comprehensive annual financial report of the village...

COMPREHENSIVE ANNUALFINANCIAL REPORT

OF THEVILLAGE OF BUFFALO GROVE, ILLINOIS

As of and for the Year Ended December 31, 2017

Prepared by the Department of Finance and General Services

Scott AndersonDirector of Finance and General Services

VILLAGE OF BUFFALO GROVE

TABLE OF CONTENTSAs of and for the Year Ended December 31, 2017

Page(s)

INTRODUCTORY SECTION

Letter of Transmittal i - iv

Certificate of Achievement for Excellence in Financial Reporting v

Organizational Chart vi

List of Elected and Appointed Officials vii

FINANCIAL SECTION

INDEPENDENT AUDITORS' REPORT 1 - 3

REQUIRED SUPPLEMENTARY INFORMATION

Management's Discussion and Analysis 4 - 18

BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements

Statement of Net Position 19 - 20

Statement of Activities 21 - 22

Fund Financial Statements

Balance Sheet - Governmental Funds 23 - 26

Reconciliation of the Balance Sheet of Governmental Funds to the Statement ofNet Position 27

Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds 28 - 29

Reconciliation of the Statement of Revenues, Expenditures and Changes inFund Balances of Governmental Funds to the Statement of Activities 30

Statement of Net Position - Proprietary Funds 31 - 34

Statement of Revenues, Expenses and Changes in Net Position - ProprietaryFunds 35 - 36

Statement of Cash Flows - Proprietary Funds 37 - 40

Statement of Fiduciary Net Position - Fiduciary Funds 41

Statement of Changes in Fiduciary Net Position - Fiduciary Funds 42

Index to Notes to Financial Statements 43

Notes to Financial Statements 44 - 95

REQUIRED SUPPLEMENTARY INFORMATION

General Fund

Schedule of Revenues, Expenditures and Changes in Fund Balance - Budgetand Actual - General 96


TABLE OF CONTENTS (cont.)As of and for the Year Ended December 31, 2017

Page(s)

REQUIRED SUPPLEMENTARY INFORMATION (cont.)

Historical Pension Information

Illinois Municipal Retirement Fund - Schedule of Changes in the Village's NetPension Liability and Related Ratios 97

Illinois Municipal Retirement Fund - Schedule of Employer Contributions 98

Police Pension Fund - Schedule of Changes in the Village's Net PensionLiability and Related Ratios 99

Police Pension Fund - Schedule of Employer Contributions 100

Police Pension Fund - Schedule of Investment Returns 101

Firefighters' Pension Fund - Schedule of Changes in the Village's Net PensionLiability and Related Ratios 102

Firefighters' Pension Fund - Schedule of Employer Contributions 103

Firefighters' Pension Fund - Schedule of Investment Returns 104

Other Post Employment Benefits - Schedule of Employer Contributions and Scheduleof Funding Progress 105

Notes to Required Supplementary Information 106

SUPPLEMENTARY INFORMATION

Governmental Funds

Combining Balance Sheet - Nonmajor Governmental Funds 107

Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds 108

Schedules of Revenues, Expenditures and Changes in Fund Balances (Deficit) -Budget and Actual

Motor Fuel Tax - Nonmajor special revenue fund 109

Metra Parking Lot - Nonmajor special revenue fund 110

Debt Service - Nonmajor debt service fund 111

Facilities Development - Major capital projects fund 112

Street Maintenance - Major capital projects fund 113

Enterprise Funds

Combining Statement of Net Position - Nonmajor Enterprise Funds 114

Combining Statement of Revenue, Expenses and Changes in Net Position -Nonmajor Enterprise Funds 115

Combining Statement of Cash Flows - Nonmajor Enterprise Funds 116



Page(s)

SUPPLEMENTARY INFORMATION (cont.)

Schedules of Revenues, Expenses and Changes in Net Position - Budget andActual - Non-GAAP Budgetary Basis

Buffalo Grove Golf - Nonmajor enterprise Fund 117

Refuse Service - Nonmajor enterprise Fund 118

Water and Sewerage - Major enterprise Fund 119

Arboretum Golf - Major enterprise Fund 120

Internal Service Funds

Combining Statement of Net Position - Internal Services Funds 121

Combining Statement of Revenues, Expenses and Changes in Net Position -Internal Service Funds 122

Statement of Revenues, Expenses and Changes in Net Position - Budget andActual

Information Technology - Internal Service Fund 123

Central Garage - Internal Service Fund 124

Building Maintenance - Internal Service Fund 125

Combining Statement of Cash Flows - Internal Service Funds 126

Fiduciary Funds

Combining Statement of Fiduciary Net Position - Pension Trust Funds 127

Combining Statement of Changes in Fiduciary Net Position - Pension Trust Funds 128

Schedules of Changes in Fiduciary Net Position - Budget and Actual

Police Pension - Pension Trust Fund 129

Firefighters' Pension - Pension Trust Fund 130

Statement of Changes in Fiduciary Assets and Liabilities - School and ParkDonations - Agency Fund 131

STATISTICAL SECTION

Net Position by Component 132 - 133

Change in Net Position 134 - 137

Fund Balances of Governmental Funds 138 - 139

Change in Fund Balances of Governmental Funds 140 - 141

Assessed and Actual Value of Taxable Property 142 - 143

Property Tax Rates - Direct and Overlapping Governments 144 - 145

Principal Property Taxpayers 146 - 147



Page(s)

STATISTICAL SECTION (cont.)

Property Tax Levy and Collections 148 - 149

Sales Tax Revenue and Number of Principal Payers - Revenue by Category 150 - 151

Direct and Overlapping Sales Tax Rates 152

Ratio of Outstanding Debt by Type 153 - 154

Ratio of General Bonded Debt Outstanding 155

Direct and Overlapping Governmental Activities Debt 156

Schedule of Legal Debt Margin 157

Demographic and Economic Statistics 158

Principal Village Employers 159

Full-Time Equivalent Employees 160 - 161

Operating Indicators 162 - 163

Capital Asset Statistics 164 - 165

Government Finance Officers Association

Certificate of Achievement for Excellence

in Financial Reporting

Presented to

Village of Buffalo Grove

Illinois

For its Comprehensive Annual Financial Report

for the Fiscal Year Ended

December 31, 2016

Executive Director/CEO

JR10490

Text Box

v

vi

Organizational Chart

Residents of Buffalo Grove

Village Board

Village Manager

Community Development

Building and Zoning

Enviromental Health

Planning and Economic

Development

Police Department

Patrol

InvestigationsYouth Services

Admin

Police Records

Fire Department

Emergency Management

Services

Fire Suppression and Rescue

Fire Prevention &Education

Emergnecy Management Agency

Office of the Village Manager

Legal

Human Resources

Golf Operations

Information Technology

Finance

General Services

Deputy Village Clerk

Village Treasurer

Public Works

Admin

Engineering

Building Maintenance

Central Garage

Streets, Drainage & Sewer

Forestry and Grounds

Water

vii

VILLAGE OF BUFFALO GROVE, ILLINOIS

List of Elected and Appointed OfficialsDecember 31, 2017

Beverly Sussman Janet M. SirabianVillage President Village Clerk

Board of Trustees

Jeffrey Berman Andrew SteinJoanne Johnson Lester OttenheimerSteve Trilling (Ceded term June 2017) David WeidenfeldEric Smith (Appointed July 2017)

Appointed Officials

Dane BraggVillage Manager

Jennifer Maltas Scott AndersonDeputy Village Manager Finance Director/Village

Treasurer

Steven Casstevens William BakerChief of Police Fire Chief

Michael Reynolds Arthur MalinowskiPublic Works Director Human Resource Director

Darren Monico Christopher StillingVillage Engineer Director of Community

Development

Geoff Tollefson Brian SheehanGolf Course Manager Building Commissioner

INDEPENDENT AUDITORS' REPORT

To the Village President andBoard of Trustees

Village of Buffalo GroveBuffalo Grove, Illinois

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Buffalo Grove, Illinois, as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Village of Buffalo Grove'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.

Auditors' Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the investment in joint venture, which represent 12.89 percent, 3.07 percent, and 15.35 percent, respectively, of the assets, revenues, and net position of the business-type activities and 15.28 percent, 3.89 percent, and 18.72 percent, respectively, of the assets, revenues, and net position of the Water and Sewerage Fund. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for investment in joint venture, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 auditors' 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 Village of Buffalo Grove'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 Village of Buffalo Grove'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.


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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Buffalo Grove, Illinois, as of December 31, 2017 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance 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 the required supplementary information as listed in the table of contents 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.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Buffalo Grove's basic financial statements. The supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates 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 supplementary information is fairly stated in all material respects, in relation to the basic financial statements as a whole.


Page 3

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Buffalo Grove's basic financial statements. The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has 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 it.

Oak Brook, IllinoisJune 20, 2018

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017

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, 2017. This information presented here should be considered in conjunction with additional information provided in the letter of transmittal, which is found on pages i-iv. Financial Highlights

The assets and deferred outflows of the Village exceeded its liabilities and deferred inflows at December 31, 2017 by $66.5 million (net position). The Net Position for governmental activities is $18.9 million or 28.5 percent of the total and business-type activities account for $47.6 million. Of this amount, $(25.2) million is unrestricted, the negative amount of unrestricted assets is directly related to the recognition of all the Villages pension obligations as noncurrent liabilities, which decreased from $87.8 million in 2016 to $75.7 million in 2017.

The Village’s net position increased by $3.2 million (or 5.0 percent) during the fiscal year ending December 31, 2017. The governmental net position increased by $2.1 million (12.8 percent) and the business-type activities net position increased by $1.1 million (2.4 percent).

As of December 31, 2017, the Village of Buffalo Grove’s general fund reported combined ending fund

balances of $27.0 million, an increase of $1.9 million from the prior year. Of this amount, $18.9 million was unassigned.

The Village’s total debt decreased by $1.3 million (or 8.1 percent). Total debt outstanding is $14.4 million as of December 31, 2017.

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 (found on pages 19-22) are designed to provide readers with a broad overview of the Village’s finances statements similar to the corporate sector in that all governmental and business-type activities are consolidated into columns that add to total for the Primary Government. The statement of net position presents information on all the Village’s assets and deferred outflows and liabilities and deferred inflows, with the difference between the two reported as net position. Changing of the net position total over time can be one useful indicator in assessing the financial position of the Village. This statement combines and consolidates governmental funds’ current financial resources (short-term spendable resources) with capital assets and long-term obligations using the accrual basis of accounting and economic resources measurement focus. 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 causing the change occurs, regardless of the timing of related cash flows. Revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes).

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Both of the government-wide financial statements distinguish functions of the Village 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 Village include public safety (police and fire), public works, streets and sidewalks, community development, and general government. Property taxes, state and home rule sales tax, shared state income tax, real estate transfer tax, prepared food and beverage tax, and utility taxes finance the majority of these services. The Business-type Activities reflect private sector type operations and include Water and Sewer Funds, Refuse Fund, Buffalo Grove Golf Course and Arboretum Golf Course. The intent is for the fees to cover the costs of operations, infrastructure replacement, and debt services expenses. 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 Village uses fund accounting to ensure and demonstrate fiscal accountability and legal compliance. All of the funds of the Village can be divided into three categories; governmental funds, proprietary funds, and fiduciary funds. Governmental Funds (see pages 23-30) are used to account for primarily the same functions reported as governmental activities in the government wide financial statements. The focus, unlike the government-wide financial statement, is on the sources and uses of available resources (cash and cash equivalents), in order to provide a near, or short-term view of the Village’s operations. This information is useful in the evaluation of short-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 Village of Buffalo Grove maintains six 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, Street Maintenance, and Facilities Development Funds, which are classified as major funds. Data on the other three governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the report. Proprietary Funds (see pages 31-40) are used to report the same functions presented as business-type activities in the government-wide financial statements. The Village uses enterprise funds to account for its water and sewer utility, refuse service, and activities at the Buffalo Grove and Arboretum Golf Courses. 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 and Sewerage Fund and the Arboretum Golf Fund as they are considered to be major funds. The basic proprietary fund financial statements can be found on pages 31-40 of this report.

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Fiduciary Funds (see pages 41-42) are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are reflected in the government-wide financial statement since the implementation of GASB 67 &68. The implementation was completed in fiscal year 2015. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the financial statement 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 44-95 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the budgetary comparison to actual for the general fund, as well as the Village’s progress in funding its obligation to provide pension and OPEB benefits to its employees. Required supplementary information can be found on pages 96-106 of this report. Government-wide Financial Analysis The assets and deferred outflows of the Village of Buffalo Grove exceeded liabilities and deferred inflows by $66.5 million as of December 31, 2017. The largest portion of the Village’s net position reflects its net investment in capital assets (158.7 percent). Those capital assets include land, buildings, streets, utility infrastructure, and equipment, less any outstanding debt related to the original acquisition. The Village uses these capital assets to help facilitate service delivery to its residents; consequently, these assets are not available for future spending. Although the Village’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay the debt must be provided from other sources, since the capital assets cannot be used to reduce these liabilities. An additional portion of the Village’s net position ($1.6 million) represents resources that are subject to external restrictions on how they may be used. $1.5 million is restricted for contractual construction obligations for a road project. The remaining balance of unrestricted net position ($(25.2) million) reduces total net position significantly due to GASB 67 and 68, which requires the Village to show the outstanding pension obligations in noncurrent liabilities. The total increase in unrestricted net position from the prior year is 0.4 million (1.6 percent). The Village’s combined net position increased by $3.2 million as a result of governmental activities increasing by $2.1 million and business-type activities increasing by $1.1 million. The net position of the Village’s governmental fund was $18.9 million. The Village’s unrestricted net position for governmental activities that are available for day-to-day financial operations were $(36.0) million compared to $(36.6) million at December 31, 2016. The net position of business-type activities was $47.6 million. The business type activities unrestricted net position decreased by $0.2 million from the previous year.

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Please refer to table below for condensed Statement of Net Position:

Table 1

Village of Buffalo Grove’s Net Position

As of December 31, 2017

(in millions)

Governmental Business-Type

Activities Activities Total

2017 2016 2017 2016 2017 2016

Current and Other Assets $47.1 $46.1 $12.9 $13.1 $60.0 $59.2

Capital Assets 61.9 61.1 43.8 42.7 105.7 103.8

Total Assets 109.0 107.2 56.7 55.8 165.7 163.0

Deferred Outflows

11.3 14.4 0.8 1.0 12.1 15.4

Long-Term Liabilities 65.6 77.4 8.4 1.5 74.0 78.9

Other Liabilities 7.5 9.1 1.3 8.7 8.8 17.8

Total Liabilities 73.1 86.5 9.7 10.2 82.8 96.7

Deferred Inflows 28.3 18.3 0.2 0.1 28.5 18.4

Net Position:

Net Investment in Capital

Assets 53.3 51.8 36.8 35.5 90.1 87.3

Restricted 1.6 1.6 0.0 0.0 1.6 1.6

Unrestricted (36.0) (36.6) 10.8 11.0 (25.2) (25.6)

Total Net Position $18.9 $16.8 $47.6 $46.5 $66.5 $63.3

Normal Impacts There are five basic (normal) transactions that will affect the comparability of the Statement of Net Position summary presentation. Net Results of Activities – which will impact (increase/decrease) current assets and unrestricted net assets. Borrowing of Capital – which will increase current assets and long-term debt.

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Spending Borrowed Proceeds on New Capital – which will reduce current assets and increase capital assets. There is a second impact, an increase in invested in capital assets and an increase in related net debt which will not change the net investment in capital assets. Reduction of Capital Assets through Depreciation – which will reduce capital assets and net investment in capital assets. Current Year Impacts At the end of the current fiscal year, the Village reported positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Within the governmental activities, the Village increase in “Current and Other Assets” of $1.0 million is attributed to the $0.4 million increase in property taxes and another $0.2 million in investments. The Village experienced a decrease in receivables for income taxes in 2017 due to the State of Illinois making 14 income tax payment distributions. The Income tax receivable decreased 0.5 million in 2017. The Village also experienced slight decreases in utility and a similar increase in telecommunication tax. Utility taxes were down about $0.1 million (4.8 percent), while Telecomm was up $0.07 million (4.8 percent). The Village maintained capital improvement and asset purchases in 2017. Capital assets, government wide, increased $1.9 million (1.8 percent). The majority of additions are street, water, sewer, and storm sewer replacements. Business-type activities increased $1.1 million (2.6 percent). The Village has adopted a philosophy of funding capital improvements to a large extent on a pay-as-you –go basis, and retires debt obligations quickly, resulting in positive net position calculations. Declines in “Capital Assets” are primarily as a result of depreciation. Changes in Net Position. The Village’s total revenues and expenses for governmental and business-type activities are reflected in the following chart:

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Village of Buffalo Grove Changes in Net Position

For the Years Ended December 31, 2017 and 2016

Governmental Business-Type Total Primary

Activities Activities Government

Revenues 2017 2016 2017 2016 2017 2016

Program Revenues

Charges for Service $5.0 $4.7 $14.2 $13.7 $19.2 $18.4

Grants and Contributions Operating 1.3 1.3 - - 1.3 1.3

Capital 1.5 -

- 0.1

1.5 0.1

General Revenue

Property Tax 15.5 15.0 - - 15.5 15.0

Sales and Use Tax 10.3 10.1

- -

10.3 10.1

Income Tax 3.7 4.0 - - 3.7 4.0

Telecommunications Tax 1.6 1.5

- -

1.6 1.5

Utility Taxes 2.5 2.7 - -

2.5 2.7

Property Transfer Tax 1.3 1.1 - - 1.3 1.1

Other 2.6 2.8 0.9 0.2 3.5 3.0

Total Revenue 45.3 43.2 15.1 14.0 60.4 57.2

Expenses

Governmental Activities

General Government 6.6 6.4

- - 6.6 6.4

Public Safety 27.4 30.5

- -

27.4 30.5

Public Works 9.8 8.1 - -

9.8 8.1

Interest 0.4 0.4 - -

0.4 0.4

Business Type Water and Sewer - - 9.4 9.0 9.4 9.0

Refuse Services - - 0.7 0.7 0.7 0.7

Golf 2.9 2.9 2.9 2.9

Total Expenses 44.2 45.4 13.0 12.6 57.2 58.0

Excess before transfers and special items 1.1 (2.2)

2.1 1.4 3.2 (0.8)

Transfers In (Out) 1.0 1.1

(1.0) (1.1)

- -

Special items - - - - - -

Change in Net Position 2.1 (1.1)

1.1 0.3

3.2 (0.8)

Net position - beginning 16.8 17.9 46.5 46.2 63.3 64.1

Net position - ending $18.9 $16.8 $47.6 $46.5 $66.5 $63.3

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Normal Impacts Revenues Economic Condition – which can reflect a declining, stable or growing economic environment and has a substantial impact on property, sales, income, utility tax revenues as well as public spending habits for building permits, elective user fees and volumes of consumption. Increase/Decrease in the Village Approved Rates – while certain tax rates are set by statute, the Village has significant authority to impose and periodically increase/decrease rates (water, building and licensing fees, ambulance fee, etc.). Changing patterns in Intergovernmental and Grant Revenue – (both recurring and non-recurring) – certain recurring revenue (state shared revenues) may experience significant changes periodically while non-recurring (one-time) grants are less predictable and often distorting in their impact on year-to-year comparisons. Market Impact on Investment Income – the Village’s investment portfolio is structured to meet certain liabilities as they become due and the income generated is subject to market conditions that may cause the investment income to fluctuate. Expenses Changes in Authorized Personnel – changes in service demand may cause the Village to increase/decrease authorized staffing. Salary Increase (general wage adjustments and merit) – compensation adjustments to ensure the Village is able to attract and retain high level employees. Inflation – while overall inflation appears to be reasonably modest, the Village is a major consumer of certain commodities such as supplies, fuels, and parts. Some functions may experience unusual commodity-specific increases (e.g. fuel, road salt). Current Year Impacts Government Activities: Governmental activities increased the Village’s net position by $2.1 million to $18.9 million. Significant elements contributing to this net change are as follows; Revenues: Revenues for the Village’s governmental activities for the year ended December 31, 2017 were $45.3 million an increase of $2.1 million or 4.9 percent. Property taxes continue to be the Village’s largest source of revenue (34.2 percent) at $15.5 million. Included within the property tax revenues are the pension levies for the Police and Firefighter Pension Funds and IMRF/Social Security Levies. The pension levies account for 38.2 percent of the property tax levy. Other taxes and intergovernmental revenue including sales tax, state income tax, utility tax, prepared food and beverage tax, hotel tax, and real estate transfer tax total $22.0 million or 48.6 percent of total governmental activities revenue.

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Property taxes increased by $0.5 million. The increase in the corporate agency tax levy collected in 2017 was 3.3 percent. The corporate levy for 2017, to be collected in 2018, is funding Police and Fire Protection. The Police Protection levy increased $0.1 million (3.3 percent) and the Fire Protection Levy increased $0.2 million (2.8 percent). The total tax levy increased 3.1 percent in total. Sales tax increased by $0.82 million compared to the previous year. The growth in sales tax was (9.6 percent). Utility taxes are down $.18 million, or 6.2 percent. The region experienced a moderate winter, leading to less natural gas consumption than average. Income taxes have begun to rebound increasing $1.3 million from FY 2014, a 31.7 percent jump. Property transfer taxes continue to trend upward with an increase of $0.1 million. Income tax, sales tax, and property transfer tax are key indicators for the Village of Buffalo Grove’s local economy and are improving year over year. Expenses: The cost of all governmental activities this year was $44.2 million a decrease of 2.6 percent from 2016 ($45.4 million). The largest reduction was made in Public Safety reducing expenses $3.1 million in 2017. Public Works expenditures grew by $1.7 million (21.0 percent) for a total of $9.8 million dollars.

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Statement of Activities on pages 21-22 shows that $5.0 million in revenue was generated to finance for the services rendered by those who use them. Another $2.8 million in revenue that finances, by operating and capital grants and contributions, capital expenditures incurred, are essentially subsidies for capital improvement that is needed or would be required over time. Business-Type Activities: Business-type activities net position increased by $1.1 million. Significant changes are noted below. Revenue: Water sales increased $.8 million from the previous year. The total amount billed was $1.2 billion gallons in 2016 versus 1.24 billion in 2017. The increase in revenue was driven by a 4 percent water rate increase. Average water consumption continues to be at historic lows due to maturing landscapes, more efficient appliances, vacant properties, and resource conservation. The two golf courses generated $2.2 million in 2017, which is consistent with the 2016 revenue earnings. The following graph shows a comparison of revenues and expenses for each business type activity (less depreciation and operating transfers).

Expenses: Expenses from all business-type activities increased by $0.4 million or 3.2 percent. The Water Fund expenses increased by $0.4 million due to capital maintenance. Golf expenses were consistent with 2016 at $2.9 million total. Financial Analysis of the Village’s Funds As noted earlier the Village utilizes fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Funds The focus of the Village’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources.

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Village’s governmental funds for the year ended December 31, 2017 reflect a combined fund balance of $25.0 million on its balance sheet (pages 23-26). This represents a $2.1 million dollar increase over the balance posted last year. The Village grew revenues to match inflation and insurance cost, which continue to be the driving force behind the increase in expenditures on an annual basis. Of the total fund balance of $25.0 million, $15.2 million is unassigned indicating availability for future obligations. The 2017 unassigned fund balance increased by $2.9 million. The largest contributing factor is due to a decrease in total liabilities for the general fund of over $1.7 million (58.6 percent). Nonspendable fund balance ($.13 million) represents amounts set aside for inventory and deposits. Restricted fund balance ($1.9 million) is allocated to capital projects and employee pension benefits. Committed fund balance ($7.8 million) is to be use 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, 2017, the unassigned fund balance represents 44.7 percent of the FY 2018 operating budget. The Fund Balance of the General Fund increased by $2.0 million from December 31, 2017. A majority of the growth was generated through budget management.

The General Fund revenues increased by $0.3 million in 2017. Fines and Fee’s increased $1.1 million (64.7 percent), while Miscellaneous Income is down $1.2 million (44.4 percent) from 2016. Sales tax reported for 2017 was up slightly ($0.02 mil) and income and use tax are down ($0.15 mil). The housing stock continues to turn over quickly in Buffalo Grove, as real estate transfer tax increased for a fifth consecutive year. The property turnover rates, and increase in sales tax are great economic indicators that show Buffalo Grove is doing well and is still showing growth and is a residential destination. While state of Illinois shared revenues, specifically those that are part of the local government distributive fund are decreasing annually, and are threatened to be reduced annually by state legislature. The Village of Buffalo Grove is focused on developing, self-sustaining revenue sources. The overall growth in the General Fund revenue 8.0%, of that, 1.7 percent ($0.25 mil) is growth in revenue, while 6.3 percent ($0.96 mil) is a reduction in expenditures from 2016. The underperforming revenues also give the Village an opportunity to re-evaluate those sources if there is a trend emerging or if it was related to a short term aberration.

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General fund expenditures decreased by $1.4 million or 3.6 percent. The surplus of revenues over expenditures (before other financing sources/uses) was $4.0 million. Adding in the Other Financing Sources (Uses), the net change to fund balance resulted in an increase of $2.0 million Public Safety Expenditures decreased $1.6 million, 5.8 percent, in FY 2017. Public Works and General Government each spent $0.1 million more in 2017 versus 2016. Special Revenue Funds have a combined fund balance of $(1.6) million as of December 31, 2017 consistent with December 31, 2016 balances. In 2017 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, the Capital Projects Street Maintenance fund, and grant revenues in 2017. Revenues received from the state share of the motor fuel tax were $1.1 million. The cost of the 2017 street maintenance program was $2.4 million. The scope of each year’s identified maintenance, as determined through pavement analysis studies, has surpassed the relatively inelastic source of funding (more specifically the Motor Fuel Tax allotments). Given both the rise in the cost of maintenance and the declining revenue, the amount of street surface area repaired each year will decline. The intention of the 2016 debt issuance was to catch up with maintenance in order to maintain appropriate pavement standards and try to complete all repairs before road resurfacing turns into a compete rebuild of the pavement. The Street Maintenance Fund expended $1.4 million which was transferred from the general fund. Some street projects tied to Grant funding are not complete as of December 31, 2017, the remainder will be expended in FY 2018. 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 $(0.06) million at the end of FY 2017, the negative balance is a result of bond trustee fees associated with facilitating the Village’s debt service payments throughout the fiscal year. The Village does not levy these fees as part of the debt service portion of the tax levy. A transfer from the general fund will clear this balance in 2018. The Village debt totals $14.4 million and are all general obligation bonds, $1.2 million in principal was retired in the current year. The interest paid associated with the debt retired was $399,144. Debt per capita is $348.45 as of December 31, 2017. The Village has the sixth lowest total outstanding debt amongst all the taxing bodies represented on the 2017 Lake and/or Cook County property tax bill.

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Village’s Capital Improvement plan continued in 2017. The Village expended over $0.9 million to the Facilities Development fund infrastructure in FY 2017. The Water and Sewer funds added $2.2 million in capital assets, while General Fund added $0.5 million in capital outlay. Proprietary Funds The Village of Buffalo Grove’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The Village reports the both the Water and Sewer Fund and the Arboretum Golf Course as major proprietary funds. The Water and Sewer Fund accounts for all operating expenses of the municipal water system. Water is purchased wholesale from the City of Evanston through the Northwest Water Commission of which the Village is one of four members. Sanitary sewer service is provided by the Lake County Public Works Department for those property owners in Lake County. The Village acts as a billing partner to reduce administrative costs. The Metropolitan Water Reclamation District of Greater Chicago handles all the sanitary sewer treatment for Cook County residents and recovers its expenses through a property tax levy. The water and sewer utility experienced net operating income before interest and transfers of $2.2 million for FY 2017, an increase of $0.4 million (22.2 percent) over the prior fiscal year. A rate increase of 4 percent was applied to all usage after January 1, 2017. Sewer operations accounted for 45.2 percent, or $4.2 million of the total Water and Sewer operational expenditures. Water operations accounted for almost half of that at $1.9 million (20.4 percent). Purchased water expense was $1.7 million, and sanitary sewer fees collected on behalf of Lake County Public Works was $3.2 million for FY 2017. These two pass through expenditures account for 52.7 percent of the total operating expense of the fund. Purchased water expense increased over $3,000 from the prior year. Non-operating revenue (expense) increased $0.3 million due to investment income. The unrestricted net position of the Water and Sewer Fund at the end of the current fiscal year was $10.5 million. Of that amount $7.3 million is the Village’s equity interest in the Northwest Water Commission and $3.1 million is available to cash finance any major infrastructure improvements or enhancements to the water system. The Village also reported the Arboretum Golf Course Fund as a major proprietary fund. This fund accounts for all operations of the Arboretum Golf Course. The course reported a year end unrestricted net position balance of $384,388. Total revenues were down $0.04 million from 2016. The Village of Buffalo Grove owns and operates two municipal golf courses. Golf rounds are returning to pre-recession levels. A total of 51,138 paid rounds were played between the two courses in 2017. General Fund Budgetary Highlights The budget is formally presented to the Village Board in November and approved in December in conjunction with the tax levy request. As the Village operates under the Budget Officer Act, a public hearing is conducted, before the budget is adopted, for public comment. The budget document sets the legal spending ceiling for each fund and serves as the day-to-day management tool to ensure fiscal accountability.

