Reserve Fund Position
Many reports present this measure as a binary ‘Reserve Surplus| Deficiency’ line item. We believe that as reality is more complex our role is to provide a sense of where you are now, and a planning direction.
The first Reserve Fund Position number, an end of fiscal-year reserve fund dollar amount, is calculated by deducting the closing reserve fund balance from the benchmarked reserve requirements. It takes into account inflation, interest, transfers, borrowings and expenditures. Beware of reports that use the right amount in the wrong fiscal-year.
Beware of reports that use a deduction that is not tied to a benchmark amount, or that use current costs as the denominator, as both inflate recommended amounts.
Many reports will produce surplus (deficit) numbers for every year in their scenarios and not refer to them in their analysis.
Only best-practice reports will use the benchmark’s current replacement requirements number as the denominator. Beware of reports that forget to deduct each fiscal-year’s expenditures from their calculations.