clark county water reclamation district · in accordance with the cooperative agreement between the...

Clark County Water Reclamation District

A Component Unit of Clark County, Nevada

Comprehensive Annual Financial Report For the Years Ended June 30, 2019 and 2018

Clark County Water Reclamation District A Component Unit of Clark County, Nevada

COMPREHENSIVE ANNUAL FINANCIAL REPORT

CLARK COUNTY WATER RECLAMATION DISTRICT 5857 East Flamingo Road Las Vegas, Nevada 89122

(702) 434-6600www.cleanwaterteam.com

FOR THE YEARS ENDED

JUNE 30, 2019 AND 2018

Prepared by the Finance Group Under the Supervision of

Susan D. Heltsley, Assistant General Manager, Financial Services

http://www.cleanwaterteam.com/

COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2019

Table of Contents

Introductory Section District Officials................................................................................................................................................................... I Letter of Transmittal ...........................................................................................................................................................II District Organizational Chart ............................................................................................................................................ VI Sources and Uses of District Funds ................................................................................................................................. VII Las Vegas Metropolitan Service Area Map ................................................................................................................... VIII Wastewater Treatment Process Diagram .......................................................................................................................... IX Certificate of Achievement for Excellence in Financial Reporting ................................................................................... X

Financial Section Independent Auditors’ Report on Financial Statements and Supplementary Information ................................................. 1 Management’s Discussion and Analysis ............................................................................................................................. 3

Basic Financial Statements ............................................................................................................................................. 9 Statement of Net Position ......................................................................................................................................... 10 Statement of Revenues, Expenses and Changes in Net Position .............................................................................. 12 Statement of Cash Flows .......................................................................................................................................... 13 Notes to Financial Statements ................................................................................................................................... 15

Required Supplementary Information ........................................................................................................................... 40 Schedule of Changes in Total OPEB Liability - PEBP ............................................................................................ 41 Schedule of Changes in Total OPEB Liability – Self-Funded/HPN......................................................................... 42 Schedule of Proportionate Share of Contractually Required OPEB Contributions – PEBP .................................... 43 Schedule of Proportionate Share of Net Pension Liability ....................................................................................... 44 Schedule of Proportionate Share of Statutorily Required Pension Contribution Information .................................. 45

Supplementary Information .......................................................................................................................................... 46Schedule of Capital Assets........................................................................................................................................ 47 Schedule of Revenues and Expenses Compared to Budget ...................................................................................... 48 Schedule of Cash Flows Compared to Budget ......................................................................................................... 49

Statistical Section (Unaudited) Summary of Net Position .................................................................................................................................................. 52 Changes in Net Position .................................................................................................................................................... 53Operating Expense by Function ........................................................................................................................................ 54 Operating Revenue by Source........................................................................................................................................... 55 Non-Operating Revenue by Source .................................................................................................................................. 56 Ten Largest Customers ..................................................................................................................................................... 57 Ratios of Outstanding Debt ............................................................................................................................................... 58 Average Daily Flows ........................................................................................................................................................ 59 Schedule of Insurance Policies in Force ........................................................................................................................... 60 Budget Approved Full-Time Positions by Service Center ................................................................................................ 61 Capital Asset Statistics by Function.................................................................................................................................. 62 Demographic Statistics ..................................................................................................................................................... 63 Clark County Principal Industries ..................................................................................................................................... 65 Technical Terms ................................................................................................................................................................. 66

Comments of Independent Auditors Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............. 69

Introductory Section

Clark County Water Reclamation District Flamingo Water Resource Center

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District Officials CLARK COUNTY WATER RECLAMATION DISTRICT

COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended June 30, 2019

Clark County Water Reclamation District Officials

A Board of Trustees, consisting of seven members, governs the Clark County Water Reclamation District (the District). Each member also sits on the seven-member Clark County Commission. Current Trustees of the District Board are as follows:

Other Elected Officials

Laura Fitzpatrick Treasurer

Lynn Goya County Clerk

District Administrative Officials

Thomas A. Minwegen General Manager

Daniel Fischer Deputy General Manager, Plant Operations and Laboratory

Shawn Mollus Deputy General Manager, Engineering and Construction

Richard Donahue Assistant General Manager, Collection System

Marty Flynn Assistant General Manager, Strategic Services

Susan Heltsley Assistant General Manager, Financial Services

Brenda Pappas Assistant General Manager, Customer Care

Jay Polack Chief Information Officer

David Stoft General Counsel

Lawrence Brown III Chair

Marilyn Kirkpatrick Justin Jones Lawrence Weekly

Tick Segerblom Vice Chair

James B. Gibson Michael Naft

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Letter of Transmittal

October 4, 2019

Ex Officio Board of Trustees Board of County Commissioners Clark County Water Reclamation District 500 South Grand Central Parkway Las Vegas, Nevada 89155-1601

Honorable Trustees and Rate Payers of the Clark County Water Reclamation District:

We wish to express our appreciation to the Board for their leadership and support in planning and coordinating the operations of the Clark County Water Reclamation District (the District). We are pleased to present the District’s Comprehensive Annual Financial Report (CAFR) for the fiscal years (FY) ended June 30, 2019 and 2018.

This report was prepared by the District’s Finance Group following guidelines set forth by the Governmental Accounting Standards Board (GASB) with financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) in the United States.

Management assumes full responsibility for both the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

Piercy Bowler Taylor and Kern, a firm of Certified Public Accountants, has performed an independent audit of the District’s basic financial statements for the FY ended June 30, 2019, and issued an unmodified (“clean”) report thereof. The independent auditor’s report is located in the financial section of this report.

Management’s discussion and analysis (MD&A) immediately follows the independent auditors’ report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A and the financial statements complement this letter of transmittal and should be read in conjunction with it.

District Information The purpose of the District is to ensure the collection, treatment, and reclamation of wastewater so it can be safely returned to the environment. The District was established as a General Improvement District under Nevada Revised Statute (NRS) 318 in 1954 and, as such, is a political subdivision of the State. The District has been granted the authority to levy taxes, sell bonds, create assessment districts, and the right of eminent domain. The District’s bond covenants provide that rates and charges be sufficient to cover operation and maintenance costs and general expenses, including principal and interest payments on outstanding bonds.

The District is governed by a seven-member ex officio Board of Trustees (the Board) comprised of the members of the Clark County Commission. The Commissioners are elected to the Clark County Commission from geographical districts for staggered four-year terms. The Board elects a chairperson and a vice-chairperson to serve as the Board’s presiding officers. The Board has the power to set the District’s rates and charges. Currently, the District’s Chairperson is Commissioner Lawrence Brown III, and the Vice-Chairperson is Commissioner Tick Segerblom.


Board of County Commissioners October 4, 2019

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As a General Improvement District, the District’s cost of providing goods and services on a continuing basis is financed primarily through user charges. To that end, rates and charges should be sufficient to meet all the District’s revenue requirements (both operating and capital). The District follows the customer User Charge System guidelines set forth in Code of Federal Regulations Section 40 Part 35, which are requirements imposed on the District as an Environmental Protection Agency grant-assisted wastewater facility.

The District employs the accrual basis for recording and reporting financial transactions. Therefore, revenues and expenses are recorded in the period in which they are earned and incurred, respectively. During the year, funds will be encumbered upon approval of individual purchase orders. At year end, encumbrances lapse on unfilled orders for operations and maintenance items. Items or services received after year end are charged to the next fiscal year. The acquisition, repairs and improvement of the wastewater facilities required to provide services may be financed from existing cash resources, the issuance of bonds, state revolving loans, the receipt of grants, and other financing mechanisms.

The District’s facilities consist of a network of over 2,225 miles of pipelines for the conveyance of wastewater to facilities for treatment in the unincorporated areas of Clark County including the resort destinations on the Las Vegas Strip. The District also operates facilities in service areas outside of the Las Vegas Valley, including Laughlin, Searchlight, Moapa Valley, Blue Diamond, and Indian Springs as shown on the Page VIII Service Area Map. Wastewater is conveyed to the treatment facilities, where it undergoes a series of physical, biological and chemical processes that produce effluent that meets or exceeds federal, state and local discharge standards.

All major sewer lines within the system were constructed after 1954. Approximately 60% of the District’s sewer lines have been installed since 1988. The District’s wastewater treatment systems service 266,034 active accounts: 255,823 are residential accounts and 10,211 are commercial accounts. A total of 261,524 accounts are in the Las Vegas Valley, 3,209 are in Laughlin, and 1,301 are accounts in all other service areas.

Local Economy According to the University of Nevada Las Vegas’ Center for Business and Economic Research (CBER) Nevada Business Conditions for July 2019:

• Clark County visitor volume was slightly down (-0.3%) over the prior year• McCarran International Airport passengers increased 2.3% from the prior year• Seasonally adjusted employment increased 2.4% from the prior year, while unemployment decreased to 4.2% as of

June 2019 from 4.9% as of June 2018

Long-Term Financial Planning and Major Initiatives The District maintains both a Five-Year and a Long-Term Comprehensive Financial Plan. Included in both plans are the current and projected capital improvement program (CIP) costs, revenue and expense projections, and rate modeling. The District’s CIP includes rehabilitation and replacement of existing infrastructure, new infrastructure, and expansion of existing infrastructure due to service area growth or capacity requirements.

These comprehensive plans link the District’s physical development planning with the fiscal planning. The Five-Year and Long-Term Financial Plans allow for adjustments to be made based on changes in activity, requirements, and needs, while providing the District with the ability to maintain strong and stable cash reserves.

The District’s annual sewer service charges pay for services, supplies, personnel, annual replacement and rehabilitation debt service, and capital rehabilitation and replacement. The District uses a universal rate system, where all service areas are charged the same annual amount for sewer service fees per Equivalent Residential Unit (ERU). A single-family residence has a billing value of 1.0 ERU; all other residential and commercial accounts are derived from that base value. The District’s annual sewer service rate on July 1, 2018 was $221.09 per ERU.

System Development Approval (SDA) fees are connection fees the District charges for each ERU that connects to the wastewater facilities. SDA fees are due and payable in advance of connection to the District’s facilities. It is the practice of the District to apply SDA revenues to the District’s capital expansion program, capital equipment related to expansion of

Board of County Commissioners October 4, 2019

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existing infrastructure due to service area growth or capacity requirements, and expansion related debt. Page VII provides an overview of the District’s Sources and uses of Funds.

As of June 30, 2019, the Five-Year Capital Improvement Plan (FY 2019/20 through FY 2023/24) totaled $702 million. This estimated amount reflects the various capital projects that are expected to be designed and/or constructed over the next five years to rehabilitate existing infrastructure and to meet expansion needs. Of the total amount, the District plans to spend $675 million in the Las Vegas Valley - $258 million for replacement or rehabilitation and $355 million on capacity expansion projects. Outside the Las Vegas Valley, the District plans to spend $27 million for capacity expansion and rehabilitation projects. Management of the CIP is budgeted at $39.9 million. Capital equipment is budgeted at $22.5 million for various new and replacement equipment.

Relevant Financial Policies Debt Administration In accordance with Subsection (1)(c) of NRS 350.013, the District annually submits its Debt Management Policy to the State Department of Taxation and the Debt Management Commission. The purpose of the policy is to manage the issuance of the District’s debt obligations and to maintain the District’s ability to incur debt and other long-term obligations at favorable interest rates for capital improvements, facilities, and equipment.

It is the general intent of the District that revenue from rates and charges are adequate to cover all its costs and that ad valorem taxes be avoided. Historically, ad valorem taxes have not been relied on to support the District’s operations or debt service. No plan or intention to call upon ad valorem taxes is in place to support the District’s debt or other financial requirements. The District’s Debt Management Policy can be viewed on the District’s web site at http://www.cleanwaterteam.com.

Credit ratings indicate to potential investors whether an entity is considered a good credit risk. Credit ratings issued by the bond rating agencies are a major factor in determining the cost of borrowed funds in the municipal bond market and other debt financing mechanisms. The District currently holds a AAA bond rating with a stable outlook from Standard and Poor’s and an Aa1 rating from Moody’s Investor Services. These ratings reflect the District’s strong financial position, stable revenues, and effective financial planning.

Each time the District issues bonds through a competitive sale, a Continuing Disclosure Certificate must be executed. The Continuing Disclosure Certificate outlines the District’s responsibilities with regard to complying with Securities and Exchange Commission (SEC) Rule 15c2-12(b)(5). As of July 1, 2009, the Municipal Securities Rulemaking Board (MSRB) requires all municipal issuers to electronically file Annual Reports and Material Event Notices through the Electronic Municipal Market Access (EMMA) System which are available at http://emma.msrb.org. The District continues to be in compliance with this requirement.

Designated Unrestricted Reserves Pursuant to current policy, the District maintains several designated unrestricted reserves. Designated unrestricted reserves are available for appropriation, but the funds have been earmarked for a particular purpose. Designated unrestricted funds are designated to reflect the District’s management priorities, such as completion of capital improvement projects or providing for unknown contingent liabilities.

Restricted Reserves It is the District’s policy to maintain restricted fund balance reserves. These reserves are used to segregate financial resources of a fund reserve that are not available to liquidate liabilities of the current period. The District’s current restricted reserves include bond reserves held by the Clark County Treasurer’s office, and a workers’ compensation insurance fund.

http://www.cleanwaterteam.com/

http://emma.msrb.org/

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Customer Care Assistant General Mgr.

I Human Resources Labor Management

Recruitments Payroll

Employee Benefits Risk Management

I Employee

Development and Training

I Customer Service/

Billing


I Legal

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Technology Solutions Chief Information Officer

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Technology Infrastructure Solution

I Application

Development & Solutions

Service Facilitation

II

I I

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Finance/Accounting Chief Financial Officer

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Accounting Services

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BudgeURates

I Investment &

I Debt Management I

Procurement I I

Warehouse I

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Board of Trustees

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County Manager Assistant County Manager

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General Manager Water Reclamation District

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Engineering & Construction

Deputy General Mgr.

Planning & Development

Plant Operations,

Maintenance & Laboratory

Deputy General Mgr.

I Flamingo Water

Resource Center Operations

Design Service Area Operations

Project Design Team Moapa Valley Program Mgmt. & Project Blue Diamond Controls, Permitting, GIS Indian Springs

Survey, Document Controls Laughlin Desert Breeze

Searchlight Construction & I

Inspection Process Control Compliance &

Regulatory Affairs

I Quality Laboratory

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Energy Management Maintenance & Facilities

Asset Management

Internal Audil/Rate I Analysis

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Collection Systems Assistant General Mgr.

I Collection System

-Pretreatment-Odor Control

-Sewer Cleaning & Repairs-Emergency Response

-Underground Services Alert

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Lift Stations

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Fleet Operations

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Clark County Section 208 Water Quality

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Strategic Services Assistant General Mgr.

I Environmental

Health, Safety & Security

Governmental Affairs Management Services

Public Outreach

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VII

Sources and Uses of District Funds

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Las Vegas Metropolitan Service Area Map

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Wastewater Treatment Process Diagram

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Wastewater Treatment

Certificate of Achievement for Excellence in Financial Reporting

Financial Reporting

Financial Section

Clark County Water Reclamation District Desert Breeze Water Resource Center

6100 Elton Ave, Suite 1000 Las Vegas, NV 89107 702-384-1120 pbtk.com

INDEPENDENT AUDITORS' REPORT ON FINANCIALSTATEMENTS AND SUPPLEMENTARY INFORMATION

Honorable Clark County Water Reclamation District Board of TrusteesClark County Water Reclamation District, Nevada

We have audited the accompanying financial statements of the Clark County Water Reclamation District (theDistrict), a component unit of Clark County, Nevada, as of and for the years ended June 30, 2019 and 2018 (asrestated) and the related notes to the financial statements, which collectively comprise the District's basicfinancial statements as listed in the table of contents.

An audit performed in accordance with applicable professional standards is a process designed to obtainreasonable assurance about whether the District's basic financial statements are free from material misstatement.This process involves performing procedures to obtain audit evidence about the amounts and disclosures in thebasic financial statements. The procedures selected depend on the auditor’s judgment, including the assessmentof the risks of material misstatement of the basic financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal control relevant to the District's preparation and fairpresentation of the basic financial statements to enable the design of audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internalcontrol. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of theaccounting policies used and the reasonableness of significant accounting estimates made by management, aswell as the overall presentation of the basic financial statements.

Management’s Responsibility for the Financial Statements. Management is responsible for the preparationand fair presentation of the basic financial statements in accordance with accounting principles generallyaccepted in the United States of America; this includes the design, implementation, and maintenance of internalcontrol relevant to the preparation and fair presentation of basic financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditors' Responsibility. Our responsibility is to express an opinion on the basic financial statements based onour audit. We conducted our audit in accordance with auditing standards generally accepted in the United Statesof America and the standards applicable to financial audits contained in Government Auditing Standards, issuedby the Comptroller General of the United States. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the basic financial statements are free from material misstatement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects,the financial position of the District as of June 30, 2019 and 2018 (as restated), and the changes in financialposition and cash flows for the years then ended in accordance with accounting principles generally accepted inthe United States of America.

Emphasis of a Matter, Prior Period Restatement. As discussed in Note M to the financial statements, the2018 financial statements have been restated and net position as previously reported at June 30, 2018, wasadjusted to reverse the effect of two wastewater lines that were inadvertently recorded twice. As a result capitalassets, contributed asset contributions and net position were decreased by $2.2 million. Our opinion is not

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modified with respect to this matter.

