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Subject: Ballot for budget
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Author Messages
JanB4
(Maryland)

Posts:4


11/08/2017 5:54 PM  
I am looking for advice or samples of ballots from other HOAs. There is a debate on the board as to what the ballot should include for approving the annual budget. We are getting ready to send the ballots out and a letter is accompanying the ballots with a brief explanation, along with a copy of the current budget and YTD expenses and the proposed 2018 budget. The secretary drafted the ballots ( the separate document) and did not include any information related to the total of the budget being voted on or the annual dues resulting from that budget amount.

Some of us believe the $$ should be stated directly on the budget ballot with the Yes No check boxes. That will ensure that anyone who reads the ballots and does not have the accompanying documents will know what was being voted on rather than an ambiguous statement.

The draft ballot states: Approval of the 2018 Budget. Check one selection. If more than one selection is checked the ballot will be null and void.
Yes No


This tells me nothing!

Some of us think it should include facts. Like, Proposed 2018 Budget- $15,120. Annual 2018 Dues - $210 ($15,120 divided by 72 billable lots).
Yes No

Need some feedback please!!!!
GenoS
(Florida)

Posts:1631


11/08/2017 8:04 PM  
We send out a copy of the budget with the election materials in the annual meeting packet. Anyone marking a Y/N ballot for the budget should be able to reference the budget that's right there a foot or two away from them. You can't hold everyone's hand. "Please review the inluded budget before marking your ballot."
JohnC46
(South Carolina)

Posts:7010


11/09/2017 3:41 AM  
Typically a BOD does not have to ask for budget approval. Typically members do not have to approve the budget. Generally there are ways of turning the budget down.

We present our Annual Budget at our Annual Meeting. We answer questions about it but there is no vote on it.
GeorgeR8
(Arizona)

Posts:138


11/09/2017 4:34 AM  
Posted By JohnC46 on 11/09/2017 3:41 AM
Typically a BOD does not have to ask for budget approval. Typically members do not have to approve the budget. Generally there are ways of turning the budget down.

We present our Annual Budget at our Annual Meeting. We answer questions about it but there is no vote on it.





We don't need approval for the budget but it can be voted down. If there are 100 owners as long as 51 don't vote no it passes. Since you hardly ever get 100% participation a 33Y - 47N vote is good enough.
JohnC46
(South Carolina)

Posts:7010


11/09/2017 5:22 AM  
Posted By GeorgeR8 on 11/09/2017 4:34 AM
Posted By JohnC46 on 11/09/2017 3:41 AM
Typically a BOD does not have to ask for budget approval. Typically members do not have to approve the budget. Generally there are ways of turning the budget down.

We present our Annual Budget at our Annual Meeting. We answer questions about it but there is no vote on it.





We don't need approval for the budget but it can be voted down. If there are 100 owners as long as 51 don't vote no it passes. Since you hardly ever get 100% participation a 33Y - 47N vote is good enough.




George

In our case we have to present the next years budget, including any dues increase, to our owners on or before 12/01/xx. They have until 12/31/xx to call a Special Meeting (requires 10% of owners to call) with the sole purpose being a vote to reject the budget. To do so they need 51% of all owners (I say all owners) to reject the budget. In our case it would take 57 of our 112 owners voting no to reject the budget. If rejected, it goes back to last budget submitted with an automatic Cost Of Living increase (about 2.5%) added to it.

An aside. In 2018 we will be trying for a Covenant change that if not agreed to (75 of 112 agreeing) then come 12/01/18 we will submit a 2019 budget with a 50% increase in dues ($600 to $900 yearly) with the money going to our Reserve Fund.
SheliaH
(Indiana)

Posts:1986


11/09/2017 6:16 AM  
In my community, homeowners only vote on the budget if next year's assessment will exceed the current year by 6% or more. We send the new budget in November, as our documents require homeowners to receive it on or before December first, and we usually included a statement explaining what would be changing and why.

