In a word, NO!

As we’ve elsewhere discussed, central services represent

The “core services almost all (governments require in order)…to support their operations and mission provided by a central service provider.”¹

And in Nevada, the costs associated with those services are limited to

“Only (an) enterprise fund’s² equitable share of”³ “necessary and reasonable”⁴ “indirect costs”⁵ “for the proper and efficient administration and performance of the enterprise fund(s)”⁶ from which transfers are to be made. Which “may include costs for services and property that are payable from the general fund or any internal service funds or other funds² of the local government”⁷ but “must be limited to indirect costs for services and property provided by the local government on a centralized basis, which may include, without limitation, general administrative costs, planning costs, budgeting costs, payroll costs, legal costs, legislative costs, and costs for general ledger accounting, internal audits, the administration of accounts payable, human resources, general services, emergency services, public relations, public works, property management, building and grounds maintenance, procurement and contracts, grants management, risk management, a motor pool, road maintenance, water and sewer service, telecommunications, automatic data processing services, printing, maintaining a library, records maintenance, storage and warehousing, and animal control.”⁸

Hence the question whether the District’s allocated central service cost transfers represent an equitable allocation of the allegedly necessary and reasonably priced central service costs staff and past/current Boards have represented/currently represent?

The concept of allocated “central services” which the District relies upon for its various transfers is recognized in the “Local Government Budget and Finance Act”⁹ (“LGBFA”) as a “cost allocation (transfer device) for employees, equipment or other resources related to the purpose of…enterprise fund(s)” for which they are created¹⁰. “The extent to which general, overhead, administrative and similar expenses of a local government of a type described in paragraph (c) of subsection 1 (above,) may be (legitimately) allocated to an enterprise fund,” must be determined by those regulations¹¹ which have been adopted by the Committee on Local Government Finance¹² (“CLGF”) to assist in their implementation.

Because for purposes of this discussion NRS 354.626(1) makes it unlawful for “the governing body…of a local government¹³…or (any) member thereof, officer, office, department or agency (to)…willfully…

“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 (unless)…the…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 nonconsent item that is separately listed on the agenda for a regular meeting of the governing body,”¹⁴

Here we examine the District’s alleged allocated central service cost transfers.

At first blush NRS 354.613(1)(c)¹⁵ would appear to grant that authority given it addresses “transfer(s of) money from (a local government’s)…enterprise fund(s).” However, given the District’s non-compliance with the requirements of NAC 354.865 through NAC 354.867¹⁶ applicable to all central services cost allocation plans (discussed below), we assert these transfers are really based upon no authority whatsoever! In point of fact, just like the Recreation Facility Fee (“RFF”) is to the District’s Community Services Fund, and the Beach Facility Fee (“BFF”) is to the District’s Beach Fund¹⁷, we believe the District’s allocated central service cost transfers represent nothing more than a financial “subsidy” which pays for the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. In fact, it actually pays for even more! That would be the accumulation of unrestricted reserves (i.e., a “slush fund”) available for future Boards’ unidentified, unbudgeted, and unappropriated “pet projects.” Consider the following:

NRS 354.613(1)(c): As we’ve elsewhere discussed, General Fund expenses which can permissibly be incorporated into a NRS 354.613(1)(c) central services cost allocation plan¹⁸ must:

“(a) Make…an equitable distribution of all general, overhead, administrative and similar expenses of the local government among all activities of the local government among all activities of the local government, including the activities funded by the enterprise fund; and,

(b) Only the enterprise fund’s equitable share of those expenses may be treated as expenses of the enterprise fund and allocated to it pursuant to paragraph (c) of subsection 1.”¹⁹

Those Regulations Which Apply to The District‘s Allocation of Central Service Costs to Its Enterprise Funds: Because NRS 354.613(8) instructs that

“For the purposes of paragraph (c) of subsection 1²⁰ (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 has adopted regulations²¹ pertaining to central service cost allocation plans¹⁸. Those regulations apply to

Every local government²²

“1. That…ha(s)…enterprise funds; or,

2. To which subsection 1 of NRS 354.613 appl(ies).”²³

Given IVGID is a GID that has enterprise funds²⁴, in other words, IVGID.

With the foregoing in mind, because NAC 354.867(1)(b) instructs that

“The costs which may be allocated to an enterprise fund of a local government pursuant to paragraph (c) of subsection 1 of NRS 354.613 must be…consistent with policies, regulations and procedures that apply uniformly to the enterprise fund and other activities of the local government,”

All legitimate central service costs must be allocated equitably and applied uniformly amongst all activities of the local government.

Although IVGID staff matter-of-factly tell us the District has adopted a Central Service Cost Allocation Plan¹⁸ pursuant to NAC 354.8668 which “equitably distribute(s) general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s (various) enterprise funds,”²⁵ they fail to share the express NAC 354.8668(5)(b) and NAC 354.867 factors upon which those distributions may legitimately be allocated²⁶, and have arguably been allocated. So let us “be the one(s)”²⁷ to “pull back (IVGID’s) veil of secrecy.”²⁸

Expenses assigned to the District’s General Fund must:

1. Be “reasonable;”²⁹

2. “Provide…for an equitable distribution of general, overhead, administrative and similar costs of the local government;”³⁰

3. Be “of a type generally recognized as ordinary and necessary for the operation of the…fund(s)”³¹ from which transfers are proposed to be made;

4. Be “necessary…for the proper and efficient administration and performance of th(os)e…fund(s);”³²

5. Be properly “assignable or chargeable to the cost objective(s) of th(os)e…fund(s)”³³ from which transfers are proposed to be made;

6. “Be limited to indirect costs for services and property provided by the local government on a centralized basis;”³⁴

7. Be “determined in accordance with generally accepted accounting principles”³⁵ (“GAAP”);

8. Not exceed “market prices for comparable services or property;”³⁶

9. Be “consistent with sound business practices;”³⁷

10. Be an “indicia of an arm’s length transaction;”³⁸

11. Be “documented adequately for independent verification;”³⁹ and,

12. Demonstrate that 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.”⁴⁰

Those Factors Actually Incorporated Into The District‘s Updated⁴¹ Central Service Cost Allocation Plan(s): Okay. So now that we know what factors are required to be included in a local government’s central service cost allocation plan¹⁸, which ones, if any, have actually been incorporated into the District’s past Plan(s)?

Until Fiscal Year 2022-23⁴²:

1. “Eligible costs…(we)re based on the final (rather than tentative) General Fund budgets for Accounting…and Human Resources…These costs (we)re then, in turn, (allegedly) allocated to all District Funds/Departments/Divisions as follows:

2. Eighty percent (80%) of the eligible costs of the Accounting budget (were) allocated based on each Fund’s/Department’s/Division’s/Activity’s percentage of District-wide budgeted non-personnel costs exclusive of capital, debt and transfers….

3. 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…(were) allocated based on each Fund’s/Department’s/Division’s/Activity’s average percentage of District-wide full-time equivalent (FTE) positions, wages and benefits.

4. The combined amounts of Central Services Overhead costs…represent(ed) the amounts budgeted as Central Services Overhead costs within each Fund’s/Department’s budget…(and,)

5. The total of the amount of Central Services Overhead charged to all applicable budgetary units for the accounting period w(ere) also…recorded in the General Fund as a credit to expenditures within the Accounting…and Human Resources…budgets, reflective of each activities’ share of recovered costs.”

So how did application of this formula translate into actual central services cost allocations from inception through FY 2022?

Year	Revenues	Expenses	Deficiency	Central Services Cost Transfers	Excess (Deficient) Transfers	Fund Balance
201143						$ 615,775
201244	$ 2,458,945	$ 3,164,826	$    705,880	$ 1,074,000	$ 368,120	$ 983,893
201345	$ 2,547,137	$ 3,648,330	$ 1,101,193	$ 1,000,200	($ 100,99346)	$ 886,664
201447	$ 2,618,192	$ 3,196,367	$  578,175	$ 1,068,996	$ 490,821	$ 1,391,021
201548	$ 2,793,122	$ 3,783,856	$ 990,734	$ 1,101,000	$ 110,266	$ 1,501,287
201649	$ 3,035,284	$ 3,589,578	$ 554,294	$ 1,123,020	$ 568,70650	$ 1,819,993
201751	$ 3,017,165	$ 3,752,192	$ 735,027	$ 1,177,200	$ 442,17352	$ 1,862,249
201853	$ 3,266,537	$ 3,700,016	$ 433,479	$ 1,094,000	$ 660,52154	$ 2,522,786
201955	$ 3,653,450	$ 4,054,406	$ 400,956	$ 1,169,400	$ 768,44456	$ 3,765,586
202057	$ 3,876,422	$ 4,079,259	$ 202,837	$ 1,367,400	$ 1,164,56358	$ 4,630,149
202159	$ 3,779,698	$ 4,258,547	$ 478,849	$ 1,335,748	$ 1,100,41160	$ 5,730,56061
202262	$ 3,929,652	$ 3,741,148	$ 188,504	$ 1,538,80763	$282,70164	$ 6,013,26165

General Fund Balance Creep: As the reader can see, “at the end of the (2010-11) fiscal year the District’s General Fund balance…(which) serve(s) as a useful measure of (this) government’s net resources available for spending at the end of the fiscal year⁶⁶…remained unchanged (as it had been since 2006-07 and pretty much before) at $615,774.”⁶⁷ Yet as of June 30, 2022 the “unassigned fund balance (in the District’s General Fund)” had unnecessarily³¹ mushroomed to a whopping $6,013,261⁶⁵! In other words, a $5,397,487 increase over eleven (11) years, or an average increase of nearly $500,000 ($490,681 to be exact) per year for each and every one of those eleven (11) years! We have labeled this phenomena “fund balance creep” which parenthetically, violated the following District policies in effect at the time:

1. ¶2.0 of Policy No. 7.1.0⁶⁸ which instructed 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);”

2. ¶3.0.2 of Policy No. 18.1.0⁶⁹ which instructed that central services cost “billing(s)…shall be adjusted…(in) June…each year…such that the total charges to the Enterprise Funds, for the fiscal year ending that respective June…do…not exceed the actual allowed incurred costs net of actual applicable credits…In no case can the total billing exceed the total approved with the adoption of the District Annual Operating Budget for that fiscal year;” and,

3. Note 1(S) on page 34 of the District’s 2022-23 CAFR which instructs that “while (central services) charges are estimated based on budgeted expenses, actual charges are based on actual expenditures throughout the year (and) a year-end adjustment may be required to ensure (that) costs charged do not exceed costs incurred for the fiscal year.”

