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SFD Second Public Budget Workshop Minutes

Sedona AZ (April 12, 2012) –  In the interest of fairness, the Sedona Eye publishes the following April 9, 2012 Sedona Fire District Board Public Budget Workshop Minutes without editorial comment and or edits:

Station #1 – 2860 Southwest Drive – West Sedona – Multipurpose Room

Monday, April 9, 2012 / 4:00 PM 

~ MINUTES ~

I. CALL TO ORDER/ROLL CALL.

Board Present: David Blauert – Board Chairman; Charles Christensen – Board Clerk

Craig Dible, Phyllis Erick, Ty Montgomery – Members

Staff Present: Kris Kazian – Fire Chief; Terry Keller – Assistant Chief; Gary Johnson – Fire Marshal; Sandi Schmidt – Finance Manager; Tricia Greer – Recording Clerk

Others Present: 14 Members of the Public

Patrick Whitehurst, Sedona Red Rock News

Mr. Blauert opened the meeting at 4:00 PM.

II. SALUTE TO THE FLAG OF THE UNITED STATES OF AMERICA AND MOMENT OF SILENCE TO HONOR ALL AMERICAN MEN AND WOMEN IN SERVICE TO OUR COUNTRY, FIREFIGHTERS, AND POLICE OFFICERS.

Mr. Christensen led the Pledge of Allegiance and moment of silence.

III. PUBLIC FORUM.

Scott Jablow – Midway/Chapel Area: I’d like to say that I was unable to attend last week’s budget workshop, but read the published Minutes. I was very impressed with Chief Kazian’s report. For the short time that the Chief has been in town, with the help of his great staff, it appears he understands the budget concerns of everyone and has his finger on the pulse of this organization. I’m not surprised that he also communicates this knowledge very clearly and simply so that lay people can understand the seriousness of what SFD is facing for years to come. During this Board’s tenure, it’s not been a secret that the Board hasn’t trusted any of the SFD staff which has caused so many of them to leave. Over the strong and vocal and most often, heated criticism of the community, this Board has felt the need to spend over $38,000 so that the Board could have a Chief that you could all trust. Now, when faced with our new Chief’s logical explanation about the mil rate, one Board Member still has a problem accepting the proven facts given by the Chief that you’ve all just hired.

On page 6 of the Minutes of last week’s budget workshop, there was discussion and recommendations of what to do with the mil rate and Mrs. Erick stated, this is a quote, this is a quote… I understand this is a quote: This is the way I have seen it ever since former-Business Director Karen Daines presented it that way. I did not buy it then, and I do not buy it now – direct quote from your Minutes.

I have real concerns about this Board Member’s statement. If all these professionals and highly educated people including your newly hired Chief have explained the reasons to raise the mil rate, clearly and concisely, and this Board Member still fails to buy it, I think that the taxpayer in the district deserves to know why she feels that way, and what functional information does she have to prove otherwise.

Mrs. Erick… At this point, Chairman Blauert explained there are no comments between the Board and public and they will not debate.

Mr. Jablow: I’m not debating. I’m giving her the courtesy. I expect the same. I don’t believe that this Board Member has any formal financial degrees or background or else she would proudly state that information at either of the two candidate forums that I have attended the past few weeks. Or, it would be posted on the SFD website. And, yet, when faced with facts by professionals, she doesn’t buy it then and doesn’t buy it now. This Board Member fills an elected position and represents the community. I

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think she is duty-bound to explain why she doesn’t buy it or her lack of understanding of the topic. She should present her educated reasons for her distrust of so many professional opinions. These comments are my own and do not represent any of the organizations, City Boards, or Commissions in which I participate. Thank you.

Rich Collister – West Sedona: I’d like to thank the new Chief for his last budget presentation. It was very informative. The material and the predictions sound right on. It seems that Chief Keller and Karen Daines did a similar workshop with nearly the same information and predictions in their workshop a few months ago. It seems that the experts – you Chief, Chief Keller, Karen Daines – all agree on where the Sedona Fire Department stands regarding the budget. It appears that the ones who don’t agree are the non-experts who sit up on the Fire Board, and this is reflected in a statement by Ms. Erick, one that was quoted already, it’s in the Minutes – I didn’t buy it then and I’m not buying it now. I know that she has an important job of scheduling appointments for a doctor’s office; however, that job pales in comparison to having the knowledge and expertise in setting an operating budget for an organization which protects life and property.

And Mr. Blauert, when McGladrey first got here, and arrived here to give their initial report about the audit, you exclaimed, we can now lower the mil rate. Seriously, Dave? It shows a complete lack of understanding and knowledge regarding the Sedona Fire District. And a word about the McGladrey audit, $190 piece of dog dirt. Three empty suits from McGladrey with no knowledge of fire operations… Mr. Blauert warned Mr. Collister he was “pushing it”.

Mr. Collister: I’m talking about McGladrey, I’m not talking about you.

Board Clerk Christensen commented McGladrey has fire service experience and it is in their report.