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General Fund Budgetary Highlights

For the Fiscal Year Ended December 31, 2017

(in thousands)

Budget Actual

Revenues and Transfers:

Taxes $35,772 $34,964

Fines and Fees 2,593 4,597

Licenses and permits 286 330

Other Revenues 2,458 1,640

Transfers in 901 1,161

Total Revenues and Transfers 42,010 42,693

Expenditures and Transfers

Expenditures 39,477 37,531

Transfers Out 2,525 3,168

Total expenditures and Transfers 42,002 40,699

Change in fund balance $8 $1,994

Revenue (taxes) performed better than expected due to strong sales and income tax revenue. Actual expenditures exceeded budgeted expenditures due to unexpected, or scope modifications, of capital improvements. Capital Assets At the end of December 31, 2017, the Village had a combined total of capital assets of $105.7 million invested in a broad range of capital assets including, buildings, streets, storm sewers, and equipment. This amount represents a net increase (including additions and deductions) of $1.9 million.

Village of Buffalo Grove Capital Assets at Year End

Net of Depreciation

As of December 31, 2017 (in millions)

Governmental

Business-Type


2017 2016 2017 2016 2017 2016

Land $37.60 $36.90 $6.20 $6.20 $43.80 $43.10

Construction in progress 0.05 1.44 0.84 0.05 0.89 1.49

Land Improvements 2.77 2.83 . . 2.77 2.83

Buildings 3.71 3.34

2.05 1.71

5.76 5.05

Equipment and Vehicles 5.45 4.24 . . 5.45 4.24

Streets and storm sewers 12.31 12.30 . . 12.31 12.30

Water and Sewer Infrastructure . . 34.70 34.80 34.70 34.80

Total $61.89 $61.05 $43.79 $42.76 $105.68 $103.81

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 The Governmental Activities net capital assets increased from last year by $0.8 million (1.4 percent). For the Business-type activities, the net capital assets increased by $1.0 million or (2.4 percent). The capital activity for the Village of Buffalo Grove was mostly in facilities, road, sewer and water. The amounts added to the asset classes was offset by accumulated depreciation and not shown in the table above. The noticeable increase is in vehicles and equipment as the Village has purchased significant assets for operation in Fire and public works. Detailed information on the Village’s capital assets is included in Note 3 section C on pages 64-65. At year end, the Village had total bonded debt outstanding of $14.37 million as shown in the next table:

Village of Buffalo Grove General Obligation Bonds

As of December 31, 2017 and 2016

(in millions)

Governmental Business-Type


2017 2016 2017 2016 2017 2016

General obligation bonds $14.37 $15.64 $ - $ - $14.37 $15.64

Long-Term Debt The Village maintains assigned “AAA” ratings on its general obligation bonds respectively from both Moody’s Investor Services and Standard and Poor’s Corporation. The total per capita general obligation (GO) debt for the community stands at $348.45 and represents .86 percent of the percentage of equalized assessed valuation of the Village. The Village, under its home rule authority, does not have a legal debt limit. Detailed information on the Village’s long-term debt can be found in note 3 section F on pages 68-71. Economic Factors and Next Year’s Budgets and Rates The Village entered 2018 with a balanced operating budget. The budget for the fiscal year beginning January 1, 2018, is $75,432,884 a 0.4 percent increase from the previous year. The operating budget totals $42,292,439 resulting in a 0.7 percent increase over the previous year. Total capital spending during the year is estimated to be $8.0 million. Continued emphasis will remain on developing innovative ways to deliver services and reduce costs while actively working to improve sales tax collections through economic development.

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VILLAGE OF BUFFALO GROVE, ILLINOIS Management’s Discussion and Analysis (Unaudited) December 31, 2017 Property taxes remain the Village’s most stable revenue although the total assessed value of all taxable property is expected to increase about 3.1 percent for the 2017 tax levy (extended and collected in 2018). A tax levy was adopted for the 2018 budget that was 3.1 percent over the last year’s request. The growth in the levy is tied to two items growth in the public safety operations and public safety pensions. The Village mitigated an additional $0.7 million in levied taxes through two abatements of the 2012 and 2016 bonds. If these amounts hit the tax rolls the levy increase would be an additional 3.91 percent higher. The Village will use operating funds to pay the bond payable amount not covered through the tax levy. A twenty year proforma was completed on the Water Fund in FY 2017 and subsequently a water and sewer rate recommendation was made, and adopted, that will increase water rates by 4 percent in 2017. A Storm Water Management User Fee was introduced in the FY 2016 budget. This new user fees will offset the costs related to maintaining, repairing and developing an infrastructure reserve for future system needs. This revenue stream has resulted in an additional $1.2 million to the General Fund that is funding new and replacement storm sewer infrastructure. Budgeted expenditures include general wage adjustment for non-represented employees and contractual salary adjustments which are part of labor agreements. The Village current has two represented employee groups (police and fire). Health insurance increases were minimized through the change to the Intergovernmental Professional Benefits Cooperative (IPBC). The Village also eliminated its richest health care plan which is estimated to save the Village $0.2 million in 2018, or about 5 percent. The plan change became effective January 1, 2018. All other expenditures will be generally unchanged. There is no additional staffing recommended for FY 2018. CONTACTING THE VILLAGE’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the Village’s finances and to demonstrate the Village’s accountability for the money it receives. Questions concerning this report or requests for additional financial information should be directed to Scott Anderson, Director of Finance, Village of Buffalo Grove, 50 Raupp Boulevard, Buffalo Grove, IL 60089.


STATEMENT OF NET POSITIONAs of December 31, 2017

GovernmentalActivities

Business-typeActivities Totals

ASSETSCash and equivalents $ 21,622,188 $ 3,943,746 $ 25,565,934Investments 3,194,004 501,915 3,695,919Receivables

Property taxes 16,077,644 - 16,077,644Accounts - water and sewer - 1,676,752 1,676,752Municipal sales tax 2,890,293 - 2,890,293Illinois income tax 643,738 - 643,738Motor fuel tax 91,692 - 91,692Telecommunications tax 360,266 - 360,266Food and beverage tax 62,101 - 62,101Utility tax 225,597 - 225,597Interest 7,782 312 8,094Other 829,236 297,458 1,126,694

Inventories 96,997 35,112 132,109Due from fiduciary funds 84,629 - 84,629Deposits 35,846 - 35,846Investment in joint venture - 7,310,956 7,310,956Internal balances 837,811 (837,811) -Capital Assets

Land 37,599,977 6,198,514 43,798,491Construction in progress 58,723 840,718 899,441Buildings 24,834,125 11,170,610 36,004,735Land improvements 3,242,060 1,966,488 5,208,548Equipment and vehicles 12,198,773 70,150 12,268,923Streets and storm sewers 62,122,492 - 62,122,492Water and sewer system infrastructure - 72,183,557 72,183,557Less: Accumulated depreciation (78,156,403) (48,640,980) (126,797,383)

Total Assets 108,959,571 56,717,497 165,677,068

DEFERRED OUTFLOWS OF RESOURCESDeferred charge on refunding 50,165 - 50,165Deferred outflows of resources related to pensions 11,273,090 838,085 12,111,175Total Deferred Outflows of Resources 11,323,255 838,085 12,161,340

LIABILITIESAccounts payable 1,481,801 908,387 2,390,188Accrued wages 655,225 45,558 700,783State withholding taxes payable 53,987 - 53,987Development deposits 403,263 51,198 454,461Due to fiduciary funds 23,822 - 23,822Short term notes payable 3,400,000 - 3,400,000Other - 22,202 22,202Noncurrent Liabilities

Due within one year 1,440,419 325,631 1,766,050Due in more than one year 65,629,972 8,352,830 73,982,802

Total Liabilities 73,088,489 9,705,806 82,794,295

See accompanying notes to financial statements.Page 19


STATEMENT OF NET POSITIONAs of December 31, 2017



DEFERRED INFLOWS OF RESOURCESProperty taxes levied for a future period $ 16,077,644 $ - $ 16,077,644Deferred inflows of resources related to pensions 12,191,670 209,889 12,401,559

Total Deferred Inflows of Resources 28,269,314 209,889 28,479,203

NET POSITIONNet investment in capital assets 53,318,041 36,802,425 90,120,466Restricted for

Road construction 1,509,756 - 1,509,756Parking lot operations 119,323 - 119,323

Unrestricted (36,022,097) 10,837,462 (25,184,635)

TOTAL NET POSITION $ 18,925,023 $ 47,639,887 $ 66,564,910



STATEMENT OF ACTIVITIESFor the Year Ended December 31, 2017

Program Revenues

Functions/Programs ExpensesCharges for

Services

OperatingGrants and

Contributions

Capital Grants and

Contributions

Governmental ActivitiesGeneral government $ 6,642,798 $ 2,148,760 $ - $ -Public safety 27,384,964 1,687,759 213,181 -Public works 9,764,874 1,209,784 1,058,421 1,478,015Interest and fiscal charges 384,073 - - -

Total Governmental Activities 44,176,709 5,046,303 1,271,602 1,478,015

Business-type ActivitiesWater and Sewerage 9,454,554 11,060,938 - -Refuse Service 705,393 970,268 - -Arboretum Golf 1,661,490 1,157,819 - -Buffalo Grove Golf 1,227,383 1,043,641 - -

Total Business-type Activities 13,048,820 14,232,666 - -

Total $ 57,225,529 $ 19,278,969 $ 1,271,602 $ 1,478,015

General RevenuesTaxes

PropertyHome rule salesTelecommunications taxesUtilityProperty transferOther

IntergovernmentalState sales taxIncome and useOther

Investment incomeGain on sale of assetsMiscellaneous

Total General RevenuesTransfers

Change in net position

NET POSITION - Beginning of Year

NET POSITION - END OF YEAR


Net (Expenses) Revenues and Changes in Net Position



$ (4,494,038) $ - $ (4,494,038)(25,484,024) - (25,484,024)(6,018,654) - (6,018,654)

(384,073) - (384,073)(36,380,789) - (36,380,789)

- 1,606,384 1,606,384- 264,875 264,875- (503,671) (503,671)- (183,742) (183,742)- 1,183,846 1,183,846

(36,380,789) 1,183,846 (35,196,943)

15,510,127 - 15,510,1273,625,234 - 3,625,2341,586,128 - 1,586,1282,532,662 - 2,532,6621,256,919 - 1,256,919

853,763 - 853,763

5,604,020 - 5,604,0204,843,251 - 4,843,251

166,044 - 166,044153,816 492,132 645,948

8,758 - 8,7581,409,537 393,328 1,802,865

37,550,259 885,460 38,435,719958,315 (958,315) -

2,127,785 1,110,991 3,238,776

16,797,238 46,528,896 63,326,134

$ 18,925,023 $ 47,639,887 $ 66,564,910



BALANCE SHEETGOVERNMENTAL FUNDSAs of December 31, 2017

General FundFacilities

DevelopmentStreet

Maintenance

NonmajorGovernmental

Funds

ASSETSCash and equivalents $ 19,698,053 $ 40,281 $ - $ 1,538,153Investments 3,194,004 - - -Receivables

Property taxes 15,047,380 - - 1,030,264Municipal sales tax 2,890,293 - - -Illinois income tax 643,738 - - -Motor fuel tax - - - 91,692Telecommunication tax 360,266 - - -Food and beverage tax 62,101 - - -Utility tax 225,597 - - -Interest 7,782 - - -Other 688,504 - 140,732 -

Due from other funds 1,234,016 - - -Due from fiduciary funds 84,629 - - -Inventory 96,997 - - -Deposits 35,846 - - -

TOTAL ASSETS $ 44,269,206 $ 40,281 $ 140,732 $ 2,660,109


Totals

$ 21,276,4873,194,004

16,077,6442,890,293

643,73891,692

360,26662,101

225,5977,782

829,2361,234,016

84,62996,99735,846

$ 47,110,328



BALANCE SHEETGOVERNMENTAL FUNDSAs of December 31, 2017

General FundFacilities

DevelopmentStreet

Maintenance


Funds

LIABILITIES, DEFERRED INFLOWS OFRESOURCES, AND FUND BALANCES

LiabilitiesAccounts payable $ 1,009,928 $ 127,267 $ 87,214 $ 766Accrued wages 622,636 - - -Development deposits 403,263 - - -Due to fiduciary funds 23,822 - - -Due to other funds 61,794 139,211 82,347 59,733Payroll deductions payable 53,987 - - -Short-term notes payable - 3,400,000 - -

Total Liabilities 2,175,430 3,666,478 169,561 60,499

Deferred Inflows of ResourcesProperty taxes levied for a future period 15,047,380 - - 1,030,264

Total Deferred Inflows of Resources 15,047,380 - - 1,030,264

Fund Balances (Deficit)Nonspendable for inventory 96,997 - - -Nonspendable for deposits 35,846 - - -Restricted for road construction - - - 1,509,756Restricted for employee pension

benefits 252,729 - - -Restricted for parking lot operations - - - 119,323Committed for capital replacement 7,758,348 - - -Unassigned (deficit) 18,902,476 (3,626,197) (28,829) (59,733)

Total Fund Balances (deficit) 27,046,396 (3,626,197) (28,829) 1,569,346

TOTAL LIABILITIES,DEFERRED INFLOWS OFRESOURCES, AND FUNDBALANCES $ 44,269,206 $ 40,281 $ 140,732 $ 2,660,109


Totals

$ 1,225,175622,636403,26323,822

343,08553,987

3,400,0006,071,968

16,077,64416,077,644

96,99735,846

1,509,756

252,729119,323

7,758,34815,187,71724,960,716

$ 47,110,328



RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITION


Total Fund Balances - Governmental Funds $ 24,960,716

Amounts reported for governmental activities in the statement of net position aredifferent because:

Capital assets used in governmental funds are not financial resources andtherefore are not reported in the funds.

Land 37,599,977Construction in progress 58,723Buildings 24,834,125Land Improvements 3,242,060Equipment and vehicles 12,198,773Streets and storm sewers 62,122,492Less: Accumulated depreciation (78,156,403)

A deferred charge on refunding represents a consumption of net position that appliesto a future period and, therefore, is not reported in the funds. 50,165

Deferred outflows of resources related to pensions do not relate to current financialresources and are not reported in the Governmental Funds Balance Sheet. 11,273,090

Less amount reported in internal service funds below. (588,660)

Deferred inflows of resources related to pensions do not relate to current financialresources and are not reported in the Governmental Funds Balance Sheet. (12,191,670)

Less amount reported in internal service funds below. 147,424

Some liabilities, including long-term debt, are not due and payable in the currentperiod and therefore, are not reported in the funds.

Bonds payable (14,365,000)Compensated absences (1,656,554)Net other post-employment obligation (1,235,386)Unamortized debt premium (216,706)Net pension liability (49,596,745)

Less amount reported in internal service funds below. 1,087,553

The net position of the internal service funds are included in the governmentalactivities in the Statement of Net Position (642,951)

NET POSITION OF GOVERNMENTAL ACTIVITIES $ 18,925,023



STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS

For the Year Ended December 31, 2017

GeneralFacilities

DevelopmentStreet

Maintenance


Funds

REVENUESProperty taxes $ 14,495,834 $ - $ - $ 1,014,293Other taxes 9,816,523 - - -Charges for services 1,762,740 - - 1,242Fines and fees 2,834,073 - - 209,380Licenses and permits 330,475 - - -Intergovernmental 10,651,498 - - 1,058,421Interest 153,816 - - -Miscellaneous income 1,456,876 - - -

Total Revenues 41,501,835 - - 2,283,336

EXPENDITURESCurrent

General government 5,613,970 - - 160,778Public safety 25,776,184 - - -Public works 5,653,339 - 1,360,429 1,088,120

Capital Outlay 487,066 875,147 - -Debt Service

Principal - - - 1,275,000Interest - - - 401,609

Total Expenditures 37,530,559 875,147 1,360,429 2,925,507

Excess (deficiency) of revenues overexpenditures 3,971,276 (875,147) (1,360,429) (642,171)

OTHER FINANCING SOURCES (USES)Sales of capital assets 28,758 - - -Transfers in 1,161,846 875,147 1,537,950 630,000Transfers out (3,168,426) - - (24,000)

Total Other Financing Sources (Uses) (1,977,822) 875,147 1,537,950 606,000

Net Change in Fund Balances 1,993,454 - 177,521 (36,171)

FUND BALANCES (DEFICIT) - Beginning ofYear 25,052,942 (3,626,197) (206,350) 1,605,517

FUND BALANCES (DEFICIT) - END OFYEAR $ 27,046,396 $ (3,626,197) $ (28,829) $ 1,569,346


Totals

$ 15,510,1279,816,5231,763,9823,043,453

330,47511,709,919

153,8161,456,876

43,785,171

5,774,74825,776,1848,101,8881,362,213

1,275,000401,609

42,691,642

1,093,529

28,7584,204,943

(3,192,426)1,041,275

2,134,804

22,825,912

$ 24,960,716



RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIESFor the Year Ended December 31, 2017

Net change in fund balances - total governmental funds $ 2,134,804 Amounts reported for governmental activities in the statement of activities are differentbecause:

Governmental funds report capital outlays as expenditures. However, in the statement ofnet position the cost of these assets is capitalized, and they are depreciated over theirestimated useful lives and reported as depreciation expense in the statement of activities.

Capital outlay is reported as an expenditure in the fund financial statements but iscapitalized in the government-wide financial statements. 3,123,963

Depreciation is reported in the government-wide financial statements. (2,042,910)Net effect of certain miscellaneous adjustments to capital assets. (228,858)

Debt issued provides current financial resources to governmental funds, but issuing debtincreases long-term liabilities in the statement of net position. Repayment of debt principalis an expenditure in the governmental funds, but the repayment reduces long-termliabilities in the statement of net position.

Principal repaid 1,275,000

Governmental funds report debt premiums and discounts as other financing sources (uses)or expenditures. However, in the statement of net position, these are reported asadditions to or deductions from long-term debt. These are allocated over the period thedebt is outstanding in the statement of activities and are reported as interest expense.

Amortization of bond premium 24,702

Some expenses in the statement of activities do not require the use of current financialresources and, therefore, are not reported as expenditures in the governmental funds.

Compensated absences (138,276)Net other post employment benefit obligation (265,648)Net pension liability 10,837,239Deferred outflows of resources due to pensions (3,076,177)Deferred inflows of resources due to pensions (9,509,680)Amortization of deferred charge on refunding (7,166)

Less amount reported in internal service funds below. 151,306

Internal service funds are used by management to charge information technology, centralgarage, and building maintenance costs to individual funds. The change in net position ofthe internal service funds is reported with governmental activities. (150,514)

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 2,127,785



STATEMENT OF NET POSITIONPROPRIETARY FUNDSAs of December 31, 2017

Business-type Activities - Enterprise Funds

Water andSewerage

ArboretumGolf

NonmajorEnterprise

Funds Totals

ASSETSCurrent Assets

Cash and equivalents $ 2,608,257 $ 452,205 $ 883,284 $ 3,943,746Investments 501,915 - - 501,915Receivables

Accounts - water and sewer 1,676,752 - - 1,676,752Interest 312 - - 312Other 208,855 176 88,427 297,458Due from other funds - 41,532 20,262 61,794

Inventory - 14,146 20,966 35,112Total Current Assets 4,996,091 508,059 1,012,939 6,517,089

Noncurrent AssetsCapital Assets

Land - 5,219,738 978,776 6,198,514Land improvements - 1,516,051 450,437 1,966,488Construction in progress 840,718 - - 840,718Buildings and improvements - 8,474,799 2,695,811 11,170,610Machinery, equipment and

furnishings - - 70,150 70,150Water and sewer infrastructure 72,183,557 - - 72,183,557Less: Accumulated depreciation (37,478,978) (8,837,035) (2,324,967) (48,640,980)

Other AssetsInvestment in joint venture 7,310,956 - - 7,310,956

Total Noncurrent Assets 42,856,253 6,373,553 1,870,207 51,100,013

Total Assets 47,852,344 6,881,612 2,883,146 57,617,102

DEFERRED OUTFLOWS OF RESOURCESDeferred outflows of resources related to

pensions 639,626 44,879 153,580 838,085

Total Deferred Outflows of Resources 639,626 44,879 153,580 838,085


GovernmentalActivities -

InternalService Funds

$ 345,701-

-----

345,701

----

---

--

345,701

588,660

588,660



STATEMENT OF NET POSITIONPROPRIETARY FUNDSAs of December 31, 2017


Water andSewerage

ArboretumGolf

NonmajorEnterprise

Funds Totals

LIABILITIES Current Liabilities

Accounts payable 875,663 23,432 9,292 908,387Accrued wages 38,491 1,368 5,699 45,558Other - 1,119 21,083 22,202Development deposits 44,453 - 6,745 51,198Due to other funds 96,382 48,476 754,747 899,605IEPA loan payable 18,240 - - 18,240Compensated absences 4,751 - 6,110 10,861Installment note payable - current 296,530 - - 296,530

Total Current Liabilities 1,374,510 74,395 803,676 2,252,581

Noncurrent LiabilitiesLong-Term Debt

Compensated absences 58,007 - 74,590 132,597IEPA loan payable 329,993 - - 329,993Net pension liability 1,181,716 82,916 283,739 1,548,371Installment note payable - long term 6,341,869 - - 6,341,869

Total Noncurrent Liabilities 7,911,585 82,916 358,329 8,352,830

Total Liabilities 9,286,095 157,311 1,162,005 10,605,411

DEFERRED INFLOWS OF RESOURCESDeferred inflows of resources related to

pensions 160,188 11,239 38,462 209,889

Total Deferred Inflows of Resources 160,188 11,239 38,462 209,889

NET POSITIONNet investment in capital assets 28,558,665 6,373,553 1,870,207 36,802,425Unrestricted (deficit) 10,487,022 384,388 (33,948) 10,837,462

TOTAL NET POSITION $ 39,045,687 $ 6,757,941 $ 1,836,259 $ 47,639,887




256,62632,589

--

53,120---

342,335

--

1,087,553-

1,087,553

1,429,888

147,424

147,424

-(642,951)

$ (642,951)



STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITIONPROPRIETARY FUNDS



Water andSewerage

ArboretumGolf

NonmajorEnterprise

Funds Totals

OPERATING REVENUESWater and sewer charges $ 10,450,138 $ - $ - $ 10,450,138Daily greens fee and memberships - 739,962 692,104 1,432,066Merchandise sales - 56,654 64,171 120,825Connection and recapture fees 610,800 - - 610,800Cart, club, and other rentals - 217,676 210,358 428,034Driving range fees - - 68,478 68,478SWANCC user fees - - 970,268 970,268Miscellaneous 393,328 143,527 8,530 545,385Internal service contributions - - - -

Total Operating Revenues 11,454,266 1,157,819 2,013,909 14,625,994

OPERATING EXPENSESWater operations 1,881,149 - - 1,881,149Sewer operations 4,170,934 - - 4,170,934Water purchases 1,710,503 - - 1,710,503Golf operations - 1,187,267 1,123,539 2,310,806Cost of sales - pro shop - 42,491 44,898 87,389Refuse operations - - 705,393 705,393Depreciation 1,523,581 431,732 58,946 2,014,259Internal service fund expenses - - - -

Total Operating Expenses 9,286,167 1,661,490 1,932,776 12,880,433Operating Income (Loss) 2,168,099 (503,671) 81,133 1,745,561

NONOPERATING REVENUES (EXPENSES)Interest revenue 492,132 - - 492,132Interest expense (168,387) - - (168,387)

Total Nonoperating Revenues(Expenses) 323,745 - - 323,745

Income (Loss) Before Transfers 2,491,844 (503,671) 81,133 2,069,306

TRANSFERSTransfers in - 548,833 206,496 755,329Transfers out (1,037,644) (55,400) (620,600) (1,713,644)

Total Transfers (1,037,644) 493,433 (414,104) (958,315)Change in Net Position 1,454,200 (10,238) (332,971) 1,110,991

NET POSITION (DEFICIT) - Beginning of Year 37,591,487 6,768,179 2,169,230 46,528,896NET POSITION (DEFICIT) - END OF

YEAR $ 39,045,687 $ 6,757,941 $ 1,836,259 $ 47,639,887




$ --------

4,008,4314,008,431

-------

4,104,7434,104,743

(96,312)

--

-(96,312)

-(54,202)(54,202)

(150,514)

(492,437)

$ (642,951)



STATEMENT OF CASH FLOWSPROPRIETARY FUNDS



Water andSewerage

ArboretumGolf

NonmajorEnterprise

Funds Totals

CASH FLOWS FROM OPERATINGACTIVITIES

Received from customers $ 11,369,462 $ 1,157,819 $ 2,087,385 $ 14,614,666Received from interfund charges - - - -Paid to suppliers for goods and services (6,266,670) (1,052,300) (1,610,017) (8,928,987)Paid to employees for services (1,326,418) (152,120) (387,912) (1,866,450)

Net Cash Flows From OperatingActivities 3,776,374 (46,601) 89,456 3,819,229

CASH FLOWS FROM INVESTINGACTIVITIES

Interest income 30,993 - - 30,993Net Cash Flows From Investing

Activities 30,993 - - 30,993

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES

Transfers in - 548,833 206,496 755,329Transfers (out) (992,876) (50,027) 128,123 (914,780)

Net Cash Flows From NoncapitalFinancing Activities (992,876) 498,806 334,619 (159,451)

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES

Purchase of capital assets (2,228,568) - (820,170) (3,048,738)Water installment note principal paid (256,048) - - (256,048)Water installment note interest paid (160,088) - - (160,088)IEPA loan principal paid (17,828) - - (17,828)IEPA loan interest paid (8,299) - - (8,299)

Net Cash Flows From Capital andRelated Financing Activities (2,670,831) - (820,170) (3,491,001)

Net Change in Cash and CashEquivalents 143,660 452,205 (396,095) 199,770

CASH AND CASH EQUIVALENTS - Beginningof Year 2,464,597 - 1,279,379 3,743,976

CASH AND CASH EQUIVALENTS - ENDOF YEAR $ 2,608,257 $ 452,205 $ 883,284 $ 3,943,746




$ -4,008,431

(2,584,486)(1,345,701)

78,244

-

-

-(11,274)

(11,274)

-----

-

66,970

278,731

$ 345,701



STATEMENT OF CASH FLOWSPROPRIETARY FUNDS



Water andSewerage

ArboretumGolf

NonmajorEnterprise

Funds Totals

RECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH FLOWS FROMOPERATING ACTIVITIES

Operating income (loss) $ 2,168,099 $ (503,671) $ 81,133 $ 1,745,561Adjustments to Reconcile Operating

Income (Loss) to Net Cash Flows FromOperating Activities

Depreciation 1,523,581 431,732 58,946 2,014,259Changes in assets and liabilities

Accounts receivable (84,804) - 73,476 (11,328)Accounts payable (44,383) 15,507 (77,640) (106,516)Accrued salaries 7,081 (124) 462 7,419Deposits 316 - (93,255) (92,939)Inventory - (283) (1,511) (1,794)Compensated absences (1,467) - 7,623 6,156Deferred outflows - pensions 108,616 14,213 40,772 163,601Deferred inflows - pensions 84,449 5,258 18,789 108,496Net pension liability 14,886 (9,233) (19,339) (13,686)

NET CASH FLOWS FROMOPERATING ACTIVITIES $ 3,776,374 $ (46,601) $ 89,456 $ 3,819,229

NONCASH CAPITAL AND RELATEDFINANCING ACTIVITIES

None




$ (96,312)

-

-23,492

(242)---

160,61871,580

(80,892)

$ 78,244



STATEMENT OF FIDUCIARY NET POSITIONFIDUCIARY FUNDS


Pension Trusts Agency Fund

ASSETSCash $ 1,700,221 $ 280,049Investments

U.S. treasuries 12,101,993 -U.S. agencies 23,557,303 -Mutual funds - other than bond funds 45,300,374 -Equity securities 35,799,495 -Municipal bonds 3,339,025 -Corporate bonds 7,134,387 -

ReceivablesInterest 228,842 -

Prepaid items 1,138 -Due from primary government 23,822 -

Total Assets 129,186,600 280,049

LIABILITIESAccounts payable 107,023 -Due to primary government 84,629 -Due to other governments - 280,049

Total Liabilities 191,652 280,049

NET POSITION

Restricted for pensions $ 128,994,948 $ -



STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFIDUCIARY FUNDS


Pension Trusts

ADDITIONSContributions

Employer $ 4,388,217Plan members 1,296,295

Total Contributions 5,684,512

Investment incomeInterest 806,418Net appreciation in fair value of investments 15,444,107

Total Investment Income 16,250,525Less Investment expense 379,295

Net Investment Income 15,871,230Total Additions 21,555,742

DEDUCTIONSAdministration 124,008Pension benefits and refunds 6,143,000

Total Deductions 6,267,008

Change in Net Position 15,288,734

NET POSITION - Beginning of Year 113,706,214

NET POSITION - END OF YEAR $ 128,994,948



INDEX TO NOTES TO FINANCIAL STATEMENTSAs of and for the Year Ended December 31, 2017

NOTE Page

I Summary of Significant Accounting Policies 44A. Reporting Entity 44B. Government-Wide and Fund Financial Statements 45C. Measurement Focus, Basis of Accounting, and Financial Statement

Presentation 47D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of

Resources, and Net Position or Equity 491. Deposits and Investments 492. Receivables 523. Inventories and Prepaid Items 534. Capital Assets 535. Deferred Outflows of Resources 546. Compensated Absences 547. Long-Term Obligations 548. Deferred Inflows of Resources 559. Equity Classifications 55

II Stewardship, Compliance, and Accountability 57A. Excess Expenses Over Appropriations 57B. Deficit Balances 57

III Detailed Notes on All Funds 58A. Deposits and Investments 58B. Receivables 63C. Capital Assets 64D. Interfund Receivables/Payables and Transfers 66E. Short-Term Debt Activity 68F. Long-Term Obligations 68G. Lease Disclosures 72

IV Other Information 72A. Employees' Retirement System 72B. Risk Management 86C. Commitments and Contingencies 86D. Joint Ventures 87E. Other Postemployment Benefits 89F. Tax Abatement 92G. Effect of New Accounting Standards on Current-Period Financial Statements 95

Page 43


NOTES TO FINANCIAL STATEMENTSAs of and for the Year Ended December 31, 2017

NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Village of Buffalo Grove, Illinois (the Village) was incorporated in 1958. The Village is a home-rulemunicipality, under the 1970 Illinois Constitution, located in both Lake County, Illinois and Cook County,Illinois. The Village operates under a Council-Manager form of government and provides the followingservices as authorized by its charter: public safety (police and fire protection), sanitation (water andsewer), building and zoning, engineering, recreation, civil defense and overall administration.

