How to Create a Condo Association Budget | ReservesPro

A budget for a condo association sets what every owner pays next year, and in Florida the law has a say in how the board builds it and adopts it. Most boards build it the same way, which is to open last year's file, add a few percent and check that nothing looks wrong. That habit is a natural place to start, and it often works for a year or two. Over time, though, it answers the question "what can owners live with?" when the budget should answer "what does this building need?"

This guide builds the budget from the building's needs and works toward the assessment number. It follows the 2026 Florida statute, and it links to a deeper post for each part of the process, so you can treat it as the hub for your whole budget season.

What a condo association budget includes

Every condo budget has two parts, and it helps to keep them apart in your head before you start.

The operating budget pays for this year. It covers insurance, management fees, utilities, maintenance contracts, repairs, legal and accounting costs, and administration.
The reserve budget saves for the future. It sets money aside each year for the large projects that come up every 10, 20 or 30 years, such as a new roof, exterior painting or paving.

Florida law sets the floor for both. Under section 718.112(2)(f)1, the proposed budget "must be detailed and must show the amounts budgeted by accounts and expense classifications." It must include, at a minimum, the applicable expenses that section 718.504(21) lists. That list includes administration, management fees, maintenance, taxes on association property, insurance, security, operating capital, reserves and the fees payable to the Division of Florida Condominiums.

For the difference between the two budgets in more depth, read reserve fund vs. operating fund.

The method, step by step

Set the calendar. Work back from your fiscal year start date so the board is never short of time.
Gather the numbers. Budget from what the association actually spent and the contracts it actually holds.
Build the operating budget. Price each line from current facts, with insurance first.
Set the reserve contribution. Fund toward full funding, even when a smaller number feels easier.
Turn the total into assessments. Divide the budget by each unit's share.
Check the 115 percent rule. Know before the meeting whether the board must propose a substitute budget.
Give notice, present and adopt. Meet the 14-day rules and explain the budget in plain language.

Step 4 carries the most weight, because it decides whether the building's future costs land on today's owners or on the next ones.

Step 1: Set the calendar

Two dates in section 718.112 fix the end of budget season. The board must "adopt the annual budget at least 14 days before the start of the association's fiscal year." And at least 14 days before the budget meeting, it must deliver to each owner a notice of the meeting and a copy of the proposed budget.

So count back from the first day of your fiscal year. Subtract 14 days for adoption and another 14 for notice, and you have the date the proposed budget must be final. The board review, the insurance quote and the reserve study numbers all need to land before that date, which usually means you start a few months earlier than feels necessary.

Step 2: Gather the numbers

A budget built on last year's budget repeats last year's mistakes. A budget built on last year's actual spending corrects them. Before you write a single line, collect these:

Two years of month-by-month actual income and expenses, plus this year to date
Every vendor contract, with its renewal date and current price
The insurance declarations pages and the renewal quote, or the agent's best estimate
The most recent reserve study, and the structural integrity reserve study (SIRS, the state-required study of the building's structure and safety items) if your building needs one
Any capital projects the board has discussed that the study does not yet show
The delinquency report, because assessments you cannot collect do not pay bills

Lines that ran over budget two years in a row need a new number, not the old one carried forward. Contracts that renew during the year need the new price.

If the board has a list of projects that it has talked about but never scheduled, now is the time to put dates and costs on it. Our guide on how to prioritize capital projects helps you rank it.

Step 3: Build the operating budget

Build each operating line from the facts you gathered, not from last year's figure plus a percentage.

Insurance. For many Florida associations this is the hardest line to predict. Get the renewal quote, or the best estimate your agent can give, before you finish anything else. Our post on condo association insurance costs covers what drives the premium.

Management, maintenance and service contracts. Use the contract price for the budget year, including any increase that the renewal terms set.

Utilities. Start from 12 months of actual bills, and add any rate increase that the utility has already announced.

Repairs. Budget a realistic amount for repairs nobody can schedule. Unplanned repairs come up in any occupied building, so a zero in this line is a forecast that will miss.

Legal, accounting and administration. Include accounting and audit costs, any legal matters the board expects, and the fees payable to the Division.

When the total is in, compare it with the operating share of this year's assessments. If the new number is higher, find out why before you cut anything. A rising insurance premium, a new contract and a line that was underbudgeted for years each call for a different answer. If the operating budget is already short this year, see how to handle a condo association budget deficit.

Step 4: Set the reserve contribution

The reserve line is where a budget can go quietly wrong, because it is the easiest line to trim and the one whose cost shows up years later.

