How Irrigation Districts Should Develop Budgets and Raise Capital
Center pivots seen from above.
K
ipp Drummond has worked in finance in both the private and public sectors, including 6 years as the senior financial manager and comptroller for the Kennewick Irrigation District. In this interview, he brings his years of experience to bear to walk us through all the steps irrigation districts should go through to develop budgets and identify the best ways to raise capital. Irrigation Leader: Please tell us about your background and your experience in the different organizations you’ve worked for.
Irrigation Leader: Would you discuss the budget of an irrigation district and how it might differ from those of other organizations? Kipp Drummond: Irrigation districts, generally speaking, have a set number of customers and fixed revenue streams. Their
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Irrigation Leader: How should an irrigation district organize and plan for budgeting? Kipp Drummond: The options include annual or biannual budgets. Personally, I prefer annual budgets that include multiyear projections of both revenue and expense beyond the budget year. And, of course, capital plans are typically budgeted for 5–7 years. On the broadest level, the organization’s long-term strategic goals and plan should inform and direct the budget process. A capital plan with the projected current year budget should be in place before the budget process starts. irrigationleadermagazine.com
PHOTO BY SAM BEEBE, LICENSED UNDER CC BY 2.0.
Kipp Drummond: I have experience in both the private and public sectors. I have kept green bar manual general ledgers and implemented new enterprise resource planning systems. I have worked for a construction company and software startups; for a city and a county government; and for the Kennewick Irrigation District. I’ve seen capital creation from stock issuance to $40 million bond offerings.
revenues are capped, subject to rate increases. They have massive infrastructure and the associated high maintenance and capital costs. The resources devoted to infrastructure maintenance each year, as opposed to operations and capital expansion, is a critical budget and strategic decision to be made by senior management and the board. Each budget will reflect the board’s decision on how much to allocate to annual maintenance and the replacement of existing infrastructure. Other factors to keep in mind are that operational staff are often unionized, and that many irrigation districts are governmental and therefore require extreme transparency and accountability.