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how do you deal with interest and inflation
the reserve study that provided for your community
can include factors such as interest
that's earned on the reserve balance and inflation on the replacement cost
of those reserve components
it's very difficult to predict
what inflation's going to do
we look at the five-year index that's provided through the bureau of labor
statistics and we look specifically at inflation
in the producer price index
many people make the erroneous assumption that they should be
increasing the reserve study by the c_p_i_
the consumer price index
but the c_p_i_ only gauges factors that way
transportation costs
electricity costs housing costs and food
so when we look at the reserve study
many times what we'll do is recommend to the client that the reserve study be
calculated in today's dollars
we don't ignore the effects of inflation
but many times it's easier to make those adjustments manually at the beginning of
each budget season rather than try to predict what inflation's doing
thirty-year period