Why Is Capital Improvement Increasing?
Capital Improvement is used for improvements and replacement. We need to build this fund up over time to have money available when things break to the point of being replaced. Think of Capital Improvement like a saving account. We know that eventually, we will need to spend it on replacing something, but we do not need it today. Right now, we have about $190,000 in the fund. To put that in perspective, the replacement value of all assets (chairs, carpet, furniture, refrigerators, HVAC, etc.) on campus is $4,663,831.67. Of that, about $2,034,615.70 is “overdue,” meaning it is past its expected life but is still functioning today.
Take HVAC as an example. Our campus has 65 different units. 39 HVAC Units have passed life expectancy, which is around 15 years. If they all went out simultaneously, it would cost an estimated $692,000. 3 HVAC units are over 20 years old. Just replacing these three is $40,000 estimated cost.
As a side note, we plan to fund Capital Improvement beginning in January. What does that mean? It means that because of the volatility in the economy right now, we want to be wise stewards of the gifts the Lord has given us. We will not put the money into these accounts until we are certain that 2023 meets budget expectations in expenses and giving. Capital Improvement is being funded as a contingency that allows us to not touch the ministry. Below are the line items being funded.
Below is how each category will be funded beginning in January.