Condominium Corporation Committee Spotlight: Budget Committee

Committees are essential to the success of a condominium corporation. Well-established committees support the efforts of the board of directors, reducing individual workloads and helping the corporation stay on top of its goals.

Board of Directors are made up of volunteer homeowners who focus on specific community aspects, like budgeting. For many communities, the budget committee oversees the planning of yearly budgets and balances the annual income and spending. Here’s everything you need to know about the budget committee and its role within the condominium.

What’s a budget committee?

The condominium corporation budget committee is a group of homeowners who help the board of directors assess and record the community’s financial needs for the year. Usually chaired by the Board treasurer, committee members collaborate to draft a budget based on estimated revenue, previous years’ budgets, and anticipated expenses for daily operations, community improvements, and reserve contributions.

The committee’s planned annual budget helps the corporation stay on track with finances and properly use funds to enhance the community. The volunteer members of the budget committee generally have experience or skills related to finance, accounting, and budgeting, which help them draft the most accurate and effective annual budget for the corporation.

What’s a condominium corporation budget?

A condominium corporation’s annual budget is the overall financial plan that estimates a corporation’s expenses and revenue for the year. It’s a record used to maintain financial stability by balancing the funds the condominium corporation brings in and how much it spends to cover necessary expenses. The annual budget is drafted prior to the fiscal year to help the board better monitor its capital.

While there are several financial aspects to consider when planning an annual budget, some of the main factors to analyze include:

• Common element fees or assessments
• Reserve fund contributions
• Administrative costs
• Taxes
• Insurance
• Utilities
• Maintenance

What does a budget committee do?

Budget committee members specifically focus on setting the corporation up for financial success in the upcoming year. A lot goes into creating, approving, and adhering to a condominium corporation’s annual budget, and every community’s budget committee operates differently. Budget committee responsibilities often include:

• Reviewing budgets and financial documents from previous years
• Evaluating upcoming maintenance expenses
• Gathering estimates from vendors
• Estimating costs of special projects or services for the upcoming year
• Calculating corporation annual fees
• Assessing reserve fund levels and determining how much needs to be set aside
• Finding ways to cut costs and source funds
• Creating a budget that effectively balances income and spending
• Monitoring the condominium corporation’s adherence to the annual budget

The budget committee also sets deadlines, presents the budget for board approval, and makes adjustments when necessary. This team is crucial to a coroporation’s operations and maintaining the community’s financial health.

 

Who are the budget committee members?

The budget committee typically consists of three to five volunteer homeowners and condominium corporation board members with financial or accounting backgrounds. The Board treasurer is either the chair of the budget committee or heavily involved in the group’s decision-making. And while a certified public accountant (CPA) may participate in an advisory role, they are not typically involved in creating the budget.

When putting together the committee, it’s helpful to work with homeowners who have skills that can be useful when creating the budget. Some members may have professional accounting expertise, while others are excellent planners with a natural knack for budgeting. In any case, experienced homeowners and members of the board are a good combination for the budget committee.

What’s the purpose of a budget committee?

For a condominiumboard to make the best financial decisions for the community, it’s important to have a budget committee to create a balanced funding and spending plan. Like any condominium corporation committee, the purpose of the budget committee is to support the board of directors. With the budget committee focusing on the details of the annual budget, the board has more time to oversee other projects and proactively manage the community.

What are the benefits of a budget committee?

Starting a budget committee can positively impact condominium corporation operations and the overall community in many ways. Some benefits include:

• More freedom for the board. A budget committee frees up the board of directors to concentrate on their leadership roles and other vital aspects of the community.
• Responsible spending. Having a dedicated group of individuals tasked with budget planning means your condominium corporation’s funds are spent more responsibly.
• Homeowner involvement. Every strong condominium corporation has committed volunteers who foster a sense of community, engagement, and ownership that boosts resident satisfaction.
• Better preparation. With a planned budget, your condominium corporation is less likely to run into financial trouble, including insufficient reserve funds or the inability to fund essential projects.

What are the most common Condominium Corporation committees?

Besides a budget committee, there are many other committees that can help improve the functionality of the board. Board members must constantly juggle several community items at once—and it can quickly become an all-consuming job. Committees help share and divide the workload. Some of the most valuable committees include:

• Architectural review committee
• Welcome committee
• Social committee
• Landscape committee
• Homeowner education committee
• Neighborhood watch
• Contract review committee

With support from various committees, board members can focus on fulfilling their duties more efficiently and effectively.

Budgeting Best Practices for Your Condominium Corporation

All businesses and professional organizations can benefit from responsible budgeting, and a condominium corporation is no different.