Summer is budget season for HOA boards. While owners are at the pool, someone on the board is at the kitchen table with a spreadsheet, working out next year’s costs and whether assessments have to go up (cue the ensuing grumbles from residents).
Most boards draft next year's budget over the summer so there's time to review it, approve it, and get it to owners before the new fiscal year starts. The board sets the annual budget, and that total becomes each owner's assessment. And the people doing it are usually volunteers, not accountants, fitting it in around full-time jobs and other commitments.
This checklist breaks the job into five steps. Work through them in order, then copy the checklist at the bottom and use it as your working template for this year's budget.
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1. Start with last year's actuals, not last year's budget
Pull this year's budget and set it next to what you actually spent, line by line. The budget was the estimate you approved last summer based on the best information you had at the time. The actuals are what happened. The gap between them is the most useful thing you have going into next year.
Go category by category and ask where you came in over and where you came in under. The landscaping contract went up. Snow removal came in light after a mild winter. Insurance jumped, which it has for most communities lately. Build next year’s budget off actuals, because building off last year's budget just repeats last year's guesswork.
2. Split recurring costs from one-time costs
Recurring costs hit every year, and you can predict them: the management fee, utilities, landscaping, insurance, cleaning, pest control, routine maintenance. One-time costs happen once, and then they're gone: repainting the lobby, replacing a run of fence, a legal matter you dealt with this year.
Keep the two in separate columns. If a one-time cost from last year sneaks into next year's baseline, you've budgeted money the community doesn't need to spend, and that quietly pushes dues higher than they have to be. It's one of the most common mistakes on volunteer resident boards, and it's easy to avoid once you split the two.
There's a second split that matters just as much: keep your operating budget separate from your reserve budget. The operating budget covers the day-to-day. The reserve budget sets money aside for the big planned replacements down the road. Reserve funds are earmarked for those projects, so pulling from them to cover an operating shortfall just digs a hole you have to backfill later. Keeping them in separate buckets is good practice everywhere, and in a growing number of states it's the law: roughly a dozen states now require reserve studies or reserve funding, with more moving that way.
3. Fund the reserve, not just the operating budget
The reserve budget pays for the big planned replacements: roofs, roads, elevators, mechanical systems, anything the community owns that will eventually wear out. A reserve study tells you what those items cost to replace and roughly when each one will come due, which turns a scary unknown into an expense you can plan for.
Underfunding the reserve is the trap that catches boards, and it's worth seeing how the trap springs. When the reserve falls short, you're left with two options owners hate: a special assessment or a loan. Community Associations Institute (CAI), the leading educational resource for board members and community managers internationally, is blunt about where thin contributions lead, naming deferred maintenance, higher long-term repair costs, special assessments, and even lower property values as the result. Contributing steadily every year is what keeps you out of that corner.
If your reserve study is a few years old, or you've never commissioned one, that's the higher-priority fix before you finalize this budget. CAI recommends refreshing the study at least every three years. Our guide, Mastering Reserve Studies and Budgeting, walks through how to read a study and turn it into a funding plan.
4. Turn the budget into a dues number
Add the operating budget and the reserve contribution; that total is what the community needs. Divide it among owners using the method in your governing documents, whether that's equal shares, variable based on unit size, or percentage of ownership. The result is next year's assessment.
If that number means a dues increase, decide it now, on purpose, with the reserve study behind you. Freezing dues to keep owners happy feels good in the moment, but the cost doesn't disappear. It waits, and it comes back later as a bigger jump or a special assessment. A small annual bump that keeps pace with rising costs is far easier for owners to absorb than one large correction after years of holding flat.
5. Communicate the approved budget and any dues changes
Approving the budget isn't the finish line. How you tell owners about it decides whether they accept it or show up angry at the next meeting, so treat the rollout as part of the job, not an afterthought.
Owners accept a budget, even one with a dues increase, far better when they understand what it pays for. CAI's research says the same: homeowners report higher satisfaction with their assessments when the board explains how the budget funds visible services and long-term reserves. So, where your documents allow it, share the draft before it's final and give owners a real chance to ask questions. Then send the approved budget and the new assessment through every channel you have, with enough lead time before it takes effect, and explain the why with real numbers instead of a vague “costs went up.”
This is the step where the right software earns its keep. ManageHOA includes email and SMS broadcasting, announcements, and a document library, so the board can send the dues notice, post the approved budget, and keep a copy that owners can pull up whenever they want.
The Summer Budgeting Checklist (copy this)
Work top to bottom. Each box is one decision your board needs to make before the budget is final.
Review last year
☐ Put this year's budget next to actual spending, line by line
☐ Flag every category that came in over or under, and note why
☐ Rebuild next year's numbers from actuals, not last year's budget
Sort the costs
☐ Separate recurring costs from one-time costs into two columns
☐ Remove any one-time cost from next year's baseline
☐ Keep the operating budget and the reserve budget as separate buckets
Fund the reserve
☐ Pull the reserve study (or commission one if it's missing or stale)
☐ Set a reserve contribution that keeps planned replacements on schedule
☐ Confirm you're not relying on a special assessment to cover the gap
Set the dues
☐ Add the operating budget and reserve contribution for the total needed
☐ Divide among owners using the method in your governing documents
☐ If dues need to rise, decide the increase now with the reserve study behind it
Communicate it
☐ Share the draft budget for owner input where your documents allow it
☐ Send the approved budget and new assessment through every channel, with lead time
☐ Explain the increase with real numbers and keep the budget on file for owners
Give yourself the summer
Board budgeting lands in the summer for a reason. Start now, and you're reviewing, adjusting, and communicating at a reasonable pace, instead of rushing an approval in the fall and mailing a dues notice that catches owners off guard. Work the checklist, and the budget stops being the job nobody wants.
If your board wants the owner-communication side handled in one place, connect with a member of our team for a ManageHOA demo.