The accounting policies of the Village of Buffalo Grove, Illinois conform to accounting principles generallyaccepted in the United States of America as applicable to governmental units. The accepted standard-setting body for establishing governmental accounting and financial reporting principles is theGovernmental Accounting Standards Board (GASB).

A. REPORTING ENTITY

This report includes all of the funds of the Village. The reporting entity for the Village consists of theprimary government and its component units. Component units are legally separate organizations forwhich the primary government is financially accountable or other organizations for which the nature andsignificance of their relationship with the primary government are such that their exclusion would causethe reporting entity's financial statements to be misleading. The Village has not identified anyorganizations that meet this criteria.

The Police Pension Employees Retirement System (PPERS) is established for the Village's policeemployees. PPERS functions for the benefit of these employees and is governed by a five-memberpension board. Two members appointed by the Village’s President, one pension beneficiary elected by themembership, and two police employees elected by the membership constitute the pension board. TheVillage and the PPERS participants are obligated to fund all PPERS costs based upon actuarialvaluations. The State of Illinois is authorized to establish benefit levels and the Village is authorized toapprove the actuarial assumptions used in the determination of contribution levels. Although it possessesmany characteristics of a legally separate government, PPERS is reported as if it were part of the primarygovernment because its sole purpose is to finance and administer the pensions of the Village’s policeemployees and because of the fiduciary nature of such activities. PPERS is reported as a pension trustfund and the data for the pension is included in the government's fiduciary fund financial statements. Noseparate annual financial report is issued for the PPERS.

The Firefighters’ Pension Employees Retirement System (FPERS) is established for the Village'sfirefighters. FPERS functions for the benefit of these employees and is governed by a five-memberpension board. Two members appointed by the Village’s President, one pension beneficiary elected by themembership; and two fire employees elected by the membership constitute the pension board. The Villageand the FPERS participants are obligated to fund all FPERS costs based upon actuarial valuations. TheState of Illinois is authorized to establish benefit levels and the Village is authorized to approve theactuarial assumptions used in the determination of contribution levels. Although it possesses many of thecharacteristics of a legally separate government, FPERS is reported as if it were part of the primarygovernment because its sole purpose is to finance and administer the pensions of the Village’s firefightersbecause of the fiduciary nature of such activities. FPERS is reported as a pension trust fund and the datafor the pension is included in the government's fiduciary fund financial statements. No separate annualfinancial report is issued for the FPERS.

Page 44



NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS


The statement of net position and statement of activities display information about the reportinggovernment as a whole. They include all funds of the reporting entity except for fiduciary funds. Thestatements distinguish between governmental and business-type activities. Governmental activitiesgenerally are financed through taxes, intergovernmental revenues, and other nonexchange revenues.Business-type activities are financed in whole or in part by fees charged to external parties for goods orservices.

The statement of activities demonstrates the degree to which the direct expenses of a given function orsegment are offset by program revenues. Direct expenses are those that are clearly identifiable with aspecific function or segment. The Village does not allocate indirect expenses to functions in the statementof activities. Program revenues include 1) charges to customers or applicants who purchase, use ordirectly benefit from goods, services, or privileges provided by a given function or segment, and 2) grantsand contributions that are restricted to meeting the operational or capital requirements of a particularfunction or segment. Taxes and other items not included among program revenues are reported asgeneral revenues. Internally dedicated resources are reported as general revenues rather than asprogram revenues.


Financial statements of the Village are organized into funds, each of which is considered to be a separateaccounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts,which constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, netposition/fund balance, revenues, and expenditures/expenses.

Funds are organized as major funds or nonmajor funds within the governmental and proprietarystatements. An emphasis is placed on major funds within the governmental and proprietary categories. Afund is considered major if it is the primary operating fund of the Village or meets the following criteria:

a. Total assets/deferred outflows of resources, liabilities/deferred inflows of resources,revenues, or expenditures/expenses of that individual governmental or enterprise fund are atleast 10% of the corresponding total for all funds of that category or type, and

b. The same element of the individual governmental or enterprise fund that met the 10% testis at least 5% of the corresponding total for all governmental and enterprise funds combined.

c. In addition, any other governmental or enterprise fund that the Village believes isparticularly important to financial statement users may be reported as a major fund.

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 individualgovernmental funds and major individual enterprise funds are reported as separate columns in the fundfinancial statements.

Page 45




B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.)

Fund Financial Statements (cont.)

The Village reports the following major governmental funds:

General Fund - accounts for the Village's primary operating activities. It is used to account forand report all financial resources except those accounted for and reported in another fund.

Facilities Development Fund - to account for and report financial resources that are restricted,committed, or assigned to expenditure for capital outlays, including the acquisition orconstruction of capital facilities and other capital assets.

Street Maintenance Fund - used to account for and report financial resources that are restricted,committed, or assigned to expenditure for capital outlays, including the acquisition orconstruction of capital facilities and other capital assets.

The Village reports the following major enterprise funds:

Water and Sewerage Fund - accounts for operations of the water and sewerage system.Arboretum Golf Fund - accounts for operations of the Arboretum golf course. All activities

necessary to provide the service are accounted for in this fund including, but not limited to,administration, operations, maintenance and related debt service.

The Village reports the following nonmajor governmental and enterprise funds:

Special Revenue Funds - used to account for and report the proceeds of specific revenuesources that are restricted or committed to expenditures for specified purposes (other than debtservice or capital projects).

Motor Fuel Tax FundMetra Parking Lot Fund

Debt Service Fund - used to account for and report financial resources that are restricted,committed, or assigned to expenditure for the payment of general long-term debt principal,interest, and related costs.

Debt Service Fund

Enterprise Funds - used to account for and report any activity for which a fee is charged toexternal uses for goods or services, and must be used for activities which meet certain debt orcost recovery criteria.

Buffalo Grove Golf FundRefuse Service Fund

Page 46




B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.)

Fund Financial Statements (cont.)

In addition, the Village reports the following fund types:

Internal Service Funds - used to account for and report the financing of goods or servicesprovided by one department or agency to other departments or agencies of the Village, or toother governmental units, on a cost-reimbursement basis.

Information Technology FundCentral Garage FundBuilding Maintenance Fund

Pension Trust Funds - used to account for and report resources that are required to be held intrust for the members and beneficiaries of defined benefit pension plans.

Police Pension FundFirefighters' Pension Fund

Agency Fund - used to account for and report assets held by the Village in a trustee capacity oras an agent for individuals, private organizations, and/or other governmental units.

School and Park Donations Fund

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION


The government-wide statement of net position and statement of activities are reported using theeconomic resources measurement focus and the accrual basis of accounting. Under the accrual basis ofaccounting, revenues are recognized when earned and expenses are recorded when the liability isincurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting fromexchange and exchange-like transactions are recognized when the exchange takes place. Property taxesare recognized as revenues in the year for which they are levied. Taxes receivable for the following yearare recorded as receivables and deferred inflows. Grants and similar items are recognized as revenue assoon as all eligibility requirements imposed by the provider are met. Special assessments are recorded asrevenue when earned. Unbilled receivables are recorded as revenues when services are provided.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financialstatements. The interfund services provided and used are not eliminated in the process of consolidation.

Page 47




C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (cont.)


Governmental fund financial statements are reported using the current financial resources measurementfocus and the modified accrual basis of accounting. Revenues are recorded when they are bothmeasurable and available. Available means collectible within the current period or soon enough thereafterto be used to pay liabilities of the current period. For this purpose, the Village considers revenues to beavailable if they are collected within 90 days of the end of the current fiscal period. Expenditures arerecorded when the related fund liability is incurred, except for unmatured interest on long-term debt,claims, judgments, compensated absences, and pension expenditures, which are recorded as a fundliability when expected to be paid with expendable available financial resources.

Property taxes are recorded in the year levied as receivables and deferred inflows. They are recognizedas revenues in the succeeding year when services financed by the levy are being provided.

Intergovernmental aids and grants are recognized as revenues in the period the Village is entitled theresources and the amounts are available. Amounts owed to the Village which are not available arerecorded as receivables and unavailable revenues. Amounts received before eligibility requirements(excluding time requirements) are met are recorded as liabilities. Amounts received in advance of meetingtime requirements are recorded as deferred inflows.

Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services,special assessments and interest. Other general revenues such as fines and forfeitures, inspection fees,recreation fees, and miscellaneous revenues are recognized when received in cash or when measurableand available under the criteria described above.

Proprietary and fiduciary fund financial statements (other than agency funds) are reported using theeconomic resources measurement focus and the accrual basis of accounting, as described previously inthis note. Agency funds follow the accrual basis of accounting, and do not have a measurement focus.

The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goods inconnection with a proprietary fund's principal ongoing operations. The principal operating revenues of theWater and Sewer fund are charges to customers for sales and services. Special assessments arerecorded as receivables and contribution revenue when levied. Operating expenses for proprietary fundsinclude the cost of sales and services, administrative expenses, and depreciation on capital assets. Allrevenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

All Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principlesrequires 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 contingentassets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenditures/expenses during the reporting period. Actual results could differ from those estimates.

Page 48




D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES,AND NET POSITION OR EQUITY

1. Deposits and Investments

For purposes of the statement of cash flows, the Village considers all highly liquid investments with aninitial maturity of three months or less when acquired to be cash equivalents.

Illinois Statutes authorize the Village to make deposits/investments in insured commercial banks, savingsand 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 oragreement to repurchase these same obligations, repurchase agreements, short-term commercial paperrated within the three highest classifications by at least two standard rating services, and the Illinois FundsInvestment Pool.

Pension funds may also invest in certain non-U.S. obligations, Illinois municipal corporations taxanticipation warrants, veteran’s loans, obligations of the State of Illinois and its political subdivisions, andthe Illinois insurance company general and separate accounts, mutual funds meeting certainrequirements, equity securities, and corporate bonds meeting certain requirements. Pension funds withnet assets in excess of $10,000,000 and an appointed investment advisor may invest an additional portionof its assets in common and preferred stocks and mutual funds, that meet certain requirements. ThePolice Pension Fund’s investment policy allows investments in all of the above listed accounts, but doesexclude any repurchase agreements. The Firefighters' Pension Fund allows funds to be invested in anytype of security authorized by the Illinois Pension Code.

The Police Pension Fund's investment policy, in accordance with Illinois Statutes, establishes the followingtarget allocation across asset classes:

Asset Class Target

Long-TermExpected RealRate of Return

Cash 2% 0.00%

Fixed income 33% 4.50%

Large cap domestic equities 52% 4.75%

Small cap domestic equities 5% 5.00%

International equities 5% 5.50%

Real estate 3% 3.75%

Illinois Compiled Statues (ILCS) limit the Police Pension Fund's investments in equities, mutual funds andvariable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. Theblended asset class is comprised of all other asset classes to allow for rebalancing the portfolio.

Page 49




D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND

NET POSITION OR EQUITY (cont.)

1. Deposits and Investments (cont.)

The long-term expected rate of return on the Police Pension Fund's investments was determined using abuilding block method. The best-estimate of future real rates of return (net of pension plan investmentexpense and inflation) were developed for each major asset class. These ranges were combined toproduce long-term expected rate of return by weighting the expected future real rates of return by thetarget asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real ratesof return for each major asset class included in the police pension fund's target asset allocation are listedin the table above.

The Firefighters' Pension Fund's investment policy, in accordance with Illinois Statutes, establishes thefollowing target allocation across asset classes:

Asset Class Target

Long-TermExpected RealRate of Return

U.S. treasury bills/notes/bonds 15% 1.25%

U.S. government agency securities (non-MBS) 17.5% 1.25%

U.S. government agency securities - callable 10% 1.25%

U.S. government agency securities (MBS) 2.5% 1.25%

Taxable municipal securities 5% 1.25%

U.S. large company stocks 35% 6.45%

U.S. small company stocks 10% 8.45%

International stocks 5% 6.75%

Illinois Compiled Statues (ILCS) limit the Firefighters' Pension Fund's investments in equities, mutualfunds and variable annuities to 65%. Securities in any one company should not exceed 5% of the totalfund. The blended asset class is comprised of all other asset classes to allow for rebalancing the portfolio.

The long-term expected rate of return on the Firefighters' Pension Fund's investments was determinedusing an asset allocation study conducted by the Firefighters' Pension Fund's investment managementconsultant in 2017 in which best-estimate ranges of expected future real rates of return (net of pensionplan investment expense and inflation) were developed for each major asset class. These ranges werecombined to produce long-term expected rate of return by weighting the expected future real rates ofreturn by the target asset allocation percentage and by adding expected inflation. Best estimates orarithmetic real rates of return for each major asset class included in the firefighters' pension fund's targetasset allocation are listed in the table above.

The Village, Police and Firefighters' Pensions have adopted an investment policy. That policy follows thestate statute for allowable investments.

Page 50







Interest Rate Risk

The Village's investment policy protects against fair value losses resulting from rising interest rates bydiversifying its investment portfolio to prevent over-concentration of assets in a specific maturity, aspecific issuer, or a specific class of securities. The Village does not have a formal policy that limitsinvestment maturities as a means of managing its exposure to fair value losses arising from increasinginterest rates.

Credit Risk

The Village's investment policy applies the "prudent person" standard in managing its investmentportfolio. As such, all investments are made with such judgment and care, under circumstances thenprevailing, which persons of prudence, discretion and intelligence exercise in management of their ownaffairs, not for speculation, but for investment, considering the probable safety of their capital as well asthe probable income to be derived.

The Village's investment policy also limits investments in commercial paper to the highest ratingclassifications, as established by at least two of the four major rating services, and which mature notlater than 180 days from the purchase date. Such purchases may not exceed 10% of the issuer corporation's outstanding obligations.

Concentration of Credit Risk

The Village limits the amount that can be invested in commercial paper to one-third of the Village's totalinvestments.

Custodial Credit Risk - Deposits

The Village's investment policy requires securing deposit collateral from depository institutions whendeposits are in excess of FDIC limits. The amount of deposits not collateralized or insured by an agencyof the federal government shall not exceed 75% of the capital stock and surplus of a banking institution.These values shall be reviewed on a quarterly basis comparing actual deposits not insured orcollateralized against the capital stock and surplus measure. Values shall be taken from publishedregulatory agency reports required by either the Comptroller of the Currency or the Commissioner ofBanks and Trust Companies.

If deposits are maintained with a savings and loan association, the amount of deposits not collateralized orinsured shall not exceed 75% of the net worth of the institution as defined and reported to the regulatoryagencies. The Police and Firefighters’ Pension investment policies limit exposure to deposit custodialcredit risk by requiring deposits in excess of FDIC insurable limits to be collateralized.

Page 51







Custodial Credit Risk - Investments

The Village's investment policy requires all investments and investment collateral to be held insafekeeping by a third party custodial institution as designated by the Treasurer in the Village's name.Direct investments guaranteed by the United States or an agency of the United States do not requirecollateral.

Investments are stated at fair value, which is the amount at which an investment could be exchanged in acurrent transaction between willing parties. Fair values are based on quoted market prices. Noinvestments are reported at amortized cost. Adjustments necessary to record investments at fair value arerecorded in the operating statement as increases or decreases in investment income. Investment incomeon commingled investments of municipal accounting funds is allocated based on average balances. Thedifference between the bank statement balance and carrying value is due to outstanding checks and/ordeposits in transit.

Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allowsgovernments within the State to pool their funds for investment purposes. Illinois Funds is not registeredwith the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of theInvestment Company Act of 1940. Investments in Illinois Funds are valued at Illinois Fund’s share price,the price for which the investments could be sold.

Illinois Metropolitan Investment Fund (IMET) is a not-for-profit investment trust formed pursuant to theIllinois Municipal Code and managed by a Board of Trustees elected from the participating members.IMET is not registered with the SEC as an investment company. Investments in IMET are valued atIMET's share price, the price for which the investment could be sold. Investment in IMET's 1-3 year fundmay be redeemed with 5 business days' notice.

See Note III. A. for further information.

2. Receivables

Property taxes for levy year 2017 attaches as an enforceable lien on January 1, 2017, on property valuesassessed as of the same date. Taxes are levied by December following the lien date (by passage of a TaxLevy Ordinance).

Tax bills for levy year 2016 are prepared by Cook County and issued on or about February 1, 2017 andJuly 1, 2017, and are payable in two installments, on or about March 1, 2017 and August 1, 2017 or within30 days of the tax bills being issued.

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2. Receivables (cont.)

Tax bills for levy year 2016 are prepared by Lake County and issued on or about June 1, 2017 and August1, 2017, and are payable in two installments, on or about July 1, 2017 and September 1, 2017 or within 30days of the tax bills being issued.

The counties collect such taxes and remits them periodically. The 2017 property tax levy is recognized asa receivable and deferred inflow in fiscal 2017. As the taxes become available to finance currentexpenditures, they are recognized as revenues. At December 31, 2017, the property taxes receivable andrelated deferred inflows consisted of the estimated amount collectible from the 2017 levy.

During the course of operations, transactions occur between individual funds that may result in amountsowed between funds. Short-term interfund loans are reported as "due to and from other funds." Long-terminterfund loans (noncurrent portion) are reported as "advances from and to other funds." Interfundreceivables and payables between funds within governmental activities are eliminated in the statement ofnet position. Any residual balances outstanding between the governmental activities and business-typeactivities are reported in the governmental-wide financial statements as internal balances.

In the governmental fund financial statements, advances to other funds are offset equally by anonspendable fund balance account which indicates that they do not constitute expendable availablefinancial resources and, therefore, are not available for appropriation or by a restricted fund balanceaccount, if the funds will ultimately be restricted when the advance is repaid.

3. Inventories and Prepaid Items

Governmental fund inventories, if material, are recorded at cost based on the FIFO method using theconsumption method of accounting. Inventories consist of golf pro shop merchandise and central garagefuel reserves. The cost of inventory is recorded as expenditures/expenses when consumed rather thanwhen purchased.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded asprepaid items in both government-wide and fund financial statements. The cost of prepaid items arerecorded as expenditures/expenses when consumed rather than when purchased.

4. Capital Assets

Government-Wide Statements

Capital assets, which include property, plant and equipment, are reported in the government-wide financialstatements. Capital assets are defined by the government as assets with an initial cost of more than$10,000 and an estimated useful life in excess of 1 year. All capital assets are valued at historical cost, orestimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at theiracquisition value.

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4. Capital Assets (cont.)

Government-Wide Statements (cont.)

Depreciation and amortization of all exhaustible capital assets is recorded as an allocated expense in thestatement of activities, with accumulated depreciation and amortization reflected in the statement of netposition. Depreciation and amortization is provided over the assets' estimated useful lives using thestraight-line method. The range of estimated useful lives by type of asset is as follows:

Buildings 20 YearsWell and SystemImprovements 5 - 50 YearsFurniture and Equipment 2 - 10 YearsVehicles 2 - 12 Years


In the fund financial statements, capital assets used in governmental fund operations are accounted for ascapital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietaryfund operations are accounted for the same way as in the government-wide statements.

5. Deferred Outflows of Resources

A deferred outflow of resources represents a consumption of net position/fund balance that applies to afuture period and will not be recognized as an outflow of resources (expense/expenditure) until that futuretime.

6. Compensated Absences

Vacation pay does vest; employees may carry over vacation time equivalent of one full year'sallowance. All vacation hours carried over from the previous year must be used in the current year or besubject to forfeit. Terminated employees are reimbursed for any accumulated and earned vacation pay. The amounts of such accumulated vacation benefits are not material. In the event of termination, anyvested amounts due to Village employees for accumulated unused sick leave will be paid to ICMARetirement Corporation based on the formula set forth in the Village's personnel manual. Except for thoseamounts for known retirements in the upcoming year, accrued amounts are generally considered to be due after one year. Amounts are reported as liabilities in the Government-wide Statement of NetPosition. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits. A liabilityfor these amounts is reported in governmental funds only if they have mature, for example, as a result ofemployee resignations or retirements and are payable with expendable resources.

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7. Long-Term Obligations

All long-term obligations to be repaid from governmental and business-type resources are reported asliabilities in the government-wide statements. The long-term obligations consist primarily of bondspayable.

Long-term obligations for governmental funds are not reported as liabilities in the fund financialstatements. The face value of debts (plus any premiums) are reported as other financing sources andpayments of principal and interest are reported as expenditures. The accounting in proprietary funds is thesame as it is in the government-wide statements.

For the government-wide statements and proprietary fund statements, bond premiums and discounts areamortized over the life of the issue using the effective interest method. The balance at year end is shownas an increase or decrease in the liability section of the statement of net position.

8. Deferred Inflows of Resources

A deferred inflow of resources represents an acquisition of net position/fund balance that applies to afuture period and therefore will not be recognized as an inflow of resources (revenue) until that future time.

9. Equity Classifications

Government-Wide Statements

Equity is classified as net position and displayed in three components:

a. Net investment in capital assets - Consists of capital assets including restricted capitalassets, net of accumulated depreciation and reduced by the outstanding balances (excludingunspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that areattributable to the acquisition, construction, or improvement of those assets.

b. Restricted net position - Consists of net position with constraints placed on their use eitherby 1) external groups such as creditors, grantors, contributors, or laws or regulations of othergovernments or, 2) law through constitutional provisions or enabling legislation.

c. Unrestricted net position - All other net positions that do not meet the definitions of"restricted" or "net investment in capital assets."

When both restricted and unrestricted resources are available for use, it is the Village's policy to userestricted resources first, then unrestricted resources as they are needed.

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Fund Statements

Governmental fund balances are displayed as follows:

a. Nonspendable - Includes fund balance amounts that cannot be spent either because they arenot in spendable form or because legal or contractual requirements require them to bemaintained intact.

b. Restricted - Consists of fund balances with constraints placed on their use either by 1) externalgroups such as creditors, grantors, contributors, or laws or regulations of other governments or2) law through constitutional provisions or enabling legislation.

c. Committed - Includes fund balance amounts that are constrained for specific purposes that areinternally imposed by the government through formal action of the highest level of decisionmaking authority. Fund balance amounts are committed through a formal action (ordinance) ofthe Village Board. This formal action must occur prior to the end of the reporting period, but theamount of the commitment, which will be subject to the constraints, may be determined in thesubsequent period. Any changes to the constraints imposed require the same formal action ofthe Village Board that originally created the commitment.

d. Assigned - Includes spendable fund balance amounts that are intended to be used for specificpurposes that do not meet the criteria to be classified as restricted or committed. The Villagehas adopted a financial policy authorizing the Director of Finance to assign amounts for aspecific purpose. Assignments may take place after the end of the reporting period.

e. Unassigned - Includes residual positive fund balance within the general fund which has not beenclassified within the other above mentioned categories. Unassigned fund balance may alsoinclude negative balances for any governmental fund if expenditures exceed amounts restricted,committed, or assigned for those purposes.

Proprietary fund equity is classified the same as in the government-wide statements.

The Village considers restricted amounts to be spent first when both restricted and unrestricted fundbalance is available unless there are legal documents / contracts that prohibit doing this, such as in grantagreements requiring dollar for dollar spending. Additionally, the Village would first use committed, thenassigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made.

The Village has a formal minimum fund balance policy. That policy is to maintain fund balance in theGeneral Fund to fund operations for a period of at least three months. The amount in the General Fund isadjusted annually with the adoption of the annual budget and is calculated as three months (25 percent) ofGeneral Fund expenditures (excluding transfers to fund capital projects and pensions). The balance atyear end was $9,794,360, and is included in unassigned General Fund fund balance.

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NOTE II - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. EXCESS EXPENSES OVER APPROPRIATIONS

FundBudgetedExpenses Actual Expenses

Excess ExpensesOver Budget

Water and Sewerage $ 10,554,592 $ 12,525,155 $ 1,970,563

The Village controls expenditures/expenses at the department level. Some individual departmentsexperienced expenditures/expenses which exceeded appropriations. The detail of those items can befound in the Village's year-end budget to actual report.

B. DEFICIT BALANCES

Generally accepted accounting principles require disclosure of individual funds that have deficit balancesat year end.

As of December 31, 2017, the following individual funds held a deficit balance:

Funds Amount Reason

Debt Service $ (59,733) Expenditures exceeded revenuesFacilities Development (3,626,197) Expenditures exceeded revenuesStreet Maintenance (28,829) Expenditures exceeded revenuesCentral Garage (375,764) Expenses exceeded revenuesBuilding Maintenance (267,977) Expenses exceeded revenues

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NOTE III - DETAILED NOTES ON ALL FUNDS

A. DEPOSITS AND INVESTMENTS

The Village's deposits and investments at year end were comprised of the following:

CarryingValue

StatementBalances Associated Risks

Deposits $ 12,502,419 $ 12,970,915 Custodial Credit Risk -Deposits

Money market mutual funds 1,930,778 1,930,778 Credit RiskIllinois Funds 6,269,408 6,269,408 Credit RiskIMET - money market 2,168,742 2,168,742 Credit RiskIMET - 1-3 year fund 4,672,157 4,672,157 Credit Risk, Custodial

Credit Risk - Investments,Interest Rate Risk

U.S. treasuries 12,101,993 12,101,993 Custodial Credit Risk -Investments, InterestRate Risk

U.S. agencies 26,023,224 25,773,350 Credit Risk, CustodialCredit Risk - Investments,Concentration of CreditRisk, Interest Rate Risk

Mutual funds - other than bond funds 45,300,374 45,300,374 N/AEquity securities 35,799,495 35,799,495 Custodial Credit Risk -

Investments,Concentration of CreditRisk

Municipal bonds 4,569,023 4,569,023 Credit Risk, CustodialCredit Risk - Investments,Concentration of CreditRisk, Interest Rate Risk

Corporate bonds 7,134,387 7,134,387 Credit Risk, CustodialCredit Risk - Investments,Concentration of CreditRisk, Interest Rate Risk

Petty cash 2,700 - N/A

Total Deposits and Investments $158,474,700 $158,690,622

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NOTE III - DETAILED NOTES ON ALL FUNDS (cont.)

