City Council
Regular MeetingDeKalb, IL · November 8, 2016
Minutes
MINUTES
JOINT CITY COUNCIL AND FINANCE ADVISORY COMMITTEE
CITY OF DEKALB
NOVEMBER 8, 2016
The City Council and Finance Advisory Committee of DeKalb, Illinois, held a joint
meeting on November 8, 2016 in the City Council Chambers of the DeKalb Municipal
Building, 200 South Fourth Street, DeKalb, Illinois.
Mayor Rey called the meeting to order at 5: 30 p.m.
ROLL CALL
City Clerk Jennifer Jeep Johnson called the roll, and the following members of the City
Council were present: Alderman David Jacobson, Alderman Bill Finucane, Alderman
Michael Marquardt, Alderman Bob Snow, Alderman Kate Noreiko, Alderman Tony
Faivre, and Mayor John Rey. Alderman Dave Baker was absent.
The following members of the Finance Advisory Committee (FAC) were present:
Members Tom Teresinski, Lynn Neely, Mike Verbic, Dave Conlin, Ron Partch, and
Chair Mike Peddle.
Also present were: City Manager Anne Marie Gaura, Assistant City Manager Patty
Hoppenstedt, City Attorney Dean Frieders, Finance Director Cathy Haley, Police Chief
Gene Lowery, Fire Chief Eric Hicks, Public Works Director Tim Holdeman, Community
Development Director Jo Ellen Charlton, and City Clerk Jennifer Jeep Johnson.
PUBLIC PARTICIPATION
DeWayne Brown offered that he was glad that DeKalb’s portion of property tax is only
9%. He offered additional thoughts on the budget. He went through each line item and
offered his thoughts on each of them.
Finance Director Haley circulated a memo in the budget from Mark Charvat.
APPROVAL OF MINUTES
There were none.
FINANCIAL POLICIES
Finance Director Haley walked the Council and Committee members through the
language changes that had been made since the last meeting.
FAC Member Teresinski inquired as to the water budget. Brief discussion ensued as to
the revenue for capital projects.
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City Manager Gaura added that Council might also choose to take out low interest loans
in order to complete necessary capital improvements, and that not all of the money
might not be reflected in the budget at this time.
FAC Chair Peddle offered additional commentary on the line item for capital
improvements. He stated that ideally, the fund would be self-sustained, so that
surpluses in other areas would be transferred in to the fund.
Public Works Director Holdeman highlighted that the loan being considered would have
up to 50% principal forgiveness.
Further discussion ensued as to how the money would be moved between operating
funds and the reserve balance, and whether the same would hold true for when a deficit
occurs.
Further discussion ensued as to best practices regarding the fund balance. Mr. Peddle
added that it would be beneficial to build in a buffer for the balance.
Alderman Snow offered that there is a potential danger to that plan as it can lead to
spending down the money so as not to lose it, despite actual operational needs.
MOTION
FAC Chair Peddle moved to approve the language of the budget as amended;
seconded by FAC Member Partch.
Brief discussion ensued as to proper voting procedure, and it was decided that roll
would begin with the FAC.
VOTE
Motion carried on a 9-4-1 roll call vote. Aye: Neely, Conlin, Partch, Peddle, Marquardt,
Snow, Noreiko, Faivre, Rey. Nay: Teresinski, Verbic, Jacobson, Finucane. Absent:
Baker. Mayor Rey declared the motion passed.
FAC Member Teresinski elaborated on some of the changes that he thought should
have been included.
City Manager Gaura suggested that proposed language changes be presented at the
next meeting, so that everyone had a greater opportunity to consider them.
2016 TAX LEVY
Finance Director Haley walked the group through the proposed tax levy. She stated
that Public Works Director Holdeman and his staff have created a plan for the Special
Service Areas (SSAs) listed.
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FAC Chair Peddle stated that he lives in SSA #3. He explained there is a problem that
predates this body as the result of a mistake on the part of the County. He explained
that the decision was made to zero the levy out to make it fairer to the residents who
had been overpaying for 20 years.
City Manager Gaura asked for FAC Chair Peddle to elaborate on why some houses
were paying, and others were not.
FAC Chair Peddle provided additional information on the error made by the County, and
that the City made the decision to zero out the balance.
Brief discussion ensued as to whether or not to revisit SSA #3.
City Manager Gaura provided additional information on the uses of the funds.
Alderman Noreiko asked whether there was any way of knowing which residents are
still living within the neighborhood from the time at which the error occurred. FAC Chair
Peddle estimated that 80-90% of the residents of his area have been there since he
moved in, in 1998.
FAC Chair Peddle offered that the largest areas for mowing (one of the uses for SSA
funds) have been taken care of by the owners.
Alderman Snow wondered whether zeroing out one area is fair to the other areas.
Mayor Rey offered that it would be a good question to investigate with the County, as it
was their error to begin with.
Brief discussion ensued as to what, if any remedy would be available.
Alderman Faivre stated that the Knolls was given the option of a Home Owners
Association (HOA), and they declined in favor of the SSA. He stated that going forward,
it is something that should be considered when setting up developments, but that he
doesn’t have a suggested solution for the problem that currently exists at Heritage
Ridge.
City Attorney Frieders stated that best practices would include the creation of a backup
SSA, even when an HOA is anticipated. It would remain dormant, unless the need to
implement arises. He provided some additional information on the matter.
FAC Member Verbic wondered whether it was an option to approach the County to zero
out just the homes who had paid in already. City Attorney Frieders explained the
possible avenues, and further discussion ensued.
FAC Chair Peddle stated that the covenants that were included upon closing were
never filed with the County. He stated that the easiest way to deal with it moving
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forward is to apply the $1,000. He stated that he was explaining that there was
frustration on the part of the residents, and while due to no fault of the City, there are
concerns.
FAC Member Partch stated his belief that County real estate records should reveal the
turn-over of the neighborhood. He added that something should have been done to
remedy the situation long ago, and there has to be a way to confirm some of this data
without having to rely on the memories of the committee members.
City Attorney Frieders elaborated on the typical process in creating the SSA.
Discussion as to the creation of SSAs continued.
Alderman Jacobson inquired as to why the expenses jumped so high from year-to year
in the Greek Row neighborhood. Finance Director Haley explained that it is the jump in
electricity for the lighting that was added. Alderman Jacobson stated that it seems
really high for only having added 30 or so lights. Further discussion ensued as to the
tax levy dollars.
Public Works Director Holdeman provided additional background on the expenditures
for lighting in the area being discussed.
Alderman Jacobson stated his belief that it is unfair to tell one area of the City that they
need to pay for a special service, and not others.
FAC Member Conlin wondered whether a neighborhood could organize an HOA, and
then the SSA would then become dormant. City Attorney Frieders stated that if the City
no longer required funds, they could. However, public land would introduce some
liability concerns if not properly maintained. Brief discussion ensued as to potential
considerations.
Public Works Director Holdeman returned to the prior discussion concerning Greek
Row, stating that all of the lights in question illuminate private property. Brief discussion
ensued as to the defining characteristics of the SSA.
Finance Director Haley walked the group through the three options available for funding
pensions, which would have various impacts on the fund balance.
Alderman Finucane offered that he prefers option #3, or an overall increase of 4.9%.
FAC Member Verbic expressed his support for option #3 as well, given that police and
fire pensions are being considered.
FAC Chair Peddle disagreed based on the fact that option #1 is the only one that has as
its first priority police and fire pensions. He stated that options #2 and #3 are less than
transparent. He expressed that the pension obligation requires the increase within
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option #1, and that the City is in this position due to failures of past councils who failed
to collect the necessary amounts. He stated he could live with option #2, but option #3
fails to meet fiduciary duties.
Alderman Jacobson inquired as to where the expenditures are going, with Finance
Director Haley stating that it is all for police and fire pensions. Further discussion
ensued.
FAC Chair Peddle illuminated some of the place holder levies to prevent the City from
being left in the lurch if the State eliminates the ability to levy tax.
Alderman Jacobson expressed that he has fielded concerns regarding pension funding
levels, and wondered when in the history of the Council there was a failure to fund the
pension obligations.
FAC Chair Peddle stated that the Council has never contributed fully based on more
conservative actuarial estimates. FAC Chair Peddle also stated that the City had not
met their pension obligations that the State recommended, because an independent
actuary presented a lower number.
Further discussion ensued as to how to correctly and appropriately fund pensions, and
where shortfalls have historically occurred.
Alderman Noreiko stated that the City is facing having to resolve issues that have been
deferred by members of former councils, and that accepting option #3 fails to recognize
pension liabilities outside of police and fire. She also stated that she accepts the
political realities of option #1, so she prefers option #2 as it sends a message that these
realities need to be recognized. She characterized the decisions before the Council and
FAC as a “tough sell,” but that option #2 is the best.
Alderman Snow favored option #2 as it incorporates new construction within DeKalb.
Alderman Finucane stated that options #2 and #3 capture some new dollars, and that
the overall difference is only around $72,000. He stated that minimizing any increase is
preferred.
FAC Member Verbic stated that his support of option #3 does not mean he doesn’t
support all pensions, but rather that the City needs to examine where expenditures can
be reduced.
Alderman Marquardt wondered whether the numbers provided are hard numbers, with
confirmation that they are. Brief discussion ensued as to the procedure for paying the
pensions.
Further brief discussion ensued as to reimbursement procedures, such as fire contracts,
and emergency services. Alderman Marquardt stated his preference for option #3, but
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also suggested an alternative option, via utilization of contracted money coming in.
Finance Director Haley explained that that method wouldn’t work, and that Moody’s had
been very clear that a one-for-one payment is needed to cover pension liabilities.
Alderman Jacobson said the City isn’t fully covering its pensions, and it should actually
be contributing to them at a significantly higher percentage. He stated that the reality is
that the City is refusing to reform the system and it’s going to be forced to pay down the
fund balance that is supposed to be a priority of the City’s. He expressed that even
option #1 is not enough.
Alderman Faivre inquired as to the exact shortfall the City needs to meet. He
expressed that the City is obligated to meet those funds, but he’d like to have a
discussion as to decreasing non-core services to make up for that increase.
City Manager Gaura stated that the switch to the priority based system was created to
prioritize services.
Alderman Faivre stated that it would be a worthwhile discussion, and that he’d like an
opportunity to examine what non-core services could be cut. He expressed favor for a
modified option #1 by holding the levy rate constant as well as the fund balance
constant, while meeting pension obligations.
FAC Member Teresinski raised that the City hasn’t made budget considerations yet,
and the two are linked. He stated that the solution will come from viewing this
holistically. He recommended various other areas that are included as revenue that are
not currently included in this schedule, which would theoretically cover some of the
shortfall discussed.
