Association Budgets: Mapping Out Your Strategic Plan
It is important that everyone has the same long-term vision for the community. A strategic plan pushes the board to establish a clear set of goals and objectives for the association and assists the board in determining how to spend their time and when and where to allocate money. But the benefits don’t stop there, strategic plans also:
- Force the board to look beyond the next 12 months
- Drive more consistent action from the board
- Allow for proactively scheduling projects to take advantage of pricing opportunities and optimal timing
- Identify ways to allocate resources – such as volunteers or committees
- Forge a strong partnership and understanding between the board and management team
2.) What are the association’s discretionary needs? Meaning, the items required to maintain the current lifestyle and level of service for the members. These needs don’t directly affect property values, but instead they are added benefits above and beyond the mandatory needs. An example would be replacing basic landscaping with a lavish assortment of lush flowers at the main entrance; it’s more of desire than a necessity.
Create a master projects list based on the above for a detailed discussion to estimate the financial impact of each item and determine the order of importance based on priority drivers and a point system as shown
|Order of Importance||Priority Driver||Weighting|
|3||CURB APPEAL (AGING LANDSCAPE OR DESIGN ELEMENTS)||16|
|4||REQUIRED ANNUAL MAINTENANCE||14|
|5||REQUIRED SCHEDULED PROJECT||12|
|6||REQUIRED UNSCHEDULED MAINTENANCE||10|
|7||REQUIRED UNSCHEDULED PROJECT||8|
|8||UNREQUIRED UNSCHEDULED MAINTENANCE||6|
|9||UNREQUIRED UNSCHEDULED PROJECT||4|
After prioritizing the association’s projects, evaluate current services and define which are required vs. those that can be eliminated. Account for your available resources when defining services that must be outsourced vs. those that can be effectively absorbed by your management company, sited-staff (if available) or resident volunteers.
The final stage is implementation. Incorporate the plan into your reserve study and also into your operating budget for the next 1, 3 and 5 years.
Remember, a strategic plan will assist the board in fulfilling its fiduciary duties to the association members. By going through the strategic planning process you identify the association’s goals that can help keep the big picture in sight while examining the details. Failing to properly plan your budget could put you at risk for reduced services, decreased property values, special assessments and having an underfunded replacement reserve plan.