— by Barbara G. Bedell, Chair, Board of Fire Commissioners, San Juan County Fire Protection District #2 —
Emergency response Cost Recovery is not a new concept nor is it unique to Orcas Island. Over 90 Fire Districts in the State of Washington alone currently have a Cost Recovery program; at the federal level, FEMA publishes a handbook for districts about Cost Recovery options. The program we are currently implementing on Orcas is the result of careful planning and community input.
Why did we consider a Cost Recovery program in the first place?
We all know that our beautiful island environment makes Orcas a unique place to live. However, the absence of a hospital or an emergency room is also unique com-pared to most communities. In the absence of these facilities, Orcas Island Fire and Rescue becomes the one-size-fits-all solution to emergency needs. This is expensive to operate.
Some will argue that our tax levy is designed to support these expenses. Yes, the levy is a critical financial resource for infrastructure and base operations. However, our call volumes are increasing dramatically, and we are on pace for a record number in 2015. Through August of this year, volume is up 18%. Our variable costs average about $1,742 per response. We strive to keep this average as low as possible through efficient operations, but many factors are out of our control, such as the cost of certain drugs.
A rising response rate results in rising costs. At some point, rising costs will exceed existing resources. The Cost Recovery program is a proven strategy to offset such rising costs. We may generate as much as $150,000 in new revenue through this program.
What due diligence was done?
We examined Cost Recovery best practices and options in a task force formed in June
2014 and comprised of five Orcas residents and myself. We looked at programs in other districts to evaluate Cost Recovery options for OIFR, and we determined that a Cost Recovery program would only work for Orcas if the following conditions were met:
– There would be no impact to response and treatment standards
– Unnecessary complexity would not be introduced into OIF&R operations
– Orcas residents would not incur out-of-pocket expenses
– The program would contribute significant net revenue to the OIF&R budget
– OIF&R Fire Commissioners could change or cancel the program after implementation
We also realized that community input would be critical to the success of any local Cost Recovery program. Four public town hall events were announced and held to discuss Cost Recovery in this year alone. Former Chief Kevin O’Brien led the first two sessions and current acting Chief Miklos Preysz held the two most recent town hall events in June. Additionally, the program discussion and approval occurred transparently at public Commissioner meetings.
How will we implement the program?
Commissioners voted to authorize Chief Preysz and OIF&R staff to begin program implementation as of August 1, 2015. Important program components include the following:
– “Orcas resident” is broadly defined to include property owners, renters, and seasonal workers
– Orcas residents will never be billed for out-of-pocket expenses
– Any person can apply for a hardship fee waiver, and the Chief can grant a waiver
– The Cost Recovery fee schedule was derived from average variable costs incurred by OIF&R per response
– Our billing vendor bills on a flat fee basis per claim. Unlike other vendors charging a percentage of fees collected, our vendor’s only incentive is to provide efficient service
What do we expect from the program?
The program needs to demonstrate value to OIF&R to be effective. An important way to measure its value is through net revenue generated; the Chief will be reporting financial performance to the Commissioners regularly. However, the program must demonstrate effectiveness against the other requirements as stated above. We will be vigilant that the program delivers the value everyone at OIF&R and the community expects.
The Chief will report to the Commissioners and the public on the program’s effectiveness. Based on this and other factors, the Commissioners will be able to modify or cancel the program at any time in the future.
Where will the money go?
All funds collected from the Cost Recovery program will be deposited in a local bank account maintained by the San Juan County Treasurer on behalf of OIF&R. The Commissioners and Chief are committed to putting Cost Recovery funds back into our local community. For example, the standard of excellence for OIF&R response and treatment extends to post-incident follow-up. This is a unique, community-focused service provided by OIF&R not found in many other areas. Orcas CARES, a key component of this follow-up, will be one direct beneficiary of the Cost Recovery revenue.
The Commissioners appreciate your interest and support of this very important program.
First off, thank you to Margie for republishing the article. Although I believe there were no material “untruths” in the original writing, having the specifics of the Fire Districts resolution in front of us is helpful.
The closing statement by Commissioner Bedell is a little troubling. I would hope that the revenue recovered from this program would go back into the community – in fact I am a little worried that the statement even needs to be made. The revenue from the program should go right back in the operating budget and in fact should only be needed because the operating budget is suffering from a shortfall. Although based on the current public reports from the District Accountant, that does not appear to be the case.
