Montecito Fire Budget
updated: Oct 09, 2012, 3:20 PM

Source: Montecito Fire Protection District

CLARIFICATION OF DISTRICT BUDGET STATUS

MONTECITO, CA - It has been brought to our attention that there are misstatements being disseminated throughout the community relating to the District's financial and budget status.

First, it has been stated that Montecito Fire District is operating under a $2 million dollar deficit.

This is false. The District is not currently, nor has it ever operated under a $2 million dollar deficit.

Government accounting standards are somewhat different than what one might be accustomed to in regular private business, and if one is not familiar with these practices, the District's annual financial reports might easily be misconstrued or misread. As explained by Heather Fletcher, CPA, Audit Manager of the Santa Barbara County Auditor's office, the District's annual financial report for Fiscal year 2011 shows "a deficiency of revenues under expenditures amounting to $2,177,983".

The deficiency occurred solely during this fiscal year because MFPD refinanced its CALPERS side fund. To do so, the District used a pension obligation bond which resulted in a net savings to the District of $162,779.

The proceeds related to this bond were documented on the financial statement as an 'other financing source' as opposed to a "regular" revenue. To the untrained reader, this would make it appear as a deficit, when in fact, there was none.

Another misunderstanding relates to the District's accounting practice of borrowing funds; this specifically relates to cash flow issues.

Government entities employ a number of techniques to meet cash flow needs that arise prior to the receipt of semi-annual property tax revenues in order to cover normal operating expenses. The District routinely borrows from its Land & Building Fund (Station 3 Fund) to cover General Fund expenditures until tax revenues are received.

Because the District has enough funds in its own accounts, it has been financially prudent to borrow from its own funds, instead of from the County Treasurer or through issuance of other debt instruments, resulting in zero interest. According to Ms. Fletcher, borrowings, including tax and revenue anticipation notes, are common financing instruments used by governments to provide for cash flow needs.

And finally, the funding for Station 3.

This is a topic of much discussion. But as it relates to finances, the District has been setting aside funds since 2006 for the purchase of land and construction costs. In April of 2011, the District entered into an Option to Purchase Agreement with the Petan Company to purchase the identified property on East Valley for $1,273,862. The District received construction estimates from the architects of approximately $7,428,475 to build the station as it was conceptually drawn for a total estimated cost to purchase and build of $8,702,337.

Since 2006, the Board of Directors has set aside $8,548,261 for Station 3. There are several years before the project is scheduled to break ground, enabling the District to set aside additional funds to complete the project.

It is also important to note that the District also has the necessary funds set aside to purchase a Structure Fire Protection Engine and a Wildland Fire Engine for the new station.

The District has made every effort to be fiscally responsible, and not deficient in the balancing of its budget, or in its planning for the addition of a third fire station.

If you should have any questions relating to any of these issues, there will be a presentation on the District's finances at our October 25, 2012 Board Meeting. The meeting will be held at 8:30 at Station 1.

Comments in order of when they were received | (reverse order)

COMMENT 329751	2012-10-09 05:00 PM
Thank you so much for putting this information out. It has been confusing listening to comments from those who wish to join the board.
COMMENT 329873P	2012-10-10 07:18 AM
A change in the board is long overdue. Their arrogance and lack of accountability after the Tea Fire is legend, and many people were/have been forced off of their own property by the actions of the MFD.
FLICKA	2012-10-10 08:54 AM
How were they forced off their property? Would really like to read more as it sounds incredible. The election is about adding 2 more to the board, going from 3 to 5.
COMMENT 329921	2012-10-10 09:03 AM
Homeowners living in the areas to be covered by the new Station 3 ought to be very grateful to the District for the new fire station. When homes are built out in remote hillside areas for the views and privacy, people can't expect the existing fire stations to respond in a timely manner. Otherwise these folks should build their own wells and fire hoses and spray their homes with fire retardant chemicals to protect them. Of course, if you should have a heart attack way out in the boonies, God help you. P.S. The only way homes could be rebuilt after the Tea Fire was to comply with current building and fire access standards - in your own best interests.
COMMENT 330039P	2012-10-10 02:05 PM
Why does MFD need a $10 million third fire station to pick up heart attack victims? How about parking an ambulance on the roadway in a central position and letting it stay on call? That would be a cheaper, more efficient option. Why doesn't MFD own trucks that can service Montecito's streets instead of demanding the streets conform to the trucks? Why doesn't Montecito sell those big red parade trucks and buy less macho but more suitable trucks for Montecito's tiny road situation? And what it this financial mumbo-jumbo? A deficit means the expenses exceeded the revenues--period. It's pretty clear MFD needs alert experienced new fiscal managers. And finally, I sure hope MFD employees aren't responding to these election-based comments on company time, for that would be a violation of the law.
COMMENT 330057	2012-10-10 03:13 PM
039P should read the excellent explanation by the County concerning how deficits and revenues are accounted for: Maybe you can understand this analogy: if an attorney, a builder or business person incurs a lot of expenses throughout the month, he can't bill the client until the end of the month when all the expenses for that month have been compiled. So he may have a temporary deficit until his client pays the bill (and he gets "funded"). Why are you making a mountain out of mole hill - the funds have been set aside for a few years? What is harder to understand is why people still want to build in the mountains and the County still lets them despite the fire danger.
COMMENT 330099P	2012-10-10 04:39 PM
The MFD press release says the deficiency occurred because MFPD refinanced its CALPERS side fund. To do so, the District used a pension obligation bond which resulted in a net savings to the District of $162,779. Could someone explain what a CALPERS SIDE FUND is? If it was refinance and the savings was over $150K, which I assume was to reduce the interest rate spread, what is MFD's full debt and what does a side fund cover?

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