Understanding the Procedure for Returning Unspent CPA Project Funds
One of the most common questions we get at the Coalition is what to do when there is money left over after a CPA project has been completed – or what to do if a CPA project has been canceled before any money has been expended. How does that appropriation get returned to the CPA fund? As it turns out, CPA appropriations don’t have any unique requirements in these situations - the funds are returned using the same procedure that your community uses for non-CPA appropriations. This procedure varies by community, so you’ll have to determine which of the three possible methods is traditionally used.
1. Follow municipal bylaw or ordinance to close out appropriation
While this method is somewhat uncommon, some municipalities do have a bylaw (or ordinance in the case of a city) that specifies how leftover funding from an appropriation must be handled. If your community has such regulations, CPA appropriations should follow this procedure.
2. Close out appropriation by legislative body action (a vote at Town Meeting or City Council)
The MA Department of Revenue has stated that if a city or town has no formal regulations, municipalities should follow “local custom” in order to close out completed projects. If your community typically returns to the Legislative Body (Town Meeting or City Council) to close out completed appropriations, then you should follow the same procedure for your CPA appropriations. The CPC, or the board in charge of the appropriation, would let municipal staff know that the project is complete and they should have the legislative body vote to return the money at a future meeting.
3. Close out the appropriation through a vote by the committee that controls the funding.
If your community does not use either of the above methods to close out appropriations, then it can be done by a simple vote of whichever committee controls the funding. In most cases, this means that the CPC will need to check on the status of the project with the committee or department doing the work. They would ask that the committee/department notify municipal finance officials that the project is closed and the funds should be returned to CPA. In other cases, the CPC is the one who would vote to close the project and request that the municipal finance officials return the funds to CPA. It just depends who is in charge of that particular appropriation.
Make Sure CPA Funding is Returned to the Appropriate CPA Account!
No matter what process your community uses to close out a CPA project, it’s imperative that any unspent funding goes back into the same CPA account it was appropriated from.
The original article that was passed by Town Meeting or City Council should identify which specific account the CPA funds were appropriated from. If the funding came from one of the CPA category reserve accounts (Open Space, Historic, or Housing Reserve), then it should be returned to that account. If the CPA funding came from an undesignated source, such as the “fund balance” or “budgeted reserve,” then the funds should be returned to your undesignated CPA fund balance. For more information on these different CPA accounts, be sure to read our full technical assistance article on the topic: CPA Finances Demystified.
This process seems straightforward, but what happens when funding had been sourced from multiple CPA accounts? For example, let’s say a historic preservation project received a total of $20,000 in CPA funding, with $5,000 approved from the historic reserve and $15,000 approved from the CPA fund balance. The project is now complete, but there is a total of $7,000 in unspent CPA funds remaining. In this case, the MA Department of Revenue has advised that leftover funds must first be returned to the most restricted account, and then any remainder gets returned to less restricted accounts. So in our project example above, $5,000 would be returned to the historic reserve (the most restricted account) and the remaining $2,000 would then go back to the CPA fund balance (the less restricted account).
Summary of the Procedure for Returning Unspent CPA Funds
- Check to see if your municipality has a bylaw or ordnance covering appropriation turn-backs.
- If not, follow local custom. This typically means a vote of the legislative body to return the fund, or a vote of the committee or department in charge of the appropriation.
- Check to see which CPA account the funding came from, and then return the unspent funding to that same account.
And One Final Important Step! Update Your Community’s CP-3 Report
No matter how your community handles the return of unspent CPA funding, make sure that you update these projects appropriately in the state’s CP-3 report! Any changes to a project’s status or final funding figures need to be entered into the state’s CP-3 database. For more information, you can download the CP-3 instruction manual here.
Aug. 2023