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State approves more than $9.5M in Hopkinton’s free cash reserves

by | Mar 11, 2024 | News

Town Manager Norman Khumalo announced Monday in a press release that Hopkinton received notification from the Massachusetts Department of Revenue of approval of its available funds, or free cash, of more than $9.5 million following fiscal year 2023.

“While free cash is a common occurrence at the end of each fiscal year, the amount that is available for the town to use varies,” Khumalo stated. “We are fortunate to have ended fiscal year 2023 with a free cash amount that is higher than usual, which is an indication of the good financial health of the town and can help us to sustain a strong credit rating. This free cash will allow us additional flexibility in spending in the coming years and provide us with some supplemental funding to put toward various one-time expenses.”

Free cash is a revenue source resulting from a town’s remaining unrestricted funds from its operations of the previous fiscal year. It includes actual local receipts that exceeded revenue estimates, budget surpluses and unused free cash from previous years.

Based on a review of capital proposals, just over $3.5 million in free cash was approved and will be used by Hopkinton during the current fiscal year, which ends June 30. In FY 2025, $5.7 million in free cash is proposed to be used, largely driven by an opportunity for the town to acquire a large parcel on Main Street for approximately $3 million. It will be used as a central business district long-term parking area.

Free cash also is used as needed for one-time or unanticipated emergency expenses, such as snow and ice removal deficits, remaining bills from the prior fiscal year, replenishing other reserve accounts and post-employment benefits. Because free cash is a nonrecurring revenue source, it is not typically used in the town’s overall operating budget.

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