Finance Advisory Committee

AGENDA Finance Advisory Committee Meeting Tuesday, August 15, 2017 5:00 p.m. City Hall Council Chambers (Second Floor) 1. Call to Order 2. Roll Call for Attendance 3. Approval of Minutes a. Minutes of the Joint City Council and Finance Advisory Committee Meeting of October 27,2016 b. Minutes of the Joint City Council and Finance Advisory Committee Meeting of November 3, 2016 c. Minutes of the Joint City Council and Finance Advisory Committee Meeting of November 8, 2016 d. Minutes of the Joint City Council and Finance Advisory Committee Meeting of November 15, 2016 e. Minutes of the Finance Advisory Committee Meeting of May 2, 2017 4. Overview of the FY2016.5 Comprehensive Annual Financial Report (CAFR) – Sikich 5. Overview of City’s Bond Rating Summary Report 6. FY2018 General Fund Major Revenue Recommendations 7. Public Participation 8. Other Items 9. Confirm Next Meeting Date and Time a. Thursday, September 21, 2017 at 5:00 p.m. 10. 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.  MINUTES JOINT CITY COUNCIL AND FINANCE ADVISORY COMMITTEE CITY OF DEKALB OCTOBER 27, 2016 The City Council and Finance Advisory Committee of DeKalb, Illinois, held a joint meeting on October 27, 2016, in the City Council Chambers of the DeKalb Municipal Building, located at 200 S. Fourth Street, DeKalb, Illinois. Mayor Rey called the meeting to order at 5:32 p.m. Roll Call City Council members present were Alderman David Jacobson (arrived at 5:34 p.m.), Alderman Bill Finucane, Alderman Michael Marquardt, Alderman Bob Snow, Alderman Kate Noreiko, Alderman Anthony Faivre (arrived at 6:49 p.m.), and Mayor John Rey. City Council member, not present was Alderman David Baker. Finance Advisory Committee members present were Tom Teresinski, Lynn Neeley, Mike Verbic, David Conlin, and Chair Mike Peddle. Finance Advisory Committee member not present was Ron Partch. Others present were City Manager Anne Marie Gaura, Assistant City Manager Patty Hoppenstedt, City Attorney Dean Frieders, Finance Director Cathy Haley, Fire Chief Eric Hicks, Police Chief Eugene Lowery, Public Works Director Tim Holdeman, Interim Community Development Director JoEllen Charlton, and Deputy City Clerk Carri Parker. Mayor Rey recognized the presence of Virginia Cassidy, president of the DeKalb Public Library Board. He commented that this is the first time the Tax Levy and Budget are being discussed at the same time. Chair Peddle stated that the budget and tax levy should not be voted on before the City Council and Finance Advisory Committee met together. For best practices, he would like to start the process with the Finance Advisory Committee earlier, allowing it to provide its opinion. Public Participation Dwayne Brown stated that if the City's doesn't budget for the long term pension obligations, its credit rating will suffer. He summarized how the City has been funding the operational needs and has failed to engage in the long-term funding of the pension funds. Mr. Brown added that the pensions are underfunded and it is not working and stated that the City is leaving a horrible City for future generations. Steve Kapitan spoke about the overview memo of the General Fund. These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting October 27, 2016 Page 2 of 6 Overview Finance Director Haley presented the General Fund Overview power point presentation and memo. Chair Peddle mentioned that at one point in time the City was paying retiree health insurance for more members of the employee family’s in error but this has since been corrected. Once this error was discovered it was corrected. He mentioned this as he did not want it to affect the discussion on the retiree health coverage numbers. City Manager Gaura highlighted that most municipalities are not funding health care at this level for retirees. Alderman Jacobson added that he noticed there are new employees being added to the old program. He questioned what happened to the phase out process. Finance Director Haley replied stating this addition is not new employees but rather retirees that have put in their years of service. She added that the phase out was based on a cut-off date of hire. Alderman Jacobson added that the phase out was only for three years. He further added that all of the individuals that were between 18 to 20 years of service should have retired. Fire Chief Hicks added that the phase out was for 10 years and that the City would feel the impact of this expense for at least 20 more years. Committee Member Teresinski added that the fund balance policies were in the budget packet in 2010. He added that the improvement of the fund balance is based on the approval of the budget in 2010. He suggested that many of the items in discussion relative to the fund balance are high on the radar. Chair Peddle added that the City does have more comprehensive best practice policies and has started to put these in practice during the budget process. Finance Director Haley addressed Alderman Jacobson’s question about Percent Unit of Credit, stating that when the City switched to this method, costs to fund the pension obligations decreased and the funding levels appeared to go up. However, the problem is the national organizations were not recognizing it. Therefore, the City’s total Net Pension Liability calculated for the Comprehensive Financial Report was growing. It is the national organizations that calculate this figure based on the higher funding method. Alderman Snow commented that in 2011, pensions were not fully funded, but the City was not falling behind but were making some progress. Committee Teresinski stated that the prior periods were under funded even prior than 2007 - 2008. Police Chief Lowery added that in 1995 the Police Pension Fund was 97.4% funded. Since then, going into 2016, it is at 50%. Chair Peddle added that the last time he did the calculations, 70% of the City’s required pension contribution is consists of catchup, and not the normal funding costs that added dollars for the given year. Mayor Rey asked how often the bond rating is accessed by Moody’s. Finance Director Haley stated that Moody’s is looking at Illinois specifically because of the lower funding These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting October 27, 2016 Page 3 of 6 method the state had offered to local governments in 2011. Because of that, they are looking at several municipalities annually. Finance Director Haley, Committee Member Teresinski, Chair Peddle, and Alderman Jacobson discussed the changes of the Water Fund transfer with regard to the lump transfer to direct expenditures. Chair Peddle questioned the County Sales Tax sharing methodology. Finance Director Haley mentioned that the City has many agreements that are long in duration. These agreements will be discussed at the November 14, 2016, Committee of the Whole meeting. Alderman Finucane left the meeting at 6:32 p.m. Chair Peddle and Alderman Jacobson had a discussion on the liability costs and future staffing. Alderman Finucane returned to the meeting at 6:36 p.m. Chair Peddle left the meeting at 6:37 p.m. Finance Director Haley stated that the City needs sustainable funding sources as there are desperate capital funding problems. Chair Peddle returned to the meeting at 6:39 p.m. Alderman Jacobson provided historical information on how the fund balance was reduced and how it was a necessity. He added that it would be very hard to bring businesses and residents in to the City if the taxes continue to rise. He stated that the Council is not doing its job to get things done. He mentioned that the roads are not being repaired, nor budgeted to be repaired, and staff is pushing it off another year. City Manager Gaura replied to Alderman Jacobson with regard to the roads by stating, historical data was presented to the Finance Advisory Committee and City Council showing that since 1992, the City has not exceeded $1.5 million to repair roads. She added that this is a pattern of what the City has done. She stated the City should be funding at the $9 million dollar level, which the City cannot afford. The amount that has been for road repairs is coming out of the TIF funds. City Manager Gaura added that the comments on the staffing issue she is unable to agree with as it will affect the level of services provided to the public. She added there are services that the City has to provide to the public and that Priority Based Budgeting will allow the City to cost out every service provided by the City. She added that if the City were to have staffing reductions, the City will not be able to provide the services to the City adequately. These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting October 27, 2016 Page 4 of 6 Finance Director Haley added that staff is not recommending a $5 million tax increase. She stated that the City is only recommending to fully fund the Police and Fire pension funds based on the actuarial information staff has received. Committee Member Verbic asked if there have been any cost estimates assigned to the 2025 Strategic Plan. Finance Director Haley answered there is no cost increase based on those goals being done. She added that the FY17 Strategic Plan Goals are aligned with the FY17 budgeted dollars. Alderman Jacobson left the meeting at 6:57 p.m. Committee Member Teresinski left the meeting at 6:58 p.m. Alderman Jacobson returned to the meeting at 7:00 p.m. Committee Member Teresinski returned to the meeting at 7:01 p.m. City Manager Gaura suggested that Item F: Financial Polices be skipped and Item G: Tax Levy 2016 presented next. Chair Peddle agreed. Tax Levy 2016 Finance Director Haley introduced Jason Franken of Foster and Foster who provided an actuarial evaluation presentation on the Police and Fire Pension. Mr. Franken presented the analysis of the Police and Fire pensions and the recommendations of the funding amount the City should be doing. Alderman Faivre, Mr. Franken, Finance Director Haley, Chair Peddle, Alderman Jacobson, Alderman Marquardt, and Mayor Rey discussed the reasoning behind choosing an investment return of 7.5% and the market for the past couple years with regard to the growth and/or decline and how it affected the City. City Attorney Frieders left the meeting at 7:13 p.m. Alderman Marquardt left the meeting at 7:16 p.m. City Attorney Frieders returned to the meeting at 7:18 p.m. Mr. Franken continued with his presentation. Alderman Marquardt returned to the meeting at 7:20 p.m. Public Works Director Holdeman left the meeting at 7:20 p.m. These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting October 27, 2016 Page 5 of 6 Public Works Director Holdeman returned to the meeting at 7:23 p.m. Police Chief Lowery left the meeting at 7:27 p.m. Police Chief Lowery returned to the meeting at 7:30 p.m. Chair Peddle asked for an explanation of the salary assumption. Mr. Franken explained that the salary increase assumption is individually based and determines the pay of the members of the plan increase. Projected pay at time of retirement projects out the total retirement cost. Payroll Growth assumption is department based. He added that as higher paid employees retire, they are replaced by a lower paid employees. If everyone in the plan received a 4.5% pay increase the City would meet the 4.5% assumption on the individual basis. However, the payroll at the department level would not have increased by 4.5% due to the higher paid employee’s retirement and lower paid employee hired. He added that the figures are not absolute, they are estimates. Chair Peddle, Alderperson Noreiko, Alderman Jacobson, and Mr. Franken had a discussion to clarify the assumptions. Mr. Franken explained the recommendations. City Council, Finance Advisory Committee members, and staff discussed the recommendations. Mayor Rey requested a break at 7:55 p.m. The meeting resumed at 8:06 p.m. Mayor Rey explained there is further discussion to be held on the tax levy and recommended deferring the financial policies, general fund budget, revenues, and recommendations until the November 3, 2016 meeting. Chair Peddle agreed and stated they are relatively minor changes to the policies and should go quickly. Finance Director Haley proceeded with her presentation on the 2016 Tax Levy timeline and the appropriation of the DeKalb citizen’s tax bill. She introduced Virginia Cassidy from the DeKalb Public Library Board. Chair Peddle asked Ms. Cassidy questions regarding the Library levy and state funding. A discussion ensued based on the responses from Ms. Cassidy. Ms. Cassidy left the meeting at 8:20 p.m. Finance Director Haley continued her presentation on the 2016 Tax Levy. City Attorney Frieders left the meeting at 8:17 p.m. City Attorney Frieders returned to the meeting at 8:20 p.m. These minutes have not been approved by the Finance Advisory Committee.  Joint City Council and Finance Advisory Committee Meeting October 27, 2016 Page 6 of 6 Alderman Jacobson and Chair Peddle had a discussion with regard to the Equalized Assessed Value calculation. Finance Director Haley continued with the presentation showing the contributions needed to fulfill the pensions. Chair Peddle confirmed the debt payments are only the ones that are paid from the General Fund and TIF fund. Chair Peddle and Committee Member Teresinski discussed the levy for Fire and Police pensions. Finance Director Haley finished her 2016 Tax Levy presentation. Other Items Chair Peddle communicated the rules of operation for the Finance Advisory Committee and the timing of the joint meetings. Chair Peddle and City Manager Gaura discussed the timing of agenda submissions. Adjournment Mayor Rey requested a motion to adjourn, moved by Committee Member Verbic and seconded by Alderman Marquardt. Meeting adjourned at 9:07 p.m. __________________________________________ CARRI PARKER, Deputy City Clerk Approved by City Council November 28, 2016. These minutes have not been approved by the Finance Advisory Committee.  MINUTES JOINT CITY COUNCIL AND FINANCE ADVISORY COMMITTEE CITY OF DEKALB NOVEMBER 3, 2016 The City Council and Finance Advisory Committee of DeKalb, Illinois, held a joint meeting on November 3, 2016, in the Council Chambers of the DeKalb Municipal Building, located at 200 South Fourth Street, DeKalb, Illinois. Mayor Rey called the meeting to order at 5:37 p.m. Roll Call City Council members present were Alderman David Jacobson, Alderman Bill Finucane, Alderman Kate Noreiko, Alderman Anthony Faivre, and Mayor John Rey. Finance Advisory Committee members present were Tom Teresinski, Lynn Neeley, Mike Verbic, and Chair Mike Peddle. Others present were City Manager Anne Marie Gaura, Assistant City Manager Patty Hoppenstedt, City Attorney Dean Frieders, Finance Director Cathy Haley, Fire Chief Eric Hicks, Police Chief Eugene Lowery, Public Works Director Tim Holdeman, Community Development Director Jo Ellen Charlton, and Deputy City Clerk Carri Parker. City Council members not present were Alderman Michael Marquardt, Alderman Bob Snow, and Alderman David Baker. Finance Advisory Committee member not present was Dave Conlin. Public Participation Dwayne Brown commented on the increase in the tax levy. Mr. Brown added that he looked over the expenditures and stated he felt the City is paying too much for services and commodities. He suggested the City needs to find other sources of revenues. Financial Policies Finance Director Haley went over the changes to the Financial Policies in detail. Committee Member Teresinski, Finance Director Haley, Chair Peddle and Mayor Rey discussed the wording regarding the multi-year capital schedule within the Capital Projects Fund and Water Fund. Chair Peddle stated that he is opposed to item #1 within the Budget Policy. He added that the policy states the first meeting would be a joint meeting and that it has been These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting November 3, 2016 Page 2 of 6 previously suggested having a Finance Advisory Committee (FAC) meeting prior to the first joint meeting with the City Council. City Manager Gaura, Chair Peddle and Alderman Noreiko discussed the timing of the budget meetings and the FAC involvement in the budget development. Alderman Finucane agreed with Chair Peddle that it makes more sense that FAC have an initial meeting regarding the budget prior to the joint meetings with the City Council. Chair Peddle reiterated that the City needs a five year Financial Plan. Finance Director Haley continued with the fund balance policy changes. Committee Member Teresinski, Finance Director Haley, Alderman Finucane and Chair Peddle discussed the Fleet and Equipment Fund Policy. Committee Member Teresinski, Chair Peddle and Finance Director Haley discussed the Revenue/Expenditure Policy to gain clarification on the property tax levy portion. Committee Member Teresinski requested the management letter be included within the Accounting and Audit Policy. Chair Peddle asked if the City has an Audit Committee and would like to discuss at a future date. Finance Director Haley concluded the fund balance policy changes. Committee Member Teresinski and Finance Director Haley discussed the Investment Policy and the Debt Policy. Chair Peddle left the meeting at 6:22 p.m. Finance Director Haley clarified with City Attorney Frieders timing of the agenda and associated documentation for the next meeting date. Revenues Public Works Director Holdeman explained the additional revenue source memo. Chair Peddle returned to the meeting at 6:24 p.m. Alderman Finucane suggested that the increase should be .10 cents instead of the proposed .09 cents. These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting November 3, 2016 Page 3 of 6 Committee Member Teresinski asked how much of savings the entities receive over having to purchase gasoline at a gas station. Director Holdeman stated that the average in 2016 for regular unleaded was $1.67, resulting in a charge of $1.77 for the entities. Mayor Rey clarified the options and asked if there are suggestions to implement any of the increases. Alderman Finucane suggested that the price increase .10 cents. FY2017 Budget: General Fund Finance Director Haley presented the general fund budget. Chief Lowery, Chair Peddle, City Manager Gaura and Committee Member Verbic discussed the crossing guard program. Chair Peddle and Alderman Finucane discussed the DSATS budget. Finance Director Haley continued the general fund budget presentation. Committee Member Teresinski and City Manager Gaura discussed the suggestion of going to a Priority Based Budgeting system recommended by the Illinois City/Council Management Association. Assistant City Manager Hoppenstedt presented the budgeting process on the department level stating how each department prepared their departmental operational budgets in line with the strategic plan. Public Works Director Holdeman explained the program reductions within the Public Works Department. He commented that staff eliminated the 50/50 tree replacement program for FY2017. He added that the department reduced line items within building maintenance. By reducing these items, it causes concerns that the City is not prepared for the unexpected. Public Works Director Holdeman used an unexpected expense of the City Hall boiler system as an example. Fire Chief Hicks presented the Fire Department’s budget stating it had been reduced by $108,000. He added the current proposed budget is 25% less than what it was in FY1995. Fire Chief Hicks mentioned a few items being reduced from the FY2017 budget, i.e. no materials to provide for public prevention training (education), removal of the Juvenile Fire Setter program, suspension of training for Administration, Hazmat, and Technical Rescue Team materials. Fire Chief Hicks added that the Fire Department did everything possible to reduce the FY2017 budgeted numbers without having to affect services. He mentioned that this budget is not sustainable for longer than one year. Police Chief Lowery explained the challenges for each department on doing more with less. He continued with the 2016 crime statistics for DeKalb and added that DeKalb is ranked in the top 25 dangerous cities in Illinois. Police Chief Lowery communicated that These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting November 3, 2016 Page 4 of 6 the Police Department made $136,000 in reductions for the FY17 budget. He stated the impact of these reductions will affect police vehicles as they are breaking down on scenes, most recently in the pumpkin festival parade, holding off replacing tasers which are supposed to be replaced every five years, putting off purchasing body cameras for the second year, cutting out state training, and no longer donating to Camp Power. He added that just recently he found out that the source for NARCAN will no longer be provided to the Police Department at no charge, resulting in an unexpected expense for FY2017. He commented on the crime stats that he provides to the City Manager and how the hot spots are hard to police with these budget reductions which could result in a catastrophic event. Public Works Director Holdeman left the meeting at 7:57 p.m. Committee Member Neeley, Chair Peddle, Alderman Noreiko and Alderman Finucane discussed the information provided by Police Chief Lowery with regard to the increase in calls, number of arrests, human services funding, and the lack of NARCAN for the Police Department. Public Works Director Holdeman returned to the meeting at 8:01 p.m. Alderman Finucane left the meeting at 8:05 p.m. City Manager Gaura stated how the staff went through the budget and made the reductions based on providing the core services to the community. She added the strategic plan drove the budget process, and reductions have already been made in the FY2017 budget. She emphasized that these budget reductions will impact the level of services to the community and the quality of life in DeKalb. Alderman Finucane returned to the meeting at 8:09 p.m. Mayor Rey requested a break at 8:09 p.m. The meeting resumed at 8:19 p.m. Alderman Jacobson and Fire Chief Hicks discussed the personnel costs for the Fire Department between FY1995 and FY2017. Committee Member Teresinski, Chair Peddle, Finance Director Haley and City Manager Gaura discussed the trends and projections relative to the income and sales tax numbers. Police Chief Lowery left the meeting at 8:33 p.m. FY2017 Budget: Water, Airport and Capital Funds Finance Director Haley provided a high-level summary of the Water, Airport and Capital Funds. These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting November 3, 2016 Page 5 of 6 Police Chief Lowery returned to the meeting at 8:35 p.m. FY2017-FY2021 Capital Improvement Plan (CIP) Public Works Director Holdeman presented the Public Works FY2017-FY2021 Capital Improvement Plan (CIP). He explained the objectives, best practices, process, structure, and observations of the CIP program. Alderman Noreiko asked the condition of the streets, fleet and facilities and should Council be worried. Public Works Director Holdeman stated that the City will begin to see more and more of the unexpected as staff cannot anticipate these events. He added that if the City does not do something about City Hall there will be a catastrophic event to the City Municipal Building. Mayor Rey questioned the insufficient funds and the short falls in the projections. Public Works Director Holdeman responded that the projections are difficult and that the City will see a change in the department head's short-term and long-term thinking. Chair Peddle commented on the CIP program. He mentioned that the airport is not splitting its costs with the region (County, other entities) and should be, as the City is subsidizing the entire costs of the airport. He added however, that it is far more expensive to walk away from the airport than subsidize it. The federal aviation has a lien on the property which would cause the City to pay. City Manager Gaura added that a study was provided by Sixel at the Committee Of the Whole meeting of October 24th. Public Works Director Holdeman explained the recommendations from Sixel with regard to the changes in the Airport Advisory Board. Approval of Recommendations Regarding E and F MOTION Alderman Finucane moved to amend the increase in the vehicle fuel admin fee to .10 cents and implementing the fee in FY2017; seconded by Alderman Jacobson. VOTE Motion passed on a 10-0-4 roll call vote. Aye: Jacobson, Finucane, Noreiko, Faivre, Rey, Teresinski, Neeley, Verbic, Partch, and Peddle. Nay: none. Absent: Marquardt, Snow, Baker, and Conlin. Mayor Rey declared the motion passed. Other Items There was a discussion among those present regarding the plan for the next meeting and if an additional meeting was needed and what items should be included on the agenda. These minutes have not been approved by the Finance Advisory Committee. Joint City Council and Finance Advisory Committee Meeting November 3, 2016 Page 6 of 6 Those present determined the next joint City Council and FAC meeting will be set for November 8, 2016, and added an additional meeting on November 15, 2016. Chair Peddle requested that the FAC meet in early summer 2017 to discuss the FY2018 budget planning. Adjournment Mayor Rey requested a motion to adjourn, moved by Alderman Jacobson and seconded by Chair Peddle. Meeting adjourned at 9:47 p.m. __________________________________________ CARRI PARKER, Deputy City Clerk Approved by City Council December 12, 2016. These minutes have not been approved by the Finance Advisory Committee.  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. These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 2 of 12 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. These minutes have not been approved by the Finance Advisory Committee.  Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 3 of 12 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 These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 4 of 12 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 These minutes have not been approved by the Finance Advisory Committee.  Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 5 of 12 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 These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 6 of 12 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. These minutes have not been approved by the Finance Advisory Committee.  Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 7 of 12 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. These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 8 of 12 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. These minutes have not been approved by the Finance Advisory Committee.  Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 9 of 12 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 These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 10 of 12 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. These minutes have not been approved by the Finance Advisory Committee.  Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 11 of 12  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, These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 8, 2016 Page 12 of 12 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. These minutes have not been approved by the Finance Advisory Committee.  MINUTES CITY OF DEKALB JOINT CITY COUNTY & FINANCE ADVISORY COMMITTEE MEETING NOVEMBER 15, 2016 The City Council and Finance Advisory Committee of DeKalb, Illinois, held a joint meeting on November 15, 2016, in the City Council Chambers of the DeKalb Municipal Building, located at 200 S. Fourth Street, DeKalb, Illinois. CALL TO ORDER Mayor Rey called the meeting to order at 5:30 p.m. ROLL CALL FOR ATTENDANCE Deputy City Clerk Ruth Scott called the roll and the following were present: City Council: Alderman David Jacobson, Alderman Bill Finucane, Alderman Mike Marquardt, Alderman Bob Snow, Alderman Kate Noreiko, and Mayor John Rey. Alderman Tony Faivre arrived at 5:32 p.m. Alderman Dave Baker was absent. Finance Advisory Committee: Members Tom Teresinski, Lynn Neeley, Mike Verbic, Dave Conlin, Ron Partch, and Chair Mike Peddle. PUBLIC PARTICIPATION None. APPROVAL OF MINUTES None. FINANCIAL POLICIES Finance Director Haley stated there had been one additional recommendation on the Fund Balance Policy change to the Water Operating Fund reserves and Water Capital Projects fund. Mayor Rey asked if the wording as presented in the document represents the intent that was discussed at the last meeting. Alderman Snow stated he opposes the change in that it’s a contradiction of terms. It talks about a minimum level of 25% but now because of the additional wording, it’s a maximum level of 25%. These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 15, 2016 Page 2 of 6 Mayor Rey asked for a motion to approve the changes. Finance Advisory Committee (FAC) Chair Peddle asked City Attorney Frieders if this item needed to be reconsidered since it had already passed. City Attorney Frieders confirmed that it did because it’s a new revision. MOTION FAC Member Teresinski motioned to approve the Fund Policy as drafted; seconded by FAC Member Verbic. Alderman Marquardt asked if it’s the intention that once funds are transferred out they will not be available to be transferred back in again if needed. FAC Member Teresinski provided an explanation stating that the operational needs should be serviced through regular operations and/or cost reductions with the balance going to capital. If there was an overwhelming majority that wanted to move it up to 27.5% so there’s some flexibility, he could understand that. FAC Chair Peddle stated he was going to offer an amendment to change it to 27%. There was a brief discussion regarding the amendment. MOTION TO AMEND FAC Chair Peddle motioned to amend the Fund Policy to state 27%; seconded by FAC Member Teresinski. Alderman Snow stated he still thinks it’s too low. He’d rather see it at 30%. However, if 27% is the consensus then he would be in favor. There was no further discussion. VOTE Motion carried on a 13-1 roll call vote. Aye: Teresinski, Neeley, Verbic, Conlin, Partch, Peddle, Jacobson, Finucane, Marquardt, Snow, Noreiko, Faivre, Rey. Absent: Baker. Mayor Rey declared the motion passed. VOTE Motion carried on a 13-1 roll call vote. Aye: Teresinski, Neeley, Verbic, Conlin, Partch, Peddle, Jacobson, Finucane, Marquardt, Snow, Noreiko, Faivre, Rey. Absent: Baker. Mayor Rey declared the motion passed. FY2017 BUDGET These minutes have not been approved by the Finance Advisory Committee.  Joint City Council & Finance Advisory Committee Meeting Minutes November 15, 2016 Page 3 of 6 Finance Director Haley stated that the 2017 budget proposal overview largely falls under two categories. The first is the reduction of revenue recommendations. There was a proposal to reduce revenues by $630,000 in the FY2017 budget based on the utilization of actual revenues from FY2017. Staff reviewed the recommendation and concurs with a portion of the reduction in the home rule sales tax. She mentioned three revenue streams and the recommendation for decreases: 1) home rule sales tax decrease in the amount of $238,000; 2) state municipal sales tax decrease in the amount of 1%; and 3) the municipal utility tax for gas and electric decreased between the FY2015 and FY2016 amounts. Finance Director Haley then reviewed expenditures, stating there were four options. The first option is based on the decrease of revenues recommended by staff that was just reviewed. The second option is revenues coming in under expenditures. The third option is based on FAC recommendations showing revenues and expenditures coming in equal. The fourth option is based on revenues coming in over the expenditures to stay in line with the 25% reserve fund balance policy. City Manager Gaura suggested dividing the discussion in two – revenues then expenditures. FAC Member Teresinski asked where the income tax circumstance stands. Finance Director Haley replied that IML still doesn’t have an answer. There was a brief discussion between FAC Member Teresinski and City Manager Gaura regarding income tax and sales tax. Mayor Rey asked if the revenue assumption of reducing $395,000 is reflected in all four options. Finance Director Haley stated it was only reflected in the first option. Mayor Rey asked if it was the intent to monitor revenue streams monthly. Finance Director Haley stated that as soon as she hears from IML, reaction to the revenue tax situation will be known. There was a brief discussion between Alderman Noreiko and Finance Advisory Director Haley regarding revenue reductions. City Manager Gaura suggested not focusing on dollar amounts but on policy. Discussion ensued regarding the options. These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 15, 2016 Page 4 of 6 Mayor Rey asked for a recommendation on the revenue assumptions. FAC Member Neeley asked for clarification on the options. City Manager Gaura provided clarification. Mayor Rey noted the summary of each option: Option 1 Revenue reductions of property tax and health insurance. Options 2, 3 and 4 $395,000 reduction in revenue assumptions. Alderman Noreiko asked for clarification on what’s happening with retiree health. Finance Director Haley replied that a portion of the water fund would cover a portion of the expenditure. Alderman Snow stated he was in favor of reducing revenues, and pointed out that while sales tax is the biggest income category, it’s not the only category. He stated it speaks well of the Finance Department that revenues are coming in on line. MOTION Alderman Snow motioned to move forward with the $395,000 reduction in revenue assumptions (option 3); seconded by Alderman Noreiko. VOTE Motion carried on a 10-3-1 roll call vote. Aye: Neeley, Conlin, Partch, Peddle, Finucane, Marquardt, Snow, Noreiko, Faivre, Rey. Nay: Teresinski, Verbic, Jacobson. Absent: Baker. Mayor Rey declared the motion passed. Mayor Rey stated that expenditures would now be discussed. Finance Director Haley stated that option 1 was no longer an option based on the revenues that were just recommended. Finance Director Haley provided an overview of the remaining options. Option 2 Reduction in the health insurance Option 3 Revenues equal to expenditures. Option 4 These minutes have not been approved by the Finance Advisory Committee.  Joint City Council & Finance Advisory Committee Meeting Minutes November 15, 2016 Page 5 of 6 Reserve at 25%. Alderman Jacobson asked how option 4 is obtained. Finance Director Haley stated that the option chosen at this meeting would determine budget reductions. There was a brief discussion between Alderman Finucane and Finance Director Haley regarding the options. FAC Member Teresinski stated he supports option 4 as it gives the most flexibility and still reserves 25%. FAC Chair Peddle stated he understands that no matter what option is chosen, only a portion of that is a placeholder. Further, it’s important to recognize that there will be a significant sales tax increase in FY2017 due to various events such IHSA. Also, he believes there is something unusual about the income tax issue since it’s affecting all municipalities. Alderman Noreiko spoke in favor of option 3. Discussion ensued. Alderman Marquardt asked for clarification between the options. Finance Director Haley provided the clarification. FAC Chair Peddle stated that perhaps there needs to be another option. Alderman Faivre stated he was in favor of option 4 and explained why. There was a discussion between Alderman Jacobson and FAC Chair Peddle regarding the options. Alderman Snow provided his opinion on maintaining the fund balance. Discussion ensued. MOTION FAC Member Verbic motioned to approve option 4; seconded by FAC Member Neeley. Alderman Noreiko stated that while she originally spoke in favor of option 3, she now finds that option 4 might be a better choice. There was discussion between Mayor Rey and FAC Chair Peddle regarding how to present information to the public. FAC Chair Peddle stated that it’s important that cuts are made clear so everyone can make an informed decision and the public can contribute in an informed way. These minutes have not been approved by the Finance Advisory Committee. Joint City Council & Finance Advisory Committee Meeting Minutes November 15, 2016 Page 6 of 6 City Manager Gaura explained what would be provided at the public hearing and next Council meeting. FAC Chair Peddle stated that if the public wants to offer options with respect to the Council's discussion, it will take place at the public hearing. Discussion over the options ensued. Mayor Rey encouraged the FAC and Council members to reach out to Finance Director Haley and City Manager Gaura with questions regarding specific services. VOTE Motion carried on an 11-2-1 roll call vote. Aye: Teresinski, Neeley, Verbic, Conlin, Peddle, Jacobson, Finucane, Marquardt, Noreiko, Faivre, Rey. Nay: Partch, snow. Absent: Baker. Mayor Rey declared the motion passed. OTHER ITEMS Alderman Finucane inquired about when the November 28, 2016 City Council meeting agendas would be available for review. City Manager Gaura stated that in light of the Thanksgiving holiday, the agendas would be posted on Tuesday, November 22, 2016. ADJOURNMENT FAC Member Neeley motioned to adjourn the meeting; seconded by Alderman Jacobson. All in favor via at 13-1 voice vote. Aye: Teresinski, Neeley, Verbic, Conlin, Partch, Peddle, Jacobson, Finucane, Marquardt, Snow, Noreiko, Faivre, Rey. Absent: Baker. Mayor Rey adjourned the meeting at 6:48 p.m. _____________________________________ RUTH A. SCOTT, Deputy City Clerk Approved by City Council December 12, 2016. These minutes have not been approved by the Finance Advisory Committee.  MINUTES FINANCE ADVISORY COMMITTEE CITY OF DEKALB MAY 2, 2017 A. CALL TO ORDER The Finance Advisory Committee meeting of May 2, 2017 was called to order at 5:30 p.m. by Chair Peddle. B. ROLL CALL Committee members present were Tom Teresinski, Jason Crome, Lynn Neeley, and Chairman Mike Peddle. Staff present: City Manager Anne Marie Gaura, Finance Director Cathy Haley, Assistant City Manager Patty Hoppenstedt and Deputy City Clerk Carri Parker. Staff present in audience: Information Technology Director Marc Thorson and Management Analyst Aaron Stevens Committee members not present were Mike Verbic, David Conlin, Ron Partch. C. PUBLIC PARTICIPATION No participation D. APPROVAL OF MINUTES 1. Minutes of the Finance Advisory Committee Meeting of July 12, 2016. MOTION Committee Member Neeley moved to approve the minutes; seconded by Committee Teresinski. VOTE Motion carried on an omnibus vote. Chair Peddle declared motion passed. Chair Peddle made a statement to the Committee, Executive Team, and the Public following up on a citizen concern regarding the promise made last year to start early and provide some structure in the budget process. Chair Peddle addressed a citizen question who wanted to know the status of the Library’s Levy and confirm the Library has still not received their grant funds from the State of Illinois. With the new Library Director now on board, he wanted to clarify that Finance Advisory Committee Meeting May 2, 2017 Page 2 of 3 any monies paid by citizens through the tax levy should be refunded through the tax levy once the Library received their money. E. FIVE-YEAR FINANCIAL PLAN SAMPLE DOCUMENT Chair Peddle explained that he and Committee Member Verbic provided several examples of five year financial plans from communities. None from a municipality from within the State of Illinois. He added that he met with City staff to go over what the expectations are and explained that what is presented at the meeting this evening is just a template. City Manager Gaura stated that based on the direction received from the last meeting and the samples received from Chair Peddle and Committee Member Verbic, this template was pulled together to provide all the information being requested by the Committee. Chair Peddle stated that the City intends to have a document for the FY2018 budget but it will be a pilot document. He added that it will not be in final form and they will receive Council input as well. Committee Teresinski asked that the dialog touch on sustainability, long term capital and rationalization, current expenses, revenues and trends. He added that while there are large capital needs, it would be very difficult to add tax increases without rationalization. Committee Member Crome stated that the overall structure of the report is great. He stated that this report will facilitate transparency. Committee Member Neeley went through the report providing suggestions for improvement in the document. Page 2.2: Do not limit oneself to an economic decision, because the two largest employers are dependent on state funding. Use supplemental data from the census to update the information. Page 3.1: The school system might be able to provide us data, # of students enrolled, # of children on supplemental lunch program. If the school systems shared their data, the City would not have to research. The City should also be sure to include Cornerstone and St. Mary’s. Page 4.1: Since the NIU students are included in the census numbers, one can get employment and income data from NIU without names and personal information. Compensation data can be gathered from NIU and possibly the school district. Page 4.4: Compounding effects on our large employers are dependent on the These minutes have not been approved by the Finance Advisory Committee  Finance Advisory Committee Meeting May 2, 2017 Page 3 of 3 state. Page 5.1: This is the section that is looking at the structural imbalances, there are more people needing more help. Page 5.6: Include sub-category of crime statistics for expenditures. If we do not see housing go up we will see the insurance rates go up. Page 5.10: Using the school districts for the population trends. Page 6.1: Need to be cognizant of pension and healthcare costs. Committee Member Neeley added that it is important, when at all possible, to get their most recent data, or good solid data. Discussion between the Committee and Staff ensued about expectations for the Five- Year Financial Plan. City Manager Gaura stated that this meeting was to gather ideas and will update the document and bring it back to the Committee in August. Chair Peddle thanked Finance Director Haley for her time spent with the Committee, time spent with the City of DeKalb, and wished her luck in her future endeavors. Finance Director Haley added that it has been a pleasure working with the City, Committee, and City Manager Gaura. F. ADJOURNMENT Chair Peddle requested a motion to adjourn, moved by Committee Member Neeley and seconded by Committee Member Teresinski. Motion passed by an omnibus voice vote. Meeting adjourned at 6:24 p.m. __________________________________________ CARRI PARKER, Deputy City Clerk These minutes have not been approved by the Finance Advisory Committee RETURN TO AGENDA DATE: August 11, 2017 TO: Mike Peddle, Chairman Finance Advisory Committee FROM: Anne Marie Gaura, City Manager Jeff Wilkins, Interim Finance Director SUBJECT: FY2016.5 Comprehensive Annual Financial Report, Audit Report, and Management Letter I. Summary Sikich, LLP has completed the FY2016.5 audit. As requested by the Committee in April, a representative of Sikich will present the Comprehensive Annual Financial Report (CAFR) to the Committee on August 15, 2017. II. Background The CAFR for the fiscal year ended December 31, 2016, is being submitted to Council as mandated by both local ordinances and state statutes. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls it has established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Sikich, LLP have issued an unmodified ("clean") opinion on the City's financial statements for the year ended December 31, 2016. The independent auditor's report is located at the front of the financial section of this report. Management's discussion and analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Also included is the Management Letter, which includes comments and suggestions from Sikich, LLP that are designed to assist in effecting improvements in internal controls and procedures. There were no new comments added during FY2016.5. During audit fieldwork, Sikich LLP tested the City’s capital assets and determined that the City has taken the necessary corrective action regarding the significant deficiency on capital assets that was noted in the FY2016 Management Letter. III. Community Groups/Interested Parties Contacted City staff worked with DeKalb County to pull together some of the statistical data provided at the end of this report. Confirmation letters were also sent to all applicable financial institutions and other vendors that the audit team needed third party verification of, which included the City’s Balance Sheet and Income Statement ending balances. