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The District’s “Central Services” Cost Transfers (According to Us)

IVGID 101 Posted on by

So let’s assume you’re spending more on expenditures assigned to your General Fund1 than the revenues you’re able to generate. Given ¶1.1 of Board of Trustees’ (“Board’s”) Policy No. 6.1.0 mandates adoption of a balanced operating budget2, what do you do to balance your General Fund budget? The short answer is you increase revenues. Or you decrease expenses. Okay. How do you increase revenues given the definition of General Fund1? It’s not possible. How do you reduce expenses? Assuming you’re not willing to reduce expenses, it’s not possible either. So what to do? This explains the pickle staff face, and our explanation of the District’s central services cost allocation plan in light thereof.

Not to worry though. Because your Incline Village General Improvement District (“IVGID”) is up to the challenge. And the artifice is called central services cost transfers3 from funds which benefit from a steady revenue source. Like the Recreation Facility Fee (“RFF”) assigned to the Community Service Fund. Or the Beach Facility Fee (“BFF”) assigned to the Beach Fund. Or water or sewer rates and charges assigned to the Utility Fund. And here that vehicle is the District’s “Central Service(s) Cost Allocation Plan.”4 Once one adopts a formula of recoupment associated with the Plan, one can use it to generate the required deficient funds. Easy peasy.

Although Until Fiscal Year 2012 The District Didn‘t Have a Central Services Cost Allocation Plan, It Intentionally Budgeted to Overspend in Its General Fund And to Plug The Deficiency With Transfers From Its Enterprise Funds: Listen how the District admitted this practice at Note 12 to its various Comprehensive Annual Financial Reports5 (“CAFRs”) labeled “Transfers:”

“Each year the District makes transfers between its General Fund and (its) Enterprise Funds in an amount equal to the excess or deficiency of revenues over expenditures6 of the General Fund. The purpose of th(ese) transfer(s) is to maintain the General Fund’s fund balance at a sufficient level to (financially) support operations7 from year to year.”

And to affirm the arbitrariness of these transfers, they were fixed in the ratio: 50% from the Utility Fund, and 50% from the Community Services Fund8. Once the Beach Fund was created in 2009, the ratio changed slightly to: 50% from the District’s Utility Fund, 45% from its Community Services Fund, and 5% from its Beach Fund9.

Just As We Contend The RFF/BFF Represent The Financial Shortfall Between Budgeted Revenues And Expenses Assigned to The District‘s Community Services/Beach Funds, Respectively10, Today The District‘s Transfers From These Enterprise Funds Provide The Only Possible Funding Source to Continue Intentional Overspending Assigned to The General Fund: Starting in fiscal year 2012 the District’s practice of transferring funds from its Utility, Community Services and Beach Funds continued notwithstanding passage of NRS 354.613. However, the labeling of these transfers changed to “central services cost” transfers. And as General Fund overspending increased, unsurprisingly, the amount of central services cost transfers increased by a like amount. The reader can see this from the summary spreadsheet created below which depicts relevant General Fund entries for nearly the last twenty (20) years. Note how the numbers in the Deficiency column have fairly consistently matched those of the Central Services Cost Transfer column. Until starting in 2011-12 when overspending escalated, and the need to shore up the financial deficiency comparatively increased.

YearRevenuesExpendituresDeficiencyCentral Services
Cost Transfers		Excess
(Deficient)
Transfers		Fund
Balance
200511$ 2,615,088$ 2,640,436$ 25,348($ 560)($ 25,348)$ 415,774
200612$ 2,694,291$ 2,589,711($ 104,580)$ 128,798$ 128,798$ 415,774
 200713$ 2,619,260$ 2,808,582 $ 189,322 $ 389,322 $ 200,000$ 615,774
200814$ 2,493,880$ 2,956,832$ 462,952$ 462,952$ 0$ 615,774
200915$ 2,227,172$ 3,090,704$ 863,582$ 863,532$ 0$ 615,774
201016$ 1,961,140$ 3,154,747$ 1,267,842$ 1,267,842$ 0$ 615,775
201117$ 2,109,201$ 3,507,420$ 1,398,219$ 1,395,963($ 2,256)$ 615,774
201218$ 2,458,945$ 3,164,826$    705,880$ 1,074,000$ 368,120$ 983,893
201319$ 2,547,137$ 3,648,330$ 1,032,060$ 1,000,200($ 100,930) $ 886,667
2014 20$ 2,618,192 $ 3,196,367 $  577,370$ 1,068,996 $ 490,821 $ 1,391,021
2015 21$ 2,793,122$ 3,783,856$ 990,734$ 1,101,000$ 110,266$ 1,501,287
2016 22$ 3,035,284$ 3,589,578$ 554,294$ 1,123,020$ 568,706$ 1,819,993
2017 23$ 3,017,379$ 3,752,102$ 734,723$ 1,177,200$ 442,477$ 1,862,249
2018 24$ 3,266,537$ 3,700,016$ 433,479$ 1,094,000$ 600,521$ 2,522,786
2019 25$ 3,653,450$ 4,054,406$ 400,956$ 1,169,400$ 768,444$ 3,765,586
2020 26$ 3,876,422$ 4,079,259$ 202,837$ 1,367,400$ 1,164,563$ 4,630,149
2021 27
2022 28
2023 29
2024 30

