Help with Budget

Started by AmandaW2 • 5 replies • 1632 views

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AmandaW2 (Oklahoma)
Posts: 1

Posted:

Hi Everyone,
I am a newly appointed secretary/treasurer to a HOA for a 400+ home neighborhood in Georgia. All of our Board members are newly appointed.
We were appointed right at the time for us to make out a budget for our October HOA meeting. Our budget runs from July-June and our fiscal year is Jan-Dec.
We have a MC but they haven't exactly been hands on. They are slow with any info we receive. They don't seem to have a budget for last year or this current year. The past board members have moved,never attended, etc. One member tried to keep it going but was on their own for the most part. There is no record of a budget in any of the records I received as secretary.

Can anyone give me any pointers or links to help us out? I am sure I am making it harder in my head than it is?

Thanks in advance

NancyD1 (Florida)
Posts: 447

Posted:

Wow Amanda,

Where do we begin? First, why would you make a budget for Oct? If you have a budget it projects the whole year not a month to month. Second, why have a budget that does not reflect your fiscal year. This is very confusing. If you have a MC tell them to give you the budget for the past 2 years. You need to start somewhere and it is a lot easier if you have figures to work with. They have to have a budget. Where were the HOA dues posted to? If the MC works for the HOA and you are the Treasurer demand them and the current financial statements.They are posturing for control if they will not give them to you.

Where would the figure you pay for association dues come from? The figures had to come from a budget. You cannot pull a figure out of the air.

I cannot believe that approximately 800 people sat there for 2 years and had no budget or history of where the funds went. A HOA of your size does not take in money or pay expenses without a budget. Look at the minutes of past board meetings. There may be a budget attached to one of them. The developer passed on a budget, call him.

Your community did not run for 2 years without a budget, I will bet my budget on it.

DavidW5 (North Carolina)
Posts: 565

Posted:

Amanda,

Regardless of whether there was a budget in previous years (or whether you can find it if it does exist) you need to start from scratch. Get your MC to provide you with a copy of each contract and copies of all invoices for services and utilities. Get a year-to-date financial statement. Identify any other mandatory expenditures and any discretionary ones (don't forget contribution to a replacement reserve). Put all of this into a spreadsheet by month showing expenses in the months that they will be incurred. Add in a line for "contigency" amounting to 10% of the subtotal. Compare this to the previous year end financial statement totals. Document any assumptions you made to arrive at the numbers. Now divide the grand total by 12 and then by the number of HOA members. If that monthly dues amount is something you think you can get approved by the board you have your draft budget. If not, go back and begin cutting out discretionary expenses and reducing the contingency until you get an acceptable monthly dues number. Remember that budgeting is essentially a political process for deciding the priorities for spending the HOA's resources. There will be many compromises and negotiations needed to reach agreement.

I suggest you try to get the board to appoint a Finance Committee to aid in this process. In a community of 400 homes you will surely have some folks with accounting and/or financial backgrounds who have done this type of thing in their professional lives and will volunteer. Good luck.

Dave

JosephW (Michigan)
Posts: 882

Posted:

Here's some more info on budgets:

http://www.communityassociations.net/financial_budgets.html

Joe

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DaneC (California)
Posts: 210

Posted:

Hopefully, these may be able to provide some pointers.

Operating Cost Manual for Homeowner Associations
http://www.dre.ca.gov/pdf_docs/re8.pdf

Reserve Study Guidelines for Homeowner Association Budgets
http://www.dre.ca.gov/pdf_docs/re25.pdf

Association Budget Worksheet
http://www.dre.ca.gov/forms/re623.pdf

GloriaM (North Carolina)
Posts: 829

Posted:

If your fiscal year is Jan-Dec; then your budget is to project that calendar year. The budget should project the income and expenditures of your association. Make expense line items under Administrative, Utilities, landscape, pool, any other amenities you may have. The income should balance itself out from the expenditures. If you come up with a negative, then its time to either a) raise the dues or b) cut expenses.

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