Budgeting Checklist

It’s that time of year again when managers and board members go into hiding to develop budgets for their associations for the coming year.  The following is a checklist of some items to keep in mind as associations work through the annual budgeting process:

• Set goals for the upcoming year in relation to the various services offered by the association.
• Are there special projects that are to be undertaken?
• What costs are expected to increase?  Decrease?
• What amount should be transferred into reserves over the year?
• Determine what owner approval, if any, is required for the association’s budget.
• For pre-CCIOA communities (those established prior to July 1, 1992), this will be document specific. 

• Review the declaration, bylaws, and articles of incorporation in relation to the association’s assessment authority. 
• Check the governing documents for caps or other limits on the authority of the board to establish the budget and assessment levels which would require owner approval.
• Establish community involvement.
• Comply with any owner approval requirements, which may include sending proper notice for and holding an owner meeting to obtain any necessary approvals for the budget.

• For post-CCIOA communities (those established after July 1, 1992), the association must follow the CCIOA budget ratification process, which is as follows:
• The board approves the budget.
• Within 90 days of the board’s approval of the budget, a summary of the budget must be mailed to all owners and a meeting date must be set for owners to ratify the budget (which meeting notice must comply with the owner meeting notice requirements in the association’s governing documents).
• Hold the owners meeting to ratify the budget.  Note that quorum is not required for this meeting, and the budget will be deemed ratified unless a majority of all owners (or larger percentage that may be specified in the declaration) veto the proposed budget.
• Make sure to also check your governing documents, which might add on additional requirements.

Proper thought, planning and analysis ahead of time will go a long way to easing the headaches associated with budget season.  If you have any questions about what specific requirements may apply to your association in relation to budgeting, please consult your association’s community manager or attorney.