Cost-allocation process modified for Quality of Life fund

Carson City will continue to use a cost-allocation process - although slightly modified - for charging indirect costs to the city's Quality of Life special revenue fund, officials decided in a split vote Thursday.

Supervisors John McKenna, a certified public accountant, and Molly Walt, who serves on the Parks and Recreation Commission, opposed the motion, saying they preferred to stick to the full cost-allocation plan the city has been using for all of its special revenue funds, which include charges for the board of supervisors, clerk-treasurer and city manager as well as other departments such as finance, district attorney, purchasing and more.

Mayor Bob Crowell and supervisors Shelly Aldean and Karen Abowd, however, voted to use the Office of Management and Budget cost-allocation plan which identifies indirect costs in strict accordance with federal accounting standards which do not include supervisors or the clerk. They also excluded charges for the city manager's time.

The difference between the two plans is about $51,000, with the full-cost plan being $139,393 and the OMB plan (excluding the $5,486 for the city manager) being $88,320.

Cost allocating from the Quality of Life (Question 18) fund emerged as an issue last month among some residents who became alarmed because the method had not been used until about three years ago. They claimed the 1/4-cent tax, approved in an advisory question by voters in 1996, must not be used to pay any administrative costs, regardless of whether those costs are associated with the projects outlined in the question.

They claimed that when Question 18 was sold to the voters, the intent was that the funds needed to be kept separate from the city general fund and used exclusively for open space and a list of specific recreation projects.

The money collected for the fund is divided into three accounts: 40 percent for open space, 40 percent for parks and recreation projects, and 20 percent for the future operation and maintenance of those recreation projects.

City officials, however, said it is a standard accounting practice which has been used for decades throughout the entire country, and from this particular account, since 2002 when the account became active.

Randy Munn, chief deputy district attorney for the city's civil division, said that the moral intent of the voters was not part of the ballot question, and that cost allocation is legal.

Finance Director Nick Providenti said the cost allocations from each department come from tracking the hours the department devotes to Quality of Life matters, and that if the Quality of Life fund had to contract for its own finance director, district attorney, etc., it would cost far more than what it pays the city departments for the same work.

Supervisor Shelly Aldean said that the state is already charging similar administrative fees, and the city does the same.

"I don't know what was in the minds of the average voters," she said, "but a handful of adamant people who feel passionately about the Quality of Life fund have voiced concerns about cost-allocation from that particular fund.

"Should Question 18 then bear its own burdens?" she asked.

"This is the most efficient way to do it," Providenti said. "The costs that we're charging those funds are legitimate costs. They are audited plans."

McKenna called the whole discussion a "tempest in a teapot," adding that "this is properly allocated. There is no reason to do anything different than what we're doing right now. That's what it costs us to run that program."

In other matters Thursday, supervisors reviewed a tentative budget which includes estimated 2011 revenues of $55.2 million and budgeted 2012 revenues of $55.7 million, as well as estimated 2011 expenses of $56.5 million and budgeted 2012 expenses of $56 million.

Of the city's expenses, 78 percent goes for salaries and budgets, 22 percent for services and supplies, and 1 percent for other costs.

Providenti said he didn't expect that any drastic measures would be needed this time around.

"It's hard to present anything at this point because we don't know what the state is going to do," he said. "We can get through 2011 without anything drastic, and possibly through 2012, but in 2013 and 2014, we might have to go back to our employee associations, I don't know."

City Manager Larry Werner said a final budget would be ready by May 16, but that it still could be subject to state decisions.

"We won't have a final, final until July," he said.