On July 1, 2020, the Placentia, California’s new Fire and Life Safety Department commenced operations, marking a revolution in California firefighting – and in municipal finance. As documented in the two previous installments of this report, Placentia’s new and independent department replaced the more expensive services (part one) that had been provided by the union-dominated Orange County Fire Authority (OCFA). The savings to the small city (part two) are estimated at over $2 million per year.
How Placentia declared independence from OCFA cannot be described by merely summarizing the process followed by the local elected officials, although that is an essential part of the story. The full accounting of their experience has to include their interactions with one of the most powerful public-sector unions in Southern California, Local 3631, the union representing OCFA firefighters.
During interviews with local elected officials in Placentia and neighboring cities, city employees, and consultants involved in the effort to create the new department, the power of Local 3631 came up repeatedly. How this union used its influence is a story that cannot be ignored in any accurate account of what it took for Placentia to break free of OCFA.
The Timeline to Independence
Back in 2016, faced with a structural budget deficit that had defied previous attempts to remedy, Placentia’s city council formed a “citizens fiscal sustainability task force.” The goal of this committee was to come up with suggestions to make the city financially sustainable over the next few decades. They came back with a handful of suggestions that would make a difference. One of these was to review the city’s contract with OCFA.
In 2018, after much discussion, the city gave OCFA the required two-year notice that they intended to terminate their contract. If they didn’t serve notice in 2018, the contract would have automatically renewed in 2020 for another 10 years, and the city would have had no option but to continue purchasing services from OCFA until 2030. The initial intention was not to leave OCFA, but to have that option in order to negotiate with OCFA and to investigate alternatives.
By the end of 2018, however, with negotiations stalled, city officials put out a request for proposal (RFP) to alternative fire service providers. They were hoping that neighboring cities with independent fire departments would bid to extend their services into Placentia. But the responses they received weren’t viable.
The problem was primarily the cost of personnel. According to data the City of Placentia provided to the California State Controller, the average OCFA full-time firefighter in 2018 earned pay and benefits of $241,230 – not including the cost of paying down their pension liability, or the costs to pre-fund their retirement health insurance. Meanwhile, according to the U.S. Census Bureau, the median household income in Placentia in 2018 was $89,690, just a bit more than one-third as much.
Costs continued to rise. There was no apparent progress either in negotiations with OCFA or in RFPs from surrounding cities. In early 2019, the City of Placentia put together a panel of experts and spent the spring exploring options. On June 4, 2019, the city council made the final decision to form an independent department.
With July 1, 2020, as their termination date, Placentia had one year to put together a fire department that was ready to replace OCFA’s services. They hired a team of retired fire chiefs and fire professionals to guide them through the process. They made sure to include experts who were familiar with the operating model they were putting together. There was a lot of work to do.
Over the next several months, the city purchased the equipment the new department would require, a job that included lining up financing for these acquisitions. The city already owned the fire stations, which was a big help. The city then conducted a nationwide search for a fire chief who, in turn, began the process of hiring the battalion chiefs who, in their turn, would hire the fire captains and the rest of the personnel. The city upgraded its dispatch team to handle police and fire, since previously the team would transfer fire calls to OCFA dispatchers. They also began work on the protocols governing how the city would work with neighboring cities to coordinate emergency response.
What Placentia has done would take extraordinary effort even without special-interest opposition. But the model they pioneered included several major changes. These included the need to supplement the full-time firefighters with trained volunteers as reserve firefighters; to hire part-time firefighters to reduce overtime costs and categories of “other pay”; to replace the defined-benefit pension with a defined-contribution 401A plan; and to hire an outside contractor to provide ambulance services.
Taken together, according to officials speaking for the city, Placentia has created a fire and life safety department that offers more deployed trained personnel to respond to emergencies at far less cost. It is a model that, should it prove to be everything it expects to be, represents a fundamental change in how fire departments might operate.
For precisely that reason, however, Placentia’s plan drew attracted vehement opposition from the firefighters union.
The War for Independence
From the moment the union representing OCFA firefighters realized the City of Placentia was serious about forming its own fire department, the union began to use its influence in opposition. Three city council members formed the pro-independence voting majority on June 4, 2019; each was told by a union representative that they “would never get elected to another office again as long as I’m living and breathing.”
Union members showed up at council meetings from then on to voice opposition to the steps the city council was taking. They literally yelled at the city council and city staff, in some cases “accidentally” bumping into them in crowded meetings. There were occasions when the mayor had to have a police escort from the council meetings to her home because of fears for her personal safety.
At one point the union leaders asked for private meetings with each of the members of the city council, and asked what it would take for Placentia to renew its contract with OCFA. But it’s important to note that this apparent sign of flexibility didn’t take place until Placentia had already made the decision to terminate the contract and was well into its exit strategy.
But how these union officials characterized their ability to negotiate on behalf of OCFA – the agency that employs them – is revealing.
