Why Didn’t our Percent Funded Change?
May 10, 2019 No Comments
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.
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.
According to National Reserve Study Standards (see complete standards here), an evaluation of Reserve Fund Strength is one of the three primary results from a Reserve Study (the current component list, the current strength of the Reserve Fund, and the current recommendation for Reserve contributions).
A client recently asked a good question: if Reserves are all about becoming prepared for future expenses, why would you use current cost in computing the Percent Funded (Reserve Fund strength) value for the association?
Boards are free to choose how to fund Reserves. Typically Governing Documents require the Board to collect “adequate” or “sufficient” Reserves to care for the association’s common areas.
Special Assessments are the typical unwanted consequence when an Association is surprised by significant expenses that are larger, or earlier, than expected.
