CPA Accounts Earn Interest - Just Remember to Check Your CP-2 Form!
Did you know that Section 7 of the CPA legislation requires that any interest earned on cash sitting in a community’s CPA fund must be credited back to the fund? In cases where CPA cash is pooled with other municipal funds, the Treasurer must allocate the interest earned on the CPA portion to the Community Preservation Fund. Unfortunately, it’s possible for that transfer to get lost in the shuffle, and in a few instances over the years, that’s exactly what happened. Thankfully, it just takes a bit of upkeep on the part of the local Community Preservation Committee (CPC) to ensure your CPA interest is credited.
Fortunately, there’s an easy way for the CPC to make sure that your CPA fund received a credit for any interest earned during the previous fiscal year. Each town is required to file a number of reports with the Department of Revenue (DOR) each year, and the CP-2 form clearly shows the amount of interest that has been earned on the CPA account. This form is due every year on October 31st, so if your CPC doesn't receive a copy around that time, be sure to ask for it. DOR requires that the accounting officer in each community must provide the CPC with a copy of the form each year (as outlined in Bulletin 2001-9B, top of page 8).
If the CPC finds that no interest has been reported on the CP-2, it would be important to check with your municipal officials to see if this is a mistake. If interest was due, it can prove to be very difficult to get that money into the CPA fund unless the error is caught quickly. In the early years of CPA, one community had to forgo five years’ worth of CPA interest, and interest rates back then were much higher than they are today.
Closing the books on a town’s fiscal year is a huge undertaking, and a stressful time of year for your municipal officials, so honest mistakes do occur. But this particular mistake is easily avoidable if the CPC checks the CP-2 in a timely fashion, and will ensure that all of your community’s CPA dollars are accounted for.
Dec. 2020