The Timing of The District‘s Adoption of Its Annually Updated Central Services Cost Plan Reaffirms The Truism That According to Us, Its Real Purpose Continues to Be to Cover The Financial Deficiency Between Budgeted Revenues And Intentional Overspending Assigned to The District‘s General Fund: Given NRS 354.613(8) instructs that

“For the purposes of paragraph (c) of subsection 1 (of NRS 354.613,) the Committee on Local Government Finance (“CLGF”) shall adopt regulations setting forth the extent to which general, overhead, administrative and similar expenses of a local government of a type described in paragraph (c) of subsection 1 may be allocated to an enterprise fund,”

the CLGF have adopted NAC 354.865 – NAC 354.867. And in particular, NAC 354.8668(7)(a) which instructs that:

“The central service cost allocation plan of a local government….must be updated31 annually…before…April 15, 2025…The date on which the local government must submit its tentative budget to the Department of Taxation.32.

But this never happens. Typically, the District’s central services cost allocation plan gets submitted to the Board for approval at the same time its final budget is submitted for approval. Thus for 2024-25, the District’s updated central services cost allocation plan was approved by the Board on May 31, 202433. And why the delay? If your intent is to use the artifice of a plan such as this one, to plug the financial gap between budgeted revenues and expenses, because “the ends justify the means,” don’t you have to know the amount of the shortfall before you can come up with an amount? And to do this, don’t you first have to come up with a budget exclusive of central services cost transfers? Stated a bit differently, if you come up with a central services cost transfer amount first, and a budget of expenses afterwards, don’t you run the risk that the amount proposed to be transferred won’t be enough? Like we have said. The annual timing of actual adoption of a central services cost allocation plan represents another factor which supports the conclusion we have reached.

The Propriety of The District‘s Updated Central Services Cost Allocation Plans: Given the CLGF has adopted regulations34 setting forth the extent to which general, overhead, administrative and similar expenses of a local government of a type described in NRS 354.613(c)(1) may be allocated to an enterprise fund, how is the public assured that costs assigned to the Plan:

1. Are “reasonable?”35

2. “Are of a type generally recognized as ordinary and necessary for the operation of the…fund(s)”36 from which they have been transferred?

3. Are “necessary…for the proper and efficient administration and performance of th(os)e…fund(s)?”37

4. Have been properly “assignable or chargeable to the cost objective(s) of th(os)e…fund(s)” from which they have been transferred38?

5. Or their expenditure “consistent with sound business practices?”39

6. Or the proposed costs have been “determined in accordance with generally accepted accounting principles”40 (“GAAP”)?

7. Or they are an “indicia of an arm’s length transaction?”41

8. Or they do not exceed “market prices for comparable services or property?”42

9. Or they and their allocation are “documented adequately for independent verification?”43

10. Or staff have “acted with prudence under the circumstances considering their responsibilities to each pertinent governmental unit (they have assessed)…its employees, and…(we) the general public?”44

Given affirmative answers to the foregoing questions are all mandatory, and yet the Board never provides answers in the form of findings addressing the same, we contend this failure represents another factor which supports the conclusion we have reached.

