LASA Aged Care LeadersProfessional Development Program

7th February, 2018

Classification of expenditure

Budget Components

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Resident Funded

Fortnightly Fee

General Service Fund

Maintenance Reserve Fund

Capital Replacement Fund

Resident Funded

Company Funded

General Services Fund (GSF)

General Services Fund (GSF)

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Captures expenses on items such as:

– Administration

– Salaries & Wages

– Gardening & Grounds

– Rates

– Insurance

Some GSF items may not be increased by more than CPI over the prior year’s budget

Surpluses and deficits from prior years are to be taken into account when setting the next year’s budget

Village Operator should not make a profit from the GSF expense items

Designed to be “break even” – expenses should match income from fees

General Services Fund (GSF)

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Section 106 Items: Audit Fees Bank Charges Cleaning Electricity & Gas Printing & Stationery

Section 107 Items: Insurance Council Rates Water Rates Salaries & Wages MRF Contributions

The GSF expenses are divided by the Retirement Villages Act 1999 into “Section 106” items and “Section 107” items:

Within Management Control (CPI Limited)

No Management Control

MaintenanceReserve Fund (MRF)

Maintenance Reserve Fund (MRF)

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Fund designed to maintain the Village’s capital items

Captures expenses on items such as:

Repairs and maintenance

Contracted services such as Fire, Safety and Pest Control

External Painting

Budget takes into account a Quantity Surveyor’s report that is updated annually

Any surpluses remain in the MRF fund for the future years

No restrictions on annual increases

Capital Replacement Fund (CRF)

Capital Replacement Fund (CRF)

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Fund is designed to REPLACE the Village’s capital items such as:

Vehicles

Hot Water Systems

Unit Refurbishments

Budget takes into account a Quantity Surveyor’s report that is updated annually

Funded by the village operator

Classification of expenditure

Classification of expenditure

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General Services (GSC) Maintenance Reserve (MRF) Capital Replacement (CRF) Capital Improvement

Definition Recurrent and routine in nature The upkeep of a capital item owned by the village to keep it in good condition and working order

Restoring an item to a state in which it can function efficiently without changing its character, which may include restoration to its former appearance, state or condition

Work done to make good damage or deterioration that has occurred by ordinary wear and tear, accidental or deliberate damage, or weathering over time

Substitution of the same type of item with an equivalent item

Changes and substantially improvesthe functionality of the asset as a whole

Frequency Regular: more than four times per year

Occasionally, annual or twice yearly Long term and irregularBenefit to be derived over several years

Long term and irregular

Part Vs Whole Replacement of a part, not the whole unit

Replaces the asset as a whole

Materials Lower end of value, eg, <$100 or <$300

Where new improved materials are used because old materials are unavailable – remains a repair

Change of materials that improves the value and function of the asset

Other Includes reinstatement costs if Scheme Operator is responsibleIncludes installation costs

Replacement of items (not recoverable from resident) when refurbishing the unit

Method of financing (ie, vehicle lease) does not alter the nature of spend

Where a newly-acquired item must have work done on it before it can properly function is an improvement

Refurbishment to a unit which alters or upgrades it from its original condition

Paid From GSC Bank Account MRF Bank Account CRF Bank Account Scheme Operator Bank Account (unless residents have specifically asked for it and agreed to pay for it)

Examples

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A new extension to the Community facilities to increase the floor space for resident functions.

A replacement office chair to meet OHS requirements for the manager who is new to theorganisation?

The six monthly Fire alarm testing for the Community Centre?

The council rates on the village Community Centre?

Snake being removed from common property after winter hibernation

Carpet cleaning of the Community Centre on an annual basis.

Replacement bus for use in the Village?

Roof Tile replacement on an ILU after a storm allowing water into the property.

Training expense for village manager on how to understand financial information in the Village?

The kitchen refurbishment in a vacant unit prior to the resale?

The kitchen refurbishment in an occupied unit requested by the resident?

Capex

CRF

MRF

GSC

MRF

MRF

CRF

MRF/CRF

GSC

CRF

Resident

Questions?