When I learned to swim, I learned the hard way. My father and I were riding horses one day right outside Riverton, Kan. We became all hot and sweaty in the course of our adventure, and there happened to be a nice, cool creek alongside the road. We both walked down and dipped our feet in an attempt to cool off.

My father is long since gone, but I don't think he would regret me telling the story of what happened next. He turned to me and asked me if I knew how to swim yet. With all the wisdom of a 9-year-old child I bragged, “Of course I do.” What I meant was that I had been in the water and splashed around a lot, but I really wasn't sure if I knew how to swim. Reaching over, he grabbed the back of my T-shirt and my belt, hoisted me off the ground, and tossed me out in the middle of the creek. It literally was sink or swim. As I came up spitting and sputtering, my dad laughingly asked, “Well, how good are you at it?”

Obviously the story has a positive outcome because I'm still around to tell it. Even so, I will never forget how quickly I went from being somewhat smug and evasive in answering my father's question before quickly learning that I had to actually put it into practice.

In some cases I think that we are seeing a parallel to this phenomenon in the funding of fire protection on a national basis. We all have budgeted for fire protection by adding digits on an annual basis to show how much our budgets could or should increase because of a rising revenue sources. We might have known how to swim in those calm waters of the past, but things are getting a little tougher these days. The water is getting deeper, and in some cases the surface is much more turbulent.

Of course, when you question the fiscal control of fire departments, there are some people who will resent the assumption that there is a problem. On the other hand, I know that there are many fire chiefs who will attest that we are seeing a new era when it comes to dealing with the financial side of the fire service. This particular debate has resulted in many different camps with respect to whether we really have a problem or if its ever going to be solved.

For example, there are those who believe that there's more than enough money out there in the hands of the taxpayers, and they should be more willing to turn it over so we can use it to manage our problem. Then there is a philosophical camp that believes a fire department's job is to budget how much fire protection costs, and somebody else can worry about whether that is adequately funded.

There is a camp that expresses deep concerns about the financial stability of fire protection and questions whether the process should be reformed. Then there is one camp for which I have a certain amount of pity — the group that lives in denial. They act as if there's no problem, and therefore they anticipate that it would go away with some significant event in the future, such as the turn of a calendar year or the end of a fiscal year.

Although I'm not sure who's right, I do believe that there are some specific things we as fire officers should pay a lot more attention to if we are going to be perceived as being part of the solution. They are revenue, expenditure and accountability.

1. Revenue

   If someone wanted to write a book about how fire departments are funded throughout this nation, they would have to take a crash course in understanding every type of fiscal system known to the human race. There's no consistency across the landscape of the fire service regarding where our money comes from, nor is there any direct nexus in a lot of cases between the services we provide and the money we receive. It's like a business where someone offers a service and from some people accepts payment in cash and from others services in trade. Meanwhile, some people expect the service for free.

   The vast majority of the fire service doesn't pay attention to the revenue side of the equation unless they are within an independent fire protection district. These are the fire departments that are closest to where their money comes from. Unfortunately, a significant number of other firefighting agencies receive their money through what's commonly referred to as the general fund. I once asked the city finance director if he could define for me exactly what the general fund consisted of, and his answer was that nobody knows. I'm not sure that anybody really cares.

   Unfortunately, a lot of the time and effort spent developing individuals for fire service succession planning focuses only on budget development. Learning how to set up a spreadsheet that shows your personnel costs and how to develop formulae for determining the rates of your benefits as applied to personnel costs or capital improvement is primarily an exercise conducted with a calculator.

   Any fire chief who expects a portion the community's revenue stream had better become more expert in revenue sources. The degree to which fire chiefs understand how revenue is generated in their communities in relationship to those things they have control over, the more likely they can draw a strong connection between revenue and the needs of the fire service.

   Geographic Information Systems is the spreadsheet of the fire service. This is especially true when it comes to looking at revenue projections. The fire service should become much more knowledgeable as to what data is available in each of our assessor's offices and in our finance departments that can be keyed back to the very same properties we are attempting to protect. Get to know as much as you can about how revenue is generated before you start making up the process of how you are going to spend it.

   Have you ever stopped to think of how important the 25 biggest sales tax revenue generators are to your community? Who are they? What kinds of buildings do they occupy? What kinds of forces do they employ? If you look at the largest sales tax revenue generators in your community, you often will discover that these also have a name in the fire context — target hazard.

   I once completed an audit of the sales tax generators in my community by working with the finance department and discovered that three buildings in the town generated 33% of the total sales tax revenue collected and used by the city. Those three buildings, any one of which could have had a serious fire, were vital to the revenue stream of the community. I made it my business to learn as much as I could about those buildings to justify a series of strategies to make sure those buildings stayed in business. Similarly, what are your largest property tax contributors? There is a tendency for us to think of property tax as a “given” tax, but when buildings burn down they go off the tax rolls. It's extremely important that the fire department also knows where the major employers in a community are.

   You may think that seems like an awful lot of detail work. However, much of this information needs to be developed only once, and it has a tendency to be highly predictable from that day forward, unless the state or federal legislature is in session. It was once said that no one's life or fortune remains safe as long as the legislature is in session. That's very true when it comes to revenue streams in government. Regional, state and federal governments have the ability to do two things that are of major consequence to the fire department. They can deny a revenue stream coming back to the city for a variety of reasons, or they can mandate the performance of a duty on the fire department. They leave it up to you to figure out how you are going to pay for it.

2. Expenditure

   I hesitate even beginning to discuss budget preparation because there are so many different philosophical approaches to budgets that they defy simplification. Therefore, I am going to make only some very specific observations.

   The budget should always be developed from the bottom up, not from the top down. Budget preparation should involve as many layers in the organization as is conceivable. My primary reason for advocating this is for people to have some degree of knowledge and ownership of the budget's implications. When budgets are developed in a vacuum at the upper end, they take on an aura of entitlement on how to spend money. In other words, individuals don't understand what it takes to put together the expenditure side of the department; their objective is to spend every single dime of it.

   I will readily admit to you that in government there is a tendency for the competent to be punished. I learned a long time ago that if you are a good money manager and find money at the end of the year left in your budget, someone would come along to pirate it away for some other purpose. It's unfortunate that more city mangers don't read Fire Chief because I'm hereby advising them to start rewarding their fire chiefs for their ability to manage resources rather than punishing them by living within the budget.

   The second suggestion I have about budget implementation is that we become as creative as possible to stop the spiking of our costs in the fire service. I am not going to get into a real elaborate discussion of amortization versus acquisition or lease purchase versus outright purchase. However, as fire chiefs we should be trying to have a very predictable budget stream that can relate to all that information we learned from revenue projection.

   When we prepare budgets we must be into impact consequence as well as incremental decision-making. It's very important that we clearly state to our governing bodies the consequences of anything in our budget that has a recurring cost. This is one area where most fire departments get into their greatest difficulty. They either adopt a pay me now or pay me later approach, or they fail to realize the impact of balloon payments on the spiking phenomenon.

   Finally, manage your budget every month instead of on an annual basis. The value of identifying trends and patterns early in the budgetary process so you can maintain control over them can't be underestimated. This isn't strictly to contain costs but rather to control them. These aren't necessarily the same.

3. Accountability

   If you were in almost any other business, accountability would be something with which you'd be very familiar. People who spend more money than they make eventually will go bankrupt. Accountability in this sense starts with the concept of budgetary control, but it also requires understanding how your budget expenditures are going to affect the revenue potential in the community. The fire service needs to become much more sensitive to its performance measures as it operates as a business.

I recently conducted a workshop with a group of fire officers. I asked them a series of questions and found that as I went down the list, fewer and fewer people had answers. You try it: What is your budget for a fire department? What is the budget for each perspective platoon? What is the budget for each individual fire station? What is the budget for each specific fire company that you have within your overall deployment plan? What is the specific budget amount that it takes for the individual programs to function within your organization, such as training and fire prevention? If you were confronted with a problem of which budget you must reduce by 10%, how would you compare the cost of various elements in relationship to their impact on the services being delivered?

To answer each of those questions requires a certain amount of interrogation of your system. But the answer to all of those questions is what determines the difference between mediocre fiscal management and highly accountable fiscal management.

Early in my fire service career, I had an experience that paralleled my father's unceremoniously dumping of me into the creek. As a fire captain I was brought into the chief's office one day and told that I was going to be responsible for the formulation of a department-wide budget. At that point I had received very little information through the training environment as a fire officer. Fortunately for me I had been a union president and had spent a lot of time examining the city budget. I knew how to dog paddle, but I certainly wasn't prepared for doing the breaststroke in the budget pool.

I survived that experience, but just barely. That was more than 40 years ago. Today the fire service is much more intense than it was then, yet I haven't seen a terrific increase in preparing individuals to cope with budgets. Granted, many fire departments have now brought in civilians to help them work their way through the budget dilemma.

Even so, we shouldn't be paddling around unprepared for how deep the water is going to get. Fire departments should invest in developing a body of knowledge on their revenue stream and become experts at relating the revenue stream to budget expenditures. We must do everything we can to prove to our political bosses that we are one of the best investments in town. If your feet can't touch bottom, then you better be ready to swim.

With more than 40 years in the fire service, Ronny J. Coleman has served as fire chief in Fullerton and San Clemente, Calif., and was the fire marshal of the State of California from 1992 to 1999. He is a certified fire chief and a master instructor in the California Fire Service Training and Education System. A Fellow of the Institution of Fire Engineers, he has an associate's degree in fire science, a bachelor's degree in political science and a master's degree in vocational education.