Editor’s note: Penn Valley Fire Protection District submitted their response to a Grand Jury report questioning the District Board’s “Lack of Attention to Their Fiscal Responsibility.” The responses paint a different picture.

Findings

F1. PVFD’s current and anticipated revenue strearn will not support the November 2024 promotions and hires for more than a few years.

DISAGREE – Penn Valley Fire Protection District, which now also includes the former Rough and Ready Fire Protection District, is financially stable. Long term financial projections indicate sustainable revenue to support the 2024 promotions and hires.

F2. The timing and funding issues with respect to PVFD’s November 2024 promotions and hires caused the collapse of the four-way reorganization discussions.

DISAGREE – It was NCC’s decision to withdraw from the consolidation conversation, without any discussion with the Consolidation Committee, the PVFPD Chief, or with the boards of the four involved agencies. The NCC Chief was well aware of the intention to make promotions and hires. PVFPD assumed he was speaking with and for the NCC Board when championing these staffing changes. As an employee and not an elected official, he was not bound by The Brown Act and spoke routinely and freely with NCC and individual PVFPD board members and staff. Conversations between individual PVFPD Board members and the NCC Chief re: these specific promotions, including timing, had been ongoing since the early Summer of 2024.

In the October 1, 2024, PVFPD Board Meeting, the NCC Chief was specifically asked by a PVFPD Board Member if the promotions being proposed would impact the consolidation effort, to which he was recorded replying, “now is the time and the sooner the better!”

Furthermore, NCC refused to provide any meaningful financial data to PVFPD, including the PERS actuarial. NCC refused to allow the involvement of the PVFPD CPA/Finance Manager in the preparation of financials for the consolidated agency for which she was intended to become Finance Manager. NCC appeared to be meeting without the knowledge or participation of the Consolidation Committee, PVFPD Chief, PVFPD Finance Manager, Organized Labor, Public Relations Committee or the boards of PVFPD or R&RFPD to craft the Service Plan, Organizational Chart and narrative of the proposed consolidation. PVFPD was being excluded in the consolidation planning.

Lack of trust between PVFPD and NCC was growing; collapse was inevitable.

F3. The November 2024 personnel changes would have remained effective in the proposed four way agreement.

AGREE — These personnel changes were discussed, at length, with the NCC Chief prior to implementation with his assent. They were included in the consolidation Organizational Chart (attached) created and distributed by NCC.

F4. Because Penn Valley made the promotions and hires when it did, personnel at NCC, Rough, and Ready, and Ophir Hill lost the opportunity to compete for those positions.

AGREE – The promotions were offered to the most qualified for the positions, the three PVFPD Captains who had been working out-of-class as Battalion Chiefs for 10 years and who were uniquely qualified to run an Advanced Life Support agency, including an ambulance service. These promotions had been discussed at the Consolidation Committee, and it was the agreement of the committee that the PVFPD Captains merited the positions. Note that at this time there was an operational need to make the promotions, there were no personnel at R&RFPD, the NCC generated Consolidation Organizational Chart (attached) clearly showed three Battalion Chiefs in the PVFPO area, and the consolidation had not taken place. Further, these promotions had the full support of the NCC Chief, as evidenced by the October 1, 2024 PVFPD Board of Directors Meeting audio recording where a PVFPD Board Member specifically asked the NCC Chief if he was in support of making these promotions at this time, to which he replied “now is the time and the sooner the better!”

F5. ln making those personnel changes. Penn Valley’s Board depended on the tax increases that would occur in the four-way consolidation.

AGREE – As had been the discussion and understanding throughout the process and had been documented in the NCC-generated and distributed Plan For Service and Organizational Chart page 54 (attached), these three positions, as well as the creation of additional positions that included a Chief overseeing Fleet and Facilities that was offered to the PVFPO Chief, were intended to be funded through the tax shift agreed upon between the agencies. Note, however, that the savings generated by planned overtime reduction, increased ambulance revenue and billing of Chief services to R&RFPD actually covered the expense of promotions,

F6. That assumption by the Penn Valley Board deprived its potential partners of any voice in how to allocate these additional tax revenues.

