The Department Budget — Opportunity or chore!

The Department Budget — Opportunity or chore!

The author is assistant city manager of Corpus Christi, Tex. He holds both bachelor’s and master’s degrees in public administration from Cornell University, and has since boyhood had very close contacts with the fire service.

EVERY FIRE CHIEF is annually faced with the problem of preparing and justifying a budget. Whatever the organization, big or small, the problem is the same. The Fire Chief usually comes to a conclusion at this time that his chief administrator or municipal council never understands the fire service or that taxes are of greater concern than the welfare of the people. Is this so? Or might the problem be bad communications and a lack of understanding of the budget process?

A budget is the financial tool through which the long-range goals of the city are transformed through estimated service costs, composed of staffing, equipment, facility, and overhead requirements, into an appropriation which enables each department to accomplish its annual program if the appropriation is spent with the efficiency anticipated by management.

What does this definition mean? To most chiefs the budget is simply a listing of last year’s expenditures plus some money for new programs and increased costs. This listing is submitted to the city manager or council who always seem to cut the request to avoid raising taxes. This is exactly what a budget should not be.

The budget should be the chief’s everyday companion, constantly reminding him of his long-range and annual goals. Jts administration should be a continuous process, involving all supervisory personnel as well as a significant portion of the chief’s daily efforts. Since the budget involves work to be accomplished as well as its estimated cost, the actions of every fire fighter as they affect the department’s total performance, are a part of the budget process.

Programs or goals

The backbone of any budget is the desired goals of the community, refined by departmental reviews of longrange building, equipment and operational needs. The methods which should be used for these reviews could be the topic of a separate article. Regardless of the process, even if it is just the random thoughts of the chief, this review must and always does, consciously or unconsciously, take place. The long-range program must at least include plans for new fire station construction and the purchase of new and replacement equipment. It should also include manpower coverage goals as well as programs for improving training, safety and personnel performance.

The goals should include what ought to be done as well as what is being done. Thus, the first consideration in the budget process should be how effectively is the department meeting the community’s needs. The departmental ratings by the National Board of Fire Underwriters, the State Rating Organization, or in Texas, the State Insurance Commission, and various performance measurement indices to be discussed later will provide helpful information for this review. The adequacy of the departmental program can be graphically portrayed as:

Adequacy of Program =

Actual Departmental Program Community’s Needs

Continuous self-appraisal

The annual budget process should be based on a continuous inventory of manpower, operations, equipment, and stations. The inventory should be summarized as the preparation of each year’s budget begins and should include:

  1. Stations and Equipment
    1. Review of company locations, considering shifts in population density and land use.
    2. Review of station locations, considering technology.
    3. Inspection of stations to ascertain condition and determine maintenance and custodial requirements.
    4. Analysis of equipment condition and maintenance costs.
    5. Review of communication system maintenance including inter-station and fire alarm systems.
  2. Organization, Staffing, and Personnel
    1. Organization review to see that company administration is effective.
    2. Review of all firefighting and non-firefighting positions to insure need and efficiency. Are all assignments correct in regard to responsibility, quantity of work, and community need?
    3. Detailed review of staffing and personnel, including:
      1. Are shift hours adequate?
      2. Is morale satisfactory and are the men in good physical condition?
      3. Are salary and fringe benefits adequate to attract and keep competent personnel?
      4. Is turnover or absenteeism excessive?
      5. What improvements in training have been made and are planned?
  3. Performance and Records
    1. Review loss and fire ratios.
      1. Losses per $1,000 of true (market) valuation or per capita or per fire.
      2. Fires per 1,000 persons or $1,000 of true (market) valuation.
    2. Review rating by National Board of Fire Underwriters, rating board or Insurance Commission.
    3. c. Review all firefighting company records to insure:
      1. Adequacy of training.
      2. Full manpower utilization.
      3. Adequate duty assignments including team or company inspections.

All of the inventory should be completed before any part of the budget request is prepared. The information should be accumulated on simple, but meaningful, forms through carefully designed procedures. Budget forms and procedures in most cities are designed by someone other than the fire chief, but a requirement to use inadequate city forms for final presentation is no excuse for the chief to use unsound procedures in the preparation of his own budget request. Standard city forms can be supplemented with additional material but budget requests based on information accumulated through inadequate procedures will be difficult, if not impossible to substantiate.

Activities, work units, and costs

The goal in all budgeting is to equate the need for money with something tangible, i.e., either a unit of service or work. Thus, a lump sum or total dollar request, for example $300,000 for fire prevention and fighting, is the most uninformative and inadequate type of budget. Breaking the request down by type of expenditure or object code, for example salaries, uniforms, or station maintenance is an improvement, but only equates money to the item or service being purchased, rather than to the work or service being provided to the public. The most understandable budget is a breakdown of expenditures by the actual work being performed, grouped into activities, such as prevention and investigation, communications, training, shop, administration, and the various stations. Until a method is devised to directly relate activity work units or services to cost, the activity budgets should also be broken down by major expenditure groupings as shown in Fig. 1.

The activity basis presents a clear picture of the total departmental operation to the chief and the public; allows the development of costs or man-hour figures for each work unit of each activity; and enables the chief to shift financial responsibility to the lower supervisory positions, including station captains, so that all responsible officers will better understand the financial limitations and challenges which face the department.

Performance or work units should be developed and estimated with as much or more care as any budget expenditure estimate. The relationship of cost to the planned work is the most significant analysis in the whole budget process.

