Adopt A Buget

[Father Cadan]

Quote

The budget 

Many organizations work from a yearly budget. Usually the treasurer prepares the budget with the help of the financial committee, the committee chairmen, and perhaps the executive board. The budget is then submitted to the members for approval. A budget is a guide for spending; it is not set in stone. It can be amended by the members when it is presented for adoption, and even after it is adopted. 

Usually, when a bill is received that is within the budget, the person responsible for that budget item, such as a committee chairman, signs the bill as approved and gives it to the treasurer for payment. For example: The Buildings and Grounds Committee has a budget of $2,000 for painting. When bids were taken for painting, the lowest bid was $1,950. A contract was signed and when the job was completed, a bill was received for $1,950. The chairman of the Building and Grounds Committee approves the bill by signing his name and writing the words "approved for payment," and sends it to the treasurer who then pays the bill. However, some organizations may still require membership approval for the expenditure to be paid even though it is within a budgeted amount. 

If the budget has not allotted enough for painting, and the lowest bid is for $2,050, the chairman of the Building and Grounds Committee must get membership approval for the additional expense before contracting for the painting. 

If an organization does not work from a budget, each expenditure must have prior approval by the membership unless an organization has a rule stating differently. In this situation, the Building and Grounds Committee would get estimates for painting and submit them to the membership for a vote. After the membership decides on which bid to accept, the Building and Grounds Committee chairman can then enter into a contract with the company, and the work can be done. When the bill is received and the committee is satisfied with the work done, the treasurer pays the bill.

~Webster's New World Robert's Rules of Order Simplified and Applied, 2nd Edition~

What does the unqualified motion to adopt a budget mean? Does it authorize "the person responsible" to approve the bill and further authorize the treasurer to write the check? Does it depend on how the motion to adopt the budget is worded? For example the US House 'appropriates' funds thusly:

Quote

That the following sums are appropriated, out of any money in the Treasury not otherwise appropriated, for the fiscal year ending September 30, 2020, and for other purposes, namely... For necessary expenses of the Committee on Foreign Investment in the United States, $20,000,000, to remain available until expended: Provided, That the chairperson of the Committee may transfer funds provided under this heading to a department or agency represented on the Committee...

RONR 11th edition refers to adopting the budget as if we should already know what this means.

[George Mervosh]

42 minutes ago, Father Cadan said:

~Webster's New World Robert's Rules of Order Simplified and Applied, 2nd Edition~

If you're quoting from this horrible source, I don't know anyone here who can help you.

[Rob Elsman]

Whether the adoption of the budget includes authorization for expenditure should be readily apparent from the form of the motion and/or other norms that the society has previously adopted.

[Richard Brown]

39 minutes ago, Rob Elsman said:

Whether the adoption of the budget includes authorization for expenditure should be readily apparent from the form of the motion and/or other norms that the society has previously adopted.

In an ideal world, that would be true.  And perhaps it SHOULD be the case.  However, in the world I live in,  I find that more often than not that neither the budget nor the bylaws contain such instructions or detail. 

Edited to add:  In my experience, it often boils down to either custom or the whim of the president or treasurer.

Edited October 21, 2019 at 07:58 PM by Richard Brown
Added last paragraph

[Gary Novosielski]

The background info in that Webster's thing is a not unreasonable starting point, but your organization needs to decide how it will develop, approve, and administer its budgets for itself, by including this info in the bylaws or at least by adopting Standing Rules covering the procedures to be followed.

If you have a Finance Committee, and want them to develop a draft budget, set a rule for that.  If you want them to hold hearings so committees or members can influence the priorities, put that in.  Some groups find that hearings can increase the likelihood that the budget, when up for adoption by the membership, won't draw a lot of amendments, since members know what to expect.  It will be up to you how detailed the budget gets at the lower line-item level.

I wouldn't necessarily add rules requiring that the draft be presented to the membership x-number of days in advance, unless you're sure you can meet that date--but rule or no rule I would recommend doing it, and with enough lead time that members don't feel blindsided.  Like any main motion, it will be subject to amendment when it's pending, and the drafters of the budget should be prepared to answer questions and free to debate the merits of particular items.

You should adopt rules regarding who can approve items for payment, as your research suggests.  You can decide that all bills that comport with the budget and duly approved by a committee chair, or whomever you authorize will be paid by the Treasurer.  This should be reflected in the Treasurer's duties.  If you like you can limit such payments to a certain ceiling amount, requiring an individual membership vote prior to payment, even when they fall within the budget.

Those are some rough outlines.  If you don't feel you have a good framework of rules, task your finance committee with drawing up a draft set of rules, or where necessary bylaws amendments, that are appropriate for your organization.  You don't want to hogtie yourself with rules that will bite your nether regions later on, but neither do you want to tempt or test the honesty of those entrusted with your funds.  And make sure you have provisions for putting together an audit committee (or if you're a large enough outfit, hiring a CPA) to perform an annual audit of the books, including recommendations for procedural changes that may, with hindsight, be necessary.