Given 15% of 2021-22 budgeted ($4,135,303⁷⁰) General Fund expenditures, for example, totaled $620,295, and the General Fund balance stood at a whopping $6,013,261⁶⁵, this represents 9.69 times the maximum permissible fund balance according to ¶2.0 of Policy No. 7.1.0 at the time! In other words, starting in 2011-12, and continuing for the next decade, the District deliberately used central service cost transfers to increase the unassigned General Fund balance (rather than keeping it “static”). In order to accumulate a “slush fund” available for future Boards’ unidentified, unbudgeted, and unappropriated pet projects. This “General Fund balance creep” is evidence that the real purpose of the District’s annual updates to its central service cost plan is not “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 (various) enterprise funds” as staff and past Boards have represented²⁵.

The Failure to Make Year–End Adjustments: As aforesaid, ¶3.0.2 of Board Policy No. 18.1.0 instructs that the amount of Central Services Overhead charged out through the District’ allocation plan shall not exceed the actual cost of overhead incurred. For this reason, prior to the close of the last accounting period of the fiscal year, the cumulative amount of Central Service Charges posted for the fiscal year is required to be compared to actual expenditures incurred by Accounting and Human Resources activities. And “to the extent…Central Services Overhead costs charged (and recovered) exceed the amount of eligible overhead costs actually expended, an adjustment (sha)ll be included in the June Central Services Overhead charge.” But this is an endeavor the District never performs. And as can be seen, certainly was not performed through fiscal year 2021-22. The practice of failing to make year-end adjustments represents further evidence the District’s annual update to its central service cost allocation plan is not limited to “equitably distribut(ing) general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s (various) enterprise funds” as staff and past Boards have represented²⁵.

Look What Happened For Fiscal Year 2022-23: From inception, revenues and expenses associated with the District’s public parks and athletic fields have been reported in its “Parks” Fund⁷¹, a sub-fund of the District’s Community Services Fund². Yet starting in fiscal year 2022-23, the Board at the time decided to transfer that reporting⁷² to the District’s General Fund. The reason being that because the District’s parks were and are “public” facilities available to the general public as a whole without the assessment of user fees⁷³, it’s unfair to shackle local parcel owners with a financial obligation which benefits the general public as a whole. But since this transfer in reporting meant there would now be an additional shortage of nearly $1.2 million in the District’s General Fund⁷⁴ annually, rather than reducing intentional overspending it would have to be made up somehow and from somewhere. Reverting to its policy of covering recreation financial shortfalls with the RFF/BFF, staff informed the Board and the public that the:

“Preferred (and in essence only) means (wa)s to (create) budget capacity in (the) General Fund” by disingenuously increasing the amount of central service cost transfers.

But since spending assigned to the District’s Community Services and Beach Funds exceeds revenues, the shortfall is covered by the RFF/BFF, respectively. And any shortage in the Utility Fund is covered by increased water and sewer fees. So if budget capacity in the District’s General Fund had to be manufactured from increased central service cost transfers, it meant that the RFF/BFF as well as water/sewer fees would have to be increased by even higher RFFs/BFFs and utility charges. But the Board refused to go along with staff’s proposed program. Instead, the District began invading the excess unrestricted General Fund balance to the tune of $1,330,735 or more annually!

And in addition, instead of allocating all $1,776,154 of alleged central service costs amongst all District activities, the Board allocated none to its Internal Services enterprise Fund⁷⁵, and gave the District’s Utility enterprise Fund “a holiday…from paying the General Fund’s central services allocation of $445,000.”⁷⁶ Which amongst other consequences, required the District’s Community Services and Beach enterprise Funds to pay inequitable allocations⁷⁷. All of which resulted in a draw down of excess fund balance.

Look What Happened For Fiscal Year 2023-24: Given staff refused to reduce intentional overspending assigned to the District’s General Fund, the Board was left with little choice when it came to FY 2023-24. Meaning it was forced to implement staff’s preferred and only means for covering the financial shortfall. That was increasing the amount of central services cost transfers. And as a result, the methodology outlined at ¶2.0.2 of Policy No. 18.1.0 was changed⁷⁸ so that

“Eighty percent (80%) of Budget and Accounting central overhead costs, net of credit for interest earnings, (we)re to be allocated on the basis of Services and Supplies expenses, by fund” (see ¶2.0.2.1);

“Human Resources, Payroll and twenty percent (20%) of Budget and Accounting costs (we)re to be allocated on the basis of a blended rate of budget(ed) full-time equivalent positions, wages and benefits” (see ¶2.0.2.2); and,

“Information Technology – 45% based on the number of revenue transactions, or (if) that number is not readily available, then based on total revenue, and 45% based on workstation and point-of-sale counts or, if those are unavailable then based on FTE headcount” (see ¶2.0.2.3).

This disingenuous change in methodology became “add(ing the costs of)…Information Technology to (the District’s) Central Services Overhead Allocation Plan.”⁷⁹ So that instead of $1,887,589⁸⁰ worth of central services costs to be allocated, we were told that $3,046,198⁸¹ would now be required.

Look What Happened For Fiscal Year 2024-25: For some reason higher central services costs were not actually implemented until fiscal year 2024-25. Central services cost transfers increased to a whopping $3,742,044⁸². Given the difference between revenues⁸³ and expenses⁸⁴ totaled $3,258,067, and central service cost transfers totaled $3,742,043⁸⁵, the District was able to put an end to reducing excess General Fund transfers by adding an additional $483,876.

General Fund Balance Plunge: Commencing in 2022-23, the District returned to the very same methodology that existed prior to passage of NRS 354.613⁸⁶! Using transfers from one or more of the District’s enterprise funds to its General Fund to cover the financial shortfall between budgeted revenues and intentional overspending⁸⁷ in order to balance the budget⁸⁸. Until FY 2025. The reader can see from the spreadsheet below how these transfers from the District’s General Fund balance were used to pay for massive overspending increases in FY 2024 over FY 2023 by a whopping $2,246,887 (from $1,661,889 to $3,940,945). Causing excess General Fund balance to drop, and central service cost transfers to nearly double (from $1,331,154 to $2,191,924). We have labeled this phenomena “fund balance plunge:”

Year	Revenues	Expenses	Deficiency	Central Services Cost Transfers	Excess (Deficient) Transfers	Fund Balance
202259						$ 6,013,26162
202389	$ 4,269,727	$ 5,931,61690	$ 1,661,889	$ 1,331,154	($ 1,330,735)	$ 4,682,52691
202492	$ 4,352,469	$ 8,293,41493	$ 3,940,945	$ 1,956,300	($ 1,984,645)	$ 1,300,94494
202595	$ 4,527,142	$ 7,785,209	$ 3,258,067	$ 3,742,04396	$ 483,976	$ 1,740,02397
202698	$ 4,512,486	$ 8,553,47074	$ 4,040,984	$ 4,050,500	$ 9,516	$ 1,965,470

In our opinion the foregoing is further evidence that the District’s allocated central services cost plan¹⁸ really doesn’t really reflect the “equitabl(e) distribut(ion of) general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of (its various) enterprise funds” as staff and past Boards have represented²³. But rather, serve as another example of assessing more than financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. at the time.

In our opinion General Fund balance creep is further evidence that the real purpose of the District’s annual updates to its central services cost allocation plan is not “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 (various) enterprise funds” as staff and past Boards have represented²³. But rather, to act as a financial “plug” or “subsidy” which pays for the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund which as the reader now sees, totals even more!

Look What Happened For Fiscal Year 2024-25: Central services cost transfers increased to a whopping $3,742,044⁹⁹. Given the difference between revenues¹⁰⁰ and expenses¹⁰¹ totaled $3,258,067, and central service cost transfers totaled $3,742,043¹⁰², the District was able to add an additional $483,876 to its General Fund balance. More evidence the District’s allocated central services cost plan¹⁸ really doesn’t really reflect the “equitabl(e) distribut(ion of) general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of (its various) enterprise funds” as staff and past Boards have represented²³. But rather, another example of assessing more than financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. at the time.

Fiscal Year 2025-26:

Then Look What Happened For Fiscal Year 2026-27: again, to cover the financial shortfall between budgeted revenues and intentional overspending. The methodology for determining allocated central services costs was adjusted again to modify ¶2.0.2.2 to read

“Eighty percent (80%) of Human Resources payroll and twenty percent (20%) of Budget and Accounting payroll costs (we)re to be allocated on the basis of a blended rate of budget fulltime equivalent positions, wages and benefits.”¹⁰³

The stated rationale for this adjustment again supports our conclusion that rather than recouping an “equitabl(e) distribut(ion of) general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…(the) operations of (its various) enterprise funds” as staff and past Boards have represented¹⁹, they’re intended to cover the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. Just listen:

“As part of the fiscal year 2026-27 budget process, the total costs that would have been included in the central service cost calculation was greater than $4 million. This figure would provide a very costly amount to the various departments¹⁰⁴. (Since) the cost allocation plan is meant to bring the general fund whole¹⁰⁵ and maintain operations…the calculation was updated to only include the total payroll costs of the identified departments, information technology, human resources and finance.”¹⁰⁶

Ladies and gentlemen. How many times do we have to in essence hear the same thing before we understand these disingenuously labeled fees aren’t what staff and past/current Boards have told/tell us?

Once a local government chooses to allocate costs which are marginally, if at all, necessary to those enterprise funds (with restricted revenue sources) which are assessed (such as “executive and legislative costs, it)…should exercise caution and…maintain documentation to show that those charges are equitable and reflect the cost of actual services provided.”¹⁰⁷ Precisely what NAC 354.867(1)(d) instructs¹⁰⁸! Yet that’s not what IVGID did at the time, nor currently does.

At least up and until FY 2022-23 staff told the public that “the District…limit(s its)…allocation (to) allowable…Human Resources and Finance/Accounting…administrative overhead costs” only¹⁰⁹:

“Eligible costs to be allocated…are based on the final General Fund budgets for Accounting (activity 120)…and Human Resources (activity 150)…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, exclusive of capital, debt and transfers. These would include Professional Services, Services and Supplies, Utilities, and Cost of Goods Sold. One-hundred percent (100%) of (the) costs of the Human Resources budget plus 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 thus allocated to each Department/Division/Activity 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 (is)…recorded in the General Fund as a credit (against) expenditures within the Accounting (activity 120) and Human Resources (activity 150) budgets, reflective of each activit(y’)s share of recovered costs.”¹¹⁰

These representations are not true. These transfers end up extending to all [rather than “only the enterprise fund’s equitable share of those expenses”¹¹¹] non-personnel costs assigned to the District’s General Fund including personnel, capital and debt. As an example, page 114 of the 5/26/2022 Board packet depicts a statement of estimated 2022-23 sources (i.e., revenues) and uses (i.e., expenses) budgeted to the District’s General Fund. $4,117,002 of revenue and $6,773,405 of expenses. Given budgeted personnel costs total $4,279,462, and budgeted capital improvement costs total $633,000, all remaining expenses total $1,860,943. Yet given there were $1,887,589 of budgeted central services cost transfers, it’s clear the latter ended up paying for all remaining operational expenses, and more. Not just those assigned to Accounting and Human Resources.