Alderman Noreiko wondered whether the City is prepared to make significant budgetary
cuts that might take some serious digging to accomplish.
Mayor Rey agreed that the budget before Council reflects months of effort on the part of
the staff to reflect the best budget they can. He believes that revenue adjustments
needed are beyond FY2017.
Alderman Jacobson expressed his belief that the purpose of these meetings is to go
through the budget process line item by line item, and if that isn’t done, just the status
quo is being maintained.
Further discussion ensued.
City Manager Gaura stated that shifting to a priority based budget was in direct
response to the concerns expressed by Council. She stated that the cuts made in 2010
have presented challenges from a budgetary perspective.
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Alderman Noreiko stated her belief that questioning competency and commitment of the
aldermen is not productive. She stated that she depends upon the expertise of the
people in charge of the departments.
FAC Member Verbic stated that Council members shouldn’t be involved in how cuts
happen, as that is what the staff is for. But the fact remains that there is a gap from
year-to-year, and these comments are starting to get to that matter.
FAC Chair Peddle suggested that it was time to decide on the tax levy. The concerns
have been heard, and there is time to consider cuts to the budget after passing the levy.
Alderman Jacobson stated his belief that a decision can’t be made on the levy before a
discussion on the budget.
FAC Chair Peddle stated that the priority is the passing of the levy, because there is a
public meeting on it on Monday.
MOTION
Alderman Marquardt moved to approve option #3; seconded by Alderman Finucane.
Alderman Finucane clarified the rates in question.
Alderman Jacobson stated that option #3 deviates from several financial policies.
Further brief discussion ensued as to the surplus fund.
Alderman Snow didn’t believe that the City should be reducing its fund balance by that
much, but those drastic cuts will absolutely affect core services. He is still in favor of
option #2.
FAC Chair Peddle shared Alderman Snow’s position, and stated he would vote against
option #3, and instead vote in favor of option #2, though he doesn’t believe it’s optimal.
Alderman Jacobson stated the biggest increase was in personnel, not the budget.
VOTE
Motion failed on a 3-9-1 roll call vote. Aye: Teresinski, Conlin, Marquardt. Nay: Neeley,
Verbic, Partch, Peddle, Jacobson, Finucane, Snow, Noreiko, Faivre. Absent: Baker.
Mayor Rey declared the motion failed.
MOTION
FAC Chair Peddle moved to approve option #2; seconded by FAC Member Partch.
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MOTION
Alderman Faivre moved to amend option #2 moves to reduce the increase of $462,000;
no rate increase, and fully funding pensions.
Alderman Faivre withdrew his motion.
Further discussion ensued.
City Manager Gaura reiterated that the course of conversations is being set by the
Council and FAC.
City Attorney Frieders restated that the tax levy is what’s currently being considered,
and the budget has neither been discussed, nor passed.
FAC Chair Peddle stated that unless option #1 is selected, the City will be violating its
pension policy.
VOTE
Motion carried on a 10-3-1 roll call vote. Aye: Verbic, Conlin, Partch, Peddle,
Teresinski, Neely, Finucane, Snow, Noreiko, Faivre. Nay: Jacobson, Marquardt, Rey.
Mayor Rey declared the motion passed.
A short recess was called by Mayor Rey at 7:48 pm.
Mayor Rey called the meeting to order at 8:00 pm.
FY 2017 BUDGET
Finance Director Haley stated that the fund balance has dropped below the 25% based
on the tax levy decision made prior to the break. She read aloud a response from the
Director of the Illinois Municipal League regarding sales tax revenue.
City Manager Gaura stated that in light of the conversations, it is the staff’s
recommendation not to take action regarding revenues. Regarding expenditures,
everything is on the table rather than looking at non-core services, as they have not yet
been categorized by priority based budgeting.
Brief discussion ensued on how to submit comments and questions.
FAC Member Teresinski addressed revenue projections, pointing out three areas of
concern: 1) Home rule sales tax: He pointed out a negative trend, which is one of the
City’s biggest revenues. He also pointed out the projected increase will be 5.7 points,
which is a substantial amount of change; 2) Municipal Sales Tax: Also trending down,
while the City is budgeting a 2.5% increase; and 3) Utility Sales Tax: also trending
down, but have it budgeted as increasing.
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FAC Member Teresinski further added his belief that these areas are problematic
regarding the projected revenue stream. He stated that the projections will be affected
by whether the City’s population increases or decreases.
Finance Director Haley added that she’s always concerned about sales tax revenue,
because the City is so dependent upon it. She stated that these are intended as
working documents, and are updated constantly. Finance Director Haley also stated
that they are projections, and they are constantly adjusted based on data. Her biggest
concern at this point is income tax revenue, which has dropped significantly.
FAC Member Neely stated support for FAC Member Teresinski’s comments, and added
that the drop in campus freshman on the NIU campus was of particular concern,
because it drops retail tax income as well. She stated that the drop in enrollment affects
the City as a municipality. Additionally, the number of people employed at NIU has
dropped, which ultimately affects taxes as well, both retail and income. She
commented on the fact that the students on campus impact on census numbers from
2010, which remain unchanged until 2020 unless we request a special census. She
added that it should potentially be considered in the future.
City Manager Gaura added that conversations with NIU have been held in order to
better determine the real population of DeKalb. Additionally, a decrease in students in
apartment housing has been replaced by families in some areas, which will need to be
factored in as well.
FAC Chair Peddle stated that the population includes students whether they live on
campus or not. He added that there has been a discussion as to the employees of the
City and University and whether they live within the City.
FAC Member Verbic asked whether there was a legal deadline for passing the budget.
City Attorney Frieders answered that the end of the fiscal year, or there would be
considerable operational challenges.
FAC Member Teresinksi added further considerations regarding the tax burden to the
citizens. He added that reductions would be permanent reductions until revenue would
increase or exceed costs. Either real growth, or inflation needs to occur.
FAC Member Verbic stated that cuts in the $850,000 range may be fairly close to what
is needed.
Discussion ensued as to particular line items in the budget, and the best way to
approach the budgetary process.
City Manager Gaura provided further background on how the staff approached their
budgetary cuts, and their reports.
Alderman Jacobson offered that there are soft projections in the budget that wouldn’t
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impact residents on a day-to-day basis. He offered the following suggestions for cuts:
A 10% salary cut across the board for City employees, with a 12% management cut.
He expressed that the people do not feel adequately represented by people at the
higher staff level.
A freeze on pay increases.
Reduce senior management staff by no less than three employees.
Cut crossing guards and have the school district cover it.
Convert non-essential staff from full-time to part-time, to volunteer.
Cut all non-essential budget expenses, such as social services.
Cut cell phones and sponsorships.
Cut dues and subscriptions. He asserted that it has gone up significantly over the
past few years.
Switch to a digital services phone system.
Explore part-time service.
Create volunteer non-certified police presence.
Discontinue lock-out service.
Require the school district to reimburse the social service offer.
Discontinue leaf collection service.
Internal part-time cleaning crew.
Outsource all lawn maintenance and other public works services such as bush
trimming etc.
Discontinue payment for social service bureaus.
Temporarily discontinue all bike path projects.
Open source software licensing.
Discontinue Municipal Band funding.
Outsource beautification efforts to student and community groups.
Explore more internship opportunities.
Explore outsourcing options for other services like HR and Payroll.
Outsource IT and Engineering.
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Reduce the City Manager’s spending to $10,000.
Require that the management staff disclose the relationships between other staff
members for the purposes of transparency.
Mayor Rey stated that he does not recommend immediate response to the suggestions
of Alderman Jacobson, but he encouraged Council members to submit questions or
thoughts after a period of reflection.
Both City Manager Gaura and Assistant City Manager Hoppenstedt addressed a
comment by Alderman Jacobson concerning that some current employees have worked
with City Manager Gaura previously. They vehemently stated that only the most
qualified candidates have been considered for roles, regardless of former employment
relationships.
FAC Chair Peddle stated that the conversation has degenerated to the point where the
meeting isn’t moving forward.
FAC Member Teresinski put forth some further suggestions: a recommendation to reset
the revenue streams that were flat to stop the negative decline, and any spending
increases in the future would be related to the increased revenue base. He further
recommended to reduce the spending in the budget by $1 million dollars.
FAC Chair Peddle viewed them as individual recommendations, and said they are
worthy of discussion.
FAC Member Partch wanted to see the proposals in writing, and stated the City needs
to be careful that people want to live in a place based on the quality of life, and that
making cuts to a budget doesn't tell the full story of a community.
Mayor Rey said that all suggestions should be submitted to Finance Director Haley and
City Manager Gaura.
REVIEW OTHER ITEMS
A confirmation of the next meeting date on November 15, 2016 at 5:30 p.m.
ADJOURNMENT
MOTION
Alderman Jacobson moved to adjourn; seconded by Alderman Noreiko.
VOTE
Motion carried on a 13-0-1 voice vote. Aye: Teresinski, Neeley, Verbic, Conlin, Partch,
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Peddle, Jacobson, Finucane, Marquardt, Snow, Noreiko, Faivre, Rey. Nay: None.
Absent: Baker. Mayor Rey declared the motion carried, and concluded the meeting at
8:58 p.m.
_____________________________________
JENNIFER JEEP JOHNSON, City Clerk
Approved by City Council December 12, 2016.
Approved by the Finance Advisory Committee: August 15, 2017.
Agenda
REVISED AGENDA
Joint City Council & Finance Advisory Committee Meeting
Tuesday, November 8, 2016
5:30 p.m.
City Hall Council Chambers (Second Floor)
A. Call to Order
B. Roll Call for Attendance
C. Public Participation
D. Approval of Minutes
E. Financial Policies (attachment)
1. Review and Discussion
2. Approval of Recommendation
F. 2016 Tax Levy
1. Review and Discussion
2. Approval of Recommendation
G. FY2017 Budget
1. Review and Discussion
2. Approval of Recommendation
H. Other Items
1. Confirm next meeting date November 15, 2016
I. Adjournment
The Finance Advisory Committee’s role (as listed in Chapter 54-11) is to provide well-
reasoned, financially sound recommendations to the Council. Meetings and reporting
shall be on a project-by-project basis or as otherwise assigned by the City Council. The
Finance Advisory Committee shall work in cooperation with the City Council and the
City Manager to analyze the City’s financial policies, long term financial stability, options
for greater efficiencies and possible revenue and expenditure modifications.
DATE: November 8, 2016
TO: Honorable Mayor John Rey
City Council
Finance Advisory Committee
FROM: Anne Marie Gaura, City Manager
Cathy Haley, Finance Director
SUBJECT: Financial Policies
Attached are the changes discussed at the meeting on November 3, 2016. The wording
for the fund balance policy on page 6 of the document reflects the Capital Improvement
Plan which has yet to have a funding source identified. As a part of the annual budget
process these policies are reviewed and this policy can be revisited again in FY2017.
