CMCA - Certified Manager of Community Associations Budgeting and Reserve Studies Questions and Answers Flashcards

A roof costs $200,000 to replace, has a 25-year useful life, and is 10 years old. What is its fully funded balance?

Answer: $80,000

Fully funded balance = current replacement cost × (effective age ÷ useful life), so $200,000 × 10/25 = $80,000.

An association has $150,000 in reserves and a total fully funded balance of $300,000. What is its percent funded?

Answer: 50%

Percent funded = actual reserve balance ÷ fully funded balance, so $150,000 ÷ $300,000 = 50%.

Under the CAI National Reserve Study Standards, which item would generally NOT qualify as a reserve component?

Answer: Pool chemicals purchased monthly

Recurring monthly supplies have no predictable multi-year remaining life and belong in the operating budget.

Which reserve study level of service includes a component inventory, condition assessment, life and valuation estimates, fund status, and funding plan?

Answer: Full reserve study

A full study is the only level that establishes the component inventory from scratch along with all other tasks.

A reserve funding plan that aims to keep the reserve balance just above zero is known as what?

Answer: Baseline funding

Baseline funding keeps the cash balance above zero over the projection period, with the highest risk of shortfalls.

The board wants a funding goal of keeping reserves at a set target such as 70% funded. Which funding method is this?

Answer: Threshold funding

Threshold funding keeps the balance above a specified dollar amount or percent funded chosen by the board.

A manager notices utility costs are 18% over budget at midyear. What is the BEST first step?

Answer: Perform a variance analysis to identify the cause

Variance analysis explains why actuals differ from budget so the board can make an informed response.