The scenario: A meeting between the city manager and the fire chief occurred the other day. The chief was notified that as December 31, 2010, the city will not be providing fire protection services, as it is going to outsource all public services to a private corporation. The city made this decision based on the current budget constraints, the loss of revenue, and the need to provide other essential services to the citizens. The city manager went on to say that the firefighters will be provided notice by HR at the end of this meeting and that the city wants that the chief to remain onboard as a consultant to provide a seamless transition for those services.
This scenario is occurring in many cities across our nation. If it’s not happening to you right now, your elected and paid municipal leadership are looking at ways to cut costs, and the fire service has become a target. We have been placed on notice, and we had better become proactive (not simply react) to this reality.
The recent article “Outsourcing Safety” by Autumn Giusti1 in an electronic periodical, American City and County2, indicates that municipal budgets are continuing to experience shortfalls and that local governments are essentially out of options. Now the focus for budget reductions is on public safety to balance the local government budget–a balancing act that will cut stations, personnel, and look to outside contracting sources to provide these essential services. Having essentially cut other municipal or county services to the bone, cities and local government have now targeted fire, EMS, and police services. In my part of the country, smaller communities are outsourcing to share costs of providing essential emergency and other municipal services. This is a result of the current economic situation, and many more small to medium-sized communities are acting on the concept of outsourcing their public services, either to surrounding communities or to the private sector.
Outsource Bidding for Fire Protection
The city of San Mateo, California, is joining a growing list of agencies vying to take over public safety duties in San Carlos, where officials are considering contracting with San Mateo County for police protection and with the state for fire services. The Bay Area city of 28,000 has faced a deficit every year for the past decade, and the city manager indicated San Carlos has exhausted its budget strategies. In budget meetings, there was a continual request to the city directors to reduce their divisions more and more. One of the comments from one of those directors indicated that the city could close a fire station. The city reportedly spends $9 million a year on police and $6.3 million on the fire department it shares with neighboring city, Belmont. An analysis of a proposed outsourcing of services demonstrated that the city could save $3.2 million on the police department and $1 million to $2 million on the fire department by outsourcing. San Mateo indicated it can provide fire service in San Carlos at a cost of $5.3 million per year, according to an informal five-page proposal. That would represent a savings from the $6.2 million San Carlos spends on its joint fire department with Belmont.
The article goes on to say San Mateo’s quote is higher than an earlier informal proposal from the California Department of Forestry and Fire Protection (Cal-Fire), which says it can do the job for between $3.5 million and $4.3 million annually. The competing proposals suggest a growing interest in a plan from San Carlos officials to outsource public safety services as they try to cut expenses and reduce a projected $3.5 million deficit in next year’s budget.3
Taking just the opposite position, in the city of Milpitas, the City Council has adopted a position that the city shall NOT outsource any Milpitas Fire Department operations to the state of California or other agencies, despite escalating employee costs to provide such services to residents. The council voted 4-1 June 15, with one councilmember dissenting, to approve a request from a councilman to NOT hand over the city’s fire services to Cal-Fire, the state’s lead fire agency. The councilmember proposing the resolution indicated that talk of Milpitas contracting with Cal-Fire that had surfaced in newspaper advertisements and via residents’ Web sites was working against community values. In making the proposal, the councilmember indicated that the community needed to focus on its community values and the budget needs to reflect those community values and not to close police and fire stations, the community center, and the library. The council unanimously adopted a total budget of nearly $130.2 million and approved formal agreements with the city’s major employee unions, which included seeing most city employees agreeing to slash pay by about 7 percent by taking 18 work furlough days, which equates to one and a half days a month.
In Dallas, Texas, the city has recently been presented a proposal from a private ambulance service to outsource its EMS. One of the arguments presentenced in the proposal is that firefighters should not have to deal with EMS issues and should focus on fire only. The proposal indicated a major cost savings to the city if the private sector is awarded EMS service. This is the tip of the iceberg.
Shock and Awe
On June 30, 2010, Maywood, California, fired all of its full-time employees and now will contract out all of its municipal duties. The reason was that the city’s workers’ compensation and commercial insurance carrier terminated Maywood’s coverage because of its claims history over the past five years as reflected in 2005-2010 Loss Summary Statements. In a statement on its Web site, the city says: “As a result, the City of Maywood will be unable to administer a traditional staff.” Shrinking grants and funding from both the state and the federal government also played a role in the decision, according to the statement; but the Mayor sought to reassure Maywood residents that they would not experience a loss of service as a result of the decision. “Our community will continue to receive quality services,” she wrote. “Maywood’s streets will continue to be swept, our summer park programs will continue to operate, and our waste will be collected and hauled as scheduled. Further, the community will be protected and patrolled by the Los Angeles County Sheriff’s Department.”
