Fall is the time when most homeowner associations go through the ritual of counting last year's cost and crunching next year's numbers hoping to squeeze blood out of the community turnip. Often it's so dry, there isn't even any turnip juice left much less any O positive. But crunch you must. Here are some of the ways to make the cash flow more freely.

Adjust by Inflation

Check the area Consumer Price Index - CPI (governmentese for "tax increase") and raise all budget items by at least that amount An exception is utilities which enjoy a larger and incomprehensible rate increase based on the utilities the utility companies expect not to sell added to the cost of maintaining antiquated power generation plants plus a fudge factor they hope to slip by the utility rate commission (just a little budget humor ).

Add a Contingency aka Slush Fund

A special budget item equal to 5-10% of all other expenses. Used to cover all those things you forgot to include.

Looking Back for Future Savings.

Often next year's budget is based on last year's. Do a side by side comparison of the last three years' budgets. You may learn something...like seeing large and unnoticed utility cost variances. The Board three years ago may have been entirely different and totally indifferent to the budget. You may catch a cost savings that got passed through unscrutinized.

Leave Out Potential Income

Late fees may not happen so don't count on them. Besides, it's a bit insulting to plan on owner irresponsibility.

Divide Expenses by Category

Assign expenses to either Administrative (like Management Contract, Legal, Reserve Study, Accounting, Office Supplies, Postage) Utilities, Maintenance (Landscape Contract, Gutter Cleaning, Pool Maintenance, etc.) and Capital Reserves (Painting, Roof Replacement, etc.). Make sure to include significant expense items. Instead of lumping everything into "General Repairs" divide it among "Plumbing Repairs", "Electrical Repairs" and "General Repairs", for example. It's important to know where significant monies are being spent. If this hasn't be done in the past, start doing it in the future. In other words, when a significant bill is paid, assign it a proper description so that next year the Budget Committee can assess whether there is a trend.

Reserve Systematically & Wisely

Reserves are funds collected to pay for periodic maintenance and repair to roofs, siding, paint, pools and other common area components. It's critical that these costly events be forecast at least 30 years out so that this year 's budget collects a fair share of future expenses. Failure to forecast and collect from all owners inevitably leads to special assessments, the product of poor planning. Since costs can be accurately predicted, why not let all share the expense instead of penalizing a few? The "Reserve Study" as it is called, analyzes these future costs and provides a reasonable maintenance and funding plan that can be included in the budget. It is probably the most fundamental factor for homeowner association success. For more on this subject, see www.regenesis.net.

Include Board Education

While the Board members are volunteers, the association should invest in educating them to improve performance. Subscribing to and buying related resources, attending seminars and joining CAI-Community Associations Institute will all return enormous dividends to the association as director competence levels are raised. For more on this, see Seminars, Library and Videos.

Add Cable TV

In many areas, "Bulk Rate Agreements" are available to homeowner associations who agree to pay for Basic Cable Service for all owners. This can result in a significant savings for an expense that almost 100% of all owners pay retail for. Call your local cable provider and check out the options.

Some other cost cutting hints:

Published: November 8, 2000

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .