Comprehensive Annual Financial Report – 2017 report

COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE VILLAGE OF BUFFALO GROVE, ILLINOIS As of and for the Year Ended December 31, 2017

Prepared by the Department of Finance and General Services Scott Anderson Director of Finance and General Services

VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS As 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 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities

23 - 26 27 28 - 29 30

Statement of Net Position - Proprietary Funds

31 - 34

Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds

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 Notes to Financial Statements

43 44 - 95

REQUIRED SUPPLEMENTARY INFORMATION General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General

96

VILLAGE OF BUFFALO GROVE 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 Net Pension 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 Pension Liability 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 Pension Liability 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 Schedule of 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

VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.)

As of and for the Year Ended December 31, 2017

Page(s) SUPPLEMENTARY INFORMATION (cont.)

Schedules of Revenues, Expenses and Changes in Net Position - Budget and Actual - 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 and Actual 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 Park Donations - 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

VILLAGE OF BUFFALO GROVE TABLE OF CONTENTS (cont.)

As of and for the Year Ended December 31, 2017

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 Ratio of Outstanding Debt by Type

152 153 - 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

v

Organizational Chart

Residents of Buffalo Grove

Village Board

Village Manager

Community Development

Police Department

Fire Department

Office of the Village Manager

Finance

Public Works

Building and Zoning

Patrol

Emergency Management Services

Legal

General Services

Admin

Enviromental Health

InvestigationsYouth Services

Fire Suppression and Rescue

Human Resources

Deputy Village Clerk

Engineering

Planning and Economic Development

Admin

Fire Prevention &Education

Golf Operations

Village Treasurer

Building Maintenance

Police Records

Emergnecy Management Agency

Information Technology

Central Garage

Streets, Drainage & Sewer

Forestry and Grounds

Water

vi

VILLAGE OF BUFFALO GROVE, ILLINOIS List of Elected and Appointed Officials December 31, 2017

Beverly Sussman Village President

Janet M. Sirabian Village Clerk

Board of Trustees

Jeffrey Berman Joanne Johnson Steve Trilling (Ceded term June 2017) Eric Smith (Appointed July 2017)

Andrew Stein Lester Ottenheimer David Weidenfeld

Appointed Officials Dane Bragg Village Manager Jennifer Maltas Deputy Village Manager

Scott Anderson Finance Director/Village Treasurer

Steven Casstevens Chief of Police

William Baker Fire Chief

Michael Reynolds Public Works Director

Arthur Malinowski Human Resource Director

Darren Monico Village Engineer

Christopher Stilling Director of Community Development

Geoff Tollefson Golf Course Manager

Brian Sheehan Building Commissioner

vii

INDEPENDENT AUDITORS' REPORT To the Village President and Board of Trustees Village of Buffalo Grove Buffalo 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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To the Village President and Board of Trustees 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.

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To the Village President and Board of Trustees 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, Illinois June 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 businesstype 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

2017

Total

2016

2017

2016

$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

11.3

14.4

0.8

1.0

12.1

15.4

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

53.3 1.6

51.8 1.6

36.8 0.0

35.5 0.0

90.1 1.6

87.3 1.6

(36.0)

(36.6)

10.8

11.0

(25.2)

(25.6)

$18.9

$16.8

$47.6

$46.5

$66.5

$63.3

Current and Other Assets

Deferred Outflows Long-Term Liabilities

2017

2016

Net Position: Net Investment in Capital Assets Restricted Unrestricted Total Net Position

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

Revenues

Governmental

Business-Type

Total Primary

Activities

Activities

Government

2017

2016

2017

2016

2017

2016

Program Revenues Charges for Service

$5.0

$4.7

$14.2

$13.7

$19.2

$18.4

Operating

1.3

1.3

-

-

1.3

1.3

Capital

1.5

-

-

0.1

1.5

0.1

Property Tax

15.5

Sales and Use Tax

10.3

15.0

-

-

15.5

15.0

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

2.6

2.8

0.9

0.2

3.5

3.0

45.3

43.2

15.1

14.0

60.4

57.2

6.6

6.4

-

-

6.6

6.4

-

Grants and Contributions

General Revenue

Other Total Revenue

Expenses Governmental Activities General Government 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

2.9

2.9

2.9

2.9

13.0

12.6

57.2

58.0

Golf Total Expenses

44.2

45.4

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

$18.9

$16.8

$47.6

$46.5

$66.5

$63.3

Net position - ending

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

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 reevaluate those sources if there is a trend emerging or if it was related to a short term aberration.

- 13 -

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

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

General Fund Budgetary Highlights For the Fiscal Year Ended December 31, 2017 (in thousands) Budget

Actual

Taxes Fines and Fees Licenses and permits Other Revenues Transfers in Total Revenues and Transfers

$35,772 2,593 286 2,458 901 42,010

$34,964 4,597 330 1,640 1,161 42,693

Expenditures and Transfers Expenditures Transfers Out Total expenditures and Transfers

39,477 2,525 42,002

37,531 3,168 40,699

Change in fund balance

$8

$1,994

Revenues and Transfers:

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)

Land

Governmental

Business-Type

Activities

Activities

2017

2016

2017

Total

2016

2017

2016

$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

.

.

34.70

34.80

34.70

34.80

$61.89

$61.05

$43.79

$42.76

$105.68

$103.81

Water and Sewer Infrastructure Total

- 16 -

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)

General obligation bonds

Governmental

Business-Type

Activities

Activities

2017

2016

$14.37

$15.64

2017 $

-

Total 2016

$

-

2017

2016

$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.

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VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION As of December 31, 2017

Governmental Business-type Activities Activities ASSETS Cash and equivalents Investments Receivables Property taxes Accounts - water and sewer Municipal sales tax Illinois income tax Motor fuel tax Telecommunications tax Food and beverage tax Utility tax Interest Other Inventories Due from fiduciary funds Deposits Investment in joint venture Internal balances Capital Assets Land Construction in progress Buildings Land improvements Equipment and vehicles Streets and storm sewers Water and sewer system infrastructure Less: Accumulated depreciation Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding Deferred outflows of resources related to pensions Total Deferred Outflows of Resources LIABILITIES Accounts payable Accrued wages State withholding taxes payable Development deposits Due to fiduciary funds Short term notes payable Other Noncurrent Liabilities Due within one year Due in more than one year Total Liabilities

$ 21,622,188 3,194,004 16,077,644 2,890,293 643,738 91,692 360,266 62,101 225,597 7,782 829,236 96,997 84,629 35,846 837,811 37,599,977 58,723 24,834,125 3,242,060 12,198,773 62,122,492 (78,156,403) 108,959,571

$

3,943,746 501,915 1,676,752 312 297,458 35,112 7,310,956 (837,811) 6,198,514 840,718 11,170,610 1,966,488 70,150 72,183,557 (48,640,980) 56,717,497

Totals $ 25,565,934 3,695,919 16,077,644 1,676,752 2,890,293 643,738 91,692 360,266 62,101 225,597 8,094 1,126,694 132,109 84,629 35,846 7,310,956 43,798,491 899,441 36,004,735 5,208,548 12,268,923 62,122,492 72,183,557 (126,797,383) 165,677,068

50,165 11,273,090 11,323,255

838,085 838,085

50,165 12,111,175 12,161,340

1,481,801 655,225 53,987 403,263 23,822 3,400,000 -

908,387 45,558 51,198 22,202

2,390,188 700,783 53,987 454,461 23,822 3,400,000 22,202

1,440,419 65,629,972 73,088,489

325,631 8,352,830 9,705,806

1,766,050 73,982,802 82,794,295

See accompanying notes to financial statements.

Page 19

VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION As of December 31, 2017

Governmental Business-type Activities Activities DEFERRED INFLOWS OF RESOURCES Property taxes levied for a future period Deferred inflows of resources related to pensions Total Deferred Inflows of Resources NET POSITION Net investment in capital assets Restricted for Road construction Parking lot operations Unrestricted TOTAL NET POSITION

$ 16,077,644 12,191,670 28,269,314

209,889 209,889

$ 16,077,644 12,401,559 28,479,203

53,318,041

36,802,425

90,120,466

1,509,756 119,323 (36,022,097)

10,837,462

1,509,756 119,323 (25,184,635)

$ 18,925,023

$

Totals

$ 47,639,887

$ 66,564,910

See accompanying notes to financial statements.

Page 20

VILLAGE OF BUFFALO GROVE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2017

Functions/Programs Governmental Activities General government Public safety Public works Interest and fiscal charges Total Governmental Activities

$

Business-type Activities Water and Sewerage Refuse Service Arboretum Golf Buffalo Grove Golf Total Business-type Activities Total

Charges for Services

Expenses

$

6,642,798 27,384,964 9,764,874 384,073 44,176,709

$

Program Revenues Operating Capital Grants and Grants and Contributions Contributions

2,148,760 1,687,759 1,209,784 5,046,303

9,454,554 705,393 1,661,490 1,227,383 13,048,820

11,060,938 970,268 1,157,819 1,043,641 14,232,666

57,225,529

$ 19,278,969

$

213,181 1,058,421 1,271,602

$

$

1,271,602

1,478,015 1,478,015 -

$

1,478,015

General Revenues Taxes Property Home rule sales Telecommunications taxes Utility Property transfer Other Intergovernmental State sales tax Income and use Other Investment income Gain on sale of assets Miscellaneous Total General Revenues Transfers Change in net position NET POSITION - Beginning of Year NET POSITION - END OF YEAR

See accompanying notes to financial statements.

Page 21

Net (Expenses) Revenues and Changes in Net Position Governmental Activities

$

Business-type Activities

(4,494,038) $ (25,484,024) (6,018,654) (384,073) (36,380,789) -

-

$

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

(36,380,789)

$

Totals

(4,494,038) (25,484,024) (6,018,654) (384,073) (36,380,789) 1,606,384 264,875 (503,671) (183,742) 1,183,846

1,183,846

(35,196,943)

15,510,127 3,625,234 1,586,128 2,532,662 1,256,919 853,763

-

15,510,127 3,625,234 1,586,128 2,532,662 1,256,919 853,763

5,604,020 4,843,251 166,044 153,816 8,758 1,409,537

492,132 393,328

5,604,020 4,843,251 166,044 645,948 8,758 1,802,865

37,550,259 958,315

885,460 (958,315)

38,435,719 -

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

See accompanying notes to financial statements.

Page 22

VILLAGE OF BUFFALO GROVE BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2017

General Fund ASSETS Cash and equivalents Investments Receivables Property taxes Municipal sales tax Illinois income tax Motor fuel tax Telecommunication tax Food and beverage tax Utility tax Interest Other Due from other funds Due from fiduciary funds Inventory Deposits TOTAL ASSETS

$ 19,698,053 3,194,004

Facilities Development

$

15,047,380 2,890,293 643,738 360,266 62,101 225,597 7,782 688,504 1,234,016 84,629 96,997 35,846 $ 44,269,206

40,281 -

Street Maintenance

$

$

40,281

-

Nonmajor Governmental Funds

$

140,732 $

140,732

1,538,153 1,030,264 91,692 -

$

2,660,109

See accompanying notes to financial statements.

Page 23

Totals

$

21,276,487 3,194,004 16,077,644 2,890,293 643,738 91,692 360,266 62,101 225,597 7,782 829,236 1,234,016 84,629 96,997 35,846

$

47,110,328

See accompanying notes to financial statements.

Page 24

VILLAGE OF BUFFALO GROVE BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2017

General Fund LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable Accrued wages Development deposits Due to fiduciary funds Due to other funds Payroll deductions payable Short-term notes payable Total Liabilities Deferred Inflows of Resources Property taxes levied for a future period Total Deferred Inflows of Resources

$

1,009,928 622,636 403,263 23,822 61,794 53,987 2,175,430

Facilities Development

$

127,267 139,211 3,400,000 3,666,478

Street Maintenance

$

87,214 82,347 169,561

Nonmajor Governmental Funds

$

766 59,733 60,499

15,047,380 15,047,380

-

-

1,030,264 1,030,264

96,997 35,846 -

-

-

1,509,756

Fund Balances (Deficit) Nonspendable for inventory Nonspendable for deposits Restricted for road construction Restricted for employee pension benefits Restricted for parking lot operations Committed for capital replacement Unassigned (deficit) Total Fund Balances (deficit)

252,729 7,758,348 18,902,476 27,046,396

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

$ 44,269,206

(3,626,197) (3,626,197)

$

40,281

(28,829) (28,829)

$

140,732

119,323 (59,733) 1,569,346

$

2,660,109

See accompanying notes to financial statements.

Page 25

Totals

$

1,225,175 622,636 403,263 23,822 343,085 53,987 3,400,000 6,071,968 16,077,644 16,077,644

96,997 35,846 1,509,756 252,729 119,323 7,758,348 15,187,717 24,960,716

$

47,110,328

See accompanying notes to financial statements.

Page 26

VILLAGE OF BUFFALO GROVE RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION As of December 31, 2017

Total Fund Balances - Governmental Funds

$

24,960,716

Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds.

Land Construction in progress Buildings Land Improvements Equipment and vehicles Streets and storm sewers Less: Accumulated depreciation

37,599,977 58,723 24,834,125 3,242,060 12,198,773 62,122,492 (78,156,403)

A deferred charge on refunding represents a consumption of net position that applies to 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 financial resources and are not reported in the Governmental Funds Balance Sheet.

Less amount reported in internal service funds below.

11,273,090 (588,660)

Deferred inflows of resources related to pensions do not relate to current financial resources and are not reported in the Governmental Funds Balance Sheet.

Less amount reported in internal service funds below.

(12,191,670) 147,424

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

Bonds payable Compensated absences Net other post-employment obligation Unamortized debt premium Net pension liability Less amount reported in internal service funds below.

(14,365,000) (1,656,554) (1,235,386) (216,706) (49,596,745) 1,087,553

The net position of the internal service funds are included in the governmental activities in the Statement of Net Position NET POSITION OF GOVERNMENTAL ACTIVITIES

(642,951) $

18,925,023

See accompanying notes to financial statements.

Page 27

VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2017

General REVENUES Property taxes Other taxes Charges for services Fines and fees Licenses and permits Intergovernmental Interest Miscellaneous income Total Revenues

$ 14,495,834 9,816,523 1,762,740 2,834,073 330,475 10,651,498 153,816 1,456,876 41,501,835

EXPENDITURES Current General government Public safety Public works Capital Outlay Debt Service Principal Interest Total Expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Sales of capital assets Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES (DEFICIT) - Beginning of Year FUND BALANCES (DEFICIT) - END OF YEAR

Facilities Development $

-

Street Maintenance $

-

Nonmajor Governmental Funds $

1,014,293 1,242 209,380 1,058,421 2,283,336

5,613,970 25,776,184 5,653,339 487,066

875,147

1,360,429 -

160,778 1,088,120 -

37,530,559

875,147

1,360,429

1,275,000 401,609 2,925,507

3,971,276

(875,147)

(1,360,429)

(642,171)

28,758 1,161,846 (3,168,426) (1,977,822)

875,147 875,147

1,537,950 1,537,950

630,000 (24,000) 606,000

-

177,521

(36,171)

1,993,454

25,052,942 $ 27,046,396

(3,626,197) $ (3,626,197) $

(206,350) (28,829) $

1,605,517 1,569,346

See accompanying notes to financial statements.

Page 28

Totals $

15,510,127 9,816,523 1,763,982 3,043,453 330,475 11,709,919 153,816 1,456,876 43,785,171

5,774,748 25,776,184 8,101,888 1,362,213 1,275,000 401,609 42,691,642

1,093,529

28,758 4,204,943 (3,192,426) 1,041,275 2,134,804

22,825,912 $

24,960,716

See accompanying notes to financial statements.

Page 29

VILLAGE OF BUFFALO GROVE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For 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 different because: Governmental funds report capital outlays as expenditures. However, in the statement of net position the cost of these assets is capitalized, and they are depreciated over their estimated 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 is capitalized in the government-wide financial statements.

Depreciation is reported in the government-wide financial statements.

Net effect of certain miscellaneous adjustments to capital assets.

3,123,963 (2,042,910) (228,858)

Debt issued provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities 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 as additions to or deductions from long-term debt. These are allocated over the period the debt 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 financial resources and, therefore, are not reported as expenditures in the governmental funds.

Compensated absences Net other post employment benefit obligation Net pension liability Deferred outflows of resources due to pensions Deferred inflows of resources due to pensions Amortization of deferred charge on refunding Less amount reported in internal service funds below.

(138,276) (265,648) 10,837,239 (3,076,177) (9,509,680) (7,166) 151,306

Internal service funds are used by management to charge information technology, central garage, and building maintenance costs to individual funds. The change in net position of the internal service funds is reported with governmental activities.

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES

(150,514) $

2,127,785

See accompanying notes to financial statements.

Page 30

VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2017

Business-type Activities - Enterprise Funds Water and Sewerage ASSETS Current Assets Cash and equivalents Investments Receivables Accounts - water and sewer Interest Other Due from other funds Inventory Total Current Assets

$

2,608,257 501,915

Nonmajor Enterprise Funds

Arboretum Golf $

452,205 -

$

883,284 -

Totals $

3,943,746 501,915

1,676,752 312 208,855 4,996,091

176 41,532 14,146 508,059

88,427 20,262 20,966 1,012,939

1,676,752 312 297,458 61,794 35,112 6,517,089

840,718 -

5,219,738 1,516,051 8,474,799

978,776 450,437 2,695,811

6,198,514 1,966,488 840,718 11,170,610

72,183,557 (37,478,978)

(8,837,035)

70,150 (2,324,967)

70,150 72,183,557 (48,640,980)

7,310,956 42,856,253

6,373,553

1,870,207

7,310,956 51,100,013

47,852,344

6,881,612

2,883,146

57,617,102

DEFERRED OUTFLOWS OF RESOURCES Deferred 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

Noncurrent Assets Capital Assets Land Land improvements Construction in progress Buildings and improvements Machinery, equipment and furnishings Water and sewer infrastructure Less: Accumulated depreciation Other Assets Investment in joint venture Total Noncurrent Assets Total Assets

See accompanying notes to financial statements.

Page 31

Governmental Activities Internal Service Funds $

345,701 345,701

345,701

588,660 588,660

See accompanying notes to financial statements.

