HomeMy WebLinkAboutMINUTES - 09282010 - D.5RECOMMENDATION(S):
CONSIDER the Corrective Action Plan prepared by the County Administrator and the
Contra Costa County Fire Chief on recommended changes to the Contra Costa County Fire
Protection District's operation and FY 2010/11 Budget; and ADOPT associated
appropriation adjustment.
FISCAL IMPACT:
As described in the Board Order of September 14, 2010 and the background information
below, this report makes recommendations to adjust appropriations and revenues to reduce
reliance on fund balance and begin to re-balance District expenses with revenue projections.
Because the Proposed Budget included the closure of four stations for twelve months and
the Corrective Action Plan includes service delivery modifications and reallocation of
suppression staff, the fiscal impact of the plan, although a decrease from current operations,
is actually an increase in budgeted expenses of $764,173; however, the plan also increases
revenues in the amount of $851,750 resulting in a decreased reliance on reserves of $87,577.
APPROVE OTHER
RECOMMENDATION OF CNTY
ADMINISTRATOR
RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 09/28/2010 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Gayle B. Uilkema, District II Supervisor
Mary N. Piepho, District III Supervisor
Susan A. Bonilla, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Lisa Driscoll, County
Finance Director 925-335-1023
I hereby certify that this is a true and correct copy of an action taken and entered
on the minutes of the Board of Supervisors on the date shown.
ATTESTED: September 28, 2010
David J. Twa, County Administrator and Clerk of the Board
of Supervisors
By: , Deputy
cc: Chief Louder, Rich Seithel, County Administration
D. 5
To:Board of Supervisors
From:David Twa, County Administrator
Date:September 28, 2010
Contra
Costa
County
Subject:Contra Costa County Fire Protection District - Corrective Action Plan
BACKGROUND:
As was reported on September 14, 2010, the Board of Supervisors adopted a FY 2010-11
Proposed Budget on April 20 for the Contra Costa County Fire Protection District that
included significant reductions to the District’s operations. The reductions were needed
to offset the impact of expenditure and revenue forecasts that projected a reliance on
reserves of over $16 million (see Recommended Budget pages 336-337). The Proposed
Budget included a $7.4 million expenditure decrease, which incorporated the elimination
of approximately eight positions and “browning-out” four stations on a rotating basis.
Even with these proposed reductions the District anticipated the utilization of $8.8
million from reserves. With property taxes continuing to drop and personnel contracts in
place with pending cost-of-living increases, the District’s utilization of reserve funds was
not only already high but projected to grow, making it increasingly difficult to balance its
budget in the future.
Understanding that the reliance on reserves was increasing, that the fiscal problem was
structural, that the District must remain fiscally solvent, and that the District must
prudently plan for FY 2011-12 and beyond in an uncertain and challenging economic
environment, the District had no choice but to make plans to reduce its budget along with
accompanying service level reductions. The District evaluated staffing models, the
effectiveness of overtime versus relief staffing for positions required due to contractual
minimum staffing requirements, and the equipment replacement program. It is important
to note that the District has not made a capital expenditures since FY 2008-09 and have
no expenditures planned for capital in FY 2009-10 and 2010-11. Capital expenditures are
primarily needed to replace aging fire engines, fire trucks and other fire apparatus as well
as light vehicles; and to make significant repairs to some 40 buildings including 30 fire
stations. Continuing to reduce capital funding to zero will ultimately result in a pent-up
capital demand that will eventually have to be addressed – likely at a higher expense.
The Contra Costa County Fire Protection District’s operations are funded over 88% by
property taxes; therefore, it has been particularly hard hit by the housing market decline’s
impact on property tax revenue. The County Administrator’s Recommended Budget for
the District described a $7.4 million gap between projected revenues and expenses for FY
2010-11. The Board of Supervisors asked the Acting Chief to answer specific questions
regarding the gap including workers’ compensation expenses and appropriations. The
Board requested the County Administrator to work with the Fire District to review
recommendations regarding reductions. The Board stated that it was not opposed to
changing some of the budget recommendations to soften the impact of cuts so long as a
fiscally prudent plan was in place to correct the structural problem and that the changes
and delay did not impact the County General Fund.
Since that original direction, the Board named a permanent Fire Chief and directed the
County Administrator’s Office to delay adoption of the District’s budget to give the new
Chief an opportunity to review the operation and budget and present a corrective action
plan to the Board.
Attached is the Contra Costa County Fire Protection District’s Corrective Action Plan as
recommended by the County Administrator on September 14. The Plan is a work in
progress and does not include projections for several key items that may decrease or
increase costs in the future such as:
The Pending Chevron Refinery Property Tax reassessment. This item will be a fixed
non-ongoing cost.
