Explanation of the Community Preservation Act
trust fund distribution formula
Section 10 of the CPA statute
(MGL c.44B) describes the trust fund distribution method, which includes up to
three rounds of funding. The second and third
rounds of funding only come into play when there are not enough revenues in the
CPA trust fund to provide a 100% match for each CPA community. In the first six years of CPA, the trust
fund ran a surplus, so there was sufficient revenue to match each participating
community's local CPA revenues at a rate of 100%. The second and third rounds of funding were
not triggered since all communities received 100% on the first round.
Beginning with the October
2008 distribution, revenues in the CPA trust fund were not sufficient
to provide 100% matches on the first round.
Therefore, DOR has applied the second round distribution this year.
The formula is complicated, but
we've prepared a summary that describes, in general, how it works.
Round One
Eighty percent (80%) of the total
revenue in the trust fund as of each August 30th will be paid out in round one,
and each CPA community will receive the same percentage match to funds raised
locally with their CPA surcharges. If a
community's CPA surcharge is 3%, then it is 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) are available for distribution in rounds two and three. Only communities that have the maximum 3%
surcharge are eligible to receive additional funding in rounds two and
three. There are 71 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 would provide the highest level of funding, with decile
10 resulting in the lowest.
As a result of this weighting,
some smaller CPA communities may still receive 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?
There are two documents below
that will help explain this formula in a bit more detail:
Click
here for a sample calculation of the trust fund distribution formula (prepared
by DOR)