The District maintains formal financial policies to ensure long-term fiscal sustainability and guide budget development. The FY 2025-26 budget complies with all of the District’s relevant financial policies.  Key financial policies include:

 

Budget Policy: This provides a structured approach for preparing operating and capital budgets that align with the District’s goals and priorities. It supports financial planning, promotes transparency, aids in strategic decision-making, ensures sound fiscal oversight, and helps maintain financial stability through effective cost control and resource allocation. 

 

Fund Balance Reserve Policy: This ensures the District maintains adequate fund balances and reserves to support both short- and long-term financial obligations. It helps minimize the impact of unexpected costs or revenue shortfalls, provides internal funding for capital projects and asset replacements, addresses rising retirement costs, and strengthens the District’s overall financial resiliency. 

 

Investment Policy: This policy serves as a framework to guide the investment of public funds in compliance with state and local laws, with a strong focus on responsible financial management. It prioritizes safety, liquidity, and return, helping to safeguard assets, maintain daily cash flow, and effectively support the District’s short and long-term financial goals and objectives. 

 

Pension Funding Policy: This provides a structured approach for funding both current and future pension obligations. It supports annual budget planning, reflects sound financial management, encourages long-term fiscal strategy, helps maintain strong credit ratings, and communicates the District’s pension funding commitment to employees and the public. 

 

Capital Asset and Surplus Policy: This provides a framework for the responsible management of the District’s capital assets by establishing clear procedures, controls, and accountability. The policy sets thresholds for capital outlays and capital improvement projects, defines criteria for asset classification, and ensures assets are properly safeguarded against loss, theft, or damage. It also supports compliance with Generally Accepted Accounting Principles (GAAP) through accurate asset tracking, depreciation recording, and documentation. Additionally, the policy outlines procedures for the proper disposal of assets that are surplus, obsolete, or no longer in service. 

 

Purchasing Policy: This policy ensures that goods and services are acquired in a cost-effective, transparent, and consistent manner.  It supports compliance with applicable regulations and promotes accountability in the use of public funds. The policy also supports the budget planning process by helping divisions anticipate procurement needs, manage spending within approved limits, and align purchases with the District’s financial goals and operational priorities throughout the fiscal year. 

 

(Please click on links above to view the policies.)

The District’s financial records are maintained in compliance with Generally Accepted Accounting Principles (GAAP), as prescribed for governmental agencies in the United States. The Governmental Accounting Standards Board (GASB) sets the accounting and financial reporting standards that the District follows.

 

Revenues and expenditures are accounted for using the modified accrual basis of accounting, which is the same basis of accounting used in the District's audited financial statements. Under this method, revenues are recognized when they are both measurable and available to finance current period expenditures. "Measurable" means the transaction amount can be determined, and "available" means it is collectible within the current period or soon thereafter. For example, property taxes received within 60 days of the fiscal year-end and investment earnings paid after year-end are considered accrued revenues. Expenditures are recorded when the liability is incurred, if measurable, except for unmatured interest on long-term debt, which is recognized when due.

 

The District operates on a fiscal year from July 1 to June 30 and uses fund accounting to record transactions. Abila MIP software is the primary general ledger system, serving as the comprehensive collection of accounts that supports the major financial statements. It consolidates all financial transactions and is supplemented by subsidiary ledgers, providing detailed information for specific accounts. This system forms the foundation for data accumulation and reporting. The District’s financial activities are organized within three major funds: the General Fund, the Capital Improvement Projects (CIP) Fund, and the Special Revenue Fund.

 

Fund Structure

The District tracks its financial activities across three main fund categories:

1. General Fund (GF): The primary operating fund, accounting for all financial resources not required to be recorded in another fund.

2. Capital Improvement Projects Fund (CIP): Used for the acquisition of property, renovation, or reconstruction of fire stations and other facilities.

3. Special Revenue Fund (SRF): Accounts for funds received and disbursed for federal emergency activities, including grants for the District’s California Task Force 3 Urban Search and Rescue, managed through FEMA agreements.

 

The General Fund (GF) is further divided into divisions, with each division containing specific programs where operating expenses are recorded. The Capital Improvement Program (CIP) Fund is broken down by program as well, but only includes capital outlays or fixed assets since operating expenses for these programs are recorded in the General Fund, as noted above. Additionally, capital improvement projects are detailed by station. The Special Revenue Fund (SRF) is organized by cooperative agreement. 

 

Financial Transparency and Accountability

This fund structure ensures clear tracking of the District’s financial resources and supports transparency in fund management and reporting. The District’s budget is prepared in accordance with GAAP, which also governs the preparation of year-end financial statements. This consistency ensures the District meets its operational needs while maintaining fiscal responsibility and upholding sound accounting practices.

Budgeting is a crucial aspect of organizational management, translating goals and objectives into financial and resource allocations. The budget serves as a management commitment, guiding efficient use of financial and human resources while ensuring accountability for the District’s programs over a twelve-month period. The Annual Budget is foundational for the District's financial planning and control.

 

The District adopts a balanced budget on an annual basis. A balanced budget is defined as one in which anticipated operating revenues and other financing resources are equal to or greater than operating expenditures. Utilizing reserves to balance the budget is permitted when appropriate and in accordance with the fund balance policy.

