Cost Accounting in Local Government

What Can Fire Fighters Teach Police Officers?

One of the advantages of seniority is that you can see how local government has changed over the years. One of the dramatic changes that I have witnessed in many California cities is the transition of the fire profession from the one-horse function of suppression to the full-team of fire/life safety. Many fire departments now spend more time eliminating the causes of fires than they spend fighting fires. The continuation of this work has been partially financed by issuing permits for activities with a high risk for causing fires. This function-related revenue plus the realization that the fire risk will return without enforcement has lead many local governments to institutionalize the fire prevention function.

On the other hand, I have seen many California local governments react to crime by increasing the number of police officers. If they have created a crime prevention program, it is one of the first programs to bite-the-dust in a period of budget contraction.

As a result, there is a tremendous growth industry in the provision of burglar alarm systems. It’s been mentioned that home security is a $30 Billion industry which is growing at a rate of 7% to 8% compounded annually.

The growth of this industry has been matched by the increase in false alarms to the point that some department’s response is lackadaisical. When we had a burglary at our old office in Anaheim, the alarm system alerted the alarm company, which called the police. The response was so slow that the burglars were long gone before the police arrived. We joked at the time that the alarm company should have called the fire department as their response time was faster and it would have scared off the burglars.

So, what’s happening? On the one hand, you have home and business owners installing alarm systems to protect their property. On the other hand, you have cities establishing alarm permits and charging for excessive false alarms. Each party is irritated by the other. Why should I pay for an alarm permit when I’m helping the police to do their job? versus Why should we respond to alarm calls when over 90% are shown to be false?

This is a perfect opportunity for a paradigm change. Rather than fight alarm systems, I suggest that police departments embrace alarm systems.

When I started in this field, many departments had alarm boards where alarm systems, mostly businesses, came direct to the dispatch center. As the boards aged, most departments discontinued the service rather than replacing the boards with more modern equipment because this was viewed as a cost center not a revenue center.

Let’s do a sample business plan using my home town for the numbers:

  1. Nationally, most companies that monitor alarm systems charge between $15 and $40 per month. Also, nationally, 17.8% of all homes were alarmed in 2000, compared to 7% in 1988.
  2. My town has 40,000 homes and 11,000 businesses.
  3. If we estimate that 10% of the homes would want our municipal alarm system at $15 per month, it would amount to $720,000 per year.
  4. If we estimate that 25% of the businesses would want our system at $40 per month, it would amount to $110,000 per year.
  5. Assuming that the current water billing system could incorporate our fixed monthly charge, there would be minimal on-going expense after the initial setup.
  6. The direct cost of the current dispatch center is about $1.7 Million. Since private alarm monitoring centers will generally call a dispatcher when getting an alarm, it is hard to estimate how much additional workload would be created. However, the revenue stream would be almost 50% of the current budget. With eleven dispatchers currently, this new revenue would support at least five additional dispatchers.

Other benefits:

  1. The town becomes known for an aggressive response to burglar alarms which, by itself, will decrease the number of burglaries.
  2. The town doesn’t need the alarm permit except for residents and businesses that are not using the municipal alarm system.
  3. The town can better manage false alarms through training and maintenance services that it offers to customers while still charging for excessive false alarms.

Finally, through closer contact with the police department, the town becomes more crime resistant. The department is proactively preventing crime rather than reacting after it’s occurred just like the fire department is proactively preventing fires rather than relying on fire suppression.

Comments are currently closed.