This article is presented by Dr. Roger J. Geronimo. Roger is an accomplished professional, tenor, has been a college dean, professor, entrepreneur, and corporate financial executive. He currently serves on the Conquistador Condominium Board of Directors as Treasurer.
Greetings to all residents of the Conquistador Condos. I have been delighted to serve for over 4 years as a board member and your Treasurer. I want you all to know that I take this responsibility, although voluntarily, with the utmost concern because this is my profession. In addition to my board responsibilities, I also remain an online graduate instructor.
I personally begin the process in August. Unfortunately I can’t say (We) because there seems to be very little interest in the budget process. I always like to have people on a committee and would appreciate someone to replace the superb guidance received from Clark Murphy; a professional bank executive who has passed away.
Here is the process. I begin to accumulate actual expenses through the year and look at the line items that are yet to be accomplished. This gives me a general idea on how the year end budget will look. (Last year we came within $5000.00 of our allocated 1 million dollar budget!)
The next step is factoring in our contractual obligations. These items include refuse pickup, cable TV as well as landscaping and pest control contracts.
I then sit with Dave our insurance agent/broker and together we review our current property and flood insurance coverages. (These two items alone account for almost 40% of our total annual budget) With this information, Dave and I forecast an estimated premium for the following year.
With September’s actuals for the current year I then sit with our property manager in order to discuss personnel issues. These include discussion related to current wages as well as projected increases for the following year. We also discuss additional personnel needs and for what, how much and when. Security issues are also discussed. The Manager also discusses a desired increase for himself. Worker benefits are discussed to see if we are providing adequate benefits to our staff.
In a final meeting with the Manager we go over every single expense line item and discuss what is required for the next year and at what cost. We then go over every single reserve item and update the item for the current cost data available. For these I depend on the Manager to provide updated cost data from at least two if not more sources. The Manager is also questioned as to whether or not our useful life for each reserve item remains accurate.
This year’s paving reserve item, for example, required a major increase based upon the price of oil. However even with that increase nobody could imagine how the price increased and continues to do so as of the date of this article.
With every year's audit our CPA firm spends at least an entire day reviewing our reserve accounts and making any adjustments they deem necessary. It is important to note that state statutes guide the specifics of what we can and can’t do in the budgetary process including the reserves.
Even with this oversight by our CPA firm it is also important to periodically obtain a Reserve Study by outside experts with no special interests. This should be done every 5-10 years and will be accomplished this budgetary year.
For example, state statutes and IRS nonprofit regulations restrict us from having an excessive amount of owner’s equity on the books. (This is the excess of revenue over expenses since the inception of the Association) In the “for profit” business world this would be called retained earnings.
This must be kept in mind so that we plan on spending these excesses for the benefit of the Association and its residents in a sound, efficient manner.
Finally, for the next budgetary year, probably my last, I have a couple of desires.
1. More involvement from our residents. Last year only one person attended one of our three ‘open to the public’ budgetary review meetings.
2. A capital improvement line item. Since regulations call only for capital assets greater than $1000 and a useful life greater than one year, items such as landscaping is not allowed. However if we have a capital improvement line item that includes landscaping, tree removal and trimming, along with other beautification items, then it can legally be included as a reserve line item.
3. Involvement and suggestions to replace my expertise on the board with a like individual.
4. A review of our Reserve Study with agreement to implement any suggested changes.
5. A planned continuation of our roof replacements, paving, resurfacing, and painting initiatives.
6. A complete review and revision of our by-laws, covenants, and regulations some of which exist but are legally unenforceable causing only harassment to law abiding residents.
Please feel free to address any questions to tenore2@hotmail.com
Respectfully submitted,
Roger J. Geronimo, PhD