Annual Audit Report
of the
ILLINOIS MUNICIPAL LEAGUE

Accountants' Report

Illinois Municipal League:

We have examined the consolidated balance sheet of the Illinois Municipal League as of December 31, 1987 and 1986, and the related consolidated statements of revenue, expenses, and changes in fund balance and changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the consolidated financial position of the Illinois Municipal League as of December 31, 1987 and 1966, and the results of its consolidated operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

June 21, 1988
Springfield, Illinois

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1987 AND 1986

	1987	1986
ASSETS
CURRENT ASSETS
Cash	$ 79,829	$ 48,157
Temporary cash investments (Note 2)	1,210,259	1,276,105
Accrued interest	6,200	786
Accounts receivable:
Loan program fee (Note 4)	370,011	128,640
Insurance service charges	24,602	15,350
Other	4,972	7,678
Prepaid pension expense (Note 5)	10,000	10,000
Other	4,880	3,802
Total current assets	1,710,753	1,490,518
FIXED ASSETS (Note 1-c and 3)	704,540	255,574
LOAN PROGRAM FEE RECEIVABLE (Note 4)		370,011
PREPAID PENSION EXPENSE (Note 5)	70,000	80,000
TOTAL. ASSETS	$2,485,293	$2,196,103
LIABILITIES AND FUND BALANCE
CURRENT LIABILITIES
Accounts payable	$ 19,505	$ 12,676
Unearned income:
Dues	180,765	153,951
Advertising	5,412	3,404
Other	4,168	1,212
Total current liabilities	209,850	171,243
FUND BALANCE	2,275,443	2,024,860
TOTAL LIABILITIES AND FUND BALANCE	$2,485,293	$2,196,103
See the accompanying notes

CONSOLIDATED STATEMENT OF REVENUE,
EXPENSES AND CHANGES IN FUND BALANCE
YEARS ENDED DECEMBER 31, 1987 AND 1986

	1987	1986
REVENUE
Membership dues	$ 326,037	$ 319,495
Illinois Municipal Review:
Advertising	30,775	3l,697
Subscriptions	2,187	1,180
Foreign fire Insurance service charges	285,856	261,056
Conferences	217,112	189,584
Publications	29,177	19,616
Interest on invested funds	128,500	106,564
Services and facilities fee (Note 6)	332,099	300,299
Loan program fee (Note 4)	-0-	731,250
Other	2,100	63
Total revenue	1,353,843	1,961,504
EXPENSES
Salaries - excluding legal services	288,899	280,755
Payroll taxes and contributions to
Illinois Municipal Retirement Fund	62,714	74,202
Automobile maintenance	1,946	1,479
Office supplies	18,585	20,804
Office expense	52,212	42,628
Travel	51,418	41,543
Postage	23,922	22,618
Memberships	621	980
Insurance	31,078	28,409
Illinois Municipal Review	83,150	74,385
Conference expense	178,572	178,005
Legal services	117,297	101,466
Publications	26,927	32,814
Dues - National League of Cities	27,264	27,088
Library	1,927	3,965
Accounting and auditing	21,505	21,993
Depreciation	32,949	30,329
Meetings and committees	45,053	54,537
Building repairs and maintenance	8,174	11,513
Equipment leasing and maintenance	23,823	25,465
Other	5,244	4,379
Total expenses	1,103,260	1,079,357
EXCESS OF REVENUE OVER EXPENSES	250,583	882,147
FUND BALANCE - BEGINNING OF YEAR	2,024,860	1,142,713
FUND BALANCE - END OF YEAR	$2,275,443	$2,024,860

CONSOLIDATED STATEMENT OF CHANGES
IN FINANCIAL POSITION
YEARS ENDED DECEMBER 31, 1987 AND 1986

	1987	1986
SOURCES OF FUNDS
Operations:
Excess of revenue over expenses	$250,583	$ 882,147
Add (deduct ) items not involving
working capital:
Depreciation	32,949	30,329
Loan program fee		(370,011)
Pension expense	10,000	10,000
Total sources of funds from operations	293,532	552,465
Decrease in long-term portion of loan prograal	370.011	________
Total aources of funds	663,543	552,465
USES OF FUNDS - Additions to fixed assets	481,915	97,139
INCREASE IN WORKING CAPITAL	$181,628	$ 455,326
CHANGES TO WORKING CAPITAL
INCREASES (DECREASES) IN CURRENT ASSETS
Cash	$ 31,672	$( 26,160)
Temporary cash investments	(65,846)	373,585
Interest accrued	5,414	( 4,263)
Accounts receivable	247,917	99,213
Other	1,078	315
Increase In current assets	220,235	442,690
INCREASES (DECREASES) IN CURRENT LIABILITIES
Accounts payable	6,829	3,742
Unearned income	28,822	( 17,156)
Other	2,956	778
Increase (decreaae) in current liabilities	38,607	( 12,636)
INCREASE IN WORKING CAPITAL	$181,628	$ 455,326

