Money matters are important to any homeowner, putting much pressure on those board members in charge of creating a budget—no easy task. Within a budget, condo boards and associations must try to predict expenses for the upcoming year, including maintenance, construction or any unforeseen variables. Associations must also worry about specific reserve budgets in order to avoid special assessments.
"The best strategy for budgeting is history—to know what happened in the past," says Karen P. Sackstein, a certified public accountant based in Fair Lawn who specializes in working with associations. "It's also important to have current contracts going forward so you know what all costs will be. You also need to not be too stringent because things out of the ordinary do come up."
According to Gary Sherman, CPA, with Rosenberg Rich Baker Berman & Company, with offices in Bridgewater and Maplewood, the majority of the numbers that appear in the budget come from costs that the association had the year before. However, a past budget is not the only factor that should be considered in creating a new budget. Those making the decisions are given the difficult tasks of figuring and projecting.
All Things Created
When it's time for your board to create your HOAs budget for the year, it's a good idea to start earlier rather than later. "The budget process should begin about three to four months before the association's year end," says David L. Ferullo, CPA with The Curchin Group in Red Bank. It's also important to include all of the necessary individuals in the decision making process. "At a minimum, it should include members of the board of trustees, finance committee and its management company. Or, if self managed, its property manager."
Members of other committees such as landscaping, recreation and facilities can also be involved, and unit owners themselves are also not completely left out of the process in some cases.