Budgeting Tips

Preparing annual budgets can be one of the most stressful and time-consuming responsibilities Managers and Board Members are tasked with. Luckily for us, this Chapter has so many talented Managers and Business Professionals that are always happy to help! I asked for budgeting tips and was overwhelmed with the fantastic guidance I received!

Michelle Baldry, PE, PRA, RS, Reserve Advisors

“Start now. Preparation is half of the battle and part of preparation is scheduling. Schedule backwards; start with the date you want to have the budget approved and work your way back through your mailing requirements and meeting dates to when you’ll have to have the first draft prepared by.”

Rebecca Clemson-Petrik, CMCA, AMS, PCAM, FirstService Residential

“Successful budgeting is a community collaboration. Invite your committees to submit their wish list items for consideration.”

Vicki Eaton, CMCA, AMS, LSM, PCAM, General Manager at Worman’s Mill Community Conservancy

“As soon as your budget is passed, start planning for the following year.” Iris Hobbs, CMCA, AMS, PCAM, General Manager at Golden Sands Club

“A car burns less fuel and is more efficient when regular maintenance is performed. Just like a car, the equipment and systems in a building will run more efficiently and economically, when regularly maintained per the equipment manufacturers requirements and operated per the original system design intent. One of the best ways to stay on budget is for the staff to follow a detailed preventative maintenance program (PMP) so unexpected equipment or system failures that require immediate and unplanned repairs or replacements are less likely to occur. Maintaining the equipment and systems in peak operating condition also ensures the system is operations at maximum efficiency resulting in lower energy costs while maintaining owner/tenant comfort. Some localities and/or utility companies have rebate programs in place that may reimburse a property for implementing in extensive “PMP.” Elisabeth Kirk, EBP, TRC Engineering

“Anyone can “make” a budget and consider the job finished. However, the key to creating a solid and useful budget is to accurately include the past, known expenditures with a reasonable estimate for the future anticipated costs, including the expenses for projects that don’t occur every year and then also incorporating appropriate funds for any newly anticipated project which will realistically be accomplished in the next fiscal year. Then, once created and approved, actually refer back to the budget as a guide before undertaking actions and authorizing payments.” Ellen W. Throop, Davis, Agnor, Rapaport, Skalny “The consequences of chronic underfunding only become worse with time.”

Don Plank, PCAM, National Cooperative Bank

“While preparing your budget, make sure you review your reserve study to incorporate the recommended reserve contributions into your budget.” Anne M. Sheehan, CPA, Goldklang Group CPAs

“Adjust insurance renewals to coincide with the fiscal year to avoid unbudgeted premium increases.”

Alicia Menefee, CMCA, HPS Property Management

“Reach out to your insurance broker for an update on the current insurance market conditions for our industry, and a review of the five year loss performance of the community you manage. Gathering and discussing the facts about these two important factors will allow you to better manage expectations, make an informed decision about the insurance renewal strategy, and budget properly. It is generally never a good practice to bid the insurance program every single year, especially if the association has not had a favorable loss performance in the last five years. An insurance broker that specializes in Common Interest Communities should be able to assist you with forecasting a reasonable expectation of the renewal premium, and any other financial changes you may need to budget for, such as new or increased deductibles.”

Jessica M. Knutsen, CIC, EBP, CIRMS, USI Insurance—Community Associations Division.

“Don’t overspend. The budget is not a pot of gold at the end of the rainbow.” B.K. Swartwood, CMCA, AMS, PCAM, Comsource Management

“Start Early. The Board should have a list of the projects they want to tackle by the end of the first quarter in order to allow adequate time to complete the budget process. The goal should be to have initial draft budgets in the hands of the Board for review by the beginning of September.” Todd Wawrzeniak, Sentry Management