Page 32

VILLAGE OF BUFFALO GROVE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2017

Business-type Activities - Enterprise Funds Water and Sewerage LIABILITIES Current Liabilities Accounts payable Accrued wages Other Development deposits Due to other funds IEPA loan payable Compensated absences Installment note payable - current Total Current Liabilities

Nonmajor Enterprise Funds

Arboretum Golf

Totals

875,663 38,491 44,453 96,382 18,240 4,751 296,530 1,374,510

23,432 1,368 1,119 48,476 74,395

9,292 5,699 21,083 6,745 754,747 6,110 803,676

908,387 45,558 22,202 51,198 899,605 18,240 10,861 296,530 2,252,581

Noncurrent Liabilities Long-Term Debt Compensated absences IEPA loan payable Net pension liability Installment note payable - long term Total Noncurrent Liabilities

58,007 329,993 1,181,716 6,341,869 7,911,585

82,916 82,916

74,590 283,739 358,329

132,597 329,993 1,548,371 6,341,869 8,352,830

Total Liabilities

9,286,095

157,311

1,162,005

10,605,411

DEFERRED INFLOWS OF RESOURCES Deferred 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

28,558,665 10,487,022

6,373,553 384,388

NET POSITION Net investment in capital assets Unrestricted (deficit) TOTAL NET POSITION

$ 39,045,687

$

6,757,941

1,870,207 (33,948) $

1,836,259

36,802,425 10,837,462 $ 47,639,887

See accompanying notes to financial statements.

Page 33

Governmental Activities Internal Service Funds 256,626 32,589 53,120 342,335

1,087,553 1,087,553 1,429,888

147,424 147,424

(642,951) $

(642,951)

See accompanying notes to financial statements.

Page 34

VILLAGE OF BUFFALO GROVE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2017

Business-type Activities - Enterprise Funds Water and Sewerage OPERATING REVENUES Water and sewer charges Daily greens fee and memberships Merchandise sales Connection and recapture fees Cart, club, and other rentals Driving range fees SWANCC user fees Miscellaneous Internal service contributions Total Operating Revenues OPERATING EXPENSES Water operations Sewer operations Water purchases Golf operations Cost of sales - pro shop Refuse operations Depreciation Internal service fund expenses Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Interest revenue Interest expense Total Nonoperating Revenues (Expenses) Income (Loss) Before Transfers TRANSFERS Transfers in Transfers out Total Transfers Change in Net Position

$ 10,450,138 610,800 393,328 11,454,266

Nonmajor Enterprise Funds

Arboretum Golf $

1,881,149 4,170,934 1,710,503 1,523,581 9,286,167 2,168,099

739,962 56,654 217,676 143,527 1,157,819

$

1,187,267 42,491 431,732 1,661,490 (503,671)

492,132 (168,387)

-

Totals

692,104 64,171 210,358 68,478 970,268 8,530 2,013,909

$ 10,450,138 1,432,066 120,825 610,800 428,034 68,478 970,268 545,385 14,625,994

1,123,539 44,898 705,393 58,946 1,932,776 81,133

1,881,149 4,170,934 1,710,503 2,310,806 87,389 705,393 2,014,259 12,880,433 1,745,561

-

492,132 (168,387)

323,745 2,491,844

(503,671)

81,133

323,745 2,069,306

(1,037,644) (1,037,644) 1,454,200

548,833 (55,400) 493,433 (10,238)

206,496 (620,600) (414,104) (332,971)

755,329 (1,713,644) (958,315) 1,110,991

NET POSITION (DEFICIT) - Beginning of Year 37,591,487 NET POSITION (DEFICIT) - END OF $ 39,045,687 YEAR

6,768,179 $

6,757,941

$

2,169,230

46,528,896

1,836,259

$ 47,639,887

See accompanying notes to financial statements.

Page 35

Governmental Activities Internal Service Funds $

4,008,431 4,008,431

4,104,743 4,104,743 (96,312)

(96,312)

(54,202) (54,202) (150,514) (492,437) $

(642,951)

See accompanying notes to financial statements.

Page 36

VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2017

Business-type Activities - Enterprise Funds Water and Sewerage CASH FLOWS FROM OPERATING ACTIVITIES Received from customers Received from interfund charges Paid to suppliers for goods and services Paid to employees for services Net Cash Flows From Operating Activities

Totals

$ 11,369,462 $ 1,157,819 $ 2,087,385 $ 14,614,666 (6,266,670) (1,052,300) (1,610,017) (8,928,987) (1,326,418) (152,120) (387,912) (1,866,450) 3,776,374

CASH FLOWS FROM INVESTING ACTIVITIES Interest income Net Cash Flows From Investing Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in Transfers (out) Net Cash Flows From Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of capital assets Water installment note principal paid Water installment note interest paid IEPA loan principal paid IEPA loan interest paid Net Cash Flows From Capital and Related Financing Activities Net Change in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS - Beginning of Year CASH AND CASH EQUIVALENTS - END OF YEAR

Nonmajor Enterprise Funds

Arboretum Golf

$

(46,601)

89,456

3,819,229

30,993

-

-

30,993

30,993

-

-

30,993

(992,876)

548,833 (50,027)

206,496 128,123

755,329 (914,780)

(992,876)

498,806

334,619

(159,451)

(2,228,568) (256,048) (160,088) (17,828) (8,299)

-

(820,170) -

(3,048,738) (256,048) (160,088) (17,828) (8,299)

(2,670,831)

-

(820,170)

(3,491,001)

143,660

452,205

(396,095)

2,464,597

-

2,608,257

$

452,205

199,770

1,279,379 $

883,284

3,743,976 $

3,943,746

See accompanying notes to financial statements.

Page 37

Governmental Activities Internal Service Funds $

4,008,431 (2,584,486) (1,345,701) 78,244

-

(11,274) (11,274)

-

66,970

278,731 $

345,701

See accompanying notes to financial statements.

Page 38

VILLAGE OF BUFFALO GROVE STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2017

Business-type Activities - Enterprise Funds Water and Sewerage RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) $ Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation Changes in assets and liabilities Accounts receivable Accounts payable Accrued salaries Deposits Inventory Compensated absences Deferred outflows - pensions Deferred inflows - pensions Net pension liability NET CASH FLOWS FROM OPERATING ACTIVITIES

$

2,168,099

Arboretum Golf

$

1,523,581

431,732

(84,804) (44,383) 7,081 316 (1,467) 108,616 84,449 14,886 3,776,374

(503,671) $

15,507 (124) (283) 14,213 5,258 (9,233) $

(46,601) $

Nonmajor Enterprise Funds

81,133

Totals

$

58,946

2,014,259

73,476 (77,640) 462 (93,255) (1,511) 7,623 40,772 18,789 (19,339) 89,456

1,745,561

(11,328) (106,516) 7,419 (92,939) (1,794) 6,156 163,601 108,496 (13,686) $

3,819,229

NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None

See accompanying notes to financial statements.

Page 39

Governmental Activities Internal Service Funds

$

(96,312)

23,492 (242) 160,618 71,580 (80,892) $

78,244

See accompanying notes to financial statements.

Page 40

VILLAGE OF BUFFALO GROVE STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS As of December 31, 2017

Pension Trusts ASSETS Cash Investments U.S. treasuries U.S. agencies Mutual funds - other than bond funds Equity securities Municipal bonds Corporate bonds Receivables Interest Prepaid items Due from primary government Total Assets

$

LIABILITIES Accounts payable Due to primary government Due to other governments Total Liabilities NET POSITION Restricted for pensions

1,700,221

Agency Fund $

280,049

12,101,993 23,557,303 45,300,374 35,799,495 3,339,025 7,134,387

-

228,842 1,138 23,822 129,186,600

280,049

107,023 84,629 191,652

280,049 280,049

$ 128,994,948

$

-

See accompanying notes to financial statements.

Page 41

VILLAGE OF BUFFALO GROVE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Year Ended December 31, 2017

Pension Trusts ADDITIONS Contributions Employer Plan members Total Contributions

$

Investment income Interest Net appreciation in fair value of investments Total Investment Income Less Investment expense Net Investment Income Total Additions DEDUCTIONS Administration Pension benefits and refunds Total Deductions Change in Net Position NET POSITION - Beginning of Year NET POSITION - END OF YEAR

4,388,217 1,296,295 5,684,512 806,418 15,444,107 16,250,525 379,295 15,871,230 21,555,742 124,008 6,143,000 6,267,008 15,288,734 113,706,214

$ 128,994,948

See accompanying notes to financial statements.

Page 42

VILLAGE OF BUFFALO GROVE INDEX TO NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE I

Page Summary of Significant Accounting Policies A. Reporting Entity B. Government-Wide and Fund Financial Statements C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position or Equity 1. Deposits and Investments 2. Receivables 3. Inventories and Prepaid Items 4. Capital Assets 5. Deferred Outflows of Resources 6. Compensated Absences 7. Long-Term Obligations 8. Deferred Inflows of Resources 9. Equity Classifications

44 44 45

II

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

57 57 57

III

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

58 58 63 64 66 68 68 72

IV

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

72 72 86 86 87 89 92 95

47 49 49 52 53 53 54 54 54 55 55

Page 43

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As 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-rule municipality, 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 following services as authorized by its charter: public safety (police and fire protection), sanitation (water and sewer), building and zoning, engineering, recreation, civil defense and overall administration.

The accounting policies of the Village of Buffalo Grove, Illinois conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The accepted standardsetting body for establishing governmental accounting and financial reporting principles is the Governmental 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 the primary government and its component units. Component units are legally separate organizations for which the primary government is financially accountable or other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading. The Village has not identified any organizations that meet this criteria.

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

Page 44

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally 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 or services.

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

Fund Financial Statements Financial statements of the Village are organized into funds, each of which is considered to be a separate accounting 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, net position/fund balance, revenues, and expenditures/expenses.

Funds are organized as major funds or nonmajor funds within the governmental and proprietary statements. An emphasis is placed on major funds within the governmental and proprietary categories. A fund 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 at least 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% test is 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 is particularly 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 individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

Page 45

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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 for and 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 or construction 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 or construction 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 revenue sources that are restricted or committed to expenditures for specified purposes (other than debt service or capital projects).

Motor Fuel Tax Fund Metra 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 to external uses for goods or services, and must be used for activities which meet certain debt or cost recovery criteria.

Buffalo Grove Golf Fund Refuse Service Fund

Page 46

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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 services provided by one department or agency to other departments or agencies of the Village, or to other governmental units, on a cost-reimbursement basis.

Information Technology Fund Central Garage Fund Building Maintenance Fund Pension Trust Funds - used to account for and report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans.

Police Pension Fund Firefighters' Pension Fund Agency Fund - used to account for and report assets held by the Village in a trustee capacity or as 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 Government-Wide Financial Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and deferred inflows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue 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 financial statements. The interfund services provided and used are not eliminated in the process of consolidation.

Page 47

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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

Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are collected within 90 days of the end of the current fiscal period. Expenditures are recorded 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 fund liability 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 recognized as 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 the resources and the amounts are available. Amounts owed to the Village which are not available are recorded as receivables and unavailable revenues. Amounts received before eligibility requirements (excluding time requirements) are met are recorded as liabilities. Amounts received in advance of meeting time 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 measurable and available under the criteria described above.

Proprietary and fiduciary fund financial statements (other than agency funds) are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this 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. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Water and Sewer fund are charges to customers for sales and services. Special assessments are recorded as receivables and contribution revenue when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues 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 principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

Page 48

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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 an initial 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, savings and loan institutions, obligations of the U.S. Treasury and U.S. Agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States or agreement to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, and the Illinois Funds Investment Pool.

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

The Police Pension Fund's investment policy, in accordance with Illinois Statutes, establishes the following target allocation across asset classes: Long-Term Expected Real Asset Class Target Rate 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 and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. The blended asset class is comprised of all other asset classes to allow for rebalancing the portfolio.

Page 49

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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 a building block method. The best-estimate of future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real rates of return for each major asset class included in the police pension fund's target asset allocation are listed in the table above.

The Firefighters' Pension Fund's investment policy, in accordance with Illinois Statutes, establishes the following target allocation across asset classes: Long-Term Expected Real Asset Class Target Rate 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, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. 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 determined using an asset allocation study conducted by the Firefighters' Pension Fund's investment management consultant in 2017 in which best-estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real rates of return for each major asset class included in the firefighters' pension fund's target asset allocation are listed in the table above.

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

Page 50

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.)

1. Deposits and Investments (cont.)

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

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

The Village's investment policy also limits investments in commercial paper to the highest rating classifications, as established by at least two of the four major rating services, and which mature not later 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 total investments.

Custodial Credit Risk - Deposits The Village's investment policy requires securing deposit collateral from depository institutions when deposits are in excess of FDIC limits. The amount of deposits not collateralized or insured by an agency of 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 or collateralized against the capital stock and surplus measure. Values shall be taken from published regulatory agency reports required by either the Comptroller of the Currency or the Commissioner of Banks and Trust Companies.

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

Page 51

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.)

1. Deposits and Investments (cont.)

Custodial Credit Risk - Investments The Village's investment policy requires all investments and investment collateral to be held in safekeeping 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 require collateral.

Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank statement balance and carrying value is due to outstanding checks and/or deposits in transit.

Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allows governments within the State to pool their funds for investment purposes. Illinois Funds is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment 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 the Illinois 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 at IMET's share price, the price for which the investment could be sold. Investment in IMET's 1-3 year fund may 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 values assessed as of the same date. Taxes are levied by December following the lien date (by passage of a Tax Levy Ordinance).

Tax bills for levy year 2016 are prepared by Cook County and issued on or about February 1, 2017 and July 1, 2017, and are payable in two installments, on or about March 1, 2017 and August 1, 2017 or within 30 days of the tax bills being issued.

Page 52

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.)

2. Receivables (cont.)

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

The counties collect such taxes and remits them periodically. The 2017 property tax levy is recognized as a receivable and deferred inflow in fiscal 2017. As the taxes become available to finance current expenditures, they are recognized as revenues. At December 31, 2017, the property taxes receivable and related 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 amounts owed between funds. Short-term interfund loans are reported as "due to and from other funds." Long-term interfund loans (noncurrent portion) are reported as "advances from and to other funds." Interfund receivables and payables between funds within governmental activities are eliminated in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities 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 a nonspendable fund balance account which indicates that they do not constitute expendable available financial resources and, therefore, are not available for appropriation or by a restricted fund balance account, 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 the consumption method of accounting. Inventories consist of golf pro shop merchandise and central garage fuel reserves. The cost of inventory is recorded as expenditures/expenses when consumed rather than when purchased.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items are recorded 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 financial statements. 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, or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their acquisition value.

Page 53

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.)

4. Capital Assets (cont.)

Government-Wide Statements (cont.)

Depreciation and amortization of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation and amortization reflected in the statement of net position. Depreciation and amortization is provided over the assets' estimated useful lives using the straight-line method. The range of estimated useful lives by type of asset is as follows: Buildings Well and System Improvements Furniture and Equipment Vehicles

20 Years 5 - 50 Years 2 - 10 Years 2 - 12 Years

Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund 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 a future period and will not be recognized as an outflow of resources (expense/expenditure) until that future time.

6. Compensated Absences Vacation pay does vest; employees may carry over vacation time equivalent of one full year's allowance. All vacation hours carried over from the previous year must be used in the current year or be subject 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, any vested amounts due to Village employees for accumulated unused sick leave will be paid to ICMA Retirement Corporation based on the formula set forth in the Village's personnel manual. Except for those amounts 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 Net Position. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits. A liability for these amounts is reported in governmental funds only if they have mature, for example, as a result of employee resignations or retirements and are payable with expendable resources.

Page 54

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.)

7. Long-Term Obligations All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of bonds payable.

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

For the government-wide statements and proprietary fund statements, bond premiums and discounts are amortized over the life of the issue using the effective interest method. The balance at year end is shown as 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 a future 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 capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

b.

Restricted net position - Consists of net position with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments 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 use restricted resources first, then unrestricted resources as they are needed.

Page 55

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCS AND NET POSITION OR EQUITY (cont.)

Fund Statements Governmental fund balances are displayed as follows: a. Nonspendable - Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained intact. b. Restricted - Consists of fund balances with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. c. Committed - Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (ordinance) of the Village Board. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the Village Board that originally created the commitment. d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific purposes that do not meet the criteria to be classified as restricted or committed. The Village has adopted a financial policy authorizing the Director of Finance to assign amounts for a specific 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 been classified within the other above mentioned categories. Unassigned fund balance may also include 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 fund balance is available unless there are legal documents / contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the Village would first use committed, then assigned 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 the General Fund to fund operations for a period of at least three months. The amount in the General Fund is adjusted annually with the adoption of the annual budget and is calculated as three months (25 percent) of General Fund expenditures (excluding transfers to fund capital projects and pensions). The balance at year end was $9,794,360, and is included in unassigned General Fund fund balance.

Page 56

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE II - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. EXCESS EXPENSES OVER APPROPRIATIONS Budgeted Expenses

Fund Water and Sewerage

$

10,554,592

Actual Expenses $

12,525,155

Excess Expenses Over Budget $

1,970,563

The Village controls expenditures/expenses at the department level. Some individual departments experienced expenditures/expenses which exceeded appropriations. The detail of those items can be found 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 balances at year end.

