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Example Budgeting Worksheet

The text in this topic relates to the Example Budgeting Worksheet.

In order to better understand their financial position, the managers for the water system must complete the budgeting worksheet. Note that almost all of their revenues come from service fees ($249,971 of $255,430 in total revenues). Most of their expenditures go to pay for maintenance, salaries and benefits, and chemicals.

On the surface, it would seem that the system is in a fairly good financial situation. After expenses, it has a net income of $10,358 a year. However, the system cannot afford the annual $36,399 contribution to its reserve account with its current income. If the system does not raise revenues or secure outside funding, it will not have the income necessary to pay for rehabilitation and replacement of its assets in the future. The water system managers will have to start thinking about how to raise the additional revenue necessary to make up for the shortfall.

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Budgeting Worksheet Instructions   Step 5 – What Should I Do Next?