Full Funding

Full funding is a reserve funding goal that aims to bring the reserve balance to, and keep it at or near, 100% funded.

At 100% funded, the reserve balance equals the fully funded balance. The association has set aside money at the same pace its components have worn out.

Full funding is the most conservative of the three common goals. It carries the lowest risk of a special assessment, because the fund can absorb a project that comes early or costs more than planned. It is also the fairest to owners over time, since each owner pays for the wear that happens while they own.

The trade-off is the contribution. An association that is well below 100% needs higher contributions for some years to close the gap. Plans usually reach the goal gradually, over many years, instead of in one step.

Being fully funded does not mean having cash on hand to replace everything today. It means the balance matches the wear to date.

Source: this definition follows the National Reserve Study Standards, published by Community Associations Institute (CAI), explained in our own words. State law can define the term differently for its own purposes.