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended June 30, 2016. This was the 23rd consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. It is thought that the City’s current CAFR continues to meet the Certificate of Achievement Program's requirements and it will be submitted it to the GFOA to determine its eligibility for another certificate. IV. Legal Impact Local ordinances and state statutes require the City to issue a report of its financial position and activity annually, and that this report be audited by an independent firm of certified public accountants, which the City has complied with during the audit process. Page |2  Exhibit A Comprehensive Annual Financial Report Six Months Ended December 31, 2016 City of DeKalb, Illinois  CITY OF DEKALB, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Six Months Ended December 31, 2016 Prepared by the City of DeKalb Finance Department CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION List of Principal Officials.................................................................................................. i Organization Chart ............................................................................................................ ii Certificate of Achievement for Excellence in Financial Reporting .................................. iii Transmittal Letter.............................................................................................................. iv-x FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT ........................................................................ 1-3 GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS Management’s Discussion and Analysis ..................................................................MD&A 1-13 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position ................................................................................... 4 Statement of Activities ....................................................................................... 5-6 Fund Financial Statements Governmental Funds Balance Sheet................................................................................................. 7-8 Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Position .................... 9 Statement of Revenues, Expenditures, and Changes in Fund Balances ........ 10-11 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities in the Statement of Activities ...................................................... 12 Proprietary Funds Statement of Net Position .............................................................................. 13-14 Statement of Revenues, Expenses, and Changes in Net Position .................. 15 Statement of Cash Flows ............................................................................... 16-17 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS (Continued) Basic Financial Statements (Continued) Fund Financial Statements (Continued) Fiduciary Funds Statement of Fiduciary Net Position................................................................. 18 Statement of Changes in Fiduciary Net Position ............................................. 19 Notes to Financial Statements ................................................................................. 20-85 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress and Employer Contributions Other Postemployment Benefits Plan ..................................................................... 86 Schedule of Employer Contributions Illinois Municipal Retirement Fund ........................................................................ 87 Police Pension Fund ................................................................................................ 88 Firefighters’ Pension Fund ...................................................................................... 89 Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios Illinois Municipal Retirement Fund ........................................................................ 90 Police Pension Fund ................................................................................................ 91 Firefighters’ Pension Fund ...................................................................................... 92 Schedule of Investment Returns Police Pension Fund ................................................................................................ 93 Firefighters’ Pension Fund ...................................................................................... 94 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual General Fund ................................................................................................................ 95 Motor Fuel Tax Fund.................................................................................................... 96 Mass Transit Fund ........................................................................................................ 97 Tax Increment Financing #1 Fund ............................................................................... 98 Tax Increment Financing #2 Fund ............................................................................... 99 Notes to Required Supplementary Information ........................................................... 100 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS Schedule of Revenues - Budget and Actual - General Fund ................................... 101-102 Schedule of Expenditures - Budget and Actual - General Fund ............................. 103 Schedule of Detailed Expenditures - Budget and Actual - General Fund ............... 104-108 NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet ....................................................................................... 109 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................................................. 110 Nonmajor Special Revenue Funds Combining Balance Sheet .................................................................................. 111-112 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ......................................................................... 113-114 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Foreign Fire Insurance Tax Fund .................................................................. 115 Housing Rehabilitation Fund ......................................................................... 116 Community Development Block Grant Fund ................................................ 117 Heritage Ridge Special Service Area #3 Fund .............................................. 118 Knolls Special Service Area #4 Fund ............................................................ 119 Greek Row Special Service Area #6 Fund .................................................... 120 Heartland Fields Special Service Area #14 Fund .......................................... 121 Nonmajor Debt Service Funds Combining Balance Sheet .................................................................................. 122 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ......................................................................... 123 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual General Debt Service Fund ............................................................................ 124 Tax Increment Financing Debt Service Fund ................................................ 125 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Continued) NONMAJOR GOVERNMENTAL FUNDS (Continued) Nonmajor Capital Projects Funds Combining Balance Sheet .................................................................................. 126 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ......................................................................... 127 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Capital Projects Fund ..................................................................................... 128 Equipment Fund............................................................................................. 129 Fleet Replacement Fund ................................................................................ 130 ENTERPRISE FUNDS Combining Schedule of Revenues, Expenses, and Changes in Net Position - Budget and Actual - Water Fund Department Accounts ............... 131-132 Schedule of Revenues, Expenses, and Changes in Net Position - Budget and Actual Airport Fund ....................................................................................................... 133 Refuse Fund ........................................................................................................ 134 INTERNAL SERVICE FUNDS Combining Statement of Net Position ..................................................................... 135 Combining Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual .......................................................................... 136-137 Combining Statement of Cash Flows ...................................................................... 138 FIDUCIARY FUNDS PENSION TRUST FUNDS Combining Statement of Net Position ................................................................ 139 Combining Statement of Changes in Plan Net Position - Budget and Actual ............................................................................................ 140 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Continued) DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY Statement of Net Position and Combining Balance Sheet ...................................... 141-142 Statement of Activities and Combining Statement of Revenues, Expenditures, and Changes in Fund Balances/Net Position ................................. 143-144 SUPPLEMENTAL FINANCIAL INFORMATION Schedule of Long-Term Debt Requirements General Obligation Bonds of 2010A ....................................................................... 145 General Obligation Refunding Bonds of 2010B ..................................................... 146 General Obligation Refunding Bonds of 2010C ..................................................... 147 General Obligation Bonds of 2012A ....................................................................... 148 General Obligation Bonds of 2013B ....................................................................... 149 General Obligation Refunding Bond Series of 2014 (Total Issue) ......................... 150 General Obligation Refunding Bond Series of 2014 (Debt Service Fund Share) ... 151 General Obligation Refunding Bond Series of 2014 (Water Fund Share) .............. 152 General Obligation Refunding Bond Series of 2014 (Airport Fund Share) ............ 153 IEPA Loan #L17133700 Contract Payable of 1999 ................................................ 154 IEPA Loan #L17161400 Contract Payable of 2000 ................................................ 155 IEPA Loan #L174045 Contract Payable of 2012.................................................... 156 Component Unit - DeKalb Public Library General Obligation Bonds of 2013A .................................................................. 157 Loan Payable of 2015 ......................................................................................... 158 Debt Certificates of 2011.................................................................................... 159 STATISTICAL SECTION Financial Trends Net Position by Component ......................................................................................... 160-161 Change in Net Position ................................................................................................. 162-165 Fund Balances of Governmental Funds ....................................................................... 166-167 Changes in Fund Balances of Governmental Funds .................................................... 168-169 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued) Page(s) STATISTICAL SECTION (Continued) Revenue Capacity Taxable Sales by Category ........................................................................................... 170 Taxable Sales by Category - Home Rule ..................................................................... 171 Direct and Overlapping Sales Tax Rates ..................................................................... 172 Assessed Value and Actual Value of Taxable Property .............................................. 173 Property Tax Rates - Direct and Overlapping Governments ....................................... 174 Principal Property Taxpayers ....................................................................................... 175 Property Tax Rates, Levies, and Collections ............................................................... 176-177 Debt Capacity Ratios of Outstanding Debt by Type ............................................................................ 178 Ratios of General Bonded Debt Outstanding............................................................... 179 Direct and Overlapping Governmental Activities Debt............................................... 180 Legal Debt Margin ....................................................................................................... 181 Pledged-Revenue Coverage ......................................................................................... 182 Demographic and Economic Information Demographic and Economic Information .................................................................... 183 Principal Employers ..................................................................................................... 184 Operating Information Full-Time Equivalent Employees................................................................................. 185-186 Operating Indicators ..................................................................................................... 187-188 Capital Asset Statistics ................................................................................................. 189 INTRODUCTORY SECTION  CITY OF DEKALB, ILLINOIS PRINCIPAL OFFICIALS December 31, 2016 LEGISLATIVE John Rey, Mayor Alderman David Jacobson, Ward One Alderman Bill Finucane, Ward Two Alderman Michael Marquardt, Ward Three Alderman Bob Snow, Ward Four Alderman Katherine Noreiko, Ward Five Alderman David Baker, Ward Six Alderman Anthony Faivre, Ward Seven Jennifer Jeep Johnson, City Clerk ADMINISTRATIVE Anne Marie Gaura, City Manager Patty Hoppenstedt, Assistant City Manager Gene Lowery, Police Chief Eric Hicks, Fire Chief Cathy Haley, Finance Director Tim Holdeman, Public Works Director Jo Ellen Charlton, Community Development Director Cris Randall, HR Director Marc Thorson, IT Director -i-  Organizational Chart _______________________________________________________________________________________________ Residents of DeKalb City Clerk Mayor City Council City Manager Finance Information Community Public Works City Manager's Police Department Fire Department Human Resources Department Technology Development Department Office Administration Administration Administration Patrol Operations Street Investigations Utility Support Services Special Services Engineering & Communications Transportation Crime Free Airport Housing - ii -  Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of DeKalb Text38: Illinois For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2016 Executive Director/CEO - iii - June 26, 2017 Mayor Jerry Smith Members of the DeKalb City Council City Manager Anne Marie Gaura Residents of the City of DeKalb The Comprehensive Annual Financial Report of the City of DeKalb for the fiscal year ended December 31, 2016 is hereby submitted as mandated by both local ordinances and state statutes. These ordinances and statutes require that the City of DeKalb issue annually a report of its financial position and activity, and that this report be audited by an independent firm of certified public accountants. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that it has established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Sikich, LLP, have issued an unmodified ("clean") opinion on the City of DeKalb’s financial statements for the year ended December 31, 2016. The independent auditor's report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the City of DeKalb The City of DeKalb was incorporated in 1856, and is located in the center of DeKalb County Illinois. Located 60 miles west of Chicago, the City of DeKalb’s current land area is 15.55 square miles and approximately 130 miles of streets. In spite of its proximity to the Chicago region, the City remains apart, maintaining its own unique character as a rapidly growing university community with both urban and rural roots. Many of its older neighborhoods have brick paved streets and well-kept historic homes while the edge of the City bustles with new residential and commercial development. The City of DeKalb has a 2016 population estimate of 44,030, therefore the City is a home rule community because its population exceeds 25,000. Home rule communities in the State of Illinois have greater control of their finances because of additional revenue generating abilities afforded to home rule communities. As a home-rule unit of government under the 1970 Illinois Constitution, the City has no tax rate limit or debt limit, nor is it required to seek referendum approval to raise its tax rate or to issue debt. In 1961, a Council-Manager form of government was adopted by the City of DeKalb. Seven aldermen are elected, one in each of the seven wards, and aldermanic elections are held every two years, at which time half of the City Council is elected. The Mayor is elected, at large, every four years. The City Manager is appointed by the City Council and all other employees are appointed by the City Manager. The elected officials determine policy while professional appointed officials implement policy. The City provides a full range of services including: public safety (police and fire protection); the construction and maintenance of highways, streets, and infrastructure; municipal airport services; water production, treatment and distribution; planning and zoning; and general administrative services. The financial reporting entity (the City) includes all the funds of the primary government (i.e., the City of DeKalb, DeKalb County, Illinois), as well as all of its component units. The DeKalb Public Library is considered a component unit of government which, although a legally separate entity, is in substance a part of the primary government’s operations and included as part of the primary government. Therefore, in the CAFR, the Library’s audited financial data is presented in a separate column in the entity-wide financial statements to differentiate their financial position and results of operations from those of the primary government. The City Council is required to adopt a budget for each fiscal year by no later than the close of the prior fiscal year. This annual budget serves as the foundation for the City of DeKalb’s financial planning and control. These controls are intended to ensure that there is compliance with the legal provisions of the annual budget approved by the Mayor and City Council. Activities of the governmental and proprietary funds are included in the approved annual budget. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Local Economy The local economy is still being impacted by regional, state and national economic conditions. However, the City’s three largest sources of revenue have started to show signs of economic vitality. These three largest sources of revenue are property taxes received from the county, sales taxes, both municipal and home rule, and income tax. The EAV decline has slowed and the unemployment rate has dropped. The City’s total EAV increased by 7.64% compared to the small increase from the previous year of .67%. Prior to the small increase in 2015 the EAV dropped drastically for six years in a row. The City’s income tax revenue has trended downward slightly from FY16. This per-capita revenue source is based more on the state’s economy and unemployment rate rather than the local economy. Page |v The State of Illinois’ unemployment rate peaked to 11.50% in December 2009 and has dropped to 4.70% in April 2017. The state portion of sales tax revenue continues to show signs of a slight decrease from the comparable six-months of FY16 but still an increase over FY14. The home rule portion continues to show a downward trend which could be offset by the increase being seen in Local Use Tax. Combined these actual revenue dollars came in below budgeted parameters by over $51,086 or 0.76%. However, signs of economic vitality for the City are Local Use Tax and Restaurant & Bar Tax as both came in above budgeted parameters. As a result, the General Fund unrestricted fund balance ended at $8,374,964 or 41.32% of annual expenditures. This is $748,112 lower than FY16, yet continues to be the strongest the General Fund balance reserves have been in the last twelve years. Long-term Financial Planning The following processes are utilized by the City to accomplish its long-term financial planning: 1. The City implemented a 10-year strategic plan in 2015 to ensure that its long-term goals are reviewed, updated and implemented to continue to address the City’s mission of “Deliver high quality municipal services to those who live, work, learn in, or visit our community.” All elected officials, appointed board and commission chairpersons, executive team members, and DeKalb residents participated in the planning sessions that helped to create this final 2025 Strategic Plan Document. 2. The City has established several key written financial policies including a Budget policy, a Reserve & Fund Balance Policy, a Revenue & Expenditure policy, an Accounting, Auditing & Financial Reporting policy, a Debt Management policy and an Investment policy. The General Fund fund balance policy is currently 25% of the total General Fund annual expenditures to provide financing for unanticipated expenditures and revenue shortfalls and possible delays and changes in state distribution of shared revenues. 3. The City adopted a new Purchasing Manual to establish guidelines for City staff in procuring goods and materials in a manner that is consistent with the highest standards of public service in obtaining quality goods and services at the lowest possible price. 4. The City adopted a 10-year capital improvement plan for the Water Fund and structured the necessary fees in order to maintain the Water Divisions capital equipment and infrastructure, and maintain or enhance the current levels of service. 5. The City Adopted a 5-year Capital Improvement Plan during the FY17 budget process for the General Capital Infrastructure of Streets, Fleet and Equipment. Funding to implement this plan is being reviewed during the FY18 budget process. 6. The City attempts to maintain a diversified and stable revenue system to shelter it from short- term fluctuations in any one revenue source. All fees and charges were reviewed and five P a g e | vi  recommendations will be implemented in FY16.5 and FY17. These were increases to the ambulance transport fees, increase in the video gaming licensing fees, increase to the fuel surcharge, adding a treat non-transport to the ambulance fees and adding a fee for the leasing of our records management software fee. The City will continue to make this review an annual process during the budget season each year. Relevant Financial Policies The City Council passed a resolution in 2015 to adopt certain financial management policies including a budget policy, a fund balance policy, a revenue and expenditure policy, an accounting/auditing and financial reporting policy, a capital asset policy, a debt management policy, and an investment policy. Changes were made to these policies during the FY17 budget process to incorporate a Capital Equipment Replacement Funding Policy for the implementation of the City’s 5-year Capital Improvement Plan. Excluding amounts restricted, committed, or assigned for various purposes, the unassigned fund balance in the General Fund was 41.32% of actual expenditures for FY16.5. Because of the City’ changed from a twelve-month to a six-month reporting period, this was a 13.06% increase over last fiscal year. Cash temporarily idle during the year was invested in demand deposits, certificates of deposit, and the Illinois Funds Investment Pool. The City's investment policy seeks to ensure the preservation of capital in the overall portfolio, while mitigating credit and interest rate risks. Major Initiatives During FY 2016.5, the City was able to initiate and/or complete a variety of projects, programs and activities designed to meet identified community needs. These included:  Completed the STEAM Learning Center Feasibility Study.  Completed the Egyptian Theatre Business Planning Feasibility Assessment.  Monthly meetings being held with the NIU Student Leaders Group will provide a productive outlet for NIU student voices.  Implementation of the City of DeKalb Core Values Logo. This imagery will serve as a constant reminder of the beliefs and convictions that will guide and direct behavior and support the City’s mission and visions.  Increased content levels on the City’s Facebook page.  Launched a City Twitter and Instagram accounts to further communicate important updates and to reach more community members.  Launched the DeKalb e-News, an electronic newsletter dedicated to sharing information and resources with the community.  Development of a Benefits Handbook for non-bargaining unit employees and a Personnel Manual for all employees.  The City launched an online applicant tacking system, NeoGov, which allows the City to automate the hiring process. P a g e | vii  Initiated the City’s performance management process.  Attained 25% General Fund Balance reserve level.  Switched fiscal year end date from June 30th to December 31st.  Completed an RFP on Liability Insurance carriers and reduced the City’s insurance premium.  Implemented internal control procedures.  Continued to fund the Police and Fire pension funds at the higher funding methodology to help sustain the City’s bond rating with Moody’s.  Achieved the Government Finance Officers Association Award “Excellence in Financial Reporting” for the 23nd consecutive year.  Achieved the Government Finance Officers Association “Distinguished Budget Presentation Award for the 2nd consecutive year  Achieved the Government Finance Officers Association Award for “Outstanding Achievement in Popular Annual Financial Reporting” for the 2nd consecutive year.  Installed a payment kiosk in the City Hall lobby to better serve the citizens of the City.  Updated the City Hall phone tree to provide better direction for the citizens who call the City.  Upgraded the Channel 14 broadcasting system.  Outfitted the City ambulances with new internet devices to securely and seamlessly manage the multiple network connections.  The “20/20: A Clear Vision for the Future”, a strategic plan for 20 new crime reduction and community partnership initiatives in 20 months was completely implemented.  Expanded the Camp Power program into the Pleasant Street neighborhood.  Provided training that focused on how to embrace cultural diversity, how to de-escalate situations before they escalate into violent encounters and how to implement the four pillars of procedural justice which are fairness, impartiality, giving voice and transparency. The goal of these training initiatives is to enhance the trust and build better a relationship between the community and the police.  Implemented a co-policing program that is designed to enhance community safety on campus and within neighborhoods adjacent to the university. From attending each other’s roll calls, riding and training together and working collaboratively to implement proactive policing measures to reduce crime, both departments have developed a strong working relationship and continue to seek other ways to collaborate.  Continued reduction in crime in rental properties through the City’s Crime Free Housing program. The goal of the Crime Free Housing program has been to change criminal behavior, lessen crime and to decrease the calls for service at our rental units. The partnership between the Police Department’s Crime Free Housing program and our rental property owners has demonstrated the value of partnering with our community. There was a 16% decline in cases where crimes were committed by tenants or their guests.  Cardiac monitor replacement.  Purchased two new ambulances.  Replaced a 26 year-old aerial ladder truck with a 2008 model.  Re-instituted fire safety public education into five elementary schools, two middle schools, and the high school.  Updated operational response plans, which now include a disaster and aviation plan. These plans revisited mutual aid agreements with surrounding communities. The disaster P a g e | viii  response plan activates response assistance to DeKalb of equipment and personnel from 54 different fire departments, as well as personnel and equipment from six technical rescue teams and six hazardous materials teams.  Developed a five-year capital improvement program.  Constructed a rear entrance at City Hall that is compliant with the American Disabilities Act (ADA).  Refurbished the front reception area of City Hall.  Changed the billing of water, sewer, and refuse from a quarterly billing cycle to a bi- monthly billing cycle.  Coordinated Economic Incentive Agreements with Bemis Toyota, Dairy Queen and Thai Pavilion to encourage continued reinvestment in DeKalb, specifically the Sycamore Road corridor and the downtown.  Assisted 3M in the coordination of their construction of a one million square foot facility in Park 88 in less than one year. This guarantee on the tight timeline was critical in ensuring 3M stayed in DeKalb instead of locating this facility and moving these jobs to Atlanta, Georgia. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of DeKalb for its comprehensive annual financial report for the fiscal year ended June 30, 2016. This was the twenty-third consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the GFOA has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the City of DeKalb for its Popular Annual Financial Report for the fiscal year ended June 30, 2015. This is the second year the City has received this award. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, the City must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability, and reader appeal. Finally, the GFOA has presented to the City of DeKalb the Distinguished Budget Presentation Award for the FY16 Budget document. This is the second year the City has received this award. P a g e | ix The GFOA established the Distinguished Budget Presentation Awards Program (Budget Awards Program) in 1984 to encourage and assist state and local governments to prepare budget documents of the very highest quality that reflect both the guidelines established by the National Advisory Council on State and Local Budgeting and the GFOA’s best practices on budgeting and then to recognize individual governments that succeed in achieving that goal. The preparation of this Comprehensive Annual Financial Report was made possible by the efficient and dedicated service of the entire staff of the City’s Finance Department. Each member of the department has my sincere appreciation for the contributions made in the preparation of this report. My appreciation is also expressed to the Mayor, City Council, the City Manager’s Office, and all other City Departments for their dedication and support in maintaining the highest standards of professionalism in the management of the City of DeKalb’s finances. Respectfully submitted, Robert H. Miller Assistant Finance Director Page |x FINANCIAL SECTION  INDEPENDENT AUDITOR’S REPORT The Honorable Mayor Members of the City Council City of DeKalb, Illinois We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of DeKalb, Illinois (the City), as of and for the six months ended December 31, 2016, and the related notes to financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. -1- -1- Opinions In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of DeKalb, Illinois as of December 31, 2016, and the respective changes in financial position and cash flows, where applicable, thereof, for the six months then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and other required supplementary information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual fund financial statements and schedules, supplemental financial information, and statistical section in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section, supplemental financial information, and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. -2- -2- Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated June 12, 2017 on our consideration of the City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Naperville, Illinois June 12, 2017 -3- -3- GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS  CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2016 As the management of the City of DeKalb (the “City”), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2016. The City converted to a calendar year as of January 1, 2017 and therefore had a six month transition period. This should be considered when reading and understanding this document. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal included earlier in this report. USING THE FINANCIAL SECTION OF THIS COMPREHENSIVE ANNUAL REPORT Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused sick leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, highways and streets, and community development. The business-type activities of the City include a water system, a municipal airport, and refuse services. The government-wide financial statements can be found on pages 4 through 6 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. (See independent auditor’s report) MD&A 1 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains seventeen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Motor Fuel Tax Fund, Mass Transit Fund, TIF #1 Fund, and TIF #2 Fund, which are considered to be “major” funds. Data from the other twelve governmental funds are combined into a single, aggregate presentation. Individual fund data for each of these non-major governmental funds is provided elsewhere in this report. The City adopts an annual budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with the budget. The basic governmental fund financial statements can be found on pages 7 through 12 of this report. Proprietary Funds. There are two different types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water system, the municipal airport, and refuse services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City maintains three internal service funds to account for workers’ compensation insurance premiums, health insurance premiums, and liability insurance premiums. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water Fund, the Airport Fund, and the Refuse Fund. Data from the other three internal service funds are combined into a single, aggregate presentation. Individual fund data for each of these internal service funds is provided elsewhere in this report. The basic proprietary fund financial statements can be found on pages 13 through 17 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. (See independent auditor’s report) MD&A 2 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The City maintains two fiduciary funds, the Police Pension Fund and the Fire Pension Fund. Data from the two fiduciary funds are combined into a single, aggregate presentation. Individual fund data for each of these fiduciary funds is provided elsewhere in this report. The basic fiduciary fund financial statements can be found on pages 18 and 19 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 20 through 85 of this report. Financial Analysis of the City as a Whole Beyond presenting current year financial information in the government-wide and major individual fund formats, the City also presents comparative information from the prior year in Management’s Discussion and Analysis. By doing so, the City is providing the best means of analyzing its financial condition and position as of December 31, 2016. That being said, with the FY16.5 fiscal year only covering the six months ending with December 31, 2016, some year to year comparisons will not offer a good means for analysis. (See independent auditor’s report) MD&A 3 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) GOVERNMENT-WIDE STATEMENTS Net Position The following table reflects the condensed Statement of Net Position. Table 1 Statement of Net Position As of December 31, 2016 Governmental Business-Type Total Activities Activities Primary Government FY16.5 FY16 FY16.5 FY16 FY16.5 FY16 Current and Other Assets $ 51,059,664 40,578,668 7,619,474 7,296,702 58,679,138 47,875,370 Capital Assets 129,363,259 131,309,223 56,506,148 57,049,230 185,869,407 188,358,453 Total Assets 180,422,923 171,887,891 64,125,622 64,345,932 244,548,545 236,233,823 Deferred Outflows 8,990,269 6,699,392 398,930 871,223 9,389,199 7,570,615 Total Assets and Deferred Outflows 189,413,192 178,587,283 64,524,552 65,217,155 253,937,744 243,804,438 Long-Term Liabilities 118,384,298 116,676,411 6,730,081 7,122,869 125,114,379 123,799,280 Other Liabilities 10,630,253 4,253,617 2,051,777 2,167,332 12,682,030 6,420,949 Total Liabilities 129,014,551 120,930,028 8,781,858 9,290,201 137,796,409 130,220,229 Deferred Inflows 15,162,356 11,939,730 115,224 - 15,277,580 11,939,730 Total Liabilities and Deferred Inflows 144,176,907 132,869,758 8,897,082 9,290,201 153,073,989 142,159,959 Net Position: Net Investment in Capital Assets 109,971,927 111,898,622 52,481,077 52,803,874 162,453,004 164,702,496 Restricted 13,940,693 13,365,048 - - 13,940,693 13,365,048 Unrestricted (78,676,335) (79,546,145) 3,146,393 3,123,080 (75,529,942) (76,423,065) Total Net Position 45,236,285 45,717,525 55,627,470 55,926,954 100,863,755 101,644,479 The City’s combined net position decreased from $101.6 million to $100.8 million for the six months ending December 31, 2016. Net position attributable to governmental activities decreased by $481,240 due primarily to the increase in net pension liability for the police and fire pension funds. While the City is in the process of funding both pensions at the entry age normal cost method, investment rate of returns were much lower than the actuarial assumption of 7.5%, which created a larger net pension liability. Net position attributable to business-type activities decreased by $299,484 due mainly to a reduction in deferred outflows for the six months ending December 31, 2016. For more detailed information, see the Statement of Net Position on page 4. (See independent auditor’s report) MD&A 4 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Activities The following table summarizes the revenue and expenses of the City’s activities. Table 2 Changes in Net Position For the Fiscal Periods Ended June 30, 2016 and December 31, 2016 Governmental Business-Type Total Activities Activities Primary Government FY16.5 FY16 FY16.5 FY16 FY16.5 FY16 Revenues Program Revenues: Charges for Services $ 2,103,262 4,016,686 4,320,803 7,906,974 6,424,065 11,923,660 Operating Grants/Contributions 672,466 1,218,315 - - 672,466 1,218,315 Capital Grants/Contributions 1,866,646 3,933,596 42,829 81,555 1,909,475 4,015,151 General Revenues Property Taxes 12,678,579 11,812,941 - - 12,678,579 11,812,941 Sales Taxes 6,197,334 11,801,518 - - 6,197,334 11,801,518 Utility Taxes 1,513,310 3,202,384 - - 1,513,310 3,202,384 State Income Taxes 1,786,638 4,462,992 - - 1,786,638 4,462,992 Other Taxes 3,279,118 5,585,744 - - 3,279,118 5,585,744 Other 470,613 342,765 56,827 148,014 527,440 490,779 Total Revenues 30,567,966 46,376,941 4,420,459 8,136,543 34,988,425 54,513,484 Expenses General Government 5,395,790 8,456,094 - - 5,395,790 8,456,094 Public Safety 13,631,506 33,400,660 - - 13,631,506 33,400,660 Highways and Streets 4,480,747 8,086,082 - - 4,480,747 8,086,082 Community Development 7,362,107 6,984,506 - - 7,362,107 6,984,506 Interest on Long-Term Debt 433,303 1,057,938 - - 433,303 1,057,938 Water - - 2,766,772 5,354,514 2,766,772 5,354,514 Airport - - 674,622 1,263,527 674,622 1,263,527 Refuse - - 1,024,302 2,110,657 1,024,302 2,110,657 Total Expenses 31,303,453 57,985,280 4,465,696 8,728,698 35,769,149 66,713,978 Change in Net Position Before Transfers (735,487) (11,608,339) (45,237) (592,155) (780,724) (12,200,494) Transfers 254,247 (62,163) (254,247) 62,163 - - Change in Net Position (481,240) (11,670,502) (299,484) (529,992) (780,724) (12,200,494) Net Position, July 1 45,717,525 57,126,372 55,926,954 56,910,678 101,644,479 114,037,050 Restatement - 261,655 - (453,732) - (192,077) Net Position, December 31 45,236,285 45,717,525 55,627,470 55,926,954 100,863,755 101,644,479 (See independent auditor’s report) MD&A 5 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) For the six months ended December 31, 2016, revenues totaled $34.9 million. The City benefits from a highly diversified revenue base. Revenues from property taxes amounted to $12.6 million or 36.2% of total revenues. Property taxes support governmental activities including the City’s contribution to the Police and Fire Pension Funds. Property tax revenues increased over last fiscal year as the City continued to fund the Fire and Police Pension Funds based on the actuarial valuation, which came in higher than in years past. Property tax revenues collected in Fiscal Year 2016.5 were based on the 2015 Equalized Assessed Valuation (EAV) and property tax rate. The City’s 2015 EAV increased by 0.6% to $468,077,742 due primarily to the slow recovery in the economy. The EAV approximates 33 1/3% of the total market value of real estate within the corporate limits of the City. The property tax rate for 2015 was $1.1942 per $100 of EAV. Sales taxes are typically the highest revenue source for the City. They are collected by the State of Illinois and remitted back to the City on a monthly basis. The general sales tax collected by the state for sales within the corporate boundaries of the City is 6.25%. However, only 1% of that total is remitted back to the City of DeKalb. The remainder goes to the state (5%), and DeKalb County (.25%). In addition, a home rule sales tax of 1.75% is also collected by the State of Illinois and remitted back to the City on a monthly basis. The home rule sales tax is not applicable to food, drugs, or licensed vehicle purchases. For FY16.5, general sales tax revenues were $2,748,303 compared to $5,289,536 for FY16, while home rule sales tax revenues were $3,449,031 compared to $6,511,982 for FY16. Even though it may appear that sales taxes in the six month fiscal year should result in a sizable decrease, we need to keep in mind that the FY16.5 fiscal year included the month of December, which is typically the highest sales month and therefore skews the six month numbers. Overall, sales tax revenues have been stable over the last four years and are projected to keep at the pace in the near future. (See independent auditor’s report) MD&A 6 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Income taxes are shared with municipalities by the state on a per-capita basis. The City’s income tax revenue was $1,786,638 in FY16.5 compared to $4,462,992 in FY16. This per-capita revenue source is based more on the state’s economy and unemployment rate rather than the local economy. The State of Illinois’ unemployment rate peaked to 11.50% in December 2009 and has dropped to 4.70% in April 2017. Telecommunications taxes are collected by the state and remitted back to the City on a monthly basis. The City’s telecommunications tax rate is 6%. A total of $373,735 was collected in FY16.5 compared to $849,837 that was collected in FY16. This revenue source is expected to decrease slightly over the next several years as more residents convert to internet telephone service or cellular telephone service as their primary source of communication and eliminate landline service. Also, the option to package and bundle programs has brought down the consumer costs of cell phones and therefore has dropped this tax revenue source. Use tax is a tax imposed on