The budget is an estimate of planned expenditures. Committees may spend as planned, even if the amounts exceed (within reason) the amount in the budget. However, if a committee wishes to spend for a new initiative or wishes to incur expenditures that substantially exceed what was in the budget, they should inform the finance committee, which will arrange for a budget amendment to be presented to business meeting approving the proposed expenditure. In any event, business meeting will be kept informed of budget execution (income and spending) during the course of the year.
Particular Considerations for House and Grounds
- H&G should draw up an annual plan of expenditures, including a contingency amount that is not specific, but represents an estimate of repair expenses that might come up on average.
- The total planned expenditures would be part of the budget (no more off-budget use of reserve for replacement) so that there is transparency for business meeting as to what is being spent.
- There would be a reserve for replacement. The reserve for replacement would be based on a plan, and include an itemized list of large expenses for items that need replacing when they wear out or break down. Examples are new roof, new furnace, replacement windows, and painting (since painting occurs only periodically).
- When an expenditure included in the reserve for replacement is incurred, it is financed by drawing down the reserve.
- The budget would include every year a transfer to the reserve for replacement sufficient to cover expenditures over a long term. For example, if the replacement plan calls for $100,000 of expenditures over 10 years, then the annual contribution to the reserve should be $10,000.
- Timing of expenditures to be financed by the reserve for replacement does not affect the donations called for by the annual budget, since there is a balancing income from the reserve. Therefore, for these items H&G should incur the expenditure when needed, regardless of the budget year it falls into.
- For expenditures not financed by the reserve for replacement, if H&G is otherwise indifferent about the timing of an expenditure, an effort should be made to stick with the budget (which may involve accelerating or postponing an expense), and to plan the budget so as to achieve a relatively smooth level of expense from one year to the next.
- In the case of expenditures that are larger than the budget anticipated, if they are discretionary in nature, business meeting approval should be sought. Nondiscretionary amounts should be spent without specific business meeting approval. These might involve for example larger than anticipated snow removal costs or some unanticipated event requiring a large repair (for example a fallen tree). Such expenditures could be financed either by soliciting special contributions or by drawing down the general (unrestricted) reserve.