Condo budgeting can be a four month process. During this time a proposed budget is developed and reviewed by many people from condo committees, boards and management to condo owners.
Establishing a formal process for preparing and accepting a condo budget ensures it is adequately reviewed and presented to owners prior to being voted on by a Board of Directors. Ensuring the process is known in advance to all, and that condo owners have an opportunity to comment in advance of board acceptance, ensures reasonable disclosure to all.
Preliminary Budget–Month 1
The process begins with a Preliminary Budget prepared by the property manager. It is based on past experience and future anticipated expenditures. It incorporates known expenses, inflationary increases, anticipated increases in known expenditures and goals of the condo corporation. This is balanced against anticipated revenues from condo fees. Any anticipated deficit is addressed by reducing expenditures or increasing condo fees.
Property managers do not have a fiduciary responsibility to the condo corporation. Cost containment or expenditure reduction is generally not part of their job responsibility. A budget not reviewed in detail after initial preparation by directors and/or committees is a budget not adequately vetted.
Revised Preliminary Budget – Month 2
A Revised Preliminary Budget is one reviewed by homeowners with experience or knowledge of budgeting and condo expenditures. This may be known as a Finance Committee or a subcommittee of this group. Their job is to delve into details of the Preliminary Budget.
Once the Preliminary Budget reflects input received and adjustments incorporated so that it is accepted by the Finance Committee, this Revised Preliminary Budget can be submitted for review to the Board of Directors.
Draft Budget – Month 3
The Board of Directors has authority to accept the budget as presented to them, including changes to condo fees, for presentation to condo owners.
By this time anywhere from ten to twenty individuals will have had an opportunity to review and comment on what is now a Draft Budget.
Draft Budget Presentation to Owners – Month 4
The Draft Budget can be presented to condo owners for comment at a community or information meeting. After receiving comment the Board of Directors votes to accept the Draft Budget, with or without changes, at their next meeting.