by Eric Richard

The following are notes I took at a workshop held by MassDEP.

Gerald Harry, Massachusetts Department of Revenue

Enterprise Funds are established under MGL Chapter 44.   This allows you to segregate revenues and expenses from the tax levy.

Cities and Towns can adopt an Enterprise Fund subject to Town Meeting or City Council.We see enterprise funds set up for water, sewer, ambulances, trash, hockey rinks, etc. Once it is adopted, it must be run for a minimum of 3 years.

They help measure financial performance by allowing you to readily measure the impacts of the decisions that you make on costs/revenue.

If there is money left over at the end of each fiscal year, this is called net assets unrestricted and can be carried forward.

We have been trying to encourage communities to build a reserve fund (no more than 5% of the overall user charges) into Enterprise Funds to protect against unforseen emergencies.

Revenues for an Enterprise Fund are primarily generated by the user fees.  You can get some revenue from investing the money.  You can potentially get state grants for funds.

You can use excess funds  to subsidize user fees.  But you need to recognize that this points to a deeper issue about your user fees that will eventually catch up with you.

You can use money from the Enterprise Funds for indirect costs.  For example, if you have a town employee (like a Billing Clerk) who is spending some portion of their time doing billing for an Enterprise Fund, you can pay for a reasonable amount of that from the Enterprise Fund.