Reserve Study Tutorial #7
Funding Goals
Once the present status if the reserve fund is determined
a sound funding plan must be put together.
Generally speaking, when putting together
a funding plan, there are four “Funding Principles”
(CAI National Reserve Study Standards) that should be considered:
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Sufficient
funds when required |
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Stable
contribution rate over the years |
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Fiscally
responsible |
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Evenly
distributed contributions over the years |
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| Comment:
A sound funding plan must provide enough cash when
necessary to meet the needs of each reserve component. |
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| Comment:
A funding plan should not require reserve contributions
that vary greatly from year to year. Ideally a funding
plan should recommend one monthly contribution (with
increases to offset inflation) for the entire 30-year
period. |
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| Comment:
Any funding plan should be prudent and financially
sound. |
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Ideally the reserve contributions should not be
weighted more to the present or the future. Doing
so would put undue burden on either the present
owners or the future owners. |
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A sound funding plan from a reputable reserve study
provider is an association's best bet to ensure their community
will always look as good as the day it was built.
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