Why Are Reserve Fund Studies Wrong 18 Out Of 25 Times?

Sounds like a university math problem, but it isn’t. Math problems have answers. Reserve fund studies are subject to numerous assumptions beyond anyone’s reasonable control. One such assumption made by far too many reserve fund planners (one that has been for many years) is that the cost of work and expenses from reserve should change at a percentage rate equal to the rate of change that the annual contributions to reserve do. The available evidence illustrates that correlation simply does not happen often enough to justify being used in, or forming the basis of, 30-year or longer cash flow plans.   Read the article…………


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