The East Contra Costa Fire Protection District (ECCFPD) Fire Board recently approved the district’s 2019-20 operating budget, and while it is balanced and only nominally higher than the previous year, the district has made some fundamental changes to its budget plan, compared to the prior year.
The new budget plan matches its $16.8 million in expected revenue with nearly the same amount of expenses. The plan projects a razor-thin margin of $16,000 in revenue in excess of expenses. Total operating expenses are up $1.6 million over the prior year, driven almost exclusively by higher salary costs resulting from the hiring of six trainee firefighters. Total income for the district is forecast to be up about 4% over the prior year.
“Between last year, the 2018-19 budget, and the new year, the 2019-20 budget — as far as the operating portion of the budget goes — there’s not really any significant change,” said Joe Young, fire board member and chair of the district’s finance subcommittee. “The operating cost does go up some, and that is primarily because we hired six new firefighter trainees, because we are anticipating a significant number of retirements in the next 18 months. So we’re bringing these people in and getting them trained so they’ll be able to fill those positions as people retire.”
The approved plan not only details the expected income and expenses for the current year, but also provides a preliminary look at each of the next ten years. The ECCFPD operating budget stays in the black for nine of those ten years. In the 2028-29 plan, expenses are forecast to exceed operating income, putting the district in the red by approximately $119,000, which represents less than 1% of the $21 million in operating expenses expected that year.
“On the long picture, our 10-year projection is pretty good,” said Young. “We’re beginning to get a little bit in the red in our 10th year. It’s only $119,000, so it’s not problematic. In other words, we will probably resolve those issues as we implement our strategic plan and, hopefully, do our revenue measure next year.”
One significant change in the 2019-20 plan is the addition of a planned $2 million fire-prevention budget that is tracked and reported separately from the operating budget. The district was forced to stand up a fire prevention bureau after the Contra Costa County Fire Protection District — which had performed inspection duties for the district since ECCFPD’s inception in 2002 — opted to not renew the contract for those services. The contract expired in late 2018, and the obligation reverted to ECCFPD.
Income derived from construction plan reviews and building inspections will be used to offset the expense of the prevention bureau, and a study is currently underway to help the district determine a fee structure that will support that approach. Young also explained that revenue from fire prevention activity cannot be used to support other fire service operations, which is why the fire prevention budget is reported as separate and distinct from the operating budget.
Also reflected in the 2019-20 plan is an operating fund excess with a starting balance of $10.2 million, much of which came from the 2017 discovery of $6.2 million erroneously left behind when the district transferred its funds and financial operations from the county to the district. The district’s reserve equating to 20% of its operating revenue comes from that fund, and approximately $1.9 million is planned to be spent on initiatives identified in the district’s strategic plan, including pension-rate stabilization, planning for the 2020 revenue measure and planning for a training facility.
ECCFPD Fire Chief Brian Helmick cautioned against assuming that the excess operating fund can be used to operate an additional station, despite the relatively large balance it currently reflects. He said the fund would quickly be exhausted, leaving the district facing layoffs and operating without a financial safety net.
“For us to eliminate the operating fund excess that we have would be a short-term play,” explained Helmick. “The long-term impacts would be detrimental ... I would agree with people that our reserves are higher today. And I agree with them that could open another station today. But I’m glad we have a 10-year forecast for people to look and see what would happen tomorrow if we made a very reactive decision to do something like that, because there would be a lot of red.”
Helmick added that the district’s financial future will become more clear in 2020, as some type of funding mechanism will be put in front of voters. Whether that measure passes or fails will influence decisions on how that fund is utilized.
“From a budget standpoint, I think that the district is still financially sound,” said Young. “We are looking forward toward implementing our strategic plan, and hopefully obtaining additional revenue to allow us to open more stations in the next several years.”
The ECCFPD budget documents can be found at www.eccfpd.org/financial-reports-current-mous.