And there are other examples as well. How about legal fees the District incurs with Josh Nelson’s and Sergio Rudin’s firm to attend Board and Audit Committee meetings? Or the legal fees the District incurs to defend litigation such as citizen Mark Smith’s public records concealment lawsuit. Or the “Dr. Bill” therapy sessions our prior Board contracted for to get all of our trustees to work together. Or membership fees in the League of Cities and Chamber of Commerce. Or the expensive accounting and HR software costs we regularly incur. And their annual licensing renewal fees. How about Government Finance Officers Association (“GFOA“) membership and conference attendance fees? And those additional costs to purchase a prestigious GFOA “certificate of excellence” as a propaganda piece to be included in our Annual Comprehensive Financial Reports (“ACFRs”). Or the funds necessary to replace ad valorem tax revenues lost by Washoe County’s unilateral offset to pay for court ordered tax refunds due to the county’s improper assessment methods? And the fuels management/defensible space services which benefit the entire Incline Village/Crystal Bay community rather than just those whose parcels/dwelling units which are assessed? What do any of the services represented by any of these costs have to do with necessary, reasonable or equitable central services costs the General Fund allegedly incurs on the District’s other departments’ behaves? Yet these and other similar extraneous costs have absolutely nothing to do with providing necessary services to the District’s various enterprise departments. And they’re included in the District’s formula for allocating General Fund overspending.

Moreover, because IVGID is a local government, it is required to comply with a series of LGBFA requirements having little if anything to do with the purposes for which its enterprise funds were established (i.e., providing water, sewer, and public recreation services to local parcel owners). Since General Fund expenses include all of these governmental expenses, it’s improper to assign any allocation based thereon⁵⁷. Yet it does!

By paying all of the District’s General Fund overspending, not only do central services cost transfers cover more than the financial shortfall between budgeted revenues and all intentional overspending assigned to the General Fund, they empower staff to compel our enterprise funds to pay far more than their equitable share, and disingenuously proclaim they have passed a balanced budget¹¹²! And because they do, we believe these facts represent further evidence the District’s annual update to its central services cost allocation plan does not “equitably distribute general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s (various) enterprise funds” as staff and past Boards have represented⁶.

And The Allocations 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” IVGID¹¹³.

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.”¹¹⁴

IVGID Staff‘ Admission: On May 26, 2022 staff inadvertently admitted what we represent. As detailed above, staff tell the public “the District…limit(s its)…allocation (to) allowable administrative overhead costs to Human Resources and Finance/Accounting expenditures” only¹¹⁵. But as we’ve demonstrated above, in reality those transfers end up extending to all non-personnel costs assigned to the District’s General Fund exclusive of personnel, capital and debt. We contend this admission¹¹⁶ is further evidence that the true purpose of the District’s annual update to its central services cost allocation plan is not “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 (various) enterprise funds” as District staff and the Board represent⁶.

The Failure to Make Year–End Adjustments: ¶3.0.2 of Board Policy No. 18.1.0 instructs that the amount of Central Services Overhead charged out through the District’ allocation plan shall not exceed the actual cost of overhead incurred. For this reason, prior to the close of the last accounting period of the fiscal year, the cumulative amount of Central Services Charges posted for the fiscal year is required to be compared to actual expenditures incurred by Accounting and Human Resources activities. And “to the extent that Central Services Overhead costs charged (and recovered) exceed the amount of eligible overhead costs actually expended, an adjustment (sha)ll be included in the June Central Services Overhead charge.” But this is an endeavor the District never performs.

As can be seen from the spreadsheet above which reports yearly General Fund revenues, expenses, deficiencies, central services cost allocations, and their effect on fund balance, since 2012 excess charges have been collected and added to an ever growing General Fund balance. This practice of failing to make year-end adjustments represents further evidence the District’s annual update to its central services cost allocation plan is not limited to “equitably distribut(ing) general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s (various) enterprise funds” as staff and past Boards have represented⁶.

General Fund Balance Plunge: When the then Board refused to go along with staff’s proposed fix, starting in 2022-23 the District began invading General Fund balance to the tune of $1,330,735 or more annually. In other words, the very same methodology that existed prior to passage of NRS 354.613¹¹⁷! Or using transfers such as these from one or more of the District’s enterprise funds to cover the financial shortfall between budgeted revenues and intentional overspending¹¹⁸ in order to balance the budget¹¹⁹. Until FY 2025. The reader can see from the spreadsheet below how these transfers from the District’s General Fund balance were used to pay for massive overspending increases in 2024 over 2023 by a whopping $2,246,887 (from $1,661,889 to $3,940,945). And as a result, central services cost transfers were required to nearly double (from $1,331,154 to $2,191,924). And because still this increase in central services cost transfers wasn’t sufficient to cover out-of-control overspending, we have labeled this phenomena “fund balance plunge:”

Year	Revenues	Expenses	Deficiency	Central Services Cost Transfers	Excess (Deficient) Transfers	Fund Balance
202241						$ 6,013,261
2023120	$ 4,269,727	$ 5,931,616121	$ 1,661,889	$ 1,331,154	($ 1,330,735)	$ 4,682,526122
2024123	$ 4,352,469	$ 8,293,414124	$ 3,940,945	$ 1,956,300	($ 1,984,645)	$ 1,300,944125
2025126	$ 4,730,729	$ 8,110,716127	$ 3,379,987	$ 3,742,043	$ 362,056	$ 1,272,892
2026128	$ 4,512,486	$ 8,553,47074	$ 4,040,984	$ 4,050,500	$ 9,516	$ 1,965,470

The Timing of The District‘s Adoption of Its Annual Updated Central Services Cost Allocation Plan(s): also supports the conclusion the District’s central services cost transfers do not evidence what staff and past Boards have represented⁶. NAC 354.8668(7)(a) instructs that:

“The central service cost allocation plan of a local government….must be updated¹²⁹ annually…before…April 15 (of each year. In other words,)…the date on which the local government must submit its tentative budget to the Department of Taxation¹³⁰.

But this never happens. Typically, the District’s central services cost allocation plan⁵ 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, 2024¹³¹ at the same time its final budget was approved. And for 2025-26, the same thing happened¹³². So why the delay in annually updating the District’s central services cost allocation plan?

If your real intent is to use the artifice of a “plan” to plug the financial shortfall between budgeted revenues and intentional overspending (which is what we contend), don’t you have to know the amount of the shortfall before you start the plugging? Stated differently, if you come up with a central services cost transfer amount before coming up with a budget which by design includes intentional overspending, don’t you run the risk your allocated central services cost transfer amount won’t be adequate? It is for this reason then we believe that the timing of the District’s annual update to its central services cost allocation plan represents additional evidence its real purpose is to accomplish exactly what we represent.

Rescission of The Decision to Financially Report “Parks’” Revenues And Expenses in The District’s General Fund: also supports the conclusion the District’s central services cost transfers do not evidence what staff and past Boards have represented⁶. Faced with an ever plunging fund balance (see the spreadsheet above), staff had to come up with more in order to pay for intentional overspending. And their answer became to reverse prior Board’s decision to financially report “Parks’” revenues and out-of-control overspending in the General Fund. And instead, to report them in the District’s Community Services Fund. So at the Board’s April 9, 2025 meeting it adopted Resolution No. 1912 which effective July 1, 2025, formally returned financial reporting of Parks operations to the District’s Community Services Fund¹³³. Notwithstanding, this still wasn’t enough! Because for 2025-26, the General Fund balance is projected to fall dangerously close to the Policy No. 7.1.0‘s 15% minimum of annual budgeted expenditures.  Meaning only one remaining alternative exists. You guessed it! To continue to increase enterprise fund transfers disingenuously labeling them central services cost transfers.

In our opinion these never ending increases in central services cost transfers represent more evidence that the true purpose of the District’s annual updates to its alleged central services cost allocation plan is not “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 (various) enterprise funds” as staff and past Boards have represented⁶. But rather, the financial “plug” or “subsidy” we contend pays for this shortfall. Plus as we have seen (see our General Fund balance creep discussion above), even more! Just look at the massive increases in central services cost transfers between 2024-25 and 2025-26¹³⁴.

Where in NRS 354.613, NAC 354.8668, or NAC 354.867 is The Public Instructed a Central Services Cost Allocation Plan‘s Methodology, Founded in Part Upon 80% of a Local Government‘s Department‘s, Division‘s or Activity‘s Budget And Accounting Services And Supplies Expense¹³⁵, is Equitable? Nowhere!

And Where in NRS 354.613, NAC 354.8668, or NAC 354.867 is The Public Instructed a Central Services Cost Allocation Plan‘s Methodology, Founded in Part Upon 20% of a Local Government‘s Department‘s, Division‘s or Activity‘s FTE Budget and Accounting Wage And Benefit Costs, And 100% of Its FTE Human Resources Wage, Benefit And Payroll Costs¹³⁶, is Equitable? Nowhere!

Moreover, Over Reliance Upon FTEs Which is the Earmark of The District‘s “So Called” Updated Central Services Cost Allocation Plans, Results in an Inequitable Allocation: Recall that the District’s central services cost allocation plan⁵, in part, is based upon each Fund’s/Department’s/Division’s/Activity’s average percentage of estimated District-wide FTE positions, budgeted wages, employee benefits and payroll costs¹³⁷. In other words, the District’s plan in essence “averag(es) each activity’s share of estimated full-time equivalents, budgeted wages, and employee benefits.”⁷⁷ Given NRS 354.613(8) instructs that:

“(a) Each cost allocation (must) make…an equitable distribution of all general, overhead, administrative and similar expenses of the local government among all activities of the local government…(b) Only the enterprise fund’s equitable share of those expenses may be treated as expenses of the enterprise fund (from which transfers are to be made) and allocated to it pursuant to paragraph (c) of subsection 1,”

And NAC 354.8668(5)(a) instructs that:

“The costs which may be allocated to an enterprise fund of a local government pursuant to paragraph (c) of subsection 1 of NRS 354.613 must be…necessary and reasonable for the proper and efficient administration and performance of the enterprise fund” to which charges are assessed,

The ultimate question then, is whether the District’s updated central services cost allocation plan⁵ is too heavily dependent upon FTEs, and their wages and benefits²²? Rather than allowing for different types of costs incurred to better match amounts allocated with the drivers of those costs to the activities responsible for paying for them, to “provide…for an equitable distribution of general, overhead, administrative and similar costs of th(is) local government.”¹¹ For the reasons which follow, we answer yes!

1. What Are General Improvement Districts (“GIDs”)? The first thing the reader needs to understand before answering this query is that IVGID is government¹³⁸. Not a lesser percentage of government, nor an homeowners’ association, nor merely a “quasi” government¹³⁹. 100% government!

