Each year when the District’s Board approves a budget for the forthcoming year, it must adopt¹ an updated Central Service Cost Allocation Plan”² which provides for transfers from its Utility, Community Services and Beach enterprise funds, to its General Fund “to cover the cost of services provided by the General Fund under Board policy.”³ As part of the budget process, the Board traditionally approves a resolution⁴ which establishes the amount of central service costs to be transferred, and their allocation, amongst the District’s various funds/sub-funds⁵. In accordance with NRS 354.613(1)(c), the resolution the Board adopts approves “a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund(s) which (are) approved by the (IVGID) Board under a nonconsent item that is separately listed on the agenda for a regular meeting.”⁶ For an example of allocated central services costs for 2022-23, the reader is directed to page 045 of the 5/26/2022 Board packet.

The District’s Central Services Cost Allocation Plan²: is adopted pursuant to Board Policy 18.1.0 in accordance with the requirements of NAC 354.8654. According to staff the stated purpose of the Plan is to allocate an “equitable distribution of general, overhead, administrative and similar costs (assigned by staff to the)…District’s General Fund⁷…in conformity with…Nevada Revised Statute Section(s) 354.107(1)⁸ and 354.613(1)(c)⁹. For a history of how this Plan came about, and its disingenuous labeling and allocations, the reader is directed to our “Are IVGID’s Central Service Cost Transfers What They Tell Us They Are” web page.

What’s Included in The District’s Central Services Cost Allocation Plan? According to District Staff, “eligible costs to be allocated…are based on the final General Fund budgets for Accounting…and Human Resources…These costs are then, in turn, allocated to all District Funds/Department/Divisions as follows: eighty percent (80%) of the eligible costs of the Accounting budget is allocated based on each Fund/Department/Division/Activity’s percentage of District-wide budgeted non-personnel costs (and) exclusive of capital, debt and transfers….(And) one-hundred percent (100%) of (the) costs of the Human Resources budget plus (the remaining) twenty percent (20%) of the eligible costs of the Accounting budget are allocated based on each Fund/Department/Division/Activity’s average percentage of District-wide full-time equivalent (FTE) positions, wages and benefits. The combined amounts of Central Services Overhead costs…represent the amounts budgeted as Central Services Overhead costs within each Fund/Department’s budget…The total of the amount of Central Services Overhead charged to all applicable budgetary units for the accounting period will also be recorded in the General Fund as a credit to expenditures within the Accounting…and Human Resources…budgets, reflective of each activities’ share of recovered costs².

Additional Costs to be Included in Future Central Services Cost Allocation Plans: At the Board’s April 5, 2023 meeting¹⁰ staff revealed where according to them additional General Fund revenues are destined to come from if financial reporting of Parks maintenance and capital are transferred to the General Fund. “Information Technology (I/T) [will be]…added to costs being allocated to operating departments through the Central Services Cost Allocation Plan.” And what will this translate to? Instead of $1,887,589¹¹ worth of central services costs to be allocated, we will be looking at $3,046,198¹².

What Must be Included in The District’s Central Service Cost Allocation Plan? Although IVGID staff tell us that the District’s “Central Services Cost Allocation Plan has been developed to equitably distribute general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s Enterprise Funds,”¹³ do we know whether the costs assigned to the Plan are in accordance with those mandated by NAC 354.8668(5)(b) and NAC 354.867? In other words, they are “of a type generally recognized as ordinary and necessary for the operation of the…fund(s)”¹⁴ from which they have been transferred? Or they are “necessary…for the proper and efficient administration and performance of th(os)e…fund(s)?”¹⁵ Or they have they been properly “assignable or chargeable to the cost objective(s) of th(os)e…fund(s)” from which they have been transferred¹⁶? Or they are “reasonable?”¹⁷ Or is their expenditure “consistent with sound business practices?”¹⁸ Or have they been “determined in accordance with generally accepted accounting principles”¹⁹ (“GAAP”)? Or are they an “indicia of an arm’s length transaction?”²⁰ Or do they exceed “market prices for comparable services or property?”²¹ Or are they and their allocation “documented adequately for independent verification”²² Or have staff “acted with prudence under the circumstances considering their responsibilities to each pertinent governmental unit (they have assessed)…its employees, and…(we) the general public?”²³ Given the foregoing queries are all mandatory, the subject inquiry and how the District’s Plan meets those requirements may not be as straightforward as one may expect at first blush.

Conclusion: So now that you the reader know how the District’s Central Services Cost Allocation Plan is annually adopted and it mechanics, hopefully you can evaluate for yourself whether it meets its representations.

1. See NAC 354.8668(7)(a).
2. See NAC 354.8654 which defines that plan 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.”
3. See page 157 of the 2019-20 Budget.
4. An example of that resolution (for fiscal year 2022-23) appears at pages 396-397 of the packet of materials prepared by staff in anticipation of the Board’s June 29, 2022 meeting (“the 6/29/2022 Board packet“).
5. See pages 43-44 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet”).
6. See ¶I(a) at page 30 of the 5/26/2022 Board packet.
7. See NAC 354.8668(5)(a) which mandates these costs adhere to this requirement.
8. Which instructs that “the Committee on Local Government Finance (“CLGF”)…adopt…regulations as are necessary for the administration of this chapter.”
9. Which instructs that “except as otherwise provided in this section, 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 which is approved by the governing body under a non-consent item that is separately listed on the agenda for a regular meeting of the governing body.”
10. See page 23 of the packet of materials prepared by staff in anticipation of the Board’s April 5, 2023 meeting (“the 4/5/2023 Board packet“).
11. See page 045 of the 5/26/2022 Board packet.
12. See page 31 of the 4/5/2023 Board packet.
13. See page 043 of the 5/26/2022 Board packet based upon the requirement of NAC 354.8668(5)(a) that the Plan “provides for an equitable distribution of general, overhead, administrative and similar costs of the local government.”
14. See NAC 354.867(2)(a) which mandates these costs adhere to this requirement.
15. See NAC 354.867(1)(a) which mandates these costs adhere to this requirement.
16. See NAC 354.8668(5)(b) which mandates these costs adhere to this requirement.
17. See NAC 354.867(1) which mandates these costs adhere to this requirement.
18. See NAC 354.867(2)(b) which mandates these costs adhere to this requirement.
19. See NAC 354.867(1)(c) which mandates that these costs adhere to this requirement.
20. See NAC 354.867(2)(b) which mandates these costs evidence “an arm’s length transaction.”
21. See NAC 354.867(2)(c) which mandates these costs not exceed these prices.
22. See NAC 354.867(1)(d) which mandates these costs be adequately documented for independent verification.
23. See NAC 354.867(2)(d) which mandates these costs adhere to these requirements.