Revolving Funds/Non-School Purposes 

A departmental revolving fund is a place to set aside revenue received, through fees and charges, for providing a specific service or program. The revenue pool is, in turn, a source of funds available to use by a department without further appropriation to support the particular service or program. Most frequently, cities and towns create general departmental revolving funds under M.G.L. Ch. 44 Sec. 53E½. The fund is created with an initial city council or town meeting authorization that identifies which department’s receipts are to be credited to the revolving fund and specifies the program or purposes for which money may be spent. It designates the department, board or official with authority to expend the funds and places a limit on the total amount of the annual expenditure. To continue the revolving fund in subsequent years, annual approval of a similar article is necessary. Managers are also required, each year, to report on the fund and program activities. Under Sec. 53E½, any expenditure from a revolving fund is restricted to the then current fund balance or to the authorized spending limit, which cannot exceed one percent of the most recent tax levy. The combined authorized expenditures for all revolving funds cannot exceed ten percent of the levy.

If a revolving fund balance remains after total spending has reached the authorized limit, the balance carries over to the next fiscal year. Interest that accrues on a revolving fund balance under Sec. 53E½ reverts to the general fund. However, if the revolving fund is not reauthorized, any remaining balance closes to free cash, unless it is transferred by the legislative body to another revolving fund. Including Ch. 53E½, Massachusetts General Laws allow revolving funds for about a dozen specific, non-school related purposes. Another 13 apply to schools, but are not discussed here. The rules that govern these non-school funds vary. When considering the establishment of other, specific purpose revolving funds, communities should always refer to the statutes to determine whether requirements exist for local acceptance or other city council or town meeting action in initial or subsequent years; what sort of activities may be financed through the revolving fund; and, to what extent salaries or capital items can be covered by the fund revenue. Each statute will specify if a spending ceiling applies and whether or not accrued interest remains with the revolving fund or belongs to the general fund. Other non-school related funds include the following:

Anniversary celebrations - M.G.L. Ch. 44 Sec. 53i and Ch. 40 Sec. 5h

Arts Lottery Council - Ch. 10 Sec. 58

Law Enforcement Trust - Ch. 94c Sec. 47

Outside Consultants - Ch. 44 Sec. 53g

Smart Growth Consultants - Ch. 40R Sec. 11(h)

Performance Bond Defaults - Ch. 41 Sec. 81u

Parks and Recreation - Ch. 44 Sec. 53d

Special Detail - Ch. 44 Sec. 53c

Wetlands Protection - Ch. 131 Sec. 40

Expedited Permitting - Ch. 43D Sec. 6(b)

Multi-Community Yard Waste - Ch 179 of the Acts of 1993

posted by Jeff Bennett

Things selectmen and department heads should be aware of:


Reserve Fund requirements:

 The Reserve Fund is a sum of money appropriated at Town Meeting to be used at the discretion of the Finance Committee to cover extraordinary or unforeseen expenses that arise during the fiscal year. The creation and use of the Reserve Fund is specified in Chapter 40 § 6 of the Massachusetts General Laws (MGL). There are a number of important requirements in both MGL and in DOR rules that departments should be aware of:
• The reserve fund is to be used for “…extraordinary or unforeseen expenditures” as determined by the Finance Committee. This means if the Finance Committee does not feel that a request is sufficiently unforeseen or extraordinary, it is not eligible for a Reserve Fund transfer.
• The Finance Committee in essence acts in place of a special town meeting, thus saving the Town the expense of such a meeting. Because of this, the Finance Committee will consider how likely it would be for the request to pass if it was presented at a special town meeting, in additional to other requirements and considerations.
• The Finance Committee cannot approve any Reserve Fund request for a purpose that town meeting has already voted against. Put another way, the Finance Committee cannot “overrule” town meeting.


• No funds can be spent directly from the Reserve Fund. Instead, if the Finance Committee approves a request, the funds are transferred to an existing account where they can then be spent for the requested purpose.
• Reserve Fund transfers are designated for a specific purpose stated on the reserve fund transfer form. Any unexpended balance should remain earmarked, and should not be used for another purpose or be transferred back into the Reserve Fund.
• Requests should always be worded to request funds for unpaid or future expenses, not to reimburse an account for expenses that have already been paid.
• Massachusetts General Law strictly forbids expenditures in excess of appropriation, under penalty of fine or imprisonment (except for snow and ice removal). Consequently, departments should never incur expenses in excess of appropriation before approval of a reserve fund transfer. Put simply, you must have enough money available before you spend it.

