2020 is around the corner. Does your 2020 budget reflect an increase to monthly assessments? If the answer is no, your may not be adequately planning for your operating expenses and funding your reserves for long-term needs.

Keeping dues flat is often seen as an indication that the board is doing a good job, but there are valid instances where raising dues could be the right decision for the long-term prosperity of the community.

When it comes to operating expenses, the budget should at least increase to keep up with inflation and rising costs for the services and amenities provided by dues. Incrementally raising dues can help ensure a sufficient flow of funds into the operating budget in anticipation of those rising costs.

When it comes to reserve funds, industry sources cite that over 70% of community reserves are underfunded, primarily because monthly dues are not adequately allocated to the reserve budget. Incrementally raising dues to allocate adequate contributions to the reserve account allows the board to fund major expenses without imposing special assessments.

It is a challenging task for boards to strike the right balance between containing costs and enhancing communities. However, boards that realistically evaluate the state of their association’s finances are best able to manage their communities without financial surprises.

Learn more here.

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