Board Makes Large Expenditure Not in Approved Budget

Our Board approved our Fiscal Year Budget in March of this year for 2011/2012.
The Budget included anticipated Operating and Reserve Expenditures and was put together by our management company, present to and adopted by the Board.

I am concerned that they did not break out the Reserve expenses from the Operating expenses. The buget is for $312K and all of the expenses add up to only $232K, leaving $80K unaccounted for. We are a Non-Profit.

We received a letter in the mail stating that aaphalt replacement and resurfacing would begin this week. This is a needed repair BUT it was not budgeted for. The cost will be in the neighborhood of $50-70K. Our Bylaws state that the Board makes the budget each year and sets our monthly asssessments by it. Any 'capital' expenditures beyond $1,000 after the Budget is set requires approval of the Co-owners. The kick is that I spoke with our Property Manager after the Budget was approved and ask him why the asphalt was not budgeted for. He told me that the cost of petroleum was way high and that the Board was going to present the expenditure to the Co-owners at the Annul Meeting (June) and have a vote on it....

Does anyone know how to handle this seeming impropriety?

Do you have a Reserve Plan? How is the Reserve Fund "defined"?

Is the asphalt work included in this plan?

While everything seems to be in one pot, there well may be a distribution method there. The Board surely needs to explain WHERE they plan to get thhis project funded.

Ask the treasurer to explain all these funds to you. You have a right to ask and to see.

Are you a condo?

See the Michigan Condo Act. Here's a Q & A from another web site;

What are the “reserve fund” requirements of the Condominium Act?

Under Section 559.205 of the Condominium Act, a condominium Association must maintain a reserve fund for major repairs and replacement of common elements. This reserve fund must be equal to 10% of the Association’s current annual budget on a noncumulative basis. However, the Association should carefully analyze the condominium project to determine if a greater amount should be set aside, or if additional reserve funds should be established for other purposes. R 559.511(4).