shared fire and emergency services analysis and …169a74e0-eced-407f...term “shared services”...

North County Fire & Medical District and Sun Lakes Fire District

Shared Fire and Emergency Services Analysis and Recommendation

February 2017

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TABLE OF CONTENTS Executive Summary ................................................................................................................................ 3

Overview .................................................................................................................................................. 4

Current Operations ................................................................................................................................ 5

Current Personnel Totals ....................................................................................................................... 5

Current Operating Budgets ................................................................................................................... 5

Joint Powers Authority – Overview/Analysis ...................................................................................... 6

Conceptual JPA Staffing Plan ............................................................................................................... 6

Proposed Staffing Model ...................................................................................................................... 7

Conceptual JPA Organizational Chart .................................................................................................. 7

Financial Analysis ................................................................................................................................. 8

Sun Lakes Fire District – Stand-Alone (no JPA) Budget Projections ............................................... 8

Sun Lakes Fire District – JPA Budget Projections ........................................................................... 9

Sun Lakes Fire District – Tax Rate Projections ................................................................................ 9

North County Fire & Medical District – Stand-Alone (no JPA) Budget Projections ..................... 10

North County Fire & Medical District – JPA Budget Projections .................................................. 10

North County Fire & Medical District – Tax Rate Projections ....................................................... 11

JPA Fiscal Analysis Summary ............................................................................................................ 11

Tax Rate Projection Summary ............................................................................................................ 12

Conclusion ............................................................................................................................................. 13

Appendix ................................................................................................................................................ 14

Sun Lakes Fire District – Stand-Alone (no JPA) Budget Projections Spreadsheet ........................... 15

Sun Lakes Fire District – JPA Budget Projections Spreadsheet ....................................................... 16

North County Fire & Medical District – Stand-Alone (no JPA) Budget Projections Spreadsheet ... 17

North County Fire & Medical District – JPA Budget Projections Spreadsheet ................................ 18

Rounds Consulting Group – Sun Lakes Fire District Assessed Valuation Projections ............. 19 - 22

James Vincent Group – Financial Analysis Summary ................................................................. 23 -26

Sun Lakes Firefighters Association JPA Endorsement Letter ........................................................... 27

North County Firefighters Association JPA Endorsement Letter ...................................................... 28

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Executive Summary This analysis was prompted by ongoing challenges for the North County Fire & Medical District and the Sun Lakes Fire District to continue to provide high levels of service in an environment of increasing operational costs and continued revenue insufficiencies. Sun Lakes and North County are not alone. Emergency service agencies across the State of Arizona are struggling to recover from a historic recession. Making this recovery more difficult are the districts’ extremely restricted funding sources including arbitrary tax rate caps, budget growth ceilings, and the passage of Proposition 117 constricting growth in property valuation to 5% or less annually. These constraints in revenues, coupled with increasing operational costs are having a damaging impact on emergency services throughout the state and are forcing changes to the way fire districts operate. Both Sun Lakes and North County have a long history of cooperative efforts as participants in the Phoenix Regional Dispatch System. These shared service efforts include dispatching and automatic emergency response, standardized operating procedures, recruit training and the Regional Wireless Cooperative. These collaborative efforts have provided high levels of service while containing costs. In addition, good rapport and a high level of trust exist between North County and Sun Lakes management and labor groups. This combination of factors creates a perfect window of opportunity to explore additional cooperative alternatives as both districts endeavor to maintain long-term financial stability and diminish the prospect of workforce or service level reductions. The good government objective of this study was to perform an analysis of additional shared service opportunities that might provide possibilities to further maximize the use of diminishing funding. The term “shared services” is used in a broad sense to include any arrangement wherein the districts share in revenue, cost or operational responsibility associated with a particular function. More specifically, “shared services” can be described as:

• An arrangement where one district “outsources” the performance of a service or function to another.

• Jointly purchasing equipment and supplies with the intent of driving efficiencies through volume discounts. These could include formal and informal arrangements.

• Sharing of personnel for various functional duties. • Combining functional support functions, while maintaining separate operational or “response”

capabilities. • A merger or consolidation, which is the dissolution of two fire districts to create one new

agency. Under a merger/consolidation, the mill or tax rates for the two agencies must be the same. In the case of Sun Lakes and North County, one mill rate would have to be increased while the other would be decreased. However, the upside of a merger is that it leaves only one legal entity and therefore less administrative demands.

