REND LAKE CONSERVANCY DISTRICT
MANAGEMENT’S DISCUSSION AND ANALYSIS
April 30, 2011
The Rend Lake Conservancy District’s (District) discussion and analysis is designed to identify
the significant financial issues within the District, provide a summary of the District’s financial
activity, discuss variances in the District’s financial position, and discuss individual fund issues
and/or concerns.
This narrative overview and analysis of the financial activities of the District is for the fiscal year
ended April 30, 2011. We encourage readers to consider this information in conjunction with the
District’s financial statements, which follow.
The District implemented new reporting standards consistent with Governmental Accounting
Standards Board Statement #34 in the fiscal year ending April 30, 2004.
USING THIS REPORT
The following chart is provided for your review:
Management’s Discussion
and Analysis
Basic Financial Statements
Government-wide
Financial Statements
Fund Financial
Statements
Required Supplementary
Information (other than MD&A)
The financial statement’s focus is on both the District as a whole government-wide and on the
major individual funds. Both perspectives (government-wide and major fund) allow the reader
to address relevant questions and enhance the District’s accountability.
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OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the District’s basic
financial statements. The District’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 themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad
overview of the District’s finances. They are comprised of the Statement of Net Assets and
Statement of Activities.
The Statement of Net Assets presents information on all of the District’s assets and liabilities,
with the difference between the two reported as net assets. Over time, increases or decreases in
net assets may serve as a useful indicator of whether the financial position of the District is
improving or deteriorating. This statement combines and consolidates governmental fund’s
current financial resources with capital assets and long-term obligations.
The Statement of Activities presents information showing how the District’s net assets changed
during the fiscal year. All changes in net assets are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of the related cash flows. Thus
revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).
Both of the financial statements have separate sections for two different types of programs or
activities. These two types of activities are:
Governmental Activities – The activities in this section are mostly supported by taxes and
charges for services. The governmental activities of the District include General Administration.
Enterprise (Business-Type) Activities – These functions normally are intended to recover all or a
significant portion of their costs through user fees and charges to external users of goods and
services. These business-type activities of the District include Inter-City Water, Recreation and
Sewer Treatment.
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 District, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All of the funds of the District can be divided into two categories:
governmental funds and proprietary funds.
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Fund Financial Statements – Continued
The fund financial statements provide detail information about each of the District’s most
significant funds, called major funds. The concept of major funds, and the determination of
which are major funds, was established by GASB Statement 34 and replaces the concept of
combining like funds and presenting them in total. Instead, each major fund is presented
individually. All of the District's funds are considered major funds.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements.
Required Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplementary information providing a budgetary comparison statement for the
general fund.
STATEMENT OF NET ASSETS
Condensed Statement of Net Assets
Governmental Activities
2011
2010
Current and Other Assets
Noncurrent Assets
Total Assets
Business-Type Activities
2011
2010
Total Primary Government
2011
2010
$ 1,320,450 $ 1,270,847 $ 8,489,788 $ 7,006,591 $ 9,810,238
1,264,906
1,285,184
46,703,754
47,484,075
47,968,660
$ 8,277,438
48,769,259
2,585,356
2,556,031
55,193,542
54,490,666
57,778,898
57,046,697
Current Liabilities
Non-current Liabilities
593,521
-
524,123
94,200
1,468,542
10,294,865
3,848,888
9,688,528
2,062,063
10,294,865
4,373,011
9,782,728
Total Liabilities
593,521
618,323
11,763,407
13,537,416
12,356,928
14,155,739
1,264,906
726,929
1,285,184
652,524
36,481,527
38,970
6,909,638
37,037,799
37,186
3,878,265
37,746,433
38,970
7,636,567
38,322,983
37,186
4,530,789
$ 1,991,835 $ 1,937,708 $ 43,430,135 $ 40,953,250 $ 45,421,970
$ 42,890,958
Net Assets:
Invested in Capital Assets
Net of Debt
Restricted
Unrestricted
Total Net Assets
Normal Impacts
There are four basic transactions that will affect the Statement of Net Assets summary
presentation.
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Net Results of Activities – This can impact all classifications of the Statement of Net Assets,
current assets and liabilities, long-term assets and liabilities and net assets. In this fiscal year the
change in net assets was $54,127 for the governmental activities and $2,518,068 for the business
type activities.
Spending Borrowed Proceeds or Current Assets on New Capital Assets – Spending
borrowed proceeds will increase capital assets and liabilities and will have no impact on net
assets. Spending current assets (cash and investments) will increase capital assets and decrease
current assets. In addition, it will increase net assets invested in capital assets, net of related debt
and decrease unrestricted net assets. Capital assets were purchased this fiscal year utilizing
current assets and $478,974 of borrowed funds.
Reduction of Capital Assets through Depreciation – Depreciation will reduce capital assets
and invested in capital assets, net of debt. Depreciation expense in this fiscal year was
$2,218,377.
