Financial, Compliance, and Program Audit
State of Illinois
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SYNOPSISThe Public Utilities Act (220 ILCS 5/8-403.1) requires the Auditor General to conduct an annual financial, compliance, and program audit of distributions received by any municipality from the Municipal Economic Development Fund. Qualified solid waste energy facilities are required to pay into the Fund $0.0006 per kilowatt hour of electricity the facilities sold to electric utilities.
Each audit is to be for distributions from the Fund for the immediately preceding year. This is the fourth audit conducted under this requirement. This audit covers distributions from the Fund during calendar year 2002.
The Village of Robbins was the only entity to receive distributions from the Fund. The audit concluded that:
The Village of Robbins is the only entity to receive distributions from the Municipal Economic Development Fund. In calendar year 2002, Robbins cash receipts from the Municipal Economic Development Fund (MEDF) totaled $374,067. Robbins earned $186 in interest income and reimbursed the MEDF account for previous expenditures totaling $35,000. Robbins cash disbursements from the Fund receipts totaled $411,464 in calendar year 2002. Robbins began calendar year 2002 with a cash balance of $4,810 in its bank account for Municipal Economic Development Funds and ended the year with a balance of $2,600 in the account.
Based on our review of documentation provided by the Village of Robbins, we concluded that Robbins calendar year 2002 expenditures of Fund receipts generally appeared to be consistent with Public Utilities Act requirements. Specific disbursements were made for employee payroll and health insurance expenses; Village water expenses; legal services; appraisals of properties within the Village; and other general Village expenses including an annual festival, routine maintenance, and repairs.
As in our prior audit of 2001 expenditures, we questioned whether one expenditure made in 2002 met the Public Utilities Act's guidelines. That expenditure was a $12,715 payment to a plaintiff as part of a lawsuit settlement against the Village. It is questionable whether this expenditure complies with the requirements established by the Public Utilities Act regarding the allowable uses of Municipal Economic Development Funds. The Act states that MEDF distributions may be used only to:
promote and enhance industrial, commercial, residential, service, transportation, and recreational activities and facilities within its boundaries, thereby enhancing the employment opportunities, public health and general welfare, and economic development within the community, including administrative expenditures exclusively to further these activities.
The Act also lists specific purposes for which the MEDF distributions cannot be used.
Village officials stated that the lawsuit settlement payment in 2002 preceded our fieldwork for the 2001 audit, and no settlement payments had been made since we raised the issue in May 2002. They stated that Robbins' use of the MEDF distributions is consistent with the Public Utilities Act, noting that funds were not used for any purpose specifically prohibited by the Act.
We referred the questionable expenditure from the audit of 2001 expenditures to the Office of the Attorney General in August 2002, as required by the Public Utilities Act. As of August 2003, the Attorney Generals office had not yet completed its review of this expenditure to determine whether it complied with Public Utilities Act requirements. Therefore, we will also refer the lawsuit settlement payment made during 2002 to the Office of the Attorney General for review.
In our prior audit, we recommended that the Village adopt more detailed policies and procedures to ensure that Municipal Economic Development Funds are used consistently with the requirements of the Public Utilities Act. In July 2003, Village officials adopted a more detailed spending policy on the use of Municipal Economic Development Funds.
THE MUNICIPAL ECONOMIC DEVELOPMENT FUND
The Public Utilities Act was amended in January 1999 to create the Municipal Economic Development Fund. The Municipal Economic Development Fund is a trust fund created outside the State treasury to receive and maintain payments from qualified solid waste energy facilities that sell electricity to electric utilities. Each qualified facility must make payments of $0.0006 per kilowatt hour of electricity it produces and sells to the electric utilities.
The State Treasurer is required to make quarterly distributions from the Fund to each city, village, or incorporated town that has within its boundaries an incinerator that:
According to information from the Illinois Commerce Commission and the Illinois Environmental Protection Agency, Robbins had the only operating incinerator in the State that met these criteria and was entitled to receive disbursements from the Municipal Economic Development Fund. (pages 13)
EXPENDITURE OF DISTRIBUTIONS FROM
THE MUNICIPAL ECONOMIC DEVELOPMENT FUND
Digest Exhibit 1
Fund Distribution Received
Total CY 02 Cash Disbursements:
(Deficiency) of Cash Receipts Over Cash Disbursements:
Cash Balance End of CY01:
Cash Balance as of 12/31/02:
|Note: Figures rounded to nearest dollar.
Totals may not add due to rounding.
* Other Village funds reimbursed $35,000 to the MEDF account during CY02.
Source: Village of Robbins.
The State Treasurer made four quarterly Municipal Economic Development Fund payments to Robbins in calendar year 2002 totaling $374,067 (see Digest Exhibit 1). Robbins earned $186 in interest income on the funds received and repaid its MEDF account for prior disbursements totaling $35,000. These prior disbursements had been used to pay other Village expenses. Digest Exhibit 1 also shows that Robbins disbursed $411,464 in Municipal Economic Development Fund receipts during calendar year 2002.
Specific disbursements were made for employee payroll and health insurance expenses, Village water expenses, appraisals of Village property, payment to a plaintiff in a lawsuit against the Village, the Villages annual festival, acquisition of legal services, and general Village expenses. General expenses included repair of police and fire vehicles, telephone bills, and office supplies. Digest Exhibit 2 summarizes the amount and purpose for Robbins cash disbursements from the Municipal Economic Development Fund during calendar year 2002.
Digest Exhibit 2
|Village employee payroll expenses
Village water bills paid to City of Chicago
General Village expenses
Village insurance premiums and deductibles
Village annual festival
Lawsuit settlement payment
Property appraisal services
Village audit for year ended April 30, 2000
Legal services related to delinquent tax properties
|Note: Figures rounded to nearest dollar. Total
may not add due to rounding.
Source: Village of Robbins.
Based on our review of documentation provided by the Village of Robbins, we concluded that most of Robbins calendar year 2002 expenditures of Fund receipts appeared to comply with Public Utilities Act guidelines. However, we questioned whether the use of Municipal Economic Development Funds to make a payment to a plaintiff in a settlement agreement was in accordance with the Public Utilities Act guidelines. The payment for $12,715 was the final payment of a $33,000 settlement reached in October 1998. In our previous audit (of calendar year 2001), we questioned a similar payment of $46,000 to settle a different lawsuit.
Village officials stated that Robbins' use of the MEDF distributions for the lawsuit settlement agreement is consistent with the Public Utilities Act.
In August 2002, we referred the questionable payment from the audit of calendar year 2001 to the Attorney General, as required by the Public Utilities Act. As of August 2003, the Attorney Generals office had not yet completed its review of that payment to determine if it was consistent with the provisions of the Public Utilities Act. Consequently, we will refer the $12,715 settlement agreement payment made in calendar year 2002 to the Attorney General for review.
In our previous audit, we recommended that Robbins adopt more detailed policies and procedures on allowable uses of Municipal Economic Development Funds. Robbins officials provided a revised detailed spending policy to address concerns raised; this policy was adopted by Village trustees on July 22, 2003. (pages 3-6)
The Village of Robbins response to the audit states that it believes all expenditures were in compliance with the Public Utilities Act. The full text of the response is included as Appendix C of the report.
WILLIAM G. HOLLAND