August has come and gone which means that most of our Associations are fast approaching “budget season.” A homeowner association’s budget provides a road map for the operations of the community, so getting it right is important. Below are 5 tips for budget season that can help Associations create accurate budgets:
Review your current contacts. It is always good to check with your vendors to make sure there will be no increase in costs in the coming fiscal year.
Review your insurance policies and consult with your insurance professionals to see if there are any predicted changes to the policies. Often, in our coastal communities, the Association insurance policies can be effected by previous year’s storms. Also, always be on the lookout for potential changes in flood maps. This can affect your flood premium rates.
Looking at the historical trends of certain line items can help you set a budget number. This is especially true for items such as pine straw, water and sewer, electric, etc. Historically, this items will often be similar, unless you have added increased service areas. It is always important to check to see if your utilities rates will increase.
Analyze the Association’s capital assets and determine its useful life and estimate replacement cost and make sure you are funding the reserve fund properly. It is often useful to get a professional reserve study completed so you can assure you are properly funding the reserve portion of your budget.
The budget process is the time when you are planning for the next year. Sit down as a board and decide what improvements and projects you would like to complete. If your Association has committees, ask them for a “wish list” of projects they would like to do and incorporate the funds into the budget.
We hope these budget season tips make the task of creating your budget for the upcoming fiscal year a bit easier.