What Florida requires

Under section 718.112(2)(f)2.a, the budget "must include reserve accounts for capital expenditures and deferred maintenance." Those accounts must cover roof replacement, building painting and pavement resurfacing at any cost, plus any other item whose replacement cost or deferred maintenance exceeds $25,000 adjusted for inflation. The Division posts that threshold at $25,675 for 2026. The amount reserved must be "computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of the reserve item."

A building three or more habitable stories tall also needs a SIRS, which is a study of the parts of the building that keep it structurally sound and safe. Under section 718.112(2)(g), the association must complete one "at least every 10 years." It covers the roof, the structure (including load-bearing walls), fireproofing and fire protection, plumbing, electrical systems, waterproofing and exterior painting, and windows and exterior doors. Other items join the list only when they cost more than the threshold and their failure would harm those items.

For those SIRS items, the reserve amount "must be based on the findings and recommendations of the association's most recent structural integrity reserve study." For a budget adopted on or after December 31, 2024, an association that must obtain a SIRS cannot vote to provide no reserves or less reserves for the SIRS items. The one exception is a multicondominium with an alternative funding method that the Division approved. Owners can still waive or reduce other reserves by a majority of the total voting interests, but the cost of a waiver does not go away; it moves to the owners who are there when the work comes due.

For the full set of 2026 rules, see Florida condo reserve funding requirements and how to budget for SIRS costs.

Pick the funding goal before you pick the number

The statute sets the minimum. The reserve study turns that minimum into a yearly number, and the number depends on the funding goal the board picks. In study language, a component is one item that reserves pay to repair or replace, such as the roof or the elevators. Percent funded compares the money in the reserve account with the cost of the wear the components have already taken. The Community Associations Institute (CAI) calls that cost of used-up life the "fully funded balance."

CAI's Reserve Study Standards name three funding goals.

Baseline funding lets the reserve balance "approach but never fall below zero." CAI calls it "the funding goal with the greatest risk" and says it "is not recommended as a long-term solution/plan."
Threshold funding keeps the balance above a dollar amount or percent funded that the board chooses. It is only as strong as the number the board picks.
Full funding aims to "attain and maintain reserves at or near 100 percent funded."

Full funding is the goal, and the only choice a board has to make is how fast it gets there. It is the only goal in which each year's owners pay for the wear that happens on their watch, instead of passing it to whoever owns the unit when the roof comes due.

The other two goals defer part of that cost, and deferral costs more in both directions. Saved dollars earn interest while they wait for the project. Deferred dollars come due later at a higher replacement price, often as a special assessment or a loan. A board may hear 70% funded called good enough. We treat 70% as a floor, a level the fund should never drop below, and never as the goal. CAI's own standard says percent funded "is not by itself a measure of 'adequacy'", so the direction of the trend matters more than any single reading.

For the comparison in full, read baseline vs. threshold vs. full funding and what percent funded means.

Put the number in the budget

Budget the contribution that your funding plan calls for, and raise it each year as costs rise. The statute lets the association adjust reserve assessments "annually to take into account an inflation adjustment and any changes in estimates." A contribution that stays flat while the building ages falls further behind each year.

If your fund is behind today, the budget is where the catch-up plan starts. Our guide on how to fund condo reserves covers the wider strategy. To check the math for a single component, try the asset reserve calculator.

Step 5: Turn the total into assessments

This step is arithmetic. Add the operating budget and the reserve contribution to get the total that owners must fund. Divide that total by each unit's share as your declaration of condominium sets it, then divide by the number of payments in the year.

The assessment is the result of the budget, not the starting point. When a board picks the assessment first and trims the budget to fit, the reserve line is often what gets trimmed, and that is how a quiet shortfall becomes a special assessment a few years later. For a worked walk-through of the fee itself, see how to set condo maintenance fees.

A good template makes this step faster and keeps the operating and reserve sections apart.

Step 6: Check the 115 percent rule

Before the budget goes out, compare the new assessments with last year's. Under section 718.112(2)(e)2, if a proposed budget "requires assessments against unit owners which exceed 115 percent of assessments for the preceding fiscal year," the board must at the same time propose a substitute budget that leaves out the discretionary expenses the law does not require.

The board presents the substitute at the budget meeting, before it adopts the annual budget. Owners can adopt the substitute "by a majority of all voting interests," unless the bylaws require more. If they do not adopt it, the board's original budget may be adopted. The notice for a meeting with a substitute budget goes out at least 14 days ahead, by hand delivery or mail, with an affidavit of notice.

The test leaves three things out. It excludes the provision for required reserves, the SIRS work that the board does not expect every year, and insurance premiums. So a board that raises reserves to meet its plan, or that absorbs a large insurance increase, may stay under 115 percent even when the total assessment rises by more than that. Run the numbers both ways, and ask your association attorney to confirm before the notice goes out.

