Condo members who are elected to their association’s board in Chicago have many responsibilities, but perhaps one of the biggest is managing the annual budget.
Board members must maintain a fiduciary responsibility to the association and make all decisions based on the best interests of the community. That said, despite those decisions being made in the best interest of the association, that doesn’t mean all members will see it that way.
To help your Chicago condo association members best understand the purpose of the annual budget, how expenses are managed and decisions made it can be useful to explain and discuss the purpose of your condo budget. Here are some talking points to help you maintain transparency with your budget.
Condo Association Budget Breakdown – Explained
Budgets for condo associations serve several important purposes in effectively managing the financial aspects of the community. The condo board determines and manages the budget with the following purposes in mind:
● Financial planning – Budgets provide a roadmap for the association’s financial activities so the board can best plan and allocate resources effectively. By outlining annual projected income and expenses, budgets enable the association to anticipate and prepare for its financial needs and obligations – both in the short and long term.
● Expense management – Budgets allow condo associations to track and control expenses. By setting spending limits and allocating funds to specific categories, budgets help prevent overspending and promote financial discipline within the association.
● Assessments and fee determination – Having a clear understanding of the association’s budget is crucial for determining the amount of assessments or fees that will need to be collected from unit owners. If assessments need to be raised, the board will also need to demonstrate the why and how with clear budget projections.
● Reserves planning – Each condo association in Illinois is also required to maintain a reserves fund. Reserves help you pay for planned improvement projects as well as fund unexpected emergencies. By including reserve contributions in the budget, associations can build up funds over time to handle future expenses and maintain the property’s value.
Additionally, budgets serve an important purpose in providing transparency to the association’s financial activities and promoting accountability. They give unit owners and stakeholders a clear understanding of how the association’s funds are being allocated and help foster trust in the association’s board.
As you get to work preparing your association’s annual budget, don’t forget to share the purpose behind the budget with your community. The more informed they are, the more supportive they will likely be of any changes or increases to the budget. To ask your questions about budget planning or what it takes to serve on your Chicago condo board, please contact us at First Community Management.