Trilogy at Power Ranch Community Association

Board of Directors’ Policy on Budgeting

and

The Annual Planning Process and Budget Preparation Procedures

Purpose:

The budget is created to monetize Trilogy’s operational plan for the upcoming year taking into consideration

Trilogy’s mission statement and goals, objectives and mandates as set by the Board of Directors and governing

documents. The budget should then be used to monitor operations (financially and operationally) throughout the

year to verify that goals and objectives and mandates are being met. The budget should be viewed as a guideline

to help meet the plan established for the budgeted year. Variances to budget should be explained and kept to a

minimum.

Board of Directors’ Policy regarding Budgeting:

Each year the budgeting/planning process shall start in the month of May with a planning session to set

operational goals for the upcoming year. The plan shall contain written statements as to goals and objectives and

tasks needed to accomplish the plan. From that plan, a financial budget shall be set for the Operating, Repair &

Replacement, and Capital Funds. The budgets will be presented to community members during the month of

November. The board of Directors will then approve the three budgets during the month of November and set

assessment rates by fund for the next year.

Annual Planning Process:

Each year, the Board will have during the month of May a planning session to prepare a plan for the upcoming

year.

That planning session should have selected staff personnel, the Board of Directors, and selected

committee chair people in attendance.

The planning session shall review the Community Mission Statement and any preset Board of Directors’

goals for the upcoming year.

With the aid of a facilitator, each amenity and departmental function should be discussed, including

needs to meet the mission statement.

List known quality issues

List concerns of the community members.

List specific facilities needs

List agreed upon changes to operations.

List specific goals along with aligned tasks.

Create a plan document to be used as a guideline to accomplish stated goals and create a budget.

Annual Plan Assumptions:

The results of the initial planning session should include not only the goals for the coming year, but a set

of planning assumptions as well. These would include such things as:

o The anticipated inflation rates for compensation, supplies and material

o Pricing and/or revenue assumptions for revenue producing departments (Should community

activities be run at breakeven? What is an acceptable net revenue/loss for specific departments?)

o New and expanded programs to be funded (for example: fitness expects to begin a golf fitness

program in the fall, which will require more resources in 2015; more Sisso trees will need

removal in 2015, impacting the landscape account, etc.)

o What programs, if any, that will be decreased or terminated in 2015

Adopted: 5/14/14

o Guideline on what is expected for the 2015 operating assessment and the total assessment, a

constraint on the funds available without outside revenue sources.

o Guideline for the R&R and Capital assessment. Assuming the construction project is approved

Wednesday, these guidelines have been preset by the board.

Annual Budgeting Process:

The budgeting process should begin immediately after the planning session is finished. The primary

responsibility for the first round draft budget is staff with the assistance of the Controller. They should

use designated Finance committee members and the Treasurer as needed.

As a framework, a budgeting spreadsheet should be utilized that shows last year actuals, current year

actuals YTD with estimates for the balance of the year, and the current year budget. A Reserve Study

shall be acquired for use in the budgeting process no later than August of each year. Capital items defined

in the planning process shall be monetized.

Each department head shall work with the Executive Director and Community Manager in developing

departmental budgets to include associated expenses and revenues.

Management should take the following into consideration in preparing the first round draft budget:

o Expected inflation rates

o Specific expected cost increases/decreases (e.g. SRP, SW Gas, other contracted items)

o Planned changes in programs as identified in the planning process

o Planned changes in staffing levels

o Review of all contracted expenses including the need for contract renewal

o Identified and known maintenance issues to be addressed in the upcoming year

o Other changes identified in the planning process

o Expected revenues for the various non-dues related accounts, taking into account any planned

changes in programs.

The following five expense categories account for about 78% of the entire operations budget. These

accounts should be assigned as follows:

o Compensation Costs – The Executive Director and the Treasurer. This should include that

Management should prepare a staffing plan for the coming year as part of the budget

process. The staffing plan should describe what staff is needed, both full time and part-time, to

fulfill the year’s goals and plans.

o Utility costs – the Facilities Director and the Controller

o IT functions/accounts – the IT Committee and the Community Manager

o Landscape contract and other costs – the Facilities Director and the Community Manager

o Magazine costs – the Activities Director and the Community Manager

o All other accounts should assigned by department.

Using the Reserve Study acquired, an A, B, C list should be made identifying items planned for repair or

replacement in the upcoming year.

The first round draft budget should contain budgeted amounts for each account by month. Where

revenues/costs are not expected to be realized evenly across the year, the dollar amounts by account

should fluctuate by month.

Adopted: 5/14/14

Budget Calendar:

May – Planning session with Board of Directors, certain staff and certain committee chair people

June – Begin the budgeting process

August – Receive the annual reserve study

Finalized the first round budget

September – Present first round draft budget to Finance committee and Treasurer

Revise the first round budget per comments

October – Present second round draft budget to Board

Revise the second round budget per Board comments

Set proposed assessment rates per fund

November – Final draft budget is prepared

Present budgets in draft format to members at a Town Hall Meeting

Make any necessary changes – budget finalized and approved

November – In late November budgets along with upcoming year’s assessment rates by fund are mailed

to members.

Adopted: 5/14/14