As of December 31, 2017, the following individual funds held a deficit balance: Funds Debt Service Facilities Development Street Maintenance Central Garage Building Maintenance

Amount $

(59,733) (3,626,197) (28,829) (375,764) (267,977)

Reason Expenditures exceeded revenues Expenditures exceeded revenues Expenditures exceeded revenues Expenses exceeded revenues Expenses exceeded revenues

Page 57

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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: Carrying Value

Statement Balances

$ 12,502,419

$ 12,970,915

1,930,778 6,269,408 2,168,742 4,672,157

1,930,778 6,269,408 2,168,742 4,672,157

U.S. treasuries

12,101,993

12,101,993

U.S. agencies

26,023,224

25,773,350

Mutual funds - other than bond funds Equity securities

45,300,374 35,799,495

45,300,374 35,799,495

Municipal bonds

4,569,023

4,569,023

Corporate bonds

7,134,387

7,134,387

2,700

-

$158,474,700

$158,690,622

Deposits Money market mutual funds Illinois Funds IMET - money market IMET - 1-3 year fund

Petty cash Total Deposits and Investments

Associated Risks Custodial Credit Risk Deposits Credit Risk Credit Risk Credit Risk Credit Risk, Custodial Credit Risk - Investments, Interest Rate Risk Custodial Credit Risk Investments, Interest Rate Risk Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk N/A Custodial Credit Risk Investments, Concentration of Credit Risk Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk Credit Risk, Custodial Credit Risk - Investments, Concentration of Credit Risk, Interest Rate Risk N/A

Page 58

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

A. DEPOSITS AND INVESTMENTS (cont.)

Reconciliation to financial statements Per statement of net position Cash and equivalents Investments Per statement of net position - fiduciary funds Cash - pension trusts Cash - agency U.S. treasuries U.S. agencies Mutual funds - other than bond funds Equity securities Municipal bonds Corporate bonds Total Deposits and Investments

$ 25,565,934 3,695,919 1,700,221 280,049 12,101,993 23,557,303 45,300,374 35,799,495 3,339,025 7,134,387 $158,474,700

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

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

Page 59

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

A. DEPOSITS AND INVESTMENTS (cont.)

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 method and valuation inputs as follows: Village December 31, 2017 Investment Type

Level 1

Level 2

Level 3

Total

U.S. agencies Municipal bonds

$

-

$

2,465,921 1,229,998

$

-

$

2,465,921 1,229,998

Total

$

-

$

3,695,919

$

-

$

3,695,919

Police Pension December 31, 2017 Investment Type

Level 1

Level 2

Level 3

Total

U.S. treasuries $ U.S. agencies Corporate bonds Equity securities 35,799,495 Mutual funds - other than bond funds 7,748,746

$

8,987,785 6,727,187 7,134,387 -

$

-

$

Total

$ 22,849,359

$

-

$ 66,397,600

$ 43,548,241

8,987,785 6,727,187 7,134,387 35,799,495 7,748,746

Firefighters' Pension December 31, 2017 Investment Type

Level 1

Level 2

Level 3

Total

U.S. treasuries $ U.S. agencies Municipal bonds Mutual funds - other than bond funds 37,551,628

$

3,114,208 16,830,116 3,339,025 -

$

-

$

Total

$ 23,283,349

$

-

$ 60,834,977

$ 37,551,628

3,114,208 16,830,116 3,339,025 37,551,628

Page 60

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

A. DEPOSITS AND INVESTMENTS (cont.)

Custodial Credit Risk Deposits Custodial credit risk is the risk that in the event of a financial institution failure, the Village's deposits may not 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, the Village will not be able to recover the value of its investments or collateral securities that are in the possession 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 Type Money market mutual funds Illinois Funds Illinois Metropolitan Investment Fund U.S. agencies Municipal bonds Corporate bonds

Standard & Poors

Moody's Investors Services

Not Rated Not Rated AAA Not Rated AAA Not Rated Not Rated, AA+ to AAA Not Rated, Aaa Not Rated, A to Not Rated, A3 AAA to Aaa Not Rated, ANot Rated, A3 to AAA to Aaa

Page 61

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

A. DEPOSITS AND INVESTMENTS (cont.)

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 U.S. agencies Municipal bonds Totals

Fair Value

Less than one year

1 - 5 years

$

2,465,921 1,229,998

$

752,602 930,190

$

1,713,320 299,807

$

3,695,919

$

1,682,792

$

2,013,127

Police Pension Maturity Investment Type U.S. treasuries U.S. agencies Corporate bonds Totals

Fair Value $

Less than one year

1-5 years

6-10 years

More than 10 years

8,987,785 6,727,187 7,134,387

$

2,911,506 1,411,120 204,434

$

4,066,924 4,549,327 5,944,694

$

191,328 985,259

$

2,009,355 575,412 -

$ 22,849,359

$

4,527,060

$ 14,560,945

$

1,176,587

$

2,584,767

Firefighters' Pension Maturity Investment Type U.S. treasuries U.S. agencies Municipal bonds Totals

Fair Value $

Less than one year

1-5 years

6-10 years

More than 10 years

3,114,208 16,830,116 3,339,025

$

921,271 98,417 300,889

$

1,965,406 3,742,577 1,631,478

$

227,531 11,934,837 1,177,755

$

1,054,285 228,903

$ 23,283,349

$

1,320,577

$

7,339,461

$ 13,340,123

$

1,283,188 Page 62

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

A. DEPOSITS AND INVESTMENTS (cont.)

Money-Weighted Rate of Return Police Pension Fund For the year ended December 31, 2017, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 14.38%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Firefighters' Pension Fund For the year ended December 31, 2017, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 14.05%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually 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.

Page 63

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2017, was as follows: Beginning Balance Governmental Activities Capital assets not being depreciated Land Construction in progress Total Capital Assets Not Being depreciated Capital assets being depreciated Buildings Equipment and vehicles Land improvements Streets Storm sewers Total Capital Assets Being Depreciated Total Capital Assets Less: Accumulated depreciation for Buildings Equipment and vehicles Land improvements Streets Storm sewers Total Accumulated depreciation Net Capital Assets Being Depreciated Total Governmental Activities Capital Assets, Net of Accumulated Depreciation

Deletions

Ending Balance

703,310 58,723

$ 1,443,830

$ 37,599,977 58,723

38,340,497

762,033

1,443,830

37,658,700

24,224,501 11,477,792 3,242,060 23,013,290 38,278,587

609,624 2,136,663 867,548 191,925

1,415,682 204,074 24,784

24,834,125 12,198,773 3,242,060 23,676,764 38,445,728

100,236,230

3,805,760

1,644,540

102,397,450

138,576,727

4,567,793

3,088,370

140,056,150

$ 36,896,667 1,443,830

Additions

$

(20,884,061) (7,243,731) (406,847) (12,930,111) (36,064,425)

(241,491) (921,198) (64,845) (443,775) (371,601)

1,415,682 -

(21,125,552) (6,749,247) (471,692) (13,373,886) (36,436,026)

(77,529,175)

(2,042,910)

1,415,682

(78,156,403)

22,707,055

1,762,850

228,858

24,241,047

$ 61,047,552

$ 2,524,883

$1,672,688

$ 61,899,747

Page 64

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

C. CAPITAL ASSETS (cont.)

Depreciation expense was charged to functions as follows: Governmental Activities General government Public safety Public works Total Governmental Activities Depreciation Expense Beginning Balance Business-type Activities Capital assets not being depreciated Land Construction in progress Total Capital Assets Not Being depreciated Capital assets being depreciated Buildings Land improvements Equipment Water/Sewer infrastructure Total Capital Assets Being Depreciated Total Capital Assets Less: Accumulated depreciation for Buildings Land improvements Equipment Water/Sewer infrastructure Total Accumulated depreciation Net Capital Assets Being Depreciated

$

6,198,514 50,114

Additions $

803,408

$

62,970 665,678 1,314,262

$

2,042,910 Ending Balance

Deletions $

12,804

$

6,198,514 840,718

6,248,628

803,408

12,804

7,039,232

10,337,636 1,966,488 94,510 70,758,397

832,974 1,425,160

24,360 -

11,170,610 1,966,488 70,150 72,183,557

83,157,031

2,258,134

24,360

85,390,805

89,405,659

3,061,542

37,164

92,430,037

(8,633,213) (1,967,961) (94,510) (35,955,397) (46,651,081)

(490,678) (1,523,581) (2,014,259)

24,360 24,360

(9,123,891) (1,967,961) (70,150) (37,478,978) (48,640,980)

36,505,950

243,875

Business-type Capital Assets, Net of Accumulated depreciation $ 42,754,578

$ 1,047,283

$

-

36,749,825

12,804

$ 43,789,057

Page 65

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

D. INTERFUND RECEIVABLES/PAYABLES AND TRANSFERS Interfund Receivables/Payables The following is a schedule of interfund receivables and payables including any overdrafts on pooled cash and investment accounts: Receivable Fund General General General General General General General Arboretum Golf Nonmajor Business Type

Payable Fund Water and Sewerage Arboretum Golf Nonmajor Business Type Internal Service Street Maintenance Facilities Development Nonmajor Governmental General General

Amount $

Total - Fund Financial Statements

1,295,810 (457,999)

Less: Government-wide eliminations Total Internal Balances - Government-Wide Statement of Net Position

96,382 48,476 754,747 53,120 82,347 139,211 59,733 41,532 20,262

$

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 cash related transactions. All remaining balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.

Page 66

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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

Transfers The following is a schedule of interfund transfers: Fund Transferred To General General General General General Facilities Development Street Maintenance Arboretum Golf Nonmajor Business Type Nonmajor Governmental Nonmajor Governmental

Fund Transferred From Water and Sewerage Arboretum Golf Nonmajor Governmental Nonmajor Business Type Internal Service Funds General General General General Water and Sewerage Nonmajor Business Type

Amount $

Total - Fund Financial Statements

4,960,272 (4,001,957)

Less: Fund eliminations Total Transfers - Government-Wide Statement of Activities

857,644 55,400 24,000 170,600 54,202 875,147 1,537,950 548,833 206,496 180,000 450,000

Principal Purpose To fund administrative, operating, and maintenance expenses Administrative expenses Administrative expenses Administrative expenses Funding of capital reserve Funding of capital projects Funding of capital projects Administrative expenses Administrative expenses To fund debt service To fund debt service

$

958,315

Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance 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-type activities are netted and eliminated.

Page 67

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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: Beginning Balance Line of credit Totals

$ $

Issued

3,400,000 3,400,000

$ $

Ending Balance

Redeemed -

$ $

-

$ $

3,400,000 3,400,000

F. LONG-TERM OBLIGATIONS Long-term obligations activity for the year ended December 31, 2017, was as follows: Beginning Balance Governmental Activities Bonds Payable General obligation debt Premium Sub-totals

$

Other Liabilities Vested compensated absences Other postemployment benefits Net pension liability Total Other Liabilities Total Governmental Activities Long-Term Liabilities Business-type Activities Loans and Notes Payable IEPA loan payable Water installment note Sub-totals

$

Decreases -

$

1,275,000 24,702 1,299,702

$

14,365,000 216,706 14,581,706

Amounts Due Within One Year $

1,315,000 1,315,000

1,518,278

263,695

125,419

1,656,554

125,419

969,738 60,433,984 62,922,000

650,328 12,003,730 12,917,753

384,680 22,840,969 23,351,068

1,235,386 49,596,745 52,488,685

125,419

$

78,803,408

$

12,917,753

$

24,650,770

$

67,070,391

$

1,440,419

$

366,061 6,894,447 7,260,508

$

-

$

17,828 256,048 273,876

$

348,233 6,638,399 6,986,632

$

18,240 296,530 314,770

Other Liabilities Vested compensated absences Net pension liability Total Other Liabilities Total Business-type Activities Long-Term Liabilities

15,640,000 241,408 15,881,408

Increases

Ending Balance

137,302 1,562,057 1,699,359

$

8,959,867

17,017 258,411 275,428

$

275,428

10,861 272,097 282,958

$

556,834

143,458 1,548,371 1,691,829

$

8,678,461

10,861 10,861

$

325,631

Page 68

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

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 the governmental funds will be retired by future property tax levies or tax increments accumulated by the debt service fund.

Balance Governmental Activities Date of Final Interest Original December 31, General Obligation Debt Issue Maturity Rates Indebtedness 2017 General Obligation Bonds Series 2010A 4/6/2010 12/31/2020 2.0-4.0% $ 5,160,000 $ 1,125,000 General Obligation Bonds Series 2010B 4/6/2010 12/31/2025 2.5-3.85% 2,600,000 1,845,000 General Obligation Bonds Series 2012 8/27/2012 6/30/2030 2.0-2.75% 6,000,000 6,000,000 General Obligation 5,395,000 Bonds Series 2016 5/3/2016 12/30/2031 2.0 - 3.0% 6,125,000 Total Governmental Activities - General Obligation Debt

$ 14,365,000

Debt service requirements to maturity are as follows: Governmental Activities General Obligation Debt Principal Interest

Years 2018 2019 2020 2021 2022 2023-2027 2028-2031 Totals

$

1,315,000 1,210,000 1,285,000 940,000 965,000 5,025,000 3,625,000

$

367,694 331,119 296,369 259,469 237,181 826,841 218,938

$

14,365,000

$

2,537,611

Page 69

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

F. LONG-TERM OBLIGATIONS (cont.)

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 the Village'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.

Balance Business-type Activities Date of Final Interest Original December 31, IEPA Loan Payable Issue Maturity Rates Indebtedness 2017 IEPA Loan Payable

11/20/2013

12/1/2033

2.295%

Total Business-type Activities IEPA Loan Payable

$

407,307

$

348,233

$

348,233

Debt service requirements to maturity are as follows: Business-type Activities IEPA Loan Payable Principal Interest

Years 2018 2019 2020 2021 2022 2023-2027 2028-2032 2033 Totals

$

18,240 18,661 19,092 19,532 19,983 107,051 119,989 25,685

$

7,888 7,467 7,036 6,595 6,595 26,003 13,357 1,465

$

348,233

$

76,406

Page 70

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

F. LONG-TERM OBLIGATIONS (cont.)

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

Balance Business-type Activities Date of Final Interest Original December 31, Water Installment Note Issue Maturity Rates Indebtedness 2017 Water Installment Note

3/27/2015

6/1/2029

2.350%

Total Business-type Activities Incentive Agreements

$

6,970,999

$

6,638,399

$

6,638,399

Debt service requirements to maturity are as follows: Business-type Activities Water Installment Note Principal Interest

Years 2018 2019 2020 2021 2022 2023-2027 2028-2029 Totals

$

296,530 340,052 386,802 436,970 490,763 3,403,287 1,283,995

$

153,703 146,338 137,921 128,372 117,611 377,770 25,674

$

6,638,399

$

1,087,389

Other Debt Information In the governmental activities, the Village's obligation for compensated absences, other postemployment benefits, 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 of new 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 the Village's financial statements. At December 31, 2017, $1,210,000 of bonds outstanding are considered defeased.

Page 71

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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

G. LEASE DISCLOSURES Lessee - Operating Leases The Village has commitments with non-Village entities to lease certain property. Future minimum rental commitments as of December 31, 2017 are as follows: Amount Years 2018 2019 2020 2021 2022 2023-2025 Totals

$

126,660 129,193 131,777 134,412 137,101 378,836

$

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

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 as participating members. IMRF has a two tier plan. Members who first participated in IMRF or an Illinois Reciprocal 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 at age 55 (at reduced benefits) or after age 60 (at full benefits) with 8 years of service are entitled to an annual retirement benefit, payable monthly for life in an amount equal to 1-2/3% of their final rate of earnings (average of the highest 48 consecutive months' earnings during the last 10 years) for credited service up to 15 years and 3% for each year thereafter.

Page 72

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

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 reduced benefits) or after age 67 (at full benefits) with 10 years of service are entitled to an annual retirement benefit, payable monthly for life in an amount equal to 1-2/3% of their final rate of earnings for the first 15 years of service credit, plus 2% for each year of service after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last 10 years of service, divided by 96. Under Tier 2, the pension is increased every year after retirement, upon reaching age 67, by the lesser of 3% of the original pension amount or 1/2 of the increase in the Consumer Price Index of the original pension amount.

Plan membership. At December 31, 2016, the measurement date, membership in the plan was as follows: Retirees and beneficiaries Inactive, non-retired members Active members Total

104 54 95 253

Contributions. As set by statute, Village employees participating in IMRF are required to contribute 4.50% 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. The Village’s actuarially determined contribution rate for calendar year 2016 was 13.87% of annual covered payroll for IMRF. The Village also contributes for disability benefits, death benefits and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by the IMRF Board of Trustees, while the supplemental retirement benefits rate is set by statute.

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 an actuarial valuation as of that date.

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

Page 73

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Actuarial Assumptions. The total pension liability for IMRF was determined by actuarial valuations performed as of December 31, 2016 using the following actuarial methods and assumptions: Actuarial cost method Asset valuation method Actuarial assumptions Investment Rate of Return Inflation Salary increases

Entry Age Normal Market Value 7.50% 3.50% 3.75% to 14.50%, including inflation 2.75%

Price inflation

Mortality. For non-disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2012). The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP2014 (base year 2012). The IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same adjustment that were applied for non-disabled lives. For active members, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience.

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

Asset Class Equities International equities Fixed income Real estate Alternatives Private equity Hedge funds Commodities Cash equivalents

Target Allocation 38.00% 17.00% 27.00% 8.00% 9.00%

1.00%

Projected Returns/Risks One Year Ten Year Arithmetic Geometric 8.30% 6.85% 8.45% 6.75% 3.05% 3.00% 6.90% 5.75% 12.45% 5.35% 4.25% 2.25%

7.35% 5.25% 2.65% 2.25%

Page 74

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

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

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

1% Decrease Total pension liability Plan fiduciary net pension Net pension liability/(asset)

$ $

67,952,083 50,608,825 17,343,258

$ $

60,017,497 50,608,825 9,408,672

1% Increase $ $

53,529,451 50,608,825 2,920,626

Changes in net pension liability/(asset). The changes in net pension liability/(asset) for the calendar year ended December 31, 2016 were as follows: Total Pension Liability (a) Balances at December 31, 2015 Service cost Interest on total pension liability Differences between expected and actual experience of the total pension liability Change of assumptions Benefit payments, including refunds of employee contributions Contributions - employer Contributions - employee Net investment income Other (net transfer) Balances at December 31, 2016 Plan fiduciary net position as a percentage of the total pension liability

$

$

Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability/(Asset) (b) (a) - (b)

58,559,118 $ 871,953 4,310,485 (921,372)

48,644,743 -

(220,386) (2,582,301)

(2,582,301)

60,017,497

1,112,901 428,936 3,350,903 (346,357) 50,608,825 $

$

$

9,914,375 871,953 4,310,485 (921,372) (220,386) (1,112,901) (428,936) (3,350,903) 346,357 9,408,672 84.32 % Page 75

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Pension expense and deferred outflows of resources and deferred inflows of resources related to 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 the following sources: Deferred Outflows of Resources Difference between expected and actual experience Assumption changes Net difference between projected and actual earnings on pension plan investments Contributions subsequent to the measurement date Total

$

737,892 699,183

Deferred Inflows of Resources $

1,106,770 168,618

2,486,783 1,168,759 $

5,092,617

$

1,275,388

The amount reported as deferred outflows resulting from contributions subsequent to the measurement date in the above table will be recognized as a reduction in the net pension liability/(asset) for the year ending . The remaining amounts reported as deferred outflows and inflows of resources related to pensions ($2,648,470) will be recognized in pension expense as follows: Year Ending December 31, 2016 2017 2018 2019 Total

Village $

1,049,165 1,005,029 614,163 (19,887)

$

2,648,470

Police Pension Plan description. Police sworn personnel are covered by the Police Pension Plan, which is a defined benefit single-employer pension plan. Although this is a single employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois State Statutes (Chapter 40 ILCS 5/3) and may be amended only by the Illinois legislature. The Village accounts for the plan as a pension trust fund.

As provided for in the Illinois Compiled Statutes, the Plan provides retirement benefits as well as death and 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 Pension Fund as provided for in Illinois Compiled Statutes.

Page 76

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Tier 1 - Covered employees attaining the age of 50 or more with 20 or more years of creditable service are entitled to receive an annual retirement benefit of one half of the salary attached to the rank on the last day of service, or for one year prior to the last day, whichever is greater. The pension shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least 8 years but less than 20 years of credited service may retire at or after age 60 and receive a reduced retirement benefit. The monthly pension of a police officer who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and paid upon reaching at least the age 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 are entitled to receive a monthly pension of 2.5% of the final average salary for each year of creditable service. 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 50 and receive a reduced retirement benefit. The monthly pension of a police officer shall be increased annually on the January 1 occurring either on or after the attainment of age 60 or the first anniversary of the pension start date, whichever is later. Each annual increase shall be calculated at 3% or one half the annual unadjusted percentage increase in the CPI, whichever is less.

