TRANSMITTAL LETTER FOR BOARD MEETING OF AUGUST 6, 2020
COMMITTEE ON BUDGET AND EMPLOYMENT
Mr. Brian A. Perkovich, Executive Director
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Report on Budgetary Revenues and Expenditures for the second quarter of 2020, ended June 30, 2020
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Dear Sir:
Attached is a report of revenues and expenditures for the second quarter of 2020, ended June 30, 2020. This report is prepared on an unaudited budgetary basis of accounting.
The actual second quarter 2020 Corporate Fund net tax revenue of $133.5 million is 51.0 percent of the budgeted revenues and is $4.2 million above the collections for the same period in 2019. PPRT allocations to the Corporate Fund totaled $4.8 million during the second quarter, $2.7 million less than the same period in 2019 and is expected to end the year $2.8 million, or 14 percent, under budget. Actual Corporate Fund non-tax revenue for 2020 includes the following: user charge income of $26.4 million, TIF surplus distributions of $15.0 million, and rental and easement income of $11.1 million. We continue to monitor user charge revenues closely and are now cautiously optimistic that revenues will be near budget at the end of the year but expect that refunds will impact 2021 revenues.
The 2020 second quarter expenditures of $153.9 million are 38.6 percent of the $398.2 million Corporate Fund budget. Year-end expenditures are expected to be near $353 million, or 89 percent of the budgeted appropriation and flat to 2019 expenditures. Energy and healthcare costs, two of the primary expenditure drivers, are monitored closely throughout the year. Energy expenditures (electricity and gas) in 2020 are 18.1 percent lower than the same period in 2019. We do not expect the trend to continue for the remainder of the year. Healthcare costs to date are 10.9 percent lower than the same period in 2019. In general, health care expenses are down because elective surgeries/procedures were not being performed during April and May. This has resulted in lower costs for outpatient and hospital services across the plans. This was particularly evident in the retiree population where the cost of these services is down approximately 25%. In addition, costs were impacted by the almost complete closure of dental and vision provider offices during April and May. These categories are down approximately 35% compared to last year because of these closures.
The two primary economic factors driving the District’s revenues are the Consumer Price Index (CPI) and the real estate market. The CPI for All Urban Consumers (CPI-U) increased 0.6 percent for the 12- month period ending June 30, 2020. The index for all items less food and energy rose 0.2 percent in June, its first monthly increase since February. The Illinois Association of Realtors reports that Chicago metropolitan area home sales are down 18.1 percent through June 2020, while the median sales price has increased 3.3 percent in the same period.
We will continue to closely monitor economic conditions, revenues, and expenditures to evaluate the financial impacts of COVID-19 to 2020 year-end projections and the subsequent impacts to 2021 budgetary estimates. Because of the immediate economic uncertainty, the District will plan a very conservative approach to early 2021 projections.
Respectfully Submitted, Eileen M. McElligott, Administrative Services Officer, SAR
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