All changes can be reviewed and discussed during tonight’s joint City Council FAC budget
meeting at 5:30 p.m.
Budget Policy
______________________________________________________________________________
Policy Number: 01-01 Date: November 8, 2016July 27,
2015
Purpose: The City Manager shall submit an annual budget to the City Council which is within
the City’s ability to pay. The annual budget should provide for the following:
1. A meeting will be held with the Finance Advisory Committee after June 30 and Formatted: Font: Not Bold
before joint City Council budget discussions begin to discuss the previous year-end Formatted: Numbered + Level: 1 + Numbering Style: 1, 2,
3, … + Start at: 1 + Alignment: Left + Aligned at: 0.25" +
Comprehensive Annual Financial Report, review revenues trends and discuss any new Indent at: 0.5"
policy recommendations. Formatted: Font: Not Bold
Formatted: Font: Not Bold
1.2. Management shall prepare a draft of the annual budget for review by the Formatted: Font: Not Bold
City Council and the Finance Advisory Committee in October/NovemberApril of
each year. The recommended budget should be submitted to the City Council for
review and a public hearing in Novemberin May of each year. The final budget
document shall be submitted to the full membership for approval prior to
December 31June 30 of each year.
2.3. The annual budget should effectively communicate meaningful and
understandable information to the City residents, City Council, City Staff, and other
readers.
3.4. The annual budget shall be monitored on a monthly basis. Revenue and
expenditure budget reports shall be prepared and made available to City
management staff for departmental review on a monthly basis. A quarterly budget
summary report (Treasurer’s Report) shall be presented to the City Council.
4.5. The annual budget should allow for the implementation of as many of the City
Council’s goals and objectives from the 2025 strategic plan as financially possible.
5.6. The annual budget should provide for the adequate funding of all pension
plans (IMRF, Police Pension Fund, and Firefighters Pension Fund). An independent
actuary should be used to determine the annual City contributions to the Police
Pension Fund and the Firefighters Pension Fund and determine if these pension
funds are adequately funded.
6.7. The annual budget should provide funding for the adequate maintenance of
municipal equipment, municipal facilities, and infrastructure.
7.8. The annual budget should set aside-adequate funding (pay-as-you-go
funding) for the replacement of major equipment. Annual funding (depreciation
funding) for these replacements will eliminate major expenditure jumps in the
annual budget when these acquisitions are made.
8.9. During the budget process, the City will assess the need for contingency
funds to be included in the budget to fund unanticipated expenditures that might
arise.
9.10. The annual budget should finance current operating expenditures, excluding
major capital expenditures, with current revenues. The use of reserve funds to
finance current operating expenditures should be carefully considered and avoided
if possible.
10.11. The City should limit the use of the reserve fund to nonrecurring operating
expenditures or capital expenditures, specifically if our anticipated fund balance is
below our Fund Balance Reserve Policy of 25%. This fund reserve will be calculated
by comparing the difference between current assets and current liabilities to
current annual budget operating expenses, excluding enterprise expenditures.
11.12. When the City is required to undertake a budget amendment and/or execute
expenditure transfers to ensure that actual expenditures are within approved budgetary
limits as authorized by City Council the following procedures will be followed.
Administration of these procedures will be the responsibility of the City’s Finance
Director and the Finance Director will sign off that these procedures have been adhered
to for any budget amendments and/or expenditure transfers undertaken by the City.
Those procedures are as follows:
12.a. Upon knowledge that a budget amendment and/or expenditure transfer Formatted
will be required, the City’s Finance Director will inform both the Finance
Committee and the City Council.
13.b. Documents will be drafted by the Finance Director with the reason for Formatted
the required budget amendment and/or expenditure transfer, including the
specific accounts affected and the dollar amounts of said amendments and/or
expenditure transfers.
14.c. Formal City Council review and approval of proposed budget Formatted
amendments and/or expenditure transfers will be required before any
amendments and/or transfers are executed by the Finance Director.
Fund Balance Policy
______________________________________________________________________________
Policy Number: 01-02 Date: November 8, 2016July 27,
2015
Purpose: Fund balance measures the net financial resources available to finance expenditures
of future periods. Fund balance reserve policies are established to avoid cash flow
interruptions, generate investment income, and reduce the need for borrowing. The fund
balance reserves identified within this policy are the minimum balances necessary to
accomplish these objectives.
While keeping in mind the uneven nature of the City’s cash flows, should the projected ending
fiscal year fund balance fall below the desired percentage or amount, the City should create a
plan to restore the appropriate levels.
Part II – Governmental Funds
This section only applies to fund balances reported in the General Fund, Special Revenue Funds,
Debt Service Funds, Capital Projects Funds, and Permanent Funds.
1. Definitions
The five fund balance classifications outlined in GASB Statement 54 follows:
Nonspendable Fund Balance: This classification includes amounts that cannot be spent
because they are either (a) not in spendable form or (b) legally or contractually required
to be maintained intact. This would include items not expected to be converted to cash
including inventories and prepaid amounts. It may also include the long-term amount of
loans and receivables, as well as property acquired for resale and the corpus (principal)
of a permanent fund.
Restricted Fund Balance: This classification should be reported when constraints placed
on the use of resources are either (a) externally imposed by creditors, grantors,
contributors, or laws or regulations of other governments or (b) imposed by law through
constitutional provisions or enabling legislation.
Committed Fund Balance: This classification reflects specific purposes pursuant to
constraints imposed by formal action of the district’s highest level of decision-making
authority (generally the governing board). Also, such constraints can only be removed or
changed by the same form of formal action.
Assigned Fund Balance: This classification reflects amounts that are constrained by the
government’s intent to be used for specific purposes, but meet neither the restricted
nor committed forms of constraint.
Unassigned Fund Balance: This classification is the residual classification for the general
fund only. It is also where negative residual amounts for all other governmental funds
would be reported.
2. Fund Balance Commitments & Assignments
Committed fund balance for a specific use must be taken by formal action of the City
Council. Amendments or modifications of the committed fund balance must also be
approved by formal action of the City Council. In order to be recognized in the annual
Audit Report, commitments of fund balance must be enacted prior to the end of that
Report’s particular fiscal year.
Assigned Fund Balance is intended for specific purposes not imposed by external parties
or City Council’s formal action. The City Council authorizes the City Manager and/or
his/her designee(s) to assign fund balance. Such assignments cannot exceed the
available (spendable, unrestricted, uncommitted) fund balance in any particular Fund.
3. Reserves
General Fund: Unassigned fund balance will be maintained at a minimum level equal to
25% of annual expenditures. The City’s unassigned General Fund balance will be
maintained to provide the municipality with sufficient working capital and a margin of
safety to address emergencies without borrowing.
TIF Funds: The City currently has two budgeted TIF Funds (the Central Area TIF and TIF
II). These Funds should be self-supporting and should maintain a fund balance
equivalent to meet the planned improvements identified in a multi-year capital
schedule(s).
Capital Projects Fund: This Fund is used for resources accumulated and used in right of
way improvements such as street repair, street reconstruction, and curb and gutter
replacement. Costs associated with this Fund must not be State MFT eligible and must
cost over $5,000 and have a useful life of at least three years. The funding source for
this Fund will be the local home rule motor fuel tax. The Capital Projects Fund should
work toward establishingmaintain a fund balance of the planned improvements for the
current fiscal year at a minimum dollar amount to meet the planned improvements
identified in a multi-year capital replacement schedule(s)..
Special Revenue Funds: These Funds are used to account and report the proceeds of
specific revenue sources which are restricted or committed toward expenditures for
specific purposes other than debt service or capital projects. In general, all these Funds
should maintain the least fund balance necessary to cover current fiscal year
expenditures, plus an amount to pay for those expenditures of the subsequent fiscal
year needed to avoid a cash deficit position.
4. Fund Balance Classification
Fund balance classifications depict the nature of the net resources that are reported in a
governmental fund type. An individual governmental fund may include nonspendable
resources and amounts that are restricted, committed, or assigned, or any combination
of those classifications. The General Fund may also include an unassigned amount.
5. Prioritization of Fund Balance Use
When an expenditure is incurred for a purpose which can be paid from multiple fund
balance classifications, the City will spend the most restricted dollars before less
restricted, in the following order:
Nonspendable (if funds become spendable)
Restricted
Committed
Assigned
Unassigned
Part III – Enterprise, Internal Service, & Fiduciary Funds
This section applies to Funds outside the scope of GASB 54.
1. Definitions
Restricted Net Assets: The component of net assets restricted by external parties,
constitutional restrictions, and enabling legislation.
Net Assets Invested in Capital Assets, Net of Related Debt: A component of net assets
calculated by reducing capital assets by accumulated depreciation and the principal
portion of related debt.
Unrestricted Net Assets: The portion of net assets that is neither restricted nor invested
in capital assets net of related debt.
2. Reserves
Water Operating Fund: The unrestricted net assets of the Water Fund will be
maintained at a minimum level equal to 25% of the annual budgeted operational
expenses, plus the budgeted capital improvements. (stemming from the water system
construction impact fees).
Water New Construction Fund: This revenue is from impact fees and is restricted for
any new water main infrastructure in the City of DeKalb.
Water Capital Projects Fund: This fund includes water related expenditures pertaining Formatted: Underline
to fleet, equipment and capital projects. Capital projects include existing water
infrastructure for water mains, wells, treatment plants and water towers.
Airport Fund: The unrestricted net assets of the Airport Fund will be maintained at a
minimum level equal to 25% of annual budgeted operational expenses, plus the
budgeted capital improvements for the current fiscal year.
Other Specified Funds: The Health Insurance Fund should maintain unrestricted net
assets of one month of IPBC premium. Any amount above this threshold may be
transferred to the Workers’ Compensation Fund or Liability/Property Insurance Fund to
be used toward claims, eliminate potential deficits, or maintain net asset policy in these
other Funds.
The Workers’ Compensation Fund should maintain unrestricted net assets of $1,000,000
collectively (or 1 year premium for reinsurance plus the average annual retention costs
associated with that premium).
The Liability/Property Insurance Fund should maintain unrestricted net assets
approximately equivalent to 25% of annual budgeted expenses.
The Fleet Replacement Fund will account for revenue and expenditures associated with
the acquisition of City vehicles and major equipment (i.e. trailers and plows). A
chargeback system from each division and Fund requiring vehicles will be utilized as the
main revenue source. The Fleet Replacement Fund should maintain unrestricted net
assets of the planned replacements for the current fiscal year.
