Why Didn’t our Percent Funded Change?

I recently had a client have us investigate the contribution differences between our recommendation to Fully Fund their Reserves, and only Baseline Fund their Reserves. After their initial reaction that the difference was rather small, they asked why their Percent Funded didn’t change. Good question!

The reason their Percent Funded didn’t change is that Percent Funded is a measure of the strength of the Reserve Fund on the first day of their fiscal year. With no change to their Reserve Component List and no change in their starting Reserve balance, there was no change to their Percent Funded.

If you want to see an increase in your Percent Funded, the best way is to add some cash to  your starting Reserve balance. You could make some adjustments to your Reserve Component List in order to minimize the present Reserve needs of the association, but that type of monkey-business is regularly discouraged.

This entry was posted in Blog and tagged . Bookmark the permalink.

6 Responses to Why Didn’t our Percent Funded Change?

  1. I had been honored to obtain a call from a friend as he found the important guidelines shared on the site. Looking at your blog article is a real great experience. Thanks again for thinking of readers at all like me, and I wish you the best of success as a professional in this field.

  2. David Clements says:

    Thanks so much for a great website. This is the first time I have come across this.

    You put a lot of emphasis on the percent funded. My association has one one reserve study and is looking forward to a second soon. The first study was done by one of your competitors who does not offer the percent-funded analysis. Rather, they analyzed using a baseline-funding method, where the goal is to contribute annually so that it is anticipated that the reserve balance will never drop below zero (or below some other minimum).

    I think it would be great to get a report that could offer both kinds of analysis, ie toggle between percent funding and baseline funding. Just as with an accounting program such as Quickbook data can be presented as either Cash basis or accrual basis. Will your analyses offer this?

  3. Roberto Rouhoff says:

    Thanks for helping out, superb information.

  4. Jerald Vanskike says:

    We are a group of volunteers and opening a new scheme in our community. Your web site offered us with valuable info to work on. You have done an impressive job and our entire community will be thankful to you.

  5. Shantel Mazyck says:

    Useful as well as accurate…