Other Matters. Accounting principles generally accepted in the United States of America require that themanagement's discussion and analysis, postemployment benefits other than pensions, schedule of fundingprogress, proportionate share of the collective net pension liability information, proportionate share of statutorilyrequired pension contribution information, on pages 3-8 and 40-51 be presented to supplement the basicfinancial statements. Such information, although not a part of the basic financial statements, is required by theGovernmental Accounting Standards Board who considers it to be an essential part of financial reporting forplacing the basic financial statements in an appropriate operational, economic, or historical context. We haveapplied certain limited procedures to the required supplementary information in accordance with auditingstandards generally accepted in the United States of America, which consisted of inquiries of management aboutthe methods of preparing the information and comparing the information for consistency with management’sresponses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit ofthe basic financial statements. We do not express an opinion or provide any assurance on the informationbecause the limited procedures do not provide us with sufficient evidence to express an opinion or provide anyassurance.

Other Information. Our audit was conducted for the purpose of forming our opinion on the financialstatements that collectively comprise the District's basic financial statements. The introductory section, othersupplementary information, as listed in the table of contents, and statistical section are presented for purposes ofadditional analysis and are not a required part of the basic financial statements.

The other supplementary information, as listed in the table of contents, is the responsibility of management andwas derived from and relates directly to the underlying accounting and other records used to prepare the basicfinancial statements. Such information has been subjected to the auditing procedures applied in the audit of thebasic financial statements and certain additional procedures, including comparing and reconciling suchinformation directly to the underlying accounting and other records used to prepare the basic financial statementsor to the basic financial statements themselves, and other additional procedures in accordance with auditingstandards generally accepted in the United States of America. In our opinion, the other supplementaryinformation as listed in the table of contents is fairly stated, in all material respects, in relation to the basicfinancial statements as a whole.

The introductory section and statistical section have not been subjected to the auditing procedures applied in theaudit of the basic financial statements, and accordingly, we do not express an opinion or provide any assuranceon them.

Other Reporting Required by Government Auditing Standards. In accordance with Government AuditingStandards, we have also issued our report dated October 4, 2019, on our consideration of the District's internalcontrol over financial reporting and on our tests of its compliance with certain provisions of laws, regulations,contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of ourtesting of internal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on internal control over financial reporting or on compliance. That report is an integral partof an audit performed in accordance with Government Auditing Standards in considering the District's internalcontrol over financial reporting and compliance.

Las Vegas, NevadaOctober 4, 2019

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CLARK COUNTY WATER RECLAMATION DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

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Management’s Discussion and Analysis As management of the Clark County Water Reclamation District (the District), we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal years ended June 30, 2019 and 2018. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our financial statements which follow this analysis.

Financial Highlights Total Net Position increased by $79.7 million (4.5%) to $1.84 billion at June 30, 2019. During fiscal year ended

2018, total net position increased by $25.3 million (1.5%) for a total of $1.76 billion.

Change in Net Position increased by $54.3 million (214.4%) to $79.7 million for fiscal year 2019. During fiscalyear ended 2018 change in net position decreased by $20.0 million (-44.1%) for a total of $25.3 million.

Capital Assets, Net of Accumulated Depreciation decreased by $24.7 million (-1.3%) to $1.89 billion at June 30,2019. During fiscal year ended 2018 capital assets, net of accumulated depreciation, decreased by $21.8 million(-1.1%) for a total of $1.91 billion.

Overview of the Financial Statements The District uses accrual basis accounting and accounts for all assets used in the production of services offered. The financial statements of the District are self-contained and may be used by its Board of Trustees, rate payers, creditors, investors, legislators or the general public to evaluate the performance of the District in a manner similar to that used to evaluate private sector businesses.

The District is required to present three basic financial statements – The Statement of Net Position; The Statement of Revenues, Expenses and Changes in Net Position; and The Statement of Cash Flows.

The Statement of Net Position, which outlines the District’s financial and capital resources, serves as the District’s statement of financial position or balance sheet. Net Position equals assets, plus deferred outflows of resources, minus liabilities, minus deferred inflows of resources.

The Statement of Revenues, Expenses and Changes in Net Position presents basic information regarding the District’s financial activities and provides insight to the user regarding the sources of funding for the District’s operations.

The Statement of Cash Flows reports cash receipts and disbursements during the reporting year for operating activities, capital and related financing activities, and investing activities.

All statements are prepared in accordance with accounting principles generally accepted in the United States.

Notes to the Financial Statements The notes to the financial statements provide additional information that is necessary to acquire a full understanding of the data provided in the District’s financial statements. The notes to the financial statements can be found on pages 15-39 of this report.

Other Information In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the District’s progress in funding its obligation to provide Postemployment Benefits Other Than Pensions (OPEB) to its employees and its proportionate share of net pension liability and schedule of contributions related to pension. Required supplementary information can be found beginning on page 42 of this report.


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Financial Analysis Net position over time may serve as a useful indicator of a government’s financial condition. In the case of the District, assets and deferred outflows exceeded liabilities and deferred inflows by $1.84 and $1.76 billion in fiscal years 2019 and 2018, respectively. Net position increased 4.5% in fiscal year 2019 and increased 1.5% in fiscal year 2018. See Net Position (Table 1), for a summary of the District’s net position over the last three years.

Table 1 - Net PositionYear Ended

Restated Year Ended Year Ended

June 30, 2019 June 30, 2018 Increase (Decrease) June 30, 2017 Increase (Decrease)Current and other assets 507,291,683$ 417,266,053$ 90,025,630$ 21.6% 392,201,364$ 25,064,689$ 6.4%Capital assets 1,889,400,018 1,914,064,837 (24,664,819) (1.3%) 1,935,912,797 (21,847,960) (1.1%)

Total Assets 2,396,691,701 2,331,330,890 65,360,811 2.8% 2,328,114,161 3,216,729 0.1%

Deferred Loss on Bond Refunding 37,901,690 39,896,522 (1,994,832) (5.0%) 41,891,354 (1,994,832) (4.8%)Deferred Outflows/OPEB 737,191 636,213 100,978 N/A - 636,213 N/ADeferred Outflows/Pension Plan 11,611,007 10,440,542 1,170,465 11.2% 12,004,816 (1,564,274) (13.0%)

Current liabilities 41,198,034 40,672,654 525,380 1.3% 49,785,724 (9,113,070) (18.3%)Non-Current liabilities 541,776,823 575,852,706 (34,075,884) (5.9%) 596,245,393 (20,392,687) (3.4%)

Total Liabilities 582,974,857 616,525,360 (33,550,503) (5.4%) 646,031,117 (29,505,757) (4.6%)

Deferred Inflows/OPEB 23,575,527 4,327,511 19,248,016 N/A - 4,327,511 N/ADeferred Inflows/Pension Plan 3,234,212 3,979,582 (745,370) (18.7%) 3,853,923 125,659 3.3%

Net Position:Net investment in capital assets 1,410,831,661 1,419,606,935 (8,775,274) (0.6%) 1,415,191,745 4,415,190 0.3%Restricted 22,840,446 20,548,092 2,292,353 11.2% 19,010,619 1,537,473 8.1%Unrestricted 403,484,887 317,316,687 86,168,200 27.2% 297,922,927 19,393,760 6.5%

Total Net Position 1,837,156,993$ 1,757,471,714$ 79,685,279$ 4.5% 1,732,125,291$ 25,346,423$ 1.5%

As outlined in the above table, total net position is comprised of three distinct components: net investment in capital assets, restricted and unrestricted. By far, the largest portion of the District’s net position of $1.84 billion reflects its investment in capital assets. This portion, $1.4 billion, represents the capital assets net of any outstanding debt that is directly attributable to the acquisition, construction or improvement of those assets. The District uses those capital assets to provide services to rate payers; consequently, those assets are not available for future spending.

An additional portion of the District’s net position, approximately $22.8 million, represents resources that are subject to constraints due to legislative restrictions or other external restrictions. The remaining balance of $403.5 million is unrestricted and may be used to meet ongoing obligations to rate payers and creditors that are not funded by restricted resources or for use in the event of a facility emergency.

The District implemented GASB Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions (OPEB) during fiscal year ended June 30, 2018, and has allocated its proportionate share of the Total OPEB liability, deferred outflows of resources, deferred inflows of resources, and OPEB expense.

At the end of the current fiscal year, the District was able to report positive balances in all three categories of net position. The same situation held true for the two previous fiscal years.


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Fiscal Year Ended 2019 Summary: • Total assets increased $65.4 million (2.8%) over fiscal year ended 2018 as a result of an increase in investments,

which were offset by a decrease in capital assets and cash and cash equivalents. • Total liabilities decreased $33.6 million (-5.4%) over fiscal year ended 2018 primarily due to decreases in the

liability for accrued other postemployment benefits (OPEB). Fiscal Year Ended 2018 Summary:

• Total assets increased $3.2 million (0.1%) over fiscal year ended 2017 as a result of increase in cash and cash equivalents, which were offset by a decrease in capital assets.

• Total liabilities decreased $29.5 million (-4.6%) over fiscal year ended 2017 primarily due to decreases in construction contracts and bonds payable.

Changes in the District’s net position can be determined by a review of the following condensed Statements of Revenues, Expenses and Change in Net Position (Table 2). Table 2 - Change in Net Position

Year EndedRestated

Year Ended Year EndedJune 30, 2019 June 30, 2018 Increase (Decrease) June 30, 2017 Increase (Decrease)

Operating Revenues:Sewer service charges 151,779,428$ 147,311,016$ 4,468,411$ 3.0% 145,560,887$ 1,750,129$ 1.2%Other 9,075,866 1,914,492 7,161,374 374.1% 2,327,450 (412,958) (17.7%)

Total Operating Revenues 160,855,294 149,225,508 11,629,787 7.8% 147,888,337 1,337,171 0.9%

Non-Operating Revenues (Expenses):Connection fees 30,463,343 26,788,540 3,674,803 13.7% 23,329,406 3,459,134 14.8%Sales tax apportionment 20,802,775 19,623,239 1,179,535 6.0% 18,544,504 1,078,735 5.8%Investment income 8,670,996 6,243,161 2,427,835 38.9% 4,633,329 1,609,832 34.7%Other (5,011,080) (19,594,885) 14,583,804 (74.4%) (8,745,193) (10,849,692) 124.1%

Total Non-Operating Revenues (Expenses) 54,926,034 33,060,055 21,865,979 66.1% 37,762,046 (4,701,991) (12.5%)

Total Revenues, Net 215,781,328 182,285,563 33,495,765 18.4% 185,650,383 (3,364,821) (1.8%)

Operating Expenses:Personnel 38,914,896 39,824,957 (910,061) (2.3%) 40,172,827 (347,870) (0.9%)Other 38,998,456 51,262,762 (12,264,306) (23.9%) 55,198,730 (3,935,968) (7.1%)Depreciation 100,262,055 99,673,167 588,888 0.6% 89,755,508 9,917,659 11.0%

Total Expenses 178,175,407 190,760,886 (12,585,478) (6.6%) 185,127,065 5,633,821 3.0%

Income Before Capital Contributions 37,605,920 (8,475,323) 46,081,243 (543.7%) 523,318 (8,998,641) (1719.5%)

Capital Contributions:Contributed assets 42,079,359 33,821,746 8,257,613 24.4% 44,806,273 (10,984,527) (24.5%)

Change in Net Position 79,685,279 25,346,423 54,338,857 214.4% 45,329,591 (19,983,168) (44.1%)

Net Position, Beginning of the Year, as Reported 1,759,729,163 1,732,125,291 27,603,872 1.6% 1,686,795,700 45,329,591 2.7%Adjustments (2,257,449) - (2,257,449) 0.0% - - 0.0%Net Position, Beginning of the Year, as Adjusted 1,757,471,714 1,732,125,291 25,346,423 1.5% 1,686,795,700 45,329,591 2.7%

Net Position, End of Year 1,837,156,993$ 1,757,471,714$ 79,685,280$ 4.5% 1,732,125,291$ 25,346,423$ 1.5%

The primary source of operating revenues, sewer service charges, totaled $151.8 million. Operating revenues also include reclaimed water sales, pretreatment inspection fees, septage waste processing fees and miscellaneous fees. Operating revenues fund all operational expenses including repair and maintenance, rehabilitation and replacement of the District’s infrastructure and equipment, and debt service.


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The primary source of non-operating revenues, connection fees, was $30.5 million. Non-operating revenues are used to fund the expansion of capital infrastructure and equipment related to service area growth and capacity requirements and debt service. The other major sources of non-operating revenues are sales tax apportionment of $20.8 million and investment income of $8.7 million. Due to the increase in capital assets placed into service, depreciation expense increased $0.6 million (0.6%). Contributed assets totaled approximately $42.1 million and $33.8 million for fiscal years ended 2019 and 2018, respectively. Fiscal Year Ended 2019 Summary:

• Total operating revenues increased $11.6 million (7.8%) over fiscal year ended 2018 as a result of increases in sewer service revenue and reclaimed water sales.

• Total non-operating revenues/expenses increased $21.9 million (66.1%) over fiscal year ended 2018 as a result of an increase in connection fees and investment income.

• Total net revenues increased $33.5 million (18.4%) over fiscal year ended 2018. • Total operating expenses excluding depreciation of $100.3 million, decreased $13.2 million (-14.5%) over fiscal

year ended 2018. • Total expenses decreased $12.6 million (-6.6%) over fiscal year ended 2018.

Fiscal Year Ended 2018 Summary:

• Total operating revenues increased $1.3 million (0.9%) over fiscal year ended 2017 as a result of increases in sewer service revenue.

• Total non-operating revenues/expenses decreased $4.7 million (-12.5%) over fiscal year ended 2017 as a result of interest expense increasing due to less capitalized interest to projects, offset by an increase to connection fees.

• Total net revenues decreased $3.4 million (-1.8%) over fiscal year ended 2017. • Total operating expenses excluding depreciation of $99.7 million, decreased $4.3 million (-4.5%) over fiscal year

ended 2017. • Total expenses increased $5.6 million (3.0%) over fiscal year ended 2017.

Capital Assets and Debt Administration The following represents the District’s investment in capital assets, net of depreciation as of June 30 for each fiscal year:

Table 3 - Capital Assets, Net of Accumulated Depreciation RestatedYear Ended Year Ended Year Ended

June 30, 2019 June 30, 2018 June 30, 2017Land and rights of way 7,958,177$ 7,958,177$ -$ 0.0% 7,958,177$ -$ 0.0%Land improvements 10,094,466 11,040,941 (946,475) (8.6%) 7,650,620 3,390,321 44.3%Buildings and wastewater treatment facilities 633,231,040 675,197,608 (41,966,568) (6.2%) 563,921,415 111,276,193 19.7%Wastewater conveyance lines 1,028,846,994 1,005,175,068 23,671,926 2.4% 917,381,767 87,793,301 9.6%Equipment 158,778,078 177,625,918 (18,847,840) (10.6%) 157,507,622 20,118,296 12.8%Work in progress 50,491,263 37,067,125 13,424,138 36.2% 281,493,196 (244,426,071) (86.8%)

Total 1,889,400,018$ 1,914,064,837$ (24,664,819)$ (1.3%) 1,935,912,797$ (21,847,960)$ (1.1%)

Increase (Decrease) Increase (Decrease)

The District’s investment in capital assets as of June 30, 2019 was $1.89 billion, net of accumulated depreciation. This investment in capital assets includes land, buildings, treatment facilities, wastewater conveyance lines, equipment, and construction in progress. This represents a decrease of $24.7 million (-1.3%) and results from accumulated depreciation being greater than the amount of assets added. See further analysis in Note D to the basic financial statements in this report.


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Major capital asset events during fiscal year 2019 included the following: Completion of package 5 of the collection system capacity upgrade ($6.4 million) Completion of phase 1 of the Jones Boulevard capacity upgrade ($1.8 million) Completion of Flamingo and Laughlin water resource centers’ electrical systems rehabilitation ($2.8 million)

The District’s investment in capital assets as of June 30, 2018 was $1.91 billion, net of accumulated depreciation. This investment in capital assets includes land, buildings, treatment facilities, wastewater conveyance lines, equipment, and construction in progress. This represents a decrease of $21.8 million (-1.1%) and is directly attributable to an increase in capital assets being depreciated. Major capital asset events during fiscal year 2018 included the following:

Completion of the Dual Media Filters Phase 3 and 4 projects ($122.6 million) Completion of the Las Vegas Wash Improvements project ($57.5 million) Completion of the Paradise Whitney Interceptor Package 3 project ($50.5 million)

Long-Term Debt The acquisition, construction and rehabilitation of the District’s infrastructure and facilities required to provide services are financed from existing cash resources, State Revolving Loans, grants, and the issuance of bonds. The District’s General Obligation/Revenue backed bonds constitute direct and general obligations of the District. The full faith and credit of the District is pledged to the payment of principal and interest thereon. Principal and interest are paid from net pledged revenues of the District and are secured by the District’s ability to access ad valorem taxes. Net pledged revenues are defined as gross revenues of the District less operation and maintenance expenses. Historically, taxes have not been relied on to support the District’s operations or debt service. No change in this practice is contemplated at this time. The District currently holds a AAA bond rating with a stable outlook from Standard and Poor’s and an Aa1 rating from Moody’s Investor Services. Neither of these ratings has changed in the past fiscal year. The District assesses its financial plan on an annual basis. The District’s bond covenants provide that rates and charges be sufficient to cover operation and maintenance costs and general expenses, which include debt service (principal and interest). Debt proceeds, connection fees and sales tax revenues are spent first when funding capital projects. The District has the following outstanding debt that was used to finance the capital projects:

Additional information on the District’s long-term debt can be found in Note J to the basic financial statements in this report.