 

The District supports an approach where all expenses must be justified for each new period. Each program is evaluated for its needs, and associated costs must be validated, regardless of whether the budget is higher or lower than the previous year.

The Fire Chief is responsible for ensuring the District maintains a balanced operating budget, with expenditures remaining within approved limits. The Fire Chief may also implement policies to support the District’s strategic goals. The Board of Directors approves the budget and any amendments through a formal resolution that outlines general operations, proposed expenditures, and funding sources.

 

The budget development process begins in December, when budget instructions are distributed to program managers to assist them in preparing their budgets for the upcoming fiscal year using the OpenGov software. Program managers are required to submit both their current service level budgets and any enhancement requests by late January or early February.

 

Following submission, the Finance Manager and executive leadership, including the Fire Chief, Deputy Fire Chief, Division Chiefs, and Administrative Services Director, conduct multiple budget sessions to evaluate priorities and review all program proposals in detail.

These proposals are assessed line by line, and adjustments are made as needed.

 

Once the revenue and expenditure budgets are finalized, they are compiled and presented to the Board of Directors for detailed review and initial discussion. These discussions are a critical part of the budget development process and allow the Board to thoroughly examine funding priorities, evaluate resource allocations, and ensure alignment with the District’s strategic goals and service objectives. Board members engage in in-depth dialogue with staff, asking questions, requesting clarifications, and proposing adjustments as needed to ensure the budget reflects both fiscal responsibility and the needs of the community.

 

Following this initial review, a preliminary budget is formally presented at the May Board meeting for initial adoption. This step allows the Board and the public additional time to review and provide feedback prior to final approval. The final budget is then brought forward for formal adoption at the June Board meeting, in accordance with the state’s July 1 deadline. This timeline ensures that the District enters the new fiscal year with a clear, balanced, and strategic financial plan in place.

 

Throughout the budget process, the public is given multiple opportunities to participate through various public meetings. These hearings allow community members to offer feedback, share input, make suggestions, and voice any concerns regarding the budget. Additionally, the budget is closely aligned with the District’s strategic goals, which are shaped through collaboration with both the Board of Directors and community stakeholders.

 

Regarding budget amendments, the Fire Chief has the authority to approve internal budget transfers between programs of up to $250,000 per transfer, provided the total of such transfers does not exceed 5% of the total adopted expenditure budget. Any amendments beyond this authority, as outlined in the budget policy, require Board approval. This includes, but is not limited to, additional appropriations of revenue and expenses, internal transfers exceeding the Fire Chief’s limit, changes to full-time equivalent (FTE) staffing levels, and budget adjustments related to the reconciliation of actual costs for grants and capital projects.

 

The budget authorizes revenues and expenditures at the fund level, with detailed line-item appropriations for oversight. The District follows a policy of maintaining a structurally balanced budget, ensuring that recurring revenues meet or exceed recurring expenditures. Reserves may only be used to address temporary, non-recurring, non-operational shortfalls.

 

Revenues and expenditures are authorized at the fund level in the final budget resolution. The budget provides overall control of the District’s financial activities, including line-item appropriations and the methods for financing them. To facilitate ongoing monitoring, the District’s OpenGov portal provides real-time reports on expense activities, updated daily. These reports allow relevant staff to track the financial performance of their programs.

 

A summary of budget-to-actual performance for both revenue and expenditures is presented in the Treasurer’s Report at each regular Board meeting. This ensures continuous oversight and enables the Board to track the District’s financial health and compare actual results against the budget.

To ensure smooth preparation, the District follows an annual budget calendar that outlines key deadlines and meetings, though the budgeting process is continuous throughout the fiscal year (July 1 to June 30). The process typically follows this cycle:

 

July through September

• Reconciliation of fiscal records

 

October through December

• Incorporation of encumbrances, capital project carryovers, and remaining grant balances into the budget
• Budget planning and preparation meetings
• Distribution of the budget proposal guide to all divisions
• Analysis of revenue estimates

 

January through March

• Entry of budget proposals into the financial system
• Budget workshops with the program managers
• Review sessions with the executive team regarding the budget
• Drafting of revenue and expenditure budgets
• Midyear fiscal review.

 

April through June

• Finalization of revenue and expenditure projections
• Presentation of the preliminary and final budget to the Board
• Public hearings regarding the budget
• Adoption of the budget 

The District believes that sound financial management principles require that sufficient funds be retained by the District to provide a stable financial base at all times. To retain this stable financial base, the District must maintain fund balances sufficient to fund all cash flows of the District, to provide financial reserves for the replacement of fixed assets such as apparatus and equipment, unanticipated expenditures, and/or revenue shortfalls due to unfavorable economic conditions or emergencies, set aside funds to work towards the pay down of the District’s unfunded pension liability and to provide funds for other operating and capital needs.

 

The District will maintain reserves of fund balances, as defined herein, in accordance with Governmental Accounting and Financial Standards Board Statement No. 54 (GASB 54), Fund Balance Reporting, and Governmental Fund Type Definitions. This policy will ensure that the District maintains

adequate fund balances and reserves in order to:

 

a) Ensure sufficient funding to support the District’s short-term and long-term operating objectives.

b) Limit adverse annual and multi-year budgetary impacts from anticipated and unanticipated expenditures or revenue shortfalls.

c) Cover current outstanding liabilities and fund a portion of actuarial unfunded liabilities.

d) Build and maintain the financial resiliency of the District.