Chief Stewart Gary was interviewed by Justin Hyer at PublicCEO. Here is the article:
Originally authored by Justin Hyer at PublicCEO. To see the original article, please click here.
Departmental Mergers Catching Fire in CA: 4 Factors to Consider
The past half-dozen years have not been kind to local government agencies in California. Amid declining revenues, it should come as no surprise that many leaders throughout California have pursued—or at the very least considered—the idea of consolidating core services.
Fire department mergers are particularly attractive to the fiscally prudent. There is significant potential for cost savings through reductions in service redundancies by organizing to provide standardized regional responses.
Given the interest surrounding these consolidation arrangements, I sat down with the state’s foremost fire merger expert, Chief Stewart Gary. Chief Gary is the Fire Services Principal for Citygate Associates, a professional consultancy based in Folsom that provides a wide range of services to local governments.
Chief Gary has worked on over 200 fire services and EMS projects across the state, and notes that this work usually falls into four primary categories: 1) feasibility analysis for peer-to-peer merging or contracting for service; 2) performance audits or deployment analysis; 3) revenue-to-service analysis; or 4) separation of services from an existing fire services partnership.
Chief Gary made it clear that while merging fire departments is a notion worth considering, the analysis needed is quite complex.
“Is there a case to be made that small neighboring fire agencies have redundancy in their operations, especially in headquarters services? Certainly. Should agencies consider contracting for services, or full or partial merger options as a way of reducing these redundancies? Yes. However, after years of recession-driven cost reductions, huge savings may not be possible. On the other hand, cost containment for restored services going forward may be,” Chief Gary stated.
At first glance, fire mergers seem like a good arrangement for agencies that wish to increase efficiency and control costs. In many cases, fire consolidations accomplish that very aim. Why then, aren’t more agencies enacting these cost saving measures?
As Chief Gary puts it, “If this process was easy, there would be 200 fewer fire departments in the state.” Mergers must deal with employment laws established over the past hundred years that regulate everything from wages to working hours, pensions and medical benefits, and safe operating rules. Revenue constraints, like those created by Proposition 13, also hinder a department’s ability to finance merging costs. These and other reasons can cause merger analyses to favor in-house operation.
Given the complexities, Chief Gary explained the following four factors to consider before pursuing a fire department merger:
1) Fire Department Mergers Offer Substantial Benefits
There are many opportunities that accompany consolidation, but the most palpable is the potential for near-term savings, or future cost avoidance while improving the effectiveness of a headquarters team.
Personnel law and safety standards in the fire service have become incredibly complex. Understanding and implementing these regulations requires specialized supervising, training, and (for EMS) clinical oversight personnel. Accordingly, even small fire departments require a management structure that could equally serve larger departments. Worse, because of the recession, many smaller departments do not have an adequate management structure and run the risks associated with an under-trained and under-supervised force.
For example, a minimal fire management structure for a 1- or 2-station department could feasibly oversee a 3- to 10-station department (depending on the geography). It is this kind of headquarters personnel consolidation that could allow cost savings, service improvements, or both. However, many agencies do not have overlapping fire station service areas, so savings in front-line firefighters is often not possible without significant service reductions.
The benefit of consolidating management translates into more than just cost savings: improved training standards, clinical performance, and incident command oversight often accompany mergers as well.
2) Obstacles Often Hinge on Logistical Details
While the benefits are attractive, they must be balanced by the constraints of mergers. Many of these obstacles involve the nitty-gritty, yet critical personnel and fiscal logistics.
To this end, there are quite a few complex questions that must be answered before a merger is pursued. For example:
How do taxpayers split the cost of fire services when tax rates differ between municipalities?
Which existing department will oversee the provision of fiscal services, legal services, and personnel for the consolidated department?
How are the local elected officials and citizens going to govern the operations of a greater regional fire authority?
How will LAFCO and revenue regulations impact the feasibility of consolidating?
3) Agencies Vary in Their Revenue and Ability to Pay
It goes without saying that what works in Orange County likely differs from what is feasible in, for example, Modoc County. However, what about adjacent cities that maintain varying degrees of assets?
Let’s imagine two fictional cities—Pleasantville and Sunnytown—whose leaders are both intrigued by the potential benefits of merging fire departments.
Pleasantville is more prosperous than Sunnytown. Constrained by its more modest budget, Sunnytown offers its firefighters a lower direct salary and associated benefits. If these two cities merge services—with Pleasantville paying demonstrably more than Sunnytown—how is equity of compensation dealt with? Will the Pleasantville tax base have to contribute more than Sunnytown for the same level of service, or will the former Pleasantville firefighters have to take a cut in pay? The same issues arise when deciding how to pay for the timely replacement of fire apparatus or capital repairs to fire stations.
Given the complexity of labor relation mandates and employer, medical care, and retirement laws, answering these questions is tricky. But Chief Gary states that in a situation like Pleasantville’s and Sunnytown’s, compensation differences could easily eat up the modest savings from consolidating a few fire administration and support services positions, often rendering the merger unwise.
4) Local Agencies Benefit From Expert Analysis
Any city manager can attest to the fact that successfully running just one government organization involves carefully orchestrating hundreds of factors. Now imagine attempting to merge these intricate operational successes and failures with those of one, two, or ten other agencies.
A great number of city, county, and special district leaders are too taken by the promise of savings to consider the variety of costs and possible shared service inequities in a merger. These are the factors that Chief Gary and the Citygate Team address head-on.
This isn’t to say that local officials should not pursue the idea of merging fire departments. Rather, it is an avenue worthy of careful consideration.
There are numerous examples in California of fire mergers being implemented successfully and reducing costs to residents. Take Alameda County, for example, where over recent years, three suburban city fire departments have contracted into the Alameda County Fire Department. As another example, all of the Los Angeles County fire departments are forming a countywide fire training Joint Powers Authority. This will allow 31 agencies to share the costs of training while increasing regional standardization. Also, the Monterey County Airport District recently contracted its fire services to the City of Monterey.
Local government elected officials, executive managers, and public safety chiefs are not always trained to evaluate, design, and implement multi-agency contracts or mergers. It is not for the faint of heart. It is time-consuming and, at times, frustrating. What you don’t know can hurt you. So can skimpy analysis and hasty public promises of cost reductions. Learning by doing on your first try can become very expensive, fiscally or professionally. This explains why so many agencies consider a trained, experienced, and independent source to help navigate the minefield.
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Stewart Gary has served with Citygate Associates for 13 years, the last 9 as the Fire Services Principal. Chief Gary has directed over 180 fire services engagements, and he has been the lead consultant for over twenty-five fire services merger studies. Chief Gary has 42 years of experience in the fire service, including 5 years as a paramedic. He worked as a firefighter while attaining his Bachelors and Masters in Public Administration from San Diego State. He worked his way up the ranks and served as the Fire Chief in Livermore from 1994-2005, where he helped design, implement, and operate the successful Livermore/Pleasanton Fire JPA merger in 1996. This merger won a Helen Putnam award from the California League of Cities.
For more information or to contact Chief Gary, please click here.