This growing glossary contains common terms used in Civic Federation research, reports and blog posts.
Actuarial Liability: A retirement system’s projected benefit obligation due to past service by employees and retirees.
Appropriation: Spending authority from a specific fund for a specific amount, purpose and time period. 
Assessment Level: The percentage of full value at which property is being assessed.
Assessed Value (AV): The dollar amount certified by assessing officials as the value of property for real estate tax purposes. In Cook County, the assessed value should be a certain percentage of the property’s market value, depending on the classification of that particular parcel of property. 
Continuing Appropriation: (State of Illinois) Statutory authority for the Comptroller and Treasurer to spend funds in the event the legislature fails to appropriate or appropriates an insufficient amount for a specific purpose. Examples of continuing appropriations are for debt service on State bonds or for payments to State retirement systems. 
Continuing Services Ratio: This indicator measures unrestricted net assets for all funds as a percentage of expenses for all funds. The ratio reflects the degree to which unrestricted net assets can support continuing government services.
Debt Service: Payment of principal, interest and other obligations associated with retirement of debt. 
Debt Service Expenditure Ratio: This indicator measures debt service expenditure, which includes principal retirement, interest and other fiscal charges made in the current fiscal year, as a percentage of total governmental fund expenditures. The ratio can be used to assess service flexibility with the amount of expenses committed to annual debt service.
Defined Benefit Plan: A type of pension plan in which employers and employees annually contribute fixed amounts to investments intended to cover future benefit payments. Upon retirement, the employee receives an annuity based upon his or her highest salary (usually based on an average of several years) and length of service. If the amounts contributed to the plan over the term of the employee’s employment (plus accrued earnings) are insufficient to support the benefits (including health and survivor’s benefits), the former employer is required to pay the difference.
Defined Contribution Plan: A type of pension plan in which the employee and the employer contribute fixed amounts. Upon retirement, the employee receives an annuity and interest based upon the amount contributed to the plan over the term of his or her employment. Once the employee retires, the employer has no further liability to the employee (except, perhaps, for ancillary health benefits). Two common examples of defined contribution plans are 401(k) and 403(b) plans, named after the governing sections of the Federal tax code.
Effective Property Tax Rates: A measure of property tax burden for homeowners and businesses. They translate the tax rates on property tax bills into rates that reflect the percentage of full market value that a property owed in taxes for a given year.
Equalized Assessed Value (EAV): The EAV is the taxable value of property. In Illinois it is determined by multiplying the assessed value of property as determined by assessing officials by the county equalization factor. 
Federal Funds: (State of Illinois) Accounts that use federal revenues (other than those designated for General Funds) to support a variety of state programs.
Federal Medical Assistance Percentage: Known as FMAP. The rate at which the federal government reimburses a state for its Medicaid expenditures.
Full-Time Equivalent (FTE): A calculated measure of full-time employment for comparison purposes, in which each full-time employee works 37.5 hours per week for 52 weeks per year. 
Fund Balance Ratio: This indicator measures unrestricted General Fund fund balance as a percentage of General Fund operating revenues or expenditures. The ratio represents savings that the government has accumulated. The Government Finance Officers Association (GFOA) recommends that governments maintain unrestricted fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures, which is approximately 17%.
Funded Ratio: The percentage of a retirement system’s actuarial liability that is covered by a system’s assets.
General Funds: (State of Illinois) Accounts that support the regular operating and administrative expenses of most State agencies and over which the State has the most control. The General Funds consist of the General Revenue Fund, the Education Assistance Fund, the Common School Fund and the General Revenue-Common School Special Account Fund.
General State Aid: An unrestricted formula-driven grant that comprises the largest portion of State assistance to local school districts. The amount of funds a district receives depends on its financial need measured by three factors: its average daily attendance, its equalized assessed valuation of property and its local tax measured by its statutory tax rate. 
Hybrid Plan: A type of pension plan that offers a combined defined benefit and defined contribution to employees.
Home Rule: A home rule unit of government is one that is permitted to do anything not expressly prohibited by the Illinois Constitution or statutes. Article VII of the Illinois Constitution designates as a home rule government any municipality with a population over 25,000, any municipality that has adopted home rule by referendum, and a county with a chief executive officer (i.e., Cook). All special districts including school districts, community college districts, forest preserve districts, park districts, townships and sanitary districts are non-home rule. Non-home rule units of government are only allowed to take actions explicitly permitted by the Illinois Constitution and statutes. 
Increment: The increase in equalized assessed value of property within a TIF district. Taxes levied on the increment are used to pay for TIF projects. 
Lapse Period: (State of Illinois) The period following the end of the State’s fiscal year on June 30 during which agencies can liquidate liabilities incurred before the end of that fiscal year.
Level of Assessment: Ratio of assessed value to the sale price.
Line Item: Specific purpose of an appropriation, such as personal services, retirement, printing or travel. 
Lump sum: Appropriation line for a general program purpose without specific line items identified. 
