INTRODUCTORY SECTION. Principal Officials... Organizational Chart... Certificate of Achievement for Excellence in Financial Reporting...

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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-ix FINANCIAL SECTION INDEPENDENT AUDITOR S REPORT GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS Management s Discussion and Analysis... MD&A 1-12 Basic Financial Statements Government-Wide Financial Statements Statement of Net Assets... 3 Statement of Activities Fund Financial Statements Governmental Funds Balance Sheet Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Assets... 8 Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Governmental Activities in the Statement of Activities... 11

4 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS (Continued) Basic Financial Statements (Continued) Fund Financial Statements (Continued) Proprietary Funds Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows 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 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Industrial/Commercial Revitalization Fund Schedule of Funding Progress Illinois Municipal Retirement Fund Police Pension Fund Firefighters Pension Fund Other Postemployment Benefit Plan Schedule of Employer Contributions Illinois Municipal Retirement Fund Police Pension Fund Firefighters Pension Fund Other Postemployment Benefit Plan Notes to Required Supplementary Information... 73

5 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) 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 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund Capital Projects Fund Grove Mall Redevelopment Fund NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Emergency Management Fund Motor Fuel Tax Fund Recycling/Municipal Waste System Fund Asset Seizure Fund Foreign Fire Insurance Tax Fund Cable Television Fund Devon/Rohlwing Redevelopment Fund Residential Enhancement Fund PROPRIETARY FUND ENTERPRISE FUND Waterworks and Sewerage Fund Schedule of Operating and Nonoperating Revenues - Budget and Actual Schedule of Operating Expenses - Budget (Non-GAAP Basis) and Actual... 96

6 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Continued) PROPRIETARY FUND (Continued) INTERNAL SERVICE FUND Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Net Assets Combining Statement of Cash Flows Capital Replacement Fund Schedule of Operating and Nonoperating Revenues - Budget and Actual Schedule of Operating Expenditures - Budget (Non-GAAP Basis) and Actual FIDUCIARY FUND PENSION TRUST FUNDS Combining Statement of Plan Net Assets Combining Statement of Changes in Plan Net Assets - Pension Trust Funds Schedule of Changes in Plan Net Assets - Budget and Actual Firefighters Pension Fund Police Pension Fund LONG-TERM DEBT PAYABLE BY GOVERNMENTAL FUNDS Schedule of General Long-Term Debt OTHER SUPPLEMENTAL INFORMATION Schedule of Insurance in Force Long-Term Debt Requirements General Obligation Bond Series of 2003A General Obligation Refunding Bond Series of 2003B General Obligation Bond Series of General Obligation Taxable Bond Series of

7 TABLE OF CONTENTS (Continued) Page(s) 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 Assessed Value and Actual Value of Taxable Property Addison Township Property Tax Rates Property Tax Rates - Direct and Overlapping Governments - Elk Grove Township Property Tax Rates - Direct and Overlapping Governments - Schaumburg Township Principal Property Taxpayers Property Tax Levies and Collections Taxable Sales by Category Direct and Overlapping Sales Tax Rates Debt Capacity Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Schedule of Direct and Overlapping Bonded Debt Schedule of Legal Debt Margin Demographic and Economic Information Demographic and Economic Information Principal Employers Operating Information Full-Time Employees Operating Indicators Capital Assets Statistics Continuing Disclosures

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21 Management s Discussion and Analysis (MD&A) The Management Discussion and Analysis (MD&A) provides the readers of the Village of Elk Grove s financial statements with a narrative overview and analysis of the financial activities of the Village of Elk Grove for the fiscal year ended April 30, The information presented here should be considered in conjunction with the additional information provided in the Letter of Transmittal, found on pages iv through ix of this report. Overview of the Financial Statements For the eighth year, the Village s financial statements are presented as two kinds of statements. Government-wide statements provide information on the finances of the Village as a whole; major fund statements provide a snapshot look at Village resources that have been segregated for a specific purpose. Together, these statements allow for indepth comparison year to year for Village financial activities, and for comparison with the financial state of other governments. Government-wide Financial Statements The government-wide financial statements report the overall finances of the Village in a manner similar to that of a private sector business. These statements combine and consolidate short-term, consumable resources with capital assets and long-term obligations. Statement of Net Assets. The Statement of Net Assets presents information on all of the Village s assets, less liabilities, resulting in net assets for the fiscal year. Over time, increases or decreases in net assets may indicate whether the financial position of the Village is improving or deteriorating. Statement of Activities. The Statement of Activities presents information showing how a government s net assets changed during the most recent fiscal year. All changes in net assets are reported as a result of the year s activities and events. Much like a private sector business, all revenues and expenses are reported regardless of the timing of when cash is received or paid out. Both of these government-wide financial statements distinguish functions of the Village that are financed primarily by taxes, intergovernmental revenues, and charges for services (governmental activities) whereby user fees and charges to customers cover all or most of the cost of the service provided (business-type activities). The Village s governmental activities include general government, public safety, highway and streets, health services, and community services. Business-type activities of the Village are water and sewer systems. The government-wide financial statements include not only the Village itself (the primary government), but also the Elk Grove Public Library (the Library ). The Village is financially responsible for the Library, but the Library has a separate governing board. As the Library is a component unit, its financial information is reported separately from the financial information of the Village. MD&A 1

