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11

"Poor" Funding Level

Also referred to as "weak" funding level.

One of three broad funding levels on a spectrum ranging from 0-100%, which is a measure of the relative financial strength of the reserve fund.

Generally a poor funding level is considered when the percent funded balance is between 0% and 30%


Attributes
At this level the owners should be aware of the following:

This funding level is typically represented in a baseline funding model or threshold funding model.

This is also commonly known as the Unfunded or Special Levy Model, which is the default model in place with many Owner Groups.  The Owner Group does not have reserve balances that will cover expected replacement costs, and the only recourse is to schedule special levies to cover those costs when they are due.

Examples

Listed below are some examples to illustrate the concept of poor/weak funding levels:

  • With $20,000 in our reserve account, and since the 100% fund balance is $100,000, we are only 20% funded.
  • Our reserve study indicates that we ideally should have $100,000 in our reserve account. Since we only have $19,000 we are 19% funded.

Management Principles
Addressing the backlog through:
The owners can rely on certain techniques, such as foot-in-the-door and door-in-the-face technique.
Spectrum of funding levels ranging from "weak" to "strong"
Fig. Spectrum of funding levels ranging from poor/weak ("red") at the left side to strong/good ("green").


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.


Comparison of funding levels at different buildings.
Fig. Comparison of funding levels at four alternative buildings, labelled "A" through "D", where buildings "A" and "B" are considered to be in the poor/weak range.


Special assessments on a funding graph
Fig. The graph illustrates special assessments (blue bars) resulting from inadequate funds in the reserve account.

See also:
Compare with

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.

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