Reduced Mehlville fire district tax rate leaves $11 million in tax dollars untouched, report says

District receives best opinion that can be given by auditor


By setting its 2007 tax rate 58 percent below the legal maximum, the Mehlville Fire Protection District left $11 million in tax dollars untouched “while still providing full services to the community,” according to the district’s audited Comprehensive Financial Annual Report for 2007.

The fire district’s “blended” tax rate of 60.8 cents per $100 of assessed valuation was 58 percent less than the legal maximum of $1.05 per $100 that the district could levy in 2007 and 12.9 percent less than the previous tax rate of 69.8 cents per $100.

The Comprehensive Annual Financial Report for fiscal 2007 was presented at the district’s Board of Directors June 19 meeting by Robert Offerman of Hochschild, Bloom & Co.

The 2007 Comprehensive Annual Financial Report includes an audit by Hochschild, Bloom & Co. that gave an “unqualified opinion,” which is the best opinion that can be given, to the district on its financial statements.

And for the ninth consecutive year, the district received a Certificate of Achievement for Excellence in Financial Reporting for its 2006 report from the Government Finance Officers Association. Officials plan to submit the 2007 report, which was accepted last week by a 3-0 vote of the board.

Noting that the district’s property-tax-levy collections of $14,501,196 in 2007 were down from the 2005 collection level of $18,109,779, Offerman told the board last week that the fact that the district has increased services while collecting less revenue indicates good management.

“We’ve seen as you go that your tax revenues are down,” he said. “But you’ve been able to hold expenses in line. So I think that the district is doing a good job of managing its resources.”

Among other financial highlights outlined in the report for 2007 are:

• “The district’s total next assets in-creased by $2,854,802 as a result of this year’s operations. The majority of the increase is attributable to the purchase of land and the reduction of long-term debt by paying down compensated absences.”

• “In the government-wide financial statements, the assets of the district exceeded its liabilities at Dec. 31, 2007, by $31,959,734 (net assets). Of this amount, $7,336,901 represents the district’s investment in capital assets, net of related debt and the balance of $24,622,833 will be used to meet the district’s ongoing obligations to citizens and creditors.”

• “As of Dec. 31, 2007, the district’s governmental funds reported combining ending fund balances of $24,547,757, a decrease of $470,285 in comparison with the prior year. Of this amount, $11,137,726 is designated for next year’s operations, $1,344,186 is designated for sick-leave benefits, $200,000 is designated for dispatching equipment and $11,866,335 is unreserved and undesignated.”

• “Unreserved fund balance for the general fund was $17,049,871, or 149 percent of general-fund expenditures. This fund balance is provided from property taxes both received and earned at December 31, 2007, and will be used to finance the next 12 months of operations during 2008.”

The report also indicates several upgrades in service in 2007, including:

• “A child safety-seat program, which was implemented in 2006, has installed over 400 safety seats and at no cost to residents.”

• “Equipment has been upgraded and brought up to code in accordance with the district’s vehicle-replacement plan.”

• “In 2007, the land was purchased for Firehouse 2 and construction is projected to start in 2008. This project will be paid for from monies set aside from the general and ambulance revenue and there will not be a need to float a bond issue or tax increase.”

• “There was an increase of 14.5 percent in call responses from 10,146 in 2004 to 11,619 in 2007.”

• “Due to consolidation of duties and retirement, the district ended 2007 with 125 total personnel.”

Offerman noted that the district’s roster of 125 employees was down only three employees from the 2006 roster, which had 128 employees.

2007 budgetary reforms identified are:

• “Workers’ compensation premiums decreased from $892,000 in 2005 to $655,774 in 2007. The discount premium is 20 percent with a surcharge of 5 percent in 2007. The surcharge will be eliminated in 2008.”

• “A change was made in the accounting of the district’s future accrued liability on sick leave and the government-wide net assets were restated. It was determined that stating the liability at the discounted present value was not a true reflection of the district’s cost. The government-wide statement of net assets at Dec. 31, 2007, reflects the actual cost to be paid plus any benefits attached to the payment.”

• “The 2008 tax rates were set based on the district’s financial need and not amounts potentially available from the increase in property values due to reassessment.”

• “Salaries remain the largest cost factor, and appropriate increases will occur in 2008 along with hiring nine fire/medics.”

Offerman also noted last week that the district’s long-term debt dropped at the be-ginning of the year from roughly $8 million down to $7.1 million at end of the year. Of that $7.1 million, $1.4 million is reserved for 2008.

The district added $4,363,367 to its pension fund in 2007. Of that, $2,217,282 was in investment income and $2,146,085 came from employer contributions. At the same time, the district paid out benefits of $7,557,812 to pension-plan participants and beneficiaries. Additionally, the district paid out $176,123 in professional fees and $34,874 in disability insurance out of the pension fund for a total payment of $7,768,809. That marked a change in net assets in the pension fund of $3,405,442 as the district started 2007 with $41,707,287 and ended with $38,301,845.

“The pension fund, as you know, has been frozen and has been in litigation with the union,” Offerman said. “So the assets have been held in a money-market account.

“Ironically, the fund with the pension fund, which returned $2.2 million (in investment income), if you put that over your average fund balance of $40 million, the pension fund earned 5.5 percent, which isn’t too bad considering market conditions.”

Local 1889 of the International Association of Fire Fighters filed a lawsuit against the Board of Directors in March 2006 after the board voted 2-1 to adopt an amendment and two resolutions changing the district’s pension plan from a defined-benefit plan to a defined-contribution plan.

Union employees’ request for a permanent injunction prohibiting the board from changing the pension plan was denied last August by St. Louis County Circuit Court Judge Thea A. Sherry. On Dec. 24, Sherry denied union employees’ motion for a new trial, but granted their motion for an injunction pending appeal that prohibits the board from making any changes to the pension plan. Four days later, Local 1889 attorney John Goffstein filed a notice of appeal.