22 The government-wide financial statements can be found on pages 3 through 5 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Village uses fund accounting to ensure and demonstrate fiscal accountability and compliance with financerelated legal requirements. Fund financial statements provide more detailed information about the Village s most significant funds, rather than the Village as a whole. 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 report most of the Village s basic services. Governmental fund financial statements focus on the inflows and outflows of current resources and the balances of spendable resources available at the end of the fiscal year. Governmental fund statements provide a short-term view of the Village s operations. The governmental funds Balance Sheet provides a reconciliation to the Statement of Net Assets; the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances provides a reconciliation to the Statement of Activities. The Village maintains 13 governmental funds. There are five major funds, which have separately presented information in the governmental fund Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances. These are the General Fund, Industrial/Commercial Revitalization Fund, Debt Service Fund, Capital Projects Fund, and Grove Mall Redevelopment Fund. The 8 nonmajor funds are presented in the aggregate in the governmental fund financial statements. The individual fund information is presented in combining statements. The Village adopts an annual budget for its General Fund and certain special revenue funds. Budgetary comparison statements have been provided for analytical purposes. The basic governmental fund financial statements can be found on pages 6 through 11 of this report. Proprietary Funds. The Village maintains two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide statements. The Village uses an enterprise fund to account for its water and sewer operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the Village s various functions. The Village uses an internal service fund to account for the acquisition of vehicles and equipment with a minimum cost of $50,000 and an estimated useful life of five (5) or more years. These purchases are financed through a cost reimbursement to the Capital Replacement Fund from the account of the appropriate Village function. In fiscal year 2010, the Village added a Claims Liability Fund, an internal service fund established to account for claims liabilities for the Village s selfinsured general, property, health, dental and workers compensation insurance programs. MD&A 2

23 Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Information for the operation of the water and sewer system is provided separately, as it is considered a major fund of the Village. Conversely, the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds are provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 12 through 15 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Activities from fiduciary funds are not included in the government-wide financial statements because the Village cannot use these assets for its operations. The accounting used for fiduciary funds is much like that used for proprietary funds. The Village maintains two fiduciary funds: the Police Pension Fund and the Firefighters Pension Fund. The basic fiduciary fund financial statements can be found on pages 16 through 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 18 through 62 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 progress in funding its obligation to provide benefits to its employees. Required supplementary information can be found on pages 63 through 73 of this report. The combining and individual fund statements and schedules for nonmajor governmental funds, enterprise funds, and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 74 through 107 of this report. MD&A 3

24 Government-Wide Financial Analysis Statement of Net Assets. The following table reflects the condensed Statement of Net Assets. For comparison purposes, the Statement of Net Assets from the prior fiscal year is provided. Governmental Activities Statement of Net Assets April 30, 2011 Governmental Business-Type Total Primary Government Current and Other Assets 77,293,706 64,702,893 10,947,252 8,766,042 88,240,958 73,468,935 Capital Assets 125,879, ,618,708 16,588,596 17,356, ,468, ,975,508 Total Assets 203,173, ,321,601 27,535,848 26,122, ,709, ,444,443 Long-Term Liabilities 63,661,567 50,905, , ,012 64,163,061 51,339,463 Other Liabilities 28,481,081 23,335, , ,853 29,423,251 24,278,131 Total Liabilities 92,142,648 74,240,729 1,443,664 1,376,865 93,586,312 75,617,594 Net Assets: Invested in Capital, Net of Debt 81,556,902 77,669,269 16,588,596 17,356,800 98,145,498 95,026,069 Restricted 6,287,191 6,013, ,287,191 6,013,665 Unrestricted 23,186,449 23,397,938 9,503,588 7,389,177 32,690,037 30,787,115 Total Net Assets $ 111,030,542 $ 107,080,872 $ 26,092,184 $ 24,745,977 $ 137,122,726 $ 131,826,849 The Village s combined net assets increased from $131.8 to $137.1 million during The total net assets of governmental activities increased by $3.9 million, while businesstype activities experienced an increase of over $1.3 million. The increase in net assets of governmental activities was due primarily to higher than projected revenues in the General Fund. Overall, General Fund revenue was over $1.9 million higher than originally anticipated. Specifically, sales tax receipts exceeded expectations by $686,000. State shared PPRT revenues and interest income both exceeded the amount budgeted by over $250,000 each. Finally, revenues for fines and forfeits were higher than expected due to the expansion of the Village s adjudication program to include violations for health and building department activities. The continued increase in net assets of the business-type activities is attributable to increased water and sewer rates more accurately reflecting the cost of services and providing for an increase in available cash. MD&A 4