I see nothing wrong with how your secretary has drafted the ballot - the homeowners are getting copies of the current budget and the proposed one with an explanation, so they need to do their due diligence and read the dang things. If they have questions, they can always ask about anything they don't understand - in fact, they should do so before casting a vote so they make an informed decision. Otherwise, they prove my mother's saying - the easiest way to keep some people misinformed or completely unaware is to simply write the information down and hand it to them because they'll never read it!
JanetB2
(Colorado)

Posts:3642


11/09/2017 8:19 AM  
Depends on your State Laws and whether you are an HOA or Condo. You mentioned HOA so here is your State Law regarding annual budget:

https://govt.westlaw.com/mdc/Document/N5DBC80B08DEB11DFB535DB37501CBB38?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default)&bhcp=1

It states that if increase 15% or more it must be voted on by the members at a meeting.
JanB4
(Maryland)

Posts:4


11/09/2017 9:47 AM  
That is logical, however, I failed to mention that I am new on the Board this year. I served for several years up until 2010. Over the last few years the lack of transparency has been bad for members. And documentation was not provided as it should be, alot of questions were raised and we had no idea where the money was going. In the past year the treasurer has provided a budget report for the current year 5 times and her book keeping is inconsistent. When asked for a corrected copy, we don't get one until the next meeting and then it starts all over. Additionally there have been large expenditures in excess of $5000 that suddenly drop off the report. Telling someone to refer to a copy of one of the budget reports is not the best option.

And if the documents are not kept together with the ballot, it would be difficult to prove what was actually voted if there was audit on ballots. So to avoid risk, we (new members of the board) are asking for the budget amount to be on the ballot so there is no gray area. The way our bylaws are written, the dues are based on the budget/total billable lots. So that is an important point. So to prove the dues amount assessed for each year that calculation is key, the budget amount should be clearly stated.

I appreciate the responses. It is interesting seeing how other states laws work and other HOAs manage their processes.



BillH10
(Texas)

Posts:150


11/09/2017 11:10 AM  
JanB4

Admittedly I do not know the language in your documents regarding the budget and assessment increases.

The post by JanetB2 indicates your state laws regarding an annual budget permit an increase of up to 15% without owner approval.

Assuming your covenants are not more restrictive (limit the increase to 10% without approval for example), owner approval of the proposed budget is/may be somewhat a moot point as regardless of the outcome of the vote, the Board can unilaterally increase the budget up to 15% for the coming year.

I realize there may be an issue with the 15% in that the proposed budget may represent (for example) a 5% increase over the present budget. In that case, it could be argued any increase by the Board for 2018 is limited to 10% more.

If the proposed budget is rejected, you are spinning your wheels with a budget approval on the ballot as the Board can increase the budget up to 15% regardless of how the vote turns out. Board action under those circumstances could set off a lively debate and taking of sides.

So, is the proposed budget for more than the current year budget and, if so, by what percentage?

I understand the spirit of what you wish to accomplish, putting the matter to a vote when it does not have to be approved may lead you down a road of unintended consequences.
SheliaH
(Indiana)

Posts:1986


11/09/2017 12:57 PM  
If the treasurer isn’t doing his/her job properly, your options are (1) get her some training so she knows what she’s doing (sloppy bookkeeping is inexcusable) or (2) remove her from the position and put in someone else, preferably one with some accounting, bookkeeping or business background (someone who’s well versed in programs like Quicken or Excel and can design spreadsheets that will crunch the numbers for you could also work).

