Understanding the Distribution Formula

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.

For example, if a community's local CPA surcharge revenue was $1,000,000 and the Round One match that year was 30%, this community would receive $300,000 for the Round One distribution. Every CPA community would receive the same percentage (30%) of what they raised at the local level during Round One.

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.

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). Click here to view each community's decile ranking and corresponding weighted adjustment percentage.

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.

The CPA Trust Fund formula was set up to accommodate CPA communities with a variety of surcharge levels and exemptions. Because of this, there will always be a sum of money remaining after each year's trust fund distribution. This balance remains in the trust fund and becomes a part of the following year's distribution. The CPA Trust Fund does earn interest each year which is paid back into the fund.

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