Victoria State Emergency Service Unit Costing Review Mary Barry Chief Executive Officer Victoria State Emergency Service September 2008.

Victoria State Emergency ServiceUnit Costing Review

Mary BarryChief Executive OfficerVictoria State Emergency Service

September 2008

VICSES FUNDING

VICSES Output Price Review 2006/2007

• Delivered $40million to VICSES over 4 years– Systems Development and Implementation (OIMS/SAP)

– Broadband to all Units

– Volunteer Support Officers X 6

– OH&S and HR Support to staff and volunteers

– Funding to establish Statutory Authority to meet

legislative and statutory obligations

OPR Terms of Reference did not include Unit funding

Unit funding

• Funding Agreement 1990 - operating costs of VICSES Units shared by State Government and Local Councils.

• $5,000 per annum (1990) to cover power, lighting, heating, phone, pager services, fuel and consumables.

• Increased by CPI - $10,780 p.a. in 2008/09• Many Local Councils pay over and above the

minimum subsidy including the provision of cash, fuel, insurance and maintenance.

• All units irrespective of size or ERAS outcome are allocated the same minimum funding

• The level of funding to Units has not been The level of funding to Units has not been reviewed since 1990reviewed since 1990

Unit activity has increased by 50% since 2005/06

Changing weather patterns have seen a significant increase in VICSES response to storms/floods

• Tasks have increased from

8,436 in 2005/06 to

15,538 in 2007/08,

85% increase• Total Unit activity has increased:

13,317 tasks in 2005/06

19,890 tasks in 2007/08

49% increase • Unit activity is expected to

increase further as the incidents of severe weather conditions continue to rise (Climate change).

VICSES REVIEW OF UNIT FUNDING

• The Unit costing project was initiated to get a better understand of Unit cost drivers and pressures.

• Grant Thornton appointed in February 2008 to:

– Do analytical review of small, medium,large

Units based on audited data for 2006/2007

– Detailed Unit costing model incorporating:• Identification of cost drivers for Unit costs• In-Kind support provided by Councils• Identification of minimum/standard costs

involved in running unit and a $ range• Consideration of relationship of cost to variables

Unit tasks (RCR), Membership, and ERAS.

The project approach involved a number of key steps:

• Selected sample of Units representative of the Unit population: 3 small, 20 medium, 5 large – 20% of all units = 28

Total Units: 20 small, 95 medium, 25 large = 140

• Survey to collect key financial and activity information for 2006/07. Information collected via the survey was cross-checked to 2006/07 Unit financial statements where possible.

• Liaise with key stakeholders at Units to clarify elements of financial statements and activity.

• Identification of cost drivers for Unit costs and minimum/standard costs involved in running a VICSES Unit and a $ range.

• Determine relationship of cost to variables such as Unit tasks, Membership, ERAS and Road Crash Rescue.

In many cases representations made by Units have been relied upon in the compilation of the results

• Surveys were circulated to participating Units for completion based on their operating results for 2006/07.

• Where possible the information provided by Units was cross checked to Unit Financial Statements.

• Units were also asked to provide details, including an estimate of the value, of "in-kind" support provided by the Local Council or other organisations. Unit representations on the level and value of "in-kind" support were relied upon when reporting the value of support provided.

The current Unit subsidy is meeting less than 50% of the operating costs of medium and large Units

• SES Unit operating costs increase substantially as the size of the Unit increases, this is mainly in the area of Vehicle expenses.

• Unit subsidy is only meeting 49% of the costs of medium Units and 39% of the costs of large Units.

• The operating costs of large Units are greater than medium Units by 24%.

• Whilst the subsidy is generally meeting the operating costs of small Units these comprise only 15% of VICSES Unit population.

Operating costs per volunteer are comparable between Units, indicating the number of volunteers is a driver of cost

• Operating costs per volunteer are comparable between Units indicating that the number of volunteers per SES Unit is a driver of cost.

• The number of volunteers per Unit is also indicative of the size and number of tasks completed by each Unit.

The operating costs of metropolitan Units are slightly higher than regional Units

• Metropolitan Unit costs average 4% higher than regional Unit operating costs.

• Regional Units comprise 77% (108) of the total population of 140 Units.

The operating costs of Units providing Road Crash Rescue services are higher than those that don't

• Operating costs for those Units providing Road Crash Rescue services are 11% higher than for those Units not providing those services.

• Units providing Road Crash Rescue services comprise 72% (101) of the total population of 140 Units.

The composition of operating expenditure was reasonably consistent regardless of the size of the Unit

For all three types of Units the largest expenditure items were: – motor vehicle expenses and

overheads (at least 60% of total operating costs).

– Overhead costs comprise rent, office supplies, insurance etc.

• The percentage of operating costs spent on overhead and motor vehicle costs is higher for the medium and large Units.

• This is expected due to the increased levels of equipment and vehicles held by these Units.

In-Kind Support from Councils

• The nature of in-kind support varied greatly between Units.

• The level of in-kind support is not correlated to the size of the Unit but is dependent on the relationship between the Unit and their local council & community.

• Medium sized Units receive

the largest percentage of in-kind support from councils and local communities

• The types of in-kind support provided included:

– Rent, Rates– Equipment, Fuel– Repairs & Maintenance– Insurance – Utilities and Water

Participating Units

WHERE TO FROM HERE?

VICSES submission to 2009 ERC funding round:

Current minimum Subsidy all Units $10,780 $ 5,390 matched

New proposed subsidy:• Small Units 20 $12, 052 $ 6026 matched• Medium Units 98 $23,349 $11,674 matched• Large Units 25 $28,726 $14,363 matched• Total 143 (includes 3 new units)

• Total Subsidy Cost to State Government $1,623,682• Less Existing Subsidy Funding $ 754,600• Total Additional Funding $ 869,082