Communicating for Success During Budget Time
Association residents understandably want to feel that they have a say in how their assessment fees are spent. If the budgeting process is transparent, and residents are kept in the loop about the state of association finances, they more likely to buy into the decisions made by the board of directors.
Ways to Communicate During the Budgeting ProcessA regular plan of communication throughout the budget planning process and transparent financial updates help residents develop trust. David Jandak, vice president of finance at FirstService Residential, has some tips on crafting an effective, inclusive budget - while also keeping resident satisfaction high.
"When residents don’t understand all the expenses to be handled by the community association, they can become suspicious about where their money is going," said Jandak. “To avoid this, consider your budget communications to be a year-round process. Throughout the year, tell homeowners how the association is doing on budget compared to actual costs. Keep them in the loop on cost overruns as well as capital project results. That way, they are not shocked at the end of the year if there is an increase next year.” Jandak recommends frequent, shorter communications rather than an annual dissertation that homeowners won’t want to read or possibly won’t understand.
Working with your property accountant, you may want to begin with a report that lays out the budget line items in a way that can be understood by laymen. This report can serve as the basis for future communications that convey progress, updates or reminders about upcoming expenses. Not all communications must be a detailed budget report, though. Consider a bullet-point email or door drop for a report on a specific line item or project.
It’s important to allow some way for the homeowners to easily ask questions or provide feedback. Residents whose questions are being addressed will feel more included and will have a higher satisfaction with the community association.
“It’s better to over-communicate than leaving a budget question unanswered, and if you communicate early, you avoid a tidal wave of questions and objections at the budget ratification meeting,” said Jandak. “Make sure you find the right channel to reach your community, whether that is an announcement at a meeting, a letter or email, private social media group or something else.”
Budgets are not just a topic for the annual meeting – residents should be able to reference the full document at any time, and budget issues should be discussed on a regular basis. “We create financial reports every month for every association, and those are available to every resident through FirstService Residential Connect. Advise homeowners that the financials are online and urge them to understand what’s going on,” Jandak said. “There’s a shared responsibility in being aware of association finances and fully participating in the discussion. Residents who don’t know how assessments and fees are spent should be encouraged to dig into the information we offer.”
When residents volunteer on finance and budget committees, they gain valuable insights about the association, and they can also feel a greater sense of ownership about financial goals. Jandak recommends sending out an announcement asking for volunteers. People interested in the budgeting process - or wanting a greater say - will be able to provide information and input.When these individuals are involved up-front, it can reduce the amount of feedback received after the budget is finalized and approved.
How to Communicate After Annual Budget is ApprovedOnce the association budget has been drafted, reviewed, marked up, drafted, reviewed again and approved by the board, it is presented to the homeowners. Due to yearly increases, inflation and special projects, it is normal for assessments to increase. Of course, this is always uncomfortable news to share with residents.
The management team and board of directors might start by writing a notice. The notice of any increase must always be put in writing, and it’s best to communicate this as soon as possible. For large increases, the board may choose to discuss it in an open forum so they can explain the rationale behind the new fees. A proof of mailing or a reminder by text message can help get the word out about the meeting.
What happens when homeowners have questions or disagree with a line item in the budget or a fee increase? “When it comes to feedback, it usually comes in response to the letters announcing the increase,” Jandak said. “Letters are signed by the boards, but the questions come to management. If we’ve done our job, we should be well-versed and able to answer those questions without issue. Typically, if there’s a specific line item that homeowners don’t agree with, we, as the agents, try to clearly explain the rationale. If they aren’t accepting, we ask them to communicate in writing with the board if that’s an option. A one-on-one conversation can make a lot of inroads.”
Budgeting is the time for making tough decisions for how your association spends its money, but a year-round communication plan can ward off contention. Clear communication between the board and homeowners throughout the budgeting process can help solve problems before they begin and help to smoothly pave the way for needed changes.
Budgeting season is upon us! Read More:
- Planning Your High-Rise Maintenance and Capital Improvements
- Keeping Your Budget Healthy in the Age of COVID-19