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$ 13. Sources and Uses of Operating Funds general Key Po i nt To ensure the effective and efficient delivery of aviation services to the community they serve, airport governing bodies develop and implement financial management policies and procedures, including an annual operating budget, for operating expenditures and revenues. While the size and type of airport generally dictate the scope and scale of the operating budget, the governing body should review and evaluate financial records on an ongoing basis. This review should include appropriate oversight of airport finances and a comparison of actual performance to the adopted budget. Equally important is the need to retain a qualified financial expert (internal/external auditors) to conduct an annual review of the airport's financial records and activities to ensure compliance with generally accepted accounting principles, state and local financial audit requirements, and federal grant assurances and obligations. The Airport D i s cu s s i on Airport expenses normally fall into two areas: Capital improvement expenses. Capital Employee improvement expenses are generally large and Salaries Debt Liability, Retirement Plans relate to improvement or expansion of airport Service and Health Employee Property, Peril, Training, infrastructure, such as airfield pavements Owners & Insurance Development, and and lighting systems, terminal buildings, Directors Industry equipment, and land (see Issue Paper Insurance Conferences #14 Financial: Funding Capital Improvements). Access Road Maintenance Utilities F INAN C IAL Operation and maintenance expenses (O&M). O&M costs Maintenance normally occur on a regular basis and are required Gates/Loading Bridges O& M of Runways, Taxiways, Apron Custodial and to maintain the current operations of the airport. Maintenance Expenses Areas, Service Roads, and Air eld Services Lighting Maintenance Fleet of Automobile Maintenance Parking Areas Landscaping Snow Removal Buildings and Grounds Custodial Environmental and Maintenance Compliance Services rules 30

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Sources of airport revenue include: GENERAL Airfield -- landing fees, aircraft parking, and fuel flowage; Terminal concessions -- restaurants, travel services, specialty shops, amusements, automobile parking, hotels, and ground transportation; Airline leases -- all areas leased by the airlines; Other leases -- fixed-base operators, governmental units, industrial areas, cargo operators, and non-aeronautical leases; Non-operating revenue -- sale or lease of properties owned by the airport but not needed for airport operations, interest earned on investments, local taxes, and federal/state grants; and Airport resources -- such as sub-surface mineral rights. As a recipient of federal grant-in-aid funding, airport operators are obligated to: THE AIRPORT Establish aeronautical rates and charges at a level such that the facility is as self-sufficient as possible. Nonetheless, rates charged to users for airport premises and facilities are generally set to ensure that the revenues derived from such use cover the airport's cost of providing the service and are used exclusively for airport operations; Use airport-generated revenue for airport purposes (see Issue Paper #17 Financial: Use of Airport Revenue). App l i c at i o n Become familiar with your airport's annual budget, specifically how it generates revenue and its major expenditures. Be prepared to make tough decisions during difficult times. Be aware of your annual audit process. DO NOT illegally use airport revenue for non-airport expenses. Anticipate being pressured to do otherwise. FINANCIAL Recognize that an airport is a business and managing a well-thought budget is very important (see Issue Paper #15 Financial: Your Airport as a Business). RULES 31