Despite a negative fund balance in the general fund and the daunting task of replacing nearly half a million in lost annual revenue in the coming years, auditors have declared Forest Park's books above board.
Christine Torres of Crowe Horwath, the village's auditors, spoke in positive terms at the Jan. 14 village council meeting as she provided a review of her firm's audit for the fiscal year ending April 30, 2018.
She noted that all opinions in the audit are unmodified, which she explained is "the best you can get." Opinions were given for financial statements and Tax Increment Financing (TIF) funds.
However, Torres struck a cautionary note when discussing a projected decrease in the general fund and the resulting negative fund balance.
"This is something you want to continue to monitor and watch and take a look at your finances as you continue to try to create that back to a positive area as time goes on," she said.
General fund assets decreased 9 percent year over year, from $5,535,871 in 2017 to $5,010,491 in 2018, and liabilities and deferred inflows of resources increased 32 percent, from $3,998,959 in 2017 to $5,285,329 in 2018, leading to a negative fund balance of $274,838.
Leticia Olmsted, village finance director, said the negative fund balance is the result of years of expenditures exceeding revenues.
"This is really not a surprise," she said, noting that only once in the past six years have revenues exceeded expenditures. In previous years, the village covered the shortfall with reserve funds. But now the reserve funds have been depleted.
Torres also noted the general fund was supported by a $900,000 transfer from the water fund, which Olmsted said is a regular occurrence.
"That is perfectly acceptable," Torres said. "That happens in many communities and is something that is very common to occur."
In her presentation, Torres said no fraud was suspected or detected during the audit; no significant or unusual transactions were entered into during the year; and no significant accounting policies were adopted.
"That is a fantastic place to be," she said.
Torres also complimented village staff members, noting no significant difficulties were encountered and there were no significant disagreements with management during the audit.
"It was a very good experience as always," she said. "The finance department was very supportive of all our requests. We appreciate all the help and timeliness."
Torres explained that Crowe Horwath found "no exceptions" with the testing of each TIF fund separately for accuracy and compliance.
In other general fund year-to-year comparisons, total revenues increased 2 percent, from $16,463,070 in 2017 to $16,809,414 in 2018. Total expenditures increased by a slight $24,157, from $19,503,473 in 2017 to $19,527,630 in 2018.
In general fund budget-to-actual comparisons, actual revenues were $16,809,414, which is more than $2 million less than the budgeted $18,877,942. The largest shortfall was in grant revenue, which came in at $503,448, down nearly $960,00 from the budgeted $1,458,891. Village officials attributed the decrease to grants not being awarded or being suspended by the state of Illinois. Projects intended to be financed by those grants have been suspended so expenditures decreased accordingly, they added.
Other large decreases came in fines, property taxes and sales taxes.
Fines were budgeted at $1,330,000 but actual revenue was $972,811; property taxes were budgeted at $4,823,420 but actual revenue was $4,597,251; and sales taxes were budgeted at $3,389,666 but actual revenue was $3,092,692.
Olmsted tied the decrease in fines to a change in collection agencies and the fact that RedSpeed cameras on Roosevelt Road were not operating during the reconstruction project there. She said past due fines are not being collected currently but village officials expect that some past due debt will be realized once the new collection agency is in place.
In other budget-to-actual comparisons, expenditures were $19,527,630, which is nearly $2 million less than the budgeted $21,469,594.
Accounts and finances expenditures were $8,542,705, which is 14 percent less than the budgeted $9,964,399 with the decrease attributed to reductions in insurance premiums, equipment and office expenses, plus grant projects deferred or cancelled due to grants not being awarded or suspended by the state of Illinois.
Public affairs expenditures were $6,968,622, which is 7 percent less than the budgeted $7,521,974 with the decreases attributed to lower consultant fees, deferred computer equipment and lower costs than anticipated related to the village closing its 911 operation and joining the West Suburban Consolidated Dispatch Center in May 2017 to meet a state mandate.
In the management discussion and analysis (MD&A) section of the audit report, village officials paint a bleaker picture for the near future, citing the loss of revenue from the end of video gaming and the closing of Home Owners Buyers Outlet (HOBO), plus rising pension obligations.
"The numbers are what they are," Mayor Anthony Calderone said. "The community will have significant challenges ahead."
He said making up the loss of an estimated $300,000 in video gaming revenue and an estimated $150,000 in sales tax revenue from the closing of HOBO is "going to be a huge, huge task."
Pension obligations for all labor unions continue to grow and the village currently commits 50 percent of the annual levy to fund these obligations, officials said in the MD&A, noting the downward trend is likely to continue without help from the state and some additional revenue streams.
On the positive side, officials noted the village implemented some new revenue generators in 2018, including commuter parking rates, parking permits, tickets and fines, building permits and compliance fees, ambulance rates and charges for refuse services, which they expect will increase revenues in 2019, the first full year of the enhancements. Additionally, labor contracts for 2019 have been negotiated with favorable terms, they noted.
The village continues to explore cost-saving methods, including reductions in insurance premiums, fuel, telephone and credit card fees, officials said in the MD&A. Favorable terms were negotiated with the village's general liability carrier and health insurance carrier for 2019, and discussions occur on an ongoing basis with all vendors, they added. Officials also noted expected savings from closing the 911 operation and joining the consolidated dispatch center.
The village struck an optimistic note in the MD&A, citing infrastructure improvements such as the $7 million Roosevelt Road project, which they believe will spur economic development and continue what they term an "upward trend" in the housing market in the village, including such recently begun projects as a 56-unit senior living center on Circle Avenue and a 36-unit apartment building on Madison Street.
"I'm pleased with the audit," Calderone said. "The auditor's job is to present facts and thoroughness and to bring to our attention any significant discrepancies. Crowe has always performed a professional job."