FY 17 Free Cash Certification

posted Jan 18, 2018, 1:57 PM by Jason Hoch
DOR has certified our free cash for the end of the last fiscal year. Free cash is our undesignated fund balance. It is used when budgeting to offset tax impact, both operationally and for certain non-recurring expenses. A portion is also reserved each year to remain in "float" as this also covers routine cash flow since revenues do not always neatly align with expenses.  When we use it to smooth over tax impacts for routine operations, best practice is not to dramatically increase the use to offset recurring expenses as there is no guaranty that it is replenished in the following year. The majority of free cash comes from revenues that overperform expectations when budgeting and from approved appropriations unspent. We finished the year having committed approximately 95% of appropriations which is in a reasonable place to be. Spending closer to that limits our ability to deal with uncertainty and spending significantly less (i.e. 85% or less) would imply we are raising more than necessary to meet our operational needs. 

This year, the Accounting Office, at my urging, has been working to clean up a variety of lingering entries on our balance sheets of specific purpose funds, for which the purpose may have long expired.  Some of these are eligible to lapse to free cash. As we sort through those opportunities, any lapses to free cash are really one time events, so we will see an jump in free cash with that work.

To that end, for FY 17, the underspend and a portion of overperforming revenues offset our commitment of free cash in the budget process ($486,368), with additional revenues, particularly in building department fees and earnings on investments, pushing this year's number higher. In addition, the reclassification of encumbered funds, yielded around $400,000 in additional free cash this year.

All of this is a preface to explain that our general fund free cash for FY 17 increased by approximately $800,000 from the prior year, from $748,291 to $1,586,087.

It is also worth nothing that the Sewer and Water Enterprise funds also carry a good amount of free cash. This allows them the flexibility to be prepared to fund major capital expenditures as well as how we have been able to hold rates flat while still maintaining the system .

Massachusetts Department of Revenue Division of Local Services
Christopher C. Harding, Commissioner
Sean R. Cronin, Senior Deputy Commissioner of Local Services



Based upon the un-audited balance sheet submitted, I hereby certify that the amount of available funds or "free cash" as of July 1, 2017 for the Town of Williamstown is:

General Fund        $1,586,087.00
Enterprise Fund  Sewer    $1,059,310.00
Enterprise Fund  Water    $1,849,187.00
Enterprise Fund  Landfill    $48,878.00

This certification is in accordance with the provisions of G. L. Chapter 59, §23, as amended.

Certification letters will be emailed to the mayor/manager, board of selectmen, prudential committee, finance director and treasurer immediately upon approval, provided an email address is reported in DLS' Local Officials Directory. Please forward to other officials as you deem appropriate.


Director of Accounts signature

Mary Jane Handy
Director of Accounts
Massachusetts Department of Revenue