Reserve Spending

Started by SusanS9 • 2 replies • 1884 views

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SusanS9 (California)
Posts: 56

Posted:

I believe the annual operating budget must be approved by the Board. Does reserves spending (eg. for roof replacement) also need to be part of an annual budget approved by the board? Also, when replacement reserves monies are spent, are they first transferred into operating reserves, or are the two reserves kept separate?

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susan,

Reserve funding is covered in Davis/Sterling which is your guideline for how to handle Reserves. Each State is different but my State (Florida) says that Reserves are a line item in the annual budget and they are ALWAYS seperate from operating expenses. They can be used only for their designated item(s) unless otherwise approved for other purposes by a vote of the membership.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Susan,

As Donna stated, you may want to check out the D/S Act however, I don't believe it is required to include a line-item for reserve spending. On the budget for my assn all anticipated reserve spending is included at the bottom of the budget but it is not a part of the actual budget. The only thing that is in the actual budget is the amount that will be deposited into the reserve account -- this is shown as a credit in the Income portion of the budget.

When reserve monies are anticipated to be spent they should be transferred into the operating account. What would be the purpose of transferring them first into the operating reserve account?

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