Using ISO rating and accreditation to justify fire service budget

A fire department’s operating budget is impacted by ISO rating and accreditation, as well as property saved in the eyes of the community

The NFPA estimates that today there are slightly less than 30,000 fire departments and approximately 1.2 million firefighters in the United States. That means fire chiefs are currently preparing 30,000 budgets for approval of their 2018 estimated expenditures. In some cases, this can be the most stressful time for a chief, and reminds me that I’ve had some interesting discussions throughout the years regarding budgets, revenue and their impact on economic development.

As the fire marshal for the State of Ohio, my revenue was set by a .5 percent tax on the amount of fire insurance premiums generated by insurance companies doing business within the state. However, my operating budget was set as a percentage of that revenue, and then permission to spend beyond that amount on things like capital improvements or new programs had to be approved on an ongoing basis by a joint committee of the Ohio House of Representatives and Senate. So while the money may have been available, the approval to spend beyond the operating budget was an ongoing process that occurred several times in a year.

While this system may have made it more difficult to plan new programs, we were fortunate in that most of our additional spending requests were approved after a joint hearing and presentation of the cost versus benefit analysis.

The fire service continues to expand its role, not only in the areas of fire and life safety, but also into the general health and wellbeing of the community it serves.
The fire service continues to expand its role, not only in the areas of fire and life safety, but also into the general health and wellbeing of the community it serves. (Photo/Pixabay)

Property loss vs. property saved

Upon leaving my position with the state, I ran into an interesting issue at a municipal fire department where I was appointed the fire chief. If the city council looked just at the department’s previous annual report submitted by the previous chief, the cost of fire and EMS was about double the city’s annual fire loss.

While most of us might think it was a good thing to have such a low fire loss, my city manager at the time once half-jokingly and half-seriously quipped that it would be cheaper if he paid the direct property loss for the fires that occurred each year rather than pay the expense of the fire department.

Needless to say, in my first annual report as chief, there was an additional column next to the fire loss that indicated the amount of property saved by the fire department annually.

In budget committees, we may hear such things as the number of fires continues to decline, yet the cost of operating the fire department with personnel, apparatus, supplies or PPE replacement continues to rise, but let’s look at that argument with some solid statistics.

In 1986, there were approximately 40,000 fire departments in the United States with about two million firefighters, both career and volunteer, accounting for about 11.9 million total fire, EMS, hazardous material, mutual aid and miscellaneous responses. Today, 30 years later, the number of departments and total number of firefighters have dropped significantly, in part due to the critical need for volunteer firefighters, while the total number of responses in these combined categories topped over 32 million in 2016. Obviously, these increases are due to an estimated seven-percent annual increase in EMS calls, in part due to our aging population, and demand for more services.

In essence, the fire service continues to expand its role, not only in the areas of fire and life safety, but also into the general health and wellbeing of the community it serves. The department’s budget needs to reflect that growing shift in roles, and frank discussions have to occur about the positive effect the department has on both the community’s quality of life and economic development.

Which leads me to this question: “What is the impact of the fire department (i.e. how well it is run and performs) on the economic development of the community it serves?” Here are possible areas for discussion:

1. Impact of ISO rating on community partnership

As improvements are made to the infrastructure in the community and to the fire department, a positive effect should be to lower the department’s ISO fire class rating. Some might downplay that effect, but others, such as economic developers, may factor such things into where they plan their next projects.

The components of the ISO rating are all indicators to the economic developer as to whether the community they are evaluating is in a progressive or recessive mode:

  • Water supply,
  • Communications,
  • Fire service personnel and training,
  • Age and condition of apparatus,
  • Automatic and mutual aid agreements, and
  • Community risk reduction, etc.

Could this also be a factor as to whether the community can partner in any economic development and be a location for expansion and rejuvenation, or whether it will remain stagnant in at best a survival mode?

2. ASU study on economic impact

Property saved and ISO rating, while helpful, didn’t quite answer my question, so I asked the National Emergency Training Center’s Learning Research Center as well as several friends who are EFO graduates, if they had heard of any studies that researched the correlation between a fire department and the economic development of the community it serves.

Both the NETC and one of my EFO colleagues, Assistant Chief Allen Walls, suggested a 2014 Arizona State University (ASU) study conducted by Dr. Anthony Evans on the potential economic impact that could have occurred from fires within the City of Phoenix.

The study gathered data from 42 commercial fires in a 12-month period of time, and the potential consequential economic loss that could have occurred to the City of Phoenix and the State of Arizona had the Phoenix Fire Department not been successful in greatly limiting these actual fire losses. The study estimated the total economic impact at close to one billion dollars for the city, state and individual employees of these companies.

3. Accreditation and a proven track record

While the amount of property saved, ISO rating and the potential consequential loss all might be part of the answer to my original question, the direct impact of the fire department on a community’s economic development remained unanswered. So I posed this question to another colleague, Geoff Milz, who has worked in the field of economic development for over a dozen years in both the public and private sectors.

Geoff took me through the three elements of economic development:

  1. Business attraction,
  2. Business retention/expansion and
  3. Real estate development.

We discussed how difficult it would be to develop viable data that could quantify the direct impact of a fire department on a community’s economic development, especially when it came to attracting new business. However, he clearly indicated that in the equally important area of business retention or expansion, several fire department factors could have a positive economic impact, including:

  • Accreditation,
  • ISO public protection class rating,
  • Response time, and
  • Levels of provided services (e.g., paramedic, hazmat, technical rescue, community risk reduction, etc.).

Geoff’s point was in part qualitative: it is easier to retain a business when the fire department has a proven track record with the business community rather than trying to quantify the advantages provided by a fire department in order to convince a new business to locate within a community.

His other major point was that the more departments (i.e., fire, police, public works, parks and recreation, etc.) within a community that have reached accreditation, the better chance that both the businesses and their workforces will wish to stay in a community due to the positive impact of professional services on their quality of life.

So the answer to our initial question, “What is the impact of the fire department (i.e., how well it is run and performs) on the economic development of the community it serves?” might be closer, but still remains somewhat incomplete. The challenge now will be to see if anyone or any institution of learning will take up the challenge to find a quantifiable, data-driven means to show the total economic impact produced by a well-run, high performance fire department.

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