Mr. Collister said he saw nothing about knowledge of fire operations; Mr. Christensen stated he would show him later.

Mr. Collister: It’s my opinion and I have a right to my opinion. I am a taxpayer. Three empty suits from McGladrey with no knowledge of fire operations give a report to unknowledgeable Board Members who know nothing about fire operations in the district they govern over. You could have saved $190,000 by listening to your own experts like the Chief and the Business Director of the Sedona Fire Department and you know, if that wasn’t so pathetic, it would be funny. So, thank you, Chief and I’d like to thank the members of the Sedona Fire Department.

 IV. BUDGET WORKSHOP.

A. SFD Fiscal Year 2012/2013 Budget Discussion – Revenues and Expenditures.

Mr. Blauert asked if there were any comments from Board Members before beginning the Workshop.

Mr. Dible replied that ever since he became interested in SFD six or seven years ago, he heard statements repeatedly, which he would like to fine-tune. He said the first one being Sedona Fire District is unique and cannot be compared to other fire districts, as it has 168 square miles to protect, that Sedona has 4 million tourists and SFD is responsible for their safety.

Mr. Dible stated there are other fire districts all over the country that are similar; he used Durango, Colorado as a comparable and said they have 171 employees, 16 stations, 325 square miles with a tourist-based, retirement community and about 17,000 people. Durango has structure firefighting; EMS caring for approximately 2800 patients annually; six fully-licensed life support ambulances, three transport rescues and 85% of their calls are EMS; furthermore, Durango has initial wildland firefighting capability because they have the urban-wildland interface and are trained through the national wildland coordinating group and responsible for initial attacks of wildland fires in their areas, just as SFD.

Mr. Dible said Durango has a Hazardous Materials team as does SFD; they are in the process of working with neighboring areas to provide HazMat response for more remote locations; they have a technical rescue team formed in 2002 including vertical cliffs, steep embankments, gorges, ice, and Swiftwater challenges working through Mutual Aid with other agencies, as SFD does. He explained Durango has a tactical medical team, unlike SFD, which was formed in 1997 and contains specially trained medics for local law enforcement agencies.

Mr. Dible then addressed SFD’s 168 square miles and showed a map of the district. He stated SFD’s primary area of activity is along the two corridors – 89A and 179, although SFD also responds to Oak Creek Canyon to “pick some poor guy off a mountaintop or pull someone out of a river”, but there are big areas to the northwest and southeast that are never going to see a paramedic or a firefighter boot-print

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because there is nothing out there. Mr. Dible believes the more realistic thing to say is we have about half that area in which we are active and the rest of it never sees any of our resources.

Mr. Dible then addressed statements concerning “4 million tourists”; he referred to the latest Sedona Chamber of Commerce report to the City which talks about number of internet site “hits”, and that 325,000 visitors came into their visitor center, occupancy rates, average price for hotel rooms, but nothing about the number of 4 million visitors and yet, Mr. Dible stated, “It’s picked up as fact” and wondered where that number started; he then gave several examples of the number 4 million visitors quoted in websites.

Mr. Dible pointed out that by straight-line division, the number 4 million would mean 11,000 visitors a day, 77,000 per week, or 333,000 monthly.

He then pointed out Grand Canyon National Park has an elaborate system of counting visitors with statistics going back to 1919; he reported for the year 2011, the Grand Canyon had 4,298,178 tourists; Mr. Dible believes what has happened is people have surmised that if the Grand Canyon gets 4 million or more tourists annually, then they probably come to Sedona first, which is where Mr. Dible believes the figure began; he stated he would be happy to amend his comments and change his opinion if other facts support the number. Mr. Dible commented Sedona has many tourists and SFD does need to protect them, but has a problem with the number 4 million tourists with no basis in fact.

Fire Chief Kris Kazian then began his PowerPoint presentation (attached to these Minutes).

Chief Kazian said this presentation would be a quick recap and clarification for moving forward after last week’s Budget Workshop. He said he has heard people say they want the Fire Chief to be the Fire Chief and stated this budget is his first opportunity to demonstrate how he intends to operate SFD and the Board should have no question about where money is going or how things will be handled during his tenure.

Chief Kazian said the proposed budget is $12,323,151 including a Training Officer and hiring one of the three current vacant Firefighter positions, and start-up costs for the Reserve program; it does not include capital projects such as moving dispatch, upgrades to dispatch, or building a Midway Station; it deletes many of the vacant positions formerly held in the past budget.

Additionally, the proposed budget maintains the General Fund (Fund Balance) which is the 15% allocation directed by Board Policy #2008-1.

He recommended a $1.65 mil rate which gives proposed taxable revenue of $8 million and with additional revenue received through ambulance billing and other fees, gives $10,418,000 with appropriation of $1.904 million from the capital reserves leaving a balance of $2.1 million in reserves.

Chief Kazian explained the Policy-directed General Fund allows SFD to handle expenses in the first quarter before receiving new tax dollars in November and May; if there is no money in this fund, SFD would have to issue warrants for additional money and pay interest to operate SFD during the period it is awaiting tax money.