Notwithstanding, We Contend That Most if Not All of the District‘s Other Departments Don‘t Require The “So Called“ Services Furnished By The General Fund: Remember, according to the District it does not allocate all of its employee, equipment or other resource costs related to the purpose(s) of the enterprise fund(s) from which central services cost transfers are made45. Rather, staff tell the public that “the District…limit(s) the allocation (of) allowable administrative overhead costs to Human Resources and Finance/Accounting expenditures (only)…based upon a formula that uses staffing [Full-Time Equivalent (‘FTE’) positions], payroll costs, and services and supplies expenditures.”46 So which departments, if any, require Human Resources and Finance/Accounting services assigned to the General Fund?

Human Resources And Finance/Accounting Cost Allocations Allegedly Equitably And Reasonably Assigned to The District‘s Utility Fund: Let’s look to the District’s Utility Fund for starters. Very few employees (not portions of employees, but actual employees) dedicated one-hundred percent (100%) to Utility Fund functions47), very little employee turnover (32 full-time positions, and 2 part time positions in FY 2024-2548), their own dedicated administrative building, employees dedicated to their own administrative business office functions, water and sewer billing is outsourced to Data Point, and for 2024-25 an unbelievable $1,471,647 of allegedly necessarily incurred allocated central services costs49! We don’t think so.

Human Resources And Finance/Accounting Cost Allocations Allegedly Equitably And Reasonably Assigned to The District‘s Facilities Sub-Fund: Let’s look at the District’s Facilities Sub-Fund to answer the same question. Very few employees (9.3 FTEs in FY 2022-23 and FY 2023-2450), and $147,012 of allegedly necessarily incurred allocated central services costs49! Again we don’t think so.

Human Resources And Finance/Accounting Cost Allocations Allegedly Equitably And Reasonably Assigned to The District‘s Tennis Sub-Fund: Let’s look at the District’s Tennis Sub-Fund. Very few employees (2.2 FTEs in FY 2022-23 and FY 2023-2451), their own dedicated “center,” and $30,954 of allegedly necessarily incurred allocated central services costs49! Again we don’t think so.

Human Resources And Finance/Accounting Cost Allocations Allegedly Equitably And Reasonably Assigned to The District‘s Parks Sub-Fund: Let’s look at the District’s Parks Sub-Fund. Very few employees (8.4 FTEs in FY 2022-23 and 9.4 FTEs in FY 2023-2452), their own dedicated building (a portion of the Recreation Center), and absolutely no allocated central services costs whatsoever for 2024-2549! Again we don’t think so.

Human Resources And Finance/Accounting Cost Allocations Allegedly Equitably And Reasonably Assigned to The District‘s Other Recreation Sub-Fund: Let’s look at the District’s Other Recreation aka Community Services Admin Sub-Fund. Very few employees (3.8 FTEs in FY 2022-23 and 4.8 FTEs in FY 2023-2453), their own dedicated work space (a dedicated portion of the Recreation Center), and $29,756 of allegedly necessarily incurred allocated central services costs49! Again we don’t think so.

Human Resources And Finance/Accounting Cost Allocations Allegedly Equitably And Reasonably Assigned to The District‘s Internal Services Fund: Let’s look at the District’s Internal Services Fund. Very few employees (8.4 FTEs in FY 2022-23 and FY 2023-2454), their own dedicated building (a portion of the Recreation Center), and absolutely no allocated central services costs whatsoever for 2024-2549! Again we don’t think so.

Human Resources And Finance/Accounting Cost Allocations Allegedly Equitably And Reasonably Assigned to The District‘s General Fund: Let’s look at the District’s General Fund. A massive 27.942 FTEs in FY 2023-2455), their own admin building, and absolutely no allocated central services costs whatsoever for 2024-2549! Again we don’t think so.

Follow The Money:

An Example of The Kinds of Costs The District Assigns to Its General Fund Having Nothing to Do With: General Administration, Planning, Budgeting, Payroll, Legal, Legislation, Accounting, Internal Audits, Accounts Payable, Human Resources, General or Emergency Services, Public Relations, Public Works, Property Management, Building And Grounds Maintenance, Procurement And Contracts, Grants Management, Risk Management, Motor Pool, Road Maintenance, Water And Sewer Service(s), Telecommunications, Automatic Data Processing Services, Printing, Maintaining a Library, Records Maintenance, Storage And Warehousing, And Animal Control56, Which Are Paid With Central Service Cost Transfers: For decades revenues and expenses associated with the District’s parks and athletic fields were assigned to its “Parks” Fund57, a sub-fund of the District’s Community Services Fund. For fiscal year 2023-24 the Board decided to transfer “Parks'” meager revenues and assign its out-of-control expenses to the District’s General Fund. The reason being that the District’s parks are “public” facilities available to be accessed and used by the general public as a whole, and without assessment of user fees. There was the belief at the time (one in which we agree by-the-way) that facilities and services provided to the general public should be paid for from general revenues (such as taxes) rather than assessing local parcels/dwelling units for the alleged “availability” to access and use the same. But this meant there was then a shortage of approximately $1.2 million in the District’s General Fund58. So how did staff propose covering this shortfall? It’s “preferred means (wa)s to (create) budget capacity in (the) General Fund” by disingenuously increasing the amount of central services cost transfers. The alleged justification for this increase became “adding Information Technology to (the District’s) Central Services Overhead Allocation Plan.”59 In other words, rather than making $2,362,441 in central services cost transfers from the District’s Utility, Community Services and Beach Funds, staff proposed increasing the same by a whopping 50.8% to $3,562,441 or what eventually became even more!

