By Shauna Fleischbein / Published May 2024
As we approach another budget season, Florida community associations gear up for what is often a rigorous financial planning exercise. However, with the right preparation and strategic approach, this season can transform from a daunting task into a well-executed financial plan for the upcoming year. Let’s explore essential tips and tricks to ensure a smooth and successful budget process for your association.
A critical first step in budget preparation is thoroughly understanding your contractual obligations. Begin by conducting a detailed audit of all existing service contracts. Ensure all contracts are well-documented, highlighting key terms, expiration dates, and escalation clauses. Engage in proactive discussions with vendors to anticipate cost increases and negotiate terms, which allows for more accurate budget
projections.
Insurance has become a significant line item in community association budgets. Insurance costs have been consistently rising, and securing policies has become increasingly challenging, particularly for communities with deferred maintenance or delayed 40-year certifications. Collaborating closely with your insurance agent to gain a comprehensive understanding of your policies and projected cost increments is essential. Early engagement with your insurance provider will help you effectively anticipate changes and integrate them into your budget.
Reserves are critical to your association’s financial health, and recent legislative changes have tightened the regulations around them. It’s imperative, especially for condominiums and cooperatives, to ensure that your budget aligns with these new requirements, particularly concerning structural integrity reserves. Budgeting accurately for reserve funding is crucial to ensure compliance and maintain your association’s financial health.
The budgeting process is a collective effort, often involving property managers, board treasurers, and finance committees. After investing significant time and effort into creating the budget, the last thing any association wants is an error due to a simple oversight, such as a formula mistake or an outdated hardcoded number. To avoid costly errors, establish a robust quality control process. Double check all figures and formulas and verify that any manual entries are correct. A single miscalculation can have a ripple effect, so it’s essential to review the budget meticulously before presenting it for final approval.
Timely communication with your community is vital. Delays in delivering statements or coupons can lead to frustration and late payments at the beginning of the new year. To avoid these issues, it is best to initiate budget preparations early, ideally after the June financials are available. Completing an early budget meeting allows for the timely distribution of statements/coupons. Since only a handful of companies produce these documents, providing data well in advance ensures efficient production and delivery.
In addition to the essential steps outlined, also consider these factors for a comprehensive budget:
In summary, budget season doesn’t need to be a source of stress for Florida community associations. Your association can craft a robust budget by thoroughly reviewing contracts, diligently managing insurance, adhering to reserve fund regulations, enforcing quality control, and adhering to a strategic timeline. This proactive and systematic approach lays the groundwork for a financially secure and thriving community, allowing you to approach budget season confidently and clearly.
Shauna Fleischbein
Senior Business Development Manager, Castle Group
Shauna Fleischbein is a highly skilled senior business development manager who excels in networking and building relationships. She launched her career in 2007 in the property management industry and has since held various positions, including marketing and business development as well as managing luxury towers and large-scale HOAs. Shauna has been a part of the Castle family for nine and a half years, and since joining the business development team in 2016, she has achieved significant growth in the Tampa/Sarasota market. Outside of work Shauna enjoys spending quality time with her family, traveling, and cooking. To learn more about how Castle Group can serve your community, request a proposal at www.castlegroup.com/request-a-proposal.