Year Ended June 30, 2019



2007 Series -$ -$ 1,440,000$ 2008 Series - 3,005,000 5,870,000 2009A Series 3,085,000 6,000,000 8,760,000 2009B Series 3,090,000 6,030,000 8,825,000 State Revolving Loan - ARRA (2009C) 3,260,550 3,571,079 3,881,608 State Revolving Loan (2011A) 29,719,838 31,724,354 33,666,472 State Revolving Loan (2012A) 24,847,360 26,394,016 27,904,864 2015 Series Refunding 103,625,000 103,625,000 103,625,000 2016 Series Refunding 267,470,000 269,465,000 269,465,000

Total 435,097,748$ 449,814,449$ 463,437,944$


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Economic Factors and Next Year’s Budget and Rates According to the University of Nevada Las Vegas’ (UNLV) Center for Business and Economic Research (CBER) 2018 midyear outlook, “The Southern Nevada Coincident Index has recovered all of its decline during the Great Recession and stands over 5.9 percent higher than this prior peak. It took just over seven years to achieve this level of recovery.” Commercial growth, especially along the Las Vegas Strip, plays a significant role in the District’s revenue stream. The District closely monitors the trend of commercial projects and the effect on revenues and adjusts its capital improvement plan accordingly. The District’s FY 2019-2020 Operations & Maintenance (O&M) and Capital Budgets provides funding to support the collection, treatment, and reclamation of commercial and residential wastewater for the service area. As an industrial operation, the District continues to have greater expenses for capital infrastructure, power and chemicals. The FY 2019-2020 budgets addresses the needs of the District’s rate payers and the general public and allows the District to meet its obligation in protecting the public health and providing reliable collection and treatment systems. With continued teamwork and sound fiscal management, the District will continue to be in a position to proactively, effectively and responsibly plan and prepare for the future. The goal for the O&M budget is to maintain current service levels while continuing to develop a budget that better reflects actual expense activity. The rates charged by the District are among the lowest in the western region. A reduction of 4% in sewer services rates was approved by the Board of Trustees effective July 1, 2013. The District’s goal was to sustain that rate reduction for 5 years. Because the District depends on the rates for almost all of its income, the budget is linked to the rates charged. The 2018-2019 annual sewer service rates remain at $221.09 per Equivalent Residential Unit (ERU). A community advisory board (CAB) was convened in the summer of 2018 to determine annual sewer rates for the next 10 years. They proposed a 2.75% rate increase, which was approved by the Clark County Commissioners on February 5, 2019. The 2019-2020 annual sewer rates will be $227.16 per ERU. Contacting the District’s Financial Management This financial report is designed to provide users, including our rate payers and creditors, with a general overview of the District’s finances and to demonstrate the District’s financial accountability for the money it receives from its rate payers. If you have any questions about this report or need additional financial information, contact the Clark County Water Reclamation District, Attention: Susan Heltsley, Assistant General Manager, Financial Services, 5857 E. Flamingo Road, Las Vegas, NV 89122. E-mail: [email protected] Telephone: (702) 668-8064.

Basic Financial Statements

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Statement of Net Position Clark County Water Reclamation DistrictStatement of Net PositionJune 30, 2019 and 2018

Assets 2019Restated

2018Current Assets: Cash and cash equivalents 13,329,129$ 81,439,120$ Accounts receivable, net of allowance for doubtful accounts 10,769,375 13,692,657 $402,783 and $377,875 Supply inventories 2,524,174 2,045,841 Interest receivable, net of allowance for doubtful accounts $677,178 and $571,444

1,886,052 794,924

Investments 437,573,866 274,049,675 Prepaid items 1,870,312 2,014,039 Total Unrestricted Current Assets 467,952,908 374,036,256

Restricted Current Assets: Cash and cash equivalents 28,486,366 27,134,684 Sales tax receivable 3,652,869 3,443,528 Worker's compensation certificate of deposit - 116,693 Total Restricted Current Assets 32,139,235 30,694,905

Total Current Assets 500,092,143 404,731,161

Non-Current AssetsCapital Assets: Property, plant and equipment 3,010,044,248 2,951,991,261 Less accumulated depreciation and amortization 1,179,093,670 1,082,951,726

1,830,950,578 1,869,039,535 Land and rights of way 7,958,177 7,958,177 Construction in progress 50,491,263 37,067,125 Total Capital Assets, Net 1,889,400,018 1,914,064,837 Other long-term receivables, net of reserve for reclaimed water sales $2,350,524 and $13,648,855

7,199,540 12,534,892

Total Non-Current Assets 1,896,599,558 1,926,599,729

Total Assets 2,396,691,701 2,331,330,890

Deferred Outflows of Resources: Deferred loss on bond refunding 37,901,690 39,896,522 Deferred amounts related to OPEB 737,191 636,213 Deferred amounts related to pension plan 11,611,007 10,440,542 Total Deferred Outflows of Resources 50,249,888 50,973,277

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Clark County Water Reclamation DistrictStatement of Net Position (continued)June 30, 2019 and 2018

Liabilities 2019Restated

2018Current Liabilities:Payable from Unresricted Assets Accounts payable 3,490,471 3,614,386 Construction contracts payable 5,505,207 4,679,871 Accrued expenses 2,193,142 2,028,810 Accumulated compensated absences 1,052,871 1,150,232 Other liabilities 4,270,776 5,230,793 Total Payable from Unrestricted Assets 16,512,467 16,704,092

Payable from Restricted Assets Accrued debt interest payable 8,403,837 8,732,892 Current maturities of debt payable 15,762,761 14,716,701 Other liabilities 518,969 518,969 Total Payable from Restricted Assets 24,685,567 23,968,562

Total Current Liabilities 41,198,034 40,672,654

Non-Current Liabilities: Long-term portion of accumulated compensated absences 5,291,291 4,735,223 Accrued other post employment benefits 19,811,230 38,603,182 Net pension liability 58,926,437 56,558,019 Debt payable, net of current maturities 457,300,389 475,061,330 Other liabilities 447,476 894,952 Total Non-Current Liabilities 541,776,823 575,852,706

Total Liabilities 582,974,857 616,525,360

Deferred Inflows of Resources: Deferred amounts related to OPEB 23,575,527 4,327,511 Deferred amounts related to pension plan 3,234,212 3,979,582 Total Deferred Inflows of Resources 26,809,739 8,307,093

Net Position:Net investment in capital assets 1,410,831,661 1,419,606,935 Restricted: Debt service 20,082,529 18,401,792 Capital projects 2,757,917 2,101,100 Held in custody of others - 45,201 Unrestricted 403,484,887 317,316,687

Total Net Position 1,837,156,993$ 1,757,471,714$

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Statement of Revenues, Expenses and Changes in Net Position

Clark County Water Reclamation DistrictStatement of Revenues, Expenses and Changes in Net PositionYears Ended June 30, 2019 and 2018

2019Restated

2018Operating Revenues Sewer service charges 151,779,428$ 147,311,016$ Reclaimed water sales 8,020,378 872,361 Pretreatment fees 523,000 489,336 Septage fees 406,586 372,299 Other 125,902 180,496 Total Operating Revenues 160,855,294 149,225,508

Operating Expenses Salaries 26,521,049 26,020,723 Benefits 12,393,847 13,804,234 Utilities 10,562,923 10,922,925 Outside services 8,193,959 8,716,571 Chemicals 5,426,854 4,685,017 Maintenance 6,106,445 4,847,207 Other expenses 2,579,808 2,318,255 Supplies 5,103,413 4,608,702 Other losses 1,025,055 5,650,862 Impairment loss - 9,513,223 Depreciation 100,262,055 99,673,167 Total Operating Expenses 178,175,407 190,760,886

Loss From Operations (17,320,114) (41,535,378)

Non-Operating Revenues (Expenses): Unrestricted investment earnings 8,670,996 6,243,161 Net increase (decrease) in the fair value of unrestricted investment 10,650,204 (5,682,877) Restricted investment gain (loss) 755,892 (171,091) Connection fee revenue, net of refunds and allowances of 30,463,343 26,788,540 $504,758 and $49,676 Sales tax apportionment 20,802,775 19,623,239 Interest expense, net of capitalized interest of $0 and $3,631,709 (16,832,937) (13,814,314) Other non-operating revenue (expenses), net 415,761 73,397 Total Non-Operating Revenue (Expenses) 54,926,034 33,060,055

Income (Loss) Before Capital Contributions 37,605,920 (8,475,323)

Capital Contributions Contributed assets 42,079,359 33,821,746

Change in Net Position 79,685,279 25,346,423

Net Position, Beginning of the Year, As Previously Reported 1,759,729,163 1,732,125,291

Adjustments (2,257,449) -

Net Position, Beginning of the Year, As Adjusted 1,757,471,714 1,732,125,291

Net Position, End of Year 1,837,156,993$ 1,757,471,714$

State

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Clark County Water Reclamation DistrictStatement of Cash FlowsYears Ended June 30, 2019 and 2018

2019Restated

2018Cash Flows From Operating Activities:Cash flows from customers 167,432,111$ 145,319,989$ Payments to employees (37,648,520) (37,701,401) Payments for services and supplies (40,252,662) (42,004,441) Net Cash Provided by Operating Activities 89,530,929 65,614,147

Cash Flows from Non Capital Financing Activities:Repayment of notes receivables from Clark County 371,457 364,120

Cash Flows from Capital and Related Financing Activities:Sales tax apportionment - restricted to capital expenditure by statute 20,145,958 18,906,677 Connection fees received 31,773,705 25,631,414 Acquisition, construction or improvement of capital assets (32,692,542) (60,526,451) Principal payments on debt for capital assets (14,716,701) (13,623,495) Interest payments on debt for capital assets (17,165,341) (17,788,897) Net Cash Used in Capital and Related Financing Activities (12,654,921) (47,400,752)

Cash Flows from Investing Activities:Proceeds from sale of investments 361,674,616 555,258,685 Interest on investments 8,335,759 6,296,406 Purchases of investments (514,548,603) (518,584,687) Workers compensation certificate of deposit 116,693 75,837 Other financing fees 415,761 73,397 Net Cash Provided by Investing Activities (144,005,774) 43,119,638

Net increase in cash and cash equivalents (66,758,309) 61,697,153 Cash and cash equivalents, beginning of year 108,573,804 46,876,651 Cash and cash equivalents, end of year 41,815,495$ 108,573,804$

Cash and Cash Equivalent Balances: Unrestricted cash and cash equivalents 13,329,129 81,439,120 Restricted cash and cash equivalents 28,486,366 27,134,684 Cash and Cash Equivalents, End of Year 41,815,495$ 108,573,804$

Statement of Cash Flows

Statement of Cash Flows

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Clark County Water Reclamation DistrictStatement of Cash Flows (continued)Years Ended June 30, 2019 and 2018

2019Restated

2018Reconciliation of Loss from Operations to Net Cash Providedby Operating Activities:Loss from operations (17,320,114)$ (41,535,378)$ Adjustments:Depreciation 100,262,055 99,673,167 Impairment loss - 9,513,223 (Increase) decrease in receivables 6,576,816 (3,905,518) (Increase) decrease in supply inventories (478,333) 324,494 (Increase) decrease in prepaid items 143,727 (1,381,467) (Increase) decrease in deferred outflows of resources for pensions (1,170,465) 1,564,274 Increase (decrease) in deferred inflows of resources for pensions (745,370) 125,659 Increase (decrease) in net pension liability 2,368,418 (995,361) (Increase) in deferred outflows of resources for OPEB (100,978) (636,213) Increase in deferred inflows of resources for OBEP 19,248,017 4,327,512 (Decrease) in post employment benefits (18,791,952) (2,419,880) Increase in accounts payable and accrued expenses 499,126 999,396 (Decrease) in other liabilities (960,018) (39,761) Net Cash Provided by Operating Activities 89,530,929$ 65,614,147$

Non Cash Investing and Capital and Related Financing Activities:Contributed assets 42,079,359$ 33,821,746$ Adjustment of investments to carrying value 4,735,100 (5,915,103)

CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

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Notes to Financial Statements

I. Summary of Significant Accounting Policies The accounting policies of the Clark County Water Reclamation District (the District) conform to generally accepted accounting principles (GAAP) in the United States of America as applicable to governments and as defined by the Governmental Accounting Standards Board (GASB), the independent and ultimate authoritative accounting and financial reporting standard-setting body for state and local governments. The significant accounting and reporting policies for the District are discussed below. A. Reporting Entity GASB Statement No. 61, The Financial Reporting Entity: Omnibus an Amendment of GASB Statements No. 14, The Financial Reporting Entity and No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, defines the reporting entity as the primary government and organizations for which the primary government is financially accountable. Financial accountability is defined as: the appointment of a voting majority of the component units governing body by the primary government and whether the primary government has the ability to impose its will or the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. The primary government is financially accountable if an organization is fiscally dependent on and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government regardless of whether the organization has (1) a separately elected governing board, (2) a governing board appointed by a higher level of government, or (3) a jointly appointed board. Since the Clark County (the County) Board of County Commissioners is the ex officio Board of Trustees of the District, they have the ability to influence and control operations. The County reports the District as a component unit and the financial statements of the District have been included in the County’s Comprehensive Annual Financial Report (CAFR). However, because the District provides sewer services to the public for a fee and is fiscally independent of the County, it is a self-supporting entity. The District also receives separate Board approval for these financial statements and files them separately with the State of Nevada Department of Taxation; therefore, the District is the reporting entity. No entities were determined to be component units of the District. B. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The economic resource measurement focus and the accrual basis of accounting are used by the District. Under this basis of accounting, all assets and liabilities associated with District operations are included on the Statements of Net Position. Revenues are recognized as soon as they are both measurable and earned and expenses are recognized when a liability is incurred, regardless of the timing of related cash flows. Earned but unbilled receivables are recorded as revenue. The District considers revenues earned through user charges to be operating revenues. Revenues earned from connection fees, sales taxes, capital and investing activities are considered non-operating revenue. Expenses associated with operating the physical facilities are considered operating expenses. When both restricted and unrestricted resources are available for a particular use, it is the District’s practice to use restricted resources first, and then unrestricted resources as they are needed. C. Budgetary Information 1. Budgetary Basis of Accounting Prior to April 15, the County Manager submits to the Nevada State Department of Taxation the tentative budget for the next fiscal year, commencing on July 1. The budget, as submitted, contains the proposed expenses and means of financing them. The Nevada State Department of Taxation notifies the County of its acceptance of the budget. A special public hearing is set, per Nevada Revised Statute (NRS), for the third Monday in May. After all changes have been noted and hearings

CLARK COUNTY WATER RECLAMATION DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

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closed, the Board of County Commissioners, ex officio Board of Trustees for the District, adopts the budget on or before June 1. The County reports the District as a component unit of the County and the District’s annual budget is included in the County’s annual budget. Increases to the budget (augmentations) are accomplished through a letter of adjustment submitted to the County Budget Director, to be included in the next quarterly economic condition survey. This process is revenue driven; therefore, total expenses cannot be increased without additional previously unbudgeted resources being clearly identified. The letter must be filed prior to fiscal year end. The NRS requires budget controls to be exercised at the function level. Encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. All operating appropriations lapse at the end of the fiscal year. Budgets are adopted on a basis consistent with GAAP. D. Assets, Liabilities, Deferred Outflows/Inflows of resources, and Net Position 1. Cash and Cash Equivalents The District’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. 2. Inventories and Prepaid Items Supply inventories consist primarily of materials and supplies and are valued at average cost. Certain payments to vendors reflect cost applicable to future accounting periods and are recorded as prepaid items. 3. Investments The District’s formal investment policy is designed to ensure conformity with NRS 355 and to limit exposure to investment risks. When investing monies, the Clark County Treasurer, ex officio Treasurer of the District, is required to be in conformity with NRS 355 and written policies adopted by the Board of County Commissioners dictate allowable investments and the safeguarding of those investments. The District’s investments are held in the District’s name and are reported at fair value regardless of the length of time remaining to maturity. Investment revenue is increased or decreased in relation to this adjustment for unrealized gains or losses. 4. Capital Assets Connection fee revenues are used to fund capital expansion and related debt service. The Capital Improvement and Capital Expansion plans are projected for a minimum of a five-year period. The District’s five-year Capital Improvement Plan and Debt Management Policy along with a statement of current and contemplated debt (Indebtedness Report) are submitted to the Nevada State Department of Taxation and the Clark County Debt Management Commission annually in accordance with NRS 350.013(1)(c). Capital acquisitions are recorded at historical cost. Contributed capital is valued at its estimated acquisition cost on the date donated. Labor and supporting benefit costs expenses to support capital projects may be capitalized as part of the project cost. Capital assets with an infinite useful life, such as land, are not depreciated. Equipment with a historical cost of less than $5,000 is not capitalized. The cost of normal maintenance and repairs of District assets that does not increase the functionality of an asset or materially extend the asset’s life are not capitalized. Betterments that extend the useful life of assets are capitalized and depreciated over the remaining useful lives of the related assets, as applicable.


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District assets including infrastructure and wastewater conveyance lines are depreciated using the straight-line method over the following estimated useful lives:

Capital Asset Classifications Lives (in years) Buildings 10-50 Land Improvements 10-20 Machinery and Equipment 1-10 Vehicles 5-10 Wastewater Conveyance Lines 50

5. Deferred Outflows/Inflows of Resources In addition to assets, the statements of financial position will sometimes report a separate section for deferred outflows of resources. This represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. For this reporting period, the District has three items in this category. The first is the deferred loss on bond refunding. The loss is deferred and amortized over the life of the bonds. The second is the deferred amounts related to the pension plan. This amount is deferred and amortized over the average expected remaining service life of all employees that are provided with pension benefits. The third is the deferred amounts related to the other postemployment benefits (OPEB) plan. This amount is deferred and amortized over the average expected remaining service life of all employees that are provided with OPEB. In addition to liabilities, the statements of financial position will sometimes report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. For this reporting period, the District has several items that qualify for reporting in this category, relating to pensions and OPEB: 1) the differences between expected and actual experience and changes of assumptions, which are deferred and amortized over the average expected remaining service life, of all employees that are provided with pension and OPEB benefits, 2) the net difference between projected and actual earnings on investments, which are deferred and amortized over five years, and 3) contributions made subsequent to the measurement date, which are deferred for one year. 6. Net Position Flow Assumption In the current reporting period, net position represents the difference between assets and liabilities, and deferred inflows and outflows in the following categories: net investment in capital assets, restricted and unrestricted. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by any outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Restricted net position is reported when limitations are imposed on their use through external restrictions imposed by creditors, grantors or laws and regulations of the State or Federal governments. To calculate the amounts to report as restricted net position and unrestricted net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s practice to consider restricted net position to have been depleted before unrestricted net position is applied. Funds set aside for payment of bond principal and interest are classified as restricted, due to debt service requirements. The unspent portion of bond proceeds are classified as restricted to payment of capital expenses per bond resolutions. Amounts accrued for sales tax receipts not received at year end are classified as restricted in accordance with Nevada statutes or NRS. Funds received during the year are used for capital expenses.