The Equipment Fund is used to track the resources collected for and used in obtaining
major improvements to equipment which costs over $5,000 and has a useful life
expectancy of at least three years. Equipment to be funded includes computer
equipment, office furniture, copy and facsimile machines and other like equipment. A
chargeback system from each division and Fund requiring equipment will be utilized as
the main revenue for the Fund. The Equipment Fund should maintain unrestricted net
assets of the planned replacements for the current fiscal year.
Part IV – Other
1. Cash Deficits
Should any Fund incur a cash deficit by the end of the fiscal year, an interfund loan will
be created with a Fund or Fund(s) which have a cash surplus (unless restricted by
statute or Fund Balance policy).
2. Reporting
Year to date revenues and expenditures for the General Fund will be issued to the City
Council by their second regular meeting of each month.
On a quarterly basis, the City Council shall receive an update on the General Fund with a
year-end forecast for the fiscal year and also receive a summary of major fund balances.
TIF Funds will be reported in greater detail to Council by the end of March and by the
end of September of each year.
The City Council shall receive an update on Workers’ Compensation claims through
December 31 by the end of March and claims through June 30 by the end of September
of each year.
A semi-annual report on economic development incentives will be reported to Council
by the end of March and by the end of September of each year.
An update on retiree insurance costs will be reported annually by the end of March of
each year.
Capital Equipment
Replacement Fund
Policy Number: 01-03 Date: November 8, 2016
Purpose: The City of DeKalb has established the Capital Equipment Replacement Fund (CERF)
to encourage departments to set aside funds each year for the eventual replacement of
existing equipment and to avoid significant fluctuations in the operating budget from one
year to the next. In order to build and maintain sufficient funds on hand to replace items at
the end of their useful life, water tower rental income, revenue received from the E911 Board
for OSSI payments will be dedicated annually as well as, transfers by each department from
the General Fund determined annually through the budget process. The remainder of this
policy is intended to provide guidance as to how the CERF will operate.
Formatted: Font: 12 pt
The Capital Equipment Replacement Fund shall be used only to replace existing equipment
owned by the City. The fund shall not be used to purchase equipment not currently owned Formatted: Font: 12 pt
by the City or as a means to circumvent the process for having new equipment approved by Formatted: Font: 12 pt
the City Council. Requests for new equipment shall be made as part of the annual operating Formatted: Font: 12 pt
budget and must be approved by the City Council before acquisition; Formatted: Font: 12 pt
Only those items which individually have a replacement cost of more than $10,000 or groups
of similar equipment (e.g. personal computers, bullet proof vests, etc.) which, in the
aggregate, exceed $10,000 with a useful life of more than one year shall be included in the
CERF. Departments shall include individual items or groups of items with a value of less than
$10,000 in their annual operating budget.
The cost of items associated with new vehicles such as vehicle markings, light bars, radios and
similar equipment shall be included in the replacement cost of the vehicle.
The replacement cost and useful life for each vehicle or technology related equipment will be
re-evaluated by the individual departments on an annual basis. This re-evaluation may
change the annual amounts that programs contribute for the replacement of each item. The
Department Head, in consultation with the City Manager and the Finance Director shall
determine when a vehicle or equipment is due for replacement. Final capital asset
replacement decisions using CERF monies will be discussed and approved by the City Council
as part of the annual budget process.
When CERF equipment is sold, the proceeds of the sale shall be credited to the CERF Fund.
From time to time, departments may be assigned previously used technology related
equipment from within their department or another department in the City. The Director of
Information Technology, in consultation with the Department Head, shall recommend that
such equipment be assigned to a department when it meets the department’s needs and
when doing so will help avoid the expense of purchasing new equipment. Consideration shall
be given to the annual operating cost of maintaining the used equipment when deciding
whether or not to continue using it. The City Manager shall have the final say in determining
whether or not previously used technology is assigned to a department. Formatted: Font: 12 pt
Formatted: Font: 12 pt
Revenue and
Expenditure Policy
______________________________________________________________________________
Policy Number: 01-043 Date: November 8, 2016July 27,
2015
Formatted: Tab stops: 4", Left
Purpose: Revenues
The City desires to maintain a diversified and stable revenue base to reduce the impacts
of fluctuations in any one revenue source. The revenue mix combines elastic and
inelastic revenue sources to minimize the effects of an economic downturn. The City
also incorporates the following principles related to revenues as it furthers its financial
planning and fulfills its fiscal responsibilities:
1. The City prefers to keep its property tax rate as low as possible. The
following components shall be followed in priority order each year when
establishing the property tax levy:
a. Levy for Police, Fire and IMRF pensions per actuary calculations. If
the actuarial reports indicated a higher employer contribution is
needed, said increase will need to be added to the City’s overall
previous year levy request to avoid underfunding problems.
b. Levy for FICA.
c. Levy for general obligation bond principal and interest less
abatements.
d. Levy to support General Fund operations including Police, Fire,
Public Works, Community Development, Finance, Human
Resources, I.T. and Administration. The annual increase for this
component should not exceed the rate of inflation.
e. Levy to fund additional personnel as determined by the City
Council.
2. User charges and tap-on fees will be sufficient to finance all operating and
debt service costs for the Water Fund.
3. The City Manager should impose spending limits if, in his/her judgment,
revenues will be below original estimates. Staff should review and monitor
on a monthly basis expenditures to assure control of spending within
available revenues.
4. Ongoing transfers will be made from the General Fund to the Fleet
Replacement fund on an annual basis to help plan for the purchasing of large
capital equipment needs.
Expenditures
The City will strive to adhere to the following policies:
1. The City will consistently budget the minimum level of expenditures which
will provide for the public well-being and safety of the residents and
businesses of the community.
2. Expenditures will be within the confines of generated revenue. Fund
balances will not be used to pay for operating expenditures except in the
case of emergencies and after careful consideration.
Accounting, Auditing
and Financial Reporting Policy
______________________________________________________________________________
Policy Number: 01-054 Date: November 8July 27, 2015
Purpose: The City shall have an annual audit conducted on its financial records by a qualified,
independent public accounting firm. The City should request proposals from qualified
independent accounting firms to conduct an annual audit of its financial statements every five
to six yearsby the use of a request for proposal (RFP) process. In accordance with Government
Finance Officers Association’s (GFOA’s) Best Practice Guidelines, the current auditors can be
included in the RFP process, however, it is recommended changing the audit team if the same
firm came in with the best proposal.
The audit shall be conducted on an annual basis to be completed and filed within six months
after the end of each fiscal year.
The City should submit its Comprehensive Annual Financial Report (CAFR) to the Government
Finance Officers Association’s (GFOA) Certificate of Achievement for Excellence in Financial
Reporting Program.
The City’s financial statements shall be prepared according to generally-accepted accounting
principles (GAAP) as promulgated by the Governmental Accounting Standards Council (GASB).
The City should contract with an independent actuary to determine the City’s annual
contribution to the Police and Fire Pension Funds.
When the City prepares monthly significant account reconciliations, prepares the year-end
adjustments, and prepares the year-end financial statements, the following procedures will be
followed. Administration of these procedures will be the responsibility of the City’s Finance
Director and the Finance Director will sign off that these procedures have been adhered to on a
monthly and year-end basis. Those procedures are as follows:
The Finance Department, under approval of the Finance Director, will prepare a listing of all
significant accounts of the City that are to be reconciled on a monthly basis. These accounts are
to include at a minimum all balance sheet accounts at month-end, all grant related revenue and
expense accounts, all restricted use revenue accounts and all other accounts deemed necessary
by the Finance Department to be reviewed on a monthly basis. A monthly checklist of these
accounts will be prepared and signed off by the Finance Director.
Within 90 days after the close of the fiscal year the Finance Department will be required to
submit to the Finance Director all required year-end close adjustments. These adjustments are
to be approved and reviewed by the Finance Director and posted to the general ledger prior to
the auditors beginning audit fieldwork.
The City’s auditors assist in the preparation of the City’s financial statements, including the
footnote disclosures, in accordance with generally accepted accounting principles. Further, the
City will review a complete initial draft and final draft of the financial statements as prepared by
the auditors. The City Finance Director will be responsible for a final complete review of the
financial statements, including the footnotes disclosures, to ensure that the financial
statements are prepared in accordance with generally accepted accounting principles. Any
questions or concerns related to the financial statements will be discussed with the City’s
auditors.
The City’s Comprehensive Annual Financial Report and Management Letteraudited financial
statements will be approved by the City Council and available for distribution no later than six
months after the close of the City’s fiscal year-end.
Capital Asset Policy
______________________________________________________________________________
Policy Number: 01-065 Date: November 8, 2016July 27,
2015
Purpose: Capital assets purchased or acquired with an original cost of $25,000 or more are
reported at historical cost or estimated historical cost. Contributed assets are reported at fair
market value as of the date received. Additions, improvements and other capital outlays that
significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs
and maintenance are expensed as incurred.
The accounting and financial reporting treatment applied to a fund is determined by its
measurement focus. General capital assets are long-lived assets of the City as a whole.
Infrastructure such as streets, traffic signals and signs are capitalized. In the case of the initial
capitalization of general infrastructure assets (i.e., those reported by the governmental
activities) the government chose to include all such items regardless of their acquisition date.
The valuation basis for general capital assets are historical cost, or where historical cost is not
available, estimated historical cost based on replacement costs.
Capital assets in the proprietary funds are capitalized in the fund in which they are utilized. The
valuation bases for proprietary fund capital assets are the same as those used for the general
capital assets. Donated capital assets are capitalized at estimated fair market value on the date
donated.
Depreciation on all assets is computed and recorded using the straight-line method of
depreciation over the following estimated useful lives:
Buildings and Building Improvements 40 to 50 Years
Equipment 10 to 20 Years
Vehicles 3 to 20 Years
Infrastructure 25 to 50 Years
Water Distribution System 40 to 65 Years
When capital assets are purchased with the use of federal funds the following procedures will
be completed by the City. Administration of these procedures will be the responsibility of the
City’s Finance Director and the Finance Director will sign off that these procedures have been
adhered to for the purchase of every federal funded capital asset. Those procedures are as
follows:
Capital assets purchased with federal funds will be tagged with a special notation of “F” in
addition to the regular identification number system used by the City.
The description of the capital asset in the City’s capital asset records will also include the words
“federally funded” before the description of the specific asset acquired.
The source of federal funds must be noted and include a description of who holds title to the
assets, along with the asset acquisition date, the asset cost, location of the asset, condition and
use/purpose of the asset.
The portion of the asset that is federally funded must also be noted in the City’s capital asset
records. Upon disposition of any federally acquired assets, the City must note in the capital
asset records the disposition date and sale price.
