Fire district reports deficit of $5 million for past fiscal year
By KAREN CALLANAN
The Mehlville Fire Protection District experienced a $5 million deficit during fiscal 2002, according to the district's comprehensive annual financial report.
The comprehensive annual financial report for fiscal 2002 was presented to the Board of Directors last week. The report in-cludes an audit performed by Hochschild, Bloom & Co. that gave the district an "unqualified opinion," which is the best opinion that can be given.
Robert Offerman of Hochschild, Bloom & Co. presented the audit June 30 to Chairman Tom O'Driscoll and Treasurer Dan Ottoline.
O'Driscoll participated in the meeting via telephone from his bed at St. Louis University Hospital where he is recovering from an April 27 traffic accident. The board's third seat has been vacant since April 29 when former fire chief and board member Joseph Gaterman lost his battle with cancer.
In his presentation, Offerman noted the district reported total expenditures of about $21 million during fiscal 2002, while revenues totaled about $16 million.
"But again I'd like to point out that $5 million (of) expenditures exceeding revenue is really made up of the $3.3 million decline in market value of investments in the pension fund and also $2.3 million of lump-sum payments to firefighters who elected to take their early retirement incentive," Offerman said.
The district did not go into the red, however, but dipped into its reserves.
Actual spending, he said, decreased by $106,000 from 2001. After adding an expenditure of $440,000 for the early retirement incentive taken by seven employees last year, the district's total general fund expenditures decreased by $546,000, or about 5 percent, Offerman explained.
"If you take your unreserved fund balance and your deferred revenue, you have approximately a 10-month reserve in your general fund," he said.
During 2002, the district's general fund balance decreased by $781,243 — 6.5 percent — to $11,212,648.
The previous year, however, it decreased 16.4 percent to total $11,329,988. The general fund balance had de-creased 5.9 percent to $13,551,706 during 2000. In 1999, the general fund balance had increased by nearly $1.3 million — 9.9 percent.
The audit reported that the 2002 general fund had total revenues of $10,640,000 and expenditures of $11,421,000.
Expenditures were comprised of $11,036,000 in current operating expenditures, debt service payments of $394,000, capital outlay of $16,000 and transfer in of $25,000.
The unreserved portion of the general fund balance of $8,653,764 provides the district with operating resources sufficient to pay current operating expenditures as well as pay capital expenditures scheduled in the near future, Comptroller Jeff Geisler stated in a letter to Chief Ray Haddock and the Board of Directors.
"The increase in personnel was caused by significant overtime costs during the year as a result of individuals being injured and out on sick leave," Geisler stated in his letter, explaining a 6.2 percent increase in personnel. "Additional, certain apparatus was required to be in service daily prior to policy changes in September."
The decrease in general overhead — 24.9 percent — was caused by the replacement of the district's SCBA (Self-Containing Breathing Apparatus) equipment for the fire and EMS personnel in 2001 and a significant decrease in maintenance costs of building and equipment.
The decrease in professional fees — 13 percent — was due to the employee physicals in 2001 that are required every three years, Geisler's letter continued.
"The increase in dispatching resulted from increased fees charged by SCFAA (South County Fire Alarm Association), which is based on our portion of the total assessed valuations for all the fire districts its serves. The decrease in other — 5.4 percent — was caused primarily by discontinuing our district newsletter and by reducing various training and education related expenditures, the letter stated.
Debt service decreased because the district's note pay-able on a ladder truck matured on Nov. 1, 2002. The resulting debt service payments were significantly less than 2001.
Capital expenditures decreased in 2002 because of the 2001 expansion at engine house No. 5 and the administrative facility, the purchase of two 75-foot ladder trucks, one ambulance and laptop computers for the ambulances, Geisler's letter continued.
In the special revenues funds, the ambulance fund revenues totaled $4,256,000 and expenditures of $4,284,000 — so expenditures exceeded revenues by $28,000, and the fund balance ended at $2,789,000. Expenditures in 2002 increased by $105,000 — about 2.5 percent — from 2001's $4,099,000.
The fire alarm special revenue fund had revenues of $743,000 and expenditures of $551,000, with excess revenues of $192,000 and a fund balance of $1,134,000.
The South County Fire Alarm Association, included in the district's audit, had revenues of $1,125,000 and expenditures of $1,045,000 — with excess revenues of $80,000. The ending fund balance was $200,000.
"The capital projects fund, which was set up to account for the construction and renovation of the administrative office and firehouse here, had total revenues of negative $2,000, expenditures of $87,000, and expenditures exceeded revenues by $85,000," Offerman said.
The pension fund had negative revenues of $792,036, while the market value of investments declined by $3,332,060. The pension fund had expenditures of $3,610,977, so the pension fund decreased by $4,403,013. At the end of 2002, the fund's balance totaled $31,327,846.
In 2001, the pension fund had revenues of $421,114, while the market value of investments declined by $2,278,546. The pension fund reported expenditures of $1,228,080 in 2001, so the pension fund decreased by $806,966. The pension fund balance at the end of 2001 was $35,730,859.
The district's pension plan had a disappointing year in 2002, Geisler's letter also stated.
"The pension fund is currently funded at 90.9 percent as compared to 93.6 percent for 2001," Offerman explained.
The fund's net assets decreased by 12.38 percent and the return rate for the year was a negative 7.51 percent.
The district grants vacation to all employees at a rate based on years of experience, and employees are scheduled to take vacation in the following year. If terminated, an employee is reimbursed for accumulated vacation days. The liability for accrued vacation at the end of 2002 was $1,196,290.
The district also grants sick leave to all employees, earned through the employee's classification and the amount of sick leave already accumulated. Upon termination of employment because of retirement or other reasons, one-third to 100 percent of the balance accumulated is paid to the employee at the rate of pay at which the amounts were accumulated. The sick leave liability is $2,294,509, reflected at the present value of such benefits discounted at 5 percent, according to the audit.
The total fund balance is $46,663,000, Offerman said. The general fixed assets for properties and operating equipment had original costs of $17,163,000, so the district's total equity is $63,826,000, Offerman explained in the audit presentation.