The appropriate presumption in contracts between government agencies is that the head of the agency, in this case the OCFA fire chief or deputy fire chief, subject to the oversight of the elected board, is the party empowered to make requests or concessions in a negotiation. But these union leaders said – and this was confirmed in interviews with multiple sources – “it doesn’t matter what the chief or the board wants, we can get you whatever you want.”
One example of the union’s reach concerned Placentia’s relationship with CalPERS, the state agency charged with managing public employee pensions. While Placentia planned to offer 401A defined-contribution plans to their new firefighters, they had a legacy contract with CalPERS left over from nearly 40 years ago. This was because before Placentia used OCFA to perform fire services, they had already run their own fire department, a department with a retirement plan through CalPERS. Some of those firefighters were still alive and collecting CalPERS benefits, so Placentia, going through all the proper channels, made arrangements to exit CalPERS by paying the required buyout amount.
But not so fast. When the unions found out that CalPERS was going to let Placentia out of their contract, they contacted CalPERS at the highest levels and objected. Suddenly the process slowed and it became uncertain whether Placentia would be allowed to exit CalPERS. City officials believe that if they had not already nearly completed the process, and had their actions been legally vetted by their own attorneys as well as inside counsel at CalPERS, they would not have gotten out. In one of the final meetings, CalPERS officials told representatives from the firefighters union that “they would work on legislation to close this loophole” for future cases.
They weren’t kidding. Legislation is already moving through the state legislature to prohibit any public agency from establishing a fire department not covered by California’s Public Employees’ Retirement System.
There were other troubling indications of just how much political power the unions were able – and willing – to deploy against Placentia. In one of the most provocative instances, the fire fighters union directly leaned on neighboring fire agencies to refuse service in Placentia. Typically fire departments have “automatic aid” agreements by which the nearest units to an emergency situation are the ones who are dispatched, regardless of which agency operates the units. This means that there are frequent cases where, for example, a unit from Fullerton will handle a call within Placentia’s city limits, and vice versa.
But the unions attempted to disrupt this common public safety practice, and pressed neighboring cities to refuse automatic-aid agreements with Placentia. Claiming that Placentia’s new fire department is not properly equipped or adequately staffed, these unions pressured the chiefs and city council members in neighboring cities to agree to weaker, more dangerous so-called “mutual aid” agreements. Mutual-aid agreements, there’s an added layer of approval required before sending a unit across jurisdictional boundaries. This practice can add to response time, endangering people in distress.
As discussed in part two of this report, it’s at least arguable that Placentia’s fire department is as well-equipped as its neighbors to handle emergencies. In fact there is a strong case that their fire and life safety department is more capable than the neighboring fire departments. But the union’s objections are unrelenting, as exemplified in this video the union released on June 4, entitled “Placentia at risk.”
The result of the union campaign against automatic aid agreements is that so far, only one neighboring city, Fullerton, has approved an automatic aid agreement; it appears unlikely that any of the other cities will do so. Even in the case of a tiny unincorporated area surrounded by Placentia, and within less than half-a-mile of one of its fire stations, it required a vote of the Orange County Supervisors to ensure that at the least this small enclave received automatic aid from Placentia’s new fire department.
Political retaliation by the unions is expected to take the form of political spending to defeat the reelection campaigns of the three councilmembers who voted for independence, Rhonda Shader, Ward Smith, and Craig Green.
But it won’t end there. It is reported that the union plans to circulate petitions to local voters to repeal Measure U, approved in November 2018 to increase sales taxes by 1 percent. Why on earth a public-sector union that has not only endorsed but funded campaigns for new taxes oppose this one?
As one union official reportedly declared, the union’s opposition to the new tax is designed “to make sure that Placentia and every other city knows what happens when you leave OCFA.” But another motivation could be the design of Measure U, which makes so much sense that perhaps even a conservative could get behind it. The use of funds raised by Measure U must, in perpetuity, be allocated as follows: 50 percent for firefighting infrastructure, 20 percent to build up reserves, 10 percent to pay down the pension liability and retirement insurance liability, and only 20 percent for staff compensation.
But the revenue raised by Measure U is the flip side of the decision by Placentia to manage costs. The structural deficits they faced four years ago are now being managed. What the city council did, not only with respect to creating their new fire department, but also in terms of how they’re using the additional tax revenue they collect, reflects a rare recognition of reality combined with an unusual display of courage, and a balanced approach to fiscal management.
Local elected officials who study Placentia’s struggle to achieve financial health need to understand that knowing what to do is less than half the battle. They must also be prepared to fight a war with public-sector unions that wield extreme power and are prepared to fight reforms that threaten their interests with every tool they can muster.
These unions, on the other hand, especially those representing perhaps our most revered public servants of all, firefighters, might reconsider just how far they’re willing to go in damaging public safety – in bodily and in financial terms – when perhaps some of these new approaches are a vital part of what it’s going to take for all public agencies to make it through the times to come.
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Edward Ring is a contributing editor for the California Policy Center.