Download Your Budget Checklist!

Download your budget checklist!
Creating your strata corporation’s annual budget is one of your council’s most important jobs. It takes a lot of time and hard work, and it frequently means making tough spending decisions. Strata members often scrutinize it carefully because of how much it impacts the strata as a whole and themselves as individual homeowners. “The budget affects everyone because it’s something that all the owners in the strata are contributing to,” explains Dylan Murray, controller for FirstService Residential in British Columbia. “You can never over communicate about it.”
As important as your budget is, are you confident that your council is doing all it should to garner homeowner support? Is the council informing residents about important financial matters throughout the year, or is it only communicating what is required by law?
Under British Columbia’s Strata Property Act, the proposed budget and accompanying financial statement is distributed with the notice of the annual general meeting at least 2 weeks before the meeting is to take place. Unfortunately, this may be the only communication homeowners ever receive about their strata’s finances, leaving them without a good understanding of the rationale behind certain budget decisions. As a result, they bring a lot of questions to the budget meeting, making the meeting long, arduous and sometimes contentious. In worst cases, they may argue against needed expenses or even reject a budget entirely if they aren’t convinced that it is in the best interest of the strata.

By improving the way that your council communicates with homeowners about the strata budget, you can avoid these issues. Here are 5 tips to do just that.

Be sure to fill out the form on this page to download our complimentary checklist for building an actionable budget.

1. Communicate ​all year long, not just at budget time. 
It’s common for homeowners to feel like they are kept in the dark about budget issues until it’s time for their budget meeting. Instead, Murray recommends communicating financial information throughout the year. One way to do this is by making your monthly financials available to owners. Posting them to the strata’s website is a simple and cost-effective way to do this, especially if you work with a strata property management company that can take responsibility for the task. “We give owners access to monthly financial summary statements by posting them to FirstService Residential Connect,” says Murray.

You can also increase transparency about your budget by effectively communicating any material changes to the stratas financial position. “If there are any significant shortfalls or emergency expenditures, be sure to communicate these to owners as soon as feasibly possible,” Murray urges.

2. Include notes with the preliminary budget.
Along with the financial package you send to owners, Murray suggests including budget notes. “These provide details of each expenditure and revenue line item” he explains, “and can be especially useful for the clarification of any broadly defined line items, like miscellaneous expenditures or repairs and maintenance.” In addition, budget notes can help explain fee increases, as well as answer questions that homeowners would otherwise bring to the budget meeting.

3. Be well prepared for your budget meeting.
It’s critical for council members to anticipate the kinds of questions homeowners are likely to ask and to be ready to answer those questions at the meeting. “A lot depends on the council’s understanding of its strata’s financial position,” Murray notes. That’s where a good property management company comes in. “Before their budget meeting, council members will come to our office to prepare and review their financial information with their property accountant. The property manager can always answer questions that come up as well.”

4. Use the appropriate communication channels.
If the Strata Property Act or your strata’s bylaws specify a particular communication method (for example, using postal mail), make sure that you use that channel. Beyond addressing these requirements, the choice of communication channels should be based on their effectiveness and cost efficiency. In most stratas, this usually means using a combination of channels, such as email, the strata website, a printed or online newsletter, posted fliers, private social media groups and announcements at meetings. “We try to cut back on paper, so we use technology as much as possible,” says Murray.

5. Encourage homeowner feedback.
Residents need to know that their council members and their management company care about them. They will feel a greater sense of community and have a higher level of satisfaction if you give them an opportunity to voice their opinions and ask questions.
Communicating with homeowners openly and regularly can help prevent unnecessary problems, reduce conflicts and streamline your budget meetings. Most importantly, it can help pave the way for an effective budget that keeps your community operationally sound and financially healthy.
Are you following the right steps to create an actionable budget? Fill out the form to download A Budgeting Checklist – Build an Actionable Budget.
Friday January 08, 2021