2. What Are The Purposes For GIDs? The next thing the reader needs to understand before answering this query are the limited purposes for GIDs. Not the many activities IVGID is engaged in, but rather, those limited activities based upon their raison d’être. As we’ve elsewhere documented¹⁴⁰, GIDs exist¹⁴¹ “to provide various urban type services (to real property) in…areas where such services (a)re not available and c(an)not or w(ill) not be provided by (their) general-purpose government(s)”¹⁴² (here Washoe County). They don’t exist to provide for the health, safety and general welfare of their inhabitants. Or visitors. Like “save Lake Tahoe.” Or provide for a protective forest halo (aka defensible space). Or lobby for or against statewide and federal legislation. Or urge the federal government to get out of the war in Vietnam.

3. What Powers May GIDs Legitimately Exercise? The next thing the reader needs to understand before answering this query are the limited powers GIDs may expressly¹⁴³ exercise¹⁴⁴. For purposes of this discussion, it’s our position GIDs have no power to engage in purely commercial “for profit” (or more aptly “for loss”) business enterprises marketed to the world’s tourists¹⁴⁵ rather than “the inhabitants…of (Incline Village, Crystal Bay) and of the State of Nevada.”¹⁴⁶

4. IVGID Employs Nearly 1,000 Employees: The next thing the reader needs to understand before answering this query is that IVGID employs far, far more than 271.16 employees¹⁴⁷! For some number of years Transparent Nevada used to track the number and particulars of employees hired by all Nevada local governments. And for some number of years IVGID was averaging close to 1,000! In 2019, for instance, the number was 1,012¹⁴⁸. IVGID failed to report in 2020 and 2021. And then in 2022 reported 839 employees. However since then, Transparent Nevada has ceased reporting altogether. Nevertheless, the point here is that regardless of what today’s number actually is, it’s a whole lot more than 271.16!

5. The Per FTE Cost For The District‘s Central Services Compared to That Insofar as Each of The District‘s 1,000 or More Employees is Concerned: Where central services costs are founded upon FTEs, the higher the per FTE cost, the greater the central services cost allocation. In other words, another “means: of supercharging a “justified ends” methodology. So what services do IVGID’s HR, Accounting (Finance) and IT Departments actually furnish to each of its Funds, Departments, Divisions, and Activities? Are they “necessary…for the proper and efficient administration and performance of the…fund(s)” from which transfers are budgeted to be made¹²? Are they reasonably priced¹⁰? Let’s begin answering these question by examining our General Fund HR, Finance and IT Departments.

6. HR: What services does HR furnish? Hiring, firing, compensation, benefits, training, recruiting, etc. So don’t these services have to be furnished for all employees, as opposed to just the FTEs the District reports? And when you have a constant flow of seasonal or part time employees who have jobs supporting commercial “for profit” business enterprises, isn’t HR furnishing more services to these employees rather than the District’s relatively static permanent full time employees? And are all of these employees really necessary just to provide water, sewer, and recreation facilities to local parcel owners as opposed to the world’s tourists?

7. Finance: What services does Finance furnish? Transaction processing, invoice payment and monitoring, expense reporting, budgeting, auditing, etc. If you’re operating a number of commercial “for profit” business enterprises, as does IVGID, isn’t Finance furnishing far more services to these businesses than would be the case if IVGID weren’t in the recreation business? And because IVGID is a local government, isn’t it required to comply with a series of unique Local Government Budget and Finance Act¹⁴⁹ (“LGBFA”) requirements having little if anything to do with providing water, sewer, and public recreation services to local parcel owners? Like yearly tentative¹⁵⁰ and final¹⁵¹ budgets, annual audits¹⁵², annual reports of indebtedness¹⁵³, annual capital improvement plans¹⁵⁴, annual reports concerning capital improvements owned, leased or operated¹⁵⁵ and indebtedness¹⁵⁶, etc? And if so, are these endeavors “of a type generally recognized as ordinary and necessary for the operation of the…fund(s)”¹¹ from which distributions have been allocated? Are they “necessary…for the proper and efficient administration and performance of th(os)e…fund(s)”¹² from which distributions have been allocated?

8. IT: What services does IT furnish? It manages IT infrastructure, provides helpdesk support, and implements security measures. Essentially, it’s the “backbone” of IVGID’s IT needs, allowing other departments to focus on their core functions. Again, if you’re operating a number of commercial “for profit” business enterprise endeavors, isn’t IT furnishing far more services in support of these businesses than would be the case if IVGID were limited just to providing water, sewer, and recreation facilities to local parcel owners rather than the world’s tourists? Such as multi-million dollar point-of-sales software? Or a million dollar plus Tyler Munis enterprise ERP (enterprise resource planning) software?

Doesn‘t Over Reliance Upon a Methodology Primarily Based Upon a Department‘s/Division‘s/Activity‘s Higher Wages And Benefits Per FTE Skew The Allocation? To answer this question, the reader’s attention is directed to the spreadsheet below which reports FTEs by District departments, and their central services cost allocations compared to all costs. In particular, we have highlighted the allocation to the District’s Utility Fund because it consists of the fewest number of FTEs, yet realizing some of the highest wages and benefits per employee (remember, these employees are unionized). And expending some of the highest equipment and machinery costs (reported under “Services and Supplies”) in the District. Stated differently, the District’s allocation of per FTE central services costs is so glaringly high insofar as the Utility Fund is concerned, compared to the remainder of District operations, that it begs for the skew in allocation we complain of. Rather what it demonstrates is the same reason why Jesse James used to rob banks. Because “that’s where the money is:”¹⁵⁷

Year	Utility FTEs	Percentage All FTEs	General Gov‘t FTEs	Culture & Recreation FTEs	Total FTEs	Total Allocated Central Services Costs	Utility Fund Portion of Allocated Central Services Costs	Utility Fund Percentage of Allocated Central Services Costs
2014158	32	13.45%	37	167	238	$ 1,068,996	$ 291,000	27.22%
2015159	32.4	13.88%	35.7	165.4	233.5	$ 1,101,000	$ 283,000	25.7%
2016160	34.5	14.34%	39.8	166.3	240.6	$ 1,123,000	$ 304,400	27.11%
2017161	34.6	13.68%	39.4	179	253	$ 1,177,200	$ 324,400	27.56%
2018162	34.6	13.43%	39.9	185.1	259.6	$ 1,094,000	$ 297,000	27.15%
2019163	34.6	12.3%	41.9	193.8	270.3	$ 1,169,400	$ 308,600	26.39%
2020164	34.2	12.4%	42.4	199.1	275.7	$ 1,367,400	$ 353,070	25.82%
2021165	35.2	13.63%	40.08	182.2	258.2	$ 1,335,748	$ 356,440	26.7%
2022166	37.5	13.97%	40.07	190.2	268.4	$ 1,538,807	$ 445,092	28.92%
2023167	36.2	13.81%	40.1	184.7	261	$ 1,331,154	($ 1,000,000)	-75.12%
2024168	40.2	14.84%	43.4	187.3	270.9	$ 2,245,015	$ 707,734	31.52%
2025102	41.2	15.1%	44.4	187.3	272.9	$ 3,742,043	$ 1,471,647	39.33%
2026102	53.12	19.59%	28.5	182.5	271.16	$ 4,050,500	$ 1,610,400	39.76%

Additional Evidence – 19.59% of Total FTEs For FY 2026, Yet 39.76% of All Central Services Costs? For a Department which consists of very few employees (and not portions of employees), dedicated one-hundred percent (100%) to Public Works functions¹⁶⁹, very little employee turnover¹⁷⁰, their own dedicated administrative building, with employees dedicated to their own administrative business office functions, and where the mailing and billing of 4,266¹⁷¹ monthly water and/or sewer bills have been outsourced to DataPrint, LLC.

Or For 2024-25, a Total of 15.1% FTEs And an Unbelievable 39.33% of All Allegedly Necessarily Incurred And Reasonably Priced Allocated Central Services Costs¹⁰²?

Or For 2023-24, a Total of 14.84% FTEs And an Unbelievable 31.52% of All Allegedly Necessarily Incurred And Reasonably Priced Allocated Central Services Costs¹⁰²?

Or For 2022-23, a Total of 13.81% FTEs And an Unbelievable MINUS 75.12% of All Allegedly Necessarily Incurred And Reasonably Priced Allocated Central Services Costs¹⁰¹? Instead of the Utility Fund paying its equitable share of alleged central services costs, here it realized¹⁷² a 75.12% payout¹⁷³ plus avoided paying anywhere from $445,092¹⁷⁴ to $707,734¹⁷⁵ in allocated central services cost transfers to the General Fund! According to IVGID staff the purpose of this transfer was “to aid in the cost of construction on the Effluent Pipeline” project¹⁷⁶. But this is not the truth. According to the IVGID Board, the real reason was to mitigate the impact of massive water/sewer rate increases.

Overspending Has Exploded! The reader can see from the first spreadsheet above which reports yearly General Fund revenues, expenses, deficiencies, central services cost allocations, and their effect on fund balance, that although General Fund revenues have remained relatively static over the years, expenses have exploded (especially starting in 2023). And unsurprisingly, so have the amount of central services cost transfers (after all, how else can the District generate the revenues required to pay for ever increasing overspending?).

This fact serves as further evidence that the true purpose of the District’s annual updates to its central services cost allocation plan is not “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 (various) enterprise funds” as staff and past Boards have represented⁶. But rather, to serve as a financial “plug” or “subsidy” which pays for the shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. And more!

Staff‘s Use of a “Simplistic“¹⁷⁷ Mathematical Formula Which Coincidentally Yields a Pre-Determined Result: Let’s assume you’re spending more on expenditures assigned to your General Fund¹⁷⁸ than the revenues you’re able to generate. Given ¶1.1 of Policy No. 6.1.0 mandates adoption of a balanced operating budget¹⁷⁹ (which as we’ve demonstrated is exactly what staff and past Boards do/have done), what do you do to balance your General Fund budget? The short answer is to increase revenues. But how do you increase revenues given the definition of General Fund¹²³? It’s not possible. Okay, then the short answer becomes decrease expenses. But assuming you’re unwilling (which again as we’ve demonstrated is exactly what staff and past Boards do/have done), it’s not possible either. So what do you do? The artifice they use is called central services cost transfers¹⁸⁰ from the District’s enterprise funds which benefit from steady revenue sources. And this explains what the District’s central services cost allocation plan really is.

But to put this intended methodology into practice¹⁸¹, staff need to come up with a mathematical formula which yields the intended results. A “means which justifies the end.” Don’t they? And assuming this is the case, they really don’t care about the formula’s justification nor its components. Nor its reasonableness¹⁰ nor equitableness¹¹. Right? Thus here’s what the formula they came up with, at least prior to April of 2023:

sum((x*.80)*s + sum((x*.20)+y)*sum((f+w+b))*a¹⁸²

Now what do x, y, f, w and b have to do with the necessary, equitable and reasonable costs associated with the alleged central services the District’s General Fund allegedly furnishes to its select (see discussion below) other departments, divisions and activities? The simple answer is nothing. But the more fundamental answer is it doesn’t matter. Why? Because at the end of the day, it was the above-formula which prevailed because it was the one which yielded the intended and required result! And the beauty of this formula was that if it didn’t yield the required result, no problem. Staff has the freedom to fine tune “a” from 1 – 100. Or to change the formula altogether! Which is exactly what happened in April of 2023. When the Board decided to transfer financial reporting of “Parks” to the District’s General Fund. When there would be an additional shortage of approximately $1.2 million in the District’s General Fund¹⁸³. So staff chose to cover this additional shortfall by increasing the amount of central services cost transfers.