25 Change in Net Assets. The following table summarizes the revenues and expenses of the Village s activities. Change in Net Assets For the Fiscal Year Ended April 30, 2011 Governmental Business-Type Total Primary Government REVENUES Program Revenues: Charges for Services 5,409,789 4,766,615 11,631,422 10,577,310 17,041,211 15,343,925 Operating Grants and Contributions 2,769,080 2,238,851-2,769,080 2,238,851 Capital Grants and Contributions 5,026, ,544-5,026, ,544 General Revenues: - Property Taxes 16,847,942 16,063,847-16,847,942 16,063,847 Other Taxes 22,728,706 21,353,752-22,728,706 21,353,752 Other 856,608 1,102,482 24,795 34, ,403 1,136,683 Total Revenues 53,639,063 46,482,091 11,656,217 10,611,511 65,295,280 57,093,602 EXPENSES General Government 3,973,557 5,806,839-3,973,557 5,806,839 Public Safety 29,537,215 29,672,776-29,537,215 29,672,776 Highway and Streets 10,942,184 8,865,233-10,942,184 8,865,233 Health Services 1,641,110 1,630,194-1,641,110 1,630,194 Community Services 406, , , ,459 Water and Sewer ,310,010 10,164,937 10,310,010 10,164,937 Interest and Fiscal Charges 3,188,344 2,582,202-3,188,344 2,582,202 Total Expenses 49,689,393 48,936,703 10,310,010 10,164,937 59,999,403 59,101,640 Change in Net Assets 3,949,670 (2,454,612) 1,346, ,574 5,295,877 (2,008,038) MD&A 5

26 For the fiscal year ended April 30, 2011, revenues for governmental activities totaled $53.6 million, up from $46.5 million the previous year. The Village benefits from a highly diversified revenue base. Sales tax revenues were received in the amount of $12.7 million as compared to $12.2 million for the prior year. Since the overall economy is still struggling, this increase may reflect consumers shopping more frequently in Cook County as Cook County decreased its sales tax rate by.5% in July Most of the Village s retail establishments are located in the Cook County portion of the Village. Revenues from the Village s largest single source, property taxes, amounted to $16.8 million compared to $16.0 million for the prior year. Property tax revenues support governmental activities, debt service obligations, and state mandated contributions to the Fire and Police Pension Funds, as well as IMRF and FICA. The 2009 property tax rate for the Village of Elk Grove was 54.6 cents per $100 of EAV. The total assessed value of properties within the Village was $2,497,816,647, a 5.4% decrease from the prior year. The other taxes classification includes a number of different revenue sources. Among those are sales and use taxes, real estate transfer tax, hotel/motel occupancy tax, telecommunication taxes, food and beverage tax, and other franchise taxes. The two major types of sales taxes are the retailer s occupation tax (ROT) and the home-rule sales tax. Both of these sales taxes in Cook and DuPage counties are collected by the State of Illinois. The equivalent of 1% of ROT is remitted to Elk Grove Village. The home-rule sales tax rate in Elk Grove Village is 1% with all of the proceeds remitted to the Village. The Village also has a Food and Beverage tax of 1%. State-shared sales taxes and the home-rule sales taxes are recorded in the General Fund. A few revenue highlights are reviewed in the discussion regarding the change in net assets. MD&A 6

27 The Village of Elk Grove Village s expenses for governmental activities amounted to $49.6 million, up from $48.9 million during the previous year. Expenditures for the General Fund, the Village s main operating fund, totaled $38,130,481 which is $238,267 less than the previous year. This decrease is due to not filling positions by attrition and Village departments actively working to keep operating expenses down. Public safety expenses related to the operations of the Police Department and Fire Department accounted for the largest share of the total. Over 71% of the Village s General Fund expenses are related to public safety. The third largest expenditure is due to Highways and Streets, with a total FY11 general fund expenditure of $6,404,784. Highways and Streets include both the Public Works and Engineering Departments. The majority of the general fund costs are due to salary expenses and health care benefits. Financial Analysis of Village Funds Governmental Funds The focus of governmental funds is to provide information on near-term inflows, outflows, and the balance of spendable resources. Such information is helpful in assessing the Village s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. At April 30, 2011, using the modified accrual basis of accounting, the governmental funds had a combined fund balance of $41,947,680. This reflects a $6.9 million increase from the prior year balance of $35,024,233. Most of this increase in fund balance is due to the issuance of $13 million in Build America Bonds for various infrastructure programs which were only partially completed in fiscal year MD&A 7

28 The General Fund is used to account for the resources and expenses traditionally associated with a municipal government such as general government, public safety, highway and streets, and health services. The fund balance of the General Fund increased by $590,487 for a total of $20,533,511 as of April 30, The General Fund remains able to maintain the four-month reserve policy. The Industrial/Commercial Revitalization Fund is used to account for the operations of the Village s industrial and commercial revitalization programs. Financing is provided by a tax assessed on telecommunication services. The fund balance decreased by $336,643. This decrease is due to less grant revenue received in FY11. The Debt Service Fund is used to account for the accumulated monies for payment of General Obligation Bonds. Financing is provided by an annual property tax levy. The fund balance increased slightly by $2,050. The Capital Projects Fund is used to account for the purchase, maintenance, or construction of major capital projects in the Village. Projects are financed by federal and state grants and proceeds of General Obligation Bonds. The fund balance increased by $6,150,951. This increase is due to the issuance of $13 million in Build America Bonds for infrastructure projects. All Build America Bond projects must be completed by December 31, The Grove Mall Redevelopment Fund is used to account for the purchase, maintenance, and redevelopment expenditures associated with the Grove Mall property. The fund balance increased by $272,692 is due to tax levy receipts exceeding expenditures. The nonmajor funds have an aggregate fund balance increase of $243,920. The change in individual fund balance is presented in the combining statements. The increase is mainly due to additional revenues in the Recycling/Municipal Waste Fund in the form of increased recycling rebates negotiated in a contract renewal with Waste Management. Proprietary Funds The Waterworks and Sewerage Fund recorded an increase of $1,346,207 in net assets for the year. The increase in net assets of the business-type activities is attributable to the increased water and sewer rates to more accurately reflect the operations of the water and sewer system. An initial rate increase took effect January 1, 2006, and rate increases have been effective each January 1 st thereafter, through January 1, The Water/Sewer Fund unrestricted net assets and invested in capital assets amounted to $9,503,588 and $16,588,596 respectively for total net assets of $26,092,184. The Internal Service Funds experienced an increase to net assets of $185,182. The unrestricted net assets and net assets invested in capital assets amounted to $6,475,351 and $3,376,029 respectively for total net assets of $9,851,380. MD&A 8