Now The District Needs to Come Up With a Formula: which generates the deficient funds required to balance the General Fund budget, or only the portion thereof. If concerned with the former, we really don’t care about the formula’s justification nor components. Nor its reasonableness nor equitableness. Because it’s the end result we care about. One which justifies the means employed. Right? So here District staff have come up with a formula60. And here’s what it was, at least prior to April of 2023 when IT was added to the formula:

sum((x(×).80) + sum((y+x)(×).20))(×)a plus sum((sum(f+w+b+s))(×)a2)

Here’s your legend: x = Accounting budget; y = Human Resources budget; f = District wide budgeted FTEs; w = District wide budgeted wages; b = District wide budgeted benefits; District wide budgeted services and supplies; a = allocation factor, from 1 – 100; and, a2 = allocation factor from 1 -100. Got it?

Now it doesn’t matter what x, y, f, w, b, a and a2 represent. Because whatever they do, it’s the above formula which prevails because it’s the one which generates the result required. And the beauty of this formula is that if you don’t get the result you’re looking for, no problem. You have the freedom to adjust a and a2 from 1 – 100/each. Or to change the formula altogether! And for this reason alone, we cannot agree with District staff’s representation its allocated central services cost transfers represent an equitable distribution of IVGID’s general, overhead, administrative and similar costs.

General Fund Balance “Creep:” The term “fund balance” means “the excess of assets over liabilities in a governmental fund”61 at a given point in time. Given the increase in fund balance over time, the District’s central services cost transfers have represented more than that necessary to merely “plug” the difference between estimated revenues and deliberate overspending assigned to the District’s General Fund. A LOT MORE! Let us explain.

“At the end of the (2010-11) fiscal year(, the beginning of the 2011-12 fiscal year), the District’s General Fund balance remained unchanged at $615,774.”62 The following fiscal year the General Fund Balance (began its steady) increase. Initially…by $368,119.”63 “As of June 30, 2022 (the)…unassigned fund balance…in the General Fund (stood at)…$6,010,867.”64 This represents a $5,395,093 increase over ten (10) short years (hence the term “General Fund balance creep”), or an average yearly increase of $539,509 for each and every one of those ten (10) years! Given ¶2.1 of Board Policy No. 7.1.0 instructs that “the policy of the District shall be to maintain a target fund balance within the General Fund equal to 15% of annual budgeted expenditures (less transfers and debt),” budgeted expenses less transfers and debt assigned to the General Fund “for the year ended June 30, 2022 (totaled)…$3,741,1487, 15% of this number totals $561,172. And the reader can see that what staff have been doing is grossly in conflict with Board Policy No. 7.1.0. Please explain to us how this can happen when the District intentionally budgets to spend more in its General Fund than the revenues it budgets to receive? There’s only one answer. It can’t!

The above facts demonstrate that the District has been systematically budgeting for central services cost transfers well in excess of amounts required to merely balance the General Fund budget. Just as we have alleged65, to build a “slush fund” to be spent on future unidentified, unbudgeted and unappropriated “pet” projects! In other words, the District’s central services cost transfers represent a vehicle primarily intended to raise revenues, just like a tax66, and they’re not what staff/the Board represent.

The District‘s Central Services Cost Transfers Are Excessive:

IVGID “Trustees must…be deemed to have known…that the (transfers) established were far in excess of the needs for (central services)…Persons, even when acting officially, are presumed to intend the necessary consequences of their acts…It must therefore be presumed that the high (transfers) were imposed in order to bring about the known and inevitable result — that is, the accumulation of a fund for the general benefit of the (GID)…This would be an unjust discrimination and an unfair burden upon those who (pay the RFF/BFF and whose properties are connected to the District’s public water or sewer systems)…and it is clearly beyond any power possessed by” IVGID67.

Moreover, it’s not just the unreasonably excessive portions of the transfers which are invalid.

“A court cannot apportion the charge,(n) or ascertain (n)or allow such portion as it might find reasonable, assuming, but not deciding, that (IVGID)…is authorized to (transfer)…charges (for central services)…The entire charge, therefore, is…invalid.”68

Alleged Central Services Cost Allocation Summary: Nearly $830,000 of administrative overhead costs allegedly for Human Resources and Finance/Accounting services only furnished for these few employees? Sorry. It doesn’t even pass the smell test. These amounts to plug the financial deficiency between revenues and expenses assigned to the District’s General Fund? It makes a whole lot of sense!

The Alleged Central Services Cost Allocation Charged to the District’s Other Departments is Unnecessary For Their Operation69: Once payroll for these very few employees assigned to these other departments is outsourced, as it should be, exactly what necessary central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers are necessary for the operation of those fund(s) from which an allocation has been made?

The Alleged Central Services Cost Allocation Charged to the District’s Other Departments is Not Ordinary For Their Operation70: Once payroll for these very few employees assigned to these other departments is outsourced, as it should be, exactly what ordinary central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers are ordinary and necessary for the operation of those fund(s) from which an allocation has been made?

The Alleged Central Services Cost Allocation Charged to the District’s Other Departments Have Not Been Properly Assignable Nor Chargeable to Their Cost Objectives71: Once payroll for these very few employees assigned to these other departments is outsourced, as it should be, exactly what properly assignable and chargeable central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers have been properly assignable or chargeable to the cost objective(s) of those fund(s) from which an allocation has been made?

The Alleged Central Services Cost Allocation Charged to the District’s Other Departments is Unreasonable Insofar as Market Prices For Comparable Services or Property is Concerned72: Once payroll for these very few employees assigned to these other departments is outsourced, as it should be, exactly what reasonable insofar as market prices for comparable services or property is concerned central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers are reasonable insofar as market prices for comparable services or property are concerned?

For All of These Reasons, The Amounts Charged to the District’s Other Departments Are Not Prudent Under the Circumstances73: Once payroll for these very few employees assigned to these other departments is outsourced, as it should be, exactly what prudent under the circumstances central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers are the product of prudence under the circumstances considering staff’s responsibilities to each pertinent governmental unit they have assessed, its employees, and the general public?

The Alleged Central Services Cost Allocation Charged to the District’s Other Departments Haa Not Been Determined in Accordance With Generally Accepted Accounting Principles74: Once payroll for these very few employees is outsourced, as it should be, exactly what GAAP compliant central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers have been determined in accordance with GAAP?

The Alleged Central Services Cost Allocation Charged to the District’s Other Departments is Not Adequately Documented For Independent Verification75:Once payroll for these very few employees is outsourced, as it should be, exactly what adequately documented central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers are adequately documented for independent verificiation?

For All of These Reasons The Amounts Charged to the District’s Other Departments Are Inconsistent With Sound Business Practices76: Once payroll for these very few employees is outsourced, as it should be, exactly what consistent with sound business practice central Human Resources and Finance/Accounting services from the General Fund are being provided for the operation of these departments? And given the burden is upon the District, what evidence have IVGID staff affirmatively produced which demonstrates the District’s central services cost transfers are consistent with sound business practices?

Based Upon All of The Above Factors, The Simple Fact of The Matter Is That The Amounts Charged by The General Fund to the District’s Other Departments Do Not Result in an Equitable Distribution of General, Overhead, Administrative and Similar Costs77: So much then for District staff’s representation that its allocated central services cost transfers represent an equitable distribution of IVGID’s general, overhead, administrative and similar costs.

