January 2026
On November 25, 2025, Governor Maura Healy signed into law Chapter 73 of the Acts of 2025, “An act making appropriations for the fiscal year 2025 to provide for supplementing certain existing appropriations and for certain other activities and projects” (“the Act”). Section 175 of the Act allows a city, town, or district that was a member unit of the Hampshire County Group Insurance Trust (the “Trust”) to amortize the amount of its unanticipated health insurance related deficit for either fiscal year 2026 or fiscal year 2027, but not both, over a period not to exceed 5 years, in equal installments, or more rapidly.
The following are the requirements that must be followed to amortize the unanticipated Trust health insurance related deficit:
- Member units opting to amortize a deficit must submit the Certification of Withdrawal (“the Certification”) form (Attachment A) to the Division of Local Services (DLS) Director of Accounts by June 30, 2026. This form certifies that the member unit has withdrawn from the Trust, as required by the legislation. This form must be signed by a majority of the local appropriating authority as defined in section 21C of Chapter 591. For regional school districts, this is a majority of the school committee, and for special purpose districts, this is a majority of the prudential committee. The Certification must also indicate whether the member unit is electing to amortize a Trust deficit for FY2026. If the member unit opts to amortize the FY2026 Trust deficit, they will not be eligible to amortize a FY2027 deficit. If the member unit elects not to amortize a FY2026 Trust deficit, they will remain eligible to amortize a FY2027 deficit.
- Local appropriating authorities as defined above shall adopt a Deficit Amortization Schedule (Attachment B) before setting the next subsequent annual tax rate from the year the member unit is electing to amortize. For non-tax rate setting units, the amortization schedule is due prior to the certification of free cash or excess and deficiency for the fiscal year in which the deficit being amortized occurred.
1 Per G.L. c 59 § 21C, ''Local appropriating authority'', in a town, the board of selectmen; in a city, the council, with the mayor's approval when required by law; in a municipality having a town council form of government, the town council.
Deficit Calculation
The deficit defined in the Act shall be calculated as follows for either Fiscal Year’s 2026 and 2027:
The amount appropriated to fund the cost of the Trust health insurance premiums less the actual fiscal year’s Trust health insurance premiums, plus any costs related to terminating membership in the Trust, consulting services related to securing membership in a new health insurance plan or any other similar costs.
Accounting Treatment of the Trust health insurance deficit
The deficit as defined above must be set up as an appropriation deficit in the member unit’s general fund of the combined balance sheet for the fiscal year in which a deficit occurred. The accounting entry is:
DR. Fund Balance Reserved for HCHIT Appropriation Deficit XX,XXX
CR. Undesignated Fund Balance XX,XXX
(To establish the HCHIT deficit)
The appropriation deficit must be set up on both the FY2026 and FY2027 combined balance sheet, if a deficit exists in said years. However, for the year not selected for amortization, the deficit must be fully funded on the next subsequent fiscal year’s tax rate recap or before from an available fund, or in the case of a regional school district, fully added to the next fiscal year’s budget assessments, and in a non-tax rate setting special purpose district, added to the next fiscal year’s budget. For the year selected for amortization, not less than 1/5th of the deficit must be funded on the next subsequent fiscal year’s recap or before from an available fund, or in the case of a regional school district, not less than 1/5th of the deficit must be added to the next fiscal year’s budget assessments, and in a non-tax rate setting special purpose district, not less than 1/5th of the deficit must be added to the next fiscal year’s budget.
Amortization of the Deficit – Accounting Treatment
The amount of the deficit for the fiscal year chosen must be divided by the number of years selected on the amortization schedule in part 2 above. After the deficit is raised or otherwise provided for in a
particular year, that portion of the Fund Balance Reserved for HCHIT Appropriation Deficit is recorded as follows:
DR. Undesignated Fund Balance XX,XXX
CR. Fund Balance Reserved for HCHIT Appropriation Deficit XX,XXX
(To record 1 year of amortization or extinguishment of the HCHIT Appropriation Deficit)
Free Cash/Excess and Deficiency Treatment
Although the member unit will see a reduction from the Free Cash/Excess and Deficiency in the calculation, the entry to record the appropriation deficit increases undesignated fund balance so there will not be an “actual” reduction of free cash and excess and deficiency.
If you have any questions, please contact your Bureau of Accounts Field Representative.
BOA Field Representative Municipal Assignments
BOA Field Representative District Assignments
Certification of Withdrawal from Hampshire County Group Insurance Trust
Member Unit Hampshire County Group Insurance Trust Deficit Amortization Schedule
| Date published: | January 30, 2026 |
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