Submitted By
Donna M. Gayden, Interim Chief Financial Officer
Reviewed By
Ahmad M. Zayyad, Deputy Village Manager / Interim Director of Development Customer Services
Agenda Item Title
Title
Department Presentations Regarding the Fiscal Year 2024 Proposed Budget
End
Overview
Overview
This is the first review of the proposed operating budget for Fiscal Year 2024. Staff will be available to review and answer questions on any of the following budgets:
1. General Fund:
Village Manager’s Office, Human Resources, Law, Finance, Adjudication, Information Technology and Village Clerk’s Office
End
Report
The meetings pertaining to and leading up to the adoption of the FY24 budget will include a review of the major Funds (i.e. General, Parking, Water/Sewer, Health Insurance, and Self-Insured Retention Funds).
The capital improvement project funds were thoroughly discussed on September 11th, September 26th and October 16th and the CIP Document was formally adopted on October 30th. Please note that the first budget year (2024) of the five-year capital plan has been incorporated into the operating budget document.
The General Fund as presented in the FY24 Proposed First Draft Budget has been balanced with a fund balance appropriation of approximately $6,261,172. This transfer was due to the following:
1. The balanced budget reflects a property tax levy increase of 3%; which equates to an overall increase of $711,763 excluding debt service. The corporate levy has a decrease of ($618,460) or 3% from fiscal year 2023, whereas the police pension levy has an increase of 13% or $846,927 and the fire pension levy has an increase of 8% or $483,296. Both pension increases are reflected on the current actuarial report.
2. There is an appropriation of fund balance of $6,261,172. The fund balance at the end of fiscal year of 2022 was $38,913,187 and the 2023-year end projected fund balance is estimated at $43,663,734. The current policy states that the General Fund Balance objective is to have on-hand unreserved fund balance between 10% and 20% of the current year’s estimated operating expenditures. With this transfer the fund balance is estimated to be $37,402,562 or 45%.
3. Other Taxes reflect an overall decrease of $139,000 or approximately 1%. Personal Property Tax per the State of Illinois will decrease 25% or $975,000 for fiscal year 2024. State Income Tax Revenue represents the largest increase $630,000 or 7%.
4. Licenses/Permits/ Fines decreased in Fines by $452,840 or 17%. Building Permits reflects a decrease of $500,000 or 25%.
5. Charges for Services reflect an increase of $100,700 or 4% over fiscal year 2023.
6. Interfund Transfers Revenue increased by $3,000,000. This transfer represents a transfer from the ARPA Fund for 2023 estimated lost revenue.
7. Financing and Investment revenues reflects an increase of $1,450,000 in interest revenue. The current fiscal year budget for interest revenue was based on extremely low rates at the time of budget preparation. Although rates increased dramatically in 2023, the 2024 budget increase represents a conservative projection based on the unknown upcoming interest rates.
8. One-time expenditures are estimated at $5,861,831, which includes $1,100,000 for the Alternative Response Pilot Program, $607,487 for Crisis Response, $75,000 for Translation Services, $100,000 for finance long term planning; Village Clerk’s office digitization software for $50,000, Village Clerk’s Leadership Lab for $2,000, Development Services - Roosevelt Road Study at $100,000, Development Services Economic Development Planning for $100,000, Adjudication Mediation Training for $4,500, Development Services Special Events Tourism Program External Support for $25,000, Finance Non-Union Salary Comp Study for $250,000, CPOC Study Org Planning - External Support for $100,000 and transfer to CIP for $3,347,844.
9. Finance overall increase of $6,309,659 a 132% increase. The major changes are an increase in the transfer to CIP of $5,247,844, increase in transfer to SIR Fund of $500,000, increase in the turnover savings of $1,176,151, one-time cost of $1,100,000 for the Alternative Response Program and $607,487 for Crisis Response one-time cost.
10. The police budget increased $2,119,128 or 7%. The major increases are $846,277 for the police pension expense and an increase in salary and benefits of $2,027,167.
11. The Fire budget increased $870,760 or 5%. The major increases $483,296 for the fire pension expense and an increase of $387,464 for salaries and benefits.
Chapter 2 of the Municipal Code establishes the foundation for the Municipal Budget and provides:
• The Village fiscal year is January 1 - December 31 annually.
• The Board of Trustees must adopt the annual budget prior to the start of the Fiscal Year and passage of the annual budget shall be in lieu of passage of the appropriation ordinance.
• On or before the Village Board of Trustees' first regular meeting in November of each year, the Village Manager shall submit to the Board of Trustees an annual Municipal budget which contains estimates of revenues together with recommended expenditures in conformity with good fiscal management practice.
The use of fund accounting for the Village’s revenues and expenditures is required as the Village is established under State Law as a municipal corporation and the Financial Accounting Foundation (FAF) requires the use of Generally Accepted Account Principles (GAAP) established by the Government Accounting Standards Board (GASB). Among the basic principles of governmental GAAP is fund accounting. Because of the diverse nature of governmental operations and the numerous legal and fiscal constraints under which those operations must be conducted, it is impossible to record all governmental financial transactions and balances in a single accounting entity. Therefore, unlike a small private business which is accounted for as a single entity, a governmental unit is accounted for through separate funds, each of which is a fiscal and accounting entity with a self-balancing set of accounts. When compared to the private sector, fund accounting would most closely resemble a large publicly traded company that consists of a parent corporation and its subsidiaries, where each subsidiary maintains a separate set of accounting records and reports its numbers to the parent which then consolidates all the information for investor reporting.
Anticipated Future Actions/Commitments
Additional meetings of the Village Board are scheduled pertaining to adoption of the FY24 operating budget as follows:
1. November 28, 2023: Special Village Board Meeting for continued review of the operating
budget (if needed)
2. December 4, 2023: Board adoption of operating budget, levies, and abatements