Your HOA Budget Timeline and Tasks. What Should You do First?

June 27, 2018    Erin Rice, Controller    Education, Homeowner Tips

Completing your Homeowners Association’s budget is a project just like any other.  With over 20 years in this business, Crummack Huseby has perfected our way of planning a strategic and beneficial budget for the homeowners based on their needs. But where do you start to plan?



Every good plan needs a timeline, and budgeting is no different. The budget process for HOA’s should start six months before year-end.

In the first two months, you’ll gather your materials.  The necessary materials include the annual reserve study, contract, utility cost increases, planned one-time operating expenses for the coming year, and the community’s most recent financial statements.

Construction of the budget will start in the third month with the creation of the budget spreadsheet, meetings to discuss additional expenses, cost reduction measures, and appropriate increases.

The final stages, including accounting review of the draft budget, fine-tuning and final approval, should occur in the 4th and 5th months.  This will leave enough time to comply with civil code section 5300, which requires the budget to be distributed to the membership 30-90 days before the end of the fiscal year.




What projects would you like to complete next year? Do the plants at the entry need to be replaced, or does the pool need resurfacing?  No matter the size or scope of the project, you should add it to your budgeting plan.  You will also want to set up an appointment with your reserve analyst to walk the community and discuss anticipated needs for next year.  Don’t hesitate to ask questions or make suggestions.  They may be the construction expert, but you are the expert in your community.  Once you and your reserve analyst have decided on what major component projects will be completed in the upcoming year, the reserve analyst will complete your reserve study and have the first of your materials.  The reserve study is critical as this alone is the association's budget for significant components.  The Board should use this document as its roadmap for reserve fund spending and determine the number of assessments each homeowner will pay into the reserve fund each month.



At this point in the project, you’ll want to get your community manager and your vendors involved as your new budgetary needs may have cost increases.  Is minimum wage going up?  If so, this will translate into increases for all labor.  Are the weather centers predicting this to be the hottest summer on record?  Expect increases in water and electricity costs.  Having your manager reach out to all contract vendors is critical.  Without information about cost increases for the upcoming year, the budget, and funds, will fall short of the mark.  Vendors to contact include but are not limited to landscape, property protection, pest control, janitorial service, pool maintenance, street sweeping, auditing, insurance, management fees, and lighting.  Utilities are another important expense to consider.  Have you received anything from your utility company about upcoming rate changes?  Pass that information along to your manager.  Ask your manager to call the utility companies to request upcoming rate change information.  If no specific rate change information is available, a wise rule is to use a 12-month average with a 3% increase.  The final piece of information required is your most recent finances.  Typically this will be the August financial for December year-end or the 8th operating month if your fiscal year end is a month other than December.



Now that your materials have been gathered, it’s time to start construction.  Only one very important tool is required for this project.  The Budget Spreadsheet. Crummack Huseby uses your materials: reserve study, contract and utility increases, planned one-time expenditures, and recent income statement to create a spreadsheet that will help the HOA Board walk through the community’s expenses to build a budget, both accurate and useful as a cost management tool.

Starting with your current income statement, we project expenses through the end of the year and provide a comparison of current actual expenses versus budget alongside proposed figures for the new year. Comments on new contract prices, utility increases, and other changes from the old year to the new will be included.  Creating an accurate budget is critical to the operation of your HOA.



Homeowner’s Associations are not-for-profit corporations and need to create a zero-sum budget where income is offset to the dollar by expenses. Your HOA Board has a fiduciary responsibility to maintain the association's common area on behalf of the membership, provide a balanced budget to meet these expenditures, and make every reasonable attempt to meet that budget without overcharging the Homeowners.

Follow us on Facebook so you can be the first to read Part Two of this article, where we provide insight on creating and implementing the smartest budgets for your community. We will discuss the questions your Board should be asking about expenses, what your management company’s accountant should know, and thoughts on the timing of assessment increases. 

Planning and creating a budget is no easy task. If you’d like for Crummack Huseby to walk you through the process or would like for us to help your HOA plan their budget, our incredible financial team is here to help. 

If you’d like to call or email us directly, we’d love that too. 888-399-9430 Toll-free | 949-367-9430 Phone | 




Erin Rice is a financial leader in Orange County as the Controller of Crummack Huseby Property Management, Inc., an award-winning company that provides highly customized and personalized services for homeowners and builders in Southern California.

Crummack Huseby is a property management company that understands what it takes to create a community within the community associations they partner with. Our successful business partnerships with home builders, developers, and homeowner’s associations have brought value to clients throughout Southern California. Our talented and award-winning managers work closely with our clients to determine their specific needs - to elevate, inspire and achieve their goals for their communities. If you are interested in learning more about how Crummack Huseby can help your community association with cost-effective daily service management, social and lifestyle management onsite or offsite, and financial/budgeting forecasting analysis.

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