Annually church and school boards approve a budget for the upcoming year. One area that tends to be left out of financial planning is property maintenance. When preparing a budget for property maintenance, it is recommended to have a process in place that will accomplish your budgeting goals. Here are four steps you can use to guide your church’s facility budgeting:
- Plan for regular maintenance.
- Scrutinize the life cycle of high-cost equipment, such as HVAC, pipe organs, audio-visual equipment, etc.
- Meet with the safety officer and discuss the needs for capital expenses, which include extending the life of the building, computer equipment, office equipment, including furniture and fixtures. Will there be any upcoming major renovations and/or additions?
- Set up a contingency fund to handle unexpected expenses that come up during the year. At a minimum, start by funding the insurance coverage deductible since claims are sudden and unexpected. Trying to come up with funds to pay the insurance deductible can be difficult if not included in the annual budget.
- Operations – This includes, but is not limited to, routine general maintenance, janitorial, and maintenance staffing expenses. Accuracy is a key component when budgeting. Do the actual math for your church’s yearly operations, which depends on your location in the country. Use these figures in your planning.
- Deferred Maintenance – This is the practice of postponing maintenance. Typically when the general maintenance budget is not adequately funded, the need to address delayed maintenance increases. Deferred maintenance can cause a burden on the church because the cost is usually higher than that of the initial general maintenance costs. It is important to note that damages resulting from lack of maintenance are not covered by insurance.
- Capital Fund Reserve – It is advised to keep up with the real cost of the life cycle of property and equipment. The safety officer working with the treasurer should prepare a list of all church assets that have a life cycle and go line-by-line with a valuation. Once those values are determined, budgeting for them gets much easier.
- Capital Projects – These types of projects include but are not limited to adding on a room, a major renovation, a new church building, a community center, etc. When budgeting for a large capital project, it is essential to work with your conference.
All four areas of budgeting ¾ operations, deferred maintenance, capital fund reserve, and capital projects ¾ should have their own line on the financial statement and be fully funded. Make it a policy to never borrow from those funds to do something else. Lastly, budget for the unexpected claim by funding the property insurance deductible.
There are many demands on your ministry’s limited funds. As you allocate those funds, remember providing and maintaining a building that is safe and ascetically pleasing is essential to those we minister to.