Florida Community Association Manager Practice Exam

Which of the following is NOT a permissible exclusion from budget calculations for increases?

1. Reserves

2. Infrequency of expense

3. Regular operational costs

4. Betterments

The correct answer is: Regular operational costs

In the context of community association management, the budget must provide for all necessary expenses to ensure the smooth operation of the community. Regular operational costs are ongoing expenses that are essential for the daily functioning of the association, such as maintenance, utilities, and administrative costs. These costs are predictable and should be included in budget calculations to avoid financial shortfalls and to ensure that the community can meet its obligations. On the other hand, reserves, infrequency of expense, and betterments may not be necessary for every budget cycle. Reserves are typically set aside for future capital improvements or replacements and can be adjusted or excluded based on the specific budget goals for a certain period. Infrequent expenses, which occur irregularly, might not need to be included in each budget cycle, as they don’t reflect the routine financial picture of the community. Betterments, which refer to improvements that enhance property value rather than mere repairs, can also be considered separately from regular operational costs when planning budgets. Thus, while exclusions are permissible in certain contexts, regular operational costs are fundamental and must always be included in budget calculations, making them an essential aspect of sound financial planning for a community association.