Discretionary budget line items are items based on owner, board, and committee desires; they are items people would like to have—given their values, lifestyle, and preferred level of service, e.g., social and recreational expenses.

• A. Items based on owner, board, and committee desires; e.g., social and recreational expenses.
• B. Items that are required by law to operate the association.
• C. Reserve funds for major repairs and replacements.
• D. Emergency expenditures that arise unexpectedly.

Answer: (A)

Discretionary budget items are optional expenses that reflect what owners, the board, and committees want, based on values, lifestyle, and the level of service they desire. They cover things residents would like to have, such as social and recreational programs or amenities that aren’t required by law or essential to operate. That’s why the statement matches: these line items are driven by resident preferences rather than mandates.

By contrast, items required by law to operate are mandatory operating expenses tied to compliance and basic functioning of the association. Reserve funds are specifically set aside for major repairs and replacements and appear in a separate reserve plan, not in the discretionary portion. Emergency expenditures that arise unexpectedly are typically handled through contingency or emergency funding, not through discretionary line items.