Fire Chief Randall Bradley
DRAFT LONG RANGE FINANCIAL FORECAST
The major economic downturn that began in 2008 has decreased District property tax revenue, and significantly increased pension costs as well as the District’s pension Unfunded Actuarial Accrued Liabilities (UAALs). Over the past two years, in order to maintain service levels, the District has had to utilize a small amount of reserve funds, reduce administrative staff by five full time positions, freeze salaries and health care benefits, renegotiated service contracts and put a new cost recovery program (vehicle accident cost recovery) in place. During this period the District has also been very aggressive in applying for and obtaining grants to offset capital equipment costs.
As the District begins to stabilize and recover from the economic downturn it is important to develop and implement a long range financial plan that maintains and increases public confidence by ensuring financial and service level sustainability. As part of this fiscal planning process, the following goals were developed:
- Maintain and/or improve service levels
- Fund required capital equipment and facility replacements and/or renovations
- Maintain a minimum of 10% of annual operating costs in reserves
- Eliminate Unfunded Actuarial Accrued Liabilities (UAAL)
- Eliminate Pension Obligation Bond (POB) debt per bond schedule
The following strategies to meet these goals were developed:
- Offer competitive salary and benefit packages that will enable the District to maintain a quality workforce
- Lengthen the apparatus replacement schedule to a 20 year replacement cycle
- Hold expenditure increases to half of economic growth rate and utilize the difference to fund UAALs
- Create a second tier pension system to reduce pension costs and limit future unfunded liabilities
- Through the collective bargaining process change the employee health benefit funding model to reduce the Other Post Employee Benefits (OPEB) UAAL
- Utilize a portion of the Capital Project Fund to augment the General Fund in years General Fund dollars are not available to pay down UAALs
This long range financial forecast achieves these goals utilizing the strategies outlined above, a retrospective analysis and application of past performances of assessed property values, district operational costs and the District’s pension system’s ability to earn expected return on investments. On at least an annual basis each assumption will have to be reevaluated and the tables updated to reflect actual performance. Although the assumptions are fairly conservative, failure to meet the assumed goals will require additional analysis and could lead to future service level and/or employee salary and benefit adjustments.
The District has been involved in lengthy labor negotiations to develop agreements that will allow for the long term sustainability for the District. While the labor groups have met and negotiated in good faith, the District has not yet been able to reach agreement on terms for successor labor contracts. While the District look forward to further good faith negotiations with its labor groups, it is also important for the District to issue this draft report as part of the District’s overall efforts to promote and ensure the District’s long term financial health.
Click here to take you to a copy of the Draft Long Range Financial Forecast and also a list of the elements and associated assumptions and justifications used to develop the Long Range Financial Forecast (plan).
Randall Bradley, Fire Chief
Moraga-Orinda Fire District