Plan membership. At December 31, 2017, the Police Pension membership consisted of: Retirees and beneficiaries Inactive, non-retired members Active members Total

48 3 63 114

Page 77

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

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

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

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

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

Entry Age Normal 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 assumptions were based on the results of an actuarial experience study conducted by Lauterbach & Amen, LLP in 2016.

Page 78

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Discount rate. The discount rate used to measure the total pension liability for the Police Pension Plan was 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 will be made at the current contribution rate and that Village contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Plan’s fiduciary net position was projected not 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 of 7.00% was blended with the index rate of 3.44% for tax exempt 20-year general obligation municipal bonds with an average AA credit rating as of December 31, 2017 to arrive at a discount rate of 7.00% used to determine the total pension liability. The plan's projected net position is expected to cover future benefit payments in full for the current employees in the 2017 to 2097 projection period.

Discount rate sensitivity. The following is a sensitivity analysis of the net pension liability to changes in the discount rate. The table below presents the pension liability of the Village calculated using the discount rate of 7.00% as well as what the net pension liability would be if it were to be calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the current rate: Current 1% Decrease Discount Rate 1% Increase Total pension liability Plan fiduciary net position

$ 108,463,029 67,432,478

$

94,603,289 67,432,478

$

83,330,936 67,432,478

Net pension liability

$

$

27,170,811

$

15,898,458

41,030,551

Page 79

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Changes in net pension liability/(asset). The Village's changes in net pension liability/(asset) for the calendar year ended December 31, 2017 was as follows: Total Pension Liability (a) Balances at December 31, 2016 Service cost Interest on total pension liability Differences between expected and actual experience of the total pension liability Change of assumptions Benefit payments, including refunds of employee contributions Contributions - employer Contributions - employee Net investment income Administration Balances at December 31, 2017

$

Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability/Asset (b) (a) - (b)

93,634,056 1,637,139 6,171,178

$

59,527,769 -

353,405 (3,590,403)

$

$

-

(3,602,086) 94,603,289 $

34,106,287 1,637,139 6,171,178 353,405 (3,590,403)

(3,602,086) 2,524,306 744,694 8,300,527 (62,732) 67,432,478 $

Plan fiduciary net position as a percentage of the total pension liability

(2,524,306) (744,694) (8,300,527) 62,732 27,170,811 71.28%

Pension expense and deferred outflows of resources and deferred inflows of resources related to pensions. For the year ended December 31, 2017, the Village recognized pension expense of $3,174,678. The Village reported deferred outflows and inflows of resources related to pension from the following sources: Deferred Outflows of Resources Difference between expected and actual experience Assumption changes Net difference between projected and actual earnings on pension plan investments Total

$

618,581 2,493,113

Deferred Inflows of Resources $

1,811,201 $

4,922,895

517,433 2,999,876 3,317,949

$

6,835,258

Page 80

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

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 2019 2020 2021 2022 Thereafter

$

201,413 201,410 (548,432) (1,200,341) (523,821) (42,592)

Total

$

(1,912,363)

Firefighters' Pension Plan description. Fire sworn personnel are covered by the Firefighters' Pension Plan, which is a defined benefit single-employer pension plan. Although this is a single employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois State Statutes (Chapter 40 ILCS 5/3) and may be amended only by the Illinois legislature. The Village accounts for the plan as a pension trust fund.

As provided for in the Illinois Compiled Statutes, the Firefighters' Pension Plan provides retirement benefits as well as death and 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 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 are entitled to receive a monthly retirement benefit of one half of the monthly salary attached to the rank held in 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 a maximum of 75% of such monthly salary. Employees with at least 10 years but less than 20 years of credited service may retire at or after age 60 and receive a reduced retirement benefit. The monthly pension of a firefighter who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and paid upon reaching at least the age 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 are entitled to receive a monthly pension of 2.5% of the final average salary for each year of creditable service. 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 50 and receive a reduced retirement benefit. The monthly pension of a firefighter shall be increased annually on the January 1 occurring either on or after the attainment of age 60 or the first anniversary of the pension start date, whichever is later. Each annual increase shall be calculated at 3% or one-half the annual unadjusted percentage increase in the CPI, whichever is less.

Page 81

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Plan membership. At December 31, 2017, the Firefighters' Pension Plan membership consisted of: Retirees and beneficiaries Inactive, non-retired members Active members

35 1 55 91

Total

Contributions. Participants contribute a fixed percentage of their base salary to the plans. At December 31, 2017, the contribution percentage was 9.455%. If a participant leaves covered employment with less than 20 years of service, accumulated participant contributions may be refunded without accumulated interest. The Village is required to contribute the remaining amounts necessary to finance the plans as actuarially determined by an enrolled actuary. Effective January 1, 2011 the Village’s contributions must accumulate to the point where the past service cost for the Firefighters' Pension Plan is 90% funded by the year 2040. The Village's actuarially determined contribution rate for the fiscal year ending December 31, 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 an annual actuarial valuation as of that date.

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

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

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

Entry Age Normal Market Value

Actuarial assumptions Interest rate

7.00%

Inflation

2.50%

Projected salary increases

3.50%

Cost-of-living adjustments

2.50% Page 82

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Mortality rates were based on the L&A 2016 Illinois Firefighters' Mortality Table. The actuarial assumptions 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' Pension Plan was 7.00%, the same as the prior valuation. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that Village contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Plan’s fiduciary net position was 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 of projected benefit payments to determine the total pension liability.

Discount rate sensitivity. The following is a sensitivity analysis of the net pension liability to changes in the discount rate. The table below presents the pension liability of the Village calculated using the discount rate of 7.00% as well as what the net pension liability would be if it were to be calculated using a discount rate that is 1 percentage point lower (6.00%) or 1 percentage point higher (8.00%) than the current rate: Current 1% Decrease Discount Rate 1% Increase Total pension liability Plan fiduciary net position

$

87,718,573 61,562,470

$

76,128,103 61,562,470

$

66,722,493 61,562,470

Net pension liability

$

26,156,103

$

14,565,633

$

5,160,023

Page 83

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Changes in net pension liability/(asset). The Village's changes in net pension liability/(asset) for the calendar year ended December 31, 2017 was as follows: Total Pension Liability (a) Balances at December 31, 2016 Service cost Interest on total pension liability Differences between expected and actual experience of the total pension liability Benefit payments, including refunds of employee contributions Contributions - employer Contributions - employee Net investment income Administration Balances at December 31, 2017

$

72,153,825 1,348,459 4,961,836

Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability/Asset (b) (a) - (b) $

54,178,445 -

204,895

$

$

-

(2,540,912) 76,128,103 $

17,975,380 1,348,459 4,961,836 204,895

(2,540,912) 1,863,911 520,771 7,601,179 (60,924) 61,562,470 $

Plan fiduciary net position as a percentage of the total net position

(1,863,911) (520,771) (7,601,179) 60,924 14,565,633 80.87%

Pension expense and deferred outflows of resources and deferred inflows of resources related to pensions. For the year ended December 31, 2017, the Village recognized pension expense of $1,829,339. The Village reported deferred outflows and inflows of resources related to pension from the following sources: Deferred Outflows of Resources Difference between expected and actual experience Assumption changes Net difference between projected and actual earnings on pension plan investments Total

$

180,327 726,925

Deferred Inflows of Resources $

1,188,411 $

2,095,663

790,290 447,593 3,053,030

$

4,290,913

Page 84

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

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 2019 2020 2021 2022 Thereafter

$

(236,217) (236,221) (793,412) (818,085) (54,829) (56,486)

Total

$

(2,195,250)

PENSION SEGMENT INFORMATION Fiduciary Net Position Pension Trust Police Firefighters' Pension Pension Assets Cash Investments U.S. treasuries U.S. agencies Mutual funds - other than bond funds Equity securities Municipal bonds Corporate bonds Receivables Interest Prepaid items Due from primary government Total Assets Liabilities Accounts payable Due to primary government Total Liabilities Net Position Held in trust for pension benefits

$ 1,093,838 $

606,383 $

Total 1,700,221

8,987,785 6,727,187 7,748,746 35,799,495 7,134,387

3,114,208 16,830,116 37,551,628 3,339,025 -

12,101,993 23,557,303 45,300,374 35,799,495 3,339,025 7,134,387

79,452 1,138 11,911 67,583,939

149,390 11,911 61,602,661

228,842 1,138 23,822 129,186,600

66,832 84,629 151,461

40,191 40,191

107,023 84,629 191,652

$ 67,432,478 $ 61,562,470 $ 128,994,948

Page 85

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Changes in Plan Net Position Pension Trust Police Firefighters' Pension Pension Additions Contributions Employer Plan members Total Contributions Investment Income Net appreciation in fair value of investments Interest Total Investment income Less investment income Net investment income Total Additions

$ 2,524,306 $ 1,863,911 $ 749,965 546,330 3,274,271 2,410,241

Total

4,388,217 1,296,295 5,684,512

8,314,479 214,240 8,528,719 233,109 8,295,610 11,569,881

7,129,628 592,178 7,721,806 146,186 7,575,620 9,985,861

15,444,107 806,418 16,250,525 379,295 15,871,230 21,555,742

Deductions Administration Pension benefits and refunds Total Deductions

63,085 3,602,087 3,665,172

60,923 2,540,913 2,601,836

124,008 6,143,000 6,267,008

Net change in net position

7,904,709

7,384,025

15,288,734

Net position, beginning of year Net position, end of year

59,527,769 54,178,445 113,706,214 $ 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 are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year.

C. COMMITMENTS AND CONTINGENCIES Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments are only reported in governmental funds if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred.

Page 86

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

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), which consists of 23 municipalities. The Agency is a municipal corporation and public body politic and corporate established pursuant to the Constitution of the State of Illinois and the Intergovernmental Cooperation Act of 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 from each member municipality. Each Director has an equal vote. The officers of the Agency are appointed by the Board of Directors. The Board of Directors determines the general policy of the Agency, makes all appropriations, approves contracts, adopts resolutions providing for the issuance of bonds or notes by the Agency, adopts by-laws, rules and regulations, and exercises such powers and performs such duties as may 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 take any action not specifically reserved to the Board of Directors by the Act, the Agency Agreement or the Bylaws.

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

The Agency has entered into Solid Waste Disposal Contracts with the member municipalities. The Contracts 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 minimum annual cost of the System. The minimum annual cost includes operation and maintenance of the System as well as project costs.

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

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

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

Page 87

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

D. JOINT VENTURES (cont.)

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

Complete financial statements for SWANCC can be obtained from the Agency's administrative office at 2700 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 four municipalities. The Commission is a municipal corporation and public body politic and corporate established pursuant to the Constitution of the State of Illinois and the Intergovernmental Cooperation Act of 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 its members and other potential water purchasers.

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

The Commission is governed by a Board of Commissioners, which consists of one Village Manager from each member municipality.

Each Commissioner has an equal vote. The officers of the Commission are appointed by the Board of Commissioners. The Board of Commissioners determines the general policy of the Commission, makes all appropriations, approves contracts for sale or purchase of water, adopts resolutions providing for the issuance of bonds or notes by the Commission, adopts by laws, rules and regulations, and exercises such powers and performs such duties as may be prescribed in the Commission Agreement or the by-laws.

The Commission has entered into Water Supply Contracts with the four member municipalities for a term of 40 years, extending to 2025. The Contracts 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 minimum annual quantity of water.

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

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

Page 88

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

D. JOINT VENTURES (cont.)

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

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

In accordance with the joint venture agreement, the Village remitted $1,710,503 to NWWC for the year ended 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 the Village's Water and Sewerage Fund.

The Village has committed to retire a portion of the outstanding debt of the Northwest Water Commission of approximately $3 million. These amounts have been calculated using the Village's current allocation percentage 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 at 1525 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 Grove Group Health Plan (the plan) provides health insurance contributions for eligible retirees and their spouses through the Village’s group health insurance plan, which cover both active and retired members. Benefit provisions are established through personnel policy guidelines and state that eligible retirees and their spouses receive healthcare insurance to age 65 at established contribution rates. The plan does not issue a publicly available financial report.

Contribution requirements are established through personnel policy guidelines and may be amended by the 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-asyou-go financing requirements. For fiscal year 2017, the Village contributed $384,680 to the Plan.

Page 89

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

E. OTHER POSTEMPLOYMENT BENEFITS (cont.)

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

$

648,712 33,941 (32,325)

Annual OPEB cost Contributions made Increase in net OPEB obligation (asset)

650,328 (384,680) 265,648

Net OPEB Obligation (Asset) - Beginning of Year Net OPEB Obligation (Asset) - End of Year

969,738 $

1,235,386

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

Fiscal Year Ended December 31, 2015 December 31, 2016 December 31, 2017

Annual OPEB Cost $

302,918 633,942 650,328

Percentage of Annual OPEB Cost Contributed 72.24% 66.75% 59.15%

Net OPEB Obligation $

758,973 969,738 1,235,386

Page 90

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

E. OTHER POSTEMPLOYMENT BENEFITS (cont.)

The funded status of the plan as of December 31, 2017, the most recent actuarial valuation date, was as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets

$

10,256,824 -

Unfunded Actuarial Accrued Liability (UAAL)

$

10,256,824

Funded ratio (actuarial value of plan assets/AAL) Covered payroll (active plan members) UAAL as a percentage of covered payroll

-% $

17,961,975 57%

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

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce shortterm volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the December 31, 2017 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions 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 techniques that 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 projected payroll on an open basis. The amortization period at December 31, 2017, was 30 years.

Page 91

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

F. TAX ABATEMENT Tax abatements are a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits 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 a Development Improvement Agreement passed by the Village board in Ordinance 2016-067 on December 19th, 2016. Woodman’s will be financially responsible for constructing all necessary offsite roadway and intersection improvements as required by the Village, County, or State along the public roadways along the perimeter of the property. The offsite improvements are estimated to be $4,000,000. The Village will reimburse Woodman’s, an amount not to exceed $4,000,000 for the roadway improvements and an additional payment of $3,000,000 for a combined total of $7,000,000. In order to promote and assist Woodman’s with the project, the Village agrees to share certain sales tax received that corresponds to the new sales tax revenue generated from the retail sales of the project. The sales tax allowable is limited to the sales tax associated with grocery, general merchandise, and products only. Woodman’s must acquire or otherwise be authorized to use the premise in Buffalo Grove, construct and operate the business, and construct the offsite roadway improvements to be eligible for the incentives. Incentive payments as of December 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 Village Ordinance 2000-67 on November 20th, 2000 and has since been amended with Village Ordinance 200318 on March 3, 2003, Ordinance 2009-47 on August 3, 2009. Edward Hines Lumber Co. shall maintain a single order-acceptance point policy for all Credit Sales and shall not relocate the single order-acceptance point outside of the Village unless it violates or contravenes any state or federal law or court decision/determination. The Village will remit 60 percent of the Municipal Sales tax resulting from the Credit Sales received by the Village to Edward Hines Lumber Co. The Village will keep the remaining 40 percent. Incentive payments as of December 31, 2017 were $1,395,403.

Page 92

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

F. TAX ABATEMENT (cont.)

The Village of Buffalo Grove has entered into a tax abatement agreement with LAB Development, LLC as an incentive to stimulate economic development. The abatement is authorized through Village Ordinance 2011-14 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 orderacceptance point on premise. The amendment to the original agreement in 2016 requires LAB Development to extend their current lease at the premise in Buffalo Grove and expand the operation from 61,416 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 abatement of 100% of the Municipal Sales Tax in year one of the agreement, this percentage decreases 10% per year until year seven of the agreement. The amount of Municipal Sales tax abated to LAB Development could not exceed $500,000 over the seven year term. The amended agreement extended the abatements to LAB Development under new terms. LAB is entitled to 80 percent of the base Municipal Sales Tax above $162,207 in year one. The percentage per year decreases 10 percent until year five, from year five to 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 of Municipal Sales Tax to be abated is not to exceed $2,600,000 over the life of the amended agreement. If LAB Development, LLC relocates or ceases business operations on the premise within five years of the commencement date of the amended contract they shall reimburse the Village 100 percent of the Municipal Sales Tax payments to the Village within ninety days. If LAB Development, LLC relocates or ceases business operations on the premise after the fifth year they will remit $750,000 to the Village within ninety days. If LAB Development, LLC relocates or ceases business operations on the premise after the sixth year they will remit $375,000 to the Village within ninety days. If LAB Development, LLC relocates or ceases business operations on the premise after the seventh year they will remit $187,500 to the Village within ninety days. If LAB Development conducts less than $30,000,000 of taxable sales at the premise in any given year of the contract they shall not receive more than 50 percent of the Municipal Sales Tax increment for that year. Incentive payments as of December 31, 2017 were $273,220.

Page 93

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

F. TAX ABATEMENT (cont.)

The Village of Buffalo Grove has entered into a tax abatement agreement with Zonatherm. In order to encourage Zonatherm to maintain its business operation in the Village, and to assist with their project in the Village, the Village agrees to share sales tax received by the Village using a formula which corresponds to new sales tax generated by Zonatherm over a finite period of time. For the first sales tax year, 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’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the third sales tax year eighty percent (80%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fourth sales tax year seventy percent (70%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fifth sales tax year sixty percent (60%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the sixth sales tax year fifty percent (50%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the seventh sales tax year fifty percent (50%) of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. The entire distribution can not exceed $500,000 in aggregate. This agreement will end upon the completion of the seventh year or the $500,000 cap. In the event that Zonatherm cease the business within seven years or generate less than $1,000 in sales tax in any sales tax year, Zonatherm shall reimburse the Village one-hundred percent (100%) of the municipal sales 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 assist with their project in the Village, the Village agrees to share a portion of its home rule sales tax received by the Village using a formula which corresponds to new sales tax revenue generated by the business over a finite period of time. For the first 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 tax for annual taxable sales greater than $40,000,000. For the second 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 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 tax for 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 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 fifth 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 tax for annual taxable sales greater than $40,000,000. For the sixth 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 tax for annual taxable sales greater than $40,000,000. Should Bits relocate or cease its business within the first two years of the agreement Bits shall reimburse the Village eighty-five percent (85%) of the total home rule sales tax distributed. Should Bits relocate or cease its business after two years of this agreement than Bits agrees to reimburse the Village seventy percent (70%) of the total home rule sales tax payments received. Should Bits relocate or cease its business after three years of this agreement than Bits agrees to reimburse the Village seventy percent (55%) of the total home rule sales tax payments received. Should Bits relocate or cease its business after four years of this agreement than Bits agrees to reimburse the Village seventy percent (40%) of the total home rule sales tax payments received.

