The budgeting and capital reserves process: a realistic approach and model for a non-profit organization.ABSTRACT The budgeting and capital reserves process is an important procedure for evaluation of financial results and management decision-making decision-making, n the process of coming to a conclusion or making a judgment. decision-making, evidence-based, n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from . Different organizations use different procedures. The objective is the same, that is, to effectively manage an organization. The purpose of the paper is to show actual budgets and procedures for a selected non-profit organization A non-profit organization (abbreviated "NPO", also "non-profit" or "not-for-profit") is a legally constituted organization whose primary objective is to support or to actively engage in activities of public or private interest without any commercial or monetary profit purposes. . The procedures are analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. , critiqued, and suggestions are noted. Also, model building is suggested for a particular non-profit industry. In addition, another non-profit organization's budget information is illustrated for comparison purposes. The emphasis is on thorough planning and control. Various details are presented financially and analyzed with descriptive notes as well as financial comparisons. Budgeting and capital reserves can be applied to virtually every situation including non-profit organizations. The actual examples illustrated in this paper do not break down the information by service division, etc. because of the nature and size of the organization. However, the financial information is placed into categories such as administrative expenses and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . Keywords: Budgeting Process, Budget Model, Revenues and Expenses, Capital Reserves, Reserves Justification, Ownership, and Administration 1. INTRODUCTION A budget is a planning tool and should be prepared well in advance of the period of the actual performance. Plenty of time should be allowed for presenting the budget to the board of administration for approval and for making final changes. The budget should be compared with the actual results in order to measure whether the organization's goals are met (Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). Society, 1998, p.3). Much has been written about the budgeting process. However, organizations have unique environments. A non-profit organization faces some different issues than a for-profit for-prof·it adj. Established or operated with the intention of making a profit: a for-profit organization. organization. There is technically no income in a not-for profit organization (Rich, p. 1). The emphasis in this paper is strictly on an actual non-profit organization. However, the example has broad applications as evidenced by using it as a basis for model building. The model including constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. considerations provides a helpful decision-making process. The uniqueness of the model may lead to further development by a particular organization. For illustration and comparison purposes another non-profit organization's budget information is presented. 2. BACKGROUND INFORMATION Every time-share time-share v. time-shared, time-shar·ing, time-shares v.tr. 1. Computer Science To use (a computer) by time-sharing. 2. To occupy (a vacation property) by time-sharing. v. association has an approved set of condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. documents. Some of the relevant and selected information from the example's condominium documents include: 1) "Interval Ownership", is a concept whereby a Unit and share of the Common Elements assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to the Unit are conveyed for the periods of time, the purchaser receiving a stated Unit Week for a period of years, together with a remainder over in fee simple as tenant in common with all other purchasers of "Unit Weeks" in each such Condominium Unit in that percentage interest determined and established by original Declaration of Condominium at 12:00 noon on the first Commencement-Termination Day in the year 2022. 2) Each of the Owners of the Condominium shall own an undivided interest undivided interest n. title to real property held by two or more persons without specifying the interests of each party by percentage or description of a portion of the real estate. in the Common Elements and Limited Common Elements, and the undivided interest, stated as percentages of such ownership in the said Common Elements and Limited Common Elements, as set forth to the original declaration. 3) The common expenses of the Condominium shall be shared by the Unit Owners, as specified and set forth in the original declaration and amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. by the Association. Any common surplus of the Association shall be owned by each of the Unit Owners in the same percentage specified for sharing common expense. 