OPERATING BUDGET

Each year, boards are required to prepare a pro forma budget for conducting the operations of their associations.

Required Elements. The operating budget must include all of the following:

• Estimated revenues and expenses on an accrual basis.

• A summary of the association's reserves.

• A statement as to whether the board has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserves for such work.

• A general statement addressing the procedures used for the calculation and establishment of those reserves. Civil Code §1365(a)

Operating Account. All monies received by the association are deposited into an operating account. Allocated reserve contributions are then transferred monthly from the operating account to the reserve account. Allocation of reserve interest depends on the association's funding plan.

Updated by ADAMS KESSLER 8/9/2008