Transparency in Community Association Budgeting

Budgeting time often involves making difficult decisions about how a community association allocates its funds, and these decisions can sometimes stir up disagreement. However, providing clear communication about the budget to all homeowners throughout the year can help prevent issues before they arise and facilitate necessary changes more smoothly. When residents feel engaged in the process from the start, they're less likely to oppose the budget and will likely better understand any proposed updates. A transparent budgeting process cultivates happier and more content community members.

Ways to Communicate During the Budgeting Process

There are several strategies to maintain peace and satisfaction within your association during budget season and the start of a new fiscal year. Here are some tips for crafting an effective and inclusive budget while keeping resident contentment high.

Many homeowners perceive that there is a lack of transparency in the budgeting process, feeling as though the board only shares the final budget without permitting any insight or influence. To counter this perception, consider issuing quarterly or semi-annual updates on how the association is performing compared to the budget. If spending exceeds the budget, keep homeowners informed to reduce surprises when discussing potential increases for the following year. Frequent and concise communications are more effective than a lengthy annual report that may go unread or misunderstood.

Without appropriate communication and transparency, a poorly conveyed budget can spark unrest and distrust among residents. Clearly laying out the budget plans and explaining the details, especially during substantial assessment increases, ensures residents feel included and satisfied with their community’s decisions.

It's always beneficial to communicate a bit more than needed to avoid leaving questions unanswered. Choose the best method to reach your community, whether it's a meeting announcement, a letter or email, a private social media group, or another medium.

Resident involvement in the budgeting process shouldn’t stop at attending the annual meeting. Involvement can extend to participation in finance and budget committees. By calling for volunteers for these committees, associations might find those most interested in the budget process, providing valuable input and reducing the feedback received after the budget is finalized.

How to Communicate After Annual Budget Is Approved

Once the budget has been thoroughly drafted, reviewed, and approved by the board, it needs to be presented to homeowners, perhaps including a two percent increase in homeowner fees for the upcoming year.

Communicating the Increase to Shareholders

Begin by drafting a notice to the shareholders. The exact involvement of the board and management team can vary, but the communication of any increase must always be documented in writing. It's advisable to share this notice as early as possible, ideally at least 30 days before the fee increase is implemented.

The efforts to communicate a fee increase may vary across associations. Some opt for open meetings to explain budget changes and the reasons behind them. Others might use proof of mailing to ensure all residents receive the notice, independent of electronic communication. A text messaging system can also be beneficial to encourage attendance at budget meetings.

When homeowners question or disagree with specific budget items or fee increases, their feedback often comes in response to the announcement letters. Although these letters are signed by the board, management usually addresses the inquiries. If management has done their job well, they can answer these questions efficiently. With any specific disagreements, a clear explanation is provided, and homeowners can submit written communication to the board. A one-on-one conversation can also be incredibly effective.

Ultimately, budgeting is about making tough financial decisions for the association, and these choices can sometimes lead to contention. Ongoing, clear communication between the board and homeowners can preemptively resolve issues and facilitate necessary changes seamlessly.