Committee reviews operating budget drivers; APF and dues increases recommended for board consideration
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Summary
Budget staff presented the FY25–26 operating budget outlook, highlighting inflation, wages, pools operating costs, and reserve modeling. The committee generally supported assumptions including a 4% wage pool, projected 1,100 APF transactions and recommended board review of a proposed $200 APF increase and a proposed 4.9% member-due increase.
Sun City West finance staff presented the proposed FY25–26 operating budget to the Budget & Finance Committee, emphasizing inflation and wages as the primary budget drivers and identifying areas of pressure such as pools, wages and health insurance.
“Inflation and minimum wage are huge budget drivers for us,” Director of Finance Cliff (staff) told the committee, presenting historical data and wage-survey comparisons. Cliff said the association’s wages are approximately 12% below market average on comparable surveys and that the FY25–26 budget includes a 4% salary pool to address cost-of-living and merit adjustments.
Cliff provided a facility-focused cost breakdown to illustrate operating pressure. Pools and spas were shown as a single line with roughly $1,022,000 in direct costs (labor approximately $328,000; utilities about $416,000; chemicals and pool equipment roughly $276,000). By contrast, golf operations were presented as roughly $13 million in revenue and $14 million in expense, with an approximate $1.1 million net subsidy across the five courses.
Reserve modeling and capital planning were a key part of the discussion. Cliff presented a five-year model showing roughly $53 million in capital projects over five years and projected reserve levels holding near $28 million if modeled assumptions hold. He also showed the effect of rolling forward fully funded balance (FFB) requirements, noting that the FFB includes approximately $5.7 million in funded uses for next year and that inflation reduces the FFB percentage by roughly 1.4 points.
On new-home and APF assumptions, staff recommended a budgeted volume of about 1,100 APF transactions for the coming year. The committee discussed both volume and rate; staff proposed a $200 increase to the APF rate, and the operating package also includes a proposed member-dues increase (committee discussion referenced a proposed 4.9% increase to member dues). Committee members noted sensitivity among residents but generally expressed comfort with staff assumptions given the association’s capital needs and reserve targets.
Committee members asked for clarity on lines where assumptions are fixed (health insurance and minimum wage) and probed the operating impacts of IT and master-plan investments. Several committee members praised the staff’s transparency and modeling. “This committee discussion today was thorough,” committee member David said, expressing confidence in the materials and staff work.
Staff said procurement and capital projects will return to the governing board for final approval; the committee indicated it was generally comfortable with the proposed operating assumptions and expect staff to present requested clarifications and documentation at upcoming meetings. The committee will forward its observations to the governing board for the final budget decision.
