Revolving Fund Bylaw

One of the changes enabled by the Municipal Modernization Act is to streamline the approach to Revolving Funds. Currently, each fund is established separately with a vote of Town Meeting and the annual limitations on spending have to voted annually in separate articles. The new approach allows one consistent bylaw governing the funds and one article incorporating all spending limits for revolving funds. In our case, we only have 2 at the moment.

This is a recommended approach by counsel and Department of Revenue. The Accounting Department has prepared the bylaw based on review of other similar bylaws and guidance from DOR.

These two articles together do not change anything about the existing operation, purpose and spending limits of the funds. This is simply an approach to align existing practice with new law.

ESTABLISH REVOLVING FUNDS BY-LAW

Article 16. To see if the Town will vote to amend the general by-laws of the town by adding a new section to establish and authorize revolving funds for use by certain Town departments, boards, committees, agencies or officers under Massachusetts General Laws Chapter 44, § 53E½, or take any other action relative thereto.

DEPARTMENTAL REVOLVING FUNDS

1. Purpose. This By-law establishes and authorizes revolving funds for use by Town departments, boards, committees, agencies or officers in connection with the operation of programs or activities that generate fees, charges or other receipts to support all or some of the expenses of those programs or activities. These revolving funds are established under and governed by General Laws Chapter 44, §53E½.

2. Expenditure Limitations. A department or agency head, board, committee or officer may incur liabilities against and spend monies from a revolving fund established and authorized by this By-law without appropriation subject to the following limitations:

A. Fringe benefits of full-time employees whose salaries or wages are paid from the fund shall also be paid from the fund, except for those employed as school bus drivers.

B. No liability shall be incurred in excess of the available balance of the fund.

C. The total amount spent during a fiscal year shall not exceed the amount authorized by Town Meeting on or before July 1 of that fiscal year, or any increased amount of the authorization that is later approved during that fiscal year by the Selectboard and the Finance Committee.

3. Interest. Interest earned on monies credited to a revolving fund established by this By-law shall be credited to the general fund.

4. Procedures and Reports. Except as provided in General Laws Chapter 44, §53E½ and this By-law, the laws, by-law, rules, regulations, policies or procedures that govern the receipt and custody of the Town monies and the expenditure and payment of Town funds shall apply to the use of a revolving fund established and authorized by this By-law. The Town Accountant shall include a statement on the collections credited to each fund, the encumbrances and expenditures charged to the fund and the balance available for expenditure in the regular report the Town Accountant provides the department, board, committee, agency or officer on appropriations made for its use.

5. Authorized Revolving Funds.

The following Table of Authorized Revolving Funds establishes:

A. Each revolving fund authorized for use by a Town department, board, committee, agency or office;

B. The department or agency head, board, committee or officer authorized to spend from each fund;

C. The fees, charges and other monies charged and received by the department, board, committee, agency or officer in connection with the program or activity for which the fund is established that shall be credited to each fund by the Town Accountant;

D. The expenses of the program or activity for which each fund may be used;

E. Any restrictions or conditions on expenditures from each fund;

F. Any reporting or other requirements that apply to each fund; and

G. The fiscal years each fund shall operate under this By-law.