Understanding the Formula Used to Distribute Revenue from the Statewide CPA Trust Fund

March 12, 2013: The formula used by the Massachusetts Department of Revenue (DOR) to distribute revenue from the statewide CPA Trust Fund contains up to three rounds of funding. After doing the calculations for all three rounds each fall, DOR then distributes the funding to communities by November 15th.

The Coalition has prepared the following summary that describes, in general, how it works.

Round One
Eighty percent (80%) of the total revenue in the Trust Fund at the end of October each year will be paid out in round one, and each of the CPA communities will receive the same percentage match to funds raised locally with their CPA surcharges. If a community’s CPA surcharge is less than 3%, it is not eligible to advance to the second and third round.

The funds remaining in the CPA Trust Fund after the first round distribution (20% of the total funds in the Trust Fund) are available for distribution in rounds two and three. Only communities that have adopted the maximum 3% surcharge are eligible to receive additional funding in rounds two and three. There are over 70 communities with a 3% surcharge level (see the "Surcharge" column on this report).

Rounds Two and Three
The second and third rounds are weighted so that smaller and less affluent communities receive higher funding. The state’s Commissioner of Revenue is charged with ranking CPA communities based on population and property valuation per capita. Based on this ranking, communities are divided into deciles, which determine the degree of additional funds distributed.

Communities with the lowest equalized property valuations and smallest populations are placed in the most favorable deciles, which provide higher matches in the second and third rounds. Decile 1 provides the highest level of funding in rounds two and three (and decile 10 the lowest).

As a result of this weighting, it is possible that some smaller CPA communities will still end up receiving a 100% match by the end of the second round. The third round distribution is optional, at the discretion of the Commissioner of Revenue, but the Commissioner has chosen to issue third round funding every year since 2010.

Further Resources:

    >> Revenues from the deed recording fee to the CPA Trust Fund, updated monthly

    >> A sample calculation of the Trust Fund distribution formula (prepared by DOR)

    >> The Trust Fund distribution formula detailed in the Community Preservation Act, MGL Chapter 44B, Section 10