It is indeed potassium iodide, and therefore if it is left out of the formula you have, consider the formula to be defective or inaccurate as KI is an essential ingredient for control of image quality.
The limits call for a very tiny deviation in iodide, but I would have to look up the information.
Water quality does impact on process quality. The commercial preparations contain extra ingredients to minimize the effects of municipal water supplies, and kits in Europe differ from their counterparts in the US for this reason.
As a general rule, C41 developer contains Quadrofos to control water quality problems related to calcium. It may also contain Disodium EDTA as needed to remove other metal salts such as iron and the like. If you mix with distilled water, this is not usually a problem, depending on the quality of the distilled water, of course.