Step 7: Give notice, present and adopt

At least 14 days before the budget meeting, the board must hand deliver, mail or electronically transmit to each owner a notice of the meeting and a copy of the proposed budget. An officer, the manager or the person who gives notice must sign an affidavit that the notice went out, and the affidavit is filed with the official records. The meeting is open to all owners, and it may be held by video conference. An association with 25 or more units must also post the annual budget and any proposed budget for the annual meeting on its website or app, under section 718.111(12)(g).

Before the notice goes out:

Ask your manager or accountant to check the draft for errors
Walk every board member through the numbers, so each one can explain the budget, not just vote on it
Write a one-page summary in plain language for owners

At the meeting, present the operating budget and the reserve budget separately, and say what drives each increase. If reserves are rising because earlier budgets underfunded them, say that plainly. Owners take a clear reason far better than a surprise later. Our guide on how to explain reserve fund increases covers the hardest part of the conversation.

Common budget mistakes

Starting from the assessment. A budget built to hit a target assessment answers the wrong question from the first line, and the reserve line often pays for it.

Holding reserves flat. Costs rise and components age, so a flat reserve contribution falls behind a little more each year.

Guessing on insurance. Budget from the renewal quote or the agent's estimate. A guess on the hardest line to predict puts the whole budget at risk.

Borrowing from reserves. Under section 718.112(2)(f)3, reserve funds and their interest stay in the reserve accounts and "may be used only for authorized reserve expenditures," unless a majority of all the total voting interests approves another use in advance. An association that must obtain a SIRS cannot vote to use SIRS reserves for anything else. Section 718.111(14) also lets reserve and operating funds share an account "for investment purposes only," and the reserve money must be accounted for separately.

A zero for repairs. Unplanned repairs will come, so give them a line.

Treating every special assessment as a failure. Full funding prevents the assessments that underfunding causes. A hurricane, a new building code or a lawsuit can still create a cost that no reserve study predicted. A board that plans for those cases can meet them calmly. See how to avoid special assessments for the ones that planning can prevent.

The budget is one year of a longer plan

The officers and directors of a Florida association have "a fiduciary relationship to the unit owners" under section 718.111(1). In practice, that duty is easier to meet when the board can see past the year in front of it. An annual budget answers what this year costs. It does not show how next year's insurance renewal, a loan for a concrete project, a special assessment vote and the reserve schedule fit together over five years.

A Capital Plan shows that picture by putting operating expenses, reserves, insurance, debt and special assessments into one five-year model, with the scenarios your board is weighing side by side. Reserves Pro builds it with your board from the reserve study, financials and documents you already have, presents it to your board or finance committee, and refreshes it every quarter. Then each budget season starts from a plan instead of from last year's file.

See how a Capital Plan works for your board

Frequently asked questions

What should a budget for a condo association include?

Two parts. The operating budget covers the recurring costs, such as insurance, management, maintenance, utilities and administration. The reserve budget saves for the big, predictable projects, such as the roof, painting and paving. In Florida the budget must show amounts by account and expense classification, and it must include reserve accounts for roof replacement, building painting, pavement resurfacing and any other item that costs more than the inflation-adjusted threshold, which is $25,675 for 2026.

When does a Florida condo board have to adopt the budget?

At least 14 days before the association's fiscal year starts. The board must also deliver a notice of the budget meeting and a copy of the proposed budget to each owner at least 14 days before that meeting. Work back from your fiscal year start date to set the calendar.

What happens if the new budget raises assessments by more than 15 percent?

If the proposed budget requires assessments of more than 115 percent of the prior year, the board must also propose a substitute budget without discretionary expenses. Owners can adopt the substitute by a majority of all voting interests, unless the bylaws require more. If they do not, the board's budget may be adopted. Required reserves, structural integrity reserve study (SIRS) work that is not a regular yearly expense, and insurance premiums do not count toward the 115 percent test.

How much should a condo association budget for reserves?

Enough to reach and stay at full funding, which means the reserve balance matches the cost of the wear the building has already used up. Baseline and threshold funding set lower targets and leave part of the cost for later owners. Your reserve study and funding plan give the number, and the board decides how fast it closes the gap.

Can a Florida condo use reserve funds to cover an operating shortfall?

Only if a majority of all the total voting interests approves the other use in advance. For an association that must obtain a structural integrity reserve study, owners cannot vote to use the SIRS reserves for anything except those components. This is not legal advice, so talk to your association attorney before any vote.

This article is general information about condo budgeting and Florida condominium law, current to the 2026 statutes. It is not legal advice, so consult your association attorney about the statute and your governing documents. It is not financial or investment advice, so consult your CPA, your treasurer or a registered investment advisor about your association's numbers.