From the Village of Fox River Grove:
Village Becomes a Debt Free Community
FOX RIVER GROVE— At its December 3rd meeting, the Village Board took action to eliminate all of the Village’s outstanding debt, $3,262,746.25 to be exact, a move that will yield the Village approximately $280,000 in net interest savings over the next ten years.
$2.615 million of the debt payment was for the recently constructed Public Works Facility at the corner of Lincoln and Hillcrest and the remaining $648,000 was for a road resurfacing project that took place in 2010.
Of municipalities with a population of 4,700 or greater, being debt free is rare.
According to data found on the Illinois Comptroller website, 245 of the 246 communities reported to have some form of debt in the 2018 fiscal year.
Assuming no other municipalities have paid off all their debt in the last year and a half, Fox River Grove would become only the second municipality out of 246 with the debt free status.
“We are now proud to say that we’ve finally become a debt free Village,” said Village President Nunamaker.
“This was made possible by the accumulation of operational cost savings over the past several years and fiscally responsible decision making by the Village Board,” Nunamaker continued.
Since 2013, it is estimated that the Village has achieved an accumulated operational savings of approximately $2.3 million through various cost savings measures such as
- reducing staffing levels through gained operational efficiency
- applying technology to achieve those efficiencies, and
- turning to the private sector for services when a cost savings opportunity arose.
These operational cost savings will continue to save the Village an estimated $600,000 annually in future years.
That sounds great, with the exception of the mysterious “applying technologies”. That could mean anything from simply using a phone (instead of running all over the place) to get things done to some kind of Ai. On second thought, now number one “reducing staff” looks very suspicious in light of that train of thought. Has the Grove become some kind of borg?
Did FRG pay up to date on the funding of it’s police pension, $65k wasn’t it?
TOTAL BS.
There are all kinds of obligations (pensions, bonds, etc.) that incur liabilities aka DEBT!
The Village of Fox River Grove press release ignores their own FY 2019 AFR which states long term debt includes the IMRF pension unfunded liability of $439,821 (94% funded) & Downstate Fire pension unfunded liability of $5,972,582 (36% funded), which is a total unfunded pension liability of $6,412,403.
In other words rather than being debt free after taking “…action to eliminate all of the village’s outstanding debt, $3,262,746.25 to be exact…” the village has $6,412,403 in pension debt remaining.
+++++++++
Here is one definition of unfunded liabilities.
“Unfunded liabilities are debt obligations that do not have sufficient funds set aside to pay the debt.”
http://www.thebalance.com/unfunded-liabilities-definition-and-examples-4159564
+++++++++
Here is the Village of Fox River Grove annual financial report (AFR) for the Fiscal Year Ended April 30, 2019.
http://www.foxrivergrove.org/egov/apps/document/center.egov?view=item;id=1816
+++++++++
Here is the December 4, 2019 Village of Fox River Grove press release titled, “Village Becomes a Debt Free Community.”
http://www.foxrivergrove.org/egov/apps/document/center.egov?view=item;id=1862
+++++++++++
Furthermore 36% funded is below average for a Downstate Fire pension fund and awful by any measure.
The village would better serve its residents by explaining all forms of long term debt rather than cherry picking and proclaiming itself debt free by ignoring its own AFR.
Inadvertently omitted the Downstate Police Pension debt in the above comment.
The Downstate Police Pension debt is $5,972,582 (36% funded).
36% funded is awful by any measure, and is lower than the average Illinois Downstate Police Pension Fund.
++++++++
IMRF Pension Debt $439,821
Downstate Police Pension Debt $5,972,582
Total Village of Fox River Grove IMRF & Downstate Police Pension Debt: $6,412,403.
+++++++++
What does pension debt of $6,412,403 mean?
That is the unfunded liability (net pension liability).
What does that mean?
In layman’s terms that is the amount of money that should be in the fund, but is not.
It is missing money.
Some actuaries and financial types disagree with that definition for various reasons.
However precise technical definitions are not conducive to the general public comprehending the big picture.
+++++++++
If the pension funds were 100% funded, that $6,412,403 would be in the investment funds.
But the $6,412,403 is not in the investment funds.
++++++++++
100% of the underfunded amount is the responsibility of the employer and thus taxpayers and fee payers, per state law and Illinois Supreme Court majority interpretation of state law.
++++++++++
One major problem with underfunded pensions, as with any debt, is interest.
Interest makes the cost of any product more expensive, and pensions are no exception.
++++++++++
Fox River Grove also has OPEB debt.
That is covered at the below URL, in a comment from around 1.5 hours ago.
It may take awhile for the comment to appear online due to the occasional posting lag of some blog comments.
http://mchenrycountyblog.com/2019/12/13/is-fox-river-grove-really-debt-free-no
+++++++++
The Cook County Treasurer has a debt disclosure ordinance that indicates pension unfunded liabilities per property taxing district on a report.
https://cookcountytreasurer.com/PDFs/DDO/debtdisclosuredata.pdf
It’s better than nothing but could be improved.
The following are suggested improvements:
One column for each type of borrowing instrument (general obligation bonds, debt certificates, TIF notes, etc.), plus an associated column for the interest associated with each type of debt (one column for GO bond interest, one column for debt certificate interest, one column for TIF not interest, etc.).
A consolidated column for all types of borrowing debt that includes principal and interest.
One column for each type of pension unfunded liability (Downstate Police, Downstate Fire, IMRF, and if there are others list them).
A consolidated column for all types of pension unfunded liabilities.
One column for each type of OPEB unfunded liability (employer sponsored plan, TRIP / THIS proportionate share for school districts, CIP proportionate share for community colleges, etc.).
A consolidated column for all types of OPEB.
A grand total column of all types of long term debt (borrowing instruments, unfunded pension liabilities, unfunded OPEB)that includes principal and interest.
+++++++++++++
The Cook County Treasurer also has a Property Tax Portal, with various types of debt listed on property tax bills.
cookcountypropertyinfo.com/newsarticle.aspx?articleid=517
youtube.com/watch?v=Z_FmNsrpV68
cookcountypropertyinfo.com
+++++++++++++
McHenry County does not have a debt disclosure ordinance or property tax portal containing borrowing instrument debt, pension debt, and OPEB debt.
+++++++++++++
The Illinois Comptroller Warehouse has a three year archive of annual audits (annual financial reports, comprehensive annual financial reports) and TIF reports for each property taxing district.
The annual audits contain the borrowing instrument, pension, and OPEB debt.