Principal Payment on Debt Secured by Capital Assets – which will (a) reduce current assets
and liabilities and (b) reduce unrestricted net assets and increase invested in capital assets, net of
debt. Principal paid on notes payable in this fiscal year was $273,861 excluding notes paid off
through refinancing.
Statement of Activities
The following condensed Statement of Activities for the fiscal year ended April 30, 2011
displays the revenues and expenses for the current fiscal year.
Governmental Activities
2011
2010
REVENUES
Program Revenues:
Charges for Services
Operating Grants and
Contributions
Capital Grants and
Contributions
General Revenues:
Property Taxes
Other Taxes
Investment income
Miscellaneous
Total Revenues
EXPENSES
General Government
Water
Recreation
Sewage
Total Expenses
$
Business-Type Activities
2011
2010
Total Primary Government
2011
2010
- $
- $ 10,850,704 $ 9,728,906 $ 10,850,704
-
-
-
-
-
-
-
-
854,154
1,204,979
854,154
1,204,979
395,463
83,891
6,397
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485,763
368,728
68,005
8,843
1,565
447,141
74,935
83,057
73,727
11,936,577
131,056
120,299
47,219
11,232,459
470,398
83,891
89,454
73,739
12,422,340
499,784
68,005
129,142
48,784
11,679,600
911,636
911,636
895,334
895,334
6,756,951
1,756,653
424,905
8,938,509
5,758,935
1,781,229
420,116
7,960,280
911,636
6,756,951
1,756,653
424,905
9,850,145
895,334
5,758,935
1,781,229
420,116
8,855,614
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$ 9,728,906
Change in Net Assets
Before Transfers
Transfers
Change in Net Assets
Net Assets, Beginning
of the Year - restated
Net Assets, End of the
Year
(425,873)
480,000
54,127
2,572,195
2,572,195
2,823,916
2,823,986
42,849,775
40,066,972
$ 1,991,835 $ 1,937,708 $ 43,430,135 $ 40,953,250 $ 45,421,970
$ 42,890,958
1,937,708
(448,193)
487,200
39,007
1,898,701
2,998,068
(480,000)
2,518,068
40,912,067
3,272,179
(487,200)
2,784,979
38,168,271
OVERALL FINANCIAL POSITION
Results of Operations
Net asset increases of $2,572,195 in this fiscal year and $2,823,986 in the prior fiscal year
continue to improve the financial position of the District. Those increases included grant income
in both years. Without the grant income the increases would have been $1,718,041 this year and
$1,619,007 last year. Cash, cash equivalents and investments increased by $1,275,314.
Investment income decreased from $129,142 last year to $89,454 this year because interest rates
continue to decline. Compared to the prior year, operating revenue for the enterprise funds
increased by $741,362 ($1,092,184 excluding grant income). Operating expenses increased by
$924,317, and non-operating expenses increased by $83,950 resulting a decrease in change in net
assets in the enterprise funds of $266,911 compared to the prior year.
Property Taxes
The District’s property tax revenue in the fiscal year was $470,398, less than 5% of the District’s
total revenue. On the most recent levy the District tax for a property with a fair market value of
$100,000 amounted to only $26 a year. The tax levy of 2004 payable in 2005 was $571,000.
The Board of Trustees has reduced the levy four of the last five years. The levy in 2010 payable
in 2011 is $454,000.
THE DISTRICT'S FUNDS
Governmental Fund
The District has only one governmental fund. It is the administrative fund for the District. In the
fiscal year ended April 30, 2011 receipts for the fund came from Property Taxes ($395,463),
Personal Property Replacement Tax ($83,891), Interest and Miscellaneous Income ($6,409) and
Administration Fees ($480,000) from the other funds.
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Governmental Fund
Net assets increased during the fiscal year by $54,127. Actual revenues were 105% of budgeted.
Actual expenditures were 95% of budgeted expenses. An increase in net assets was achieved in
the year despite a decrease in management fees.
Proprietary Funds
Inter-City Water
Inter-City Water is comprised of a water plant and water distribution system. During the year,
34 wholesale customers purchased 4,783,399,815 gallons at an average price of $1.67 per
thousand gallons. Approximately 1,200 retail customers purchased 172,419,600 gallons at an
average price of $3.55 per thousand gallons. Total sales in the year were up from the prior year
by 554 million gallons (12.6%) and $1,068,188 (14.1%).
Wholesale sales increased 543 million gallons (12.8%). A new customer, the City of Marion,
accounted for 504 million of the increase. Retail sales were up by 11 million gallons. Among
retail customers residential sales were up 4 million gallons (5.3%) while retail commercial sales
were up 7 million gallons (8.5%).
Sales in dollars increased 1.5% more than the increase in gallons sold because of a rate increase.
The average increase in cost to customers per 1,000 gallons was 2 cents for wholesale ($1.67), 4
cents for commercial retail ($2.30), and 7 cents for residential retail ($5.16). The impact of the
rate increase was reduced by an increase in sales. Average cost decreases to a customer each
time they increase volume enough to reach another price point.
