IVGID GM’s Corner: Operating a financially sound government
December 23, 2015
IVGID is one of the most fiscally healthy government entities in the West. Frankly, that was one of my primary motivators for accepting this position.
Most public entities are facing a future of continually diminishing resources due to massive unfunded liabilities. The primary unfunded liabilities are future pension obligations, future retiree health obligations and deteriorating infrastructure — particularly roads and highways.
A recent study pegged the unfunded liability for members of the Nevada Public Employee Retirement System at approximately $18,000 per capita and $48.5 billion statewide. In terms of retiree health care, the City of Reno and Washoe County each have over $200 million in unfunded liabilities noted on their balance sheets.
While I can't find an exact number, I'm guessing that the future unfunded cost of replacing roads and highways in our County exceeds $200 million as well.
“IVGID continues to be the envy of public agencies across Nevada with our ever increasing net position, readily available cash, low debt ratio and no unfunded pension and medical liabilities.”
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IVGID doesn't participate in the Public Retirement System, doesn't offer retiree health benefits, and isn't responsible for maintaining roads and highways. In addition, we have a good plan in place for the upkeep and replacement of all of our existing assets. We have enough resources available to provide all of our services and maintain our assets.
This puts us in the enviable position of being able to focus on improving service — while many of our counterparts have to focus the majority of their energy on how to cut services.
UPDATE ON IVGID'S AUDIT
Last week, the Board of Trustees reviewed IVGID's annual Comprehensive Annual Financial Report (CAFR) for the Fiscal Year ended June 30, 2015.
While most everyone is familiar with the District's Budget document, which authorizes the spending of money, the CAFR describes what was actually spent and the status of assets and liabilities at the end of the fiscal year.
All of the documents included in the CAFR comply with accounting requirements promulgated by the Government Accounting Standards Board (GASB) and are reviewed by an outside auditing firm.
The auditor verifies the proper design and execution of our transactions. Internal controls and protocols are tested. Financial amounts are tested along with how they are presented. We've met every standard that both the regulatory agencies and any potential bondholder would require of us.
The District's auditor, Eide Bailly LLP, issued an unmodified opinion on the CAFR. An unmodified (clean) opinion, which is the best audit report that can be issued, states that the financial statements are fairly presented in conformity with generally accepted accounting principles.
The auditor also prepared a "Report on Compliance and Internal Control" in relation to the audit of the basic financial statements. The auditors reported no material weaknesses in our controls.
What does the CAFR demonstrate regarding the overall financial condition of the District?
It demonstrates that IVGID continues to be the envy of public agencies across Nevada with our ever increasing net position, readily available cash, low debt ratio and no unfunded pension and medical liabilities.
Over the past five years:
Our cash position has remained stable while our net investment in capital assets has increased by over 15% from $91.3 million to $105.1 million.
Our annual expenses have increased cumulatively by approximately 6%, or on average, a little more than one percent per year.
Our utility revenues have increased by 29% to ensure adequate cash flow to not only fund annual operations but to also fund future capital improvement needs.
Our user fee revenues have been relatively stable despite recessionary pressures and less than favorable weather conditions during most of the period.
Our governmental revenues (property tax and combined taxes) are no longer subject to property tax litigation refunds and have shown a steady increase over the entire period.
Our bonded indebtedness has dropped from $2,052 to $1,299 per capita.
Our recreation fee cost to the property owners has remained flat over the entire period.
Our unrestricted cash of $20.2 million is nearly 71% greater than our total outstanding indebtedness of $11.9 million.
Since 2009, our outstanding indebtedness has dropped from $24.4 million to $11.9 million.
Our outstanding indebtedness is only 1.6% of our statutory debt capacity.
Our ratio of debt service to total expenditures has dropped to 9 percent.
All of our non-utility debt will be retired by 2023.
Despite this track record of exceptional financial performance, we refuse to rest on our laurels and we will continue to endeavor to provide quality service to all of our customers at the lowest cost possible. In addition, we will continue to excel in financial and capital planning in the most transparent, inclusive manner possible.
"GM's Corner" is a recurring column from Incline Village General Improvement Distinct General Manager Steve Pinkerton, who will discuss issues and offer updates regarding various district matters. He may be reached for comment at email@example.com.