Glossary 2 Barrera & Company

Glossary: Page 2

Cash Flow Method	Full Funding	Remaining Useful Life
Component	Fully Funded Balance	Replacement Cost
Component Inventory	Fund Status	Reserve Balance
Component Method	Funding Goals	Reserve Provider
Condition Assessment	Funding Plan	Reserve Study
Current Replacement Cost	Funding Principle	Responsible Charge
Deficit	Life and Valuation Estimates	Special Assessment
Effective Age	Percent Funded	Surplus
Financial Analysis	Physical Analysis	Useful Life

Full Funding

100% Funded. When the actual (or projected) Reserve balance is equal to the Fully Funded Balance. [back to the top]

Fully Funded Balance (FFB)

Total Accrued Depreciation. An indicator against which Actual (or projected) Reserve balance can be compared. The Reserve balance that is in direct proportion to the fraction of life "used up" of the current Repair or Replacement cost. This number is calculated for each component, then summed together for an association total. Two formulae can be utilized, depending on the provider’s sensitivity to interest and inflation effects. Note: Both yield identical results when interest and inflation are equivalent. [back to the top]

Fund Status

The status of the reserve fund as compared to an established benchmark such as percent funding. [back to the top]

Funding Goals

Independent of methodology utilized, the following represent the basic categories of Funding Plan goals:
1. Baseline Funding: Establishing a reserve funding goal of keeping the reserve cash balance above zero.
2. Fully Funding: Setting a reserve funding goal of attaining and maintaining reserves at or near 100% funded.
3. Statutory Funding: Establishing a reserve funding goal of setting aside the specific minimum amount of reserves required by local statues.
4. Threshold Funding: Establishing a reserve funding goal of keeping the reserve balance above a specified dollar or percent funded amount. Depending on the threshold, this may be more or less conservative than "fully funding." [back to the top]

Funding Plan

An association’s plan to provide income to a Reserve fund to offset anticipated expenditures from that fund

Funding Principles:
- Sufficient funds when required
- Stable contribution rate over the years
- Evenly distributed contributions over the years
- Fiscally responsible [back to the top]

Life and Valuation Estimates

The task of estimating Useful Life, Remaining Useful Life, and Repair or Replacement Costs for the Reserve components.[back to the top]

Percent Funded

The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the accrued Fund Balance, expressed as a percentage. [back to the top]

Physical Analysis

The portion of the Reserve Study where the Component Inventory, Condition Assessment, and Life and Valuation Estimate tasks are performed. This represents one of the two parts of the Reserve Study. [back to the top]