Audit Objective
Determine whether the Caledonia Joint Fire District (District) Board of Fire Commissioners (Board) and District officials properly planned for long-term financial and capital needs.
Key Findings
Although the District has significant future operating and capital needs, the Board and District officials did not properly plan for these long-term financial and capital needs. The Board and District officials did not develop written multiyear financial and capital plans or develop and adopt a written policy related to fund balance and reserves. For example, the Board and District officials maintained a capital building reserve totaling $16,424 and planned to construct a multimillion-dollar fire station but did not develop a detailed written financial plan for this capital project.
The Board and District officials also did not develop a written vehicle and equipment replacement plan and three Board members did not know when these items needed to be replaced or their estimated replacement costs. Although the District had a capital equipment and apparatus reserve totaling $847,113, the Board Chair’s original estimated vehicle and equipment replacement needs indicated the District would need $2.7 million to replace these items over the next five years.
Without written long-term financial plans, officials did not determine, among other things, how the construction and replacements would be funded long term, the sustained financial needs associated with constructing a new fire station and replacing old vehicles and equipment, or the effect these decisions would have on the District’s fund balance and the tax levy.
Recommendations
The audit report includes two recommendations to help improve the District’s long-term planning. District officials generally agreed with our findings and indicated they would take corrective action. Appendix B includes our comment on the District’s response letter.