From The Blog
How the Association Budgets
Creating the KICA budget is one of the most important tasks that is completed on an annual basis. The budget not only determines the assessment levels for the year to come, it also ensures that the association is meeting its mandate of being good stewards of financial resources.
OPERATING AND RESERVE BUDGETS
KICA operates with two separate budgets, the operating budget and the reserve budget. The operating budget covers the costs of administration, security and livability, land and lakes maintenance, recreation and amenity operations, and general maintenance. Principally, the operating budget covers expenditures that are routine and predictable. This budget is funded primarily by: the annual assessment paid for by all property owners (more than 80% of funds), commercial access fees (approx. 10% of funds), investment income the amenity assessment and user fees and other miscellaneous income. The association is committed to a balanced operating budget.
The reserve budget covers the cost of major repairs to or replacement of existing island infrastructure. The reserve budget takes into account Reserve Study projections, which forecast the lifespan of and maintenance costs for all infrastructure in the next 30 years. It also considers predicted revenues. The reserve budget is funded by five sources: a transfer fee on all real estate transactions (about40-45% of funds), the annual supplemental reserve assessment (about 40% of funds) paid for by all property owners, commercial access fees (about15% of funds), investment income and if needed, a transfer from operations income. Each year, reserve budget costs vary due to the planned repair and replacement schedule for all assets, so this budget is designed to fluctuate between negative and positive variances.
WHAT THE BUDGET FUNDS
The annual budget funds KICA’s five basic operations, all of which are crucial to daily life on Kiawah. KICA operates and provides administrative support for:
Security and Livability: Security controls access to the Main Gate and V-Gate, conducts island patrols and oversees commercial access. Livability manages covenant enforcement and contractor oversight.
Recreation and Amenities: Recreation operations include member events, as well as the operation of The Sandcastle, Rhett’s Bluff, Cinder Creek and Eagle Point.
Land and Lakes Maintenance: Land Management handles all landscaping and maintenance on KICA common property. The Lakes team handles water quality management, wildlife management, as well as mosquito abatement.
General Maintenance: This department does minor repairs to common property, such as roads, leisure trails, and boardwalks. General Maintenance includes a mechanic’s shop, which services vehicles and tools.
Major Repairs and Replacement (MR&R): MR&R staff include civil engineers who plan and manage the repair or replacement of roads, bridges, drainage systems and other island infrastructure.
THE BUDGET PROCESS
The process of stewarding millions of dollars annually to maintain Kiawah Island is lengthy and thoughtful. Although it’s a truly ongoing process ,budget season officially launches with the creation of the first draft in September and commences with final approval by the board in early November.
To create a first draft, KICA staff evaluate operational needs and identify potential improvements to the organization’s functionality, efficiency and services. By the beginning of September, this draft is refined by KICA’s Director of Finance and Administration and is then provided to KICA’s Finance Committee for the first review. This year, the Finance Committee reviewed the first draft of the 2021 budget at its Oct. 2 meeting.
The Finance Committee is comprised of members of the community, staff and board members with expertise in finance and management. Committee members provide valuable discussion and feedback on all budget items, analyze numerous scenarios ,and make recommendations for budget revisions. The committee then reports to the KICA Board of Directors with a briefing. Staff and the Finance Committee continue through October with several more drafts and multiple revisions, meetings, and updates to the board. This year’s Oct. 15 Java With Jimmy will also focus on the budget process.
In late October, the board will review the drafted budget, and community member input will requested. Then at the Nov. 2 board meeting, the board will vote on the final draft of the 2021 budget.
After approval, the final budget is published online.
In addition to active fall budgeting months, KICA’s Director of Finance and Administration provides monthly updates throughout the year to the board and Finance Committee to ensure proper oversight on execution and spending trends. Monthly financial reports and annual audits are posted online at kica.us/financials. KICA is proud to have a strong record of clean audits.