A. DEPOSITS AND INVESTMENTS (cont.)

Reconciliation to financial statements

Per statement of net positionCash and equivalents $ 25,565,934Investments 3,695,919

Per statement of net position - fiduciaryfunds

Cash - pension trusts 1,700,221Cash - agency 280,049U.S. treasuries 12,101,993U.S. agencies 23,557,303Mutual funds - other than bond funds 45,300,374Equity securities 35,799,495Municipal bonds 3,339,025Corporate bonds 7,134,387

Total Deposits and Investments $158,474,700

Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time andsavings accounts (including NOW accounts) and $250,000 for demand deposit accounts (interest-bearingand noninterest-bearing). In addition, if deposits are held in an institution outside of the state in which thegovernment is located, insured amounts are further limited to a total of $250,000 for the combined amountof all deposit accounts.

The Village categorizes its fair value measurements within the fair value hierarchy established by generallyaccepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fairvalue of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputsare significant other observable inputs; Level 3 inputs are significant unobservable inputs.

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The valuation methods for recurring fair value measurements are as follows:

As of December 31, 2017, the Village's investments were measured using the market valuation methodand valuation inputs as follows:

Village

December 31, 2017

Investment Type Level 1 Level 2 Level 3 Total

U.S. agencies $ - $ 2,465,921 $ - $ 2,465,921 Municipal bonds - 1,229,998 - 1,229,998

Total $ - $ 3,695,919 $ - $ 3,695,919

Police Pension

December 31, 2017


U.S. treasuries $ - $ 8,987,785 $ - $ 8,987,785 U.S. agencies - 6,727,187 - 6,727,187 Corporate bonds - 7,134,387 - 7,134,387 Equity securities 35,799,495 - - 35,799,495 Mutual funds - other than bond funds 7,748,746 - - 7,748,746

Total $ 43,548,241 $ 22,849,359 $ - $ 66,397,600

Firefighters' Pension

December 31, 2017


U.S. treasuries $ - $ 3,114,208 $ - $ 3,114,208 U.S. agencies - 16,830,116 - 16,830,116 Municipal bonds - 3,339,025 - 3,339,025 Mutual funds - other than bond funds 37,551,628 - - 37,551,628

Total $ 37,551,628 $ 23,283,349 $ - $ 60,834,977

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Custodial Credit Risk

Deposits

Custodial credit risk is the risk that in the event of a financial institution failure, the Village's deposits maynot be returned to the Village.

The Village does not have any deposits exposed to custodial credit risk.

Investments

For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, theVillage will not be able to recover the value of its investments or collateral securities that are in thepossession of an outside party.

The Village does not have any investments exposed to custodial credit risk.

Credit Risk

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.

As of December 31, 2017, the Village's investments were rated as follows:

Investment TypeStandard &

Poors

Moody'sInvestorsServices

Money market mutual funds Not Rated Not RatedIllinois Funds AAA Not RatedIllinois Metropolitan Investment Fund AAA Not Rated

U.S. agenciesNot Rated,AA+ to AAA Not Rated, Aaa

Municipal bondsNot Rated, A to

AAANot Rated, A3

to Aaa

Corporate bondsNot Rated, A-

to AAANot Rated, A3

to Aaa

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Interest Rate Risk

Interest rate risk is the risk that changes in interest rates will adversely affect the value of an investment.

As of December 31, 2017, the Village's investments were as follows:

Village

Maturity

Investment Type Fair ValueLess than one

year 1 - 5 years

U.S. agencies $ 2,465,921 $ 752,602 $ 1,713,320Municipal bonds 1,229,998 930,190 299,807

Totals $ 3,695,919 $ 1,682,792 $ 2,013,127

Police Pension

Maturity


year 1-5 years 6-10 yearsMore than 10

years

U.S. treasuries $ 8,987,785 $ 2,911,506 $ 4,066,924 $ - $ 2,009,355U.S. agencies 6,727,187 1,411,120 4,549,327 191,328 575,412Corporate bonds 7,134,387 204,434 5,944,694 985,259 -

Totals $ 22,849,359 $ 4,527,060 $ 14,560,945 $ 1,176,587 $ 2,584,767


Maturity


year 1-5 years 6-10 yearsMore than 10

years

U.S. treasuries $ 3,114,208 $ 921,271 $ 1,965,406 $ 227,531 $ -U.S. agencies 16,830,116 98,417 3,742,577 11,934,837 1,054,285Municipal bonds 3,339,025 300,889 1,631,478 1,177,755 228,903

Totals $ 23,283,349 $ 1,320,577 $ 7,339,461 $ 13,340,123 $ 1,283,188

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Money-Weighted Rate of Return

Police Pension Fund

For the year ended December 31, 2017, the annual money-weighted rate of return on pension planinvestments, net of pension plan investment expense, was 14.38%. The money-weighted rate of returnexpresses investment performance, net of investment expense, adjusted for the changing amountsactually invested.

Firefighters' Pension Fund

For the year ended December 31, 2017, the annual money-weighted rate of return on pension planinvestments, net of pension plan investment expense, was 14.05%. The money-weighted rate of returnexpresses investment performance, net of investment expense, adjusted for the changing amountsactually invested.

See Note I.D.1. for further information on deposit and investment policies.

B. RECEIVABLES

All of the receivables on the balance sheet are expected to be collected within one year.

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C. CAPITAL ASSETS

Capital asset activity for the year ended December 31, 2017, was as follows:

BeginningBalance Additions Deletions

EndingBalance

Governmental ActivitiesCapital assets not being

depreciatedLand $ 36,896,667 $ 703,310 $ - $ 37,599,977Construction in progress 1,443,830 58,723 1,443,830 58,723

Total Capital Assets NotBeing depreciated 38,340,497 762,033 1,443,830 37,658,700

Capital assets being depreciatedBuildings 24,224,501 609,624 - 24,834,125Equipment and vehicles 11,477,792 2,136,663 1,415,682 12,198,773Land improvements 3,242,060 - - 3,242,060Streets 23,013,290 867,548 204,074 23,676,764Storm sewers 38,278,587 191,925 24,784 38,445,728

Total Capital Assets BeingDepreciated 100,236,230 3,805,760 1,644,540 102,397,450

Total Capital Assets 138,576,727 4,567,793 3,088,370 140,056,150

Less: Accumulated depreciation forBuildings (20,884,061) (241,491) - (21,125,552)Equipment and vehicles (7,243,731) (921,198) 1,415,682 (6,749,247)Land improvements (406,847) (64,845) - (471,692)Streets (12,930,111) (443,775) - (13,373,886)Storm sewers (36,064,425) (371,601) - (36,436,026)

Total Accumulateddepreciation (77,529,175) (2,042,910) 1,415,682 (78,156,403)

Net Capital Assets BeingDepreciated 22,707,055 1,762,850 228,858 24,241,047

Total GovernmentalActivities CapitalAssets, Net ofAccumulatedDepreciation $ 61,047,552 $ 2,524,883 $1,672,688 $ 61,899,747

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C. CAPITAL ASSETS (cont.)

Depreciation expense was charged to functions as follows:

Governmental ActivitiesGeneral government $ 62,970Public safety 665,678Public works 1,314,262

Total Governmental Activities Depreciation Expense $ 2,042,910

BeginningBalance Additions Deletions

EndingBalance

Business-type ActivitiesCapital assets not being depreciated

Land $ 6,198,514 $ - $ - $ 6,198,514Construction in progress 50,114 803,408 12,804 840,718

Total Capital Assets Not Beingdepreciated 6,248,628 803,408 12,804 7,039,232

Capital assets being depreciatedBuildings 10,337,636 832,974 - 11,170,610Land improvements 1,966,488 - - 1,966,488Equipment 94,510 - 24,360 70,150Water/Sewer infrastructure 70,758,397 1,425,160 - 72,183,557

Total Capital Assets BeingDepreciated 83,157,031 2,258,134 24,360 85,390,805

Total Capital Assets 89,405,659 3,061,542 37,164 92,430,037

Less: Accumulated depreciation forBuildings (8,633,213) (490,678) - (9,123,891)Land improvements (1,967,961) - - (1,967,961)Equipment (94,510) - 24,360 (70,150)Water/Sewer infrastructure (35,955,397) (1,523,581) - (37,478,978)

Total Accumulated depreciation (46,651,081) (2,014,259) 24,360 (48,640,980)

Net Capital Assets BeingDepreciated 36,505,950 243,875 - 36,749,825

Business-type CapitalAssets, Net ofAccumulated depreciation $ 42,754,578 $ 1,047,283 $ 12,804 $ 43,789,057

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D. INTERFUND RECEIVABLES/PAYABLES AND TRANSFERS

Interfund Receivables/Payables

The following is a schedule of interfund receivables and payables including any overdrafts on pooled cashand investment accounts:

Receivable Fund Payable Fund Amount

General Water and Sewerage $ 96,382General Arboretum Golf 48,476General Nonmajor Business Type 754,747General Internal Service 53,120General Street Maintenance 82,347General Facilities Development 139,211General Nonmajor Governmental 59,733Arboretum Golf General 41,532Nonmajor Business Type General 20,262

Total - Fund Financial Statements 1,295,810

Less: Government-wide eliminations (457,999)

Total Internal Balances - Government-Wide Statement ofNet Position $ 837,811

All amounts are due within one year.

The principal purpose of these interfunds is due to negative cash balances in certain funds and other cashrelated transactions. All remaining balances resulted from the time lag between the dates that (1) interfundgoods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in theaccounting system, and (3) payments between funds are made.

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D. INTERFUND RECEIVABLES/PAYABLES AND TRANSFERS (cont.)

Transfers

The following is a schedule of interfund transfers:

Fund Transferred To Fund Transferred From Amount Principal Purpose

General Water and Sewerage $ 857,644

To fund administrative,operating, and maintenanceexpenses

General Arboretum Golf 55,400 Administrative expensesGeneral Nonmajor Governmental 24,000 Administrative expensesGeneral Nonmajor Business Type 170,600 Administrative expensesGeneral Internal Service Funds 54,202 Funding of capital reserveFacilities Development General 875,147 Funding of capital projectsStreet Maintenance General 1,537,950 Funding of capital projectsArboretum Golf General 548,833 Administrative expensesNonmajor Business Type General 206,496 Administrative expensesNonmajor Governmental Water and Sewerage 180,000 To fund debt serviceNonmajor Governmental Nonmajor Business Type 450,000 To fund debt service

Total - Fund Financial Statements 4,960,272

Less: Fund eliminations (4,001,957)

Total Transfers - Government-Wide Statementof Activities $ 958,315

Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that thebudget requires to expend them, (2) move receipts restricted to debt service from the funds collecting thereceipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund tofinance various programs accounted for in other funds in accordance with budgetary authorizations.

For the statement of activities, interfund transfers within the governmental activities or business-typeactivities are netted and eliminated.

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E. SHORT-TERM DEBT ACTIVITY

The Village issued short-term debt for funding costs related to the Emerald Ash Borer reforestation.

Short-term debt activity for the year ended December 31, 2017, was as follows:

BeginningBalance Issued Redeemed

EndingBalance

Line of credit $ 3,400,000 $ - $ - $ 3,400,000

Totals $ 3,400,000 $ - $ - $ 3,400,000

F. LONG-TERM OBLIGATIONS

Long-term obligations activity for the year ended December 31, 2017, was as follows:

BeginningBalance Increases Decreases

EndingBalance

Amounts DueWithin One

Year

Governmental ActivitiesBonds Payable

General obligation debt $ 15,640,000 $ - $ 1,275,000 $ 14,365,000 $ 1,315,000Premium 241,408 - 24,702 216,706 -

Sub-totals 15,881,408 - 1,299,702 14,581,706 1,315,000

Other LiabilitiesVested compensated

absences 1,518,278 263,695 125,419 1,656,554 125,419Other postemployment

benefits 969,738 650,328 384,680 1,235,386 -Net pension liability 60,433,984 12,003,730 22,840,969 49,596,745 -

Total Other Liabilities 62,922,000 12,917,753 23,351,068 52,488,685 125,419

Total GovernmentalActivities Long-TermLiabilities $ 78,803,408 $ 12,917,753 $ 24,650,770 $ 67,070,391 $ 1,440,419

Business-type ActivitiesLoans and Notes Payable

IEPA loan payable $ 366,061 $ - $ 17,828 $ 348,233 $ 18,240Water installment note 6,894,447 - 256,048 6,638,399 296,530

Sub-totals 7,260,508 - 273,876 6,986,632 314,770

Other LiabilitiesVested compensated

absences 137,302 17,017 10,861 143,458 10,861Net pension liability 1,562,057 258,411 272,097 1,548,371 -

Total Other Liabilities 1,699,359 275,428 282,958 1,691,829 10,861

Total Business-typeActivities Long-TermLiabilities $ 8,959,867 $ 275,428 $ 556,834 $ 8,678,461 $ 325,631

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F. LONG-TERM OBLIGATIONS (cont.)

General Obligation Debt

All general obligation bonds payable are backed by the full faith and credit of the Village. Bonds in thegovernmental funds will be retired by future property tax levies or tax increments accumulated by the debtservice fund.

Governmental Activities

General Obligation DebtDate ofIssue

FinalMaturity

InterestRates

OriginalIndebtedness

BalanceDecember 31,

2017

General ObligationBonds Series 2010A 4/6/2010 12/31/2020 2.0-4.0% $ 5,160,000 $ 1,125,000

General ObligationBonds Series 2010B 4/6/2010 12/31/2025 2.5-3.85% 2,600,000 1,845,000

General ObligationBonds Series 2012 8/27/2012 6/30/2030 2.0-2.75% 6,000,000 6,000,000

General ObligationBonds Series 2016 5/3/2016 12/30/2031 2.0 - 3.0% 6,125,000 5,395,000

Total Governmental Activities - General Obligation Debt $ 14,365,000

Debt service requirements to maturity are as follows:

Governmental ActivitiesGeneral Obligation Debt

Years Principal Interest

2018 $ 1,315,000 $ 367,6942019 1,210,000 331,1192020 1,285,000 296,3692021 940,000 259,4692022 965,000 237,1812023-2027 5,025,000 826,8412028-2031 3,625,000 218,938

Totals $ 14,365,000 $ 2,537,611

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IEPA Loan Payable

The Village borrowed funds from the Illinois Environmental Protection Agency (IEPA) for the design,construction, and installation of various architectural, mechanical and electrical improvements to theVillage's four existing pump stations. Under loan agreement #L17-4103, the Village can borrow up to$710,000 and has borrowed $407,307 as of December 31, 2017.

Business-type Activities

IEPA Loan PayableDate ofIssue

FinalMaturity

InterestRates


BalanceDecember 31,

2017

IEPA Loan Payable 11/20/2013 12/1/2033 2.295% $ 407,307 $ 348,233

Total Business-type Activities IEPA Loan Payable $ 348,233


Business-type ActivitiesIEPA Loan Payable


2018 $ 18,240 $ 7,8882019 18,661 7,4672020 19,092 7,0362021 19,532 6,5952022 19,983 6,5952023-2027 107,051 26,0032028-2032 119,989 13,3572033 25,685 1,465

Totals $ 348,233 $ 76,406

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Water Installment Note

In fiscal year 2015, the Village entered into an installment note agreement with U.S. Bankcorp to fund itswater meter project. The Village receives installment proceeds as water meters are purchased or work isperformed on the project. U.S. Bankcorp (seller of the installment note) placed $6,970,999 into escrow onthe closing date of the agreement. As of December 31, 2017, the Village had received all of theinstallment note proceeds.


Water Installment NoteDate ofIssue

FinalMaturity

InterestRates


BalanceDecember 31,

2017

Water Installment Note 3/27/2015 6/1/2029 2.350% $ 6,970,999 $ 6,638,399

Total Business-type Activities Incentive Agreements $ 6,638,399


Business-type ActivitiesWater Installment Note


2018 $ 296,530 $ 153,7032019 340,052 146,3382020 386,802 137,9212021 436,970 128,3722022 490,763 117,6112023-2027 3,403,287 377,7702028-2029 1,283,995 25,674

Totals $ 6,638,399 $ 1,087,389

Other Debt Information

In the governmental activities, the Village's obligation for compensated absences, other postemploymentbenefits, and net pension liability will be repaid from the General Fund.

Prior-Year Defeasance of Debt

In prior years, the Village defeased certain general obligation and other bonds by placing the proceeds ofnew bonds in an irrevocable trust to provide for all future debt service payments on the old bonds.Accordingly, the trust account assets and the liability for the defeased bonds are not included in theVillage's financial statements. At December 31, 2017, $1,210,000 of bonds outstanding are considereddefeased.

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G. LEASE DISCLOSURES

Lessee - Operating Leases

The Village has commitments with non-Village entities to lease certain property. Future minimum rentalcommitments as of December 31, 2017 are as follows:

Years Amount

2018 $ 126,6602019 129,1932020 131,7772021 134,4122022 137,1012023-2025 378,836

Totals $ 1,037,979

NOTE IV - OTHER INFORMATION

A. EMPLOYEES' RETIREMENT SYSTEM

The Village 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 isa single-employer pension plan; and the Firefighters' Pension Plan which is a single-employer pensionplan. The benefits, benefits levels, employee contributions and employer contributions for the plans aregoverned by Illinois Compiled Statutes and can only be amended by the Illinois General Assembly. ThePolice Pension Plan and the Firefighters' Pension Plan do not issue separate reports on the pensionplans. IMRF does issue a publicly available report that includes financial statements and supplementaryinformation for the plan as a whole, but not for individual employers. That report can be obtained fromIMRF, 2211 York Road, Suite 500, Oak Brook, Illinois 60523.

Illinois Municipal Retirement Fund

Plan description. 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 asparticipating members. IMRF has a two tier plan. Members who first participated in IMRF or an IllinoisReciprocal System prior to January 1, 2011 participate in Tier 1. All other members participate in Tier 2.For Tier 1 participants, pension benefits vest after 8 years of service. Participating members who retire atage 55 (at reduced benefits) or after age 60 (at full benefits) with 8 years of service are entitled to anannual retirement benefit, payable monthly for life in an amount equal to 1-2/3% of their final rate ofearnings (average of the highest 48 consecutive months' earnings during the last 10 years) for creditedservice up to 15 years and 3% for each year thereafter.

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NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 participants,pension benefits vest after 10 years of service. Participating members who retire at age 62 (at reducedbenefits) or after age 67 (at full benefits) with 10 years of service are entitled to an annual retirementbenefit, payable monthly for life in an amount equal to 1-2/3% of their final rate of earnings for the first 15years of service credit, plus 2% for each year of service after 15 years to a maximum of 75% of their finalrate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive monthswithin the last 10 years of service, divided by 96. Under Tier 2, the pension is increased every year afterretirement, upon reaching age 67, by the lesser of 3% of the original pension amount or 1/2 of theincrease in the Consumer Price Index of the original pension amount.

Plan membership. At December 31, 2016, the measurement date, membership in the plan was asfollows:

Retirees and beneficiaries 104Inactive, non-retired members 54Active members 95

Total 253

Contributions. As set by statute, Village employees participating in IMRF are required to contribute4.50% of their annual covered salary. The statute requires the Village to contribute the amount necessary,in addition to member contributions, to finance the retirement coverage of its own employees. TheVillage’s actuarially determined contribution rate for calendar year 2016 was 13.87% of annual coveredpayroll for IMRF. The Village also contributes for disability benefits, death benefits and supplementalretirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and deathbenefits are set by the IMRF Board of Trustees, while the supplemental retirement benefits rate is set bystatute.

Net Pension Liability/(Asset). The net pension liability/(asset) was measured as of December 31, 2016,and the total pension liability used to calculate the net pension liability/(asset) was determined by anactuarial valuation as of that date.

Summary of Significant Accounting Policies. For purposes of measuring the net pensionliability/(asset), deferred outflows of resources and deferred inflows of resources related to pensions, andpension expense, information about the fiduciary net position of IMRF and additions to/deductions fromIMRF fiduciary net position have been determined on the same basis as they are reported by IMRF. Forthis purpose, benefit payments (including refunds of employee contributions) are recognized when dueand payable in accordance with the benefit terms. Investments are reported at fair value.

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Actuarial Assumptions. The total pension liability for IMRF was determined by actuarial valuationsperformed as of December 31, 2016 using the following actuarial methods and assumptions:

Actuarial cost method Entry Age NormalAsset valuation method Market ValueActuarial assumptions

Investment Rate of Return 7.50%Inflation 3.50%Salary increases 3.75% to 14.50%,

including inflationPrice inflation 2.75%

Mortality. For non-disabled retirees, an IMRF specific mortality table was used with fully generationalprojection scale MP-2014 (base year 2012). The IMRF specific rates were developed from the RP-2014Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. Fordisabled 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 RetireesMortality Table applying the same adjustment that were applied for non-disabled lives. For activemembers, an IMRF specific mortality table was used with fully generational projection scale MP-2014(base year 2014). The IMRF specific rates were developed from the RP-2014 Employee Mortality Tablewith adjustments to match current IMRF experience.

Long-Term Expected Real Rate of Return. The long-term expected rate of return on pension planinvestments was determined using an asset allocation study in which best-estimate ranges of expectedfuture real rates of return (net of pension plan investment expense and inflation) were developed for eachmajor asset class. These ranges were combined to produce long-term expected rate of return by thetarget asset allocation percentage and by adding expected inflation. The target allocation and bestestimates of arithmetic and geometric real rates of return for each major asset class are summarized inthe following table:

Projected Returns/Risks

Asset ClassTarget

AllocationOne YearArithmetic

Ten YearGeometric

Equities 38.00% 8.30% 6.85%International equities 17.00% 8.45% 6.75%Fixed income 27.00% 3.05% 3.00%Real estate 8.00% 6.90% 5.75%Alternatives 9.00%

Private equity 12.45% 7.35%Hedge funds 5.35% 5.25%Commodities 4.25% 2.65%

Cash equivalents 1.00% 2.25% 2.25%

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Discount rate. The discount rate used to measure the total pension liability for IMRF was 7.50%. Thediscount rate calculated using the December 31, 2015 measurement date was 7.47%. The projection ofcash flows used to determine the discount rate assumed that member contributions will be made at thecurrent contribution rate and that Village contributions will be made at rates equal to the differencebetween actuarially determined contribution rate and the member rate. Based on those assumptions, thefiduciary net position was projected to be available to make all projected future benefit payments of currentplan members. Therefore, the long-term expected rate of return on investments was applied to all periodsof projected benefits to determine the total pension liability.

Discount rate sensitivity. The following is a sensitivity analysis of the net pension liability/(asset) tochanges in the discount rate. The table below presents net pension liability/(asset) of the Villagecalculated using the discount rate of 7.50% as well as what the net pension liability/(asset) would be if itwere to be calculated using a discount rate that is 1 percentage point lower (6.50%) or 1 percentage pointhigher (8.50%) than the current rate:

1% Decrease Current

Discount Rate 1% Increase

Total pension liability $ 67,952,083 $ 60,017,497 $ 53,529,451Plan fiduciary net pension 50,608,825 50,608,825 50,608,825Net pension liability/(asset) $ 17,343,258 $ 9,408,672 $ 2,920,626

Changes in net pension liability/(asset). The changes in net pension liability/(asset) for the calendaryear ended December 31, 2016 were as follows:

Increase (Decrease)

Total PensionLiability

(a)

Plan FiduciaryNet Position

(b)

Net PensionLiability/(Asset)

(a) - (b)

Balances at December 31, 2015 $ 58,559,118 $ 48,644,743 $ 9,914,375Service cost 871,953 - 871,953Interest on total pension liability 4,310,485 - 4,310,485Differences between expected and actual

experience of the total pension liability(921,372) - (921,372)

Change of assumptions (220,386) - (220,386)Benefit payments, including refunds of

employee contributions(2,582,301) (2,582,301) -

Contributions - employer - 1,112,901 (1,112,901)Contributions - employee - 428,936 (428,936)Net investment income - 3,350,903 (3,350,903)Other (net transfer) - (346,357) 346,357

Balances at December 31, 2016 $ 60,017,497 $ 50,608,825 $ 9,408,672

Plan fiduciary net position as a percentage ofthe total pension liability %84.32

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Pension expense and deferred outflows of resources and deferred inflows of resources relatedto pensions. For the year ended December 31, 2017, the Village recognized pension expense of$2,552,674. The Village reported deferred outflows and inflows of resources related to pension from thefollowing sources:

DeferredOutflows ofResources

DeferredInflows of

Resources

Difference between expected and actual experience $ 737,892 $ 1,106,770Assumption changes 699,183 168,618Net difference between projected and actual earnings on pensionplan investments 2,486,783 -Contributions subsequent to the measurement date 1,168,759 -

Total $ 5,092,617 $ 1,275,388

The amount reported as deferred outflows resulting from contributions subsequent to the measurementdate in the above table will be recognized as a reduction in the net pension liability/(asset) for the yearending . The remaining amounts reported as deferred outflows and inflows of resources related topensions ($2,648,470) will be recognized in pension expense as follows:

Year Ending December 31, Village

2016 $ 1,049,1652017 1,005,0292018 614,1632019 (19,887)

Total $ 2,648,470

Police Pension

Plan description. Police sworn personnel are covered by the Police Pension Plan, which is a definedbenefit single-employer pension plan. Although this is a single employer pension plan, the defined benefitsand employee and employer contribution levels are governed by Illinois State Statutes (Chapter 40 ILCS5/3) and may be amended only by the Illinois legislature. The Village accounts for the plan as a pensiontrust fund.

As provided for in the Illinois Compiled Statutes, the Plan provides retirement benefits as well as deathand disability benefits to employees grouped into two tiers. Tier 1 is for employees hired prior to January 1,2011 and Tier 2 is for employees hired after that date. The following is a summary of the Police PensionFund as provided for in Illinois Compiled Statutes.

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Tier 1 - Covered employees attaining the age of 50 or more with 20 or more years of creditable service areentitled to receive an annual retirement benefit of one half of the salary attached to the rank on the lastday of service, or for one year prior to the last day, whichever is greater. The pension shall be increasedby 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of75% of such salary. Employees with at least 8 years but less than 20 years of credited service may retireat or after age 60 and receive a reduced retirement benefit. The monthly pension of a police officer whoretired with 20 or more years of service after January 1, 1977 shall be increased annually, following thefirst anniversary date of retirement and paid upon reaching at least the age of 55, by 3% of the originalpension and 3% compounded annually thereafter.

Tier 2 - Covered employees attaining the age of 55 or more with 10 or more years of creditable service areentitled to receive a monthly pension of 2.5% of the final average salary for each year of creditableservice. The salary is initially capped at $106,800 but increases annually thereafter and is limited to 75%of final average salary. Employees with 10 or more years of creditable service may retire at or after age 50and receive a reduced retirement benefit. The monthly pension of a police officer shall be increasedannually on the January 1 occurring either on or after the attainment of age 60 or the first anniversary ofthe pension start date, whichever is later. Each annual increase shall be calculated at 3% or one half theannual unadjusted percentage increase in the CPI, whichever is less.

Plan membership. At December 31, 2017, the Police Pension membership consisted of:


Total 114

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Contributions. Covered employees are required to contribute 9.91% of their base salary to the PolicePension Plan. If an employee leaves covered employment with less than 20 years of service, accumulatedemployee contributions may be refunded without accumulated interest. The Village is required tocontribute the remaining amounts necessary to finance the plans as actuarially determined by an enrolledactuary. Effective January 1, 2011 the Village’s contributions must accumulate to the point where the pastservice cost for the Police Pension Plan is 90% funded by the year 2040. The Village's actuariallydetermined contribution rate for the fiscal year ending December 31, 2017 was 39.84% of annual coveredpayroll.

Net Pension Liability/(Asset). The net pension liability/(asset) was measured as of December 31, 2017,and the total pension liability used to calculate the net pension liability/(asset) was determined by anannual actuarial valuation as of that date.

Summary of Significant Accounting Policies. The financial statements of the Police Pension Plan areprepared using the accrual basis of accounting. Plan member contributions are recognized in the period inwhich contributions are due. The Village’s contributions are recognized when due and a formalcommitment to provide the contributions are made. Benefits and refunds are recognized when due andpayable in accordance with the terms of the plan.

Plan investments are reported at fair value. Short-term investments are reported at cost, whichapproximated fair value. Investments that do not have an established market are reported at estimatedfair values.