• A Joint Powers Authority (JPA). Under this model, the two districts would maintain local control over service levels and budget totals while maintaining separate tax rates. However, the personnel, equipment, facilities and daily operations of the functionally combined districts would be governed by a JPA Board. This board would be comprised of elected officials who would be appointed from each agency participating in the JPA. The JPA Board would set policies, recommend an annual operating budget, assist in long-range planning, negotiate labor/management agreements, and perform other duties as outlined in the JPA governance documents.

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The principal goal of each of these shared service models is to maintain or enhance the quality of emergency services and to leverage acquisition of the latest equipment and training while controlling operational costs. The fiscal and operational analysis of these models suggests that each holds the potential for improving the coordination and efficiency of fire and emergency medical services in Sun Lakes and North County. The analysis demonstrates that decreased operating costs, increased cost avoidance, increased efficiencies, and improved service delivery to taxpayers would be best realized with the more comprehensive merger or JPA models. However, the current large disparity between the tax rates makes a merger or consolidation imprudent at this time. Therefore, the recommendation of management and labor leaders from both districts is that the North County Fire & Medical District and Sun Lakes Fire District form a JPA (Fire Authority) with an anticipated implementation date of July 1, 2017.

Overview

Fire districts in the State of Arizona are working through a “Perfect Fiscal Storm”. The economic downturn caused many agencies to lose a significant portion of their net assessed valuations which led to a substantial decrease in revenues. In addition to the loss of revenue, Proposition 117 moved fire districts from the secondary to the primary cash value and established an artificial cap of 5% annualized revenue growth. This change in statute has severely limited fire districts’ abilities to recover from the financial losses and to prepare for both density and geographic population growth. Add to these losses the rising costs of pensions, healthcare, insurance, and other inflationary pressures and the financial picture rapidly becomes unsustainable. Arizona fire districts are now faced with a new and different fiscal reality. This reality includes the described decrease in existing revenues, the reduced ability to generate new revenue through existing mechanisms, the decrease in the ability to create new mechanisms for revenue generation, increased expenses from healthcare costs, and the burden of skyrocketing pension commitments. While normal operational expenses are well within a fire district’s ability to anticipate and likely control, the external pressures exerted by legislated mandates and restrictions, inflationary pressure and political and market forces are well beyond the ability of small political entities to manage. It is apparent that fire districts must find a new methodology for maintaining operational and readiness levels or bear the loss of service capability. Joint Powers Authorities have been employed very successfully by many fire districts in neighboring states for years. As mentioned, Phoenix area fire departments have benefitted from intergovernmental agreements that allow for the sharing of dispatching services, academy training, communications systems and automatic-aid responses. However, Arizona fire districts have been unable to form JPAs. That changed a few years ago when the Arizona Fire District Association successfully demonstrated the value of JPAs to State legislators ultimately leading to the decision to modify state statutes. This change has now prompted many fire districts to explore JPAs as a potential model to assist with their fiscal sustainability challenges. As of July 1, 2016, Central Yavapai and Chino Valley Fire Districts, in the Prescott area, and the Montezuma-Rimrock and Camp Verde Fire Districts, in the Camp Verde area, formed the first fire authority JPAs in the State of Arizona. The following sections of this document begin a more detailed analysis with an examination of current operations compared to a prospective JPA model.

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Current Operations North County Fire & Medical District and Sun Lakes Fire District are political subdivisions of the state of Arizona, formed under A.R.S. Title 48, Chapter 5. Sun Lakes and North County are each governed by an elected 5 person board. North County (originally Sun City West) was formed in 1981 and Sun Lakes in 1975. Collectively, both districts protect more than 65,000 residents within a roughly 100 square mile area of unincorporated portions of Maricopa County. Last year, the districts responded to nearly 14,000 incidents or an average of 41 calls for assistance each day. District services are currently provided from 5 fire stations and an administrative/maintenance facility in North County and from 2 stations (including administrative office space) in Sun Lakes. Daily emergency apparatus staffing includes: North County:

• 4 engine companies, • 1 ladder/LT truck, • 4 ambulances, and • 1 battalion chief unit

Sun Lakes:

• 2 engine companies, • 2 ambulances, and • 1 battalion chief unit

Current Personnel Totals

Current Operating Budgets

Fiscal Year 2016/2017 Operating Budget North County Sun LakesWages and Benefits 12,884,301$ 6,811,998$

