VILLAGE OF BUFFALO GROVE, ILLINOIS

Management’s Discussion and Analysis (Unaudited)

December 31, 2022

The Village of Buffalo Grove’s Management’s Discussion and Analysis (MD&A) offers the readers of the Village of Buffalo Grove’s financial statements this narrative overview and analysis of the financial activities of the Village of Buffalo Grove for the fiscal year ended December 31, 2022. This information presented here should be considered in conjunction with additional information provided in the letter of transmittal, which is found in the introductory section of this report, and the Village’s financial statements, which can be found in the basic financial statement section of this report.

Financial Highlights

• The assets and deferred outflows of the Village exceeded its liabilities and deferred inflows at December 31, 2022 by $107.1 million (net position). The Net Position for governmental activities is $30.5 million or 28.5 percent of the total, and business-type activities account for $76.5 million. Of this amount, ($7.6) million is unrestricted. Governmental activities unrestricted amount is ($30.0) million at the end of the year. This negative amount of unrestricted assets is directly related to the recognition of all retirement obligations in noncurrent liabilities, which is $67.6 million for 2022 (an increase of $23.0 million or 51.6% from 2021).

• The Village’s total debt increased by $34.4 million (or 91.7 percent). Total general bonded debt outstanding is $48.0 million as of December 31, 2022 During the year, the Village issued $18.5 million in general obligation bonds and is accounting for $19 million in TIF Revenue notes per a developer agreement for redevelopment of property located in the TIF District.

• The Village’s net position increased by $5.9 million (or 5.8 percent) from a beginning balance of $101.2 million during the fiscal year ending December 31, 2022. The governmental net position decreased by $6.2 million (16.9 percent) from a beginning balance of $36.7 million and the business-type activities net position increased by $12.1 million (18.8 percent) from a beginning balance of $64.5 million

• As of December 31, 2022, the Village of Buffalo Grove’s General Fund reported ending fund balance of $47.8 million, an increase of $9.5 million from the prior year. Of this amount, $17.7 million was unassigned.

Overview of the Financial Statements

The MD&A is intended to serve as an introduction to the Village’s basic financial statements. The Village of Buffalo Grove’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2)fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements.

Government-wide financial statements

The government-wide financial statements are designed to provide readers with a broad overview of the Village’s finances similar to the corporate sector in that all governmental and business-type activities are consolidated into one total for the Primary Government.