Percent funded is a barometers of the financial health of a community with regards to its reserve account balance. Essentially it is the calculation of how much the community has in the reserve account versus how much it ideally should have at one particular point in time. This figure can be helpful for Community Membership, Boards and outside parties such as Lenders to grasp the current position the reserve accounts are in.
However, Percent Funded is only part of the entire picture in a reserve study. Additionally there are graphs, charts, projections and a cash flow analysis for all the funding plans provided our completed reserve studies. Just because a community has a high percent funded level today does not mean it will continue that way into the future. Large expenses will often drive down the percent funded level so it's important to review the projections of the expenses and the cash flow analysis in the study to see how a community's reserve account balance is impacted in time periods of large expenses, falling percent funded and the risk associated with a low percent funded level versus expected expenditures.
In our reserve studies we provide numerous funding plans for a community to consider and implement. Our Recommended Funding Model will guide the community towards a higher percent funded over time, which carries with it a lower risk for special assessments, reliance on loans and deferred maintenance issues.