4) All Owners of Units committed to Interval Ownership shall pay a "maintenance fee". The maintenance fee shall include the following applicable items: The unit's share of common expenses, as set forth; A) Repair and upkeep of the Unit for normal wear and tear (example-repairing interior walls); B) Repair and replacement of furniture, fixtures, appliances, carpeting and utensils; C) Casualty and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. liability insurance on the Unit; D) Utilities for the subject Unit; E) Personal property, real estate, and any other applicable taxes not billed directly to the Owner of the Unit Weeks in the Unit; F) Any other expenses incurred in the normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of and maintenance of the Unit which cannot be attributed to a particular unit week Owner. The maintenance fee shall be prorated among all Owners of Unit Weeks in a specific Unit by applying a fraction, the numerator numerator the upper part of a fraction. numerator relationship see additive genetic relationship. numerator Epidemiology The upper part of a fraction of which is the number of Unit Weeks owned by a specific Owner, the denominator denominator the bottom line of a fraction; the base population on which population rates such as birth and death rates are calculated. denominator of which is fifty-one Adj. 1. fifty-one - being one more than fifty 51, li cardinal - being or denoting a numerical quantity but not order; "cardinal numbers" (51), to the total of all such expenses. The foregoing shall not apply to any Unit Week conveyed to the Association. Notwithstanding any other provision, the Board of Administration may at their option, make a determination to exclude from the maintenance fee all or part of the personal property, real estate, and any other applicable taxes not billed directly to the Owners of the Unit Weeks in any Unit committed to Interval Ownership. In the event the Board of Administration makes such a determination, then the Owners of Unit Weeks shall be separately assessed for said taxes based upon the formula provided for herein for the proration Proration A situation during a corporate action in which the available cash or shares are not sufficient to satisfy the offers tendered by shareholders. Therefore, a proportion of both cash and shares is granted for each offer tendered. of the maintenance fee. A non-profit organization needs to be able to balance its cash inflows and cash outflows. In more recent years time-share associations have had the challenge of maintaining fees while trying to hold down rising costs. Even in a period of relatively low inflation, costs do go up (Rich, p. 1). Over the years time share associations have developed more pertinent PERTINENT, evidence. Those facts which tend to prove the allegations of the party offering them, are called pertinent; those which have no such tendency are called impertinent, 8 Toull. n. 22. By pertinent is also meant that which belongs. Willes, 319. and sophisticated budgeting procedures. The ownership has demanded more accountability and therefore, management representing the ownership, has responded. In addition to annual operating expenses, the proposed budget must include reserve accounts for capital expenditures and deferred maintenance as required by law. These accounts shall include, but not be limited to, interior replacement, roof replacement, building painting, and pavement pavement, the wearing surface of a road, street, or sidewalk. Parts of Babylon and Troy are believed to have been paved; Roman roads were noted for their durable stone paving. Cobblestones were common from late medieval times into the 19th cent. resurfacing, as well as any capital expenditure or deferred maintenance item for which the estimated cost exceeds $10,000.00. The amount to be reserved shall be computed by a formula based upon estimated life and replacement cost of each item. These reserves shall be funded unless the members subsequently determine by majority vote of those present in person or by proxy at a duly called meeting to fund no reserves or less than adequate reserves for a fiscal year. The vote to waive To intentionally or voluntarily relinquish a known right or engage in conduct warranting an inference that a right has been surrendered. For example, an individual is said to waive the right to bring a tort action when he or she renounces the remedy provided by law for such or reduce reserves, if any is taken, shall be conducted only after the proposed budget has been sent to members. In addition to the statutory reserves provided above, or in place of them if the members so vote, the Board may establish one or more additional reserve accounts for insurance deductibles, contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , general operating expenses, repairs, improvements or special projects. There is never enough to handle every conceivable con·ceive v. con·ceived, con·ceiv·ing, con·ceives v.tr. 1. To become pregnant with (offspring). 2. contingency contingency n. an event that might not occur. (Rich, p. 3). The purpose of the reserves is to provide financial stability and to avoid the need to make special assessments on a frequent basis. The amounts proposed to be so reserved shall be reported in the proposed annual budget each year. These funds may be spent for any purpose approved by the Board. 