How do we run a mid-year review of the HOA budget and forecast where the year will end?

By OurHOA · General information · Revised November 1, 2026

How an HOA treasurer runs a mid-year budget review: reforecast each line, check the reserve transfers, and decide what to do about a projected shortfall or surplus.

Part of the HOA board handbook: treasurer and money.

The short answer

Once the books for month six are closed, stop comparing actual spending to the budget and start comparing it to a forecast. The forecast is actual results for the first six months plus an honest estimate of each remaining month, built one line at a time. Put the forecast next to the budget, sort every large gap into timing, one-time or recurring, and bring the board a one-page report with a recommendation. Two jobs get done at once. You find a shortfall while there are still six months to close it, and you give next year's budget real numbers instead of last year's guesses. The review itself is ordinary financial practice and no statute in Texas, Florida or Colorado requires it by name, but what the board can do with the results depends on state law and the association's declaration and bylaws. This guide is general education, not legal or tax advice.

What to pull before you start

A forecast built on unreconciled books is a guess, so reconcile every bank account through the end of month six first. Then gather the adopted budget, the income statement by month for the year so far, last year's actuals by month, the accounts receivable aging, every service contract with its monthly amount and renewal date, the insurance renewal date and any early premium quote, the reserve study's contribution schedule, and a list of repairs the board already knows about. For a calendar-year association, the June books are usually ready by mid-July. Put the review on the July or August board agenda. That leaves time to act before next year's proposed budget goes out in the fall.

Build the forecast one line at a time

Do not double the six-month number. Most lines are not spread evenly across the year. Use the method that fits each line. Fixed contracts. Landscaping at $2,150 a month is $12,900 for the last six months unless the contract changes. Check for a price step at renewal. Seasonal lines. Water, electricity for pool pumps, and snow removal follow the calendar. Look at what share of last year's total fell in the same remaining months and apply it. If July through December was 61 percent of last year's water bill, that share is your starting point, adjusted for any rate change. Annual and lumpy bills. Insurance, the tax return or CPA review, the reserve study update and state filing fees often land in one month. Mark each as paid or still coming. Income. Forecast assessments on what you expect to collect, not what you billed. Use the aging report: an account 90 days behind and already with the attorney will not pay on schedule. Leave late fees and interest out of the forecast unless they have been steady for years. A worksheet row looks like this, for a 90-home association with $200 monthly dues: Line | Budget | Actual Jan-Jun | Forecast Jul-Dec | Projected year | Variance | Type Assessments collected | 216,000 | 104,900 | 106,300 | 211,200 | -4,800 | Collections Water | 18,000 | 7,400 | 11,900 | 19,300 | -1,300 | Recurring (March rate increase) Insurance | 24,000 | 26,850 | 0 | 26,850 | -2,850 | Recurring from next year Pool repairs | 3,000 | 4,600 | 500 | 5,100 | -2,100 | One-time (pump motor) Add a note column. Six months from now, nobody will remember why the water forecast was $11,900.

Sort the gaps before anyone proposes a fix

Set a threshold, such as any line off by more than 10 percent and more than $500. Then label each one. Timing means the money moved in a different month than planned, such as a bill paid in June that the budget put in August. It washes out by year end and needs no action. One-time means a real overrun that will not repeat, like the pump motor. Absorb it from the contingency line or from savings elsewhere. Recurring means the underlying cost changed: the water rate went up, the insurance premium reset, a contract renewed higher. These are the lines that matter most, because they belong in next year's budget at the new level. Collections deserves its own label. If income is short because three owners stopped paying, that is not a spending problem and cutting the landscaping will not fix it. Make sure each account is moving through the collection policy on schedule. Our guide on the past-due dues timeline for boards walks through those steps.

