Threshold funding is best described as:

• A. A reserve funding goal of keeping the reserve balance above a specified dollar or percent funded amount.
• B. Funding that fully funds the reserve to its target level.
• C. Funding only for emergencies as they arise.
• D. A plan that relies on special assessments exclusively.

Answer: (A)

Threshold funding means setting a minimum level for the reserve fund and keeping the balance at or above that level, defined as a specific dollar amount or percentage funded. It’s a proactive approach that ensures there are always funds available for expected major repairs and capital needs, without requiring the reserve to be fully funded all at once. If the balance dips below the threshold, contributions are increased to bring it back up. This differs from fully funding to the target level (which aims to reach the full amount), from funding only for emergencies (reactive), or from relying on special assessments exclusively (external, episodic funding).