Chief Kazian said the budget is projected out at 3.85% to 4% increase annually, which does not include huge capital expenses such as a Midway Station or dispatch. He stated if SFD goes to a $1.65 mil rate, in Fiscal Year 2013/2014, staff would most likely be asking for $1.91 mil rate taking the balance of the capital reserves and adding it to come up with the proposed budget.

He said the following year in Fiscal Year 2014/2015, SFD would have to go to $2.63 mil rate and no capital reserves to carryover, which makes a very large tax increase for our residents to meet the projected budget.

He thanked Mr. Dible for providing historical information and showed a slide in his presentation of a pie chart from Yavapai County in 2007/2008 stating SFD’s percentage of property taxes was 31%, the largest “piece of the pie”; he then showed a similar Yavapai County chart from 2011, showing SFD at 18% in 4th place on the tax bill; SFD is providing much leaner, efficient, and cost-effective service than in the past.

Chief Kazian stated he is not here to debate whether an increase in the mil rate is or is not a tax increase, but the costs to operate SFD have not gone down – fire trucks, ambulances, energy, etc. all cost more.

He said the mil rate is a multiplier that provides SFD with tax revenue necessary to operate efficiently and effectively. He said he has heard individuals say they cannot afford to pay more in taxes; that is why staff is trying not to raise the true dollar amount SFD charged citizens last year and wants to keep it as close to the

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same amount as possible.

Chief Kazian said regardless of semantics, SFD is “dollar for dollar” out for neutrality; he said there is no hidden agenda or “smoke and mirrors”, it is just the fact.

He then provided a slide of a tax bill of a home in the Village of Oak Creek within our fire district in 2009 showing the taxpayer paid $856.36 to Sedona Fire District; in 2010, that same homeowner only had to pay $615.00, and for 2011, on the same house with decreased assessed value (AV), the homeowner is paying $460.22, which is a 46% decrease;

Chief Kazian compared that decrease to the television program, The Biggest Loser, and showed a picture of a gentleman named Jay who lost 45% of his body weight. He asked all to keep in mind the picture of “Healthy Jay” as he goes through the presentation and stated it is important to realize that if we do not raise the mil rate, the capital reserve balance will decrease. He pointed out the taxable revenue decreasing from $6.952 million to $6.1 million to $5.8 million would be the lowest in more than a decade.

Chief Kazian stated he would prefer to incrementally raise the mil rate to get where SFD needs to be, rather than necessitate a huge increase for our citizens at once.

He showed a slide indicating if SFD remains at $1.40, at the end of Fiscal Year 2012/2013, SFD would have had to use most of the $4 million in reserves and have only $854,000 remaining; that amount would then be used in 2013/2014, leaving SFD with zero reserves.

He then showed a slide of projections at $1.65, the house previously discussed in the VOC would receive a $4.51 increase, but SFD could set the mil rate to make that zero; however, the problem is that Coconino County has decreased at a different rate than Yavapai, which means a Coconino County home valued about the same as the VOC home would receive a tax increase of about $30; he said because the two counties depreciate at different rates, it is very difficult to match up the taxes equally; he also reminded the Board that not every house depreciates at the same rate, so some homes may actually increase in AV, some decrease, and some stay approximately the same.

Chief Kazian said that is why even if we stayed at $1.40, he could not guarantee everyone’s tax bill would be lower than the year before. He reported that Yavapai County provides a higher percentage of SFD’s tax bill than Coconino County, so his goal is to help the greatest number of district residents.

Chief Kazian said staff has included approximately $400,000 annual capital improvement line item, so that when a fire truck or ambulance is needed, we have an amount built-in instead of an up and down capital amount; this is how public administrators plan wisely.

He said the final report of regional dispatch consolidation was provided to him and indicates if SFD chooses to participate, there would be a $2.166 million upfront cost to move our dispatch center; he stated there would be savings in future years and money would be recouped resulting in a “break even” point and possibly, savings, but that amount is not built into this budget and if the Board chooses to join, we must figure out how to include funds; he said the Midway Station, whether financing, cash, bonding, or other option, must also be factored into the budget; he also mentioned Stations 1 and 4 need renovating.

Chief Kazian said SFD must plan where it wants to be in 5, 10, 15, or more years. He said our calculations are right in-line with Arizona Fire District Association recommendations for the State.

He pondered how SFD would maintain its core services and said the only way possible is if the Board considers raising the mil rate or deal with the cascading effects of not doing so. Chief Kazian said this is not a scare tactic; it is just factual information to share related to budgetary, financial concerns for SFD operations.

Chief Kazian is also considering opportunities to increase revenues. He showed a slide regarding maintaining core services and relayed some of the statements made by Board Members last week.

He said we must identify what exactly is a core service and if identified as not being able to maintain, what are we willing to cut?

