RESERVE FUNDING
FUNDING GOALS • Full funding. Setting a reserve funding goal to attain and maintain reserves at or near 100 per- cent funded. Risk assessment: Generally, this is the most conservative. • Threshold funding. Establishing a goal of keeping the reserve balance above a specified dollar or percent funded amount. Risk assessment: Risk varies. • Baseline Funding. Establishing a goal allowing the reserve cash balance to be at or near zero during the cash-flow projection. Risk assessment: Greatest risk.
FUNDING PLAN EXAMPLES While percent funded is an indicator of an association’s reserve fund size, it should be viewed in the context of how it changes due to the association’s reserve funding plan and risk tolerance. It is not itself a measure of adequacy. This graph highlights how account balances vary across different funding methodologies.
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