But because one hundred percent (100%) of General Fund Accounting and Human Resources expenses were already tapped so to speak, staff had to concoct another alleged “central service” cost to throw into the formula. And that became Information Technology¹⁸⁴. In other words, rather than making $2,191,924⁶⁹ in central services cost transfers from the District’s Utility, Community Services and Beach enterprise Funds, staff convinced the Board to increase the same transfers by another whopping 70.72% to $3,742,043!

And just so everyone knows, when the then level of central services cost transfers become insufficient to cover the financial shortfall in the General Fund, which exactly what occurred for FY 2026¹⁸⁵, the formula was augmented again to include some other alleged “central service” cost never before allocated. Like the General Manager’s salary and benefits. Or the costs of our trustees. Or the costs of Risk Management. Or Health & Wellness. Or General Administration. Whatever and from wherever available to make the required numbers work (i.e., the intended result). Until there are no other costs to tap.

It is for the above-reasons we have concluded the District’s central services cost transfers to its General Fund exhibit the very ills identified by former Assembly person Kirkpatric in her May 11, 2011 testimony before the Assembly Government Affairs Committee¹⁸⁶. And they’re really no different than the forced RFF/BFF subsidies and out-of-control water and sewer charges the District levies from local parcel/dwelling unit owners. In other words,

1. The RFF pays for intentional overspending budgeted to the District’s Community Services Fund;

2. The BFF pays for the same intentional overspending budgeted to the District’s Beach Fund;

3. Ever increasing water and sewer charges pay for the same intentional overspending budgeted to the District’s Utility Fund; and,

4. Now that the reader can see the District’s central services cost transfers accomplish the very same thing insofar as the District’s General Fund is concerned.

Ladies and gentlemen, “if it looks like a duck, walks like a duck, and quacks like a duck, then it just may be a duck!”¹⁸⁷ And for these reasons we believe the above-facts represent further evidence the District’s annual update to its central services cost allocation plan does not “equitably distribute general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s (various) enterprise funds” as staff and past Boards have represented⁶. Rather, they serve as a financial “plug” or “subsidy” which pays for the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. Plus more!

Stated Differently, Numbers Don’t Lie. But The Liars Who Tell Us What Those Numbers Allegedly Represent, Do: This saying is a deviation of the maxim attributed to Mark Twain (i.e., that “figures don’t lie, but liars do figure”¹⁸⁸) more than ninety-five (95) years ago. 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 from perverting the truth in the interest of some theory he wishes to establish.”

In our opinion this describes District staff and past “rubber stamp” Boards. Since their actions admit they’re not truth tellers! And their formula for reasonably and equitably computing central services cost allocations is nothing more than a “moving target” end which is justified by its means.

IVGID Staff‘s Conscious Refusal to Allocate Alleged Central Services Costs Amongst All District Funds/Divisions/Departments/Activities: Recall that the District’s central services cost allocation plan⁵, in part, is based upon allocation amongst all District Funds/Departments/Divisions²² which arguably benefit from those vital services. However, that’s not what happens in the real world. Take a look at the 2024-25 Plan the IVGID Board adopted at its May 31, 2024 meeting¹⁸⁹. That document identifies twelve (12) different District divisions/departments/activities allegedly incorporated into the Plan. Although each was supposed to be assigned an allocated percentage of total central services costs, note that under the column “Internal Services” no allocation whatsoever was assigned. Notwithstanding we see that this fund allegedly benefited from nine percent (9%) of all central services.

The reader’s attention is next directed to the column “General.” Notwithstanding we see this fund allegedly benefited from 13% of all central services, just like the District’s Internal Services Fund the amount allocated was zero! In other words, for 2024-25 a combined twenty-five percent (25%) of all alleged central services costs were not allocated amongst all District departments/divisions.

Then of course for 2022-23 (see the discussion above), notwithstanding the District’s Utility Fund consisted of 36.2 FTEs (13.81% of all FTEs), it was assigned no central services costs whatsoever!

The District takes the position its “General…and Internal Service Funds¹⁹⁰…(need) not be billed as it would only add a layer to recalculating their related rates and charges to…other funds.”¹⁹¹ We disagree. According to the District’s “so called” plan²², all District funds/departments/divisions/activities are required to be billed their equitable allocated portion of central services costs. If that ends up increasing the rates charged by Internal Services or the amounts billed to other District departments, then so be it! Because then the truth will be revealed and we can have an honest discussion about whether it costs local parcel owners more or less than the cost to outsource these functions to maintain an Internal Services department and such bloated personnel assigned to the General Fund. Although “governments must weigh the benefits of an internal services costing system against the cost and complexity of system design choices,”¹⁹² here the District does not.

And insofar as the General Fund is concerned, here we’re talking about central services furnished to the General Fund FTEs rather than any other department’s FTEs. These costs can’t be billed out to other departments given NRS 354.613(8)(b) instructs “only (an) enterprise fund’s equitable share of those expenses may be treated as expenses of the enterprise fund and allocated to it.” The fact excess allocated central services cost revenues add to the General Fund’s fund balance, means that unlike all other District funds/departments/divisions/activities, the General Fund pays nothing for those central services furnished to its FTE’s.

Finally, as reported above, beginning in fiscal year 2023-24 the Board decided to transfer financial reporting of “Parks’” revenues and out-of-control expenses to the District’s General Fund. Prior thereto Parks was a sub-fund under the District’s Community Services Fund⁵¹. And as a sub-fund, it was charged its allocated portion of the District’s central services costs⁵³. But once this transfer in reporting took place, District staff ceased charging Parks its equitable allocated portion of central services costs. Notwithstanding it employed a minimum of 8.4 FTEs¹⁹³!

Four examples then that for whatever reasons, the District really doesn’t allocate all eligible central services costs amongst all District Funds/Departments/Divisions²² as staff represents⁶. Rather because of District staff’s “ends justify the means” philosophy, they exercise discretion to pick and choose which funds/departments/divisions/activities reimburse the General Fund for the costs of the central services allegedly furnished, and which do not. Even though the District as a whole allegedly benefits therefrom. Which again ends up skewing the allocation amongst only those FTEs which remain.

Staff‘s Conscious Refusal to Provide The Mandated, Signed, Attestation re “Compliance With The Provisions of NAC 354.865 to 354.867, Inclusive:” In order to provide assurance to the State and the public that the District’s central services cost allocation plan actually complies with law¹⁹⁴, NAC 354.8668(8) instructs its plan:

“Must include an attestation, signed by the chief financial officer (“CFO”) of the local government or his or her designee, that the central service cost allocation plan complies with the provisions of NAC 354.865 to 354.867, inclusive.”

Don’t you the reader think all local governments which adopt NAC 354.8654 central services cost allocation plans know what NAC 354.8668(8) mandates? Especially when non-adherence is criminal¹⁹⁵? Don’t you think the “so called” professional Finance Directors IVGID employs at a base compensation level of well in excess of $200,000 annually know this? Don’t you think our trustees, including a former finance professional for Procter & Gamble, Trustee Mick Homan, and our current General Manager (“GM”) who claims to have over thirty (30) years of governmental finance experience, know this? Don’t you think our ignorant rank and file finance employees who’ve been placed on notice of the requirement of NAC 354.8668(8) by members of our community know this? If so, please explain to us why in Incline Village this mandate is never complied with? Never! Let us venture an explanation of the reasons why.

Because our former CFOs, after former CFOs are unwilling to attest to a known falsehood. Which would jeopardize their continued employment with the District. And we guess they stupidly think that by keeping their mouths shut, no one will discover their intentional violations of NAC 354.8668(8). Well they’re wrong! These intentional omissions represent further evidence the District’s annual update to its central services cost allocation plan does not “equitably distribute general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s (various) enterprise funds” as staff and past Boards have represented⁶. Rather, we believe they serve as evidence these transfers serve as a financial “plug” or “subsidy” which pays for the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund plus more!

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 to Special Revenue? While continuing to report water and sewer service revenues and expenses in the Utility enterprise Fund? Faced with added scrutiny over “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 then Board to change the District’s Community Services and Beach Funds from Enterprise¹⁹⁶ to Special Revenue¹⁹⁷. The disingenuous justification given 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.

District staff’s tactics can’t be displayed in a readily understandable fashion? Are you kidding us? Although we might have been born at night, it just wasn’t last night! In our opinion what we had here was nothing short of circumventing the protections created by NRS 354.613 so District staff no longer had to concern themselves with the validity of transfers from its Utility, Community Services and Beach enterprise 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? The simple answer is they can’t! And to further demonstrate these fund conversions represent the circumvention we identify, 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-types¹⁹⁸. Now why would they do this?

Because in our view this behavior¹⁹⁹ represents an admission by means of conduct 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 shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund.

The District‘s Continued “Lack (of) Full Transparency:” The Moss Adams report concludes the District’s central services cost allocation plan is “simplistic” and “lack(s) the detail of which specific budgeted expenditure line items make…up the central service cost total to be allocated.”¹²² It therefore recommended “the District…improve the transparency of its plan:

By providing the detail of line items included in the budget that make up the total central service costs that ultimately are allocated to the District’s various activities (and)…revising (its) Policies and Practices to include the methodology…used to allocate central service costs (which)…should allow for different bases for different types of costs incurred to better match amounts allocated with the drivers of those costs to the activities responsible for paying for them.”

And specifically “to improve the transparency of the internal service costs allocated,” Moss Adams recommended:

“The District…consider accounting for central services within an Internal Services Fund (‘ISF’) instead of through reimbursements to the General Fund. ISFs provide a mechanism to accumulate costs that benefit multiple activities/funds, (and) allow for the capturing of all costs on a full accrual basis…The use of ISFs (will) require the setting of rates for interfund charges, over time, on a cost-reimbursement basis…We recommend a detailed schedule of the individual expenditure line items in the budget that make up the total to be allocated be included in the budget document along with the support for the allocation bases. To better match the costs of services used by each activity, we recommend identifying the different types of costs to be allocated and using a basis for allocation for each type that better aligns with the drivers of that cost to the benefitting activities…We recommend that interfund charges eventually become based on actual costs incurred…The correct use of an internal services fund will require reimbursement of actual costs incurred.”²⁰⁰

Four (4) or more years have lapsed since the Moss Adams report, and how many of their recommendations have been implemented? The answer is none. And why is that? Because staff have no interest in coming up with a bona fide central services cost allocation plan. What they really have an interest in accomplishing is creation of an artifice which allows them to come up with a mathematical formula (see the discussion above) which covers the financial shortfall between budgeted revenues and intentional overspending. Thus for this additional reason, we believe staff’s failure to implement any of Moss Adam’s central services cost allocation recommendations represents further evidence the District’s annual update to its central services cost allocation plan doesn’t “equitably distribute general, overhead and administrative costs incurred by the District’s General Fund in the course of supporting…operations of the District’s (various) enterprise funds” as staff and past Boards have represented⁶. Rather, they serve as a financial “plug” or “subsidy” which pays for the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. Plus more!

