The question of combining two local fire districts in 2016 hinted at a potential savings, and Central Arizona Fire and Medical Authority (CAFMA) officials have said they saved $686,000 in the first year.
HOW WE GOT HERE
As with most innovations, the idea to form CAFMA was posed as a potential solution to a number of problems.
Both the Central Yavapai Fire District (CYFD) and the Chino Valley Fire District (CVFD) were facing staffing and funding dilemmas following the Great Recession in the late 2000s.
On the Chino side, firefighters were at risk of being completely laid off; the wage scale had been frozen for several years – meaning no one was getting raises; and hours had been cut to meet budget demands that couldn’t be met by increasing the district’s tax rate – because the rate was already maxed out at the legal cap of $3.25 annually, the Courier reported at the time.
To make do, CVFD tried to hire people who could juggle multiple roles within the department, said CAFMA Chief Scott Freitag, who was the CVFD Fire Chief before CAFMA was formed.
“Chino’s battalion chiefs were trying to be battalion chiefs for facilities, maintenance, fleet, operations; they were trying to do everything and it just becomes overwhelming,” Freitag said.
On the Central Yavapai side, the situation was no better.
Under the administration at the time, the department was buying all new equipment using its savings instead of paying for it with year-to-year tax income, said Scott Bliss, chief of Planning and Logistics for CAFMA.
“You can only do that so long and then you’re out of your savings account,” Bliss said. “We’ve been trying to slowly roll the purchase of new equipment back into the tax base; that’s a big one.”
Additionally, millions of dollars were being carried over each year to pay for the next year.
“There was a legitimate reason that was done during the recession, but it’s a really bad budget practice long term,” Bliss said. “The first year you do that, you’ve just addicted your budget to this rollover.”
Though each agency could have technically survived these situations by continuing to make cuts, reduce services, and – in CYFD’s case – significantly increase its tax rate, the idea to combine the districts’ administrations posed many opportunities to save money.
For starters, both organizations had administrative holes in their systems that the other could fill with its existing staff. Included was a fire chief, which CYFD lost in 2013. This alone would save CYFD a $40,000 hiring process and about $150,000 to $200,000 a year in additional salary and employee-related costs, Freitag said.
The next big savings would come from economies of scale.
“I think everybody understands the Costco concept,” said Dave Tharp, chief of Administration for CAFMA. “When you’re buying things in bulk, you’re going to save more money.”
The same goes for buying insurance or supplies for a fire department. Better deals for such things are offered to a large organization than they are to two smaller ones individually.
Overall, Tharp and Bliss projected a $493,000 savings in the first year of operation if the fire districts agreed to combine forces.
By unanimous votes, both departments’ governing boards agreed to the state’s first Joint Powers Authority structure in October 2015, and the agreement took effect July 1, 2016, the Courier reported.
As of July 1, 2017, the savings were even more than anyone expected.
Between costs for personnel, supplies and services, there was a realized savings of just over $686,000. This figure was determined during the first auditing process for CYFD and CVFD since the merger.
“That doesn’t mean we are going to see that (amount of savings) year-over-year-over-year, but what we are seeing is that there are savings that are being realized, and people are going to be spending less money in the long-term,” Tharp said.
Future savings will mostly come in the form of efficiencies and having room to expand in service territory without hiring on more upper-pay scale people to manage it, Frietag said.
For example, within the next five years, CYFD will likely have to add a fire station to effectively cover the growing community, he said. Were it not a part of CAFMA, it would have to hire three additional middle-management people to do this. But under the fire authority, CVFD and CYFD now have the capacity to grow by four additional fire stations without having to add even a single middle manager.
“We term that ‘cost avoidance’ for the future,” Freitag said. “You figure that was, safely, $350,000 in cost avoidance. We never termed that savings, because it wasn’t money we were spending at the time, but it’s money that would have to be spent in the future.”