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E. Revenues and Expenses 1. Revenues/Tax Roll Sewer services are billed in advance on July 1 for the upcoming fiscal year ending June 30. In accordance with NRS 318.201, Procedure for Collection of Service Charges on Tax Roll, the District elects to have accounts receivable that are delinquent collected on the Clark County tax roll. For fiscal years ended 2019 and 2018, $6,800,935 and $6,522,558 of the delinquent accounts receivable were placed on the tax roll. As of June 30, 2019, the outstanding tax rolled balances, which includes all previous years’ balances, totaled $7,422,695. 2. Compensated Absences The District’s policy permits employees to accumulate earned but unused vacation and sick leave benefits, which are eligible for payment upon separation from the District. Such benefits are accrued when incurred. 3. Pensions The District uses the same basis used in the Public Employees’ Retirement System of Nevada’s (PERS) Comprehensive Annual Financial Report, for reporting its proportionate share of the PERS collective net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, including information related PERS fiduciary net position and related additions/deductions. Benefit payments (including refunds of employee contributions) are recognized by PERS when due and payable in accordance with the benefit terms. PERS investments are reported at fair value. II. Detailed Note Disclosures A. Cash and Cash Equivalents

The bank balance is fully insured or collateralized by the Office of the State Treasurer’s Nevada Collateral Pool. The underlying securities are held by the investment’s counterparty, not in the name of the District. Semiannually, the District transfers funds to the Clark County Treasurer for principal and interest payments on the District’s debt service. At June 30, 2019, and June 30, 2018, there was $28,486,366 and $27,134,684 held by the Clark County Treasurer on our behalf, respectively. These funds are considered restricted on the statement of net position.

Cash and Cash EquivalentsBook Balance – Cash 12,400,494$ 19,815,852$ Commercial Paper - 58,926,437 Money Market Funds 928,635 2,696,831 Total Reported Cash and Cash Equivalents 13,329,129$ 81,439,120$

Bank Balance – Cash 13,926,673$ 21,110,125$

Balance as of June 30, 2019

Balance as of June 30, 2018


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B. Investments The Clark County Treasurer, as ex officio Treasurer for the District, performs the District’s investment function as outlined in an inter-local agreement. The types of investments utilized for the District’s portfolio are various federal agency securities, commercial paper, certificates of deposit, and money market funds. Nevada Revised Statute 682A-Investments, authorizes the County Treasurer to invest in obligations of the U.S. Treasury and U.S. agencies having maturity dates that do not extend more than 10 years from the date of purchase, negotiable notes or short term negotiable bonds issued by other local governments in the State of Nevada and bankers acceptances not exceeding 180 days maturity and eligible by law for rediscount with the Federal Reserve Banks (purchases are subject to 10% of the funds available for local government investment). All District investments have maturity dates that do not extend more than 10 years from the date of purchase. Certain bond covenants require the County and its component units to invest with security dealers who are primary dealers when investing in repurchase agreements. Primary dealers are dealers that submit daily reports of market and positions and monthly financial statements to the Federal Reserve of New York and are subject to its formal oversight. Securities purchased by the County and its component units are delivered against payment and held in a custodial safekeeping account with the trust department of a bank designated by the County. At June 30, 2019, the District had the following investments (rating is based on Moody’s index):

At June 30, 2018, the District had the following investments (rating is based on Moody’s index):

Investments

Reported Amount/

Fair Value

US Government Obligations Aaa Aa1 Aa2 A1 A2 P-1 NR

U.S. Treasuries 159,466,100$ 159,466,100$ -$ -$ -$ -$ -$ -$ -$ U.S. Agencies 131,899,509 131,899,509 - - - - - - - Corporate Notes 81,489,710 - - 14,187,220 4,044,880 20,161,100 18,100,860 - - Asset-Backed Securities 64,718,547 - 41,124,977 - - - - - 23,593,570 Reported as Investments 437,573,866 291,365,609 41,124,977 14,187,220 4,044,880 20,161,100 18,100,860 - 23,593,570 Commercial Paper - - - - - - - - - Money Market Funds 928,635 - 928,635 - - - - - - Reported as Cash Equivalents 928,635 - 928,635 - - - - - -

Total Investments 438,502,501$ 291,365,609$ 42,053,612$ 14,187,220$ 4,044,880$ 20,161,100$ 18,100,860$ -$ 23,593,570$

Investments

Reported Amount/

Fair Value

US Government Obligations Aaa Aa1 Aa2 A1 A2 P-1 NR

U.S. Treasuries 170,031,600$ 170,031,600$ -$ -$ -$ -$ -$ -$ -$ U.S. Agencies 39,316,500 39,316,500 - - - - - - - Corporate Notes 32,593,940 - 4,974,800 4,984,700 - 7,890,790 14,743,650 - - Asset-Backed Securities 32,107,635 - 27,176,085 - - - - - 4,931,550 Reported as Investments 274,049,675 209,348,100 32,150,885 4,984,700 - 7,890,790 14,743,650 - 4,931,550 Commercial Paper 58,926,437 - - - - - - 58,926,437 - Money Market Funds 2,696,831 - 2,696,831 - - - - - - Reported as Cash Equivalents 61,623,268 - 2,696,831 - - - - 58,926,437 -

Total Investments 335,672,943$ 209,348,100$ 34,847,716$ 4,984,700$ -$ 7,890,790$ 14,743,650$ 58,926,437$ 4,931,550$


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GASB Statement No. 72, Fair Value Measurement and Application, defines fair value, establishes a framework for measuring fair value and provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of fair value hierarchy are as follows:

Level 1. Inputs are unadjusted quoted prices for identical assets and liabilities in active markets. Level 2. Inputs are other observable inputs. Level 3. Inputs are unobservable.

The fair value measurement level within the hierarchy is based on the lowest of any input that is deemed significant to the fair value measurement. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs. At year end, the District’s Level 1 investments (comprised of U.S. Treasury obligations) were valued based on quoted market prices provided by recognized broker dealers and Level 2 investments (comprised of U.S. Agency obligations, Money Market Funds, Corporate Notes, and Asset-Backed Securities) were valued, by recognized broker dealers, based on a matrix pricing model that maximizes the use of observable inputs for similar securities. At June 30, 2019, the fair values of the District’s investments were categorized by maturity as follows:

At June 30, 2018, the fair values of the District’s investments were categorized by maturity as follows:

Investment Type Fair Value Less than 1 1 to 3 3 to 5 Greater than 5U.S. Treasuries (Level 1) 159,466,100$ 39,798,900$ 89,773,000$ 29,894,200$ -$ U.S. Agency Obligations (Level 2) 131,899,509 29,939,000 9,997,600 46,293,500 45,669,409 Corporate Notes (Level 2) 81,489,710 19,989,950 25,152,500 36,347,260 - Asset-Backed Securities (Level 2) 64,718,547 - 16,643,622 32,875,875 15,199,050 Reported as Investments 437,573,866 89,727,850 141,566,722 145,410,835 60,868,459 Commercial Paper (Level 2) - - - - - Money Market Funds (Level 2) 928,635 928,635 - - - Reported as Cash Equivalents 928,635 928,635 - - -

Total Investments 438,502,501$ 90,656,485$ 141,566,722$ 145,410,835$ 60,868,459$

Investment Maturities in Years

Investment Type Fair Value Less than 1 1 to 3 3 to 5 Greater than 5U.S. Treasuries (Level 1) 170,031,600$ 14,881,100$ 87,800,900$ 67,349,600$ -$ U.S. Agency Obligations (Level 2) 39,316,500 - 39,316,500 - - Corporate Notes (Level 2) 32,593,940 17,937,440 4,933,100 9,723,400 - Asset-Backed Securities (Level 2) 32,107,635 - 6,940,910 15,352,775 9,813,950 Reported as Investments 274,049,675 32,818,540 138,991,410 92,425,775 9,813,950 Commercial Paper (Level 2) 58,926,437 58,926,437 - - - Money Market Funds (Level 2) 2,696,831 2,696,831 - - - Reported as Cash Equivalents 61,623,268 61,623,268 - - -

Total Investments 335,672,943$ 94,441,808$ 138,991,410$ 92,425,775$ 9,813,950$

Investment Maturities in Years


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Interest Rate Risk Interest rate risk is defined as the risk that the fair value of an investment will be adversely affected by changes in market interest rates. Through its investment policy, the County Treasurer’s office manages its exposure to fair value losses arising from increasing rates by limiting the average weighted duration of its investment pool portfolio to less than 2.5 years. This strategy provides the cash flow and liquidity needed for operations. Credit Risk Credit risk is defined as the risk that another party to a deposit or investment transaction (counterparty) will fail to fulfill its obligation. Credit risk can be associated with the issuer of a security, with a financial institution holding deposits or with a party holding securities or collateral. Credit risk exposure can be affected by a concentration of deposits or investments into a single investment type or with any single counterparty. Concentration of Credit Risk The District places no limits on the amount that can be invested in any one issuer beyond that stipulated by the NRS. Investments in any one issuer that represent 5% or more of the District’s total investments at June 30 were as follows:

Custodial Credit Risk Custodial credit risk is the risk that, in the event of the failure of the counterparty to a transaction, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Consistent with the County’s Investment policy, $438,502,501 was held on behalf of the District in 2019 and $335,672,943 in 2018. C. Restricted Current Assets The District’s bond fund maintains periodic deposits sufficient to provide for payments of principal and interest on debt, as such obligations mature, per NRS 350.660. The bond fund is required by the various bond covenants. Any unspent bond proceeds are restricted to payment of capital expenses per bond resolutions, and at this time, all bond proceeds have been spent. Sales tax revenue, ¼ of 1% sales tax allocation, is restricted by statute to capital expenses for the expansion of existing plant infrastructure. The District received $20.8 million in sales tax revenue during fiscal year 2019 and $19.6 million during fiscal year 2018. Sales tax receivable is identified as a restricted current asset. Because the District self-insures workers’ compensation, in fiscal year 2018 the District had a certificate of deposit for $116,693 pledged to the Nevada Department of Insurance, in lieu of providing a surety bond to them. In fiscal year 2019, the District liquidated the certificate of deposit and purchased a surety bond in the amount of $291,000.

Reported Amount/ % of Reported Amount/ % ofFair Value Total Fair Value Total

Issuer Investment Type June 30, 2019 June 30, 2019 June 30, 2018 June 30, 2018U.S. Treasury Notes Treasury Note 159,466,100$ 36.4% 170,031,600$ 50.7%Federal Farm Credit Bank U.S. Agencies 65,872,409 15.0% 9,866,000 2.9%Federal Home Loan Bank U.S. Agencies 56,029,500 12.8% 19,731,500 5.9% Totals 281,368,009$ 199,629,100$


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D. Capital Assets Capital Assets are summarized as follows at June 30, 2019:

Capital Assets are summarized as follows at June 30, 2018:

Restated Beginning Balance

June 30, 2018 Increases Decreases Ending Balance

June 30, 2019 Capital Assets, Being Depreciated:Buildings and wastewater treatment facilities 1,300,432,699$ 3,750,811$ (2,079,991)$ 1,302,103,519$ Land improvements 13,985,327 - - 13,985,327 Wastewater conveyance lines 1,287,216,800 52,078,683 (2,125,859) 1,337,169,624 Equipment 350,356,433 7,616,883 (1,187,538) 356,785,778 Total Capital Assets Being Depreciated 2,951,991,259 63,446,377 (5,393,388) 3,010,044,248

Less Accumulated Depreciation for:Buildings and wastewater treatment facilities (625,235,091) (45,250,934) 1,613,546 (668,872,479) Land improvements (2,944,386) (946,475) - (3,890,861) Wastewater conveyance lines (282,041,732) (27,711,166) 1,430,268 (308,322,630) Equipment (172,730,515) (26,353,484) 1,076,299 (198,007,700) Total Accumulated Depreciation (1,082,951,724) (100,262,059) 4,120,113 (1,179,093,670)

Net Capital Assets Being Depreciated 1,869,039,535 (36,815,682) (1,273,275) 1,830,950,578

Capital Assets Not Being Depreciated:Land and rights of way 7,958,177 7,958,177 Construction in progress 37,067,125 33,182,093 (19,757,955) 50,491,263 Total Capital Assets, Not Being Depreciated 45,025,302 33,182,093 (19,757,955) 58,449,440

Total Capital Assets, Net 1,914,064,837$ (3,633,589)$ (21,031,230)$ 1,889,400,018$

Beginning Balance

June 30, 2017 Increases Decreases

Restated Ending Balance June 30, 2018

Capital Assets, Being Depreciated:Buildings and wastewater treatment facilities 1,150,228,601$ 160,904,531$ (10,700,433)$ 1,300,432,699$ Land improvements 9,718,607 4,266,720 - 13,985,327 Wastewater conveyance lines 1,176,386,892 116,296,197 (5,466,289) 1,287,216,800 Equipment 306,885,699 46,972,695 (3,501,961) 350,356,433 Total Capital Assets Being Depreciated 2,643,219,799 328,440,143 (19,668,683) 2,951,991,259

Less Accumulated Depreciation for:Buildings and wastewater treatment facilities (586,307,186) (45,867,663) 6,939,758 (625,235,091) Land improvements (2,067,987) (876,399) - (2,944,386) Wastewater conveyance lines (259,005,125) (26,552,251) 3,515,644 (282,041,732) Equipment (149,378,077) (26,376,853) 3,024,415 (172,730,515) Total Accumulated Depreciation (996,758,375) (99,673,166) 13,479,817 (1,082,951,724)

Net Capital Assets Being Depreciated 1,646,461,424 228,766,977 (6,188,866) 1,869,039,535

Capital Assets Not Being Depreciated:Land and rights of way 7,958,177 - - 7,958,177 Construction in progress 281,493,196 66,394,604 (310,820,675) 37,067,125 Total Capital Assets, Not Being Depreciated 289,451,373 66,394,604 (310,820,675) 45,025,302

Total Capital Assets, Net 1,935,912,797$ 295,161,581$ (317,009,541)$ 1,914,064,837$


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E. Long-Term Receivables On January 19, 2010, the District entered into an agreement with the United States Air Force (USAF) for the purpose of connecting the Creech Air Force Base (CAFB) sewer system to the District’s collection and treatment system. As agreed, the District is responsible for sewage collection and treatment for the community of Indian Springs. Compensation due to the District consists of two components: a sewer service charge and an initial service charge. On September 1, 2013 the District began receiving sewage flows from the CAFB sewer system. The initial service charge will recover the capital costs associated with the design and construction of the CAFB facilities as well as the capital recovery for 0.25 million gallons per day of capacity. The initial service charge is to be repaid on a monthly basis over a twenty-year term at an annual interest rate of 5.42% beginning September 1, 2013, as a note receivable (the Note). The final contract amount exceeded the initial contract amount of $9.4 million related to the initial service charge by $2.4 million. The USAF continues to review the $2.4 million and continues to make scheduled payments on the $9.4 million initial service charge. At this time, although management intends to pursue collection of the Note in its entirety, management determined that an allowance was necessary for the $2.4 million including related interest at the end of the fiscal year. The note receivable as of June 30 was as follows:

2019 2018Long-term receivable 9,550,063$ 9,926,170$ Plus short-term portion 319,873 508,734Total receivable 9,869,936 10,434,904 Less allowance (2,350,524) (2,350,523)Net receivable 7,519,412$ 8,084,381$

As of June 30, 2019, and June 30, 2018, accrued interest recorded on the receivable was $746,930 and $644,345 respectively. Additionally, the District has long-term receivables that are due upon receipt from the Las Vegas Valley Water District (LVVWD) in accordance with a cooperative agreement (the Agreement) for the reimbursement of operation, maintenance, and capital costs of the Desert Breeze Water Resource Center (DBWRC). In fiscal year 2018, the receivables were carried net of an allowance for uncollectable amounts maintained for estimated losses. In fiscal year 2018, this obligation was classified as noncurrent because it was not reasonably expected to be paid within a year or during the normal operating cycle of the District. In fiscal year 2019, an agreement was signed with LVVWD, and LVVWD paid CCWRD $11,144,842, liquidating the receivable and crediting reclaimed water sales $7,445,311. The LVVWD long-term receivables as of June 30 were as follows:

2019 2018

Long-term receivable -$ 14,997,863$ Less allowance - (11,298,332)Net receivable -$ 3,699,531$


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The District previously entered into an interlocal agreement with Clark County to provide funding for construction with the Sloan Channel. The note was paid in full on July 23, 2019. The Clark County note receivable as of June 30 was as follows:

2019 2018Long-term receivable -$ 1,259,715$ Plus short-term portion 1,259,715 371,457Total receivable 1,259,715$ 1,631,172$

F. Construction Commitments As of June 30, 2019, the remaining obligated balance of construction contracts in progress was $66,290,101. Construction contracts payable were as follows at June 30:

2019 2018Construction contracts retention 1,374,844$ 1,804,690$ Construction contracts payable 4,130,363 2,875,181 Total construction payables 5,505,207$ 4,679,871$

G. Risk Management and Worker's Compensation Coverage - Self-Funded Program The District is exposed to various risks of loss related to torts; theft of, or damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District maintains a risk management program to assess coverage of potential risks of loss. Under this program, the District believes it is more economical to manage risks internally with regard to its workers’ compensation coverage. The District hires a third-party to act as claims administrator of the worker’s compensation program. The self-insurance coverage includes the purchase of an insurance policy to cover workers’ compensation claims for the District that exceed $750,000 per person. As of June 30, 2019, a liability of $1,581,295 was accrued to provide for unpaid claims. The accrued liability represents the approximate maximum number of claims expected for the year. For the last four fiscal years, no settlement amounts have exceeded insurance coverage. Changes in the District's claims liability amount in fiscal 2019 and 2018 are as follows:

Beginning of Fiscal Year

Liability

Claims Incurred

During Period

Prior Period Changes in Estimates

Current Year Payments on

Claims

End of Fiscal Year

Liability2019 1,707,785$ 113,360$ 66,848$ (306,698)$ 1,581,295$ 2018 1,064,767 141,371 774,417 (272,770) 1,707,785 2017 1,034,260 140,855 210,793 (321,141) 1,064,767


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The District has designated and set aside $282,476 and $634,000 in its investment balances at June 30, 2019, and June 30, 2018, respectively for future workers’ compensation losses. The District provides a surety bond to the Nevada Department of Insurance (NDI) in the amount of $291,000.

