Preparing and Planning AMA’s Budget
The staff at AMA Headquarters has completed the 2026 annual budget preparation process.
Similar to building a model airplane, preparing the annual budget begins with planning and identifying current and future goals, objectives, and assumptions. It continues with stakeholder and department head input. The heavy lifting occurs when department heads prepare base revenue and expenditure budgets by program, whereby expenditures and revenues that are related to AMA’s goals and objectives are identified during the planning phase. Requests are then submitted for operational and capital resources.
The Finance Committee reviews the draft budget, including decision requests and the capital budget, and then considers the projected available resources, the direction provided by the initial planning process, AMA’s fiscal policies, and the most cost-effective and efficient method of service delivery to the AMA stakeholders. The proposed budget is finalized and prepared, highlighting the major changes in the budget from the previous year. Finally, the Executive Council (EC) adopts the budget by resolution.
Having a good, robust budget planning process does not prevent the realities of the bottom-line outcome. AMA’s 2026 budget is tight, and not all requested resources can be funded. The main revenue source—membership—makes up 75% of AMA’s operating revenue. Membership is projected to remain flat throughout the next budget period. The remaining other revenues (e.g., Model Aviation advertising, club fees, and education) are also projected to remain flat. New International Aeromodeling Center (IAC) user fees will be established to recover the full cost of services provided, except when the EC determines that a subsidy is in the AMA stakeholders’ interest.
While revenues remain flat, operating expenditures are projected to increase over the budget period. The projected increases are primarily because of anticipated higher costs for salaries, benefits, and other services. Insurance premiums have also increased. These increased costs are consistent with what every household and business has experienced throughout the last few years.
Any amounts remaining in excess of all revenues and expenditures are allocated to the reserve fund. The reserve fund is similar in function to a household savings account, where funds are accumulated over time to be utilized for major purchases.
Historically, AMA has taken a conservative approach to the budget process. As a result, revenues occasionally exceed budgetary expectations. At the end of the year, any surplus revenue is returned to the reserve fund balance.
Similarly, expenditure budgets that are not fully utilized at year’s end are returned to the reserve. In addition, AMA utilizes the reserve fund to fund unexpended district allocations, one-time expenditures, and capital projects.
Through good investment planning, the reserve fund balance has had a positive financial position while subsidizing operations and capital projects. Reserve fund investments have grown to the extent of not negatively impacting the capital value. In essence, AMA has done a good job of allowing reserve funds to work to cover operational needs and capital projects while retaining the capital value. It is anticipated that the reserve fund balance will increase modestly over time because of good investment management, austere operating approach, and careful capital activities incorporated into the reserve fund balance.
Maintaining quality services and programs, prioritizing critical capital projects, and operating in a cost-effective manner are guiding principles in the preparation of the budget. The budget addresses priorities while attempting to have a positive operating position. The operating budget is tight but stable with services that are maintained at existing levels; however, challenges lie ahead with respect to AMA membership preservation.
Membership replenishment, IAC maintenance and repair, and other capital integrity impacts are being realized, and the loss of membership revenues and other sources makes addressing long-term operating issues challenging. Revenues have been diminished, but the need to continue to provide quality services has created pressures in the operating budget as well. Replacement of past revenue streams and exploring new revenue sources in the coming years will improve AMA’s ability to fund its operations, programs, and services.