Actuarial Assumptions. The total pension liability was determined by an actuarial valuation performed asof December 31, 2017 using the following actuarial methods and assumptions:

Actuarial cost method Entry Age Normal

Asset valuation method Market Value

Actuarial assumptions

Interest rate 7.00%

Inflation 2.50%

Projected salary increases 3.50%

Cost-of-living adjustments 2.50%

Mortality rates were based on the L&A 2016 Illinois Police Mortality Table. The actuarial assumptionswere based on the results of an actuarial experience study conducted by Lauterbach & Amen, LLP in2016.

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Discount rate. The discount rate used to measure the total pension liability for the Police Pension Planwas 7.00%. The discount rate calculated using the December 31, 2016 measurement date was 6.72%.The projection of cash flows used to determine the discount rate assumed that member contributions willbe made at the current contribution rate and that Village contributions will be made at rates equal to thedifference between actuarially determined contribution rates and the member rate. Based on thoseassumptions, the Plan’s fiduciary net position was projected not to be available to make all projectedfuture benefit payments of current plan members. Therefore, the long-term expected rate of return onPlan investments of 7.00% was blended with the index rate of 3.44% for tax exempt 20-year generalobligation municipal bonds with an average AA credit rating as of December 31, 2017 to arrive at adiscount rate of 7.00% used to determine the total pension liability. The plan's projected net position isexpected to cover future benefit payments in full for the current employees in the 2017 to 2097 projectionperiod.

Discount rate sensitivity. The following is a sensitivity analysis of the net pension liability to changes inthe discount rate. The table below presents the pension liability of the Village calculated using thediscount rate of 7.00% as well as what the net pension liability would be if it were to be calculated usinga discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than thecurrent rate:

1% DecreaseCurrent


Total pension liability $ 108,463,029 $ 94,603,289 $ 83,330,936Plan fiduciary net position 67,432,478 67,432,478 67,432,478

Net pension liability $ 41,030,551 $ 27,170,811 $ 15,898,458

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Changes in net pension liability/(asset). The Village's changes in net pension liability/(asset) for thecalendar year ended December 31, 2017 was as follows:

Increase (Decrease)


(a)


(b)

Net PensionLiability/Asset

(a) - (b)

Balances at December 31, 2016 $ 93,634,056 $ 59,527,769 $ 34,106,287Service cost 1,637,139 - 1,637,139Interest on total pension liability 6,171,178 - 6,171,178Differences between expected and actual

experience of the total pension liability 353,405 - 353,405Change of assumptions (3,590,403) - (3,590,403)Benefit payments, including refunds of employeecontributions (3,602,086) (3,602,086) -Contributions - employer - 2,524,306 (2,524,306)Contributions - employee - 744,694 (744,694)Net investment income - 8,300,527 (8,300,527)Administration - (62,732) 62,732


Plan fiduciary net position as a percentage of thetotal pension liability 71.28%



DeferredInflows of

Resources

Difference between expected and actual experience $ 618,581 $ 517,433Assumption changes 2,493,113 2,999,876Net difference between projected and actual earnings on pensionplan investments 1,811,201 3,317,949

Total $ 4,922,895 $ 6,835,258

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The amounts reported as deferred outflows and inflows of resources related to pensions ($1,912,363)will be recognized in pension expense as follows:

Year Ending December 31, Amount

2018 $ 201,4132019 201,4102020 (548,432)2021 (1,200,341)2022 (523,821)Thereafter (42,592)

Total $ (1,912,363)


Plan description. Fire sworn personnel are covered by the Firefighters' Pension Plan, which is a definedbenefit single-employer pension plan. Although this is a single employer pension plan, the defined benefitsand employee and employer contribution levels are governed by Illinois State Statutes (Chapter 40 ILCS5/3) and may be amended only by the Illinois legislature. The Village accounts for the plan as a pensiontrust fund.

As provided for in the Illinois Compiled Statutes, the Firefighters' Pension Plan provides retirementbenefits as well as death and disability benefits to employees grouped into two tiers. Tier 1 is foremployees hired prior to January 1, 2011 and Tier 2 is for employees hired after that date. The following isa summary of the Firefighters' Pension Plan as provided for in Illinois Compiled Statutes.

Tier 1 - Covered employees attaining the age of 50 or more with 20 or more years of creditable service areentitled to receive a monthly retirement benefit of one half of the monthly salary attached to the rank heldin the fire service at the date of retirement. The monthly pension shall be increased by one twelfth of 2.5%of such monthly salary for each additional month over 20 years of service through 30 years of service to amaximum of 75% of such monthly salary. Employees with at least 10 years but less than 20 years ofcredited service may retire at or after age 60 and receive a reduced retirement benefit. The monthlypension of a firefighter who retired with 20 or more years of service after January 1, 1977 shall beincreased annually, following the first anniversary date of retirement and paid upon reaching at least theage of 55, by 3% of the original pension and 3% compounded annually thereafter.

Tier 2 - Covered employees attaining the age of 55 or more with 10 or more years of creditable service areentitled to receive a monthly pension of 2.5% of the final average salary for each year of creditableservice. The salary is initially capped at $106,800 but increases annually thereafter and is limited to 75%of final average salary. Employees with 10 or more years of creditable service may retire at or after age 50and receive a reduced retirement benefit. The monthly pension of a firefighter shall be increased annuallyon the January 1 occurring either on or after the attainment of age 60 or the first anniversary of thepension start date, whichever is later. Each annual increase shall be calculated at 3% or one-half theannual unadjusted percentage increase in the CPI, whichever is less.

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Plan membership. At December 31, 2017, the Firefighters' Pension Plan membership consisted of:


Total 91

Contributions. Participants contribute a fixed percentage of their base salary to the plans. At December31, 2017, the contribution percentage was 9.455%. If a participant leaves covered employment with lessthan 20 years of service, accumulated participant contributions may be refunded without accumulatedinterest. The Village is required to contribute the remaining amounts necessary to finance the plans asactuarially determined by an enrolled actuary. Effective January 1, 2011 the Village’s contributions mustaccumulate to the point where the past service cost for the Firefighters' Pension Plan is 90% funded bythe year 2040. The Village's actuarially determined contribution rate for the fiscal year ending December31, 2017 was 33.42% of annual covered payroll.

Net pension liability/(asset). The net pension liability/(asset) was measured as of December 31, 2017,and the total pension liability used to calculate the net pension liability/(asset) was determined by anannual actuarial valuation as of that date.

Summary of significant accounting policies. The financial statements of the Firefighters' Pension Planare prepared using the accrual basis of accounting. Plan member contributions are recognized in theperiod in which contributions are due. The Village’s contributions are recognized when due and a formalcommitment to provide the contributions are made. Benefits and refunds are recognized when due andpayable in accordance with the terms of the plan.

Plan investments are reported at fair value. Short-term investments are reported at cost, whichapproximated fair value. Investments that do not have an established market are reported at estimatedfair values.

Actuarial assumptions. The total pension liability was determined by an actuarial valuation performed asof December 31, 2017 using the following actuarial methods and assumptions:

Actuarial cost method Entry Age Normal

Asset valuation method Market Value

Actuarial assumptions

Interest rate 7.00%

Inflation 2.50%

Projected salary increases 3.50%

Cost-of-living adjustments 2.50%

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Mortality rates were based on the L&A 2016 Illinois Firefighters' Mortality Table. The actuarialassumptions were based on the results of an actuarial experience study conducted by Lauterbach &Amen, LLP in 2016.

Discount rate. The discount rate used to measure the total pension liability for the Firefighters' PensionPlan was 7.00%, the same as the prior valuation. The projection of cash flows used to determine thediscount rate assumed that member contributions will be made at the current contribution rate and thatVillage contributions will be made at rates equal to the difference between actuarially determinedcontribution rates and the member rate. Based on those assumptions, the Plan’s fiduciary net positionwas projected to be available to make all projected future benefit payments of current plan members.Therefore, the long-term expected rate of return on Plan investments was applied to all periods ofprojected benefit payments to determine the total pension liability.

Discount rate sensitivity. The following is a sensitivity analysis of the net pension liability to changes inthe discount rate. The table below presents the pension liability of the Village calculated using thediscount rate of 7.00% as well as what the net pension liability would be if it were to be calculated usinga discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than thecurrent rate:

1% DecreaseCurrent


Total pension liability $ 87,718,573 $ 76,128,103 $ 66,722,493Plan fiduciary net position 61,562,470 61,562,470 61,562,470

Net pension liability $ 26,156,103 $ 14,565,633 $ 5,160,023

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Changes in net pension liability/(asset). The Village's changes in net pension liability/(asset) for thecalendar year ended December 31, 2017 was as follows:

Increase (Decrease)


(a)


(b)

Net PensionLiability/Asset

(a) - (b)

Balances at December 31, 2016 $ 72,153,825 $ 54,178,445 $ 17,975,380Service cost 1,348,459 - 1,348,459Interest on total pension liability 4,961,836 - 4,961,836Differences between expected and actual

experience of the total pension liability 204,895 - 204,895Benefit payments, including refunds of employeecontributions (2,540,912) (2,540,912) -Contributions - employer - 1,863,911 (1,863,911)Contributions - employee - 520,771 (520,771)Net investment income - 7,601,179 (7,601,179)Administration - (60,924) 60,924


Plan fiduciary net position as a percentage of thetotal net position 80.87%



DeferredInflows of

Resources

Difference between expected and actual experience $ 180,327 $ 790,290Assumption changes 726,925 447,593Net difference between projected and actual earnings on pensionplan investments 1,188,411 3,053,030

Total $ 2,095,663 $ 4,290,913

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The amounts reported as deferred outflows and inflows of resources related to pensions ($2,195,250)will be recognized in pension expense as follows:

Year Ending December 31, Amount

2018 $ (236,217)2019 (236,221)2020 (793,412)2021 (818,085)2022 (54,829)Thereafter (56,486)

Total $ (2,195,250)

PENSION SEGMENT INFORMATION

Fiduciary Net PositionPension Trust

PolicePension

Firefighters'Pension Total

AssetsCash $ 1,093,838 $ 606,383 $ 1,700,221Investments

U.S. treasuries 8,987,785 3,114,208 12,101,993U.S. agencies 6,727,187 16,830,116 23,557,303Mutual funds - other than bond funds 7,748,746 37,551,628 45,300,374Equity securities 35,799,495 - 35,799,495Municipal bonds - 3,339,025 3,339,025Corporate bonds 7,134,387 - 7,134,387

ReceivablesInterest 79,452 149,390 228,842

Prepaid items 1,138 - 1,138Due from primary government 11,911 11,911 23,822 Total Assets 67,583,939 61,602,661 129,186,600

LiabilitiesAccounts payable 66,832 40,191 107,023Due to primary government 84,629 - 84,629 Total Liabilities 151,461 40,191 191,652

Net Position

Held in trust for pension benefits $ 67,432,478 $ 61,562,470 $ 128,994,948

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Changes in Plan Net PositionPension Trust

PolicePension

Firefighters'Pension Total

AdditionsContributionsEmployer $ 2,524,306 $ 1,863,911 $ 4,388,217Plan members 749,965 546,330 1,296,295

Total Contributions 3,274,271 2,410,241 5,684,512

Investment IncomeNet appreciation in fair value of investments 8,314,479 7,129,628 15,444,107Interest 214,240 592,178 806,418

Total Investment income 8,528,719 7,721,806 16,250,525Less investment income 233,109 146,186 379,295

Net investment income 8,295,610 7,575,620 15,871,230 Total Additions 11,569,881 9,985,861 21,555,742

DeductionsAdministration 63,085 60,923 124,008Pension benefits and refunds 3,602,087 2,540,913 6,143,000

Total Deductions 3,665,172 2,601,836 6,267,008

Net change in net position 7,904,709 7,384,025 15,288,734

Net position, beginning of year 59,527,769 54,178,445 113,706,214

Net position, end of year $ 67,432,478 $ 61,562,470 $ 128,994,948

B. RISK MANAGEMENT

The Village is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets;errors and omissions; workers compensation; and health care of its employees. All of these risks arecovered through the purchase of commercial insurance, with minimal deductibles. Settled claims have notexceeded the commercial coverage in any of the past three years. There were no significant reductions incoverage compared to the prior year.

C. COMMITMENTS AND CONTINGENCIES

Claims and judgments are recorded as liabilities if all the conditions of Governmental AccountingStandards Board pronouncements are met. The liability and expenditure for claims and judgments areonly reported in governmental funds if it has matured. Claims and judgments are recorded in thegovernment-wide statements and proprietary funds as expenses when the related liabilities are incurred.

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D. JOINT VENTURES

Solid Waste Agency of Northern Cook County (SWANCC)

The Village is a member of the Solid Waste Agency of Northern Cook County (the Agency), whichconsists of 23 municipalities. The Agency is a municipal corporation and public body politic and corporateestablished pursuant to the Constitution of the State of Illinois and the Intergovernmental Cooperation Actof the State of Illinois, as amended (the Act). The Agency is empowered under the Act to plan, construct,finance, operate and maintain a solid waste disposal system to serve its members.

The Agency is governed by a Board of Directors, which consists of one appointed Mayor or President fromeach member municipality. Each Director has an equal vote. The officers of the Agency are appointedby the Board of Directors. The Board of Directors determines the general policy of the Agency, makes allappropriations, approves contracts, adopts resolutions providing for the issuance of bonds or notes by theAgency, adopts by-laws, rules and regulations, and exercises such powers and performs such duties asmay be prescribed in the Agency Agreement or the by-laws.

The Executive Committee of the Agency consists of seven members elected by the Board of Directors.Each member is entitled to one vote on the Executive Committee. The Executive Committee may takeany action not specifically reserved to the Board of Directors by the Act, the Agency Agreement or theBylaws.

The Agency covenants to establish fees and charges sufficient to provide revenues to meet all itsrequirements.

The Agency has entered into Solid Waste Disposal Contracts with the member municipalities. TheContracts are irrevocable and may not be terminated or amended except as provided in the Contract.Each member is obligated, on a "take or pay" basis, to purchase or in any event to pay for a minimumannual cost of the System. The minimum annual cost includes operation and maintenance of theSystem as well as project costs.

The obligation of the Village to make all payments as required by this Contract is unconditional andirrevocable, without regard to performance or nonperformance by the Agency of its obligations under thisContract.

The payments required to be made by the Village under this Contract shall be required to be made solelyfrom revenues to be derived by the Village from the operation of the Village's System. The Village is notprohibited by the Contract from using any other available funds to make the payments required by theContract. The Contract shall not constitute an indebtedness of the Village within the meaning of anystatutory or constitutional limitation.

In accordance with the joint venture agreement, the Village remitted $703,565 to SWANCC for the yearended December 31, 2017.

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D. JOINT VENTURES (cont.)

The Village has committed to make payments to the Solid Waste Agency of Northern Cook County. TheVillage has committed to pay approximately $1,000,000 annually. This amount has been calculated usingthe Village's current allocation percentage of 6.37%. In future years, this allocation percentage will besubject to change.

Complete financial statements for SWANCC can be obtained from the Agency's administrative office at2700 Patriot Boulevard, Suite 110, Glenview, Illinois 60026.

Northwest Water Commission (NWWC)

The Village is a member of the Northwest Water Commission (the Commission), which consists of fourmunicipalities. The Commission is a municipal corporation and public body politic and corporateestablished pursuant to the Constitution of the State of Illinois and the Intergovernmental Cooperation Actof the State of Illinois, as amended (the Act). The Commission is empowered under the Act to plan,construct, improve, extend, acquire, finance, operate and maintain a water supply system to serve itsmembers and other potential water purchasers.

The members form a contiguous geographic service area which is located northwest of downtownChicago. Under the Commission Agreement, additional members may join the Commission upon theapproval of each member.

The Commission is governed by a Board of Commissioners, which consists of one Village Managerfrom each member municipality. Each Commissioner has an equal vote. The officers of theCommission are appointed by the Board of Commissioners. The Board of Commissioners determinesthe general policy of the Commission, makes all appropriations, approves contracts for sale or purchaseof water, adopts resolutions providing for the issuance of bonds or notes by the Commission, adopts bylaws, rules and regulations, and exercises such powers and performs such duties as may be prescribed inthe Commission Agreement or the by-laws.

The Commission has entered into Water Supply Contracts with the four member municipalities for a termof 40 years, extending to 2025. The Contracts are irrevocable and may not be terminated or amendedexcept as provided in the Contract. Each member is obligated, on a "take or pay" basis, to purchase or inany event to pay for a minimum annual quantity of water.

The Commission has entered into an agreement with the City of Evanston under which the City hasagreed to sell quantities of lake water sufficient to supply the projected water needs of the Commissionthrough the year 2025.

The obligation of the Village to make all payments as required by this Contract is unconditional andirrevocable, without regard to performance or nonperformance by the Commission of its obligations underthis Contract.

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D. JOINT VENTURES (cont.)

The payments required to be made by the Village under this Contract shall be required to be made solelyfrom revenues to be derived by the Village from the operation of the Village's System. The Village is notprohibited by the Contract from using any other available funds to make the payments required by thecontract. The Contract shall not constitute an indebtedness of the Village within the meaning of anystatutory or constitutional limitation.

The obligation of the Village to make payments required by this Contract from revenues of the Village'sSystem shall be payable from the operation and maintenance account of the Village's Water andSewerage Fund and from all other accounts of the Village's Water and Sewerage Fund in which there areavailable funds.

In accordance with the joint venture agreement, the Village remitted $1,710,503 to NWWC for the yearended December 31, 2017. The Village's equity interest in NWWC was $7,310,956 at December 31,2017. The Village's net investment and its share of the operating results of NWWC are recorded in theVillage's Water and Sewerage Fund.

The Village has committed to retire a portion of the outstanding debt of the Northwest Water Commissionof approximately $3 million. These amounts have been calculated using the Village's current allocationpercentage of 18.45%. In future years, this allocation percentage will be subject to change.

Complete financial statements for NWWC can be obtained from the Commission's administrative office at1525 North Wolf Road, Des Plaines, Illinois 60016.

E. OTHER POSTEMPLOYMENT BENEFITS

The Village administers a single-employer defined benefit healthcare plan The (Village of Buffalo GroveGroup Health Plan (the plan) provides health insurance contributions for eligible retirees and their spousesthrough the Village’s group health insurance plan, which cover both active and retired members. Benefitprovisions are established through personnel policy guidelines and state that eligible retirees and theirspouses receive healthcare insurance to age 65 at established contribution rates. The plan does not issuea publicly available financial report.

Contribution requirements are established through personnel policy guidelines and may be amended bythe action of the governing body. The plan may be amended by the Village Board and is detailed in the"Plan Document and Summary Plan Description." The required contribution is based on projected pay-as-you-go financing requirements. For fiscal year 2017, the Village contributed $384,680 to the Plan.

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E. OTHER POSTEMPLOYMENT BENEFITS (cont.)

The Village’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on theannual required contribution of the employer (ARC). The ARC represents a level of funding that, if paid onan ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarialliabilities (or funding excess) over a period not to exceed thirty years. The following table shows thecomponents of the Village’s annual OPEB cost for the year, the amount actually contributed to plan, andchanges in the Village’s net OPEB obligation to the Retiree Health Plan:

Annual required contribution $ 648,712Interest on net OPEB obligation 33,941Adjustment to annual required contribution (32,325)

Annual OPEB cost 650,328Contributions made (384,680)

Increase in net OPEB obligation (asset) 265,648

Net OPEB Obligation (Asset) - Beginning of Year 969,738

Net OPEB Obligation (Asset) - End of Year $ 1,235,386

The Village's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the netOPEB obligation for 2017 were as follows:

Fiscal Year EndedAnnual OPEB

Cost

Percentage ofAnnual OPEB

CostContributed

Net OPEBObligation

December 31, 2015 $ 302,918 72.24% $ 758,973December 31, 2016 633,942 66.75% 969,738December 31, 2017 650,328 59.15% 1,235,386

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E. OTHER POSTEMPLOYMENT BENEFITS (cont.)

The funded status of the plan as of December 31, 2017, the most recent actuarial valuation date, was asfollows:

Actuarial accrued liability (AAL) $ 10,256,824Actuarial value of plan assets -

Unfunded Actuarial Accrued Liability (UAAL) $ 10,256,824

Funded ratio (actuarial value of plan assets/AAL) -%

Covered payroll (active plan members) $ 17,961,975

UAAL as a percentage of covered payroll 57%

Actuarial valuations of an ongoing plan involve estimates for the value of reported amounts andassumptions about the probability of occurrence of events far into the future. Examples includeassumptions about future employment, mortality, and the healthcare cost trend. Amounts determinedregarding the funded status of the plan and annual required contributions of the employer are subject tocontinual revision as actual results are compared with past expectations and new estimates are madeabout the future. The schedule of funding progress, presented as required supplementary informationfollowing the notes to the financial statements, presents multiyear trend information that shows whetherthe actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accruedliabilities for benefits.

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan asunderstood by the employer and plan members) and include the types of benefits provided at the time ofeach valuation and the historical pattern of sharing benefit costs between the employer and plan membersto that point. The 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-termperspective of the calculations.

In the December 31, 2017 actuarial valuation, the entry age actuarial cost method was used. The actuarialassumptions include a 4.00% investment rate of return and an annual healthcare cost trend rate of 6.50%initially, reduced by decrements to an ultimate rate of 5.00% after 7 years. Both rates include a 3.00%inflation assumption. The actuarial value of Retiree Health Plan assets was determined using techniquesthat spread the effects of short-term volatility in the market value of investments over a three-year period.The plan’s unfunded actuarial accrued liability is being amortized as a level percentage of projectedpayroll on an open basis. The amortization period at December 31, 2017, was 30 years.

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F. TAX ABATEMENT

Tax abatements are a reduction in tax revenues that results from an agreement between one or moregovernments and an individual or entity in which (a) one or more governments promise to forgo taxrevenues to which they are otherwise entitled and (b) the individual or entity promises to take a specificaction after the agreement has been entered into that contributes to economic development or otherwisebenefits the governments or the citizens of those governments.

The Village is disclosing all abatement agreements individually.

The Village of Buffalo Grove has entered into a tax abatement agreement with Woodman’s Food Market,Inc. as an incentive to stimulate economic development. The abatement is authorized through aDevelopment Improvement Agreement passed by the Village board in Ordinance 2016-067 on December19th, 2016. Woodman’s will be financially responsible for constructing all necessary offsite roadway andintersection improvements as required by the Village, County, or State along the public roadways alongthe perimeter of the property. The offsite improvements are estimated to be $4,000,000. The Village willreimburse Woodman’s, an amount not to exceed $4,000,000 for the roadway improvements and anadditional payment of $3,000,000 for a combined total of $7,000,000. In order to promote and assistWoodman’s with the project, the Village agrees to share certain sales tax received that corresponds to thenew sales tax revenue generated from the retail sales of the project. The sales tax allowable is limited tothe sales tax associated with grocery, general merchandise, and products only. Woodman’s must acquireor otherwise be authorized to use the premise in Buffalo Grove, construct and operate the business, andconstruct the offsite roadway improvements to be eligible for the incentives. Incentive payments as ofDecember 31, 2017 were $0.

The Village of Buffalo Grove has entered into a tax abatement agreement with Edward Hines Lumber Co.as an incentive to stimulate economic development. The abatement is authorized through VillageOrdinance 2000-67 on November 20th, 2000 and has since been amended with Village Ordinance 2003-18 on March 3, 2003, Ordinance 2009-47 on August 3, 2009. Edward Hines Lumber Co. shall maintain asingle order-acceptance point policy for all Credit Sales and shall not relocate the single order-acceptancepoint outside of the Village unless it violates or contravenes any state or federal law or courtdecision/determination. The Village will remit 60 percent of the Municipal Sales tax resulting from theCredit Sales received by the Village to Edward Hines Lumber Co. The Village will keep the remaining 40percent. Incentive payments as of December 31, 2017 were $1,395,403.

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F. TAX ABATEMENT (cont.)

The Village of Buffalo Grove has entered into a tax abatement agreement with LAB Development, LLC asan incentive to stimulate economic development. The abatement is authorized through Village Ordinance2011-14 on March 21, 2011 and has since been amended with Village Ordinance 2016-032 on May 10,2016. LAB Development, LLC shall conduct its business in Buffalo Grove, maintain a single order-acceptance point on premise. The amendment to the original agreement in 2016 requires LABDevelopment to extend their current lease at the premise in Buffalo Grove and expand the operation from61,416 square feet to 124,605 square feet. The lease extension must be no less than 8.5 years,commencing January 1, 2016. The original agreement provided LAB Development with a tax abatementof 100% of the Municipal Sales Tax in year one of the agreement, this percentage decreases 10% peryear until year seven of the agreement. The amount of Municipal Sales tax abated to LAB Developmentcould not exceed $500,000 over the seven year term. The amended agreement extended the abatementsto LAB Development under new terms. LAB is entitled to 80 percent of the base Municipal Sales Taxabove $162,207 in year one. The percentage per year decreases 10 percent until year five, from year fiveto eight and a half the percentage is fixed at 50 percent. The base Municipal Sales tax amount of$162,207 is fixed for the term of the contract and prorated for the half year in 2024. The amount ofMunicipal Sales Tax to be abated is not to exceed $2,600,000 over the life of the amended agreement. IfLAB Development, LLC relocates or ceases business operations on the premise within five years of thecommencement date of the amended contract they shall reimburse the Village 100 percent of theMunicipal Sales Tax payments to the Village within ninety days. If LAB Development, LLC relocates orceases business operations on the premise after the fifth year they will remit $750,000 to the Village withinninety days. If LAB Development, LLC relocates or ceases business operations on the premise after thesixth year they will remit $375,000 to the Village within ninety days. If LAB Development, LLC relocates orceases business operations on the premise after the seventh year they will remit $187,500 to the Villagewithin ninety days. If LAB Development conducts less than $30,000,000 of taxable sales at the premise inany given year of the contract they shall not receive more than 50 percent of the Municipal Sales Taxincrement for that year. Incentive payments as of December 31, 2017 were $273,220.

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The Village of Buffalo Grove has entered into a tax abatement agreement with Zonatherm. In order toencourage Zonatherm to maintain its business operation in the Village, and to assist with their project inthe Village, the Village agrees to share sales tax received by the Village using a formula whichcorresponds to new sales tax generated by Zonatherm over a finite period of time. For the first sales taxyear, one-hundred percent (100%) of that year’s incremental municipal sales tax above the base of$100,000 will be paid to Zonatherm. For the second sales tax year ninety percent (90%) of that year’smunicipal sales tax above the base of $100,000 will be paid to Zonatherm. For the third sales tax yeareighty percent (80%) of that year’s municipal sales tax above the base of $100,000 will be paid toZonatherm. For the fourth sales tax year seventy percent (70%) of that year’s municipal sales tax abovethe base of $100,000 will be paid to Zonatherm. For the fifth sales tax year sixty percent (60%) of thatyear’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the sixth sales taxyear fifty percent (50%) of that year’s municipal sales tax above the base of $100,000 will be paid toZonatherm. For the seventh sales tax year fifty percent (50%) of that year’s municipal sales tax above thebase of $100,000 will be paid to Zonatherm. The entire distribution can not exceed $500,000 inaggregate. This agreement will end upon the completion of the seventh year or the $500,000 cap. In theevent that Zonatherm cease the business within seven years or generate less than $1,000 in sales tax inany sales tax year, Zonatherm shall reimburse the Village one-hundred percent (100%) of the municipalsales tax payments received. Incentive payments as of December 31, 2017 were $0.

In order to encourage Bits to relocate its business operation to the Village of Buffalo Grove, and to assistwith their project in the Village, the Village agrees to share a portion of its home rule sales tax received bythe Village using a formula which corresponds to new sales tax revenue generated by the business over afinite period of time. For the first sales tax year, seventy-five percent (75%) of that year’s home rule salestax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent(100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. For thesecond sales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by theVillage for the first $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’sHome rule sales tax for annual taxable sales greater than $40,000,000. For the third sales tax year,seventy-five percent (75%) of that year’s home rule sales tax received by the Village for the first$40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule sales taxfor annual taxable sales greater than $40,000,000. For the fourth sales tax year, seventy-five percent(75%) of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxablesales and one-hundred percent (100%) of that year’s Home rule sales tax for annual taxable sales greaterthan $40,000,000. For the fifth sales tax year, seventy-five percent (75%) of that year’s home rule salestax received by the Village for the first $40,000,000 in annual taxable sales and one-hundred percent(100%) of that year’s Home rule sales tax for annual taxable sales greater than $40,000,000. For the sixthsales tax year, seventy-five percent (75%) of that year’s home rule sales tax received by the Village for thefirst $40,000,000 in annual taxable sales and one-hundred percent (100%) of that year’s Home rule salestax for annual taxable sales greater than $40,000,000. Should Bits relocate or cease its business withinthe first two years of the agreement Bits shall reimburse the Village eighty-five percent (85%) of the totalhome rule sales tax distributed. Should Bits relocate or cease its business after two years of thisagreement than Bits agrees to reimburse the Village seventy percent (70%) of the total home rule salestax payments received. Should Bits relocate or cease its business after three years of this agreementthan Bits agrees to reimburse the Village seventy percent (55%) of the total home rule sales tax paymentsreceived. Should Bits relocate or cease its business after four years of this agreement than Bits agrees toreimburse the Village seventy percent (40%) of the total home rule sales tax payments received.

