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Free Cash Certification

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October 17, 2022


Every year cities and towns in the Commonwealth of Massachusetts are required to submit a set of financial statements to the Massachusetts Department of Revenue – Division of Local Services, to have their surplus funds for the General Fund and Enterprise Fund’s certified. This is known as the “Free Cash Certification”.  Free cash is the cash in the community’s treasury on July 1 that is free of any encumbrance and may be appropriated for use.

On October 12, 2022 the Town of Barnstable received its certification. The table below illustrates the certified amounts for each fund compared to the amount certified on the previous July 1 date. Certified amounts for each community can be viewed online using the following link: https://dlsgateway.dor.state.ma.us/gateway/DLSPublic/CertificationFreeCashPublicReport/CertificationFreeCashPublic

Table 1

The decrease in the HYCC and Sewer enterprise operations are the result of surplus appropriated for the Fiscal Year 2023 capital and operating budgets. The increase in all the other funds is the result of surplus generated at the close of Fiscal Year 2022 exceeding any surplus used to balance the Fiscal Year 2023 capital and operating budgets for those respective funds. These amounts are available for the Fiscal Year 2024 budget development as well as any Fiscal Year 2023 unplanned expenditures.

Table 2

Four enterprise funds have a surplus that was certified in excess of their Fiscal Year 2023 operating budgets. The Airport Fund is close to having 100% of its operating budget in reserves. The town’s target reserve balance for the enterprise funds is in most cases 50%, or 6 months depending upon the fund’s revenue stream volatility, capital needs and it susceptibility to extraordinary and unforeseen expenses. The HYCC enterprise fund is well below this level and is acceptable as it receives significant General Fund subsidies on an annual basis. The enterprise fund model is only used so that management can easily measure this subsidy. The town’s General Fund policy is 4% and the reserve level is nearly 4 times this amount at 15%.

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