Sharper Management


For most Associations, it is budget season. Your Community Manager has worked hard to develop a proposed 2018 operating budget that will keep your association fiscally healthy by projecting and planning for expense trends (such as utilities), plugging in contract figures (such as lawn/snow), budgeting for operating projects you’ve directed to be completed (perhaps gutter cleaning or painting), allocating a dollar amount to contribute to your Reserve Fund (your “savings”), etc.

As you may know, your operating budget is what sets the “dues” amount that people will pay each month. Technically, it’s the “assessment” amount, but no one likes to use that word.  It’s always difficult when the realization kicks in that you need to raise your dues to meet your expenses. No one likes to be responsible for making people pay more money. Nevertheless, it is your fiduciary duty as a Board to keep the Association fiscally healthy.

There is one pitfall that a number of Associations can fall into during the budget approval process. Boards get hesitant to raise dues and they look for reasons to keep stagnant on the revenue/dues need. Perhaps it’s a down economy; maybe a number of your residents are on a “fixed income;” or sometimes it’s seeing the Association is trending positive with their budget vs actuals and have a “surplus.”

Here’s the advice that no one wants to hear – and certainly few have the gumption to say:  You should raise your dues every year.  Costs don’t go down. Inflation is real.

The pitfall many Associations fall into is a reluctance to approve small dues increase, then needing a larger one to catch up the next year.  It is far more prudent and healthy to do smaller increases every year than it is put yourselves (and the residents) on a roller coast ride of no increase, no increase, 12% increase, no increase, 8% increase.  In the long run, you’ll find your Association stays fiscally strong, and you’ll be surprised at how well, and quickly, the community will be conditioned to annual inflationary increases.