I believe that one of the primary reasons that the approval is being met by Orcas Island residents with such surprise (despite small community discussions that did in fact happen) is that nearly a year ago, we were told by our then Chief that in preparing for the 2014 Proposition #1 levy:
“The OIFR staff and commissioners performed an intensive analysis of current operations and levels of service. The examination included a detailed operational strategic planning process and a comprehensive financial analysis projecting operational expenses through 2023.”
(Chief Kevin Obrien Press Release 1/31/14)
I understand the theory of cost recovery and believe that there is an appropriate amount of weight that should be given to the discussion – especially for Districts and Municipalities that suffer from lack of voter supported tax levies. In the case of Orcas Island, our community time and time again supports increased tax allocation to the fire district – and from that we receive excellent service given our remote setting. I know that in casting my vote, I did so with the expectation and understanding that was given to me with the last levy proposal: That “a comprehensive financial analysis projecting operational expenses” was done. Nowhere was I informed that the analysis was only applicable to me as a resident. I had expected that my family and friends would enjoy the same level of security, with similar end user outcomes while on the island that I do.
Given the financial condition of the district and the willingness for voters of Orcas Island – when properly informed- to support the financial and functional health of the Fire District, the Cost Recovery program is a unnecessary and unduly burdensome policy that goes against the spirit of service that the voters of Orcas Island perceive to exist within our department.
Thank You Justin, for your immediate response to the OIFD letter on the issue, I have been to the OIFD meetings, can hardly hear what the chairman says as she is always facing the commissioners. not the public and the executive sessions, never come back with any action by the board.
My understanding is that the Affordable Care Act requires (under Essential Health Benefits) insurance plans to cover emergency services at some level. This includes emergency evaluation and transport.
We are all required to have health insurance under the ACA.
Islanders who are complying with the law are paying for insurance policies that cover EMS/transport right now. This is a benefit islanders are already purchasing, that they are currently receiving no local value for – those dollars are leaving the island and not returning. OIFR’s cost-recovery plan will return these benefit dollars to the community.
Justin, to be clear.. This is not intended to be an additional revenue stream, but to duly maintain costs associated to OUR tax payers dollars.
My simple comment is, those paying taxes currently into our community and also paying thru their insurance carriers are In fact paying twice. This program is designed to help midi gate that.
The discussion of fiscal responsibility should always be monitored, make sure present and future commission are on task.
I believe this program ways in the best interest for our community, yes it will need to be managed, yes ALL the monies should and need to be accounted for, I would argue that these funds NOT go into the general fund but be tracked absolutely separate. All actions taken by the board on cost disperson should and will be done in public meeting format. That is why there is a seperste checking account that is monitored by the county.
Secondly, it will be tracked in a separate format on the budget sheet.
This discussion of fee for service is three Chiefs old. I am confident that the district has a high reguard for stewarding this program with the upmost integrity and commitment to serve our community’s interest.
Clyde Duke.
Fire Commissioner.
Clyde,
Thank you for the response. I appreciate the perspective. Don’t agree… But such is life.
As a point of clarity regarding my comment about the general fund:
Commissioner Bedell seems to insinuate in her letter that the funds from cost recovery will be used for programs that are extensions outside of the OIFR operational base. The concern I am raising has less to do with the tracking (which I agree needs to be done in a clear and separate spreadsheet column) and more to do with the basic reason that the monies are being collected in the first place.
If, indeed, these are “cost recovery” monies from providing EMS response services then they should be used to “recover costs” from EMS response services. If they are used to support added programs because service costs are already covered through standard funding mechanisms (I.e tax levy) then I would argue that the cost recovery was unnecessary from the get-go.
I look forward to following the progress of the program and hope that ultimately it proves to be an unnecessary part of our district operation.
Justin, my hope is this cost recovery helps minimize tax dollars.. Again, not as an additional resourse, but actually lesson the burdon of tax dollars being needed.
Thanks for your comments, always enjoy intelligent discussion, this is a very important topic and I’m gladd to see the engagement!
Clyde
I wish there was a “like” button. You speak for a lot of us Justin. Thank you.
Justin has a lot of experience hitting the nail on the head with his job as a contractor …that experience has served his letter writing well. Just last year OIFD got a $22 million levy to cover the next ten years.
$22,000,000.00!!!
Clyde is correct that this cost recovery policy has been considered for a long time. As commissioner with Clyde ten years ago we talked about it at length.
What Clyde just wrote “…(These funds) are not an additional resource, but..lessen the tax burden…” Is a critical detail in the ” grand scheme”.
I believe Clyde wishes it to be so. However, Clyde is leaving office as of January 2016 and the decision will be left to others. My guess is that we will not see one penny of tax reduction but instead more empire building.
Anyone care to wager?