Creating a responsible budget in today's economic climate is more critical than ever. As prices continue to climb, associations face the challenge of maintaining financial stability while meeting the needs of their residents. A strong property management partner can provide valuable guidance and support throughout this process.
Remember, your budget is a roadmap for the financial health of your association. It impacts every resident and directly influences the long-term well-being of your community. As board members, you have a fiduciary responsibility to make sound financial decisions. This includes acting with care, confidentiality, and loyalty, while staying within the scope of your authority.
When developing your 2025 Georgia association budget, prioritize these essential strategies:
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Invest in the future: Don't neglect reserve funds and essential maintenance. These investments protect property values and prevent costly problems down the road.
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Plan with purpose: Develop a detailed budget timeline with clear milestones. This proactive approach ensures a smooth and efficient process.
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Keep residents informed: Transparency is crucial. Communicate openly with residents about budget decisions, explaining the rationale behind any adjustments.
"Residents understand that costs increase, but they expect responsible financial management," advises Brent Reynolds, vice president at FirstService Residential. "Clear communication about budget priorities builds trust and demonstrates your commitment to the community's best interests."
Streamlining Your Association's Budget Process
A successful budget season hinges on careful planning and execution. While it may seem far off, starting the process well in advance of your annual meeting can significantly reduce stress and improve your financial outcomes. This proactive approach allows ample time to explore cost-saving measures, negotiate with vendors, and even identify new income opportunities for your association.
"Every community operates on its own unique fiscal calendar," notes Amy Sanchez, president at FirstService Residential. "Understanding your association's specific fiscal year, whether it's January to December or another timeframe, is essential for tailoring the budget timeline."
Begin by reviewing your current financial statements and reserve study. Ideally, this should happen as early as July. However, if you're starting later, don't worry! There's still time to create a solid budget, and you can always adjust your timeline for the next cycle.
Engage your management team to analyze cost trends and potential rate increases for key budget components, such as service contracts and utilities. July and August are opportune months to conduct this research and connect with vendors to explore potential savings or negotiate favorable rates. Don't hesitate to leverage expert advice, particularly for insurance matters, and rely on your management company to connect you with qualified vendors if needed.
While it might be tempting to cut back on reserves or defer maintenance in response to rising costs, this can lead to larger expenses down the road. Remember, your fiduciary duty includes protecting the association's assets. Prioritize funding reserves for critical structural components like roofs and foundations, as delaying these expenses can have significant long-term consequences.
Consider resident expectations regarding amenities and services during the budgeting process. Ensuring adequate funding for community programs, events, amenities, security, and other resident-focused services is essential for maintaining a thriving and harmonious community.
Aim to have a draft budget ready for review by late August or September, allowing time for workshops and revisions before your budget adoption meetings. Finally, remember to submit your finalized budget to homeowners with clear explanations by November 15th.
Sanchez cautions against delaying the process: "Waiting until the last minute to finalize costs can create unnecessary challenges. It leaves residents with limited time to adjust and hinders your team's ability to update accounts and communicate effectively. Instead of waiting for exact figures, use estimates for expenses like utilities to build a proactive and well-informed budget."
Watch this video to learn how to master your 2025 Georgia association budget.
Investigate insurance
While the insurance market in Georgia has not been as challenging as in Florida, costs for insurance have increased everywhere. Often, those increases are due to global events that homeowners might not even be aware of. The reinsurance market is impacted by global events including mudslides, earthquakes, wildfires, flooding, and of course, hurricanes. This puts pressure on reinsurers which ultimately causes higher insurance premiums, according to Chris Hevia, vice president at FirstService Residential. It remains to be seen what pressure the damage from Hurricane Helene will put on the Georgia association insurance market.
Make sure you have an honest conversation with your broker about your needs and budget. And remember that the right property management partner can help connect you with the insurance you need at the best value in the market.
Smart strategies for Controlling Association Costs
Effective cost management is at the heart of every successful budget. While looking for savings is always important, it's crucial to balance cost reduction with maintaining the quality of life your residents expect.
"Remember that homeowners have certain expectations for their community," advises Sanchez. "They generally aren't willing to accept a significant downgrade in services or amenities."
With that in mind, explore these strategies to identify potential cost savings without compromising resident satisfaction:
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Evaluate cost vs. benefit: Engage your homeowners in discussions about the value they place on specific services and amenities. You might be surprised to discover areas where adjustments can be made without impacting overall satisfaction.
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Leverage group buying power: Partnering with a large property management company can unlock unexpected savings through bulk purchasing and preferred vendor agreements.
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Invest in energy efficiency: Consider upgrades like energy-efficient lighting, improved windows, and better insulation. These investments may have upfront costs, but they often generate long-term savings and may even qualify for rebates or incentives.
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Negotiate multi-year contracts: Explore opportunities to secure discounts by committing to long-term agreements with vendors for services like landscaping, pool maintenance, and elevator upkeep.
Beyond these strategies, consider these additional cost-saving measures:
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Optimize vendor relationships: Build strong relationships with vendors to negotiate better pricing and explore opportunities for bundled services.
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Embrace technology: Implement technology solutions to streamline operations and reduce administrative costs.
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Promote resident involvement: Encourage residents to participate in cost-saving initiatives, such as water conservation programs or community-led beautification projects.
By implementing a combination of these strategies, your association can effectively manage costs while preserving the quality of life within your community.
Raise revenue
Your association may have revenue sources beyond collecting association dues that can help offset increased operating costs. Your management team can help you explore creative options to optimize your revenue:
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Allow advertising in your newsletters or offer sponsorships of events
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Stage vendor fairs or markets with merchant-paid participation fees
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Implement a schedule of miscellaneous fees, especially for things that cost your association money or use staff time, including parking for guests, holding onto lost keys, fees for applications and background checks, presenting payments with insufficient funds, etc.)
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Improve interest from your investment accounts (The right property management company may have banking relationships that can help you get advantageous rates while paying lower fees.)
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Rent space, including unused parking spaces. This can be a revenue boon if you’re in a busy area. If you have a high-rise, cell companies might even have interest in your rooftop for a tower.
Transparency builds trust with your community
Open and honest communication with your residents is paramount throughout the budget-planning process. Avoid creating an environment of secrecy. Instead, foster a sense of transparency and trust by keeping your community informed about how their money is being managed.
"Don't limit yourself to a single communication channel," Sanchez emphasizes. "Utilize a variety of methods to reach residents, including text messages, emails, voicemails, social media platforms, and your community website. In addition, leverage board meetings and town halls to facilitate open dialogue."
Here are some effective ways to keep residents engaged in the budget process:
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Share regular updates: Provide periodic updates on the budget's progress, highlighting key decisions and explaining the rationale behind them.
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Offer opportunities for input: Encourage resident feedback through surveys, online forums, or dedicated email addresses.
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Explain key budget drivers: Clearly communicate the factors influencing budget decisions, such as rising utility costs, necessary repairs, or planned upgrades.
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Demystify the budget document: Present the budget in a user-friendly format, using visuals and plain language to make it easy to understand.
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Be responsive to questions: Address resident questions and concerns promptly and thoroughly.
By embracing transparency and open communication, you can build trust with your community and ensure they feel included in the financial decision-making process. Remember, crafting a budget that secures the future of your community is a significant responsibility, and a strong property management partner can provide invaluable support along the way.
Budgeting for your community’s future is one of your greatest responsibilities as a board member. Having the right property management partner on your side will help. Contact FirstService Residential today to learn more about building a better budget.