A physical inventory of all assets acquired with federal funds will be performed on a biennial
basis. The results of the City’s inventory of federally funded capital assets will be reconciled to
the City’s capital asset records to ensure accuracy. This inventory will be overseen and
approved by the City’s Finance Director.
Debt Management Policy
______________________________________________________________________________
Policy Number: 01-076 Date: November 8, 2016July 27,
2015
Purpose: The City of DeKalb developed this Debt Management Policy to help ensure the City’s
credit worthiness and to provide a functional tool for debt management and capital planning.
The City of DeKalb faces continuing capital infrastructure requirements to meet the increasing
needs of its citizens. The City limits long-term debt to only those capital improvements that
cannot be financed from current revenues. The City of DeKalb will not use long-term debt to
fund operating programs.
The costs of the capital requirements will be met through the issuance of various types of debt
instruments. Consequently, the City needs to anticipate increases in debt levels based upon
historical data. With these increases, the effects of decisions regarding the type of issue,
method of sale, and payment structure become ever more critical to the City's financial well-
being. To help ensure the City's credit worthiness, an established program of managing the
City's debt becomes essential.
To this end, the City Council recognizes this "Debt Management Policy" to be financially
prudent and in the City's best economic interest. This policy will provide a functional tool for
debt management and capital planning, and enhance the City's reputation for managing its
debt in a conservative and prudent manner.
Goals Related to the Issuance of General Obligation and Revenue Bond Debt:
The City shall pursue the following goals below when issuing debt. Though the City may not have
achieved all these goals as of yet, these are long term objectives for which we must continue to
strive toward.
1. Maintain at least an Aa3 (Moody’s) or equivalent credit rating for each general
obligation debt issue.
2. Take all practical precautions to avoid any financial decision which will negatively
impact current credit ratings on existing or future debt issues.
3. The City should attain a General Fund unassigned balance equal to a minimum of
twenty five percent (25%) of total annual expenditures.appropriations, exclusive of
inter fund transfers.
4. Consider market timing.
5. Determine the amortization (maturity) schedule which will best fit with the overall
debt structure of the City’s general obligation debt and related tax levy at the time
the new debt is issued. The City may choose to delay principal payments or
capitalized interest during project construction. For issuance of revenue bonds, the
amortization schedule which will best fit with the overall debt structure of the fund
and its related rate structure will be considered. Consideration will be given to
coordinating the length of the issue with the lives of assets, whenever practicable,
while considering repair and replacement costs of those assets to be incurred in
future years as an offset to the useful lives, and the related length of time in the
payout structure.
6. Consider the impact of such new debt on overlapping debt and the financing plans
of local governments which overlap, or underlie the City.
7. Assess financial alternatives to include new and innovative financing approaches,
including whenever feasible, categorical grants, revolving loans or other
state/federal aid.
8. Minimize debt interest costs.
Debt Issuance in General:
1. Authority and Purposes of the Issuance of Debt
The laws of the State of Illinois authorize the issuance of debt by the City. The Local
Bond Law confers upon municipalities the power and authority to contract debt,
borrow money, and issue bonds for public improvement projects as defined therein.
Under these provisions, the City may contract debt to pay for the cost of acquiring,
constructing, reconstructing, improving, extending, enlarging, and equipping such
projects or to refund bonds. The City Charter authorizes the City Council to incur debt
by issuing bonds for any lawful municipal purpose as authorized by the State
Constitution or its Home Rule Powers.
2. Short-Term Debt (three years or less)
The City may issue short-term debt to finance projects or portions of projects for which
the City ultimately intends to issue long-term debt. This will be used to provide interim
financing which will eventually be refunded with proceeds of long-term obligations,
which may include, but not be limited to, bond anticipation notes or variable rate
demand notes. The City will have an estimated timeframe when any short-term debt
issue will eventually be converted into long-term debt.
a. Line of Credit
The City may also issue debt instruments to meet cash flow requirements.
With the approval of the City Council, the City may establish a tax-exempt
line of credit with a financial institution selected through a competitive
process. This line should have a limit of $2,500,000. Draws should be
made on the line of credit when the need for financing is needed to meet
operating expenditures on a temporary basis. Draws made on the line of
credit must be requested by the Finance Director and approved by the
City Manager and the City Council.
3. Long-Term Debt (more than three years)
The City may issue long-term debt which may include, but not limited to, general
obligation bonds, certificates of participation, capital appreciation bonds, special
assessment bonds, self-liquidating bonds and double barreled bonds.
Level or declining debt service should be employed unless operational matters
dictate otherwise, or except to achieve overall level debt service with existing bonds.
The City shall be mindful of the potential benefits of bank qualification and will strive
to limit its annual issuance of debt to $10 million or less when such estimated
benefits are greater than the benefits of exceeding the bank qualification limit.
Should subsequent changes in the law raise this limit, then the City policy will be
adjusted accordingly.
The cost of issuance of private activity bonds is usually higher than for governmental
purpose bonds. Consequently, private activity bonds will be issued only when they
will economically benefit the City.
The cost of taxable debt is higher than for tax-exempt debt. However, the issuance
of taxable debt is mandated in some circumstances and may allow valuable
flexibility in subsequent contracts with users or managers of the improvement
constructed with the bond proceeds. In addition, there may be circumstances in
which the issuance of taxable debt may be more cost effective than the issuance of
tax-exempt debt. Therefore, the City will usually issue obligations tax exempt, but
may occasionally issue taxable obligations.
a. Capital Leasing
The City may also enter into long-term leases for public facilities, property,
and equipment with a useful life greater than one year that costs less than
$500,000. The City should be limited to issuing a capital lease of no more
than $1,000,000 in a fiscal year.
Whenever a lease is arranged with a private sector entity, a tax-exempt
rate should be sought. Whenever a lease is arranged with a government
or other tax-exempt entity, the City should strive to obtain an explicitly
defined taxable rate so that the lease will not be counted in the City’s
total annual borrowing subject to arbitrage rebate.
The lease agreement should permit the City to refinance the lease at no
more than reasonable cost should the City decide to do so. A lease which
can be called at will is preferable to one which can merely be accelerated.
4. Capital Improvement Program
The Capital Improvement Program (CIP), approved by the City Council as part of the Formatted: Not Highlight
annual budget, should determine the City's capital needs. The program should be a
five-year plan for the acquisition, development and/or improvement of the City's
infrastructure. Projects included in the CIP should be prioritized; and the means for
financing each should be identified. If the current resources are insufficient to meet
the needs identified in the CIP, the City Council may consider incurring debt to fund the
shortfall. The City Council may also consider incurring debt to fund multiple years of
the Capital Improvement Program. The CIP should be revised and supplemented each
year to maintain and test compliance in keeping with the City's Debt stated Formatted: Not Highlight
Management Policy Financial Policy #01-07.policies on debt management. Formatted: Not Highlight
Formatted: Not Highlight
5. Structure of Debt Issues
The duration of a debt issue should not remain outstanding beyond the asset’s useful
life. Each new bond issue should be structured to be callable in 10 years. The City
should design the financing schedule and repayment of debt so as to take best
advantage of market conditions and, as practical, to recapture or maximize its credit
capacity for future use, and moderate the impact to the taxpayer. In keeping with the
stated goals of this debt management policy, the City should structure each general
obligation issue (except refunding and mini-bond issues) to comply with the rapidity of
debt repayment provisions in Section III. E-4 following.
6. Credit Enhancements
Credit enhancements are mechanisms which guarantee principal and interest
payments. Typically they include bond insurance and/or a line or letter of credit.
Usually this will bring a lower interest rate and a higher rating from the rating agencies,
thus lowering costs.
The City may enter into agreements with commercial banks or other financial entities
for the purpose of acquiring credit enhancements when their use is judged cost
effective or otherwise advantageous. Any such agreements shall be approved by the
City Council.
7. Inclusion of Local Institutions
Whenever practical and in the best interest of promoting the City of DeKalb, local
financial institutions are to be offered the opportunity to bid on debt instruments.
Legal Constraints and Other Limitations on the Issuance of Debt
1. State Law
30 ILCS 305/0.01, et. seq.: the short title is "The Bond Authorization Act."
2. Authority for Debt
The City may, by bond ordinance, incur indebtedness or borrow money, and authorize
the issue of negotiable obligations, including refunding bonds, for any capital
improvement of property, land acquisition, or any other lawful purpose with approval
by the City Council.
3. Debt Limitation
The City of DeKalb is a home rule community. As such, the debt limitations of the bond
laws are not applicable because the General Assembly has set no limits for home rule
municipalities.
4. Methods of Sale
When feasible and economical, obligations should be issued by competitive rather
than negotiated sale. A sale may be negotiated when the issue is predominantly a
refunding issue or in other non-routine situations which require more flexibility than
a competitive offer allows. Whenever the option exists to offer an issue either for
competition or for negotiation, analysis of the options should be performed to aid in
the decision-making process. When a sale is not competitively bid, the City will
publicly present the reasons and select the underwriter or direct purchaser. If a
Financial Advisor is hired to assist the City in bond issuance, the Financial Advisor will
not underwrite any debt issues on which it is advising.
The criteria used to select an underwriter in a competitive sale should be the true
interest cost. In a negotiated sale, the underwriter may be selected with or without
a request for proposals (RFP). The criteria used to select an underwriter in a
negotiated sale should include the following:
Overall experience
Marketing philosophy
Capability
Previous experience as managing a co-managing partner
Financial statements
Public Finance team and resources
Underwriter’s discount
When cost/beneficial, the City may privately place its debt. Since no underwriter
participates in a private placement, it may result in lower costs of issuance. Private
placement is sometimes an option for small issues.
5. Credit Implications
When issuing new debt, the City should strive not to exceed credit industry
benchmarks where applicable. Therefore, the following factors should be considered
in developing debt issuance plans:
a. Ratio of Gross Bonded Debt to Full Market Value of Taxable Property
The formula for this computation is Gross Bonded Debt, which is the total
outstanding debt, divided by the current Full Market Value of Taxable
Property as determined by the Township Assessors. The City should not
exceed 2% of Gross Bonded Debt per Full Market Value of Taxable Property.
b. Gross Bonded Debt Per Capita
The formula for this computation is Gross Bonded Debt divided by the
current population as determined by the most recent U.S. Census. The City
should not exceed $1,200 for Gross Bonded Debt per capita.
c. Ratio of Annual Debt Service to General Fund Expenditures
The formula for this computation is annual debt service expenditures
divided by General Fund expenditures (excluding certain interfund
transfers). The City should not exceed 10% of General Fund expenditures
for annual debt service.
d. Rapidity of Debt Service Repayment
The City's general obligation bond issues should be so structured whereby
the duration of the debt should not exceed 120% of the life of the asset.
e. Current Fund Balance General Fund Cash Reserve
The City should maintain a General Fund unassigned balance equal to a
minimum of twenty five percent (25%) of total annual appropriations,
exclusive of interfund transfers. Such calculation, including a projection to
June 30th (of the current fiscal year), should be made on an annual basis by
the Finance Director (or designee) during the budget process.