DISAGREE – As had been the discussion and understanding throughout the process, had been discussed between the Consolidation Committee, PVFPD Chief and NCC Chief, and, had been documented in the NCC-generated and distributed Plan For Service and Organizational Chart (attached), these three positions, as well as the creation of additional positions that included a Chief overseeing Fleet and Facilities that was offered to the PVFPD Chief, were intended to be funded, in the long term, through additional funds generated by consolidation, PVFPD, as a sole entity, was able to support the promotions with savings from the reduction of planned overtime, increased ambulance revenue and by billing R&RFPD for Chief Services.

F7. The Board has delegated authority for budget construction and decisions to the Chief and the Finance Manager.

AGREE – Per PVFPD Bylaws, the Fire Chief is directed to prepare and submit for approval key documents, including the preliminary budget, final budget and a monthly financial report. PVFPD employs a Finance Manager that is a CPA. The Finance Manager and the Fire Chief, with input and the publicly transparent oversight of the Board of Directors, at no less than three (3) monthly board meetings annually, are delegated authority to prepare and present to the board for consideration and approval, the preliminary budget and the final budget. The responsibility for adopting and adhering to a budget remains with the Board.

F8. The responsibility for adopting and adhering to an appropriate budget remains with the Board.

AGREE

F9. In this decade, PVFD’s Board has approved the budgets that the Chief and the Finance Manager created without change.

DISAGREE – The Board has always been involved in budget oversite, asks questions and requests clarification and/or changes as deemed necessary. The agency employs a CPA as Finance Manager, who works with the Chief to draft budgets that are conservative and responsible.

The draft budget comes before the board a minimum of three (3) times before approval, and remains a fluid document that is reviewed monthly, via financials included in the publicly posted monthly board packets. This report erroneously makes claim that the board asks no questions and makes no changes to the budget, based on a review of approved meeting minutes. According to Robert’s Rules of Order, by which we govern, minutes should state what happened, not what was said, so detailed arguments and specific questions are not typically included.

F1O. PVFD’s Board does not maintain appropriate oversight of the district’s financial condition.

DISAGREE – The PVFPD Board is uniquely able to demonstrate the ability to begin each fiscal year with an average of $2.5M in the bank after all obligations are met. This amount has been growing all but one of the past 5 years, including the current, post promotion fiscal year. The Board has demonstrated and continues to demonstrate a solid understanding of its financial situation, as authenticated by its financial stability and growing reserves.

F11. The Board of Directors and each of its members has fiduciary responsibility to the district and its residents.

AGREE

F12. In approving promotions and hires without a sufficient revenue stream to support them for more than limited period, the Board has not fulfilled its fiduciary responsibility to the district.

DISAGREE – There was always a planned revenue stream to support these promotions. The financial implications of adding Battalion Chiefs was discussed in detail in PVFPD Board Meetings, as wen as with both the NCC Chief and PVf PD Chief and was approved by both Chiefs as a needed measure to continue the work of the consolidation. Had either Chief recommended against the promotions, or if there was any doubt as to the sustainability, the board would not have supported the promotions.

F13. PVFD expended district money for tile promotions and hires before its Board had approved the expenditure, the promotions, or the hires.

DISAGREE – The referenced expenditure falls under the discretion of the Fire Chief as a customary clothing expense in the adopted 2024-2025 fiscal year budget. No board approval was required.

The PVFPD board reached consensus in the October 1, 2024, board meeting, attended by the NCC Chief. In that meeting, the board directed staff to provide financials relative the promotions and new hires to present at the November 5, 2024, board meeting. Everyone was in agreement, including the NCC Chief, as evidenced in the audio recording of the October 1, 2024, meeting, which was provided to the Grand Jury.

F14. That expenditure violated § 601 of PVFD’s bylaws.

DISAGREE – The aforementioned by-law does not pertain to this purchase. In no way did the purchase of badges “bind the District by any contract, or pledge its credit, or render it liable for any purpose in any amount without prior specific approval of the Board” Badges are customary purchases and, in this case, fell under the board approved 2024/2025 budget line CLOTHING, per our SOP 101-Purchasing (attached).

