Cohousing-L Mailing List: Re: Love your budget process?

[Michael Barrett (mbarrett]

I don't know if we _love_ our present budget process. It is a change 
from our original process, and has worked well now for 4 years.

The budget is in two parts: fixed and pledge.  The fixed part includes 
projected Common House utilities, insurance, capital reserve, snow 
removal, safety items, tax preparation, taxes, licenses, and a 
contingency fund of about 6% of operating expenses.  The pledge part is 
everything else, including a discretionary fund of about 6% of operating 
expenses.

Committees submit budgets to the Finance Committee budget "director" who 
creates a spreadsheet of everything, with details included. The sheet 
includes the monthly dues required to meet the proposed budgets 
offered.  The average amount required for the pledge budget is 
calculated in two different ways - with two different results - see later)

At a first plenary meeting all budget items (fixed and pledge) are 
considered one at a time. Fixed budget items tend to go through 
unchanged, with only questions and explanations before reaching 
consensus on the fixed budget. For the pledge budget, committees make 
arguments for their proposed expenditures. By an informal 
sense-of-the-meeting process, committees adjust their budgets in real 
time to broadly meet community wishes. After everything has been 
considered once, the spreadsheet is redrawn and reconsidered at a second 
meeting. At the second (and third if needed) meeting further 
sense-of-the-meeting adjustments are made to the proposed pledge budget, 
until such time as the plenary consenses to say it is ready for the 
pledge drive.

In the pledge drive households are invited to offer a confidential 
pledge amount over and above the required fixed amount. The actual 
pledges are known to only two people: the budget "director" and the 
treasurer.

The fixed amount of the dues is the total fixed budget divided by the 
number of houses with distinct postal addresses in the community. The 
number of persons living in the house: adults, children and/or renters 
does not affect the fixed dues. (Annually around budget time there tend 
to be some conversations about the fairness of multi-person families in 
the larger homes, perhaps with a renter, paying the same as a single 
people living in a smaller home, but there is seemingly insufficient 
desire or energy to seek a change.)

The Finance Committee provides homeowners with _two_average pledge 
amounts required to balance the proposed pledge budget. The first is 
calculated the same way as the fixed budget amount: total pledge budget 
divided by the number of houses with distinct postal addresses. The 
second one is total pledge budget divided by the total number of adults, 
including renters, living in the community. Homeowners are invited to 
consider which number is more appropriate and fair for them to use as a 
guide towards determining a pledge amount. Of course the suggestion is 
that the multi-adult homes may wish to multiply the second guidance 
number by the number of adults in the home. We haven’t had to decide 
what age signifies an adult (yet).

 We also publish a self-questionnaire (inspired by Quaker thinking) 
asking people to examine (privately to themselves) what they get from 
the community, what they contribute (in all forms) to the community, and 
what resources (of all kinds) they may have.

Homeowners may pledge any amount including $0. If they chose to 
_not_make a pledge their dues will be set at the level of total budget 
(fixed and pledge) divided by the number of houses with distinct postal 
addresses. The pledges made have a wide distribution. The actual numbers 
are kept confidential.

After a pledge deadline passes the actual pledge total is compared with 
that required to meet the proposed pledge budget. If the result is a 
shortfall, this is communicated to the community by email with an 
invitation (totally optional) to individuals to adjust their pledge, and 
the value of the average pledge increase needed to balance the budget.

 When the pledge process is complete the plenary will then, if 
necessary, reduce the pledge budget to align with the total pledges 
made, and then consense on that as the final pledge budget.

 We have used this process four times now starting with the 2008 
budget. In the first year, the initial pledges slightly exceeded the 
requirements. Since then there has been a small shortfall each year in 
the initial pledge round, but so far the final pledge total has always 
met the budget.

Michael - budget director for the 2011 budget of our SW Virginia 
cohousing community.