Debt Administration
1. Financial Disclosures
The City shall prepare appropriate disclosures as required by the Securities and
Exchange Commission, the federal government, the State of Illinois, rating agencies,
underwriters, investors, agencies, taxpayers, and other appropriate entities and
persons to ensure compliance with applicable laws and regulations.
2. Review of Financing Proposals
All capital financing proposals that involve a pledge of the City's credit through the sale
of securities, execution of loans or lease agreements and/or otherwise directly involve
the lending or pledging of the City's credit shall be referred to the Finance Director who
shall determine the financial feasibility, and the impact on existing debt of such
proposal, and shall make recommendations accordingly to the City Manager.
3. Establishing Financing Priorities
The Finance Director shall administer and coordinate the City's debt issuance program
and activities, including timing of issuance, method of sale, structuring the issue, and
marketing strategies. The Finance Director along with the City's bond consultants shall
meet, as appropriate, with the City Manager and the City Council regarding the status
of the current year's program and to make specific recommendations.
4. Credit Rating
The City should endeavor to maintain and/or to improve its credit rating and staff will
specifically discuss with the City Council any proposal which might cause that rating to
be lowered.
Before a general obligation bond is issued, the City will update its rating from at least
one national rating agency. The City Manager, Finance Director, and the City's bond
consultants should meet with a rating agency to disclose the City's capital plans, debt
issuance program, and other appropriate financial information as required by the
rating agency.
5. Refunding Policy
The City should consider refunding outstanding debt when legally permissible and
financially advantageous. When refunding for savings purposes, a net present value
debt service savings of at least two percent or greater must be achieved. Depending
on the time to maturity and the absolute level of interest rates of the refunding
candidate this target may change. For longer maturities the target can be higher, for
shorter maturities, lower. For higher interest rates the target may be higher, for
lower rates it could be lower. There may be circumstances where the City may
refund bonds for restructuring purposes that may not generate any savings.
6. Investment of Borrowed Proceeds
The City acknowledges its ongoing fiduciary responsibilities to actively manage the
proceeds of debt issued for public purposes in a manner that is consistent with Illinois
statutes that govern the investment of public funds, and consistent with the permitted
securities covenants of related bond documents executed by the City. The
management of public funds should enable the City to respond to changes in markets
or changes in payment or construction schedules so as to (i) optimize returns, (ii) insure
liquidity, and (iii) minimize risk. The City will invest bond proceeds in accordance with
the City’s investment policy and federal arbitrage requirements.
Glossary of Terms:
Ad Valorem Tax - A direct tax based "according to value" of property.
Advanced Refunding Bonds - Bonds issued to refund an outstanding bond issue prior to the date
on which the outstanding bonds become due or callable. Proceeds of the advanced refunding
bonds are deposited in escrow with a fiduciary, invested in United States Treasury Bonds or other
authorized securities, and used to redeem the underlying bonds at maturity or call date.
Amortization - the process of paying the principal amount of an issue of bonds by periodic
payments either directly to bondholders or to a sinking fund for the benefit of bondholders.
Arbitrage - Usually refers to the difference between the interest paid on the tax-exempt securities
and the interest earned by investing the proceeds in higher yielding taxable securities. Internal
Revenue Service regulations govern arbitrage (reference I.R.S. Reg. 1.103-13 through 1.103-15).
Arbitrage Bonds - Bonds which are deemed by the I.R.S. to violate federal arbitrage regulations.
The interest on such bonds becomes taxable and the bondholders must include this interest as
part of gross income for federal income tax purposes (I.R.S. Reg. 1.103-13 through 1.103-15).
Assessed Value - An annual determination of the just or fair market value of property for purposes
of ad valorem taxation.
Basis Point - 1/100 of one percent.
Bond - Written evidence of the issuer's obligation to repay a specified principal amount on a date
certain, together with interest at a stated rate, or according to a formula for determining that rate.
Bond Anticipation Notes (BANS) - Short-term interest bearing notes issued by a government in
anticipation of bonds to be issued at a later date. The notes are retired from proceeds of the bond
issue to which they are related.
Bond Counsel - An attorney retained by the City to render a legal opinion whether the City is
authorized to issue the proposed bonds, has met all legal requirements necessary for issuance,
and whether interest on the bonds is, or is not, exempt from federal and state income taxation.
Bonded Debt - The portion of an issuers total indebtedness represented by outstanding bonds.
Direct Debt or Gross Bonded Debt - The sum of the total bonded debt and any unfunded
debt of the issuer.
Net Direct Debt or Net Bonded Debt - Direct debt less sinking fund accumulations and all
self-supporting debt.
Total Overall Debt - Net direct debt plus the issuer's applicable share of the direct debt of
all overlapping jurisdictions.
Net Overall Debt - Net direct debt plus the issuer's applicable share of the net direct debt
of all overlapping jurisdictions.
Overlapping Debt - The issuer's proportionate share of the debt of other local
governmental units which either overlap or underlie it.
Callable Bond - A bond which permits or requires the issuer to redeem the obligation before the
stated maturity date at a specified price, the call price, usually at or above par value.
Capital Appreciation Bonds (CAB) - A long-term security on which the investment return is
reinvested at a stated compound rate until maturity. The investor receives a single payment at
maturity representing both the principal and investment return.
Certificates of Participation - Documents, in fully registered form, that act like bonds. However,
security for the certificates is the government's intent to make annual appropriations during the
term of a lease agreement. No pledge of full faith and credit of the government is made.
Consequently, the obligation of the government to make basic rental payments does not
constitute an indebtedness of the government.
Commercial Paper - Very short-term, unsecured promissory notes issued in either registered or
bearer form, and usually backed by a line of credit with a bank.
Coupon Rate - The annual rate of interest payable on a coupon bond (a bearer bond or bond
registered as to principal only, carrying coupons evidencing future interest payments), expressed
as a percentage of the principal amount.
Debt Limit - The maximum amount of debt which an issuer is permitted in incur under
constitutional, statutory or charter provision.
Debt Service - The amount of money necessary to pay interest on an outstanding debt, the serial
maturities of principal for serial bonds, and the required contributions to an amortization or
sinking fund for term bonds.
Demand Notes (Variable Rate) - A short-term security which is subject to a frequently available
put option feature under which the holder may put the security back to the issuer after giving
specified notice. Many of these securities are floating or variable rate, with the put option
exercisable on dates on which the floating rate changes.
Double Barreled Bonds (Combination Bonds) - A bond which is payable from the revenues of a
governmental enterprise and are also backed by the full faith and credit of the governmental unit.
Enterprise Funds - Funds that are financed and operated in a manner similar to private business in
that goods and services provided are financed primarily through user charges.
General Obligation Bond - A bond for whose payment the full faith and credit of the issuer has
been pledged. More commonly, but not necessarily, general obligation bonds are payable from ad
valorem property taxes and other general revenues.
Lease Purchase Agreement (Capital Lease) - A contractual agreement whereby the government
borrows funds from a financial institution or a vendor to pay for capital acquisition. The title to the
asset(s) normally belongs to the government with the lessor acquiring security interest or
appropriate lien therein.
Letter of Credit - A commitment, usually made by a commercial bank, to honor demands for
payment of a debt upon compliance with conditions and/or the occurrence of certain events
specified under the terms of the commitment.
Level Debt Service - An arrangement of serial maturities in which the amount of principal maturing
increases at approximately the same rate as the amount of interest declines.
Long-Term Debt - Long-term debt is defined as any debt incurred whose final maturity is more
than three years.
Maturity - The date upon which the principal of a municipal bond becomes due and payable to
bondholders.
Mini-bonds - A small denomination bond directly marketed to the public.
Net Interest Cost (NIC) - The traditional method of calculating bids for new issues of municipal
securities. The total dollar amount of interest over the life of the bonds is adjusted by the amount
of premium or discount bid, and then reduced to an average annual rate. The other method is
known as the true interest cost (see "true interest cost").
Offering Circular - Usually a preliminary and final document prepared to describe or disclose to
investors and dealers information about an issue of securities expected to be offered in the
primary market. As a part of the offering circular, an official statement should be prepared by the
City describing the debt and other pertinent financial and demographic data used to market the
bonds to potential buyers.
Other Contractual Debt - Purchase contracts and other contractual debt other than bonds and
notes. Other contractual debt does not affect annual debt limitation and is not a part of
indebtedness within the meaning of any constitution or statutory debt limitation or restriction.
Par Value or Face Amount - In the case of bonds, the amount of principal which must be paid at
maturity.
Parity Bonds - Two or more issues of bonds which have the same priority of claim or lien against
pledged revenues or the issuer's full faith and credit pledge.
Principal - The face amount or par value of a bond or issue of bonds payable on stated dates of
maturity.
Private Activity Bonds - One of two categories of bonds established under the Tax Reform Act of
1986, both of whom are subject to certain tests and State volume caps to preserve tax exemption.
Ratings - Evaluations of the credit quality of notes and bonds, usually made by independent rating
services, which generally measure the probability of the timely repayment of principal and interest
on municipal bonds.
Refunding Bonds - Bonds issued to retire bonds already outstanding.
Registered Bond - A bond listed with the registrar as to ownership, which cannot be sold or
exchanged without a change of registration.
Reserve Fund - A fund which may be used to pay debt service if the sources of the pledged
revenues do not generate sufficient funds to satisfy the debt service requirements.
Self-Supporting or Self Liquidating Debt - Debt that is to be repaid from proceeds derived
exclusively from the enterprise activity for which the debt was issued.
Short-Term Debt - Short-term debt is defined as any debt incurred whose final maturity is three
years or less.
Spread - The income earned by the underwriting syndicate as a result of differences in the price
paid to the issuer for a new issue of municipal bonds, and the prices at which the bonds are sold to
the investing public, usually expressed in points or fractions thereof.
Tax-Exempt Bonds - For municipal bonds issued by the City tax-exempt means interest on the
bonds are not included in gross income for federal income tax purposes; the bonds are not items
of tax preference for purposes of the federal, alternative minimum income tax imposed on
individuals and corporations; and the bonds are exempt from taxation by the State of Illinois.
Tax Increment Bonds - Bonds secured by the incremental property tax revenues generated from a
redevelopment project area.
Term Bonds - Bonds coming due in a single maturity.
