REPORT DIGEST
VILLAGE OF ROBBINS’ USE OF MUNICIPAL ECONOMIC
DEVELOPMENT FUND MONIES
FINANCIAL,
COMPLIANCE, & PROGRAM AUDIT
For the Year Ended:
December 31, 2010
Release Date: March 2012
Summary of Findings:
Total this audit: 1
Total last audit: 1
Repeated from last audit: 1
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
To obtain a copy of the Report contact:
Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703
(217) 782-6046 or TTY (888) 261-2887
This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov
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SYNOPSIS
The 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 (MEDF). 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
twelfth audit conducted under this requirement.
This audit covers distributions from the Fund during calendar year
2010. The Village of Robbins was the
only entity to receive distributions from the Fund. The audit concluded that:
• In 2010, Robbins received $386,132.93 in quarterly
disbursements from the Fund.
• Robbins used these monies for specific disbursements such
as Village payroll, employee insurance expenses, and general Village
expenses. Based on our review of
documentation provided by the Village of Robbins, we concluded that Robbins’
calendar year 2010 expenditures of MEDF receipts
appeared to be consistent with Public Utilities Act requirements.
• Robbins officials have not yet calculated and transferred the interest earned on a $1.6 million Department of Commerce and Economic Opportunity grant deposited into the Village’s MEDF fund in April 2007. The Public Utilities Act requires that MEDF monies be held in a “separate account.”
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 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 facilities
make payments to the Department of Revenue, which deposits the payments into
the Fund. The Department may assess
penalties and interest if the facilities do not submit the payments.
Amendments added by Public Act 94-836 require that the
Treasurer compare the monthly amount received to the amount received for the
corresponding month in 2002. If the amount
received in 2002 is greater, the difference is to be transferred from the
General Revenue Fund to the MEDF. A total of $286,806.98 was transferred in
2010.
The State Treasurer is required to make quarterly
distributions from the Fund to each eligible municipality. Prior to August 2009, an eligible city,
village, or incorporated town had to have within its boundaries an incinerator
that:
(1) uses, or on the effective date of Public Act 90-813 [January
29, 1999], used municipal waste as its primary fuel to generate electricity;
(2) was determined by the Illinois Commerce Commission (ICC) to
qualify as a qualified solid waste energy facility prior to the effective date
of Public Act 89-448 [March 14, 1996]; and
(3) commenced
operation prior to January 1, 1998.
According to information from the ICC 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.
Public Act 96-449, effective August 14, 2009, changed the
requirements for a municipality that is eligible to receive funds. An eligible municipality now must be located
in Cook County and must have “approved construction of an incinerator within
its boundaries that will burn recovered wood processed for fuel to generate
electricity.” An official at IEPA
confirmed that the plant in Robbins is the only place in Cook County with a
permit to burn clean wood recovered from construction and demolition debris on
a permanent basis. (pages 2–3)
EXPENDITURE OF FUNDS FROM THE MUNICIPAL ECONOMIC DEVELOPMENT
FUND
The Village of Robbins is the only entity to receive
distributions from the Municipal Economic Development Fund. In calendar year 2010, Robbins’ net cash
receipts from the Municipal Economic Development Fund (MEDF)
totaled $386,132.93 and the Village earned $17.51 in interest income on monies
deposited into its MEDF account. Digest Exhibit 1 shows that Robbins disbursed
$386,148.54 in Municipal Economic Development Fund receipts during calendar
year 2010. Robbins began the year with a
cash balance of $56.99 in its bank account for Municipal Economic Development
Funds and ended the year with a balance of $58.89 in the account.
The Public Utilities Act establishes requirements regarding
the allowable uses of Municipal Economic Development Funds (220 ILCS
5/8-403.1(j)). 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. Based on our review of documentation provided
by the Village of Robbins, we concluded that Robbins’ calendar year 2010
expenditures of MEDF receipts appeared to be
consistent with Public Utilities Act requirements. Specific disbursements were made for employee
payroll; employee insurance expenses; purchase and repair of Village vehicles;
repairs to Village property; and other general Village expenses. Digest Exhibit 2 summarizes the amount and
purpose for Robbins’ cash disbursements from the Municipal Economic Development
Fund receipts during calendar year 2010.
In April 2007, Robbins officials deposited $1.6 million in
grant funds it received from the Department of Commerce and Economic
Opportunity into its MEDF account, resulting in a
commingling of the funds for approximately one month. The Public Utilities Act requires that MEDF monies be held in a “separate account.” When the grant monies were removed from the
Village’s MEDF account, Village officials did not
properly allocate and transfer the amount of interest earned on the grant
monies out of the MEDF account. As of October 2011, Village officials still
had not calculated the interest earned on the grant funds and transferred it to
the proper account. We recommended that
Village officials calculate the amount of interest earned by the grant funds
and transfer that amount to the proper fund.
We audited the Village of Robbins Statements of Cash
Receipts from the Municipal Economic Development Fund and Cash Disbursements
from those Cash Receipts for the year ended December 31, 2010. The Village of Robbins was not able to
provide us with complete results of its financial audits of the Village of
Robbins for the year ended April 30, 2010, and the year ended April 30,
2009. Our audit was delayed several
months while we attempted to obtain these documents from the Village. We concluded that, except for the effects of
such adjustment or disclosures, if any, as might have been determined to be
necessary had we been able to consider the complete audit results, the
financial statement presents fairly, in all material respects, the cash
receipts and cash disbursements made from those receipts for the year ended
December 31, 2010. Appendix B to the
full report contains the Independent Auditors’ Report. (pages
4-8)
AGENCY RESPONSE
The Village of Robbins responded that it has relied on
Municipal Economic Development funding to supplement municipal operations due
to its distressed financial condition.
Village officials noted that their current financial plight is evident
by the Village’s inability to provide timely and recent audit reports of the
Village to OAG auditors. They also noted
that as they revamp services and overall financial operations to better reflect
current and acceptable standards, it is their belief that this will be the last
audit reflecting reoccurring and unresolved discrepancies of the past. The full text of the Village’s response is
included as Appendix C of the report.
WILLIAM G. HOLLAND
Auditor General
WGH:BH
This audit was conducted by the staff of the Office of the Auditor General.