Many associations kept dues flat for years while insurance, landscaping, and repair costs rose. The board did not decide to underfund anything. The gap just showed up quietly, in the reserve contribution and in deferred maintenance.
This guide shows a board how to test whether its dues have kept pace, using the association's own records, and how to present the answer to owners.
Why flat dues hit the reserve first
The operating budget has to balance. Insurance premiums, the landscaping contract, utilities, and management fees come due whether or not dues rose. When dues stay flat and those bills climb, the board has three places to find the money:
- Cut the reserve contribution. This is the easiest cut, and the one nobody sees this year.
- Defer maintenance. Small repairs wait, then become larger repairs.
- Raise dues or levy an assessment. Owners see this one.
The first two pass the cost to the future. A reserve study makes that cost visible, because it shows what the community should be setting aside each year to replace roofs, paving, and other components. See our guide to HOA percent funded for how the study measures the gap.
Compare against general inflation, with a limit
The Consumer Price Index is a public yardstick. The BLS all-items index for urban consumers (CPIAUCNS, via the Federal Reserve Bank of St. Louis) was 196.8 in December 2005 and 315.6 in December 2024. That is about 60% higher over 19 years.
An association's costs do not track the all-items index. Insurance, labor-heavy landscaping, and construction materials each move on their own. So CPI is a floor for the conversation, not a measure of what your association's costs did. The accurate comparison uses your own bills.
A four-step test
- Pull a starting year. Choose a year the board trusts as balanced, such as the first year dues were last set against actual expenses.
- List each expense line for that year and for this year. Insurance, landscaping, utilities, management, repairs and supplies, and the reserve contribution.
- Calculate the change for each line. Use invoices and renewal letters, not estimates.
- Compare the total change to the change in dues. The difference is the gap the association has been absorbing.
Here is a sample. The numbers are round and illustrative. They do not describe any real community.
| Expense line (sample) | Year one | This year | Change |
|---|---|---|---|
| Insurance | $50,000 | $90,000 | +80% |
| Landscaping | $40,000 | $60,000 | +50% |
| Repairs and supplies | $30,000 | $42,000 | +40% |
| Utilities | $20,000 | $24,000 | +20% |
| Management and admin | $20,000 | $26,000 | +30% |
| Operating total | $160,000 | $242,000 | +51% |
| Dues collected | $200,000 | $200,000 | 0% |
| Left for reserves | $40,000 | -$42,000 |
In this sample, flat dues leave a $40,000 reserve contribution in year one and a $42,000 deficit now. The association would have to dip into reserves just to pay operating bills. A board that runs this test sees the problem before a roof bid or a renewal letter forces it.
Read your own insurance history
Insurance is often the largest single line. Pull the last several renewal letters and note the premium, the deductible, and the coverage changes. A rising premium paired with a higher deductible means the association now carries more risk itself. A reserve study does not set insurance coverage, so ask your agent and your attorney what the association is exposed to.
Reset the plan, not only the dues
Once the test shows a gap, fix both sides.
- Reprice the operating budget. Rebid the landscaping contract and review the management agreement. Our guide on comparing contractor bids covers scope and price side by side.
- Update the reserve study. If the study is old, its replacement costs are low too. See how often to update a reserve study.
- Choose how to close the gap. The usual tools are a dues increase phased over several years, a one-time assessment, or a loan. Each has tradeoffs for owners.
- Show owners the history. A chart of the association's own expenses against its dues is more persuasive than any national statistic.
How to present it to owners
- Lead with the board's own invoices.
- Show the years dues stayed flat and what that deferred.
- Explain what an increase pays for: insurance, maintenance, and the reserve.
- Offer options and their effect per unit.
- Bring an independent party if the room is skeptical. We can present the study and funding plan to your community; see our reserve study service.
This guide is general information, not legal or financial advice. CPI figures come from the Bureau of Labor Statistics via FRED. Your governing documents and your association's attorney control how dues and assessments may be set and levied.