Fall is the time of the year when many HOAs shift their focus to the next year and begin working on the annual budget. A solid budget helps track progress, plans for growth and makes adjustments throughout the year. Here are a few of the things we look at when preparing your annual budget.
Know the History:
It’s good to review the HOA financial information for at least the last two years to get an accurate picture of where you are vs. where you want to be. Budgeting is rarely an exact science because there are usually unforeseen situations. Knowing the history helps us understand the adjustments needed to the budget and/or assessment fees to keep your association in a solid financial position.
Evaluate Maintenance and Projects:
It’s important to include the correct amount for monthly services, seasonal maintenance and special projects. We identify all vendor contracts that are due for renewal and budget any changes in rates and record any updated insurance information. Then we assess and prioritize any major projects for the association and include the association cost in the budget.
Budget for the Reserve Fund:
No budget is complete without funding the reserves. The percentage of revenue that you put in reserve depends on the long-term liabilities and obligations identified in your reserve study. Adequately funded reserves can’t eliminate special assessments but it decreases the likelihood that special assessments will be needed.
Assess general and administrative costs:
This is a good time to review insurance premiums and deductibles to ensure that they are budgeted correctly. Some associations may need to review the budget for legal, collections, mailings and other professional services required by the association.
Leland and the Board have a fiduciary duty to manage association funds and property in a sound manner. We take every precaution to ensure your association adopts a stable financial plan for the coming year.
For any questions about your association budget please contact your Leland accounting manager.