HOA Budget Committees 101

The budget committee is made up of members of our community association, which allows residents to provide input as to how their money is used. How does the budget committee operate and who works on it?  

The Treasurer’s and Accountant’s Roles

It's clear why the board treasurer should be the budget committee chair. As chair, it’s the treasurer’s role to keep everyone on target as the budget is planned out. The treasurer also puts the budget forward for endorsement by the board and members. If the association uses an accountant, he or she may provide consultation, but the accountant truly has no direct role in the action of putting the budget together.

Who Should Be on the Committee?

The owners who work on the budget committee should comprise a representative sample of the community. Naturally, if there are members disposed to serving who have special knowledge in matters such as insurance, that’s a plus. As far as size goes, a useful overall guideline is that the committee shouldn’t be so great that it becomes unmanageable. 

What the Committee Does

The treasurer ensures that every committee members comprehends the three core elements of the budget:

1. Money required for day-to-day running of the community, such as shared electricity and water, grounds keeping, insurance, and general maintenance. These costs are either contract-based or can be fairly approximated based on experience. A vital matter when examining items in the operating budget is community members' expectations — for instance, do members prefer the landscaper of the “blow, mow, and go” sort, or will they instead opt for a landscaper who provides a superior quality of service?

2. Money required to sustain our reserves at adequate levels. Reserve funds make money available for the fixing and restoration of the community’s holdings - examples include the pool, roofs, pavement, etc. 

3. Money for extensions or upgrades to the current property. This is a result of what members of the community desire and will commit to paying for. The community ought to give input and consent for this element. 

Equipped with this knowledge, the committee will assess total costs for the next year and weigh that sum against the association’s possible income (assessments, interest on investments, concession income, etc.). If costs exceed income, the committee will seek ways to reduce costs without negatively impacting service. If that doesn’t produce a balanced budget, the committee might be compelled to make a hard choice — whether to increase levies or impose a one-time special assessment.