Reading a 30-Year Funding Projection: A Board's Walkthrough

The Document Everyone Signs Off On But Few Actually Read

Most reserve studies include a 30-year funding projection. It is usually a wide spreadsheet with dozens of columns and rows, printed in a font size that seems designed to discourage close reading. Most board members glance at the recommended contribution figure, approve the budget, and move on.

That is a mistake. The 30-year projection tells you whether your association is headed toward stable finances or a special assessment. Learning to read it takes about 20 minutes. This walkthrough uses a made-up example so you can do it with your own study.

Meet Maplewood Commons

Maplewood Commons is a made-up 96-unit condominium association, built in 2004. We built its numbers for this article so that every figure below can be checked with a calculator. Its 30-year projection covers 2025 through 2054. Here are the key numbers from the summary page:

• Starting reserve balance (Jan 2025): $412,000
• Fully funded balance: $1,430,000
• Percent funded: 29%
• Recommended 2025 contribution: $186,000 per year, rising 1.5% each year
• Current contribution: $142,000 per year
• Assumed inflation: 3%
• Assumed interest earnings: 2%

Those seven lines already tell a story. Maplewood holds less than a third of its fully funded balance, and the reserve specialist recommends raising annual contributions by roughly 31%. The board wanted to know why, and whether they could soften that increase. The projection has the answers.

Four items drive the plan. At today's cost they are roofs at $608,000 (due 2029), exterior painting at $164,000 (due 2029, then every 8 years), elevator modernization at $406,000 (due 2038) and asphalt reconstruction at $499,000 (due 2039). The projection inflates each cost at 3% a year to the year the work is due.

Column by Column: What You Are Looking At

A funding projection has one row per year. Read left to right, the standard columns are:

1. Beginning Balance

The reserve cash on hand at the start of the year. Year one matches your actual bank balance. Every year after is calculated by the software.

2. Annual Contribution

How much the association plans to add to reserves that year. In Maplewood's recommended plan, this starts at $186,000 and rises 1.5% each year.

3. Interest Earned

Investment income on the reserve balance. At 2%, a $400,000 balance earns roughly $8,000. This number matters more than boards expect, because in later years the balance can be large.

4. Expenditures

The money spent that year on repairs and replacements. This is the column that swings wildly. Some years show nothing at all. Others show more than $800,000 when the roofs come due.

5. Ending Balance

Beginning balance, plus contributions, plus interest, minus expenditures. This becomes next year's beginning balance.

6. Percent Funded

The ending balance divided by the fully funded balance for that year. This is your main measure of reserve health. Watch how it moves.

Following the Story Across the Years

Here is where reading pays off. On the Maplewood recommended-funding page, the numbers move like this:

• 2025-2028: Small expenditures: seal coat, concrete repairs, hallway carpet and lighting. The balance climbs from $412,000 to about $1,032,000. Percent funded rises from 29% to about 56%.
• 2029: A big year. Roof replacement at about $684,000 and exterior painting at about $185,000, both in 2029 dollars. The balance drops from about $1,032,000 to about $381,000. Percent funded falls to about 33%.
• 2030-2037: Recovery. Contributions keep flowing, expenses stay moderate, and the balance rebuilds to about $1,321,000, or 74% funded.
• 2038-2039: Elevator modernization (about $596,000) and asphalt reconstruction (about $755,000) arrive in back-to-back years. The balance falls to about $436,000 and percent funded to about 52%.
• 2040-2053: Steady climbing again, with percent funded reaching about 96%.
• 2054: The roofs come due a second time. The balance drops from about $2,860,000 to about $1,771,000, which is still about 94% funded.

The lowest ending balance in all 30 years is about $381,000, in 2029.

That pattern, called a saw-tooth, is normal and healthy. Reserve balances rise steadily and then drop when large projects happen. Percent funded falls less than the balance does in those years, because a new roof has no wear yet and so the fully funded balance drops too. What you never want to see is a line that dips toward or below zero. If the ending balance goes negative in any year, the association runs out of money and faces a special assessment or a loan.

The Test That Matters: Does the Line Ever Cross Zero?

The board at Maplewood asked the natural question. Could they start at $142,000 instead of $186,000, with the same 1.5% yearly increase? The reserve specialist ran that as a second scenario, and the projection showed the answer plainly.

Under the $142,000 plan, the 2029 roof year pulls the ending balance down to about $145,000. That survives. The 2038 elevator work leaves about $205,000. Then the 2039 asphalt work pushes the balance to about negative $406,000, and it reaches about negative $429,000 in 2040. The line crosses zero. In 2039 Maplewood would not have enough cash to pay for the asphalt work. A special assessment of roughly $4,500 per unit would be required, or the board would need a bank loan with interest costs on top.

Seeing the negative number changed the conversation. The difference between the two plans is $44,000 a year at the start, about $38 per unit per month. The board was not choosing between $142,000 and $186,000 today. They were choosing between a manageable increase now and a bill of several thousand dollars per unit in 2039.

What to Check on Your Own Projection

Pull your study and look for these five things in order:

• The lowest ending balance across all 30 years. Find the worst year. If it is comfortably positive, you have a cushion. If it is near zero or negative, you have a funding gap.
• The direction of percent funded. It should trend upward or hold steady over the full period. A steady decline signals underfunding.
• The biggest expenditure years. Know when your roofs, paving, elevators, and mechanical systems come due. Those are the years that stress the plan.
• The inflation and interest assumptions. Small changes here move the ending numbers a lot over 30 years. Ask your provider what rates they used and whether they are reasonable.
• The contribution increase schedule. Most plans build in annual increases. Confirm your budget actually follows them. A plan that assumes 3% yearly increases fails if the board freezes dues.

The Projection Is a Living Document

One projection is a snapshot based on today's estimates. Costs shift, projects get deferred, and interest rates change. The value of the 30-year view is not precision in year 27. It is the early warning it gives you about the years that will hurt. Maplewood now knows that 2029 and 2039 are their pressure points, and they can plan a decade ahead instead of scrambling.

Read the projection every year when you review your study. The worst-year balance and the percent-funded trend are the two numbers that tell you almost everything about your financial trajectory.

ReservePath helps associations manage their reserve studies, track components, and model funding scenarios so boards can read these projections with confidence and plan for the years that matter most.

Frequently Asked Questions

What does a 30-year reserve funding projection show?

It shows, for each of the next 30 years, the beginning reserve balance, the annual contribution, interest earned, expenditures, the ending balance and the percent funded.

What is the most important number in a funding projection?

The lowest ending balance across all 30 years. If the worst year is comfortably positive you have a cushion, and if it is near zero or negative you have a funding gap.

Is it normal for the reserve balance to drop sharply in some years?

Yes. Balances rise steadily and then drop when large projects such as roofs or paving come due, which creates a saw-tooth pattern. The warning sign is a balance that dips toward or below zero.

How is percent funded calculated in each year of the projection?

It is the ending balance for that year divided by the fully funded balance for that year. It should trend upward or hold steady over the full period.

What happens if the projection shows a negative ending balance?

The association would run out of reserve cash in that year and would need a special assessment or a loan. Raising contributions earlier, in smaller steps, is usually the way to avoid it.

Sources

• An Explanation of Reserve Study Standards, based on the National Reserve Study Standards (percent funded, fully funded balance, full, threshold and baseline funding goals), Community Associations Institute, 2019