Operations 2,108,251$ 899,050$ Training 163,525$ 76,500$

Contingency/Reserves 425,000$ 337,423$ Debt Service/Depreciation 718,177$ -$

Total Expenses 16,299,254$ 8,124,971$ Net Assessed Value 416,541,781$ 210,829,864$

Tax Rate 2.8044$ 3.2500$

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Joint Powers Authority – Overview/Analysis Arizona fire districts are authorized pursuant to Arizona Revised Statutes Section 48-805.01 to create a Joint Powers Authority (JPA). Under the JPA, two legal entities divest their operational and administrative obligations to a new over-arching third legal entity; the Fire Authority. An intergovernmental agreement (IGA) is the mechanism that creates this third entity. In this case, Sun Lakes and North County would still exist as taxing authorities, however a third agency, “New Fire Authority,” becomes the employer. The personnel, equipment, facilities and funds to support the formation and operation of a new entity are combined in order to provide service to the common area once served by the individual agencies. It is an act of leveraging the economies of scale of combining two small governments under one management structure. Both the Sun Lakes and North County governing boards would still maintain control over local district service levels and tax rates. However, the daily operations of the functionally combined districts would be governed by a JPA Board who would set policies, recommend an annual budget, assist in long-range planning, negotiate labor/management agreements, and perform other duties as outlined in the JPA governance documents. This board would be comprised of elected officials who would be appointed from and by the Sun Lakes and North County district governing boards. The JPA form of governance allows many opportunities for districts to jointly exercise powers related to emergency services that can significantly benefit the participating agencies. A JPA can offer an opportunity to create a partnership between participating agencies that addresses the maximizing of resources, creating cost containment opportunities, ensuring a high level of fire and EMS services, and maintaining local control. As current statute dictates, three audits would still need to be completed each year under the JPA model. Two of the audits would be very minimal in complexity based on limited fiscal transactions that would take place under Sun Lakes and North County. A JPA agreement would also contain a clause or pathway for dissolution. However once combined, it is difficult to separate the two. As with other cooperative endeavors, the districts should not enter this type of arrangement with the idea that it would not be successful. Conceptual JPA Staffing Plan The North County/Sun Lakes JPA model developed for this analysis retains all existing stations and personnel in both districts. The initial analysis shows that operational efficiencies gained from a JPA service model could plausibly allow for increased firefighter and EMS staffing in both districts. The increased staffing model would stabilize the emergency services workforce in Sun Lakes allowing for improved compliance with current Automatic-Aid staffing recommendations (4-person engine or ladder companies). The enhanced staffing model would allow for a fourth firefighter to be assigned to North County Station 106, along with additional Rover (fill-in) personnel to assist in reducing overtime costs for both districts. The initial JPA model also includes the conversion of ambulance staffing in both districts back to nearly 100% EMS (civilian) personnel during the first year of consolidated operations.

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Proposed Staffing Model

Conceptual JPA Organizational Chart

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Financial Analysis The primary focus of the financial analysis was answering the question, “Is there anything the districts can do as a blended organization to become more efficient, more effective, or reduce costs?” In this section, a ten-year financial model was developed including the total estimated budget and tax rates for a theoretical JPA – Fire Authority as compared to estimated budgets for stand-alone districts (no JPA). To create a JPA draft budget for Fiscal Year 2017/2018, separate budgets were created for both fire districts and for the theoretical Fire Authority. This financial modeling was designed to provide a broad illustration of the estimated fiscal impact that could be anticipated should the districts elect to pursue the formation of a JPA. It is important to note that certain financial projections are being made based largely on historical data and industry projections. Each of the following charts can be found in a larger format in the appendix at the back of this document.

Sun Lakes Fire District ~ Stand-Alone (no JPA) Budget Projections

The assumptions included in the following “stand-alone” budget projection use the District’s average inflationary year-over-year expenditure increases with no escalation in the current number of personnel. The inflationary data was provided by the James Vincent Group (JVG) after a recent analysis was commissioned by the District governing board. In addition, the cost of the substantial public safety pension increase slated to impact the District next fiscal year was also included in the 2017 projections along with employee wage and benefit concessions of approximately $350,000.

As depicted above, without substantial structural modification, Sun Lakes will be unable to sustain their current operational model beyond tax year 2019. Additional and significant wage and benefit concessions and/or workforce reductions would likely be required to maintain future financial solvency.

