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Start Community Association budgets early and enjoy the holidays
Believe it or not, it’s already mid July and time to start budget preparations. Most associations are “multi-million dollar non-profit corporations.” This means that the board of directors of an association is often running a small to midsize business. Like other businesses, Homeowner Associations and Condominium Associations need to prepare their annual budget for the following year.
Gather Requirements. Get out those governing documents and review the budget requirements. Is there a maximum assessment increase? Who approves the budget? Is a meeting required? Many communities have requirements in their governing documents that specify the budget be adopted 30-60 days before the end of the fiscal year. Draft a timeline to ensure the notice requirements are met. Avoid late November and December budget confirmation meetings so volunteer leaders can enjoy the holidays. Starting early gives the committee and/or board members time to prepare a thoughtful and comprehensive budget for the community and can reduce the workload.
Anticipate Changes. Utility costs typically increase every year. Contract services are also subject to increases. Call your service providers to check if there will be an increase in the coming year. Determine your goals for next year and review your projects so that funding is included in the budget. Solicit input from committees and owners on their priorities for the community. Communication during the budget process is essential. This is especially important if you are considering a rate increase.
Review Current Year. July is also an ideal time to review the expenses for the first half of the current year to see how the community is tracking to the current budget. Identify needed adjustments for the rest of the year. Complete the income and expense estimates for the balance of the year so that any surplus or deficit can be included in next year’s budget.
Checklist for July
- Form Budget Committee
- Review Reserve Study updates
- Determine annual reserve contribution
- Identify goals/projects for next year
- Solicit budget requests from committees
- Submit budget requirements to Manager
- Solicit bid estimates for projects, contract increases, utility increases, etc.