HomeMy WebLinkAbout2009-07-28 Special MinutesMINUTES OF THE JULY 28, 2009, SPECIAL MEETING
OF THE BOARD OF TRUSTEES
RICHARD T. FLICHINGER MUNICIPAL CENTER
6101 CAPULINA AVENUE
MORTON GROVE, ILLINOIS 60053
Pursuant to proper notice in accordance with the Open Meetings Act, the special meeting was called to
order at 7:00 pm by Mayor Daniel J. Staackmann who led the assemblage in the Pledge of Allegiance.
Corporation Counsel Liston called the roll. In attendance were:
Elected Officials: President Daniel Staackmann, Trustees Dan DiMaria, Larry Gomberg,
William Grear, Sheldon Marcus, John Thill, and Maria Toth, and Village
Clerk Tony Kalogerakos (arrived late)
Village Staff: Village Administrator Joseph F. Wade, Corporation Counsel Teresa
Hoffman Liston, Finance Director/Treasurer Ryan Horne, Fire Chief
Tom Friel, Community and Economic Development Director Bill
Neuendorf, and Public Works Director Andy DeMonte
Also Present: Several local residents
Mr. Wade stated the purpose of today's special meeting was to present a report on the financial
condition of the Village and the impact the very difficult economic times was having on the Village's
revenues and expenses. He introduced Ryan Horne, the Finance Director/Treasurer of the Village who
took over as the head of the Finance Department in February.
Mr. Horne stated this evening's agenda would include a review of major finances, both actual, those
budgeted and projected for 2009 expenses, and a similar analysis of Village expenses. He would
discuss the Village's fund balances and economic projections for the balance of the year. Mr. Horne
thanked his staff for their hard work in preparation for tonight's meeting. He noted while he will be
reporting on many numbers, he would also try to add context to these numbers.
He reviewed the Village's General Fund Revenues. Mr. Horne stated the real estate levy, retail sales
taxes, home rule sales taxes, state income tax, telecommunication tax, electric consumption tax
represented 82.6% of all Village revenues. He noted retail sales taxes were budgeted at $4 million for
2009, a decrease of $300,000 from the 2008 budget. Based on receipts received to date, and historical
analysis of receipts for the past five years, he projected the Village would receive a total of $3,290,645
in retail sales taxes, or approximately $709,000 less than budgeted, or a decrease of 18%. Likewise,
home rule sales taxes had been budgeted at $2,383,000; a decrease of $234,000 from the 2008 budget.
Based on projections, he expected the Village to receive $2,099,496 in home rule sales taxes which
compared unfavorably to the amount budgeted by 12% or $283,000. State income tax had been
budgeted at $2,010,000, a decrease of $115,000 from the 2008 budget. He projected actual receipts to
be $1,881,874; an unfavorable decrease in this revenue of $128,000 or 6%. The telecommunication
tax had been budgeted at $1,015,000. Mr. Horne projected the Village would receive $1,132,993 or an
additional revenue of $117,000. Likewise, the electricity tax budgeted at $910,000 was projected to
show receipts of $891,963 or $18,000 less than budgeted. Mr. Horne projected additional revenues to
the Village budgeted at $3,850,000 would bring in receipts at $4,295,398.24, or additional revenue
compared to the budget in the amount of $446,098.24. Hence, Mr. Horne projected the Village would
receive in total General Fund revenue $21,597,744; $574,930 less (3%) than projected.
Mr. Horne did a similar analysis of the Village's Expenditures. He expected Village expenditures
originally budgeted at $25,256,875 would result in actual expenditures of $24,726,481 or afavorable
variance of $530,394. When comparing projected revenue against projected expenses, he projected the
difference between projected revenue and projected expenditures would produce an unfavorable
variance of $44,536. While this number may sound encouraging, Mr. Horne reminded the Board in the
original budget, the Village had projected a funding deficit of $3,084,000 which would be taken from
the Village's fund balance. Hence, the actual amount to betaken from the Village's fund balance for
2009 would be $3,128,737.
Mr. Horne gave a report to the Board on the Village's Fund Balance. He noted no single item in a
typical state or local government financial statement attracts more attention, discussion, or debate than
fund balance. The simple definition of fund balance is assets minus liabilities. He noted the Village's
fund balance actually had five different components: non-spendable fund balances which were assets
that are practically never converted to cash from the view of the current budget period. He gave
receivables in the Waukegan Road TIF District as an example. He also stated some fund balances
could be classified as restricted. These are resources that are subject to legal restrictions such as the
Village's commuter parking revenue, the Illinois Department of Transportation Motor Fuel Taxes, and
E911 Emergency Dispatch. The Village has also committed fund balances which are self-imposed
limitations set in place by the Corporate Authorities. An example of that was restrictions placed on the
proceeds to be received from the sale of Dempster Street property. Mr. Horne also noted the Village
has assigned fund balances which are limitations resulting from the intended use of resources. For
example, for budget year 2009, the Village assigned over $3 million of fund balance to meet General
Fund expenses. Finally, Mr. Horne noted unassigned fund balances are net resources in excess of
everything classified above.
