CT August 2026

BUDGET... from page 40.

butions ensure that owners pay their fair share toward the eventual replacement of assets during the time they benefit from them. Recent legislation has strengthened reserve funding requirements and address the risks associated with under funded reserves. Boards and managers should remain informed about these legal obligations and engage quali fied professionals to conduct reserve studies. Ultimately, it is the board’s responsibility to ensure reserve contributions are collected and deposited into a reserve fund in compliance with current regulations. Unexpected events-such as severe weather, emergency repairs, equipment failures, and insurance-related claims- can significantly impact an association’s finances. Even well-planned budgets can be strained by unforeseen circumstances. Experienced managers advocate for contin gency planning and conservative forecasting to help com munities respond effectively without compromising essential services or financial stability. While the board ultimately adopts the budget, manag ers serve as trusted advisors throughout the process. They bridge the gap between financial reports and day-to-day operations, offering insight into the community’s practical needs and identifying potential challenges before they become costly problems. Strong collaboration between the board and manage ment team leads to better budgeting decisions, improved financial planning, and greater long-term sustainability. Developing and adopting a budget is only part of the pro cess; effectively communicating it to homeowners is equally important. When residents understand the reasoning behind budget decisions and how they benefit the community, they are more likely to support them. Managers help boards explain budget priorities, assessment changes, reserve fund ing, and long-term plans, fostering transparency and trust. Creating a community association budget requires bal ancing operational needs, long-term planning, and fiscal responsibility. Regularly monitoring revenues, expenses, and reserve funding helps boards and managers make informed decisions, address issues proactively, and main tain the community’s financial health. A successful budget not only funds current services but also protects assets, preserves property values, and prepares the association for future challenges. n

A recommended starting point is reviewing spending trends over the previous two years and comparing budget ed amounts to actual expenses. Understanding the associ ation’s history and the circumstances that influenced prior years is essential. Key questions include: • Has a particular general ledger account been over bud get once or is a recurring trend? • What factors contributed to the variance? • Can future costs be managed differently to reduce simi lar overruns? Snow removal expenses provide a common example. These costs can fluctuate significantly due to weather condi tions and may exceed budgeted amounts in severe winters. Boards and managers should evaluate whether contract adjustments, contingency funding, or surplus allocations can help mitigate these unpredictable expenses. Another critical component of budgeting is gathering cost information and obtaining vendor proposals well in advance of budget discussions. Early planning allows managers and Boards to establish realistic projections and develop strategic goals for upcoming projects, repairs, and services. The budget process also provides an opportunity to evaluate existing programs and services. Boards may determine that certain services are no longer necessary or that alternative solutions could provide greater value. These conversations can be challenging, especially in an environment of rising costs. Inflation, increasing insurance premiums, utility expenses, vendor contract increases, reg ulatory requirements, and reserve funding obligations all place pressure on association finances The goal is to create a budget that is both realistic and financially responsible while minimizing unnecessary bur dens on owners. Proactive planning helps prevent budget shortfalls and reduces the likelihood of unexpected assess ment increases during the year. Ensuring adequate reserve funding is one of the most important aspects of budget development. Reserves are set aside for the future repair or replacement of major common elements, such as roofs, paving, siding, elevators, clubhouses, and mechanical systems. Proper reserve contri

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AUGUST 2026