Statement of Activities 29

VILLAGE OF BUFFALO GROVE, ILLINOIS

Management’s Discussion and Analysis (Unaudited) December 31, 2020

The Village’s governmental funds for the year ended December 31, 2020 reflect a combined fund balance of $50.7 million on its balance sheet. This represents a $21.1 million dollar increase over the balance posted last year. While most revenue streams for the Village decreased from 2019, the Village issued $24 million in General Obligation Bonds in 2020 and experienced an overall increase in revenues of $1.9 million. New revenue streams due to Illinois Rebuild funds of $.9 million, $.5 million in Motor Fuel Tax Transportation Renewal Distribution funds, and $.4 million in Local Motor Fuel Tax funds were received in 2020. While the Village curbed expenditures due to Covid-19, the overall increase over prior year of $8.3 million is due to inflationary costs along with an increase in capital project expenditure activity of $5.9 million. Of the total fund balance of $50.7 million, $20.2 million is unassigned indicating availability for future obligations.

The 2020 unassigned fund balance increased by $1.2 million. Nonspendable fund balance ($0.57 million) represents amounts set aside for inventory and deposits. Restricted fund balance ($20.6 million) relates to the remaining proceeds available on the 2020 General Obligation Bond, federal and state seizure funds, and non-major special revenue fund balances including the Motor Fuel Tax and Local Motor Fuel Tax funds. Committed fund balance ($9.3 million) is to be used for future capital replacement.

The General Fund is the Village’s main operating fund and accounts for core municipal services including, public safety (police and fire), public works, community development, and general administration. As such, it useful to review the liquidity of the fund by comparing the unassigned fund balance against the operating General Fund operating budget. As of December 31, 2020, the unassigned fund balance represents 47.2 percent of the FY 2020 operating budget. The Fund Balance of the General Fund increased by $2.6 million for the fiscal year ended December 31, 2020.

General Fund revenues decreased by $0.2 million in 2020. Fines and Fees increased slightly reporting $3.1 million, while Miscellaneous Income is down $1.6 million (59.3 percent) from 2019. State Sales tax (net of rebates) reported for 2020 was down 2 percent ($0.1 million). Income tax increased $0.1 million (2.6 percent) and use tax increased $0.45 million (32.3 percent). Real estate transfer taxes decreased by $35,000 (-3.5 percent). Other State of Illinois shared revenues decreased $18,000 (-6.24%). It should be noted that these revenues tend to be threatened to be reduced annually by the state legislature. The Village of Buffalo Grove is focused on developing self-sustaining revenue sources.

VILLAGE OF BUFFALO GROVE, ILLINOIS

Management’s Discussion and Analysis (Unaudited) December 31, 2020

The overall decrease in the General Fund revenue was 0.4 percent, while expenditures increased 6.7 percent ($2.7 million) in 2020.

The surplus of revenues over expenditures (before other financing sources/uses) was $3.8 million. Adding in the Other Financing Sources (Uses), the net change to fund balance resulted in an increase of $2.6 million. Public Safety Expenditures increased $1.3 million, 3.4 percent, in FY 2020. Public Works increased 14.8 percent ($0.9 million) and General Government spent $0.5 million more in 2020 versus 2019.

Special Revenue Funds have a combined fund balance of $3.0 million as of December 31, 2020. In 2020 the Village continued its initiative to improve local roadways by resurfacing streets, repairing bridges, and maintaining street, curb and gutter as needed. These projects were funded through Motor Fuel Tax (MFT) funds, Local Motor Fuel Tax (LMFT) funds, the Capital Projects Street Maintenance fund, and grant revenues in 2020. Revenues received from the state share of the motor fuel tax were $2.4 million and local share of motor fuel tax of $0.4 million. The scope of each year’s identified maintenance, as determined through pavement analysis studies, surpasses the revenues typically received; however, in 2020, new revenue streams brought in additional funding: Motor Fuel Transportation Renewal Fund revenues, Local Motor Fuel Tax revenues and Illinois Rebuild grant revenues to help with the relatively inelastic funding source provided by Motor Fuel Tax allotments. The intention of the 2020 debt issuance was to help fund the Village’s streets and water and sewer infrastructure modernization program. The Street Maintenance Fund expended $7.5 million which was mostly transferred from the General Fund. Some street projects tied to grant funding are not complete as of December 31, 2020, the remainder will be expended in FY 2021. The Village continues to make streets a priority spending over the annual allotment for MFT by transferring general fund revenues to funds that build and improve roadway infrastructure.

The Debt Service Fund has a fund balance of $16.8 million at the end of FY 2020, The Village debt totals $34.6 million, all general obligation bonds, and retired $1.3 million in principal in the current year and issued $24.0 million in general obligation bonds. The interest paid associated with the debt retired was $1.2 million. Debt per capita is $916.91 as of December 31, 2020.

The Village’s Capital Improvement plan continued in 2020. The Village expended over $0.5 million to the Facilities Development fund infrastructure in FY 2020.