Number crunching ... what a drag. But money is the grease that makes the HOA wheel turn and having enough of it in all the right places ensures the assets and property values are maintained. HOAs have the ability to draw the members into the budget process in a way big government can't. With a bit of planning, the budget can be a harmonizing exercise instead of a battleground of discontent.
Philosophically, it's important for the Board to adopt a "we're one of you" attitude because, frankly, it's true. All HOA members, including directors, pay their fair share of the freight. Even if the Board has the power to unilaterally adopt the budget, approaching it as a consensus building exercise will work wonders in how the message is received.
Form a Budget Committee. It is often difficult to get members to volunteer for Board positions but getting some to commit to a short term Budget Committee is not so tough. There are always a certain number of bean counters out there that would make time for a 4-6 week stint crunching numbers. Targeting CPA or bookkeeper members is logical but there are amateurs that can provide valuable service, especially if they are long-time residents who know the HOA's history or have served on a past Board.
Poll the Members. Asking the members for budget suggestions is usually largely symbolic, like raising the flag and seeing if anyone salutes. There may be a couple who do but most don't even notice. But the mere fact that all were asked goes a long way toward building support. Those that respond may be thoughtful or total flakes but the Board doesn't need to commit to including the suggestions, only to consider them. Gather this information the month prior to Budget Committee meetings so the information can be included for consideration.
Budget Review Meeting. Once the Draft Budget has been compiled, a Budget Review Meeting should be scheduled. This could be part of a regular Board Meeting if the budget is simple or a part of a special meeting if the budget is complex or contentious. All members should be invited and encouraged to attend. A formal presentation should be made and presenters prepared to answer questions or justify line items.
Budget Approval. After the Review is held, formal approval of the Budget should take place. If this requires a quorum of members to vote, sending out formal announcements, ballots, etc. are in order. If the Board has the authority to approve the Budget (hopefully yes), it's still a good idea to inform the members when and where that approval will take place. It should happen at least 30 days prior to the start of the new fiscal year. Assuming the budget has increased (and it usually should due to inflation alone), the Board should give members at least 30 days notice of any homeowner fee change.
Circulate Approved Budget. Once the budget has been formally adopted, a copy of it along with detailed notes explaining each line item and a side-by-side comparison of the past and future budgets should be sent to each member. A cover letter should explain what the new homeowner fee will be if equal or include a matrix showing the different fee levels if prorated by percentage or fraction. This would be the perfect time to distribute payment envelopes and coupons if you use them.
The whole budget process generally takes 4 to 12 weeks from start to finish depending on complexity and the requirements for approval. There are few exercises that have a more profound effect on the HOA's destiny so don't downplay it. The budget is a chance for a new beginning, improvement and team building. Don't miss the opportunity to engage the members.