3. FINANCIAL INFORMATION The financial information for revenues for the 8 months ended August 31, 2004 is shown in Table A. The table is clearly organized showing monthly budget and variances either favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. or unfavorable. In addition, year to date actual, year to date budget with variances either favorable or unfavorable are presented. The final column shows the year budget to indicate how much of a line item has not been spent by comparing the years to date actual with the year budget. The explanation of the year to date shows a creative aspect by explaining each line item variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality as shown in Table B. The budget process continues month after month through 2004. Every time-share association must prepare an approved budget for the year so maintenance fees can be applied and sent out to the ownership before year end for the next year. Taxes are part of the total fee but the ownership has no control over the taxes and therefore, they are ignored for this paper. The entire year's budget is developed. The reserve portion of the total maintenance fees may vary depending on the projected capital and most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , when the projects will be implemented the longer the time period the less the reserve amount to be assessed. For example, if the kitchen appliances are replaced in ten years instead of seven years the reserve assessment would be less. As shown with monthly budgets, the annual budget for 2005 provides justifications. See Table C for the projected justifications. The capital reserve for 2005 is shown in Table D. The reserve categories include interior, roof, painting and capital improvements. For example, the average estimated life (in years) represents all interior items such as the stove stove, device used for heating or for cooking food. The stove was long regarded as a cooking device supplementary to the fireplace, near which it stood; its stovepipe led into the fireplace chimney. It was not until about the middle of the 19th cent. , microwave, refrigerator, dishwasher, beds, television, and other furniture items. The statutory funding is usually waived by the owners. The proposed reserves provided by the owners will cover the 2005 projected expenditures with an ending estimated balance. In order to not go beyond the available capital reserves, the Board of administration may decide to delay expenditure until the following year or years. For example, the porch porch Roofed structure, usually open at front and sides, projecting from the face of a building and used to protect an entrance. If colonnaded, it may be called a portico. and guest bedroom furniture was moved from 2004 to 2005. For more details see Table E that illustrates three years of reserve disbursements. 4. RESERVE JUSTIFICATIONS The manager at the resort generally draws up the projected reserves with justifications for the next budget year. Table F illustrates the actual 2005 capital reserve justifications. The Board of administration wants to maintain and upgrade the resort but not dramatically increase the reserve payments by owners. The reserve categories are increased minimally with roof and paving staying the same. The capital reserve is recommended with a decrease in funding. The actual proposed increase in reserve funding is only $2.29 per unit week. The intent is to provide minimal increases but cover necessary and desired expenditures. Each reserve account draws interest by category. However, the projected income from investments will hopefully cover inflation relative to future expenditures for appliances, furniture, etc. The reserve accounts are not updated for price increases. Instead when expenditures are approved for the current or next year, the number and quantity of items to be purchased are within reserve limits. The Board of Administration may decide to delay expenditure beyond financial considerations due to the acceptable condition of the appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. or other item. There is a tendency to extend the projected usefulness or estimated life to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. the outflow of cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. . This is described as sandbagging Sandbagging is the practice of deceptively portraying oneself as being in a weaker position than is true.
IOMA Instituto de Obra Médico Asistencial (de la Provincia de Buenos Aires; Spanish) IOMA International Oxidative Medicine Association IOMA International Online Music Awards , 2004, p 2). 5. RESERVE BUDGET Every time-share association must prepare an approved reserve budget for the year so the maintenance and reserve fees can be assessed and sent out to the ownership before year end for the next year. Taxes are part of the total fee but the ownership has no control over the taxes and therefore, they are ignored for this paper. The entire year's capital budget is developed as shown in Table G. The reserve portion of the total maintenance fees may vary depending on the projected capital outlay capital outlay See capital expenditure. and most importantly, when the projects will be implemented the longer the time period the less the reserve amount to be assessed. Note that the assessment expenses continuously remain at zero. The Board of administration avoids such assessments at all costs. 