Budget Reserves

Started by BellaM2 • 7 replies • 1026 views

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BellaM2 (Florida)
Posts: 61

Posted:

When putting together the 2018 Budget is it required in the State of Florida to include the total Statutory Reserves from the inception of the HOA to present. Meaning from 2007-2017 Reserves total of $880,000. instead of 2018 total alone of $114,000. for the upcoming year.

GenoS (Florida)
Posts: 4,276

Posted:

The budget should include the amount that will be set aside for reserves in 2018. The amount already accumulated in your reserve funds should appear in other financial reports, such as a balance sheet, and the end-of-year totals should be in your year-end financial report. For example, our 2018 budget was approved by the board last week. It shows $100,000 as the reserves contribution for 2018 on a line separate from the operating budget totals. There's no mention of the current reserve account balances. Those numbers appear elsewhere, but not in the yearly budget itself.

GenoS (Florida)
Posts: 4,276

Posted:

This is a good publication from the Florida Department of Business and Professional Regulation, a/k/a the DBPR. "Budgets & Reserve Schedules". Figure 2.2 on page 23 is "Sample Reserves Section of the Proposed Budget". It does provide estimated fund balances for the end of the coming fiscal year. My association also has a breakdown like this, but we only publish it as part of the year-end financial report. We would also make it available to any owner who requested a copy. We're mindful of it and it's literally on the table at every meeting of our Finance Committee.

Page 31 discusses the method of "Pooled Reserves" and we're transitioning to that method next year, so the reserves budget calculations are a bit different. With the Pooled method, there is not a line-by-line reserve fund balance for each component.

BellaM2 (Florida)
Posts: 61

Posted:

Thanks for all the help

BellaM2 (Florida)
Posts: 61

Posted:

Our CAM mailed out our Coupon Books for the 2018 Assessments to the owners before the Board approved the Budget. Guess she was in a hurry to go on vacation. Please give me your comments on this? Legal or not?

BillH10 (Texas)
Posts: 1,217

Posted:

Bella, I don't know about the legalities of the situation but if the assessment amount in the coupon books is the same as the amount in the subsequently approved budget, my recommendation is the Board figuratively slap the hand of the CAM for the early mailing and drop the matter. I cannot see how doing anything else would be worth the time, effort, or expense.

Now, if the coupon books have to be replaced because they are not correct, that expense should be borne by the management company.

KerryL1 (California)
Posts: 14,550

Posted:

I agree with Bill, Bella.

GenoS (Florida)
Posts: 4,276

Posted:

I also agree with Bill. It's sloppy business practice and someone will have to pay to have the books re-printed, but you'd have to ask an attorney whether it was "illegal" or not. My gut tells me it's not illegal per se since it wouldn't seem to break any laws. At most it would probably be a contract dispute but that would depend on the exact wording of the agreements.

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