No, RONR is not a big help in this area, but it does provide the means to get these rules in place, once you've determined what your individual organization needs.  

 

[Father Cadan]

1 hour ago, George Mervosh said:

If you're quoting from this horrible source, I don't know anyone here who can help you.

Please find a better source to quote from.

[jstackpo]

 

9 minutes ago, Father Cadan said:

Please find a better source to quote from.

Read Gary R.'s note just preceding yours.

RONR is a procedural handbook, not a Financial Advisory service.

[Father Cadan]

Assume an organization uses the example bylaws in RONR. The attached budget is distributed to all the members at a meeting. A motion to "adopt the budget as distributed" is passed. The treasurer proceeds to write many checks during the budgeted fiscal year. Has the treasurer done something wrong?

Edited October 21, 2019 at 09:01 PM by Father Cadan

[Father Cadan]

4 minutes ago, jstackpo said:

 

Read Gary R.'s note just preceding yours.

RONR is a procedural handbook, not a Financial Advisory service.

Procedurally, what does it mean to adopt a budget. RONR uses the word budget at least three times. I do not need or want Financial Advisory Services.

[jstackpo]

12 minutes ago, Father Cadan said:

A motion to "adopt the budget as distributed" is passed. The treasurer proceeds to write many checks of the budgeted fiscal year. Has the treasurer done something wrong?

RONR doesn't say.  

In the Federal Government budget process there is a distinction between "Authorize" (spending) and "Appropriate" (money).

(At least I think that may be the distinction; I could never keep them straight.  I didn't do budgets in my working career.)

What does your "Alliance" consider "adopt" to mean? Authorize?  Appropriate? Both?  Neither?  Only your association knows for sure. (Like hair color).  Maybe "obligate" is the right word.

Edited October 21, 2019 at 09:04 PM by jstackpo

[Father Cadan]

1 minute ago, jstackpo said:

RONR doesn't say.  

In the Federal Government budget process there is a distinction between "Authorize" (spending) and "Appropriate" (money).

(At least I think that may be the distinction; I could never keep them straight.  I didn't do budgets in my working career.)

What does your "Alliance" consider "adopt" to mean? Authorize?  Appropriate? Both?  Neither?  Only your association knows for sure. (Like hair color)

This is a problem I see in many organizations. They do not specify what adopting a budget means, but, like RONR, they talk about adopting one. What does the unqualified motion to adopt a budget mean? If it means nothing, i.e. confers no authority/limits no officer why bother having one?

[Gary Novosielski]

15 minutes ago, Father Cadan said:

Assume an organization uses the example bylaws in RONR. The attached budget is distributed to all the members at a meeting. A motion to "adopt the budget as distributed" is passed. The treasurer proceeds to write many checks during the budgeted fiscal year. Has the treasurer done something wrong?

That depends entirely on the rules your organization has adopted, as I pointed out above.  Is your treasurer authorized to write many checks if they are within the budget?   If so, then No, if not, then Possibly.  

[Gary Novosielski]

1 minute ago, Father Cadan said:

This is a problem I see in many organizations. They do not specify what adopting a budget means, but, like RONR, they talk about adopting one. What does the unqualified motion to adopt a budget mean? If it means nothing, i.e. confers no authority/limits no officer why bother having one?

For planning purposes, if nothing else.  No other document so clearly conveys the priorities, goals, and values of an organization than an approved budget.

You are free to have your budget confer as much or as little authority or limitations as your organization decides is appropriate.  RONR doesn't care what decisions you reach, it only requires that you reach them in an orderly and democratic manner.  

The adoption of an unqualified motion to approve a budget may mean that not enough thought has gone into the process.

[Father Cadan]

7 minutes ago, Gary Novosielski said:

That depends entirely on the rules your organization has adopted, as I pointed out above.  Is your treasurer authorized to write many checks if they are within the budget?   If so, then No, if not, then Possibly.  

 

1 minute ago, Gary Novosielski said:

For planning purposes, if nothing else.  No other document so clearly conveys the priorities, goals, and values of an organization than an approved budget.

You are free to have your budget confer as much or as little authority or limitations as your organization decides is appropriate.  RONR doesn't care what decisions you reach, it only requires that you reach them in an orderly and democratic manner.  

The adoption of an unqualified motion to approve a budget may mean that not enough thought has gone into the process.

The attached budget is for a fake organization.

Using RONR sample bylaws...Article VII Section 1 "... This comittee [shall] prepare... a budget for the fiscal year... and submit it to the Society... The ... Committee may from time to time submit amendments to the budget... which may be adopted by a majority vote [of the Society]."

