Budget Reactions

By Evelyn Dufford, CMCA, PCAM

Remember Newton’s Law of Motion? To every action there is an equal and opposite reaction. It seems to be alive and well in Community Association management.  During this season of budget increases and communities running out of money, notices are being sent out foretelling of unpleasant events.  Keeping this in mind as we work thru these unpleasant events will help to lessen the “opposite reaction”.

Here is one scenario.  A community needs to increase the assessments by 30% to compensate for this year’s deficit and next year’s expenses.  Not the best news for a community member to receive.  You could send the budget out with the budget meeting notice and see what happens.  With this one big push of a large increase I would expect a big pushback response at the meeting.

Another way for the Board to manage this big blow to the community is to educate the membership thru the process. A budget forum with a presentation of the budget prior to the formal meeting would help the membership understand the issues and allow for a free exchange of the information.  Present the proposed budget with lots of pictures and graphs. It helps to tell the story of what happened this year and what is expected to happen next year.  The forum is a way for the Board to receive feedback from the community before the final budget is adopted.  Doesn’t mean that the ideas the members share have to be acted upon now and you never know when or where a good idea will appear. From here the budget is adopted and the membership receives the budget with the meeting notice and an explanation of numbers by the Board members.  Now the meeting takes place with two different opportunities for the Membership to understand the numbers prior to a vote.

This type of communication and education format can be used in with any difficult situation the Associations face.  We have used this for large construction projects and special assessments.

To sum it up, two little nudges will be better than one big pushback.  Sir Isaac Newton would be proud.