6. MODEL BUILDING The various tables provide financial information and justification. A board of administration will suggest so called "what ifs". For example, what if exchange revenues are no longer provided by RCI RCI Royal Caribbean International RCI Radio Canada International RCI Rehabilitation Council of India RCI Residential Communities Initiative RCI Roof Consultants Institute RCI Remote Control Interface RCI Residential, Commercial, Industrial ; what if guest supplies can be reduced by 10%. A budget model needs to have some variation of these elements as shown in Diagram diagram /di·a·gram/ (di´ah-gram) a graphic representation, in simplest form, of an object or concept, made up of lines and lacking pictorial elements. 1, The number of line items will vary depending on the time share association. However, more detail seems to add to budgeting effectiveness and therefore, better management. Resources are utilized to perform an activity. The objective of activity analysis is to trace resources to specific activities in order to create an activity standard or budget cost. Therefore, costs are consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. by activities. The more direct relationship between resource and the activity, the greater the relevance of the activity standard or budget cost. A resource (cost) is traceable where a strong cause and effect relationship can be established with a particular activity (Brimson Brimson may refer to a town or name origin:
The final step in setting an activity standard or budget cost is to validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data that the activity is defined at the correct level of detail. If the analysis is too detailed then time is wasted tracing the key criteria in determining the correct level of detail. To determine the correct level of detail consideration should be given to the following: 1. Readily available and verifiable output. 2. Must represent a significant cost as determined by management. 3. Importance in a business process (Brimson, 2002, p. 64). Such a relationship and evaluation criteria are illustrated in Figure 1. [FIGURE 1 OMITTED] The graph shows that as activities are added, the decision-makers are better able to manage the organization. There is a point where the level of detail distracts from the decision making and benefits decline (Brimson, 2002, p.64). The example presented demonstrates the elements of the model. However, the "what ifs" are really suggested by the board of administration and not the management. The primary reason is to hold down maintenance fees. It seems from all indications that the level of detail is appropriate for day to day management. However, the board of administration focuses on the more material items for significant impact on the maintenance fees. Of course, any organization will hit an upper planning limit and a lower planning limit. Through experience, the proper limits are achieved. [GRAPHIC OMITTED] 7. COMPARISON Some time-share associations prepare their budgets in different formats and fewer details. For example, Table H illustrates an association's budget that does not provide month to month budget information. Also, the classifications of expenses vary as well as the accounts shown. The association's management does not provide any 2005 operating budget Noun 1. operating budget - a budget for current expenses as distinct from financial transactions or permanent improvements budget items, operating cost, operating expense, overhead - the expense of maintaining property (e.g. justifications in descriptive form. Some time-share associations prepare their capital budgets in different formats and more details. For example, Table I illustrates an association's budget that does not provide the same format or details. Also, the items or accounts are shown with no classifications. The association's management does not provide any 2005 capital budget justifications in descriptive form. The more informed the owners and board of administration is, the better the understanding of the decisions that have to be made as to operations and maintenance fees. 8. CONCLUSIONS The budgeting planning process requires a careful analysis of the revenue and expense items over time. The capital budgeting planning process requires a careful analysis of the incoming reserves and expenditures over time. The current analysis includes the time value of money and inflation. Through experience a non-profit organization can build budgets and capital reserves that have the elements for effective management. The illustration of a budgeting and capital reserve model demonstrates what can be included in a proper budgeting and capital reserve process. The non-profit organization has not fully utilized the "what ifs" analysis. Therefore, the potential for the more effective management is outlined. The design and critique of the level of activities implied an on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" review of what should be considered and what should be eliminated. As stated, the budgeting process is an on-going task. REFERENCES Bart Noun 1. Bart - a member of the British order of honor; ranks below a baron but above a knight; "since he was a baronet he had to be addressed as Sir Henry Jones, Bart." baronet aristocrat, blue blood, patrician - a member of the aristocracy , C., "Budgeting Gamesmanship games·man·ship n. 1. The art or practice of using tactical maneuvers to further one's aims or better one's position: ", Academy of Management Executive 1988, pp. 285-294 Brimson, James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. A., The Handbook
This article is about reference works. For the subnotebook computer, see .