Pg 577 ln 29 "Thus, for example, if it is desired that the assembly adopt an annual budget but that the board be empowered to alter it to deal with contingencies that may develop, the bylaws (or the budget resolution) must specifically confer this power on the board." This, in my opinion presumes that the budget authorizes spending. If it did not why would the board care to amend the budget? The board should be sending every expenditure back to the society as a recommendation.

pg 461 "[The Treasurer]... cannot disburse funds except by authority of the society, or as the bylaws prescribe." The sample bylaws do not prescribe. Does the adoption of a budget give the Treasurer authority?

[Dan Honemann]

19 minutes ago, Father Cadan said:

 

The attached budget is for a fake organization.

Using RONR sample bylaws...Article VII Section 1 "... This comittee [shall] prepare... a budget for the fiscal year... and submit it to the Society... The ... Committee may from time to time submit amendments to the budget... which may be adopted by a majority vote [of the Society]."

Pg 577 ln 29 "Thus, for example, if it is desired that the assembly adopt an annual budget but that the board be empowered to alter it to deal with contingencies that may develop, the bylaws (or the budget resolution) must specifically confer this power on the board." This, in my opinion presumes that the budget authorizes spending. If it did not why would the board care to amend the budget? The board should be sending every expenditure back to the society as a recommendation.

pg 461 "[The Treasurer]... cannot disburse funds except by authority of the society, or as the bylaws prescribe." The sample bylaws do not prescribe. Does the adoption of a budget give the Treasurer authority?

In your example, I'm quite sure you do not believe that the mere adoption of that budget you present, with nothing more, authorizes the Treasurer to grant a $6,000 scholarship to whomever he wishes, or a Community Grant (whatever that is) of $30,000 to whomever he wishes (and so forth and so on). 

What you have quoted from RONR, on page 461, means what it says.

 

[Father Cadan]

12 minutes ago, Daniel H. Honemann said:

In your example, I'm quite sure you do not believe that the mere adoption of that budget you present, with nothing more, authorizes the Treasurer to grant a $6,000 scholarship to whomever he wishes, or a Community Grant (whatever that is) of $30,000 to whomever he wishes (and so forth and so on). 

What you have quoted from RONR, on page 461, means what it says.

 

The problem I have with the quote from page 461 is that I do not know if an adopted budget counts as an authorization. Do you believe that the entire Society must meet every (let's presume) two weeks to approve each payroll check?

Alternatively if the budget for payroll as approved by the Society was $1, would the motion to "pay our janitor $1,000 for the work he did in the last pay period" be in order? Would the voting threshold be a majority or 2/3? 

I would assume that the budgeted item for Community Grants would have to be disbursed according to the terms of the grant, whatever those are.

The manner in which Webster's New World Robert's Rules of Order Simplified and Applied, 2nd Edition handles the issue makes sense to me. The Society controls its general affairs by adopting a budget. The Board acting within the budget handles the day to day approval of each specific item (general supervision of day to day affairs). The Board must stay within that budget for each line item. Committees to which budgets are given must likewise stay within their assigned amounts. Grants or other line items must comply with whatever motion made them. I.e. "I move that we give the immediate past president a token of appreciation not to exceed $100 every year." This not only limits the amount but the number of times per year.

Here's another wrench: The vote on the motion to "Adopt the budget as distributed" has just been completed and the Chair states: " The ayes being in the majority the motion to 'adopt the budget' is approved, the treasurer will pay the expenses of the Society accordingly.

[Gary Novosielski]

I'll say this one last time.  You can do things however you want,  Complaining that RONR doesn't get deeply involved in this area is pointless, because it does not prevent you from doing things your way either.  If you like the way Webster's suggests, adopt rules to implement that system. 

Whenever you feel the urge to complain about the shortcomings of RONR in this area, stop, think about how, in your view, it should be done, and propose rules to implement that process.  I'm pretty sure that will be a better use of your time.  RONR is fairly clear, means what it says, and is very comprehensive with respect to the conduct of business.  It purposely avoids getting involved with the administrative details of the organization, leaving it up to the founders and members to run things as wisdom dictates.

 

[Father Cadan]

23 hours ago, Gary Novosielski said:

I'll say this one last time.  You can do things however you want,  Complaining that RONR doesn't get deeply involved in this area is pointless, because it does not prevent you from doing things your way either.  If you like the way Webster's suggests, adopt rules to implement that system. 

Whenever you feel the urge to complain about the shortcomings of RONR in this area, stop, think about how, in your view, it should be done, and propose rules to implement that process.  I'm pretty sure that will be a better use of your time.  RONR is fairly clear, means what it says, and is very comprehensive with respect to the conduct of business.  It purposely avoids getting involved with the administrative details of the organization, leaving it up to the founders and members to run things as wisdom dictates.

