Friendswood City Council fears fire, EMS capital fund insolvency in 2019

Friendswood City

Friendswood City

 

 

Officials fear that the Friendswood Volunteer Fire Department capital expenditure fund will be under water in two years, according to a July Friendswood City Council presentation.

City council is weighing its options to sustainably fund FVFD capital expenditures after a 13-member committee formed in February delivered a personnel, revenue and service analysis of the department.

“We’ve been trying to deal with this issue for several years, and we decided we couldn’t kick the can down the road any longer,” City council member Steve Rockey said. “The plan is going to go under water in about two years because we’re not generating enough money to continue paying out.”

While no decision has been made, city council members are considering two options: raise property taxes or charge residents a fee-for-service. Council members Rockey and John Scott have attended public town halls to hear citizen feedback on city proposals.

Friendswood EMS does not currently bill residents for care or ambulance rides.

“The bigger issue is the shortfall and what we do going forward,” Scott said. “Are we going to tax the daylights out of the people to get the revenue necessary or are we going to charge for rides?”

 

Donations not sustaining FVFD

FVFD is a nonprofit that contracts with the city to provide fire and EMS services. The capital expenditures fund derives its revenue from an optional $6 donation on the city water bill. Only about 60 percent of users opt to check the donation box, officials said.

“We have to do the water bill donation for capital expenditures,” Friendswood volunteer EMS Chief Lisa Camp said. “We can’t have fire trucks that are 21 years old because it’s going to affect your home insurance on your fire protection, so there are reasons we have had that plan in place. … We need the water bill fund to increase.”

The capital expenditure fund does not pay for manpower or supplies, which comes out of the city’s general revenue fund. The fund pays for equipment purchases and maintenance, including new fire engines and ambulances.

This year, donations are expected to be $220,000, according to city estimates. In 2016, only about $170,000 came in due to technical issues related to the city’s transition to a new online bill pay software the year before.

The city paid $1.5 million over the 2016-17 fiscal year for FVFD salaries and benefits as well as operations, according to city documents.

The capital expenditure fund for the FVFD is running an annual deficit of $160,000. In 15 years, the fund is projected to be more than $2.5 million in the red, according to city estimates.

The $6 donation limit hasn’t changed since 2004, said Rick McFee, board president of the FVFD who volunteers for the EMS division. The FVFD board has urged city council in the past to raise the donation amount, and McFee said the board would like to see at least a $1 increase.

“The water bill donation has been an issue for the last six years,” McFee said. “The fact that we’ve not had an increase in the donation amount since 2004—we’ve had inflation in the plan for the replacement of the vehicles—it has an impact clearly.”

FVFD comprises two divisions: fire and emergency medical services. While fire calls are stable at several hundred calls per year, EMS calls have continued to jump year-over-year.

In 2016, the city’s volunteer EMS department responded to more than 2,000 calls. Half of EMS calls are ambulance rides, according to a July city council presentation analyzing the FVFD.

The increased calls stem from the small towns booming population. Since 1990, the population has increased from 23,000 to 39,000 residents in 2016, according to the U.S. Census Bureau. At the same time, the median age in Friendswood has increased from 33 to 41 over the same time period, according to city estimates.

“That’s where the drain has been,” Camp said.

Voters approved a 2013 bond referendum that included an expansion of fire station No. 4 off Woodlawn Drive and a new fire station with an ambulatory bay. The Kenneth Camp Fire Station No. 1 broke ground in 2016, and FVFD moved into the station on August 8. The new station requires additional capital expenditures.

 

Flaws in the funding model

The current funding model is not keeping up with expenses, council members Rockey and Scott said at a July town hall.

“[EMS service has] not been free, and it’s not going to remain free,” Rockey said.

The water bill doesn’t give residents a convenient way to donate more since they check a pre-determined box. Residents looking to donate more would have to separately send money to FVFD. Additionally, the online bill pay system doesn’t readily show residents whether their bill includes a donation to FVFD.

