Operating Account Balance at end of the year

Started by SandyA • 2 replies • 1739 views

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SandyA (Kentucky)
Posts: 8

Posted:

We are a fairly new board, we just took everything over from the developer 2 years ago. Our bylaws say: "“Current expenses”, which shall include all receipts and expenditures within the year for which the budget is made, including a reasonable allowance for contingencies and working funds, except expenditures chargeable to reserves or to additional improvements. The balance in this fund at the end of each year, if any, shall be placed into a reserve account."
Is that saying what we think it's saying, that at the end of the year all of the balance in the operating account has to move to the reserve account? How do you handle bills that are due in January before that month's assessments are collected?

WilliamT (Arizona)
Posts: 489

Posted:

I'm not sure if you have printed the entire paragraph or not.

But typically you should maintain two to three months of operating funds (depending on what your budget shows that you will need in those first few months), and place the rest into the reserve fund.

If your reserve funds are placed in CD's, a good method is to have them in one year or longer CD's and staggered so that some of them are renewable each quarter. That gives you the greatest interest rate, and you'll still have reserve fund cash available every three months if needed. If not needed, then it rolls over for another year or so.

Bill

RogerB (Colorado)
Posts: 5,067

Posted:

Sandy, I suggest you amend the By-laws by deleting "The balance in this fund at the end of each year, if any, shall be placed into a reserve account." I would replace that statement with "The balance in this fund at the end of each year, if any, shall be retained in the Association's operating and reserve accounts rather than being returned to the members."

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