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Should Bits relocate or cease its business after five years of this agreement than Bits agrees to reimbursethe Village seventy percent (35%) of the total home rule sales tax payments received. Incentive paymentsas of December 31, 2017 were $0.

G. EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS

The Governmental Accounting Standards Board (GASB) has approved the following:

Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other

Than Pensions

Statement No. 80, Blending Requirements for Certain Component Units - an Amendment of

GASB Statement No. 14

Statement No. 81, Irrevocable Split-Interest Agreements

Statement No. 83, Certain Asset Retirement Obligations

Statement No. 84, Fiduciary Activities

Statement No. 85, Omnibus 2017

Statement No. 86, Certain Debt Extinguishment Issues

Statement No. 87, Leases

Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and

Direct Placements

When they become effective, application of these standards may restate portions of these financialstatements.

Page 95

R E Q U I R E D S U P P L E M E N T A R Y I N F O R M A T I O N


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL - GENERAL


Budgeted Amounts

Original Final ActualVariance withFinal Budget

REVENUESProperty taxes $ 14,504,881 $ 14,504,881 $ 14,495,834 $ (9,047)Other taxes 9,963,240 9,963,240 9,816,523 (146,717)Charges for services 1,222,773 1,222,773 1,762,740 539,967Fines and fees 2,802,778 2,802,778 2,834,073 31,295Licenses and permits 286,140 286,140 330,475 44,335Intergovernmental 11,304,167 11,304,167 10,651,498 (652,669)Interest 65,800 65,800 153,816 88,016Miscellaneous income 959,450 959,450 1,456,876 497,426

Total Revenues 41,109,229 41,109,229 41,501,835 392,606

EXPENDITURESCurrent:

General government 5,770,665 5,896,084 5,613,970 282,114Public safety 26,973,138 26,973,138 25,776,184 1,196,954Public works 6,733,636 6,733,636 5,653,339 1,080,297Capital Outlay - - 487,066 (487,066)

Total Expenditures 39,477,439 39,602,858 37,530,559 2,072,299

Excess of revenues overexpenditures 1,631,790 1,506,371 3,971,276 2,464,905

OTHER FINANCING SOURCES(USES)

Sales of capital assets - - 28,758 28,758Transfers in 901,000 901,000 1,161,846 260,846Transfers out (2,524,956) (2,524,956) (3,168,426) (643,470)

Total Other Financing Sources(Uses) (1,623,956) (1,623,956) (1,977,822) (353,866)

Net Change in Fund Balance $ 7,834 $ (117,585) 1,993,454 $ 2,111,039

FUND BALANCE - Beginning of Year 25,052,942

FUND BALANCE - END OF YEAR $ 27,046,396

See independent auditors' report and accompanying notes to required supplementary information.Page 96


ILLINOIS MUNICIPAL RETIREMENT FUND

SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY

For the past three fiscal years

2017 2016 2015

Total pension liability

Service cost 871,953$ 860,654$ 964,574$

Interest 4,310,485 4,031,299 3,808,085

Differences between expected and actual experience (921,372) 1,338,146 (1,126,970)

Changes of assumptions (220,386) 145,117 1,736,515

Benefit payments, including refunds of member contributions (2,582,301) (2,416,367) (2,148,231)

Net change in total pension liability 1,458,379 3,958,849 3,233,973

Total pension liability - beginning 58,559,118 54,600,269 51,366,296

Total pension liability - ending (a) 60,017,497$ 58,559,118$ 54,600,269$

Plan fiduciary net position

Employer contributions 1,112,901$ 1,093,142$ 1,071,994$

Employee contributions 428,936 402,168 369,278

Net investment income 3,350,903 241,715 2,892,087

Benefit payments, including refunds of member contributions (2,582,301) (2,416,367) (2,148,231)

Other (net transfer) (346,357) 520,582 (1,146,370)

Net change in plan fiduciary net position 1,964,082 (158,760) 1,038,758

Plan fiduciary net position - beginning 48,644,743 48,803,503 47,764,745

Plan fiduciary net position - ending (b) 50,608,825$ 48,644,743$ 48,803,503$

Employer's net pension liability - ending (a) - (b) 9,408,672$ 9,914,375$ 5,796,766$

Plan fiduciary net position as a percentage of the total

pension liability 84.32% 83.07% 89.38%

Covered-employee payroll 8,023,803$ 8,157,772$ 8,195,678$

Employer's net pension liability as a percentage of covered-

employee payroll 117.26% 121.53% 70.73%

Notes to Schedule:

Actuary valuations are as of December 31st, which is 6 months prior to the end of the fiscal year.

The District implemented GASB Statement No. 68 in fiscal year 2015. Information prior to fiscal year 2015 is not available.

See independent report and accompanying notes to required supplementary information

Page 97


ILLINOIS MUNICIPAL RETIREMENT FUND

SCHEDULE OF EMPLOYER CONTRIBUTIONS

For the past three fiscal years

2017 2016 2015

Actuarially determined contribution 1,164,635$ 1,112,901$ 1,093,141$

Contributions in relation to the actuarially

determined contribution (1,164,635) (1,112,901) (1,093,142)

Contribution deficiency (excess) -$ -$ (1)$

Covered-employee payroll 8,384,700$ 8,023,803$ 8,157,772$

Contributions as a percentage of covered-

employee payroll 13.89% 13.87% 13.40%

Notes to Schedule:

Valuation date:

Methods and assumptions used to determine contribution rates:

Actuarial cost method

Amortization method

Remaining amortization period

Asset valuation method

Inflation 2.75%

Salary increases

Investment rate of return 7.50% Retirement Age

Mortality

Other information:

There were no benefit changes during the year.

RP-2014 Employee Mortality Table, adjusted to match current IMRF experience

3.75% to 14.50%, including inflation

Experience-based table of rates that are specific to the type of eligibility condition

Actuarially determined contribution rates are calculated as of December 31 each year, one year prior to the end of the fiscal year in which contributions are reported.

The Village implemented GASB Statement No. 68 in fiscal year 2015. Information prior to fiscal year 2015 is not available.

Aggregate entry age normal

Level percentage of payroll, closed

26 Years

5-Year Smoothed Market, 20% corridor

See independent report and accompanying notes to required supplementary informationPage 98

2017 2016 2015 2014

Total pension liabilityService cost 1,637,139$ 1,534,051$ 1,386,660$ 1,415,171$ Interest 6,171,178 5,861,687 5,438,273 5,318,732 Differences between expected and actual experience 353,405 358,140 (1,015,708) - Changes of assumptions (3,590,403) 170,816 4,811,344 - Benefit payments, including refunds of member contributions (3,602,086) (3,283,543) (2,969,657) (2,747,592) Net change in total pension liability 969,233 4,641,151 7,650,912 3,986,311

Total pension liability - beginning 93,634,056 88,992,905 81,341,993 77,355,682

Total pension liability - ending (a) 94,603,289$ 93,634,056$ 88,992,905$ 81,341,993$

Plan fiduciary net positionEmployer contributions 2,524,306$ 2,430,017$ 2,284,315$ 2,083,758$ Employee contributions 627,548 622,198 669,077 654,693 Other contributions 117,147 - - - Net investment income 8,300,527 3,418,114 186,635 3,756,487 Benefit payments, including refunds of member contributions (3,602,086) (3,283,543) (2,969,657) (2,747,592) Administration (62,732) (43,969) (39,870) (33,343) Net change in plan fiduciary net position 7,904,710 3,142,817 130,500 3,714,003

Plan fiduciary net position - beginning 59,527,769 56,384,952 56,254,452 52,540,449 Plan fiduciary net position - ending (b) 67,432,479$ 59,527,769$ 56,384,952$ 56,254,452$

Village's net pension liability - ending (a) - (b) 27,170,810$ 34,106,287$ 32,607,953$ 25,087,541$

Plan fiduciary net position as a percentage of the total pension liability 71.28% 63.57% 63.36% 69.16%

Covered-employee payroll 6,565,793$ 6,406,672$ 6,056,962$ 5,984,178$

Village's net pension liability as a percentage of covered-employee payroll 413.82% 532.36% 538.35% 419.23%

Notes to Schedule:

The Pension implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available.

VILLAGE OF BUFFALO GROVEPOLICE PENSION FUND

SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOSAs of and for the Year Ended December 31, 2017

Last Four Fiscal Years

See independent auditors' report and accompanying notes to required supplementary information. Page 99


SCHEDULE OF EMPLOYER CONTRIBUTIONSFor the Year Ended December 31, 2017


2017 2016 2015 2014

Actuarially determined contribution 2,538,183$ 2,407,865$ 2,256,676$ 2,359,777$

Contributions in relation to the actuarially determined contribution 2,641,453 2,430,017 2,284,315 2,083,758

Contribution deficiency (excess) (103,270)$ (22,152)$ (27,639)$ 276,019$


Contributions as a percentage of covered-employee payroll 40.23% 37.93% 37.71% 34.82%

Notes to Schedule:The Plan implemented GASB Statement No. 67 in fiscal year 2014. Information

Valuation date: January 1, 2017

Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age Amortization method Remaining amortization period 24 years Asset valuation method Inflation 2.50% Salary increases Investment rate of return 7.00%, net of pension plan investment expense, including inflation Mortality Mortality rates were based on L&A 2016 Illinois Police table

4.00% to 8.67%, average, including inflation

Market Value

Level percentage of payroll, closed


2017 2016 2015 2014

Annual money-weighted rate of return, net of investment expense 14.38% 5.71% 0.67% 7.00%

Notes to Schedule:




SCHEDULE OF INVESTMENT RETURNSAs of December 31, 2017


2017 2016 2015 2014

Total pension liabilityService cost 1,348,459$ 1,260,242$ 1,179,270$ 1,378,069$ Interest 4,961,836 4,757,916 4,508,473 4,304,137 Differences between expected and actual experience 204,895 (133,067) (1,080,688) 218,159 Changes of assumptions - (588,791) 1,139,953 (938,734) Benefit payments, including refunds of member contributions (2,540,912) (2,225,410) (2,141,668) (1,943,411)

Net change in total pension liability 3,974,278 3,070,890 3,605,340 3,018,220

Total pension liability - beginning 72,153,824 69,082,934 65,477,594 62,459,374 Total pension liability - ending (a) 76,128,102$ 72,153,824$ 69,082,934$ 65,477,594$

Plan fiduciary net positionEmployer contributions 1,863,911$ 2,166,040$ 2,202,138$ 2,168,844$ Employee contributions 520,184 516,422 524,714 502,014 Other contributions 588 - - - Net investment income 7,601,179 3,415,513 654,625 3,195,916 Benefit payments, including refunds of member contributions (2,540,912) (2,225,410) (2,141,668) (1,943,409) Administration (60,924) (42,284) (48,363) (42,368)

Net change in plan fiduciary net position 7,384,026 3,830,281 1,191,446 3,880,997

Plan fiduciary net position - beginning 54,178,445 50,348,164 49,156,718 45,275,721 Plan fiduciary net position - ending (b) 61,562,471$ 54,178,445$ 50,348,164$ 49,156,718$

Village's net pension liability - ending (a) - (b) 14,565,631$ 17,975,379$ 18,734,770$ 16,320,876$

Plan fiduciary net position as a percentage of the total pension liability 80.87% 75.09% 72.88% 75.07%


Village's net pension liability as a percentage of covered-employee payroll 260.76% 333.46% 352.91% 312.36%

Notes to Schedule:


VILLAGE OF BUFFALO GROVEFIREFIGHTERS' PENSION FUND

SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOSLast Four Fiscal Years


VILLAGE OF BUFFALO GROVEFIREFIGHTERS PENSION FUND

SCHEDULE OF EMPLOYER CONTRIBUTIONSFor the Year Ended December 31, 2017


2017 2016 2015 2014

Actuarially determined contribution 1,862,674$ 1,728,496$ 1,848,990$ 1,884,815$

Contributions in relation to the actuarially determined contribution 1,864,498 2,166,040 2,202,138 2,168,844 Contribution deficiency (excess) (1,824)$ (437,544)$ (353,148)$ (284,029)$


Contributions as a percentage of covered-employee payroll 33.38% 40.18% 41.48% 41.51%

Notes to Schedule:

Valuation date: January 1, 2017

Methods and assumptions used to determine contribution rates: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Mortality

The Plan implemented GASB Statement No. 67 in fiscal year 2014. Information prior to fiscal year 2014 is not available.

Mortality rates were based on the L&A 2016 Illinois Firefighters Table.7.00%, net of pension plan investment expense,

Entry-ageLevel percentage of payroll, closed24 yearsMarket Value

4.00% to 9.73%, average, including inflation2.50%


2017 2016 2015 2014

Annual money-weighted rate of return, net of investment expense 14.05% 6.78% 1.32% 7.08%

Notes to Schedule:



VILLAGE OF BUFFALO GROVEFIREFIGHTERS PENSION FUND

SCHEDULE OF INVESTMENT RETURNSAs of December 31, 2017



OTHER POST EMPLOYMENT BENEFITSSCHEDULE OF EMPLOYER CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS

December 31, 2017

Year Ended

AnnualRequired

ContributionPercentageContributed

12/31/17 $ 648,712 59.30 %12/31/16 628,882 67.29 12/31/15 604,694 59.30

ActuarialValuation

Date

Actuarial Valueof Assets

(a)

ActuarialAccrued

Liability (AAL)- Entry Age

(b)

Unfunded AAL(UAAL)

(b-a)

FundedRatio(a/b)

CoveredPayroll

(c)

UAAL as aPercentageof Covered

Payroll((b-a)/c)

12/31/17 $ - $ 10,256,824 $ 10,256,824 0.00% $ 17,961,975 57.10%12/31/15 - 9,333,479 9,333,479 0.00% 19,951,806 46.78%12/31/13 - 4,545,910 4,545,910 0.00% 19,787,930 22.97%



NOTES TO REQUIRED SUPPLEMENTARY INFORMATIONDecember 31, 2017

BUDGETARY INFORMATION

The budget data included in the financial statements represent the Village's program budget and theappropriations represent the Village's legal expenditure limit. Budgets are adopted for General, SpecialRevenue, Debt Service, Capital Projects, Proprietary, Pension Trust Funds and Internal Service Funds.All governmental fund-type budgets, pension trust fund-type budgets and internal service fund-typebudgets are adopted on a basis consistent with GAAP. Proprietary funds are adopted on a basis otherthan GAAP in that depreciation expense, income from the joint venture, and contributions from developersare not budgeted, and principal payments on long-term debt (if any) are budgeted.

The Village Board of Trustees follows these procedures in establishing the budgetary and appropriationsdata reflected in the financial statements:

(1) The Village Manager submits to the Board a proposed program budget for the fiscal yearcommencing January 1. The program budget includes proposed expenditures and the means offinancing them.

(2) Appropriation ordinance public hearings are conducted by the Village to obtain taxpayer comments, and the ordinance is subsequently adopted by the Board.

(3) The program budget is legally enacted through a resolution adopted by the Board.

(4) Any expenditures that exceed the total appropriations at the fund level must be approved by theBoard of Trustees.

The Village Manager is authorized to transfer budgeted amounts between departments within any fund.However, any modifications to the legally adopted appropriation ordinance may not exceed expenditurelimits, at the fund level, mandated by the appropriation ordinance without approval by the Board.

Appropriations, which are not expended by year-end, lapse and must be reappropriated in the followingyear for the expenditure to be made. The Village does not employ the encumbrance method ofaccounting to reserve net position for subsequent year expenditures.

See independent auditors' report.Page 106

S U P P L E M E N T A R Y I N F O R M A T I O N


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS


Motor FuelTax

Metra ParkingLot Debt Service

TotalNonmajor

GovernmentalFunds

ASSETSCash $ 1,418,064 $ 120,089 $ - $ 1,538,153Receivables

Property taxes - - 1,030,264 1,030,264Motor fuel tax 91,692 - - 91,692

TOTAL ASSETS $ 1,509,756 $ 120,089 $ 1,030,264 $ 2,660,109

LIABILITIES, DEFERRED INFLOWS OFRESOURCES, AND FUND BALANCES

LiabilitiesAccounts payable $ - $ 766 $ - $ 766Due to other funds - - 59,733 59,733

Total Liabilities - 766 59,733 60,499

Deferred Inflows of ResourcesProperty taxes levied for a future period - - 1,030,264 1,030,264

Total Deferred Inflows of Resources - - 1,030,264 1,030,264

Fund BalancesRestricted for parking lot operations - 119,323 - 119,323Restricted for road construction 1,509,756 - - 1,509,756Unassigned - - (59,733) (59,733)

Total Fund Balances 1,509,756 119,323 (59,733) 1,569,346

TOTAL LIABILITIES,DEFERRED INFLOWS OFRESOURCES, AND FUNDBALANCES $ 1,509,756 $ 120,089 $ 1,030,264 $ 2,660,109

Page 107


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDSFor the Year Ended December 31, 2017

Motor FuelTax

Metra ParkingLot Debt Service

TotalNonmajor

GovernmentalFunds

REVENUESProperty taxes $ - $ - $ 1,014,293 $ 1,014,293Intergovernmental 1,058,421 - - 1,058,421Charges for services - 1,242 - 1,242Fines and fees - 209,380 - 209,380

Total Revenues 1,058,421 210,622 1,014,293 2,283,336

EXPENDITURESCurrent

General government - 160,778 - 160,778Public works 1,088,120 - - 1,088,120

Debt ServicePrincipal - - 1,275,000 1,275,000Interest - - 401,609 401,609

Total Expenditures 1,088,120 160,778 1,676,609 2,925,507

Excess (deficiency) of revenues overexpenditures (29,699) 49,844 (662,316) (642,171)

OTHER FINANCING SOURCES (USES)Transfers in - - 630,000 630,000Transfers out - (24,000) - (24,000)

Total Other Financing Sources (Uses) - (24,000) 630,000 606,000

Net Change in Fund Balances (29,699) 25,844 (32,316) (36,171)

FUND BALANCES - Beginning of Year 1,539,455 93,479 (27,417) 1,605,517

FUND BALANCES (DEFICIT) - END OFYEAR $ 1,509,756 $ 119,323 $ (59,733) $ 1,569,346

Page 108


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL - MOTOR FUEL TAX - NONMAJOR SPECIAL REVENUE FUND


Original andFinal Budget Actual

Variance withFinal Budget

REVENUESIntergovernmental $ 1,000,000 $ 1,058,421 $ 58,421

Total Revenues 1,000,000 1,058,421 58,421


Public works 1,500,000 1,088,120 411,880Total Expenditures 1,500,000 1,088,120 411,880

Net Change in Fund Balance $ (500,000) (29,699) $ 470,301

FUND BALANCE - Beginning of Year 1,539,455

FUND BALANCE - END OF YEAR $ 1,509,756

Page 109


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL - METRA PARKING LOT - NONMAJOR SPECIAL REVENUE

FUNDFor the Year Ended December 31, 2017



REVENUESCharges for services $ 1,200 $ 1,242 $ 42Fines and fees 210,000 209,380 (620)

Total Revenues 211,200 210,622 (578)


General government 187,021 160,778 26,243Total Expenditures 187,021 160,778 26,243

Excess (deficiency) of revenues over (under)expenditures 24,179 49,844 25,665

OTHER FINANCING SOURCES (USES)

Transfers out (24,000) (24,000) -Total Other Financing Sources (Uses) (24,000) (24,000) -

Net Change in Fund Balance $ 179 25,844 $ 25,665

FUND BALANCE - Beginning of Year 93,479

FUND BALANCE - END OF YEAR $ 119,323

Page 110


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL - DEBT SERVICE - NONMAJOR DEBT SERVICE FUND




REVENUESProperty taxes $ 1,169,895 $ 1,014,293 $ (155,602)

Total Revenues 1,169,895 1,014,293 (155,602)

EXPENDITURESDebt Service

Principal 1,275,000 1,275,000 -Interest 404,144 401,609 2,535

Total Expenditures 1,679,144 1,676,609 2,535

Excess (deficiency) of revenues over (under)expenditures (509,249) (662,316) (153,067)

OTHER FINANCING SOURCES

Transfers in 504,000 630,000 126,000Total Other Financing Sources 504,000 630,000 126,000

Net Change in Fund Balance $ (5,249) (32,316) $ (27,067)

FUND BALANCE (DEFICIT) - Beginning of Year (27,417)

FUND BALANCE (DEFICIT) - END OF YEAR $ (59,733)

Page 111


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL - FACILITIES DEVELOPMENT - MAJOR CAPITAL PROJECTS




REVENUESMiscellaneous income $ 565,000 $ - $ (565,000)

Total Revenues 565,000 - (565,000)

EXPENDITURESCapital Outlay 1,974,723 875,147 1,099,576

Total Expenditures 1,974,723 875,147 1,099,576

Excess (deficiency) of revenues over (under)expenditures (1,409,723) (875,147) 534,576


Transfers in 1,875,303 875,147 (1,000,156)Total Other Financing Sources 1,875,303 875,147 (1,000,156)

Net Change in Fund Balance $ 465,580 - $ (465,580)

FUND BALANCE (DEFICIT) - Beginning of Year (3,626,197)

FUND BALANCE (DEFICIT) - END OF YEAR $ (3,626,197)

Page 112


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL - STREET MAINTENANCE - MAJOR CAPITAL PROJECTS


Budgeted Amounts


REVENUESTotal Revenues $ - $ - $ - $ -

EXPENDITURESPublic works - - 1,360,429 (1,360,429)Capital Outlay 350,000 1,501,161 - 1,501,161

Total Expenditures 350,000 1,501,161 1,360,429 140,732

Excess (deficiency) of revenues over(under) expenditures (350,000) (1,501,161) (1,360,429) 140,732


Transfers in 1,537,950 1,537,950 1,537,950 -Total Other Financing Sources 1,537,950 1,537,950 1,537,950 -

Net Change in Fund Balance $ 1,187,950 $ 36,789 177,521 $ 140,732

FUND BALANCE (DEFICIT) - Beginning of Year (206,350)

FUND BALANCE (DEFICIT) - END OF YEAR $ (28,829)

Page 113


COMBINING STATEMENT OF NET POSITIONNONMAJOR ENTERPRISE FUNDS


Buffalo GroveGolf

RefuseService

Total NonmajorEnterprise

Funds


Cash and equivalents $ - $ 883,284 $ 883,284Receivables

Other 1,828 86,599 88,427Due from other funds 20,262 - 20,262

Inventory 20,966 - 20,966Total Current Assets 43,056 969,883 1,012,939

Noncurrent AssetsCapital Assets

Land 978,776 - 978,776Land improvements 450,437 - 450,437Buildings and improvements 2,695,811 - 2,695,811Machinery, equipment and furnishings 70,150 - 70,150Less: Accumulated depreciation (2,324,967) - (2,324,967)

Total Noncurrent Assets 1,870,207 - 1,870,207Total Assets 1,913,263 969,883 2,883,146

DEFERRED OUTFLOWS OF RESOURCESDeferred outflows of resources related to pensions 153,580 - 153,580Total Deferred Outflows of Resources 153,580 - 153,580

LIABILITIESCurrent Liabilities

Accounts payable 9,292 - 9,292Accrued wages 5,699 - 5,699Due to other funds 754,747 - 754,747Other 21,083 - 21,083Compensated absences 6,110 - 6,110Development deposits 6,745 - 6,745

Total Current Liabilities 803,676 - 803,676Noncurrent Liabilities

Long-Term DebtCompensated absences 74,590 - 74,590Net pension liability 283,739 - 283,739

Total Noncurrent Liabilities 358,329 - 358,329Total Liabilities 1,162,005 - 1,162,005

DEFERRED INFLOWS OF RESOURCESDeferred inflows of resources related to pensions 38,462 - 38,462Total Deferred Inflows of Resources 38,462 - 38,462

NET POSITIONNet investment in capital assets 1,870,207 - 1,870,207Unrestricted (deficit) (1,003,831) 969,883 (33,948)

TOTAL NET POSITION $ 866,376 $ 969,883 $ 1,836,259

Page 114


COMBINING STATEMENT OF REVENUES, EXPENSES, ANDCHANGES IN NET POSITION

NONMAJOR ENTERPRISE FUNDSFor the Year Ended December 31, 2017

Buffalo GroveGolf

RefuseService

Total NonmajorEnterprise

Funds

OPERATING REVENUESDaily greens fee and memberships $ 692,104 $ - $ 692,104Merchandise sales 64,171 - 64,171Cart, club, and other rentals 210,358 - 210,358Driving range fees 68,478 - 68,478SWANCC user fees - 970,268 970,268Miscellaneous 8,530 - 8,530

Total Operating Revenues 1,043,641 970,268 2,013,909

OPERATING EXPENSESGolf operations 1,123,539 - 1,123,539Cost of sales - pro shop 44,898 - 44,898Refuse operations - 705,393 705,393Depreciation 58,946 - 58,946

Total Operating Expenses 1,227,383 705,393 1,932,776

Operating Income (Loss) (183,742) 264,875 81,133

TRANSFERSTransfers in 206,496 - 206,496Transfers out (70,600) (550,000) (620,600)

Total Transfers 135,896 (550,000) (414,104)

Change in Net Position (47,846) (285,125) (332,971)

NET POSITION - Beginning of Year 914,222 1,255,008 2,169,230

NET POSITION - END OF YEAR $ 866,376 $ 969,883 $ 1,836,259

Page 115


COMBINING STATEMENT OF CASH FLOWSNONMAJOR ENTERPRISE FUNDS


Buffalo GroveGolf

RefuseService Totals

CASH FLOWS FROM OPERATING ACTIVITIESReceived from customers $ 1,043,641 $ 1,043,744 $ 2,087,385Paid to suppliers for goods and services (831,148) (778,869) (1,610,017)Paid to employees for services (387,912) - (387,912)

Net Cash Flows From Operating Activities (175,419) 264,875 89,456

CASH FLOWS FROM NONCAPITAL FINANCINGACTIVITIES

Transfers in 206,496 - 206,496Transfers (out) 678,123 (550,000) 128,123

Net Cash Flows From Noncapital Financing Activities 884,619 (550,000) 334,619

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES

Acquisition and construction of capital assets (820,170) - (820,170)Net Cash Flows From Capital and Related Financing

Activities (820,170) - (820,170)

Net Change in Cash and Cash Equivalents (110,970) (285,125) (396,095)

CASH AND CASH EQUIVALENTS - Beginning of Year 110,970 1,168,409 1,279,379

CASH AND CASH EQUIVALENTS - END OF YEAR $ - $ 883,284 $ 883,284

RECONCILIATION OF OPERATING INCOME (LOSS) TONET CASH FLOWS FROM OPERATING ACTIVITIES

Operating income (loss) $ (183,742) $ 264,875 $ 81,133Adjustments to Reconcile Operating Income (Loss) to Net

Cash Flows From Operating ActivitiesDepreciation 58,946 - 58,946

Changes in assets and liabilitiesInventory (1,511) - (1,511)Accounts payable (4,164) (73,476) (77,640)Accrued wages 462 - 462Accounts receivable - 73,476 73,476Compensated absences 7,623 - 7,623Deferred outflows - pensions 40,772 - 40,772Deferred inflows - pensions 18,789 - 18,789Net pension liability (19,339) - (19,339)Deposits (93,255) - (93,255)

NET CASH FLOWS FROM OPERATINGACTIVITIES $ (175,419) $ 264,875 $ 89,456

NONCASH CAPITAL AND RELATED FINANCINGACTIVITIES

None

Page 116


SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL -NON-GAAP BUDGETARY BASIS

BUFFALO GROVE GOLF - NONMAJOR ENTERPRISE FUNDFor the Year Ended December 31, 2017

Original AndFinal Budget Actual


OPERATING REVENUES

Daily greens fee and memberships $ 713,000 $ 692,104 $ (20,896)Merchandise sales 70,850 64,171 (6,679)Cart, club, and other rentals 236,850 210,358 (26,492)Driving range fees 62,000 68,478 6,478Miscellaneous 15,500 8,530 (6,970)

Total Operating Revenues 1,098,200 1,043,641 (54,559)

OPERATING EXPENSES

Golf operations 1,669,385 1,123,539 545,846Cost of sales - pro shop 50,000 44,898 5,102Add: Capital assets capitalized - 12,804 (12,804)