Second, water bills are sent per meter, not per resident. So those living in apartments, senior-living facilities or other multi-family complexes would never see a water bill. That means an apartment complex’s level of donation is the same as a single-family home.

“Because it is a donation, our attorney says you can’t have it different for different businesses,” Rockey said.

 

Options to fund EMS

While more viable solutions for the funding gap could come to light in the near future, city council has proposed two options. The city could move with a plan that uses both options.

“There’s a cost to everything. With the rising cost of supplies and wages, it’s getting harder to sustain ourselves,” Camp said. “This is not free; it’s never been free.”

The first option is to keep EMS free to consumers but increase property tax rates by three- to four-cents per $100 valuation to cover the cost. The increase amounts to $120 in property taxes each year for a home that’s appraised at $300,000.

“Three or four cents is gigantic,” Rockey said. It may not seem like it, but to those of us who get elected, believe me, there’s only one thing I can guarantee you about Friendswood people: they don’t like taxes.”

However, senior citizens with frozen appraisals who benefit the most from EMS would pay the least for the service. Nearly 60 percent of all EMS calls from 2013-2016 were made by residents ages 60 and older, according to city documents. Those residents comprise less than 20 percent of the population.

The second funding option city council members proposed to fill FVFD coffers was to start charging residents who use 9-1-1 for medical emergencies. Of the 14 benchmark cities Friendswood studied as part of its FVFD analysis, Friendswood was the only city that did not charge for EMS.

“When we talked to some people at the state-level, no one could believe that we still don’t bill,” Rockey said. “We may be less than a handful of cities in the state that don’t bill for EMS.”

Each resident living in a senior living facility averaged nearly 2.5 EMS calls from 2013-2016, according to city documents.

Council members Rockey and Scott posited that a pay-for-service option would allow the cost burden to fall on those who use EMS and ambulatory services. The average ambulance ride costs consumers $2,500, according to city estimates.

“We are subsidizing the insurance companies,” Scott said. “You’re paying insurance to have ambulance rides, but the ambulance isn’t getting billed. So your insurance thanks you tremendously.”

Although most insurance and Medicare cover ambulance rides, consumers have varying deductibles, and Medicare doesn’t cover the full cost due to a spending cap.

The city and FVFD do not currently have a system to bill individuals for EMS service. If the city moved in that direction, the city could hire a third party biller or push to include EMS billing as part of its contract with FVFD.

Also, the city could altogether opt for a third party EMS service that offers billing, an option that Scott mentioned but has received strong push back from residents. The city’s contract with FVFD ends in 2019.

Additionally, council members put forward a suggestion for an optional “personal insurance” plan run through the city or FVFD that each resident can opt into to cover ambulatory expenses leftover after primary health insurance expenditures.

Separately, city council is considering a transition from a volunteer EMS department to full-time staff. The transition would cost the city an additional $1.1 million in the upcoming fiscal year for salaries and benefits if implemented and include 12 full-time EMS staff, a full-time EMS chief and a part-time medical director.

The city has already made strides toward a full-time department.

The city’s EMS call volume has strained volunteer resources. Over the past eight years, FVFD personnel makeup has transitioned from roughly 70 percent volunteers and 30 percent part-time to about 70 percent paid—full- and part-time—and 30 percent volunteers, McFee said. The department has 37 EMS volunteers.

“What happens Monday through Thursday night is [volunteers] want to go to work the next day and our call volumes have increased to almost 15 calls a day. It just taxes them with going to work and they’re falling asleep at work,” Camp said. “The volunteers want to volunteer, … but obviously they’ve got to go to work, and there in lies the issue.”

The boost in personnel would allow the city to have “optimal” staffing of two crews with two people each for each shift.

Regardless of the plan, Camp assured residents that the tradition of volunteerism here to stay.

“They’re not getting rid of the volunteers,” Camp said. “We’re not going anywhere.”