29 General Fund Budgetary Highlights General Fund For the Fiscal Year Ended April 30, 2011 Original Budget Amended Budget Actual REVENUES Taxes 27,132,390 27,132,390 27,862,763 Licenses and Permits 1,882,060 1,882,060 1,928,497 Other 7,717,550 7,717,550 8,929,708 Total Revenues 36,732,000 36,732,000 38,720,968 EXPENDITURES AND TRANSFERS Expenditures 40,007,613 40,500,415 38,130,481 Transfers Out Total Expenditures and Transfers 40,007,613 40,500,415 38,130,481 Change in Fund Balances (3,275,613) (3,768,415) 590,487 Total tax revenues in the General Fund were higher than budgeted amounts mainly due to higher than anticipated collections of sales and use taxes ($686,180 over), and increased interest income ($276,111 over). In addition, state shared income tax revenues for PPRT were also higher than the budget projections provided by the State ($251,742 over). Fines and forfeits ($310,889 over) provided a steady increase in revenues due to the expansion of the Village s adjudication program. The Village of Elk Grove approved the following budget amendment to the General Fund during the year: $492,802 increase to cover outstanding purchase orders at April 30, 2010 and to allow projects that could not be completed in the prior year to be rolled over into the new fiscal year. MD&A 9

30 Capital Assets The following schedule reflects the Village s capital asset balances as of April 30, Capital Assets As of April 30, 2011 Governmental Activities Business-Type Activities Total Land 5,440,659 1,739,522 7,180,181 Land Right of Way 25,519,549-25,519,549 Buildings and Land Improvements 63,491,283 4,758,673 68,249,956 Machinery and Equipment 5,569,909 3,376,304 8,946,213 Licensed Vehicles 8,488,002 1,627,307 10,115,309 Underground Water and Sewer Lines - 17,070,310 17,070,310 Infrastructure 64,660, ,938 64,779,964 Storm Sewers 9,389,447 57,495 9,446,942 Construction in Progress 4,630,346-4,630,346 Total 187,189,221 28,749, ,938,770 Less: Accumulated Depreciation (61,309,737) (12,160,953) (73,470,690) Total 125,879,484 16,588, ,468,080 Major capital asset events during fiscal year 2011: Purchase of SCBA equipment for Fire Department personnel in the amount of $183,950 (grant assistance provided); Conversion of a reserve ambulance into a cable production vehicle in the amount of $88,007; Purchase of six (6) police squad cars in the total amount of $146,375; Expenses related to various infrastructure improvements under the Build America Bond Program in the total amount of $6,193,402. See Note 4 for additional information on the capital asset activity of the Village. MD&A 10

31 Long-Term Debt The table below summarizes the Village s bonded and similar indebtedness. Bonded and Similar Indebtedness As of April 30, 2011 Governmental Activities Business-Type Activities Total General Obligation Bonds 50,355,000 38,860,000-50,355,000 38,860,000 Net Pension Obligation (Asset) (4,201,491) (3,924,485) - (4,201,491) (3,924,485) Net Other Post-Employment Benefit Obligation 10,770,303 9,234, , ,012 11,271,797 9,668,902 Total 56,923,812 44,170, , ,012 57,425,306 44,604,417 As an Illinois home-rule community, the Village is not subject to any debt limitation. The Village s credit rating by Moody s Investors Services, Inc. is rated at Aaa. This outstanding bond rating is the highest rating held by governmental bodies nationwide and is indicative of financial strength and economic stability. Recognizing that some Aaa public finance ratings would likely be indirectly affected by credit deterioration at the federal level, in July 2011, Moody s placed the Aaa credit ratings of 177 public finance issuers, including Elk Grove Village, under review. The Village is proud to report that after a review of our outstanding bonded debt, Moody s has notified the Village that Elk Grove will keep its Aaa credit rating. The Village was evaluated on vulnerability to disruptions in financial markets and reliance on federal spending, among other risk factors. Attributes that allowed the Village to maintain our Aaa credit rating include overall financial position, operating flexibility, and management responsiveness to changing economic conditions. See Note 6 for additional information on the long-term debt activity of the Village. The Net Pension Asset (NPA) reflects the cumulative difference between what the Village was required to make to the Fire and Police Pension Funds and the contributions actually made. The Village has paid the full amount of the actuarially required contributions (ARC). During fiscal year 2011, the Village contributed $277,006 more than the combined Annual Pension Cost (APC) for the two pension funds. The Village implemented Statement No. 45 of the Governmental Accounting Standards Board (Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Pensions) effective May 1, In connection with that accounting standard, the Net Other Post-Employment Benefit Obligation (NOPEBO) represents the amount of contributions that the Village was required to make pursuant to the actuarial calculations for the accrued cost of retiree health insurance during MD&A 11

32 Economic Factors Continuing economic development efforts maintain the Village s status as the second largest location of employment in the state, second only to Chicago. Furthermore, Elk Grove Village s unemployment rate of 8.5% continues to be below the State of Illinois 2010 calendar year average of 10.3%. The Village s top employers include Alexian Brothers Medical Center with 1,800 employees, ADP with 900 employees and Citigroup with 550 employees. The Village of Elk Grove is also a top employer with nearly 350 full-and parttime employees. Recently, the Village welcomed SOOO Good, in addition, two (2) new restaurants opened in the Elk Grove Town Center Crazy II Buffet and Good Tequilas 3. Other new businesses include Elite Training & Fitness (health club) Chicago Parts and Sound (car parts and accessory store) Harmony Salon & Spa, and H2O Waterwalls (water wall design). Contacting the Village s Financial Management This financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the Village s finances and to demonstrate the Village s accountability for the money it receives. Questions concerning this report or requests for additional information should be directed to Christine Tromp, Director of Finance, Village of Elk Grove, 901 Wellington Avenue, Elk Grove Village, Illinois, MD&A 12

33 STATEMENT OF NET ASSETS April 30, 2011 Component Primary Government Unit Governmental Business-Type Elk Grove Village Activities Activities Total Public Library ASSETS Cash and investments $ 55,287,966 $ 7,362,796 $ 62,650,762 $ 4,534,520 Receivables (net of allowances) Property taxes 8,899,528-8,899,528 2,362,885 Accounts - 2,460,957 2,460,957 - Accrued interest 25,104 3,512 28,616 - Other 988, ,729 - Prepaid expenses 115, ,216 14,241 Inventory 83,447 8,635 92,082 - Due from other governments 5,811,698-5,811, ,942 Due from developers - 79,048 79,048 - Due from fiduciary funds 1,592,000-1,592,000 - Due from component unit 31,177-31,177 - Deposits with joint venture - 1,031,657 1,031,657 - Unamortized bond issuance costs 225, ,658 - Unamortized loss on refunding 31,339-31,339 - Net pension asset 4,201,491-4,201,491 - Capital assets Nondepreciable 35,590,554 1,739,522 37,330,076 75,679 Depreciable, net of accumulated depreciation 90,288,930 14,849, ,138,004 4,205,280 Total assets 203,173,190 27,535, ,709,038 11,430,547 LIABILITIES Accounts payable 4,814, ,325 5,528, ,779 Contracts and retainages payable 303, ,765 - Accrued wages payable 897,282 60, ,667 85,267 Accrued interest payable 1,217,852-1,217,852 - Unearned property tax revenue 16,176,908-16,176,908 4,304,555 Unearned other revenue 320, ,171 - Due to primary government ,177 Refundable bonds 236, ,123 - Deposits payable - 81,069 81,069 - Claims payable 1,324,301 18,547 1,342,848 - Other liabilities 112, ,161 - Noncurrent liabilities Due within one year 3,078,290 67,844 3,146,134 89,499 Due in more than one year 63,661, ,494 64,163, ,649 Total liabilities 92,142,648 1,443,664 93,586,312 5,245,926 NET ASSETS Invested in capital assets, net of related debt 81,556,902 16,588,596 98,145,498 4,280,959 Restricted for Public safety 623, ,528 - Highways and streets 1,707,903-1,707,903 - Health services 1,529,188-1,529,188 - Community services 363, ,537 - Debt service 2,063,035-2,063,035 - Unrestricted 23,186,449 9,503,588 32,690,037 1,903,662 TOTAL NET ASSETS $ 111,030,542 $ 26,092,184 $ 137,122,726 $ 6,184,621 See accompanying notes to financial statements

34 STATEMENT OF ACTIVITIES For the Year Ended April 30, 2011 Program Revenues Operating Capital Charges Grants and Grants and FUNCTIONS/PROGRAMS Expenses for Services Contributions Contributions PRIMARY GOVERNMENT Governmental Activities General government $ 3,973,557 $ 1,994,263 $ - $ - Public safety 29,537,215 2,515, ,482 - Highway and streets 10,942, ,652 1,029,339 5,026,938 Health services 1,641,110 73, ,011 - Community services 406, Interest and fiscal charges 3,188, ,248 - Total governmental activities 49,689,393 5,409,789 2,769,080 5,026,938 Business-Type Activities Waterworks and sewerage 10,310,010 11,631, Total business-type activities 10,310,010 11,631, TOTAL PRIMARY GOVERNMENT $ 59,999,403 $ 17,041,211 $ 2,769,080 $ 5,026,938 COMPONENT UNIT Elk Grove Village Public Library $ 4,423,312 $ 364,835 $ 23,372 $ 32,

