The creation and implementation of an annual operating budget are among the most significant ongoing activities of a housing co-operative. OGHC has a formal budgetary process that you can read about at the bottom of this page.
In addition to this formal policy, the Board initiates the budget process in the spring by asking Committees to provide information on spending for the following year. On the basis of this information, and with the advice of the Finance Committee, the Board adopts a set of priorities for the budget. These priorities and any additional instructions are communicated to our property management company which prepares a draft budget in the month of August. The Finance Committee reviews the draft budget and the Treasurer presents it to the Board in early November.
This survey represents this year’s attempt to increase member input into the budgeting process. In this year, the focus is on the budget process. We are asking for comments and input on the current budget process.
The following notes on the constraints on revenue, spending, and saving are intended as context for any discussion of budgetary process.
Apart from a few non-members who rent parking spots, all our income comes from our members. And almost all of it comes from housing charges. For 2022 Housing Charges account for 90.6 per cent of our income of $987,085, while parking, wifi, and laundry account for an additional six per cent. (You can view our 2022 budget here.) A one-time federal grant to install accessible doors accounts for 2 per cent of our 2021 income. Manitoba Housing has imposed a rent freeze on 34 of our units for 2022. Historically, OGHC has charged the same rent for units of the same size. It would be in keeping with this policy therefore to extend the rent freeze to all units.
Our total budgeted spending for 2022 is $939,782. Most of our spending is on items that we must pay: our mortgage, our utilities, our taxes, and our insurance. For 2022 we have budgeted $733,460 for spending on these non-discretionary items. That works out to 78 per cent of our budgeted expenses on what are usually described as “non-discretionary” expenses. Maintenance accounts for another 13 per cent of spending—and while maintenance spending is technically described as “discretionary” a failure to spend on maintenance will result in the deterioration of the co-op and lead to longterm costs. Finally, administrative spending accounts for 6 per cent of expenses.
Assiniboine Credit Union has provided us with a mortgage. A condition of that mortgage is that we run an annual operating surplus of that is equal to 10 per cent of that year’s total of principal and mortgage payment. For 2022 that amount is $46,998.
Please provide comment on the OGHC budget process.
The OGHC budget process
The following guidelines for the creation of the budget are set down in our Financial Management Policy.
A.1. ANNUAL OPERATING BUDGET
- The board of directors will annually approve an operating budget for the next fiscal year, in accordance with Article 4.1 of the co-op’s Occupancy Rules. The co-op’s fiscal year runs from 1 January to 31 December.
- As a policy decision, the board of directors has determined that the co-op’s monthly housing charges will not exceed the Manitoba Housing Affordable Housing Rental Program Rents. These rents are based on median market rents for similar-sized units in the City of Winnipeg and are adjusted annually by Manitoba Housing.
- The Finance Committee will develop an operating budget for the next fiscal year which incorporates the housing charges anticipated for the next year. This budget will be reviewed by the board of directors at their November meeting.
- Before the end of November, the board of directors will hold a general informational meeting in order for members to consider and discuss the proposed operating budget. The operating budget must include:
- all sources of revenue
- the total expected cost of operating the co-op, including contributions to the replacement reserve fund, and maintenance of other reserve funds.
- a breakdown of the total cost into separate categories of expenditure
- sufficiently detailed notes on each category to allow meaningful discussion by members.
- the full monthly housing charges proposed for each suite, or size of suite.
- the charges proposed for services provided to members and charged separately, such as parking, laundry, internet access, guestroom rental, etc.
e. At the general informational meeting, members have the right to question the proposed budget and suggest changes in spending priorities. These changes should be incorporated by the board of directors if they are supported by the majority of members and are economically feasible.
f. The board of directors must approve a finalized operating budget no later than the end of December each year.
g.During each fiscal year, the board of directors has the authority to spend the operating funds of the co-op up to the amount of the total operating budget. The board can use a surplus in one category of expense to offset a deficit in another category of expense within the overall budget.