It’s Budget Time
Last year’s audit is in the wrap-up stages. It appears your PORAC financial team was able to gauge our income and expenses fairly well. When you deduct our unrealized gains and losses on our investments, we ended up with a surplus.
By the time you read this article, the Budget Committee will be well on the way toward presenting the proposed 2019 budget to the Board of Directors. As in the past, our accountant has done an extensive review of the last three to five years’ income and expenses to create a better prediction for the 2019 budget. We continue to see some certainties in areas where increases will be needed.
You will have an opportunity to review PORAC’s budget at the Conference of Members in Reno, Nevada. If you have not yet registered, please make sure to do so as quickly as possible! I would hate to see you left out of the Annual Conference. You may register at PORAC.org.
Now let’s take a look at your individual association’s budget. When preparing it, you may want to use the three-to-five-year average method we employ at PORAC. However, association budget preparation calls for a bit of a paradigm shift in your thought process, from government budgeting to business budgeting.
In the first phase, you need to determine which items you want to maintain at status quo and which will require an increase or decrease. This is where the three-to-five-year average comes in handy in providing justification for the amounts you have decided to place under each category.
Second, it’s important to remember in business budgeting that a surplus in your last year’s budget shows you have done a great job in the budgeting process, as well as fulfilling your fiduciary responsibility to your members. The surplus does not mean you need to go and spend the money before the end of the budget cycle, fearing that item will not be fully funded for the following year. Remember that as association leaders, you make the decisions on what will or will not be funded for the following year.
Finally, do not set your budget in stone. You are not required to have your members formally adopt the budget, although that does not preclude them from reviewing it and making recommendations. If it’s your association’s practice to formally adopt your yearly budget, you may want to reconsider it, especially when it comes to making significant increases to a specific line item. If your members formally adopted the budget, you will have to get your entire membership to meet and adopt the change. If you are a part of a small association, this may not be a problem; however, for large associations it could be a costly process. Either way, keep your members involved and informed during the process by giving them the opportunity to review the budget along the way and provide them with guidance through the fiscal roadmap your board has decided to follow for the following year.
Not setting your budget in stone does not mean you are not automatically giving your board a blank check to do as they please with your money. However, it is imperative that your bylaws and standing rules that govern your board, president and vice president’s actions in spending your money are up to date. They should clearly delineate how much authority you are willing to give these executive officers when it comes to making financial decisions and when they need to seek input from the members.
Please don’t forget to attend your local chapter meetings and keep yourself informed as to what is occurring within your city, county and state — especially in the “war on police” environment we find ourselves in today. It is extremely unfortunate that certain groups can espouse hatred toward law enforcement and we have to be the ones to stand up and support each other. It is unfortunate how those who condemn us are also the first to expect our help when things go sideways for them. In addition, we have some politicians who can’t help but jump in front of a camera or reporter to save their hides and make uneducated or unnecessary remarks when an event occurs that is not textbook in nature or is considered inappropriate or wrong by those who have never done this job or faced making a critical decision in their lives. Hopefully, you understand that your chapter meetings are imperative; see you there.
PORAC Finance and Administrative Manager Kim Busman and I are available to assist you with your association’s budgeting needs. I look forward to seeing you at Conference in Reno and providing you with the opportunity to review your 2019 PORAC budget. In the meantime, be safe and have fun.