He then restated his commitment, as follows: “I’ve been hired by you the Board to run as Fire Chief of Sedona. I am making you that promise that I spoke of earlier, that I will now and forever operate with fiscal responsibility and dedication to maintain the services we do have here in Sedona.

I have a job as a Fire Chief and that’s to provide effective fire and EMS services for everyone, maintain sound business practices, and have a staff that’s appropriately sized to handle the office part of the job. It’s your job as the Board to see that we make sure we are operating with the necessary tools and the resources needed to be effective.”

He then reminded all of “Healthy Jay” who was 45% leaner than he started and that

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SFD is 46% leaner in taxes than a few years ago; he asked can we continue to operate that way losing, losing, and losing – because at some point, “Jay” does not look very healthy anymore and nor would the Sedona Fire District.

Chief Kazian said SFD is operating lean and efficiently, and staff is asking for Board support to maintain core services and work to answer questions and through our efforts, show we are providing the best service for the best price. Chief Kazian reminded the Board that numbers presented in their budget binders were realigned and moved around to better reflect how we operate, but do not show true increases in those areas.

Mr. Blauert thanked Chief Kazian for his presentation and asked for Board questions. After a brief discussion, it was determined the Board inadvertently received the slide handouts from a previous version of Chief Kazian’s PowerPoint;

Mr. Dible asked for the Board to receive the updated version. Mr. Dible then distributed a handout he prepared showing SFD Annual Budget amounts from Fiscal Year 2002 through the proposed budget for FY 2013 (attached).

Mrs. Erick commented for FY 2012, people should be told there was contingency included;

Mr. Dible said the budgets on the handout are not what was actually spent, but rather, was given to the county as budgeted.

Chief Kazian also asked the Board to recall that the $15.9 million budget in FY 2009 included millions of dollars allocated for capital projects so that number looks inflated as well, just as Mrs. Erick mentioned for this year’s budget.

Mr. Dible asked if SFD had spent $11.2 million of the current budget of $13.28 million.

Chief Kazian replied as of 3/31/12, the current budget is at $7.6 million spent year to date;

Finance Manager Sandi Schmidt stated she believes SFD is on-target to spend $11.2 million, but that amount has not been yet been spent.

Chief Kazian said we are at 59% spent of the budget with 75% of the fiscal year completed, and some is contingency, although the $190,000 paid for the McGladrey report has been removed from contingency;

Mr. Dible commented it appears we will have spent $11.2 million of the $13.2 million at the end of the fiscal year;

Chief Kazian said staff is estimating $4 million carryover in capital reserves at the end of this fiscal year.

Mr. Christensen asked about the capital reserve and general funds;

Chief Kazian said he believes at the end of this fiscal year, there will be about $4 million in capital reserves and the general fund would have the Board Policy-directed 15% of the $13.28 million funds, at a little less than $2 million.

Mr. Christensen said a previous Board set the $2 million as a pad to cover incidentals during the period of time when awaiting tax dollars;

Chief Kazian said that is for operating expense of the first quarter of a new tax year;

Mr. Christensen asked why we are not using the capital reserves;

Chief Kazian replied any unspent dollars, such as savings in overtime, get rolled over into the capital reserve fund at the end of the fiscal year, and staff is making an educated guess that it will be approximately $4 million.

Mr. Christensen said as a taxpayer and for his constituents, he believes SFD is holding a lot of money in reserve that is the taxpayers’ and he does not “like this picture” with that much money in capital reserves;

Chief Kazian said he appreciates that and looking at the graph going back to 2009 when SFD was at $15.9 million, we have been systematically “chipping away” at reducing it and, as stated, in two years, we will have none; he said every public service entity uses carryover, but there have been large capital projects that were supposed to have been funded and were not; he said that is where this money was earmarked and saved up by previous Fire Boards, but capital reserves will be at zero in two years; he said if those funds are used up more quickly, the problem would be the mil rate would “skyrocket”; therefore, he is trying to get incremental increases in the mil rate.

Mr. Christensen said he would like to see the capital reserve fund put back into the budget and continue to conserve as he sees areas where there could still be cuts, such as McGladrey’s recommendations; he said he wants to see the W-2 incomes of employees this year to see the amount of overtime spent.

Mr. Dible commented consultants on the Regional Communications Center report are requesting a meeting “sooner rather than later” to see if this joint project can be accomplished; he asked Chief Kazian what would be proper procedure;

Chief Kazian said he spoke to Kevin at IXP today and could arrange a meeting;

Chief Kazian said there are a couple of items in the report that are already “off the table” and there are pros and cons in the project, which will require a long discussion with the Board at some point.

Mr. Dible said a

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decision would have to be made fairly quickly to get it into the budget;

Chief Kazian replied he, personally, believes it would be difficult to get it into this budget year based on a couple of dynamics and there would be no savings whatsoever in the first year or probably the second or third year;

Mr. Dible said there are start-up costs and it is a long-term commitment with the savings coming in five or ten years.

Chief Kazian will try to facilitate a meeting as soon as possible, but there much work to be done on this project and it is not a “turnkey” operation or a “slam dunk”. 

