5 Tips for Presenting HOA Budgets

October 9, 2018 Josie Flicek

As a board member, preparing an annual budget and establishing assessments for your association falls squarely within your fiduciary duty. The budgeting process can be long and involved, but it is the board’s responsibility to make sure that sufficient funds are readily available to maintain common areas, pay bills and keep things running smoothly.

Residents may view the budgeting process as a time to express their concerns and offer input or comments. Presenting a budget that adequately reflects the needs and voices of your community will promote trust, confidence and respect for the board and prove that the obligation to act in the best interest of members has been fulfilled. A positive budget presentation and reception can set the tone for the upcoming year, so as you prepare to present your budget, keep these five tips in mind:

  1. Include a comparison column.

A comparison column provides details about the changes that are being made in the new budget. Use this column to compare the actual income versus expenses from the previous budget, and the estimated ending income and expenses for the current year and the new budget amounts.

  1. Explain line items.

Including a “notes” column to explain line items in your budget will help association members fully understand what each line item represents. Provide the new budget amount and a brief explanation of everything that is included in each category and note details related to upcoming projects, proposed utility prices and historical trends to ease resistance and confusion.

  1. Ensure accuracy.

Homeowners trust their board to make smart financial decisions for their community, so closely examine your budget and make sure that it accurately represents the association’s expenses and is balanced before presenting.  

  1. Create a cover letter.

Preface the budget with a cover letter to identify any increases in assessments right off the bat. Make sure to explain the increases in detail and note when they will become effective so there won’t be any surprises.

  1. Confirm that everything is accounted for.

Before presenting your final budget, review your community’s maintenance plan and reserve study to ensure items noted for the year are accounted for in the budget. If anything gets missed, there can be serious financial repercussions.  

Have questions about budget presentations? Want to share tips you’ve learned? Comment below!

About the Author

Josie  Flicek

Josie Flicek, CMCA®, AMS®, serves as the Business Development Manager at Cities Management, Inc. in Minnesota. She’s been in the community management business for ten years, beginning her career as a community association manager before going into business development. Josie holds a bachelor’s degree in finance from the University of Minnesota Duluth.

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