A reserve study is the most consequential document most boards never read past the summary page. It is worth twenty minutes.
What is in it
A component list: every element the corporation has to replace, with its expected life, its remaining life and its replacement cost. A roof, an elevator cab, a boiler, the parking membrane.
A funding plan: what the corporation must contribute each year so that the money is there when each of those things reaches the end of its life.
An opening balance: what is actually in the reserve fund today.
Everything else in the study is derived from those three things.
Percent funded is a ratio, not a grade
Percent funded compares what is in the fund with what would be in it if the corporation had been contributing perfectly since the building went up. It is a useful diagnostic and it is not a pass mark.
A corporation at 30 percent funded with a credible catch up plan and no near term major replacement can be in better shape than one at 60 percent with a roof due in two years. Read the cash flow table, not the headline.
The two ways a plan goes wrong
The first is optimism about life. A component list that says the roof has ten years left when the roofer says four is not a funding problem yet, and it will be.
The second is contribution increases that were adopted on paper and never actually implemented in the budget. That gap shows up nowhere in the study and everywhere in the balance three years later.
What a board should do with it
Compare the opening balance with what the previous study projected for this year. If they disagree, find out why before adopting anything.
Look at the largest single item in the next ten years and ask whether the fund reaches it. That one comparison drives most special assessments.
Then adopt the plan, deliver the notice owners are entitled to, and put the contribution into the budget. A funding plan that is not in the budget is a document, not a plan.