Conclusion: Although you won’t find it clearly stated in the 2011-12 Budget, back then the District budgeted for $771,961 of central services cost transfers²⁰¹; roughly half ($385,981) came from its Utility Fund²⁰², and the other half came from its Community Services²⁰³ and Beach²⁰⁴ Funds²⁰⁵ combined. Given the District’s 2025-26 budgeted transfers of $4,050,500¹⁰³, allocated central services costs have more than quintupled in just fourteen (14) short years! And this is in spite of the fact the District’s ad valorem and consolidated tax revenues have only increased [from $2,405,716²⁰⁶ to $4,730,448^{73 207}] by less than twofold, and expending has increased by more than 270% (from  $3,154,741²³ to $8,553,470⁷³) during the same period of time! It’s apparent to us that the massive increase in overspending has been subsidized by central services cost transfers. One can affix any label one wants to a subsidy. And one can come up with any formula one wants to conjure up which results in 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. So if not equitable allocations for legitimate central services costs, exactly what kind of monetary exactments do these transfers represent? In our opinion criminal ones! Because NRS 354.626(1) instructs that it’s unlawful for “any officer or employee of a local government (to) willfully violate NRS 354.470 to 354.626, inclusive.”²⁰⁸

And now you know!

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Conclusion: And if central services cost transfers increase by an additional $1.2 million for 2023-24 should expenses associated with the District’s public parks and athletic fields be transferred to its General Fund, as staff are proposing, the increase in central services cost transfers within ten (10) short years will be a mind boggling 461%!

As bad as these numbers are, the increase in central services cost transfers from the District’s Community Services and Beach Funds²⁰⁹ has been greater. Nearly 330% (from $357,382⁵⁶ to $1,178,206) from the District’s Community Services Fund, and nearly 494% (from $28,598⁵⁷ to $141,194⁴²) from its Beach Fund! Given the District’s Community Services and Beach Funds are budgeted to overspend nearly $7 million annually, this level of overspending is directly subsidized by the RFF and BFF, respectively, and General Fund overspending is largely subsidized by central services cost transfers from these two funds, hopefully the reader sees that overspending budgeted in the District’s General Fund is actually paid for by the RFF, BFF, and the District’s water and sewer rates and charges²¹⁰. And now you know!

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Which Extends to Fee Increases From Enterprise Funds: This is an issue closely related to central services cost transfers given “the governing body of a local government may (not)…loan or transfer money from…fees imposed,” and they are separately addressed at NRS 354.613(2)²¹¹. For 2020-21 the IVGID Board increased the BFF from $125 to $500²¹². For 2021-22 it increased the BFF from $500 to $680²¹³. Nowhere was any mention made of whether either of these increases was prohibited by law. Nor that they were necessary for continuation of the purpose(s) for which the Beach Fund was created. Nor whether these increases would be used solely for the purposes for which the fees were collected. Simply transfers from fee increases.

So What ‘s the Consequence For Violating NRS 354.613? NRS 354.613(7) provides the answer: “The sole remedy for a violation of this section is the penalty provided in NRS 354.626. (Thus) any person who pays a fee for the enterprise for which the enterprise fund is created²¹⁴ may file a complaint with the district attorney or Attorney General alleging a violation of this section for prosecution pursuant to NRS 354.626.”²¹⁵

And as Evidence of “Consciousness of Guilt,”²¹⁶ Consider How the District Attempted to Circumvent the Protections of NRS 354.613 by Converting its Community Services and Beach Funds from Enterprise to Special Revenue: Faced with added scrutiny over the central services allegedly provided to the District’s various funds other than its General Fund, starting in fiscal year 2014-15, staff chose to eliminate that scrutiny altogether by changing the District’s Community Services and Beach Funds from enterprise⁴ to special revenue²¹⁷ Staff’s explanation for this change appears at Note 19, at 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.” Absolute hogwash!

What we had here was nothing short of circumventing the protections created by NRS 354.613! After all, if transfers are made from a fund other than an enterprise one, how can they be prohibited or limited by NRS 354.613? And to further demonstrate that these fund conversions represented 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-types²¹⁸.