Revenue ProjectionsActual County Data

NAV Projections (per Rounds data after 2017) $210,829,864 $222,711,678 $230,952,010 $239,497,234 $248,358,632 $257,547,902 $267,077,174 $276,959,029 $287,206,513 $297,833,154Estimated Tax Rate 3.25$ 3.25$ 3.25$ 3.25$ 3.25$ 3.25$ 3.25$ 3.25$ 3.25$ 3.25$

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected

Tax Revenue 6,851,971$ 7,238,130$ 7,505,940$ 7,783,660$ 8,071,656$ 8,370,307$ 8,680,008$ 9,001,168$ 9,334,212$ 9,679,578$ FDAT 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ FFRPF (1%) 58,000$ 58,580$ 59,166$ 59,757$ 60,355$ 60,959$ 61,568$ 62,184$ 62,806$ 63,434$ Health and Medical (3%) 750,000$ 772,500$ 795,675$ 819,545$ 844,132$ 869,456$ 895,539$ 922,405$ 950,078$ 978,580$ Prevention (1%) 51,000$ 51,510$ 52,025$ 52,545$ 53,071$ 53,602$ 54,138$ 54,679$ 55,226$ 55,778$ Other (1%) 14,000$ 14,140$ 14,281$ 14,424$ 14,568$ 14,714$ 14,861$ 15,010$ 15,160$ 15,312$

Total 8,124,971$ 8,534,860$ 8,827,088$ 9,129,932$ 9,443,781$ 9,769,037$ 10,106,114$ 10,455,447$ 10,817,481$ 11,192,681$

Expense Projections2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Actual Projected Projected Projected Projected Projected Projected Projected Projected ProjectedWages and Benefits (4.95% inc + $350k psprs 2017) 6,536,393$ 7,161,998$ 7,516,517$ 7,888,584$ 8,279,069$ 8,688,883$ 9,118,983$ 9,570,373$ 10,044,106$ 10,541,289$ Operations 919,450$ 1,005,858$ 1,056,151$ 1,108,958$ 1,164,406$ 1,222,627$ 1,283,758$ 1,347,946$ 1,415,343$ 1,486,110$ Training 120,100$ 141,560$ 145,807$ 150,181$ 154,686$ 159,327$ 164,107$ 169,030$ 174,101$ 179,324$ Contingency / Reserves 549,028$ 225,444$ 108,613$ Debt Service / Depreciation -$

Total 8,124,971$ 8,534,860$ 8,827,088$ 9,147,724$ 9,598,162$ 10,070,837$ 10,566,848$ 11,087,349$ 11,633,550$ 12,206,724$ Exp vs Rev Variance 0$ -$ -$ (17,792)$ (154,381)$ (301,800)$ (460,734)$ (631,902)$ (816,070)$ (1,014,043)$

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Sun Lakes Fire District ~ JPA Budget Projections

As illustrated below, modifications to the Sun Lakes employee wage and benefits to mirror the current North County wages and benefit package, coupled with numerous realized economies of scale under the JPA model are anticipated to reduce the tax rate for Sun Lakes property owners. Most importantly, the JPA model is expected to maintain the fiscal and therefore operational stability of the Sun Lakes Fire District indefinitely.

Sun Lakes Fire District Projected Tax Rate ~ With and Without JPA

Revenue Projections Actual County DataNAV Projections (Rounds data after 2017) $210,829,864 $222,711,678 $230,952,010 $239,497,234 $248,358,632 $257,547,902 $267,077,174 $276,959,029 $287,206,513 $297,833,154Estimated Tax Rate 3.25$ 3.20$ 3.20$ 3.20$ 3.20$ 3.20$ 3.20$ 3.20$ 3.20$ 3.20$


Tax Revenue 6,851,971$ 7,126,774$ 7,390,464$ 7,663,912$ 7,947,476$ 8,241,533$ 8,546,470$ 8,862,689$ 9,190,608$ 9,530,661$ FDAT 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ FFRPF (1%) 58,000$ 58,580$ 59,166$ 59,757$ 60,355$ 60,959$ 61,568$ 62,184$ 62,806$ 63,434$ Health and Medical (3.5%) 750,000$ 776,250$ 803,419$ 831,538$ 860,642$ 890,765$ 921,941$ 954,209$ 987,607$ 1,022,173$ Prevention (2.5%) 51,000$ 52,275$ 53,582$ 54,921$ 56,294$ 57,702$ 59,144$ 60,623$ 62,139$ 63,692$ Other (1%) 14,000$ 14,140$ 14,281$ 14,424$ 14,568$ 14,714$ 14,861$ 15,010$ 15,160$ 15,312$

