Question List for Budget Meetings
Dennis,
My condo community has a meeting next week and “Budgets” is on the agenda. What questions should homeowners ask during budget talks?
I never know what to ask because for us, the topic is handled so casually. The President whispers to the property manager as they look over the budget copy in front of them; then the President asks other board members if they’ve reviewed it. After some whispering the President talks openly but very generally (only about assessment increases) for a couple minutes, then the board votes to accept the new budget. Homeowners don’t see what they are seeing until months later with the mailed ballots.
I’ve read parts of your proposed legislation (33-1243 D.) I really hope this will become law. Thank you for your work. I am urging my district officials to take this seriously.
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PJ,
You have a right to see the budget before the board votes to approve that budget. Look for year-over-year expenditure differences and understand the justification for those increases. Far too many boards decide how much they want to raise the assessment and then just fudge the budget to justify that number. This will be detected by detailed questions on every line item that increased from the last budget and the rationale for that increase. Watch out for the standard excuse of the cost of living. While everyone knows the cost of living increases, that does not necessarily convert to specific cost increases. The board must look at how they spend money and to seek ways to save costs and not just increase the budget without any effort expected to streamline costs.
Dennis
Dennis – I politely asked our property manager for a copy of the proposed 2025 budget that will be discussed tonight and voted on, but I was told I couldn’t have a copy until the board approves it. AFTER approval the budget will be put on the community portal for us to view. What do I do now?
PJ,
Something like this clearly depicts your board’s disdain for your community. How can any of you provide any intelligent questions to the board in their deliberation of that budget prior to approval. It is clearly an attempt to circumvent the requirement of the open meeting laws that allow the community to comment on anything before the board for action. It is absolutely common sense to provide copies of the budget to anyone homeowner before the meeting where it will be approved. This is your money that they are spending and you are being prevents from even asking questions on that before they approve it. I drafted a bill (second priority) that will fix all of this abuse. Without this legislation homeowners have no say on the budget and board will continue this facade of approval.
Dennis
Update, I finally got a copy of proposed budget scenarios a few days before the meeting. Our CCR’s say the board shall put out a proposed budget no less than 30 days or no more than 60 days before new fiscal year, which is Jan 1st and that owners can request copies of proposed budget, then make written comments back to the board, then after that the board will review all comments at the scheduled meeting where the proposed budget will be discussed and that they can make adjustments then at that meeting as necessary prior to voting. (they haven’t been following this method).
The meeting felt like a disaster. Projected increased amounts were noted on many budget line items as a percentage, but those increased amounts were not factored on all line items – instead the numbers from 2024 budget remained. I’m not an accountant, but shouldn’t you include that projected cost on the proposed budget for those categories where an expected or known increase will occur? No one could answer simple questions as to how much our operational and common expense costs were projected to increase for 2025 vs 2024. Not even a guess. One on the board said with new US President taking office there will be labor shortages because illegal immagrants are most likey on our landscaping contract, so that is why there is an expected increase to that vendor contract. I found that to be a rude assumption. The property manager admitted he is the one that made our budget scaenarios, but then said he’s not a mathemetician when his mistakes and misinformation were pointed out. The property manager cited 10% increase for insuranace policy premiums but actually doubled that projected amount on the line item (one of only a few line items where the numbers made sense). The Property manager bullied the board saying essentially we didn’t have time to wait for errors in the proposed budget scenarios to be ironed out before voting, and that the budget needed to be passed right now, because if we don’t we won’t have time to put the dues increase in effect for January. Our CCRs give us until Dec 2 (30 day mark) to vote on budget so we still had time. Property manager recommended to the board that if they wanted to vote in an increase to assessments, they should do it right now at the meeting and IF there is a discrepancy in the budget scenarios he presneted, that he would send a fresh budget for the scenario chosen to the board, that they could later approve those changes at maybe a special meeting, and then the final accepted budget would be mailed to owners. And guess what? Contractually, as soon as the board approves a budget at the meeting, any property management fee increase is automatically effective. I cannot get other people to consider the property management company cares more about their pocketbooks than our community. I reviewed every line item proposed against 2024 budget and priors and we budget money in categories they cannot explain. No one seems to care or read anything. The board and property guy has an “answer” for everything. We paid 1100% over budget this year for our income tax filing but no one on board or property management company will say why and are actually refusing to say why – i’ve waited 4 months for an answer. I’m told we’ve had property manager turnover which is why. I said that our accounting section should know the answer in 10 minutes. It has left me feeling like why do I even try and why am I the only one that seems to notice?
Clearly Your board is not running your community the community manager is. There is nothing more important for any board to do then develop the projected budget for the next fiscal year. They are also obligated to comply with the budget process contained in their own governing documents. The story the community manager provided the community and board was total BS. The board job is to get the budget right and assess the homeowner accordingly. If they cannot get the budget right, then continue the existing budget and assessment until they can get the budget right and then amend that budget and provide a supplemental assessment for and necessary increases. It is communities like your that drive me to propose legislation that will limit any board to approve a budget above a specific threshold increase without the prior ratification by the homeowners. The homeowner are required to pay for the board’s and community manager’s incompetence. Unfortunately, right now there is little that I can do to help your community. Your community can either continue to pay the unreasonable assessment or stand up and work together to stop this madness. Failing to comply with the governing documents is an issue that anyone can challenge before the ADRE dispute resolution process. Additionally, everyone that witnessed this debacle needs to be outraged at this total incompetence and hold the board accountable.
Talk to everyone you know and tell them that they do not have to stand still and be victims of this incompetence but it will take action and a willingness to challenge the board on this process and budget. I’ll do what I can to get legislation in place to protect homeowners from this endless abuse of their finances.
Dennis