WHISPERWOOD HOME OWNER’S ASSOCIATION
ANNUAL BUDGET AND RESERVES REPORT
FOR YEAR 2025
The 2025 budget report for Whisperwood Homeowners Association has been carefully prepared to ensure the ongoing maintenance and improvement of our community amenities, while maintaining financial responsibility. This year’s budget reflects our commitment to preserving the quality of life for residents by addressing necessary repairs, including significant updates to the swimming pool and common areas, while also contributing to the reserve fund for future projects. Through diligent planning, we have prioritized both immediate needs and long-term sustainability, all within the framework of our $140,000 annual budget.
Shouldn’t we save money instead of spending it? – Analysis
RESERVES:
In Texas, the amount an HOA should have in reserves depends on the specific needs and size of the community, the age of the property, and the types of amenities maintained (such as the pool, pool house, and grounds in our case). However, there are some general guidelines and best practices:
- General Rule of Thumb
Many financial experts suggest that an HOA should keep 10% to 40% of its annual budget in reserves, depending on the scope of repairs and future expenses. $1,400 to $56,000
A common goal is for an HOA to maintain a reserve fund that covers 70% to 100% of the projected future expenses. In some cases, 100% of the projected amount may be required for HOAs to avoid special assessments.
$98,000 to $140,000
HOAs with more amenities and older properties typically require more reserves than newer developments with fewer shared amenities.
- How Much Is Too Much?
Too Much in Reserves: While having ample reserves is necessary for the financial health of the HOA, too much can sometimes lead to overfunding, which may signal that the HOA is collecting more in fees than needed. In Texas, this can be an issue if homeowners feel they are being overcharged. Typically, reserves exceeding 150% of the anticipated future expenses might be considered excessive. $210,000 would be considered excessive in our case. - Considerations for Texas
Property Age and Size: Older properties or those with extensive common areas typically need more reserves due to the higher likelihood of repairs. In Texas, where harsh weather conditions like heat or heavy rains can impact properties, you may need larger reserves to account for potential storm damage or maintenance costs. - Avoiding Special Assessments:
An adequate reserve fund protects homeowners from unexpected special assessments. A well-funded reserve ensures that when major repairs are needed, the HOA can cover the costs without imposing additional fees on homeowners. - Examples of Adequate Reserve Percentages
Low Reserve Adequacy: 30% or below – indicates the HOA may be underfunded and at risk of needing special assessments or loans for major repairs. $42,000
Moderate Reserve Adequacy: 50% to 70% – considered healthy but may still require careful management for future needs. $70,000 to $98,000
High Reserve Adequacy: 70% to 100% – ideal for most HOAs, covering expected costs and future repairs. $98,000 – $140,000
Overfunding: 150% or more – suggests that the HOA may be collecting more funds than necessary, which could lead to dissatisfaction among homeowners and loss of your non-profit status. $210,000
RECOMMENDATION:
Recommended Reserve Fund: Generally, 70% to 100% of of the annual budget. $98,000 to $140,000.
Too Much in Reserves: If the HOA reserves exceed 150% of the anticipated needs, it may be considered excessive. Over $210,000 is too much.
Regularly conducting reserve studies and adjusting HOA dues accordingly can help ensure that the reserve fund remains at an appropriate level without overburdening homeowners.
BREAKDOWN OF RESERVES AND SUGGESTED POOL EXPENDITURES
| Current Reserve Holdings in CD 6490 | $103,420 |
| CD 6802 | 77,560 |
| CD 8900 | 35,175 |
| Current Reserve Holdings in MM | 86,460 |
| Total In Reserves | $302,615 |
| State Recommended Reserve Holdings | (140,000) |
| Total available to spend on pool improvement | $162,615 |
BUDGET BREAK DOWN AND DETAIL:
Breakdown and Explanation of Expenses by Category and Recommended Percentage of Budget to Allocate to Each
- Administrative Costs:
- Range: 10% to 15%
- Estimate: $13,500 to $20,000
- Covers management fees, legal/accounting services, HOA software, communication with residents.
