Friday, February 19, 2016 || By Michael Romain || Upgraded: 10:30 PM
Broadview mayor Sherman Jones, far left, pictured with former Illinois Gov. Pat Quinn during a community event in 2014.
Standard & Poor’s, the rating services agency, recently upgraded the Village of Broadview’s underlying bond rating from ‘BBB’ to ‘A+,’ the final two upgrades in a four-level increase that took place over roughly a year. Broadview’s officials say it could be rather unprecedented.
Before the ‘BBB’ rating, the village’s rating was two notches lower, a BBB minus with a negative outlook, according to Broadview Mayor Sherman Jones, whose figures were confirmed by a Feb. 27, 2015 S & P analysis.
At the time of the Feb. 27 analysis, which announced the village’s bond outlook from positive to stable, S & P credit analyst Kathryn Clayton noted that the “positive outlook reflects our view of the village’s strong budgetary performance and management’s expectation that reserves will return to positive during the next two to three years.”
“That’s basically unheard of,” Jones said. “We asked S & P why we got such a huge bump and the only reason they didn’t take us off BBB the last time they regraded us was because we still had a $3.8 million deficit in our general fund.”
Less than one year later — and with the village having erased that earlier deficit — a Feb. 10, 2016 S & P analysis noted that the recent upgrade “reflects our view of the village’s improved budgetary flexibility, with positive fund balances, and management’s expectation that revenues will increase, allowing continued financial stability,” according to S & P analyst Jessica Akey.
Jones said when he took office in 2009, he inherited an $800,000 pension fund deficit, a $5 million deficit in the village’s capital projects fund and more than $20 million of debt.
“That all came about because of some poor financial practices of the previous regime,” Jones said during a recent interview. “And it resulted in layoffs in the police and fire departments and a total dismantling of the public works department.”
Jones said the village brought in outside contractors to explain its financial situation before he doubled down on more budget cuts and more aggressively pursued alternative sources of revenue like federal and private grants, and public/private collaborations with local businesses.
“We brought in all department heads and separated out the budget,” he said. “We took out the annual revenues and projected revenues and tasked our department heads with coming up with budgets that were reasonable, achievable and attainable — and after they did, we cut the budgets some more. We also went out and got contractors and explained what our financial situation was. We cut a lot of expenses across the board.”
Jones said he also got buy-in from village employees to look for ways to cut the costs of employees’ insurance plans, which he said was costing the village “well over $1 million a year.”
“The cost of insurance was killing us,” he said. “It was ridiculous. So, I created a committee of the employees so they could buy into [budget reform measures]. Each department would get a representative on the committee and they came up with a plan that would save the village money and would save them money and at the end of the day, we’d all have a good deal. So, that committee meets now and does that work for me.
“That’s work I don’t have to do — but it’s to their benefit, because they don’t have such high insurance rates and they can stem off any potential layoffs and revenue shortfalls. They’re in, they know it from the ground-up, there’s no hiding anything. We’ve changed our insurance carrier three times since I’ve been here and saved over $1 million in health benefit costs for employees, which directly impacts our bottom line.”
Jones said as he and his team made deep cuts, they also got creative in their quest to find new revenue streams.
“We created some public/private partnerships that garnered us a lot of infrastructure, things we couldn’t have paid for out of pocket,” Jones said. “For example, Garda Armored Car Service [which is based in Broadview] has a public/private partnership with us that yielded us five brand new SUVs, so we didn’t end up spending any money out of our coffers for those. We also got some grants that paid for police officers. We got grants that paid for 75 percent of a brand new fire engine. We ended up getting a brand new ambulance. There were a lot of things we did to change how we did things in order to achieve this.”
“It’s pretty unprecedented,” said Broadview’s Interim Finance Director Gregory J. Peters about the bond upgrade, echoing the perspective of one of the village’s financial advisors. “It’s very unusual.”
“The first big thing was that the village was able to financially get out of this deficit position. The ratings agency wouldn’t have moved the village’s bond rating to any kind of ‘A’ rating as long as it was in deficit.”
Peters and Jones noted that a recent infusion of cash into the village’s coffers from an expiring TIF fund helped erase much of that deficit. Now, Jones noted, the village is projecting an estimated $300,000 surplus for the 2016 fiscal year.
Jones noted that the new rating gives the village serious momentum in a variety of areas.
“It makes the cost of money cheaper — it’s just like your credit rating,” he said. “It allows you to have a whole lot more financial flexibility to do things. It makes people want to come to your town, because they know you’re financially stable. This impacts the entire community.” VFP
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