensions not reported in the funds. Change in Deferred Items - IMRF (223,713) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal on long-term debt consumes the current financial resources of the governmental funds. Additions to Compensated Absences Payable (14,157) Decrease to Net Pension Liability - IMRF 274,569 Issuance of Debt (3,148,511) Retirement of Debt 155,559 Changes to accrued interest on long-term debt in the Statement of Activities does not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. (17,558) Changes in Net Position of Governmental Activities 424,342 The notes to the financial statements are an integral part of this statement. 12

44 Statement of Net Position - Proprietary Fund - Business-Type Activities - Enterprise Fund April 30, 2018 See Following Page

45 Statement of Net Position - Proprietary Fund - Business-Type Activities - Enterprise Fund April 30, 2018 Water and Sewer ASSETS Current Assets Cash and Investments $ 4,726,759 Receivables - Net of Allowances Accounts 446,878 Prepaids 10,103 Total Current Assets 5,183,740 Noncurrent Assets Capital Assets Nondepreciable 11,834,312 Depreciable 32,678,442 Accumulated Depreciation (14,489,090) Total Noncurrent Assets 30,023,664 Total Assets 35,207,404 DEFERRED OUTFLOWS OF RESOURCES Deferred Items - IMRF 60,462 Total Assets and Deferred Outflows of Resources 35,267,866 The notes to the financial statements are an integral part of this statement. 13

46 Water and Sewer LIABILITIES Current Liabilities Accounts Payable 112,245 Accrued Salaries Payable 6,715 Accrued Interest Payable 8,303 Compensated Absences Payable 1,444 Installment Contract Payable 21,804 IEPA Loan Payable 83,433 Total Current Liabilities 233,944 Noncurrent Liabilities Compensated Absences Payable 5,778 Net Pension Liability - IMRF 110,502 Installment Contract Payable 71,025 IEPA Loan Payable 965,921 Total Noncurrent Liabilities 1,153,226 Total Liabilities 1,387,170 DEFERRED INFLOWS OF RESOURCES Deferred Inflows - IMRF 39,064 Total Liabilities and Deferred Inflows of Resources 1,426,234 NET POSITION Net Investment in Capital Assets 28,881,481 Unrestricted 4,960,151 Total Net Position 33,841,632 The notes to the financial statements are an integral part of this statement. 14