the privilege of using, in the State of Illinois, any item of tangible personal property that is purchased anywhere at retail. This revenue source is collected by the State and forwarded to the City on a per capita basis. For FY16.5, $564,630 was collected compared to the $1,040,616 collected in FY16. This revenue source is expected to increase further next year due to the state’s increased collection efforts which include a separate line for use taxes on the state income tax return form along with the increase in internet sales that are considered use tax revenue depending on the purchase The major revenue component of the “charges for services” classification is fees from the City’s water utility. Water related revenue was $2,929,368 in FY16.5 compared to $5,391,676 in FY16. In the case of the Water Fund, the economy is still having an impact on water revenue. Foreclosures, closed businesses, and a tendency to conserve water are still contributing factors that continue to drive down the City’s water sales. In addition, the general trend towards using water- saving fixtures and toilets is reducing water consumption. Capital grants and contributions revenue were $1,909,475 in FY16.5 and $4,015,151 in FY16. Streets, storm sewers, right-of-ways, water mains, etc. are recorded on the City’s general ledger as contributions of capital assets upon acceptance of the public improvements from the developer by the City Council. Airport related capital grants and contributions decreased from $81,555 in FY16 to $42,829 in FY16.5. (See independent auditor’s report) MD&A 7 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The City’s expenses totaled $35.7 million in FY16.5 compared to $66.7 million in FY16. General government expenses were 15.1% of the total or $5,395,790. This represents a 36.2% decrease from the FY16 total of $8,456,094. This decrease is primarily due to the change from a twelve- month to a six-month fiscal reporting period. Public safety expenses related to the operations of both the Police Department and Fire Department accounted for the largest share of expenses at $13,631,506 or 38.1% of the total. This represents a 59.2% decrease from the FY16 total of $33,400,660. This decrease is primarily due to the change from a twelve-month to a six-month fiscal reporting period. Highways and Streets related expenses were $4,480,747 or 12.5% of the total. This represents a 44.6% decrease from the FY16 total of $8,086,082. Once again, this decrease is primarily due to the change from a twelve-month to a six-month fiscal reporting period. Community Development related expenses accounted for 20.6% of the total or $7,362,107. This represents a 5.4% increase from the FY16 total of $6,984,506. This increase was due to paying the DeKalb Community School District #428 $1.8 million out of the TIF funds for facility maintenance. Water related expenses were $2,766,772 or 7.7% of the total. This represents a 48.3% decrease from the FY16 total of $5,354,514. This decrease is primarily due to the change from a twelve- month to a six-month fiscal reporting period. Airport related expenses were $674,622 or 1.9% of the total. This represents a 46.6% decrease from the FY16 total of $1,263,527. (See independent auditor’s report) MD&A 8 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The Refuse Fund ($1,024,302 or 2.9% of total expenses) and interest on long-term debt ($433,303 or 1.2% of total expenses) account for the balance of the FY16.5 expenses. FINANCIAL ANALYSIS OF THE CITY’S FUNDS At December 31, 2016, the governmental funds had a combined fund balance of $24,037,626. This reflects an $853,454 or 3.7% increase from the prior fiscal year. The General Fund fund balance decreased by $255,540 or 2.7%. Originally the General Fund was budgeted to have a $454,734 decrease in its fund balance for FY16.5. This difference between the budgeted and actual General Fund fund balance can be attributed to revenues coming in higher than budgeted parameters and expenditures coming in below budgeted parameters. The Motor Fuel Tax Fund fund balance increased by $139,397 or 4.5%. The TIF District Funds fund balances increased by $126,650 or 1.2%, A TIF phase out committee has been formed to plan out the remaining expenditures for the remaining years of these two TIF’s. Finally, the fund balances of non-major governmental funds increased by $842,947 or 295.3%. Funds typically are being spent on projects in the Foreign Fire Insurance Fund, Housing Rehabilitation Fund, Community Development Block Grant Fund, Special Service Area Funds, and the Capital Project Funds. With the shortened fiscal year, several equipment items that were budgeted for in FY16.5 did not get purchased until 2017, which increased year-end fund balance in the Equipment Fund. (See independent auditor’s report) MD&A 9 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table 3 General Fund Budgetary Highlights For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual Revenues Taxes $ 11,760,730 11,760,730 11,683,183 Licenses & Permits 328,650 328,650 308,697 Intergovernmental 6,220,995 6,220,995 5,796,506 Charges for Services 1,123,750 1,123,750 1,349,663 Fines & Forfeitures 474,487 474,487 333,018 Miscellaneous 249,400 249,400 270,422 Total Revenues 20,158,012 20,158,012 19,741,489 Expenditures and Transfers General Government (2,909,258) (2,909,258) (3,099,567) Public Safety (14,552,052) (14,552,052) (13,863,123) Highways and Streets (1,980,322) (1,980,322) (1,976,052) Community Development (829,645) (829,645) (777,116) Disposal of Capital Assets - - - Transfers In 271,100 271,100 271,100 Transfers Out (612,569) (612,569) (552,271) Total Expenditures and Transfers (20,612,746) (20,612,746) (19,997,029) Change in Fund Balance (454,734) (454,734) (255,540) The City had originally budgeted for a $454,734 decrease to the General Fund fund balance. The City conducts periodic budget reviews throughout the fiscal year to identify revenue and expenditure line items that require amendments and, accordingly, the City Council approved three budget amendments during the year. The amendments accounted for any unanticipated changes in revenues or expenditures that occurred since the initial budget was adopted. The budget amendments had no impact on the General Fund fund balance. Actual results for FY16.5 indicated a decrease in fund balance of $255,540. The better than expected General Fund results for FY16.5 were attributable to increased revenues due to the improving local economy, and to the City being able to contain expenditures and not exceed the budgeted level for any department. With respect to the business-type activities, the Water Fund had a decrease in Net Position due to the GASB 68 IMRF pension obligation expense being recorded. The Municipal Airport Fund showed a decrease in Net Position at the end of FY16.5 due to lower than anticipated revenues. The City has established a fund balance policy for these funds to ensure reserves are available for operations first before committing any funds to capital projects. (See independent auditor’s report) MD&A 10 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Capital Assets The following schedule reflects the City’s capital asset balances as of December 31, 2016 and June 30, 2016 Table 4 Capital Assets As of June 30, 2016 and December 31, 2016 Governmental Business-Type Activities Activities Total FY16.5 FY16 FY16.5 FY16 FY16.5 FY16 Land $ 10,409,215 10,358,605 19,386,047 19,386,047 29,795,262 29,744,652 Land Right of Way 25,742,257 25,742,257 544,893 544,893 26,287,150 26,287,150 Construction in Progress 255,667 198,864 684,427 640,086 940,094 838,950 Buildings and Improvements 20,814,645 20,814,645 4,804,864 4,804,864 25,619,509 25,619,509 Equipment 2,832,248 2,832,248 658,640 688,715 3,490,888 3,520,963 Vehicles 8,451,624 8,460,549 966,936 966,936 9,418,560 9,427,485 Infrastructure 153,207,659 153,207,659 12,797,766 12,797,766 166,005,425 166,005,425 Water Distribution System - - 42,614,946 42,614,946 42,614,946 42,614,946 Less: Accumulated Depreciateion (92,350,056) (90,305,604) (25,952,371) (25,395,023) (118,302,427) (115,700,627) Total 129,363,259 131,309,223 56,506,148 57,049,230 185,869,407 188,358,453 At year-end, the City’s investment in capital assets for both its governmental and business-type activities was $185.9 million (net of accumulated depreciation). This represents a decrease of $2.5 million or 1.3% from June 30, 2016. This decrease is the result of the capitalization of new capital assets acquired or constructed during FY16.5 offset by the current year’s depreciation expense for all depreciable capital assets. See Note 4 to the financial statements for further information on capital assets. (See independent auditor’s report) MD&A 11 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Long-Term Debt As of December 31, 2016, the City had a total of $125,114,379 in long-term debt outstanding. The table below summarizes the City’s bonded and similar indebtedness. Table 5 Bonded and Similar Indebtedness As of December 31, 2016 Governmental Business-type Activities Activities Total FY16.5 FY16 FY16.5 FY16 FY16.5 FY16 General Obligation Bonds $ 24,153,425 24,998,425 1,726,575 1,726,575 25,880,000 26,725,000 Premium on Bonds 258,910 307,166 - - 258,910 307,166 Capital Leases 183,332 199,999 - - 183,332 199,999 IEPA Loan - - 2,298,496 2,518,781 2,298,496 2,518,781 Compensated Absences 4,937,879 5,243,538 575,318 628,691 5,513,197 5,872,229 Net Pension Liability 81,184,888 78,413,065 1,703,652 1,828,480 82,888,540 80,241,545 Net OPEB Obligation 7,057,478 6,915,527 426,040 420,342 7,483,518 7,335,869 Claims Payable 608,386 598,691 - - 608,386 598,691 Total 118,384,298 116,676,411 6,730,081 7,122,869 125,114,379 123,799,280 In regards to governmental activities, $24,153,425 is outstanding from General Obligation Bonds and $183,332 is outstanding for capital leases. Additionally, as of December 31, 2016, $4,937,879 is outstanding for compensated absences payable, $7,057,478 is outstanding for net other postemployment benefit obligations, $81,184,888 is outstanding for net pension liabilities, $608,386 is outstanding for claims payable, and $258,910 in unamortized premium on bonds was outstanding. Business-type activity debt includes $1,726,575 outstanding from the General Obligation Refunding Bonds issued to advance refund the 2004 General Obligation Refunding Bonds issued to finance safety improvements at the airport and to partially advance refund the 2006 General Obligation Bonds issued to finance the water main replacement program. Another $2,298,496 is outstanding IEPA loans. $575,318 is outstanding in business-type activity debt in the form of compensated absences payable as of December 31, 2016, $1,703,652 is outstanding for net pension liabilities, and $426,040 is outstanding for net other postemployment benefit obligations. The City received a credit rating of Aa2 by Moody’s Investors Service in connection with the issuance of its 2014 General Obligation Refunding Bonds. See Note 5 to the financial statements for further information on long-term debt. Economic Factors Although, the City’s property tax base is primarily residential, the commercial and industrial tax base continues to be an important component in the diversification of the City’s tax base. In 2016, the equalized assessed valuation (EAV) for residential properties was $298,748,883 or 59.3% of the total EAV. Commercial EAV was $154,031,848 or 30.6% of the total EAV. Farm, industrial and other EAV was $51,081,098 or 10.1% of the total EAV. EAV approximates 33 1/3% of the (See independent auditor’s report) MD&A 12 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) market value of real property within the City’s corporate limits. Property taxes imposed on property within the City’s corporate limits provide a stable revenue source. Because the City is a home rule municipality, it is not subject to the Property Tax Extension Limitation Law. While the City receives revenue from a variety of sources, it closely monitors its sales tax revenue, income tax revenue, and development and construction related revenue such as building permits, water connection fees, and impact fees. In FY16.5, most revenue sources decreased from the previous fiscal year due to the change from a twelve-month to a six-month reporting period. These revenues and all other revenue sources will continue to be monitored during 2017 to ensure that the City addresses any significant variations in revenues in a timely fashion. The 2011-2015 American Community Survey released by the U.S. Census Bureau found that 81.2% of residential properties in the City had a value of $100,000 or more and 52.8% had a value of $150,000 or more. The median value was $154,100 and the median income of families living in the City was $59,588. The 2010 census found that the City’s population was 43,862 which is an increase of 12.4% over the 2000 census population of 39,018. The City’s population estimate for 2016 is 44,030. Due to the increase in population over the years, the City has experienced increased per capita revenue from the State of Illinois for income taxes, motor fuel taxes, and use taxes. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. Questions concerning this report or requests for additional financial information should be directed to Finance Director, City of DeKalb, 200 S Fourth St, DeKalb, Illinois 60115. (See independent auditor’s report) MD&A 13  CITY OF DEKALB, ILLINOIS STATEMENT OF NET POSITION December 31, 2016 Governmental Business-Type Component Unit Activities Activities Total Library ASSETS Cash and Investments $ 29,347,845 $ 6,188,498 $ 35,536,343 $ 1,861,029 Receivables (Net, Where Applicable, of Allowances for Uncollectibles) Property Taxes 13,988,743 - 13,988,743 2,790,084 Accounts Receivable 700,499 1,746,724 2,447,223 92,675 Accrued Interest 45,125 10,330 55,455 122 Other 1,293,656 72,598 1,366,254 - Prepaid Items 249,326 9,863 259,189 - Inventory 19,437 40,501 59,938 - Advance To/From Other Funds 478,000 (478,000) - - Due from Other Governments 4,937,033 28,960 4,965,993 - Capital Assets Not Depreciated 36,407,139 20,615,367 57,022,506 25,287,312 Depreciated (Net of Accumulated Depreciation) 92,956,120 35,890,781 128,846,901 285,252 Total Assets 180,422,923 64,125,622 244,548,545 30,316,474 DEFERRED OUTFLOWS OF RESOURCES Pension Items - IMRF 1,803,191 398,930 2,202,121 325,906 Pension Items - Police Pension 3,582,114 - 3,582,114 - Pension Items - Firefighters' Pension 3,600,629 - 3,600,629 - Loss on Refunding 4,335 - 4,335 - Total Deferred Outflows of Resources 8,990,269 398,930 9,389,199 325,906 Total Assets and Deferred Outflows of Resources 189,413,192 64,524,552 253,937,744 30,642,380 LIABILITIES Accounts Payable 8,655,925 1,672,822 10,328,747 411,488 Accrued Payroll 752,221 89,193 841,414 34,379 Accrued Interest Payable 336,943 30,023 366,966 118,849 Line of Credit - - - 3,830,331 Unearned Revenue 68,313 212,573 280,886 - Deposits Payable - 47,166 47,166 - Due to Fiduciary Funds 816,851 - 816,851 - Long-Term Liabilities Due Within One Year 3,436,861 914,195 4,351,056 1,962,185 Due in More than One Year 114,947,437 5,815,886 120,763,323 7,407,751 Total Liabilities 129,014,551 8,781,858 137,796,409 13,764,983 DEFERRED INFLOWS OF RESOURCES Pension Items - IMRF 332,006 115,224 447,230 59,030 Pension Items - Firefighters' Pension 764,477 - 764,477 - Pension Items - Police Pension 77,130 - 77,130 - Unavailable Property Taxes 13,988,743 - 13,988,743 2,790,084 Total Deferred Inflows of Resources 15,162,356 115,224 15,277,580 2,849,114 Total Liabilities and Deferred Inflows of Resources 144,176,907 8,897,082 153,073,989 16,614,097 NET POSITION Net Investment in Capital Assets 109,971,927 52,481,077 162,453,004 13,577,788 Restricted for Public Safety 332,684 - 332,684 - Highways and Streets 3,236,896 - 3,236,896 - Economic Development 10,371,113 - 10,371,113 - Endowments - - - 223,662 Unrestricted (Deficit) (78,676,335) 3,146,393 (75,529,942) 226,833 TOTAL NET POSITION $ 45,236,285 $ 55,627,470 $ 100,863,755 $ 14,028,283 See accompanying notes to financial statements. -4-  CITY OF DEKALB, ILLINOIS STATEMENT OF ACTIVITIES For the Six Months Ended December 31, 2016 Program Revenues Operating Capital Charges Grants and Grants and FUNCTIONS/PROGRAMS Expenses for Services Contributions Contributions PRIMARY GOVERNMENT Governmental Activities General Government $ 5,395,790 $ 291,387 $ - $ 1,812,615 Public Safety 13,631,506 1,580,396 28,527 2,000 Highways and Streets 4,480,747 - 643,939 52,031 Community Development 7,362,107 231,479 - - Interest 433,303 - - - Total Governmental Activities 31,303,453 2,103,262 672,466 1,866,646 Business-Type Activities Water 2,766,772 2,929,368 - - Airport 674,622 328,053 - 42,829 Refuse 1,024,302 1,063,382 - - Total Business-Type Activities 4,465,696 4,320,803 - 42,829 TOTAL PRIMARY GOVERNMENT $ 35,769,149 $ 6,424,065 $ 672,466 $ 1,909,475 COMPONENT UNIT Library $ 1,298,581 $ 28,452 $ - $ 285,300 Transfers In (Out) CHANGE IN NET P NET POSITION, JU NET POSITION, D -5-  Net (Expense) Revenue and Change in Net Position Primary Government Governmental Business-Type Component Unit Activities Activities Total Library $ (3,291,788) $ - $ (3,291,788) $ - (12,020,583) - (12,020,583) - (3,784,777) - (3,784,777) - (7,130,628) - (7,130,628) - (433,303) - (433,303) - (26,661,079) - (26,661,079) - - 162,596 162,596 - - (303,740) (303,740) - - 39,080 39,080 - - (102,064) (102,064) - (26,661,079) (102,064) (26,763,143) - - - - (984,829) General Revenues Taxes Property 12,678,579 - 12,678,579 2,859,340 Home Rule Sales 3,449,031 - 3,449,031 - Utility 1,513,310 - 1,513,310 - Restaurant/Bar 963,756 - 963,756 - Hotel/Motel 158,910 - 158,910 - Other 945,709 - 945,709 - Intergovernmental State Sales Taxes 2,748,303 - 2,748,303 - Income Taxes 1,786,638 - 1,786,638 - Local Use Taxes 564,630 - 564,630 - Replacement Taxes 71,305 - 71,305 14,583 Other 574,808 - 574,808 - Investment Income 103,038 18,951 121,989 2,228 Miscellaneous 344,060 37,876 381,936 5,846 Gain on Sale of Capital Asset 23,515 - 23,515 - Transfers In (Out) 254,247 (254,247) - - Total 26,179,839 (197,420) 25,982,419 2,881,997 CHANGE IN NET POSITION (481,240) (299,484) (780,724) 1,897,168 NET POSITION, JULY 1 45,717,525 55,926,954 101,644,479 12,131,115 NET POSITION, DECEMBER 31 $ 45,236,285 $ 55,627,470 $ 100,863,755 $ 14,028,283 See accompanying notes to financial statements. -6-  CITY OF DEKALB, ILLINOIS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2016 Special Revenue Motor Mass General Fuel Tax Transit ASSETS Cash and Investments $ 5,671,025 $ 3,217,698 $ 757,464 Receivables (Net, Where Applicable, of Allowances for Uncollectibles) Property Taxes 5,708,863 - - Accounts Receivable 700,499 - - Accrued Interest 17,799 - - Other 1,101,757 - - Prepaid Items 73,176 - - Inventory 19,437 - - Advances to Other Funds 478,000 - - Due from Other Governments 4,451,360 104,451 323,785 Due from Other Funds 98,753 - - TOTAL ASSETS $ 18,320,669 $ 3,322,149 $ 1,081,249 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Accounts Payable $ 1,809,115 $ 85,253 $ 1,028,340 Accrued Payroll 744,598 - 7,623 Unearned Revenue 11,949 - 45,286 Due to Other Funds 817,024 - - Total Liabilities 3,382,686 85,253 1,081,249 DEFERRED INFLOWS OF RESOURCES Unavailable Property Tax Revenues 5,708,863 - - Total Deferred Inflows of Resources 5,708,863 - - Total Liabilities and Deferred Inflows of Resources 9,091,549 85,253 1,081,249 FUND BALANCES Nonspendable Prepaids 73,176 - - Inventory 19,437 - - Advances to Other Funds 478,000 - - Restricted Public Safety 283,543 - - Debt Service - - - Highways and Streets - 3,236,896 - Economic Development - - - Assigned for Capital Projects - - - Unassigned (Deficit) 8,374,964 - - Total Fund Balances 9,229,120 3,236,896 - TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 18,320,669 $ 3,322,149 $ 1,081,249 -7-  Special Revenue Tax Increment Tax Increment Nonmajor Total Financing Financing Governmental Governmental #1 #2 Funds Funds $ 6,766,932 $ 9,186,570 $ 1,295,140 $ 26,894,829 6,866,742 1,391,138 22,000 13,988,743 - - - 700,499 6,743 16,489 - 41,031 - - 25,077 1,126,834 - - 51 73,227 - - - 19,437 - - - 478,000 - - 57,437 4,937,033 - 173 14,288 113,214 $ 13,640,417 $ 10,594,370 $ 1,413,993 $ 48,372,847 $ 4,260,201 $ 1,350,187 $ 73,861 $ 8,606,957 - - - 752,221 - - - 57,235 61,411 7,980 43,650 930,065 4,321,612 1,358,167 117,511 10,346,478 6,866,742 1,391,138 22,000 13,988,743 6,866,742 1,391,138 22,000 13,988,743 11,188,354 2,749,305 139,511 24,335,221 - - 51 73,227 - - - 19,437 - - - 478,000 - - 49,141 332,684 - - 22,758 22,758 - - - 3,236,896 2,452,063 7,845,065 73,985 10,371,113 - - 1,130,130 1,130,130 - - (1,583) 8,373,381 2,452,063 7,845,065 1,274,482 24,037,626 $ 13,640,417 $ 10,594,370 $ 1,413,993 $ 48,372,847 See accompanying notes to financial statements. -8-  CITY OF DEKALB, ILLINOIS RECONCILIATION OF FUND BALANCES OF GOVERNMENTAL FUNDS TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF NET POSITION December 31, 2016 FUND BALANCES OF GOVERNMENTAL FUNDS $ 24,037,626 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds 129,363,259 The loss on refunding of bonds is capitalized and amortized over the life of the bonds on the statement of net position 4,335 Differences between expected and actual experiences, assumption changes, and net difference between projected and actual earnings for the Police Pension Fund are recognized as deferred outflows and inflows of resources on the statement of net position 3,504,984 Differences between expected and actual experiences, assumption changes, and net difference between projected and actual earnings for the Firefighters' Pension Fund are recognized as deferred outflows and inflows of resources on the statement of net position 2,836,152 Differences between expected and actual experiences, assumption changes, and net difference between projected and actual earnings for the Illinois Municipal Retirement Fund are recognized as deferred outflows and inflows of resources on the statement of net position 1,471,185 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds General obligation bonds (24,153,425) Capital leases (183,332) Net pension liability - Police Pension (33,850,456) Net pension liability - Firefighters' Pension (40,800,138) Net pension liability - IMRF (6,534,294) Premium on bonds payable (284,297) Discount on bonds payable 25,387 Compensated absences payable (4,937,879) Other postemployment benefit obligation (7,057,478) Accrued interest on long-term liabilities is reported as a liability on the statement of net position (336,943) The net position of the Internal Service Funds is included in the governmental activities in the statement of net position 2,131,599 NET POSITION OF GOVERNMENTAL ACTIVITIES $ 45,236,285 See accompanying notes to financial statements. -9-  CITY OF DEKALB, ILLINOIS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Six Months Ended December 31, 2016 Special Revenue Motor Mass General Fuel Tax Transit REVENUES Taxes $ 11,683,183 $ - $ - Licenses and Permits 308,697 - - Intergovernmental 5,796,506 623,644 1,812,615 Charges for Services 1,349,663 - - Fines and Forfeitures 333,018 - - Investment Income 47,426 4,155 - Miscellaneous 222,996 - - Total Revenues 19,741,489 627,799 1,812,615 EXPENDITURES Current General Government 3,099,567 - 1,801,379 Public Safety 13,863,123 - - Highways and Streets 1,976,052 341,749 - Community Development 777,116 - - Capital Outlay - 146,653 11,236 Debt Service Principal Retirement - - - Interest and Fiscal Charges - - - Total Expenditures 19,715,858 488,402 1,812,615 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 25,631 139,397 - OTHER FINANCING SOURCES (USES) Proceeds on Sale of Capital Assets - - - Transfers In 271,100 - - Transfers (Out) (552,271) - - Total Other Financing Sources (Uses) (281,171) - - NET CHANGE IN FUND BALANCES (255,540) 139,397 - FUND BALANCES, JULY 1 9,484,660 3,097,499 - FUND BALANCES, DECEMBER 31 $ 9,229,120 $ 3,236,896 $ - - 10 -  Special Revenue Tax Increment Tax Increment Nonmajor Total Financing Financing Governmental Governmental #1 #2 Funds Funds $ 6,430,015 $ 1,181,326 $ 414,770 $ 19,709,294 - - - 308,697 - - 52,031 8,284,796 - - 97,833 1,447,496 - - 14,052 347,070 20,272 31,152 33 103,038 - - 121,064 344,060 6,450,287 1,212,478 699,783 30,544,451 - - 166,528 5,067,474 - - 18,246 13,881,369 - - - 2,317,801 412,119 243,243 - 1,432,478 4,343,392 1,575,686 136,251 6,213,218 - - 861,667 861,667 - - 437,752 437,752 4,755,511 1,818,929 1,620,444 30,211,759 1,694,776 (606,451) (920,661) 332,692 - - 23,515 23,515 - - 1,922,015 2,193,115 (961,675) - (181,922) (1,695,868) (961,675) - 1,763,608 520,762 733,101 (606,451) 842,947 853,454 1,718,962 8,451,516 431,535 23,184,172 $ 2,452,063 $ 7,845,065 $ 1,274,482 $ 24,037,626 See accompanying notes to financial statements. - 11 -  CITY OF DEKALB, ILLINOIS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF ACTIVITIES For the Six Months Ended December 31, 2016 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 853,454 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures; however, they are capitalized on the statement of net position and depreciated on the statement of activities 107,413 Depreciation expense does not require the use of current financial resources and, therefore, is not reported as an expenditure in governmental funds (2,053,377) The repayment of the principal portion of long-term debt is reported as an expenditure when due in governmental funds but as a reduction of principal outstanding on the statement of net position 861,667 Amortization of premium on bonds is reported as a reduction of interest expense on the statement of activities 50,674 Amortization of discount on bonds is reported as a reduction of interest expense on the statement of activities (2,418) Amortization of the loss on refunding is reported as interest expense on the statement of activities (45,654) The decrease of accrued interest payable is shown as an decrease of expense on the statement of activities 1,847 The decrease in compensated absences payable is shown as an decrease of the statement of activities 305,659 The change in the other postemployment benefit obligation (141,951) The change in the Police Pension Fund net pension liability and deferred outflows/inflows of resources is not a source or use of financial resources 222,821 The change in the Firefighters' Pension Fund net pension liability and deferred outflows of resources is not a source or use of a financial resource 405,169 The change in the Illinois Municipal Retirement Fund net pension liability and deferred outflows of resources is not a source or use of a financial resource (1,333,181) The change in net position of Internal Service Funds is reported in governmental activities 286,637 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ (481,240) See accompanying notes to financial statements. - 12 -  CITY OF DEKALB, ILLINOIS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2016 Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds CURRENT ASSETS Cash and Investments $ 5,949,971 $ 77,066 $ 161,461 $ 6,188,498 $ 2,453,016 Receivables Accounts Receivable 1,586,043 - 160,681 1,746,724 - Accrued Interest 10,330 - - 10,330 4,094 Other 13,008 17,710 41,880 72,598 166,822 Prepaid Expenses 2,442 7,421 - 9,863 176,099 Inventory - 40,501 - 40,501 - Due from Other Governments - 28,960 - 28,960 - Total Current Assets 7,561,794 171,658 364,022 8,097,474 2,800,031 NONCURRENT ASSETS Capital Assets Nondepreciable 528,648 20,086,719 - 20,615,367 - Depreciable 46,248,484 15,594,668 - 61,843,152 - Accumulated Depreciation (20,956,372) (4,995,999) - (25,952,371) - Total Noncurrent Assets 25,820,760 30,685,388 - 56,506,148 - Total Assets 33,382,554 30,857,046 364,022 64,603,622 2,800,031 DEFERRED OUTFLOWS OF RESOURCES Pension Items - IMRF 359,233 39,697 - 398,930 - Total Assets and Deferred Outflows of Resources 33,741,787 30,896,743 364,022 65,002,552 2,800,031 CURRENT LIABILITIES Accounts Payable 1,323,075 184,416 165,331 1,672,822 48,968 Accrued Payroll 79,412 9,781 - 89,193 - Accrued Interest Payable 27,390 2,633 - 30,023 - Deposits Payable 13,435 33,731 - 47,166 - Unearned Revenue 27,987 21,967 162,619 212,573 11,078 Claims Payable - - - - 304,193 General Obligation Bonds Payable 286,325 70,250 - 356,575 - IEPA Loans Payable 448,960 - - 448,960 - Compensated Absences Payable 106,525 2,135 - 108,660 - Total Current Liabilities 2,313,109 324,913 327,950 2,965,972 364,239 LONG-TERM LIABILITIES General Obligation Bonds Payable 1,099,250 270,750 - 1,370,000 - Net Pension Liability - IMRF 1,543,346 160,306 - 1,703,652 - Net Other Postemployment Benefit Payable 374,030 52,010 - 426,040 - IEPA Loans Payable 1,849,536 - - 1,849,536 - Advances from Other Funds - 478,000 - 478,000 - Compensated Absences Payable 426,098 40,560 - 466,658 - Claims Payable - - - - 304,193 Total Long-Term Liabilities 5,292,260 1,001,626 - 6,293,886 304,193 Total Liabilities 7,605,369 1,326,539 327,950 9,259,858 668,432 (This statement is continued on the following page.) - 13 -  CITY OF DEKALB, ILLINOIS STATEMENT OF NET POSITION (Continued) PROPRIETARY FUNDS December 31, 2016 Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds DEFERRED OUTFLOWS OF RESOURCES Pension Items - IMRF $ 105,251 $ 9,973 $ - $ 115,224 $ - Total Deferred Inflows of Resources 105,251 9,973 - 115,224 - Total Liabilities Deferred Inflows of Resources 7,710,620 1,336,512 327,950 9,375,082 668,432 NET POSITION Net Investment in Capital Assets 22,136,689 30,344,388 - 52,481,077 - Unrestricted (Deficit) 3,894,478 (784,157) 36,072 3,146,393 2,131,599 TOTAL NET POSITION $ 26,031,167 $ 29,560,231 $ 36,072 $ 55,627,470 $ 2,131,599 See accompanying notes to financial statements. - 14 -  CITY OF DEKALB, ILLINOIS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Six Months Ended December 31, 2016 Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds OPERATING REVENUES Charges for Services $ 2,929,368 $ 328,053 $ 1,063,382 $ 4,320,803 $ 3,694,237 Miscellaneous 15,075 7,342 - 22,417 (1,223) Total Operating Revenues 2,944,443 335,395 1,063,382 4,343,220 3,693,014 OPERATING EXPENSES Administration - - - - 3,170,803 Operations 2,196,533 478,378 1,024,302 3,699,213 - Depreciation 529,348 193,575 - 722,923 - Total Operating Expenses 2,725,881 671,953 1,024,302 4,422,136 3,170,803 OPERATING INCOME (LOSS) 218,562 (336,558) 39,080 (78,916) 522,211 NON-OPERATING REVENUES (EXPENSES) Investment Income 18,948 3 - 18,951 7,425 Gain on Sale of Capital Assets 5,459 10,000 - 15,459 - Interest Expense (40,891) (2,669) - (43,560) - Total Non-Operating Revenues (Expenses) (16,484) 7,334 - (9,150) 7,425 NET INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 202,078 (329,224) 39,080 (88,066) 529,636 CONTRIBUTIONS Contributions - Capital Grant Revenue - 42,829 - 42,829 - Total Contributions - 42,829 - 42,829 - TRANSFERS Transfers In - 16,853 - 16,853 151,274 Transfers (Out) (271,100) - - (271,100) (394,274) Total Transfers (271,100) 16,853 - (254,247) (243,000) CHANGE IN NET POSITION (69,022) (269,542) 39,080 (299,484) 286,636 NET POSITION, JULY 1 26,100,189 29,829,773 (3,008) 55,926,954 1,844,963 NET POSITION, DECEMBER 31 $ 26,031,167 $ 29,560,231 $ 36,072 $ 55,627,470 $ 2,131,599 See accompanying notes to financial statements. - 15 -  CITY OF DEKALB, ILLINOIS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Six Months Ended December 31, 2016 Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users $ 2,783,885 $ 282,135 $ 1,070,460 $ 4,136,480 $ - Receipts from Interfund Services Transactions - - - - 2,930,498 Receipts from Employees and Others - - - - 665,665 Receipts from Miscellaneous Revenues 15,075 7,342 - 22,417 (1,223) Payments to Other Funds (252,779) (43,312) (35,350) (331,441) - Payments to Suppliers (1,209,504) (103,878) (1,143,982) (2,457,364) (2,920,105) Payments to Employees (322,111) (236,707) - (558,818) - Net Cash from Operating Activities 1,014,566 (94,420) (108,872) 811,274 674,835 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund Advances - 144,000 - 144,000 - Transfers In - 16,853 - 16,853 151,274 Transfers (Out) (271,100) - - (271,100) (394,274) Net Cash from Noncapital Financing Activities (271,100) 160,853 - (110,247) (243,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Grants - 41,587 - 41,587 - Purchase of Capital Assets (135,500) (44,341) - (179,841) - Proceeds From Sale of Capital Assets 5,459 10,000 - 15,459 - Principal Payments on Long-Term Debt (220,285) - - (220,285) - Interest Payments on Long-Term Debt (42,466) (2,669) - (45,135) - Net Cash from Capital and Related Financing Activities (392,792) 4,577 - (388,215) - CASH FLOWS FROM INVESTING ACTIVITIES Interest Received on Investments 16,668 3 - 16,671 7,425 Net Cash from Investing Activities 16,668 3 - 16,671 7,425 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 367,342 71,013 (108,872) 329,483 439,260 CASH AND CASH EQUIVALENTS, JULY 1 5,582,629 6,053 270,333 5,859,015 2,013,756 CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 5,949,971 $ 77,066 $ 161,461 $ 6,188,498 $ 2,453,016 (This statement is continued on the following page.) - 16 -  CITY OF DEKALB, ILLINOIS STATEMENT OF CASH FLOWS (Continued) PROPRIETARY FUNDS For the Six Months Ended December 31, 2016 Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating Income (Loss) $ 218,562 $ (336,558) $ 39,080 $ (78,916) $ 522,211 Adjustments to Reconcile Operating Income (Loss) to Net Cash from Operating Activities Depreciation and Amortization 529,348 193,575 - 722,923 - Changes in Assets and Liabilities Accounts Receivable (136,778) 2,294 (2,030) (136,514) - Other Receivables (8,718) - 5,140 (3,578) (108,251) Prepaid Expenses 7,087 3,128 - 10,215 219,150 Inventory - (3,891) - (3,891) - Accounts Payable 17,801 50,617 (155,030) (86,612) 21,854 Accrued Payroll 10,296 374 - 10,670 - Claims Payable - - - - 9,694 Other Payables 285 2,018 - 2,303 - Unearned Revenue 13 (44,321) 3,968 (40,340) 10,177 Pension Items - IMRF 536,665 50,852 - 587,517 - Net Pension Liability - IMRF (114,023) (10,805) - (124,828) - Other Postemployment Benefit 5,103 595 - 5,698 - Compensated Absences (51,075) (2,298) - (53,373) - NET CASH FROM OPERATING ACTIVITIES $ 1,014,566 $ (94,420) $ (108,872) $ 811,274 $ 674,835 See accompanying notes to financial statements. - 17 -  CITY OF DEKALB, ILLINOIS STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUNDS December 31, 2016 ASSETS Cash and Short-Term Investments $ 1,416,414 Investments U.S. Treasury Obligations 8,651,173 U.S. Agency Obligations 7,353,693 Corporate Bonds 2,801,220 Mutual Funds 36,006,024 Common Stock 161,406 Receivables Accrued Interest 85,565 Due From City 816,851 Prepaid Expenses 2,208 Total Assets 57,294,554 LIABILITIES Accounts Payable 23,806 Total Liabilities 23,806 NET POSITION RESTRICTED FOR PENSIONS $ 57,270,748 See accompanying notes to financial statements. - 18 -  CITY OF DEKALB, ILLINOIS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUNDS For the Six Months Ended December 31, 2016 ADDITIONS Contributions Employer Contributions $ 4,597,863 Employee Contributions 632,294 Total Contributions 5,230,157 Investment Income Net Appreciation in Fair Value of Investments 2,057,132 Interest 949,631 Total Investment Income 3,006,763 Less Investment Expense (43,238) Net Investment Income 2,963,525 Total Additions 8,193,682 DEDUCTIONS Administrative Expenses 39,538 Benefits and Refunds 3,054,792 Total Deductions 3,094,330 NET INCREASE 5,099,352 NET POSITION RESTRICTED FOR PENSIONS July 1 52,171,396 December 31 $ 57,270,748 See accompanying notes to financial statements. - 19 -  CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS December 31, 2016 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of DeKalb (the City) have been prepared in conformity with accounting principles generally accepted in the United States of America, as applicable to governments (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies: a. Reporting Entity The City is a municipal corporation governed by an elected mayor and council. As defined by GAAP established by GASB, the financial reporting entity consists of the primary government, as well as its component units, which are legally separate organizations for which the elected officials of the primary government are financially accountable. Financial accountability is defined as: 1) Appointment of a voting majority of the component unit’s board and either (a) the ability to impose will by the primary government or (b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government; or 2) Fiscal dependency on the primary government. Based on the above criteria, the City has one component unit. Discretely Presented Component Unit The component unit column in the basic financial statements includes the financial data of the City’s component unit. It is reported in a separate column to emphasize that it is legally separate from the City. The DeKalb Public Library The DeKalb Public Library (the Library) operates and maintains the City’s public library facilities. The Library’s Board is appointed by the Mayor with the consent of the City Council. The Library may not issue bonded debt, and its annual budget and property tax levy requests are subject to the City Council’s approval. Separate financial statements for the Library are not available. - 20 - - 20 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) b. Fund Accounting The City uses funds to report on its financial position and the change in its financial position. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. The minimum number of funds are maintained consistent with legal and managerial requirements. Funds are classified into the following categories: governmental, proprietary, and fiduciary. Governmental funds are used to account for all or most of the City’s general activities, including the collection and disbursement of committed, restricted, or assigned monies (special revenue funds), the funds committed, restricted, or assigned for the acquisition or construction of capital assets (capital projects funds), and the funds committed, restricted, or assigned for the servicing of long-term debt (debt service funds). The General Fund is used to account for all activities of the City not accounted for in some other fund. Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments or agencies primarily within the City (internal service funds). Fiduciary funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the City. The City utilizes pension trust funds which are generally used to account for assets that the City holds in a fiduciary capacity. c. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the City. The effect of material interfund activity has been eliminated from these statements. Interfund services provided and used are not eliminated on these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. - 21 - - 21 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Government-Wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct expenses of a given function, segment, or program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Motor Fuel Tax Fund accounts for the operations of street maintenance programs and capital projects as authorized by the Illinois Department of Transportation. Financing is provided by the City’s share of gasoline taxes. The City has elected to report the Motor Fuel Tax Fund as major. The Mass Transit Fund accounts for the restricted grant revenues for the two community mass transit services: Northern Illinois University’s Huskies Line and Voluntary Action Center’s Trans Vac Service. The City has elected to report the Mass Transit Fund as major. The Tax Increment Financing #1 Fund accounts for the restricted property taxes for the redevelopment activities within a defined area of the community in order to eliminate blighted conditions in that area. The Tax Increment Financing #2 Fund accounts for the restricted property taxes for the redevelopment activities within another defined area of the community in order to eliminate blighted conditions in that area. - 22 - - 22 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Government-Wide and Fund Financial Statements (Continued) The City reports the following major proprietary funds: The Water Fund accounts for the provision of water service to the residents of the City. All activity necessary to provide such services is accounted for in this fund including, but not limited to, administration, operation, maintenance, financing and related debt service, and billing and collection. The Airport Fund is used to account for the operation of the Taylor Municipal Airport. Financing may be provided from a number of sources including user fees as well as property taxes. Additionally, the City reports the following Internal Service Fund: Internal Service Funds account for the City’s self-insured property, casualty, workers’ compensation and health insurance programs provided to other departments or agencies of the City on a cost reimbursement basis. These are reported as part of the governmental activities on the government-wide financial statements as they provide services to the City’s governmental funds/activities. The City reports pension trust funds as fiduciary funds to account for the Police Pension Fund and Firefighters’ Pension Fund. d. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues and additions are recorded when earned and expenses and deductions are recorded when a liability is incurred. Property taxes are recognized as revenues in the year for which they are levied (i.e., intended to finance). Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Operating revenues and expenses are directly attributable to the operation of the proprietary funds. Non-operating revenue/expenses are incidental to the operations of these funds. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means - 23 - - 23 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period, generally 60 days except for sales taxes, income taxes, and telecommunication taxes which use 90 days. The City recognizes property taxes when they become both measurable and available in the year for which they are levied (i.e., intended to finance). Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as expenditures when due. Property taxes, sales taxes owed from the state at year end, franchise taxes, licenses, charges for services, restaurant and bar taxes and investment income associated with the current fiscal period are all considered to be susceptible to accrual and are recognized as revenues of the current fiscal period. Fines and permits revenues are not susceptible to accrual because generally they are not measurable until received in cash. In applying the susceptible to accrual concept to intergovernmental revenues (e.g., federal and state grants), the legal and contractual requirements of the numerous individual programs are used as guidelines. There are, however, essentially two types of revenues. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and are generally revocable only for failure to comply with prescribed eligibility requirements, such as equal employment opportunity. These resources are reflected as revenues at the time of receipt or earlier if they meet the availability criterion. The City reports unearned revenue and deferred/unavailable revenue on its financial statements. Deferred/unavailable revenues arise when a potential revenue does not meet both the available criteria for recognition in the current period, under the modified accrual basis of accounting. Unearned revenue arises when a revenue is measurable but not earned under the accrual basis of accounting. Unearned revenues also arise when resources are received by the City before it has a legal claim to them or prior to the provision of services, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability or deferred inflows of resource for unearned and deferred/unavailable revenue are removed from the financial statements and revenue is recognized. - 24 - - 24 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) e. Cash and Investments For purposes of the statement of cash flows, the City’s proprietary funds considers cash and cash equivalents to include cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Investments with a maturity of one year or less when purchased and all non- negotiable certificates of deposit are stated at cost or amortized cost. Investments with a maturity greater than one year when purchased are reported at fair value. All investments of the pension trust funds, regardless of length of maturity, are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. f. Interfund Receivables/Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “interfund receivables/payables” (current portion of interfund loans) or “advances to/from other funds” (noncurrent portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Advances are offset by nonspendable fund balance in applicable governmental funds. Interfund service transactions are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. - 25 - - 25 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) g. Property Taxes Property taxes for 2015 are levied in December 2015 and attach as an enforceable lien on the property on January 1, 2015. Tax bills are prepared by the County and issued on or about May 1, 2016 and August 1, 2016, and are due and collectible on or about June 1, 2016 and September 1, 2016. The County collects the taxes and remits them periodically to the City. Those 2015 taxes were intended to finance the six month period ending December 31, 2016. The 2016 levy, which attached as a lien on property as January 1, 2016, is intended to finance the 2017 fiscal year and is not considered available or earned for current operations and are, therefore, reported as deferred/unavailable revenue. h. Inventories and Prepaid Items/Expenses Inventories are valued at cost, which approximates market, using the first-in/first-out (FIFO) method. The costs of governmental fund inventories are recorded as expenditures when consumed rather than when purchased. Payments made to vendors for services that will benefit periods beyond the date of this report are recorded as prepaid items/expenses. Prepaid items/expenses are recorded as expenditures/expenses when consumed rather than when purchased. i. