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Assessment An assessment is the owner's financial obligation to the community association during a given period of time—usually one year.
Baseline funding The goal of this funding strategy is to keep the reserve cash balance above zero.
Chart of accounts An organized list of titles, descriptions and assigned numbers of all accounts in an organization's general ledger. The assigned number helps you locate the account. The title describes the purpose of the account.
Discretionary budget line items These are items based on owner, board and committee desires. They are items people would like to have—given their values, lifestyle, and preferred level of service (e.g. social and recreational expenses, and picnic areas).
Expenses Expenses are the cost of goods and services used to operate and maintain the community's property.
FHA Federal Housing Administration. Regulates and influences such items as the amount of insurance a community association must carry, procedures for financial operations and requirements for the upkeep of property.
FHLMC Federal Home Loan Mortgage Corporation. Buys mortgages from lenders and in doing so require certain types of insurance to be in place.
FNMA Federal National Mortgage Association. Federally established secondary mortgage institution that may set requirements that your community association will have to meet if owners are to participate in their financing programs
Full funding The goal of this funding strategy is to attain and maintain the reserves at or near 100 percent as called for on the component inventory.
Historical trend budgeting This method begins with the assumption that existing line items are needed. The amount of funds allotted to each during the current year is adjusted for expected changes in the coming year.
Major improvement expenses Major improvement expenses consist of items that are not necessarily required, but are added to improve the overall welfare, safety or life of the residents—or to enhance the value of the community association as reflected in the resale value of units.
Operating budget The section of a budget devoted to operating activities includes operating expenses and major improvement expenses—but not the replacement fund.
Operating expenses Operating expenses are those items that occur on a regular basis—day to day, week to week, month to month, and year to year.
Reconciliation of expenses and revenue After you draft both your operating and replacement fund budgets for the coming year, you must reconcile your estimated expenses with your community's anticipated revenue. To reconcile means to bring together after a difference.
Replacement fund The replacement fund consists of funds put aside—in reserve—for the replacement of major components of a community's common property.
Reserve cash flow statement Shows the amount to be funded and the amount to be expended from the replacement fund over a given period of time.
Reserve study A reserve study is a budget planning tool that considers the current status of the replacement fund and determines a stable and equitable funding plan to offset the anticipated future major common area expenditures.
Revenue Revenue consists of the collective items or amounts of income which, in the case of a community association, are appropriated for public expenses.
Threshold funding This method is based on the baseline-funding concept. The minimum reserve cash balance in threshold funding is set at a predetermined dollar amount.
Zero-based budgeting With this method, all line items are set to zero and the amount of funds allotted to each must be justified.