35 Net (Expense) Revenue and Change in Net Assets Component Primary Government Unit Governmental Business-Type Elk Grove Village Activities Activities Total Public Library $ (1,979,294) $ - $ (1,979,294) $ - (26,497,446) - (26,497,446) - (4,059,255) - (4,059,255) - (579,512) - (579,512) - (406,983) - (406,983) - (2,961,096) - (2,961,096) - (36,483,586) - (36,483,586) - - 1,321,412 1,321, ,321,412 1,321,412 - (36,483,586) 1,321,412 (35,162,174) (4,002,662) General Revenues Taxes Property 16,847,942-16,847,942 4,475,545 Sales 12,772,013-12,772,013 - Use 502, ,745 - Utility and telecommunications 4,442,456-4,442,456 - Income 2,707,548-2,707,548 - Hotel/motel 1,107,940-1,107,940 - Food and beverage 718, ,424 - Real estate transfer 388, ,549 - Other 89,031-89,031 - Investment income 673,049 18, ,065 4,500 Miscellaneous 183,559 6, ,338 - Total 40,433,256 24,795 40,458,051 4,480,045 CHANGE IN NET ASSETS 3,949,670 1,346,207 5,295, ,383 NET ASSETS, MAY 1 107,080,872 24,745, ,826,849 5,707,238 NET ASSETS, APRIL 30 $ 111,030,542 $ 26,092,184 $ 137,122,726 $ 6,184,621 See accompanying notes to financial statements

36 BALANCE SHEET GOVERNMENTAL FUNDS April 30, 2011 Industrial/ Nonmajor Total Commercial Debt Capital Grove Mall Governmental Governmental General Revitalization Service Projects Redevelopment Funds Funds ASSETS Cash and investments $ 17,142,392 $ 7,568,992 $ 3,802,314 $ 13,599,593 $ - $ 5,337,271 $ 47,450,562 Receivables (net of allowances) Property taxes 6,554,932-2,273, ,992 8,899,528 Accrued interest 7,783 4, ,862 Other 856, , ,729 Prepaid items 53,731 1, , ,569 Inventory 83, ,447 Due from other governments 4,511, , ,312 5,584,450 Due from other funds ,330 1,330 Due from fiduciary funds 1,592, ,592,000 Due from component unit 31, ,177 Advances to other funds 3,187, ,187,268 TOTAL ASSETS $ 34,020,696 $ 8,511,619 $ 6,075,918 $ 13,599,593 $ - $ 5,739,096 $ 67,946,922 This statement is continued on the following page

37 Industrial/ Nonmajor Total Commercial Debt Capital Grove Mall Governmental Governmental General Revitalization Service Projects Redevelopment Funds Funds LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 905,846 $ 2,036,289 $ - $ 1,680,848 $ - $ 141,251 $ 4,764,234 Contracts and retainages payable , ,765 Accrued wages payable 875,877 11, , ,282 Deferred property tax revenue 11,265,209-4,012, , ,132 16,176,908 Deferred other revenue 125, , ,171 Due to other funds 1, ,330 Advances from other funds ,048, ,501 3,187,268 Refundable deposits 236, ,123 Other liabilities 77,402 13,561-21, ,161 Total liabilities 13,487,185 2,061,148 4,012,883 2,005,811 3,594, ,764 25,999,242 FUND BALANCES Reserved for prepaid items 53,731 1, , ,569 Reserved for inventory 83, ,447 Reserved for public safety , ,528 Reserved for highways and streets ,707,903 1,707,903 Reserved for health services ,529,188 1,529,188 Reserved for community services , ,537 Reserved for debt service - - 2,063, ,063,035 Reserved for capital projects ,593, ,593,782 Reserved for advances 3,187, ,187,268 Unreserved, undesignated General Fund 17,209, ,209,065 Special Revenue Funds - 6,448, ,448,774 Capital Project Funds (deficit) (3,594,451) 617,035 (2,977,416) Total fund balances (deficit) 20,533,511 6,450,471 2,063,035 11,593,782 (3,594,451) 4,901,332 41,947,680 TOTAL LIABILITIES AND FUND BALANCES $ 34,020,696 $ 8,511,619 $ 6,075,918 $ 13,599,593 $ - $ 5,739,096 $ 67,946,922 See accompanying notes to financial statements

38 RECONCILIATION OF FUND BALANCES OF GOVERNMENTAL FUNDS TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF NET ASSETS April 30, 2011 FUND BALANCES OF GOVERNMENTAL FUNDS $ 41,947,680 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 Capital Assets 125,879,484 Less Capital Assets of Internal Service Funds Included Below (3,376,029) Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds General obligation bonds payable (50,355,000) Redevelopment limited obligation note payable (3,989,958) Compensated absences payable (1,513,290) Net other postemployment benefit obligation (10,770,303) Accrued interest payable (1,217,852) Interest rebates 227,248 Unamortized bond premium (111,306) Deferred charges is shown as an asset on the statement of net assets but are reported as an expenditure in the governmental funds 256,997 The net assets of the internal service fund are included in the governmental activities in the statement of net assets 9,851,380 The net pension asset is not a current financial resource and is, therefore, not reported in the governmental funds 4,201,491 NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 111,030,542 See accompanying notes to financial statements