Page 94

VILLAGE OF BUFFALO GROVE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017

NOTE IV - OTHER INFORMATION (cont.)

F. TAX ABATEMENT (cont.)

Should Bits relocate or cease its business after five years of this agreement than Bits agrees to reimburse the Village seventy percent (35%) of the total home rule sales tax payments received. Incentive payments as 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 financial statements.

Page 95

REQUIRED SUPPLEMENTARY INFORMATION

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL For the Year Ended December 31, 2017

Budgeted Amounts Original REVENUES Property taxes Other taxes Charges for services Fines and fees Licenses and permits Intergovernmental Interest Miscellaneous income Total Revenues

$

EXPENDITURES Current: General government Public safety Public works Capital Outlay Total Expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Sales of capital assets Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance

$

14,504,881 9,963,240 1,222,773 2,802,778 286,140 11,304,167 65,800 959,450 41,109,229

Final $

14,504,881 9,963,240 1,222,773 2,802,778 286,140 11,304,167 65,800 959,450 41,109,229

$

14,495,834 9,816,523 1,762,740 2,834,073 330,475 10,651,498 153,816 1,456,876 41,501,835

$

(9,047) (146,717) 539,967 31,295 44,335 (652,669) 88,016 497,426 392,606

5,770,665 26,973,138 6,733,636 39,477,439

5,896,084 26,973,138 6,733,636 39,602,858

5,613,970 25,776,184 5,653,339 487,066 37,530,559

282,114 1,196,954 1,080,297 (487,066) 2,072,299

1,631,790

1,506,371

3,971,276

2,464,905

901,000 (2,524,956)

901,000 (2,524,956)

28,758 1,161,846 (3,168,426)

28,758 260,846 (643,470)

(1,623,956)

(1,623,956)

(1,977,822)

(353,866)

7,834

$

(117,585)

1,993,454

FUND BALANCE - Beginning of Year FUND BALANCE - END OF YEAR

Variance with Final Budget

Actual

$

2,111,039

25,052,942 $

27,046,396

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

Page 96

VILLAGE OF BUFFALO GROVE ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY For the past three fiscal years 2017 Total pension liability Service cost Interest Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of member contributions

$

Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Employer contributions Employee contributions Net investment income Benefit payments, including refunds of member contributions Other (net transfer)

871,953 4,310,485 (921,372) (220,386) (2,582,301)

2016

$

860,654 4,031,299 1,338,146 145,117 (2,416,367)

2015

$

964,574 3,808,085 (1,126,970) 1,736,515 (2,148,231)

1,458,379

3,958,849

3,233,973

58,559,118

54,600,269

51,366,296

$

60,017,497

$

58,559,118

$

54,600,269

$

1,112,901 428,936 3,350,903 (2,582,301) (346,357)

$

1,093,142 402,168 241,715 (2,416,367) 520,582

$

1,071,994 369,278 2,892,087 (2,148,231) (1,146,370)

Net change in plan fiduciary net position

1,964,082

Plan fiduciary net position - beginning

(158,760)

1,038,758

48,803,503

48,644,743

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 Covered-employee payroll Employer's net pension liability as a percentage of coveredemployee payroll

84.32% $

8,023,803

117.26%

83.07% $

8,157,772

89.38% $

8,195,678

121.53%

70.73%

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

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

See independent report and accompanying notes to required supplementary information Page 97

VILLAGE OF BUFFALO GROVE ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the past three fiscal years 2017 Actuarially determined contribution

$

Contributions in relation to the actuarially determined contribution

2016

1,164,635

$

$

Covered-employee payroll

$

8,384,700

1,112,901

$

(1,112,901)

(1,164,635)

Contribution deficiency (excess)

2015

$ $

8,023,803

1,093,141

(1,093,142) $ $

(1) 8,157,772

Contributions as a percentage of coveredemployee payroll

13.89%

13.87%

13.40%

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

Valuation date: 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.

Methods and assumptions used to determine contribution rates: Aggregate entry age normal Actuarial cost method Level percentage of payroll, closed Amortization method 26 Years Remaining amortization period Asset valuation method

5-Year Smoothed Market, 20% corridor

Inflation

2.75%

Salary increases

3.75% to 14.50%, including inflation

Investment rate of return Retirement Age

7.50%

Mortality

Experience-based table of rates that are specific to the type of eligibility condition RP-2014 Employee Mortality Table, adjusted to match current IMRF experience

Other information: There were no benefit changes during the year.

See independent report and accompanying notes to required supplementary information Page 98

VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOS As of and for the Year Ended December 31, 2017 Last Four Fiscal Years 2017 Total pension liability Service cost Interest Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of member contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Employer contributions Employee contributions Other contributions Net investment income Benefit payments, including refunds of member contributions Administration Net change in plan fiduciary net position

$

1,637,139 6,171,178 353,405 (3,590,403) (3,602,086) 969,233

2016

$

1,534,051 5,861,687 358,140 170,816 (3,283,543) 4,641,151

2015

$

1,386,660 5,438,273 (1,015,708) 4,811,344 (2,969,657) 7,650,912

2014

$

1,415,171 5,318,732 (2,747,592) 3,986,311

93,634,056 $ 94,603,289

88,992,905 $ 93,634,056

81,341,993 $ 88,992,905

77,355,682 $ 81,341,993

$

$

$

$

2,524,306 627,548 117,147 8,300,527 (3,602,086) (62,732) 7,904,710

2,430,017 622,198 3,418,114 (3,283,543) (43,969) 3,142,817

2,284,315 669,077 186,635 (2,969,657) (39,870) 130,500

2,083,758 654,693 3,756,487 (2,747,592) (33,343) 3,714,003

Plan fiduciary net position - beginning Plan fiduciary net position - ending (b)

59,527,769 $ 67,432,479

56,384,952 $ 59,527,769

56,254,452 $ 56,384,952

52,540,449 $ 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 Covered-employee payroll Village's net pension liability as a percentage of coveredemployee payroll

71.28% $

6,565,793

413.82%

63.57% $

6,406,672

532.36%

63.36% $

6,056,962

538.35%

69.16% $

5,984,178

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.

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

Page 99

VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the Year Ended December 31, 2017 Last Four Fiscal Years 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 Contribution deficiency (excess)

$

2,641,453 (103,270)

$

2,430,017 (22,152)

$

2,284,315 (27,639)

$

2,083,758 276,019

Covered-employee payroll

$

6,565,793

$

6,406,672

$

6,056,962

$

5,984,178

Contributions as a percentage of coveredemployee 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: Entry-age Actuarial cost method Level percentage of payroll, closed Amortization method 24 years Remaining amortization period Asset valuation method Market Value 2.50% Inflation Salary increases 4.00% to 8.67%, average, including inflation 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

Page 100 See independent auditors' report and accompanying notes to required supplementary information.

VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF INVESTMENT RETURNS As of December 31, 2017 Last Four Fiscal Years 2017 Annual money-weighted rate of return, net of investment expense

14.38%

2016

5.71%

2015

2014

0.67%

7.00%

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

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

Page 101

VILLAGE OF BUFFALO GROVE FIREFIGHTERS' PENSION FUND SCHEDULE OF CHANGES IN THE VILLAGE'S NET PENSION LIABILITY AND RELATED RATIOS Last Four Fiscal Years 2017 Total pension liability Service cost Interest Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of member contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Employer contributions Employee contributions Other contributions Net investment income Benefit payments, including refunds of member contributions Administration Net change in plan fiduciary net position

$

$

$

1,348,459 4,961,836 204,895 (2,540,912) 3,974,278 72,153,824 76,128,102

1,863,911 520,184 588 7,601,179 (2,540,912) (60,924) 7,384,026

2016

$

$

$

1,260,242 4,757,916 (133,067) (588,791) (2,225,410) 3,070,890 69,082,934 72,153,824

2,166,040 516,422 3,415,513 (2,225,410) (42,284) 3,830,281

2015

$

$

$

1,179,270 4,508,473 (1,080,688) 1,139,953 (2,141,668) 3,605,340 65,477,594 69,082,934

2,202,138 524,714 654,625 (2,141,668) (48,363) 1,191,446

2014

$

$

$

1,378,069 4,304,137 218,159 (938,734) (1,943,411) 3,018,220 62,459,374 65,477,594

2,168,844 502,014 3,195,916 (1,943,409) (42,368) 3,880,997

Plan fiduciary net position - beginning Plan fiduciary net position - ending (b)

$

54,178,445 61,562,471

$

50,348,164 54,178,445

$

49,156,718 50,348,164

$

45,275,721 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 Covered-employee payroll Village's net pension liability as a percentage of coveredemployee payroll

80.87% $

5,585,881

260.76%

75.09% $

5,390,509

333.46%

72.88% $

5,308,713

352.91%

75.07% $

5,224,950

312.36%

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

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

Page 102

VILLAGE OF BUFFALO GROVE FIREFIGHTERS PENSION FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS For the Year Ended December 31, 2017 Last Four Fiscal Years 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 Contribution deficiency (excess)

$

1,864,498 (1,824)

$

2,166,040 (437,544)

$

2,202,138 (353,148)

$

2,168,844 (284,029)

Covered-employee payroll

$

5,585,881

$

5,390,509

$

5,308,713

$

5,224,950

Contributions as a percentage of coveredemployee payroll

33.38%

40.18%

41.48%

41.51%

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

Valuation date:

January 1, 2017

Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age Amortization method Level percentage of payroll, closed Remaining amortization period 24 years Asset valuation method Market Value Inflation 2.50% Salary increases 4.00% to 9.73%, average, including inflation Investment rate of return 7.00%, net of pension plan investment expense, Mortality Mortality rates were based on the L&A 2016 Illinois Firefighters Table.

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

Page 103

VILLAGE OF BUFFALO GROVE FIREFIGHTERS PENSION FUND SCHEDULE OF INVESTMENT RETURNS As of December 31, 2017 Last Four Fiscal Years 2017 Annual money-weighted rate of return, net of investment expense

14.05%

2016

6.78%

2015

2014

1.32%

7.08%

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

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

Page 104

VILLAGE OF BUFFALO GROVE OTHER POST EMPLOYMENT BENEFITS SCHEDULE OF EMPLOYER CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS December 31, 2017

Year Ended 12/31/17 12/31/16 12/31/15

Actuarial Valuation Date

Actuarial Value of Assets (a)

12/31/17 12/31/15 12/31/13

$

-

Annual Required Contribution $

Percentage Contributed

648,712 628,882 604,694

Actuarial Accrued Liability (AAL) - Entry Age (b)

Unfunded AAL (UAAL) (b-a)

$ 10,256,824 9,333,479 4,545,910

$ 10,256,824 9,333,479 4,545,910

59.30 % 67.29 59.30

Funded Ratio (a/b) 0.00% 0.00% 0.00%

Covered Payroll (c) $ 17,961,975 19,951,806 19,787,930

UAAL as a Percentage of Covered Payroll ((b-a)/c) 57.10% 46.78% 22.97%

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

Page 105

VILLAGE OF BUFFALO GROVE NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2017

BUDGETARY INFORMATION

The budget data included in the financial statements represent the Village's program budget and the appropriations represent the Village's legal expenditure limit. Budgets are adopted for General, Special Revenue, 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-type budgets are adopted on a basis consistent with GAAP. Proprietary funds are adopted on a basis other than GAAP in that depreciation expense, income from the joint venture, and contributions from developers are 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 appropriations data reflected in the financial statements: (1)

The Village Manager submits to the Board a proposed program budget for the fiscal year commencing January 1. The program budget includes proposed expenditures and the means of financing 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 the Board 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 expenditure limits, 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 following year for the expenditure to be made. The Village does not employ the encumbrance method of accounting to reserve net position for subsequent year expenditures.

See independent auditors' report.

Page 106

SUPPLEMENTARY INFORMATION

VILLAGE OF BUFFALO GROVE COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS As of December 31, 2017

Motor Fuel Tax ASSETS Cash Receivables Property taxes Motor fuel tax TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable Due to other funds Total Liabilities

$

1,418,064

$

91,692

120,089

Debt Service

$

-

-

$

1,030,264 -

1,538,153 1,030,264 91,692

$

1,509,756

$

120,089

$

1,030,264

$

2,660,109

$

-

$

766 766

$

59,733 59,733

$

766 59,733 60,499

Deferred Inflows of Resources Property taxes levied for a future period Total Deferred Inflows of Resources Fund Balances Restricted for parking lot operations Restricted for road construction Unassigned Total Fund Balances TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

Metra Parking Lot

Total Nonmajor Governmental Funds

$

-

-

1,509,756 1,509,756

119,323 119,323

1,509,756

$

120,089

1,030,264 1,030,264

1,030,264 1,030,264

(59,733) (59,733)

$

1,030,264

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

$

2,660,109

Page 107

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2017

Motor Fuel Tax REVENUES Property taxes Intergovernmental Charges for services Fines and fees Total Revenues

$

EXPENDITURES Current General government Public works Debt Service Principal Interest Total Expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES - Beginning of Year FUND BALANCES (DEFICIT) - END OF $ YEAR

Metra Parking Lot

1,058,421 1,058,421

$

1,242 209,380 210,622

Total Nonmajor Governmental Funds

Debt Service $

1,014,293 1,014,293

$

1,014,293 1,058,421 1,242 209,380 2,283,336

1,088,120

160,778 -

-

160,778 1,088,120

1,088,120

160,778

1,275,000 401,609 1,676,609

1,275,000 401,609 2,925,507

(29,699)

(29,699) 1,539,455 1,509,756

$

49,844

(662,316)

(642,171)

(24,000) (24,000)

630,000 630,000

630,000 (24,000) 606,000

25,844

(32,316)

(36,171)

93,479

(27,417)

1,605,517

(59,733) $

1,569,346

119,323

$

Page 108

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - MOTOR FUEL TAX - NONMAJOR SPECIAL REVENUE FUND For the Year Ended December 31, 2017

Original and Final Budget REVENUES Intergovernmental Total Revenues

$

EXPENDITURES Current: Public works Total Expenditures Net Change in Fund Balance

1,000,000 1,000,000

$

1,500,000 1,500,000 $

1,058,421 1,058,421

$

1,088,120 1,088,120

(500,000)

(29,699) $

FUND BALANCE - Beginning of Year FUND BALANCE - END OF YEAR

Variance with Final Budget

Actual

58,421 58,421

411,880 411,880 470,301

1,539,455 $

1,509,756

Page 109

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - METRA PARKING LOT - NONMAJOR SPECIAL REVENUE FUND For the Year Ended December 31, 2017

Original and Final Budget REVENUES Charges for services Fines and fees Total Revenues

$

EXPENDITURES Current: General government Total Expenditures Excess (deficiency) of revenues over (under) expenditures

1,200 210,000 211,200

Variance with Final Budget

Actual $

1,242 209,380 210,622

$

42 (620) (578)

187,021 187,021

160,778 160,778

26,243 26,243

24,179

49,844

25,665

(24,000) (24,000)

(24,000) (24,000)

OTHER FINANCING SOURCES (USES) Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance

$

179

25,844

FUND BALANCE - Beginning of Year FUND BALANCE - END OF YEAR

$

25,665

93,479 $

119,323

Page 110

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - DEBT SERVICE - NONMAJOR DEBT SERVICE FUND For the Year Ended December 31, 2017

Original and Final Budget REVENUES Property taxes Total Revenues

$

EXPENDITURES Debt Service Principal Interest Total Expenditures

1,169,895 1,169,895

$

1,275,000 404,144 1,679,144

Excess (deficiency) of revenues over (under) expenditures

Variance with Final Budget

Actual 1,014,293 1,014,293

$

1,275,000 401,609 1,676,609

(155,602) (155,602)

2,535 2,535

(509,249)

(662,316)

(153,067)

504,000 504,000

630,000 630,000

126,000 126,000

(32,316) $

(27,067)

OTHER FINANCING SOURCES Transfers in Total Other Financing Sources Net Change in Fund Balance

$

(5,249)

FUND BALANCE (DEFICIT) - Beginning of Year FUND BALANCE (DEFICIT) - END OF YEAR

(27,417) $

(59,733)

Page 111

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - FACILITIES DEVELOPMENT - MAJOR CAPITAL PROJECTS FUND For the Year Ended December 31, 2017

Original and Final Budget REVENUES Miscellaneous income Total Revenues

$

EXPENDITURES Capital Outlay Total Expenditures Excess (deficiency) of revenues over (under) expenditures

565,000 565,000

Variance with Final Budget

Actual $

-

1,974,723 1,974,723

875,147 875,147

(1,409,723)

(875,147)

1,875,303 1,875,303

875,147 875,147

465,580

-

$

(565,000) (565,000) 1,099,576 1,099,576

534,576

OTHER FINANCING SOURCES Transfers in Total Other Financing Sources Net Change in Fund Balance

$

FUND BALANCE (DEFICIT) - Beginning of Year FUND BALANCE (DEFICIT) - END OF YEAR

(1,000,156) (1,000,156) $

(465,580)

(3,626,197) $

(3,626,197)

Page 112

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - STREET MAINTENANCE - MAJOR CAPITAL PROJECTS FUND For the Year Ended December 31, 2017

Budgeted Amounts Original REVENUES Total Revenues

$

Final -

EXPENDITURES Public works Capital Outlay Total Expenditures Excess (deficiency) of revenues over (under) expenditures

$

Variance with Final Budget

Actual -

$

-

350,000 350,000

1,501,161 1,501,161

1,360,429 1,360,429

(350,000)

(1,501,161)

(1,360,429)

1,537,950 1,537,950

1,537,950 1,537,950

36,789

177,521

$

(1,360,429) 1,501,161 140,732

140,732

OTHER FINANCING SOURCES Transfers in Total Other Financing Sources Net Change in Fund Balance

1,537,950 1,537,950 $

1,187,950

$

FUND BALANCE (DEFICIT) - Beginning of Year FUND BALANCE (DEFICIT) - END OF YEAR

$

140,732

(206,350) $

(28,829)

Page 113

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS As of December 31, 2017

Buffalo Grove Golf ASSETS Current Assets Cash and equivalents Receivables Other Due from other funds Inventory Total Current Assets Noncurrent Assets Capital Assets Land Land improvements Buildings and improvements Machinery, equipment and furnishings Less: Accumulated depreciation Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions Total Deferred Outflows of Resources LIABILITIES Current Liabilities Accounts payable Accrued wages Due to other funds Other Compensated absences Development deposits Total Current Liabilities Noncurrent Liabilities Long-Term Debt Compensated absences Net pension liability Total Noncurrent Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions Total Deferred Inflows of Resources NET POSITION Net investment in capital assets Unrestricted (deficit) TOTAL NET POSITION

