The budget problems at the Moraga-Orinda Fire District may be worse than previously thought.
A financial audit released last week revealed the district has depleted its general fund reserves and has used its capital projects fund to balance its operating budget, according to fire district officials.
The audit states the district used the final $1.5 million in general fund reserves to balance last year’s budget, then took $88,000 from the capital projects fund in June to sustain operations
The district has already used $1.2 million from its capital projects fund to buy property in Lafayette for a new fire station. That fund is expected to have about $3 million on June 30 after it receives $1 million in fire flow tax revenue.
The audit was discussed at the district’s finance committee meeting Tuesday night and the latest financial issues will be on the agenda at the board of directors meeting on Nov. 6.
The problems were discovered recently by Administrative Services Director Gloriann Sasser. She was hired in August to replace former administrative services director Sue Casey, who resigned in July.
The news comes just weeks after the board of directors approved a plan to reduce daily staffing levels at district stations from 19 to 17 fire personnel.
The change was made to help ease a $950,000 projected deficit in this year’s $20 million budget. The staffing cuts are expected to save $550,000. That still leaves a $400,000 shortfall.
Alex Evans, a new member on the fire district board of directors, said he is “very disappointed” previous auditors did not notice the use of capital projects money for general fund expenses. He said that auditor will probably not be used again.
He did praise Sasser for uncovering the situation and notifying the board.
Evans said the capital project funds use is not illegal, but it may not have been the wisest financial practice.
“It’s one way to manage finances, but it’s probably not a good idea,” he said.
Evans said the big overall issue is the district’s continuing problem of having more expenses than it does revenue.
“We seem to be going broke,” he said.
He said the district has only two short-term options.
One is to cut programs or staffing even more. The other is to increase the rate of the fire flow tax to Moraga homes. The tax is already at its maximum limit in Orinda. Both cities are currently at 6 cent per fire risk factor. That’s as high as Orinda allows, but Moraga’s cap is 30 cents per factor.
Evans said a parcel tax or other levy could be placed on a future ballot, but that would be a long-term alternative.
“Everything has to be on the table in my opinion,” he said.
Evans would not comment on how the district got into this financial predicament.
“I’m here to help get us out of this,” he said.
The Orinda Citizens Emergency Services Task Force has drawn up their own analysis, criticizing the district’s handling of its financial crisis
The group, formed two years ago by volunteers to monitor the fire district’s operations, says the district will soon be broke at the current pace.
“This is not a sustainable model,” said Steve Cohn, a member of the task force. “They need to take a lot harder line on cost savings.”
Cohn said the district has enough revenue. Its problem, he says, is it has too many expenses, including pension liabilities.
Cohn said the task force is also concerned about the response time from district fire stations to emergencies. He said they also feel Orinda is paying more than its fair share for the service it receives.