Fire Chief Stephen Healy
LONG RANGE FINANCIAL FORECAST
Since the District’s Long-Range Financial Plan was first established in 2012, it has been a dynamic document. It changes several times a year. District staff cannot change the document every time there is a minor change, but it is necessary to update the document semi-annually: in January, following the mid-year budget review and in July upon adoption of the annual preliminary budget. These two benchmarks offer the best overall picture of the District’s financial situation. Our goal is to post the updated document at these times.
The District remains committed to having a balanced general fund budget with a 10% reserve and enough revenue in the capital fund to purchase equipment and maintain our essential facilities. In the summer of 2013, as the District began to recover from the economic downturn of 2008, two significant events occurred, which negatively impacted our budget:
1. Our retirement system (CCCERA) lowered its assumed rate of return on investments from 7.75% to 7.25%. What seemed like a small amount at the time (0.5%) had a significant impact on our retirement costs. As a result, the District’s retirement costs are projected to increase approximately $2,000,000 in 2014-15.
2. In mid-2013, staff discovered an accounting error that began in 2006 with the issuance of pension obligation bonds. The problem was corrected, but $2,000,000 had to be recorded as restricted fund balance, depleting the District’s General Fund reserves and requiring a loan from the Capital Projects Fund.
During the first half of fiscal year 2013-14, staff was directed to reduce staffing levels and cut program budgets wherever possible to stabilize the budget. To date, over $800,000 in expenditure reductions have occurred. Staff continues to successfully receive grants, which have provided some relief; however, to balance the budget in FY 2014-15, additional expenditure reductions will be necessary.
The District remains committed to the goals of maintaining service levels, funding capital projects and eliminating unfunded liabilities. In November of 2013, staff introduced a new fund balance policy and brought the District into compliance with Governmental Accounting Standards Board (GASB) statements and Generally Accepted Accounting Principles (GAAP).
Click here to view the Long Range Financial Forecast.
Stephen Healy, Fire Chief
Moraga-Orinda Fire District