 

I do not remember complaining. I think that when Robert referred to a budget, he assumed, and, at the time, it was likely a good assumption, that people knew what approving a budget did. Since I have had people/organizations espouse both views of budgets (i.e. they authorize spending vs they are just a bunch of numbers/a plan/guidance) I am trying to figure out what a budget is under RONR. Robert gives us sample bylaws, and I think I have figured out the answer by reading Parliamentary Law. 

I am still left with some problems in consistency with both views. If a budget does not authorize expenditures then adopting a budget does not limit anything. Therefore it would be in order to move to "expend $10,000 to buy computers" even though the budget only lists $1,000 in the line item for computers. The budget is what the Society planned to do the other motion is what the Society is actually doing. If, however, budgets are binding and not just plans, then the example motion in this paragraph would be out of order and the budget would first need to be amended by a 2/3 vote.

I understand that when creating my own organization from scratch I can "do things however {I} want." I am asking, "What if the organization I am working with does not say one way or the other?"

Edited October 23, 2019 at 04:21 AM by Father Cadan

[Gary Novosielski]

11 minutes ago, Father Cadan said:

I understand that when creating my own organization from scratch I can "do things however {I} want." I am asking, "What if the organization I am working with does not say one way or the other?"

Then amend the rules to remove the ambiguity.

[Father Cadan]

On 10/22/2019 at 9:29 PM, Gary Novosielski said:

Then amend the rules to remove the ambiguity.

Because it has been my experience that this question comes up after the fact I am trying to figure out what the default is. Similar to someone saying we do not specify a quorum in any of our documents. I can show in RONR where the default is specified. If someone says we adopted the budget and then the treasure paid for budgeted items; is that allowed? I can not find a default in RON,R though I can find hints in RONR and Parliamentary Law and in Demeter's and in reviewing the Common Law of England. These hints seem to be in two camps. The first is that adopting of the budget is really receiving a report with no recommendations and therefore authorizes nothing; the second being that adopting of the budget is really a motion to 'expend up to the listed amount for the expenses of the listed category'.

Where I am having a problem is in the inconsistency following the presumption of each camp. If adopting a budget is a report with no recommendations exceeding expenses in line items is not barred, a board is able to spend as much as it desires since the superior body has not limited it. If adopting a budget is an authorization the expenses are authorized only up to listed amounts for listed categories, going beyond the limits would require an amendment of the budget.

The only reason I have continued this discussion for so long is that I believe that this is a fairly common problem likely to lead to legal battles, member disgruntlement etc.

[Dan Honemann]

39 minutes ago, Father Cadan said:

Where I am having a problem is in the inconsistency following the presumption of each camp. If adopting a budget is a report with no recommendations exceeding expenses in line items is not barred, a board is able to spend as much as it desires since the superior body has not limited it. If adopting a budget is an authorization the expenses are authorized only up to listed amounts for listed categories, going beyond the limits would require an amendment of the budget.

The only reason I have continued this discussion for so long is that I believe that this is a fairly common problem likely to lead to legal battles, member disgruntlement etc.

Doesn't the paragraph that begins on line 23, page 577, answer this question for you?

[Josh Martin]

2 hours ago, Father Cadan said:

Because it has been my experience that this question comes up after the fact I am trying to figure out what the default is. Similar to someone saying we do not specify a quorum in any of our documents. I can show in RONR where the default is specified. If someone says we adopted the budget and then the treasure paid for budgeted items; is that allowed? I can not find a default in RON,R though I can find hints in RONR and Parliamentary Law and in Demeter's and in reviewing the Common Law of England. These hints seem to be in two camps. The first is that adopting of the budget is really receiving a report with no recommendations and therefore authorizes nothing; the second being that adopting of the budget is really a motion to 'expend up to the listed amount for the expenses of the listed category'.

Where I am having a problem is in the inconsistency following the presumption of each camp. If adopting a budget is a report with no recommendations exceeding expenses in line items is not barred, a board is able to spend as much as it desires since the superior body has not limited it. If adopting a budget is an authorization the expenses are authorized only up to listed amounts for listed categories, going beyond the limits would require an amendment of the budget.

The only reason I have continued this discussion for so long is that I believe that this is a fairly common problem likely to lead to legal battles, member disgruntlement etc.

In my view, if we assume an organization has adopted the sample bylaws in RONR, the adoption of a budget, in and of itself, does not authorize the Treasurer, acting alone, the authority to spend anything. The board, however, is authorized to spend amounts up to the amounts authorized in the budget, to the extent that such expenses are within the board’s authority under the sample bylaws of “general supervision of the affairs of the Society between its business meetings,” and the Treasurer may act on the board’s instructions. The rule on pg. 577 suggests that the board may not exceed the limitations in the budget.

A particular organization will likely have its own language concerning the powers of the board and of the Treasurer, and therefore the answer for a particular society may well be different.

Edited October 25, 2019 at 01:05 AM by Josh Martin