Total Operating Expenses 1,719,385 1,181,241 538,144

Operating Income (Loss) - Non-GAAP BudgetaryBasis (621,185) (137,600) 483,585

TRANSFERS

Transfers in 103,185 206,496 103,311Transfers out - (70,600) (70,600)

Net Transfers 103,185 135,896 32,711

Change in net position - Non-GAAP BudgetaryBasis $ (518,000) $ (1,704) $ 516,296

Page 117



REFUSE SERVICE - NONMAJOR ENTERPRISE FUNDFor the Year Ended December 31, 2017



OPERATING REVENUES

SWANCC user fees $ 1,045,000 $ 970,268 $ (74,732)

Total Operating Revenues 1,045,000 970,268 (74,732)

OPERATING EXPENSES

Refuse operations 760,000 705,393 54,607

Total Operating Expenses 760,000 705,393 54,607

Operating Income - Non-GAAP Budgetary Basis 285,000 264,875 (20,125)

TRANSFERS

Transfers out (550,000) (550,000) -

Net Transfers (550,000) (550,000) -

Change in net position - Non-GAAP BudgetaryBasis $ (265,000) $ (285,125) $ (20,125)

Page 118



WATER AND SEWERAGE - MAJOR ENTERPRISE FUNDFor the Year Ended December 31, 2017



OPERATING REVENUES

Water and sewer charges $ 11,385,243 $ 10,450,138 $ (935,105)Connection and recapture fees 53,500 610,800 557,300Miscellaneous - 393,328 393,328

Total Operating Revenues 11,438,743 11,454,266 15,523

OPERATING EXPENSES

Water operations 3,473,500 1,881,149 1,592,351Sewer operations 5,381,092 4,170,934 1,210,158Water purchases 1,700,000 1,710,503 (10,503)Add: Capital assets capitalized - 4,762,569 (4,762,569)

Total Operating Expenses 10,554,592 12,525,155 (1,970,563)

Operating Income (Loss) - Non-GAAP BudgetaryBasis 884,151 (1,070,889) (1,955,040)

NON-OPERATING REVENUES (EXPENSES)

Interest revenue 7,800 492,132 484,332Interest expense (160,088) (168,387) (8,299)

Total Non-Operating Revenues (Expenses) (152,288) 323,745 476,033

Net Income (Loss) Before Transfers - Non-GAAP Budgetary Basis 731,863 (747,144) (1,479,007)

TRANSFERS

Transfers out (945,000) (1,037,644) (92,644)

Net Transfers (945,000) (1,037,644) (92,644)

Change in net position - Non-GAAP BudgetaryBasis $ (213,137) $ (1,784,788) $ (1,571,651)

Page 119



ARBORETUM GOLF - MAJOR ENTERPRISE FUNDFor the Year Ended December 31, 2017

Budgeted Amounts


OPERATING REVENUES

Daily greens fee and memberships $ 822,000 $ 822,000 $ 739,962 $ 82,038Merchandise sales 55,620 55,620 56,654 (1,034)Cart, club, and other rentals 248,940 248,940 217,676 31,264Miscellaneous 142,200 142,200 143,527 (1,327)

Total Operating Revenues 1,268,760 1,268,760 1,157,819 (110,941)

OPERATING EXPENSES

Golf operations 1,849,960 1,418,228 1,187,267 230,961Cost of sales - pro shop 47,000 47,000 42,491 4,509Add: Capital assets capitalized - - 53,277 (53,277)

Total Operating Expenses 1,896,960 1,465,228 1,283,035 182,193

Operating (Loss) - Non-GAAPBudgetary Basis (628,200) (196,468) (125,216) 71,252

TRANSFERS

Transfers in 196,468 548,833 548,833 -Transfers out - - (55,400) (55,400)

Net Transfers 196,468 548,833 493,433 (55,400)

Change in net position - Non-GAAP Budgetary Basis $ (431,732) $ 352,365 $ 368,217 $ 15,852

Page 120


COMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDS


InformationTechnology

CentralGarage

BuildingMaintenance Totals


Cash $ 101,980 $ 90,395 $ 153,326 $ 345,701Total Current Assets 101,980 90,395 153,326 345,701

Total Assets 101,980 90,395 153,326 345,701

DEFERRED OUTFLOWS OF RESOURCESDeferred outflows of resources related to

pensions - 337,223 251,437 588,660

Total Deferred Outflows of Resources - 337,223 251,437 588,660

LIABILITIESCurrent Liabilities

Accounts payable 101,190 47,465 107,971 256,626Accrued wages - 18,498 14,091 32,589Due to other funds - 29,942 23,178 53,120

Total Current Liabilities 101,190 95,905 145,240 342,335

Noncurrent LiabilitiesNet pension liability - 623,022 464,531 1,087,553

Total Noncurrent Liabilities - 623,022 464,531 1,087,553

Total Liabilities 101,190 718,927 609,771 1,429,888

DEFERRED INFLOWS OF RESOURCESDeferred inflows of resources related to

pensions - 84,455 62,969 147,424

NET POSITIONUnrestricted (deficit) 790 (375,764) (267,977) (642,951)

TOTAL NET POSITION $ 790 $ (375,764) $ (267,977) $ (642,951)

Page 121


COMBINING STATEMENT OF REVENUES, EXPENSES, ANDCHANGES IN NET POSITIONINTERNAL SERVICE FUNDS



CentralGarage


OPERATING REVENUESInternal service contributions $ 1,196,410 $ 1,553,271 $ 1,258,750 $ 4,008,431

Total Operating Revenues 1,196,410 1,553,271 1,258,750 4,008,431

OPERATING EXPENSESInformation technology 1,195,620 - - 1,195,620Central garage - 1,602,902 - 1,602,902Building maintenance - - 1,306,221 1,306,221

Total Operating Expenses 1,195,620 1,602,902 1,306,221 4,104,743

Operating Income (Loss) 790 (49,631) (47,471) (96,312)

Income (Loss) Before Transfers 790 (49,631) (47,471) (96,312)

TRANSFERSTransfers out - (35,075) (19,127) (54,202)

Total Transfers - (35,075) (19,127) (54,202)

Change in net position 790 (84,706) (66,598) (150,514)

NET POSITION (DEFICIT) - Beginning of Year - (291,058) (201,379) (492,437)

NET POSITION (DEFICIT) - END OFYEAR $ 790 $ (375,764) $ (267,977) $ (642,951)

Page 122


SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUALINFORMATION TECHNOLOGY - INTERNAL SERVICE FUND




OPERATING REVENUES

Internal service contributions $ 1,351,359 $ 1,196,410 $ (154,949)


OPERATING EXPENSES

Information technology 1,351,359 1,195,620 155,739


Operating Income - 790 790

TRANSFERS

Change in net position $ - $ 790 $ 790

Page 123


SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUALCENTRAL GARAGE - INTERNAL SERVICE FUND




OPERATING REVENUES



OPERATING EXPENSES

Central garage 1,756,782 1,602,902 153,880


Operating Income - (49,631) (49,631)

TRANSFERS

Transfers out - (35,075) (35,075)

Total Transfers - (35,075) (35,075)

Change in net position $ - $ (84,706) $ (84,706)

Page 124


SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUALBUILDING MAINTENANCE - INTERNAL SERVICE FUND




OPERATING REVENUES



OPERATING EXPENSES

Building maintenance 1,462,984 1,306,221 156,763


Operating Income - (47,471) (47,471)

TRANSFERS

Transfers out - (19,127) (19,127)

Total Transfers - (19,127) (19,127)

Change in net position $ - $ (66,598) $ (66,598)

Page 125


COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDS



CentralGarage


CASH FLOWS FROM OPERATINGACTIVITIES

Received from interfund charges $ 1,196,410 $ 1,553,271 $ 1,258,750 $ 4,008,431Paid to suppliers for goods and services (1,194,830) (767,062) (622,594) (2,584,486)Paid to employees for services (344) (749,715) (595,642) (1,345,701)

Net Cash Flows From OperatingActivities 1,236 36,494 40,514 78,244

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES

Transfers (out) - (10,735) (539) (11,274)Net Cash Flows From Noncapital

Financing Activities - (10,735) (539) (11,274)

Net Change in Cash and CashEquivalents 1,236 25,759 39,975 66,970

CASH AND CASH EQUIVALENTS - Beginningof Year 100,744 64,636 113,351 278,731

CASH AND CASH EQUIVALENTS - ENDOF YEAR $ 101,980 $ 90,395 $ 153,326 $ 345,701

RECONCILIATION OF OPERATINGINCOME (LOSS) TO NET CASH FLOWSFROM OPERATING ACTIVITIES

Operating income (loss) $ 790 $ (49,631) $ (47,471) $ (96,312)Changes in assets and liabilities

Accounts payable 790 (2,595) 25,297 23,492Accrued wages (344) 4,013 (3,911) (242)Deferred outflows - pensions - 94,997 65,621 160,618Deferred inflows - pensions - 40,704 30,876 71,580Net pension liability - (50,994) (29,898) (80,892)

NET CASH FLOWS FROMOPERATING ACTIVITIES $ 1,236 $ 36,494 $ 40,514 $ 78,244

NONCASH CAPITAL AND RELATEDFINANCING ACTIVITIES

None

Page 126


COMBINING STATEMENT OF FIDUCIARY NET POSITIONPENSION TRUST FUNDSAs of December 31, 2017

Police PensionFirefighters'

Pension Totals

ASSETSCash $ 1,093,838 $ 606,383 $ 1,700,221Investments

U.S. treasuries 8,987,785 3,114,208 12,101,993U.S. agencies 6,727,187 16,830,116 23,557,303Mutual funds - other than bond funds 7,748,746 37,551,628 45,300,374Equity securities 35,799,495 - 35,799,495Municipal bonds - 3,339,025 3,339,025Corporate bonds 7,134,387 - 7,134,387

ReceivablesInterest 79,452 149,390 228,842

Prepaid items 1,138 - 1,138Due from primary government 11,911 11,911 23,822

Total Assets 67,583,939 61,602,661 129,186,600

LIABILITIESAccounts payable 66,832 40,191 107,023Due to primary government 84,629 - 84,629

Total Liabilities 151,461 40,191 191,652

NET POSITION

Restricted for pensions $ 67,432,478 $ 61,562,470 $ 128,994,948

Page 127


COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONPENSION TRUST FUNDS


Police PensionFirefighters'

Pension Total

ADDITIONSContributions

Employer $ 2,524,306 $ 1,863,911 $ 4,388,217Plan members 749,965 546,330 1,296,295

Total Contributions 3,274,271 2,410,241 5,684,512Investment income

Interest 214,240 592,178 806,418Net appreciation in fair value of investments 8,314,479 7,129,628 15,444,107

Total Investment Income 8,528,719 7,721,806 16,250,525Less Investment expense 233,109 146,186 379,295

Net Investment Income 8,295,610 7,575,620 15,871,230Total Additions 11,569,881 9,985,861 21,555,742

DEDUCTIONSPension benefits and refunds 3,602,087 2,540,913 6,143,000Administration 63,085 60,923 124,008

Total Deductions 3,665,172 2,601,836 6,267,008

Change in Net Position 7,904,709 7,384,025 15,288,734

NET POSITION - Beginning of Year 59,527,769 54,178,445 113,706,214

NET POSITION, END OF YEAR $ 67,432,478 $ 61,562,470 $ 128,994,948

Page 128


SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUALFor the Year Ended December 31, 2017



AdditionsContributionsEmployer $ 2,525,647 $ 2,524,306 $ (1,341)Plan members 682,740 749,965 67,225

Total contributions 3,208,387 3,274,271 65,884Investment IncomeInterest 300,000 214,240 (85,760)Net appreciation in fair value of investments 2,850,000 8,314,479 5,464,479

Total investment income 3,150,000 8,528,719 5,378,719Less Investment expense 250,000 233,109 16,891

Net investment income 2,900,000 8,295,610 5,395,610

Total additions 6,108,387 11,569,881 5,461,494

DeductionsPension benefits and refunds 3,650,000 3,602,087 47,913Administration 45,000 63,085 (18,085)

Total deductions 3,695,000 3,665,172 29,828

Change in net position $ 2,413,387 7,904,709 $ 5,491,322

Net position, beginning of year 59,527,769

Net position, end of year $ 67,432,478

Page 129

VILLAGE OF BUFFALO GROVEFIREFIGHTERS' PENSION FUND

SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUALFor the Year Ended December 31, 2017

Original Budget Final Budget ActualVariance withFinal Budget

AdditionsContributionsEmployer $ 1,862,674 $ 1,862,674 $ 1,863,911 $ 1,237Plan members 559,488 559,488 546,330 (13,158)

Total contributions 2,422,162 2,422,162 2,410,241 (11,921)Investment IncomeInterest 450,000 450,000 592,178 142,178Net appreciation in fair value of

investments 1,750,000 1,750,000 7,129,628 5,379,628Total investment income 2,200,000 2,200,000 7,721,806 5,521,806

Less Investment expense 150,000 150,000 146,186 3,814Net investment income 2,050,000 2,050,000 7,575,620 5,525,620

Total additions 4,472,162 4,472,162 9,985,861 5,513,699

DeductionsPension benefits and refunds 2,532,912 2,622,443 2,540,913 81,530Administration 50,000 50,000 60,923 (10,923)

Total deductions 2,582,912 2,672,443 2,601,836 70,607

Change in net position $ 1,889,250 $ 1,799,719 7,384,025 $ 5,584,306

Net position, beginning of year 54,178,445

Net position, end of year $ 61,562,470

Page 130


STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIESSCHOOL AND PARK DONATIONS - AGENCY FUND


Balances BalancesJanuary 1 Additions Deletions December 31

AssetsCash & Cash Equivalents 253,494$ 94,437$ 67,882$ 280,049$

Liabilities

Due to Other Governments 253,494$ 94,437$ 67,882$ 280,049$

Page 131

Statistical Section

Contents Page

Financial Trends 132 - 141

Revenue Capacity 142 - 152

Debt Capacity 153 - 157

Demographic and Economic Information 158 - 161

Operating Information 162 - 165

This portion of the Village of Buffalo Grove's 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 Village's overall economic condition.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

These schedules contain trend information to help the reader understand how the Village's financial performance and well-being have changed over time.

These schedules contain information to help the reader assess the factors affecting the Village's ability to generate its property and sales taxes.

These schedules present information to help the reader assess the affordability of the Village's current levels of outstanding debt and the Village's ability to issue additional debt.

These schedules offer demographic and economic indicators to help the reader understand the environment within which the Village's financial activities take place and to help make comparisons over time and other governments.

These schedules contain information about the Village's operations and resources to help the reader understand how the Village's financial information relates to the services the Village provides and the activities it performs.


Net Position by ComponentLast Ten Fiscal Years

Fiscal Years 2017 2016 2015 2014

Governmental ActivitiesNet Investment in Capital Assets 53,318,041$ 51,756,933$ 50,609,420$ 50,712,982$ Restricted 1,629,079 1,632,934 1,974,115 2,664,110 Unrestricted (36,022,097) (36,592,629) (34,637,401) 11,048,700

Total Governmental Activities Net Position 18,925,023$ 16,797,238$ 17,946,134$ 64,425,792$

Business-type ActivitiesNet Investment in Capital Assets 36,802,425$ 35,494,070$ 38,372,943$ 35,871,503$ Unrestricted 10,837,462 11,034,826 7,770,059 11,067,173

Total Business-type Activities Net Position 47,639,887$ 46,528,896$ 46,143,002$ 46,938,676$

Primary GovernmentNet Investment in Capital Assets 90,120,466$ 87,251,003$ 88,982,363$ 86,584,485$ Restricted 1,629,079 1,632,934 1,974,115 2,664,110 Unrestricted (25,184,635) (25,557,803) (26,867,342) 22,115,873

Total Primary Government Net Position 66,564,910$ 63,326,134$ 64,089,136$ 111,364,468$

* Auditors restated 2012, from 2011 and earlier have not been adjusted.**Beginning in 2015, the Village implemented GASB 68 which resulted in the inclusionof a net pension liability.

Data Source

Audited Financial Statements

Page 132

2013 2012* 2011 2010 2009 2008

51,011,919$ 52,096,183$ 53,362,147$ 53,742,519$ 54,563,385$ 53,551,265$ 2,412,222 6,268,039 1,918,263 956,803 140,712 80,438

12,387,400 11,550,011 13,429,876 15,738,272 16,590,052 23,259,339

65,811,541$ 69,914,233$ 68,710,286$ 70,437,594$ 71,294,149$ 76,891,042$

35,553,648$ 36,706,161$ 37,807,146$ 38,410,966$ 39,808,889$ 41,374,269$ 11,515,793 11,242,301 12,989,124 14,644,341 15,011,209 17,003,316

47,069,441$ 47,948,462$ 50,796,270$ 53,055,307$ 54,820,098$ 58,377,585$

86,565,567$ 88,802,344$ 91,169,293$ 92,153,485$ 94,372,274$ 94,925,534$ 2,412,222 6,268,039 1,918,263 956,803 140,712 80,438

23,903,193 22,792,312 26,419,000 30,382,613 31,601,261 40,262,655

112,880,982$ 117,862,695$ 119,506,556$ 123,492,901$ 126,114,247$ 135,268,627$

Page 133


Change in Net PositionLast Ten Fiscal Years

Fiscal Years 2017 2016 2015 2014

ExpensesGovernmental Activities

General Government 6,642,798$ 6,441,707$ 5,885,811$ 5,843,623$ Public Safety 27,384,964 30,528,127 27,256,737 22,920,180 Public Works 9,764,874 8,078,874 11,551,606 13,553,093 Interest 384,073 356,799 285,863 302,781

Total Governmental Activities Expenses 44,176,709$ 45,405,507$ 44,980,017$ 42,619,677$

Business-type ActivitiesWater & Sewer 9,454,554 9,001,632 8,561,248 8,435,463 Refuse Service 705,393 703,565 702,106 803,039 Golf Courses 2,888,873 2,886,404 3,288,882 2,739,077

Total Business-type Activities Expenditures 13,048,820 12,591,601 12,552,236 11,977,579

Total Primary Government Expenses 57,225,529$ 57,997,108$ 57,532,253$ 54,597,256$

Program RevenueGovernmental Activities

Charges for ServicesGeneral Government 2,148,760$ 1,855,506$ 1,624,134$ 1,901,996$ Public Safety 1,687,759 1,718,647 1,745,580 1,623,171 Public Works 1,209,784 1,151,594 61,194 88,665

Operating Grants and Contributions 1,271,602 1,281,732 1,229,028 1,285,396

Capital Grants and Contributions 1,478,015 - - -

Total Governmental Activities ProgramRevenues 7,795,920 6,007,479 4,659,936 4,899,228

Business-type activitiesCharges for Services

Water & Sewer 11,060,938 10,304,638 9,495,691 9,076,261 Refuse Service 970,268 1,135,748 1,039,876 1,044,442 Golf Courses 2,201,460 2,240,868 2,335,928 2,257,494

Operating Grants and Contributions - - - - Capital Grants and Contributions - 94,326 - -

Total Business-type Activities Program

Revenues 14,232,666 13,775,580 12,871,495 12,378,197

Total Primary Government Revenues 22,028,586$ 19,783,059$ 17,531,431$ 17,277,425$

Net (Expense) RevenueGovernmental Activities (36,380,789)$ (39,398,028)$ (40,320,081)$ (37,720,449)$ Business-type Activities 1,183,846 1,183,979 319,259 400,618

Total Primary Government Net Expense (35,196,943)$ (38,214,049)$ (40,000,822)$ (37,319,831)$

* Auditors restated 2012, from 2011 and earlier have not been adjusted.

Page 134

2013 2012* 2011 2010 2009 2008

6,567,545$ 6,101,008$ 5,010,274$ 4,769,874$ 6,182,475$ 5,705,497$ 21,964,989 22,344,117 22,657,643 22,312,910 22,753,590 21,115,737 15,091,414 12,026,911 11,106,433 11,081,374 10,421,659 13,222,026

374,511 384,180 248,539 194,655 334,142 379,501

43,998,459$ 40,856,216$ 39,022,889$ 38,358,813$ 39,691,866$ 40,422,761$

8,079,364 8,931,336 8,753,149 9,865,981 9,519,169 8,684,651 902,811 874,366 935,365 942,757 944,392 1,017,164

2,942,747 2,991,170 3,057,912 3,043,367 3,118,647 3,423,903

11,924,922 12,796,872 12,746,426 13,852,105 13,582,208 13,125,718

55,923,381$ 53,653,088$ 51,769,315$ 52,210,918$ 53,274,074$ 53,548,479$

1,207,504$ 1,226,552$ 1,240,547$ 1,195,928$ 977,464$ 1,211,188$ 1,498,819 1,283,956 1,404,308 1,419,761 1,563,236 1,514,666

82,393 118,547 86,421 71,606 50,709 94,670 1,161,509 1,178,442 1,230,387 1,253,103 1,349,044 1,307,895

- - - - - -

3,950,225 3,807,497 3,961,663 3,940,398 3,940,453 4,128,419

8,692,812 7,464,870 7,782,000 9,091,520 8,008,360 7,538,534 1,040,878 1,050,386 1,036,872 1,041,661 1,004,431 923,207 1,178,368 2,221,714 2,175,418 2,088,106 2,320,247 2,356,962 1,072,499 - - - - -

- - - - - 133,599

11,984,557 10,736,970 10,994,290 12,221,287 11,333,038 10,952,302

15,934,782$ 14,544,467$ 14,955,953$ 16,161,685$ 15,273,491$ 15,080,721$

(40,048,234)$ (37,048,719)$ (35,061,226)$ (34,418,415)$ (35,751,413)$ (36,294,342)$ 59,635 (2,059,902) (1,752,136) (1,630,818) (2,249,170) (2,173,416)

(39,988,599)$ (39,108,621)$ (36,813,362)$ (36,049,233)$ (38,000,583)$ (38,467,758)$

Page 135


Change in Net Position (Cont.)Last Ten Fiscal Years

Fiscal Years 2017 2016 2015 2014

General Revenues and Other Changes in Net PositionGovernmental Activities

TaxesProperty 15,510,127$ 15,034,583$ 14,742,622$ 14,554,564$ Sales and Home Rule 9,229,254 9,095,471 9,274,777 8,455,972 Income and Use 4,843,251 4,994,426 5,409,875 4,104,736 Telecommunications 1,586,128 1,513,254 1,644,309 1,679,653 Utility 2,532,662 2,659,554 2,643,642 2,819,427 Property Transfer 1,256,919 1,115,360 904,311 790,819 Other 1,019,807 1,110,503 1,092,554 1,113,831

Investment Earnings 153,816 65,600 25,061 107,765 Miscellaneous 1,409,537 1,596,806 1,458,118 1,636,721 Transfers 958,315 1,062,190 749,027 1,070,724 Gain on sale of assets 8,758 1,385 1,601 488

Total Government Activities 38,508,574 38,249,132 37,945,897 36,334,700

Business-type ActivitiesInvestment Earnings 492,132$ 14,159$ 10,112$ 18,820$ Miscellaneous 393,328 249,946 5,737 520,521 Transfers (958,315) (1,062,190) (749,027) (1,070,724)

Total Business-type Activities (72,855) (798,085) (733,178) (531,383)

Total Primary Government 38,435,719$ 37,451,047$ 37,212,719$ 35,803,317$

Change in Net PositionGovernmental Activities 2,127,785$ (1,148,896)$ (2,374,184)$ (1,385,749)$ Business-type Activities 1,110,991 385,894 (413,919) (130,765)

Total Primary Government Changein Net Position 3,238,776$ (763,002)$ (2,788,103)$ (1,516,514)$

Data Source


Page 136

2013 2012 2011 2010 2009 2008

14,504,750$ 14,330,407$ 14,458,248$ 13,657,589$ 12,504,508$ 12,058,815$ 7,803,749 7,570,915 6,984,134 7,309,800 7,196,969 8,436,647 4,737,656 5,462,111 3,714,864 4,165,248 3,601,619 4,646,776 1,943,811 2,200,809 2,134,462 2,183,190 2,345,249 2,417,496 2,629,997 2,510,242 2,567,091 2,393,340 - -

760,164 459,036 629,376 545,515 670,762 590,596 1,052,788 1,070,409 1,044,164 1,017,612 1,006,249 1,076,929

54,522 132,436 133,059 250,290 490,881 810,982 1,506,994 1,239,906 1,495,155 1,822,276 1,403,283 2,081,112

951,111 635,500 553,000 217,000 935,000 80,230 - - - - - -

35,945,542 35,611,771 33,713,553 33,561,860 30,154,520 32,199,583

12,455$ 27,087$ 41,100$ (46,666)$ (374,632)$ 267,263$ - 1,259 4,999 2,133 1,315 187,034

(951,111) (635,500) (553,000) (217) (935,000) (80,230)

(938,656) (607,154) (506,901) (44,750) (1,308,317) 374,067

35,006,886$ 35,004,617$ 33,206,652$ 33,517,110$ 28,846,203$ 32,573,650$

(4,102,692)$ (1,436,948)$ (1,347,673)$ (856,555)$ (5,596,893)$ (4,094,759)$ (879,021) (2,667,056) (2,259,037) (1,675,568) (3,557,487) (1,799,349)

(4,981,713)$ (4,104,004)$ (3,606,710)$ (2,532,123)$ (9,154,380)$ (5,894,108)$

Page 137


Fund Balances of Governmental FundsLast Ten Fiscal Years

Fiscal Years 2017 2016 2015 2014

General FundNonspendable 132,843$ 167,957$ 551,242$ 573,812$ Restricted 252,729 229,953 223,622 130,435 Committed 7,758,348 8,511,306 7,532,123 7,438,256 Unassigned 18,902,476 16,143,726 14,991,907 13,225,644 Reserved - - - - Unreserved - - - -

Total General Fund 27,046,396 25,052,942 23,298,894 21,368,147

All other Governmental FundsRestricted 1,629,079 1,632,934 1,974,115 1,965,328 Assigned - - - - Unassigned (3,714,759) (3,859,964) (3,707,560) (2,324,296) Unreserved - - - - Unreserved, Reported in

Special Revenue Funds - - - - Capital Projects Funds - - - -

Total All other Governmental Funds (2,085,680) (2,227,030) (1,733,445) (358,968)

Total Governmental Funds 24,960,716$ 22,825,912$ 21,565,449$ 21,009,179$

* Auditors restated 2012, from 2011 and earlier have not been adjusted.

Data Source


Page 138

2013 2012* 2011 2010 2009 2008

562,399$ 518,437$ 1,031,936$ -$ -$ -$ 162,274 - - - - -

7,345,420 7,335,685 7,948,344 - - - 12,395,113 10,759,935 9,871,895 - - -

- - - 1,138,273 1,248,428 1,536,571 - - - 17,763,849 18,307,270 22,444,819

20,465,206 18,614,057 18,852,175 18,902,122 19,555,698 23,981,390

1,796,997 6,112,703 1,918,263 - - - 101,213 144,075 146,116 - - -

(927,395) (253,826) (234,206) - - - - - - 20,271 (12,970) 33,167

- - - 2,124,937 1,252,015 1,239,501 - - - 927,626 903,315 1,911,178

970,815 6,002,952 1,830,173 3,072,834 2,142,360 3,183,846

21,436,021$ 24,617,009$ 20,682,348$ 21,974,956$ 21,698,058$ 27,165,236$

Page 139


Change in Fund Balances of Governmental FundsLast Ten Fiscal Years

Fiscal Years 2017 2016 2015 2014***

RevenuesProperty Taxes 15,510,127$ 15,034,583$ 14,742,622$ 14,554,564$ Other Taxes 9,816,523 9,701,271 9,712,718 9,564,978 Licenses and Permits 1,763,982 326,177 1,330,769 207,312 Intergovernmental 3,043,453 11,843,812 1,931,512 11,081,081 Fines and Forfeitures 330,475 3,025,628 350,042 1,803,317 Charges for Services 11,709,919 1,504,400 12,271,219 1,371,779 Investment Income 153,816 65,600 25,061 107,765 Miscellaneous 1,456,876 1,610,746 1,404,841 2,107,628

Total Revenue 43,785,171 43,112,217 41,768,784 40,798,424

ExpenditureCurrent

General Government 5,774,748$ 5,693,142$ 5,084,772$ 5,522,549 Public Safety 25,776,184 27,407,019 25,237,115 22,773,535 Public Works 8,101,888 6,978,307 8,092,735 10,878,278 Capital Outlay 1,362,213 8,252,604 2,828,194 2,018,451

Debt ServicePrincipal 1,275,000 525,000 510,000 790,000 Interest 401,609 371,456 296,747 313,665 Other Charges - - - -

Total Expenditures 42,691,642 49,227,528 42,049,563 42,296,478

Excess (Deficiency) of Revenuesover Expenditures 1,093,529 (6,115,311) (280,779) (1,498,054)

Other Financing Sources (Uses)Transfers In 4,204,943$ 3,402,595$ 3,521,760$ 2,552,288 Transfers Out (3,192,426) (2,253,984) (2,686,312) (1,481,564) Sales of capital assets 28,758 1,385 1,601 488 Auction Proceeds - - - - Bond Issued - 6,125,000 - - Premium on Issuance of Debt - 100,778 - - Transfer to Escrow Agent - - - -

Total Other Financing Sources (Uses) 1,041,275 7,375,774 837,049 1,071,212

Net Change in Fund Balance 2,134,804$ 1,260,463$ 556,270$ (426,842)

Debt Serviceas a Percentage of Non-Capital Expenditures 4.24% 2.19% 2.06% 2.68%

*Transitional fiscal year May 1, 2007 through December 31, 2007** Auditors restated 2012, from 2011 and earlier have not been adjusted.*** Beginning in 2014, state shared revenues have been recorded as intergovernmental revenues.