See American Institute of Certified Public Accountants (AICPA). Inc., 2002, pp.53-80 Declaration of Condominium Documents October October: see month. 9, 1998, pp.3-7 Drtina, R., S. Hoeger, and J, Schaub Schaub may refer to:
Hornyak, S., "Budgeting Made Easy", Management Accounting, (October 1998), pp. 18-23 IOMA, "Gaming The Budget Process: What Controllers Can Do To Avoid This "Distortion distortion, in electronics, undesired change in an electric signal waveform as it passes from the input to the output of some system or device. In an audio system, distortion results in poor reproduction of recorded or transmitted sound. Tax", The Controller's Report, (July July: see month. 2004), pp.1-4 Jacobs, F. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. and D. Clay Whybark, Why ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ? A Primer on SAP Implementation, Irwin IRWIN are a collective of Slovene artists, primarily painters, part of Neue Slowenische Kunst (NSK). They describe their own work as "retro-principle" or "retro-avant-garde".[1] The group is emphatic about their work being collective rather than individual. McGraw-Hill The McGraw-Hill Companies, Inc., (NYSE: MHP) is a publicly traded corporation headquartered in Rockefeller Center in New York City. Its primary areas of business are education, publishing, broadcasting, and financial and business services. , 2002, pp. 24-25 Rich, M., Practical Thoughts On Budget Preparation, Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). Chapter Community Associations Institute The Community Associations Institute (CAI) is an influential trade association and special interest group, dominated by lawyers and community managers,[1] that petitions for legislative beneficence for its members. , www.caimichigan.org See .org. (networking) org - The top-level domain for organisations or individuals that don't fit any other top-level domain (national, com, edu, or gov). Though many have .org domains, it was never intended to be limited to non-profit organisations. RFC 1591. Virginia Society of Certified Public Accountants The Virginia Society of Certified Public Accountants (VSCPA) is the leading professional association dedicated to enhancing the success of Certified Public Accountants (CPAs). , Budgeting: A Guide for Small Non-Profit Organizations, September September: see month. , 1998, pp 1-4 Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by J. Pineno, Shenandoah University Shenandoah University is a comprehensive Level VI private university with an enrollment of approximately 3,000 students in over 80 programs in six schools: College of Arts and Sciences, Harry F. Byrd, Jr. , Winchester, Virginia, USA L. Mark Tyree, Shenandoah University, Winchester, Virginia, USA Dr. Charles J. Pineno earned his Ph.D. at The Pennsylvania State University Pennsylvania State University, main campus at University Park, State College; land-grant and state supported; coeducational; chartered 1855, opened 1859 as Farmers' High School. . Currently, he is Professor and holder of the Braun Chair in Accounting at Shenandoah University. Dr. L. Mark Tyree earned his Ed.D. at The College Of William and Mary Noun 1. William and Mary - joint monarchs of England; William III and Mary II in 1984. He is Professor and holder of the Yount, Hyde & Barbour Chair in Accounting at Shenandoah University.
TABLE A
STATEMENT OF REVENUES AND EXPENSES
For 8 Months Ended August 31, 2004
Monthly Monthly Variance
Actuals Budget Fav Unfav
60,973 60,973 (0) 41100
-- 41110
183 1,100 (917) 41130
118 100 18 41135
50 (50) 41137
708 708 (0) 41147
325 500 (175) 41161
238 300 (62) 49290
62,544 63,731 (1,187)
Year to Date Year to Date Variance
Actuals Budget Fav(Unfav) Yr. Bdgt.
REVENUES
Association Fees 487,783 487,704 (1)
Reserve Revenue 213,466 213,457 9
Late Fee Inc. 6,461 9,700 (3,239)
Interest Inc. 859 1,000 (141)
Long Distance 367 1,025 (658)
Concess.Inc. 5,661 5,654 (3)
Exchange Rev. 2,652 3,090 (438)
Other Revenue 1,374 1,500 (126)
TOTAL 718,624 723,220 (4,596) 975,399
TABLE B
BUDGET ANALYSIS
FOR THE 8 MONTHS ENDED AUGUST 31, 2004
FINANCIALS
LINE ITEM YTD YTD BUDGET VARIANCE YEAR BUDGET
REVENUES
LATE FEE INCOME 6,461 9,700 (3,239) 12,300
Continues to be under budget
EXCHANGE REVENUE 2,652 3,090 (438) 4,565
Under budget MTD/YTD. I expect this line item to be under budget
for September as well. There were many cancellations due to the
hurricanes.
OWNER MAILINGS 3,586 2,400 (1,186) 4,800
Over budget MTD due to the timing of the mailing of the newsletter.
TABLE C
2005 OPERATING BUDGET JUSTIFICATIONS
REVENUES
ASSOCIATION FEES--Total operating minus income.
LATE FEE INCOME--Decrease of $1900 based on 2004 projected actual.
INTEREST INCOME--No increase based on 2004 projected actual and no
anticipated increase in interest rates.
TELEPHONE INCOME--Decrease of $400 based on 2004 projected actual.
CONCESSION INCOME--No increase. This income is from the beach
concession.
EXCHANGE REVENUE--Decrease of $315 based on 2004 projected actual.
OTHER REVENUE--No increase. This line item reflects income from the
washers and dryers.
COST OF SALES--I have projected 4 association weeks being sold based
on purchasing weeks from Levitt.
