CAM Matters

Budget Meeting Gone Wrong

By Betsy Barbieux, CAM, CFCAM, CMCA / Published February 2024

The board budget meeting was set to begin at 10:00 a.m. Board members and their two managers were seated around the table with copies of the budget drafts, previous meeting minutes, an agenda, pens, and calculators in front of them.

     Board members and managers knew this was not going to be an easy meeting. In fact, one manager said to the other manager, “This is our first budget meeting for the season, and if we get through this one, all the others will be easy.” Little did she know how true that would be.

     Owners began to enter the management company conference room, and you could tell that some were very unhappy and had no problem letting it show. They seated themselves and chatted among themselves.

     Just as one manager was getting ready to nod at the board president that it was time to call the meeting to order, an owner rushed up to the board table, and in a loud voice started reading. “This budget meeting will not open. This current board of directors is to cease and desist immediately. We the people, we the property owners, we the association members do hereby recall this board of directors as outlined in item 2.7 in our documents. Further, we the people, we the property owners, we the association members do hereby remove this board in its entirety per item 3.5 of the bylaws.” And he went on. “We the people, we the property owners, we the association members do hereby reject this excessive budget as outlined in item 6.4 of the bylaws.” He mentioned the statutory provisions related to budget increases of more than 115 percent. He continued with, “This meeting is in recess to be continued at the clubhouse for the purpose of appointing a temporary board of directors to conduct and continue the daily operation of the community. And as for the management company, you are fired.”

     In the meantime one of the managers stood and was telling him to sit down. Her voice kept getting louder and louder as he kept reading and reading. The manager finally said, “If you do not sit down, I am going to call the police.” He did not sit down, so now she is ordering them out of the office. No one seemed to hear her. She is now yelling as loud as she can with a 5-4-3-2-1 countdown, and at 10:07 a.m. dials 911. The owners still did not seem to want to leave. While the manager was talking to the dispatch operator at the police station, one older gentleman approached her with cane in hand as if he was going to hit her. The 911 operator became concerned when she heard the manager say, “Do not touch me with that cane.”

     Fortunately or unfortunately, the unruly owners left just as the police arrived. All that was left were two well-behaved owners, but the policeman canvased the parking lot just to make sure everyone was gone.

     After the board and the managers took some time to compose themselves, they wondered if they should continue with the budget meeting or not. They agreed to do so after the managers explained the correct way to recall board members.

     But first, the managers explained that community association budgets are approached opposite to the way any other organization, corporation, business, charitable organization, or social or civic group approaches a budget. Board members don’t do market analyses, or use historical giving trends, or anticipated dues and then scrunch the expenses under that projected, hoped for, prayed over income.

     Board members are supposed to approach a budget draft by first analyzing the expected expenses for the next year. The total of expected expenses becomes the income. That anticipated income then becomes the amount of the assessment collected from the owners. Florida law requires the complete funding of the anticipated expenses, which includes reserve amounts.

     Next, the managers explained the correct process for recalling board members, noting the Division of Condominiums specifically prefers that recall be by written agreement, not at a membership meeting. The managers noted there is a recall guide produced by the Division for disgruntled owners to use, and it includes a recall ballot for each owner to vote on. The Division also notes that recall may be without cause. In other words, it is unnecessary to go through a list of offenses of each board member. It’s not hard to imagine the verbal (and physical) fighting back and forth if offenses were read and board members tried to defend themselves. It could only go from bad to worse.

     The Division of Condominium recall guide clearly outlines the following requirements:

• How to select a unit owner representative and his or her role in the process
• Using the recall ballot and the precise steps to take to fill it out
• How to correctly sign the recall ballot
• Appropriate use of a voting certificate (if the association uses them)
• Proper service of the written recall agreement on the board of directors
• Instructions for the recall meeting of the board to certify or not certify the written recall agreement
• Recall arbitration process if the recall is not certified by the board of directors

     And lastly, the managers explained the language in the condominium statute about the 115 percent, which does not place a cap on assessment increases; it merely permits the owners to petition to substitute their own budget if the coming year’s assessment exceeds the current year by 115 percent. Reserves and insurance premiums are not included when calculating the 115 percent increase.

     At the end of the board budget meeting, the remaining two owners commented that it was a shame the others did not stay to listen to the conversation, the deliberation about the impact the increase would have on the owners, and the final decision that was made. All of this was over an increase of $25 per month.

Betsy Barbieux, CAM, CFCAM, CMCA

Florida CAM Schools

     Betsy Barbieux, CAM, CFCAM, CMCA, guides managers, board members, and service providers in handling daily operations of their communities while dealing with different communication styles, difficult personalities, and conflict. Effective communication and efficient management are her goals. Since 1999 Betsy has educated thousands of managers, directors, and service providers. She is your trainer for life! Betsy is the author of Boardmanship, a columnist in the Florida Community Association Journal, and a former member of the Regulatory Council for Community Association Managers. Subscribe to CAM Matters^TM at www.youtube.com/c/cammatters. For more information, contact Betsy@FloridaCAMSchools.com, call 352-326-8365, or visit www.FloridaCAMSchools.com.