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Funding Trajectory

The cumulative effect, and the absolute effect, of the annual incremental adjustments to the reserve contributions each fiscal year over one of the following terms:

The trajectory reflects the changing balances over time relative to the inflows from funding allocations and outflows for capital project expenses.


Types of Trajectories
Capital funding trajectories fall into two broad types:
Listed below is an alternative method of classifying funding trajectories:


Elements of a Trajectory
Listed below are some of the key elements of each of the funding trajectories.

Management Principles
The type of trajectory impacts the degree to which the capital costs are amortized and how the owners can achieve a state of equilibrium that matches their tolerance for risk and desired standard of care.
Three different types of funding trajectories - linear, incremental and lumpy.
Fig. Three different types of capital funding trajectories: linear, incremental and lumpy.



Four types of funding trajectories
Fig. Four types of capital funding trajectories - two of which are "lumpy" and two are "linear" in nature.


Funding trajectories and inflection points resulting from three alternative funding methods - "Adequate Reserve", "Capital Load" and "Non-Termed.
Fig. Lifecycle funding trajectories and inflection points resulting from three alternative funding methods - "Adequate Reserve", "Capital Load" and "Non-Termed.


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.


Funding trajectory represented as a cash flow graph.
Fig. A capital funding trajectory represented as a cash flow graph over a 30-year planning horizon.

See also:
Compare with:

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

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