Where did this all start? Reportedly, the Los Angeles County Sheriff’s Department has provided contract police services since 1954 and claims it was the first agency to do so.4 Outsourcing and combining services is not a new issue for newly incorporated cities for many municipal services. Many newer cities have outsourcing of certain services as part of the incorporation plan. For example, when Deltona, Florida, incorporated 15 years ago with 86,540 residents, it relied on the county sheriff’s office for law enforcement.
This may be setting the trend for smaller cities and towns to choose to outsource those municipal services. The purpose is to save money by consolidating certain municipal services, especially public safety. In Deltona, there were major savings in outsourcing those police services–to the tune of about $3 million dollars.
The City of Sammamish, Washington, incorporated in 1999, has been a contract city, outsourcing its police protection to the county sheriff and fire protection to a local fire district.
Currently, there is a push to form a regional fire authority under the applicable state of Washington statutes enabling cities and fire districts for form a single entity with multiple partners of cities and other municipalities. The purpose is to create operational efficiency and hold down the cost of services for those cities and fire districts participating in this regionalization.
When we look across the country, read the newspapers, and look in our own trade periodicals, the trend we see is that in this period of declining revenue, cities are seeking viable alternatives to public services. In my experience with fire department budgets, about 70 to 75 percent of a fire department budget is for personnel costs, and those costs are rising every year.
Adding in other municipal services like police, public works, planning, and administration, just to name a few; the cost of providing those services rises faster than the revenue to support them. Administrators are looking for a way to balance the budget.
In a recent Fire Engineering Legal Issues podcast entitled “Cutbacks in the Fire Service,” in which we discussed closing firehouses and reducing the number firefighters and other essential fire protection services, it was pointed out that there are numerous standards providing a basis for a city or community to provide a safe fire response, not only for the firefighters but for the citizens.
The question was posed, “What is the legal jeopardy for those communities cutting back fire services?” Currently, there is no answer, but it appears that common sense, when looking to reduce the community budgets, has been tossed out the window when it comes to fire protection services.
From my point of view, politicians are under fire from all sides. The easiest thing for them to do is to look to alternative sources for the same services: They believe that they can outsource those services for less money, and the fire service is starting to look like other municipal services–parks, waste management, and public works–but with greater benefits and bigger pay raises.
Our other downfall is our inability to market our own services to our own elected officials. Most politicians do not know what we do or when we do it. They do see, however, our 24-48 hour shifts, side jobs, and firefighters driving high-end vehicles and living well in this economic recession. We are not helping ourselves here.
Another contradiction in our service is the continuation of the myth that we can provide the same level of services with fewer dollars. We continue to reassure the community that we can provide services in spite of decreasing revenues and reductions in firefighters. What the community needs is a dose of reality We must tell them the truth: We cannot do the job with fewer dollars, and we are seeking their assistance to safely provide fire and EMS services.
We need to tell the community that it may take more time to arrive at their emergency and that we will arrive with fewer resources. That is the new reality. Is the community willing to take that risk? I think it is, since it continues to vote down tax initiatives for fire protection and other essential community services.
The taxpayers are getting tired of paying more taxes to keep a certain group of government workers working. The taxpayers themselves are already suffering from job losses, loss of home value, layoffs, reduction or elimination of health benefits, and other adverse effects of the current economy. They are fighting new taxes or a continuation of existing taxes to reduce their personal tax burdens.
I believe that the taxpayers are probably willing to play the risk game and not vote for higher taxes. The result is reduced emergency services.
What is the future for the fire service in this period of declining revenues, budget cuts, and the increasing trend to look at outsourcing as an alternative? Not being apocalyptic, our industry will undergo tremendous changes over the next five years. Private-sector fire service and ambulance services are finding an audience with the elected officials.
Certainly in the big cities the unions are very influential; but as we see in New York City, the budget discussion placed 20 fire station and hundreds of firefighters on the chopping block. Thank God that was avoided, but it should be a wakeup call to the fire service that our municipal mangers are targeting the fire services. This is a national trend–budget restrictions and the closing of fire stations and reduction of firefighters.
As a councilmember in Milpitas indicated, there has been a recent and approved formal agreement with the city’s major employee unions that included seeing most city employees agreeing to slash pay by about 7 percent by taking 18 work furlough days, which equates to one and a half days a month. This is the new reality.
The fire service needs to look inwardly and work aggressively with elected and appointed city or town officials to find the creative solution to end this crisis, which means doing business differently; seeking to differentiate ourselves from the cops and public works; working with the unions on cost-cutting or cost-saving measures; and finding a different and efficient way to do business. We are talking about real money here. We need to look at some alternative source of funding.
Fee-for-service is the white elephant in the room–for years a forbidden funding alternative in the fire service industry. Fee-for-service has been a great source of revenue for EMS and other private business. We need to change our way of thinking and get out of the box on these issues
Source:http://www.fireengineering.com/index/articles/display/8679725240/articles/fire-engineering/leadership/commentary/2010/07/murphy-outsourcing-service.html
