Understanding the Formula
Used to
Distribute Revenue from the Statewide CPA Trust Fund
March 24, 2010
The formula DOR uses
to distribute revenue from the statewide CPA Trust Fund on an annual basis is
complicated. 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 August 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.
Rounds Two and Three
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 73 communities
with a 3% surcharge level (click here
to see the list).
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 (click
here to see the decile rankings).
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.
Want to know more?
The two documents
below explain this formula in a bit more detail:
Click
here for a sample calculation of the Trust Fund distribution formula (prepared
by DOR)