- YTD: $4,000
- Estimate Budget for 2025: $8,000
- Pool Maintenance and Repairs:
- Range: 10% to 20%
- Estimate: $13,500 to $20,000
- Includes regular cleaning, chemical treatments, equipment maintenance (pumps, filters), and possible repairs.
- YTD: we’ve spent $20,000 which includes does NOT include monitoring other than the really nice cameras installed this year. Also includes a pool cleaning robot and auto chemical dispenser
- Estimate Budget for 2025: $20,000
- Monitoring
- Skimming
- 3X per Week Cleaning
- 3X per Week Chemical Check
- Weekly Deep Clean
- Monthly check equipment
- All Chemicals
- Pool Monitoring:
- Range: 20% TO 30%
- Estimate: $27,000 to $40,000
- Includes monitoring by attendant.
- Year 2023: Since there was no monitoring during 2024, 2023 total was $10,000.
- Estimate Budget for 2025: $20,000 for Attendant $30,000 for Lifeguards
- A lifeguard is the most effective way to ensure safety but is more costly.
- A pool attendant provides a visible presence and can deter rule-breaking without the higher costs of a lifeguard.
- Camera monitoring may provide enough oversight if there are fewer safety concerns but should not be the sole method for ensuring safety. We can continue to illegally implement a waiver system, but that in itself is NOT a safeguard for HOA liability or Board Member liability. Not to mention the legalities the HOA will likely face as a result from the many landlords.
- Estimated expense of $15,000 to $20,000 to attract and retain a responsible individual(s) as an attendant, or $20,000 to $30,000 to attract and retain a Certified Lifeguard(s).
- Grounds Maintenance:
- Range: 10% to 15%
- Estimate: $13,500 to $20,000
- Covers landscaping, mowing, tree trimming, irrigation system maintenance.
- YTD: $15,900
- Estimate Budget for 2025: $25,000
- Insurance (Liability, Property, Pool):
- Range: 5% to 10%
- Estimate: $6,800 to $13,500
- Covers liability insurance for common areas, including the pool and grounds.
- YTD: $8,000
- Estimate Budget for 2025: $10,000
- Taxes (Property and Federal):
- Range: .5% to 1%
- Estimate: $600 to $1,400
- Covers property tax on pool house and lot as well as any federal tax payable.
- YTD: $1,300
- Estimate Budget for 2025: $1,300
- Utilities (Water, Electricity for Pool and Grounds):
- Range: 10% to 15%
- Estimate: $13,500 to $20,000
- Includes pool heating/circulation, lighting, irrigation, phone, cameras, etc.
- YTD: $9,300
- Estimate Budget for 2025: $15,000
- Reserve Fund Contribution:
- Range: 10% to 20%
- Estimate: $13,500 to $27,000
- Allocated for future repairs and capital improvements, especially for the pool area or unexpected issues.
- YTD: $25,000
- Estimate Budget for 2025: $20,000
- Miscellaneous Event Expenses:
- Range: 2% to 5%
- Estimate: $2,800 to $6,750
- For unforeseen expenses, community events, or other minor repairs.
- YTD: $0
- Estimate Budget for 2025: $5,000
This breakdown provides flexibility for routine operations while ensuring that a portion of the budget is saved for reserves and potential capital improvements. Based on these suggested percentages and the scope, goals, and mission of the Whisperwood Home Owners Association, the following is the projected budget for Whisperwood HOA, including general expenses and specific maintenance costs for the community swimming pool. This budget is based on an annual income of $140,000, with a focus on maintaining amenities, repairing common areas, and improving the pool facilities.
