As published in The View, September 2022:
The Road from Budget Meetings to the 2023 HOA Assessment
In my July and August articles, I laid out how our HOA functions, including an overview of our financial operations. That now brings us to “budget season,” which happens every year starting in August with meetings open to all homeowners. I strongly recommend, if you have the time, desire to be part of the process, or wish to comment on the process to your Board, that you attend all of the budget meetings. Or, if you would rather, you can watch the meetings from the comfort of your home as each video is posted.
What is the process? Spreadsheets are prepared for the Board to review, detailing each budgeted category and comparing this to what has already been spent and what will be spent by the end of the year. The Financial Advisory Committee reviews the data ahead of time for accuracy and reasonableness.
The Board uses this historical data as the starting point for the 2023 budget. Evaluating the new budget begins with looking at the 2022 proposed budget and comparing the year-to-date actual money spent in each category. This will show us how realistic our estimates were for 2022. Then, we go line item by line item and evaluate all the factors affecting the future budget. We rely heavily on data that has been gathered for us by the Advisory Committee Chairs, Desert Resort Management (DRM), Troon, and others.
It is only natural that there will be differing opinions about how the Board should spend the HOA’s assessment dollars. Because the outcome of the total dollars budgeted determines the 2023 HOA assessment (your monthly dues), the budget is not final until the Board votes on it in an open session in October. Up until the Board votes, all homeowners are encouraged to submit questions and suggestions to the Board. After all, this is your money.
This year, we as homeowners are already experiencing many cost increases in all aspects of your personal daily lives. During the budget process, your Board will have to deal with many similar issues on a much larger scale that reflect our common community expenses that we all share. The Board already knows that HOA insurance has dramatically increased in the second half of 2022.
Another example is the big increase in the cost of grass seed, included in Troon’s part of our budget. In 2021, the cost was $1.96/lb. In 2022 we paid almost $2.75/lb. And in 2023 we expect to pay around $3.00/lb. We use about 60,000 pounds of seed each year.
These are non-negotiable expenses. We must have insurance, and we have shopped for the best economically available policies at this time. All insurance rates are increasing exponentially. And it goes without saying that we must buy grass seed to protect our golf course and to safeguard SCSH home values.
I want to be upfront with you, as I have been in all my interaction with you, going into this budget season. I am committed to the hard work of scrutinizing every item in the budget. Last year we were fortunate to keep the assessment increase low, but that is not likely to be the case this year. I am asking that everyone, please, remember this when presenting any “wish list” to the Board at the upcoming sessions. Every $40K that we add to the budget in new spending adds $1 to each homeowner’s HOA assessment.
The Board will be weighing all options during the budget process and doing its very best during this difficult economic period for every homeowner.
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