For all other risks, such as general, automobile and excess liabilities the District purchases insurance coverage subject to specified deductibles.

The District completed an update of the annual appraisal of District structures in March 2019. The valuation provided a thorough inventory of above-ground structures and replacement costs. The District’s property insurance policy was revised to reflect these valuations, establishing a blanket valuation of $1,281,147,618.

H. Postemployment Benefits Other than Pensions (OPEB)

Plan Information In accordance with NRS, retirees of the District may continue insurance through the Clark County Retiree Health Program (County Plan), if enrolled in PERS and an active employee at the time of retirement. Within the County Plan retirees may choose between the Clark County Self-Funded Group Medical and Dental Benefits Plan (Self-Funded Plan), and Health Plan of Nevada (HPN), a fully insured health maintenance organization (HMO) plan. This plan is a single-employer defined benefit OPEB plan.

The Public Employee Benefit Program (PEBP), an agent multiple-employer defined benefit OPEB plan, was closed to enrollment for active employees as of September 1, 2008.

Each plan provides medical, dental and vision benefits to eligible active and retired employees and beneficiaries. Except for the PEBP, benefit provisions are established and amended through negotiations between the District and the employee union. PEBP benefit provisions are established and may be amended by the Nevada State Legislature. The Self-Funded/HPN plans are not administered as a qualifying trust or equivalent arrangement and are included in the Clark County CAFR as an internal service fund (the Self-Funded Group Insurance Fund), as required by the NRS.

The PEBP issues a publicly available financial report that includes financial statements and required supplementary information. The Self-Funded/HPN and PEBP reports may be obtained by writing or calling the plans at the following addresses or numbers:

Clark County, Nevada Public Employee Benefit Plan PO Box 551210 901 South Stewart Street, Suite 101 500 S. Grand Central Parkway Carson City, Nevada 89701 Las Vegas, NV 89155-1210 (800) 326-5496(702) 455-0000

Employees Covered by Benefit Terms At June 30, 2018, OPEB plan membership consisted of the following:

PEBPSelf-Funded

/HPN TotalRetired members currently receiving benefits 26 95 121Married spoused of retired members currently receiving benefits - 46 46Active members - 344 344 Total 26 485 511


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Contribution Requirements For the Self-Funded/HPN plans, contribution requirements of plan members and the District are established and may be amended through negotiations between the District Board of Trustees and the Service Employees International Union. The District pays approximately 90% of monthly premiums for active employee coverage, an average of $825 per active employee for the years ended June 30, 2019, and June 30, 2018. Retirees in the Self-Funded/HPN plans receive no direct subsidy from the District. Under state law, retiree loss experience is pooled with active loss experience for the purpose of setting rates. The difference between the true claims cost and the blended premium is an implicit rate subsidy that creates an OPEB cost for the District. The District is required to pay the PEBP an explicit subsidy, based on years of service, for retirees who have enrolled in this plan. In 2019, retirees with less than fifteen years of service were required to pay an additional monthly premium up to $338 per month. Retirees were eligible for a monthly subsidy ranging from a minimum of $34 after five years of service to a maximum of $169 for twenty or more years of service with a Nevada state or local government entity. The subsidy is set by the Nevada State Legislature and can only be amended through legislation. Actuarial Methods and Assumptions Projections of benefits are based on the substantive plans (the plans as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the District and the plan members at that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The total OPEB liability for the Self-Funded/HPN, and PEBP plans was determined using the following actuarial assumptions (based on the results of an experience review completed in 2019), applied to all periods included in the measurement: Actuarial valuation date June 30, 2018

Measurement date June 30, 2018

Reporting date June 30, 2019

Inflation Rate 2.0% per annum

Salary changes 3.0% per annum

Discount rate 3.58% per annum as of July 1, 2017 3.87% per annum as of June 30, 2018

Discount rate source 20-Bond GO tax-exempt AA or higher

Postemployment benefit changes

None

Benefit-related costs shared with inactive employees

Required to contribute 100% of premium equivalent rates

Actuarial cost method Entry Age Normal based on level percentage of salary

Healthcare cost trend rates 7.00% per annum, decreasing 0.50%/1.0% (Self-Funded/HPN plans/PEBP) per year to an ultimate rate of 4.5%

Mortality rates were based on the RP-2014 generational table, back-projected to 2006, then scaled using MP-2018, applied on a gender-specific basis.


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Changes in the assumptions and other inputs that affected the measurement of the District's total OPEB liability during the period ended June 30, 2019, were as follows:

Discount rates for the years ended June 30, 2018, and June 30, 2017, were 3.87% and 3.58%, respectively.

No changes in the OPEB benefit terms affected the measurement of the District's total OPEB liability during the period ended June 30, 2019. The District holds no assets in the OPEB trust and has no assumed asset allocations or expected real rate of return. Discount Rate As of June 30, 2019, the sensitivity of the chosen discount rate (3.87%) used to estimate the District’s OPEB liability is illustrated as follows:

Healthcare Trend Rate The District’s total OPEB liability at June 30, 2019, calculated using the healthcare trend rate of 7.00%, as well as what the District’s total OPEB liability would be if it were calculated using a healthcare trend rate that is 1% lower (6.00%) or 1% higher (8.00%) than the current healthcare trend rate was as follows:

1% DecreaseCurrent

Discount Rate 1% IncreasePEBP 1,853,000$ 1,619,000$ 1,428,000$ Self-Funded/HPN 22,089,000 18,192,000 15,174,000

Total OPEB Liability 23,942,000$ 19,811,000$ 16,602,000$

1% DecreaseCurrent

Trend Rate 1% IncreasePEBP 1,435,000$ 1,619,000$ 1,840,000$ Self-Funded/HPN 14,804,000 18,192,000 22,726,000

Total OPEB Liability 16,239,000$ 19,811,000$ 24,566,000$


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OPEB Liability As of June 30, 2019, the District reported a total OPEB liability of $19,811,230. Because the District holds no assets in the OPEB trust, it has no fiduciary net position to report, and thus, the total OPEB liability equals the net OPEB liability. At June 30, 2019, changes in the District’s OPEB liability were as follows:

For the years ended June 30, 2019, and June 30, 2018, the District’s OPEB expense was $355,086 and $1,271,418, respectively. The District reported deferred outflows and inflows of resources related to OPEB as of June 30, 2019, were as follows:

Deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date totaling $737,191 will be recognized as a reduction of the total OPEB liability in the year ended June 30, 2020.

PEBP Self-Funded/HPN Total2018 Total OPEB Liability 1,879,552$ 36,723,630$ 38,603,182$ Service Cost - 1,945,617 1,945,617 Interest 68,038 1,377,271 1,445,309 Change of Benefit Terms - - - Differences between Expected and Actual Experience (402) (17,775,013) (17,775,415) Changes of Assumptions (250,919) (3,683,170) (3,934,089) Benefit Payments (77,376) (395,998) (473,374) Net Change in Total OPEB Liability (260,659) (18,531,293) (18,791,952)

2019 Total OPEB Liability 1,618,893$ 18,192,337$ 19,811,230$

PEBP Self-Funded/HPNDeferred

Outflows of Resources

Deferred Inflows of Resources

Deferred Outflows of Resources


Changes in proportion and differences between employer contributions and proportionate share of contributions -$ -$ -$ -$ Changes of assumptions or other inputs - - - 7,036,243 Net difference between projected and actual earnings on OPEB plan investments - - - - Net difference between expected and actual experience in the Total OPEB Liability - - - 16,539,284 Employer contributions subsequent to the measurement date - - 737,191 - Total -$ -$ 737,191$ 23,575,527$


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Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

I. Pension Plans State of Nevada Public Employees’ Retirements System The District's employees are covered by the State of Nevada Public Employees' Retirement System (PERS). PERS was established on July 1, 1947, by the Nevada Legislature and is governed by the Public Employees Retirement Board whose seven members are appointed by the Governor. All public employees who meet certain eligibility requirements participate in PERS, which is a cost sharing multiple-employer defined benefit retirement plan. The District does not exercise any control over PERS. NRS 286.110 states that: "Respective participating public employers are not liable for any obligation of PERS." Benefits, as required by statute, are determined by the number of years of accredited service at the time of retirement and the participant's highest average compensation in any 36 consecutive months with special provisions for members entering PERS on or after January 1, 2010. Benefit payments to which participants or their beneficiaries may be entitled to under the plan include pension benefits, disability benefits, and survivor benefits. Monthly benefit allowances for members are computed as 2.5% of average compensation for each accredited year of service prior to July 1, 2001. For service earned on and after July 1, 2001, this multiplier is 2.67% of average compensation. For members entering PERS on or after January 1, 2010, there is a 2.5% multiplier and for members entering PERS on or after January 1, 2015, there is a 2.25% multiplier. PERS offers several alternatives to the unmodified service retirement allowance which, in general, allow the retired employee to accept a reduced service retirement allowance payable monthly during his or her lifetime and various optional monthly payments to a named beneficiary after his or her death. Post-retirement increases are provided by authority of NRS 286.575-.579 is equal to the lesser of the chart below or the average percentage increase in the Consumer Price Index (or other PERS Board approved index) for the three preceding years. Date Entered System

Percent of Benefit Increase Following the Benefit Anniversary Year 3 Year 6 Year 9 Year 12 Year 14

Prior to January 1, 2010 2% 3% 3.5% 4% 5%

On or after January 1, 2010, and before July 1, 2015

2% 3% 3.5% 4% 4%

On or after July 1, 2015 2% 2.5% 3% 3% 3%

In any event, a member’s benefit must be increased by the percentages in the table above if the benefit of a member has not been increased at a rate greater than or equal to the average of the Consumer Price Index (All Items) or other PERS Board approved index, for the period between retirement and the date of increase.

Year Ended June 30: PEBP Self-Funded/HPN2020 -$ (2,210,167)$ 2021 - (2,210,167) 2022 - (2,210,167) 2023 - (2,210,167) 2024 - (2,210,167)

Thereafter - (12,524,692) Total -$ (23,575,527)$


30

Regular members entering PERS prior to January 1, 2010, are eligible for retirement at age 65 with five years of service, at age 60 with 10 years of service, or at any age with 30 years of service. Regular members entering PERS on or after January 1, 2010, are eligible for retirement at age 65 with five years of service, or age 62 with 10 years of service, or any age with 30 years of service. Regular members entering PERS on or after January 1, 2015, are eligible for retirement at age 65 with five years of service, or age 62 with 10 years of service, or at age 55 with 30 years of service, or at any age with 33 1/3 years of service. The normal ceiling limitation on monthly benefits allowances is 75% of average compensation. However, a member who has an effective date of membership before July 1, 1985, is entitled to a benefit of up to 90% of average compensation. Members become fully vested as to benefits upon completion of five years of service. The authority for establishing and amending the obligation to make contributions and member contribution rates rests with NRS and the Nevada Legislature. New hires, in agencies that did not elect the Employer-Pay Contribution (EPC) plan prior to July 1, 1983, have the option of selecting one of two contribution plans. Contributions are shared equally by employer and employee. Employees can take a reduced salary and have contributions made by the employer or can make contributions by a payroll deduction matched by the employer. PERS’s basic funding policy provides for periodic contributions at a level pattern of cost as a percentage of salary throughout an employee’s working lifetime in order to accumulate sufficient assets to pay benefits when due. PERS receives an actuarial valuation on an annual basis indicating the contribution rates required to fund PERS on an actuarial reserve basis. Actual contributions are made in accordance with the required rates established by the Nevada Legislature. These statutory rates are increased/decreased pursuant to NRS 286.421 and 286.450. The actuarial funding method used is the Entry Age Normal Cost Method. It is intended to meet the funding objective and result in a relatively level long-term contribution requirement as a percentage of salary. For the fiscal year ended June 30, 2019, and June 30, 2018, the Statutory employer/employee matching rate was 14.5% and the EPC rate was 28.0%. PERS issues a publicly available Comprehensive Annual Financial Report that includes financial statements and required supplemental information. This report is available on the PERS website, www.nvpers.org under publications. PERS collective net pension liability was measured as of June 30, 2018, and June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of those dates. For this purpose, certain actuarial valuation assumptions are stipulated by GASB and may vary from those used to determine the prospective funding contribution rates.


31

The PERS pension liability was determined using the following actuarial assumptions for both the 2018 and 2019 fiscal years (based on the results of an experience study for the period from July 1, 2013, through June 30, 2017), applied to all periods included in the measurement:

Actuarial valuation and measurement date

June 30, 2018

Inflation rate

2.75%

Discount rate

7.50%

Payroll growth

5.00%, including inflation

Investment rate of return

7.50%

Productivity pay increase

0.50%

Projected salary increases

Regular: 4.25% to 9.15%, depending on service Rates include inflation and productivity increases

Consumer Price Index

2.75%

Actuarial cost method

Entry age normal and level percentage of payroll

At June 30, 2019, and June 30, 2018, assumed mortality rates and projected life expectancies for selected ages were as follows:

Regular Members

Mortality Rates Expected Years of

Life Remaining Age Males Females Males Females 40 0.20% 0.14% 40.4 43.6 50 0.49% 0.38% 31.4 34.5 60 0.90% 0.59% 23.2 25.9 70 1.81% 1.26% 15.6 17.7 80 4.55% 3.42% 9.1 10.5

The mortality rates and projected life expectancies are based on the following:

• For non-disabled regular members: Headcount-Weighted RP-2014 Healthy Annuity Table projected to 2020 with Scale MP-2016

• For all disabled regular members: Headcount-Weighted RP-2014-Disabled Retiree Table, set forward four years The policies which determine the investment portfolio target asset allocation are established by the PERS Board. The asset allocation is reviewed annually and is designed to meet the future risk and return needs of the PERS system.


32

The following target asset allocation policy was adopted by the PERS Board as of June 30, 2018:

Long-Term Geometric Expected Real

Asset Class Target

Allocation Rate of Return*

Domestic Stocks 42% 5.50% International Stocks 18% 5.75% U.S. Bonds 28% 0.25% Private Markets 12% 6.80%

100%

The discount rate used to measure the total pension liability was 7.5% as of June 30, 2018, and June 30, 2017. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rate specified by statute. Based on that assumption, the PERS fiduciary net position at June 30, 2018, and June 30, 2017, was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments (7.5%) was applied to all periods of projected benefit payments to determine the total pension liability as of June 30, 2018, and June 30, 2017. The following presents the District’s proportionate share of the net pension liability calculated using the discount rates for June 30, 2018, and June 30, 2017, as well as the District’s proportionate share of what the net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate:

Detailed information about PERS fiduciary net position is available in the PERS Comprehensive Annual Financial Report (CAFR), available on the PERS website, www.nvpers.org under publications. PERS fiduciary net position and addition to/deductions from it have been determined on the same basis used in the PERS CAFR. PERS financial statements are prepared in accordance with accounting principles generally accepted in the United States of America applicable to governmental accounting for fiduciary funds. PERS investments are reported at fair value. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. At the measurement dates of June 30, 2018, and June 30, 2017, the District’s proportionate share of the collective net pension liability was $58,926,437 and $56,558,019, which represents 0.43208% and 0.42525% of the collective net pension liability, respectively. Contributions for employer pay dates within the fiscal years ending June 30, 2018, and June 30, 2017, were used as the basis for determining each employer’s proportionate share. Each employer’s proportion of the net pension liability is based on their combined employer and member contributions relative to the total combined employer and member contributions for all employers.

1% Decrease (6.5%)

Current Discount Rate (7.5%)

1% Increase (8.5%)

Net Pension Liability (2019) $89,860,432 $58,926,437 $33,222,089Net Pension Liability (2018) 85,499,934 56,558,019 32,521,306


33

For the years ended June 30, 2019, and June 30, 2018, the District’s pension expense was $4,576,674 and $4,712,135, respectively, and its reported deferred outflows and inflows of resources related to pensions were as follows:

At June 30, 2018, and June 30, 2017, the average expected remaining service life is 6.22 and 6.39 years, respectively. Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date totaling $4,115,485 will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Changes in the District’s net pension liability were as follows:

At June 30, 2019, and June 30, 2018, $633,608 and $604,759, respectively, was payable to PERS equal to the June 30, 2019 and June 30, 2018, required contributions, which were included in accounts payable.