When it is impossible to equate work or service performed with actual costs, personnel hours or man years should be substituted. Since personnel costs generally average 85 to 90% of the total fire department budget, balancing actual or planned work with the amount of personnel time required to perform the task obtains information almost as useful as actual costs. Typical activity’ measurement units are: Prevention and Investigation:

Mercantile and industrial inspections per inspector

Violations noted per inspector

Violations cleared through conviction

Fires investigated

Percentage of fire causes determined Per cent of arson investigations cleared by conviction

Communications:

Number of alarm boxes maintained

Average length of out-of-service due to repair

Calls received

Number of pieces of equipment dispatched

Training:

Hours of instruction per company

Hours of training per fireman

Number of different courses held

Number of men attending out-ofcity training conferences

Shop:

Number of vehicles maintained

Cost per vehicle maintained

Number of non-vehicle repairs completed

Average frequency of pump testing and inspection

Administration:

Personnel turnover

Total number of vehicular and nan-vchicular accidents

Number of lost time injuries

Use of sick leave per employee

Average number of inspections per fireman

Departmental fire losses per $1,000 of true (market) valuation

Fires per $1,000 of true (market) valuation and per person

Each station:

Fire losses per $1,000 of true (market) valuation and per person in the station coverage area

Fires per $1,000 of true (market) valuation and per person in the station coverage area

Continued on page 225

FIRE DEPARTMENT BUDGET

Continued from page 201

Average hours of training per day per company

Average miles run per day per company

Number of vehicular and non-vehicular accidents per company

Number of lost-time injuries per company

Dwelling and mercantile units inspected per fireman

The comparison of the quantity of work units proposed with the units of accomplishment for the last three years will give a clear indication of the effectiveness of each activity and tell whether or not each segment of the department is doing a better job of meeting the community’s needs.

Effectiveness = Actual Performance / Planned Programme

Presentation

Only after the program is carefully developed and every possible step taken to improve performance should the chief consider selling the budget. Selling will be simple if the preparation has been thorough. Unfortunately, many chiefs prepare sound budgets based on careful visual analysis and discussions with their men, but fail in the written presentation.

The budget request should:

  1. State the goals or programs of the department.
    1. Viewed against local fire and loss records.
    2. Compared to national averages and the standards of the National Board of Fire Underwriters, state rating board or Insurance Commission.
  2. Show the effect on the departmental program of mutual aid agreements, required or voluntary protection of outside city industry, and the availability of reserves or volunteers.
  3. State major changes in program concepts and costs. Operational improvements proposed or recently completed should be emphasized, especially if future costs will be reduced or services improved.
  4. State the actual request, including:
    1. Departmental organization chart.
    2. Departmental staffing chart, showing shifts and positions.
    3. Function of each activity or unit.
    4. Work program of each activity or unit in easily understandable tenns.
    5. Detailed request by activity showing comparison with actual or estimated expenditures of the previous three years.
    6. Personnel detail showing requested man years by position and salary grade with comparison for previous three years. Each position should be justified even though it may have already been justified in each previous request.
  5. Compare activity work programs and proposed costs with actual programs and costs in each of the last three years, relating work units to specific costs where possible or to man years,
  6. Prepare one set of priorities for all departmental requests. If additional money is not available, old programs should possibly he deleted so that new programs can he initiated. It is vital that the chief carefully determine his overall priorities, since budget officers, city managers, and city councils usually follow the chief’s priority recommendations.
  7. Be thorough. Show that a critical self-analysis has been carried out.
  8. Be accurate. The first “pad” detected casts doubt on the entire request. For example, if the cost of cleaning floors is erroneously estimated at twice what it should be, the budget officer will review all other detailed requests with extreme care.
  9. Relate all expenditures to basic needs; e.g., hose requests should not simply state that 2,900 feet of 2 1/2-inch hose are needed but rather the purchase of 2,900 feet of 2 1/2-inch hose is needed to maintain existing hose assignments and to provide 1200 feet of service hose and 100 feet of substitute hose for one requested additional company.

For example this may he stated as shown in box.

Such a presentation clearly shows the need for 2,900 feet of hose and the method by which the request was determined.

Presenting a budget to finance a program already familiar to management and the council is much easier than selling new, undiscussed concepts. It is an all-year sales job. Living within the current year’s budget and preparing a good annual report are as much a part of the budget selling job as justifying a power estimate. The chief must first sell his program, its needs, and benefits, and then, show the city fathers what it will cost.

Conclusion

The fire chief must consider budget administration as a continuous and vital process. Only after a thorough inventory and analysis of all operations and a careful review of longrange programs and goals should the department’s budget request be developed. All supervisory personnel, as well as representatives of the finance or budget office, should take part in this review.

The development of sound units to measure work proposed or services to be rendered compared to estimated costs is the most satisfactory method of budget preparation. If the records of prior years and the abilities of the department will not support this type of presentation, the work or services to be performed should be balanced against the personnel to be used through what is called a man-year approach. Regardless of the method, the budget preparation process must be thorough and realistic.

If the department thinks constantly about its long-range goals, selling the budget will be a simple process. The easiest budget to sell is one which requests a reasonable step toward the attainment of long-range goals which, throughout the year, have already been sold to management and the council. The preparation of a sound budget with adequate supporting information so that the city manager and council can properly balance each request against the other needs of the community, for example, a new fire truck against a park development program, more library books or additional street paving, is as essential as any other duty of the chief, including fire fighting leadership.

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