SALE OF ASSOCIATION WEEKS--I have projected an average of $1500 profit
per week sold and based on the 2005 budget on 4 association weeks
being sold.
TABLE D
RESERVE CALCULATION SUMMARY
December 31, 2005
Average Average Estimated 2005
Estimated Estimate Replacement Statutory
Reserve Life Remaining Life Cost Reserve
Category in ears in ears (32 units) Funding
Interior 14.06 6.37 $1,717,920 $239,367
Roof 18.81 4.90 $192,083 $11,947
Painting 6.78 5.26 $105,200 $17,075
Paving 25.00 15.30 $165,000 $8,982
Capitol Imps. 13.24 6.50 $440,900 $62,938
Total $2,621,103 $340,309
Estimated 2005 Estimated
Fund Proposed 2005 Fund
Reserve Balance As Reserve/Assmt. Projected Balance As
Category of 1/1/05 Funding Expenses of 12/31/05
Interior $192,425 $135,231 $229,440 $98,216
Roof $133,600 $10,213 $5,609 $138,204
Painting $15,455 $15,526 $0 $30,981
Paving $27,550 $6,600 $0 $34,150
Capitol Imps. $32,000 $49,633 $41,000 $40,633
Total $401,030 $217,202 $276,049 $342,183
TABLE E
THREE YEAR RESERVE DISBURSEMENT
2005 2006 2007
CAPITAL IMPROVEMENTS
Spa $20,000
Tennis Courts-Resurface $4,000
Grills (3) $1,600
Lobby Furniture $2,000
Office Carpet $4,000
Computer Equip. $8,000
Telephone System $15,000
Laundry Equip- HK (Washer II) $9,000
Boardwalk (Beach-Platform Stringers) $30,000
Boardwalk (Beach-Railings) $5,000
Total Capital $41,000 $41,000 $16,600
Totals:
INTERIOR $229,440 $66,400 $89,600
ROOF $5,609 $ - $ -
PAINTING $ - $4,500 $ -
PAVING $ - $ - $ -
CAPITAL IMPROVEMENTS $41,000 $41 $16,600
TABLE F
2005 RESERVE JUSTIFICATIONS
CAPITAL--Decrease of $.19. Total funding for Capital Reserves is
$30.41 per unit week. Swimming pool tile/coping estimated life has
been increased from 15 years to 20 years. Laundry equipment-hk
washer II estimated life has been moved from 2004 to 2005.
Boardwalk-platform stringers and railings estimated life has been
increased from 2005 to 2006. Based on the structural inspection,
routine maintenance is all that is necessary at this time. Exterior
lighting estimated replacement cost has been increased from $20,000
to $25,000 and moved to 2009. This coincides more closely with the
exterior painting which is scheduled for 2010.
TABLE G
SUMMARY OF ANNUAL BUDGET FOR THE YEAR 2005
2005 2005 2004 2004
SUMMARY Annual Per Unit/ Per Unit/ Annual
Budget Week Week Budget
OPERATING FEE 738,182 452.32 448.33 731,681
CAPITAL RESERVE 323,234 198.06 121.67 198,564
PAINTING RESERVE 17,075 10.46 9.13 14,893
SPECIAL ASSESSMENTS 0 0.00 0.00 0
NET BEFORE CREDITS 1,078,491 660.84 579.13 945,138
CREDITS
PAINTING RESERVE REF. 0 0.00 0.00 0
OPER. SURPLUS REFUND 0 0.00 0.00 0
TOTAL CREDITS 0 0.00 0.00 0
TOTAL AMOUNT BILLED 1,078,491 660.84 579.13 945,138
2004 Proj. 2005 2005 Per
SUMMARY Actuals Annual Unit/
For Year Budget Week
OPERATING FEE 731,681 738,182 452.32
CAPITAL RESERVE 198,564 201,677 123.58
PAINTING RESERVE 14,893 15,526 9.51
SPECIAL ASSESSMENTS 0 0 0.00
NET BEFORE CREDITS 945,138 955,385 585.41
CREDITS
PAINTING RESERVE REF. 0 0 0.00
OPER. SURPLUS REFUND 0 0 0.00