F15. If the Board had already approved the promotions, hires, and expenditures, then the approval was not done in an open Board meeting and therefore violated the Brown Act.

DISAGREE – There was consensus in the October 1, 2024, public PVFPD Board of Directors meeting, and direction was given to staff to bring back the financial implications at the November 5, 2024, board meeting. The promotions were approved at the November 5th meeting.

F16. PVFD is moving forward with consolidation with R&R, but it is not completed.

DISAGREE – Upon publication of this Grand Jury Report the two districts had been consolidated for twenty (20) days. This finding contradicts a statement in the report on Page 10.

F17. Increased tire tax revenue from consolidation with R&R may help to offset the anticipated funds shortfall to which F1 refers.

AGREE- There is no anticipated shortfall. As stated in response to F1, Penn Valley Fire Protection District, which now also includes the former Rough and Ready Fire Protection District, is financially stable. Long-term financial projections indicate sustainable revenue to support the 2024 promotions and hires

F18. The increased fire tax revenue from consolidation with R&R will be close to $1 million per year.

AGREE – The increased tax revenue will exceed $1M/year.

F19. The increased fire tax. revenue from consolidation with R&R is not sufficient to cover the cost of PVFD’s November 2024 personnel changes over the long-term.

DISAGREE- The increased revenue from consolidation is sufficient to cover the costs of PVFPD’s November 2024 personnel changes over the long-term.

F20. T!1e public would have been better served by consolidation of PVFD, NCC, R&H, and OH, as originally planned.

DISAGREE – There is no supporting evidence for this assumption. Factually, the residents of Rough & Ready now have advanced life support services, including a paramedic-staffed ambulance. That would not have happened had the consolidation continued with NCC. Station 59 frequently responds to Penn Valley, Grass Valley, Nevada City and into the NCC District, providing ALS services including a transporting, medic staffed ambulance.

Recommendations

R1, PVFD’s Board should have a budget subcommittee that participates fully with the Chief and the

Finance Manager in producing each year’s budget.

AGREE – The board will take action to appoint a Finance Committee.

R2. PVFD’s Board should have mandatory training about the Brown Act’s requirements.

AGREE – PVFPO board members and au elected officials in the State of California are mandated to attend AB1234 Ethics Training every two years. AB1234 Training includes training on the Brown Act. All PVFPD board members are in compliance.

R3. PVFD’s bylaws should be available to the public on PVFD’s v-1ebsite.

AGREE – Though not mandated by any legislative body or directive, PVFPD has included a copy of the bylaws on the district website.

R4. PVFD’s bylaws should clearly state the Boards duties, making clear that each Board member has a fiduciary responsibility to the District and to the stakeholders, including au residents of the District.

AGREE – The board will take this recommendation into consideration during its next regular review of the bylaws.

R5. PVFD should pursue consolidation with NCC/OH in order to take advantage of economies of scale.

DISAGREE – There are no economies of scale in the previously proposed consolidation, nor was the previously proposed consolidation intended to provide economies of scale. The intention, clearly demonstrated by the proposed Plan for Service and the Organization Chart (attached), was to add staff to provide better service to the consolidated district.

PVFPD has been able to accomplish this intended higher level of service to constituents through our consolidation with Rough and Ready, bringing an additional ALS ambulance online to help relieve the shortfall of ambulances in Nevada County, and adding staff to respond to emergencies inside our newly expanded district, as well as in surrounding districts. No evidence has been presented that consolidation with any particular agency ls necessary at this time.

R6. PVFD should consider hiring a new auditor.

AGREE – We are currently under contract through the 2026 audit and will issue an RFP for future audits at the appropriate time. The board evaluates that proposals and selects the lowest responsible bid, in accordance with accepted fiduciary expectations. The district will continue requesting proposals from licensed CPA firms.

R7. PVFD should consider rotating auditors every five to seven years, pursuant to the recommendation of the California State Controller’s Office.

AGREE -As stated in our response to R6, we will issue an RFP following the conclusion of our current contract. Although we have remained with the same auditing firm for a number of years, the lead auditor rotates every six (6) years, pursuant to AB1345.

The full response, including attachments, can be downloaded here.