Difference between expected and actual experience 1,846,000$ 2,735,198$ -$ 3,711,350$ Net differences between projected and actual investment earnings on pension plan investments - 280,547 367,222 - Changes in assumptions 3,105,050 - 3,752,086 - Changes in proportion and differences between employer contributions and proportionate share of contributions 2,544,472 218,467 2,321,403 268,232 Contributions subsequent to the measurement date 4,115,485 - 3,999,831 -

Total 11,611,007$ 3,234,212$ 10,440,542$ 3,979,582$

June 30, 2019 June 30, 2018

Year Ended June 30:2020 2,969,817$ 2021 790,9702022 (2,036,008)2023 1,101,8782024 1,263,345

Thereafter 171,308Total 4,261,310$

2019 2018Beginning Net Pension Liability 56,558,019$ 57,553,380$ Pension Expense 4,576,674 4,712,135 Employer Contributions (4,008,437) (3,817,040) Net Change in Deferred Outflows and Inflows 1,800,181 (1,890,456) Ending Net Pensions Liability 58,926,437$ 56,558,019$


34

J. Long-Term Liabilities General Obligation Bonds Outstanding District general obligation bonds (additionally secured by pledged revenue) are rated an “AAA” by Standard & Poor’s Corporation and “Aa1” by Moody’s. The net proceeds of all bond issuances have been used to finance portions of one or more capital improvement projects. At June 30, 2019, outstanding debt payable was as follows:

2018 Payments 2019Due Within One Year

2008 Series 4.00% - 6.00% general obligation bonds, duein annual installments from 2013 through 2038 3,005,000 3,005,000 - - Original issue amount $115,825,000 on 11/20/2008

2009A Series 4.00% - 5.25% general obligation bonds, duein annual installments from 2013 through 2038 6,000,000 2,915,000 3,085,000 3,085,000 Original issue amount $135,000,000 on 04/01/2009

2009B Series 4.00% - 5.75% general obligation bonds, duein annual installments from 2013 through 2038 6,030,000 2,940,000 3,090,000 3,090,000 Original issue amount $125,000,000 on 04/01/2009

State Revolving Loan - ARRA (2009C) 0.00% , duein semi-annual installments from 2012 through 2029 3,571,079 310,529 3,260,550 310,529 Original issue amount $5,744,780 on 10/16/2009

State Revolving Loan (2011A) 3.1875% , duein semi-annual installments from 2014 through 2030 31,724,354 2,004,516 29,719,838 (1) 2,068,919 Original issue amount $40,000,000 on 03/25/2011

State Revolving Loan (2012A) 2.3562% , duein semi-annual installments from 01/01/2016 through 2032 26,394,016 1,546,656 24,847,360 (2) 1,583,313 Original issue amount $30,000,000 on 07/13/2012

2015 Series Refunding 3.25% - 5.00% general obligation bonds, duein annual installments from 2019 through 2038 103,625,000 - 103,625,000 3,530,000 Original issue amount $103,625,000 on 08/04/2015

2016 Series Refunding 3.00% - 5.00% general obligation bonds, duein annual installments from 2019 through 2038 269,465,000 1,995,000 267,470,000 2,095,000 Original issue amount $269,465,000 on 08/31/2016

Total 449,814,449$ 14,716,701$ 435,097,748$ 15,762,761$

(1) The 2011A bond was issued to the State of Nevada as collateral for a low interest loan through the State Revolving Loan Fund. (2) The 2012A bond was issued to the State of Nevada as collateral for a low interest loan through the State Revolving Loan Fund. The original issue amount represents the total amount of authorization for the loan.


35

Pledged Revenues The District’s General Obligation/Revenue Supported Bonds constitute direct and general obligations of the District, and the full faith and credit of the District is pledged to the payment of principal and interest thereon, subject to Nevada constitutional and statutory limitations on the aggregate amount of ad valorem taxes. The bonds are backed by the District’s ability to levy general ad valorem taxes on all taxable property serviced by the District. The bonds are additionally secured by certain pledged revenues derived by the District after operation and maintenance expenses are deducted (Net Pledged Revenues). Historically, the District has not levied an ad valorem tax because the District’s revenues have always been sufficient to pay debt service on all of the District’s bonds and obligations; however, in any year in which those revenues are insufficient to pay debt service, the District is obligated to levy ad valorem taxes to pay debt service. The total remaining principal and interest payments for the District’s bonds was $607,463,651 as of June 30, 2019. In fiscal year 2019, Net Pledged Revenues received totaled $133,482,375 and the required debt service totaled $31,878,694. The following table outlines the total amount of annual debt service for years 2020 through 2024 and provides total debt service in five-year increments for year 2025 through final maturity.

The District holds no unused lines of credit, direct placements or direct borrowings. None of the debt is collateralized by physical assets. The bond documents do not contain terms related to significant events of default with finance-related consequences, termination events with finance-related consequences or subjective acceleration clauses.

YearEndingJune 30 Principal Interest Total

2020 15,762,761$ 16,487,045$ 32,249,806$ 2021 16,476,759 15,777,797 32,254,556 2022 17,223,783 15,034,274 32,258,057 2023 18,003,921 14,254,886 32,258,807 2024 18,827,266 13,437,790 32,265,056

2025-2029 107,825,584 53,662,648 161,488,232 2030-2034 115,752,674 32,878,138 148,630,812 2035-2039 125,225,000 10,833,325 136,058,325

Total 435,097,748$ 172,365,903$ 607,463,651$


36

Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2019, was as follows:

Long-term liability activity for the year ended June 30, 2018, was as follows:

Beginning Balance

June 30, 2019 Additions Reductions

Ending Balance

June 30, 2019Due Within One Year

Bonds Payable: General obligation bonds 449,814,449$ -$ (14,716,701)$ 435,097,748$ 15,762,761$ Plus Deferred Amounts: For Issuance premiums 39,963,582 - (1,998,180) 37,965,402 -

Total Bonds Payable 489,778,031 - (16,714,881) 473,063,150 15,762,761

Net pension liability 56,558,019 6,376,855 (4,008,437) 58,926,437 -

Accrued OPEB 38,603,182 3,390,926 (22,182,878) 19,811,230 -

Compensated absences 5,883,353 628,662 (183,607) 6,328,408 1,052,871

Catastrophic leave 2,102 44,870 (31,219) 15,753 -

Long-Term liabilities 590,824,687$ 10,441,313$ (43,121,022)$ 558,144,978$ 16,815,632$

Beginning Balance

June 30, 2018 Additions Reductions

Ending Balance

June 30, 2018Due Within One Year

Bonds Payable: General obligation bonds 463,437,944$ -$ (13,623,495)$ 449,814,449$ 14,716,701$ Plus Deferred Amounts: For Issuance premiums 41,961,762 - (1,998,180) 39,963,582 -

Total Bonds Payable 505,399,706 - (15,621,675) 489,778,031 14,716,701

Net pension liability 57,553,380 4,712,135 (5,707,496) 56,558,019 -

Accrued OPEB 41,023,062 3,284,469 (5,704,349) 38,603,182 -

Compensated absences 5,720,668 677,927 (515,242) 5,883,353 1,150,233

Catastrophic leave 7,221 13,099 (18,218) 2,102 -

Long-Term liabilities 609,704,037$ 8,687,630$ (27,566,980)$ 590,824,687$ 15,866,934$


37

K. Net Interest Expense The District utilized debt proceeds, in addition to excess revenues, in constructing, improving and expanding its wastewater treatment facilities. The interest cost related to this debt was capitalized as part of the historical cost of constructing the applicable assets. The District implemented GASB 89 prospectively beginning July 1, 2018, which allows for interest costs to be expensed, rather than capitalized. Net interest expense is as follows for the years ended June 30:

2019 2018Interest expense 16,832,937$ 17,446,022$ Less capitalized interest - (3,631,709) Net interest expense 16,832,937$ 13,814,314$

L. Reserve Policies Designated Unrestricted Reserves The District currently maintains a single fund for all sewer revenues, expenses, and cash balances. However, financial obligations are separated into operating and capital cost centers. This segregation reflects the differing activities of the cost centers and allows for a clear picture of the District’s operating and capital requirements and the funding sources available for each. Further, separately identifying operating and capital needs assists in establishing appropriate levels of operating and capital reserves, which are a necessary and appropriate part of fiscal prudent management for the District. Operating reserves are designed to provide a liquidity cushion against variability and timing of expenses and receipts, unanticipated cash operating expenses or less than expected revenues. The District’s Operating and Maintenance Reserve is equal to 120 days of prior year actual O&M expenses. The repair and replacement of the District’s conveyance and treatment facilities is critical to the ongoing operation of the District and the safety of the community and environment. A capital contingency reserve is set aside in case of emergency, should a piece of equipment or a portion of the District’s infrastructure fail unexpectedly. This reserve amount is set at the lesser of: (1) the value of total asset original cost/asset average useful life; or (2) $50 million. NRS 354.6115 provides for the creation of reserves to stabilize the operations of local governments, including public utilities. Monies the District transfers to this reserve may only be used if the total actual revenues of the District fall short of the total anticipated revenues or expenses incurred by the District to mitigate the effects of natural disaster. The District’s budget stabilization reserve also provides resources that allow for rate stability. The District’s Budget Stabilization Reserve is equal to 10% of actual operations and maintenance expenses from the previous fiscal year. Funds are set aside in the worker’s compensation insurance reserve for potential losses. The reserve is classified as designated unrestricted funds since their use is limited (but not mandated) to the payment of any claims. Annual worker’s compensation insurance reserves are equal to the amount of the annual maximum out-of-pocket expense, per event in any given year, less the amount of the workers’ compensation insurance security deposit.


38

Restricted Reserves Funds set aside for payment of general obligation debt and revenue bonds are classified as restricted assets since their use is limited by applicable bond covenants. A bond reserve account was established in compliance with the District’s bond resolutions to meet possible deficiencies in debt service. The annual bond debt service reserve is equal to the largest annual principal and interest amount due for the remaining outstanding life of the bonds. Pursuant to NRS 616B.330(2), each self-insured employer must deposit with the Commissioner of the State of Nevada, Division of Insurance, a bond, or other security, executed by the employer as principal, and by a corporation qualified under the laws of this State, payable to the State of Nevada, and conditioned upon the payment of compensation for injuries and occupational diseases to employees. The security amount and related reserve may change as directed by the Commissioner. In accordance with the cooperative agreement between the District and the Clean Water Coalition (CWC) dated October 1, 2011, the CWC paid the District $100,000 to be held in trust and used to pay any direct expenses that may be incurred by the Trustee Agency upon termination of the CWC agency. The District has been designated as the Trustee Agency. The amount of this reserve is all unspent CWC funds at the beginning of any fiscal year. M. Reclassifications, Prior Period Adjustment and Restatement A review of the capital assets records from fiscal year ended June 30, 2018, resulted in the identification of two contributed assets which were booked to both fiscal year 2017 and fiscal year 2018. The corresponding asset, contributed asset revenue and corresponding depreciation were removed from fiscal year 2018. The effect of the prior period adjustment on the 2018 financial statements are:

Certain minor reclassifications have been made to the prior year period amounts to conform to the current presentation.

N. Contingencies In the ordinary course of its operations, claims may be filed against the District. Although unable to estimate the amount of likely losses, if any, it is the opinion of management that because of its insurance and other risk management practices these claims will not result in any material adverse effect on the District’s financial position or operations. Historically, no provision has been made for any such losses in these matters. The District does not accrue for estimated future legal and defense costs, if any, to be incurred in connection with outstanding or threatened litigation and other disputed matters, but rather, records such as period costs when the services are rendered.

As Previously AsReported Adjustment Adjusted

Statement of Net PositionCapital assets, net 1,871,296,984 (2,257,449) 1,869,039,535 Net investment in capital assets 1,421,864,384 (2,257,449) 1,419,606,935

Statement of Revenues, Expenses andChanges in Net PositionDepreciation (99,719,237) 46,070 (99,673,167) Contributed assets 36,125,265 (2,303,519) 33,821,746 Change in net position 27,603,872 (2,257,449) 25,346,423 Net position, end of year 1,759,729,163 (2,257,449) 1,757,471,714


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O. New Pronouncements In January 2017, the GASB issued Statement No. 84, Fiduciary Activities, effective for periods beginning after December 15, 2018. This statement provides guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. Management has completed its assessment of this statement and determined that it will not have a material effect on financial position or changes therein. In June 2017, the GASB issued Statement No. 87, Leases, effective for periods beginning after December 15, 2019. This statement addresses the accounting and financial reporting for leases and establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Management has completed its assessment of this statement and determined that it will not have a material effect on financial position or changes therein because the District has no long-term leased property. In August 2018, the GASB issued Statement No. 90, Majority Equity Interests, effective for periods beginning after December 15, 2018. This statement addresses the reporting of a majority equity interest in a legally separate organization and requires that such majority equity interest be reported as an investment. Management has completed its assessment of this statement and determined that it will not have a material effect on financial position or changes therein. In May 2019, the GASB issued Statement No. 91, Conduit Debt Obligations, effective for periods beginning after December 15, 2020. This statement addresses the reporting of conduit debt obligations by issuers and eliminates diversity associated with commitments extended by issuers, arrangements associated with conduit debt obligations and related note disclosures. Management has completed its assessment of this statement and determined that it will not have a material effect on financial position or changes therein. P. Subsequent Event

Events through October 4, 2019 were evaluated by the management of the District who determined that no events occurred that require additional recognition or disclosure in these financial statements.

40

Required Supplementary

Information

41

Schedule of Changes in Total OPEB Liability - PEBP

Clark County Water Reclamation DistrictRequired Supplementary Information

Postemployment Benefits Other than PensionsSchedule of Changes in Total OPEB Liability

PEBPLast Ten Fiscal Years *

Plan Year Ended

June 30

Beginning Total OPEB

LiabilityService

Cost Interest

Change of Benefit Terms

Differences between

Expected and Actual

ExperienceChanges of

AssumptionsBenefit

Payments

Net Change in Total OPEB Liability

Ending Total OPEB

Liability

Covered Employee Payroll **

Total OPEB Liability, End of Year as a Percentage of Covered-Employee

Payroll

2019 1,879,552$ -$ 68,038$ -$ (402)$ (250,919)$ (77,376)$ (260,659)$ 1,618,893$ N/A N/A

2018 2,075,432 - 58,058 - 6,322 (180,776) (79,484) (195,880) 1,879,552 N/A N/A

* Fiscal year 2018 was the first year of implementation; therefore, as information becomes available this schedule will ultimately present information for the ten most recent fiscal years.**PEBP is closed to new employees and thus has no covered payroll

42

Schedule of Changes in Total OPEB Liability – Self-Funded/HPN


Postemployment Benefits Other than PensionsSchedule of Changes in Total OPEB Liability

Self-Funded/HPN Last Ten Fiscal Years *

Plan Year Ended

June 30

Beginning Total OPEB

Liability Service Cost Interest

Change of Benefit Terms

Differences between

Expected and Actual

ExperienceChanges of

AssumptionsBenefit

Payments

Net Change in Total OPEB

Liability

Ending Total OPEB

Liability

Covered Employee

Payroll

Total OPEB

Liability, End of

Year as a Percentage of Covered-Employee

Payroll

2019 36,723,630$ 1,945,617$ 1,377,271$ -$ (17,775,013)$ (3,683,170)$ (395,998)$ (18,531,293)$ 18,192,337$ 27,787,860$ 65.47%

2018 38,947,630 2,063,444 1,162,967 - (71,011) (4,911,726) (467,674) (2,224,000) 36,723,630 26,631,154 137.90%

* Fiscal year 2018 was the first year of implementation; therefore, as information becomes available this schedule will ultimately present information for the ten most recent fiscal years.

43

Schedule of Proportionate Share of Contractually Required OPEB Contributions – PEBP


Postemployment Benefits Other than PensionsProportionate Share of Contractually Required OPEB Contribution Information - PEBP

Last Ten Fiscal Years *

Plan Year Ended June 30

Contractually required

contribution

Contributions in relation to

the contractually determined

contributions

Contribution deficiency (excess)

Covered employee payroll **

Contributions as a percentage of

covered employee

payroll

2019 77,376$ 77,376$ -$ N/A N/A

2018 79,484 79,484 - N/A N/A

**PEBP is closed to new employees and thus has no covered payroll

* Fiscal year 2018 was the first year of implementation; therefore, as information becomesavailable this schedule will ultimately present information for the ten most recent fiscal years.

44

Schedule of Proportionate Share of Net Pension Liability


Schedule of Proportionate Share of Net Pension LiabilityLast Ten Fiscal Years *


Proportion of the net pension liability

Proportionate share of the net pension liability Covered payroll

Proportionate share of the net pension liability as a percentage

of covered payroll

Plan's fiduciary net

position (in millions)

Plan fiduciary net position as a percentage of the total

pension liability

2019 0.43208% 58,926,437$ 28,570,227$ 206.25% 38,686,300$ 74.50%

2018 0.42525% 56,558,019 27,155,077 208.28% 38,686,300 74.50%

2017 0.42768% 57,553,380 26,805,607 214.71% 35,002,000 72.20%

2016 0.40472% 46,378,911 24,779,783 187.16% 34,610,700 75.13%

2015 0.40096% 41,788,009 23,947,775 174.50% 33,575,100 76.31%

* Fiscal year 2015 was the first year of implementation; therefore, as information becomes available thisschedule will ultimately present information for the ten most recent fiscal years.

45

Schedule of Proportionate Share of Statutorily Required Pension Contribution Information


Proportionate Share of Statutorily Required Pension Contribution InformationLast Ten Fiscal Years *


Statutorily required

contribution

Contributions in relation to

the statutorily determined

contributions

Contribution deficiency (excess)

Covered payroll

Contributions as a percentage of covered payroll

2019 8,230,968$ 8,230,968$ -$ 29,396,311$ 28.00%

2018 7,999,660 7,999,660 - 28,570,227 28.00%

2017 7,598,614 7,598,614 - 27,155,077 27.98%

2016 7,171,104 7,171,104 - 26,805,607 26.75%

2015 6,246,929 6,246,929 - 24,779,783 25.21%

* Fiscal year 2015 was the first year of implementation; therefore, as information becomes available thisschedule will ultimately present information for the ten most recent fiscal years.

