Making Smart Choices in Bad Economies

Times are tough. What’s a public system to do?

As public budgets continue to shrink, how can EMS leaders make smart but tough choices that keep their doors open and let them keep serving the public? A report by well-known consultants Fitch & Associates, Making Smart Choices About Fire and Emergency Medical Services in a Difficult Economy, looks at problems being faced by emergency services managers and presents a variety of solutions that are working for some.

In many communities, public safety funding makes up as much as two-thirds of the municipal budget. In today’s economy, where real estate values have dropped significantly, budgets that rely on property taxes have been impacted dramatically. When community leaders slash budgets in response, emergency managers are left to determine how to save money without costing lives.

According to the authors of the report—Fitch’s Joseph J. “Jay” Fitch, PhD, and Michael Ragone and the RedFlash Group’s Keith Griffiths, who produced it for the International City/County Management Association (ICMA)—this financial squeeze will not end any time soon. They cite U.S. Fire Administration officials who say that even once the economy rebounds, it will take 1–3 years for municipalities to see increased revenues. Fire-rescue agencies can expect a 3–5-year wait before seeing their budgets increase.

A public agency’s sheer size and exposure in the public eye make it an easy target for cuts. One easy and often-used technique is across-the-board cuts that affect every municipal department. The intent is to “share the pain” by treating everyone the same. But not every unit of government has the same mandates and measures to define success. This means across-the-board cuts are liable to have unintended consequences because the budget “fix” has not been thoroughly thought through. A more accurate process is to have serious policy discussions that take into account what the community really values, then prepare budgets accordingly.

Personnel costs are often a high percentage of agencies’ budgets, as well as municipalities’ overall expenses. An example in the report cites that public pensions represent 20% of Los Angeles’ budget costs. One way cities are lowering these costs is by moving from defined benefit plans to more 401(k)-style defined contributions plans. Another money-saving technique is a tiered system where new hires earn fewer benefits initially, but their benefits increase with tenure.

Attempts to maximize payroll dollars include the ongoing debate over whether it is cheaper to pay overtime and work existing employees more hours, or hire additional responders to save overtime costs. According to the report, the general rule says that if it costs more than 50% of pay to hire and provide benefits to new employees, then it is cheaper to pay overtime to current staff. However, strongly held beliefs and traditions also come into play when trying to decide how to proceed, which makes the overtime-vs.-new-hire decision process unique to each agency considering it.

Some agencies explore using alternative service delivery methods to achieve more (or at least maintain) with less money. But Fitch cautions EMS managers to keep the medicine in mind when looking into solutions that affect response capabilities. “Decisions on how to respond need to be based on sound medical evidence,” Fitch says. He notes that response time targets need to reflect how they affect outcomes, not necessarily just some arbitrary performance standard.

The report’s authors cite two different concepts that are finding success. In suburban Portland, OR, Tualatin Valley Fire & Rescue runs ALS-equipped and -staffed engines and uses a private third party for transports. The department deploys peak-demand engine companies or rescue response vehicles to answer calls and maintain response times during busy periods.

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