True Interest Cost (TIC) - Also known as Canadian Interest Cost. A rate which, when used to
discount each amount of debt service payable in a bond issue, will produce a present value
precisely equal to the amount of money received by the issuer in exchange for the bonds. The TIC
method considers the time value of money while the net interest cost (NIC) method does not.
Yield to Maturity - The rate of return to the investor earned from payments of principal and
interest, with interest compounded semiannually and assuming that interest paid is reinvested at
the same rate.
Zero Coupon Bond - A bond which pays no interest, but is issued at a deep discount from par,
appreciating to its full value at maturity.
Investment Policy
______________________________________________________________________________
Policy Number: 01-087 Date: November 8, 2016July 27,
2015
Purpose:
1.01 Policy
It is the policy of the City of DeKalb to invest public funds in a manner that will conform to state Formatted: Left
statute, maximize security, meet daily cash flow demands, and attempt to attain a market rate
of return.
1.02 Scope
This policy includes all funds governed by the City Council and, except for cash in certain
restricted funds, the City of DeKalb will consolidate cash balances to maximize investment
earnings. Investment income will be allocated to the various individual funds based on their
respective participation. Interest income derived from non-fund specific consolidated bank
accounts will be attributed to the General Fund.
1.03 Objectives
The primary objectives of the City of DeKalb's investment activities are, in order of priority:
A. Safety of principal Investments shall be undertaken in a manner that seeks to ensure the
preservation of capital in the overall portfolio, while mitigating credit and interest rate risks,
as defined below:
1. Credit Risk, that is, the risk of loss due to the failure of the security issuer or backer. It
may be mitigated by:
Limiting investments to the safest types of securities;
Pre-qualifying the financial institutions, broker/dealers, intermediaries, and
advisors with which the City will do business; and
Diversifying the investment portfolio so that potential losses on individual securities
will be minimized.
2. Interest Rate Risk, that is, the risk that the market value of securities in the portfolio
will fail due to changes in general interest rates. It may be mitigated by:
Structuring the investment portfolio so that securities mature to meet cash
requirements for ongoing operations, thereby avoiding the need to sell securities on
the open market prior to maturity, and
By investing operating funds primarily in shorter-term securities
B. Liquidity, so as to meet all operating requirements that may be reasonably anticipated, the
portfolio shall consist largely of securities with active secondary or resale markets (dynamic
liquidity).
C. Yield, with the objective of attaining a market rate of return throughout budgetary and
economic cycles, taking into account the investment risk constraints and liquidity needs.
Return on investment is of least importance compared to the safety and liquidity objectives
described above. The core of investments shall be limited to relatively low risk securities in
anticipation of earning a fair return relative to the risk being assumed. Securities shall not
be sold prior to maturity with the following exceptions:
1. a declining credit security could be sold early to avoid loss of principal;
2. a security swap would improve the quality, yield, or target duration in the portfolio; or,
3. liquidity needs of the portfolio require that the security be sold.
1.04 Standards of Care
A. Prudence
The standard of prudence to be used by investment officials shall be the "prudent person"
standard and shall be applied in the context of managing an overall portfolio. Investment
officers and employees of the City of DeKalb, while acting in good faith in accordance with this
investment policy and any written procedures as might be established, shall be relieved of
personal liability for an individual security’s credit risk or market price changes.
Investments shall be made with judgment and care, under circumstances then prevailing, which
persons of prudence, discretion and intelligence exercise in the management of their own
affairs, not for speculation, but for investment, considering the probable safety of their capital
as well as the probable income to be derived.
B. Ethics and Conflicts of Interest
City of DeKalb employees involved in the investment process shall refrain from personal
business activity that could conflict with the proper execution and management of the
investment program, or that could impair their ability to make impartial decisions. They shall
disclose any material interests in financial institutions with which they conduct business. They
shall further disclose any personal financial/investment positions that could be related to the
performance of the investment portfolio. Employees shall refrain from undertaking personal
investment transactions with the same individual with whom business is conducted on behalf
of their entity.
C. Delegation of Authority
Authority to manage the investment program is granted to the authorized municipal official
described in Chapter 54 of the DeKalb Municipal Code. Responsibility for the operation of the
investment program is hereby delegated to the Finance Director or his/her designee, who shall
carry out established written procedures and internal controls for the operation of the
investment program consistent with this investment policy. These procedures shall include
references to: safekeeping, delivery vs. payment, investment accounting, repurchase
agreements, wire transfer agreements collateral/depository agreements and banking services
contracts. All investments shall follow the investment plan designed and approved by the
Finance Director or his/her designee prior to execution.
No person may engage in an investment transaction except as provided under the terms of this
policy and the procedures established by the DeKalb City Council. The Finance Director, as
Chief Financial Officer, shall be accountable for all transactions undertaken and shall establish a
system of controls to regulate the activities of subordinate officials.
1.05 Safekeeping and Custody
All trades where applicable will be executed by Delivery vs. Payment (DVP). This shall ensure
that securities are deposited in the eligible financial institution prior to the release of funds.
Securities will be held by a third party custodian as evidenced by safekeeping receipts.
1.06 Authorized Financial Dealers and Institutions
A list shall be maintained of financial institutions authorized to provide investment services to
the City of DeKalb, as well as a list of approved security broker/dealers (or their respective
custodial clearing firm) selected for creditworthiness (minimum capital requirement of
$10,000,000 and at least five years of operation). These may include "primary" dealers or
regional dealers that qualify under Securities and Exchange Commission rule 15C3-1 (uniform
net capital rule).
All financial institutions and broker/dealers who desire to become qualified bidders for
investment transactions must supply the following (as appropriate):
1. audited financial statements
2. proof of National Association of Securities Dealers (NASD) certification
3. proof of state registration
4. completed broker/dealer questionnaire
5. certification of having read the City of DeKalb’s investment policy and that all
investments will comply with the policy
An annual review of the financial condition and registration of qualified bidders will be
conducted by the Finance Director or his/her designee.
1.07 Internal Controls
The Finance Director or his/her designee is responsible for establishing and maintaining an
internal control structure designed to ensure that the assets of the entity are protected from
loss, theft or misuse. The internal control structure shall be designed to provide reasonable
assurance that these objectives are met. The concept of reasonable assurance recognizes that
(1) the cost of a control should not exceed the benefits likely to be derived; and (2) the
valuation of costs and benefits requires estimates and judgments by management.
Accordingly, the Finance Director or his/her designee shall establish a process for an annual
independent review by an external auditor to assure compliance with policies and procedures.
The internal controls shall address the following points:
1. Prevention of collusion
2. Separation of transaction authority from accounting and record keeping.
3. Custodial safekeeping (Securities purchased from any bank or dealer including
appropriate collateral, as defined by State Law, shall be placed with an independent
third party for custodial safekeeping).
4. Avoidance of physical delivery securities.
5. Clear delegation of authority to subordinate staff members.
6. Written confirmation of telephone transactions for investments and wire transfers
(may be via fax if on letterhead and the safekeeping institution has a list of authorized
signatures).
7. Development of a wire transfer agreement with the lead bank or third party custodian,
which shall outline the various controls, security provisions, and delineate
responsibilities of each party making and receiving wire transfers.
1.08 Suitable and Authorized Investments
Investment Types
Consistent with the GFOA Recommended Practice on State Statutes Concerning Investment
Practices, the following investments will be permitted by this policy and are those defined by
state law where applicable:
1. U.S. Government obligations, U.S. Government agency obligations, and U.S.
Government instrumentality obligations
2. Repurchase agreements
3. Certificates of deposit
4. Savings and loan association deposits
5. Investment-grade obligations of state, provincial and local governments and public
authorities
6. Money market mutual funds regulated by the Securities and Exchange Commission and
whose portfolios consist only of domestic securities
7. Statewide investment pools
Use of repurchase agreements should be consistent with GFOA Recommended Practices on
Repurchase Agreements (see attached "GFOA Recommended Practices").
Consistent with the GFOA Recommended Practice on Use of Derivatives by State and Local
Governments, extreme caution shall be exercised in the use of derivative instruments (see
attached "GFOA Recommended Practices").
From time to time, the City may choose to invest in instruments offered by minority and
community financial institutions. These financial institutions may not meet all the criteria under
this section. All terms and relationships will be fully disclosed and authorized by the City
Manager prior to purchase and shall be consistent with state or local law.
1.09 Collateralization
Funds on deposit (checking accounts, certificates of deposit, etc.) in excess of FDIC or SIPC
limits, excluding interest, must be secured by some form of collateral, witnessed by a written
agreement (see the attached "GFOA Recommended Practices"). Pledged collateral shall be held
in safekeeping by the Federal Reserve Bank of Chicago (or other independent third party
designated by the Finance Director or his/her designee) in the name of the municipality. In
addition, the value of the pledged collateral must be marked to market monthly, or more
frequently depending on the volatility of the collateral pledged. Last, the City requires that the
amount of collateral pledged equal 110% of the uninsured amount on deposit.
1.10 Diversification
The City of DeKalb shall attempt to diversify its investments appropriate to the nature of the
funds, the purpose for the funds, and the amount available to invest. Diversification can be by
type of investment, number of institutions invested in, and length of maturity.
1.11 Maximum Maturities
To the extent practicable, the City of DeKalb shall attempt to match its investments with
anticipated cash flow requirements. Unless matched to a specific cash flow, the City of DeKalb
will not directly invest in securities maturing more than 3-years from the date of purchase.
Reserve funds may be invested in securities exceeding 3-years if the maturity of such
investments is made to coincide as nearly as practicable with the expected use of the funds.
Regardless of the foregoing, no funds may be invested in securities maturing in excess of 7-
years from the date of purchase unless authorized by the City Council.
1.12 Reporting
The Finance Director or his/her designee shall prepare a monthly investment and bank balance
report for City Council that provides:
1. Cash balances held at the end of the month;
2. A listing of individual securities and corresponding maturities held at the end of the
reporting period;
3. The percentage of the total portfolio which each type of investment represents;
4. Inception-to-date yields for each individual security;
5. Average weighted inception-to-date yield to maturity of the entire portfolio as
compared to applicable benchmarks.
1.13 Performance Standards
This investment portfolio will be managed in accordance with the parameters specified within
this policy. The portfolio should attempt to obtain a comparable rate of return during a
market/economic environment of stable interest rates. The portfolio performance should be
benchmarked to the return of the 90-day Treasury bill.
1.14 Investment Policy Adoption
The investment policy shall be adopted by the City Council.
1.15 Policy Exemption and Amendment
Exemption
Any investment currently held that does not meet the guidelines of this policy shall be
exempted from the requirements of this policy. At maturity or liquidation, such monies shall be
reinvested only as provided by this policy.
