9 Budgeting Tips for a Smoother Financial Planning Process

October 3, 2017

Community associations are constantly facing the challenge of doing more with less. Quality maintenance services, communication tools, insurance coverage, opportunities for engagement and more always need a place in the budget – but as homeowners demand high levels of service, maintaining low assessments becomes increasingly difficult. That’s why we asked our community management professionals from across the world for their go-to budgeting advice for boards. Here are their best tips for a bulletproof budget.

 

1. Don't Procrastinate.

“Get an early start and don’t wait until ‘crunch’ time.”

–Peggy Norris

Community Association Manager | Homeside Properties

 

“Start the process early - in July or August if your fiscal year ends in December. Finish the proposed budget in time to mail it to owners at least 30 days prior to adoption. Plan added lead time for copying and distribution.”

–Lisa Evans, CMCA® AMS® PCAM®

 Community Association Manager | Associa Chicagoland

 

2. Closely Examine The Provided Budget.

“Take time to review the budget from your community manager carefully. Do you understand their numbers? Has the manager provided enough information for you to prove their numbers?

Review the projected numbers for the current year and next year by looking at the history. Can you follow the reasoning for historical trends? Are you able to prove numbers for a category that justifies itself such as newsletter production or social activities? Can you follow the numbers and see that it is a realistic and fair line item?

Look for numbers that show a significant change from the prior year. By reviewing the data provided by the manager, can you understand the difference? Do you agree with the reasoning provided for the justification of the number?”

–Philip Adams, CMCA®, PCAM®

Vice President and Director of Management Operations | CGI, Richmond

 

3. Review Monthly Financials.

“An important step a board member can take to ensure accuracy of the proposed budget is to review the monthly financial report. Most importantly, review the check register and the general ledger report. If everything is properly categorized in the general ledger, then the current year’s expenditures will be accurate when projecting the next fiscal year’s expenses.”

–Ronald Jerue, CMCA®

Community Association Manager | Associa Northern California, Roseville

 

4. Check On Utility Prices.

“Make sure you check to see if utilities will increase for the next year. Not sure? Add 3-5 percent to the projection to prevent any surprises.”

–Valerie Atwell, CMCA®

Community Association Manager | Community Association Services of Indiana

 

5. Plan Projects Early.

“List the projects you want to complete in the coming year so that bids can be obtained early both for budgeting purposes and to get on the contractor’s schedule.”

–Valerie Atwell, CMCA®

Community Association Manager | Community Association Services of Indiana

 

6. Get Engaged.

“Be involved in the process, work with the manager, and don’t rely solely on the manager’s input. The manager is giving the recommendation, but the board is responsible for the approved budget.”

–Ronald Jerue, CMCA®

Community Association Manager | Associa Northern California, Roseville

 

7. Ensure Compliance.

“Review governing documents and applicable state statutes. There may be limits on annual budget increases. (E.g., in Illinois, the maximum increase from prior year budget is 15 percent).”

–Lisa Evans, CMCA® AMS® PCAM®

Community Association Manager | Associa Chicagoland

 

8. Think Long-term.

“If you are at a budget deficit, you must balance by increasing income, reducing spending or a combination of both. Expenses increase annually, and assessment increases are expected. Create a long-term plan for the association with small increases annually or a larger increase every third or fourth year.”

 –Ronald Jerue, CMCA®

Community Association Manager | Associa Northern California, Roseville

 

9. Don't Forget the Reserve Study.

“Understanding how the reserve study works not only impacts the operating budget through monthly contributions to the association’s reserves, but also the included components and the necessity for long-term planning.”

–Ronald Jerue, CMCA®

Community Association Manager | Associa Northern California, Roseville

Previous Article
12 Steps to Restoring Your Home After a Flood
12 Steps to Restoring Your Home After a Flood

Mike Holmes, professional contractor and TV host, gives his advice for home flood restoration. Read this po...

Next Post
Associa
Associa

Go pumpkin picking and give your perennials some TLC. Watch the October Buy, Eat, Do video from our friends...