Budget season can feel overwhelming, even for experienced HOA boards. Rising costs, long-term planning, and homeowner expectations all come into play. As a community manager, your role is to guide the board through the process and make sure the association is financially prepared, not just for the coming year, but for years ahead.
Here are some practical tips to help you lead a smooth, strategic budgeting process to help your boards govern with confidence.
Start Budget Planning Early
One of the biggest mistakes boards make is waiting until the last minute. Encourage your board to start budget discussions at least 3–4 months before the fiscal year ends. This gives everyone time to review financials, gather vendor proposals, and adjust for unexpected costs.
Early planning also reduces stress and allows for better communication with homeowners about any upcoming changes.
Review the Current Year’s Performance
Before projecting next year, take a close look at this year’s numbers:
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Are actual expenses close to the budgeted amounts?
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Were there any surprise costs or savings?
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Did reserve contributions happen as planned?
This review sets the foundation for realistic forecasting and helps identify areas where the accuracy can be improved.
Prepare for Contract Increases
Vendor contracts are one of the largest components of an HOA budget and they often have built-in escalators each year. Landscaping, pool maintenance, security, and insurance often see annual increases due to labor, materials, or inflation.
Reach out to vendors early for updated pricing so the board isn’t caught off guard. If increases are significant, present options like renegotiating terms or considering alternate bids.
Prioritize Reserve Funding
Underfunded reserves can lead to special assessments or deferred maintenance—both of which frustrate homeowners. Make sure the board reviews its reserve study and funds contributions at the recommended level. If that’s not possible, help them create a catch-up plan to avoid future financial strain.
Factor in Inflation and Rising Costs
From utilities to insurance, most costs are trending upward. Educate the board about inflation’s impact on the association’s expenses so they understand why assessments may need to increase. Position this as proactive planning rather than a reactive measure.
Communicate with Homeowners
Once the budget is set, assist the board in drafting a clear explanation for any assessment changes. Homeowners are more accepting of increases when they understand where the money is going and how it benefits the community.
Be a Resource, Not Just an Administrator
Community Management expertise matters. Offer recommendations, provide data, and walk the board through scenarios. Budget season isn’t just about crunching numbers, it’s about building a sustainable financial plan for the community.
Don’t Know the Next Steps?
Budget season is a chance to strengthen the community’s financial health, not just an annual task to check off the list. With early planning, a solid management partner, and clear communication, you can make informed, confident decisions that protect property values and improve quality of life for everyone in the community. Contact Arizona Community First Management if you’re interested in learning more about how we can help!