Chief Kazian stated he wanted to respond to Mr. Dible’s earlier discussion.

He said SFD can certainly be compared to other fire districts, but there are some unique challenges at Sedona Fire; he said whether or not there is usable space in the 168 square miles of the district, we are still charged to protect it and most importantly, it is our response times, even in the main corridors, that are bad; he said he is not going to state how many tourists Sedona has, but he was here over the weekend and there were a lot of people visiting; he asked if there were hospitals in the towns Mr. Dible mentioned, such as Durango, Colorado or in Park City, Utah, because Sedona has an Emergency Room, but transporting patients to the hospitals in Flagstaff or Cottonwood takes time; he said there are many variables involved that he would have to spend months evaluating to make a fair comparison of fire districts and have a logical discussion about true costs; he said we should all be careful in our comparisons because we know what SFD does and the timing of our calls.

Chief Kazian said we do not want to use the word “unique” in order to “do this” or “have that”, but we are much different from the fire district from where he came and there are not very many places similar to Sedona.

He said all he cares about is running SFD’s operations as efficiently and effectively as possible and his budget proposal is not full of anything that is not healthy or not needed for our organization.

Chief Kazian said Mr. Christensen spoke of other places we could cut and if so, he will find them, but needs time to do so.

Mr. Dible said he does not want to dwell on his opening statements, but definitive comments like Sedona having 4 million tourists, have always bothered him and he understands SFD is not the average fire district, but there are similar fire districts such as Taos, New Mexico and other areas.

Chief Kazian replied he is not debating with Mr. Dible, he just wants to make sure we are keeping comparisons “apples to apples” and keep the focus on a budget of what we are trying to accomplish.

Mr. Blauert complimented Chief Kazian and staff on the easy-to-read budget;

Chief Kazian said the staff put this budget together before his arrival and credited former-Business Director Karen Daines, Chief Keller, and Mrs. Schmidt for their work and the award-winning budget format.

Mr. Blauert then stated we would work through the budget book section by section to allow Board to ask any questions, as follows:

Fire Chief: There were no questions or comments.

Fire Board: This includes an increase of about $60,000 for legal fees.

Mr. Montgomery said he would not reduce that amount based on what has happened so far and does not want to be “upside down” in budgeting as we are this year.

Chief Kazian pointed out just because an amount is budgeted does not mean it has to be spent to the maximum.

Mr. Christensen commented the legal fee budget has gone “ballistic” and Board Members are supposed to contact the Board Chairman before going for legal advice; he believes a lot of legal advice has been solicited that was highly unnecessary.

Mr. Blauert said most of the legal bills of the last few months have not come from the Board’s actions, but the public itself;

Mr. Montgomery said that is not true and he has reviewed the legal invoices;

Mr. Christensen said the public should not be authorized to contact the attorney;

Mr. Montgomery agreed, but said at the last few meetings, it has been thrown out that the public is creating the excess in legal bills which is not true.

Chief Kazian said the legal aspects of our budget must be addressed and another $60,000 was allocated, but he hopes most of that will be carried over for next year; he said a procedure must be in place and enforced in how the attorney is used.

Mr. Montgomery said we do have a procedure and that is the Board must go through the Chairman, unless there is an issue about the Chairman.

Chief Kazian said we could put this item on a future Board meeting agenda for discussion if the Board so chooses.

Pension Board: Decreased from $5,400 to $3,500; there were no questions or comments.

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Fire Marshal: Mr. Montgomery said he would hate to think SFD is charging taxpayers for inspections, but yet, it could be a viable revenue for this budget area;

Chief Kazian said that is a very common practice and it would not be a large amount charged, but could help with enforcement and reduce re-inspections.

Mr. Montgomery said previous Boards have determined not to charge residents for amounts above what insurance pays for ambulance fees, and he agrees with that philosophy; he hopes the charges for inspections would be to business owners, and not necessarily to the building owners and could be a “slippery slope”.

Chief Kazian said we are already on a “slippery slope” with the mil rate, so we are trying to look for alternative revenue sources; he said this would not be a large amount but could offset some costs of the Fire Marshal’s budget.

Mrs. Erick asked if our ambulance billing write-off was approximately $200,000 for residents’ ambulance fees;

Mrs. Schmidt replied some years are lower or higher;

Mrs. Erick asked how we write-off insurance deductibles and said, for example, in doctor’s offices for indigent patients, there is paperwork required to do because deductibles are not automatic write-offs;

Mrs. Schmidt said for SFD specifically, it is balance billed and some residents have insurance and others do not, so a deductible is not as important because the entire amount could be written-off; SFD writes off whatever amount is out-of-pocket for a resident after insurance pays or if a resident has no insurance.

Chief Kazian said the history of SFD was not to bill residents for additional services; he said he spent time with SFD’s Billing Specialist last week and she is very knowledgeable of applicable laws and follows all rules and regulations; he said we have captured over 91% of our billable rates, which is very good; he said they could look into Mrs. Erick’s question about writing off deductibles and get an answer to her.