48

Supplementary Information

47

Schedule of Capital Assets Clark County Water Reclamation DistrictSchedule of Capital AssetsYears Ended June 30, 2019 and 2018

Restated RestatedCapital Current Year Current Year Capital Accumulated Accumulated Net CapitalAssets Cost Cost Assets Depreciation Depreciation Depreciation Depreciation Assets

June 30, 2018 Increases Decreases June 30, 2019 June 30, 2018 Increases Decreases June 30, 2019 June 30, 2019Land and Rights of Way 7,958,177$ -$ -$ 7,958,177$ -$ -$ $ - -$ 7,958,177$ Land Improvements 13,985,327 - - 13,985,327 2,944,386 946,475 - 3,890,861 10,094,466 Total Land and Improvements 21,943,504 - - 21,943,504 2,944,386 946,475 - 3,890,861 18,052,643

Buildings and Wastewater Treatment Facilities:Flamingo Water Resource Center 1,181,956,636 3,750,811 (2,079,991) 1,183,627,456 552,608,063 39,102,873 (1,613,546) 590,097,391 593,530,065 Laughlin Water Resource Center 78,466,501 - - 78,466,501 58,591,382 4,427,527 63,018,909 15,447,592 Blue Diamond Treatment Ponds 717,821 - - 717,821 748,956 48,503 - 797,459 (79,638) Indian Springs Treatment Facility 14,102,153 - - 14,102,153 4,439,830 833,537 - 5,273,367 8,828,786 Moapa Valley Treatment Facility 22,101,471 - - 22,101,471 7,847,767 694,573 - 8,542,340 13,559,131 Searchlight Treatment Ponds 3,088,117 - 3,088,117 999,094 143,919 - 1,143,013 1,945,104

Total Buildings and Wastewater Treatment Facilities: 1,300,432,699 3,750,811 (2,079,991) 1,302,103,519 625,235,092 45,250,934 (1,613,546) 668,872,479 633,231,040

Wastewater Conveyance Lines:Flamingo Water Resource Center 822,560,505 52,078,682 (2,125,860) 872,513,327 268,081,637 26,146,374 (1,430,269) 292,797,742 579,715,585 Laughlin Water Resource Center 16,240,605 16,240,605 4,935,545 358,907 5,294,452 10,946,153 Blue Diamond Water Resource Center 408,967,095 - - 408,967,095 - - - - 408,967,095 Indian Springs Treatment Facility 4,886,926 - - 4,886,926 2,046,315 240,757 - 2,287,072 2,599,854 Moapa Valley Treatment Facility 30,890,445 - - 30,890,445 5,129,748 662,706 - 5,792,454 25,097,991 Searchlight Treatment Ponds 3,671,226 - 3,671,226 1,848,488 302,422 - 2,150,910 1,520,316

Total Wastewater Conveyance Lines: 1,287,216,802 52,078,682 (2,125,860) 1,337,169,624 282,041,733 27,711,166 (1,430,269) 308,322,630 1,028,846,994

Equipment 350,356,433 7,616,883 (1,187,538) 356,785,778 172,730,515 26,353,484 (1,076,299) 198,007,700 158,778,078

Work in Progress 37,067,125 33,182,093 (19,757,955) 50,491,263 - - - - 50,491,263

Total 2,997,016,563$ 96,628,469$ (25,151,344)$ 3,068,493,688$ 1,082,951,726$ 100,262,058$ (4,120,114)$ 1,179,093,670$ 1,889,400,018$

48

Schedule of Revenues and Expenses Compared to Budget Clark County Water Reclamation DistrictSchedule of Revenues and Expenses Compared to BudgetYear Ended June 30, 2019(with Comparative Actual Amounts for Year Ended June 30, 2018)

2019Budget

2019 Actual

Variance to Budget

Restated 2018 Actual

Operating Revenues:Sewer service charges $ 148,882,391 $ 151,779,428 2,897,037$ 147,311,016$ Reclaimed water sales 950,000 8,020,378 7,070,378 872,361 Pretreatment fees 475,000 523,000 48,000 489,336 Septage fees 325,000 406,586 81,586 372,299 Other 675,000 125,902 (549,098) 180,496

Total Operating Revenues 151,307,391 160,855,294 9,547,903 149,225,508

Operating Expenses:Salaries 30,554,293 26,521,049 (4,033,244) 26,020,723 Benefits 8,968,997 12,393,847 3,424,850 13,804,234 Utilities 11,240,205 10,562,923 (677,282) 10,922,925 Outside services 11,667,252 8,193,959 (3,473,293) 8,716,571 Chemicals 5,930,138 5,426,854 (503,284) 4,685,017 Maintenance 6,547,900 6,106,445 (441,455) 4,847,207 Other expenses 2,122,523 2,579,808 457,285 2,318,255 Supplies 6,843,925 5,103,413 (1,740,512) 4,608,702 Impairments and other losses - 1,025,055 1,025,055 15,164,085 Depreciation 94,743,951 100,262,055 5,518,104 99,673,167

Total Operating Expenses 178,619,184 178,175,407 (443,777) 190,760,886

Loss from Operations (27,311,793) (17,320,114) 9,991,679 (41,535,378)

Non-Operating Revenue (Expense):

Unrestricted investment earnings 7,181,974 8,670,996 1,489,022 6,243,161 Net increase/(decrease) in the fair value of unrestricted investment

- 10,650,204 10,650,204 (5,682,877)

Restricted investment earnings - 755,892 755,892 (171,091) Connection fees, net of refunds and allowances 16,000,000 30,463,343 14,463,343 26,788,540 Sales tax apportionment 16,000,000 20,802,775 4,802,775 19,623,239

Interest expense, net of capitalized interest (17,161,994) (16,832,937) 329,057 (13,814,314) Grant revenue 36,800 - (36,800) - Other non-operating revenue (expense), net - 415,761 415,761 73,397

Total Non-Operating Revenue (Expense) 22,056,780 54,926,034 32,869,254 33,060,055

Income Before Capital Contributions (5,255,013) 37,605,920 42,860,933 (8,475,323)

Capital Contributions Contributed assets 32,500,000 42,079,359 9,579,359 33,821,746

Change in Net Position 27,244,987 79,685,279 52,440,292 25,346,423

Net Position, Beginning of the Year, As Previously Reported 1,715,941,778 1,759,729,163 43,787,385 1,732,125,291

Adjustments - (2,257,449) (2,257,449) -

Net Position, Beginning of the Year, As Adjusted 1,715,941,778 1,757,471,714 41,529,936 1,732,125,291

Net Position, End of Year $1,743,186,765 $1,837,156,993 $ 93,970,228 $1,757,471,714

49

Schedule of Cash Flows Compared to BudgetClark County Water Reclamation DistrictSchedule of Cash Flows Compared to BudgetYears Ended June 30, 2019 and 2018

2019 2019 VarianceRestated

2018Budget Actual to Budget Actual

Cash Flows from Operating Activities:Cash flows from customers $ 151,307,391 $ 167,432,111 16,124,720$ 145,319,989$ Payments to employees for services and benefits (39,523,290) (37,648,520) 1,874,770 (37,701,401)

Payments for services and supplies (44,351,943) (40,252,662) 4,099,281 (42,004,441) Net Cash Provided by Operating Activities 67,432,158 89,530,929 22,098,771 65,614,147

Cash Flows from Noncapital Financing Activities:Repayment of notes receivable from Clark County - 371,457 - 364,120

Cash Flows from Capital and Related Financing Activities:Grant revenue 36,800 - (36,800) - Sales tax apportionment 16,000,000 20,145,958 4,145,958 18,906,677 Connection fees received 16,000,000 31,773,705 15,773,705 25,631,414 Acquisition, construction or improvement of capital assets (92,710,346) (32,692,542) 60,017,804 (60,526,451)Principal payment on debt for capital assets (14,716,701) (14,716,701) - (13,623,495)Interest payment on dect for capital assets (17,161,994) (17,165,341) (3,347) (17,788,897)

Net Cash Used in Capital and Related Financing Activities (92,552,241) (12,654,921) 79,897,320 (47,400,752)

Cash Flows from Investing Activities:Proceeds from sale of investments 184,210,816 361,674,616 177,463,800 555,258,685 Interest on investments 7,181,974 8,335,759 1,153,785 6,296,406 Loan to Clark County 401,308 - (401,308) Purchases of investments (164,923,335) (514,548,603) (349,625,268) (518,584,687) Workers compensation certificate of deposit - 116,693 116,693 75,837 Other financing fees - 415,761 415,761 73,397

Net Cash Provided by Investing Activities 26,870,763 (144,005,773) (170,876,536) 43,119,638

Net Increase in Cash and Cash Equivalents 1,750,680 (66,758,309) (68,880,446) 61,697,153

Cash and Cash Equivalents, Beginning of Year 108,573,804 108,573,804 - 46,876,651

Cash and Cash Equivalents, End of Year 110,324,483$ 41,815,495$ (68,880,446)$ 108,573,804$

Cash and Cash Equivalents Balances: Unrestricted cash and cash equivalents 110,324,483$ 13,329,129$ (96,995,354)$ 81,439,120$ Restricted cash and cash equivalents - 28,486,366 28,486,366 27,134,684 Cash and Cash Equivalents, End of Year 110,324,483$ 41,815,495$ (68,508,988)$ 108,573,804$

52

Statistical Section (Unaudited)

53

Contents Page

Financial Trends 54

Revenue Capacity 57

Debt Capacity 60

Operating Information 61

Demographic and Economic Information 65

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

This section of the Clark County Water Reclamation District's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District's overall financial health.

STATISTICAL SECTION

These schedules contain trend information to help the reader understand how the District's financial performance and well-being have changed over time.

These schedules contain information to help the reader assess the District's most significant local revenue sources.

This schedule presents information to help the reader assess the affordability of the District's current levels of outstanding debt and the District's ability to issue additional debt in the future.

These schedules offer demographic and economic indicators to help the reader understand the environment within which the District's financial

These schedules contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides and the activities it performs.

52

Summary of Net Position Clark County Water Reclamation District

Summary of Net PositionLast Ten Fiscal Years

2010 2011 2012 2013 2014 2015 2016 2017Restated

2018 2019

Net investment in capital assets 1,075,343,625$ 1,066,697,040$ 1,021,883,382$ 1,012,588,221$ 1,057,541,097$ 1,152,486,134$ 1,350,781,565$ 1,415,191,745$ 1,419,606,935$ 1,410,831,661$ Restricted for debt service and capital projects 9,075,922 6,280,245 9,104,043 10,592,125 11,981,142 12,882,961 18,101,174 19,010,619 20,548,092 22,840,446 Unrestricted 417,775,634 451,145,151 503,574,724 535,979,881 512,708,509 482,682,569 317,912,961 297,922,927 317,316,687 403,484,887

Total Net Position (1) 1,502,195,181$ 1,524,122,436$ 1,534,562,149$ 1,559,160,227$ 1,582,230,748$ 1,648,051,664$ 1,686,795,700$ 1,732,125,291$ 1,757,471,714$ 1,837,156,993$

(1) The restatement adjustment as recorded and disclosed in the current financial statements is not reflected for fiscal years prior to 2018.

$-

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

$2,000,000,000

2010 2011 2012 2013 2014 2015 2016 2017 Restated 2018

2019

Restricted for debt service and capital projects

Unrestricted

Net investment in capital assets

Total Net Position (1)

53

Changes in Net Position Clark County Water Reclamation District

Changes in Net PositionLast Ten Fiscal Years

2010 2011 2012 2013 2014 2015 2016 2017Restated

2018 2019Operating Revenues:Service Fees 119,932,937$ 130,974,469$ 133,122,260$ 143,275,939$ 139,716,364$ 142,374,180$ 143,142,433$ 145,560,887$ 147,311,016$ 151,779,428$ Other 4,855,669 3,780,073 3,229,158 4,344,636 3,793,279 2,454,643 2,441,918 2,327,450 1,914,492 9,075,866 Total Operating Revenues 124,788,606 134,754,542 136,351,418 147,620,575 143,509,643 144,828,823 145,584,351 147,888,337 149,225,508 160,855,294 Non-Operating Revenues:Connection Fees 9,150,261 9,218,329 10,549,916 18,972,735 31,461,511 24,013,884 19,481,062 23,329,406 26,788,540 30,463,343Sales tax apportionment 12,242,174 13,134,404 14,055,242 14,870,001 15,911,706 17,078,167 17,717,754 18,544,504 19,623,239 20,802,775Investment income 13,767,249 8,468,947 8,878,470 4,398,963 6,024,342 6,353,418 5,504,117 4,376,746 6,072,070 9,426,888Net increase (decrease) in the fair value of unrestricted investment - (2,028,410) (3,169,527) (5,631,409) 2,086,425 2,216,807 1,929,776 (3,219,594) (5,682,877) 10,650,204Other 483,122 236,323 (71,874) 399,758 1,882,969 301,798 (1,247,980) (1,245,427) 73,397 415,761Total Non-Operating Revenues 35,642,806 29,029,593 30,242,227 33,010,048 57,366,953 49,964,074 43,384,729 41,785,634 46,874,369 71,758,971Total Revenues 160,431,412 163,784,135 166,593,645 180,630,623 200,876,596 194,792,898 188,969,080 189,673,971 196,099,877 232,614,265

Operating Expenses:Salaries 22,468,145 22,490,527 20,967,989 21,730,773 22,280,786 22,345,906 24,504,234 25,990,677 26,020,723 26,521,049Benefits 8,491,318 10,045,553 10,581,699 10,565,994 11,209,667 10,747,789 10,628,886 14,182,150 13,804,234 12,393,847Utilities 12,270,437 12,629,495 10,239,274 9,749,587 10,440,207 11,265,489 10,830,647 10,945,924 10,922,926 10,562,923Outside services 7,433,909 6,351,481 4,690,745 5,218,462 6,585,336 7,053,570 7,597,305 7,806,781 8,716,571 8,193,959Chemicals 5,277,019 5,039,405 5,443,455 5,738,662 6,115,822 5,186,742 4,870,869 4,899,456 4,685,017 5,426,854Maintenance 4,358,995 4,870,339 4,812,371 5,375,121 5,893,990 5,383,928 4,750,373 4,691,915 4,847,207 6,106,445Other expenses 1,886,372 2,015,994 2,086,233 2,519,369 6,376,168 6,160,644 2,195,097 5,004,245 2,318,255 2,579,808Supplies 1,539,659 1,403,353 2,025,589 2,040,399 1,380,948 2,777,022 4,158,204 6,179,214 4,608,702 5,103,413Bad debt expense 779,566 - - - - - - - - - Impairment and other losses - - - 1,126,222 2,744,934 2,997,433 7,579,236 15,671,195 15,164,084 1,025,055Depreciation 50,285,130 63,893,458 70,999,964 74,793,101 75,643,760 79,492,040 87,181,087 89,755,508 99,673,167 100,262,055Total Operating Expenses 114,790,550 128,739,605 131,847,319 138,857,690 148,671,619 153,410,563 164,295,938 185,127,065 190,760,886 178,175,407

Interest expense-bonds, net of capitalized interest 1,358,845 24,133,089 21,235,841 15,800,402 10,578,550 12,089,946 9,500,993 4,023,588 13,814,314 16,832,937Total Expenses 116,149,395 152,872,694 153,083,160 154,658,092 159,250,169 165,500,509 173,796,931 189,150,653 204,575,200 195,008,344

Income Before Capital Contributions 44,282,017 10,911,441 13,510,485 25,972,531 41,626,427 29,292,388 15,172,149 523,318 (8,475,323) 37,605,920

Capital Contributions:Contributed assets 3,209,008 14,595,621 9,987,987 11,547,824 28,130,054 36,528,528 51,375,748 44,806,273 33,821,746 42,079,359

Total Change in Net Position (1) 47,491,025$ 25,507,062$ 23,498,472$ 37,520,355$ 69,756,481$ 65,820,916$ 66,547,897$ 45,329,591$ 25,346,423$ 79,685,279$

(1) The restatement adjustment as recorded and disclosed in the current financial statements is not reflected for fiscal years prior to 2018.

