One owner – brave soul – asked our Dear President (you know, the one whoâs never held an actual corporate position but now plays âPresidentâ in this condo theatre) a few basic questions about the corporationâs finances.
And in his usual display of confidence without comprehension, he pointed proudly to the Reserve Fund chart and declared:
âLook! Thereâs an increase for the next three years, and then itâs just 0â2% thereafter!â
đ Bravo. A masterclass in not knowing what youâre talking about.
đ Fact Check: How Reserve Funds Actually Work
In a Reserve Fund Study, engineers model funding needs for about 30 years – but the actual cost projections (the part thatâs based on real condition assessments and verified costs) covers only the first 3 years.
Beyond that, the study assumes an inflationary factor – commonly 3% annual increases – just to extrapolate.
Thatâs not forecasting real expenses; thatâs a placeholder, a mathematical assumption to fill the gap.
So when your Dear President triumphantly points at the chart and says,
âSee? After 3 years itâs just 0â2%!â
âŚwhat heâs really showing everyone is that he doesnât understand the difference between an engineerâs placeholder and a financial plan.
He mistook the margin of error for the plan.
đ¸ Why This Matters
This kind of misrepresentation fools owners into believing fees will magically stabilize – when in fact, the opposite is true.
- Costs donât stop rising just because a chart runs out of real data.
- Inflation, deferred maintenance, and poor planning always catch up.
- And when the board keeps pretending that assumptions are forecasts, it only delays the inevitable: another special assessment.
đ Reality Check
If you want to talk about fiscal responsibility, donât wave around reserve fund tables you donât understand.
Show:
- a 10-year cash flow analysis,
- the reserve fund balance vs. required capital,
- and an honest plan to fix the deficit left by years of poor decisions.
Until then, our Dear President might consider sticking to Monopoly – the only board game where this level of financial literacy actually works.