Managed Competition: A form of alternative service delivery that requires in-house service units of a government to compete with external providers under a controlled or managed process.
Market Value of Assets: A method of reporting the value of pension assets that recognizes unrealized gains and losses immediately in the current year and can produce significant fluctuation year-to-year. This measure is subject to volatility in the market.
Medicaid: A joint federal-state program that finances healthcare for certain categories of low-income people, including children, pregnant women, the elderly and the disabled.
Net Assets: A government’s net assets are the difference between all its assets and all its liabilities. Net assets are reported in three categories: invested in capital assets (net of related debt), restricted and unrestricted. The first category shows the value of capital assets minus the outstanding debt that was incurred to build the assets. Restricted net assets are limited to a specific purpose, such as activities funded by grants from other governments or revenues set aside for payment of debt service. Unrestricted net assets are the net assets not included in the other two categories and can generally be used for any purpose. They are not necessarily cash assets and may in fact be a negative number, or deficit, because they include offsetting liabilities. For example, large unfunded pensions or retiree health care liabilities may contribute to an unrestricted net assets deficit even though those long-term liabilities are not all due in the current year.
Normal Cost: The portion of the cost of projected pension benefits allocated to the current plan year. The normal cost is computed differently under different funding methods. The employer normal cost equals the total normal cost reduced by employee contributions. 
Operating Deficit Ratio: This indicator measures the General Fund surplus or deficit as a percentage of total operating expenses. The ratio reflects the difference between revenues and expenditures in completed fiscal years, or on an actual basis and not a budgeted basis.
Other Post Employment Benefits (OPEB): Non-pension benefits provided to employees after employment ends. OPEB includes health insurance coverage for retirees and their families, dental insurance, life insurance and term care coverage. It does not include termination benefits such as accrued sick leave and vacation.
Other State Funds: (State of Illinois) Accounts for activities funded by specific revenue sources that may only be used for specific purposes.
Property Tax Extension: The property tax extension is the final amount of property tax revenue that a unit of local government is authorized to receive and that is billed to taxpayers. 
Property Tax Rate: Property tax rates are calculated using two primary pieces of information: the Equalized Assessed Value (EAV), or taxable value of property, and the taxing district’s levy, which is the amount of property tax revenue the district requests from taxpayers. Conceptually, a property tax rate = levy ÷ EAV. 
PTELL: Illinois’ property tax extension limitation law which limits property tax levy increases to 5% of the rate of inflation, whichever is less.
Reappropriation: (State of Illinois) An unspent appropriation that continues into the next fiscal year, typically for a capital or multi-year project or liability. 
Referendum: A measure proposed or passed by a legislative body that is referred to the vote of the electorate for approval or rejection.
Smoothed Value of Assets: A method of reporting the value of pension assets that mitigates the effects of short-term market volatility by recognizing each year’s investment gains or losses over a period of three to five years.
Supplemental Appropriation: (State of Illinois) Additional spending authority given by the General Assembly during the fiscal year, following passage of the initial budget. 
Tax Caps: Under the provisions of the Illinois Property Tax Extension Limitation Law, the levy of non-home rule governments in Illinois may only increase annually by 5% or the rate of inflation, whichever is less. The value of new construction is not subject to the tax cap for the year in which it occurs. 
Tax Extension: The amount of property tax dollars that local governments receive. The County Clerk calculates tax extensions by: 1) multiplying the EAV of each property by the composite tax rate and 2) applying the various limitations provided by statute such as rate limits for individual funds, tax caps and prior year EAV limitations (Cook County only). Cook County collects tax extensions and remits them to local governments. Governments receive an amount less than the total the total extension because all taxes are not collected and the County charges and administrative fee for its collection activities. 
Tax Increment Financing (TIF): An economic development tool intended to generate economic development activity that would not have occurred “but for” the incentives offered. TIF works by establishing a specifically defined district, using incremental growth in revenues over a frozen baseline amount to pay for redevelopment costs. Taxing districts other than the one establishing the district (which is usually a municipality) do not have access to increases in incremental revenues over the life of the TIF district. Once a development project is completed and has been paid for, the TIF district is dissolved and the tax base is returned to full use by all eligible taxing bodies. In Illinois, TIF is authorized for a period of up to twenty-three years, with the possibility of renewal for an additional twelve years. 
Tax Levy: The total dollar amount of a local government’s annual budget appropriations which it requests to be collected in property taxes. 
Unfunded Liability: The difference between the value of a retirement system’s actuarial liability and the value of its assets.
Unfunded Actuarial Accrued Liability (UAAL): Calculated by subtracting the actuarial value of the assets from the actuarial accrued liability (AAL) of each fund.
Unspent Appropriations: Funding authorizations that remain unspent because insufficient funding is available or expenses do not reach budgeted levels.
Voucher: (State of Illinois) Document requesting payment submitted to the Comptroller, who then writes and issues a warrant. 
Warrant: (State of Illinois) Check issued by the Comptroller to a third party who cashes it with the Treasurer.