Budget Box: Annual Budget Process

By Karl Stephens - karls@landings.org
General Manager/COO

The annual budget for The Landings Association is approved in December by the Board of Directors for the upcoming fiscal year beginning January 1. The groundwork for an approved budget begins months in advance and is currently underway for the 2023 budget. This process is inclusive of TLA staff consisting of department directors and other staff, as well as “Budget Liaisons” with industry-specific backgrounds who serve on the Finance Committee to heighten fiscal responsibility.

The first part of the budget process begins with the review of the Capital Asset Management Plan (CAMP). Staff (and consultants, including a Professional Reserve Analyst) review useful lives and estimated costs for the assets under their purview and make necessary changes each year. The Professional Reserve Analyst provides added guidance on current and future inflationary projections to capture the total cost of replacing each component. The CAMP provides the basis for funding the Capital Reserve Fund, which increases in importance as our community surpasses the 50-year mark this year.

While the CAMP review process is underway, operating budgets are thoroughly reviewed by Department Directors along with the General Manager and Finance staff. There are many factors that are vetted during the budget review process. Programs and services are evaluated based on cost/benefit, obligation, need, and/or expectations.

Part of the budgetary review includes appointing Budget Liaisons. These Budget Liaisons are members of the Finance Committee, appointed by the Treasurer to work with individual departments during the budget

process. Department Directors meet with their assigned Budget Liaisons to review each line item in their annual operating budget and Capital Asset Management Plan. At the conclusion of the department budget process, each Budget Liaison will present the budget information for their respective department to the Finance Committee.

Reviewing budgets at a department level is only one part of the budget process. The Reserves Subcommittee is also heavily involved in the budget process. Members are appointed by the Treasurer and are members of the Finance Committee. This subcommittee looks at cash flow documents that are produced as a result of the proposed operating budgets and capital asset plans to evaluate available cash for not only one year but also for an additional five years, for a short-term view, as well as a total 25-year term, for a long-term view. The minimum level of the Reserve Fund under the Threshold Funding Plan (as adopted by Board of Directors) is 30% of the current cost of replacement/maintenance of the CAMP over a specified term.

Following months of reviews, edits, and deletions, based on committee and Board input, the annual budget is presented and voted on by the Finance Committee and Board of Directors at its December meetings. Budgets are voted and approved for one operating year (January - December). You can view the budget online at www.landings.org/resources > Governing Documents. If you would like to learn more about The Landings Association’s Budget Process, please join us on October 17, 2022, at 6 p.m., in the administration building conference room (600 Landings Way South), for our first Budget Workshop of the year.

This article was originally published by The Landings Association on their website.

Visit landings.org to read the original article.