Mr. Horne then noted the Village's Fund Balance had fluctuated from a low point in 2003 of
$3,512,883 to a high point of $10,557,567 in 2007. Mr. Horne noted at the Village's June 2008
Workshop, the Board set a policy of maintaining a 25% fund balance. He then noted the Village's
Fund Balance had fluctuated from 2005 to the present between a low of approximately 25% to a high
of 45%. Currently the fund balance was 30%. However, the Village's unrestricted fund balance had
fluctuated between a low of 23%, the current fund balance, to a high of approximately 45%.
Mr. Horne then reported on the Reserves within the Village's Water Fund. He noted the current Fund
Balance in this account was $2,267,000 or 40% of the fund's operating expenses. He reminded the
Board the Village needed to replace the Dempster Street water main at a cost of $1.5 million and plans
were being made to paint the water tower at a cost of $725,000.
Mr. Horne then reported on Economic Projections. He noted national reports showed June new home
sales had increased by 11% and the supply of homes had decreased from 10.2 months to 8.8 months.
He believes increased home sales may be a good predictor of the end of the recession.
Mr. Horne then answered questions from the Board and the audience. He then introduced Dan Berg,
the Village's Auditor.
Mr. Berg reported the Village's Audit Report was currently in typing. The report had been delayed in
being finalized, in part, because the Village's Finance Department was short staffed. Recently the
Village had hired an Assistant Finance Director who had helped provide documents needed to finalize
the audit report. Mr. Berg then discussed the preliminary audit. He did not expect these numbers to
change significantly. Mr. Berg noted the Village's statement of net assets as of December 31, 2008,
showed total net assets in the amount of $35,893,311 for general governmental activities and
$2,591,342 for business type activities (i.e., the Water Fund) for total assets in the amount of
$38,484,653. He also noted the Library had total net assets in the amount of $4,736,215. Based on
revenues in the Water Department, the Village's business activities had a 5% rate of return.
He then reviewed the Village Balance Sheet. He noted the General Fund had atotal fund balance of
$10,495,039. The Debt Service Fund had a fund balance of $468,461. The Lehigh/Ferris TIF Fund
had a total fund balance in the amount of $13,031,365. The Waukegan Road TIF Fund had a negative
fund balance in the amount of $1,173,419.
Mr. Berg then explained the difference (reconciliation) of Fund Balances of the government funds to
the governmental activities in the statement of assets. He noted different accounting methods resulted
in different numbers. For example, the modified accrued method is used in the Fund Balance of the
government funds. These do not include capital assets used in governmental activities, certain interest
for payment that is not yet due, longterm liabilities, and unamortized bond premiums.
He noted based on the Village's audit, the General Fund fund balance decreased by $1.2 million from
December 31, 2007, to December 31, 2008. Also, the pension funds were $350,000 short of what the
actuarial had recommended. This discrepancy was explained because levies for pensions are always
one year behind. The Village's combined pension's lost $5 million in 2008 in market value or a loss of
10%. While that is disappointing, it is not as bad as what Mr. Berg has seen in other communities.
Mr. Berg then answered questions from the Board, and the audience. These questions included
whether this year's audit report would have comments. Mr. Berg noted comments from previous years
had been cleared up except for the auditor's comment regarding segregation of duties in the Finance
Department which was due to the shortage of personnel in that department. He also noted a prior year
adjustment due to the receipt of an IRMA deposit had been incorrectly accounted for and this would be
corrected. He noted the repayment of certain funds from the Waukegan Road TIF to the General Fund
would be correctly noted on the final audit report.
A general discussion then ensued regarding advancements to the Lehigh/Ferris TIF District from the
General Fund and the repayment of these funds.
Finally, a discussion ensued regarding the difference between Moody's calculations and the Auditor's
calculation of the Village's fund balance. Mr. Berg stated different methodologies were used and
Moody's approach was more focused on the Village's ability to pay debt.
There being no further questions, Trustee Marcus moved to adjourn the special meeting. The motion
was seconded by Trustee Gomberg and approved unanimously pursuant to a voice at 8:28 pm.
Minutes by: Tony S. Kalogerakos