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Preliminary Budget Planning

Now is the Time to get Started!

Too Shocking to Consider?

When I first learned the concept of beginning next year’s Budget work just four months into the current budget year, I will admit I was shocked.

How is that possible or practical?

Possible: For instance, with a December-end budget year, use the general expenses from the first of January through March of this year and add in the April through December records of last year.

Practical: Consider the Budget to be a “Work in progress,” which it truly is.  Use April and May to lay out the known 12 months’ income and expense.  Adjust up or down for new or different contracts.  Save the craziness of the last minute scramble in mid-August or September.  Save the “hail Mary” acts of throwing numbers on the paper just to get a Budget out the door by the end of November.

It is a matter of looking at the whole Budget ‘thing’ from a different angle.  For most Associations, Operating line items really do not change much year after year.  Yes. Utility rates and other rates will go up from time to time.  Still, many of your month by month expenditures will remain reasonably the same.

Create a timeline for your Budget Committee

April / May to lay out the twelve months framework.

May / June to query your contractors and service providers to learn if they are expecting to raise rates or fees, and to plug in those expected changes.

June / July to review the Board / Association Annual Calendar to check on any changes to planned events for the next Budget Year:

  • Is 2020  the year you need to do a new Reserve Study?
  •  Any major maintenance items that your Association’s Budget pays for out of the Operating accounts based upon your Governing Documents, and so forth?

July / August to prepare the final DRAFT that you will present for preliminary review and discussion at the Board Business Meeting, and possibly at planned Town Hall style Member Meetings.

August / September to input changes based upon initial review and discussion by the Board.  By now you should have received all planned service and contract fee increases for vendors, and service providers.

At this point,  you should have had at least two quarterly reviews of the Reserve Accounts, as well as having reviewed the existing Reserve Study to determine if the current year’s contribution from the Operating funds to the Reserve funds will be sufficient to keep any forecasted major work on track, or if you will need to increase the monthly contribution from Operating to Reserve.

September / October to bring the Budget to the Board for a vote of approval so that it can be combined with the documents the Civil Code requires Associations to produce and distribute to all the owners in November (for those Associations with a December 31 year end.)

October / November to prepare the Budget for printing, and for inclusion in the Annual Budget Report along with the separate document:  The Association’s Policies and Guidelines Statement.

November / December to bundle up all the records and notes compiled during the year’s budget planning work to help the person or committee doing the same job next year.

For more information about Community Association Budget Development, contact our office for a list of qualified professionals in your area.

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