Mrs. Schmidt said it could just be the difference between a private doctor’s office and a governmental agency.

Mr. Blauert said SFD is doing a very good job in ambulance billing;

Chief Kazian said that is another area we are exploring for generating additional revenue by adding other agencies for EMS billing.

Mr. Blauert stated we should probably make it clear that in this section of the budget, we are not just charging fees without a service and especially for new construction;

Fire Marshal Johnson explained we interact with the City of Sedona and both counties; however, the review, permits, and inspections are all done out of his office at SFD.

Mrs. Erick referenced the Salaries and Wages section wherein it states, FY 2012 had 10% reduction to six months wages and asked for an explanation.

Chief Kazian replied that was the 10% of wages for six months that was held back for a total of $628,000; he asked the Board to recall a few meetings ago where staff requested those funds be put back into the budget;

Mrs. Erick asked if that was the contingency;

Chief Kazian said it is part of the contingency and the reason SFD survived the 10% holdover was because of unfilled positions which allowed us to absorb that amount; he said there is no such contingency put into this proposed budget, this represents actual salaries of personnel currently working at SFD with the exception of the proposed Training Officer and one Firefighter.

Fleet: This was reduced by about $11,000.

Mr. Christensen said he has watched this area for years, and is an area he would like Chief Kazian to look at very carefully; he said there are a couple of areas that are “way overkill” such as providing vehicles for staff and the four-wheel drive vehicles will soon be maxed-out for mileage and he believes they should just be phased out; he said we do not need two mechanic trucks to service our limited fleet; he said there are other vehicles on which we are paying insurance and maintenance that should also be eliminated.

Chief Kazian said the past Chief reduced the fleet by about 10 vehicles and referred back to our “Healthy Jay” and although there may be a couple more vehicles to go, he would look into it and make a decision; he said Telecommunications personnel need four-wheel drive based on driving to communication towers, but as promised, he will be looking into all options for all areas.

Mrs. Erick asked Chief Kazian if most departments employ full-time mechanics or do they outsource;

Chief Kazian replied he does not know how to answer for “most” departments, but SFD has had a mechanic for decades and he would say many departments would like to have a staff mechanic, but that many fire agencies are in municipal departments and have apparatus worked on by their city public works; specifically for fire districts, he believes many have their own mechanics, although he does not know if it is “most”, but again, stated he would be looking into this area in going forward to the most effective way to operate and if SFD were to outsource fleet maintenance, it would still cost a large amount of money and we might not get as quick or as good service; he plans to evaluate all budget areas and pointed out the $11,000 reduction.

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Business Director: Mr. Montgomery asked how Chief Kazian plans to allocate this position’s functions;

Chief Kazian replied we are going to reallocate staff to cover them and have not budgeted for a Business Director in this proposed budget based on our financial situation and being in “survival” mode.

Human Resources: Chief Kazian said this is, again, reallocation of responsibilities to current staff and there is no intention at this point of filling the HR Manager position; he said there is some money in the budget for HR consulting and training.

Finance: This is another reduction of $24,000.

Administration: The Executive Assistant position was reallocated from the Fire Chief area to the Administrative budget area.

Ambulance Billing: Chief Kazian said as previously discussed, SFD has a collection rate of 91% at a cost of 5.9%, which is incredibly low; he said if other parts of our organization could be quantified as easily, you would also see great efficiencies in those areas.

As mentioned, there is a potential to bring on other agencies for this service, and if so, another person may need to be added which would be offset by additional revenue generated.

Mr. Christensen asked if there would be a cost savings if this were outsourced;

Chief Kazian said based on SFD’s percentages and aggregate amount, it takes in about $1.5 million annually and does not believe it could be done any cheaper; he said it happens here with “perfection” and is amazed at how efficiently this area operates and at the rules our Billing Specialist Kris Ahern must follow; McGladrey recommended not outsourcing ambulance billing based on our collection rate.

Mr. Blauert said he believes the average collection rate is 87%.

Mrs. Erick asked how many claims SFD handles annually and the dollar amount;

Chief Kazian said he would ask Mrs. Ahern to provide that information.

Regional Communications Center: Chief Kazian said this is another area where reallocations have occurred in order to get a true accounting of dispatch costs; he said the $596,000 has been put into the User Group budget, which is the amount SFD “pays” itself to dispatch.

Mr. Dible commented it is a “moving target” at this point;

Chief Kazian said there are options and potential and he does not want to make a decision too quickly and not do what is best for SFD.

Mr. Blauert said before finalizing this budget, he requests getting a better view from IXP consultants for the dollars, as well as the time periods for getting this on-line, to consider it more intelligently.

Chief Kazian said he found out additional information above the report today that he needs to discuss with the Board, but at a more appropriate time. Mr. Dible said there is a consensus that it is a good idea, but it is a matter of who will pay for it;

Chief Kazian said it is approximately a $6.5 million venture;

Mr. Dible said IXP is a national firm with great experience, but SFD must determine if it is worth the significant start-up costs and if five or ten years in the future, can save money in perpetuity.

