(Based off of the SHPOA 2024 year end finance report)
1. Payroll Percentage of Total Income
2. Interpretation of the 58.36% Payroll Percentage
A payroll percentage of 58.36% means more than half of your total income is being used to cover payroll expenses.
This is significantly high in the context of a Property Owners Association. Here’s how it can affect your POA:
3. Impact on SHPOA
| Category | Implication |
|---|---|
| Budget Flexibility | With 58% of income tied up in payroll, there’s less money available for maintenance, repairs, reserves, amenities, or improvements. |
| Reserves & Long-term Planning | It could restrict your ability to build or maintain a healthy reserve fund for future capital projects. |
| Dues Pressure | May increase the likelihood of raising HOA dues or special assessments to fund other necessary expenses. |
| Operational Risk | High payroll reliance can expose the POA to risk if income decreases (e.g., delinquent dues, fewer members). |
| Value to Members | Owners might question the value they’re receiving if a large portion of their dues goes to payroll rather than tangible community improvements or services. |
4. Typical Benchmarks (for reference)
While it varies, most POAs aim to keep payroll (including management, maintenance staff, etc.) between 25%–35% of the total income. At 58.36%, SHPOA is well above that range.
5. Next Steps
- Review Staffing Needs: Are all positions essential? Can some roles be outsourced or combined?
- Efficiency Audit: Consider a third-party review of operational efficiency.
- Member Communication: Be transparent about payroll costs and how they support community services.