By Ray Myers III, R.S.
CEDCORE, LLC

Using the Full Power of Equipment Replacement Reserves

In these economic times, budget constraints and financial burdens make it difficult for Fire Departments to remain properly equipped. Public support of public safety agencies, including Fire Departments continues to decline causing further budget and purchasing hardships. Equipment Replacement Reserves (ERR) studies are an important part of planning for large purchases and may help combat the current financial crises. 

These studies review, analyze and provide recommendations that will increase the effectiveness of your Equipment Replacement Reserve Fund and subsequently the entire budget. This may be accomplished in several ways. 

First, while most Fire Departments have Equipment Replacement Reserves, the majority of such reserve funds only include replacement costs for assets with extremely large cost, such as apparatus. However, Fire Departments don’t usually have large enough operating budgets to cover equipment replacement when costs exceed more than a few thousand dollars. This can be disastrous when needed equipment replacement costs are not included within the ERR Fund. Hydraulic rescue tools for example, can exceed $30,000 with accessories. Even small Volunteer Fire Departments require 10 to 15 SCBA’s, with a minimum replacement cost of $45,000. Consider the cost of boots, while only approximately $200 each, the total cost is $5,000 when you have 25 members. Those three examples are not included in the majority of ERR plans. Therefore, consider adjusting your Equipment Replacement Reserves to include all equipment with replacement costs above a threshold of a couple thousand dollars. Armed with the Equipment Replacement Reserve Study and some simple planning, you can create a comprehensive equipment replacement strategy and plan future equipment replacements based on the funding available. 

Second, because the majority of ERR Funds are significantly underfunded, this Equipment Replacement Reserve Study will show and explain the short comings and deficiencies of the current financial trajectory. The Equipment Replacement Reserve Study will include implementation recommendations that will highlight the minimum funding requirements to maintain equipment in operational working order and provide funding for replacement of lost, damaged or worn equipment. 

Third, this study can be used as the basis and justification for budget or tax increases. When you approach the public with a Levy request, how well can you explain your operational and equipment needs? The findings and recommendations contained in the Equipment Replacement Reserve Study can be used to inform the Board of Commissioners, City Council, or most importantly the general public (tax payers) of the true cost of operations or equipment replacement. The ERR Study highlights the current and future financial needs of the department and reflects proactive financial planning to maintain fiscal responsibility as well as continue safe and successful operations. 

The information in the Equipment Replacement Reserve Study will assist you in understanding the funding requirements for your department and provide the tools to make informed budgeting decisions and equipment replacement plans. An Equipment Replacement Reserve Study will also enable you to justify funding requests through the use of a transparent planning process.