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads and bridges) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost in excess of $25,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. - 26 - - 26 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) i. Capital Assets (Continued) Property, plant, and equipment is depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and Improvements 40-50 Equipment 10-20 Vehicles 3-20 Infrastructure 25-50 Water Distribution System 40-65 j. Compensated Absences Vested or accumulated vacation and sick leave that is owed to retirees or terminated employees is reported as an expenditure and a fund liability of the governmental fund that will pay it in the fund financial statements, and the remainder is reported in governmental activities. Vested or accumulated vacation and sick leave of proprietary funds and governmental activities at the government-wide level is recorded as an expense and liability as the benefits accrue to employees. k. Long-Term Obligations In the government-wide financial statements and proprietary funds in the fund financial statements, long-term debt, and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund financial statements. Bond premiums and discounts, as well as the unamortized loss on refunding, are deferred and amortized over the life of the bonds. Bonds payable are reported net of any applicable bond premium or discount. Issuance costs are reported as expenses. The unamortized loss on refunding is reported as a deferred outflow of resources. In the fund financial statements, governmental funds recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. - 27 - - 27 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) l. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. m. Fund Balance/Net Position In the fund financial statements, governmental funds report nonspendable fund balance for amounts that are either not in spendable form or legally or contractually required to be maintained intact. Restrictions of fund balance are reported for amounts constrained by legal restrictions from outside parties for a specific purpose, or externally imposed by outside entities. None of the restricted fund balance resulted from enabling legislation adopted by the City. Committed fund balance is constrained by formal actions of the City Council, which is considered the City’s highest level of decision-making authority. Formal actions include ordinances approved by the City Council. Assigned fund balance represents amounts constrained by the City’s intent to use them for a specific purpose. The authority to assign fund balance has been delegated to the City Manager through the fund balance policy adopted by the City Council. Any residual fund balance of the General Fund is reported as unassigned. Deficit fund balances of other governmental funds are also reported as unassigned. The City has established a fund balance reserve policy for several of its funds. The policy requires unassigned fund balances to be maintained in the General Fund equivalent to 25% of the fund’s annual operating expenditures. The Tax Increment Financing Funds should be self-supporting and should maintain a fund balance equivalent to meet the planned improvements identified in a multi-year capital schedule. The Capital Projects Fund should maintain a fund balance of the planned improvements for the current fiscal year. The Special Revenue 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. The Water Fund unrestricted net position will be maintained at a minimum level equal to 25% of the annual budgeted operating expenses, plus the budged capital improvements. The unrestricted net position of the - 28 - - 28 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) m. Fund Balance/Net Position (Continued) 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. The Health Insurance Fund should maintain unrestricted net position of one month of IPBC premiums. The Workers’ Compensation Fund should maintain unrestricted net position of $1,000,000 collectively. The Liability/Property Insurance Fund should maintain unrestricted net position of approximately 25% of annual budgeted expenses. The Fleet Replacement Fund should maintain unrestricted net position of the planned replacements for the current fiscal year. The Equipment Fund should maintain unrestricted net position of the planned replacements for the current fiscal year. The City’s flow of funds assumption prescribes that the funds with the highest level of constraint are expended first. If restricted or unrestricted funds are available for spending, the restricted funds are spent first. Additionally, if different levels of unrestricted funds are available for spending the City considers committed funds to be expended first followed by assigned and then unassigned funds. In the government-wide financial statements, restricted net positions are legally restricted by outside parties for a specific purpose. Net investment in capital assets represents the book value of capital assets less any outstanding long-term debt issued to acquire or construct the capital assets. n. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 2. DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool that is available for use by all funds, except the pension trust funds. Each fund’s portion of this pool is displayed on the financial statements as “cash and investments.” In addition, investments are separately held by several of the City’s funds. The deposits and investments of the pension trust fund are held separately from those of other funds. - 29 - - 29 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 2. DEPOSITS AND INVESTMENTS (Continued) The City’s investment policy authorizes the City to invest in all investments allowed by Illinois Compiled Statutes (ILCS). These include deposits/investments in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, and Illinois Funds (created by the Illinois State Legislature under the control of the State Comptroller that maintains a $1 per share value which is equal to the participants fair value) and Illinois Metropolitan Investment Fund (IMET). It is the policy of the City to invest its funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the City and conforming to all state and local statutes governing the investment of public funds, using the “prudent person” standard for managing the overall portfolio. The primary objectives of the policy are, in order of priority, safety of principal, liquidity, and rate of return. Deposits with Financial Institutions Custodial credit risk for deposits with financial institutions is the risk that in the event of bank failure, the City’s deposits may not be returned to it. The City’s investment policy requires pledging of collateral for all bank balances in excess of federal depository insurance with the collateral held by an independent third party acting as the agent of the City. Investments The following table presents the investments and maturities of the City’s debt securities as of December 31, 2016: Investment Maturities (in Years) Less Greater Investment Type Fair Value Than 1 1-5 6-10 Than 10 Negotiable Certificates of Deposit $ 13,192,161 $ 11,637,020 $ 1,555,141 $ - $ - TOTAL $ 13,192,161 $ 11,637,020 $ 1,555,141 $ - $ - - 30 - - 30 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 2. DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) The City categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The City has the following recurring fair value measurements as of December 31, 2016: negotiable certificates of deposit of $13,192,161 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs). Interest rate risk is the risk that changes in interest rates will adversely affect the market value of an investment. In accordance with its investment policy, the City limits its exposure to interest rate risk by structuring the 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 short-term securities. The City limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by requiring that deposits with financial institutions in excess of FDIC coverage be collateralized with collateral in excess of the uninsured deposits with the collateral held by a third party acting as the agent of the City. At the end of the year, the City’s investments in Illinois Funds were rated AAA by Standard and Poor’s. Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allows governments within the state to pool their funds for investment purposes. Illinois Funds is not registered with the SEC as an investment company. The State Treasurer maintains the Illinois Funds Money Market at cost and fair value through daily adjustment in the interest earnings. The State Treasurer also maintains the average duration of the pool at less than 25 days. The fair value of the City’s investment in the funds is the same as the value of the pool shares. The pool is audited annually by an outside independent auditor and copies of the report are distributed to participants. The pool had a Standard and Poor’s AAAm rating as December 31, 2016. The relationship between the City and the investment agent is a direct contractual relationship and the investments are not supported by a transferable instrument that evidences ownership or creditorship. - 31 - - 31 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 2. DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) IMET is a governmental investment fund created under the Illinois Municipal Code. IMET actively manages two investment funds for municipal treasurers, official custodians of municipal funds and other public agencies in the State. IMET’s offerings consist of the 1-3 Year Series and the Convenience Series. The 1-3 Year Series invests exclusively in United States Government backed securities (Treasury and agencies) and has a fluctuating net asset value and an average portfolio maturity of one to three years. The 1-3 Year Series is rated Aaa/MR1 by Moody’s Investors Services. The Convenience Series is a short-term money market instrument collateralized via FDIC Insurance, the FHLB LOC Program, Unites States Government securities at 110% on bank deposits and United States Government securities in the repurchase agreement program. The relationship between the City and the investment agent is a direct contractual relationship and the investments are not supported by a transferable instrument that evidences ownership or creditorship. Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the City will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the City’s investment policy requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held in a custodial account with the trust department of an approved financial institution. Illinois Funds are not subject to custodial credit risk. Concentration of credit risk is the risk that the City has a high percentage of their investments invested in one type of investment. The City’s investment policy limits the City’s investments to the safest types of securities, pre-qualifies financial institutions, broker/dealers, intermediaries, and advisors with which the City does business and diversifies the investment portfolio so that potential losses on individual securities will be minimized. At the six months ended, the City’s investment in negotiable certificates of deposit represents more than 5% of the total cash and investment portfolio. - 32 - - 32 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 3. RECEIVABLES The following receivables are included in due from other governments on the statement of net position at December 31, 2016: GOVERNMENTAL ACTIVITIES Local Use Tax $ 321,727 Sales Tax - State 1,406,065 Income Tax 492,644 Sales Tax - City 1,776,915 Auto Rental Sales Tax 4,944 Video Gaming Tax 31,687 Telecommunication Tax 185,200 Grants 392,669 TIF Surplus 220,731 Motor Fuel Tax 104,451 TOTAL GOVERNMENTAL ACTIVITIES $ 4,937,033 BUSINESS-TYPE ACTIVITIES Airport Grants $ 28,960 TOTAL BUSINESS-TYPE ACTIVITIES $ 28,960 4. CAPITAL ASSETS Capital asset activity for the six months ended December 31, 2016 was as follows: Beginning Balances, Ending Restated Increases Transfers Decreases Balances GOVERNMENTAL ACTIVITIES Capital Assets not Being Depreciated Land $ 10,358,605 $ 50,610 $ - $ - $ 10,409,215 Land Right of Way 25,742,257 - - - 25,742,257 Construction in Progress 198,864 56,803 - - 255,667 Total Capital Assets not Being Depreciated 36,299,726 107,413 - - 36,407,139 Capital Assets being Depreciated Buildings and Improvements 20,814,645 - - - 20,814,645 Equipment 2,832,248 - - - 2,832,248 Vehicles 8,460,549 - 55,575 64,500 8,451,624 Infrastructure 153,207,659 - - - 153,207,659 Total Capital Assets Being Depreciated 185,315,101 - 55,575 64,500 185,306,176 - 33 - - 33 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 4. CAPITAL ASSETS (Continued) Beginning Balances, Ending Restated Increases Transfers Decreases Balances GOVERNMENTAL ACTIVITIES (Continued) Less Accumulated Depreciation for Buildings and Improvements $ 4,681,053 $ 200,128 $ - $ - $ 4,881,181 Equipment 1,836,962 74,037 - - 1,910,999 Vehicles 5,451,814 209,472 55,575 64,500 5,652,361 Infrastructure 78,335,775 1,569,740 - - 79,905,515 Total Accumulated Depreciation 90,305,604 2,053,377 55,575 64,500 92,350,056 Total Capital Assets Being Depreciated, Net 95,009,497 (2,053,377) - - 92,956,120 GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET $ 131,309,223 $ (1,945,964) $ - $ - $ 129,363,259 Beginning Ending Balances Increases Transfers Decreases Balances BUSINESS-TYPE ACTIVITIES Capital Assets not Being Depreciated Land $ 19,386,047 $ - $ - $ - $ 19,386,047 Land Improvements 544,893 - - - 544,893 Construction in Progress 640,086 44,341 - - 684,427 Total Capital Assets not Being Depreciated 20,571,026 44,341 - - 20,615,367 Capital Assets being Depreciated Buildings and Improvements 4,804,864 - - - 4,804,864 Equipment 688,715 135,500 (55,575) 110,000 658,640 Vehicles 966,936 - - - 966,936 Airport Infrastructure 12,797,766 - - - 12,797,766 Water Distribution System 42,614,946 - - - 42,614,946 Total Capital Assets Being Depreciated 61,873,227 135,500 (55,575) 110,000 61,843,152 Less Accumulated Depreciation for Building and Improvements 2,041,362 46,826 - - 2,088,188 Equipment 479,127 14,744 (55,575) 110,000 328,296 Vehicles 774,050 14,094 - - 788,144 Airport Infrastructure 3,275,208 161,083 - - 3,436,291 Water Distribution System 18,825,276 486,176 - - 19,311,452 Total Accumulated Depreciation 25,395,023 722,923 (55,575) 110,000 25,952,371 Total Capital Assets Being Depreciated, Net 36,478,204 (587,423) - - 35,890,781 BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET $ 57,049,230 $ (543,082) $ - $ - $ 56,506,148 - 34 - - 34 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 4. CAPITAL ASSETS (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: GOVERNMENTAL ACTIVITIES General Government $ 52,916 Public Safety 242,294 Community Development 87,257 Highways and Streets 1,670,910 TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES $ 2,053,377 BUSINESS-TYPE ACTIVITIES Water $ 529,348 Airport 193,575 TOTAL DEPRECIATION EXPENSE - BUSINESS-TYPE ACTIVITIES $ 722,923 Capital asset additions were charged to functions/programs of the primary government as follows: GOVERNMENTAL ACTIVITIES Public Safety $ - Community Development 50,610 Highways and Streets 56,803 TOTAL ADDITIONS - GOVERNMENTAL ACTIVITIES $ 107,413 5. LONG-TERM DEBT a. General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities and to fund noncapital Tax Increment Financing costs. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds issued for business-type activities are reported in the proprietary funds as they are expected to be repaid from proprietary revenues. General obligation bonds are direct obligations and pledge the full faith and credit of the City. General obligation bonds currently outstanding are as follows: - 35 - - 35 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 5. LONG-TERM DEBT (Continued) a. General Obligation Bonds (Continued) Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements December 31 Portion $10,800,000 2010A Series General Obligation Refunding Bonds, dated May 27, 2010, due in annual installments of $755,000 to $1,145,000, plus interest of 2% to 4% TIF through December 2, Debt 2021 Service $ 6,045,000 $ - $ 845,000 $ 5,200,000 $ 870,000 $3,905,000 2010B Series General Obligation Refunding Bonds, dated December 1, 2010, due in annual installments of $150,000 to $955,000, plus interest of 4.25% to General 4.75% through January 1, Debt 2028 Service 3,905,000 - - 3,905,000 - $5,415,000 2010C Series General Obligation Refunding Bonds, dated December 1, 2010, due in annual installments of $180,000 to $755,000, plus interest of 1.9% to General 5.9% through January 1, Debt 2023 Service 4,270,000 - - 4,270,000 205,000 $9,905,000 2012A Series General Obligation Bonds, dated October 25, 2012, due in annual installments of $505,000 to $845,000, plus interest General of 2.0% to 2.5% through Debt January 1, 2030 Service 8,055,000 - - 8,055,000 650,000 - 36 - - 36 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 5. LONG-TERM DEBT (Continued) a. General Obligation Bonds (Continued) Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements December 31 Portion $2,380,000 2013B Series General Obligation Bonds, dated June 18, 2013, due in annual installments of $40,000 to $745,000, plus interest of General 0.8% to 3.0% through Debt January 1, 2022 Service $ 2,330,000 $ - $ - $ 2,330,000 $ 10,000 $2,870,000 2014 Series General Obligation Water 1,385,575 - - 1,385,575 286,325 Refunding Bonds, dated November 3, 2014, due in Airport 341,000 - - 341,000 70,250 annual installments of $340,000 to $750,000, General plus interest of 1.54% Debt through January 1, 2021 Service 393,425 - - 393,425 393,425 TOTAL $ 26,725,000 $ - $ 845,000 $ 25,880,000 $ 2,485,000 b. Illinois Environmental Protection Agency Loan Contracts Payable The City, through the Illinois Environmental Protection Agency (IEPA), received low interest loans for the construction of a water treatment facility. Loan contracts payable have been issued for business-type activities. IEPA loan contracts currently outstanding are as follows: Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions December 31 Portion $4,072,711 IEPA Loan #L17133700 Contract Payable of 1999, due in semiannual installments of $133,239 including interest at 2.535% through January 8, 2021 Water $ 1,244,028 $ - $ 117,471 $ 1,126,557 $ 239,428 $3,344,932 IEPA Loan #L17161400 Contract Payable of 2000, due in semiannual installments of $109,406 including interest at 2.535% through May 30, 2021 Water 1,021,502 - 96,459 925,043 196,600 - 37 - - 37 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 5. LONG-TERM DEBT (Continued) b. Illinois Environmental Protection Agency Loan Contracts Payable (Continued) Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions December 31 Portion $283,072 IEPA Loan #L174045 Contract Payable of 2012, due in semiannual installments of $5,749 including interest at 2.295% through October 26, 2032 Water $ 253,251 $ - $ 6,355 $ 246,896 $ 12,932 TOTAL $ 2,518,781 $ - $ 220,285 $ 2,298,496 $ 448,960 c. Capital Leases The City is committed under leases for various vehicle and equipment purchases as follows: Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions December 31 Portion Capital Equipment Projects $ 199,999 $ - $ 16,667 $ 183,332 $ 16,667 TOTAL $ 199,999 $ - $ 16,667 $ 183,332 $ 16,667 d. Debt Service Requirements to Maturity General Obligation Bonds Governmental Business-Type Year Ending Activities Activities December 31, Principal Interest Principal Interest 2017 $ 2,128,425 $ 833,672 $ 356,575 $ 23,906 2018 2,315,000 765,126 340,000 18,528 2019 2,395,000 681,329 345,000 13,240 2020 2,485,000 588,289 340,000 7,952 2021 2,585,000 486,069 345,000 2,663 2022 1,500,000 377,396 - - 2023 1,560,000 314,839 - - 2024 1,620,000 258,904 - - 2025 1,670,000 205,415 - - 2026 1,725,000 149,080 - - 2027 1,785,000 89,141 - - 2028 1,015,000 45,103 - - 2029 865,000 22,356 - - 2030 505,000 6,313 - - TOTAL $ 24,153,425 $ 4,823,032 $ 1,726,575 $ 66,289 - 38 - - 38 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 5. LONG-TERM DEBT (Continued) d. Debt Service Requirements to Maturity (Continued) IEPA Loan Contracts Capital Leases Business Type Governmental Year Ending Activities Activities December 31, Principal Interest Principal Interest 2017 $ 448,960 $ 54,855 $ 16,667 $ - 2018 460,381 43,433 16,667 - 2019 472,094 31,720 16,667 - 2020 484,104 19,710 16,667 - 2021 253,776 7,394 16,667 - 2022 14,495 4,030 16,667 - 2023 14,830 3,695 16,667 - 2024 15,172 3,353 16,667 - 2025 15,522 3,002 16,667 - 2026 15,880 2,644 16,667 - 2027 16,247 2,278 16,662 - 2028 16,622 1,903 - - 2029 17,006 1,519 - - 2030 17,398 1,126 - - 2031 17,800 725 - - 2032 18,209 314 - - TOTAL $ 2,298,496 $ 181,701 $ 183,332 $ - e. Changes in Long-Term Liabilities During the six months ended December 31, 2016 the following changes occurred in liabilities reported in the governmental activities: Balances Issuances or Balances Current July 1 Accretions Reductions December 31 Portion General Obligation Bonds Payable $ 24,998,425 $ - $ 845,000 $ 24,153,425 $ 2,128,425 Premium on Bonds Payable 334,971 - 50,674 284,297 - Discount on Bonds Payable (27,805) - (2,418) (25,387) - Capital Leases 199,999 - 16,667 183,332 16,667 Compensated Absences Payable 5,243,538 743,049 1,048,708 4,937,879 987,576 Net Pension Liability - IMRF 6,893,971 - 359,677 6,534,294 - Net Pension Liability - Police Pension 32,197,930 1,652,526 - 33,850,456 - Net Pension Liability - Firefighters’ Pension 39,321,164 1,478,974 - 40,800,138 - Net Other Postemployment Benefit Obligation 6,915,527 141,951 - 7,057,478 - Claims Payable 598,691 160,547 150,852 608,386 304,193 TOTAL GOVERNMENTAL ACTIVITIES $ 116,676,411 $ 4,177,047 $ 2,469,160 $ 118,384,298 $ 3,436,861 - 39 - - 39 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 5. LONG-TERM DEBT (Continued) e. Changes in Long-Term Liabilities (Continued) For the governmental activities, the compensated absences, net pension liability, and the net other postemployment benefit obligation are generally liquidated by the General Fund. Claims payable are generally liquidated by the internal service funds. Balances Balances Current July 1 Additions Reductions December 31 Portion BUSINESS-TYPE ACTIVITIES General Obligation Bonds Water $ 1,385,575 $ - $ - $ 1,385,575 $ 286,325 Airport 341,000 - - 341,000 70,250 Total General Obligation Bonds 1,726,575 - - 1,726,575 356,575 IEPA Loans Water 2,518,781 - 220,285 2,298,496 448,960 Net Pension Liability - IMRF Water 1,657,369 - 114,023 1,543,346 - Airport 171,111 - 10,805 160,306 - Total Net Pension Liability - IMRF 1,828,480 - 124,828 1,703,652 - Compensated Absences Water 583,698 65,665 116,740 532,623 106,525 Airport 44,993 - 2,298 42,695 2,135 Total Compensated Absences 628,691 65,665 119,038 575,318 108,660 Other Postemployment Benefit Obligation Water 368,927 5,103 - 374,030 - Airport 51,415 595 - 52,010 - Total Other Postemployment Benefit Obligation 420,342 5,698 - 426,040 - TOTAL BUSINESS-TYPE ACTIVITIES $ 7,122,869 $ 71,363 $ 464,151 $ 6,730,081 $ 914,195 - 40 - - 40 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 5. LONG-TERM DEBT (Continued) f. Legal Debt Margin The City is a home rule municipality. Chapter 65, Section 5/8-5-1 of the Illinois Compiled Statutes governs computation of the legal debt margin. “The General Assembly may limit by law the amount and require referendum approval of debt to be incurred by home rule municipalities, payable from ad valorem property tax receipts, only in excess of the following percentages of the assessed value of its taxable property...(2) if its population is more than 25,000 and less than 500,000 an aggregate of one percent:...indebtedness which is outstanding on the effective date (July 1, 1971) of this constitution or which is thereafter approved by referendum...shall not be included in the foregoing percentage amounts.” To date, the General Assembly has set no limits for home rule municipalities. g. Conduit Debt The City has issued Industrial Development Revenue Bonds (IDRBs) to provide financial assistance to private organizations for the construction and acquisition of industrial and commercial improvements deemed to be in the public interest. The bonds are secured solely by the property financed and are payable solely from the payments received on the underlying mortgage loans on the property. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds outstanding are not reported as a liability in these financial statements. As of December 31, 2016, there were four IDRBs outstanding totaling $8,670,076. 6. RISK MANAGEMENT The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; natural disasters; and injuries to the City’s employees. The City has purchased insurance from private insurance companies. Risks covered included certain types of liabilities and bonds. Premiums have been displated as expenditures/expense in appropriate funds. - 41 - - 41 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 6. RISK MANAGEMENT (Continued) Intergovernmental Personnel Benefit Cooperative Risks for medical and death benefits for employees and retirees are provided for through the City’s participation in the Intergovernmental Personnel Benefit Cooperative (IPBC). IPBC is a public entity risk pool established in 1979 by certain units of local government in Illinois to administer some or all of the personnel benefit programs (primarily medical, dental, and life insurance coverage) offered by these members to their officers and employees and to the officers and employees of certain other governmental, quasi governmental, and nonprofit public service entities. Management consists of a Board of Directors comprised of one appointed representative from each member. The officers of IPBC are chosen by the Board of Directors from among their membership. The City does not exercise any control over the activities of IPBC beyond its representation on the Board of Directors. IPBC also acts as an administrative agency to receive, process, and pay such claims as may come within the benefit program of each member. Through IPBC, the City offers both a PPO plan and an HMO plan. For those employees enrolled in the PPO plan, the City is responsible for the first $35,000 in claims for each individual employee participant every claim year. The members of IPBC share claims (for each individual employee) between $35,000 and $125,000. IPBC maintains stop-loss insurance to cover claims in excess of $125,000. Approximately 94% of the City’s employees and retirees are PPO participants. The HMO plan is also self-insured through a special arrangement. Members of IPBC pay for fixed costs of capitation and administration and then fund for claims not covered under the capitation fee. This plan is fully pooled and the City is not individually rated based on claims experience. All members of the IPBC pay the same rates based on plan design choices. Approximately 6% of the City’s employees and retirees are HMO participants. The City makes payments to IPBC monthly based on its participation in the plan. The rates per individual participant are determined annually based on each member’s prior experience within the pool and projected future claims. This rate also includes a provision for the cost of excess insurance purchased by IPBC. The City makes monthly payments to IPBC for administration of the plan. The City had terminal reserve net of deficit of other accounts as of December 31, 2016 of $144,758. This amount was declared as a dividend to the City and, therefore, has been recorded as a receivable in the Health Insurance Fund of $144,758 as of December 31, 2016. The City has established the following internal service funds to account for these activities: workers’ compensation, liability/property insurance, and health insurance. Each participating fund makes payments to the insurance funds. Such payments are displayed on the financial statements as revenues and expenditures/expenses to the extent that the charge to the other funds is based on the actual expenses of the funds plus an additional amount for catastrophic losses. Payments in excess of these amounts, if any, are reported as transfers. - 42 - - 42 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 6. RISK MANAGEMENT (Continued) Intergovernmental Personnel Benefit Cooperative (Continued) The City has contracted with third party administrators (TPAs) to administer the workers’ compensation program and to review and process claims. In addition, the City has contracted with third party carriers for specific and aggregate stop-loss coverage to limit the City’s exposure to losses. Prior to May 2012, the City was completely self-insured for workers’ compensation with no specific or aggregate stop-loss policies. However, as of December 31, 2016, the City is self-insured up to $600,000 in potential claims losses while any additional claims liabilities are covered by a policy purchased from a national insurance provider. There have been no significant changes in coverage from the prior two years and settlements have not exceeded coverage in any of the prior three fiscal years. A reconciliation of claims payable for the fiscal years ended June 30, 2016 and December 31, 2016 are as follows: Workers’ Compensation Liability/Property 2016 2016* 2016 2016* CLAIMS PAYABLE, JULY 1 $ 656,610 $ 522,038 $ 60,953 $ 76,653 Add Claims Incurred 229,847 120,871 44,182 39,676 Less Claims Paid (364,419) (113,437) (28,482) (37,415) CLAIMS PAYABLE, DECEMBER 31 $ 522,038 $ 529,472 $ 76,653 $ 78,914 *The City changed its fiscal year end from June 30 to December 31, effective December 31, 2016. 7. INDIVIDUAL FUND DISCLOSURES a. Due From/To Other Funds Due From Due To General Tax Increment Financing #1 $ 47,123 $ - Tax Increment Financing #2 7,980 173 Police Pension Fund - 462,811 Firefighters’ Pension Fund - 354,040 Nonmajor Governmental 43,650 - Total General 98,753 817,024 - 43 - - 43 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 7. INDIVIDUAL FUND DISCLOSURES (Continued) a. Due From/To Other Funds (Continued) Due From Due To Tax Increment Financing #1 General $ - $ 47,123 Nonmajor Governmental - 14,288 Total Tax Increment Financing #1 - 61,411 Tax Increment Financing #2 General 173 7,980 Total Tax Increment Financing #2 173 7,980 Police Pension Fund General 462,811 - Total Police Pension Fund 462,811 - Firefighters’ Pension Fund General 354,040 - Total Firefighters’ Pension Fund 354,040 - Nonmajor Governmental General - 43,650 Tax Increment Financing #1 14,288 - Total Nonmajor Governmental 14,288 43,650 TOTAL $ 930,065 $ 930,065 The purpose of significant due from/to other funds is as follows:  $47,123 due to the General Fund from the Tax Increment Financing #1 Fund to cover a budgeted transfer that did not occur within City banking until 2017. Repayment is expected within one year.  $43,650 due to the General Fund from the Nonmajor Governemntal Funds (i.e. SSA#4 Fund, SSA#6 Fund, and Debt Service Fund) to cover negative cash deficits. Repayment is expected within one year.  $462,811 due to the Police Pension Fund from the General Fund to make an additional employer contribution after year end. Repayment is expected within one year. - 44 - - 44 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 7. INDIVIDUAL FUND DISCLOSURES (Continued) a. Due From/To Other Funds (Continued)  $354,040 due to the Firefighters’ Pension Fund from the General Fund to make an additional employer contribution after year end. Repayment is expected within one year. b. Advances To/From Other Funds Receivable Fund Payable Fund Amount General Airport $ 478,000 TOTAL $ 478,000 The purpose of significant advance to/from other funds is as follows:  $478,000 advance to the Airport Fund from the General Fund as a result of cash overdrafts. Repayment is not expected within one year. c. Interfund Transfers Interfund transfers between funds for the six months ended December 31, 2016 were as follows: Transfers In Transfers Out General Airport $ - $ 16,853 Water 271,100 - Nonmajor Governmental - 535,418 Total General 271,100 552,271 Tax Increment Financing #1 Nonmajor Governmental - 961,675 Total Tax Increment Financing #1 - 961,675 Nonmajor Governmental General 535,418 - Tax Increment Financing #1 961,675 - Internal Service 243,000 - Nonmajor Governmental 181,922 181,922 Total Nonmajor Governmental 1,922,015 181,922 - 45 - - 45 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 7. INDIVIDUAL FUND DISCLOSURES (Continued) c. Interfund Transfers (Continued) Transfers In Transfers Out Water General $ - $ 271,100 Total Water - 271,100 Airport General 16,853 - Total Airport 16,853 - Internal Service Internal Service 151,274 151,274 Nonmajor Governmental - 243,000 Total Internal Service 151,274 394,274 TOTAL $ 2,361,242 $ 2,361,242 The purpose of significant transfers is as follows:  $243,000 transferred from the Internal Service Fund (Workers’ Compensation Fund) to the Equipment Fund to fund a street sweeper purchase. This transfer will not be repaid.  $271,100 transferred from the Water Fund to the General Fund to cover payment in lieu of taxes. This transfer will not be repaid.  $180,000 transferred from the General Fund to the Nonmajor Governmental Fund (General Debt Service Fund) to cover debt service payments. This transfer will not be repaid.  $961,675 transferred from the Tax Increment Financing #1 Fund to the Nonmajor Governmental Fund (TIF Debt Service Fund) to cover debt service payments. This transfer will not be repaid.  $355,418 transferred from the General Fund to the Nonmajor Governmental Fund (i.e., Equipment Fund, Fleet Replacement Fund, and Capital Projects Fund) to fund capital purchases. This transfer will not be repaid. - 46 - - 46 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 7. INDIVIDUAL FUND DISCLOSURES (Continued) c. Interfund Transfers (Continued)  $151,274 transferred from the Internal Service Fund (Property/Liability) to the Internal Service Fund (Workers’ Compensation) to effectively close the Property Liability Fund. This transfer will not be repaid.  $181,922 transferred from the Nonmajor Governmental Fund (Fleet Replacement) to the Nonmajor Governmental Fund (Equipment) to effectively close the Fleet Replacement Fund. This transfer will not be repaid. 8. LEGAL COMPLIANCE AND ACCOUNTABILITY Deficit Fund Balances/Net Position of Individual Funds The following funds had deficit fund balances/net position as of December 31, 2016: Deficit Fund Balance Knolls Special Service Area #4 $ 1,129 Greek Row Special Service Area #6 454 DeKalb Public Library General Fund 2,596,609 9. CONTINGENT LIABILITIES a. Litigation The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s attorney, the resolution of these matters will not have a material adverse effect on the financial condition of the City. b. Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. - 47 - - 47 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 9. CONTINGENT LIABILITIES (Continued) c. Sales Tax Sharing The City has entered into intergovernmental agreement with DeKalb County to share in the sales tax revenues generated from companies located within certain property developments through the fiscal year 2033. The total rebate expenditures incurred during the six months ended December 31, 2016 was $898,550 and the total rebate revenue earned during the six months ended December 31, 2016 was $84,881 d. Property Tax Rebates The City has entered into a development agreement whereby it has committed to abate 90%, 80%, 70%, 60%, and 50%, respectively, of a certain company’s TIF and non-TIF property taxes for years 1 through 5 after the issuance of occupancy permits. In addition, the company is entitled to property tax rebates of 50% for the TIF property for years 6 through 10 after the issuance of occupancy permits but no later than December 31, 2017. As of December 31, 2016, the City has incurred $1,665,063 in rebates in total to date. 10. OTHER POSTEMPLOYMENT BENEFITS a. Plan Description In addition to providing the pension benefits described, the City provides postemployment health care and life insurance benefits (OPEB) for its eligible retired employees through a single-employer defined benefit plan. The benefits, benefit levels, employee contributions, and employer contributions are governed by the City and can be amended by the City through its personnel manual and union contracts. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate report. The activity of the plan is reported in the City’s governmental and business-type activities. b. Benefits Provided The City provides postemployment health care and life insurance benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the City’s retirement plans. All health care benefits are provided through the City’s health insurance plan with IPBC. The benefit levels are the same as those afforded to active employees. Benefits include general inpatient and outpatient medical services; mental, nervous, and substance abuse care; vision care; dental care; and prescriptions. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the City’s plan becomes secondary. - 48 - - 48 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 10. OTHER POSTEMPLOYMENT BENEFITS (Continued) c. Membership At June 30, 2016 (most recent information available), membership consisted of: Retirees and Beneficiaries Currently Receiving Benefits 166 Terminated Employees Entitled to Benefits but not yet Receiving Them - Active Employees 209 TOTAL 375 Participating Employers 1 d. Funding Policy The City negotiates the contribution percentages between the City and employees through the union contracts and personnel policy. Retirees contribute a percentage of the actuarially determined premium to the plan and the City contributes the remainder to cover the cost of providing the benefits to the retirees. For the six months ended December 31, 2016, the City contributed $556,630. The City is not required to and currently does not advance fund the cost of benefits that will become due and payable in the future. Active employees do not contribute to the plan until retirement. e. Annual OPEB Costs and Net OPEB Obligation The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2016 and the prior two years was as follows: Percentage of Annual Year Annual Employer OPEB Cost Net OPEB Ended OPEB Cost Contributions Contributed Obligation 2015 $ 906,540 $ 988,408 109.03% $ 7,467,143 2016 900,810 1,007,982 111.90% 7,359,971 2016** 705,328 556,630 78.92% 7,508,669 - 49 - - 49 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 10. OTHER POSTEMPLOYMENT BENEFITS (Continued) e. Annual OPEB Costs and Net OPEB Obligation (Continued) The net OPEB obligation (NOPEBO) as December 31, 2016 was calculated as follows: Annual Required Contribution $ 685,700 Interest on Net OPEB Obligation 147,200 Adjustment to Annual Required Contribution (127,572) Annual OPEB Cost 705,328 Contributions Made (556,630) Increase in Net OPEB Obligation 148,698 Net OPEB Obligation, Beginning of Period 7,359,971 NET OPEB OBLIGATION, END OF PERIOD* $ 7,508,669 *The Library’s portion of $25,151 is included. **The City changed its fiscal year end from June 30 to December 31, effective December 31, 2016. Funded Status and Funding Progress. The funded status of the plan as of June 30, 2016 (most recent information available) was as follows: Actuarial Accrued Liability (AAL) $ 23,904,376 Actuarial Value of Plan Assets - Unfunded Actuarial Accrued Liability (UAAL) 23,904,376 Funded Ratio (Actuarial Value of Plan Assets/AAL) 0.00% Covered Payroll (Active Plan Members) $ 16,649,799 UAAL as a Percentage of Covered Payroll 143.57% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to financial statements, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. - 50 - - 50 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 10. OTHER POSTEMPLOYMENT BENEFITS (Continued) e. Annual OPEB Costs and Net OPEB Obligation (Continued) Actuarial methods and assumptions involve the projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the June 30, 2016 actuarial valuation (most recent available information), the entry-age actuarial cost method was used. The actuarial assumptions included a 4.0% investment rate of return and an annual healthcare cost trend rate of 8.0% initially, reduced by decrements to an ultimate rate of 4.0%. Both rates include a 2.5% inflation assumption. The actuarial value of assets was not determined as the City has not advance funded its obligation. The plan’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a 30-year open basis. 11. DEFINED BENEFIT PENSION PLANS The City contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer public employee retirement system; the Police Pension Plan, which is a single-employer pension plan; and the Firefighters’ Pension Plan, which is also a single-employer pension plan. The benefits, benefit levels, employee contributions, and employer contributions for all three plans are governed by ILCS and can only be amended by the Illinois General Assembly. IMRF issues a publicly available report that includes financial statements and supplementary information for the plan as a whole, but not for individual employers. That report can be obtained from IMRF, 2211 York Road, Suite 500, Oak Brook, Illinois 60523 or at www.imrf.org. The Police and Firefighters’ Pension Plans do not issue separate reports. a. Plan Descriptions Illinois Municipal Retirement Fund Plan Administration All employees (other than those covered by the Police and Firefighters’ Pension Plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. - 51 - - 51 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Illinois Municipal Retirement Fund (Continued) Plan Membership At December 31, 2016, IMRF membership consisted of: Inactive Employees or their Beneficiaries Currently Receiving Benefits 158 Inactive Employees Entitled to but not yet Receiving Benefits 89 Active Employees 104 TOTAL 351 Benefits Provided All employees (other than those covered by the Police or Firefighters’ Pension Plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. IMRF provides two tiers of pension benefits. Employees hired prior to January 1, 2011, are eligible for Tier 1 benefits. For Tier 1 employees, pension benefits vest after eight years of service. Participating members who retire at age 55 (reduced benefits) or after age 60 (full benefits) with eight years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter. Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating members who retire at age 62 (reduced benefits) or after age 67 (full benefits) with ten years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter. IMRF also provides death and disability benefits. These benefit provisions and all are established by state statute. Contributions Participating members are required to contribute 4.50% of their annual salary to IMRF. The City is required to contribute the remaining amounts necessary to fund IMRF as specified by statute. The employer contribution for the year ended December 31, 2016 was 16.23% of covered payroll. - 52 - - 52 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Illinois Municipal Retirement Fund (Continued) Actuarial Assumptions The City’s net pension liability was measured as of December 31, 2016 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of the same date using the following actuarial methods and assumptions. Actuarial Valuation Date December 31, 2016 Actuarial Cost Method Entry-Age Normal Assumptions Inflation 3.50% Salary Increases 3.75% to 14.50% Interest Rate 7.50% Cost of Living Adjustments 3.00% Asset Valuation Method Market Value For nondisabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012). The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012). The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same adjustment that were applied for non-disabled lives. For active members, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012). The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. - 53 - - 53 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Illinois Municipal Retirement Fund (Continued) Discount Rate The discount rate used to measure the total pension liability at December 31, 2016 was 7.50%. The discount rate used to measure the total pension liability at December 31, 2015 was 7.46%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that the City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the IMRF’s fiduciary net position was not projected to be available to make all projected future benefit payments of current plan members. Changes in the Net Pension Liability (a) (b) Total Plan (a) - (b) Pension Fiduciary Net Pension Liability Net Position Liability BALANCES AT JANUARY 1, 2016 $ 54,653,569 $ 44,692,201 $ 9,961,368 Changes for the Period Service Cost 744,857 - 744,857 Interest 4,008,711 - 4,008,711 Difference Between Expected and Actual Experience (502,701) - (502,701) Changes in Assumptions (267,155) - (267,155) Employer Contributions - 1,190,069 (1,190,069) Employee Contributions - 332,849 (332,849) Net Investment Income - 3,018,640 (3,018,640) Benefit Payments and Refunds (2,579,844) (2,579,844) - Other (Net Transfer) - (9,392) 9,392 Net Changes 1,403,868 1,952,322 (548,454) BALANCES AT DECEMBER 31, 2016 $ 56,057,437 $ 46,644,523 $ 9,412,914 - 54 - - 54 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Illinois Municipal Retirement Fund (Continued) Changes in the Net Pension Liability (Continued) Changes in assumptions related to retirement age and mortality were made since the prior measurement date. City Library Total Beginning Net Pension Liability at January 1, 2016 $ 8,722,450 $ 1,238,918 $ 9,961,368 Employer Contributions 552,863 57,722 610,585 Ending Net Pension Liability at December 31, 2016 8,237,946 1,174,968 9,412,914 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the six months ended December 31, 2016, the City recognized pension expense of $2,406,455. At December 31, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to IMRF from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Difference Between Expected and Actual Experience $ 142,840 $ 330,578 Changes in Assumption 20,622 175,682 Net Difference Between Projected and Actual Earnings on Pension Plan Investments 2,364,565 - TOTAL $ 2,528,027 $ 506,260 - 55 - - 55 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Illinois Municipal Retirement Fund (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources (Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to IMRF will be recognized in pension expense as follows: Year Ending December 31, 2017 $ 709,447 2018 566,917 2019 686,747 2020 58,656 2021 - Thereafter - TOTAL $ 2,021,767 City Library Total Share of Deferred Outflows $ 2,202,121 $ 325,906 $ 2,528,027 Share of Deferred Inflows (447,230) (59,030) (506,260) TOTAL $ 1,754,891 $ 266,876 $ 2,021,767 Discount Rate Sensitivity The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the City calculated using the discount rate of 7.50% as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.50%) or 1 percentage point higher (8.50%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (6.50%) (7.50%) (8.50%) Net Pension Liability - City $ 14,551,242 $ 8,237,946 $ 3,055,424 Net Pension Liability - Library 2,075,627 1,174,968 435,791 TOTAL $ 16,626,869 $ 9,412,914 $ 3,491,215 - 56 - - 56 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan Plan Administration Police sworn personnel are covered by the Police Pension Plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/3-1) and may be amended only by the Illinois legislature. The City accounts for the plan as a pension trust fund. The plan is governed by a five-member Board of Trustees. Two members of the Board are appointed by the Mayor, one member is elected by pension beneficiaries, and two members are elected by active police employees. The plan is accounted for on the economic resources measurement focus and the accrual basis of accounting. Employer and employee contributions are recognized when earned in the year that the contributions are required, benefits, and refunds are recognized as an expense and liability when due and payable. Plan Membership At December 31, 2016, the measurement date, membership consisted of: Inactive Plan Members Currently Receiving Benefits 51 Inactive Plan Members Entitled to but not yet Receiving Benefits 4 Active Plan Members 61 TOTAL 116 Benefits Provided The Police Pension Plan provides retirement benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held on the last day of service, or for one year prior to the last day, whichever is greater. The annual benefit shall be increased by 2.5% of such salary for each additional year of - 57 - - 57 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Benefits Provided (Continued) service over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least eight years but less than 20 years of credited service may retire at or after age 60 and receive 2.5% of salary for each year of service. The monthly benefit shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3% of the original pension, and 3% compounded annually thereafter. Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the police officer during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Police officers’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3% compounded. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 police officer shall be increased annually at age 60 on the January 1st after the police officer retires, or the first anniversary of the pension starting date, whichever is later. Contributions Employees are required by ILCS to contribute 9.91% of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to contribute the remaining amounts necessary to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Police Pension Plan. The City has chosen a policy to fund 100% of the past service costs by 2040. For the six months ended December 31, 2016, the City’s contribution was 38.49% of covered payroll. - 58 - - 58 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Investment Policy ILCS limits the Police Pension Fund’s (the Fund) investments to those allowable by ILCS and require the Fund’s Board of Trustees to adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The Fund’s investment policy authorizes the Fund to make deposits/invest in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, investment grade corporate bonds, and Illinois Funds. The Fund may also invest in certain non-U.S. obligations, Illinois municipal corporations tax anticipation warrants, veteran’s loans, obligations of the State of Illinois and its political subdivisions, Illinois insurance company general and separate accounts, mutual funds and corporate equity securities, and real estate investment trusts. The investment policy was not modified during the six months ended December 31, 2016. The Fund’s investment policy, in accordance with ILCS, establishes the following target allocation across asset classes: Long-Term Expected Real Asset Class Target Rate of Return Cash and Cash Equivalents 3% 0.00% Fixed Income 32% Aggregate Bonds 1.50% Investment Grade Corporates 2.00% Intermediate U.S. Treasuries 0.75% High Yield 4.50% Equities 65% - 59 - - 59 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Investment Policy (Continued) Long-Term Expected Real Asset Class Target Rate of Return Further, the policy diversifies in the following equity categories: Domestic Equities 62% Large Caps 4.75% Mid Caps 5.00% Small Caps 5.00% U.S. Real Estate 3.75% International Equities 35% Developed Foreign 5.50% Emerging Markets 7.75% Commodities 3% 0.75% ILCS limits the Fund’s investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. The long-term expected real rates of return are net of a 2.25% factor for inflation and investment expense. The Fund has hired a fund manager to manage the fixed income portfolio and utilizes its consultant to assist with the equity investments. The long-term expected rate of return on the Fund’s investments was determined using the Asset Management and Trust Division of the investment management consultant’s proprietary research and analytical tools in which best estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. Best estimates or arithmetic real rates of return excluding inflation for each major asset class included in the Fund’s target asset allocation as of December 31, 2016 are listed in the table above. Investment Concentrations At December 31, 2016, the Fund had no significant investments (other than United States Government guaranteed obligations) in any one organization that represent 5% or more of the Fund’s investments. - 60 - - 60 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Investment Rate of Return For the six months ended December 31, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 5.12%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Deposits with Financial Institutions Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Fund’s deposits may not be returned to them. The Fund’s investment policy requires all bank balances to be covered by federal depository insurance. Flow-through FDIC insurance is available for the Fund’s deposits with financial institutions. Interest Rate Risk The following table presents the investments and maturities of the Fund’s debt securities as of December 31, 2016: Investment Maturities (in Years) Less Greater Investment Type Fair Value Than 1 1-5 6-10 Than 10 U.S. Treasury Obligations $ 2,470,273 $ - $ 2,470,273 $ - $ - U.S. Agency Obligations 5,384,516 - 3,812,307 1,572,209 - Corporate Bonds 2,801,220 - 1,178,094 1,623,126 - TOTAL $ 10,656,009 $ - $ 7,460,674 $ 3,195,335 $ - Interest Valuations The Fund categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. - 61 - - 61 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Interest Valuations (Continued) The Fund has the following recurring fair value measurements as of December 31, 2016: U.S. Treasury obligations of $2,470,273, mutual funds of $19,458,733, and equity securities of $161,406 are valued using quoted market prices (Level 1 inputs); U.S. agency obligations and corporate bonds of $8,185,736 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs). Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Fund. Credit Risk The Fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in securities issued by the United States Government and/or its agencies that are implicitly guaranteed by the United States Government and corporate bonds in the top three investment classes by a national rating agency. The corporate bonds are rated AA- to AA+, and the U.S. agencies and treasuries are rated AA+ by Standard and Poor’s. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Fund requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Fund’s agent separate from where the investment was purchased in the Fund’s name. The money market mutual funds and equity mutual funds are not subject to custodial credit risk. - 62 - - 62 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Discount Rate The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that the City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Changes in the Net Pension Liability (a) (b) Total Plan (a) - (b) Pension Fiduciary Net Pension Liability Net Position Liability BALANCES AT JULY 1, 2016 $ 60,897,865 $ 28,699,935 $ 32,197,930 Changes for the Period Service Cost 581,851 - 581,851 Interest 2,278,348 - 2,278,348 Difference Between Expected and Actual Experience (30,834) - (30,834) Changes in Assumptions 2,685,767 - 2,685,767 Employer Contributions - 2,085,233 (2,085,233) Employee Contributions - 282,997 (282,997) Net Investment Income - 1,516,374 (1,516,374) Contributions - Buy Back 11,240 11,240 - Benefit Payments and Refunds (1,447,549) (1,447,549) - Administrative Expense - (21,998) 21,998 Net Changes 4,078,823 2,426,297 1,652,526 BALANCES AT DECEMBER 31, 2016 $ 64,976,688 $ 31,126,232 $ 33,850,456 - 63 - - 63 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Changes in Net Pension Liability (Continued) There was a change with respect to actuarial assumptions from the prior year to reflect revised expectations with respect to mortality rates. Actuarial Assumptions The total pension liability above was determined by an actuarial valuation using the following actuarial methods and assumptions. Actuarial Valuation Date December 31, 2016 Actuarial Cost Method Entry-Age Normal Assumptions Inflation 2.50% Salary Increases 4.50% Interest Rate 7.50% Cost of Living Adjustments 3.00% (Tier 1) 1.25% (Tier 2) Asset Valuation Method Market Mortality rates were based on the RP-2000 Mortality Table (CHBCA). There is no margin for future mortality improvement beyond the valuation date. Discount Rate Sensitivity The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the City calculated using the discount rate of 7.5% as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.5%) or 1 percentage point higher (8.5%) than the current rate: - 64 - - 64 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Discount Rate Sensitivity (Continued) Current 1% Decrease Discount Rate 1% Increase (6.5%) (7.5%) (8.5%) Net Pension Liability $ 42,934,393 $ 33,850,456 $ 26,394,328 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the six months ended December 31, 2016, the City recognized pension expense of $1,817,444. At December 31, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to the police pension from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Difference Between Expected and Actual Experience $ - $ 764,477 Changes in Assumptions 2,461,953 - Net Difference Between Projected and Actual Earnings on Pension Plan Investments 1,120,161 - TOTAL $ 3,582,114 $ 764,477 Changes in the net pension liability related to the difference in actual and expected experience, or changes in assumptions regarding future events, are recognized in pension expense over the expected remaining service life of all employees (active and retired) in the plan. Differences in projected and actual earnings over the measurement period are recognized over a five-year period. - 65 - - 65 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Police Pension Plan (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources (Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to the police pension will be recognized in pension expense as follows: Year Ending December 31, 2017 $ 623,107 2018 623,107 2019 623,107 2020 408,690 2021 318,382 Thereafter 221,244 TOTAL $ 2,817,637 Firefighters’ Pension Plan Plan Administration Firefighter sworn personnel are covered by the Firefighters’ Pension Plan, a single-employer defined benefit pension plan sponsored by the City. The defined benefits and employee and minimum employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/4-101) and may be amended only by the Illinois legislature. The City accounts for the Firefighters’ Pension Plan as a pension trust fund. The plan is governed by a five-member Board of Trustees. Two members of the Board are appointed by the Mayor, one member is elected by pension beneficiaries, and two members are elected by active firefighter employees. The plan is accounted for on the economic resources measurement focus and the accrual basis of accounting. Employer and employee contributions are recognized when earned in the year that the contributions are required, benefits and refunds are recognized as an expense and liability when due and payable. - 66 - - 66 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Plan Membership At December 31, 2016, the measurement date, membership consisted of: Inactive Plan Members Currently Receiving Benefits 57 Inactive Plan Members Entitled to but not yet Receiving Benefits 3 Active Plan Members 55 TOTAL 115 Benefits Provided The following is a summary of benefits of the plan as provided for in ILCS: The Firefighters’ Pension Plan provides retirement benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held at the date of retirement. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least ten years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3% of the original pension, and 3% compounded annually thereafter. Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the firefighter during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Firefighters’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3% compounded. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of - 67 - - 67 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Benefits Provided (Continued) such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 firefighter shall be increased annually at age 60 on the January 1 st after the firefighter retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3% or ½ of the change in the Consumer Price Index for the proceeding calendar year. Contributions Covered employees are required to contribute 9.455% of their base salary to the Firefighters’ Pension Plan. If an employee leaves covered employment with fewer than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. Contributions are recognized when due pursuant to formal commitments, as well as statutory or contractual requirements. Benefits and refunds are recognized when due and payable in accordance with the terms of the Firefighters’ Pension Plan. The costs of administering the Firefighters’ Pension Plan are financed through investment earnings. The City is required to finance the Firefighters’ Pension Plan as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Firefighters’ Pension Plan. The City has chosen a policy to fund 100% of the past service costs by 2040. For the six months ended December 31, 2016, the City’s contribution was 51.33% of covered payroll. Investment Policy ILCS limits the Fund’s investments to those allowable by ILCS and require the Fund’s Board of Trustees to adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The Fund’s investment policy authorizes the Fund to make deposits/invest in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, investment-grade corporate bonds and Illinois Funds. The Fund may also invest in - 68 - - 68 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Investment Policy (Continued) certain non-U.S. obligations, Illinois municipal corporations tax anticipation warrants, veteran’s loans, obligations of the State of Illinois and its political subdivisions, Illinois insurance company general and separate accounts, mutual funds, corporate equity and corporate debt securities and real estate investment trusts. During the year, the following changes to the investment policy were approved by the Board of Trustees: target allocations across asset classes were adjusted. The Fund’s investment policy in accordance with ILCS establishes the following target allocation across asset classes: Long-Term Expected Real Asset Class Target Rate of Return Cash and Cash Equivalents 1% 0.5% Fixed Income Short-Term 5% 2% Intermediate 36% 2.5% Equities Large Cap 5% 4.5% Large Cap Value 5% 5% Mid Cap Value 6% 5% Small Cap 7% 6% Small Cap Value 7% 7% International Developed 4% 4.5% International Value 7% 7% International Small 7% 8% Emerging Markets 8% 8% U.S. Real Estate 2% 4% ILCS limits the Fund’s investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. - 69 - - 69 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Investment Policy (Continued) The long-term expected real rates of return are net of a 3% factor for inflation and investment expense. The long-term expected rates of return are the best estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) for each major assets class. Best estimates or geometric real rates of return excluding inflation for each major asset class included in the Fund’s target asset allocation as of December 31, 2016 are listed in the table above. Concentrations At December 31, 2016, the Fund had no significant investments (other than United States Government guaranteed obligations) in any one organization that represent 5% or more of the Fund’s investments. Investment Rate of Return For the six months ended December 31, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 5.93%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Deposits with Financial Institutions Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Fund’s deposits may not be returned to them. The Fund’s investment policy requires all bank balances to be covered by federal depository insurance. Flow-through FDIC insurance is available for the Fund’s deposits with financial institutions. - 70 - - 70 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Interest Rate Risk The following table presents the investments and maturities of the Fund’s debt securities as of December 31, 2016: Investment Maturities (in Years) Less Greater Investment Type Fair Value Than 1 1-5 6-10 Than 10 U.S. Treasury Obligations $ 6,180,900 $ 314,804 $ 5,095,338 $ 770,758 $ - U.S. Agency Obligations 1,969,177 - 881,399 681,356 406,422 TOTAL $ 8,150,077 $ 314,804 $ 5,976,737 $ 1,452,114 $ 406,422 Investment Valuations The Fund categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The Fund has the following recurring fair value measurements as of December 31, 2016: U.S. Treasury obligations of $6,180,899 and mutual funds of $16,547,291 are valued using quoted market prices (Level 1 inputs); U.S. agency obligations of $1,969,177 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs). Interest rate risk is the risk that change in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Fund. - 71 - - 71 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Credit Risk The Fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in securities issued by the United States Government and/or its agencies that are implicitly guaranteed by the United States Government. The U.S. agencies and treasuries are rated AAA by Standard and Poor’s. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Fund requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Fund’s agent separate from where the investment was purchased in the Fund’s name. The money market mutual funds and equity mutual funds are not subject to custodial credit risk. Discount Rate The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that the City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. - 72 - - 72 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Changes in the Net Pension Liability (a) (b) Total Plan (a) - (b) Pension Fiduciary Net Pension Liability Net Position Liability BALANCES AT JULY 1, 2016 $ 62,792,625 $ 23,471,461 $ 39,321,164 Changes for the Period Service Cost 560,373 - 560,373 Interest 2,345,602 - 2,345,602 Difference Between Expected and Actual Experience 26,697 - 26,697 Changes in Assumptions 2,745,788 - 2,745,788 Employer Contributions - 2,512,630 (2,512,630) Employee Contributions - 257,245 (257,245) Contributions - Buy Back 80,812 80,812 - Net Investment Income - 1,447,151 (1,447,151) Benefit Payments and Refunds (1,607,243) (1,607,243) - Administrative Expense - (17,540) 17,540 Net Changes 4,152,029 2,673,055 1,478,974 BALANCES AT DECEMBER 31, 2016 $ 66,944,654 $ 26,144,516 $ 40,800,138 There was a change with respect to actuarial assumptions from the prior year to reflect revised expectations with respect to mortality rates. - 73 - - 73 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Actuarial Assumptions The total pension liability above was determined by an actuarial valuation using the following actuarial methods and assumptions. Actuarial Valuation Date December 31, 2016 Actuarial Cost Method Entry-Age Normal Assumptions Inflation 2.50% Salary Increases 4.50% Interest Rate 7.50% Cost of Living Adjustments 3.00% (Tier 1) 1.25% (Tier 2) Asset Valuation Method Market Mortality rates were based on the RP-2000 Mortality Table (CHBCA). There is no margin for future mortality improvement beyond the valuation date. Discount Rate Sensitivity The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the City calculated using the discount rate of 7.5% as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.5%) or 1 percentage point higher (8.5%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (6.5%) (7.5%) (8.5%) Net Pension Liability $ 49,829,787 $ 40,800,138 $ 33,370,794 - 74 - - 74 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) a. Plan Descriptions (Continued) Firefighters’ Pension Plan (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the six months ended December 31, 2016, the City recognized pension expense of $2,152,429. At December 31, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to the firefighters’ pension from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Difference Between Expected and Actual Experience $ 24,473 $ 77,130 Changes in Assumption 2,516,972 - Net Difference Between Projected and Actual Earnings on Pension Plan Investments 1,059,184 - TOTAL $ 3,600,629 $ 77,130 Changes in the net pension liability related to the difference in actual and expected experience, or changes in assumptions regarding future events, are recognized in pension expense over the expected remaining service life of all employees (active and retired) in the plan. Differences in projected and actual earnings over the measurement period are recognized over a five-year period. Amounts reported as deferred outflows of resources and deferred inflows of resources related to the firefighters’ pension will be recognized in pension expense as follows: Year Ending December 31, 2017 $ 778,650 2018 778,650 2019 778,650 2020 557,397 2021 399,112 Thereafter 231,040 TOTAL $ 3,523,499 - 75 - - 75 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) b. Pension Fund Disclosures Plan Net Position Police Firefighters’ Pension Pension Total ASSETS Cash and Short-Term Investments $ 365,082 $ 1,051,332 $ 1,416,414 Investments U.S. Treasury Obligations 2,470,273 6,180,900 8,651,173 U.S. Agency Obligations 5,384,516 1,969,177 7,353,693 Corporate bonds 2,801,220 - 2,801,220 Mutual Funds 19,458,733 16,547,291 36,006,024 Equity Securities 161,406 - 161,406 Receivables Accrued interest 35,849 49,716 85,565 Due from City 462,811 354,040 816,851 Prepaid Expenses 2,208 - 2,208 Total assets 31,142,098 26,152,456 57,294,554 LIABILITIES Accounts Payable 15,866 7,940 23,806 Total liabilities 15,866 7,940 23,806 NET POSITION RESTRICTED FOR PENSIONS $ 31,126,232 $ 26,144,516 $ 57,270,748 - 76 - - 76 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 11. DEFINED BENEFIT PENSION PLANS (Continued) b. Pension Fund Disclosures (Continued) Changes in Plan Net Position Police Firefighters’ Pension Pension Total ADDITIONS Contributions Employer $ 2,085,233 $ 2,512,630 $ 4,597,863 Employee 294,237 338,057 632,294 Total Contributions 2,379,470 2,850,687 5,230,157 Investment Income Net Appreciation in Fair Value of Investments 1,091,934 965,198 2,057,132 Interest 446,219 503,412 949,631 Total Investment Income 1,538,153 1,468,610 3,006,763 Less Investment Expense (21,779) (21,459) (43,238) Net Investment Income 1,516,374 1,447,151 2,963,525 Total Additions 3,895,844 4,297,838 8,193,682 DEDUCTIONS Administrative Expenses 21,998 17,540 39,538 Benefits and Refunds 1,447,549 1,607,243 3,054,792 Total Deductions 1,469,547 1,624,783 3,094,330 NET INCREASE 2,426,297 2,673,055 5,099,352 NET POSITION RESTRICTED FOR PENSIONS July 1 28,699,935 23,471,461 52,171,396 December 31 $ 31,126,232 $ 26,144,516 $ 57,270,748 - 77 - - 77 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY a. Financial Information No separate financial statements are available for the DeKalb Public Library (the Library). b. Deposits and Investments Library Deposits with Financial Institutions Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Library’s deposits may not be returned to it. The Library’s investment policy requires pledging of collateral in excess of federal depository insurance with collateral held by the Library’s agent in the Library’s name. Library Investments The following table presents the investments and maturities of the Library’s debt securities as of December 31, 2016: Investment Maturities (in Years) Less Greater Investment Type Fair Value Than 1 1-5 6-10 Than 10 Negotiable Certificates of Deposit $ 344,999 $ 274,928 $ 70,071 $ - $ - TOTAL $ 344,999 $ 274,928 $ 70,071 $ - $ - The Library categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The Library has the following recurring fair value measurements as of December 31, 2016: negotiable certificates of deposit of $260,535 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs). Interest rate risk is the risk that changes in interest rates will adversely affect the market value of an investment. The Library limits its exposure to interest rate risk by structuring the 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 investing operating funds primarily in shorter term securities. Unless matched to a specific cash flow, the Library does not directly invest in securities maturing more than three years from the date of purchase. - 78 - - 78 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued) b. Deposits and Investments (Continued) Library Investments (Continued) The Library limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in negotiable certificates of deposit. Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Library will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Library’s investment policy requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Library’s agent in the Library’s name, separate from where the investment was purchased. Concentration of credit risk is the risk that the Library has a high percentage of their investments invested in one type of investment. The Library attempts to diversify its investments appropriate to the nature of the funds, purpose for the funds, and the amount available to invest. c. Receivables Property taxes for 2015 are levied in December 2015 and attach as an enforceable lien on the property on January 1, 2015. Tax bills are prepared by the County and issued on or about May 1, 2016 and August 1, 2016, and are due and collectible on or about June 1, 2016 and September 1, 2016. The County collects the taxes and remits them periodically to the City. Those 2015 taxes were intended to finance the six month period ending December 31, 2016. The 2016 levy, which attached as a lien on property as January 1, 2016, is intended to finance the 2017 fiscal year and is not considered available or earned for current operations and are, therefore, reported as deferred/unavailable revenue. - 79 - - 79 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued) d. Capital Assets The following is a summary of the capital asset activity for the six months ended December 31, 2016: Beginning Beginning Balances, Ending Balances Restatement Restated Increases Decreases Balances GOVERNMENTAL ACTIVITIES Capital Assets not Being Depreciated Land $ 1,558,032 $ - $ 1,558,032 $ - $ - $ 1,558,032 Construction in Progress 21,441,741 1,320,198 22,761,939 967,341 - 23,729,280 Total Capital Assets not Being Depreciated 22,999,773 1,320,198 24,319,971 967,341 - 25,287,312 Capital Assets Being Depreciated Buildings and Improvements 593,325 - 593,325 - - 593,325 Equipment and Furniture 227,010 - 227,010 - - 227,010 Total Capital Assets Being Depreciated 820,335 - 820,335 - - 820,335 Less Accumulated Depreciation for Buildings and Improvements 369,950 - 369,950 5,012 - 374,962 Equipment and Furniture 151,387 - 151,387 8,734 - 160,121 Total Accumulated Depreciation 521,337 - 521,337 13,746 - 535,083 Total Capital Assets Being Depreciated, Net 298,998 - 298,998 (13,746) - 285,252 GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET $ 23,298,771 $ 1,320,198 $ 24,618,969 $ 953,595 $ - $ 25,572,564 Depreciation expense was charged to functions/programs of the governmental activities as follows: GOVERNMENTAL ACTIVITIES Culture and Recreation $ 13,746 TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES $ 13,746 - 80 - - 80 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued) e. Long-Term Debt General Obligation Bonds The City issues general obligation bonds on behalf of the Library to provide funds for the acquisition and construction of major capital facilities. General obligation bonds currently outstanding are as follows: Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements December 31 Portion $6,685,000 2013A Series General Obligation Bonds, dated June 18, 2013, due in annual installments of $265,000 to $470,000, plus interest of 3% to 4% through Library January 1, 2033 General $ 6,150,000 $ - $ - $ 6,150,000 $ 280,000 TOTAL $ 6,150,000 $ - $ - $ 6,150,000 $ 280,000 Loans Payable The Library enters into loans payable for the acquisition of capital equipment. Loans payable currently outstanding are as follows: Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions December 31 Portion $3,000,000 Loan Payable of 2015 dated June 5, 2015 matures on March 18, 2017, plus interest at prime rate (3.75%) at December 31, Library 2016 General $ 2,000,000 $ - $ 430,000 $ 1,570,000 $ 1,570,000 TOTAL $ 2,000,000 $ - $ 430,000 $ 1,570,000 $ 1,570,000 - 81 - - 81 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued) e. Long-Term Debt (Continued) Debt Certificates The City issues debt certificates on behalf of the Library to provide funds for the acquisition and construction of major capital facilities. Debt certificates currently outstanding are as follows: Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements December 31 Portion $1,000,000 2011 Series Debt Certificates, Dated December 16, 2011, due in annual installments of $111,000, plus interest of 2.96% through July 1, Library 2020. General $ 555,556 $ - $ 111,111 $ 444,445 $ 111,111 TOTAL $ 555,556 $ - $ 111,111 $ 444,445 $ 111,111 Debt Service Requirements to Maturity Year Ending General Obligation Bonds Loans Payable December 31, Principal Interest Principal Interest 2017 $ 280,000 $ 205,825 $ 1,570,000 $ 14,719 2018 285,000 197,350 - - 2019 295,000 188,650 - - 2020 305,000 179,650 - - 2021 315,000 170,350 - - 2022 325,000 160,750 - - 2023 335,000 150,850 - - 2024 345,000 140,650 - - 2025 355,000 130,150 - - 2026 365,000 118,894 - - 2027 375,000 106,400 - - 2028 390,000 93,013 - - 2029 405,000 78,594 - - 2030 420,000 62,600 - - 2031 435,000 45,500 - - 2032 450,000 27,800 - - 2033 470,000 9,400 - - TOTAL $ 6,150,000 $ 2,066,426 $ 1,570,000 $ 14,719 - 82 - - 82 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued) e. Long-Term Debt (Continued) Debt Service Requirements to Maturity (Continued) Year Ending Debt Certificates December 31, Principal Interest 2017 $ 111,111 $ 13,156 2018 111,111 9,867 2019 111,111 6,578 2020 111,112 3,289 TOTAL $ 444,445 $ 32,890 Changes in Long-Term Liabilities During the six months ended December 31, 2016 the following changes occurred in long-term liabilities for Library: Balances Issuances or Balances Current July 1 Accretions Reductions December 31 Portion General Obligation Bonds Payable $ 6,150,000 $ - $ - $ 6,150,000 $ 280,000 Loans Payable 2,000,000 - 430,000 1,570,000 1,570,000 Debt Certificates Payable 555,556 - 111,111 444,445 111,111 Compensated Absences Payable 40,065 - 34,693 5,372 1,074 Net Pension Liability - IMRF 1,238,918 - 63,950 1,174,968 - Net Other Postemployment Benefit Obligation 24,102 1,049 - 25,151 - TOTAL GOVERNMENTAL ACTIVITIES $ 10,008,641 $ 1,049 $ 639,754 $ 9,369,936 $ 1,962,185 The compensated absences, net pension liability, and the net other postemployment benefit obligation are generally liquidated by the General Fund. - 83 - - 83 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued) f. Short-Term Debt Changes in Short-Term Liabilities During the six months ended December 31, 2016, the following changes occurred in short-term liabilities: Balances Balances Current July 1 Additions Reductions December 31 Portion GOVERNMENTAL ACTIVITIES Line of Credit $ 1,591,079 $ 2,239,252 $ - $ 3,830,331 $ 3,830,331 TOTAL GOVERNMENTAL ACTIVITIES $ 1,591,079 $ 2,239,252 $ - $ 3,830,331 $ 3,830,331 Line of Credit On January 6, 2016, the Library entered into a line of credit. The maximum amount that can be drawn down is $4,500,000. Amounts drawn under the line of credit during the six months ended December 31, 2016 totaled $2,239,252. Amounts due at December 31, 2016 totaled $3,830,331. Interest is payable at 3.75% and paid monthly. The line of credit was set to mature December 18, 2016 but was extended through March 18, 2017. 13. SIGNIFICANT EVENT The City Council passed an Ordinance which amended the City’s Municipal Code allowing the City to change their fiscal year to December 31, 2016. 14. PRIOR PERIOD ADJUSTMENT Discretely Presented Component Unit Library General Fund To record Library retainage payable not accrued for in the prior fiscal year $ (1,320,198) TOTAL GENERAL FUND $ (1,320,198) Library Governmental Activities To record Library construction in progress not capitalized in the prior fiscal year $ 1,320,198 To record Library retainage payable not accrued for in the prior fiscal year (1,320,198) TOTAL GOVERNMENTAL ACTIVITIES $ - - 84 - - 84 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued) 15. TAX ABATEMENTS The City rebates property taxes to recruit, retain, or improve local business facilities or their supporting public infrastructure under certain circumstances. The terms of these rebate arrangements are specified within written agreements with the businesses concerned. For the eight months ended December 31, 2016, the City rebated 50% of the City portion of the property tax levy for the 3M distribution center located at 1250 Macom Drive. This is the fourth year of the five-year abatement. The abatement for the year amounted to $41,058. The City also rebated 80% of the City portion of the property tax levy for the Right Pointe development located at 2754 Wagner Court. This is the second year of the five-year abatement. The abatement for the year amounted to $5,039. 