Total 8,124,971$ 8,428,019$ 8,720,912$ 9,024,553$ 9,339,336$ 9,665,672$ 10,003,985$ 10,354,715$ 10,718,319$ 11,095,271$

Expense Projections 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected

Wages and Benefits (After 2017 = 4.5%) 6,811,998$ 6,288,646$ 6,571,635$ 6,867,359$ 7,176,390$ 7,499,327$ 7,836,797$ 8,189,453$ 8,557,978$ 8,943,087$ Operations (After 2017 = 3.5%) 899,050$ 995,295$ 1,030,130$ 1,066,185$ 1,103,501$ 1,142,124$ 1,182,098$ 1,223,472$ 1,266,293$ 1,310,613$ Training (After 2017 = 2%) 76,500$ 87,450$ 89,199$ 90,983$ 92,803$ 94,659$ 96,552$ 98,483$ 100,453$ 102,462$ Administrative 681,628$ 654,948$ 625,026$ 591,643$ 554,562$ 513,538$ 468,308$ 418,595$ 364,109$ Contingency 337,423$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ Capital -$ 225,000$ 225,000$ 225,000$ 225,000$ 225,000$ 225,000$ 225,000$ 225,000$ 225,000$

Total 8,124,971$ 8,428,019$ 8,720,912$ 9,024,553$ 9,339,336$ 9,665,672$ 10,003,985$ 10,354,715$ 10,718,319$ 11,095,271$

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North County Fire & Medical District ~ Stand-Alone (no JPA) Budget Projections The assumptions included in the following “stand-alone” budget projections use the District’s average inflationary year-over-year expenditure increases with no increase in current wage and benefit packages. The inflationary data was provided by the James Vincent Group (JVG) after a recent analysis was commissioned by the District governing board. In addition, the costs associated with the substantial pension increase slated to impact the District next fiscal year were also included in the 2017 projections.

As illustrated above, North County remains on a stable fiscal foundation because of continued growth and savings. As anticipated, the tax rate is expected to increase each of the next couple of years due to increased costs, expiration of a personnel grant, and expanded services. Regardless, the District will likely not have the capacity to continue to grow as demand for services increase due to the limited revenues and revenue generation constraints. In addition, the significant increase in pension expense, increases in healthcare costs, and general inflationary pressures further limit future revenues.

North County Fire & Medical District ~ JPA Budget Projections

As the chart on the next page depicts, the sharing or reduction of certain costs and the realized efficiencies gained through the JPA will have a positive economic impact on the average District homeowner for commensurate services. The economies gained through the JPA are projected to decrease the estimated North County property tax rate for each of the ten years evaluated and will also assist the District in its continued effort to maintain or enhance the current level of its emergency services by maintaining financial stability.


NAV Projections (per Rounds data after 2017) 416,541,781$ 441,653,887$ 469,286,566$ 495,475,760$ 523,232,533$ 552,658,722$ 583,863,918$ 616,966,208$ 652,093,014$ 689,382,016$ Estimated Tax Rate 2.8044$ 3.0000$ 3.0655$ 3.0300$ 2.9900$ 2.9500$ 2.9100$ 2.8710$ 2.8400$ 2.8000$


Tax Revenue 11,787,524$ 13,249,617$ 14,385,980$ 15,012,916$ 15,644,653$ 16,303,432$ 16,990,440$ 17,713,100$ 18,519,442$ 19,302,696$ FDAT 607,413$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ FFRPF (1%) 115,000$ 135,000$ 136,350$ 137,714$ 139,091$ 140,482$ 141,886$ 143,305$ 144,738$ 146,186$ Health and Medical (4.5%) 2,647,375$ 2,962,507$ 3,095,820$ 3,235,132$ 3,380,713$ 3,532,845$ 3,691,823$ 3,857,955$ 4,031,563$ 4,212,983$ Prevention (2.5%) 154,871$ 156,762$ 160,681$ 164,698$ 168,816$ 173,036$ 177,362$ 181,796$ 186,341$ 190,999$ Other 987,071$ 579,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$

