Your homeowners association has set up a board of directors that will help govern the HOA. Not every responsibility, however, must rest with every member. To work alongside and within your board of directors, you need a budget committee that will help control the finances of your homeowner’s association.
What is an HOA Budget Committee?
The HOA budget committee is responsible for overseeing the financial aspects of the HOA. This includes routine management of the community, from keeping up with pest control or maintaining the grass and plants in community areas, to ensuring that there is enough money in the reserve pool to cover repairs and other unexpected expenses that may arise as the year progresses. The budget committee is also responsible for assessing the funds needed for improvement projects throughout the community and may need to discuss how to raise additional funds or bring in additional income to complete projects not already covered by HOA dues.
What are the Responsibilities of the Budget Committee?
Specific responsibilities of the budget committee will depend on the HOA board and the needs of the homeowners in the community in the upcoming year. This may include:
- Assessing the funds necessary to complete maintenance over the upcoming year
- Obtaining estimates for regular services to help ensure that the HOA is receiving the best savings for its needs
- Obtaining estimates for projects and services that will need to be completed in the upcoming year, but which are not completed regularly
- Deciding how to raise funds when the reserve is not adequate to covering the year’s needs, including cutting costs in some areas, raising dues, or assessing a one-time fee for homeowners
- Estimating the reserve that needs to be kept in the budget in case of unexpected expenses, including natural disasters that are common to the area.
- Setting long-term financial goals for the HOA. This might include setting aside funds each year for long-term projects or for future repairs.
- Monitor adherence to the budget and ensure that the HOA is sticking to the guidelines created by the budget committee.
In some cases, the budget committee may be responsible for evaluating the needs and desires of homeowners. For example, it may be important to know whether or not homeowners want pest control for the entire community or if they want landscapers who take care of blowing leaves off of communal areas.
Who Should be on the Committee?
Your homeowner’s association budget committee can be made up of members of the board, members of the homeowner’s association, or a combination of the two. Members of the committee should not have a personal interest in how funds are spent. Ideally, they should be responsible individuals with budget experience to help them make the decisions that guide the HOA’s spending. The HOA treasurer should be on the budget committee and may be the chairman of that committee.
What are the Benefits of a Budget Committee?
Having a specific budget committee allows the HOA board of directors to operate and hold meetings with the answers to many common questions already in hand. The finance committee will know exactly how much money the HOA has on hand, how much can be spent in repairs or on community projects, and which contractors are able to offer the best benefits for the lowest costs. This also allows the HOA board the freedom to concentrate on other aspects of managing the community.
Having a budget committee is a great way to ensure that your HOA’s funds are being spent in the most responsible way possible. If your HOA board of directors is still forming or you haven’t had a budget committee in the past, it’s time to seriously consider how it could positively impact your board and your homeowners.