16. SUBSEQUENT EVENT On May 10, 2017, the Library approved an extension for one year on two outstanding loans. Along with interest on both loans, the Library will reduce principal outstanding of their $3,000,000 2015 loan payable by $100,000 each year, and the principal outstanding on the $4,500,000 2016 line of credit by $300,000 each year. - 85 - - 85 - REQUIRED SUPPLEMENTARY INFORMATION  CITY OF DEKALB, ILLINOIS REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFIT PLAN December 31, 2016 Schedule of Funding Progress (2) UAAL Actuarial (4) As a Actuarial (1) Accrued (3) Unfunded Percentage Valuation Actuarial Liability Funded AAL (5) of Covered Date Value of (AAL) Ratio (UAAL) Covered Payroll December 31, Assets Entry-Age (1) / (2) (2) - (1) Payroll (4) / (5) 2012 $ - $ 20,805,232 0.00% $ 20,805,232 $ 13,467,132 154.49% 2013 - 21,666,777 0.00% 21,666,777 13,631,798 158.94% 2014 - 20,149,079 0.00% 20,149,079 14,916,350 135.08% 2015 N/A N/A N/A N/A N/A N/A 2016 - 23,904,376 0.00% 23,904,376 16,649,799 143.57% 2016* N/A N/A N/A N/A N/A N/A Employer Contributions Annual Required Fiscal Employer Contribution Percentage Year Contributions (ARC) Contributed 2012 $ 813,475 $ 2,265,382 35.91% 2013 950,439 882,122 107.74% 2014 997,999 905,260 110.24% 2015 988,408 856,213 115.44% 2016 1,007,982 860,985 117.07% 2016* 556,630 685,700 81.18% N/A - Information not available *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. (See independent auditor's report.) - 86 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF EMPLOYER CONTRIBUTIONS ILLINOIS MUNICIPAL RETIREMENT FUND Last Three Fiscal Years JUNE 30, JUNE 30, DECEMBER 31, FISCAL YEAR ENDED 2015 2016 2016* Actuarially Determined Contribution $ 1,234,927 $ 1,106,410 $ 610,585 Contribution in Relation to the Actuarially Determined Contribution 1,234,927 1,106,410 610,585 CONTRIBUTION DEFICIENCY (Excess) $ - $ - $ - Covered-Employee Payroll $ 5,664,236 $ 6,850,602 $ 3,739,039 Contributions as a Percentage of Covered-Employee Payroll 21.80% 16.15% 16.33% *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Notes to the Required Supplementary Information The information presented was determined as part of the actuarial valuations as of December 31, 2013 and 2014. Additional information as of the latest actuarial valuation presented is as follows: the actuarial cost method was entry-age normal; the amortization method was level percent of pay, closed, and the amortization period was 27 years; the asset valuation method was five-year smoothed market; and the significant actuarial assumptions were an investment rate of return at 7.5% annually, projected salary increases assumption of 3.75% to 14.50% compounded annually, and postretirement benefit increases of 3.0% compounded annually. Ultimately, this schedule should present informaiton for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 87 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF EMPLOYER CONTRIBUTIONS POLICE PENSION FUND Last Four Fiscal Years JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, FISCAL YEAR ENDED 2014 2015 2016 2016* Actuarially Determined Contribution $ 1,379,234 $ 1,627,268 $ 1,730,712 $ 1,080,991 Contribution in Relation to the Actuarially Determined Contribution 1,352,291 1,448,949 1,622,105 2,085,233 CONTRIBUTION DEFICIENCY (Excess) $ 26,943 $ 178,319 $ 108,607 $ (1,004,242) Covered-Employee Payroll $ 5,215,818 $ 5,565,214 $ 5,638,291 $ 5,417,619 Contributions as a Percentage of Covered-Employee Payroll 25.93% 26.04% 28.77% 38.49% *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Notes to the Required Supplementary Information The information presented was determined as part of the actuarial valuation as of December 31 of two years prior. Additional information as of the latest actuarial valuation presented is as follows: the actuarial cost method was entry- age normal; the amortization method was level percent of pay, closed, and the amortization period was 26 years; the asset valuation method was at five-year average market value; and the significant actuarial assumptions were an investment rate of return of 7.5% annually and projected salary increase assumption of 4.5%. Ultimately, this schedule should present informaiton for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 88 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF EMPLOYER CONTRIBUTIONS FIREFIGHTERS' PENSION FUND Last Four Fiscal Years JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, FISCAL YEAR ENDED 2014 2015 2016 2016* Actuarially Determined Contribution $ 2,078,061 $ 2,250,772 $ 2,373,253 $ 1,312,560 Contribution in Relation to the Actuarially Determined Contribution 2,037,490 2,024,522 2,158,166 2,512,630 CONTRIBUTION DEFICIENCY (Excess) $ 40,571 $ 226,250 $ 215,087 $ (1,200,070) Covered-Employee Payroll $ 4,649,060 $ 4,846,412 $ 4,941,381 $ 4,895,248 Contributions as a Percentage of Covered-Employee Payroll 43.83% 41.77% 43.68% 51.33% *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Notes to the Required Supplementary Information The information presented was determined as part of the actuarial valuation as of December 31 of two years prior. Additional information as of the latest actuarial valuation presented is as follows: the actuarial cost method was entry- age normal; the amortization method was level percent of pay, closed, and the amortization period was 26 years; the asset valuation method was at five-year average market value; and the significant actuarial assumptions were an investment rate of return of 7.5% annually and projected salary increase assumption of 4.5%. Ultimately, this schedule should present informaiton for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 89 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS ILLINOIS MUNICIPAL RETIREMENT FUND Last Three Fiscal Years DECEMBER 31, DECEMBER 31, DECEMBER 31, MEASUREMENT DATE 2014 2015 2016 TOTAL PENSION LIABILITY Service Cost $ 708,539 $ 681,650 $ 744,857 Interest 3,499,944 3,822,530 4,008,711 Changes of Benefit Terms - - - Differences Between Expected and Actual Experience 940,811 459,522 (502,701) Changes of Assumptions 1,655,050 66,340 (267,155) Benefit Payments, Including Refunds of Member Contributions (2,279,953) (2,414,792) (2,579,844) Net Change in Total Pension Liability 4,524,391 2,615,250 1,403,868 Total Pension Liability - Beginning 47,513,928 52,038,319 54,653,569 TOTAL PENSION LIABILITY - ENDING $ 52,038,319 $ 54,653,569 $ 56,057,437 PLAN FIDUCIARY NET POSITION Contributions - Employer $ 1,417,780 $ 1,122,559 $ 1,190,069 Contributions - Member 292,711 351,553 332,849 Net Investment Income 2,586,081 223,883 3,018,640 Benefit Payments, Including Refunds of Member Contributions (2,279,953) (2,414,792) (2,579,844) Administrative Expense 550,760 162,122 (9,392) Net Change in Plan Fiduciary Net Position 2,567,379 (554,675) 1,952,322 Plan Net Fiduciary Position - Beginning 42,679,497 45,246,876 44,692,201 PLAN NET FIDUCIARY POSITION - ENDING $ 45,246,876 $ 44,692,201 $ 46,644,523 EMPLOYER'S NET PENSION LIABILITY $ 6,791,443 $ 9,961,368 $ 9,412,914 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 86.90% 81.80% 83.20% Covered-Employee Payroll $ 6,138,945 $ 6,850,602 $ 7,288,918 Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 110.60% 145.40% 129.10% Changes in assumptions related to retirement age and mortality were made since the prior measurement date. Ultimately, this schedule should present informaiton for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 90 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS POLICE PENSION FUND Last Four Fiscal Years JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, MEASUREMENT DATE 2014 2015 2016 2016** TOTAL PENSION LIABILITY Service Cost $ 983,478 $ 994,063 $ 1,138,556 $ 581,851 Interest 3,601,542 3,816,916 4,396,163 2,278,348 Changes of Benefit Terms - - - - Differences Between Expected and Actual Experience 654,735 546,806 (981,619) (30,834) Changes of Assumptions* - 3,756,869 - 2,685,767 Contributions - Buy Back - - 157,490 11,240 Benefit Payments, Including Refunds of Member Contributions (2,255,726) (2,480,487) (2,579,348) (1,447,549) Net Change in Total Pension Liability 2,984,029 6,634,167 2,131,242 4,078,823 Total Pension Liability - Beginning 49,148,427 52,132,456 58,766,623 60,897,865 TOTAL PENSION LIABILITY - ENDING $ 52,132,456 $ 58,766,623 $ 60,897,865 $ 64,976,688 PLAN FIDUCIARY NET POSITION Contributions - Employer $ 1,352,291 $ 1,448,949 $ 1,622,105 $ 2,085,233 Contributions - Member 632,775 711,771 570,363 282,997 Contributions - Buy Back - - 157,490 11,240 Net Investment Income 3,240,785 312,398 17,314 1,516,374 Benefit Payments, Including Refunds of Member Contributions (2,255,726) (2,480,487) (2,579,348) (1,447,549) Administrative Expense (39,544) (44,531) (44,990) (21,998) Net Change in Plan Fiduciary Net Position 2,930,581 (51,900) (257,066) 2,426,297 Plan Net Fiduciary Position - Beginning 26,078,320 29,008,901 28,957,001 28,699,935 PLAN NET FIDUCIARY POSITION - ENDING $ 29,008,901 $ 28,957,001 $ 28,699,935 $ 31,126,232 EMPLOYER'S NET PENSION LIABILITY $ 23,123,555 $ 29,809,622 $ 32,197,930 $ 33,850,456 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 55.60% 49.30% 47.10% 47.90% Covered-Employee Payroll $ 5,215,818 $ 5,565,214 $ 5,638,291 $ 5,417,619 Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 443.30% 535.60% 571.10% 624.80% *The December 31, 2016 valuation had changes in the mortality rates. **The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Ultimately, this schedule should present informaiton for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 91 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS FIREFIGHTERS' PENSION FUND Last Four Fiscal Years JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, MEASUREMENT DATE 2014 2015 2016 2016** TOTAL PENSION LIABILITY Service Cost $ 1,033,286 $ 1,077,550 $ 1,103,489 $ 560,373 Interest 3,857,132 4,102,276 4,495,233 2,345,602 Changes of Benefit Terms - - - - Differences Between Expected and Actual Experience 1,330,700 (477,382) (102,841) 26,697 Changes of Assumptions* - 2,460,941 - 2,745,788 Contributions - Buy Back - - - 80,812 Benefit Payments, Including Refunds of Member Contributions (2,922,598) (2,982,470) (3,072,413) (1,607,243) Net Change in Total Pension Liability 3,298,520 4,180,915 2,423,468 4,152,029 Total pension liability - beginning 52,889,722 56,188,242 60,369,157 62,792,625 TOTAL PENSION LIABILITY - ENDING $ 56,188,242 $ 60,369,157 $ 62,792,625 $ 66,944,654 PLAN FIDUCIARY NET POSITION Contributions - Employer $ 2,037,490 $ 2,024,522 $ 2,158,156 $ 2,512,630 Contributions - Member 420,534 466,475 477,022 257,245 Contributions - Buy Back - - - 80,812 Net Investment Income 3,075,655 126,661 (403,920) 1,447,151 Benefit Payments, Including Refunds of Member Contributions (2,922,598) (2,982,470) (3,072,413) (1,607,243) Administrative Expense (34,562) (43,547) (41,613) (17,540) Net Change in Plan Fiduciary Net Position 2,576,519 (408,359) (882,768) 2,673,055 Plan Net Fiduciary Position - Beginning 22,186,069 24,762,588 24,354,229 23,471,461 PLAN NET FIDUCIARY POSITION - ENDING $ 24,762,588 $ 24,354,229 $ 23,471,461 $ 26,144,516 EMPLOYER'S NET PENSION LIABILITY $ 31,425,654 $ 36,014,928 $ 39,321,164 $ 40,800,138 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 44.10% 40.30% 37.40% 39.10% Covered-Employee Payroll $ 4,649,060 $ 4,846,412 $ 4,941,381 $ 4,895,248 Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 676.00% 743.10% 795.80% 833.50% *The December 31, 2016 valuation had changes in the mortality rates. **The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Ultimately, this schedule should present informaiton for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 92 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF INVESTMENT RETURNS POLICE PENSION FUND Last Four Fiscal Years JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, FISCAL YEAR ENDED 2014 2015 2016 2016* Annual Money-Weighted Rate of Return, Net of Investment Expense 12.36% 1.05% (0.90%) 5.12% *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Ultimately, this schedule should present information for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 93 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF INVESTMENT RETURNS FIREFIGHTERS' PENSION FUND Last Four Fiscal Years JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, FISCAL YEAR ENDED 2014 2015 2016 2016* Annual Money-Weighted Rate of Return, Net of Investment Expense 13.67% 0.73% (1.53%) 5.93% *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Ultimately, this schedule should present information for the last ten years. However, until ten years of information can be compiled, information will be presented for as many years as is available. (See independent auditor's report.) - 94 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes $ 11,760,730 $ 11,760,730 $ 11,683,183 Licenses and Permits 328,650 328,650 308,697 Intergovernmental 6,220,995 6,220,995 5,796,506 Charges for Services 1,123,750 1,123,750 1,349,663 Fines and Forfeitures 474,487 474,487 333,018 Investment Income 17,500 17,500 47,426 Miscellaneous 231,900 231,900 222,996 Total Revenues 20,158,012 20,158,012 19,741,489 EXPENDITURES General Government 2,909,258 2,909,258 3,099,567 Public Safety 14,552,052 14,552,052 13,863,123 Highways and Streets 1,980,322 1,980,322 1,976,052 Community Development 829,645 829,645 777,116 Total Expenditures 20,271,277 20,271,277 19,715,858 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (113,265) (113,265) 25,631 OTHER FINANCING SOURCES (USES) Transfers In 271,100 271,100 271,100 Transfers (Out) (612,569) (612,569) (552,271) Total Other Financing Sources (Uses) (341,469) (341,469) (281,171) NET CHANGE IN FUND BALANCE $ (454,734) $ (454,734) (255,540) FUND BALANCE, JULY 1 9,484,660 FUND BALANCE, DECEMBER 31 $ 9,229,120 (See independent auditor's report.) - 95 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MOTOR FUEL TAX FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Intergovernmental State Motor Fuel Tax $ 570,189 $ 570,189 $ 623,644 Federal Grants 83,311 83,311 - Investment Income 1,400 1,400 4,155 Total Revenues 654,900 654,900 627,799 EXPENDITURES Highways and Streets Contractual Services 260,000 455,000 341,749 Capital Outlay 725,000 1,115,000 146,653 Total Expenditures 985,000 1,570,000 488,402 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (330,100) (915,100) 139,397 OTHER FINANCING (USES) Transfer In 51,670 51,670 - Total Other Financing (Uses) 51,670 51,670 - NET CHANGE IN FUND BALANCE $ (278,430) $ (863,430) 139,397 FUND BALANCE, JULY 1 3,097,499 FUND BALANCE, DECEMBER 31 $ 3,236,896 (See independent auditor's report.) - 96 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MASS TRANSIT FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Intergovernmental Federal Grants $ 1,827,442 $ 1,827,442 $ 684,937 State Grants 2,327,114 2,327,114 1,127,678 Miscellaneous 14,380 14,380 - Total Revenues 4,168,936 4,168,936 1,812,615 EXPENDITURES General Government Personal Services 110,765 110,765 109,175 Commodities 11,253 11,253 9,803 Contractual Services 2,616,036 2,616,036 1,682,401 Capital Outlay 1,439,075 1,439,075 11,236 Total Expenditures 4,177,129 4,177,129 1,812,615 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (8,193) (8,193) - OTHER FINANCING SOURCES (USES) Transfers In 8,628 8,628 - Total Other Financing Sources (Uses) 8,628 8,628 - NET CHANGE IN FUND BALANCE $ 435 $ 435 - FUND BALANCE, JULY 1 - FUND BALANCE, DECEMBER 31 $ - (See independent auditor's report.) - 97 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TAX INCREMENT FINANCING #1 FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Property $ 6,347,587 $ 6,347,587 $ 6,430,015 Investment Income 6,560 6,560 20,272 Total Revenues 6,354,147 6,354,147 6,450,287 EXPENDITURES Community Development Contractual Services 467,590 467,590 412,119 Capital Outlay 4,872,519 5,956,189 4,343,392 Total Expenditures 5,340,109 6,423,779 4,755,511 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,014,038 (69,632) 1,694,776 OTHER FINANCING SOURCES (USES) Transfer (Out) (961,675) (961,675) (961,675) Total Other Financing Sources (Uses) (961,675) (961,675) (961,675) NET CHANGE IN FUND BALANCE $ 52,363 $ (1,031,307) 733,101 FUND BALANCE, JULY 1 1,718,962 FUND BALANCE, DECEMBER 31 $ 2,452,063 (See independent auditor's report.) - 98 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TAX INCREMENT FINANCING #2 FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Property $ 1,216,456 $ 1,216,456 $ 1,181,326 Investment Income 20,900 20,900 31,152 Total Revenues 1,237,356 1,237,356 1,212,478 EXPENDITURES Community Development Contractual Services 202,877 202,877 243,243 Capital Outlay 247,500 2,179,182 1,575,686 Total Expenditures 450,377 2,382,059 1,818,929 NET CHANGE IN FUND BALANCE $ 786,979 $ (1,144,703) (606,451) FUND BALANCE, JULY 1 8,451,516 FUND BALANCE, DECEMBER 31 $ 7,845,065 (See independent auditor's report.) - 99 -  CITY OF DEKALB, ILLINOIS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2016 1. BUDGETS Annual budgets are adopted for all governmental and proprietary funds. Budgets are adopted on a basis consistent with GAAP. All annual appropriations lapse at fiscal year end. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation, is utilized in the governmental and proprietary funds. All outstanding encumbrances lapse at year end and do not carry forward into the subsequent fiscal year unless they are reappropriated. All departments of the City submit requests for appropriations to the City Manager so that a budget may be prepared. The budget is prepared by fund, department and division, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year. The proposed budget is presented to the governing body for review. The governing body holds public hearings and may add to, subtract from or change appropriations, but may not change the form of the budget. The budget may be amended by the governing body. The budget officer can transfer amounts between departments within a fund; however, transfers between funds must be approved by the City Council. Expenditures may not legally exceed budgeted appropriations at the fund level. During the year, there were several budget transfers. 2. EXCESS OF ACTUAL EXPENDITURES/EXPENSES OVER BUDGET IN INDIVIDUAL FUNDS The City reported no funds in excess of actual expenditures/expenses (exclusive of depreciation and amortization) over budget for the fiscal year. --100 97 -- COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES  MAJOR GOVERNMENTAL FUNDS GENERAL FUND The General Fund accounts for all financial resources except those required to be accounted for in another fund. SPECIAL REVENUE FUNDS The Motor Fuel Tax Fund is used to account for the operations of street maintenance programs and capital projects as authorized by the Illinois Department of Transportation. Financing is provided by the City’s share of gasoline taxes. The Mass Transit Fund is used to account for the tow community mass transit services: Northern Illinois University Huskies Line and Voluntary Action Center’s Trans Vac Service. The Tax Increment Financing #1 Fund is used to account for redevelopment activities within another defined area of the community in order to eliminate blighted conditions in that area. The Tax Increment Financing #2 Fund is used to account for redevelopment activities within another defined area of the community in order to eliminate blighted conditions in that area.  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES - BUDGET AND ACTUAL GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Property $ 5,094,730 $ 5,094,730 $ 5,049,737 Home Rule Sales 3,510,000 3,510,000 3,449,031 Utilities 1,550,000 1,550,000 1,513,310 Franchise 245,000 245,000 242,959 Restaurant/Bar 925,000 925,000 963,756 Miscellaneous 436,000 436,000 464,390 Total Taxes 11,760,730 11,760,730 11,683,183 Licenses and Permits Licenses Amusement - - 400 Liquor 122,000 122,000 174,179 Rooming House 7,900 7,900 6,200 Other 10,000 10,000 15,500 Permits Building and Electrical 165,000 165,000 93,461 Plumbing 10,000 10,000 2,661 HVAC 7,500 7,500 2,581 Sewer 1,250 1,250 900 Parking 1,000 1,000 1,570 Other 4,000 4,000 11,245 Total Licenses and Permits 328,650 328,650 308,697 Intergovernmental State Sales 2,765,000 2,765,000 2,748,303 Income 2,245,530 2,245,530 1,786,638 Local Use 538,050 538,050 564,630 Replacement 64,000 64,000 71,305 Federal Grants 83,500 83,500 47,852 TIF Property Tax Surplus 185,000 185,000 220,731 TIF Sales Tax Surplus 339,915 339,915 354,077 State Grants - - 2,970 Total Intergovernmental 6,220,995 6,220,995 5,796,506 Charges for Services Fire Services 425,000 425,000 454,710 Ambulance Fees 472,500 472,500 613,092 Police Services 3,750 3,750 8,677 Zoning Fees 5,000 5,000 6,300 Administration Fees 67,500 67,500 67,500 Fuel Sales 50,000 50,000 36,982 Rental Crime Free Registration 100,000 100,000 161,077 Finger Print Fee - - 1,325 Total Charges for Services 1,123,750 1,123,750 1,349,663 (This schedule is continued on the following page.) - 101 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES - BUDGET AND ACTUAL (Continued) GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES (Continued) Fines and Forfeitures Circuit Court $ 150,000 $ 150,000 $ 125,484 Tow 111,000 111,000 78,205 Police 133,987 133,987 58,807 Abatement 2,500 2,500 8,280 False Fire Alarm 2,500 2,500 2,000 DUI 25,000 25,000 16,887 Other 49,500 49,500 43,355 Total Fines and Forfeitures 474,487 474,487 333,018 Investment Income 17,500 17,500 47,426 Miscellaneous Refunds/Reimbursements 190,900 190,900 200,683 Miscellaneous 41,000 41,000 22,313 Total Miscellaneous 231,900 231,900 222,996 TOTAL REVENUES $ 20,158,012 $ 20,158,012 $ 19,741,489 (See independent auditor's report.) - 102 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual GENERAL GOVERNMENT Elected Officials $ 47,237 $ 47,237 $ 46,925 Municipal Band 55,450 55,450 51,402 City Manager's Office Administration 606,600 606,600 537,707 Human Resources Division 274,034 274,034 248,096 General Fund Support Service 1,580,572 1,580,572 1,876,497 Finance Administration 353,410 353,410 346,634 Information and Technology 409,521 409,521 384,891 Less Administrative Costs Charged to Other Departments and Funds (417,566) (417,566) (392,585) Total General Government 2,909,258 2,909,258 3,099,567 PUBLIC SAFETY Police Protection 7,708,309 7,708,309 7,310,733 Fire Protection 6,843,743 6,843,743 6,552,390 Total Public Safety 14,552,052 14,552,052 13,863,123 HIGHWAYS AND STREETS Public Works Administration 97,822 97,822 88,475 Public Facilities and Fleet Maintenance 321,000 321,000 318,488 Streets 1,366,278 1,366,278 1,405,132 Engineering 195,222 195,222 163,957 Total Highways and Streets 1,980,322 1,980,322 1,976,052 COMMUNITY DEVELOPMENT Community Development Administration 829,645 829,645 777,116 Total Community Improvement 829,645 829,645 777,116 TOTAL EXPENDITURES $ 20,271,277 $ 20,271,277 $ 19,715,858 (See independent auditor's report.) - 103 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual GENERAL GOVERNMENT Elected Officials Personnel Services $ 35,147 $ 35,147 $ 35,148 Commodities 790 790 721 Contractual Services 11,300 11,300 11,056 Total Elected Officials 47,237 47,237 46,925 Municipal Band Commodities 1,500 1,500 447 Contractual Services 53,950 53,950 50,955 Total Municipal Band 55,450 55,450 51,402 City Manager's Office Administration Personnel Services 385,662 385,662 347,357 Commodities 9,205 9,205 13,167 Contractual Services 210,483 210,483 176,112 Capital Outlay 1,250 1,250 1,071 Total City Manager's Office Administration 606,600 606,600 537,707 Human Resources Division Personnel Services 163,824 163,824 177,064 Commodities 1,355 1,355 1,321 Contractual Services 108,355 108,355 57,514 Capital Outlay 500 500 12,197 Total Human Resource Division 274,034 274,034 248,096 General Fund Support Service Personnel Services 755,572 755,572 967,962 Contractual Services 825,000 825,000 908,535 Total General Fund Support Service 1,580,572 1,580,572 1,876,497 (This schedule is continued on the following pages.) - 104 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual GENERAL GOVERNMENT (Continued) Finance Administration Personnel Services $ 290,342 $ 290,342 $ 290,166 Commodities 4,820 4,820 6,352 Contractual Services 58,248 58,248 50,116 Total Finance Administration 353,410 353,410 346,634 Information and Technology Personnel Services 200,032 200,032 175,234 Commodities 28,950 28,950 44,716 Contractual Services 164,239 164,239 141,571 Capital Outlay 16,300 16,300 23,370 Total Information and Technology 409,521 409,521 384,891 Less Administrative Costs Charged to Other Departments and Funds (417,566) (417,566) (392,585) Total General Government 2,909,258 2,909,258 3,099,567 PUBLIC SAFETY Police Protection Police Department Administration Personnel Services 502,728 502,728 490,431 Commodities 92,456 92,456 60,277 Contractual Services 45,961 45,961 39,301 Capital Outlay 870 870 - Total Police Department Administration 642,015 642,015 590,009 Patrol Services Personnel Services 4,355,170 4,355,170 4,382,495 Commodities 166,540 166,540 77,829 Contractual Services 40,990 40,990 32,051 Capital Outlay 63,201 63,201 65,936 Total Patrol Services 4,625,901 4,625,901 4,558,311 (This schedule is continued on the following pages.) - 105 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual PUBLIC SAFETY (Continued) Police Protection (Continued) Communications Personnel Services $ 665,232 $ 665,232 $ 615,140 Commodities 1,446 1,446 1,059 Contractual Services 10,395 10,395 8,121 Capital Outlay 12,521 12,521 6,799 Total Communications 689,594 689,594 631,119 Criminal Investigations Personnel Services 1,229,149 1,229,149 1,057,316 Commodities 12,120 12,120 12,504 Contractual Services 12,814 12,814 2,796 Total Criminal Investigations 1,254,083 1,254,083 1,072,616 Police Department Special Services Personnel Services 296,096 296,096 278,616 Commodities 7,322 7,322 2,186 Contractual Services 12,493 12,493 29,825 Capital Outlay 805 805 10 Total Police Department Special Services 316,716 316,716 310,637 Crime Free Housing and Inspection Personnel Services 162,993 162,993 145,476 Commodities 8,407 8,407 1,325 Contractual Services 8,380 8,380 1,240 Capital Outlay 220 220 - Total Crime Free Housing and Inspection 180,000 180,000 148,041 Total Police Protection 7,708,309 7,708,309 7,310,733 (This schedule is continued on the following pages.) - 106 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual PUBLIC SAFETY (Continued) Fire Protection Fire Department Administration Personnel Services $ 455,632 $ 455,632 $ 454,302 Commodities 19,628 19,628 18,395 Contractual Services 25,979 25,979 18,093 Total Fire Department Administration 501,239 501,239 490,790 Fire Department Operations Personnel Services 5,973,090 5,973,090 5,846,853 Commodities 72,591 72,591 77,106 Contractual Services 151,295 151,295 132,853 Capital Outlay 145,528 145,528 4,788 Total Fire Department Operations 6,342,504 6,342,504 6,061,600 Total Fire Protection 6,843,743 6,843,743 6,552,390 Total Public Safety 14,552,052 14,552,052 13,863,123 HIGHWAYS AND STREETS Public Works Administration Personnel Services 85,472 85,472 78,334 Commodities 500 500 66 Contractual Services 11,850 11,850 10,075 Total Public Works Administration 97,822 97,822 88,475 Public Facilities and Fleet Maintenance Personnel Services 161,089 161,089 150,502 Commodities 16,300 16,300 16,224 Contractual Services 143,311 143,311 151,762 Capital Outlay 300 300 - Total Public Facilities and Fleet Maintenance 321,000 321,000 318,488 (This schedule is continued on the following page.) - 107 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual HIGHWAYS AND STREETS (Continued) Streets Personnel Services $ 940,589 $ 940,589 $ 953,180 Commodities 218,950 218,950 257,777 Contractual Services 168,739 168,739 167,704 Capital Outlay 38,000 38,000 26,471 Total Streets 1,366,278 1,366,278 1,405,132 Engineering Personnel Services 119,186 119,186 114,253 Commodities 8,636 8,636 3,281 Contractual Services 66,400 66,400 45,712 Capital Outlay 1,000 1,000 711 Total Engineering 195,222 195,222 163,957 Total Highways and Streets 1,980,322 1,980,322 1,976,052 COMMUNITY DEVELOPMENT Community Development Administration Personnel Services 421,024 421,024 360,143 Commodities 7,465 7,465 9,001 Contractual Services 401,156 401,156 407,972 Total Community Development Administration 829,645 829,645 777,116 Total Community Development 829,645 829,645 777,116 TOTAL EXPENDITURES $ 20,271,277 $ 20,271,277 $ 19,715,858 (See independent auditor's report.) - 108 -  NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS The Foreign Fire Insurance Fund is used to account for certain fire department related expenditures. Financing is provided by taxes on out-of-state insurance companies. The Housing Rehabilitation Fund is used to account for federal and state grants received through 1983 that were targeted for low interest housing rehabilitation loans to income qualified properties. The Community Development Block Grant Fund is used to account for the receipts and disbursement of community development grant funds. The Heritage Ridge Special Service Area #3 Fund is used to account for the accumulation of resources for improvements for Special Service Area #3. The Knolls Special Service Area #4 Fund is used to account for the accumulation of resources for improvements for Special Service Area #4. The Greek Row Special Service Area #6 Fund is used to account for the accumulation of resources for improvements for Special Service Area #6. The Heartland Fields Special Service Area #14 Fund is used to account for the accumulation of resources for improvements for Special Service Area #14. DEBT SERVICE FUNDS The General Debt Service Fund is used to account for the accumulation of resources and payment of bond principal and interest on debt other than tax increment financing debt. The TIF Debt Service Fund is used to account for the accumulation of resources and payment of bond principal and interest on the tax increment financing areas.  NONMAJOR GOVERNMENTAL FUNDS (Continued) CAPITAL PROJECTS FUNDS The Capital Projects Fund is used to account for the City’s general infrastructure improvements including street (re)construction, storm water management, public buildings, street lighting, sidewalk repairs, as well as the purchase of vehicles and equipment. The Equipment Fund is used to account for major equipment purchases which cost in excess of $5,000 and have a useful life expectancy of three years or more. The Fleet Replacement Fund is used to account for revenues and expenditures associated with the acquisition of City vehicles and major equipment (i.e. trailers and plows).  CITY OF DEKALB, ILLINOIS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2016 Total Nonmajor Special Debt Capital Governmental Revenue Service Projects Funds ASSETS Cash and Investments $ 124,515 $ 39,681 $ 1,130,944 $ 1,295,140 Receivables Property Taxes 22,000 - - 22,000 Other - 25,077 - 25,077 Prepaid Items 51 - - 51 Due from Other Funds - - 14,288 14,288 Due from Other Governments 27,185 - 30,252 57,437 TOTAL ASSETS $ 173,751 $ 64,758 $ 1,175,484 $ 1,413,993 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUNDS BALANCES LIABILITIES Accounts Payable $ 28,507 $ - $ 45,354 $ 73,861 Due to Other Funds 1,650 42,000 - 43,650 Total Liabilities 30,157 42,000 45,354 117,511 DEFERRED INFLOWS OF RESOURCES Unavailable Property Taxes 22,000 - - 22,000 Total Liabilities and Deferred Inflows of Resources 52,157 42,000 45,354 139,511 FUND BALANCES Nonspendable Prepaid Items 51 - - 51 Restricted Public Safety 49,141 - - 49,141 Debt Service - 22,758 - 22,758 Specific Purpose 73,985 - - 73,985 Assigned for Capital Projects - - 1,130,130 1,130,130 Unassigned (Deficit) (1,583) - - (1,583) Total Fund Balances (Deficit) 121,594 22,758 1,130,130 1,274,482 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 173,751 $ 64,758 $ 1,175,484 $ 1,413,993 (See independent auditor's report.) - 109 -  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Six Months Ended December 31, 2016 Total Nonmajor Special Debt Capital Governmental Revenue Service Projects Funds REVENUES Taxes $ 63,377 $ 163,296 $ 188,097 $ 414,770 Intergovernmental 52,031 - - 52,031 Charges for Services - - 97,833 97,833 Fines and Forfeitures - 14,052 - 14,052 Investment Income 33 - - 33 Miscellaneous 4,028 - 117,036 121,064 Total Revenues 119,469 177,348 402,966 699,783 EXPENDITURES General Government 45,453 - 121,075 166,528 Public Safety 18,246 - - 18,246 Capital Outlay 20,973 - 115,278 136,251 Debt Service Principal Retirement - 845,000 16,667 861,667 Interest and Fiscal Charges - 437,752 - 437,752 Total Expenditures 84,672 1,282,752 253,020 1,620,444 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 34,797 (1,105,404) 149,946 (920,661) OTHER FINANCING SOURCES (USES) Transfers In - 1,141,675 780,340 1,922,015 Transfers (Out) - - (181,922) (181,922) Proceeds from Sale of Capital Assets - - 23,515 23,515 Total Other Financing Sources (Uses) - 1,141,675 621,933 1,763,608 NET CHANGE IN FUND BALANCES 34,797 36,271 771,879 842,947 FUND BALANCES (DEFICIT), JULY 1 86,797 (13,513) 358,251 431,535 FUND BALANCES, DECEMBER 31 $ 121,594 $ 22,758 $ 1,130,130 $ 1,274,482 (See independent auditor's report.) - 110 -  CITY OF DEKALB, ILLINOIS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2016 Community Foreign Fire Housing Development Insurance Tax Rehabilitation Block Grant ASSETS Cash and Investments $ 49,532 $ 67,566 $ 37 Receivables (Net, Where Applicable, of Allowances for Uncollectibles) Property Taxes - - - Prepaid Items 51 - - Due from Other Governments - - 27,185 TOTAL ASSETS $ 49,583 $ 67,566 $ 27,222 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUNDS BALANCES LIABILITIES Accounts Payable $ 391 $ 38 $ 27,222 Due to Other Funds - - - Total Liabilities 391 38 27,222 DEFERRED INFLOWS OF RESOURCES Unavailable Property Taxes - - - Total Liabilities and Deferred Inflows of Resources 391 38 27,222 FUND BALANCES Nonspendable Prepaid Items 51 - - Restricted Public Safety 49,141 - - Specific Purpose - 67,528 - Unassigned (Deficit) - - - Total Fund Balances (Deficit) 49,192 67,528 - TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 49,583 $ 67,566 $ 27,222 - 111 - Heritage Ridge Knolls Greek Row Heartland Fields Special Service Special Service Special Service Special Service Area #3 Area #4 Area #6 Area #14 Total $ 3,812 $ 31 $ 646 $ 2,891 $ 124,515 - 5,500 14,000 2,500 22,000 - - - - 51 - - - - 27,185 $ 3,812 $ 5,531 $ 14,646 $ 5,391 $ 173,751 $ 145 $ 610 $ - $ 101 $ 28,507 - 550 1,100 - 1,650 145 1,160 1,100 101 30,157 - 5,500 14,000 2,500 22,000 145 6,660 15,100 2,601 52,157 - - - - 51 - - - - 49,141 3,667 - - 2,790 73,985 - (1,129) (454) - (1,583) 3,667 (1,129) (454) 2,790 121,594 $ 3,812 $ 5,531 $ 14,646 $ 5,391 $ 173,751 (See independent auditor's report.) - 112 -  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Six Months Ended December 31, 2016 Community Foreign Fire Housing Development Insurance Tax Rehabilitation Block Grant REVENUES Taxes $ 45,876 $ - $ - Intergovernmental - - 52,031 Investment Income - 33 - Miscellaneous - 4,028 - Total Revenues 45,876 4,061 52,031 EXPENDITURES General Government - 248 37,882 Public Safety 18,246 - - Capital Outlay 5,700 - 14,149 Total Expenditures 23,946 248 52,031 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 21,930 3,813 - NET CHANGE IN FUND BALANCES 21,930 3,813 - FUND BALANCES (DEFICIT), JULY 1 27,262 63,715 - FUND BALANCES (DEFICIT), DECEMBER 31 $ 49,192 $ 67,528 $ - - 113 - Heritage Ridge Knolls Greek Row Heartland Fields Special Service Special Service Special Service Special Service Area #3 Area #4 Area #6 Area #14 Total $ - $ 5,000 $ 10,001 $ 2,500 $ 63,377 - - - - 52,031 - - - - 33 - - - - 4,028 - 5,000 10,001 2,500 119,469 1,257 4,686 500 880 45,453 - - - - 18,246 - - 1,124 - 20,973 1,257 4,686 1,624 880 84,672 (1,257) 314 8,377 1,620 34,797 (1,257) 314 8,377 1,620 34,797 4,924 (1,443) (8,831) 1,170 86,797 $ 3,667 $ (1,129) $ (454) $ 2,790 $ 121,594 (See independent auditor's report.) - 114 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOREIGN FIRE INSURANCE TAX FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Foreign Fire Insurance Tax $ 45,000 $ 45,000 $ 45,876 Total Revenues 45,000 45,000 45,876 EXPENDITURES Public Safety Commodities 16,000 16,000 15,572 Contractual Services 1,521 1,521 2,674 Capital Outlay 16,700 16,700 5,700 Total Expenditures 34,221 34,221 23,946 NET CHANGE IN FUND BALANCE $ 10,779 $ 10,779 21,930 FUND BALANCE, JULY 1 27,262 FUND BALANCE, DECEMBER 31 $ 49,192 (See independent auditor's report.) - 115 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HOUSING REHABILITATION FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Investment Income $ 10 $ 10 $ 33 Miscellaneous - - 4,028 Total Revenues 10 10 4,061 EXPENDITURES Current General Government Contractual Services 872 872 248 Capital Outlay 12,000 12,000 - Total Expenditures 12,872 12,872 248 NET CHANGE IN FUND BALANCE $ (12,862) $ (12,862) 3,813 FUND BALANCE, JULY 1 63,715 FUND BALANCE, DECEMBER 31 $ 67,528 (See independent auditor's report.) - 116 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Intergovernmental Grants $ 320,306 $ 320,306 $ 52,031 Total Revenues 320,306 320,306 52,031 EXPENDITURES General Government Commodities 500 500 - Contractual Services 94,306 94,306 37,882 Capital Outlay 65,500 65,500 14,149 Total Expenditures 160,306 160,306 52,031 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 160,000 160,000 - OTHER FINANCING SOURCES (USES) Transfers (Out) (160,000) (160,000) - Total Other Financing Sources (Uses) (160,000) (160,000) - NET CHANGE IN FUND BALANCE $ - $ - - FUND BALANCE, JULY 1 - FUND BALANCE, DECEMBER 31 $ - (See independent auditor's report.) - 117 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HERITAGE RIDGE SPECIAL SERVICE AREA #3 FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES None $ - $ - $ - Total Revenues - - - EXPENDITURES General Government Contractual Services 500 1,257 1,257 Total Expenditures 500 1,257 1,257 NET CHANGE IN FUND BALANCE $ (500) $ (1,257) (1,257) FUND BALANCE, JULY 1 4,924 FUND BALANCE, JUNE 30 $ 3,667 (See independent auditor's report.) - 118 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL KNOLLS SPECIAL SERVICE AREA #4 FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Property Taxes $ 5,000 $ 5,000 $ 5,000 Total Revenues 5,000 5,000 5,000 EXPENDITURES General Government Contractual Services 3,500 4,686 4,686 Total Expenditures 3,500 4,686 4,686 NET CHANGE IN FUND BALANCE $ 1,500 $ 314 314 FUND BALANCE (DEFICIT), JULY 1 (1,443) FUND BALANCE (DEFICIT), JUNE 30 $ (1,129) (See independent auditor's report.) - 119 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GREEK ROW SPECIAL SERVICE AREA #6 FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Property Taxes $ 10,000 $ 10,000 $ 10,001 Total Revenues 10,000 10,000 10,001 EXPENDITURES General Government Contractual Services 500 500 500 Capital Outlay 10,000 10,000 1,124 Total Expenditures 10,500 10,500 1,624 NET CHANGE IN FUND BALANCE $ (500) $ (500) 8,377 FUND BALANCE (DEFICIT), JULY 1 (8,831) FUND BALANCE (DEFICIT), JUNE 30 $ (454) (See independent auditor's report.) - 120 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HEARTLAND HILLS SPECIAL SERVICE AREA #14 FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Property Taxes $ 2,500 $ 2,500 $ 2,500 Total Revenues 2,500 2,500 2,500 EXPENDITURES General Government Contractual Services 1,750 1,750 880 Total Expenditures 1,750 1,750 880 NET CHANGE IN FUND BALANCE $ 750 $ 750 1,620 FUND BALANCE, JULY 1 1,170 FUND BALANCE, DECEMBER 31 $ 2,790 (See independent auditor's report.) - 121 -  CITY OF DEKALB, ILLINOIS COMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS December 31, 2016 General TIF Debt Service Debt Service Total ASSETS Cash and Investments $ 39,681 $ - $ 39,681 Other Receivable 25,077 - 25,077 TOTAL ASSETS $ 64,758 $ - $ 64,758 LIABILITIES AND FUND BALANCES LIABILITIES Due to Other Funds $ 42,000 $ - $ 42,000 Total Liabilities 42,000 - 42,000 FUND BALANCES Restricted for Debt Service 22,758 - 22,758 Total Fund Balances 22,758 - 22,758 TOTAL LIABILITIES AND FUND BALANCES $ 64,758 $ - $ 64,758 (See independent auditor's report.) - 122 -  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For the Six Months Ended December 31, 2016 General TIF Debt Service Debt Service Total REVENUES Taxes $ 163,296 $ - $ 163,296 Fines and Forfeitures 14,052 - 14,052 Total Revenues 177,348 - 177,348 EXPENDITURES Debt Service Principal - 845,000 845,000 Interest and Fiscal Charges 321,077 116,675 437,752 Total Expenditures 321,077 961,675 1,282,752 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (143,729) (961,675) (1,105,404) OTHER FINANCING SOURCES (USES) Transfers In 180,000 961,675 1,141,675 Total Other Financing Sources (Uses) 180,000 961,675 1,141,675 NET CHANGE IN FUND BALANCES 36,271 - 36,271 FUND BALANCES (DEFICIT), JULY 1 (13,513) - (13,513) FUND BALANCES, DECEMBER 31 $ 22,758 $ - $ 22,758 (See independent auditor's report.) - 123 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL DEBT SERVICE FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Hotel/Motel $ 22,000 $ 22,000 $ 22,701 Local Fuel Tax 132,000 132,000 140,595 Fines and Forfeitures 30,000 30,000 14,052 Total Revenues 184,000 184,000 177,348 EXPENDITURES Debt Service Interest and Fiscal Charges 320,086 321,078 321,077 Total Expenditures 320,086 321,078 321,077 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (136,086) (137,078) (143,729) OTHER FINANCING SOURCES (USES) Transfer In 180,000 180,000 180,000 Total Other Financing Sources (Uses) 180,000 180,000 180,000 NET CHANGE IN FUND BALANCE $ 43,914 $ 42,922 36,271 FUND BALANCE (DEFICIT), JULY 1 (13,513) FUND BALANCE, DECEMBER 31 $ 22,758 (See independent auditor's report.) - 124 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TAX INCREMENT FINANCING DEBT SERVICE FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES None $ - $ - $ - Total Revenues - - - EXPENDITURES Debt Service Principal Retirement 845,000 845,000 845,000 Interest and Fiscal Charges 116,675 116,675 116,675 Total Expenditures 961,675 961,675 961,675 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (961,675) (961,675) (961,675) OTHER FINANCING SOURCES (USES) Transfer In 961,675 961,675 961,675 Total Other Financing Sources (Uses) 961,675 961,675 961,675 NET CHANGE IN FUND BALANCE $ - $ - - FUND BALANCE, JULY 1 - FUND BALANCE, DECEMBER 31 $ - (See independent auditor's report.) - 125 -  CITY OF DEKALB, ILLINOIS COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECTS FUNDS December 31, 2016 Capital Fleet Projects Equipment Replacement Total ASSETS Cash and Investments $ 197,498 $ 933,446 $ - $ 1,130,944 Due from Other Funds 14,288 - - 14,288 Due from Other Governments 30,252 - - 30,252 TOTAL ASSETS $ 242,038 $ 933,446 $ - $ 1,175,484 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable $ 12,488 $ 32,866 $ - $ 45,354 Total Liabilities 12,488 32,866 - 45,354 FUND BALANCES Assigned for Capital Projects 229,550 900,580 - 1,130,130 Total Fund Balances 229,550 900,580 - 1,130,130 TOTAL LIABILITIES AND FUND BALANCES $ 242,038 $ 933,446 $ - $ 1,175,484 (See independent auditor's report.) - 126 -  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECTS FUNDS For the Six Months Ended December 31, 2016 Capital Fleet Projects Equipment Replacement Total REVENUES Taxes $ 188,097 $ - $ - $ 188,097 Charges for Services - - 97,833 97,833 Miscellaneous Income - 76,000 41,036 117,036 Total Revenues 188,097 76,000 138,869 402,966 EXPENDITURES General Government Contractual Services 55,703 65,372 - 121,075 Capital Outlay 71,598 972 42,708 115,278 Debt Service Principal - - 16,667 16,667 Total Expenditures 127,301 66,344 59,375 253,020 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 60,796 9,656 79,494 149,946 OTHER FINANCING SOURCES (USES) Transfers In 32,479 723,273 24,588 780,340 Transfers (Out) - - (181,922) (181,922) Proceeds from Sale of Capital Assets - 21,200 2,315 23,515 Total Other Financing Sources (Uses) 32,479 744,473 (155,019) 621,933 NET CHANGE IN FUND BALANCES 93,275 754,129 (75,525) 771,879 FUND BALANCES, JULY 1 136,275 146,451 75,525 358,251 FUND BALANCES, DECEMBER 31 $ 229,550 $ 900,580 $ - $ 1,130,130 (See independent auditor's report.) - 127 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL PROJECTS FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Taxes Local Motor Fuel Taxes $ 177,500 $ 177,500 $ 188,097 Total Revenues 177,500 177,500 188,097 EXPENDITURES General Government Contractual Services 25,000 65,703 55,703 Capital Outlay 180,000 213,979 71,598 Total Expenditures 205,000 279,682 127,301 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (27,500) (102,182) 60,796 OTHER FINANCING SOURCES (USES) Transfers In 32,479 32,479 32,479 Total Other Financing Sources (Uses) 32,479 32,479 32,479 NET CHANGE IN FUND BALANCE $ 4,979 $ (69,703) 93,275 FUND BALANCE, JULY 1 136,275 FUND BALANCE, DECEMBER 31 $ 229,550 (See independent auditor's report.) - 128 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL EQUIPMENT FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Miscellaneous Income $ 84,000 $ 84,000 $ 76,000 Total Revenues 84,000 84,000 76,000 EXPENDITURES General Government Contractual Services 502,857 509,252 65,372 Capital Outlay 244,000 244,000 972 Total Expenditures 746,857 753,252 66,344 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (662,857) (669,252) 9,656 OTHER FINANCING SOURCES (USES) Transfers In 541,351 541,351 723,273 Proceeds from Sale of Capital Assets - - 21,200 Total Other Financing Sources (Uses) 541,351 541,351 744,473 NET CHANGE IN FUND BALANCE $ (121,506) $ (127,901) 754,129 FUND BALANCE, JULY 1 146,451 FUND BALANCE, DECEMBER 31 $ 900,580 (See independent auditor's report.) - 129 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FLEET REPLACEMENT FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual REVENUES Charges for Services Rental Income $ 70,805 $ 70,805 $ 97,833 Miscellaneous Income 39,500 39,500 41,036 Total Revenues 110,305 110,305 138,869 EXPENDITURES Capital Outlay 191,538 191,538 42,708 Debt Service Principal 16,667 16,667 16,667 Total Expenditures 208,205 208,205 59,375 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (97,900) (97,900) 79,494 OTHER FINANCING SOURCES (USES) Transfers In 24,588 24,588 24,588 Transfers (Out) - - (181,922) Proceeds from Sale of Capital Assets - - 2,315 Total Other Financing Sources (Uses) 24,588 24,588 (155,019) NET CHANGE IN FUND BALANCE $ (73,312) $ (73,312) (75,525) FUND BALANCE, JULY 1 75,525 FUND BALANCE, DECEMBER 31 $ - (See independent auditor's report.) - 130 -  MAJOR ENTERPRISE FUNDS The Water Fund is used to account for the provision of water service to the residents of the City. All activity necessary to provide such services is accounted for in this fund including, but not limited to, administration, operation, maintenance, financing and related debt service, and billing and collection. The Airport Fund is used to account for the operations of the Taylor Municipal Airport. Financing may be provided from a number of sources including user fees as well as property taxes. NONMAJOR ENTERPRISE FUNDS The Refuse Fund is used to account for the billing, collection, and payment of refuse collection.  CITY OF DEKALB, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL WATER FUND DEPARTMENT ACCOUNTS For the Six Months Ended December 31, 2016 Operations and Maintenance System Construction Original Final Original Final Budget Budget Actual Budget Budget Actual OPERATING REVENUES Charges for Services Water Sales $ 2,675,000 $ 2,675,000 $ 2,883,458 $ - $ - $ - Permits 7,500 7,500 1,832 15,000 15,000 4,515 Miscellaneous 11,075 11,075 15,075 - - - Total Operating Revenues 2,693,575 2,693,575 2,900,365 15,000 15,000 4,515 OPERATING EXPENSES EXCLUDING DEPRECIATION Personal Services 1,268,506 1,268,506 1,622,956 - - - Commodities 219,261 219,261 195,058 - - - Contractual Services 429,913 429,913 305,106 - - - Other Services/Expenses 20,000 20,000 15,100 - - - Equipment 12,050 158,050 136,511 - - - Total Operating Expenses 1,949,730 2,095,730 2,274,731 - - - OPERATING INCOME (LOSS) 743,845 597,845 625,634 15,000 15,000 4,515 NON-OPERATING REVENUES (EXPENSES) Investment Income 12,300 12,300 15,727 - - 3,221 Gain on Sale of Capital Assets 750 750 5,459 - - - Principal (220,286) (220,286) - - - - Interest Expense (42,319) (42,319) (40,891) - - - Total Non-Operating Revenues (Expenses) (249,555) (249,555) (19,705) - - 3,221 NET INCOME (LOSS) BEFORE TRANSFERS 494,290 348,290 605,929 15,000 15,000 7,736 TRANSFERS Transfers In - - - - - - Transfers (Out) (587,900) (587,900) (587,900) - - - Total Transfers (587,900) (587,900) (587,900) - - - CHANGE IN NET POSITION - BUDGETARY BASIS $ (93,610) $ (239,610) 18,029 $ 15,000 $ 15,000 7,736 ADJUSTMENTS TO GAAP BASIS Additions to capital assets 135,500 - Depreciation and Amortization (529,348) - Total adjustment to GAAP basis (393,848) - CHANGE IN NET POSITION - GAAP BASIS (375,819) 7,736 NET POSITION, JULY 1 25,003,599 1,096,590 NET POSITION, DECEMBER 31 $ 24,627,780 $ 1,104,326 - 131 -  Capital Total Original Final Original Final Budget Budget Actual Eliminations Budget Budget Actual $ - $ - $ 39,563 $ - $ 2,675,000 $ 2,675,000 $ 2,923,021 - - - - 22,500 22,500 6,347 - - - - 11,075 11,075 15,075 - - 39,563 - 2,708,575 2,708,575 2,944,443 - - - - 1,268,506 1,268,506 1,622,956 - - - - 219,261 219,261 195,058 - - - - 429,913 429,913 305,106 - - - - 20,000 20,000 15,100 476,800 476,800 57,302 - 488,850 634,850 193,813 476,800 476,800 57,302 - 2,426,530 2,572,530 2,332,033 (476,800) (476,800) (17,739) - 282,045 136,045 612,410 - - - - 12,300 12,300 18,948 - - - - 750 750 5,459 - - - - (220,286) (220,286) - - - - - (42,319) (42,319) (40,891) - - - - (249,555) (249,555) (16,484) (476,800) (476,800) (17,739) - 32,490 (113,510) 595,926 476,800 476,800 316,800 (316,800) 476,800 476,800 - - - - 316,800 (587,900) (587,900) (271,100) 476,800 476,800 316,800 - (111,100) (111,100) (271,100) $ - $ - 299,061 - $ (78,610) $ (224,610) 324,826 - 135,500 - (529,348) - (393,848) 299,061 (69,022) - 26,100,189 $ 299,061 $ 26,031,167 (See independent auditor's report.) - 132 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF OPERATING REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL AIRPORT FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual OPERATING REVENUES Charges for Services Rents/Taxes $ 185,500 $ 185,500 $ 155,837 Fuel Sales 275,000 275,000 172,216 Airport Operations 15,700 15,700 - Miscellaneous 2,500 2,500 7,342 Total Operating Revenues 478,700 478,700 335,395 OPERATING EXPENSES Personal Services 167,998 167,998 202,953 Commodities 155,540 155,540 137,646 Contractual Services 117,596 117,596 103,329 Other Services 22,636 22,636 22,087 Equipment 29,150 29,150 2,269 Permanent Improvements - 426,500 10,094 Total Operating Expenses 492,920 919,420 478,378 OPERATING INCOME (LOSS) (14,220) (440,720) (142,983) NON-OPERATING REVENUES (EXPENSES) Investment Income - - 3 Gain on Sale of Capital Assets - - 10,000 Interest Expense (2,633) (2,633) (2,669) Total Non-Operating Revenues (Expenses) (2,633) (2,633) 7,334 CONTRIBUTIONS Contributions - Capital Grant Revenue - 394,450 42,829 TRANSFERS Transfers In 16,853 16,853 16,853 CHANGE IN NET POSITION - BUDGETARY BASIS $ - $ (32,050) (75,967) ADJUSTMENTS TO GAAP BASIS Depreciation and Amortization (193,575) Total adjustments to GAAP basis (193,575) CHANGE IN NET POSITION (269,542) NET POSITION, JULY 1 29,829,773 NET POSITION, DECEMBER 31 $ 29,560,231 (See independent auditor's report.) - 133 -  CITY OF DEKALB, ILLINOIS SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL REFUSE FUND For the Six Months Ended December 31, 2016 Original Final Budget Budget Actual OPERATING REVENUES Charges for Services $ 1,060,000 $ 1,060,000 $ 1,063,382 Total Operating Revenues 1,060,000 1,060,000 1,063,382 OPERATING EXPENSES Contractual Services 1,020,350 1,024,302 1,024,302 Total Operating Expenses 1,020,350 1,024,302 1,024,302 CHANGE IN NET POSITION $ 39,650 $ 35,698 39,080 NET POSITION, JULY 1 (3,008) NET POSITION, DECEMBER 31 $ 36,072 (See independent auditor's report.) - 134 -  INTERNAL SERVICE FUNDS Workers’ Compensation Fund - to account for payment of workers’ compensation insurance premiums. Financing is provided by contributions from other funds. Health Insurance Fund - to account for payment of health insurance premiums. Financing is provided by contributions from employees, retirees, and other funds. Liability/Property Insurance Fund - to account for payment of liability insurance premiums. Financing is provided by contributions from other funds.  