Board of Directors Educational Series: “HOA Budgeting and Reserve Studies Best Practices”


On September 14, 2016, we were lucky to partner up with Association Reserves and Levy, Erlanger & Company, CPAs to present, “HOA Budgeting and Reserve Studies Best Practices.”

This evening seminar covered:

  • Reserve study basics
  • Technology components and how to incorporate them into your reserve study
  • How to understand your reserve study quickly
  • Annual budgets & requirements

The discussion covered the importance of maintaining reserves and not relying on special assessments, annual provisions and accumulated liability, and using reserves for technology replacements and upgrades, such as solar panels and electric vehicle charging stations.

We discussed what a Reserve Study is: a long-term financial plan for ongoing deterioration of properties, and a budgeting tool that will help anticipate big projects and expense, as well as the purpose: guidance for a financial foundation, to sustain and improve the health of your property, insight into the condition of your property, and to avoid unexpected expenses that will dry up the reserve account. The reserve study helps the association to be proactive in planning for its future to maintain the financial health of the community.

Next, the discussion moved to the Pro Forma Operating Budget:

  • Major components
  • Remaining life
  • Useful life
  • Current replacement cost
  • Component study prepared at least once every 3 years
  • Cash reserves
  • Percent reserves are funded
  • (Under) – over-funded reserves per ownership interest
  • Methods of funding
  • Known or anticipated special assessments (next 30 years)
  • Statement of procedures
  • Accrual-basis revenues and expenses
  • Summary of the pro forma budget (optional with legal/CPA guidance)
  • Distribution within 30 to 90 days before the start of the next fiscal year (i.e. October 3 to December 1 for calendar yearend association)
  • Penalty for noncompliance

There were a lot of takeaways from this seminar, and we are so grateful to be able to continue to provide these educational forums for our Boards. Thank you, Derek Eckert and David Levy for making this event possible!

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