One of the primary tasks of the HOA board is to make wise, prudent use of the community association’s funds. This does not mean scrimping and pinching pennies at every opportunity—the HOA board must provide true value and security to its residents—but it does mean that the board should seek out whatever avenues it can for saving money. Conducting regular reviews of the HOA budget can help the community board members spot potential areas for reducing costs. Here are five particular things to look out for.
1. First, conduct annual assessments of your insurance policy. Insurance is, for most boards, the largest expense in the annual budget. Because insurance is constantly changing, however, there may sometimes arise some areas in which you can adjust your policy and reduce premiums. Review the insurance policy regularly, and keep the lines of communication open between your board and your insurance agent.
2. Second, review utility expenses—in condos or apartments, or even in communities that have widely-used common areas. Are electrical costs getting out of hand—and have you considered switching to energy-efficient light bulbs or appliances, to combat those rising costs? Regular utility assessments are critical for boards seeking to reduce costs.
3. Another way to control costs is to negotiate lower rates with your vendors. Conduct annual reviews for your vendors, and consider bids from a few local contractors. This kind of competition can help you ensure that your vendors keep their costs as low as possible.
4. Fourth, think of some ways in which your HOA might be able to reduce the hours of any contractors or staff members—such as putting motion sensors in place instead of actual security guards, or seeing if there are residents who might help manage the pool area.
5. For associations that urgently need to cut some costs, remember to draw a line between necessities and non-necessities. Refurbishing the clubhouse may be something you want to do, but if money is tight, it can probably wait another year or two.
Conducting regular budgetary reviews is essential for HOAs seeking to save money and control operational costs.