$

-

Total Nonmajor Enterprise Funds

Refuse Service $

1,828 20,262 20,966 43,056 978,776 450,437 2,695,811 70,150 (2,324,967) 1,870,207 1,913,263

883,284

$

883,284

86,599 969,883

88,427 20,262 20,966 1,012,939

969,883

978,776 450,437 2,695,811 70,150 (2,324,967) 1,870,207 2,883,146

153,580 153,580

-

153,580 153,580

9,292 5,699 754,747 21,083 6,110 6,745 803,676

-

9,292 5,699 754,747 21,083 6,110 6,745 803,676

74,590 283,739 358,329 1,162,005

-

74,590 283,739 358,329 1,162,005

38,462 38,462

-

38,462 38,462

1,870,207 (1,003,831) $ 866,376 $

969,883 969,883

$

1,870,207 (33,948) 1,836,259

Page 114

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2017

Buffalo Grove Golf OPERATING REVENUES Daily greens fee and memberships Merchandise sales Cart, club, and other rentals Driving range fees SWANCC user fees Miscellaneous Total Operating Revenues

$

OPERATING EXPENSES Golf operations Cost of sales - pro shop Refuse operations Depreciation Total Operating Expenses

$

1,123,539 44,898 58,946 1,227,383

Operating Income (Loss) TRANSFERS Transfers in Transfers out Total Transfers Change in Net Position NET POSITION - Beginning of Year NET POSITION - END OF YEAR

692,104 64,171 210,358 68,478 8,530 1,043,641

Refuse Service

$

692,104 64,171 210,358 68,478 970,268 8,530 2,013,909

705,393 705,393

1,123,539 44,898 705,393 58,946 1,932,776

(183,742)

264,875

81,133

206,496 (70,600) 135,896

(550,000) (550,000)

206,496 (620,600) (414,104)

(47,846)

(285,125)

(332,971)

914,222 $

970,268 970,268

Total Nonmajor Enterprise Funds

866,376

1,255,008 $

969,883

2,169,230 $

1,836,259

Page 115

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2017

CASH FLOWS FROM OPERATING ACTIVITIES Received from customers Paid to suppliers for goods and services Paid to employees for services Net Cash Flows From Operating Activities

Buffalo Grove Golf

Refuse Service

Totals

$

1,043,744 $ (778,869) 264,875

2,087,385 (1,610,017) (387,912) 89,456

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in Transfers (out) Net Cash Flows From Noncapital Financing Activities

206,496 678,123 884,619

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Net Cash Flows From Capital and Related Financing Activities Net Change in Cash and Cash Equivalents

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows From Operating Activities Depreciation Changes in assets and liabilities Inventory Accounts payable Accrued wages Accounts receivable Compensated absences Deferred outflows - pensions Deferred inflows - pensions Net pension liability Deposits NET CASH FLOWS FROM OPERATING ACTIVITIES

(550,000) (550,000)

-

(820,170)

(820,170)

-

(820,170)

(285,125)

110,970 $

$

-

(396,095)

1,168,409

1,279,379

$

883,284

$

883,284

(183,742) $

264,875

$

81,133

58,946 (1,511) (4,164) 462 7,623 40,772 18,789 (19,339) (93,255) $

206,496 128,123 334,619

(820,170)

(110,970)

CASH AND CASH EQUIVALENTS - Beginning of Year CASH AND CASH EQUIVALENTS - END OF YEAR

1,043,641 $ (831,148) (387,912) (175,419)

(175,419) $

-

58,946

(73,476) 73,476 264,875

(1,511) (77,640) 462 73,476 7,623 40,772 18,789 (19,339) (93,255) $

89,456

NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None Page 116

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL NON-GAAP BUDGETARY BASIS BUFFALO GROVE GOLF - NONMAJOR ENTERPRISE FUND For the Year Ended December 31, 2017

Original And Final Budget

Actual

Variance with Final Budget

OPERATING REVENUES Daily greens fee and memberships Merchandise sales Cart, club, and other rentals Driving range fees Miscellaneous

$

Total Operating Revenues

713,000 70,850 236,850 62,000 15,500

$

692,104 64,171 210,358 68,478 8,530

$

(20,896) (6,679) (26,492) 6,478 (6,970)

1,098,200

1,043,641

(54,559)

1,669,385 50,000 -

1,123,539 44,898 12,804

545,846 5,102 (12,804)

1,719,385

1,181,241

538,144

OPERATING EXPENSES Golf operations Cost of sales - pro shop Add: Capital assets capitalized Total Operating Expenses Operating Income (Loss) - Non-GAAP Budgetary Basis

(621,185)

(137,600)

483,585

103,185 -

206,496 (70,600)

103,311 (70,600)

103,185

135,896

32,711

TRANSFERS Transfers in Transfers out Net Transfers Change in net position - Non-GAAP Budgetary Basis

$

(518,000)

$

(1,704)

$

516,296

Page 117

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL NON-GAAP BUDGETARY BASIS REFUSE SERVICE - NONMAJOR ENTERPRISE FUND For the Year Ended December 31, 2017

Original And Final Budget

Actual

Variance with Final Budget

OPERATING REVENUES SWANCC user fees

$

Total Operating Revenues

1,045,000

$

970,268

$

(74,732)

1,045,000

970,268

(74,732)

760,000

705,393

54,607

760,000

705,393

54,607

285,000

264,875

(20,125)

(550,000)

(550,000)

-

(550,000)

(550,000)

-

OPERATING EXPENSES Refuse operations Total Operating Expenses Operating Income - Non-GAAP Budgetary Basis TRANSFERS Transfers out Net Transfers Change in net position - Non-GAAP Budgetary Basis

$

(265,000)

$

(285,125)

$

(20,125)

Page 118

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL NON-GAAP BUDGETARY BASIS WATER AND SEWERAGE - MAJOR ENTERPRISE FUND For the Year Ended December 31, 2017

Original And Final Budget

Actual

Variance with Final Budget

$ 11,385,243 53,500 -

$ 10,450,138 610,800 393,328

11,438,743

11,454,266

3,473,500 5,381,092 1,700,000 -

1,881,149 4,170,934 1,710,503 4,762,569

1,592,351 1,210,158 (10,503) (4,762,569)

10,554,592

12,525,155

(1,970,563)

(1,070,889)

(1,955,040)

7,800 (160,088)

492,132 (168,387)

484,332 (8,299)

(152,288)

323,745

476,033

731,863

(747,144)

(1,479,007)

(945,000)

(1,037,644)

(92,644)

(945,000)

(1,037,644)

(92,644)

(213,137)

$ (1,784,788)

$ (1,571,651)

OPERATING REVENUES Water and sewer charges Connection and recapture fees Miscellaneous Total Operating Revenues

$

(935,105) 557,300 393,328 15,523

OPERATING EXPENSES Water operations Sewer operations Water purchases Add: Capital assets capitalized Total Operating Expenses Operating Income (Loss) - Non-GAAP Budgetary Basis

884,151

NON-OPERATING REVENUES (EXPENSES) Interest revenue Interest expense Total Non-Operating Revenues (Expenses) Net Income (Loss) Before Transfers - NonGAAP Budgetary Basis TRANSFERS Transfers out Net Transfers Change in net position - Non-GAAP Budgetary Basis

$

Page 119

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL NON-GAAP BUDGETARY BASIS ARBORETUM GOLF - MAJOR ENTERPRISE FUND For the Year Ended December 31, 2017

Budgeted Amounts Original

Final

Actual

Variance with Final Budget

OPERATING REVENUES Daily greens fee and memberships Merchandise sales Cart, club, and other rentals Miscellaneous

$

Total Operating Revenues

822,000 55,620 248,940 142,200

$

822,000 55,620 248,940 142,200

$

739,962 56,654 217,676 143,527

$

82,038 (1,034) 31,264 (1,327)

1,268,760

1,268,760

1,157,819

(110,941)

1,849,960 47,000 -

1,418,228 47,000 -

1,187,267 42,491 53,277

230,961 4,509 (53,277)

1,896,960

1,465,228

1,283,035

182,193

OPERATING EXPENSES Golf operations Cost of sales - pro shop Add: Capital assets capitalized Total Operating Expenses Operating (Loss) - Non-GAAP Budgetary Basis

(628,200)

(196,468)

(125,216)

71,252

196,468 -

548,833 -

548,833 (55,400)

(55,400)

196,468

548,833

493,433

(55,400)

TRANSFERS Transfers in Transfers out Net Transfers Change in net position - NonGAAP Budgetary Basis

$

(431,732)

$

352,365

$

368,217

$

15,852

Page 120

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS As of December 31, 2017

Information Technology ASSETS Current Assets Cash Total Current Assets

$

Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions Total Deferred Outflows of Resources LIABILITIES Current Liabilities Accounts payable Accrued wages Due to other funds Total Current Liabilities Noncurrent Liabilities Net pension liability Total Noncurrent Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions NET POSITION Unrestricted (deficit) TOTAL NET POSITION

101,980 101,980

Central Garage

$

$

Totals

153,326 153,326

$

345,701 345,701

101,980

90,395

153,326

345,701

-

337,223

251,437

588,660

-

337,223

251,437

588,660

101,190 101,190

47,465 18,498 29,942 95,905

107,971 14,091 23,178 145,240

256,626 32,589 53,120 342,335

-

623,022 623,022

464,531 464,531

1,087,553 1,087,553

101,190

718,927

609,771

1,429,888

-

84,455

62,969

147,424

(375,764)

(267,977)

(642,951)

(375,764) $

(267,977) $

(642,951)

790 $

90,395 90,395

Building Maintenance

790

$

Page 121

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended December 31, 2017

Information Technology OPERATING REVENUES Internal service contributions Total Operating Revenues

$

OPERATING EXPENSES Information technology Central garage Building maintenance Total Operating Expenses

1,196,410 1,196,410

Central Garage

$

1,195,620 1,195,620

1,553,271 1,553,271

Building Maintenance

$

1,602,902 1,602,902

Totals

1,258,750 1,258,750

$

1,306,221 1,306,221

4,008,431 4,008,431

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)

-

(35,075) (35,075)

(19,127) (19,127)

(54,202) (54,202)

790

(84,706)

(66,598)

(150,514)

-

(291,058)

(201,379)

(492,437)

(375,764) $

(267,977) $

(642,951)

TRANSFERS Transfers out Total Transfers Change in net position NET POSITION (DEFICIT) - Beginning of Year NET POSITION (DEFICIT) - END OF YEAR

$

790

$

Page 122

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL INFORMATION TECHNOLOGY - INTERNAL SERVICE FUND For the Year Ended December 31, 2017

Original And Final Budget

Actual

Variance with Final Budget

1,196,410

$

OPERATING REVENUES Internal service contributions

$

Total Operating Revenues

1,351,359

$

(154,949)

1,351,359

1,196,410

(154,949)

1,351,359

1,195,620

155,739

1,351,359

1,195,620

155,739

-

790

790

OPERATING EXPENSES Information technology Total Operating Expenses Operating Income TRANSFERS Change in net position

$

-

$

790

$

790

Page 123

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL CENTRAL GARAGE - INTERNAL SERVICE FUND For the Year Ended December 31, 2017

Original And Final Budget

Actual

Variance with Final Budget

1,553,271

$

OPERATING REVENUES Internal service contributions

$

Total Operating Revenues

1,756,782

$

(203,511)

1,756,782

1,553,271

(203,511)

1,756,782

1,602,902

153,880

1,756,782

1,602,902

153,880

OPERATING EXPENSES Central garage Total Operating Expenses Operating Income

-

(49,631)

(49,631)

-

(35,075)

(35,075)

-

(35,075)

(35,075)

TRANSFERS Transfers out Total Transfers Change in net position

$

-

$

(84,706)

$

(84,706)

Page 124

VILLAGE OF BUFFALO GROVE SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL BUILDING MAINTENANCE - INTERNAL SERVICE FUND For the Year Ended December 31, 2017

Original And Final Budget

Actual

Variance with Final Budget

1,258,750

$

OPERATING REVENUES Internal service contributions

$

Total Operating Revenues

1,462,984

$

(204,234)

1,462,984

1,258,750

(204,234)

1,462,984

1,306,221

156,763

1,462,984

1,306,221

156,763

OPERATING EXPENSES Building maintenance Total Operating Expenses Operating Income

-

(47,471)

(47,471)

-

(19,127)

(19,127)

-

(19,127)

(19,127)

TRANSFERS Transfers out Total Transfers Change in net position

$

-

$

(66,598)

$

(66,598)

Page 125

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2017

Information Technology CASH FLOWS FROM OPERATING ACTIVITIES Received from interfund charges Paid to suppliers for goods and services Paid to employees for services Net Cash Flows From Operating Activities

$

1,196,410 $ (1,194,830) (344) 1,236

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers (out) Net Cash Flows From Noncapital Financing Activities Net Change in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS - Beginning of Year CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) Changes in assets and liabilities Accounts payable Accrued wages Deferred outflows - pensions Deferred inflows - pensions Net pension liability NET CASH FLOWS FROM OPERATING ACTIVITIES

Central Garage

$

$

1,553,271 $ (767,062) (749,715) 36,494

Totals

1,258,750 $ 4,008,431 (622,594) (2,584,486) (595,642) (1,345,701) 40,514

78,244

-

(10,735)

(539)

(11,274)

-

(10,735)

(539)

(11,274)

1,236

25,759

39,975

66,970

100,744

64,636

113,351

278,731

101,980

790

$

$

790 (344) $

Building Maintenance

1,236

$

90,395

$

153,326

$

345,701

(49,631) $

(47,471) $

(96,312)

(2,595) 4,013 94,997 40,704 (50,994)

25,297 (3,911) 65,621 30,876 (29,898)

23,492 (242) 160,618 71,580 (80,892)

36,494

$

40,514

$

78,244

NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None

Page 126

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUNDS As of December 31, 2017

Firefighters' Pension

Police Pension ASSETS Cash Investments U.S. treasuries U.S. agencies Mutual funds - other than bond funds Equity securities Municipal bonds Corporate bonds Receivables Interest Prepaid items Due from primary government

$

Total Assets LIABILITIES Accounts payable Due to primary government Total Liabilities NET POSITION Restricted for pensions

$

1,093,838

$

606,383

Totals $

1,700,221

8,987,785 6,727,187 7,748,746 35,799,495 7,134,387

3,114,208 16,830,116 37,551,628 3,339,025 -

12,101,993 23,557,303 45,300,374 35,799,495 3,339,025 7,134,387

79,452 1,138 11,911

149,390 11,911

228,842 1,138 23,822

67,583,939

61,602,661

129,186,600

66,832 84,629

40,191 -

107,023 84,629

151,461

40,191

191,652

61,562,470

$ 128,994,948

67,432,478

$

Page 127

VILLAGE OF BUFFALO GROVE COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUNDS For the Year Ended December 31, 2017

Police Pension ADDITIONS Contributions Employer Plan members Total Contributions Investment income Interest Net appreciation in fair value of investments Total Investment Income Less Investment expense Net Investment Income Total Additions DEDUCTIONS Pension benefits and refunds Administration Total Deductions

$

Change in Net Position NET POSITION - Beginning of Year NET POSITION, END OF YEAR

$

2,524,306 $ 749,965 3,274,271

Firefighters' Pension

Total

1,863,911 $ 546,330 2,410,241

4,388,217 1,296,295 5,684,512

214,240 8,314,479 8,528,719 233,109 8,295,610 11,569,881

592,178 7,129,628 7,721,806 146,186 7,575,620 9,985,861

806,418 15,444,107 16,250,525 379,295 15,871,230 21,555,742

3,602,087 63,085 3,665,172

2,540,913 60,923 2,601,836

6,143,000 124,008 6,267,008

7,904,709

7,384,025

15,288,734

59,527,769

54,178,445

113,706,214

67,432,478 $

61,562,470 $

128,994,948

Page 128

VILLAGE OF BUFFALO GROVE POLICE PENSION FUND SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUAL For the Year Ended December 31, 2017 Original and Final Budget Additions Contributions Employer Plan members Total contributions Investment Income Interest Net appreciation in fair value of investments Total investment income Less Investment expense Net investment income

$

Total additions Deductions Pension benefits and refunds Administration Total deductions Change in net position Net position, beginning of year Net position, end of year

$

Variance with Final Budget

Actual

2,525,647 $ 682,740 3,208,387

2,524,306 $ 749,965 3,274,271

300,000 2,850,000 3,150,000 250,000 2,900,000

214,240 8,314,479 8,528,719 233,109 8,295,610

(85,760) 5,464,479 5,378,719 16,891 5,395,610

6,108,387

11,569,881

5,461,494

3,650,000 45,000 3,695,000 2,413,387

3,602,087 63,085 3,665,172 7,904,709 $ 59,527,769 67,432,478

47,913 (18,085) 29,828 5,491,322

$

(1,341) 67,225 65,884

Page 129

VILLAGE OF BUFFALO GROVE FIREFIGHTERS' PENSION FUND SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION - BUDGET AND ACTUAL For the Year Ended December 31, 2017 Original Budget Additions Contributions Employer Plan members Total contributions Investment Income Interest Net appreciation in fair value of investments Total investment income Less Investment expense Net investment income

$

Total additions Deductions Pension benefits and refunds Administration Total deductions Change in net position Net position, beginning of year Net position, end of year

$

Final Budget

Variance with Final Budget

Actual

1,862,674 $ 559,488 2,422,162

1,862,674 $ 559,488 2,422,162

1,863,911 $ 546,330 2,410,241

1,237 (13,158) (11,921)

450,000

450,000

592,178

142,178

1,750,000 2,200,000 150,000 2,050,000

1,750,000 2,200,000 150,000 2,050,000

7,129,628 7,721,806 146,186 7,575,620

5,379,628 5,521,806 3,814 5,525,620

4,472,162

4,472,162

9,985,861

5,513,699

2,532,912 50,000 2,582,912 1,889,250 $

2,622,443 50,000 2,672,443 1,799,719 $

2,540,913 60,923 2,601,836 7,384,025 $ 54,178,445 61,562,470

81,530 (10,923) 70,607 5,584,306

Page 130

VILLAGE OF BUFFALO GROVE STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES SCHOOL AND PARK DONATIONS - AGENCY FUND For the Year Ended December 31, 2017

Balances January 1

Additions

Deletions

Balances December 31

Assets Cash & 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 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.

Contents

Page

Financial Trends These schedules contain trend information to help the reader understand how the Village's financial performance and well-being have changed over time.

132 - 141

Revenue Capacity These schedules contain information to help the reader assess the factors affecting the Village's ability to generate its property and sales taxes.

142 - 152

Debt Capacity 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.

153 - 157

Demographic and Economic Information 158 - 161 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.

Operating Information 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.