1. See https://waocio.my.site.com/s/glossary/a0U4U00000DLoJYUA1/central-services.
2. For an understanding of the District’s various reporting funds, the reader is directed to our Understanding The District’s Funds Structure discussion.
3. See NRS 354.613(8)(b).
4. See NAC 354.867(1)(a).
5. See NAC 354.8668(2).
6. See NAC 354.867(1)(a).
7. See NAC 354.8668(1).
8. See NAC 354.8668(2).
9. See NRS 354.470.
10. See NRS 354.613(1)(c).
11. See NAC 354.865 – 354.867.
12. See NRS 354.613(8).
13. According to NRS 354.474(1)(a), the term “local government means every political subdivision or other entity which has the right to levy or receive money from ad valorem or other taxes or any mandatory assessments, and includes, without limitation…districts organized pursuant to chapter…318…of NRS.” Because IVGID is “a governmental subdivision of the State of Nevada” [see NRS 318.075(1)], it has the power to levy and collect ad valorem taxes [see NRS 318.225], and it was organized pursuant to NRS 318 [see NRS 318.055(4)(a) which instructs that “district(s)…authorized to exercise more than one basic power (must use) the words ‘General Improvement District'” in its initiating ordinance.], it is a local government for purposes of the LGBFA.
14. See NRS 354.613(1)(c).
15. We submit NRS 354.474(1) which instructs that “the provisions of NRS 354.470 to 354.626, inclusive, apply to all local governments,” and general improvement districts (“GIDs”) are local governments. NRS 354.474(1)(a) instructs that “’local government’ means every political subdivision or other entity which has the right to levy or receive money from ad valorem or other taxes or any mandatory assessments, and includes…districts organized pursuant to chapter…318.” The Incline Village General Improvement District (“IVGID”) was created pursuant to NRS 318 (see Washoe County Ordinance No. 97, Bill No. 57 effective June 1, 1961). And NRS 318.225 gives it “the right to levy or receive money from ad valorem…taxes.”
16. Regulations adopted pursuant to NRS 354.613(8) [“for the purposes of paragraph (c) of subsection 1, 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”] pertaining to the “Allocation of Costs to Enterprise Fund(s).”
17. See our What Are The RFF/BFF According to Us discussion.
18. “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” (see NAC 354.8654).
19. See NRS 354.613(8) as well as NAC 354.8668(5).
20. In other words “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 nonconsent item that is separately listed on the agenda for a regular meeting of the governing body.”
21. See NAC 354.865–354.867.
22. See NAC 354.005 which defines “local government” as “any local government subject to the provisions of the Local Government Budget and Finance Act, NRS 354.470 to 354.626, inclusive.” As we have demonstrated above, general improvement districts (“GIDs”) are subject to the LGBFA [see NRS 354.474(1)(a)].
23. See NAC 354.8666.
24. See our Understanding The District’s Funds Structure discussion.
25. 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.”
26. NRS 354.613(1) and (2)(c) instruct that “transfer(s of) money from…enterprise fund(s), mon(ies) collected from fees imposed for the purpose for which…enterprise fund(s were)…created or any income or interest earned on money in an enterprise fund,” are impermissible [actually unlawful given NRS 354.626(1) instructs that “any officer or employee of a local government who willfully violates NRS 354.470 to 354.626, inclusive, is guilty of a misdemeanor”] unless, in part, “the loan or transfer is made…for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund.” For the purposes of paragraph (c) of subsection 1, NRS 354.613(8) instructs that the 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.” Those regulations became effective December 20, 2012, and appear at NAC 354.865 – 867.
27. “‘Be the One’ is a song recorded by United Kingdom and Albanian singer Dua Lipa for her eponymous (2017) debut studio album” (go to https://en.wikipedia.org/wiki/Be_the_One_(Dua_Lipa_song)).
28. This “veil…refers to a situation where something is intentionally kept hidden or concealed, preventing the truth from being revealed, and creating a sense of mystery or opacity” (go to https://www.oxfordlearnersdictionaries.com/definition/american_english/veil_1#:~:text=%5Bsingular%5D%20(formal)%20something,behind%20a%20veil%20of%20secrecy).
29. See NAC 354.867(1) which mandates these costs adhere to this requirement.
30. See NAC 354.8668(5)(a) which mandates these costs adhere to this requirement.
31. See NAC 354.867(2)(a) which mandates these costs adhere to this requirement.
32. See NAC 354.867(1)(a) which mandates these costs adhere to this requirement.
33. See NAC 354.8668(5)(b) which mandates these costs adhere to this requirement.
34. See NAC 354.8668(2) which mandates these costs adhere to this requirement.
35. See NAC 354.867(1)(c) which mandates that these costs adhere to this requirement.
36. See NAC 354.867(2)(c) which mandates these costs not exceed these prices.
37. See NAC 354.867(2)(b) which mandates these costs adhere to this requirement.
38. See NAC 354.867(2)(b) which mandates these costs evidence “an arm’s length transaction.”
39. See NAC 354.867(1)(d) which mandates these costs be adequately documented for independent verification.
40. See NAC 354.867(2)(d) which mandates these costs adhere to these requirements.
41. NAC 354.8668(7) instructs that “the central service cost allocation plan of a local government…must be updated annually.
42. See page 044 of the 5/26/2022 Board packet.
43. See pages 23 and 24 of The District’s 2010-11 CAFR.
44. See page 22 of the District’s 2011-12 CAFR.
45. See page 23 of the District’s 2012-13 CAFR.
46. Supplemented by $3,764 from sale of assets.
47. See page 23 of the District’s 2013-14 CAFR.
48. See page 23 of the District’s 2014-15 CAFR.
49. See page 26 of the District’s 2015-16 CAFR.
50. “As of July 1, 2015 the Board of Trustees established Special Revenue, Capital Project and Debt Service
    funds for its Community Services and Beach activities” (see Note 14 at page 53 of the District’s 2015-16 CAFR). $250,000 of community services cost transfers were re-distributed to the District’s Community Services Capital Projects special revenue funds (see page 26 and Note 7 at page 49 of the District’s 2015-16 CAFR).
51. See page 26 of the District’s 2016-17 CAFR.
52. “On August 29, 2012 the Board…established $400,000 Committed balance in the General Fund. Upon determination that the General Fund (would be)…able to meet its obligations, the District w(ould) then release the commitment…and make a transfer to the Community Services Special Revenue Fund. (Given) the District’s budget for the year ending June 30, 2017 included making the transfer…to
    the Community Services Special Revenue Fund,” $400,000 of community services cost transfers were re-distributed to the District’s Community
    Services Special Revenue Fund (see Note 14 at page 51 of the District’s 2016-17 CAFR).
53. See page 25 of the District’s 2017-18 CAFR.
54. Supplemented by $16 from sale of assets.
55. See page 25 of the District’s 2018-19 CAFR.
56. “The Governmental Funds Statement of Revenues, Expenditures, and Change in Fund Balance evidences an $800,000 prior period adjustment (see page 27 of the District’s 2018-19 CAFR) “as a result of A Prior Period Adjustment was made “to reflect (a)…transfer from the Workers Compensation
    Fund” (see Note 22 at page 56 of the District’s 2018-19 CAFR). And $325,644 of community services cost transfers were re-distributed (see Note 7 at page 48 of the District’s 2018-19 CAFR) to the District’s Community Services Capital Project special revenue fund.
57. See page 60 of the District’s 2019-2020 CAFR.
58. $300,000 of community services cost transfers were re-distributed (see Note 8 at page 47 of the District’s 2019-2020 CAFR) from community services cost transfers to the District’s Community Services ($241,875) and Beach ($13,125) special revenue (see page 23 of the District’s 2019-2020 CAFR), and Utility ($45,000) enterprise fund (see Note 8 at page 47 of the District’s 2019-2020 CAFR).
59. See page 51 of the District’s 2020-2021 CAFR.
60. Net changes in fund balances for the District’s Community Services and Beach Special Revenue, Capital Project and Debt Service funds, combined, totaled $3,207,771 (see page 65 of the District’s 2020-2021 CAFR). But “the Governmental Funds Statement of Revenues, Expenditures, and Change in Fund Balance discloses three prior period adjustments. The first (wa)s a transfer between the Community Services Special Revenue Fund and the Community Services Capital Projects Fund that (wa)s reported in the prior year $1,637,400 lower than the entry in the financial reports. The second…(wa)s for the $243,512 that was reported as unavailable revenue but should have been recorded as revenue when received in prior years. (And) there were several assets capitalized in prior years that the auditors determined should not have been capitalized. The total affect to the financial reports was $3,207,771 (see Note 22 at page 44 of the District’s 2020-2021 CAFR). Excess General Fund revenues and central services transfers were allocated amongst the District’s General, Community Services and Beach, Capital Project and Debt Service special revenue funds. The portion allocated to the General Fund was $1,100,411 inclusive of the above $243,512 in prior years that should have been recorded as revenue. The remaining $2,350,872 increased the fund balances in the Community Services ($2,323,286) and Debt Service ($27,586) special revenue funds (see page 21 of the District’s 2020-2021 CAFR).
61. Also see page 64 of the District’s 2020-2021 CAFR.
62. See pages 52-53 of the District’s 2021-2022 CAFR.
63. See page 25 of the District’s 2021-2022 CAFR.
64. Less central services cost transfers were necessary ($188,504) given the “excess…of revenues over expenditures” supplemented by a $94,197 “prior period adjustment…(evidenced in) the Statement of Activities, (and) the Governmental Funds Statement of Revenues, Expenditures, and Change in Fund Balance” (see page 21 of the District’s 2021-2022 CAFR), and a $192,287 loan to the Internal Services Fund (see pages 20 and 24 of the District’s 2021-2022 CAFR.
65. See page 22 of the District’s 2021-22 CAFR.
66. See page 14 of the 2021-22 CAFR.
67. See page 16 of the 2010-11 CAFR.
68. One can examine this Policy at pages 87-91 of the packet of materials prepared by staff in anticipation of the Board’s May 7, 2025 meeting (“the 5/7/2025 Board packet“).
69. One can examine this Policy at pages 110-113 of the 5/7/2025 Board packet.
70. See page 9, Schedule B-10 of the 2021-22 Budget.
71. For fiscal year 2022-23 the reader can examine staff’s financial reporting for 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”).
72. A minimum of $1,247,595 annually [see pages 8 of Schedule B-10 ($1,152,887 of operational costs) and 9 of Schedule B-11 ($94,708 of capital expenses) to the District’s 2023-24 Form 4404LGF].
73. There was this belief on the Board at the time that facilities and services provided to the general public should be paid for from general revenues (such as taxes) rather than assessing the owners of local parcels/dwelling units.
74. 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“).
75. See page 24 of the District’s 2023 Annual Comprehensive Financial Report (“the 2023 ACFR“).
76. See page 12 of the 2023 ACFR under Management’s Discussion and Analysis.
77. The Community Services Fund paid $1,204,069 (see pages 24 and 52 of the 2023 ACFR, and the Beach Fund paid $127,085 (see pages 24 and 53 of the 2023 ACFR).
78. Although the methodology changed, the language in Policy No. 18.1.0 didn’t. The version of Policy No. 18.1.0 that was in place for FY 2024, and in fact through July 1 if not November 12 of 2025, can be viewed at pages 110-113 of the 5/7/2025 Board packet. At the Board’s November 12, 2025 meeting, it changed ¶2.0.2 of Policy No. 18.1.0. That version can be viewed at pages 368-371 of the packet of materials prepared by staff in anticipation of the Board’s November 12, 2025 meeting (“the 11/12/2025 Board packet“).
79. See page 150 of the 2/22/2023 Board packet.
80. See page 045 of the 5/26/2022 Board packet.
81. See page 31 of the 4/5/2023 Board packet.
82. See that Supplemental Item G.3.B. to that packet of materials prepared .by staff in anticipation of the Board’s May 31, 2024 meeting (“the 5/31/2024 Board packet”).
83. $4,527,142 (see page 21 of the 2025 ACFR).
84. $7,785,209 (see page 21 of the 2025 ACFR).
85. See pages 24 and 58 of the 2025 ACFR.
86. See our History of The District’s Central Services Cost Transfers discussion.
87. See Note 12 labeled “Transfers” at page 44 to the District’s 2004-05 Comprehensive Annual (Audited) Financial Report (“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.
88. Because ¶1.1 of Board Policy No. 6.1.0 mandates adoption of a balanced operating budget.
89. See pages 21 and 24 of the District’s 2022-2023 CAFR.
90. Includes the $1,331,154 of central services cost transfers deducted from the $4,600,462 expense figure reflected in the District’s 2022-2023 CAFR.
91. Given the massive reduction in fund balance, we provide this explanation. $1,000,000 of central services cost transfers were re-distributed “to the Utility Fund (see pages 9 and 10 under the column “Actual Prior Year Ending 6/30/2023” of the District’s 2024-25 Budget) to aid in the cost of construction on the Effluent Pipeline” (see Note 8 at page 40 of the District’s 2022-2023 CAFR). An additional $330,735 was used towards a $375,113 litigation settlement (see page 9 under the column “Actual Prior Year Ending 6/30/2023” of the District’s 2024-25 Budget) with resident Mark Smith over his public records concealment lawsuit, augmented by a $44,378 reduction in fund balance.
92. See pages 15 and 18 of the District’s 2023-2024 CAFR.
93. Includes the $1,956,300 of central services cost transfers deducted from the $6,337,114 expense figure reflected in the District’s 2023-2024 CAFR. Given the substantial increase in overspending, we provide this explanation. For FY 2024 “the General Fund…include(d) the District’s parks, which were moved to the General Fund from the Community Services Fund as of July 1, 2023” (see page 22 of the 2023-2024 CAFR). And as a result, General Fund expenses increased by $1,736,652 [from $4,600,462 in FY 2023 (see page 21 of the 2022-2023 CAFR) to $6,337,114 in FY 2024 (see page 15 of the 2023-2024 CAFR)]. It turns out $1,247,585 of those increased expenses were incurred as a result of new expenses assigned to parks operations (take a look at the “actual prior year ending 6/30/2024” column on Schedules B-10 and B-11, at pages 8 and 9 of the District’s final FY 2025-26 Budget filed on Form 4404LGF with the Department of Taxation. There the District reported $1,152,877 in operational and $94,708 in capital expenses assigned to “Park” functions. And although this page (15) of the CAFR represents $6,337,114 of expenditures, as aforesaid, the reader needs to understand that an additional $1,956,300 of expenditures were actually incurred yet disingenuously reduced by a comparable amount of central services cost transfers.
