What is an HOA reserve funding plan or disclosure?
Reviewed by the OurHOA team · Updated June 2026
A reserve funding plan is the schedule for setting aside money to replace big shared assets, and most states make the association disclose it to owners. Here is what it contains, where you receive it, and how to read it.
Reserve study, funding plan, and disclosure - three related things
These terms get used interchangeably, but they're distinct. A reserve study is the engineer's or specialist's assessment of your community's major shared components - roofs, roads, pools, elevators, fences - their remaining useful life, and what they'll cost to replace (we explain it in our guide on what a reserve study is). The reserve funding plan is the financial half: the multi-year schedule of how much the association will contribute each year so the money is actually there when those components fail. The reserve disclosure is the summary owners receive showing that plan, how well-funded reserves are, and what's coming. The study tells you what you'll need; the funding plan tells you how the HOA intends to pay for it.
What the funding plan actually contains
A funding plan lays out projected reserve contributions year by year, usually for 20-30 years, against the projected replacement timeline from the reserve study. It reflects a chosen funding method: full funding (aim to keep reserves at or near 100% of the calculated need), baseline funding (keep the balance above zero but accept a thinner cushion), threshold funding (hold reserves above a set floor), or a cash-flow approach that smooths contributions to avoid spikes. The plan should also state the assumed inflation and interest rates and flag whether a special assessment or loan is anticipated. Different methods produce very different dues, which is why the plan - not just the study - is what owners should look at.
Where you receive it - the annual disclosure
Most states require the funding plan to be handed to owners, not buried. In California, Civil Code section 5550 requires a reserve study at least every three years with annual review, section 5565 spells out what the reserve funding plan must contain, and section 5300 requires the annual budget report - delivered 30 to 90 days before the fiscal year ends - to include a reserve funding plan summary, the current reserve balance, the percent funded, and any planned special assessments. Florida condominiums now face a stricter regime after the Surfside collapse: Florida Statutes section 718.112(2)(g) and the structural integrity reserve study (SIRS) requirement bar boards from waiving or underfunding reserves for structural components, with the disclosures flowing to owners. Treat your state's exact disclosure as the controlling version; see also our guide on the HOA annual disclosure or policy statement.
Percent funded - the number to find first
The single most useful figure in a reserve disclosure is 'percent funded': the association's actual reserve balance divided by the amount the reserve study says it should ideally have at this point. Above roughly 70% is generally considered strong; 30-70% is fair but worth watching; below 30% is a warning sign that a special assessment or a sharp dues increase may be coming. A low percent funded isn't an emergency by itself, but paired with aging components and flat contributions it's how communities back into a surprise special assessment. Our guide on how to read HOA financials walks through where this sits alongside the budget and balance sheet.
How to read it without an accounting degree
Look for three things. First, is the funding plan keeping pace - are contributions rising roughly with costs, or frozen while the percent funded slides downward year over year? Second, are big-ticket items (roof, road repaving, pool resurfacing) coming due in the next few years, and is the money on track to be there? Third, does the plan quietly assume a future special assessment to plug a gap - if so, that's a planned cost, not a maybe. If the disclosure shows chronic underfunding, expect either higher dues or a special assessment down the line; our guide on HOA special assessments explains how those work.
How OurHOA helps
A reserve funding plan only protects owners if it's visible and kept current. Because the required contents, timing, and disclosure rules depend on your state and your governing documents, treat this as general education and confirm the specifics for your association. OurHOA helps self-managed boards track reserve balances and contributions, organize the documents that go into the annual disclosure, and share that information cleanly with owners - so the funding plan is something the whole community can see and plan around, not a surprise that lands as a special assessment.
OurHOA is the friendly, affordable way self-managed communities keep dues, records, and reminders in one place. See how it works.
These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.