Page 140

2013 2012** 2011 2010 2009 2008

14,504,750$ 14,330,407$ 14,458,248$ 13,657,589$ 12,504,508$ 12,058,815$ 19,240,365 18,325,614 17,074,091 17,614,705 14,806,744 17,168,444

294,622 275,434 280,139 278,164 276,857 278,965 997,371 1,011,949 1,060,719 1,096,794 1,106,234 1,134,407

1,647,364 1,283,956 1,404,308 1,419,761 1,559,190 1,514,666 1,010,868 1,236,158 1,216,497 1,145,679 970,537 1,200,381

54,522 132,457 133,196 249,396 490,881 790,244 1,506,994 1,239,861 1,442,617 1,720,640 1,444,610 2,081,112

39,256,856 37,835,836 37,069,815 37,182,728 33,159,561 36,227,034

6,465,636 5,556,101 5,509,433 4,979,904 5,596,822 5,458,962 21,805,910 21,791,218 22,008,351 21,802,732 20,882,745 20,499,004 12,178,705 9,865,723 8,256,079 8,704,005 10,337,090 10,792,931

1,347,276 1,561,904 1,510,924 3,157,156 1,245,940 1,286,175

940,000 920,000 1,055,000 980,000 1,165,000 1,150,000 385,395 285,420 248,539 194,655 334,142 379,501

- - - 127,930 - -

43,122,922 39,980,366 38,588,326 39,946,382 39,561,739 39,566,573

(3,866,066) (2,144,530) (1,518,511) (2,763,654) (6,402,178) (3,339,539)

2,119,313 2,621,132 1,891,354 2,153,190 2,909,382 4,121,451 (1,434,235) (1,985,632) (1,338,354) (1,936,190) (1,974,382) (4,041,221)

- 45 52,538 103,565 - - - 6,000,000 - 7,760,000 - - - 91,669 - 178,229 - - - - - (5,218,242) - -

685,078 6,727,214 605,538 3,040,552 935,000 80,230

(3,180,988) 4,582,684 (912,973) 276,898 (5,467,178) (3,259,309)

3.17% 3.14% 3.52% 3.19% 3.91% 4.00%

Page 141


Assessed and Actual Value of Taxable PropertyLast Ten Levy Years

Tax Levy Residential Commercial Industrial Other Year Property Property Property Property

2017 * 1,342,197,928$ * 315,723,608$ * 3,900,196$ * 628,731$ 2016 1,249,925,407 302,093,041 3,611,330 636,718 2015 1,191,523,466 297,951,249 3,377,285 631,771 2014 1,120,788,463 294,457,084 9,119,150 696,091 2013 1,115,221,955 292,225,583 9,050,042 618,433 2012 1,223,424,081 296,910,564 10,221,534 617,198 2011 1,338,206,375 315,118,343 10,706,904 832,216 2010 1,435,137,071 325,603,742 12,723,472 636,502 2009 1,535,445,605 346,125,532 14,583,031 628,346 2008 1,510,235,133 353,063,176 17,166,096 630,017

*Cook County property class and assessed valuation is an estimate. Cook County information not yet available.

Note: Total Direct Tax Rate is weighted for both Cook and Lake Counties

Data Source

Office of Cook County ClerkOffice of Lake County Clerks Page 142

Estimated EstimatedTotal Assessed Total Direct Actual Taxable Actual Taxable

Value Tax Rate Value Value (%)

* 1,662,450,463$ * 0.9545 * 4,987,351,389$ * 33.333%1,556,266,496 1.0363 4,668,799,488 33.333%1,493,483,771 1.0110 4,480,451,313 33.333%1,425,060,788 1.0411 4,275,182,364 33.333%1,417,116,013 1.0280 4,251,348,039 33.333%1,531,173,377 0.9187 4,593,520,131 33.333%1,664,431,364 0.8594 4,993,294,092 33.333%1,774,100,787 0.7999 5,322,302,361 33.333%1,896,782,514 0.7359 5,690,347,542 33.333%1,881,094,422 0.6661 5,643,283,266 33.333%

Page 143


Property Tax Rates - Direct and Overlapping GovernmentsLast Ten Levy Years

Comparative Tax Rates(Per $100 Assessed and Equalized Valuation)

Tax Levy Year 2017 2016 2015 2014 2013

Lake County Village of Buffalo Grove 0.908 0.921 0.955 0.993 0.983 County, including Forest Preserve 0.809 0.825 0.871 0.893 0.881 Combined School Districts (102, 125, 532) 6.634 6.680 7.034 7.164 7.068 Buffalo Grove Park District 0.482 0.492 0.517 0.553 0.537 Vernon Area Public Library 0.291 0.293 0.308 0.317 0.311 All Other (3) 0.099 0.104 0.110 0.113 0.105

Total (5) 9.223 9.315 9.794 10.033 9.885

-0.99% -4.90% -2.38% 1.50% 3.12%

Cook CountyVillage of Buffalo Grove N/A 1.138 1.316 1.235 1.211 County, including Forest Preserve N/A 0.596 0.621 0.126 0.125 Metropolitan Water Reclamation District

of Greater Chicago N/A 0.406 0.426 0.430 0.417 Combined School Districts (21, 214, 512) N/A 7.909 8.989 8.657 8.053 Buffalo Grove Park District N/A 0.606 0.714 0.677 0.658 Indian Trails Public Library District N/A 0.476 0.534 0.529 0.504 All Other (4) N/A 0.073 0.130 0.094 0.129

Total (6) N/A 11.204 12.730 11.748 11.097

Percentage Change Year -to-Year N/A -11.99% 8.36% 5.86% 9.68%

Notes:Notes:

(1) Taxes Levied on a calendar year basis for collection in the subsequent year.(2) The Village is a home rule unit under the 1970 Illinois State Constitution and, as such, has no statutorytax rate limitations.(3) Includes Road and Bridge and General Assistance for the Township herein.

N/A - Not Yet Available

Data Source

Cook County Tax ExtensionLake County Tax Extension

(6) Representative tax rates for other government units are from Cook County Tax Code 38077, which represents the largest portion of the Village's 2016 EAV within Cook County.

(4) Includes Northwest Mosquito Abatement, Consolidated Elections, Road and Bridge, and General Assistance for the Township herein.(5) Representative tax rates for other government units are from Vernon Township Tax Code 16- 92, which the largest portion of the Village's 2017 EAV.

Page 144

2012 2011 2010 2009 2008

0.929 0.852 0.797 0.750 0.665 0.820 0.755 0.703 0.664 0.652 6.779 6.158 5.610 5.301 5.102 0.511 0.452 0.425 0.351 0.370 0.441 0.385 0.315 0.301 0.222 0.106 0.092 0.102 0.094 0.092

9.586 8.694 7.952 7.461 7.103

10.26% 9.33% 6.58% 5.04% -1.31%

1.030 0.886 0.810 0.691 0.670 0.594 0.520 0.474 0.464 0.466

0.370 0.320 0.274 0.261 0.252 6.917 6.565 5.792 5.103 5.004 0.557 0.479 0.439 0.371 0.376 0.463 0.393 0.347 0.307 0.308 0.187 0.107 0.071 0.068 0.067

10.118 9.270 8.207 7.265 7.143

9.15% 12.95% 12.97% 1.71% -9.64%

Page 145


Principal Property TaxpayersCurrent Fiscal Year and Eight Years Ago

2017Percentage

of TotalVillage

Equalized Taxable Assessed Assessed

Taxpayer Valuation Rank Valuation

Chevy Chase Business Park Ltd $21,759,899 1 1.309%

Hamilton Partners(1) 11,468,682 2 0.690%

Penobscot Management LLC(3) 9,436,975 3 0.568%

Millbrook 9,167,002 4 0.551%

Buffalo Grove STE 106 8,674,553 5 0.522%

Leider Lane Investors LLC 8,630,563 6 0.519%

Arthur J. Rogers and Company (4) 8,229,224 7 0.495%

BRI 1862 Riverwalk LLC (5) 8,145,927 8 0.490%

Riverwalk South LLC(2) 7,819,608 9 0.470%

Resource Real Estate Inc 6,589,815 10 0.396%

Amli at Chevy Chase, LP - -

Remax Consumers Plastics, Inc - -

Inland Wooland LLC - -

NTL Shopping Plaza Inc - - $99,922,248 6.010%

(1) Previously HP Riverwalk II, LLC

(2) Previously Marack and Associates

(3) Previously The Wheatlands LLC

(4) Previously American National Bank and Trust of Chicago

(5) Previously Riverwalk II LLC

Data Source:

Office of the County Clerk of Cook Office of the County Clerk of Lake

Note: Every effort was made to seek out and report the largest taxpayers. However, many of the taxpayers contain multiple parcels, and it is possible that some parcels and their valuations have been overlooked.

Page 146

2009Percentage

of TotalVillage

Equalized Equalized Assessed AssessedValuation Rank Valuation

$18,960,235 2 1.010%

12,986,131 3 0.690%

9,405,158 5 0.500%

11,978,786 4 0.640%

- 0.000%

- 0.000%

9,012,393 7 0.480%

- 0.000%

9,241,551 6 0.490%

- 0.000%

22,307,549 1 1.190%

7,355,354 8 0.390%

6,895,030 9 0.370%

6,587,600 10 0.350%$114,729,787 6.110%

Page 147


Property Tax Levy and CollectionsLast Ten Fiscal Years

Lake County Cook CountyCollected within the Collected within the

Fiscal Year After the Levy Fiscal Year After the LevyLevy Tax Percentage Tax PercentageYear Levied Amount of Levy Levied Amount of Levy

2016 11,783,047$ 11,761,365$ 99.82% 3,811,228$ 3,748,763$ 98.36%2015 11,678,742 11,426,115 97.84% 3,514,106 3,608,468 102.69%2014 11,339,326 11,322,087 99.85% 3,500,800 3,409,452 97.39%2013 11,413,067 11,172,745 97.89% 3,424,515 3,381,819 98.75%2012 11,183,780 11,105,274 99.30% 3,449,572 3,399,477 98.55%2011 11,026,478 11,019,638 99.94% 3,279,285 3,225,824 98.37%2010 10,911,629 10,902,757 99.92% 3,280,083 3,203,676 97.67%2009 10,826,999 10,818,398 99.92% 3,131,059 2,992,768 95.58%2008 9,648,296 9,639,444 99.91% 2,882,493 2,902,223 100.68%2007 9,137,324 9,133,824 99.96% 2,937,238 2,871,428 97.76%

Data Source:

Office of the County Clerk

Page 148

Village TotalPercentage

Collected of Levy

15,510,127$ 99.46%15,034,583 98.96%14,731,539 99.27%14,554,564 98.09%14,504,751 99.12%14,245,462 99.58%14,106,433 99.40%13,811,166 98.95%12,541,667 100.09%12,005,252 99.43%

Page 149


Sales Tax Revenue and Number of Principal PayersRevenue By Category

Last Ten Calendar Years

2017 2016 2015 2014

General Merchandise -$ 86,125$ 66,228$ * 9,098$ Food 1,557,474 1,481,195 1,552,983 1,080,556 Drinking and Eating Places 1,107,878 1,118,330 1,062,206 1,023,545 Apparel 68,075 92,409 94,538 104,229 Furniture, Households and radio 380,907 369,583 521,007 356,095 Lumber, Building and Hardware 2,357,551 2,074,008 1,879,818 1,666,708 Automotive Filling Stations 1,007,356 867,250 918,216 947,278 Drugs and Miscellaneous Retail 1,568,024 1,986,578 1,790,381 2,349,469 Agriculture and All Other 2,573,323 2,231,299 2,313,502 1,693,506 Manufacturers 200,727 220,927 351,808 270,063

10,958,408$ 10,550,687$ 10,550,687$ 9,500,547$

Total Number of Payers 1,036 1,022 1,043 974

Village Direct Sales Tax rate 1.00% 1.00% 1.00% 1.00%

Village Home Rule Tax rate 1.00% 1.00% 1.00% 1.00%

Note: Blank Categories have less than four taxpayers; therefore, no data is shown to protect theconfidentiality of individual taxpayers.

* Excludes values for taxpayers in Cook County.

Data Source:

Office of the County Clerk of CookOffice of the County Clerk of LakeIllinois Department of Revenue

Page 150

Calendar Year

2013 2012 2011 2010 2009 2008

10,105$ 17,526$ 18,514$ 3,901$ 4,637$ 5,819$ 1,133,605 1,193,312 1,244,667 1,362,170 1,357,378 1,415,835 1,025,547 997,738 921,617 933,212 941,804 906,628

120,210 130,163 129,402 128,663 112,951 104,376 463,678 * 437,774 378,836 415,396 223,008 521,316

1,236,689 812,434 534,413 402,483 716,935 1,379,764 857,713 954,996 853,864 959,870 1,222,500 1,177,121

1,915,937 1,847,550 1,982,824 1,431,121 1,432,484 1,285,513 1,572,248 1,347,303 1,193,620 1,062,978 1,257,806 2,082,955

285,848 334,442 378,326 379,893 399,141 390,034

8,621,580$ 8,073,238$ 7,636,083$ 7,079,687$ 7,668,644$ 9,269,361$

972 966 1,286 997 975 1,002

1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Page 151


Direct and Overlapping Sales Tax RatesLast Ten Fiscal years

State ofVillage Village Illinois

Fiscal Direct Home Rule Sales TaxYear Rate Rate Rate

2017 1.00% 1.00% 6.50%2016 1.00% 1.00% 6.50%2015 1.00% 1.00% 6.50%2014 1.00% 1.00% 6.50%2013 1.00% 1.00% 6.50%2012 1.00% 1.00% 6.50%2011 1.00% 1.00% 6.50%2010 1.00% 1.00% 6.50%2009 1.00% 1.00% 6.50%2008 1.00% 1.00% 6.50%

*Transitional fiscal year May 1, 2007 through December 31, 2007

Data Source:

Illinois Department of Revenue

Page 152


Ratio of Outstanding Debt by TypeLast Ten Years

Governmental

Activities

General General TotalYear Obligation Obligation IEPA Installment PrimaryEnded Bonds Bonds Loan Note Government

12/31/2017 14,581,706$ -$ 348,233$ 6,638,399$ 21,568,338$ 12/31/2016 15,881,408 - 366,060 6,894,447 23,141,915 12/31/2015 10,202,453 - 383,487 1,193,599 11,779,539 12/31/2014 10,730,503 - 400,519 - 11,131,022 12/31/2013 11,340,000 - 173,618 - 11,513,618 12/31/2012 12,280,000 - - - 12,280,000 12/31/2011 7,200,000 - - - 7,200,000 12/31/2010 8,255,000 - - - 8,255,000 12/31/2009 6,575,000 - - - 6,575,000 12/31/2008 7,740,000 - - - 7,740,000

*Transitional fiscal year May 1, 2007 through December 31, 2007December 31, 2007 represents an eight-month period.

Notes:

Details of the Village's outstanding debt can be found in the Notes to the Financial Statements.

(1) See the Schedule of Demographic and Economic Statistics for equalized assessed valuation of property, personal income, and population data.


Page 153

Ratio ofTotal

Outstanding Debt

Debt to Total OutstandingEqualized Outstanding as a PercentageAssessed Debt of PersonalValuation Per Capita (1) Income

0.43% 523.17 1.11%0.50% 557.64 1.19%0.26% 283.82 0.61%0.26% 265.11 0.57%0.27% 275.59 0.61%0.27% 290.10 0.65%0.14% 171.79 0.39%0.16% 198.93 0.45%0.12% 156.62 0.36%0.14% 183.54 0.44%

Page 154


Ratio of General Bonded Debt OutstandingLast Ten Fiscal Years

Ratio ofTotal

Amounts OutstandingAvailable Debt to Total

General in Debt Equalized OutstandingFiscal Obligation Service Assessed DebtYear Bonds Fund Total Valuation Per Capita (1)

2017 14,581,706$ -$ 14,581,706$ 0.29% 353.70 2016 15,881,408 - 15,881,408 0.34% 382.68 2015 10,202,453 - 10,202,453 0.23% 245.82 2014 10,730,503 - 10,730,503 0.25% 255.57 2013 11,340,000 - 11,340,000 0.27% 271.43 2012 12,280,000 19,527 12,260,473 0.27% 289.64 2011 7,200,000 12,543 7,187,457 0.14% 171.49 2010 8,255,000 20,271 8,234,729 0.15% 198.45 2009 6,575,000 (12,970) 6,587,970 0.12% 156.93 2008 7,740,000 33,167 7,706,833 0.14% 182.76

*Transitional fiscal year May 1, 2007 through December 31, 2007

Notes:

Details of the Village's outstanding debt can be found in the Notes to the Financial Statements.

(1) See the Schedule of Assessed Value and Estimated Actual Value of Taxable Propertyfor property value data.

Page 155


Direct and Overlapping Governmental Activities DebtAs of December 31, 2017

Percentage of Village ofDebt Applicable Buffalo Grove

Gross to the Village of ShareDebt Buffalo Grove* of Debt

Overlapping DebtSchool Districts

Cook County School District #21 30,255,000$ 18.68% 5,650,897$ Kildeeer Countryside Community Consolidated #96 - 38.30% - Aptakisic-Tripp Community Consolidated #102 17,870,000 76.70% 13,706,920 Lincolnshire-Half Day District #103 6,010,000 12.08% 726,127 Adlai E. Stevenson H.S. District # 125 3,455,000 37.35% 1,290,393 Wheeling Township H.S. District #214 39,325,000 3.92% 1,541,928 Harper Community College #512 126,895,000 2.03% 2,571,993 College of Lake County #532 30,895,000 5.37% 1,659,542

Total School Districts 254,705,000 27,147,800

Other Than School DistrictsLake County 180,270,000 5.10% 9,201,540 Lake County Forest Preserve 255,895,000 5.10% 13,061,674 Cook County 3,085,186,750 0.23% 7,203,864 Cook County Forest Preserve 149,290,000 0.23% 348,590 Metropolitan Water Reclamation District 2,377,123,381 0.24% 5,658,246 Buffalo Grove Park District 14,100,000 97.62% 13,764,265 Wheeling Park District 8,995,000 7.65% 688,248

Total Other than School Districts 6,070,860,131 49,926,427

Total Overlapping Debt 6,325,565,131 77,074,227

Total Village of Buffalo Grove Direct Debt 14,581,706 100.00% 14,581,706

Total Direct and Overlapping Debt 6,340,146,837$ 91,655,933$

*Determined by ratio of assessed valuation of property subject to taxation in the Village of Buffalo Groveto valuation of property subject to overlapping unit

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Village. This schedule estimates the portion of outstanding debt of those overlapping governments that is borne by the residents and businesses of the Village of Buffalo Grove. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

Page 156


Schedule of Legal Debt MarginDecember 31, 2017

Under the 1970 Illinois Constitution, there is no legal limit for home rule municipalities except asset by the General Assembly.

Page 157


Demographic and Economic StatisticsLast Ten Years

Equalized Per CapitaFiscal Assessed Personal Personal Per Capita UnemploymentYear Population Valuation EAV Income Income Rate

2017 41,226 1 1,662,450,463$ 40,325 1,938,570,198$ 47,023 4 5.7%2016 41,500 E 1,614,251,028 38,898 1,949,794,500 46,983 4 4.3%2015 41,503 E 1,475,693,765 35,985 1,930,595,051 46,517 1 4.2%2014 41,987 E 1,425,060,788 33,941 1,939,085,621 46,183 E 5.7%2013 41,778 E 1,456,040,510 34,852 1,882,391,346 45,057 1 6.8%2012 42,330 E 1,531,173,377 36,172 1,891,582,681 44,687 E 7.1%2011 41,911 E 1,664,431,364 39,713 1,854,311,029 44,244 E 7.6%2010 41,496 A 1,774,100,787 42,754 1,817,773,776 43,806 3 8.4%2009 41,980 E 1,896,782,514 45,138 1,802,196,362 42,930 E 7.8%2008 42,170 E 1,881,094,422 44,607 1,774,145,979 42,071 E 4.8%

A - Actual 1- US Census WebsiteE - Estimate 2- Northern Illinois University Estimate

3 - American Community Survey 3 Year Estimates4- Illinois Department of Employment Security

*Transitional fiscal year May 1, 2007 through December 31, 2007** Estimate for Cook County EAV

Data Source:

U.S. Department of Labor, Bureau of Labor StatisticsU.S. Census Bureau

Page 158


Principal Village EmployersCurrent Year and Nine Years Ago

2017 2008Percent Percentof Total of TotalVillage Village

Employer Employees Rank Population Employees Rank Population

Siemens Building Technologies 1,800 1 4.37% 1,030 1 2.31%I.S.I. 1,200 2 2.91%ESS 550 3 1.33%Plexus Corporation 370 4 0.90% 400 5 0.90%Veritas Document Solutions 300 5 0.73%ARxIUM, Inc (1) 200 6 0.49%Vapor Bus Direct 200 7 0.49%Leica Microsystems, Inc 200 8 0.49%Crosscom National LLC 170 9 0.41%Eagle Test Systems, Inc 150 10 0.36% 266 7 0.60%MNJ Technologies 150 10 0.36%The Salem Group. Inc. 150 10 0.36%Wes-Tech Automation Solutions, LLC 150 10 0.36%Allstate Insurance Company 996 2 2.24%Rexam 756 3 1.70%Dominicks Finer Foods (3 locations) 483 4 1.09%Harris Trust & Savings Bank 350 6 0.79%Federal Express 250 8 0.56%Baxter Global Technical Services 250 9 0.56%Village of Buffalo Grove 245 10 0.55%

Data Source:Sources: 2018 Illinois Manufacturing Directory2018 Illinois Services Directory and a selective telephone survey(1) Previously Intelligent Hospital Solutions

Page 159


Full-Time Equivalent EmployeesLast Ten Years

Function/Program 2017 2016 2015 2014

General GovernmentAdministration

Village Managers Office 5.5 5.0 6.0 7.5 Planning - - - 1.5 Information Technology - - - 3.0

Finance 9.0 9.0 8.0 10.0 Building and Zoning 14.0 12.0 12.0 9.5

Public SafetyPolice

Full-Time Police Officers 61.0 63.0 63.0 63.0 Community Service Officers 2.0 3.0 3.0 3.0

Civilians 16.0 15.5 15.0 15.0

FireFull-time Firefighters/Paramedics 58.0 59.0 59.0 58.0 Civilians 4.5 1.0 1.0 1.5

Public WorksPublic Works Administration 12.0 6.0 6.0 6.0 Streets/Forestry 20.0 20.0 20.0 18.5 Water/Sewer 12.0 9.0 10.0 9.0 Central garage 5.5 5.5 5.5 5.5 Building Maintenance 4.5 6.0 6.0 6.0

RecreationAdministration 2.0 3.0 19.5 19.5 Grounds Maintenance - - 11.5 11.5

226.0 217.0 245.5 248.0

Recreation

Seasonal 25.0 24.5 24.5 24.5

Data Source:

Village Finance DepartmentPage 160

2013 2012 2011 2010 2009 2008

5.5 4.5 4.0 4.0 4.5 5.0 1.5 1.5 1.5 1.5 1.5 1.5 3.5 3.5 3.5 3.5 3.5 3.5 9.5 8.5 8.5 8.5 9.0 9.5

10.0 10.0 10.0 10.0 10.0 10.5

64.0 69.0 69.0 69.0 71.0 71.0 3.0 3.0 3.0 3.0 3.0 3.0

17.0 16.5 17.5 17.5 20.5 21.5

58.0 62.0 62.0 62.0 62.0 62.0 3.5 3.5 6.0 6.0 6.0 6.0

5.0 11.0 11.0 12.0 12.0 14.5 18.5 20.0 20.0 20.0 20.0 20.0 8.0 13.0 13.0 13.0 13.0 14.0 5.5 5.5 5.5 5.5 5.5 5.0 4.0 4.0 4.0 4.0 4.0 4.0

18.0 13.5 13.5 13.5 13.5 13.5 16.0 15.0 15.0 15.0 15.0 15.0

250.5 264.0 267.0 268.0 274.0 279.5

24.5 34.0 34.0 34.0 34.0 34.0

Page 161


Operating IndicatorsLast Ten Fiscal Years


General GovernmentBuilding and Zoning

Building Permits Issued 2,567 2,957 2,582 2,833 Building Inspections Conducted 6,692 9,053 11,625 7,074 Property Maintenance Inspections Conducted 1,954 2,160 1,894 3,172

Public SafetyPolice

Physical Arrests 441 521 809 886 Parking Violations 6,781 5,754 3,766 3,634

Traffic Violations 5,310 6,054 7,969 8,349 DUI Arrests 87 74 97 154 Vehicle Crashes 1,294 1,473 363 1,429

FireAmbulance Calls/EMS 3,201 3,160 3,123 3,385 Service Calls 293 309 340 1,245

Fire Calls 1,082 1,279 1,585 821 Auto Aid/Mutual Aid 1,045 987 1,055 1,063

Public WorksStreets

Street Resurfacing (Miles) 2.76 11.40 2.45 3.28 Parks and Recreation

Park Sites 46 46 46 46 Golf Course - Combined

Golf Rounds Played - Paid 51,138 53,599 68,602 54,689 Water

New Connections (Tap-ons) 3 19 23 9 Average Daily consumption (1) 3.23 3.60 3.39 3.58 Peak Daily consumption (1) 5.98 5.54 5.14 5.40

(1) - Millions of Gallons

N/A - Not Available

Data Source:

Various Village Departments

Page 162

2013 2012 2011 2010 2009 2008

2,651 2,206 1,930 1,959 1,922 1,746 7,456 15,858 9,661 7,088 6,633 5,054 3,288 5,828 3,462 3,158 2,348 2,159

759 671 820 981 989 1,085 2,984 3,341 2,031 2,062 3,267 3,451

13,171 10,826 11,867 11,999 11,373 15,795 124 107 164 222 267 337

1,507 1,260 1,396 1,391 1,414 1,786

2,613 2,789 2,568 2,743 2,553 2,590 483 487 1,053 610 718 751 865 698 737 735 774 881 654 680 676 654 672 689

10.84 5.51 2.90 3.00 4.94 4.94

46 46 46 46 46 46

53,639 59,937 56,918 52,740 59,723 58,097

27 15 12 50 7 25 3.70 3.92 4.09 4.30 4.21 4.09 6.20 7.93 7.84 7.30 7.29 7.03

Page 163


Capital Asset StatisticsLast Ten Fiscal Years


Public SafetyPolice

Stations 1 1 1 1 Patrol Units 31 29 30 29

FireStations 3 3 3 3 Fire Apparatus 20 20 20 20

Public WorksStreets

Street (Miles) 114.02 118.22 118.20 118.20 Streetlights 2,790 2,789 2,789 2,786

WaterWater Mains 181.97 181.31 181.14 180.90 Fire Hydrants 2,514 2,501 2,493 2,487

WastewaterSanitary Sewers 139.96 139.92 139.92 139.80

Data Source:

Various Village DepartmentsPage 164

2013 2012 2011 2010 2009 2008

1 1 1 1 1 1 28 34 36 36 36 36

3 3 3 3 3 3 21 21 21 21 21 20

117.70 117.70 117.70 117.70 117.70 117.50 2,778 2,778 2,778 2,745 2,743 2,714

180.30 180.25 180.25 179.83 179.82 180.63 2,477 2,475 2,475 2,475 2,474 2,474

139.30 139.27 139.27 139.27 139.27 139.24

Page 165

comprehensive annual financial report of the village...

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