HOA Budgeting That Actually Works

Build the budget around 5 buckets

1. Operations – staffing, utilities, janitorial, landscape.

   1. Expect power costs to stay elevated: Tampa Electric’s 2025 rates rose ~6.7% for a typical home (commercial changes vary by load profile), and further statewide proposals (e.g., FPL) signal ongoing pressure. Plan for increases rather than flatlining last year’s number.

2. Repairs & Maintenance – preventive work + service contracts.

   1. Small preventative maintenance (PM) beats big capex: lock in multi-year service pricing where possible.

3. Reserves – replacements based on useful life and components.

   1. Use current reserve standards (CAI) and keep your study fresh—funding tied to component condition, not last year’s habit.

4. Risk – insurance, deductibles, inspections, emergency set-asides.

   1. Property insurance remains volatile. While some markets saw selective easing, Florida’s overall premiums remain far above U.S. averages—model multiple renewal scenarios.

5. Community – amenities, curb appeal, communications, engagement.

   1. Protect small wins residents feel day-to-day; cut ghost spend, not livability.

2 rules that keep budgets honest

1. Zero-base the top 10 lines. These typically drive ~80% of spend (insurance, utilities, security, landscape, elevator, janitorial, management, reserves, maintenance contracts, contingency). Scrub each line item from first principles rather than applying a flat % uplift.

2. Add a 3–5% contingency with a clear trigger (e.g., insurance renewal variance vs. budget, utility true-ups, vendor COLA). No vague slush funds—tie it to named risks.

Stress-test the draft in 10 minutes

• Run three quick shocks and ask, “Do we still have 30–60 days of operating cash after each hit?”

• Insurance +20% (Florida renewals can swing; state oversight notes continued market transition from Citizens back to voluntary carriers, but levels remain high.)

• Utilities +12% (reflects approved/anticipated rate actions and fuel riders—calibrate to your provider.)

• Vendor contracts +8% (labor/materials inflation still sticky for trades).

If you fail any test, fix it now—not in Q3.

5 ways to find 5–10% without cutting service

1. Re-bid top vendors and bundle scope (e.g., janitorial + day porter + supplies). Ask for multi-year with caps.

2. Shift routine work to PM contracts (HVAC, elevators, life safety) to prevent emergency callouts.

3. Right-size insurance: validate replacement-cost appraisals (at least every 3 years), deductible strategy, and sublimits; get quotes early. (New 2025 guidance reinforces replacement-cost reviews on a 3-year cadence.)

4. Kill “ghost spend.” Audit rarely-used subscriptions, duplicative monitoring, and unused storage units.

5. Buy smarter power. Enroll in budget billing or demand-management programs where available, and tighten common-area schedules and setpoints.

Reserves: treat them like a bill, not a leftover

• Align funding with CAI Reserve Study Standards: component inventory, condition, useful life, and replacement cost drive the number—not politics. Update your study and funding plan before budget adoption.

• Communicate plainly: “We’re funding $X to avoid a $Y special assessment later.” Owners accept math more than mystery.

Simple KPIs for the board packet (one pagers)

• Budget variance: target ≤5% YTD

• Days cash on hand: ≥45 (aim for 60)

• Open work orders: trend and average age

• Reserve funding progress: % of annual plan funded

• Insurance renewal delta vs. budget: % and dollars