I understand your concern over lack of transparency due to the behavior of previous reports and you said you are new, so I suspect you’d rather err on the side of providing all the information at once. However, as I said earlier, people need to take responsibility and READ the reports for themselves, especially if that’s been a problem over the previous years. Sadly, people are really lazy and sometimes the more paper you toss at them the less likely they’ll review all of it. Especially if there are no pictures! Columns of numbers can also leave people cold – it’s unfortunate because the devils and angels are all in the details, but that’s how people operate these days

How about having a separate information meeting to discuss the budget and allow people to ask questions? Perhaps someone who’s really good at PowerPoint can put together some slides that can show graphs and other illustrations that explain what’s going on with the budget. You can then schedule another meeting where people can simply vote and they won’t need a bunch of numbers and writing on the ballot. Document the hell out of everything in your meeting minutes along with attaching supporting documents to the minutes and you should be ok.
Encourage homeowners to hold onto the documents – better yet, if you have a website, post this information on it for easy reference. Throughout the year, the board should publish monthly or quarterly financial reports where people can see the income/expense statements and can track line items against the budget.

People should also remember a budget is a guide, but it’s not written completely in stone because things may happen over the year that may throw it out of whack (e.g. a bad storm that wrecks a large part of the common area).
JohnC46
(South Carolina)

Posts:7010


11/09/2017 6:43 PM  
Posted By BillH10 on 11/09/2017 11:10 AM
JanB4

Admittedly I do not know the language in your documents regarding the budget and assessment increases.

The post by JanetB2 indicates your state laws regarding an annual budget permit an increase of up to 15% without owner approval.

Assuming your covenants are not more restrictive (limit the increase to 10% without approval for example), owner approval of the proposed budget is/may be somewhat a moot point as regardless of the outcome of the vote, the Board can unilaterally increase the budget up to 15% for the coming year.

I realize there may be an issue with the 15% in that the proposed budget may represent (for example) a 5% increase over the present budget. In that case, it could be argued any increase by the Board for 2018 is limited to 10% more.

If the proposed budget is rejected, you are spinning your wheels with a budget approval on the ballot as the Board can increase the budget up to 15% regardless of how the vote turns out. Board action under those circumstances could set off a lively debate and taking of sides.

So, is the proposed budget for more than the current year budget and, if so, by what percentage?

I understand the spirit of what you wish to accomplish, putting the matter to a vote when it does not have to be approved may lead you down a road of unintended consequences.





Sound advice. Keep people informed but do not put the budget up for a vote if you do not have to.
JohnC46
(South Carolina)

Posts:7010


11/09/2017 6:44 PM  
Posted By SheliaH on 11/09/2017 12:57 PM
If the treasurer isn’t doing his/her job properly, your options are (1) get her some training so she knows what she’s doing (sloppy bookkeeping is inexcusable) or (2) remove her from the position and put in someone else, preferably one with some accounting, bookkeeping or business background (someone who’s well versed in programs like Quicken or Excel and can design spreadsheets that will crunch the numbers for you could also work).

I understand your concern over lack of transparency due to the behavior of previous reports and you said you are new, so I suspect you’d rather err on the side of providing all the information at once. However, as I said earlier, people need to take responsibility and READ the reports for themselves, especially if that’s been a problem over the previous years. Sadly, people are really lazy and sometimes the more paper you toss at them the less likely they’ll review all of it. Especially if there are no pictures! Columns of numbers can also leave people cold – it’s unfortunate because the devils and angels are all in the details, but that’s how people operate these days

How about having a separate information meeting to discuss the budget and allow people to ask questions? Perhaps someone who’s really good at PowerPoint can put together some slides that can show graphs and other illustrations that explain what’s going on with the budget. You can then schedule another meeting where people can simply vote and they won’t need a bunch of numbers and writing on the ballot. Document the hell out of everything in your meeting minutes along with attaching supporting documents to the minutes and you should be ok.
Encourage homeowners to hold onto the documents – better yet, if you have a website, post this information on it for easy reference. Throughout the year, the board should publish monthly or quarterly financial reports where people can see the income/expense statements and can track line items against the budget.

People should also remember a budget is a guide, but it’s not written completely in stone because things may happen over the year that may throw it out of whack (e.g. a bad storm that wrecks a large part of the common area).




More good advice. A budget is a guideline. It is not cast in concrete.
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