TOTAL CREDITS 0 0 0.00
TOTAL AMOUNT BILLED 945,138 955,385 58,541
TABLE H
2005 APPROVED OPERATING BUDGET
JANUARY 1, 2005-DECEMBER 31, 2005
1020 units/weeks
2005 2005 APPROVED
APPROVED BUDGET
BUDGET PER UNIT WEEK
REVENUE:
Operating Income:
Assessment Income $381,286 $373.81
Other Income $27,000 $26.47
TOTAL OPERATING INCOME $408,286 $400.28
Recommended Reserves $61,989 $60.77
TOTAL REVENUE $470,275 $461.05
TABLE I
OPERATING BUDGET
JANUARY 1, 2005-DECEMBER 31, 2005
1020 units/weeks
RESERVE ALLOCATIONS:
REMAIN. CURRENT
ESTIMATED USEFUL COST TO 2004
ITEMS LIFE LIFE REPLACE FUNDING
Furn. & Fix. 15 8 $250,000 $29,172
Roof 25 19 $22,275 $250
Paving 20 12 $10,057 $133
Weathproof. 7 6 $45,685 $5,212
Deck 30 14 $35,000 $1,782
Pool 25 8 $38,500 $4,364
Lg. Appliances 12 8 $101,850 $6,258
Elevator 30 11 $38,000 $2,499
Heat Replace. 5 3 $20,000 $4,571
Ins. Deduct. -- -- $11,103 $0
Grounds Refurb. 10 3 $9,115 $0
Phone System 10 5 $17,500 $1,635
Office Equip. 5 2 $20,000 $755
Mech. & Elec. 35 13 $35,000 $2,180
Def. Maint. (other) -- -- -- $500
TOTAL $654,085 $59,311
RESERVE ALLOCATIONS:
ESTIMATED ESTIMATED AMOUNT
2004 BALANCE to be
ITEMS EXPENDITURES 12/31/04 FUNDED
Furn. & Fix. $20,814 (2,527.00) $252,527
Roof $0 17,525.00 $4,750
Paving $0 8,630.00 $1,427
Weathproof. $1,200 13,211.00 $32,474
Deck $0 12,546.00 $22,454
Pool $6,342 (1,389.00) $39,889
Lg. Appliances $5,000 16,651.00 $85,199
Elevator $1,250 12,462.00 $25,538
Heat Replace. $2,756 12,674.00 $7,326
Ins. Deduct. $0 11,001.00 $102
Grounds Refurb. $200 3,915.00 $200
Phone System $0 10,965.00 $6,535
Office Equip. $580 14,631.00 $5,369
Mech. & Elec. $0 3,327.00 $31,673
Def. Maint. (other) $0 500.00 $500
TOTAL $38,142 139,122 $515,963
RESERVE ALLOCATIONS:
RECOM- 2005 APPROVED
MENDED BUDGET PER
ITEMS FUNDING UNIT WEEK
Furn. & Fix. $31,566 $30.95
Roof $250 $0.25
Paving $119 $0.12
Weathproof. $5,412 $5.31
Deck $1,604 $1.57
Pool $4,986 $4.89
Lg. Appliances $6,258 $6.14
Elevator $2,322 $2.28
Heat Replace. $2,442 $2.39
Ins. Deduct. $102 $0.10
Grounds Refurb. $0 $0.00
Phone System $1,307 $1.28
Office Equip. $2,685 $2.63
Mech. & Elec. $2,436 $2.39
Def. Maint. (other) $500 $0.49
TOTAL $61,989 $60.77
The State of Florida mandates that condominium associations prepare
calculations to "fully fund" reserves. The law also provides that
reserve requirements may be "waived" or "reduced", allowing unit
owners to put less money into the reserve accounts. However, to meet
"fully funded" requirements for the Reserves, the resulting annual
maintenance fee would be $434.50, an increase of $24.05 when compared
to the 2004 maintenance fees. Accordingly, the Board of Directors
recommends the full funding requirements for Reserves, thereby
establishing the maintenance fee at $4343.58 for the 2005 budget
year.
"Recommended Funding" Per Unit Week -- 2005
Operations $373.81
Reserves $60.77
PER UNIT WEEK $434.58
PROPERTY TAXES $25.42
TOTAL PER UNIT WEEK $460.00
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