39 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended April 30, 2011 Industrial/ Nonmajor Total Commercial Debt Capital Grove Mall Governmental Governmental General Revitalization Service Projects Redevelopment Funds Funds REVENUES Taxes $ 27,862,763 $ 2,023,279 $ 3,252,629 $ - $ 989,815 $ 1,215,964 $ 35,344,450 Licenses and permits 1,928, ,981 2,030,478 Intergovernmental 4,651, ,309-3,614-1,107,551 6,103,304 Charges for services 819, ,445 1,653,391 Fines 1,748, ,293 1,778,182 Investment income 576,111 25,582 3,947 30, , ,049 Miscellaneous 1,132, ,512-76,664 1,275,108 Total revenues 38,720,968 2,389,170 3,256,576 99, ,907 3,401,504 48,857,962 EXPENDITURES Current General government 3,550, ,550,226 Public safety 27,388, ,473 27,626,873 Highways and streets 6,404,784 2,725, ,007,227 10,137,824 Health services 787, ,548 1,655,619 Community services , ,983 Capital outlay ,948, , ,857 7,841,281 Debt service Principal - - 1,505, ,505,000 Interest and fiscal charges - - 1,749, ,677 53,496 2,210,699 Total expenditures 38,130,481 2,725,813 3,254,526 6,948, ,215 3,157,584 54,934,505 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 590,487 (336,643) 2,050 (6,849,049) 272, ,920 (6,076,543) This statement is continued on the following page

40 Industrial/ Nonmajor Total Commercial Debt Capital Grove Mall Governmental Governmental General Revitalization Service Projects Redevelopment Funds Funds OTHER FINANCING SOURCES (USES) Bonds issued $ - $ - $ - $ 13,000,000 $ - $ - $ 13,000,000 Total other financing sources (uses) ,000, ,000,000 NET CHANGE IN FUND BALANCES 590,487 (336,643) 2,050 6,150, , ,920 6,923,457 FUND BALANCES (DEFICIT), MAY 1 19,943,024 6,787,114 2,060,985 5,442,831 (3,867,143) 4,657,412 35,024,223 FUND BALANCES (DEFICIT), APRIL 30 $ 20,533,511 $ 6,450,471 $ 2,063,035 $ 11,593,782 $ (3,594,451) $ 4,901,332 $ 41,947,680 See accompanying notes to financial statements

41 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, 2011 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 6,923,457 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures; however, they are capitalized and depreciated in the statement of activities 8,373,281 Contributions of capital assets are reported as program revenues only in the statement of activities 4,553,853 The issuance of long-term debt is reported as another financing source in governmental funds but as an increase of principal outstanding in the statement of activities (13,000,000) The repayment of long-term debt is reported as an expenditure/other financing use when due in governmental funds but as a reduction principal outstanding in the statement of activities 2,034,872 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 145,192 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 (3,372,906) Change in accrued interest payable (961,349) Change in interest rebates receivable 227,248 Change in compensated absences 99,247 Change in net pension asset 277,006 Change in net other postemployment benefit obligations (1,535,413) The change in net assets of certain activities of internal service funds is in governmental funds 185,182 CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 3,949,670 See accompanying notes to financial statements

42 STATEMENT OF NET ASSETS PROPRIETARY FUNDS April 30, 2011 Business-Type Activities Enterprise Governmental Activities Internal Service CURRENT ASSETS Cash and investments $ 7,362,796 $ 7,837,404 Receivables Accounts 2,460,957 - Accrued interest 3,512 12,242 Inventory 8,635 - Prepaid items Due from developers 79,048 - Total current assets 9,915,595 7,849,646 NONCURRENT ASSETS Deposits with joint venture 1,031,657 - Capital assets Nondepreciable 1,739, ,158 Depreciable, net of accumulated depreciation 14,849,074 3,157,871 Total capital assets 16,588,596 3,376,029 Total noncurrent assets 17,620,253 3,376,029 Total assets 27,535,848 11,225,675 CURRENT LIABILITIES Accounts payable 714,325 49,994 Accrued wages 60,385 - Compensated absences payable 67,844 - Deposits payable 81,069 - Claims payable 18,547 1,324,301 Total current liabilities 942,170 1,374,295 NONCURRENT LIABILITIES Net other postemployment benefit obligation 501,494 - Total noncurrent liabilities 501,494 - Total liabilities 1,443,664 1,374,295 NET ASSETS Invested in capital assets 16,588,596 3,376,029 Unrestricted 9,503,588 6,475,351 TOTAL NET ASSETS $ 26,092,184 $ 9,851,380 See accompanying notes to financial statements

43 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended April 30, 2011 Business-Type Activities Enterprise Governmental Activities Internal Service OPERATING REVENUES Charges for services $ 11,493,774 $ 4,185,026 Late payment charges 137,648 - Total operating revenues 11,631,422 4,185,026 OPERATING EXPENSES Administration 2,039,822 - Water division 6,372,954 - Sewer division 972,698 - Storm sewer maintenance 167,775 - Highways and streets Depreciation 764, ,424 Claims - 3,550,684 Total operating expenses 10,318,130 4,042,852 OPERATING INCOME (LOSS) 1,313, ,174 NONOPERATING REVENUES (EXPENSES) Investment income 18,016 43,008 Miscellaneous 6,779 - Gain on sale of capital assets 8,120 - Total nonoperating revenues (expenses) 32,915 43,008 CHANGE IN NET ASSETS 1,346, ,182 NET ASSETS, MAY 1 24,745,977 9,666,198 NET ASSETS, APRIL 30 $ 26,092,184 $ 9,851,380 See accompanying notes to financial statements