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2016 Liability/ Workers' Health Property Compensation Insurance Insurance Total CURRENT ASSETS Cash and Investments $ 2,071,683 $ 381,333 $ - $ 2,453,016 Receivables Accrued Interest 4,094 - - 4,094 Other 1,904 164,918 - 166,822 Prepaid Expenses 176,099 - - 176,099 Total Current Assets 2,253,780 546,251 - 2,800,031 CURRENT LIABILITIES Accounts Payable 6,186 42,782 - 48,968 Claims Payable 304,193 - - 304,193 Unearned Revenue - 11,078 - 11,078 Total Current Liabilities 310,379 53,860 - 364,239 NONCURRENT LIABILITIES Claims Payable 304,193 - - 304,193 Total Noncurrent Liabilities 304,193 - - 304,193 Total Liabilities 614,572 53,860 - 668,432 NET POSITION Unrestricted 1,639,208 492,391 - 2,131,599 TOTAL NET POSITION $ 1,639,208 $ 492,391 $ - $ 2,131,599 (See independent auditor's report.) - 135 -  CITY OF DEKALB, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL INTERNAL SERVICE FUNDS For the Six Months Ended December 31, 2016 Workers' Compensation Health Insurance Prop Original Final Original Final Budget Budget Actual Budget Budget Actual OPERATING REVENUES Charges for Services Contributions $ 601,600 $ 601,600 $ 601,604 $ 2,981,976 $ 2,981,976 $ 3,027,633 Miscellaneous - - - - - - Total Operating Revenues 601,600 601,600 601,604 2,981,976 2,981,976 3,027,633 OPERATING EXPENSES Administration 276,374 276,374 244,550 2,825,771 2,825,771 2,754,952 Claims 325,000 325,000 120,871 - - - Total Operating Expenses 601,374 601,374 365,421 2,825,771 2,825,771 2,754,952 OPERATING INCOME 226 226 236,183 156,205 156,205 272,681 NON-OPERATING REVENUES Investment Income 19,350 19,350 7,406 3,010 3,010 19 Total Non-Operating Revenues 19,350 19,350 7,406 3,010 3,010 19 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 19,576 19,576 243,589 159,215 159,215 272,700 OTHER FINANCING SOURCES (USES) Transfers In - - 151,274 - - - Transfers (Out) (243,000) (243,000) (243,000) - - - Total Other Financing Sources (Uses) (243,000) (243,000) (91,726) - - - CHANGE IN NET POSITION $ (223,424) $ (223,424) 151,863 $ 159,215 $ 159,215 272,700 NET POSITION, JULY 1 1,487,345 219,691 NET POSITION, DECEMBER 31 $ 1,639,208 $ 492,391 - 136 -  Liability/ Property Insurance Total Original Final Original Final Budget Budget Actual Budget Budget Actual $ 65,000 $ 65,000 $ 65,000 $ 3,648,576 $ 3,648,576 $ 3,694,237 7,500 7,500 (1,223) 7,500 7,500 (1,223) 72,500 72,500 63,777 3,656,076 3,656,076 3,693,014 13,254 13,254 10,754 3,115,399 3,115,399 3,010,256 50,000 50,000 39,676 375,000 375,000 160,547 63,254 63,254 50,430 3,490,399 3,490,399 3,170,803 9,246 9,246 13,347 165,677 165,677 522,211 - - - 22,360 22,360 7,425 - - - 22,360 22,360 7,425 9,246 9,246 13,347 188,037 188,037 529,636 - - - - - 151,274 - - (151,274) (243,000) (243,000) (394,274) - - (151,274) (243,000) (243,000) (243,000) $ 9,246 $ 9,246 (137,927) $ (54,963) $ (54,963) 286,636 137,927 1,844,963 $ - $ 2,131,599 (See independent auditor's report.) - 137 -  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Six Months Ended December 31, 2016 Liability/ Workers' Health Property Compensation Insurance Insurance Total CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Interfund Services Transactions $ 598,303 $ 2,264,067 $ 68,128 $ 2,930,498 Receipts from Employees and Others - 665,665 - 665,665 Receipts from Miscellaneous Revenue - - (1,223) (1,223) Payments to Suppliers (100,758) (2,718,250) (101,097) (2,920,105) Net Cash from Operating Activities 497,545 211,482 (34,192) 674,835 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers In 151,274 - - 151,274 Transfers (Out) (243,000) - (151,274) (394,274) Net Cash from Noncapital Financing Activities (91,726) - (151,274) (243,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES None - - - - Net Cash from Capital and Related Financing Activities - - - - CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 7,406 19 - 7,425 Net Cash from Investing Activities 7,406 19 - 7,425 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 413,225 211,501 (185,466) 439,260 CASH AND CASH EQUIVALENTS, JULY 1 1,658,458 169,832 185,466 2,013,756 CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 2,071,683 $ 381,333 $ - $ 2,453,016 RECONCILIATION OF OPERATING INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating Income $ 236,183 $ 272,681 $ 13,347 $ 522,211 Adjustments to Reconcile Operating Income to Net Cash from Operating Activities Changes in Assets and Liabilities Receivables (3,301) (108,078) 3,128 (108,251) Prepaid Expenses 189,150 - 30,000 219,150 Accounts Payable (10,834) 36,702 (4,014) 21,854 Claims Payable 86,347 - (76,653) 9,694 Unearned Revenue - 10,177 - 10,177 NET CASH FROM OPERATING ACTIVITIES $ 497,545 $ 211,482 $ (34,192) $ 674,835 (See independent auditor's report.) - 138 -  FIDUCIARY FUNDS PENSION TRUST FUNDS The Police Pension Fund is used to account for the accumulation of resources to be used for retirement annuity payments to employees on the police force at appropriate amounts and times in the future. Resources are contributed by employees at rates fixed by law and by the City at amounts determined by an annual actuarial study. The Firefighters’ Pension Fund is used to account for the accumulation of resources to be used for retirement annuity payments to employees on the fire department at appropriate amounts and times in the future. Resources are contributed by employees at rates fixed by law and by the City at amounts determined by an annual actuarial study.  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF NET POSITION PENSION TRUST FUNDS December 31, 2016 Pension Trust Police Firefighters' Pension Pension Total ASSETS Cash and Short-Term Investments $ 365,082 $ 1,051,332 $ 1,416,414 Investments U.S. Treasury Obligations 2,470,273 6,180,900 8,651,173 U.S. Agency Obligations 5,384,516 1,969,177 7,353,693 Corporate Bonds 2,801,220 - 2,801,220 Mutual Funds 19,458,733 16,547,291 36,006,024 Equity Securities 161,406 - 161,406 Receivables Accrued Interest 35,849 49,716 85,565 Due from City 462,811 354,040 816,851 Prepaid Expenses 2,208 - 2,208 Total Assets 31,142,098 26,152,456 57,294,554 LIABILITIES Accounts Payable 15,866 7,940 23,806 Total Liabilities 15,866 7,940 23,806 NET POSITION RESTRICTED FOR PENSIONS $ 31,126,232 $ 26,144,516 $ 57,270,748 (See independent auditor's report.) - 139 -  CITY OF DEKALB, ILLINOIS COMBINING STATEMENT OF CHANGES IN PLAN NET POSITION - BUDGET AND ACTUAL PENSION TRUST FUNDS For the Six Months Ended December 31, 2016 Police Pension Firefighters' Pension Total Original Final Original Final Original Final Budget Budget Actual Budget Budget Actual Budget Budget Actual ADDITIONS Contributions Employer Contributions $ 2,103,837 $ 2,103,837 $ 2,085,233 $ 2,535,041 $ 2,535,041 $ 2,512,630 $ 4,638,878 $ 4,638,878 $ 4,597,863 Employee Contributions 280,847 280,847 294,237 242,627 242,627 338,057 523,474 523,474 632,294 Total Contributions 2,384,684 2,384,684 2,379,470 2,777,668 2,777,668 2,850,687 5,162,352 5,162,352 5,230,157 Investment Income Net Appreciation in Fair Value of Investments - - 1,091,934 - - 965,198 - - 2,057,132 Interest 1,087,284 1,087,284 446,219 905,000 905,000 503,412 1,992,284 1,992,284 949,631 Total Investment Income 1,087,284 1,087,284 1,538,153 905,000 905,000 1,468,610 1,992,284 1,992,284 3,006,763 Less Investment Expense (27,652) (27,652) (21,779) (22,500) (22,500) (21,459) (50,152) (50,152) (43,238) Net Investment Income 1,059,632 1,059,632 1,516,374 882,500 882,500 1,447,151 1,942,132 1,942,132 2,963,525 Total Additions 3,444,316 3,444,316 3,895,844 3,660,168 3,660,168 4,297,838 7,104,484 7,104,484 8,193,682 DEDUCTIONS Administrative Expenses 24,219 24,219 21,998 14,395 14,395 17,540 38,614 38,614 39,538 Benefits and Refunds 1,317,742 1,497,742 1,447,549 1,592,037 1,766,037 1,607,243 2,909,779 3,263,779 3,054,792 Total Deductions 1,341,961 1,521,961 1,469,547 1,606,432 1,780,432 1,624,783 2,948,393 3,302,393 3,094,330 NET INCREASE $ 2,102,355 $ 1,922,355 2,426,297 $ 2,053,736 $ 1,879,736 2,673,055 $ 4,156,091 $ 3,802,091 5,099,352 NET POSITION RESTRICTED FOR PENSIONS July 1 28,699,935 23,471,461 52,171,396 December 31 $ 31,126,232 $ 26,144,516 $ 57,270,748 (See independent auditor's report.) - 140 -  DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY  CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY STATEMENT OF NET POSITION AND BALANCE SHEET December 31, 2016 Capital Statement of General Projects Permanent Total Adjustments Net Position ASSETS AND DEFERRED OUTFLOWS OF RESOURCES CURRENT ASSETS Cash and Investments $ 1,592,344 $ 45,315 $ 223,370 $ 1,861,029 $ - $ 1,861,029 Receivables (Net, Where Applicable, of Allowance for Uncollectibles) Property taxes 2,790,084 - - 2,790,084 - 2,790,084 Accounts 92,324 59 292 92,675 - 92,675 Accrued Interest 122 - - 122 - 122 Total Current Assets 4,474,874 45,374 223,662 4,743,910 - 4,743,910 NONCURRENT ASSETS Capital Assets Not Depreciated - - - - 25,287,312 25,287,312 Depreciated (Net of Accumulated Depreciation) - - - - 285,252 285,252 Total Noncurrent Assets - - - - 25,572,564 25,572,564 Total Assets 4,474,874 45,374 223,662 4,743,910 25,572,564 30,316,474 DEFERRED OUTFLOWS OF RESOURCES Pension Items - IMRF - - - - 325,906 325,906 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 4,474,874 $ 45,374 $ 223,662 $ 4,743,910 $ 25,898,470 $ 30,642,380 - 141 -  Capital Statement of General Projects Permanent Total Adjustments Net Position LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES/ NET POSITION LIABILITIES Accounts Payable $ 411,488 $ - $ - $ 411,488 $ - $ 411,488 Accrued Payroll 34,379 - - 34,379 - 34,379 Accrued Interest Payable 5,201 - - 5,201 113,648 118,849 Line of Credit 3,830,331 - - 3,830,331 - 3,830,331 Long-Term Liabilities Due Within One Year - - - - 1,962,185 1,962,185 Due in More than One Year - - - - 7,407,751 7,407,751 Total Liabilities 4,281,399 - - 4,281,399 9,483,584 13,764,983 DEFERRED INFLOWS OF RESOURCES Pension Items - IMRF - - - - 59,030 59,030 Unavailable Property Taxes 2,790,084 - - 2,790,084 - 2,790,084 Total Deferred Inflows of Resources 2,790,084 - - 2,790,084 59,030 2,849,114 Total Liabilities and Deferred Inflows of Resources 7,071,483 - - 7,071,483 9,542,614 16,614,097 FUND BALANCES/NET POSITION Net Investment in Capital Assets - - - - 13,577,788 13,577,788 Restricted - Endowments - - 223,662 223,662 - 223,662 Assigned - 45,374 - 45,374 (45,374) - Unrestricted (Deficit) (2,596,609) - - (2,596,609) 2,823,442 226,833 Total Fund Balances (Deficit)/Net Position (2,596,609) 45,374 223,662 (2,327,573) 16,355,856 14,028,283 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES/ NET POSITION $ 4,474,874 $ 45,374 $ 223,662 $ 4,743,910 $ 25,898,470 $ 30,642,380 (See independent auditor's report.) - 142 -  CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY STATEMENT OF ACTIVITIES AND COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES/NET POSITION For the Six Months Ended December 31, 2016 Capital Statement General Projects Permanent Total Adjustments of Activities REVENUES Taxes Property Taxes $ 2,768,573 $ - $ - $ 2,768,573 $ - $ 2,768,573 TIF Surplus 90,767 - - 90,767 - 90,767 Replacement Taxes 14,583 - - 14,583 - 14,583 Grants 285,300 - - 285,300 - 285,300 Charges for Services 28,452 - - 28,452 - 28,452 Investment Income 3,243 (152) (863) 2,228 - 2,228 Miscellaneous 5,846 - - 5,846 - 5,846 Total Revenues 3,196,764 (152) (863) 3,195,749 - 3,195,749 EXPENDITURES Current Culture and Recreation 1,857,101 - - 1,857,101 (750,202) 1,106,899 Debt Service Principal 541,111 - - 541,111 (541,111) - Interest and Fiscal Charges 204,907 - - 204,907 (13,225) 191,682 Total Expenditures 2,603,119 - - 2,603,119 (1,304,538) 1,298,581 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 593,645 (152) (863) 592,630 1,304,538 1,897,168 - 143 -  Capital Statement General Projects Permanent Total Adjustments of Activities OTHER FINANCING SOURCES (USES) Transfers In $ - $ 10,000 $ 900 $ 10,900 $ - $ 10,900 Transfers (Out) (10,900) - - (10,900) - (10,900) Total Other Financing Sources (Uses) (10,900) 10,000 900 - - - NET CHANGE IN FUND BALANCES/ NET POSITION 582,745 9,848 37 592,630 1,304,538 1,897,168 FUND BALANCES (DEFICIT)/ NET POSITION, JULY 1 (1,859,156) 35,526 223,625 (1,600,005) 13,731,120 12,131,115 Prior Period Adjustment (1,320,198) - - (1,320,198) 1,320,198 - FUND BALANCES (DEFICIT)/ NET POSITION, JULY 1, RESTATED (3,179,354) 35,526 223,625 (2,920,203) 15,051,318 12,131,115 FUND BALANCES (DEFICIT)/ NET POSITION, DECEMBER 31 $ (2,596,609) $ 45,374 $ 223,662 $ (2,327,573) $ 16,355,856 $ 14,028,283 (See independent auditor's report.) - 144 - SUPPLEMENTAL FINANCIAL INFORMATION  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BONDS OF 2010A December 31, 2016 Date of Issue May 27, 2010 Date of Maturity December 1, 2021 Authorized Issue $10,800,000 Denomination of Notes $5,000 Interest Rates 2% to 4% Interest Dates December 1 and June 1 Principal Maturity Date December 1 Payable at Northern Trust Company, Chicago, Illinois Purpose TIF Downtown Improvements and Northland Plaza Roadwork FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Tax Levy Interest Due on Year Principal Interest Total June 1 Amount December 1 Amount 2016 $ 870,000 $ 208,000 $ 1,078,000 2017 $ 104,000 2017 $ 104,000 2017 1,020,000 173,200 1,193,200 2018 86,600 2018 86,600 2018 1,060,000 132,400 1,192,400 2019 66,200 2019 66,200 2019 1,105,000 90,000 1,195,000 2020 45,000 2020 45,000 2020 1,145,000 45,800 1,190,800 2021 22,900 2021 22,900 $ 5,200,000 $ 649,400 $ 5,849,400 $ 324,700 $ 324,700 (See independent auditor's report.) - 145 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BONDS OF 2010B December 31, 2016 Date of Issue December 1, 2010 Date of Maturity January 1, 2028 Authorized Issue $3,905,000 Denomination of Notes $5,000 Interest Rates 4.25% to 4.75% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Northern Trust Company, Chicago, Illinois Purpose Refund the Series 1997A and 2002 Bonds FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Tax Levy Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ - $ 175,968 $ 175,968 2017 $ 87,984 2017 $ 87,984 2017 - 175,968 175,968 2018 87,984 2018 87,984 2018 - 175,968 175,968 2019 87,984 2019 87,984 2019 - 175,968 175,968 2020 87,984 2020 87,984 2020 - 175,968 175,968 2021 87,984 2021 87,984 2021 - 175,968 175,968 2022 87,984 2022 87,984 2022 150,000 172,780 322,780 2023 87,984 2023 84,796 2023 840,000 151,322 991,322 2024 84,796 2024 66,526 2024 875,000 113,583 988,583 2025 66,526 2025 47,057 2025 915,000 73,298 988,298 2026 47,057 2026 26,241 2026 955,000 30,278 985,278 2027 26,241 2027 4,037 2027 170,000 4,037 174,037 2028 4,037 2028 - $ 3,905,000 $ 1,601,106 $ 5,506,106 $ 844,545 $ 756,561 (See independent auditor's report.) - 146 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BONDS OF 2010C December 31, 2016 Date of Issue December 1, 2010 Date of Maturity January 1, 2023 Authorized Issue $5,415,000 Denomination of Notes $5,000 Interest Rates 1.9% to 5.9% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Northern Trust Company, Chicago, Illinois Purpose Refund a portion of the Series 2014 and 2009 Bond Anticipation Notes FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Tax Levy Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ 205,000 $ 215,846 $ 420,846 2017 $ 109,896 2017 $ 105,950 2017 620,000 198,415 818,415 2018 105,950 2018 92,465 2018 650,000 169,655 819,655 2019 92,465 2019 77,190 2019 680,000 137,040 817,040 2020 77,190 2020 59,850 2020 715,000 100,395 815,395 2021 59,850 2021 40,545 2021 755,000 59,573 814,573 2022 40,545 2022 19,028 2022 645,000 19,028 664,028 2023 19,028 2023 - $ 4,270,000 $ 899,952 $ 5,169,952 $ 504,924 $ 395,028 (See independent auditor's report.) - 147 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION BONDS OF 2012A December 31, 2016 Date of Issue October 25, 2012 Date of Maturity January 1, 2030 Authorized Issue $9,905,000 Denomination of Notes $5,000 Interest Rates 2.0% to 2.5% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Amalgamated Bank of Chicago, Chicago, Illinois Purpose Police Station Construction FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Requirements Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ 650,000 $ 161,382 $ 811,382 2017 $ 83,941 2017 $ 77,441 2017 660,000 148,282 808,282 2018 77,441 2018 70,841 2018 550,000 136,181 686,181 2019 70,841 2019 65,340 2019 - 130,680 130,680 2020 65,340 2020 65,340 2020 - 130,680 130,680 2021 65,340 2021 65,340 2021 - 130,680 130,680 2022 65,340 2022 65,340 2022 765,000 123,031 888,031 2023 65,340 2023 57,691 2023 780,000 107,582 887,582 2024 57,691 2024 49,891 2024 795,000 91,832 886,832 2025 49,891 2025 41,941 2025 810,000 75,782 885,782 2026 41,941 2026 33,841 2026 830,000 58,863 888,863 2027 33,841 2027 25,022 2027 845,000 41,066 886,066 2028 25,022 2028 16,044 2028 865,000 22,356 887,356 2029 16,044 2029 6,312 2029 505,000 6,312 511,312 2030 6,312 2030 - $ 8,055,000 $ 1,364,709 $ 9,419,709 $ 724,325 $ 640,384 (See independent auditor's report.) - 148 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION BONDS OF 2013B December 31, 2016 Date of Issue June 18, 2013 Date of Maturity January 1, 2022 Authorized Issue $2,380,000 Denomination of Notes $5,000 Interest Rates 0.8% to 3.0% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Amalgamated Bank of Chicago, Chicago, Illinois Purpose Police Station Construction FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Requirements Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ 10,000 $ 69,441 $ 79,441 2017 $ 34,753 2017 $ 34,688 2017 15,000 69,263 84,263 2018 34,688 2018 34,575 2018 135,000 67,125 202,125 2019 34,575 2019 32,550 2019 700,000 54,600 754,600 2020 32,550 2020 22,050 2020 725,000 33,225 758,225 2021 22,050 2021 11,175 2021 745,000 11,174 756,174 2022 11,174 2022 - $ 2,330,000 $ 304,828 $ 2,634,828 $ 169,790 $ 135,038 (See independent auditor's report.) - 149 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (TOTAL ISSUE) December 31, 2016 Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Requirements Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ 750,000 $ 26,943 $ 776,943 2017 $ 16,367 2017 $ 10,576 2017 340,000 18,528 358,528 2018 10,576 2018 7,952 2018 345,000 13,240 358,240 2019 7,952 2019 5,288 2019 340,000 7,952 347,952 2020 5,288 2020 2,664 2020 345,000 2,664 347,664 2021 2,664 2021 - $ 2,120,000 $ 69,327 $ 2,189,327 $ 42,847 $ 26,480 (See independent auditor's report.) - 150 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (DEBT SERVICE FUND SHARE) December 31, 2016 Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Tax Levy Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ 393,425 $ 3,037 $ 396,462 2017 $ 3,037 2017 $ - $ 393,425 $ 3,037 $ 396,462 $ 3,037 $ - (See independent auditor's report.) - 151 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (WATER FUND SHARE) December 31, 2016 Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Tax Levy Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ 286,325 $ 19,183 $ 305,508 2017 $ 10,697 2017 $ 8,486 2017 273,875 14,858 288,733 2018 8,486 2018 6,372 2018 275,500 10,617 286,117 2019 6,372 2019 4,245 2019 273,875 6,376 280,251 2020 4,245 2020 2,131 2020 276,000 2,131 278,131 2021 2,131 2021 - $ 1,385,575 $ 53,165 $ 1,438,740 $ 31,931 $ 21,234 (See independent auditor's report.) - 152 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (AIRPORT FUND SHARE) December 31, 2016 Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Tax Levy Tax Levy Interest Due on Year Principal Interest Total January 1 Amount July 1 Amount 2016 $ 70,250 $ 4,723 $ 74,973 2017 $ 2,633 2017 $ 2,090 2017 66,125 3,670 69,795 2018 2,090 2018 1,580 2018 69,500 2,623 72,123 2019 1,580 2019 1,043 2019 66,125 1,576 67,701 2020 1,043 2020 533 2020 69,000 533 69,533 2021 533 2021 - $ 341,000 $ 13,125 $ 354,125 $ 7,879 $ 5,246 (See independent auditor's report.) - 153 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS IEPA LOAN #L17133700 CONTRACT PAYABLE OF 1999 December 31, 2016 Date of Issue October 22, 1999 Date of Maturity January 8, 2021 Authorized Issue $4,072,711 Interest Rates 2.535% Interest Dates July 8 and January 8 Payable at Illinois Environmental Protection Agency Purpose Radium Compliance FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Requirements Year Principal Interest Total 2017 $ 239,428 $ 27,050 $ 266,478 2018 245,536 20,942 266,478 2019 251,800 14,678 266,478 2020 258,223 8,255 266,478 2021 131,570 1,669 133,239 $ 1,126,557 $ 72,594 $ 1,199,151 (See independent auditor's report.) - 154 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS IEPA LOAN #L17161400 CONTRACT PAYABLE OF 2000 December 31, 2016 Date of Issue April 24, 2000 Date of Maturity May 30, 2021 Authorized Issue $3,344,932 Interest Rates 2.535% Interest Dates November 30 and May 30 Payable at Illinois Environmental Protection Agency Purpose Radium Compliance FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Requirements Year Principal Interest Total 2017 $ 196,600 $ 22,212 $ 218,812 2018 201,615 17,196 218,811 2019 206,758 12,053 218,811 2020 212,033 6,779 218,812 2021 108,037 1,369 109,406 $ 925,043 $ 59,609 $ 984,652 (See independent auditor's report.) - 155 -  CITY OF DEKALB, ILLINOIS LONG-TERM DEBT REQUIREMENTS IEPA LOAN #L174045 CONTRACT PAYABLE OF 2012 December 31, 2016 Date of Issue August 9, 2013 Date of Maturity October 26, 2032 Authorized Issue $283,072 Interest Rates 2.295% Interest Dates October 26 and April 26 Payable at Illinois Environmental Protection Agency Purpose Hollister Avenue Watermain Replacement FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Requirements Year Principal Interest Total 2017 $ 12,932 $ 5,592 $ 18,524 2018 13,231 5,294 18,525 2019 13,536 4,989 18,525 2020 13,849 4,677 18,526 2021 14,168 4,357 18,525 2022 14,495 4,029 18,524 2023 14,829 3,695 18,524 2024 15,172 3,353 18,525 2025 15,522 3,003 18,525 2026 15,880 2,644 18,524 2027 16,247 2,277 18,524 2028 16,622 1,903 18,525 2029 17,005 1,519 18,524 2030 17,398 1,127 18,525 2031 17,800 725 18,525 2032 18,210 312 18,522 $ 246,896 $ 49,496 $ 296,392 (See independent auditor's report.) - 156 -  CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION BONDS OF 2013A December 31, 2016 Date of Issue June 18, 2013 Date of Maturity January 1, 2033 Authorized Issue $6,685,000 Denomination of Notes $5,000 Interest Rates 3% to 4% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Amalgamated Bank of Chicago, Chicago, Illinois Purpose Library Expansion FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Requirements Year Principal Interest Total 2017 $ 280,000 $ 205,825 $ 485,825 2018 285,000 197,350 482,350 2019 295,000 188,650 483,650 2020 305,000 179,650 484,650 2021 315,000 170,350 485,350 2022 325,000 160,750 485,750 2023 335,000 150,850 485,850 2024 345,000 140,650 485,650 2025 355,000 130,150 485,150 2026 365,000 118,894 483,894 2027 375,000 106,400 481,400 2028 390,000 93,013 483,013 2029 405,000 78,594 483,594 2030 420,000 62,600 482,600 2031 435,000 45,500 480,500 2032 450,000 27,800 477,800 2033 470,000 9,400 479,400 $ 6,150,000 $ 2,066,426 $ 8,216,426 (See independent auditor's report.) - 157 -  CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY LONG-TERM DEBT REQUIREMENTS LOAN PAYABLE 2015 June 30, 2016 Date of Issue June 5, 2015 Date of Maturity December 18, 2015 Authorized Issue $3,000,000 Interest Rates 3.25% Interest Dates December 18 Payable at First National Bank of Omaha, Nebraska Purpose Library Expansion FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Requirements Year Principal Interest Total 2017 $ 1,570,000 $ 14,719 $ 1,584,719 $ 1,570,000 $ 14,719 $ 1,584,719 (See independent auditor's report.) - 158 -  CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY LONG-TERM DEBT REQUIREMENTS DEBT CERTIFICATES OF 2011 December 31, 2016 Date of Issue December 1, 2011 Date of Maturity July 1, 2012 Authorized Issue $1,000,000 Denomination of Notes $5,000 Interest Rates 2.96% Interest Dates July 1 Principal Maturity Date July 1 Payable at Castle Bank, DeKalb, Illinois Purpose Library Expansion FUTURE PRINCIPAL AND INTEREST REQUIREMENTS Fiscal Requirements Year Principal Interest Totals 2017 $ 111,111 $ 13,156 $ 124,267 2018 111,111 9,867 120,978 2019 111,111 6,578 117,689 2020 111,112 3,289 114,401 $ 444,445 $ 32,890 $ 477,335 (See independent auditor's report.) - 159 - STATISTICAL SECTION  STATISTICAL SECTION This part of the City of DeKalb, Illinois’ statistical comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Contents Page(s) Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. 160-169 Revenue Capacity These schedules contain information to help the reader assess the City’s most significant local revenue source, the sales tax. 170-177 Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. 178-182 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 183-184 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. 185-189 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.  CITY OF DEKALB, ILLINOIS NET POSITION BY COMPONENT Last Ten Fiscal Years Fiscal Year 2008 2009 2010 2011 GOVERNMENTAL ACTIVITIES Net Investment in Capital Assets $ 113,947,561 $ 116,350,547 $ 116,154,934 $ 119,410,592 Restricted 10,131,297 10,401,769 15,569,514 11,857,498 Unrestricted (Deficit) (16,660,106) (14,726,824) (20,131,463) (17,715,142) TOTAL GOVERNMENTAL ACTIVITIES $ 107,418,752 $ 112,025,492 $ 111,592,985 $ 113,552,948 BUSINESS-TYPE ACTIVITIES Net Investment in Capital Assets $ 46,840,204 $ 48,402,014 $ 48,482,070 $ 48,222,651 Unrestricted (985,741) (724,236) (463,724) 2,919,291 TOTAL BUSINESS-TYPE ACTIVITIES $ 45,854,463 $ 47,677,778 $ 48,018,346 $ 51,141,942 PRIMARY GOVERNMENT Net Investment in Capital Assets $ 160,787,765 $ 164,752,561 $ 164,637,004 $ 167,633,243 Restricted 10,131,297 10,401,769 15,569,514 11,857,498 Unrestricted (17,645,847) (15,451,060) (20,595,187) (14,795,851) TOTAL PRIMARY GOVERNMENT $ 153,273,215 $ 159,703,270 $ 159,611,331 $ 164,694,890 Note: The City implemented GASB Statement No. 68 for the fiscal year ending June 30, 2015. *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Audited Financial Statements - 160 -  2012 2013 2014 2015 2016 2016* $ 120,169,717 $ 118,266,115 $ 116,047,087 $ 113,826,017 $ 111,898,622 $ 109,971,927 12,358,010 12,182,850 11,764,636 12,897,923 13,365,048 13,940,693 (15,138,497) (13,241,757) (11,899,046) (69,597,568) (79,546,145) (78,676,335) $ 117,389,230 $ 117,207,208 $ 115,912,677 $ 57,126,372 $ 45,717,525 $ 45,236,285 $ 48,123,532 $ 47,928,816 $ 49,590,809 $ 52,605,345 $ 52,803,874 $ 52,481,077 4,179,066 4,899,564 4,329,375 4,305,333 3,123,080 3,146,393 $ 52,302,598 $ 52,828,380 $ 53,920,184 $ 56,910,678 $ 55,926,954 $ 55,627,470 $ 168,293,249 $ 166,194,931 $ 165,637,896 $ 166,431,362 $ 164,702,496 $ 162,453,004 12,358,010 12,182,850 11,764,636 12,897,923 13,365,048 13,940,693 (10,959,431) (8,342,193) (7,569,671) (65,292,235) (76,423,065) (75,529,942) $ 169,691,828 $ 170,035,588 $ 169,832,861 $ 114,037,050 $ 101,644,479 $ 100,863,755 - 161 -  CITY OF DEKALB, ILLINOIS CHANGE IN NET POSITION Last Ten Fiscal Years Fiscal Year 2008 2009 2010 2011 EXPENSES Governmental Activities General Government $ 9,084,220 $ 10,441,675 $ 9,268,403 $ 10,647,791 Public Safety 17,889,697 19,020,552 19,606,432 19,660,618 Highways and Streets 7,844,631 6,074,929 9,415,300 4,465,186 Community Development 4,068,000 6,022,846 5,083,380 7,929,922 Interest 1,010,059 902,204 723,651 857,764 Total Governmental Activities Expenses 39,896,607 42,462,206 44,097,166 43,561,281 Business-Type Activities Water and Sewer 4,146,713 4,347,248 4,222,070 4,438,481 Airport 994,597 1,111,227 914,295 1,154,982 Refuse 1,466,215 1,656,645 1,671,915 1,736,937 Developmental Services 365,050 378,497 380,574 - Total Business-Type Activities Expenses 6,972,575 7,493,617 7,188,854 7,330,400 TOTAL PRIMARY GOVERNMENT EXPENSES $ 46,869,182 $ 49,955,823 $ 51,286,020 $ 50,891,681 PROGRAM REVENUES Governmental Activities Charges for Services General Government $ 303,453 $ 292,071 $ 340,015 $ 325,169 Public Safety 2,440,715 2,631,448 2,710,546 2,739,272 Highways and Streets 333,154 325,866 210,319 496,852 Community Development 75,291 403,355 402,209 395,147 Operating Grants and Contributions 2,481,892 3,656,334 2,488,211 3,257,775 Capital Grants and Contributions 2,083,090 2,013,494 2,471,003 4,144,333 TOTAL GOVERNMENTAL ACTIVITIES PROGRAM REVENUES 7,717,595 9,322,568 8,622,303 11,358,548 BUSINESS-TYPE ACTIVITIES Charges for Services Water and Sewer 4,387,320 4,788,391 5,136,193 5,454,296 Airport 262,783 261,655 247,364 405,332 Refuse 1,584,288 1,623,529 1,625,213 1,696,466 Developmental Services 96,580 88,319 38,835 - Operating Grants and Contributions 611 - - - Capital Grants and Contributions 359,444 2,673,502 760,930 392,373 Total Business-Type Activities Program Revenues 6,691,026 9,435,396 7,808,535 7,948,467 TOTAL PRIMARY GOVERNMENT PROGRAM REVENUES $ 14,408,621 $ 18,757,964 $ 16,430,838 $ 19,307,015 NET (EXPENSE) REVENUE Governmental Activities $ (32,179,012) $ (33,139,638) $ (35,474,863) $ (32,202,733) Business-Type Activities (281,549) 1,941,779 619,681 618,067 TOTAL PRIMARY GOVERNMENT NET (EXPENSE) REVENUE $ (32,460,561) $ (31,197,859) $ (34,855,182) $ (31,584,666) - 162 -  2012 2013 2014 2015 2016 2016* $ 8,859,145 $ 11,865,375 $ 9,744,441 $ 12,795,131 $ 8,456,094 $ 5,395,790 20,989,072 19,017,122 20,797,002 22,259,920 33,400,660 13,631,506 2,207,978 1,449,053 5,016,398 4,158,954 8,086,082 4,480,747 10,738,364 13,208,902 10,726,424 8,859,472 6,984,506 7,362,107 1,016,815 1,080,709 1,209,191 987,476 1,057,938 433,303 43,811,374 46,621,161 47,493,456 49,060,953 57,985,280 31,303,453 4,159,836 4,081,382 4,080,350 4,288,137 5,354,514 2,766,772 1,318,730 1,641,540 1,322,518 1,410,722 1,263,527 674,622 1,670,364 1,756,850 1,844,724 1,920,958 2,110,657 1,024,302 - - - - - - 7,148,930 7,479,772 7,247,592 7,619,817 8,728,698 4,465,696 $ 50,960,304 $ 54,100,933 $ 54,741,048 $ 56,680,770 $ 66,713,978 $ 35,769,149 $ 238,190 $ 330,222 $ 485,114 $ 417,915 $ 456,082 $ 291,387 2,462,313 2,090,752 2,504,342 3,608,300 2,875,539 1,580,396 212,232 125,794 144,137 107,317 - - 237,838 422,991 460,458 4,588,613 685,065 231,479 1,143,618 1,131,494 1,166,973 1,114,773 1,218,315 672,466 6,075,050 4,843,630 4,072,079 4,375,595 3,933,596 1,866,646 10,369,241 8,944,883 8,833,103 14,212,513 9,168,597 4,642,374 5,367,480 5,503,049 5,179,180 5,377,744 5,391,676 2,929,368 846,375 1,094,127 772,805 658,557 468,110 328,053 1,757,410 1,773,670 2,053,424 2,010,485 2,047,188 1,063,382 - - - - - - - - - - - - 562,770 130,658 959,182 2,566,070 81,555 42,829 8,534,035 8,501,504 8,964,591 10,612,856 7,988,529 4,363,632 $ 18,903,276 $ 17,446,387 $ 17,797,694 $ 24,825,369 $ 17,157,126 $ 9,006,006 $ (33,442,133) $ (37,676,278) $ (38,660,353) $ (34,848,440) $ (48,816,683) $ (26,661,079) 1,385,105 1,021,732 1,716,999 2,993,039 (740,169) (102,064) $ (32,057,028) $ (36,654,546) $ (36,943,354) $ (31,855,401) $ (49,556,852) $ (26,763,143) - 163 -  CITY OF DEKALB, ILLINOIS CHANGE IN NET POSITION (Continued) Last Ten Fiscal Years Fiscal Year 2008 2009 2010 2011 GENERAL REVENUES AND OTHER CHANGES IN NET POSITION Governmental Activities Taxes Property $ 10,366,305 $ 12,446,812 $ 13,371,039 $ 13,405,653 Sales 10,251,569 11,297,335 11,413,254 11,426,292 Utility 4,230,240 4,012,575 3,739,824 4,449,288 Income 4,274,684 3,954,000 3,472,035 3,561,130 Other 2,695,564 2,575,341 2,484,759 3,426,431 Investment Income 347,511 189,302 75,779 71,691 Miscellaneous 5,618,738 2,972,237 188,830 157,306 Gain on Sale of Assets - - - - Transfers In (Out) 232,052 229,413 296,836 (2,453,290) Total Governmental Activities 38,016,663 37,677,015 35,042,356 34,044,501 Business-Type Activities Investment Income 132 300 16 16 Miscellaneous 1,452,830 110,649 42,707 28,384 Transfers In (Out) (232,052) (229,413) (321,836) 2,453,290 Total Business-Type Activities 1,220,910 (118,464) (279,113) 2,481,690 TOTAL PRIMARY GOVERNMENT $ 39,237,573 $ 37,558,551 $ 34,763,243 $ 36,526,191 CHANGE IN NET POSITION Governmental Activities $ 5,837,651 $ 4,537,377 $ (432,507) $ 1,841,768 Business-Type Activities 939,361 1,823,315 340,568 3,099,757 TOTAL PRIMARY GOVERNMENT CHANGE IN NET POSITION $ 6,777,012 $ 6,360,692 $ (91,939) $ 4,941,525 Note: The City implemented GASB Statement No. 68 for the fiscal year ending June 30, 2015. The City correctly included Public Works General Fund expenses under Highway and Streets for fiscal year ended June 30, 2016. *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Audited Financial Statements - 164 -  2012 2013 2014 2015 2016 2016* $ 12,733,599 $ 12,673,310 $ 12,392,230 $ 11,981,519 $ 11,812,941 $ 12,678,579 11,132,604 11,078,544 10,435,096 11,092,497 11,801,518 6,197,334 3,788,953 3,534,755 3,600,059 3,433,879 3,202,384 1,513,310 3,745,298 4,130,363 4,197,440 4,515,729 4,462,992 1,786,638 4,775,612 4,835,868 4,994,817 5,340,751 5,585,744 3,279,118 37,782 124,029 164,693 182,353 (257,706) 103,038 839,167 623,137 953,687 1,258,401 598,730 344,060 - - - - 1,741 23,515 225,400 494,250 627,800 (29,377) (62,163) 254,247 37,278,415 37,494,256 37,365,822 37,775,752 37,146,181 26,179,839 380 4,338 113 27 38,672 18,951 571 (6,038) 2,492 4,326 109,342 37,876 (225,400) (494,250) (627,800) 29,337 62,163 (254,247) (224,449) (495,950) (625,195) 33,690 210,177 (197,420) $ 37,053,966 $ 36,998,306 $ 36,740,627 $ 37,809,442 $ 37,356,358 $ 25,982,419 $ 3,836,282 $ (182,022) $ (1,294,531) $ 2,927,312 $ (11,670,502) $ (481,240) 1,160,656 525,782 1,091,804 3,026,729 (529,992) (299,484) $ 4,996,938 $ 343,760 $ (202,727) $ 5,954,041 $ (12,200,494) $ (780,724) - 165 -  CITY OF DEKALB, ILLINOIS FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Fiscal Year 2008 2009 2010 2011 GENERAL FUND Reserved $ 738,577 $ 2,067,865 $ 2,177,003 $ 6,257 Unreserved 2,161,911 1,633,753 1,331,219 - Nonspendable - - - 50,934 Restricted - - - - Committed - - - - Unassigned - - - 2,692,928 TOTAL GENERAL FUND $ 2,900,488 $ 3,701,618 $ 3,508,222 $ 2,750,119 ALL OTHER GOVERNMENTAL FUNDS Reserved $ 1,808,174 $ 2,653,139 $ 2,783,493 $ - Unreserved, Undesignated (Deficit) Reported in Special Revenue Funds (445) (362) (383) - Capital Project Funds 9,104,021 8,552,208 13,352,510 - Nonspendable - - - 3,650 Restricted - - - 11,725,897 Assigned - - - 340,327 Unassigned (Deficit) - - - - TOTAL ALL OTHER GOVERNMENTAL FUNDS $ 10,911,750 $ 11,204,985 $ 16,135,620 $ 12,069,874 *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Audited Financial Statements - 166 -  2012 2013 2014 2015 2016 2016* $ - $ - $ - $ - $ - $ - - - - - - - 61,660 37,161 30,216 22,865 361,584 570,613 - - 104,523 173,187 - 283,543 6,262 6,262 6,262 6,447 - - 4,669,218 5,177,514 5,916,598 8,018,754 9,123,076 8,374,964 $ 4,737,140 $ 5,220,937 $ 6,057,599 $ 8,221,253 $ 9,484,660 $ 9,229,120 $ - $ - $ - $ - $ - $ - - - - - - - - - - - - - 1,500 - - - - 51 12,537,031 12,176,588 11,660,113 12,728,487 13,365,048 13,679,908 219,840 3,739,068 498,285 571,040 358,251 1,130,130 - - (205,934) - (23,787) (1,583) $ 12,758,371 $ 15,915,656 $ 11,952,464 $ 13,299,527 $ 13,699,512 $ 14,808,506 - 167 -  CITY OF DEKALB, ILLINOIS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Fiscal Year 2008 2009 2010 2011 REVENUES Taxes $ 31,898,673 $ 34,305,038 $ 34,111,071 $ 36,266,887 Intergovernmental 4,347,447 6,070,086 5,344,122 6,576,584 Licenses, Permits and Fees 364,103 354,375 346,229 499,938 Charges for Services 1,721,234 1,772,322 1,916,012 2,137,997 Fines and Forfeitures 766,504 728,572 647,913 639,450 Investment Income 347,511 189,302 75,779 71,691 Miscellaneous 734,928 737,263 549,695 517,485 Total Revenues 40,180,400 44,156,958 42,990,821 46,710,032 EXPENDITURES General Government 6,925,455 8,604,319 7,839,924 9,582,025 Public Safety 16,666,201 17,407,054 18,074,077 18,267,633 Highways and Streets 2,322,976 1,797,965 1,550,121 1,045,409 Community Development 4,529,707 3,930,979 3,730,883 2,933,330 Capital Outlay 6,843,723 8,163,413 13,281,421 12,011,245 Debt Service Principal Retirement 4,465,000 2,605,000 12,825,000 5,940,000 Interest and Fiscal Charges 882,467 859,247 775,771 808,239 Total Expenditures 42,635,529 43,367,977 58,077,197 50,587,881 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (2,455,129) 788,981 (15,086,376) (3,877,849) OTHER FINANCING SOURCES (USES) Transfers In 4,032,407 5,679,484 10,104,589 5,461,545 Transfers (Out) (3,800,355) (5,450,071) (9,807,753) (8,529,492) Bonds Issued 10,607,240 - 19,183,291 9,320,000 Premium (Discount) on Bonds Issued - - 336,326 (41,304) Payment to Bond Escrow Agent - - - (7,158,799) Sale of Capital Assets 60,231 6,608 7,162 2,050 Total Other Financing Sources (Uses) 10,899,523 236,021 19,823,615 (946,000) NET CHANGE IN FUND BALANCES $ 8,444,394 $ 1,025,002 $ 4,737,239 $ (4,823,849) DEBT SERVICE AS A PERCENTAGE OF NONCAPITAL EXPENDITURES 10.38% 13.44% 8.70% 14.62% Note: For fiscal year 2016, the City correctly included Public Works General Fund expenditures under Highway and Streets. *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Audited Financial Statements - 168 -  2012 2013 2014 2015 2016 2016* $ 24,753,767 $ 24,330,856 $ 24,430,463 $ 24,733,924 $ 25,403,303 $ 19,709,294 18,750,569 17,863,890 16,384,065 18,199,099 16,614,186 8,284,796 396,095 483,375 554,740 713,565 876,788 308,697 2,149,403 1,727,442 1,961,818 2,003,002 2,285,408 1,447,496 605,075 758,942 1,077,493 1,005,578 854,491 347,070 37,681 120,520 163,453 182,313 (257,706) 103,038 839,167 623,137 953,687 1,258,401 600,698 344,060 47,531,757 45,908,162 45,525,719 48,095,882 46,377,168 30,544,451 8,981,636 10,496,713 9,356,378 11,547,939 8,310,899 5,067,474 19,371,392 18,642,683 19,942,140 20,479,288 21,418,254 13,881,369 609,488 750,074 800,879 537,655 3,773,836 2,317,801 3,185,002 4,083,703 4,015,770 8,500,421 3,588,312 1,432,478 10,359,355 18,631,978 10,892,511 1,547,500 4,835,430 6,213,218 2,129,920 2,268,121 2,548,453 2,296,031 2,065,017 861,667 938,679 835,209 1,054,116 988,529 911,606 437,752 45,575,472 55,708,481 48,610,247 45,897,363 44,903,354 30,211,759 1,956,285 (9,800,319) (3,084,528) 2,198,519 1,473,814 332,692 5,113,090 5,138,884 6,123,312 5,655,359 3,130,209 2,193,115 (4,420,390) (4,707,634) (6,220,512) (6,034,736) (2,942,372) (1,695,868) - 12,910,969 - 776,775 - - - 87,782 - - - - - - - (776,775) - - 26,533 11,400 55,198 6,920 1,741 23,515 719,233 13,441,401 (42,002) (372,457) 189,578 520,762 $ 2,675,518 $ 3,641,082 $ (3,126,530) $ 1,826,062 $ 1,663,392 $ 853,454 7.38% 6.99% 8.00% 7.35% 6.79% 4.32% - 169 -  CITY OF DEKALB, ILLINOIS TAXABLE SALES BY CATEGORY Last Ten Calendar Years Calendar Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Merchandise $ 171,985,064 $ 164,736,328 $ 154,138,547 $ 161,257,806 $ 129,818,177 $ 149,564,784 $ 145,091,378 $ 145,331,012 $ 142,983,051 $ 137,420,731 Food 53,207,066 60,740,900 55,760,959 56,012,687 67,456,918 65,852,747 65,400,022 65,602,683 62,574,399 60,061,923 Drinking and Eating Places 65,260,253 67,402,498 64,478,308 66,461,264 66,649,641 68,587,766 67,411,032 72,375,099 73,690,804 75,136,564 Apparel 9,626,133 7,332,715 6,235,098 5,912,150 30,582,619 7,128,112 8,019,269 9,156,209 9,682,582 9,307,673 Furniture, H.H., and Radio 33,834,022 28,883,333 24,677,414 25,081,450 22,181,422 20,684,998 20,194,461 20,299,326 22,219,433 21,361,547 Lumber, Building Hardware 26,936,010 24,505,165 22,566,265 21,682,737 21,563,108 22,120,923 23,492,009 26,215,248 26,667,559 28,115,438 Automobile and Filling Stations 93,408,943 94,746,090 76,117,806 81,678,462 84,369,200 90,624,448 81,838,781 83,933,383 81,644,714 75,090,664 Drugs and Miscellaneous Retail 83,283,571 84,314,769 81,599,087 79,606,161 76,036,417 74,197,724 78,920,501 81,900,819 86,883,148 89,850,869 Agriculture and All Others 41,446,148 39,136,195 28,154,513 28,623,247 29,011,979 29,448,085 30,174,323 30,610,577 26,789,604 26,717,140 Manufacturers 15,254,811 18,224,889 13,889,966 15,507,914 7,289,300 1,546,592 3,116,244 3,392,915 1,455,793 3,703,355 TOTAL $ 594,242,021 $ 590,022,882 $ 527,617,963 $ 541,823,878 $ 534,958,781 $ 529,756,179 $ 523,658,020 $ 538,817,271 $ 534,591,087 $ 526,765,904 CITY DIRECT SALES TAX RATE 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Note: The data presents taxable sales subject to the Municipal Retailer's Occupation Tax. Data Source Illinois Department of Revenue - 170 -  CITY OF DEKALB, ILLINOIS TAXABLE SALES BY CATEGORY - HOME RULE Last Ten Calendar Years Calendar Year 2007 2008* 2009 2010 2011 2012 2013 2014 2015 2016 General Merchandise $ 110,641,629 $ 105,718,900 $ 99,635,725 $ 106,361,293 $ 87,558,389 $ 99,024,929 $ 96,069,313 $ 95,614,092 $ 94,092,573 $ 93,307,247 Food 16,220,246 17,771,292 16,039,202 18,341,512 30,104,054 29,741,123 28,856,277 28,086,495 24,719,290 23,139,941 Drinking and Eating Places 63,696,181 65,892,248 63,016,745 64,921,928 65,295,493 67,176,678 66,489,229 70,711,436 71,004,958 74,617,226 Apparel 9,619,122 7,316,764 6,230,748 5,911,746 19,317,301 7,046,287 7,946,743 9,091,595 9,583,535 9,213,771 Furniture, H.H. and Radio 33,782,135 28,777,827 24,555,874 24,340,125 21,984,344 20,503,154 20,039,027 20,419,645 22,061,903 21,256,310 Lumber, Building Hardware 26,884,766 24,259,864 22,394,973 21,589,323 21,526,692 22,070,597 23,431,577 26,161,570 26,623,933 28,061,982 Automobile and Filling Stations 43,057,278 44,642,599 36,573,132 42,992,984 46,695,364 47,519,288 48,575,366 46,268,699 38,844,447 33,810,004 Drugs and Miscellaneous Retail 58,432,889 59,739,818 58,394,357 57,668,525 56,027,770 56,447,398 58,367,979 59,423,173 59,678,688 59,042,749 Agriculture and All Others 37,826,626 35,885,916 26,970,847 27,405,131 28,250,729 28,487,957 28,584,214 29,168,574 25,247,798 25,269,254 Manufacturers 14,914,125 17,841,691 13,412,811 15,166,169 6,981,465 1,250,597 2,801,034 3,018,957 1,149,345 3,446,081 TOTAL $ 415,074,997 $ 407,846,919 $ 367,224,414 $ 384,698,736 $ 383,741,601 $ 379,268,008 $ 381,160,759 $ 387,964,236 $ 373,006,470 $ 371,164,565 CITY DIRECT SALES TAX RATE 1.25% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% *The City raised its Home Rule Sales tax to 1.75% on July 1, 2008. Note: The data presents taxable sales subject to the City's Home Rule Sales Tax. Data Source Illinois Department of Revenue - 171 -  CITY OF DEKALB, ILLINOIS DIRECT AND OVERLAPPING SALES TAX RATES Last Ten Calendar Years City Municipal Calendar Home Rule Retailers County State Year Rate Occupation Tax Rate Rate Total 2007 1.25% 1.00% 0.25% 5.00% 7.50% 2008 1.75% 1.00% 0.25% 5.00% 8.00% 2009 