Published: 09/12/2022

- by Alana Ashby

● Set goals: Review the association’s budget each year, plan for long-term goals to avoid maintenance and financial issues. Long-term planning will help upgrade the community and increase property values. The community should ask these questions: What expenses must the association cover, and what other expenses could it cover to improve the community? Expenses that must be covered are utilities, taxes, and maintenance. Items that will improve the community will differ annually, so you should arrange them in rank order for budgeting purposes.

● Determine assessments: in some communities, the basic equation for determining association assessments is as simple as totaling your total operating expenses and the annual reserve contribution, then dividing by the percentage of ownership. An association must estimate costs first and then determine their revenue source, most of which is made up of assessments. Once you determine your annual assessment, examine the number. Is it the same or close to the same as what you charged last year? If so, that’s a good sign for your budget. If not, it’s time to make revisions to your assessments or budget.

● Look for trends in past budgets: In addition to a current year’s budget, boards should examine each line item cost in their association’s budget within the past 5 years. Note any trends. This will help anticipate future costs that may impact the operating budget and reserves beyond the current year.

● Review collections procedures: Reducing bad debt, such as delinquencies, can save your community money.

● Don’t defer maintenance. Allocate a portion of the operating budget for things such as exterior painting, replacing broken gates or fencing, repair damaged stucco or wood, replace faded or torn poolside chairs, and enforce resident violations that degrade common area and exterior aesthetics of the property.

Alana Ashby, CMCA and owner of AMI, helped to establish and served as a Board Member for Community Associations Institute (CAI) Idaho Chapter. Alana has extensive experience in all aspects of financial management, real estate development and management, as well as negotiation.

#HOA #HOAManagement #HOABoard #HOAMember #HOAEducation #HomeownerEducation