Amendment
This policy shall be reviewed on an annual basis. Any changes must be approved by the City
Manager and any other appropriate authority, as well as the individual(s) charged with
maintaining internal controls.
RETURN TO AGENDA
DATE: November 4, 2016
TO: Honorable Mayor John Rey
City Council
Finance Advisory Committee
FROM: Anne Marie Gaura, City Manager
Cathy Haley, Finance Director
SUBJECT: Annual Tax Levy Tax Year 2016.
Attached are three options for the 2016 tax levy that have been formulated based on
comments and inputs from the City Council and the FAC joint budget meetings.
Option #1 is the levy as was presented by staff increasing the full amount needed to fund
the Police and Fire pension funds back up to the full Entry Age Normal method
recommended by the actuarial valuation from Foster & Foster.
Option #2 is the levy holding the tax rate at the level it was in 2015 based on the estimated
EAV provided from the County. Still fully funding the two pension funds through property
tax revenue as recommended by the EPI study, Moody’s and is a “Best Practice” through
IGFOA. FICA and IMRF dollars would be dropped significantly.
Option #3 is the levy completely depleting any dollars going toward IMRF or FICA and
strictly having the City property tax revenue cover the two pension fund actuarial
contributions. Still keeping the one for one known revenue source to a known
expenditure.
Option #1
$ Increase/ % Increase/
2016 Estimated Tax Decrease Decrease
2016 ESTIMATED TAX LEVY
2015 Tax Levy Levy before 2016 Tax Levy after over prior over prior
Extensions Abatements Abatements year year
AGGREGATE LEVIED FUNDS
Corporate $824,144 $824,107 $824,144 $0 0.00%
IMRF $251,077 $251,035 $251,077 $0 0.00%
Social Security $204,831 $204,818 $204,831 $0 0.00%
Public Library $2,298,549 $2,298,549 $2,298,549 $0 0.00%
SSA #3-Heritage Ridge $0 $1,000 $1,000 $1,000 100.00%
SSA #4-Knolls $5,000 $5,500 $5,500 $500 10.00%
SSA #6 - Greek Row $10,000 $14,000 $14,000 $4,000 40.00%
SSA#14 Heartland Fields $2,500 $2,500 $2,500 $0 0.00%
Aggregate Levy Totals $3,596,101 $3,601,509 $3,601,601 $5,500 0.15%
PUBLIC SAFETY PENSION LEVIES
Fire Pension $2,177,872 $2,632,815 $2,632,815 $454,943 20.89%
Police Pension $1,636,915 $2,035,981 $2,035,981 $399,066 24.38%
Public Safety Pension Totals $3,814,787 $4,668,796 $4,668,796 $854,009 22.39%
DEBT SERVICE LEVIES
G.O. Bonds 2013A-Library $494,945 $620,000 $486,626 ($8,319) -1.68%
G.O. Bonds 2013B&2012A-Police $0 $900,000 $0 $0 0.00%
G.O. Bonds 2010A - TIF $0 $1,425,125 $0 $0 0.00%
G.O. Bonds 2010B&2010C-Refunding $0 $1,350,000 $0 $0 0.00%
G.O. Bonds 2014-Refunding $0 $400,875 $0 $0 0.00%
Total Bond & Interest $494,945 $4,696,000 $486,626 ($8,319) -1.68%
TOTAL $7,905,833 $12,966,305 $8,757,023 $851,190 10.77%
Levy Year Rate EAV Dollars Increase
2015 1.1942 468,077,742 $5,589,784
2016 1.2699 506,786,682 $6,435,474 $845,690
PROPERTY TAX COMPUTATION CALCULATION
COMPARISON BETWEEN 2015 AND 2016 Full Pension Contribution Option #1
2015 Market Value 2015 2016 Difference
$ 100,000.00 Home EAV 33,333 36,090 $.17 - Per Day
Tax Rate 1.1942% 1.2699% $5.02 - Per Month
Tax Bill $398 $458 $60 - Annually
$ 150,000.00 Home EAV 50,000 54,135 $.25 - Per Day
Tax Rate 1.1942% 1.2699% $7.53 - Per Month
Tax Bill $597 $687 $90 - Annually
$ 200,000.00 Home EAV 66,667 72,180 $.33 - Per Day
Tax Rate 1.1942% 1.2699% $10.04 - Per Month
Tax Bill $796 $917 $120 - Annually
** EAV x Tax Rate = Property Tax Revenue
Fund Balance held at 25%
Option #2
$ Increase/ % Increase/
2016 Estimated Tax Decrease Decrease
2016 ESTIMATED TAX LEVY
2015 Tax Levy Levy before 2016 Tax Levy after over prior over prior
Extensions Abatements Abatements year year
AGGREGATE LEVIED FUNDS
Corporate $824,144 $824,107 $824,144 $0 0.00%
IMRF $251,077 $251,035 $72,480 ($178,597) -71.13%
Social Security $204,831 $204,818 $0 ($204,831) -100.00%
Public Library $2,298,549 $2,298,549 $2,298,549 $0 0.00%
SSA #3-Heritage Ridge $0 $1,000 $1,000 $1,000 100.00%
SSA #4-Knolls $5,000 $5,500 $5,500 $500 10.00%
SSA #6 - Greek Row $10,000 $14,000 $14,000 $4,000 40.00%
SSA#14 Heartland Fields $2,500 $2,500 $2,500 $0 0.00%
Aggregate Levy Totals $3,596,101 $3,601,509 $3,218,173 ($377,928) -10.51%
PUBLIC SAFETY PENSION LEVIES
Fire Pension $2,177,872 $2,632,815 $2,632,815 $454,943 20.89%
Police Pension $1,636,915 $2,035,981 $2,035,981 $399,066 24.38%
Public Safety Pension Totals $3,814,787 $4,668,796 $4,668,796 $854,009 22.39%
DEBT SERVICE LEVIES
G.O. Bonds 2013A-Library $494,945 $620,000 $486,626 ($8,319) -1.68%
G.O. Bonds 2013B&2012A-Police $0 $900,000 $0 $0 0.00%
G.O. Bonds 2010A - TIF $0 $1,425,125 $0 $0 0.00%
G.O. Bonds 2010B&2010C-Refunding $0 $1,350,000 $0 $0 0.00%
G.O. Bonds 2014-Refunding $0 $400,875 $0 $0 0.00%
Total Bond & Interest $494,945 $4,696,000 $486,626 ($8,319) -1.68%
TOTAL $7,905,833 $12,966,305 $8,373,595 $467,762 5.92%
Levy Year Rate EAV Dollars Increase
2015 1.1942 468,077,742 $5,589,784
2016 1.1942 506,786,682 $6,052,047 $462,262
PROPERTY TAX COMPUTATION CALCULATION
COMPARISON BETWEEN 2015 AND 2016 Holding rate the same Option #2
2015 Market Value 2015 2016 Difference
$ 100,000.00 Home EAV 33,333 36,090 $.09 - Per Day
Tax Rate 1.1942% 1.1942% $2.74 - Per Month
Tax Bill $398 $431 $33 - Annually
$ 150,000.00 Home EAV 50,000 54,135 $.14 - Per Day
Tax Rate 1.1942% 1.1942% $4.12 - Per Month
Tax Bill $597 $646 $49 - Annually
$ 200,000.00 Home EAV 66,667 72,180 $.18 - Per Day
Tax Rate 1.1942% 1.1942% $5.49 - Per Month
Tax Bill $796 $862 $66 - Annually
** EAV x Tax Rate = Property Tax Revenue
Fund Balance drops to 23.85%
Option #3
$ Increase/ % Increase/
2016 Estimated Tax Decrease Decrease
2016 ESTIMATED TAX LEVY
2015 Tax Levy Levy before 2016 Tax Levy after over prior over prior
Extensions Abatements Abatements year year
AGGREGATE LEVIED FUNDS
Corporate $824,144 $824,107 $824,144 $0 0.00%
IMRF $251,077 $251,035 $0 ($251,077) -100.00%
Social Security $204,831 $204,818 $0 ($204,831) -100.00%
Public Library $2,298,549 $2,298,549 $2,298,549 $0 0.00%
SSA #3-Heritage Ridge $0 $1,000 $1,000 $1,000 100.00%
SSA #4-Knolls $5,000 $5,500 $5,500 $500 10.00%
SSA #6 - Greek Row $10,000 $14,000 $14,000 $4,000 40.00%
SSA#14 Heartland Fields $2,500 $2,500 $2,500 $0 0.00%
Aggregate Levy Totals $3,596,101 $3,601,509 $3,145,693 ($450,408) -12.52%
PUBLIC SAFETY PENSION LEVIES
Fire Pension $2,177,872 $2,632,815 $2,632,815 $454,943 20.89%
Police Pension $1,636,915 $2,035,981 $2,035,981 $399,066 24.38%
Public Safety Pension Totals $3,814,787 $4,668,796 $4,668,796 $854,009 22.39%
DEBT SERVICE LEVIES
G.O. Bonds 2013A-Library $494,945 $620,000 $486,626 ($8,319) -1.68%
G.O. Bonds 2013B&2012A-Police $0 $900,000 $0 $0 0.00%
G.O. Bonds 2010A - TIF $0 $1,425,125 $0 $0 0.00%
G.O. Bonds 2010B&2010C-Refunding $0 $1,350,000 $0 $0 0.00%
G.O. Bonds 2014-Refunding $0 $400,875 $0 $0 0.00%
Total Bond & Interest $494,945 $4,696,000 $486,626 ($8,319) -1.68%
TOTAL $7,905,833 $12,966,305 $8,301,115 $395,282 5.00%
Levy Year Rate EAV Dollars Increase
2015 1.1942 468,077,742 $5,589,784
2016 1.1799 506,786,682 $5,979,566 $389,782
PROPERTY TAX COMPUTATION CALCULATION
COMPARISON BETWEEN 2015 AND 2016 Deplete IMRF and FICA Option #3
2015 Market Value 2015 2016 Difference
$ 100,000.00 Home EAV 33,333 36,090 $.08 - Per Day
Tax Rate 1.1942% 1.1799% $2.31 - Per Month
Tax Bill $398 $426 $28 - Annually
$ 150,000.00 Home EAV 50,000 54,135 $.11 - Per Day
Tax Rate 1.1942% 1.1799% $3.47 - Per Month
Tax Bill $597 $639 $42 - Annually
$ 200,000.00 Home EAV 66,667 72,180 $.15 - Per Day
Tax Rate 1.1942% 1.1799% $4.63 - Per Month
Tax Bill $796 $852 $56 - Annually
** EAV x Tax Rate = Property Tax Revenue
Fund Balance drops to 23.67%
RETURN TO AGENDA