Budget disclosures

Why members get a disclosure, not a vote

Most boards adopt the operating budget on their own authority. The members who pay for it through their assessments usually don't get to vote on the number itself, only in the specific circumstances covered in Board budget approval and Member budget approval where required.

Disclosure is the check members have instead of a vote. A state statute, if one applies to your association, sets a floor: what has to be shared, and by when. Your governing documents can require more than the statute does, but not less. If neither says anything, members still deserve to know what they're being asked to pay before the fiscal year starts, that's board policy territory, not a legal requirement.

California's Annual Budget Report, one worked example

California requires an association to distribute an Annual Budget Report to every member on a fixed schedule tied to the fiscal year, not a fixed calendar date.

"an association shall distribute an annual budget report 30 to 90 days before the end of its fiscal year"

Source: California Civil Code Section 5300, Annual Budget Report, State of California

The report has to include a pro forma operating budget (a projection of the coming year's revenue and expenses), a summary of the association's reserves, a statement of whether the board has put off repairing or replacing any major component with 30 years or less of life left in it, and whether the board expects to need a special assessment or a loan.

California also lets a board send a shorter summary instead of the full report, as long as the first page carries a boldface notice telling members how to get the complete report at no cost.

Timing windows, required contents, and whether a summary option exists at all vary by state. Check your state's common interest community statute before assuming California's 30 to 90 day window, or its content list, applies to you.

What to check for your own association

Three questions, in order. First, does your state have a statute that requires a budget disclosure at all, and if so, what does it require and by when? Second, do your governing documents add anything on top of that, a stricter deadline, an extra line item, a required meeting? Third, if your board sends a summary rather than the full report, does it tell members, clearly, how to get the full version?

If you can't answer those three from memory, ask whoever prepares your board's disclosure, treasurer, manager, or management company, to walk you through what's sent, when, and which statute it's built to satisfy.