Budget - Is ratification of an over-expenditure required?

[Guest anon]

If a condominium's declaration requires the board to adopt an annual budget, and the state requires budget ratification by the owners, would an over-expenditure of the total budget amount require owner ratification?

I was taught that budgets are for the purpose of authorizing planned expenditures based on estimates. With a budget in hand, a commitment can be made to set-aside a specified not-to-exceed amount from funds available in an account, thus authorizing an obligation to be made under a legal purchase agreement for goods or services. Once the obligation is fulfilled  payment can be authorized for expenditure and any balance remaining in excess of the committed amount is released for future use under the budget.  This process is similar to how a checking account register would be maintained.

While over or under expenditure within the scope of specific budget line items are a matter of performance, over-expenditure of the total budget amount could result in insolvency with serious negative implications.

This condominium's declaration says if the budget proves inadequate for any reason, the board may prepare a supplemental budget. That process could resolve over-expenditures, albeit after-the-fact but it does not ratify the act of over-expenditure.

I see where some society's meeting minutes contain motions to ratify budget over-expenditures. What happens if over-expenditures are not approved?

[Josh Martin]

43 minutes ago, Guest anon said:

If a condominium's declaration requires the board to adopt an annual budget, and the state requires budget ratification by the owners, would an over-expenditure of the total budget amount require owner ratification?

I was taught that budgets are for the purpose of authorizing planned expenditures based on estimates. With a budget in hand, a commitment can be made to set-aside a specified not-to-exceed amount from funds available in an account, thus authorizing an obligation to be made under a legal purchase agreement for goods or services. Once the obligation is fulfilled  payment can be authorized for expenditure and any balance remaining in excess of the committed amount is released for future use under the budget.  This process is similar to how a checking account register would be maintained.

While over or under expenditure within the scope of specific budget line items are a matter of performance, over-expenditure of the total budget amount could result in insolvency with serious negative implications.

This condominium's declaration says if the budget proves inadequate for any reason, the board may prepare a supplemental budget. That process could resolve over-expenditures, albeit after-the-fact but it does not ratify the act of over-expenditure.

I see where some society's meeting minutes contain motions to ratify budget over-expenditures. What happens if over-expenditures are not approved?

Based on the specific facts presented here, I am inclined to think that expenditures in excess of the total budget must be authorized by the membership, although it will ultimately be up to the organization to interpret its own rules.

If it is correct that the board lacks the authority on its own to make such expenditures, and then makes such an expenditure anyway and it is not ratified by the membership, then as a parliamentary matter, the individual board members are responsible for the expense and may be ordered to repay it (although I advise consulting an attorney if things come to that), and the board members could be disciplined, such as by removing them from office. See Ch. XX of RONR.