162 - 165

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

VILLAGE OF BUFFALO GROVE, ILLINOIS Net Position by Component Last Ten Fiscal Years Fiscal Years Governmental Activities Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Position Business-type Activities Net Investment in Capital Assets Unrestricted Total Business-type Activities Net Position Primary Government Net Investment in Capital Assets Restricted Unrestricted Total Primary Government Net Position

2017

2016

2015

2014

$ 53,318,041 $ 51,756,933 $ 50,609,420 $ 50,712,982 1,629,079 1,632,934 1,974,115 2,664,110 (36,022,097) (36,592,629) (34,637,401) 11,048,700 $ 18,925,023

$ 16,797,238

$ 17,946,134

$ 64,425,792

$ 36,802,425 10,837,462

$ 35,494,070 11,034,826

$ 38,372,943 7,770,059

$ 35,871,503 11,067,173

$ 47,639,887

$ 46,528,896

$ 46,143,002

$ 46,938,676

$ 90,120,466 $ 87,251,003 $ 88,982,363 $ 86,584,485 1,629,079 1,632,934 1,974,115 2,664,110 (25,184,635) (25,557,803) (26,867,342) 22,115,873 $ 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 inclusion of a net pension liability.

Data Source Audited Financial Statements

Page 132

2013

2012*

2011

2010

2009

2008

$ 51,011,919 2,412,222 12,387,400

$ 52,096,183 6,268,039 11,550,011

$ 53,362,147 1,918,263 13,429,876

$ 53,742,519 956,803 15,738,272

$ 54,563,385 140,712 16,590,052

$ 53,551,265 80,438 23,259,339

$ 65,811,541

$ 69,914,233

$ 68,710,286

$ 70,437,594

$ 71,294,149

$ 76,891,042

$ 35,553,648 11,515,793

$ 36,706,161 11,242,301

$ 37,807,146 12,989,124

$ 38,410,966 14,644,341

$ 39,808,889 15,011,209

$ 41,374,269 17,003,316

$ 47,069,441

$ 47,948,462

$ 50,796,270

$ 53,055,307

$ 54,820,098

$ 58,377,585

$ 86,565,567 2,412,222 23,903,193

$ 88,802,344 6,268,039 22,792,312

$ 91,169,293 1,918,263 26,419,000

$ 92,153,485 956,803 30,382,613

$ 94,372,274 140,712 31,601,261

$ 94,925,534 80,438 40,262,655

$ 112,880,982

$ 117,862,695

$ 119,506,556

$ 123,492,901

$ 126,114,247

$ 135,268,627

Page 133

VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position Last Ten Fiscal Years Fiscal Years Expenses Governmental Activities General Government Public Safety Public Works Interest Total Governmental Activities Expenses

$

6,642,798 27,384,964 9,764,874 384,073 $ 44,176,709

Business-type Activities Water & Sewer Refuse Service Golf Courses Total Business-type Activities Expenditures Total Primary Government Expenses Program Revenue Governmental Activities Charges for Services General Government Public Safety Public Works Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues

2016

2017

$

6,441,707 30,528,127 8,078,874 356,799 $ 45,405,507

2015

$

5,885,811 27,256,737 11,551,606 285,863 $ 44,980,017

2014

$

5,843,623 22,920,180 13,553,093 302,781 $ 42,619,677

9,454,554 705,393 2,888,873 13,048,820

9,001,632 703,565 2,886,404 12,591,601

8,561,248 702,106 3,288,882 12,552,236

8,435,463 803,039 2,739,077 11,977,579

$ 57,225,529

$ 57,997,108

$ 57,532,253

$ 54,597,256

$

$

$

$

2,148,760 1,687,759 1,209,784 1,271,602 1,478,015

1,855,506 1,718,647 1,151,594 1,281,732 -

1,624,134 1,745,580 61,194 1,229,028 -

1,901,996 1,623,171 88,665 1,285,396 -

7,795,920

6,007,479

4,659,936

4,899,228

11,060,938 970,268 2,201,460 -

10,304,638 1,135,748 2,240,868 94,326

9,495,691 1,039,876 2,335,928 -

9,076,261 1,044,442 2,257,494 -

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) Revenue Governmental Activities Business-type Activities

$ (36,380,789) $ (39,398,028) $ (40,320,081) $ (37,720,449) 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)

Business-type activities Charges for Services Water & Sewer Refuse Service Golf Courses Operating Grants and Contributions Capital Grants and Contributions Total Business-type Activities Program Revenues

* Auditors restated 2012, from 2011 and earlier have not been adjusted.

Page 134

2013

$

6,567,545 21,964,989 15,091,414 374,511 $ 43,998,459

2012*

$

6,101,008 22,344,117 12,026,911 384,180 $ 40,856,216

2011

$

5,010,274 22,657,643 11,106,433 248,539 $ 39,022,889

2010

$

4,769,874 22,312,910 11,081,374 194,655 $ 38,358,813

2009

$

6,182,475 22,753,590 10,421,659 334,142 $ 39,691,866

2008

$

5,705,497 21,115,737 13,222,026 379,501 $ 40,422,761

8,079,364 902,811 2,942,747 11,924,922

8,931,336 874,366 2,991,170 12,796,872

8,753,149 935,365 3,057,912 12,746,426

9,865,981 942,757 3,043,367 13,852,105

9,519,169 944,392 3,118,647 13,582,208

8,684,651 1,017,164 3,423,903 13,125,718

$ 55,923,381

$ 53,653,088

$ 51,769,315

$ 52,210,918

$ 53,274,074

$ 53,548,479

$

$

$

$

$

$

1,207,504 1,498,819 82,393 1,161,509 -

1,226,552 1,283,956 118,547 1,178,442 -

1,240,547 1,404,308 86,421 1,230,387 -

1,195,928 1,419,761 71,606 1,253,103 -

977,464 1,563,236 50,709 1,349,044 -

1,211,188 1,514,666 94,670 1,307,895 -

3,950,225

3,807,497

3,961,663

3,940,398

3,940,453

4,128,419

8,692,812 1,040,878 1,178,368 1,072,499 -

7,464,870 1,050,386 2,221,714 -

7,782,000 1,036,872 2,175,418 -

9,091,520 1,041,661 2,088,106 -

8,008,360 1,004,431 2,320,247 -

7,538,534 923,207 2,356,962 133,599

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

VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Net Position (Cont.)

Last Ten Fiscal Years Fiscal Years

Business-type Activities Investment Earnings Miscellaneous Transfers Total Business-type Activities

2016

2017

General Revenues and Other Changes in Net Position Governmental Activities Taxes Property $ 15,510,127 Sales and Home Rule 9,229,254 Income and Use 4,843,251 Telecommunications 1,586,128 Utility 2,532,662 Property Transfer 1,256,919 Other 1,019,807 Investment Earnings 153,816 Miscellaneous 1,409,537 Transfers 958,315 Gain on sale of assets 8,758 Total Government Activities 38,508,574

$

$

492,132 $ 393,328 (958,315) (72,855)

15,034,583 9,095,471 4,994,426 1,513,254 2,659,554 1,115,360 1,110,503 65,600 1,596,806 1,062,190 1,385 38,249,132

2015

$

14,159 $ 249,946 (1,062,190) (798,085)

14,742,622 9,274,777 5,409,875 1,644,309 2,643,642 904,311 1,092,554 25,061 1,458,118 749,027 1,601 37,945,897

2014

$ 14,554,564 8,455,972 4,104,736 1,679,653 2,819,427 790,819 1,113,831 107,765 1,636,721 1,070,724 488 36,334,700

10,112 $ 18,820 5,737 520,521 (749,027) (1,070,724) (733,178) (531,383)

Total Primary Government

$

38,435,719

$

37,451,047

Change in Net Position Governmental Activities Business-type Activities

$

2,127,785 1,110,991

$

(1,148,896) $ 385,894

(2,374,184) $ (1,385,749) (413,919) (130,765)

3,238,776

$

(763,002) $

(2,788,103) $ (1,516,514)

Total Primary Government Change in Net Position $

$

37,212,719

$ 35,803,317

Data Source Audited Financial Statements

Page 136

2013

2012

2011

2010

2009

2008

$ 14,504,750 7,803,749 4,737,656 1,943,811 2,629,997 760,164 1,052,788 54,522 1,506,994 951,111 35,945,542

$ 14,330,407 7,570,915 5,462,111 2,200,809 2,510,242 459,036 1,070,409 132,436 1,239,906 635,500 35,611,771

$ 14,458,248 6,984,134 3,714,864 2,134,462 2,567,091 629,376 1,044,164 133,059 1,495,155 553,000 33,713,553

$ 13,657,589 7,309,800 4,165,248 2,183,190 2,393,340 545,515 1,017,612 250,290 1,822,276 217,000 33,561,860

$ 12,504,508 7,196,969 3,601,619 2,345,249 670,762 1,006,249 490,881 1,403,283 935,000 30,154,520

$ 12,058,815 8,436,647 4,646,776 2,417,496 590,596 1,076,929 810,982 2,081,112 80,230 32,199,583

$

12,455 $ (951,111) (938,656)

$ 35,006,886

27,087 $ 1,259 (635,500) (607,154)

$ 35,004,617

41,100 $ 4,999 (553,000) (506,901)

$ 33,206,652

(46,666) $ 2,133 (217) (44,750)

$ 33,517,110

(374,632) $ 1,315 (935,000) (1,308,317)

$ 28,846,203

267,263 187,034 (80,230) 374,067

$ 32,573,650

$ (4,102,692) $ (1,436,948) $ (1,347,673) $ (856,555) $ (879,021) (2,667,056) (2,259,037) (1,675,568)

(5,596,893) $ (4,094,759) (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

VILLAGE OF BUFFALO GROVE, ILLINOIS Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years General Fund Nonspendable Restricted Committed Unassigned Reserved Unreserved Total General Fund All other Governmental Funds Restricted Assigned Unassigned Unreserved Unreserved, Reported in Special Revenue Funds Capital Projects Funds Total All other Governmental Funds Total Governmental Funds

2016

2017 $

132,843 252,729 7,758,348 18,902,476 -

$

2015

167,957 229,953 8,511,306 16,143,726 -

$

2014

551,242 223,622 7,532,123 14,991,907 -

$

573,812 130,435 7,438,256 13,225,644 -

27,046,396

25,052,942

23,298,894

21,368,147

1,629,079 (3,714,759) -

1,632,934 (3,859,964) -

1,974,115 (3,707,560) -

1,965,328 (2,324,296) -

-

-

-

(2,227,030)

(1,733,445)

(2,085,680) $ 24,960,716

$ 22,825,912

$ 21,565,449

(358,968) $ 21,009,179

* Auditors restated 2012, from 2011 and earlier have not been adjusted.

Data Source Audited Financial Statements

Page 138

2013 $

2012*

562,399 162,274 7,345,420 12,395,113 20,465,206

1,796,997 101,213 (927,395) -

$

2011

518,437 7,335,685 10,759,935 18,614,057

6,112,703 144,075 (253,826) -

$

2010

1,031,936 7,948,344 9,871,895 18,852,175

1,918,263 146,116 (234,206) -

$

1,138,273 17,763,849 18,902,122

20,271

2009 $

1,248,428 18,307,270 19,555,698

(12,970)

2008 $

1,536,571 22,444,819 23,981,390

33,167

-

-

-

2,124,937 927,626

1,252,015 903,315

1,239,501 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

VILLAGE OF BUFFALO GROVE, ILLINOIS Change in Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Years Revenues Property Taxes Other Taxes Licenses and Permits Intergovernmental Fines and Forfeitures Charges for Services Investment Income Miscellaneous Total Revenue Expenditure Current General Government Public Safety Public Works Capital Outlay Debt Service Principal Interest Other Charges Total Expenditures

2017

Net Change in Fund Balance Debt Service as a Percentage of Non-Capital Expenditures

2015

2014*** $ 14,554,564 9,564,978 207,312 11,081,081 1,803,317 1,371,779 107,765 2,107,628 40,798,424

$

15,510,127 9,816,523 1,763,982 3,043,453 330,475 11,709,919 153,816 1,456,876 43,785,171

$ 15,034,583 9,701,271 326,177 11,843,812 3,025,628 1,504,400 65,600 1,610,746 43,112,217

$ 14,742,622 9,712,718 1,330,769 1,931,512 350,042 12,271,219 25,061 1,404,841 41,768,784

$

5,774,748 25,776,184 8,101,888 1,362,213

$

$

Excess (Deficiency) of Revenues over Expenditures Other Financing Sources (Uses) Transfers In Transfers Out Sales of capital assets Auction Proceeds Bond Issued Premium on Issuance of Debt Transfer to Escrow Agent Total Other Financing Sources (Uses)

2016

$

$

5,693,142 27,407,019 6,978,307 8,252,604

1,275,000 401,609 42,691,642

525,000 371,456 49,227,528

1,093,529

(6,115,311)

5,084,772 25,237,115 8,092,735 2,828,194

5,522,549 22,773,535 10,878,278 2,018,451

510,000 296,747 42,049,563

790,000 313,665 42,296,478

(280,779)

(1,498,054)

4,204,943 $ 3,402,595 $ 3,521,760 (3,192,426) (2,253,984) (2,686,312) 28,758 1,385 1,601 6,125,000 100,778 1,041,275 7,375,774 837,049

2,552,288 (1,481,564) 488 1,071,212

2,134,804

4.24%

$

1,260,463

$

2.19%

556,270

2.06%

(426,842)

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 19,240,365 294,622 997,371 1,647,364 1,010,868 54,522 1,506,994 39,256,856

$ 14,330,407 18,325,614 275,434 1,011,949 1,283,956 1,236,158 132,457 1,239,861 37,835,836

$ 14,458,248 17,074,091 280,139 1,060,719 1,404,308 1,216,497 133,196 1,442,617 37,069,815

$ 13,657,589 17,614,705 278,164 1,096,794 1,419,761 1,145,679 249,396 1,720,640 37,182,728

$ 12,504,508 14,806,744 276,857 1,106,234 1,559,190 970,537 490,881 1,444,610 33,159,561

$ 12,058,815 17,168,444 278,965 1,134,407 1,514,666 1,200,381 790,244 2,081,112 36,227,034

6,465,636 21,805,910 12,178,705 1,347,276

5,556,101 21,791,218 9,865,723 1,561,904

5,509,433 22,008,351 8,256,079 1,510,924

4,979,904 21,802,732 8,704,005 3,157,156

5,596,822 20,882,745 10,337,090 1,245,940

5,458,962 20,499,004 10,792,931 1,286,175

940,000 385,395 43,122,922

920,000 285,420 39,980,366

1,055,000 248,539 38,588,326

980,000 194,655 127,930 39,946,382

1,165,000 334,142 39,561,739

1,150,000 379,501 39,566,573

(3,866,066)

(2,144,530)

(1,518,511)

(2,763,654)

(6,402,178)

(3,339,539)

2,119,313 (1,434,235)

2,621,132 (1,985,632)

1,891,354 (1,338,354)

2,153,190 (1,936,190)

2,909,382 (1,974,382)

4,121,451 (4,041,221)

685,078 (3,180,988)

3.17%

45 6,000,000 91,669 6,727,214

52,538 605,538

4,582,684

(912,973)

3.14%

3.52%

103,565 7,760,000 178,229 (5,218,242) 3,040,552 276,898

3.19%

935,000

80,230

(5,467,178)

(3,259,309)

3.91%

4.00%

Page 141

VILLAGE OF BUFFALO GROVE, ILLINOIS Assessed and Actual Value of Taxable Property Last Ten Levy Years

Tax Levy Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

Residential Property *

$ 1,342,197,928 1,249,925,407 1,191,523,466 1,120,788,463 1,115,221,955 1,223,424,081 1,338,206,375 1,435,137,071 1,535,445,605 1,510,235,133

Commercial Property *

$

315,723,608 302,093,041 297,951,249 294,457,084 292,225,583 296,910,564 315,118,343 325,603,742 346,125,532 353,063,176

Industrial Property *

$

3,900,196 3,611,330 3,377,285 9,119,150 9,050,042 10,221,534 10,706,904 12,723,472 14,583,031 17,166,096

Other Property *

$

628,731 636,718 631,771 696,091 618,433 617,198 832,216 636,502 628,346 630,017

*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 Clerk Office of Lake County Clerks

Page 142

Total Assessed Value *

$ 1,662,450,463 1,556,266,496 1,493,483,771 1,425,060,788 1,417,116,013 1,531,173,377 1,664,431,364 1,774,100,787 1,896,782,514 1,881,094,422

Estimated Actual Taxable Value

Total Direct Tax Rate *

0.9545 1.0363 1.0110 1.0411 1.0280 0.9187 0.8594 0.7999 0.7359 0.6661

*

$ 4,987,351,389 4,668,799,488 4,480,451,313 4,275,182,364 4,251,348,039 4,593,520,131 4,993,294,092 5,322,302,361 5,690,347,542 5,643,283,266

Estimated Actual Taxable Value (%) *

33.333% 33.333% 33.333% 33.333% 33.333% 33.333% 33.333% 33.333% 33.333% 33.333%

Page 143

VILLAGE OF BUFFALO GROVE, ILLINOIS Property Tax Rates - Direct and Overlapping Governments Last Ten Levy Years Comparative Tax Rates (Per $100 Assessed and Equalized Valuation) Tax Levy Year Lake County Village of Buffalo Grove County, including Forest Preserve Combined School Districts (102, 125, 532) Buffalo Grove Park District Vernon Area Public Library All Other (3) Total (5)

2017 0.908 0.809 6.634 0.482 0.291 0.099 9.223 -0.99%

2016 0.921 0.825 6.680 0.492 0.293 0.104 9.315 -4.90%

2015 0.955 0.871 7.034 0.517 0.308 0.110 9.794 -2.38%

2014 0.993 0.893 7.164 0.553 0.317 0.113 10.033 1.50%

2013 0.983 0.881 7.068 0.537 0.311 0.105 9.885 3.12%

Cook County Village of Buffalo Grove County, including Forest Preserve Metropolitan Water Reclamation District of Greater Chicago Combined School Districts (21, 214, 512) Buffalo Grove Park District Indian Trails Public Library District All Other (4) Total (6)

N/A N/A

1.138 0.596

1.316 0.621

1.235 0.126

1.211 0.125

N/A N/A N/A N/A N/A N/A

0.406 7.909 0.606 0.476 0.073 11.204

0.426 8.989 0.714 0.534 0.130 12.730

0.430 8.657 0.677 0.529 0.094 11.748

0.417 8.053 0.658 0.504 0.129 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 statutory tax rate limitations.

(3) Includes Road and Bridge and General Assistance for the Township herein.

(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. (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.

