Vistoso Golf Casitas
2024 Budget process
This month’s article is written by Ted Dann, Vistoso Community Association (VCA) Treasurer
The budget process is the way we plan the financial performance of the VCA for the upcoming year. First Service Residential (FSR) Management and the Board of Directors are actively engaged in formulating our Budget for 2024, so now is a good time to provide members a sense of what goes into the budget process.
The Basic Components of the 2024 VCA budget include:
Operating Income include:
- Residential assessments which constitute 70% of Income.
- Commercial dues are calculated by the number of net acres occupied and constitute 25% of Income.
- Interest on investments, fees, fines, and builder assessments all of which constitute 5% of Income.
- Reserve Funding is an offset to Income and consumes 25% of Income.
Operations Expenses include:
- Administrative expenses include management fees and salaries, legal fees, office lease, financial services, insurance, and other fees, constituting 33% of expenses.
- Utility expenses include water/sewer, electricity, and telecommunications, constituting 10% of expenses.
- Landscaping, maintenance, monitoring and repair of common areas and parks, all of which constitute 58% of expenses.
Reserve Funding:
- The 2023 Reserve Study is available on the VCA website. It identifies virtually all common assets and estimates depreciation and timing of replacement or repair over time, going out 30 years. The replacement timeline is an important input into the budget process. In any given year the VCA Reserve Fund contribution from Operating Funds is based on what is indicated as necessary and prudent in the Reserve Study. The main value of the Reserve Study is the replacement timeline and a calculation of how well funded VCA’s Reserve Fund is, expressed as a percentage of fully funded. From the percentage fully funded flows a probability of the need for a Special Assessment. In VCA’s case this probability is relatively low. Examples of budgeted Reserve Fund spending for 2024 include granite replacement, monument refurbishment, drainage, irrigation replacement, asphalt seal coating, play structure repairs and replacements.
- In addition to budgeted Reserve spending, from time-to-time unbudgeted Reserve spending must occur. The Reserve Study is updated periodically as needed to address funding requirements to support unexpected or unbudgeted Reserve Fund expenditures.
What to Expect
The 2024 VCA Budget process began in late summer with an initial draft prepared by the FSR Management team. That draft was reviewed and analyzed by the me and the Finance Committee. Once preliminary approval is given by the Finance Committee, the budget was reviewed by Board of Directors at the October 9th Budget Review Workshop that was open to membership for comment. The Budget, at this stage is still in draft form and a revised draft was resubmitted to the Finance Committee for a second review. The Finance Committee will meet on October 17th to review, revise if needed, and approve the Budget for submission to the Board of Directors for adoption at the regularly scheduled October 26th General Board meeting which is also open to the membership.
The monitoring of VCA financial performance throughout the budget year is performed by FSR management and is monitored by the Finance Committee and your Board of Directors monthly. The results of that review are reported to VCA membership in the form of a monthly Treasurer’s Report, and inclusion of VCA’s full financial statements in the monthly General Board meeting materials. The goal is to keep the VCA in a strong financial position through 2024 and beyond. Once the final 2024 budget is approved members will be updated.