Continued on next page

August 1988 / Illinois Municipal Review / Page 21

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1987 AND 1986

1. SIGNIFICANT ACCOUNTING POLICIES

a. Principles of consolidation. The financial statements include the accounts of the Illinois Municipal League (League) and its wholly-owned subsidiary, the Illinois Municipal League Building Corporation.

b. Income recognition. Dues are considered earned pro rarta over the dues year for each member-municipality, or one-twelfth of the annual amount each month.

c. Property and depreciation. Property is carried at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the assets.

d. Investments. Investments are carried at amortized cost.

e. Reclassifications. Certain previously reported amounts for 1986 have been reclassified to conform to 1987 classifications.

2. TEMPORARY CASH INVESTMENTS

The temporary cash investments approximate market value and consist of the following:

	1987	1986
Certificates of deposit	$ 506,095	$ 306,223
Federal agency securities	704,164
U. S. Treasury bills		519,882
U. S. Treasury note subject to
bank repurchase agreement	_________	450,000
Total	$l,210,259	$l,276,105

3. FIXED ASSETS

Fixed assets at December 31 are as follows:

	1987	1986
Land	$ 49,865	$49,865
Building	175,995	175,995
Furniture and equipment	108,194	96,240
Automobiles	61,841	62,512
Construction in progress	459,156	________
Total	855,051	384,612
Accumulated depreciation	150,511	129,038
Fixed assets - net	$ 704,540	$ 255,574

See Note 8 for building purchased in 1987.

4. POOLED MUNICIPAL LOAN PROGRAM

In 1986, the League commenced sponsorship of the Illinois Municipal League Pooled Municipal Loan Program which provides low cost financing to the League's member municipalities. The League, acting as the Program Administrator, is to represent the Village of Woodridge by coordinating the process of making loans and managing the Program.

Upon the initial funding of the Program in 1986, the League earned a fee of $731,250. Of this amount, $232,599 was received in 1986 and $128,640 was received in 1987. The balance of $370,011 is expected to be collected from the bank trustee in 1988. In addition, the League is to receive an annual administration fee based on the amount of outstanding loans to participants. No such loans were outstanding as of December 31, 1987 or December 31, 1986.

5. PENSION PLAN

The League is a member of the Illinois Municipal Retirement Fund ("IMRF"), an agent-multiple-employer public employee retirement system. Substantially all employees are covered by the defined benefit plan with benefits based upon years of service and final compensation. Employees contribute 4.5% of their annual salary to IMRF and the League is required to contribute the remaining amounts necessary to fund the system using the actuarial basis specified by state statute.

At December 31, 1987, the actuaries for IMRF determined that the present value of the total pension benefit obligation, including vested benefits of $1,129,715, was $l,133,913. Net assets available for benefits at cost total $1,342,576 (market value is $1,294,378). The assumed rate of return used to compute the above was 7%.

Total contributions by the League to IMRF was $35,680 which consisted of $10,956 normal cost, $20,862 amortization of the unfunded accrued liability, and $3,862 death and disability costs. The unfunded liability is being amortized over a 10-year period. In addition to the funding of the pension costs accrued, the League elected to fund an additional $100,000 in 1985. The prepaid pension contribution is being amortized to future periods since such prepayment reduces future funding requirements of the plan.

Certain changes in actuarial assumptions, benefit provisions and methodology were made in 1987 in determining the pension benefit obligation. Separate dollar effects of each change were not economically determinable on an individual employee basis by IMRF.

6. RELATED PARTY TRANSACTIONS

The League provides services and facilities to a related organization, the Illinois Municipal League Risk Management Association. The Association, which has a common board of directors with the League, is an unincorporated not-for -profit association that provides a cooperative program of self-insurance for participating Illinois municipalities. The League's fee is based on contributions and interest earned by the Association.

7. INCOME TAXES

The League is exempt from income taxes and therefore no provision for income taxes is required.

8. CONSTRUCTION IN PROGRESS

In May 1987, the League purchased a new headquarters building in Springfield, Illinois for $380,000. Improvements are to be made to the building during 1987 and 1988 at an approximate cost of $950,000. As of December 31, 1987, the League has incurred $79,156 of costs towards the planned improvements.

Page 22 / Illinois Municipal Review / August 1988