Budget Ratifications, changes, etc.

Started by WendyJ1 • 3 replies • 1230 views

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WendyJ1 (California)
Posts: 4

Posted:

We are in the middle of a disagreement about how this year's budget was adopted. I have two questions for those of you who are working with California HOAs specifically. The timeline goes like this:
Sept Bd Mtg-Board votes to hold budget workshops
Sept Workshop-no minutes, etc, and not all board members present (however now they're saying that this was a committee delegated by the board to work on the budget and they had the power to take an action to approve the budget)
late Sept - Budget and Assessment notices mailed out
Oct Board Mtg (after 30 day deadline for sending out the budget) - board ratifies budget

1. It would seem to me as a board member elected at the November meeting that the board has the ultimate say in whether or not the budget is approved. So, in your opinion, is it ok to send out the budget before the board ratifies the action? It seems wrong to me.

2. There is some discussion among board members about possibly changing the budget and sending out a revised one. Have any of you ever done this? Any advice?

Thanks!

DonnaS (Tennessee)
Posts: 5,671

Posted:

Wendy,
After reading your questions, I think that your Board basically followed a normal procedure in adopting the budget.

Holding the budget workshops was a good idea as it gives everyone the opportunity to review or at least hear discussions on the proposed budget. Workshops do not normally require formal minutes but the chair should have kept notes or minutes.

Committees can operate without a Board member present but they do have to report to the Board on whatever instructions that they recieved from the Board. Now--you contradict yourself--"(and they had the power to take an action to approve the budget)" They can approve the work that they did and agree as a committee to send it to the Board for the Board to vote to accept but they do not vote to accept it for the years actual budget. They do not have that authority

The next paragraph, you said "Oct Board meeting(after 30 day deadline for sending out the budget)--BOARD RATIFIES BUDGET."
If indeed, that is the correct scenerio, then that is absolutely the correct way to pass the new budget.

As for the discussion that the Board might possibly change the budget, they cannot just send out the revision. They must give proper notice and go by the process of notification to members and then at a duly called meeting, have another vote by the board members. Unless they have just a single item that is messed up, they might be able to make an adjustment without having to change the entire budget

WendyJ1 (California)
Posts: 4

Posted:

Let me clarify a couple of points. The board voted to hold "budget workshops" but no homeowners were invited. The only people present were 4 of 6 board members. The management company is now saying that the board delegated its authority to this "committee," but there isn't any record of the delegation in the September minutes.

Our fiscal year begins November 1 and the budget was sent out to homeowners along with the notice of the increased assessment in late September. The board had not yet voted to ratify the budget. Then, after the budget was sent out as the approved budget, then on October 4, 2007 (less than 30 days before the assessment and budget would go into effect) the board formally ratified the approved budget. My understanding was that the "approved budget" must be sent out to homeowners at least 30 days before the beginning of the fiscal year. The way I understand this is that the budget mailed to homeowners had not been formally approved by the board.

Thanks for your comments.

JohnM3 (Florida)
Posts: 288

Posted:

Dear Wendy: Every state has different rules concerning HOAs. So my suggestion is only to pay attention to posts that come from people in your state.
Ours is in Florida I am the Treas. I start in August with my copy of the TOPS software report. Add 6% for COLA. Then I take the completed budget to my MC. They check my math and double check my numbers based on TOPS.
At the Oct meeting that is the sole item on the agenda ( I am also the Sec so I know the agenda ) we discuss the budget and invite all members to come to the meeting. We argue about every single item including carry-over from 1 year to the next.
We then set the budget up on a dry erasable board. Figure out how to increase our income versus expenses. We are only allowed to increase the budget by 10 percent per year by our CC R's unless we get permission from 90 percent of the members for a special assessment to cover costs.
Then we vote on the budget print it and get it mailed out by Nov 15th. We discuss it with members at the Nov 28th meeting and it goes into effect Jan 1.
In 20 years we have never ever had a special assessment and we went thru a huge Law Suit and worked it out. Yes we have borrowed money from our bank but everything is paid for now.
We started out 20 years ago at $24 per month. In Jan our latest raise goes into effect. The new dues will be $100 per month per unit... Are we frugal? You bets your bottom dollar. But we have an ace in our pocket we rent out certain streets to TV ad companies and even had a film done in our community. Kmart did an advert in our community as well as PODS.
Yes you can live frugally but its tough. By the way we use a atty for liening non-payers not cause we are nasty but everybody has to pay there fair share......

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