Chief Kazian said he could not say if it is a definite yes or no, but it is a definite maybe.

Mr. Christensen asked if we are actively trying to increase our customers’ rates;

Chief Kazian replied he has had conversations with an agency, but it would be inappropriate to discuss it now.

Telecommunications: There was a $27,000 reduction in this section’s budget.

Chief Kazian said a part-time position was eliminated from this section.

Assistant Chief/Operations: There was a slight increase in this budget;

Chief Kazian said that was probably commensurate with the Fire Chief’s budget proportionately.

Operational Wages and Benefits: This section was reduced $600,000 from last year;

Chief Kazian stated the reason is some of the Paramedics were moved from this account to the EMS account for DHS reporting and one Firefighter was added in; he said there are three unfilled Firefighter positions and he is recommending filling one of those positions in this budget, and one per year for the following two years.

Training: Mr. Blauert said this is an area that needs more attention, and “if you don’t train your people, we can’t have a good response team”.

Chief Kazian agreed we must provide training and a Training Officer is

4/9/12 SFD Budget Workshop Minutes Page 9

included in the proposed budget, although not in this particular section.

Mr. Blauert asked about the Equipment under $5,000 section;

Chief Kazian asked Chief Keller to clarify;

Chief Keller stated the increase is due to programming technology to connect stations for live video training, which saves money in having to repeat the same training.

Chief Kazian said he wrote a grant in Chicago for 17 different fire stations and 7 different agencies for $680,000 and believes $10,000 is a lean number to make it happen here.

Mr. Blauert asked Chief Keller if SFD brought in guest trainers;

Chief Keller replied they can do web-based training so all personnel can simultaneously receive and interact; he said they have brought in speakers occasionally, but that is an area we have drastically reduced over the years to save money; he said SFD has also made money by hosting speakers and inviting other agencies to be paid participants.

Facilities: There is a small increase.

Mr. Christensen said the Uptown station has always concerned him, as it is our oldest and least functional station, and asked if we are looking at replacing or rebuilding it; he asked if SFD is under OSHA violations or restrictions because of the age and deterioration of that station.

Chief Kazian he is not aware of any OSHA hazards and asked Chief Keller to comment;

Chief Keller said several years ago, SFD requested a voluntary OSHA compliance inspection and SFD received a mostly clean bill of health with about a dozen areas noted for improvements, but there are Americans with Disability Act concerns with Station 4;

Chief Kazian said the building is old and not efficiently designed as a fire station and has been identified for renovations, but as indicated, no capital improvements are included in the proposed budget.

Chief Keller said the Citizen Committee pushed down the renovation/rebuilding project for Station 4 because of response time issues and why the Midway Station was raised to the top of the priority list. He said response time is a greater need than the age of that building.

Mr. Christensen said his understanding was the priority list was to be fluid and could move around as the need arose;

Chief Kazian said there is definitely a need for addressing the Midway station, the dispatch center, Station 4, and Station 1 and there will always be on-going costs for facilities; he said these are large capital needs and why the mil rate should be incrementally increased so we do not find ourselves “behind the 8 ball” to begin with and then, to throw in large capital projects is a “recipe for disaster”; he said the first Budget Workshop was about other agencies increasing their mil rate by an average of 39% and SFD is minus 10% and we “cannot survive this way”; he said that is why he is looking to go to $1.65.

Chief Kazian said he wants to help SFD out today, so we are not in a much worse spot “down the road”.

Wildland: There were no comments or questions.

Logistics: Mr. Blauert asked why this section had increased;

Chief Kazian said this includes $37,500 for 15 sets of turnouts for the proposed Reserve Program; he noted if we implement this amount for the Reserve Program and the Training Officer, this will not be a turnkey operation that will happen July 1st, or even September 1st, as time will be needed to initiate and provide training, and it would be late in the next fiscal year for this program to come to fruition.

Mr. Blauert said several agencies in the Tubac/Green Valley area were trying to create a reserve program to work together;

Chief Kazian said a program could augment our firefighting staff, rather than replace; he said there was discussion in the McGladrey report about replacing Firefighters with Reserves, but we must follow FSLA laws; it may present opportunities to reduce costs over time, but a Firefighter cannot be replaced with a Reserve without serious complications and recourse; he said he comes from a system with Reserves and it is a “beautiful thing” when it works, but it is a process and even if SFD hires 15 Reserves, it is not enough to fulfill his vision for a program, but others could be added in future years. He said it will not be an immediate savings or fix and will probably cost more initially; it will, however, give SFD an opportunity to “try on” Firefighters to see if they would be viable candidates for full-time slots.

Mr. Blauert said he wants to talk to Chief Kazian about a joint Reserve program as was presented at the AFDA conference;

Chief Kazian said he would be happy to research this, but there would not be time to do so before this budget is approved; going forward, there could be changes and adjustments made;

Mrs. Erick asked if Mr. Blauert was referring to the district sharing Reserves with other agencies;

Mr. Blauert said yes, three districts were discussing sharing a program, but he is not sure if it was ever implemented.