1.75% 1.00% 0.25% 5.00% 8.00% 2010 1.75% 1.00% 0.25% 5.00% 8.00% 2011 1.75% 1.00% 0.25% 5.00% 8.00% 2012 1.75% 1.00% 0.25% 5.00% 8.00% 2013 1.75% 1.00% 0.25% 5.00% 8.00% 2014 1.75% 1.00% 0.25% 5.00% 8.00% 2015 1.75% 1.00% 0.25% 5.00% 8.00% 2016 1.75% 1.00% 0.25% 5.00% 8.00% The City raised its Home Rule Sales tax to 1.75% on July 1, 2008. *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source City, County, and State Records - 172 -  CITY OF DEKALB, ILLINOIS ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Levy Years Levy Total Direct Year Residential Commercial Industrial Farm Railroad Total Tax Rate* 2007 $ 407,662,378 $ 163,615,149 $ 51,250,520 $ 666,539 $ 628,255 $ 623,822,841 0.8437 2008 420,413,802 172,166,813 51,905,133 686,727 682,620 645,855,095 0.8509 2009 413,507,993 176,052,268 52,801,237 721,404 833,695 643,916,597 0.9293 2010 389,625,409 167,457,427 49,380,638 825,082 1,044,391 608,332,947 0.9856 2011 365,267,969 167,604,810 47,742,181 782,590 1,107,165 582,504,715 1.0293 2012 331,382,501 156,902,473 43,536,967 731,665 1,252,297 533,805,903 1.1321 2013 300,043,381 143,720,391 39,939,551 673,596 1,546,704 485,923,623 1.3510 2014 285,032,206 138,851,901 38,459,111 1,010,413 1,612,750 464,966,381 1.4113 2015 283,233,886 142,889,179 38,998,251 1,020,259 1,936,167 468,077,742 1.6853 2016 298,748,883 154,031,848 48,012,868 1,098,215 1,970,015 503,861,829 N/A Note: The City only reports the rate setting EAV. *This includes the City of DeKalb and the DeKalb Public Library. **The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Office of the County Clerk - 173 -  CITY OF DEKALB, ILLINOIS PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Levy Years Tax Levy Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 TAX RATES City of DeKalb 0.6000 0.6000 0.6500 0.6899 0.7205 0.7952 0.9809 1.0245 1.1942 N/A DeKalb Library 0.2437 0.2509 0.2793 0.2957 0.3088 0.3369 0.3701 0.3868 0.4911 N/A 0.8437 0.8509 0.9293 0.9856 1.0293 1.1321 1.3510 1.4113 1.6853 N/A DeKalb County 0.8449 0.8495 0.8539 0.9052 0.9694 1.0892 1.2013 1.2483 1.2364 N/A DeKalb Township 0.1116 0.1130 0.1149 0.1260 0.1350 0.1508 0.1687 0.1797 0.1820 N/A DeKalb Road & Bridge 0.1874 0.1808 0.1839 0.1477 0.1548 0.1768 0.1977 0.2106 0.2133 N/A Forest Preserve District 0.0677 0.0678 0.0663 0.0700 0.0740 0.0797 0.0852 0.0876 0.0853 N/A Sanitary District 0.0913 0.0927 0.0944 0.1036 0.1110 0.1244 0.1393 0.1486 0.1504 N/A DeKalb School District #428 4.7288 5.2079 5.2606 5.7414 6.2148 7.0275 7.8215 8.2714 8.2500 N/A Kishwaukee Community College 0.5497 0.5468 0.5638 0.5601 0.5758 0.6416 0.7294 0.7123 0.6972 N/A Park District 0.5247 0.5131 0.5208 0.5606 0.5987 0.6745 0.7519 0.7969 0.7960 N/A TOTAL TAX RATE PER $100 EQUALIZED ASSESSED VALUATION 7.9498 8.4225 8.5879 9.2002 9.8628 11.0966 12.4460 13.0667 13.2959 N/A SHARE OF TOTAL TAX RATE LEVIED BY CITY OF DEKALB AND THE DEKALB LIBRARY 10.61% 10.10% 10.82% 10.71% 10.44% 10.20% 10.85% 10.80% 12.68% N/A The rates are directly applied to the total rate setting EAV amounts listed in the schedule of EAV by property class. Data Source Office of the County Clerk - 174 -  CITY OF DEKALB, ILLINOIS PRINCIPAL TAXPAYERS December 31, 2016 2016 2007 Percentage Percentage Taxable of Total 2000 of Total Assessed Assessed Assessed Assessed Taxpayers Type of Business Valuation Rank Valuation Valuation Rank Valuation 3M Warehouse/Distributor $ 16,129,836 1 3.32% $ 5,412,680 6 1.19% Target Warehouse/Distributor 9,860,583 2 2.03% 14,351,446 1 3.14% University Village I & II Apartments 6,825,515 3 1.40% 4,913,082 7 1.08% Panduit Manufacturing 6,522,488 4 1.34% 6,172,503 5 1.35% ARC - Goodyear Warehouse/Distributor 6,028,754 5 1.24% 8,611,728 2 1.89% Nestle Warehouse/Distributor 5,722,229 6 1.18% Mason Properties Apartments 5,691,533 7 1.17% 7,917,129 3 1.73% Northland Plaza Retail 5,364,985 8 1.10% 6,345,371 4 1.39% DeKalb Area Retirement Center Retirement Center 4,946,894 9 1.02% 3,686,624 10 0.81% JLAR Apartments/Retail 3,555,646 10 0.73% 4,028,159 9 0.88% Dream Fund LLC Apartments 4,648,471 8 1.02% TOTAL $ 70,648,463 14.53% $ 66,087,193 14.48% Data Sources County Assessors Office (not adjusted for unreported title transfers) City of DeKalb - 175 -  CITY OF DEKALB, ILLINOIS PROPERTY TAX RATES, LEVIES, AND COLLECTIONS Last Ten Levy Years City of DeKalb DeKalb Library Collections within the Total Collections Collections within the Total Collections Levy Year to Date Levy Year to Date Total Tax Percent of Collections in Percent of Total Tax Percent of Collections in Percent of Tax Levy Rates per Levy Levy Subsequent Levy Rates per Levy Levy Subsequent Levy Year $100 Requested Amount Collected Years Amount Collected $100 Requested Amount Collected Years Amount Collected 2007 0.6000 $ 3,742,937 $ 3,679,970 98.32% $ - $ 3,679,970 98.32% 0.2437 $ 1,520,000 $ 1,492,137 98.17% $ - $ 1,492,137 98.17% 2008 0.6000 3,889,007 3,765,927 96.84% - 3,765,927 96.84% 0.2509 1,620,420 1,574,213 97.15% - 1,574,213 97.15% 2009 0.6500 4,185,332 4,160,967 99.42% - 4,160,967 99.42% 0.2793 1,798,500 1,796,093 99.87% - 1,796,093 99.87% 2010 0.6899 4,196,805 4,107,807 97.88% - 4,107,807 97.88% 0.2957 1,798,523 1,760,288 97.87% - 1,760,288 97.87% 2011 0.7205 4,196,890 4,127,590 98.35% - 4,127,590 98.35% 0.3088 1,798,536 1,767,397 98.27% - 1,767,397 98.27% 2012 0.7952 4,244,718 4,161,753 98.05% - 4,161,753 98.05% 0.3369 1,798,552 1,762,669 98.00% - 1,762,669 98.00% 2013 0.9809 4,270,457 4,203,106 98.42% - 4,203,106 98.42% 0.3701 1,798,549 1,769,239 98.37% - 1,769,239 98.37% 2014 1.0245 4,270,540 4,231,993 99.10% - 4,231,993 99.10% 0.3868 2,289,658 2,257,413 98.59% - 2,257,413 98.59% 2015 1.1942 5,094,730 5,049,737 99.12% - 5,049,737 99.12% 0.4911 2,786,674 2,768,573 99.35% - 2,768,573 99.35% 2016 1.2021 5,565,384 - 0.00% - - 0.00% 0.0000 3,235,125 - 0.00% - - 0.00% Note: Amount reflects collection through December 31, 2016. Data Sources Office of the County Clerk Office of the County Treasurer - 176 -  Total Collections within the Total Collections Levy Year to Date Total Tax Percent of Collections in Percent of Rates per Levy Levy Subsequent Levy $100 Requested Amount Collected Years Amount Collected 0.8437 $ 5,262,937 $ 5,172,107 98.27% $ - $ 5,172,107 98.27% 0.8509 5,509,427 5,340,140 96.93% - 5,340,140 96.93% 0.9293 5,983,832 5,957,060 99.55% - 5,957,060 99.55% 0.9856 5,995,328 5,868,095 97.88% - 5,868,095 97.88% 1.0293 5,995,426 5,894,987 98.32% - 5,894,987 98.32% 1.1321 6,043,270 5,924,422 98.03% - 5,924,422 98.03% 1.3510 6,069,006 5,972,345 98.41% - 5,972,345 98.41% 1.4113 6,560,198 6,489,406 98.92% - 6,489,406 98.92% 1.6853 7,881,404 7,818,310 99.20% - 7,818,310 99.20% 1.2021 8,800,509 - 0.00% - - 0.00% - 177 -  CITY OF DEKALB, ILLINOIS RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Governmental Activities Business-Type Activities Percentage Fiscal G.O. Bond Due to Tax Increment Tax Increment G.O. Bond IEPA Total of Year G.O. Anticipation Other Financing Financing Capital G.O. Anticipation Loan Capital Primary Personal Per Ended Bonds Notes Governments Revenue Bonds Note Leases Bonds Notes Payable Leases Government Income* Capita* 2008 $ 13,433,931 $ 10,500,000 $ 998,998 $ 2,795,000 $ - $ 1,888,540 $ 4,395,000 $ - $ 5,346,065 $ 245,519 $ 39,603,053 5.31% $ 862.87 2009 11,452,534 10,500,000 498,998 2,145,000 - 1,583,900 4,180,000 - 4,994,081 188,714 35,543,227 4.76% 774.16 2010 20,952,108 4,000,000 1,337,055 1,430,000 - 1,245,095 3,950,000 - 4,633,118 128,674 37,676,050 4.84% 858.97 2011 22,377,250 - - 655,000 - 892,257 3,710,000 - 4,262,947 66,093 31,963,547 4.11% 728.65 2012 20,828,534 - - 345,000 - 578,302 3,537,172 - 3,883,332 25,516 29,197,856 3.59% 663.14 2013 31,587,600 - - - - 851,150 3,269,269 - 3,673,988 13,786 39,395,793 4.68% 894.75 2014 29,313,530 - - - - 527,697 2,996,366 - 3,370,464 7,038 36,215,095 4.23% 822.51 2015 27,274,168 - - - - 216,666 2,093,225 - 2,951,138 - 32,535,197 3.86% 738.53 2016 25,305,591 - - - - 199,999 1,726,575 - 2,518,781 - 29,750,946 3.54% 675.70 2016** 24,153,425 - - - - 183,333 1,792,865 - 2,480,195 - 28,609,818 3.40% 649.78 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. The City abates the entire property tax levied to pay general obligation bond debt each year. *See the schedule of Demographic and Economic Statistics for personal income and population data. **The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. - 178 -  CITY OF DEKALB, ILLINOIS RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years Percentage of Less Amounts Total Taxable Fiscal General Available in Assessed Year Obligation Debt Service Value of Per Ended Bonds Fund Total Property* Capita** 2008 $ 17,828,931 $ 648,125 $ 17,180,806 3.76% $ 374.33 2009 15,632,534 524,966 15,107,568 2.42% 329.05 2010 24,902,108 578,835 24,323,273 3.77% 554.54 2011 26,087,250 560,413 25,526,837 3.96% 581.91 2012 24,365,706 231,049 24,134,657 3.97% 548.14 2013 34,856,869 185,283 34,671,586 5.95% 787.45 2014 32,309,896 - 32,309,896 6.05% 733.82 2015 29,367,393 - 29,367,393 6.04% 666.62 2016 27,032,166 - 27,032,166 5.81% 613.95 2016*** 25,946,290 - 25,946,290 5.54% 589.29 *See the Schedule of Assessed Value and Actual Value of Taxable Property for property value data. **See the Schedule of Demographics and Economic Statistics for population data. ***The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. - 179 -  CITY OF DEKALB, ILLINOIS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT December 31, 2016 Percentage of Gross Debt Applicable City's Governmental Unit Bonded Debt to the City* Share of Debt City of DeKalb $ 25,946,290 100.00% $ 25,946,290 DeKalb County 12,790,000 27.10% 3,466,090 DeKalb School District #427 96,496,356 75.12% 72,488,063 Kishwaukee Community College #523 50,141,101 24.62% 12,344,739 Sanitary District 53,031,556 0.83% 440,162 Park District 665,000 99.24% 659,946 Total Overlapping $ 213,124,013 $ 89,399,000 Total Direct and Overlapping $ 239,070,303 $ 115,345,290 *Determined by ratio of assessed value of property subject to taxation in overlapping unit to value of property subject to taxation in City. Note: The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Office of the County Clerk - 180 -  CITY OF DEKALB, ILLINOIS LEGAL DEBT MARGIN December 31, 2016 The City is a home rule municipality. Article VII, Section 6(k) of the 1970 Illinois Constitution governs computation of the legal debt margin. "The General Assembly may limit by law the amount and require referendum approval of debt to be incurred by home rule municipalities, payable from ad valorem property tax receipts, only in excess of the following percentages of the assessed value of its taxable property... (2) if its population is more than 25,000 and less than 500,000 an aggregate of one percent: …indebtedness which is outstanding on the effective date (July 1, 1971) of this constitution or which is thereafter approved by referendum…shall not be included in the foregoing percentage amounts." To date the General Assembly has set no limits for home rule municipalities. - 181 -  CITY OF DEKALB, ILLINOIS PLEDGED-REVENUE COVERAGE Last Ten Fiscal Years Tax Increment Financing Bonds and Notes Incremental Incremental Less Excluded Available Fiscal Property Sales Contractual for Debt Debt Service Year Taxes Tax Obligations Service Principal Interest Coverage 2008 $ 5,360,771 $ 1,576,559 $ (500,000) $ 6,437,330 $ 570,000 $ 87,629 $ 9.79 2009 6,597,332 1,645,810 (498,998) 7,744,144 650,000 87,122 10.51 2010 6,883,479 1,477,587 (1,337,055) 7,024,011 715,000 76,212 8.88 2011 6,937,664 1,400,702 - 8,338,366 775,000 48,464 10.13 2012 6,691,097 1,368,512 - 8,059,609 310,000 9,831 25.20 2013** 6,679,893 1,330,744 - 8,010,637 345,000 9,212 22.62 2014 6,604,296 - - 6,604,296 - - N/A 2015 6,439,568 - - 6,439,568 - - N/A 2016 6,347,586 - - 6,347,586 - - N/A 2016* 6,430,015 - - 6,430,015 - - N/A NA - Information Unavailable *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. ** The City issued Tax Increment Financing Revenue Bonds in the amount of $4,350,000 which were paid off in Fiscal Year 2013. Note: Details of the City's outstanding debt can be found in the notes to the financial statements. - 182 -  CITY OF DEKALB, ILLINOIS DEMOGRAPHIC AND ECONOMIC INFORMATION Last Ten Fiscal Years Per Capita Median Fiscal Equalized Personal Personal Family Unemployment Year Population Assessed Value Income Income Income Rate 2008 45,897 $ 623,822,841 $ 746,331,117 $ 16,261 $ 53,017 5.3% 2009 45,912 645,855,095 746,575,032 16,261 53,017 9.8% 2010 43,862 643,916,597 777,673,260 17,730 60,571 9.8% 2011 43,867 608,332,947 777,761,910 17,730 60,571 10.0% 2012 44,030 582,504,715 814,026,640 18,488 60,571 9.6% 2013 44,030 533,805,903 841,853,600 19,120 60,571 10.3% 2014 44,030 485,923,623 856,999,920 19,464 60,571 6.9% 2015 44,054 464,966,381 843,854,370 19,155 60,571 5.0% 2016 44,030 468,077,742 840,444,640 19,088 59,588 5.2% 2016* 44,030 503,861,829 840,444,640 19,088 59,588 5.2% *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Sources City Records, U.S. Census Bureau, Illinois Department of Employment Security, and Office of the County Clerk - 183 -  CITY OF DEKALB, ILLINOIS PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2016 2007 % of % of Total City Total City Employer Rank Employees Population Rank Employees Population Northern Illinois University 1 3,523 8.00% 1 3,600 7.84% KishHealth System 2 1,200 2.73% 2 700 1.53% DeKalb School District 3 885 2.01% Sonoco - Alloyd Company 4 500 1.14% 5 325 0.71% 3M 5 480 1.09% 6 325 0.71% Target Distribution Center 6 435 0.99% 3 650 1.42% Wal-Mart Super Center 7 360 0.82% 4 600 1.31% Nestle Distribution 8 250 0.57% 8 250 0.54% City of DeKalb 9 202 0.46% Panduit 10 200 0.45% GE Motors 10 120 0.26% Ideal Industries (DeKalb) 9 125 0.27% Jewel/Osco 7 260 0.57% Data Sources Illinois Manufacturers Directory, Illinois Services Directory, DeKalb County Economic Development Corporation, City Records - 184 -  CITY OF DEKALB, ILLINOIS FULL-TIME EQUIVALENT EMPLOYEES Last Ten Fiscal Years Function/Program 2008 2009 2010 2011 GENERAL GOVERNMENT Legislative** 9.00 9.00 9.00 9.00 Administrative Services 25.00 24.00 23.00 17.50 City Clerk 1.50 1.50 1.50 0.50 Legal 4.50 4.50 4.50 3.50 40.00 39.00 38.00 30.50 PUBLIC SAFETY Police Officers 63.00 63.00 61.00 60.00 Civilians 26.50 25.50 25.50 24.50 89.50 88.50 86.50 84.50 Fire Firefighters 60.00 60.00 58.00 54.00 Staff 2.00 2.00 2.00 1.00 62.00 62.00 60.00 55.00 COMMUNITY IMPROVEMENT Community Development 21.00 16.50 13.00 - Engineering Services 5.50 5.50 8.00 - Public Works Administration 1.00 1.00 1.00 2.00 Public Facilities 2.50 1.00 1.00 1.00 Engineering 1.00 1.00 1.00 - Streets 21.00 19.00 19.00 20.00 52.00 44.00 43.00 23.00 Water and Sewer 17.50 16.00 16.00 10.00 Airport Division 1.50 1.50 1.50 2.50 Development Services 2.00 1.00 - 6.50 Mass Transit - - - 2.50 TOTAL FULL-TIME EQUIVALENT EMPLOYEES 264.50 252.00 245.00 214.50 Note: This schedule lists positions budgeted but not necessarily filled. These positions are part-time. *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source City Budget Records - 185 - 2012 2013 2014 2015 2016 2016* 9.00 9.00 9.00 9.00 9.00 9.00 16.50 20.00 20.50 22.50 24.00 23.50 0.50 - - - - - 2.00 - - - - - 28.00 29.00 29.50 31.50 33.00 32.50 61.00 63.00 65.00 65.00 65.00 65.00 24.50 30.00 30.50 34.00 34.00 34.00 85.50 93.00 95.50 99.00 99.00 99.00 53.00 52.00 57.00 57.00 57.00 57.00 1.00 1.00 1.00 1.50 2.00 2.00 54.00 53.00 58.00 58.50 59.00 59.00 - 7.50 8.00 6.50 6.00 6.00 - - - - - - 2.00 2.00 2.00 2.00 2.00 2.00 1.00 1.00 1.00 1.00 1.00 1.00 - 0.50 0.50 0.50 2.00 2.00 20.00 21.00 21.00 21.00 21.00 21.00 23.00 32.00 32.50 31.00 32.00 32.00 10.00 10.00 10.50 10.50 10.50 10.50 4.50 4.50 6.00 6.00 6.00 6.00 6.00 - - - - - 2.50 2.00 2.00 3.50 3.50 3.50 213.50 223.50 234.00 240.00 243.00 242.50 - 186 -  CITY OF DEKALB, ILLINOIS OPERATING INDICATORS Last Ten Fiscal Years Function/Program 2008 2009 2010 2011 GENERAL GOVERNMENT Community Development Building Permits Issued Residential Permits Issued New Construction 43 3 8 2 Remodel 48 82 69 55 Industrial/Commercial Permits Issued New Construction 22 9 10 20 Remodel 28 25 31 12 Other Permits 653 681 745 764 Total Number of Permits 794 800 863 853 Total Building Permit Valuation $ 31,125,085 $ 11,102,307 $ 8,455,270 $ 30,110,627 PUBLIC SAFETY Police Physical Arrests 2,359 3,023 2,480 2,689 Traffic Violations 6,102 10,530 8,273 4,829 Parking Violations 13,386 12,986 13,965 13,967 Fire Fire Responses (Fire and Non-Fire) 2,908 2,641 3,129 3,199 Emergency Medical Services Responses 4,091 4,018 4,334 4,476 PUBLIC WORKS Vehicles Maintained by Department 130 132 131 128 Street Construction (Miles) - - - - Street Reconstruction (Miles) 1.30 0.45 1.15 0.65 Street Resurfacing (Miles) 1.48 1.48 1.70 1.73 WATER Average Daily Consumption 12/31 Industrial/Commercial 531,537 488,491 431,992 417,353 Residential 2,284,357 2,275,385 2,171,686 2,185,873 Government/Church/School 677,174 702,852 636,183 561,908 Water Billing Accounts on 12/31 Industrial/Commercial 774 787 761 767 Residential 9,993 10,007 10,011 10,020 Government/Church/School 230 239 221 224 *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Various City Departments - 187 -  2012 2013 2014 2015 2016 2016* 1 1 4 3 6 - 63 67 52 49 54 25 16 15 21 19 16 5 21 20 25 27 33 22 647 634 651 580 595 355 748 737 753 678 704 407 $ 11,637,858 $ 11,611,226 $ 8,958,807 $ 54,359,021 $ 66,276,980 $ 3,581,909 2,799 2,917 2,795 2,987 2,911 1,650 6,136 4,729 4,253 3,956 3,788 1,442 12,211 9,733 7,144 6,335 5,555 2,899 1,667 3,516 3,437 3,489 3,948 4,084 2,122 5,005 5,236 5,207 5,196 5,344 124 133 135 142 144 145.00 - - - - - - 0.16 0.51 0.43 - - - 2.86 2.17 1.22 1.66 1.77 1.14 395,288 402,758 401,301 400,450 437,786 444,766 2,114,983 2,117,781 2,124,660 1,997,021 1,922,611 1,959,605 615,165 589,752 562,971 513,539 502,681 610,122 756 753 731 717 682 749 10,104 10,015 9,960 9,963 10,030 9,964 224 225 222 211 217 217 - 188 -  CITY OF DEKALB, ILLINOIS CAPITAL ASSET STATISTICS Last Ten Fiscal Years Function/Program 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016* PUBLIC SAFETY Police Stations/Municipal Center 1 1 1 1 1 1 1 1 1 1 Patrol Vehicles 26 28 27 27 26 28 28 29 29 28 Fire Stations 3 3 3 3 3 3 3 3 3 3 Ambulances 5 5 5 5 5 6 7 6 6 6 Fire Trucks 5 4 4 4 4 4 4 5 5 5 PUBLIC WORKS Residential Streets (Miles) 125 126 128 128 128 128 128 128 128 128 Traffic Signals 21 22 22 23 24 24 24 24 24 24 WATER Water Towers 4 4 4 4 4 4 4 4 4 4 Storage capacity (MG) 5.75 5.75 5.75 5.75 5.75 5.75 5.75 5.75 5.75 5.75 Water Wells 9 9 9 9 9 9 9 9 9 9 Water Mains (miles) 172 175 175 175 177 177 177 177 178 178 *The City changed its fiscal year end from June 30 to December 31 effective December 31, 2016. Data Source Various City Departments - 189 - RETURN TO AGENDA City of DeKalb, Illinois Rating Update July 24, 2017 Moody’s Investor Rating Surveillance Rating • Moody’s downgraded the City’s previous “Aa3” rating to “A1” • This is a significant drop because it puts takes the City from the Aa category to the single A category • The rating downgrade is due to higher pension liability based on Moody’s restatement, and dependence on revenues from the State of Illinois • Moody’s will continue to monitor the City • The following conditions could make the rating increase:  Expansion and diversification of the tax base  Moderation of the City's unfunded pension liability • The following conditions could make the rating decrease:  Deterioration in the tax base  Material declines in the City’s reserves and liquidity  Increase in the City's unfunded pension liability • Moody’s was complementary regarding Financial Operations and Reserves: “Solid Reserves and Improving Financial Position” 1 City of DeKalb Rating History 2  Rating Categories and Definitions Grade Moody's Standard & Poor's Description Aaa AAA Extremely strong capacity ot meet financial obligations Aa1 AA+ Aa2 AA Very strong capacity to meet obligations Investment Aa3 AA- Grade A1 City of DeKalb A+ A2 A Strong capacity but susceptible to adversity A3 A- Baa1 BBB+ Baa2 BBB Adequate financial capacity but adverse conditions will Baa3 State of Illinois BBB- lead to weakness Ba1 City of Chicago BB+ Ba2 BB Non-Investment Grade Speculative Non-Investment Ba3 BB- Grade B1 B+ B2 B Highly Speculative B3 B- Caa CCC+ Ca CCC Extremely speculative C CCC- 3 Calculation of Moody’s ANPL Adjusted Net Pension Liability (ANPL) = Adjusted Liabilities (AAL) - Plan Assets (AVA) AAL Adjustment Fire Police IMRF Total AAL (000s) 62,792 60,898 54,653 178,343 Assumed investment rate of return 7.46% 7.46% 7.46% Citibank Pension Liability Index (as of valuation date) 4.34% 4.34% 4.34% AAL Projected Forward 13 years at 7.5% (000s) 159,997 155,171 139,259 454,428 Discounted at Citibank Pension (000s) 92,098 89,320 80,161 261,580 Liability Rate Above Less: Actuarial Value of Plan Assets (000s) 23,471 28,699 44,692 96,862 ANPL (000s) 68,627 60,621 35,469 164,718 Operating Fund Revenues (000s) 33,544 ANPL/GF Revenues 4.91 4 Moody’s Focus on Pension Liability • Moody’s puts greater focus on annual net pension liabilities (ANPL) which they calculate using their own methodology • The City changed from the Project Unit Cost (PUC) methodology to the more convervative Age Entry Normal method on the actuarial calculation, which is viewed positively by Moody’s however it increases the pension liability • In addition, the City uses a 7.46% discount rate on future cashflows resulting in an AAL of $178,343 (000) versus Moody’s who uses a 4.34% discount rate resulting in a $261,580(000) AAL • Moody’s looks at this liability divided by annual general fund revenues to come up with a ratio • The City’s ratios of general fund revenues to ANPL is 4.9 and they state that the median for Aa rated issuers is lower (between 1 and 2) 5 S&P Rating Estimator Overall Estimate 6  Notice and Disclaimer The accompanying information was obtained from sources which William Blair & Company, L.L.C. believes to be reliable but does not guarantee its accuracy and completeness. The material has been prepared solely for informational purposes and is not a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. Historical data is not an indication of future results. The opinions expressed are our own unless otherwise stated. Additional information is available upon request. Contact Information: Elizabeth M. Hennessy William Blair & Company Managing Director 222 West Adams ehennessy@williamblair.com Chicago, Illinois 60606 Phone: (312) 364-8955 www.williamblair.com Fax: (312) 236-0174 RETURN TO AGENDA 7 DATE: August 11, 2017 TO: Mike Peddle, Chair Finance Advisory Committee FROM: Anne Marie Gaura, City Manager Jeff Wilkins, Interim Finance Director SUBJECT: Fiscal Year 2018 General Fund Major Revenue Recommendations FISCAL YEAR 2018 GENERAL FUND MAJOR REVENUES RECOMMENDATIONS General Fund Revenue Sources General Fund Revenues are the taxes, fees and other charges that the City assesses to provide services to its citizens. General Fund Revenues are composed of the following revenue streams: The three largest sources of revenue are property taxes collected by the County, sales taxes, both municipal and home rule, and income tax. Other taxes include local use tax, utility tax and restaurant and bar tax. 1|Page Summary FY 2018 General Fund Revenues The Fiscal Year 2017 General Fund Budget included Major Revenues totaling $30,954,108. The same Major Revenues are projected to total $31,860,758 for Fiscal Year 2018 - a projected major revenue increase of $906,650. General Fund Major Revenue Trends Major Revenue Trend FY 2017 Budget FYE 2017 FY18 Projection FY18 v. FYE17 % +/- Property Tax ↑ 5,565,384 5,565,384 5,937,357 6.7% Municipal Sales Tax ↑ 5,364,944 5,364,944 5,420,467 1.0% Home Rule Sales Tax ↑ 6,512,000 6,642,770 6,707,185 1.0% Local Use Tax ↑ 1,034,705 1,100,750 1,144,780 4.0% Income Tax ↓ 4,513,075 4,289,362 4,418,043 3.0% Restaurant & Bar Tax ↑ 1,935,000 1,964,381 2,003,668 2.0% Hotel/Motel Tax ↓ 290,000 261,241 261,241 0.0% Utility Tax ↓ 2,550,000 2,520,000 2,517,019 -0.1% Telecommunications Tax ↓ 819,000 752,347 737,595 -2.0% Crime Free Registration ↔ 195,000 195,000 195,000 0.0% Video Gaming Tax ↑ 205,000 208,021 245,000 17.8% Ambulance User Fees ↑ 1,060,000 1,103,829 1,269,403 15.0% Fire Services ↑ 910,000 969,951 1,004,000 3.5% TOTAL 30,954,108 30,937,980 31,860,758 3.0% GENERAL FUND REVENUE SUMMARY- by category FY 2015 FY 2016 FY 2016.5 FY 2017 FYE 2017 FY 2018 % of % Chg. vs. Actual Actual Actual Budget Estimate Budget Budget FYE17 Est. REVENUES Property Taxes 4,203,086 4,231,993 5,049,737 5,565,328 5,565,384 5,937,357 16.0% 6.7% Sales & Use Taxes 14,871,442 15,009,558 7,861,928 15,136,705 15,330,819 15,537,341 41.8% 1.3% Franchise & Utility Tax 3,919,346 3,701,236 1,756,269 3,867,000 3,718,013 3,752,614 10.1% 0.9% Licenses & Permits 902,452 1,069,443 469,774 1,104,350 1,140,238 1,008,250 2.7% -11.6% Intergovernmental Revenues 5,152,467 5,346,898 2,226,336 5,196,175 5,022,843 5,126,143 13.8% 2.1% Service Charges & Fees 1,850,465 1,950,961 1,188,585 2,290,775 2,297,437 2,541,805 6.8% 10.6% Fines 803,428 749,130 307,551 789,819 752,200 762,700 2.1% 1.4% Other Income 1,379,258 975,721 881,307 1,224,867 1,285,015 1,223,971 3.3% -4.8% REVENUES NET OF TRANSFERS 33,081,944 33,034,940 19,741,487 35,175,019 35,111,949 35,890,181 Transfer In 2,211,417 508,965 663,685 1,653,582 1,492,284 1,261,503 3.4% -15.5% TOTAL GENERAL FUND REVENUES 35,293,361 33,543,905 20,405,172 36,828,601 36,604,233 37,151,684 100.0% 1.5% The tables above show projections for major revenues will increase by 3% in aggregate and total revenues increase by 1.5%. Below is a summary of the projections and assumptions. This report includes historical graphs for each Major Revenue along with FY2018 Projection. 2|Page GENERAL FUND MAJOR REVENUES Property Taxes (General Fund) – Every December the City levies property taxes to provide funding for Police and Fire pension obligations and a portion of employer IMRF obligations. Other City obligations can be funded with property taxes, however, the City has reduced property taxes collected for other purposes. As a Home Rule community, the City levies dollars and has received between 98.00% and 99.00% of dollars levied the last four years as shown in the attached chart. The initial levy recommendation of $5,937,357 is an increase of $371,973. This increase is dedicated to Police and Fire pensions. No increase is dedicated for employer obligation for IMRF. Any increase in the IMRF cost will require the City to absorb the cost. The “Corporate” levy is also dedicated to the employer obligation for Police and Fire pension funds. The entire increase in the property tax levy for Police, Fire and Corporate reflect is to meet the obligation as provided by the actuary. The actuary for the Police and Fire Pension Funds provided the employer required contribution. The employer required contribution for Police is $2,680,967 (49.5% of payroll) and Fire is $3,183,910 (65% of payroll). The actuarial calculation for funded ratio of the Police Pension is 50% and Fire Pension is 41.1%. The actuarial recommendations for pension funding will be reviewed in more detail at the September 21 Finance Advisory Committee Meeting. PROPERTY TAXES - GENERAL FUND 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LEVY LINE ENDING ENDING ENDING ENDING ENDING EST ITEM FY 2014 FY 2015 FY 2016 FY 2016.5 FY 2017 FY 2018 Corporate 0 0 0 824,107 824,108 824,108 IMRF 320,337 251,024 251,028 251,035 72,480 72,480 Fire Pension 2,078,106 2,056,983 2,177,836 2,177,856 2,632,815 2,841,800 Police Pension 1,379,248 1,472,175 1,636,885 1,636,914 2,035,981 2,198,969 Social Security 467,027 490,275 204,791 204,818 0 0 TOTAL LEVIED 4,244,718 4,270,457 4,270,540 5,094,730 5,565,384 5,937,357 TOTAL COLLECTED 4,161,753 4,203,086 4,231,993 5,049,737 2,847,471 % COLLECTED 98.05% 98.42% 99.10% 99.12% 51.16% 3,000,000 FY 2014 FY 2015 2,500,000 FY 2016 FY 2016.5 2,000,000 FY 2017 1,500,000 1,000,000 500,000 0 Corporate IMRF Fire Pension Police Pension Social Security 3|Page Sales Tax Revenue (1% Sales Tax) – In the State of Illinois, there is a base 6.25% sales tax on general merchandise. It is administered and collected by the Illinois Department of Revenue. One percent of the Sales Tax is distributed to the municipality where the sale occurred. This tax is captured in the City’s General Fund and is used for basic City operations. Sales tax has trended fairly stable over the last few years. The range of dollars collected for Municipal Sales tax has ranged between $5.25 million and $5.40 million annually. FY2017 Year End Projection meets the initial budget of $5,364,944. The FY2018 projection of $5,420,467 reflects a modest 1% increase. MUNICIPAL SALES TAX (1.0% ) 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FYE 2014 FYE 2015 FYE 2016 FYE 2016.5 FYE 2017 FY 2018 JUL OCT 420,703 422,789 425,278 416,591 AUG NOV 476,485 482,157 478,055 472,486 SEP DEC 450,575 476,461 470,123 453,161 OCT JAN 438,598 462,556 444,872 430,808 NOV FEB 428,468 457,482 434,708 450,828 DEC MAR 502,766 545,759 517,143 524,429 JAN APR 398,547 413,724 386,585 395,729 FEB MAY 373,278 403,346 408,587 386,033 MAR JUN 444,597 456,302 442,186 454,139 APR JUL 445,349 431,466 390,783 438,244 MAY AUG 439,080 438,569 437,976 JUN SEP 440,117 432,324 453,238 SUB-TOTAL 5,258,561 5,422,936 5,289,536 2,748,303 1,674,146 Rebate Adjustment (800,161) TOTAL 4,458,400 5,422,936 5,289,536 2,748,303 1,674,146 BUDGET 4,500,636 5,398,150 5,400,000 2,765,000 5,364,944 5,420,467 % OF BUDGET 99.06% 100.46% 97.95% 99.40% 31.21% 600,000 FYE 2014 FYE 2015 550,000 FYE 2016 500,000 FYE 2016.5 FYE 2017 450,000 400,000 350,000 300,000 250,000 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 4|Page Home Rule Sales Tax Revenue (1.75% Sales Tax) - The City also collects a 1.75% Home Rule Sales Tax. The amount of Home Rule Sales Tax collected over the last few years has also remained fairly constant between $6.50 million to $6.70 million. Revenue collected for the last twelve months have exceeded the FY2017 budget by $66,000 and the last four months have trended 4% greater ($80,000 increase) versus same period of last year. A modest 2% growth rate applied to the prior 12 months was expected for FY2017 Year End. However, the State of Illinois imposed a new “2% administrative collection fee”. The FY2017 Year End Projection of $6,642,770 has been adjusted for the new fee and is still expected to exceed the FY2017 Budget of $6,512,000. FY2018 Budget Projection of $6,707,185 reflects 1% growth compared to FYE 2017. HOME RULE SALES TAX (1.75% ) 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FYE 2014 FYE 2015 FYE 2016 FYE 2016.5 FYE 2017 FY 2018 JUL OCT 509,993 523,479 514,401 508,982 AUG NOV 549,816 622,923 603,378 585,889 SEP DEC 538,939 605,338 589,435 577,244 OCT JAN 540,893 580,123 547,924 534,916 NOV FEB 617,663 578,132 547,758 559,120 DEC MAR 588,176 692,395 659,938 682,879 JAN APR 557,557 490,854 460,925 476,957 FEB MAY 551,263 478,854 485,496 468,942 MAR JUN 672,508 533,076 536,726 563,580 APR JUL 556,645 514,688 469,083 522,874 MAY AUG 546,724 532,857 526,865 JUN SEP 563,835 520,613 570,054 TOTAL 6,794,013 6,673,332 6,511,982 3,449,031 2,032,353 Rebate Adjustment (858,551) 5,935,462 6,673,332 6,511,982 3,449,031 2,032,353 BUDGET 5,807,528 6,926,784 7,000,000 3,510,000 6,512,000 6,707,185 % OF BUDGET 102.20% 96.34% 93.03% 98.26% 31.21% 750,000 FYE 2014 FYE 2015 FYE 2016 650,000 FYE 2016.5 FYE 2017 550,000 450,000 350,000 250,000 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 5|Page Local Use Tax – The State collects the local use tax and distributes the tax on a per capita basis. The revenues collected by the State have been consistently growing over the last few years. The City’s revenue has ranged between $785,000 and $1,073,944 (calendar year 2016). Economists at the Illinois Municipal League have estimated a per capita increase of 3.5% for municipal fiscal year 2018. The prior year actual was over 6% per capita increase. Given that the last 12 months have exceeded budget by $55,000 and year to date actuals have exceeded prior year by 4%, an estimated FY 2017 Year End Projection exceeds budget by $65,000 for a total of $1,100,750. The FY 2018 projection of $1,144,780 continues a 4% growth rate. LOCAL USE TAX 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FYE 2014 FYE 2015 FYE 2016 FYE 2016.5 FYE 2017 FY 2018 JUL OCT 71,933 74,509 81,037 75,651 AUG NOV 61,882 63,535 74,049 82,472 SEP DEC 57,821 68,806 85,140 84,779 OCT JAN 62,381 83,489 85,744 92,462 NOV FEB 66,946 78,993 84,498 89,769 DEC MAR 63,025 75,099 120,832 139,495 JAN APR 99,162 113,832 74,240 80,584 FEB MAY 52,580 40,274 75,675 75,838 MAR JUN 51,618 78,608 88,924 98,621 APR JUL 68,151 82,879 86,613 84,690 MAY AUG 62,828 81,353 84,281 JUN SEP 66,752 77,491 99,583 TOTAL 785,080 918,868 1,040,615 564,628 339,733 BUDGET 669,256 786,376 900,000 538,050 1,034,705 1,144,780 % OF BUDGET 117.31% 116.85% 115.62% 104.94% 32.83% 160,000 FYE 2014 140,000 FYE 2015 FYE 2016 120,000 FYE 2016.5 FYE 2017 100,000 80,000 60,000 40,000 20,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 6|Page Income Tax – FY2017 income tax revenue through month of June is 52.8% of budget. However, historically income tax revenue has been higher during the first half of the calendar year. Income tax revenue is a part of the Local Government Distributive Fund (LGDF) which is collected and disbursed by the State of Illinois based on the total income tax collected by the State of Illinois and distributed on a per capita basis. The City uses projections from IML’s economists to budget these dollars. IML’s has reduced the per capita projections for MFY2017 but raised the projection MFY2018 by 4.5%. However, the State of Illinois has reduced the LGDF by 10% for State Fiscal Year 2018 (July 1, 2017 – June 30, 2018). Subsequent to IML’s projection, the State of Illinois raised the individual and corporate income tax rates. Effects of the increase remain to be seen. For the reasons, the FY2017 Year End projection is $4,289,362. This is $223,713 below the FY2017 budget of $4,513,075. The FY2018 Projection of 4,418,043 remains below FY2017 budget. INCOME TAX 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FYE 2014 FYE 2015 FYE 2016 FYE 2016.5 FYE 2017 FY 2018 JUL JUL 390,898 410,240 462,461 409,700 AUG AUG 242,865 239,317 268,375 238,585 SEP SEP 236,934 234,026 255,612 260,605 OCT OCT 413,370 417,572 449,249 385,104 NOV NOV 273,687 281,524 296,216 258,473 DEC DEC 218,453 211,689 231,660 234,170 JAN JAN 404,539 358,671 434,662 378,602 FEB FEB 429,320 535,139 475,656 437,878 MAR MAR 245,209 233,453 275,372 229,188 APR APR 428,801 477,067 426,089 441,983 MAY MAY 665,488 789,263 600,567 590,131 JUN JUN 247,875 327,768 287,073 305,197 TOTAL 4,197,440 4,515,729 4,462,992 1,786,638 2,382,979 BUDGET 4,200,462 4,320,664 4,358,970 2,245,530 4,513,075 4,418,043 % OF BUDGET 99.93% 104.51% 102.39% 79.56% 52.80% 900,000 FYE 2014 FYE 2015 800,000 FYE 2016 700,000 FYE 2016.5 FYE 2017 600,000 500,000 400,000 300,000 200,000 100,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 7|Page Restaurant and Bar Tax (2%) – This revenue has shown yearly growth from FY2014. Calendar Year 2016 revenue was $1,904,622 and revenue for the last 12 months was $1,925,863. Year to date the revenue has trended nearly 3% higher than same period last year. FY2017 Year End estimate is $1,964,381 and FY2018 projection is 2% higher at $2,003,668. RESTAURANT & BAR TAX (2%) 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FYE 2014 FYE 2015 FYE 2016 FYE 2016.5 FYE 2017 FY 2018 JUL AUG 225,153 152,436 145,293 147,964 AUG SEP 120,649 144,103 156,317 155,711 SEP OCT 139,089 152,410 167,182 170,192 OCT NOV 171,237 161,802 175,395 169,137 NOV DEC 152,420 167,694 161,502 173,283 DEC JAN 155,738 150,949 166,667 147,469 JAN FEB 150,728 147,815 131,384 135,195 FEB MAR 98,466 140,851 163,241 164,791 MAR APR 93,149 145,136 165,835 173,063 APR MAY 155,797 158,145 167,038 168,695 MAY JUN 84,320 162,516 162,893 169,888 JUN JUL 284,488 172,450 150,474 TOTAL 1,831,234 1,856,308 1,913,222 963,756 811,633 BUDGET 1,674,447 1,761,825 1,825,000 925,000 1,935,000 2,003,668 % OF BUDGET 109.36% 105.36% 104.83% 104.19% 41.94% 300,000 FYE 2014 275,000 FYE 2015 250,000 FYE 2016 225,000 FYE 2016.5 200,000 FYE 2017 175,000 150,000 125,000 100,000 75,000 50,000 25,000 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 8|Page Hotel/Motel Tax (7% tax - 6% Gen Fund, 1% Debt Service) – This revenue has flattened to $251,194 for calendar year 2016 and $256,119 for the last 12 months. Year to date revenue has trended approximately $5,000 higher than same period last year. FY2017 Year End projection of $261,241 is not anticipated to reach FY2017 budget estimate of $290,000. FY2018 projection of $261,241 reflects no increase to the FYE 2017 projection. HOTEL/MOTEL TAX - 6% GF (1% of 7% H/M Tax dedicated to Debt Service Fund) 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FY2014 FY2015 FY2016 FY2016.5 FY2017 FY 2018 JUL AUG 16,737 26,496 29,627 28,149 AUG SEP 7,715 34,216 23,736 28,480 SEP OCT 14,013 17,130 25,104 20,690 OCT NOV 30,069 30,672 22,562 24,768 NOV DEC 14,914 29,323 18,026 19,794 DEC JAN 8,096 11,525 20,162 14,327 JAN FEB 7,924 16,706 15,327 15,043 FEB MAR 10,224 20,113 15,104 14,392 MAR APR (5,000) 12,324 17,564 20,902 APR MAY 12,213 23,669 21,014 22,835 MAY JUN 26,213 22,346 23,471 24,233 JUN JUL 13,865 16,778 22,506 TOTAL 156,983 261,299 254,203 136,209 97,404 BUDGET 208,000 240,613 290,000 137,500 290,000 261,241 % OF BUDGET 75.47% 108.60% 87.66% 99.06% 33.59% 40,000 FY2014 35,000 FY2015 30,000 FY2016 FY2016.5 25,000 FY2017 20,000 15,000 10,000 5,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN -5,000 -10,000 9|Page Utility Tax (Electric and Gas) – This revenue has declined since FY2014 collections of $2,667,249. The reduction of electric and natural gas prices and lower consumer demand has a downward effect on this revenue. FY2018 projection of $2,517,019 reflects a continued downward trend. UTILITY TAX (ELECTRIC AND GAS) 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FY2014 FY2015 FY2016 FY2016.5 FY2017 FY 2018 JUL AUG 147,795 191,087 165,456 185,499 AUG SEP 182,343 153,859 190,999 211,306 SEP OCT 171,114 175,216 163,081 177,593 OCT NOV 188,673 202,827 128,507 165,568 NOV DEC 200,201 186,231 177,745 156,073 DEC JAN 267,249 260,509 224,776 243,538 JAN FEB 344,385 276,805 293,840 346,600 FEB MAR 332,856 319,073 257,670 217,266 MAR APR 329,207 301,058 241,221 228,293 APR MAY 185,256 191,774 190,644 221,843 MAY JUN 173,749 160,211 165,146 112,243 JUN JUL 144,420 138,735 153,460 TOTAL 2,667,249 2,557,384 2,352,547 1,139,575 1,126,245 BUDGET 2,730,095 2,590,050 2,560,000 1,150,000 2,550,000 2,517,019 % OF BUDGET 97.70% 98.74% 91.90% 99.09% 44.17% 400,000 FY2014 350,000 FY2015 FY2016 300,000 FY2016.5 FY2017 250,000 200,000 150,000 100,000 50,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 10 | P a g e Telecom – This revenue has declined since FY2014 collections of $948,052. The reduction of land line phones will continue this trend. FY2018 projection is $737,595 down from FY2017 budget of $819,000. TELECOM TAX 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FY2014 FY2015 FY2016 FY2016.5 FY2017 FY 2018 JUL OCTOBER 78,743 77,339 71,547 63,215 AUG NOVEMBER 78,689 72,504 65,429 62,054 SEP DECEMBER 82,747 75,309 108,695 63,267 OCT JANUARY 81,190 73,801 64,838 60,152 NOV FEBRUARY 78,163 66,355 63,570 61,308 DEC MARCH 80,117 79,829 89,442 63,739 JAN APRIL 79,834 71,924 65,920 59,353 FEB MAY 79,415 71,222 60,824 59,331 MAR JUNE 79,230 76,294 67,074 58,535 APR JULY 79,967 69,916 63,457 57,599 MAY AUGUST 74,777 69,451 64,777 JUN SEPTEMBER 75,181 72,552 64,264 TOTAL 948,052 876,495 849,837 373,735 234,819 BUDGET 0 900,000 850,000 400,000 819,000 737,595 % OF BUDGET N/A 97.39% 99.98% 93.43% 28.67% 120,000 FY2014 FY2015 100,000 FY2016 FY2016.5 FY2017 80,000 60,000 40,000 20,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 11 | P a g e Rental Crime Free Registration – Revenue was consistently between $190,000 and $197,000 in fiscal years 2014 to 2016. However, calendar year 2016 revenues totaled $219,862. FY2018 is projected at $195,000. This is no change from FY2017. RENTAL CRIME FREE REGISTRATION 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FY2014 FY2015 FY2016 FY2016.5 FY2017 FY 2018 JUL JUL 7,649 1,950 500 1,429 AUG AUG 2,815 1,091 1,973 580 SEP SEP 950 1,250 5,362 10,424 OCT OCT 850 680 4,255 250 NOV NOV 10,003 23,448 44,950 94,320 DEC DEC 97,843 88,995 76,831 54,074 JAN JAN 43,039 31,338 24,930 5,039 FEB FEB 21,330 23,952 4,606 8,641 MAR MAR 4,086 5,676 17,544 5,320 APR APR 4,151 7,472 2,535 665 MAY MAY 3,919 2,290 7,586 700 JUN JUN 950 750 1,583 546 TOTAL 197,586 188,892 192,655 161,077 20,910 BUDGET 227,000 190,366 190,000 100,000 195,000 195,000 % OF BUDGET 87.04% 99.23% 101.40% 161.08% 10.72% 120,000 FY2014 FY2015 100,000 FY2016 FY2016.5 FY2017 80,000 60,000 40,000 20,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 12 | P a g e Video Gaming Tax – This revenue has shown tremendous growth since FY2014. Calendar Year 2016 collections were $170,765 and the last 12 months totaled $189,110. There is a 30% growth trend comparing year to date to same period last year. FY2017 Year End projection is $208,021 ($205,000 was budgeted). FY2018 projections is $245,000 (18% + FY2017 Year end) VIDEO GAMING TAX 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FY2014 FY2015 FY2016 FY2016.5 FY2017 FY 2018 JUL SEPTEMBER 2,643 6,908 25,170 14,442 AUG OCTOBER 1,916 5,943 9,204 14,798 SEP NOVEMBER 2,717 6,345 10,840 15,060 OCT DECEMBER 3,058 6,039 11,864 16,136 NOV JANUARY 2,870 6,530 11,656 16,178 DEC FEBRUARY 3,821 7,848 11,917 15,509 JAN MARCH 4,399 6,532 11,462 14,262 FEB APRIL 4,165 7,021 12,876 16,286 MAR MAY 4,521 7,349 13,687 19,249 APR JUNE 5,657 6,573 12,947 16,678 MAY JULY 6,008 8,199 12,962 15,804 JUN AUGUST 5,927 9,182 14,707 TOTAL 47,703 84,469 159,293 92,124 82,279 BUDGET 20,000 38,000 80,000 65,000 205,000 245,000 % OF BUDGET 238.51% 222.29% 199.12% 141.73% 40.14% 30,000 FY2014 FY2015 25,000 FY2016 FY2016.5 20,000 FY2017 15,000 10,000 5,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 13 | P a g e Ambulance User Fees – This revenue has shown tremendous growth since FY2014. Calendar Year 2016 collections were $1,029,980 and the last 12 months totaled $1,103,829. There is a 20% growth trend comparing year to date to same period last year. FY2017 Year End projection is $1,103,829 ($1,060,000 was budgeted). FY2018 projections is $1,269,403 (15% + FY2017 Year End). AMBULANCE USER FEES 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FY2014 FY2015 FY2016 FY2016.5 FY2017 FY 2018 JUL JUL 43,342 45,211 77,937 67,871 AUG AUG 62,574 102,113 70,438 93,660 SEP SEP 81,290 81,965 88,518 133,807 OCT OCT 81,710 115,708 108,108 104,709 NOV NOV 92,987 48,435 70,878 85,571 DEC DEC 63,218 94,323 72,200 127,474 JAN JAN 52,488 27,714 69,388 87,995 FEB FEB 59,181 45,035 67,867 91,890 MAR MAR 60,757 86,951 68,692 109,971 APR APR 54,338 66,139 68,692 125,500 MAY MAY 57,838 79,390 74,433 10,885 JUN JUN 73,043 47,317 67,817 64,496 TOTAL 782,766 840,302 904,968 613,092 490,737 BUDGET 815,000 765,050 820,000 472,500 1,060,000 1,269,403 % OF BUDGET 96.04% 109.84% 110.36% 129.75% 46.30% 160,000 FY2014 140,000 FY2015 FY2016 120,000 FY2016.5 100,000 FY2017 80,000 60,000 40,000 20,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 14 | P a g e  Fire Services – A majority of the revenue is attributed to intergovernmental agreements with NIU and fire district. FY2017 Year End will exceed budget by $12,000 to $40,000. New intergovernmental agreements are reflected in the FY2018 projection of $1,004,000. The intergovernmental agreements increased by $89,000 and account for $827,813 of the total projection of $1,004,000. FIRE SERVICES 12 MONTHS 12 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS LIABILITY COLLECTION ENDING ENDING ENDING ENDING ENDING EST PERIOD PERIOD FY2014 FY2015 FY2016 FY2016.5 FY2017 FY 2018 JUL JUL 0 7,115 77,486 336,010 AUG AUG 0 310,917 318,992 78,928 SEP SEP 0 8,403 6,216 5,384 OCT OCT 368 8,345 11,381 10,903 NOV NOV 289 2,920 8,160 7,965 DEC DEC 359,951 376,668 316,439 11,091 JAN JAN 2,460 4,684 18,222 331,646 FEB FEB 81,426 4,891 79,011 86,730 MAR MAR 37,788 4,048 14,181 15,041 APR APR 4,703 39,028 5,330 8,133 MAY MAY 1,186 67,346 7,932 346,397 JUN JUN 333,851 2,401 30,734 19,601 TOTAL 822,022 836,767 894,082 450,281 807,549 BUDGET 742,000 835,596 800,000 425,000 910,000 1,004,000 % OF BUDGET 110.78% 100.14% 111.76% 105.95% 88.74% 400,000 FY2014 FY2015 350,000 FY2016 300,000 FY2016.5 FY2017 250,000 200,000 150,000 100,000 50,000 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 15 | P a g e RETURN TO AGENDA