44 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended April 30, 2011 Business-Type Activities Enterprise Governmental Activities Internal Service CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 11,476,110 $ - Receipts from interfund service transactions - 4,185,026 Receipts from miscellaneous revenues 6,779 - Payments to suppliers (6,275,076) (3,431,466) Payments to employees (1,527,235) - Payments for interfund service transactions (1,675,060) - Net cash from operating activities 2,005, ,560 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 - (191,975) Proceeds from the sale of capital assets 11,445 - Net cash from capital and related financing activities 11,445 (191,975) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 20,436 42,937 Purchase of investments (1,300,000) (2,624,998) Proceeds from sale of investments 1,900,000 2,500,000 Net cash from investing activities 620,436 (82,061) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,637, ,524 CASH AND CASH EQUIVALENTS, MAY 1 3,427,556 4,739,420 CASH AND CASH EQUIVALENTS, APRIL 30 $ 6,064,955 $ 5,218,944 This statement is continued on the following page

45 STATEMENT OF CASH FLOWS (Continued) PROPRIETARY FUNDS For the Year Ended April 30, 2011 Business-Type Activities Enterprise Governmental Activities Internal Service RECONCILIATION OF OPERATING INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income $ 1,313,292 $ 142,174 Adjustments to reconcile operating income to net cash from operating activities Depreciation 764, ,424 Miscellaneous income 6,779 - Changes in assets and liabilities Accounts receivable (157,422) - Inventory 6,655 - Prepaid expenses 4,534 - Accounts payable (20,027) - Accrued salaries 13,772 - Estimated liability for self-insurance 2, ,962 Net other postemployment benefit obligation 67,482 - Compensated absences Deposits 2,110 - NET CASH FROM OPERATING ACTIVITIES $ 2,005,518 $ 753,560 RECONCILIATION TO STATEMENT OF NET ASSETS Cash and cash equivalents $ 6,064,955 $ 5,218,944 Investments 1,297,841 2,618,460 TOTAL CASH AND INVESTMENTS $ 7,362,796 $ 7,837,404 NONCASH TRANSACTIONS Capital asset additions acquired through accounts payable $ - $ 49,994 Unrealized investment gains/losses (1,251) (6,905) TOTAL NONCASH TRANSACTIONS $ (1,251) $ 43,089 See accompanying notes to financial statements

46 STATEMENT OF FIDUCIARY NET ASSETS PENSION TRUST FUNDS April 30, 2011 ASSETS Cash and investments U.S. Treasury obligations $ 24,884,805 U.S. agency obligations 21,082,344 State and local obligations 7,729,757 Corporate bonds 494,081 Insurance contracts 2,980,378 Equity securities 26,109,242 Mutual funds 15,455,566 Money markets 5,284,357 Illinois Funds 3,082,030 Total cash and investments 107,102,560 Receivables Accrued interest 436,913 Total receivables 436,913 Total assets 107,539,473 LIABILITIES Accounts payable 6,301 Due to General Fund 1,592,000 Total liabilities 1,598,301 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $ 105,941,172 See accompanying notes to financial statements

47 STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS PENSION TRUST FUNDS For the Year Ended April 30, 2011 ADDITIONS Contributions Employer $ 4,127,226 Participants 1,393,415 Total contributions 5,520,641 Investment income Net appreciation in fair value of investments 7,750,858 Interest income 2,558,434 Less investment expenses (430,269) Net investment income 9,879,023 Total additions 15,399,664 DEDUCTIONS Administration 68,040 Pension benefits and refunds 6,442,415 Total deductions 6,510,455 NET INCREASE (DECREASE) 8,889,209 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS May 1 97,051,963 April 30 $ 105,941,172 See accompanying notes to financial statements

48 NOTES TO FINANCIAL STATEMENTS April 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Village of Elk Grove Village, Illinois (the Village), have been prepared in conformity with accounting principles generally accepted in the United States of America, as applied to governmental 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 Village s accounting policies are described below: a. Reporting Entity The Village is a municipal corporation governed by an elected mayor and six-member board of trustees. As required by generally accepted accounting principles, these financial statements present the Village (the primary government) and its component unit. In evaluating how to define the reporting entity, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made based upon the significance of their operational or financial relationships with the primary government. Discretely Presented Component Unit The Elk Grove Village Public Library (the Library) column in the basic financial statements includes the financial data of the Library. It is reported in a separate column to emphasize the Library is legally separate from the Village. The Library operates and maintains the public library within the Village. The Library s Board is elected by the voters of the Village. The Library may not issue bonded debt without the Village s approval, and its annual budget and property tax levy request are subject to the Village Board s approval. Separately issued financial statements for the Library can be obtained from the Library s administrative offices at 1001 Wellington Avenue, Elk Grove Village, Illinois