Annual Budget

Is it the BOD's place to make out the yearly budget or the Management Company's? I am assuming the treasure works it out and gives it to the MC to give notice...To those of you that have so much knowledge please bare with me on some of the questions I may ask...I am reading and trying so hard to learn all I can. Thanks

SidneyP

Often too much emphasis is given to an annual budget and assigned to the treasurer when the consideration should first be given to the annual operating plan from which the budget is then derived. The operating plan should be the responsibility of the entire board in consultation with the members (they pay the bills). Iterations between the operating plan and budget are typically required to bring them into agreement.

Having the members involved is one way to build trust between the board and the members. RogerB described a simple method for involving all the members (or at least giving members the opportunity to be involved) in his post at
http://www.hoatalk.com/Forum/tabid/55/view/topic/forumid/1/postid/8419/Default.aspx. If the board is recommending a dues or assessment increase with the proposed operating plan and budget, that can be part of the approval by members. If the members don't approve the increase, then the Board's Plan B (operating plan and budget with no increase in dues or assessments) is approved by default.

This is simple in concept but difficult to implement. The saying is "Planning is easy; implementation is a b......" But POAs are not likely successful if they don't do both the operating plan and budget.

Don...So I am understanding that we can't raise the association fees (only the 10% allowed w/o HO vote) until after the annual budget has been presented, which isn't until Jan 16th. (dues are due Jan.1st)..Roger had stated in another post that we could make it retro active, how could this be done?...You don't know how hard I have tried to get the other 2 Board members to have meetings, get the HO's involved, let them meet us. I had suggested a newsletter right from the start. I even wrote one, introducing us and trying to convey what we had planned. I sent it to the President(because she requested she check it for spelling, etc. I thought it was good and I had even gone to our entrance and took a photo of the logo for attachment to the letter. Well, she didn't correct or suggest any changes, she rewrote the whole thing and sent it back to me and ask me to add my logo. This peed me off and I told her she could take care of it herself, I was through w/newletters. A newsletter has never been sent except I sent mine to the 4/5 HO's that attended the meeting (each of them has thanks me). I have ask the other 2 Board members to follow the CC&R's but all I ever hear is they work full time and have other dememtions to their lives also. I had crunched the figures I wanted (treasurers job) to show that we didn't have enough money even to last out the year. Our old MC had low balled just about everything. Our manager had our utilities at $2000. for the year, at the end of the 2nd quarter it was already 2100 <$2600 now>. and to boot our fountain had broken in Apr. and hasn't worked since, so the cost has been even lower then normal. General maintenance budgeted for $2890., end of 2nd quarter was $4769.(our MC used their own maintenance co), postage and printing budget $250., end of 2nd quarter $380. and so on and so on. The 2006 Budget was given to us at take over and we had not done any transition investigation and just excepted what was presented. As you can see this was way below budget or they padded our out go. I have tried to get the (remaining board-2 missing) to do something but it has done no good. If the HO's need to be notified about the 2007 budget 30 days in advance of annual meeting(Jan 16th), looks like we will not make the dead line. Can the annual meeting be changed to when ever the BOD's want it?...This is long and I hope it makes sense. Again any help is appreciated.

SidneyP

No, I am not saying that a proposal to raise the annual assessments can't be made until the budget is prepared. I am saying that it is good practice to link the operating plan, budget, and annual assessments. Since the members are paying the bill and receive the benefits, it is also good practice to involve the members.

The authority to increase annual assessments is defined in your governing documents. That authority should be exercised with good governance. Members shouldn't be taken for granted.

Ron, first I would summarize available historical income and expenses for the operating account. Review any existing reserve fund studies. Then develop your annual operating and reserve fund budgets. I prefer to include minimum anticipated income and anticipated maximum expenditures for the operating budget. For the reserve fund it depends on numerous factors but a rule of thumb is to add 25% to 35% of total annual income.