Total 16,299,254$ 17,672,963$ 18,368,831$ 19,140,459$ 19,923,272$ 20,739,794$ 21,591,511$ 22,486,156$ 23,472,083$ 24,442,864$


Actual Projected Projected Projected Projected Projected Projected Projected Projected ProjectedWages and Benefits (4.5%) 12,884,301$ 14,319,745$ 14,964,134$ 15,637,520$ 16,341,208$ 17,076,562$ 17,845,008$ 18,648,033$ 19,487,194$ 20,364,118$ Operations (3.5%) 2,033,251$ 2,142,555$ 2,217,544$ 2,295,158$ 2,375,489$ 2,458,631$ 2,544,683$ 2,633,747$ 2,725,928$ 2,821,336$ Training (2%) 163,525$ 159,550$ 162,741$ 165,996$ 169,316$ 172,702$ 176,156$ 179,679$ 183,273$ 186,938$ Contingency 500,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ Debt Service / Depreciation 718,177$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$

Total 16,299,254$ 17,644,590$ 18,367,159$ 19,121,414$ 19,908,753$ 20,730,635$ 21,588,587$ 22,484,199$ 23,419,135$ 24,395,132$

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North County Fire & Medical District Tax Rate Projections ~ With and Without JPA

JPA Fiscal Analysis Summary

The JPA model can take advantage of cost containment and real dollar savings through the joint purchasing of insurance including workers compensation, and property and casualty, as well as the ability to utilize operational personnel wherever necessary which should save overtime dollars. With the additional savings from a consolidation of mass purchasing and the cost reductions realized with the blending of benefit packages, the savings side of the calculation becomes significant. With the principal benefits of a JPA model being centered on optimal utilization and streamlining of regional revenues to reduce costs, increase effectiveness, and provide a greater depth of resources; it is important to recognize that the future inclusion of additional JPA partners would likely be advantageous to all participants.


NAV Projections (per Rounds data afetr 2017) 416,541,781$ 441,653,887$ 469,286,566$ 495,475,760$ 523,232,533$ 552,658,722$ 583,863,918$ 616,966,208$ 652,093,014$ 689,382,016$ Estimated Tax Rate 2.8044$ 2.8644$ 2.8744$ 2.8444$ 2.8244$ 2.8044$ 2.7780$ 2.7544$ 2.7244$ 2.7044$


Tax Revenue 11,787,524$ 12,650,734$ 13,489,173$ 14,093,313$ 14,778,180$ 15,498,761$ 16,219,740$ 16,993,717$ 17,765,622$ 18,643,647$ FDAT 607,413$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ 590,000$ FFRPF (1%) 115,000$ 135,000$ 136,350$ 137,714$ 139,091$ 140,482$ 141,886$ 143,305$ 144,738$ 146,186$ Health and Medical (4.5%) 2,647,375$ 2,962,507$ 3,095,820$ 3,235,132$ 3,380,713$ 3,532,845$ 3,691,823$ 3,857,955$ 4,031,563$ 4,212,983$ Prevention (2.5%) 154,871$ 156,762$ 160,681$ 164,698$ 168,816$ 173,036$ 177,362$ 181,796$ 186,341$ 190,999$ Other 987,071$ 579,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$ 302,077$ SLFD Administrative Services -$ 681,628$ 654,948$ 625,026$ 591,643$ 554,362$ 513,538$ 468,308$ 418,595$ 364,109$

Total 16,299,254$ 17,755,708$ 18,429,049$ 19,147,959$ 19,950,518$ 20,791,562$ 21,636,426$ 22,537,158$ 23,438,936$ 24,450,001$


Actual Projected Projected Projected Projected Projected Projected Projected Projected ProjectedWages and Benefits (4.5%) 12,884,301$ 14,319,745$ 14,964,134$ 15,637,520$ 16,341,208$ 17,076,562$ 17,845,008$ 18,648,033$ 19,487,194$ 20,364,118$ Operations (3.5%) 2,033,251$ 2,142,555$ 2,217,544$ 2,295,158$ 2,375,489$ 2,458,631$ 2,544,683$ 2,633,747$ 2,725,928$ 2,821,336$ Training (2%) 163,525$ 159,550$ 162,741$ 165,996$ 169,316$ 172,702$ 176,156$ 179,679$ 183,273$ 186,938$ Contingency 500,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ 400,000$ Debt Service / Depreciation 718,177$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$ 622,740$