Contra Costa County Employees' Retirement Association (CCCERA) Board's recent
decision to Depool Safety employers. This item will increase retirement expenses in
FY 2011-12.
The impact of CCCERA 2008 market losses. This item will increase retirement
expenses in FY 2011-12.
The impact of CCCERA 2009 market gains. This item will decrease retirement
expenses in FY 2011-12.
Future CCCERA market changes.
Future statewide and local pension reform such as AB 1987.
The Contra Costa County Fire Protection District will continue to work with the County
Administrator's Office to explore further expenditure reductions and revenue
enhancements. The District will return to the Board of Supervisors with an Action Plan
specific to new revenues in the near future.
CONSEQUENCE OF NEGATIVE ACTION:
Not taking action on this item will delay implementation of reductions. Delay will further
reduce reserves and consequently will require more service reductions in the future.
CHILDREN'S IMPACT STATEMENT:
None.
CLERK'S ADDENDUM
The staff report was presented by David Twa, County Administrator. Chief Louder
addressed the Board in regard to the Corrective Action Plan. Chair Gioia called for
public comment. The following people spoke: Speakers: Vincent Wells, Local 1230;
George Figone, Acalanes Valley Homeowners Association; Clive Savacool,
Firefighters Local 1230; George Burtt, Acalanes Valley Homeowners Association;
Michelle Valente, resident of Lafayette; Willie Mims, Black Political Association;
Byrne Mathisen, Happy Valley Improvement Association. The Board INDICATED its
SUPPORT for the recommendations in the Corrective Action Plan and DIRECTED a
study session to examine fire district issues be scheduled.
ATTACHMENTS
CCCFPD Corrective Action Plan
TC 27
TC 24
Contra Costa County Fire Protection DistrictCorrective Action Plan September 28, 2010
Structural Imbalance•Current expenditures far exceed current revenues•Capital expenditures have not been made since FY 2008‐09•Contracted wage increases go into effect July 1, 2011•Retirement expenses increase significantly in FY 2011‐12•Reserve use in FY 2009‐10 was $2.3 million•Reserve use in FY 2010‐11 is projected to be $8.7 million•Property taxes, which funded 88% of operations in FY 2009‐10 are expected to be flat in FY 2011‐12 and then grow approximately 1% in FY 2012‐13•Reserves are projected to be completely depleted in FY 2011‐122
Correction Measuresto Replace those Originally Proposed•Expenditure Reductions ($2.18 million)•Service Delivery Modifications and/or Reallocation of Suppression Staff •8 positions eliminated on June 1 ($600,000)•Deferring $4 million in transfers to the Workers Compensation Trust Fund ($4 million)•Revenue Increases ($1.5 million)•Property Taxes drop of 2.44% rather than 5% originally projected ($1.2 million) •Increased Fee Revenue ($834,000) ‐weed abatement, dispatching services, licenses, permits, plan review, and inspections •Decreased primarily prior year property tax revenues (revenue reduction of $527,000)•Reserve use $8.7 million•Explore additional Revenue Options3
4CCCFPD 4‐Year ForecastIncluding Proposed Reductions8.5% workers comp thru FY 11/12 and 16% in 12/13 and 13/1409/10 Actual FY 10/11 FY 11/12 FY 12/13 FY 13/14Salaries 49,276,088 50,973,000 52,707,101 53,266,784 53,799,453 Benefits16,212,854 17,556,289 18,047,852 18,909,129 19,635,097 Workers Compensation4,203,774 4,332,705 4,480,104 8,522,686 8,607,912 Services & Supplies/Other21,465,532 22,074,852 22,500,000 23,175,000 23,638,500 Capital Outlay00 0 0Chevron Payment0307,000614,000 00Total Expenditures 91,158,24895,243,846 98,349,057 103,873,599 105,680,962 Current Property Tax80,624,945 78,833,443 78,833,443 79,621,777 80,816,104 Other8,204,9517,685,327 7,988,541 8,349,357 8,685,000 Total Revenue 88,829,896 86,518,770 86,821,984 87,971,13 89,501,104 Fund Balance Needed2,328,352 8,725,076 11,527,073 15,902,465 16,179,858 Fund Balance Available*17,610,425 8,885,349 (2,641,724) (18,544,189) (34,724,047)* Does not include $1.4 million in outstanding encumbrances
Conclusion•Without an influx of significant new/ increased revenues, contract concessions, and/or additional service reductions the Contra Costa County Fire Protection District will have depleted its reserves in 2011•A formal, long‐range solution to the structural problem must be implemented in the current fiscal year5
Recommendation•CONSIDER the Corrective Action Plan described above;•ADOPT adjustments to the FY 2010/11 Budget;•RETURN to the Board of Supervisors with Action Plan for additional revenues6