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Pre-Budget Thoughts For Boards And Managers

Everyone seems to dread the annual association budget process. It can be time consuming. Decisions related to assessment increases are sensitive. Costs are increasing. How do boards squeeze more or even the same services from static or only slightly increased assessments?

Pre-Budgeting What Can Managers & Boards Do To Prepare For Budget Season?

The budget planning process requires data. Where do you get it from? What will you do with the information? We always say that the budget process should not feel like it starts 4-5 months before the new year commences. The collection of information should be continuous. Maintain a physical or digital file with every monthly financial statement, the general ledger for the year, rolling income and expense trend reports, vendor contracts, access to paid vendor invoices. Review utility company websites for indications of rate changes together with understanding monthly usage rates. Maintain board meeting minutes that you can refer to. Is there a community to-do list? Are there notes from community walks. Keep the documentation updated continuously. Do not wait until you start the budget process to collect the information you will need. You really need to enter the budget building period with most information at your fingertips.


  • Assessments: The budget process will focus on determining operating fund expenses and contributions to reserves. The outcome of the expenses and contributions calculation is the assessment value.
  • Other Revenues: Be careful not to over-budget for contingent revenues that occur based on something happening. Examples include delinquent owner account interest, late fees. If you have well-documented other income sources such as clubhouse rentals, laundry facilities, cell tower lease income, take care to err on the side of being conservative with your estimates. Review historical trends. Review any agreements for time period and amounts to be received.

Operating Expenses

Know the expense trends. Know the condition of the common community components. What are vendors telling you about the repair or replacement needs for the association – keep and save notes with price estimates. Talk with vendors continuously about cost control. Know who to ask, and where to look for information – both historical and prospective.

Contributions To Reserves

If associations do not contribute assessments to the reserves fund, the association will be underfunded, and potentially be unable to pay for reserves components major repairs and/or replacements. In other words, maintenance will be deferred, and future costs will probably be higher. End Of Article

By Newman CPA

By Newman CPA

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By: Jeremy Newman CPA. Newman Certified Public Accountant PC.

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