Additional Reserve Fund Transfer guidelines

• The Request For Transfer From The Reserve Fund form should be completed in full, signed, and prepared in triplicate for the Finance Committee.
• Attention should be paid to why this expenditure is extraordinary or unforeseen, in addition to why this is a necessary expense.
• Copies of all relevant information should be provided with the request. For example, related correspondence, estimates, evidence of compliance with MGL 30B (uniform procurement), legal opinions, etc.
• To increase the likelihood of approval, the Finance Committee suggests that a representative of the department or board attend the Finance Committee meeting where the request is scheduled for consideration. If the Finance Committee has major questions that cannot be answered, it is very likely that the request will be deferred or rejected. If being present is a hardship, you can contact the designated FinCom liaison (or any other member) to try to answer any questions in advance.
• If a delay would not be harmful, the amount requested is significant, and a special town meeting is scheduled before funds are needed, Special Articles are often desirable instead of Reserve Fund transfers. If a need for additional funds was known before a special town meeting, a Reserve Fund request should include the reasons why the request was not submitted as a town meeting article.
• If a budget line item in a department or special article requires multiple Reserve Fund transfers over several years, that department should increase the amount requested for its budget at the annual town meeting. After several years of additional Reserve Funds needed, it may be difficult for the Finance Committee to consider another request for the same reason as “extraordinary or unforeseen”.
• The Finance Committee suggests that it be alerted when a department or board foresees a situation developing that may necessitate a Reserve Fund transfer, especially for large amounts. This will help the Finance Committee to forecast needs, ensure funds are available for the most critical needs, and advise boards in advance whether the Reserve Funds may or may not be available.
• If you have an immediate emergency need to spend more funds than you have available, the Finance Committee is allowed to convene an emergency meeting under the Open Meeting law.
• Finally, if the Finance Committee votes against a Reserve Fund transfer request, the department or committee can always resubmit the request with additional documentation or request those funds at a future town meeting.

posted by Jeff Bennett

Massachusetts General Law - chapter 40
section 6 Towns; reserve funds for extraordinary expenditures, establishment.

Section 6. To provide for extraordinary or unforeseen expenditures, a town may at an annual or special town meeting appropriate or transfer a sum or sums not exceeding in the aggregate five per cent of the levy of the fiscal year preceding the fiscal year for which the fund, to be known as the reserve fund, is established. No direct drafts against this fund shall be made, but transfers from the fund may from time to time be voted by the finance or appropriation committee of the town, in towns having such a committee, and in other towns by the selectmen; and the town accountant in towns having such an official, and in other towns the auditor or board of auditors, shall make such transfers accordingly.

posted by Jeff Bennett

A Face Book stalker - Really?

Diane Haley Brooks posted on her  Face Book page that her face book stalker is alive and well. Copying her face book posts and pasting them to a blog. That could be me, but what is Face Book? I went to the internet to Face Book to see what I would find.

Face Book is a popular free social networking website that allows registered users to create profiles, upload photos and video, send messages and keep in touch with friends, family and colleagues.

So, Face Book is a net work where anyone who has a face book account can see what anyone puts out there and can copy and post it anywhere else. I guess if you do not wish to have everyone to see how you feel, do not put it on the internet. I do not believe the internet is a private entity where you have any expectation of privacy. Besides, as an elected official, is it relevant and important for people to know how you think and how you feel about things? Is is important for voters to know your opinion (s)?  If you are going to say and do one thing in public and say and do another in private, do not post to face book. Perhaps Diane Haley Brooks should feel flattered that someone thinks so much of what she writes that they copy it to post it in other places so as many people as possible get to read it. I tend to follow or check out many face book pages and blogs to try and see what my elected officials are up to and what they have to say. I have to wonder if selectmen Diane Haley Brooks has a problem with one of her "friends and neighbors" wishing to see what she has to say, since she is elected and is suppose to look out for the whole town. So she wishes to refer to me as her face book stalker and I say to her, I am just trying to be informed. Again, if someone does not wish their thoughts, ideas and other things to be out there, do not post to the internet.

posted by Jeff Bennett