Whisperwood Home Owners Association
PRELIMINARY
Budget and Reserves for year 2025
INCOME:
| Category | Estimated Income ($) |
| Member Dues (466 units) | $139,800 |
| Less 2% for non-payment of Dues | $(3,000) |
| 8 Pool Parties at $200 each | $1,600 |
| Interest Income on Reserves | $1,600 |
| Total Income | $140,000 |
EXPENSES:
General HOA Expenses:
| Category | Budgeted Amount ($) |
| Accounting Fees | $2,000 |
| Bank Fees | $50 |
| Legal Fees | $3,000 |
| Licenses & Fees | $400 |
| Office Supplies | $150 |
| Meeting Rooms | $200 |
| Newsletters | $2,000 |
| Postage | $200 |
| Total General Expenses | $8,000 |
Swimming Pool Expenses:
| Category | Budgeted Amount ($) |
| Pool Maintenance and Cleaning | $10,000 |
| Pool Chemicals and Supplies | $8,000 |
| Pool Equipment Repair/Replacement | $1,000 |
| Pool Furniture Repair/Replacement | $1,000 |
| Total Pool Expenses | $20,000 |
Swimming Pool Attendant Expenses:
| Category | Budgeted Amount ($) |
| Pool Attendant / Lifeguard | $30,000 |
| Total Pool Attendant Expenses | $30,000 |
Grounds Maintenance:
| Category | Budgeted Amount ($) |
| Landscaping and Lawn Maintenance | $4,000 |
| Groundskeeper | $15,000 |
| Irrigation System Repairs | $2,000 |
| Tree Trimming | $2,000 |
| Pest Control | $1,000 |
| Weed Control | $1,000 |
| Total Grounds Maintenance | $25,000 |
Insurance Expenses:
| Category | Budgeted Amount ($) |
| WHOA Property Insurance | $8,000 |
| General Liability (Directors & Officers) | $2,000 |
| Total Insurance Expenses | $10,000 |
Tax Expenses:
| Category | Budgeted Amount ($) |
| Property Tax | $1,000 |
| Federal Tax | $300 |
| Total Tax Expenses | $1,300 |
Utilities Expenses:
| Category | Budgeted Amount ($) |
| Water, Sewer and Trash | $10,000 |
| Electricity | $2,800 |
| Gas to heat pool | $2,200 |
| Total Utilities Expenses | $15,000 |
Miscellaneous and Event Expenses:
| Category | Budgeted Amount ($) |
| Miscellaneous and Events | $5,000 |
| Total Miscellaneous Expenses | $5,000 |
Reserve Fund Contribution:
| Category | Budgeted Amount ($) |
| Contribution | $20,000 |
| Total Reserve Fund Contribution | $20,000 |
Summary:
| Category | Total ($) |
| Total Income | $140,000 |
| Total General Expenses | $8,000 |
| Total Pool Expenses | $20,000 |
| Total Pool Attendant Expenses | $30,000 |
| Total Ground Maintenance Expenses | $25,000 |
| Total Insurance Expenses | $10,000 |
| Total Tax Expenses | $1,300 |
| Total Utilities Expenses | $15,000 |
| Total Miscellaneous Expenses | $5,000 |
| Total Capital Projects | $20,000 |
| Total Expenses | $134,300 |
| Surplus/Deficit | $5,700 |
Notes:
- The HOA should contribute yearly to a reserve fund for future improvements and emergencies, ensuring financial stability without imposing special assessments.
RECOMMENDATIONS:
Laddering Strategy: Consider a laddering approach where you divide the total amount into several CDs with staggered maturity dates for the $140,000 setback for reserves.
For example:
-
- $30,000 in a 5-year CD earmarked for Pool Resurface
- $30,000 in a 4-year CD earmarked for Pool House Repairs
- $30,000 in a 3-year CD earmarked for Pool Repairs
- $30,000 in a 2-year CD earmarked for Common Area Reno
- $20,000 in a Money Market Account earmarked as an Emergency Fund
- At year end, the $20,000 budgeted for 2025 should be added to the Money Market Fund.
This method allows you to benefit from potentially higher rates in longer maturities while maintaining some liquidity as CDs mature at different times.
As a 501(c)(4), we do not pay taxes on interest as long as the money receiving the interest is from dues.