54

Operating Expense by Function

% of Supplies and % of Depreciation % ofFiscal Year Personnel Annual Services Annual Amortization Annual Total

2010 30,959,464$ 26.97% 33,545,957$ 29.22% 50,285,130$ 43.81% 114,790,551$ 2011 32,536,080 21.28% 32,310,067 21.14% 88,026,547 57.58% 152,872,694 2012 31,549,688 23.93% 29,297,667 22.22% 70,999,964 53.85% 131,847,319 2013 32,296,767 23.26% 30,641,600 22.07% 75,919,323 54.67% 138,857,690 2014 33,490,453 22.53% 36,792,472 24.75% 78,388,694 52.73% 148,671,619 2015 33,093,695 21.57% 40,824,828 26.61% 79,492,040 51.82% 153,410,563 2016 35,133,120 21.38% 34,402,495 20.94% 94,760,323 57.68% 164,295,938 2017 40,172,827 21.70% 39,527,535 21.35% 105,426,703 56.95% 185,127,065 2018 39,824,957 20.88% 41,749,539 21.89% 109,186,389 57.24% 190,760,885 2019 38,914,896 21.84% 38,998,456 21.89% 100,262,055 56.27% 178,175,407

Operating Expense by Function Clark County Water Reclamation District

Last Ten Fiscal Years

$- $50,000,000

$100,000,000 $150,000,000 $200,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Personnel Supplies & Services Depreciation Amortization Total

55

Operating Revenue by Source

Sewer % ofReclaimed

Water % of % of TotalFiscal Year Service Annual Sales Annual Other Other Revenue

2010 121,060,258$ 97.01% 2,620,050$ 2.10% 1,108,298$ 0.89% 124,788,606$ 2011 132,095,603 98.03% 2,085,156 1.55% 573,783 0.43% 134,754,542 2012 133,786,521 98.12% 2,274,004 1.67% 290,893 0.21% 136,351,418 2013 143,275,939 97.06% 2,195,074 1.49% 2,149,562 1.46% 147,620,575 2014 139,716,364 97.36% 2,357,845 1.64% 1,435,434 1.00% 143,509,643 2015 142,374,180 98.31% 1,121,695 0.77% 1,332,948 0.92% 144,828,823 2016 143,142,433 98.32% 938,717 0.64% 1,503,201 1.03% 145,584,351 2017 145,560,887 98.43% 1,273,879 0.86% 1,053,571 0.71% 147,888,337 2018 147,311,016 98.72% 872,361 0.58% 1,042,131 0.70% 149,225,509 2019 151,779,428 94.36% 8,020,378 4.99% 1,055,488 0.66% 160,855,292

Clark County Water Reclamation DistrictOperating Revenue by Source


$250,000 $20,250,000 $40,250,000 $60,250,000 $80,250,000

$100,250,000 $120,250,000 $140,250,000 $160,250,000 $180,250,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Other Reclaimed Water Sewer Service Total Revenue

56

Non-Operating Revenue by Source

Clark County Water Reclamation DistrictNon-Operating Revenue by Source


Connection Interest Sales Tax Other TotalFiscal Year Fees Collected Income Collected Income Revenue

2010 9,150,261$ 13,767,249$ 12,242,174$ 483,122$ 35,642,806$ 2011 9,218,330 6,440,537 13,134,404 236,323 29,029,594 2012 10,549,915 5,708,943 14,055,242 (71,874) 30,242,226 2013 18,972,735 (1,232,446) 14,870,001 399,758 33,010,048 2014 31,461,511 8,110,767 15,911,706 1,882,969 57,366,953 2015 24,013,884 8,570,225 17,078,167 301,798 49,964,074 2016 19,481,062 7,433,893 17,717,754 (1,247,980) 43,384,729 2017 23,329,406 1,157,151 18,544,504 (1,245,427) 41,785,634 2018 26,788,540 389,193 19,623,239 73,397 46,874,369 2019 30,463,343 20,077,091 20,802,775 415,761 71,758,970

000)

000)

000

000

000

000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Other Income Sales Tax Collected Interest Income SDA Connection Fees Collected Total Revenue

57

Ten Largest Customers

Clark County Water Reclamation DistrictTen Largest Customers

Current Year and Ten Years Ago

2019 2010

ERU's Billed Percentage of Dollar Amount ERU's Billed Percentage of Dollar AmountCustomer Rank 7/1/2019 Total ERU's Billed 7/1/2019 Rank 7/1/2010 Total ERU's Billed 7/1/2010

MANDALAY BAY RESORT CASINO 1 10,140.480 1.51% 2,303,513$ 2 8,286.375 1.54% 1,776,439$ CITY CENTER 2 9,802.260 1.46% 2,226,683 1 9,709.165 1.81% 2,078,565 MGM GRAND HOTEL 3 8,183.970 1.22% 1,859,071 3 7,694.640 1.43% 1,651,261 VENETIAN HOTEL CASINO 4 7,835.240 1.17% 1,779,853 4 7,314.510 1.36% 1,566,152 CAESARS PALACE 5 7,287.640 1.09% 1,655,460 5 7,242.075 1.35% 1,553,497 BELLAGIO 6 6,968.250 1.04% 1,582,909 6 6,972.075 1.30% 1,495,344 WYNN LAS VEGAS HOTEL CASINO 7 5,636.700 0.84% 1,280,434 8 5,703.555 1.06% 1,223,416 NELLIS AIR FORCE BASE 8 5,580.070 0.83% 1,267,569 7 5,983.102 1.12% 1,305,421 COSMOPOLITAN LAS VEGAS 9 5,455.270 0.81% 1,239,219 - - - - MIRAGE HOTEL & CASINO 10 4,981.100 0.74% 1,131,508 9 4,953.805 0.92% 1,063,119 LUXOR - - - - 10 4,700.985 0.88% 1,008,016

58

Ratios of Outstanding Debt

General Issuance Percentage Fiscal Obligation Premiums / Revenue Total of Personal PerYear Bonds Discounts Bonds Debt Income * Capita

2010 456,784,780$ 3,495,428$ -$ 460,280,208$ 66% 235.63$ 2011 452,008,449 3,161,731 - 455,170,180 63% 231.37 2012 456,767,672 2,937,240 - 459,704,912 60% 230.06 2013 480,558,254 2,827,212 - 483,385,466 63% 238.31 2014 471,160,284 2,717,184 - 473,877,468 58% 229.02 2015 464,961,090 2,607,155 - 467,568,245 54% 221.09 2016 478,124,759 11,973,606 - 490,098,365 54% 227.35 2017 463,437,944 41,961,762 - 505,399,706 52% 229.30 2018* 449,814,449 39,963,582 - 489,778,031 50% 222.21 2019* 435,097,748 37,965,402 - 473,063,150 49% 214.63

* Total Personal Income and Population are not available; therefore, numbers from 2017 are used as estimates.Details regarding the District's outstanding debt can be found in the notes to the financial statements.

Source: District Finance Service Group

Clark County Water Reclamation DistrictRatios of Outstanding Debt


59

Average Daily Flows

Clark County Water Reclamation DistrictFlamingo Water Resource Center Average Daily Flows

(Per Million Gallons)Last Ten Fiscal Years

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019July 99.82 93.53 98.81 96.50 99.99 102.19 102.01 106.49 108.04 111.17August 99.25 94.71 98.53 98.06 98.44 102.46 102.79 105.37 108.94 113.39September 96.90 93.87 97.79 96.75 98.93 102.86 100.98 103.39 107.38 110.11October 93.52 94.02 99.58 95.50 97.47 102.04 101.85 102.70 106.37 107.70November 91.34 91.90 96.06 93.21 97.28 101.48 100.75 101.31 103.75 102.86December 89.71 91.68 94.95 93.45 96.56 98.66 98.69 100.58 101.86 101.31January 90.69 91.91 95.78 92.58 96.51 99.55 98.82 101.50 102.07 102.48February 92.07 91.06 96.42 92.44 95.97 99.77 98.45 100.91 101.52 101.90March 93.25 91.49 94.93 93.65 97.59 101.36 98.93 102.93 102.61 104.00April 93.59 91.11 94.24 95.26 97.99 98.42 100.04 102.69 104.73 105.63May 94.27 90.37 95.06 90.18 97.89 100.52 100.52 103.96 106.20 106.42June 95.44 92.19 96.20 94.85 99.90 100.09 102.83 105.98 106.46 107.84Annual Average 94.15 92.32 96.53 94.37 97.88 100.78 100.56 103.15 104.99 106.23

Source: District Plant Operations Service Group

88

93

98

103

108

113

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Mar Jun

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

60

Schedule of Insurance Policies in Force

Clark County Water Reclamation DistrictSchedule of Insurance Policies in Force


Amount of Policy Description of Risk Covered Insurer Expiration Date

Statutory Limit Excess Workmen's Compensation New York Marine & General Ins Co. September 1, 2019($750,000 SIR)

$1,000,000 Employer's Liability

$50,000,000 Course of Construction Great American Ins. Co of New York September 1, 2019any one site ($20,000 deductible)

$1,000,000 Each Event Comprehensive General Argonaut Insurance Co. September 1, 2019$2,000,000 General Total Liability$2,000,000 Products & Completed work ($50,000 SIR)$1,000,000 Personal Injury$1,000,000 Adv InjuryMed Exp Excluded$1,000,000 Sewer Backup

$1,000,000 CSL Comprehensive Business Argonaut Insurance Co. September 1, 2019Automobile($50,000 SIR)

$100,000 Comprehensive Crime Argonaut Insurance Co. September 1, 2019($50,000 Deductible)

$1,000,000,000 Property Damage (Fire) Travelers Indemnity Co July 1, 2020$1,000,000 Blanket Earnings & Exp

($50,000 deductible)

$10,000,000 Commercial Umbrella Argonaut Insurance Co. September 1, 2019Coverage

$4,092,713 Scheduled Equipment Travelers Indemnity Co July 1, 2020($2,500 deductible)

$1,000,000 Each wrongful act Employee Benefits Liability Argonaut Insurance Co. September 1, 2019($50,000 SIR)

$250,000 Accounts Receivable Travelers Indemnity Co July 1, 2020($50,000 Deductible)

$1,500,000 EDP - Computer System Travelers Indemnity Co July 1, 2020($50,000 Deductible)

$6,000,000 Utility Deposit Bond Great American Ins. Co. December 20, 2019Southern Nevada Water Authority

$2,000,000 Cyber Liability Aggregate Limit Lloyd's of London July 1, 2020($50,000 Retention)

$1,000,000 Employed Lawyers Professional Liability Atlantic Specialty Ins Co. September 1, 2019

61

Budget Approved Full-Time Positions by Service Center

Clark County Water Reclamation DistrictBudget Approved Full -Time Positions by Service Center


Service Centers 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019General Management 2 2 3 3 3 3 3 7 6 5Accouting & Finance 22 23 23 23 23 23 22 25 26 26Technology Services 18 19 19 19 19 19 20 21 25 25Customer Care 37 37 38 38 36 36 36 34 34 38Plant Operations & Laboratory 90 96 96 96 96 96 96 93 95 138Engineering & Construction 47 47 47 47 48 48 51 69 69 74Water Quality, Research & Technical 3 3 3 3 3 3 3 3 4 4Collection System 109 109 127 131 136 136 136 122 122 77

Total 328 336 356 360 364 364 367 374 381 387

- 20 40 60 80

100 120 140 160

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

General Management Accounting & Finance Customer Care & Strategic Services Plant Operations & Laboratory

Engineering & Construction Water Quality, Research & Technical Collection System

62

Capital Asset Statistics by Function Clark County Water Reclamation District

Capital Asset Statistics by FunctionLast Ten Fiscal Years

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sewer Lift/Pump Station Total 29 29 29 31 29 26 25 22 23 23Miles of Sewer Pipelines 2,063 2,032 2,045 2,059 2,078 2,091 2,067 2,087 2,209 2,225Sewer Manhole Total 42,666 43,031 43,531 42,424 42,294 43,716 43,822 45,578 46,532 47,308

Source: District Engineering & Construction Service Group

0

10000

20000

30000

40000

50000

Sewer Manhole Total

2003 2004 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1,9001,9502,0002,0502,1002,1502,2002,250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Miles of Sewer Pipelines

05

101520253035

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sewer Lift/Pump Station Total

63

Demographic Statistics

Clark County Water Reclamation DistrictClark County Demographic Statistics


Year

2010 1,953,378 69,291,617,000 35,473 309,476 13.8%2011 1,967,290 71,830,557,000 36,512 309,893 13.4%2012 1,998,204 76,962,088,000 38,516 308,377 11.4%2013 2,028,421 77,011,227,000 37,966 307,574 10.0%2014 2,069,146 81,966,042,000 39,613 311,029 8.2%2015 2,114,801 85,970,490,000 40,652 314,636 7.1%2016 2,155,664 91,150,359,000 42,284 325,990 6.1%2017 2,204,079 97,457,342,000 44,217 326,952 5.5%2018 not available not available not available 334,900 4.7%2019 not available not available not available 335,333 4.2%

Source:(1) Nevada Department of Employment, Training and Rehabilitation; Nevada Labor Market Information; Clark County(2) Nevada Department of Employment, Training and Rehabilitation; Nevada Labor Market Information; Clark County(3) Nevada Department of Education/DataCenter/Enrollment Student counts as of first school day in October(4) University of Nevada, Las Vegas Center For Business & Economic Research (Las Vegas/Clark County Economic Data)

Population 1 Personal Income 2Per Capita Income 2

School Enrollment 3

Unemployment Rate 4

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Source: Population-Clark County Department of Comprehensive PlanningPersonal Income-University of Nevada, Las Vegas (data revisions per Bureau of Economic Analysis)Per Capita Income-University of Nevada, Las Vegas (data revisions per Bureau of Economic Analysis)School Enrollment-Clark County School DistrictUnemployment Rate-Nevada Department of Employment Security*2018 and 2019 Population information is not yet available* 2018 and 2019 Personal Income and Per Capita Income information are not yet available

Clark County Demographic Statistics Charts

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019*

School Enrollment vs. Population

School Enrollment Population

$-

$20,000,000,000

$40,000,000,000

$60,000,000,000

$80,000,000,000

$100,000,000,000

$120,000,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019*

Personal Income

0%2%4%6%8%

10%12%14%16%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Unemployment Rate

$- $5,000

$10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000

2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019*

Per Capita Income

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Clark County Principal Industries

Clark County Water Reclamation DistrictClark County Principal IndustriesCurrent Year and Ten Years Ago

2019 2010Percentage of Percentage ofTotal County Total County

Industry Employees Rank Employment Employees Rank Employment

Accommodation and food services 275,363 1 21.22% 257,077 1 22.16%Retail Trade 130,884 2 10.09% 117,711 2 10.15%Health care and social assistance 101,851 3 7.85% 71,024 7 6.12%Administrative, support, waste management and remediation services

100,072 4 7.71% 77,299 4 6.66%

Real estate, rental and leasing 74,238 5 5.72% 71,965 6 6.20%Construction 71,420 6 5.50% 105,251 3 9.07%Finance and insurance 70,744 7 5.45% 62,433 8 5.38%Local government 70,130 8 5.40% 72,453 5 6.24%Professional, scientific and technical services 69,307 9 5.34% 60,539 9 5.22%Transportation and warehousing 66,204 10 5.10% - - -Other services (except government) - - - 47,084 10 4.06%Total for Principal Industries 1,030,213 79.39% 942,836 81.26%

Source: United States Bureau of Economic Analysis; CAEMP25N Total Full-Time and Part-Time Employment by NAICS Industry 1 for Clark CountySource used in the past is no longer available. 2019 data is from 2017 and 2010 data is from 2008 as this is the most recent data available.

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Principal Industries Charts

27%

12%

10%10%

7%

7%

7%

7%

7%6%

2019 Clark County Principal Industries

Accommodation and food services

Retail Trade

Health care and social assistance

Administrative, support, waste management andremediation services

Real estate, rental and leasing

Construction

Finance and insurance

Local government

Professional, scientific and technical services

Transportation and warehousing

27%

12%

8%8%

8%

11%

7%

8%

6%5%

2010 Clark County Principal IndustriesAccommodation and food services

Retail Trade

Health care and social assistance

Administrative, support, waste management andremediation servicesReal estate, rental and leasing

Construction

Finance and insurance

Local government

Professional, scientific and technical services

Other services (except government)

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Technical Terms

Technical Terms

AAL Actuarial Accrued Liability ARC Annual Required Contribution ARRA American Reinvestment and Recovery Act CAFB Creech Air Force Base CAFR Comprehensive Annual Financial Report CBER Center for Business and Economic Research COUNTY PLAN Clark County Retiree Health Program CWC Clean Water Coalition DBWRC Desert Breeze Water Resource Center EMMA Electronic Municipal Market Access EPC Employer-Pay Contribution ERU Equivalent Residential Unit FASB Financial Accounting Standards Board FY Fiscal Year GAAP Generally Accepted Accounting Principles GASB Governmental Accounting Standards Board GFOA Government Finance Officers Association HMO Health Maintenance Organization HPN Health Plan of Nevada LVVWD Las Vegas Valley Water District MD&A Management Discussion and Analysis MGD Million Gallons per Day N/A Not Applicable NDI Nevada Department of Insurance NOO Net OPEB Obligation NRS Nevada Revised Statute O&M Operations and Maintenance OPEB Other Postemployment Benefits PEBP Public Employee Benefit Program PERS Public Employees Retirement System SDA System Development Approval Self-Funded Plan Clark County Self-Funded Group Medical and Dental Benefits Plan The Board Board of Trustees The County Clark County, Nevada The District Clark County Water Reclamation District The System State of Nevada Public Employees’ Retirement System UAAL Unfunded Actuarial Accrued Liability UNLV University of Nevada Las Vegas USAF United States Air Force

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Comments of Independent Auditors

6100 Elton Ave, Suite 1000 Las Vegas, NV 89107 702-384-1120 pbtk.com

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

Honorable Clark County Water Reclamation District Board of TrusteesClark County Water Reclamation District, Nevada

We have audited, in accordance with the auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards issued by theComptroller General of the United States, the financial statements of the Clark County Water ReclamationDistrict (the District), a component unit of Clark County, Nevada, as of and for the year ended June 30, 2019,and the related notes to the financial statements, which collectively comprise the District's basic financialstatements as listed in the table of contents, and have issued our report thereon dated October 4, 2019.

Internal Control over Financial Reporting. In planning and performing our audit of the basic financialstatements, we considered the District's internal control over financial reporting (internal control) to determinethe audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on thebasic financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District'sinternal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent, or detect and correct,misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, ininternal control, such that there is a reasonable possibility that a material misstatement of the District's basicfinancial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiencyis a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this sectionand was not designed to identify all deficiencies in internal control that might be material weaknesses orsignificant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internalcontrol that we consider to be material weaknesses. However, material weaknesses may exist that have not beenidentified.

Compliance and Other Matters. As part of obtaining reasonable assurance about whether the District's basicfinancial statements are free from material misstatement, we performed tests of its compliance with certainprovisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a directand material effect on the determination of basic financial statement amounts, including whether the fundsestablished by the District, as listed in Nevada Revised Statutes (NRS) 354.624 (5)(a)(1 through 5), compliedwith the express purposes required by NRS 354.6241. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances of noncompliance or other matters that are required to be reported underGovernment Auditing Standards.

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Purpose of this Report. The purpose of this report is solely to describe the scope of our testing of internalcontrol and compliance and the results of that testing, and not to provide an opinion on the effectiveness of theDistrict's internal control or on compliance. This report is an integral part of an audit performed in accordancewith Government Auditing Standards in considering the District internal control and compliance. Accordingly,this communication is not suitable for any other purpose.

Las Vegas, NevadaOctober 4, 2019

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