Easy Ways to Trim the Fat from Your Budget
For many of you, the coming months are probably the most stressful. Not only are you trying to finish those outdoor projects before the weather turns cold, you have to deal with putting costs into next year’s operating budget, and enduring the howls of protest that are sure to follow.
Everyone has an agenda when it comes to the budget, you just have to make sure your agenda is the one that wins. But how do you get there? Be realistic. Be bulletproof. And look for easy ways to save some green.
How does an association save money? Here’s a short list of the most common budget categories that have some fat in them:
Have you had an energy audit lately? Many are free and you will be left with a list of suggestions that will include estimated investment, available rebates, estimated savings, and payback period for your investment. There are still some condominiums that don’t have their heating pipes insulated yet, and haven’t updated their fluorescent lighting to T8 fixtures. And remember what Jimmy Carter said – you can always put a sweater on. Reduce the temperature in the common areas. Keep the pool a degree or two cooler. (Just make sure residents don’t need a sweater in the pool.)
Do you have phone lines you don’t need? If you have an office line and a fax line, can you combine them? Can you combine phone lines for your elevator emergency phones and alarm systems, eliminating dedicated lines? Instead of an office line and a caretaker cell phone, can you get by with just a caretaker cell phone? Each eliminated line will save you $600/year.
There are still some associations out there with $1,000 deductibles. Increasing it to $2,500 or $5,000 will save you a lot of money. Just make sure your homeowners know about the change so they can talk with their HO6 agent.
Is the association paying for repairs that it shouldn’t be paying for? You would not believe the number of associations that unwittingly pay for repairs that really should be the homeowner’s responsibility. We see it at almost every association when we first begin managing them. Review your governing documents closely to make sure you’re not giving away the house.
Revisit the expectations of the members, and find out what services they want or don’t want. They are the ones paying the bills, so maybe they don’t want the trees trimmed as often. But remember, some things that don’t cost much money provide a lot of benefit.
Enact a Maintenance Service Policy. When you review your governing documents, many of you will see the board has great authority to have homeowners pick up the costs for individual repairs. As an example, if you have problems with homeowners demanding a new garage door whenever there’s a small ding in it, modify your policy. It’s amazing how someone’s attitude changes about how badly a repair is needed when they realize they’re paying for it instead of someone else.
Review your service contracts. While you don’t want to always beat up your service providers on price, sometimes you just have to do it. Talk with them, see if there are any discounts available. But as my grandfather used to always say: In business there are three features in any service you buy – quality, price, or responsiveness – pick two.
But whatever you do, don’t even think about reducing your contribution to reserves for the next year. Your short-term gain will come back to haunt you as special assessments and even larger assessments increase.
If you feel the need to scream while doing your budget, just remember you’re not alone. There are other associations going through the same thing. Take a deep breath and look around. Savings are just waiting for you to find them.