Officials report budget shortfall of up to $3 million, possible need to reduce staffing

By Buffy Pollock, Rogue Valley Times

During a three-and-a-half-hour meeting Tuesday, the Jackson County Fire District 5 board offered a glimpse into the embattled district’s financial woes, including how it went from receiving an unprecedented amount of grant funding to possibly running out of money before the year is out.

District officials reported a budget shortfall of between $1 million and $3 million, at least in the near term, and a need to reduce staffing by up to a dozen people if drastic steps are not taken.

In a review of the district’s finances, interim Fire Chief Aaron Bustard informed board members, and an audience of about 20, of measures underway to save money.

All discretionary spending, Bustard said, has been “completely shut down.”

A firetruck ordered to replace one lost in a collision on Dead Indian Memorial Road in October has been canceled — despite the old one being insured — for a lack of funds.

The district has stopped participating in out-of-county deployments in which local fire districts and departments contribute personnel to a strike team mobilized to assist surrounding regions in large-scale emergencies. Bustard said the district could not in good faith send resources given the current uncertainty.

To deal with staffing shortages and a freeze on overtime, Bustard said neighboring districts have increased mutual aid to help with calls for service. Fire District 5 has also stepped up efforts to recruit volunteer firefighters to boost staffing levels.

“We’ve been forced to make a decision on how many people, basically, that we can staff per day,” Bustard said. “We want to keep three personnel on every fire engine. Because of that, we’re down to where we can staff two fire engines a day.”

To make payroll, Bustard said the district took out a line of credit earlier this year. The district serves over 22,000 people and operates fire stations in Phoenix, Talent and unincorporated Ashland.

Tuesday’s meeting comes just one week after the board unanimously voted to terminate the contract of district Chief Charles Hanley after an investigation corroborated allegations of covering up sexual harassment, covering up and participating in bullying, and interfering with a governmental promotion board.

Concerns about Hanley’s leadership were first raised publicly in February when members of the International Association of Fire Fighters Local 2596 said they had lost confidence in the chief.

In the months that followed, three board members resigned en masse, the Jackson County commissioners appointed their replacements, the district’s financial crisis became apparent, and district officials began developing plans to seek help from Jackson County Fire District 3 through an intergovernmental agreement.

To help combat the budget shortfall, Bustard said the district had reduced employee benefits — the interim chief himself took a benefit reduction, according to board chair Greg Costanzo — and also got board approval Tuesday to sell off district equipment.

Bustard said he saw red flags prior to being named interim chief in May, but that the reality of the district’s financial situation was worse than he could have imagined. Bustard said revenues were over-forecast, line items under-budgeted and grant dollars that flowed in after the devastating Almeda Fire in 2020 poorly managed.

Just a year ago, the district was busy focusing on construction projects — including a station retrofit, a civic building in Phoenix and a new training facility — and added staffing.

Bustard said he quickly realized “our funds in hand were not enough to make it through the end of the year.”

Board member Chris Luz explained to audience members that things had been “a little bit siloed here in the district, whereby the former chief really had a grip on the finances and the budgeting and what was going on behind the scenes, and it wasn’t shared with everybody as much as it maybe should have been.”

Board secretary Derek Volkart remembers, before he served on the board, attending a budget meeting in which Hanley was “patted on the back for getting all that grant money.”

“He said, ‘Time to grow the district from the California state line to the city limits of Medford and charge forward,’” Volkart recalled. “And here we are from $8.5 million in grant money to facing bankruptcy.”

Bustard said the district had rehired a previous office manager and finance officer “to get a perspective on what the financial outlook was for the year.” They provided a projected budget that showed the district possibly running out of operating funds in November.

Board member John Karns, who serves as fire chief for the Medford airport, said he was shocked by salaries in the district that are “above what is acceptable” and by the financial mismanagement that had taken place.

“You don’t take a district with personnel of around 25 and then add 21 people to that. It’s completely unsustainable,” Karns said.

“Astonishing finances here. And what was even more astonishing is they’re getting by the board. Absolutely asleep at the wheel.”

Karns said he hoped to see the district move forward with an intergovernmental agreement with Fire District 3.

In recent months, District 5 officials met with fire officials from Ashland, Medford and District 3 and directed Bustard to continue discussions with District 3.

District 3 Chief Mike Hussey said his district would provide some options that could bring District 5 reduced costs for certain administrative roles.

“We have an opportunity here with District 3. District 3 is the class of the field in two counties of Rogue Valley fire districts,” Karns said.

“They have the most resources, the most expertise … I hope everybody is unanimous — management, union, board, citizens, all cooperate on this because this opportunity will not come to us again.”

After Tuesday’s meeting, Bustard said support from around the region had been key in helping the district navigate its struggles.

Bustard and board chair Greg Costanzo urged the community to give input and to participate at upcoming meetings. Bustard said he felt hopeful that there were still options for the district to move forward.

“If we were a standalone agency and there was no one to assist us, there was no partnership, then people should panic, because no one would be coming,” he said.

“We have been a really strong partner to other agencies through the years, and now they are being strong partners to us … And that’s what I would tell the public, is that we’re navigating this, but we’re not being left out on our own.”

Reach reporter Buffy Pollock at 458-488-2029 or bpollock@rv-times.com. Follow her on Twitter @orwritergal. This story first appeared in the Rogue Valley Times.