Total 16,299,254$ 17,644,590$ 18,367,159$ 19,121,414$ 19,908,753$ 20,730,635$ 21,588,587$ 22,484,199$ 23,419,135$ 24,395,132$

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As described in the evaluations above, the initial year of JPA operations projects a total expenditure budget of approximately $25 million. The expenses and revenues would be proportionately allocated between the two districts with an expected reduction in the tax rate for Sun Lakes by roughly $.05 from the current rate of $3.25 to $3.20 per $100 dollars of assessed property valuation. The North County rate was anticipated to increase next fiscal year to offset the planned reduction in current staffing grant funding, the expanded ambulance operations, significant increases in mandatory pension funding, and increased staffing in the Wittmann area. The JPA funding model shows a reduction in the amount of the anticipated increase. North County’s tax rate, under the JPA model, is estimated to rise from $2.8044 to roughly $2.8644 for next tax year. This is a reduction of approximately $.15 cents when compared with the North County stand-alone model for 2017.

Tax Rate Projections ~ Summary

The financial analysis proves that it is less expensive to operate as one blended organization under a Joint Powers Authority than it is to operate as two separate agencies. The bottom line savings achieved through the creation of a Fire Authority ranges from a reduction in expenses of approximately $100,000 for tax year 2017 to an accumulated savings, for JPA versus stand-alone operations with comparable staffing and service levels, of nearly $3,000,000 over the first ten years of operations.

Max Tax Rate

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Conclusion

One of the nation’s leading experts in the field of JPAs and mergers, retired Fire Chief Jack Snook from the Tualatin Valley Fire Rescue District in Oregon and his then Assistant Chief Jeff Johnson authored a book titled, “Making the Pieces Fit, Cooperative Service Through Consolidations, Mergers and Contracts.” Chief Snook writes in his book, “the thought of consolidating or merging the fire department you’ve called ‘your department’ for years can cause tremendous anxiety.” “Cooperative service spells fear for many fire departments and elected officials, fear of the future, fear of losing identity and fear of losing control. It’s a break from tradition in an industry where the only welcomed form of progression is generally in the apparatus and equipment.” Snook and Johnson continue, “The fire department for all practical purposes sells only one product: service. As public servants we must continually seek out ways to supply a high quality product at either the same cost or reduced cost. We owe it to our customers. The formation of strategic alliances between fire departments (districts) is not only a way to cope with the current environment but is a way to provide an efficient and effective means to deliver quick service better and possibly even cheaper. Those individuals who can look past personal agendas, comfort zones and internal or external pressures will ultimately adopt solutions that not only address, but also guarantee, that the needs of the citizens served are met.” As highlighted throughout this analysis, the combination of weakening fiscal conditions, a history of successful cooperative efforts, and a high level of trust between district management and labor groups make the current conditions for a successful regional approach or strategic alliance ideal. Both Sun Lakes and North County can operate more effectively and efficiently by creating one organization to leverage the predicted cost containment and cost avoidance opportunities. Based on the analysis and research, it is apparent that the best option is to enter into a joint powers agreement between North County and Sun Lakes to form a Fire Authority. It is recommended that the individual governing boards move to approve a resolution for a Fire Authority by March 2017, or sooner, with an official JPA start date of July 1, 2017. This would give staff and consultants the needed time to properly prepare for the conversion. The combining of two well-established and successful fire districts is an enormous undertaking with far-reaching consequences. The long-term benefits to service delivery and to fiscal and fiduciary accountability for the citizens of both districts is the primary driver of this initiative. Improving both services and finances is what the citizens demand. The formation of a Joint Powers Authority between North County Fire & Medical District and Sun Lakes Fire District is the best way to achieve those goals.

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Appendix

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Sun Lakes Fire District ~ Stand-Alone (no JPA) Budget Projections

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Sun Lakes Fire District ~ JPA Budget Projections

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North County Fire & Medical District ~ Stand-Alone (no JPA) Budget Projections

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North County Fire & Medical District ~ JPA Budget Projections

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Rounds Consulting Group – Sun Lakes Fire District Assessed Valuation Projections

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James Vincent Group – Financial Analysis Summary

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Sun Lakes Professional Firefighters Association JPA Endorsement Letter

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North County Firefighters Association JPA Endorsement Letter

shared fire and emergency services analysis and …169a74e0-eced-407f...term “shared services”...

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