CAI-NJ Dec. 2018 (w)

RESERVE STUDY... from page 69.

Figure 5

in Figure 4 (on page 56). The final part of an association’s reserve funding planning is related to how often the study is updated to reflect the current conditions. For some general guidelines on updating I offer the following thoughts. 1. How often to update should take into account the type of Funding Plan being used. If Full Funding is used a longer period of time before updates may be applicable as compared to Baseline Funding where there is much more risk of a deficit if changes take place with the components. 2. If a component is added or replaced the study should be updated. 3. If the association does not follow the recommended funding in the most current study the study should be updated.

4. Updating should take place at a more regular basis as communities age. This is because the rate of deterioration of components gener- ally accelerates as they age. A rule of thumb would be every 3 years for communities up to 10 years of age and every other year for com- munities over 10 years of age.

Please keep in mind that the above are intended as guidelines and would vary with each association. In conclusion, Figure 5 is a recom- mended process that can be used in order for an association to develop a Reserve Study and Funding Plan which meets their needs.

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