FY '15 Preliminary (Unaudited) Fiscal Results:

Last April, the Council was provided fiscal projections for FY '15.  These projections were filed with the State of Nevada as part of the FY '16 final budget which was ultimately approved by Council on May 19, 2015.  The City's external auditors are currently working with the Financial Services Department staff to finalize the annual audit for FY '15, the final results for which will be presented in December in the form of the Comprehensive Annual Financial Report (CAFR).  

It is City staff's desire to provide the Council the following brief overview of select highlights of the FY '15 preliminary (unaudited) fiscal results as a partial update of the projections which were provided last April:

• General Fund revenues and transfers-in were lower than projected by $66k (0.1% of projections);
• General Fund expenditures and transfers-out were $727k lower than projected (1.3% of projections);
• General Fund ending fund balance was $661k higher than projected;
• Group Health Self Insurance Fund ending fund balance was slightly worse than projected with a negative ending fund balance of $447k;
• Workers Compensation Fund ending fund balance is still negative at $1.026M resulting from long-term liabilities stemming from long-term heart/lung/cancer benefits for public safety personnel; however, that represents a significant improvement from the nearly $4M negative fund balance in FY '14.  The heart/lung/cancer long term liability declined by $4.2M from $9.3M in FY '14 to $5.1M in FY '15.  The decline is primarily driven by benefit changes resulting from the passage of SB 153 during the 2015 Legislative session.

Nevada PERS Liability Update:

Financial Services Department staff has previously mentioned that the City will need to record a liability represinting the City's share of the Nevada PERS Net Pension Liability in compliance with GASB 68 beginning in FY '15.  City staff has not known the amount of the liability until the actuarial valuation report was complete and published by Nevada PERS.  That report has now been published and is attached to this agenda report for review.  It is also available on the Nevada PERS public website.

The timing of the actuarial valuation is such that the City will need to record the Net Pension Liability with a one year time lag.  Thus, the liability recorded in FY '15 will be based on the FY '14 Net Pension Liability of the PERS system as a whole.  The City of Sparks' total share of the PERS system Net Pension Liability will equal $76.4M in FY '15, and will be recorded as a liability on the City's government-wide financial statements that will be reported in the FY '15 CAFR.  The allocation of this $76.4M liability amongst the City's Governmental and Proprietary Funds is currently being finanlized and will also be presented in the FY '15 CAFR.

This pension liabilty represent's the City's share of the underfunded benefits of the entire Nevada PERS system.  As of FY '14, the amount of PERS system underfunded liability (i.e., the "Net Pension Liability") totaled $10.4B.  GASB 68 requires that all Nevada agencies which contribute to the Nevada PERS record their portion of this $10.4B.  This represents a reduction from a PERS Net Pension Liability of $13.1B in FY '13 (an approximate reduction of $2.7B or 20.6%).  The PERS system liability as of the end of FY '15 has yet to be finalized.

GASB 68 requires the City to record it's portion of the liability, but there is no corresponding requirement to fund this liability.  In fact, even if the City wanted to fund this liability, it could not, as the only vehicle to fund Nevada PERS pension benefits are through contributions to Nevada PERS which are established each biennium by the Nevada Legislature. 

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