Most boards set next year's reserve contribution at whatever it was last year, because nobody in the room can say what a different number would do.
Here a board works through the Projections tab on the reserves page in HOA-OS. It starts from what the community contributes today and raises it until the shortfall clears, then changes one assumption to see how far the answer moves.
What the video covers
- What the community already has set aside, against what its components will cost to replace
- Setting the contribution to what the board puts in today
- The fund over thirty years, and the year the Shortfall card shows it running out
- Saving that as a scenario
- Raising the contribution until the Shortfall card reads None
- Both answers side by side on the same chart
- Moving the inflation assumption from three percent to four
- What the projection is, and what it isn't
The full walkthrough, in words
Start from what's already set aside. The community in this walkthrough has $198,550 in reserves, against $358,000 of components that will one day need replacing. That's the figure the projection starts from.
On the Projections tab, the first job is the contribution. The tab opens with a starting figure of its own, so it's set to what this board puts in: $1,600 a month, which is $19,200 a year.
The line is the fund over the next thirty years. It climbs while money goes in and drops each time a component comes due. The streets are the big one, eight years out. At today's contribution, the Shortfall card reads year 21, the year the projection runs out of money.
Save that as a scenario with a name the board will recognize, and it stays on the chart while you try another number. Raise the contribution to $25,000 a year and the shortfall moves out to year 28. At $30,000 the card reads year 29. At $30,300 it reads None. On these assumptions, that's the lowest figure, to the nearest hundred dollars, where the projection stays above zero for all thirty years.
Save that one too, and both answers are on the same chart.
Both lines assume replacement costs rise three percent a year, a number nobody on the board sets. Make it four, and the live line drops away from the plan it matched a moment ago. The shortfall is back, in year 28. The saved lines stay where they were drawn, at three percent.
Questions boards ask about this
Is this a reserve study?
No. It's a projection from the board's own list of components, under the assumptions on screen, and it doesn't replace a reserve study.
Where does the starting balance come from?
From what the community already has set aside in reserves, $198,550 in this walkthrough.
What should the board do first on the Projections tab?
The Projections tab opens with a starting figure of its own. Set it to what the board contributes before reading anything off the chart.
What happens to the saved scenarios when an assumption changes?
They stay where they were drawn. In the walkthrough, the inflation rate moves to four percent and the live line changes, while both saved lines stay at three percent.
Related reading
- HOA Reserve Fund: How Much Money Is Enough?
- HOA Reserve Studies: What They Are and Why You Need One
- The HOA Budget Season Playbook for Boards
HOA-OS is software for self-managed HOA boards. See what it covers at hoa-os.com/self-managed-hoa-software.