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…………….


Related Articles

Reserve Planning in Your HOA: Yield, Safety & Liquidity

In recent years, reserve planning has become a long overdue reality for many older homeowner associations. The boom and bust

Dispute Over Landscaping Repairs Results in Personal Penalties against Condo Directors and a Fascinating Governance War Story

Court decisions holding corporate directors personally liable for acting in bad faith tend to be few and far between in

Recap – Motions at Meetings

It is AGM season again. Rather than re-invent the wheel, I decided to highlight a post from two years ago