N/A - Not Yet Available Data Source Cook County Tax Extension Lake County Tax Extension

Page 144

2012 0.929 0.820 6.779 0.511 0.441 0.106 9.586 10.26%

2011 0.852 0.755 6.158 0.452 0.385 0.092 8.694 9.33%

2010 0.797 0.703 5.610 0.425 0.315 0.102 7.952 6.58%

2009 0.750 0.664 5.301 0.351 0.301 0.094 7.461 5.04%

2008 0.665 0.652 5.102 0.370 0.222 0.092 7.103 -1.31%

1.030 0.594

0.886 0.520

0.810 0.474

0.691 0.464

0.670 0.466

0.370 6.917 0.557 0.463 0.187 10.118

0.320 6.565 0.479 0.393 0.107 9.270

0.274 5.792 0.439 0.347 0.071 8.207

0.261 5.103 0.371 0.307 0.068 7.265

0.252 5.004 0.376 0.308 0.067 7.143

9.15%

12.95%

12.97%

1.71%

-9.64%

Page 145

VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Property Taxpayers Current Fiscal Year and Eight Years Ago 2017

Taxpayer Chevy Chase Business Park Ltd Hamilton Partners(1) Penobscot Management LLC(3) Millbrook Buffalo Grove STE 106 Leider Lane Investors LLC Arthur J. Rogers and Company (4) BRI 1862 Riverwalk LLC (5) Riverwalk South LLC(2) Resource Real Estate Inc Amli at Chevy Chase, LP Remax Consumers Plastics, Inc Inland Wooland LLC NTL Shopping Plaza Inc

Equalized Assessed Valuation $21,759,899 11,468,682 9,436,975 9,167,002 8,674,553 8,630,563 8,229,224 8,145,927 7,819,608 6,589,815 $99,922,248

Rank 1 2 3 4 5 6 7 8 9 10

Percentage of Total Village Taxable Assessed Valuation 1.309% 0.690% 0.568% 0.551% 0.522% 0.519% 0.495% 0.490% 0.470% 0.396% 6.010%

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.

(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 Page 146

2009

Equalized Assessed Valuation $18,960,235 12,986,131 9,405,158 11,978,786 9,012,393 9,241,551 22,307,549 7,355,354 6,895,030 6,587,600 $114,729,787

Rank 2 3 5 4

7 6 1 8 9 10

Percentage of Total Village Equalized Assessed Valuation 1.010% 0.690% 0.500% 0.640% 0.000% 0.000% 0.480% 0.000% 0.490% 0.000% 1.190% 0.390% 0.370% 0.350% 6.110%

Page 147

VILLAGE OF BUFFALO GROVE, ILLINOIS Property Tax Levy and Collections Last Ten Fiscal Years

Levy Year

Lake County Collected within the Fiscal Year After the Levy Tax Percentage Levied Amount of Levy

2016 $ 11,783,047 2015 11,678,742 2014 11,339,326 2013 11,413,067 2012 11,183,780 2011 11,026,478 2010 10,911,629 2009 10,826,999 2008 9,648,296 2007 9,137,324

$ 11,761,365 11,426,115 11,322,087 11,172,745 11,105,274 11,019,638 10,902,757 10,818,398 9,639,444 9,133,824

99.82% 97.84% 99.85% 97.89% 99.30% 99.94% 99.92% 99.92% 99.91% 99.96%

Cook County Collected within the Fiscal Year After the Levy Tax Percentage Levied Amount of Levy $

3,811,228 3,514,106 3,500,800 3,424,515 3,449,572 3,279,285 3,280,083 3,131,059 2,882,493 2,937,238

$ 3,748,763 3,608,468 3,409,452 3,381,819 3,399,477 3,225,824 3,203,676 2,992,768 2,902,223 2,871,428

98.36% 102.69% 97.39% 98.75% 98.55% 98.37% 97.67% 95.58% 100.68% 97.76%

Data Source: Office of the County Clerk

Page 148

Village Total Percentage Collected of Levy $ 15,510,127 15,034,583 14,731,539 14,554,564 14,504,751 14,245,462 14,106,433 13,811,166 12,541,667 12,005,252

99.46% 98.96% 99.27% 98.09% 99.12% 99.58% 99.40% 98.95% 100.09% 99.43%

Page 149

VILLAGE OF BUFFALO GROVE, ILLINOIS Sales Tax Revenue and Number of Principal Payers Revenue By Category Last Ten Calendar Years

2017 General Merchandise Food Drinking and Eating Places Apparel Furniture, Households and radio Lumber, Building and Hardware Automotive Filling Stations Drugs and Miscellaneous Retail Agriculture and All Other Manufacturers

2016

2015

$

1,557,474 1,107,878 68,075 380,907 2,357,551 1,007,356 1,568,024 2,573,323 200,727

$

86,125 1,481,195 1,118,330 92,409 369,583 2,074,008 867,250 1,986,578 2,231,299 220,927

$

66,228 * 1,552,983 1,062,206 94,538 521,007 1,879,818 918,216 1,790,381 2,313,502 351,808

$

10,958,408

$

10,550,687

$ 10,550,687

2014 $

9,098 1,080,556 1,023,545 104,229 356,095 1,666,708 947,278 2,349,469 1,693,506 270,063

$

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 the confidentiality of individual taxpayers. * Excludes values for taxpayers in Cook County.

Data Source: Office of the County Clerk of Cook Office of the County Clerk of Lake Illinois Department of Revenue

Page 150

Calendar Year 2013

2012

2011

2010

2009

2008

$

10,105 $ 1,133,605 1,025,547 120,210 463,678 * 1,236,689 857,713 1,915,937 1,572,248 285,848

17,526 1,193,312 997,738 130,163 437,774 812,434 954,996 1,847,550 1,347,303 334,442

$

18,514 1,244,667 921,617 129,402 378,836 534,413 853,864 1,982,824 1,193,620 378,326

$

3,901 1,362,170 933,212 128,663 415,396 402,483 959,870 1,431,121 1,062,978 379,893

$

4,637 1,357,378 941,804 112,951 223,008 716,935 1,222,500 1,432,484 1,257,806 399,141

$

5,819 1,415,835 906,628 104,376 521,316 1,379,764 1,177,121 1,285,513 2,082,955 390,034

$

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

VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Sales Tax Rates Last Ten Fiscal years

Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

Village Direct Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Village Home Rule Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

State of Illinois Sales Tax Rate 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50%

*Transitional fiscal year May 1, 2007 through December 31, 2007

Data Source: Illinois Department of Revenue Page 152

VILLAGE OF BUFFALO GROVE, ILLINOIS Ratio of Outstanding Debt by Type Last Ten Years

Governmental Activities

Year Ended 12/31/2017 $ 12/31/2016 12/31/2015 12/31/2014 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008

Business-type Activities

General Obligation Bonds 14,581,706 15,881,408 10,202,453 10,730,503 11,340,000 12,280,000 7,200,000 8,255,000 6,575,000 7,740,000

General Obligation Bonds $

IEPA Loan -

$

348,233 366,060 383,487 400,519 173,618 -

Total Primary Government

Installment Note $

6,638,399 6,894,447 1,193,599 -

$

21,568,338 23,141,915 11,779,539 11,131,022 11,513,618 12,280,000 7,200,000 8,255,000 6,575,000 7,740,000

*Transitional fiscal year May 1, 2007 through December 31, 2007 December 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 of Total Outstanding Debt to Equalized Assessed Valuation 0.43% 0.50% 0.26% 0.26% 0.27% 0.27% 0.14% 0.16% 0.12% 0.14%

Debt Total Outstanding Outstanding as a Percentage Debt of Personal Per Capita (1) Income 523.17 557.64 283.82 265.11 275.59 290.10 171.79 198.93 156.62 183.54

1.11% 1.19% 0.61% 0.57% 0.61% 0.65% 0.39% 0.45% 0.36% 0.44%

Page 154

VILLAGE OF BUFFALO GROVE, ILLINOIS Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years

General Obligation Bonds

Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

Amounts Available in Debt Service Fund

$

14,581,706 15,881,408 10,202,453 10,730,503 11,340,000 12,280,000 7,200,000 8,255,000 6,575,000 7,740,000

$

19,527 12,543 20,271 (12,970) 33,167

Total $

14,581,706 15,881,408 10,202,453 10,730,503 11,340,000 12,260,473 7,187,457 8,234,729 6,587,970 7,706,833

Ratio of Total Outstanding Debt to Equalized Assessed Valuation

Total Outstanding Debt Per Capita (1)

0.29% 0.34% 0.23% 0.25% 0.27% 0.27% 0.14% 0.15% 0.12% 0.14%

353.70 382.68 245.82 255.57 271.43 289.64 171.49 198.45 156.93 182.76

*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 Property for property value data.

Page 155

VILLAGE OF BUFFALO GROVE, ILLINOIS Direct and Overlapping Governmental Activities Debt As of December 31, 2017

Gross Debt Overlapping Debt School Districts Cook County School District #21 Kildeeer Countryside Community Consolidated #96 Aptakisic-Tripp Community Consolidated #102 Lincolnshire-Half Day District #103 Adlai E. Stevenson H.S. District # 125 Wheeling Township H.S. District #214 Harper Community College #512 College of Lake County #532 Total School Districts Other Than School Districts Lake County Lake County Forest Preserve Cook County Cook County Forest Preserve Metropolitan Water Reclamation District Buffalo Grove Park District Wheeling Park District

$

30,255,000 17,870,000 6,010,000 3,455,000 39,325,000 126,895,000 30,895,000

Percentage of Debt Applicable to the Village of Buffalo Grove*

18.68% 38.30% 76.70% 12.08% 37.35% 3.92% 2.03% 5.37%

Village of Buffalo Grove Share of Debt

$

254,705,000

180,270,000 255,895,000 3,085,186,750 149,290,000 2,377,123,381 14,100,000 8,995,000

5,650,897 13,706,920 726,127 1,290,393 1,541,928 2,571,993 1,659,542 27,147,800

5.10% 5.10% 0.23% 0.23% 0.24% 97.62% 7.65%

9,201,540 13,061,674 7,203,864 348,590 5,658,246 13,764,265 688,248

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 Total Direct and Overlapping Debt

14,581,706 $ 6,340,146,837

100.00%

14,581,706 $

91,655,933

*Determined by ratio of assessed valuation of property subject to taxation in the Village of Buffalo Grove to 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

VILLAGE OF BUFFALO GROVE, ILLINOIS Schedule of Legal Debt Margin December 31, 2017 Under the 1970 Illinois Constitution, there is no legal limit for home rule municipalities except as set by the General Assembly.

Page 157

VILLAGE OF BUFFALO GROVE, ILLINOIS Demographic and Economic Statistics Last Ten Years

Fiscal Year

Population

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

41,226 41,500 41,503 41,987 41,778 42,330 41,911 41,496 41,980 42,170 A - Actual E - Estimate

Equalized Assessed Valuation 1 $ 1,662,450,463 E 1,614,251,028 E 1,475,693,765 E 1,425,060,788 E 1,456,040,510 E 1,531,173,377 E 1,664,431,364 A 1,774,100,787 E 1,896,782,514 E 1,881,094,422

Per Capita Personal EAV 40,325 38,898 35,985 33,941 34,852 36,172 39,713 42,754 45,138 44,607

Personal Income $ 1,938,570,198 1,949,794,500 1,930,595,051 1,939,085,621 1,882,391,346 1,891,582,681 1,854,311,029 1,817,773,776 1,802,196,362 1,774,145,979

Per Capita Income 47,023 46,983 46,517 46,183 45,057 44,687 44,244 43,806 42,930 42,071

Unemployment Rate 4 4 1 E 1 E E 3 E E

5.7% 4.3% 4.2% 5.7% 6.8% 7.1% 7.6% 8.4% 7.8% 4.8%

1- US Census Website 2- Northern Illinois University Estimate 3 - American Community Survey 3 Year Estimates 4- 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 Statistics U.S. Census Bureau

Page 158

VILLAGE OF BUFFALO GROVE, ILLINOIS Principal Village Employers Current Year and Nine Years Ago 2017

Employer Siemens Building Technologies I.S.I. ESS Plexus Corporation Veritas Document Solutions ARxIUM, Inc (1) Vapor Bus Direct Leica Microsystems, Inc Crosscom National LLC Eagle Test Systems, Inc MNJ Technologies The Salem Group. Inc. Wes-Tech Automation Solutions, LLC Allstate Insurance Company Rexam Dominicks Finer Foods (3 locations) Harris Trust & Savings Bank Federal Express Baxter Global Technical Services Village of Buffalo Grove

Employees 1,800 1,200 550 370 300 200 200 200 170 150 150 150 150

Rank 1 2 3 4 5 6 7 8 9 10 10 10 10

2008 Percent of Total Village Population 4.37% 2.91% 1.33% 0.90% 0.73% 0.49% 0.49% 0.49% 0.41% 0.36% 0.36% 0.36% 0.36%

Employees

Percent of Total Village Population

Rank

1,030

1

2.31%

400

5

0.90%

266

7

0.60%

996 756 483 350 250 250 245

2 3 4 6 8 9 10

2.24% 1.70% 1.09% 0.79% 0.56% 0.56% 0.55%

Data Source: Sources: 2018 Illinois Manufacturing Directory 2018 Illinois Services Directory and a selective telephone survey (1) Previously Intelligent Hospital Solutions

Page 159

VILLAGE OF BUFFALO GROVE, ILLINOIS Full-Time Equivalent Employees Last Ten Years

Function/Program

2017

2016

2015

2014

General Government Administration Village Managers Office Planning Information Technology Finance Building and Zoning

5.5 9.0 14.0

5.0 9.0 12.0

6.0 8.0 12.0

7.5 1.5 3.0 10.0 9.5

Public Safety Police Full-Time Police Officers Community Service Officers Civilians

61.0 2.0 16.0

63.0 3.0 15.5

63.0 3.0 15.0

63.0 3.0 15.0

58.0 4.5

59.0 1.0

59.0 1.0

58.0 1.5

12.0 20.0 12.0 5.5 4.5

6.0 20.0 9.0 5.5 6.0

6.0 20.0 10.0 5.5 6.0

6.0 18.5 9.0 5.5 6.0

2.0 -

3.0 -

19.5 11.5

19.5 11.5

226.0

217.0

245.5

248.0

25.0

24.5

24.5

24.5

Fire Full-time Firefighters/Paramedics Civilians Public Works Public Works Administration Streets/Forestry Water/Sewer Central garage Building Maintenance Recreation Administration Grounds Maintenance

Recreation Seasonal

Data Source: Village Finance Department Page 160

2013

2012

2011

2010

2009

2008

5.5 1.5 3.5 9.5 10.0

4.5 1.5 3.5 8.5 10.0

4.0 1.5 3.5 8.5 10.0

4.0 1.5 3.5 8.5 10.0

4.5 1.5 3.5 9.0 10.0

5.0 1.5 3.5 9.5 10.5

64.0 3.0 17.0

69.0 3.0 16.5

69.0 3.0 17.5

69.0 3.0 17.5

71.0 3.0 20.5

71.0 3.0 21.5

58.0 3.5

62.0 3.5

62.0 6.0

62.0 6.0

62.0 6.0

62.0 6.0

5.0 18.5 8.0 5.5 4.0

11.0 20.0 13.0 5.5 4.0

11.0 20.0 13.0 5.5 4.0

12.0 20.0 13.0 5.5 4.0

12.0 20.0 13.0 5.5 4.0

14.5 20.0 14.0 5.0 4.0

18.0 16.0

13.5 15.0

13.5 15.0

13.5 15.0

13.5 15.0

13.5 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

VILLAGE OF BUFFALO GROVE, ILLINOIS Operating Indicators Last Ten Fiscal Years Function/Program

2017

2016

2015

2014

General Government Building and Zoning Building Permits Issued Building Inspections Conducted Property Maintenance Inspections Conducted

2,567 6,692 1,954

2,957 9,053 2,160

2,582 11,625 1,894

2,833 7,074 3,172

Public Safety Police Physical Arrests Parking Violations Traffic Violations DUI Arrests Vehicle Crashes

441 6,781 5,310 87 1,294

521 5,754 6,054 74 1,473

809 3,766 7,969 97 363

886 3,634 8,349 154 1,429

3,201 293 1,082 1,045

3,160 309 1,279 987

3,123 340 1,585 1,055

3,385 1,245 821 1,063

2.76

11.40

2.45

3.28

46

46

46

46

51,138

53,599

68,602

54,689

3 3.23 5.98

19 3.60 5.54

23 3.39 5.14

9 3.58 5.40

Fire Ambulance Calls/EMS Service Calls Fire Calls Auto Aid/Mutual Aid Public Works Streets Street Resurfacing (Miles) Parks and Recreation Park Sites Golf Course - Combined Golf Rounds Played - Paid Water New Connections (Tap-ons) Average Daily consumption (1) Peak Daily consumption (1)

(1) - Millions of Gallons N/A - Not Available Data Source: Various Village Departments Page 162

2013

2012

2011

2010

2009

2008

2,651 7,456 3,288

2,206 15,858 5,828

1,930 9,661 3,462

1,959 7,088 3,158

1,922 6,633 2,348

1,746 5,054 2,159

759 2,984 13,171 124 1,507

671 3,341 10,826 107 1,260

820 2,031 11,867 164 1,396

981 2,062 11,999 222 1,391

989 3,267 11,373 267 1,414

1,085 3,451 15,795 337 1,786

2,613 483 865 654

2,789 487 698 680

2,568 1,053 737 676

2,743 610 735 654

2,553 718 774 672

2,590 751 881 689

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 3.70 6.20

15 3.92 7.93

12 4.09 7.84

50 4.30 7.30

7 4.21 7.29

25 4.09 7.03

Page 163

VILLAGE OF BUFFALO GROVE, ILLINOIS Capital Asset Statistics Last Ten Fiscal Years Function/Program Public Safety Police Stations Patrol Units

2017

2016

2015

2014

1 31

1 29

1 30

1 29

3 20

3 20

3 20

3 20

Public Works Streets Street (Miles) Streetlights

114.02 2,790

118.22 2,789

118.20 2,789

118.20 2,786

Water Water Mains Fire Hydrants

181.97 2,514

181.31 2,501

181.14 2,493

180.90 2,487

Wastewater Sanitary Sewers

139.96

139.92

139.92

139.80

Fire Stations Fire Apparatus

Data Source: Various Village Departments

Page 164

2013

2012

2011

2010

2009

2008

1 28

1 34

1 36

1 36

1 36

1 36

3 21

3 21

3 21

3 21

3 21

3 20

117.70 2,778

117.70 2,778

117.70 2,778

117.70 2,745

117.70 2,743

117.50 2,714

180.30 2,477

180.25 2,475

180.25 2,475

179.83 2,475

179.82 2,474

180.63 2,474

139.30

139.27

139.27

139.27

139.27

139.24

Page 165