Chief Kazian said it is a future possibility.

4/9/12 SFD Budget Workshop Minutes Page 10

Critical Incident Stress Management: Chief Kazian noted the TIPs membership fee increase of $150.

Hazardous Materials: No questions or comments.

Swiftwater Rescue: Chief Kazian said this budget increased about $1,000 for training;

Mr. Blauert noted SFD had utilized the Swiftwater Rescue team a couple of times this year.

Chief Kazian said two weeks ago, SFD responded to Camp Verde for a Swiftwater rescue as a part of Mutual Aid.

Chief Keller said the local agencies have agreed to pool resources in this area and work together.

Rope/Tower Rescue: No questions or comments.

Trench/Confined Space Rescue: No questions or comments.

Wellness: This section increased $3,000.

Chief Kazian noted health and fitness is a big part of our job.

EMS: This budget decreased from last year’s.

Chief Kazian reminded the Board about the 24 Firefighters that were reallocated to a different area for the DHS report.

Mr. Blauert asked about the defibrillation program;

Chief Keller said that was rolled into the EMS budget, rather than carry a tiny, separate budget section;

Mr. Blauert said it was a good program.

Chief Keller said some of the AEDs are getting to an age where they need to be removed from service and as those happen, they are evaluated to see if the entities want to maintain them.

Non-Operating Detail: Chief Kazian noted the Board contingency is at zero.

Mr. Blauert asked Fire Marshal Johnson about the generator that was in contingency; he replied it is in the current budget and the goal is to replace it this year.

Chief Kazian noted the partnership with the City of Sedona to evaluate options.

Fire Marshal Johnson said Battalion Chief Jayson Coil was originally involved with this project and it was determined 150 KW was needed for Station 1.

Capital Detail: Mr. Dible referenced section #8710 and asked if we were halfway through the narrow-banding project, as it was $60,000 in FY 2011/2012;

Chief Kazian said he believes we are required to have that accomplished by January 1, 2013; he stated he has a Purchase Order that requires Board signature.

Regional Comm. Center: This is a reallocation of funds and is the $596,000 discussed previously.

Chief Kazian said the joint Communications Center is “above and beyond” budgeted amounts.

Mr. Dible stated his appreciation for the format and that the budget is much easier to follow;

Chief Kazian again gave credit to the staff before his arrival, and said in researching the position, he looked at the budget and was impressed with its format and how it provides every ounce of information to understand how the fire district operates financially; he said he had never seen a better budget format.

Mr. Christensen said this budget book is half the size of the normal budget.

Chief Kazian said in order to move forward, staff needs to know if this proposed $12,323,151 budget is comfortable to the Board; he has given them numbers and mil rates for revenue in relationship to the budget.

Mr. Montgomery asked Finance Manager Schmidt for a timeline or deadline to meet for publishing the budget;

Mrs. Schmidt said it is 30 days prior to the approval, which could be as late as early July, if necessary.

Chief Kazian said if the Board is not comfortable with the budget numbers, there is a “cause and effect” relationship; he said what he does not want to happen is an “11th hour” $600,000 to $1 million cut because we would be forced to make poor decisions in cuts and services would be affected; he said as he has presented the budget, core services would continue and efficiencies would continue to be explored throughout the year; that money would not be lost, but just be rolled over to the following year to help the cause moving forward.

B. Schedule Possible Additional Budget Workshops.

4/9/12 SFD Budget Workshop Minutes Page 11

Chief Kazian said what must be decided is the mil rate and the amount of capital reserves to be taken; he said that decision could be postponed until another budget workshop before the April Board meeting.

Mr. Montgomery moved to include a discussion/possible action agenda item for the budget and the mil rate for the next Board meeting;

Mr. Dible seconded.

Mr. Dible asked about including another Budget Workshop ahead of the April Board meeting to answer any final questions; he suggested possibly having the Workshop beginning at 4:00 PM before the April meeting;

Mr. Montgomery amended his motion to have the Budget Workshop at 4:30 PM on the day of the April Board meeting including discussion and possible action on the budget and mil rate.

Mr. Blauert requested another amendment to the motion because if an executive session is needed, he prefers to have that before the Workshop so the public does not have to wait.

Chief Kazian said he believes there was an Executive Session item tabled from the last meeting that would be carried over;

Mr. Dible agreed there was one issue.

Mr. Montgomery re-phrased his motion to hold an Executive Session at 4:30 PM, Budget Workshop at 5:00 PM, with Business meeting to follow at 6:00 PM on Wednesday, April 25, 2012, including an Agenda item for discussion and possible action for the Fiscal Year 2012/2013 budget and associated mil rate;

Mr. Dible seconded the amended motion, which unanimously passed at 5 to 0.

V. ADJOURNMENT.

The meeting adjourned at 5:50 PM.

David Blauert, Chairman of the Board:tg

 

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