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Funding Models

A means and needs analysis to help owners identify and establish an appropriate funding level for sustainment of the assets in a facility.

Models serve as a sensitivity analysis to determine the financial impact of different funding levels and the resultant need for special levies/assessments.


Purpose
The purposes of a funding models are to help the owner in the following ways:

The funding model should typically match the planning horizon. For example: a 30 year model will start with fiscal 2012 as the base year and end with fiscal 2041 as the terminus year.


Components of a Funding Model
The key components of a funding model are:
The two key parts of a funding model are:
Aditional information on the relative merites of each of these four funding models can be found on their respective pages in this glossary.


Types of Funding Models
The four primary types of models are listed below: 

Additional information on the relative merites of each of these four funding models can be found on their respective pages in this glossary.

Methods of Calculation
The two primary methods of calculating the contributions to a funding model are as follows:
Additional information on the relative merites of these two calculation methods can be found on their respective pages in this glossary.


Analysis of the Model
Analysis of the patterns in the funding models utilitizes the following principles:

Variables & Assumptions
The key variables in a funding model are:
Funding models help the owners conduct a sensitivity analysis to determine how to pay for future projects. Reinvestment models are used to determine the size of the expenditures.
Workflow to illustrate how lumpy funding models form part of a sensitivity analysis.
Fig. Workflow to illustrate how funding models form part of a sensitivity analysis when helping owners review alternative funding level.


Part I: Alternative Cash Flow Graphs

Funding graph to illustrate annual closing balance, annual contributions and special assessments
Fig.Financial graphs to illustrate: a) annual closing balance, b) annual contributions and c) special assessments


"I. Care", our cartoon character, is trying to raise funding levels quicker than the owners can sustain
Fig. "I. Care" is trying to raise funding levels but this may be quicker than the owners can sustain.


Special assessments shown on funding cash flow graph
Fig. Special assessments shown on a funding cash flow graph.


Closing balance on funding graph
Fig. Closing balance shown on a funding cash flow graph.


Part II: Cash flow Table
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Fig. Cash flow table portion of a funding model.


I. Care is trying to ensure that inflows match outflows, but this requires cooperation and teamwork
Fig. I. Care is trying to ensure that inflows match outflows, but this requires agreement on long-range stewardship, cooperation and teamwork.

See also:


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