If Not Payments For Legitimate Central Services Costs, Exactly What Kind of Monetary Exactments Do These Transfers Represent? Criminal! NRS 354.626(1) states that “any officer or employee of a local government who willfully violates NRS 354.470 to 354.626, inclusive, is guilty of a misdemeanor and upon conviction thereof ceases to hold his or her office or employment.”78

Is it Any Wonder Then That in 2014 Staff Circumvented the Protections of NRS 354.613 by Bamboozling The Then Board Into Converting the District’s Community Services and Beach Funds From Enterprise Into Special Revenue? Evidence of this behavior represents consent by means of conduct that IVGID staff agree that the District’s central services cost transfers represent nothing more than another financial subsidy (just like the RFF/BFF) intended to “plug” the financial difference between estimated revenues and deliberate overspending assigned to its General Fund.

Faced with added scrutiny over the “so called” central services allegedly provided to the District’s funds other than its General Fund, and the disingenuous explanations like those recited elsewhere, starting in fiscal year 2014-15 staff chose to eliminate the inquiry altogether by convincing the Board to change the District’s Community Services and Beach Funds from Enterprise79 to Special Revenue80. The justification given for this change appears at Note 19, on page 46 of the District’s 2014-15 Comprehensive Annual Financial Report (“the 2014-15 CAFR“): “Effective July 1, 2015, with its new fiscal and budget year, the District began utilizing Special Revenue, Capital Projects and Debt Service governmental fund accounting for (its) Community Services…and…Beach Fund(s), which have to date been accounted for as enterprise funds. The District has changed its approach to the pricing of services and in particular recognizes that the use of the facility fee to provide (financial) resources for capital expenditure and debt service (allegedly) cannot be displayed in a readily understandable fashion for its constituents” in enterprise funds.

What you had here was nothing short of circumventing the protections created by NRS 354.613 so District staff no longer had to concern itself with the validity of transfers from its Utility, Community Services and Beach Funds. After all, if transfers to the District’s General Fund are made from a fund other than an enterprise one, how can they be prohibited or limited by NRS 354.613 which speaks to enterprise funds? They can’t! And to further demonstrate that the conversion of these funds from/to enterprise/special revenue represents circumvention, for fiscal year 2021-22 a new IVGID Board took charge and transitioned the District’s Community Services and Beach Fund(s) back to enterprise fund-types81.

Conclusion: One can affix any label one wants to a subsidy. And one can come up with any formula one wants to which produces the end result one seeks. But at the end of the day a subsidy is still a subsidy. And that’s what we have here. Numbers don’t lie. but the liars who tell us what those numbers represent do82. Based upon the above discussion the District’s alleged allocated central services costs are not what staff/the Board represent. Rather, they represent nothing more than that necessary to “plug” the difference between estimated revenues and deliberate overspending assigned to the District’s General Fund, and A LOT MORE! And now you know!

But in reality, we say that the District’s Central Services Cost Allocation Plan represents nothing more than a means of creating another financial subsidy as the RFF/BFF represent financial subsidies to the Community Services/Beach Funds, respectively. And unbelievably, it turns out this is the very same description IVGID staff used before the adoption of NRS 354.613.

