Quick Guide to Budget Planning for Community Managers
The time for community managers to assist board members in developing the HOA’s budget is fastly approaching. As a community manager, you can assist community board members in the research and creation of a HOA budget draft, which the board and residents would then approve or request changes to. For a board member, enacting fiduciary duties toward their association by making decisions that are in the resident’s best interest, is the main priority. For a resident, it’s about enjoying the resident-living experience while saving costs and managing their internal budgets. As a community manager handling daily operations on behalf of the association, how can you best help them achieve the goals they hold most important?
Review this past year’s budget and expenses with board members
Developing a budget is a time-consuming and exhausting task for many, but the key to reducing overall time and eliminating chaos in the process is through conducting adequate research and planning. As a community manager handling the operations of your communities, you have many types of operational information at your disposal such as previous budgets that were passed and the current fiscal year’s financial statements. Prior budgets and financial statements should be presented to board members in a way that’s simple to understand and analyze. You can obtain budget documents through your community management system’s document library and the financial statements from your accounting system.
Review work performed for the community
The board is most likely to be interested in all the projects their recruited management company performed for the community during the year. Community managers can obtain this information from their community or property management software. Specific information managers can retrieve to analyze maintenance and customer support services are the types of maintenance jobs performed, cost, hours, and the number of customer complaints or questions received.
Gain and analyze resident feedback to the community’s operations
An important part of your research is to thoroughly understand the community’s needs. Conduct a survey or speak to residents about what they like about your management services and the community, and what might be lacking. Did the community members request more amenities such as a pool, gym, tennis court, or clubhouse for events? Did they request an online help center where they can get answers at any time of the day? Or maybe, community members aren’t engaged enough in the community and a great option you’ve thought of is to host more events throughout the year. Discuss options that fit within the scope of current staffing capabilities and requirements, as well as what the community is permitted to do according to governing documents.
Develop community goals for the upcoming year
Set up a time to meet with board members to discuss the goals that they want to achieve for the upcoming year. Based on operational performance and the level of resident satisfaction with the community’s services, is the community closer to reaching the new desired goal? If not, then develop strategies to meet those goals, identify additional resources are required to achieve those goals and decide how you’ll define success.
Plan for unseen circumstances
Not planning for unexpected circumstances or events may result in the association overspending its budget or reserve account, leading to increased association fees for the resident. Unexpected circumstances the community may encounter include major equipment failures, a spike in maintenance cost, and emergency situations such as wildfires or hurricanes. Let’s see how to plan for these unseen circumstances:
- A reserve study helps to identify all community equipment, the number of years the equipment will bring value before it needs to be replaced, and the amount of money that needs to be placed aside for each equipment per year. HOAleader.com suggests calculating the amount by taking the approximated replacement cost of the equipment and dividing it by the number of years it is expected to last or bring value. Reserve study requirements vary in each region so be sure to check your state legislation to ensure community compliance with reserves. When comprehensive, a reserve study can help the association to be better prepared for unseen circumstances, maintain internal compliance, and reduce legal liability on part of the board members and the association.
- Utilities, construction, and maintenance industries are quite volatile and service prices often fluctuate based on the volatility of their supplier’s industries. Community managers providing maintenance services to communities need to ensure that they are contracting vendors with affordable prices and services. They need to stay on top of any maintenance-specific cost-savings they can bring to the community by maintaining good relations with vendors, negotiating for better pricing, or requesting bids from multiple vendors to hire the best fit.
- With natural disasters impacting residents in numerous states – wildfires in California and west-coast states, tornadoes in the midwest, and hurricanes in the east-coast – communities need to be prepared to mitigate adverse financial impacts. Managers will need to develop an emergency and communications plan and identify additional costs associated with the planning. Most importantly, community managers and board members must ensure the community has an adequate insurance policy that can cover the cost of replacing equipment, fixing common areas, and assisting with rebuilding resident homes (the latter is based on what the association’s governing documents permit). If your association is located in an area that is at high risk of flooding, for example, you need to make sure the association has sufficient coverage. Managers and board members will need to touch base with their insurance agents frequently and ensure they are bringing their insurance policies current with yearly renewals.
As author and businessman Alan Lakein stated, “Planning is bringing the future into the present so that you can do something about it now”. We absolutely agree with this! When developing a budget, it’s really important to think about how you can create a better community experience in the future by cutting costs where you can, planning for unexpected events, and continuing to deliver the quality of service your residents expect.
Pilera Software is the premier community and property management suite that has helped thousands of community managers and back-office personnel enhance communications, improve customer service, and manage compliance and operations. May we help your community achieve these success stories?