The first thing you must do when you encounter a budget surplus is to check the law. The law on HOA surplus funding varies from state to state, and some states do not even have them. Still, it is good practice and, frankly, common sense, to verify what the law says prior to taking any action whatsoever. In general, though, possible recourses include carrying over the surplus to the next year's budget, transferring the surplus to the reserve funds, or refunding the surplus to members.