Net Assets increased during the fiscal year by $2,475,188 compared to $2,811,493 in the prior
fiscal year. Grant income accounted for $854,154 of the increase in this fiscal year and
$1,199,408 of the increase in the last fiscal year. The City of Marion was a customer for nine
months of the fiscal year. Water sales are expected to increase next year by 200 million gallon
because Marion will be a customer all year. Additional growth in water sales is expected to be
1% or less.
A rate study done in 2007 established that retail water customer rates were below the cost
incurred to serve them. A rate and minimum increase of approximately 7% was implemented on
May 1, 2008 with additional 2% to 2.5% increases on May 1, 2009, 2010, 2011, and 2012.
Wholesale water rate increases of 2% to 2.5% are scheduled for May 1, 2011 and 2012.
The Marion Connection project was completed and placed in service August 1, 2010 at a total
cost of $3,655,266. Grants from EDA and Illinois EPA of $2,053,562 along with a loan from
Illinois EPA of $1,296,485 and District cash of $305,219 paid for the project.
The membrane building addition and the upgrade portion the Plant Expansion/Upgrade project
was completed and placed in service August 31, 2010 at a total cost of $19,610,942. The
membrane expansion is complete but not placed in service because it will not function as
designed. Cost incurred to date for the inoperable membrane system and the building addition
that houses it is $5,037,690. Pilot studies to find a chemistry that will allow the use of both the
sand filters and membranes are still ongoing. Until such time as a solution is found or the
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membranes are replaced with additional sand filters the District’s ability to add new wholesale
customers is limited.
Recreation
The Recreation Fund is comprised of three departments including the Golf Course and the
Lodge/Condo complex, which provide recreation opportunities and promote tourism in the area,
and Recreation Central/Leasing, which provides income and recreation opportunities through the
leasing of the restaurant, shooting complex, farm land, apartment land and oil royalties.
Net assets increased by $91,187, after an increase last year of $36,606. In the last five years fund
balance has increased by $245,738. Cash flow has been positive in all of the last five years
enabling the fund to reduce debt by $740,961, increase operating cash by $442,679, and make
equipment purchases and facility upgrades of $744,692.
Golf course maintenance is being deferred to offset reduced golf revenues. Seasons Condo
revenues continue to increase in part as a result of target marketing to construction firms with
workers in the area. Lease income remains constant with increases in farm rent offsetting the
lack of rent from the restaurant and shooting complex. Oil royalty revenue fluctuates with the
price of crude but has been up overall in the last five years.
Positive net assets indicate the Recreation Fund can in the current environment sustain itself.
Prior to the last five years stand alone sustainability was in question. Future events, that
adversely affect the golf course, lodging facilities or the restaurant, could affect sustainability,
because each department is interrelated and dependant upon the other.
Sewage Treatment System
Net assets decreased by $48,307 after a loss of $63,120 last year. Revenue is still not sufficient
to cover depreciation, an indication the fund is not sustainable long-term as currently structured.
Two small communities and seven commercial customers in the vicinity of Rend Lake are served
by the fund. Departments of the State of Illinois represent 77% of the billing. Those
departments are paying late and are currently not paying interest and maintenance charges.
Maintenance charges accessed and unpaid are for damages to the sewage system by materials
improperly put into the system per District ordinances.
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CAPITAL ASSETS AND DEBT ADMINISTRATION
As of year-end, the District had $78,167,386 invested in a variety of capital assets and
$3,717,217 invested in projects uncompleted, as reflected in the following schedule.
Governmental Business-type
Activities
Activities
Property, Plant and Equipment
Land
Construction in Progress
Accumulated Depreciation
$
Total
$
Total
Activities
1,973,437 $ 74,706,553 $ 76,679,990
925,323
562,073
1,487,396
3,717,217
3,717,217
(1,633,854)
(32,282,089)
(33,915,943)
1,264,906 $
46,703,754 $
47,968,660
In the fiscal year ending April 30, 2004 the District revised the manner in which it identifies
capital assets. The policy and threshold levels were altered to enable the District to conform to
more appropriate accounting standards. More detailed information regarding capital assets is in
Note 5 of the financial statements.
Debt Outstanding
As of year end, the District had outstanding notes and bonds as follows:
Sewage Treatment
Golf Course
Lodge
Condos
Whittington Bonds
ILEPA
$ 985,612
1,090,890
818,305
1,596,780
324,000
5,406,640
Principal payments of $273,861 were made during the fiscal year. In addition two loans in
Sewer Treatment totaling $1,038,378 were refinanced into one new loan. Aside from
refinancing the only new loan proceeds during the year was on an IEPA loan for Inter-City
Water in the amount of $478,974. Loans forgiven by IEPA and classified as grant receipts
during the year were $432,162. More detailed information regarding long-term debt is in Note 8
of the financial statements.
FINANCIAL CONTACT
The District’s financial statements are designed to present users (citizens, taxpayers, customers
and creditors) with a general overview of the District’s finances and to demonstrate the District’s
accountability. If you have questions about this report or need additional information, please
contact the District’s Comptroller, P.O. Box 907, Benton, Illinois 62812.
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