  1. According to NRS 354.534, “General fund means the fund used to account for all financial resources except those required to be accounted for in another fund.” This can’t include utility rates, tolls and charges because the District’s Utility Fund accounts for all financial resources with respect to utilities. Nor rates, tolls and charges associated with recreation other than the beaches because the District’s Community Services Fund accounts for all financial resources with respect to recreation other than the beaches. Nor rates, tolls and charges associated with the beaches because the District’s Beach Fund accounts for all financial resources with respect to the beaches.
  2. In particular, it instructs that “the District shall adopt a process that defines a balanced operating budget, encourages commitment to a balanced budget under normal circumstances, and provides for disclosure when a deviation from a balanced operating budget is planned or when it occurs.”
  3. Since central services cost transfers are expressly permitted by NRS 354.613(1)(c), is it any wonder District staff have proclaimed (whether or not it is accurate) that the purpose for these transfers is to pay for “general, overhead and administrative costs incurred by the District’s General Fund” [see page 520 of the packet of materials prepared by staff in anticipation of the Board’s May 25, 2023 meeting (“the 5/25/2023 Board packet“)]?
  4. See NAC 354.8654 which describes this term as “the documentation of a local government that identifies, accumulates, allocates or develops billing rates for the allocation of the cost of services and property provided by the local government on a centralized basis to its departments, agencies and enterprise funds.”
  5. See page page 44 to the District’s 2004-05 CAFR, page 43 to its 2005-06 CAFR, page 42 to its 2006-07 CAFR, page 38 to its 2007-08 CAFR, page 43 to its 2008-09 and 2009-10 CAFRs, and page 42 to its 2010-11 CAFR.
  6. Isn’t this an admission staff use these transfers to plug the shortfall between budgeted revenues and intentional overspending?
  7. In other words, to “maintain” intentional overspending while keeping the General Fund fund balance static.
  8. The only District funds generating revenue from which to transfer.
  9. See page 42 to the 2010-11 CAFR under ¶12 Transfers: “the allocation has been 50% to Utilities, 45% to Community Services and 5% to the Beach Funds.”
  10. See our What Are Our RFF/BFF According to Us discussion.
  11. See page 26 of The District’s 2004-05 CAFR.
  12. See page 24 of The District’s 2005-06 CAFR.
  13. See page 25 of The District’s 2006-07 CAFR.
  14. See page 23 of The District’s 2007-08 CAFR.
  15. See page 23 of The District’s 2008-09 CAFR.
  16. See page 23 of The District’s 2009-10 CAFR.
  17. See page 23 of The District’s 2010-11 CAFR.
  18. See page 22 of The District’s 2011-12 CAFR.
  19. See page 23 of The District’s 2012-13 CAFR.
  20. See page 23 of The District’s 2013-14 CAFR.
  21. See page 23 of The District’s 2014-15 CAFR.
  22. See page 28 of The District’s 2015-16 CAFR.
  23. See page 26 of The District’s 2016-17 CAFR.
  24. See page 27 of The District’s 2017-18 CAFR.
  25. See page 27 of The District’s 2018-19 CAFR.
  26. See page 25 of The District’s 2019-2020 CAFR.
  27. See page 27 of The District’s 2020-2021 CAFR.
  28. See page 27 of The District’s 2021-2022 CAFR.
  29. See page 27 of The District’s 2022-2023 CAFR.
  30. See page 2? of The District’s 2023-2024 CAFR.
  31. In other words, “approved by the governing body under a nonconsent item that is separately listed on the agenda for a regular meeting of the governing body” [see NRS 354.613(1)(c)].
  32. See NRS 354.596(2).
  33. See Supplemental Item G.3.B. to the Board’s May 31, 2024 meeting packet.
  34. See NAC 354.865 – NAC 354.867.
  35. See NAC 354.867(1) which mandates these costs adhere to this requirement.
  36. See NAC 354.867(2)(a) which mandates these costs adhere to this requirement.
  37. See NAC 354.867(1)(a) which mandates these costs adhere to this requirement.
  38. See NAC 354.8668(5)(b) which mandates these costs adhere to this requirement.
  39. See NAC 354.867(2)(b) which mandates these costs adhere to this requirement.
  40. See NAC 354.867(1)(c) which mandates that these costs adhere to this requirement.
  41. See NAC 354.867(2)(b) which mandates these costs evidence “an arm’s length transaction.”
  42. See NAC 354.867(2)(c) which mandates these costs not exceed these prices.
  43. See NAC 354.867(1)(d) which mandates these costs be adequately documented for independent verification.
  44. See NAC 354.867(2)(d) which mandates these costs adhere to these requirements.
  45. NRS 354.613(1)(c) instructs that “the governing body of a local government may, on or after July 1, 2011, loan or transfer money from an enterprise fund, money collected from fees imposed for the purpose for which an enterprise fund was created, or any income or interest earned on money in an enterprise fund, only if the loan or transfer is made…for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund.
  46. See page 24 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2020 meeting (“the 5/27/20 Board packet“).
  47. See pages 082-083 of the packet of materials prepared by staff in anticipation of the Board’s January 25, 2023 meeting (“the 1/25/2023 Board packet“).
  48. See page 186 of the packet of materials prepared by staff in anticipation of the Board’s March 12, 2025 meeting (“the 3/12/2025 Board packet“).