Check the reserve side separately

Confirm that the reserve contribution in the budget is actually being moved to the reserve account each month. A budget that shows $3,000 a month to reserves means nothing if the transfers stopped in March when the operating account ran low. Compare the reserve balance to the balance the reserve study projected for this point in the year. Do not make the operating side look balanced by quietly skipping reserve transfers. If the board thinks it has to reduce or pause them, say so in a motion, in an open meeting, with a plan to catch up. State rules. In Florida, if the members set up statutory reserves under section 720.303(6)(d), section 720.303(6)(h) says reserve funds stay in the reserve account and can be used for other purposes only if a majority approves in advance at a meeting where a quorum is present. Colorado section 38-33.3-209.5(1)(b)(VI) requires every association to adopt a policy on investing reserve funds, and (1)(a) requires accurate and complete accounting records, so read your own reserve policy before moving money. In Texas, the declaration, bylaws and any board-adopted reserve policy control.

What the board can do about a projected shortfall

Work from the least disruptive option up. First, trim discretionary spending for the rest of the year, such as deferring a cosmetic project or an extra round of mulch, but never safety repairs or insurance. Second, use the contingency line. Third, renegotiate scope on a contract that renews before year end. Only after those, consider amending the budget, raising assessments, borrowing or levying a special assessment. Those last steps carry procedure. Texas Property Code section 209.0051(h) bars a property owners' association board from considering or voting on increases in assessments, special assessments, lending or borrowing money, or the approval of an amendment of an annual budget except in an open meeting for which owners received prior notice under subsection (e). An email vote will not do. In Florida, section 720.303(6)(a) requires the annual budget to reflect the estimated surplus or deficit as of the end of the current year, so your forecast becomes a required number in next year's budget. In Colorado, section 38-33.3-303(4)(a)(I) requires the board to send owners a summary of any proposed budget within 90 days after adopting it and to set an owners' meeting to consider it, where a majority of all unit owners can veto it unless the declaration sets a larger share. Check the declaration for caps on increases or member votes on special assessments. If the forecast shows the adopted budget was simply wrong, our guide on fixing a mistake in an adopted HOA budget covers the amendment route step by step.

Florida: check your reporting threshold

Florida section 720.303(7) ties the year-end financial report to total annual revenue. An association with less than $150,000 prepares a report of cash receipts and expenditures. From $150,000 up to $300,000 it prepares compiled statements, from $300,000 up to $500,000 reviewed statements, and at $500,000 or more audited statements. The report is due within 90 days after the fiscal year ends, or on the date the bylaws set. If the mid-year forecast shows revenue crossing one of those lines, perhaps because of a special assessment, start talking to a CPA now. A compilation or review costs money that may not be in this year's budget, and CPAs book up early in the new year. Under 720.303(7)(d), a majority of the voting interests present at a properly called meeting can approve a lower level of reporting, but the association cannot use that option for consecutive fiscal years.

The report, a motion and a timeline

Keep the report to one page: the projected year-end result for operating and reserves, the five largest variances with their labels, collections status, and the treasurer's recommendation. A motion the board can adapt: "I move that the board accept the treasurer's mid-year forecast dated [date], defer the [project] to the [year] budget, and direct the treasurer to carry the revised water and insurance amounts into the proposed [year] budget." A short owner update for the newsletter or website: "At its [month] meeting the board reviewed results for the first half of the year. Water and insurance costs are running above budget, and the board has postponed [project] to keep the association on track to finish the year within its budget. Reserve contributions are on schedule." Sample timeline for a calendar-year association. July 10: June books closed and reconciled. July 20: draft forecast to the president. July or August meeting: report, decisions and minutes. August and September: contract renewal talks informed by the forecast. October: a quick third-quarter update, then the proposed budget for next year starts from the forecast, not from this year's budget. Colorado associations should also remember that section 38-33.3-209.4(2) requires the current operating budget and the prior year's financial statements to be made available to owners within 90 days after each fiscal year ends.

Mistakes boards make

Doubling six months of actuals. Counting billed assessments as cash. Forgetting the annual bills that have not arrived yet, such as the insurance renewal or the tax preparer. Skipping reserve transfers to make the operating side look fine. Keeping the forecast in the treasurer's private spreadsheet. Waiting until November, when the only tools left are a special assessment or a deficit. And spending a projected surplus in the fourth quarter just because the money is there. A surplus is either a cushion, a reserve contribution the board votes on, or a reason to look harder at next year's dues. How it is treated for tax purposes depends on which federal return the association files, so ask the tax preparer before year end.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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