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Subject: Budget for 2022
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Author Messages
DennisG7
(Georgia)

Posts:121


10/07/2021 8:34 AM  
Our GA HOA of 189 properties is 21 years old. Usually during the last couple months of every year the HOA members receive a copy of the upcoming budget for the next calendar/fiscal year. This week we received a budget for 2022. I was stunned when I looked at it.

As most HOA's we have a number of sections that are broken out: Utilities, Pools, Tennis courts, Clubhouse, Admin, etc. I'm sure everyone has pretty much the same thing.

What is different this year is that the BOD or Management company did something I'd never see before. They took the annual budget for a line item, for example Pool Service contract, $6000 and divided it by 12, putting a projected expense of $500 per month in each month. Our pool contract and service is usually for about 5 months only and then the pool is closed down and we pay for no services for 6-7 months. I'm not sure why they did this and the managemnt company will not respond to any questions. (You can't contact the BOD, only the management company)

Another example is the Nat. Gas Utility Service. during the spring, summer and fall our actual monthly gas bill is less then $100/month, usually about $35-40. In Nov -March our bill is $250-$300+ a month. This years projecion shows the SAME amount expected to be paid for every month (we are not on any budget plan to smooth out payments).

Essentially the Management company has taken the annual cost and divided it by 12, showing the same amount to be paid monthly.

Another example is the one time annual corporate registration fee or $50 paid in Jan-Feb time frame. The budget shows $4.25/mo.

The income tax prep. is also shown like this. Instead of a single month, usually March, where is normally $200, it's split up to 12 monthly payments.

Is this typical?
Dennisg7
MaxB4


Posts:1351


10/07/2021 8:37 AM  
Yes
JohnT38
(South Carolina)

Posts:764


10/07/2021 8:53 AM  
It makes perfect sense to me and this is how we do it. The cost is broken down by 12 months which reflects the amount each homeowner is paying towards this expense. It also makes it easier for the BOD to know how to set monthly assessments.
JohnC46
(South Carolina)

Posts:11514


10/07/2021 11:59 AM  
Dennis

I believe that breakdown is the way an Accrual or modified Accrual accounting system works. Accrual is the way accountants prefer. Modified Accrual is how many HOA's operate. The MC may have switched their financial software.
SheliaH
(Indiana)

Posts:4221


10/07/2021 12:20 PM  
My community do the same way, and when I served as board treasurer, I found this extremely helpful. We even compared the monthly continents people might pay If they purchased the service themselves. It helped demonstrate economics of scale

you could ask the property manager about the change, but I hope you consider attending the next board meeting and asking them as well. In fact, I would ask about this policy of sending all questions to the property manager. Questions on day to day stuff makes sense, but if you have questions on new or amended rules, or the next annual meeting, why can't you ask the board?

If they say they answer the same questions over and over, what's wrong with posting a FAQ section on the community website where people can look before asking the board? If they don't like questions of any kind, you and your neighbors would do well to consider If a change in the board needs to be made. No board should be afraid of communicating with the home - who do they think put them there in the first place??
BarbaraT1
(Texas)

Posts:569


10/07/2021 12:43 PM  
It's called the budget spread. The accounting software for every management company I've worked for will automatically do a 12 month even spread. Personally, I don't like it, because it creates a bunch of variances in the monthly income statement. So I manually adjust the spread to make it more accurately reflect spending from month to month. But not every manager does, it's just personal preference.

MaxB4


Posts:1351


10/07/2021 12:48 PM  
Posted By DennisG7 on 10/07/2021 8:34 AM
Our GA HOA of 189 properties is 21 years old. Usually during the last couple months of every year the HOA members receive a copy of the upcoming budget for the next calendar/fiscal year. This week we received a budget for 2022. I was stunned when I looked at it.

As most HOA's we have a number of sections that are broken out: Utilities, Pools, Tennis courts, Clubhouse, Admin, etc. I'm sure everyone has pretty much the same thing.

What is different this year is that the BOD or Management company did something I'd never see before. They took the annual budget for a line item, for example Pool Service contract, $6000 and divided it by 12, putting a projected expense of $500 per month in each month. Our pool contract and service is usually for about 5 months only and then the pool is closed down and we pay for no services for 6-7 months. I'm not sure why they did this and the managemnt company will not respond to any questions. (You can't contact the BOD, only the management company)

Another example is the Nat. Gas Utility Service. during the spring, summer and fall our actual monthly gas bill is less then $100/month, usually about $35-40. In Nov -March our bill is $250-$300+ a month. This years projecion shows the SAME amount expected to be paid for every month (we are not on any budget plan to smooth out payments).

Essentially the Management company has taken the annual cost and divided it by 12, showing the same amount to be paid monthly.

Another example is the one time annual corporate registration fee or $50 paid in Jan-Feb time frame. The budget shows $4.25/mo.

The income tax prep. is also shown like this. Instead of a single month, usually March, where is normally $200, it's split up to 12 monthly payments.

Is this typical?
Dennisg7



If you prefer to have it the old way, should assessments be changed on a monthly basis, based on the need for the upcoming month?
LetA
(Nevada)

Posts:1425


10/08/2021 9:22 AM  
That is how our pool cleaning service contract is in the budget. It is always a good practice to itemize your expenses every month. It helps you to plan for unexpected expenditures.
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