94. See page 15 of the District’s 2023-2024 CAFR.
95. See page 21 of the District’s 2024-2025 CAFR.
96. See pages 24 and 58 of the District’s 2024-2025 CAFR.
97. $153,630 of revenue was added to Fund Balance from a Subscription Based Information Technology Arrangement, and $198,527 was deducted from Fund Balance as Correction of an Error.
98. See the District’s 2025-26 budget Form 4404LGF.
99. See that Supplemental Item G.3.B. to that packet of materials prepared .by staff in anticipation of the Board’s May 31, 2024 meeting (“the 5/31/2024 Board packet”).
100. $4,527,142 (see page 21 of the 2025 ACFR).
101. $7,785,209 (see page 21 of the 2025 ACFR).
102. See pages 24 and 58 of the 2025 ACFR.
103. See page 18 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2026 meeting (“the 5/27/2026 Board packet“).
104. Meaning their financial reporting would be even worse than it is already!
105. In other words, to cover the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund.
106. See page 4 of the 5/27/2026 Board packet.
107. See the Office of the Washington State Auditor’s discussion on Overhead Cost Allocations.
108. A local government’s allocation must be “documented adequately for independent verification.”
109. 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“).
110. See pages 043-044 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).
111. See NRS 354.613(8)(b).
112. Note ¶1.1 of Board Policy No. 6.1.0‘s mandate that a balanced operating budget be adopted.
113. See City of Madera v. Black, 181 Cal. 306, 314, 184 P. 397 (1919).
114. See City of Madera, supra, at 181 Cal. 315.
115. 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“).
116. In other words, “do as I say rather than as I do.”
117. See our History of The District’s Central Services Cost Transfers discussion.
118. See Note 12 labeled “Transfers” at page 44 to the District’s 2004-05 Comprehensive Annual (Audited) Financial Report (“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.
119. Because ¶1.1 of Board Policy No. 6.1.0 mandates adoption of a balanced operating budget.
120. See pages 21 and 24 of the District’s 2022-2023 CAFR.
121. Includes the $1,331,154 of central services cost transfers deducted from the $4,600,462 expense figure reflected in the District’s 2022-2023 CAFR.
122. Given the massive reduction in fund balance, we provide this explanation. $1,000,000 of central services cost transfers were re-distributed “to the Utility Fund (see pages 9 and 10 under the column “Actual Prior Year Ending 6/30/2023” of the District’s 2024-25 Budget) to aid in the cost of construction on the Effluent Pipeline” (see Note 8 at page 40 of the District’s 2022-2023 CAFR). An additional $330,735 was used towards a $375,113 litigation settlement (see page 9 under the column “Actual Prior Year Ending 6/30/2023” of the District’s 2024-25 Budget) with resident Mark Smith over his public records concealment lawsuit, augmented by a $44,378 reduction in fund balance.
123. See pages 15 and 18 of the District’s 2023-2024 CAFR.
124. Includes the $1,956,300 of central services cost transfers deducted from the $6,337,114 expense figure reflected in the District’s 2023-2024 CAFR. Given the substantial increase in overspending, we provide this explanation. For FY 2024 “the General Fund…include(d) the District’s parks, which were moved to the General Fund from the Community Services Fund as of July 1, 2023” (see page 22 of the 2023-2024 CAFR). And as a result, General Fund expenses increased by $1,736,652 [from $4,600,462 in FY 2023 (see page 21 of the 2022-2023 CAFR) to $6,337,114 in FY 2024 (see page 15 of the 2023-2024 CAFR)]. It turns out $1,247,585 of those increased expenses were incurred as a result of new expenses assigned to parks operations (take a look at the “actual prior year ending 6/30/2024” column on Schedules B-10 and B-11, at pages 8 and 9 of the District’s final FY 2025-26 Budget filed on Form 4404LGF with the Department of Taxation. There the District reported $1,152,877 in operational and $94,708 in capital expenses assigned to “Park” functions. And although this page (15) of the CAFR represents $6,337,114 of expenditures, as aforesaid, the reader needs to understand that an additional $1,956,300 of expenditures were actually incurred yet disingenuously reduced by a comparable amount of central services cost transfers.
125. See page 15 of the District’s 2023-2024 CAFR.
126. Estimated Year Ending 6/30/2025. See the District’s 2025-26 budget Form 4404LGF.
127. As a result of recommendations made at pages 15 and 17 of the January 14, 2021 MossAdams “Evaluation of Certain Accounting And Reporting Matters” Report, the District discontinued its prior practice of not reporting the reimbursed cost “as a transaction of the fund initially paying for the cost, but rather,
     as a reduction of net position/fund balance” by the amount of central services cost transfers.
128. See the District’s 2025-26 budget Form 4404LGF.
129. 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)].
130. See NRS 354.596(2). Understand that here we’re talking about a tentative rather than final budget. A local government’s final budget need not “be adopted (until) on or before June 1 of each year” [see NRS 354.598(2)]. Notwithstanding, as the reader will learn below, the District’s central services cost allocation plan is improperly “based on the final General Fund budgets for Accounting…Human Resources” and Information Technology.
131. See Supplemental Item G.3.B. to the Board’s May 31, 2024 meeting packet.
132. See the Board’s May 30, 2025 meeting.
133. See pages 117-118 of the packet of materials prepared by staff in anticipations of the Board’s April 9, 2025 meeting (“the 4/9/2025 Board packet“).
134. Moreover, remember these increases don’t even take into consideration the nearly $1.25 million of Parks expenses⁵⁰ which are/will be reduced.
135. See ¶2.0.2.1 of Policy No. 18.1.0, infra.
136. See ¶2.0.2.2 of Policy No. 18.1.0, infra.
137. See page 16 of that January 14, 2021 Moss Adams, LLP report which “Evaluates…Certain (District) Account and Reporting Matters” (“the Moss Adams report“). “Moss Adams LLP was contracted by Incline Village General Improvement District to analyze and provide guidance(, in part,) on whether…the allocation of central service costs…are in agreement with applicable accounting standards” (see page 3 of the Moss Adams report).
138. See our What is a GID discussion.
139. See NRS 318.075.
140. See our What is a GID discussion.
141. See our Why The Need For GIDs Discussion.
142. See ¶II at page 8 of Legislative Commission of the Legislative Counsel Bureau, State of Nevada (“LCB”), Bulletin No. 77-11, Creation, Financing and Governance of General Improvement Districts, September 1976 (“LCB Bulletin 77-11”).
143. See Dillon’s Rule – NRS 244.137 and 268.001.
144. See our Powers a GID May Exercise discussion.
145. See NRS 318.116.
146. See NRS 318.015(1).
147. See page 2 of Schedule S2 to the District’s FY 2026 Budget.
148. In contrast the county of Carson City employed 1,082 employees. And the Sun Valley General Improvement District employed 14 employees.
149. See NRS 354.470, et seq.
150. See NRS 354.596.
151. See NRS 354.598.
152. See NRS 354.624.
153. See NRS 354.6025.
154. NRS 354.5945.
155. See NRS 354.5947.
156. See NRS 354.6025.
157. This is the famous quote wrongly attributed to legendary Jesse James (see The Story of Mistaken Attribution).
158. See The District’s 2016 Form 4404LGF.
159. See The District’s 2017 Form 4404LGF.
160. See The District’s 2018 Form 4404LGF.
161. See The District’s 2019 Form 4404LGF.
162. See The District’s 2020 Form 4404LGF.
163. See The District’s 2021 Form 4404LGF.
164. See The District’s 2022 Form 4404LGF.
165. See The District’s 2023 Form 4404LGF.
166. See The District’s 2024 Form 4404LGF.
167. See The District’s 2025 Form 4404LGF.
168. See pages 2 of Schedule S2 and 10 of Schedule F-1 to the District’s FY 2026 Budget.
169. 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“).
170. 32 full-time positions, and 2 part time positions in FY 2024-25 [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“)].
171. See page 25 of that April 2022 Water and Sewer Rate Study.
172. See page 11 of the FY 2023 ACFR.
173. “A $1 million capital transfer from the General Fund [see the ($1,000,000) “transfers out” entry (page 21 of the FY 2023 ACFR)] to the utility fund [see the $1,000,000 “transfers in” entry (page 24 of the FY 2023 ACFR)].
174. Which was paid in FY 2022.
175. Which was paid in FY 2024.
176. See page 40 of the FY 2023 ACFR).
177. See pages 15-16 of the Moss Adams report.
178. 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.
179. 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.”
180. 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“]?
181. Remember NAC 354.8668(6) mandates that “the central service cost allocation plan of a local government…must include a description of the methodology used to determine the allocation of costs.”
182. Here’s your legend: x = Accounting budget net of credit for interest earnings; y = Human Resources and Payroll budget; f = District wide budgeted FTEs; w = District wide budgeted wages; b = District wide budgeted benefits; s = District wide budgeted services and supplies; a = allocation factor, from 1 – 100.
183. 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“).
184. See page 150 of the 2/22/2023 Board packet.
185. When those transfers increased by another $308,457 to $4,050,500⁷³.
186. See page 39 of the minutes of the May 11, 2011 public hearing session for AB471 before that Committee.
187. A test first devised by the US labor leader Walter Reuther (1907–70) in the McCarthy era [go to https://www.oxfordreference.com/display/10.1093/acref/9780199916108.001.0001/acref-9780199916108-e-4080;jsessionid=624359E7E817E1DEDF4DECF3605AA43B#:~:text=and%20Legal%20Notice).-,If%20it%20looks%20like%20a%20duck%2C%20walks%20like%20a%20duck,just%20may%.
188. Go to https://quoteinvestigator.com/2010/11/15/liars-figure/.
189. See page 41 of the packet of supplemental materials prepared by staff in anticipation of the Board’s May 31, 2024 meeting (“the 5/31/2024 Board packet“).
190. What about the District’s Utility Fund?
191. See ¶2.0.1 of Policy No. 18.1.0.
192. See the Government Finance Officer’s Association’s (“GFOA”) discussion on Pricing Internal Services.
193. See pages 24 of the packet of materials prepared by staff in anticipation of the Board’s May 29, 2024 meeting (“the 5/29/2024 Board packet“) for FY 2023-24, and 131 of the packet of materials prepared by staff in anticipation of the Board’s May 30, 2025 meeting (“the 5/30/2025 Board packet“) for FY 2025-26.
194. That is, NRS 354.613(8) and “NAC 354.865 to 354.867, inclusive.”
195. See NRS 354.626(1) – “any officer or employee of a local government who willfully violates NRS 354.470 to 354.626, inclusive, is guilty of a misdemeanor.” NAC 354.8654 is included therein inasmuch as NRS 354.613(8) instructs that “for the purposes of paragraph (c) of subsection 1, the 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,” and NAC 354.8654 represents one of those regulations.
196. 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.”
197. 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.”
198. 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“).
199. Deliberate circumvention of the protections of NRS 354.613 and NAC 354.865 through NAC 354.867.
200. See pages 18-19 of the Moss Adams report.
201. See the “transfers in/out” entry at pages 83 and0 103 of the 2011-12 Budget.
202. See the “transfers in/out” entry at page 114 of the 2011-12 Budget.
203. See the $357,382 of “transfers in/out” entry at page 153 of the 2011-12 Budget.
204. See the $28,598 of “transfers in/out” entry at page 253 of the 2011-12 Budget.
205. This is because for decades, staff arbitrarily transferred: 50% of this deficiency from the District’s Utility Fund, 45% from the District’s Community Services Fund, and 5% from the District’s Beach Fund.
206. See page 104 of the 2011-12 Budget.
207. See page 66 of the 5/26/2022 Board packet.
208. Recall that the NRS which has been violated is NRS 354.613(1), which incorporates NAC 354.865 to NAC 354.867 through NRS 354.613(8).
209. The two funds subsidized by the District’s Recreation Facility Fees.
210. Which are higher than “just and reasonable.” In Springfield Gas & Electric Co. v. City of Springfield, 292 Ill. 236, 126 N.E. 739, 744 (1920) [affirmed at 257 U.S. 66, 42 S.Ct. 24], and cited with approval by the Nevada Office of Attorney General (“OAG”) at A.G.O. 53-231 (February 9, 1953), it was declared that a public utility’s rates and charges must be just and reasonable. And this term was defined as “simply high enough to produce revenue sufficient to bear all costs of maintenance…operation…interest charges on bonds and…accumulation of a surplus…sufficient to (service) all outstanding bonds,” and none other.
211. “The governing body of a local government may (not) increase the amount of any fee imposed for the purpose for which an enterprise fund was created (unless and until it first)…determines that: (a) the increase is not prohibited by law; (b) the increase is necessary for the continuation or expansion of the purpose for which the enterprise fund was created; and, (c) all fees that are deposited in the enterprise fund are used solely for the purposes for which the fees are collected.
212. See pages 33-179 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2021 meeting (“the 5/26/2021 Board packet“).
213. See page 52 of the 5/26/2021 Board packet.
214. And as the reader will learn, the subject central services cost transfers were funded by various ” fees” paid by local parcel owners.
215. NRS 354.626(1) states in part 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.”
216. “Consciousness of guilt is the inference that (a) defendant knows…he is guilty of a crime because he has taken one or more of the following actions…a false alibi or explanation for one’s actions…In a criminal trial the District Attorney or prosecutor can show that this type of conduct was due to a defendant’s criminal conduct and…would have not occurred otherwise” (go to https://gambonelaw.com/what-is-consciousness-of-guilt-and-why-its-a-problem/).
217. NRS 354.270 defines a 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.”
218. See page 38 of the 5/26/2021 Board packet.