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Budgeting is the time for making tough decisions for how your association spends its money, and sometimes those decisions can, unfortunately, lead to contention. Clear communication about the association budget should be provided to all homeowners throughout the year to help solve problems before they begin and smoothly pave the way for needed changes.
 
Residents who feel like they’ve been part of the process all along will be less likely to object to the budget and will likely have a better understanding of the proposed updates. Executing a transparent budgeting process makes residents happier, more satisfied members of the community.
 
Ways to Communicate ​During the Budgeting Process 

There are ways to help maintain harmony and happiness within your association during budget season and when the new fiscal year begins. David Jandak, vice president of finance at FirstService Residential, has some tips on crafting an effective, inclusive budget - while also keeping resident satisfaction high.

savings-2789153_1920-(1).jpg"Homeowners think that a veil exists over the budget process, that the board doesn’t share the budget until it is final and they have no knowledge of or influence on the process," said Jandak. “To avoid this, consider a quarterly or semi-annual communication that lets homeowners know how the association is doing on budget compared to actuals – if you’re over budget, let homeowners know what’s going on so that it’s not so much of a shock that there’s an increase for the following year.” Jandak recommends frequent, shorter communications rather than an annual dissertation that homeowners won’t want to read or possibly won’t understand.
 
If your association doesn’t communicate the budget in the right way, without open communication and transparency, it creates turmoil and mistrust among residents. It’s best to lay out the budget situation for residents and explain everything clearly, especially if your association has had to implement a significant assessment increase. Residents who feel their questions are being addressed will feel more included and will have a higher satisfaction with the community.
 
“It’s better to over communicate in some aspects rather than leaving a question unanswered”, 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.”
 
It’s important for residents to understand that involvement in the budgeting process goes beyond attending the annual budget meeting. “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. Encourage their participation. It will make them feel more in control and a greater part of the association.”
 
It’s also important to get homeowners involved in the finance and budget committees. Jandak recommends sending out a call for volunteers for those committees. The people who are interested in the budgeting process will be able to provide information and input. Including these individuals can reduce the amount of feedback received after the budget is finalized and approved.
 
How to Communicate After Annual Budget is Approved
 
Once the budget has been drafted, reviewed, marked up, drafted, reviewed again and approved by the board, it is presented to the homeowners. Let’s say that the budget includes a two percent increase in homeowner fees for the coming year.
 
How Do You Communicate That Increase to the Shareholders?
 
Start by writing a notice to the shareholders. The level of involvement from each team -- the board and the management – depends on a lot of things. Sometimes the letter comes from the board, but the message is composed by the management team; sometimes it’s more of a joint effort. But the notice of any increase must always be put in writing, and it’s best to put that notice in writing as early as possible, but at least 30 days before the increase goes into effect.
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The level of effort to which associations go to communicate an increase to their homeowners will vary. Some associations also have an open meeting with all residents to explain budget changes and the rationale for them. Some communities even do a proof of mailing, so they know everyone gets it, independent of electronic notices. If possible, use a text messaging system to encourage attendance at the budget 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, and sometimes those decisions can, unfortunately, lead to 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.

Being a board member just got easier. Get your financial program on track by talking to the experts at FirstService Residential. 
 
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Dave Jandak, vice president of finance, oversees our corporate and client accounting divisions. He first joined FirstService Residential in 1989 as an accounting manager. Since then, Dave has successfully implemented industry leading accounting software, financial packages and budgeting systems.

He works with our clients on an individual basis to ensure understanding of their financial statements and plays an active role in our board training programs. He also drives our bulk utility and banking programs which deliver extraordinary added value to our clients. 

He is a Certified Public Accountant (CPA) and a graduate of DePaul University, where he earned his bachelor of science in accounting.














 

 
 
 
 
 
 
 
 
Wednesday December 30, 2020