Each year the Board of Directors receive a draft of the proposed budget for review and comment.
A lot of work goes into preparing the budget. It’s a complex activity that has to start early so the budget can be finalized and approved prior to the beginning of the new fiscal year. Here’s how we do it:
- The board and manager work together to gather all financial information we’ll need to project expenses for the coming year. This could be a reserve analysis, bids for contracts, projections for utility or service increases, comparisons of past years’ budget trends and many other details.
- The board also examines all sources of income—assessments, interest on investments, proceeds from concession or club operation and other types of miscellaneous income.
- A working draft of the budget is created by adjusting the expenses and income until they balance. This may be accomplished by foregoing certain expenses to avoid raising assessments. Or it may be necessary to raise assessments to cover increased expenses such as utilities that the board cannot control.
- When the best possible draft budget is completed, the manager sends it to every board member for review and comment. One of the reasons we start the process early is to allow the board plenty of time to study the budget, ask questions and offer comments.
- Based on member comments, the board revises the draft budget as needed.
