Victoria State Emergency Service Unit Costing Review

1
Victoria State Emergency ServiceUnit Costing
Review
September 2008
Mary Barry Chief Executive Officer Victoria State
Emergency Service
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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
• OHS 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

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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
  reviewed since 1990

4
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).

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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.

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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.

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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.

8
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.

9
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.

10
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.

11
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.

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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.

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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

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Participating Units
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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