snow emergency fund

Started by RobertG1 • 3 replies • 1204 views

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RobertG1 (Delaware)
Posts: 11

Posted:

We live in a part of the country that is ery difficult to prdict snow fall. So deciding how much money to budget is hard. In 2006 we budgeted
$100,000 and spent $25.000 this year we budgeted $77,000 and spent $13,000. We want the BOD to set up a "Snow emergancy fund" to avoid special assesments anyone had any experiance. My first accounting prof would say "provide for all losses and anticipate no gains"/

Jadedone4 (Virginia)
Posts: 495

Posted:

Since you spent (roughly) one quarter, and one sixth of your budgeted amounts on actual snow removals, I would suggest that you lower your budgeted amount to 50k, with the caveat that you set aside one investment instrument at $25k (in case of emergency this can be used to supplement the operating budget, that should at least be three months, or six months funded - which for most areas overlaps into the calendar months for winter). I would make the $25k investment instrument a flexible account (that would require board approval for alteration) - so that you can move those funds easily say if you had a light or heavy snow season.

Unfortunately, with the above suggestion, you are basically back to the $77k figure ($50k dedicated, and $25k investment back-up funds).

BradP (Kansas)
Posts: 2,640

Posted:

Robert:

I do like Jadedone's advice. I guess the question would be how have your snowfall's been the past couple years based on historical averages? Have they been below, average or above average. As Jade suggested move some of that budget to a flex account for community improvements, etc., and if your snowfall doesn't reach your budget then you can spend it. In this case with over 60k left over you can either invest in a reserve fund or make significant community upgrades.

JM2 (Oregon)
Posts: 439

Posted:

Hi Robert:

The BOD should set up a reserve fund for the snowfall, based on the largest anticipated amount that you'd need, and then fund an "average" amount each year. The fund will go up and down a bit, due to variations in weather. If you have a major event, the following year you would want to budget more, in case you get two years of hard snowfall in a row...

In our area, most communities put down new barkdust on the flower/shrub beds every two to three years. A lot of them add barkdust money each year to their reserve fund, so that their assessments don't go up and down from year to year. Snowfall would be similar, except that you can't predict how much ahead of time. Avoiding the special assessment would be helpful for your community.

Several years ago, our board spent $40k to find out that they couldn't adequately deal with snowfall on our hills (some hills are > 16% grade) so we tell people ahead of time to plan around the snow so they don't have to go out when it comes (which isn't often, but sometimes accompanied by freezing rain).

J. Patrick Moore, CMCA

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