  49. See Supplemental Item G.3.B. to the packet of materials prepared by staff in anticipation of the Board’s May 31, 2024 meeting (“the 5/31/2024 Board packet“).
  50. See page 112 of the 1/25/2023 Board packet.
  51. See page 153 of the 1/25/2023 Board packet.
  52. See page 146 of the 1/25/2023 Board packet.
  53. See page 139 of the 1/25/2023 Board packet.
  54. See page 145 of the 1/25/2023 Board packet.
  55. See page 069 of the 1/25/2023 Board packet.
  56. See NAC 354.8668(2).
  57. For fiscal year 2022-23, the reader can examine staff’s financial reporting of this sub-fund at pages 160-163 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).
  58. See pages 150-151 of the packet of materials prepared by staff in anticipation of the Board’s February 22, 2023 meeting (“the 2/22/2023 Board packet“).
  59. See page 150 of the 2/22/2023 Board packet.
  60. One that uses staffing [Full-Time Equivalent (‘FTE’) positions], payroll costs, and services and supplies expenditures” [see page 24 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2020 meeting (“the 5/27/20 Board packet“].
  61. See NRS 354.533.
  62. See page 16 of the 2010-11 CAFR.
  63. See page 13 of the 2011-12 CAFR.
  64. See page 14 of the 2021-22 CAFR.
  65. For 2010-11 the District made $933,274 of transfers from its Utility, Community Services and Beach Enterprise Funds to its General Fund under the guise of central services costs (see page 23 of the 2010-11 CAFR). For 2023-24, the Board has just approved a Central Services Allocated Cost Plan which calls for doubling ($1,956,300 to be exact) of central services cost transfers [see ¶III(1) at pages 503-504 of the packet of materials prepared by staff in anticipation of the Board’s May 25, 2023 meeting (“the 5/25/2023 Board packet“)].
  66. See our What is a Tax? discussion.
  67. See City of Madera v. Black, 181 Cal. 306, 314, 184 P. 397 (1919).
  68. See City of Madera, supra, at 181 Cal. 315.
  69. See NAC 354.867(1)(a) which mandates central services cost transfers must be “necessary…for the proper and efficient administration and performance of the enterprise fund(s)” for which allocation has been made.
  70. See NAC 354.867(2)(a) which mandates central services cost transfers be “of a type generally recognized as ordinary and necessary for the operation of th(os)e fund(s)” from which an allocation has been made.
  71. See NAC 354.8668(5)(b) which mandates central services cost transfers be limited to costs for services and property that have been properly “assignable or chargeable to the cost objective(s) of th(os)e fund(s)” from which an allocation has been made.
  72. See NAC 354.867(1)(a) which mandates central services cost transfers must be “reasonable for the proper and efficient administration and performance of the enterprise fund(s)” for which allocation has been made. Moreover, NAC 354.867(2)(c) mandates central services cost transfers be reasonable insofar as “market prices for comparable services or property” are concerned.
  73. See NAC 354.867(2)(d) which mandates central services cost transfers be the product of “prudence under the circumstances considering (staff’s) responsibilities to each pertinent governmental unit (they have assessed)…its employees, and…the general public.”
  74. See NAC 354.867(1)(c) which mandates that central services cost transfers be “determined in accordance with generally accepted accounting principles” (“GAAP”).
  75. See NAC 354.867(1)(d) which mandates central services cost transfers be “adequately…documented…for independent verification.”
  76. See NAC 354.867(2)(b) which mandates central services cost transfers be “consistent with sound business practices.”
  77. See NAC 354.8668(5)(a) which mandates central services cost transfers result in “an equitable distribution of general, overhead, administrative and similar costs.”
  78. Recall that the NRS which has been violated is NRS 354.613.
  79. NRS 354.517 defines an enterprise fund as one: “established to account for operations: 1. Which are financed and conducted in a manner similar to the operations of private business enterprises, where the intent of the governing body is to have the expenses…of providing goods or services on a continuing basis to the general public, financed or recovered primarily through charges to the users; or, 2. For which the governing body has decided that a periodic determination of revenues earned, expenses incurred and net income is consistent with public policy and is appropriate for capital maintenance, management control, accountability or other purposes.”
  80. NRS 354.270 defines Special Revenue Fund to mean one “used to account for specific revenue sources, other than sources for major capital projects, which are restricted by law to (the) expenditure for specified purposes.”
  81. See page 38 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2021 meeting (“the 5/26/2021 Board packet“).
  82. This saying is a deviation of the maxim attributed to Mark Twain nearly one hundred (100) years ago; i.e., that “figures don’t lie, but liars do figure” (see https://quoteinvestigator.com/2010/11/15/liars-figure/). According to Carroll D. Wright, a prominent statistician employed by the U.S. government at the time, who used the expression earlier on June 25, 1889 while addressing the Convention of Commissioners of Bureaus of Statistics of Labor, “it is our duty, as practical statisticians, to prevent the liar from figuring; in other words, to prevent him/her from perverting the truth, in the interest of some theory he wishes to establish.”

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