Fire Department Budget Getting Tight: Grants Help, But Do Not Provide Relief from Rising Operating Expenses

August 15, 2003

Since 1998, the Palomar Mountain Volunteer Fire Department (PMVFD) has received $803,923 in grants. The Department has used this money to purchase two new fire engines, a new water tender, a new cab and chassis for its rescue, new turnouts and other emergency response equipment. Special funding has also made it possible for the Department to purchase two new cardiac defibrillators and train three new Emergency Medical Technicians (EMT's). But grant money cannot be used to pay for the Department's rising operating expenses.

With the Department's operating costs on the rise, the first question that comes to mind is: why? The answers are simple: skyrocketing worker's compensation insurance, rising costs in emergency communications and general increases in the price of doing business. I will attempt to explain all three. However, before I do, I'd like to spend a moment reviewing what the PMVFD has done over the past several years to suppress its operating costs.

First and foremost is the fact the Department has no paid positions. By relying exclusive on volunteers the Department saves the community literally hundreds of thousands of dollars each year. In fact, most estimates for a fully paid fire station run in the order of $1.5 Million to $2 Million annually.

Secondly are the grants. By aggressively pursuing opportunities for special funding, the PMVFD relieved the community of the financial burden of replacing aged fire engines and other costly vehicles that in some cases were over 40 years old. Likewise, in using grant money to purchase thousands of dollars worth of emergency equipment, the Department significantly improved its emergency response capabilities at no cost to the community.

As a County Service Area, the PMVFD must pay administrative costs to the County of San Diego. In 1999, the Department's mandatory annual administrative fees to the County approached $7,500. In signing a contract with the County by which the Department took on the lion's share of the County's administrative duties, the Department successfully reduced its annual administrative fees to a present rate of approximately $4,000 (FY 04-05). Yes, volunteer commitment increased dramatically, but by shouldering additional administrative functions, the Department reduced its administrative fees to the County by over 87%.

This year, the Department began charging non-residents of the CSA for cost-recovery of emergency services. After years of seeking legal permission to bill non-residents for services rendered, the Department in May of 2003 received the go ahead and began billing soon thereafter. To date the Department has recovered approximately $1,000 in cost recovery for services rendered to non-residents of the CSA.

So why is the Department's operating budget so tight? This year (FY 02-03) the Department received $22,589 in property tax revenue. It is important to keep in mind that when the community formed the CSA in 1984, its property taxes did not increase in order to fund the PMVFD; rather, the County voluntarily gave-up a portion of the property taxes which it was already collecting. That property tax allocation has grown from approximately $13,000 in 1984 to its present amount of just over $22,000.

Currently, it costs just under $36,000 to run the community's volunteer fire department. Traditionally, the Department has relied on proceeds from the annual BBQ along with an additional $6,000 which it receives from the County for providing Emergency Medical Services (EMS) to the community. Unfortunately, skyrocketing worker's compensation insurance, rising costs in emergency communications and general increases in the price of doing business are forcing the cost of running the volunteer fire department to go up.

PMVFD Worker's Compensation Insurance

Even though the Department relies upon volunteers, it must pay worker's compensation insurance on its members. Should a member get hurt while providing emergency care, that member must still be able to provide for his or her family. Currently, the Department pays $160.00 per member per year for worker's compensation insurance. At that price, the cost of Worker's Compensation Insurance is a significant bargain by anybody's standards. Unfortunately, as businesses up and down the state have become painfully aware, worker's compensation insurance is about to go sky high. The Department's worker's compensation insurance will rise to $260 per member next fiscal year (FY 04-05). By FY 06-07, the Department will have to pay $460 per member per year in worker's compensation insurance. That's an increase of almost 300%. This is one reason for the increase in the Department's operating expenses.

PMVFD Communications

Like all fire and emergency services departments, the PMVFD must rely on radios and a radio system to communicate. Last year, our fees for radio communications were $25.00 per call. This year, that cost went up nearly 100% o $49.37 per call, which is still less than the estimated $64.00 many fire and emergency service departments must pay. By acquiring a one-time grant the PMVFD was able to stave-off paying the increase by for one year. However, next year (FY 04-05), the Department will have to pay the full $49.37 per call. Additionally, by FY 05-06, the Department risks having to pay $5,400 in yearly communication system maintenance costs; rising emergency communications costs are another reason the Department's operating expenses are on the rise.

PMVFD General Operating Costs

Unfortunately, the general cost of conducting business is on the rise. At a yearly rate of 3%, inflation would within the next ten years drive-up the cost of running the Department to around $46,000 per year. But that does not include the rising costs in worker's compensation and communications.

PMVFD: So what does the future hold?

Put simply, the PMVFD cannot continue to provide the same level of service to the community without additional operating revenue. The Department has worked exceedingly hard to earn close to $l Million in grants, but grants cannot be used to pay for operating expenses. Taking everything into account-the Department's annual property tax funding, cost recovery, the money it currently receives from the County as the contract provider of Emergency Medical Services, earnings from the annual BBQ-and even including spending the CSA's reserves on yearly operating costs, the Department's operating expenses are projected to exceed all of its revenue sources by July 1, 2008. The gap will be more than $21,000.

So, where do we go from here? First and foremost, the Department will do everything within its power to ensure that it continues to provide the highest possible level of service. To that end, I will examine every expenditure to see if we can cut our operating expenses even more. But, I have few options left. For instance, currently, the Department pays $179.00 per qualifying member to participate in the CALPERS Volunteer Firefighters Length of Service Award System. I value this program, both as a recruitment and retention tool, but more importantly, I sincerely believe that after ten years of volunteer service to the community, our volunteer firefighters deserve some form of enduring recognition. Unfortunately, given the budget constraints that I have just described, I must consider necessity of eliminating this expense. Also, I must consider eliminating the cost of uniforms, T-shirts and badges. While I realize that these things are vital to the image and morale of our department, I must also focus on our primary mission, which is the provision of emergency services to the community.

Unfortunately, even if I were to make such drastic cuts as the regrettable ones I have just described, I would only delay the inevitable until 2010. You have my word that I will work tireless with the Fire Board and the community to Find a suitable solution to the financial challenge that we face. The irony of all of this is that we have no debt, have all new equipment and a small amount of reserve money. That is an enviable position to be in, one that most other fire departments can only covet. We simply need to find a way to meet our annual operating expenses.

I am irrevocably convinced that, as a community, we will find a way to meet our operational costs so that we can continue to provide excellent emergency services to Palomar Mountain. You also have my solemn word that I will not enact any of the aforementioned cuts without exhausting every reasonable alternative or discussing the matter with all of you and taking the time to answer your concerns.

Lastly, I ask that you resist the temptation to allow this sobering news to drain away your enthusiasm, your dedication and, most importantly, your professionalism. The secret to successful living is not that we avoid challenges and hardship, but that we meet difficult times head-on, with faith, grace and fortitude and even a little bit equanimity. Please, take heart in the community's long-standing tradition of meeting, and beating challenges. After all, it was the community's hard work and dedication that founded this fire department, for which we are but its present stewards.

Karl Bauer, Chief.