Topsfield Public Works

Free Cash, also known as Retained Earnings, is the amount of money certified by the Massachusetts Department of Revenue (DOR) that is available in a given fiscal year for appropriation.  The Water Department has a free cash account because it operates as an enterprise and it is funded solely through water rates and fees.  Free cash is calculated by totaling all of the Department's funds, subtracting funds that are already allocated for other purposes such as existing warrant articles and subtracting liabilities such as short term debt obligations.

Free Cash may increase or decrease depending the following factors:

1. Appropriated at Town Meeting for expenditure - Free cash is used to fund many of the Departments capital expenses and can only be used with the approval of the Financial Team, Board of Water Commissioners, Board of Selectmen and eventually Town Meeting.  Some of the projects that have been funded over the past ten years include the Public Works Facility which was a 20/80 split with the Highway Department (10% of total cost in cash, 10% bonded), Water Meter Replacement Project ($450,00 over 3 years), the North Street Pumpstation Rehabilitation (approximately $250,00), the Ipswich Road Water Main Replacement Project ($550,000 approximately 50% of the project cost), SCADA system installation ($100,000) and Chemical Analyzer Replacements ($32,000).  Also included in this category are water department vehicle replacements, engineering for various projects, a water quality study and contributions towards Highway Department equipment including a backhoe (50%) and front-end loader (10%).
2. Revenues exceed expenses - Free cash is accumulated when water revenues exceed what is spent.  If we collect more than what is spent, the 'profit' moves to free cash and is availalble for appropriation in subsequent fiscal years once it is certified by the DOR.
3. Expenses exceed revenues - We go to great lengths to avoid this situation but if it does occur the Town would cover the shortfall and be reimbursed using free cash in a later fiscal year.