The Office of the State Comptroller (OSC) released an audit of a Fire District (FD ) on Christmas Eve, December 24, 2024. Here is a link to the full report:
The audit focused on Board Oversight, including the LOSAP point system, which is our focus. The report provided a lot for us to comment on, so much so that this first post will be summary only, with more analysis provided in future posts. We will begin with some context, then break out the four major topics covered in the report, all of which will be expanded upon in the future.
Context on OSC Audits & Opinions
Due to the lack of legal opinions from the OSC, these audit reports have become the primary way we can learn how the OSC interprets the statutes and their recommended best-practices. The last legal opinion on volunteer firefighter LOSAP was Opinion 2003-3, which had to do with the maximum benefit that can be earned in a defined benefit plan. To be fair, the OSC might not have been asked to give a legal opinion on LOSAP since 2003. Interestingly though, in 2024 the OSC issued the first legal opinion of any kind in 12 years.
Another important point of context is that an opinion is just that – an opinion. The OSC legal team can have an opinion, as can the OSC auditors, an attorney representing a LOSAP sponsor, a CPA performing a LOSAP audit, or Firefly for that matter. It is not until a judge has ruled in a case that we would have a legally binding interpretation of a law. The most notable case being the age discrimination lawsuits that ushered in post-entitlement age benefit accruals.
For this particular audit report, we disagree with some of the conclusions made by the OSC. However, we recognize that the opinion of the OSC, or a LOSAP sponsor’s legal counsel, would carry much greater weight than ours. Our guidance is always caveated that we are not attorneys and cannot give legal advice.
Additionally, our guidance is largely based on what has been learned from OSC legal opinions and audits, and the assumption that our client wants to avoid criticism by the OSC in an audit. The Fire District also appeared to disagree with the OSC report in a few instances and expressed it felt justified continuing current operations despite the OSC’s criticisms. That is partly what makes this report so fascinating to read.
General Point System Design
The OSC recognized that when developing the point system, a LOSAP sponsor can utilize some or all of the nine (9) categories provided in the statute, and that it does not have to offer the maximum number of points provided in the statute. However, the OSC appeared critical that the District intentionally designed their point system to include only five (5) categories, saying that this did not allow for flexibility in how a member could earn the required 50 points for a year of service credit.
General Points Crediting & Activity Type
The District’s point system limited training points to eight (8), and it seems that it also limited the maximum number of points per course to five (5). However, a training course that is 25 hours long would normally be 10 points based on the statutory scheme. The OSC didn’t seem to be critical of setting a per-course maximum of five (5), as it stated in the report that “the point system could have (emphasis added) permitted additional points to be earned for courses lasting 20 hours or more.”
Regarding the miscellaneous category, the OSC has consistently stated that a miscellaneous activity is one (1) point per activity, no matter the length of the activity, which was repeated in this audit report. The OSC also questioned if some activities qualified as miscellaneous activities – either because they were activities that would fall under one of the other categories or if the activity met the definition of a miscellaneous activity. In the latter case, the OSC did not opine if the activities were covered by VFBL.
Department Responses: Calculating the Minimum Response Requirement
The FD was calculating the minimum number of calls required to earn 25 points in the department responses category on a progressive scale rather than a flat scale. The OSC’s opinion is that the flat scale is the correct interpretation, but the FD’s response stated their legal counsel noted there is no case law on how to calculate the number of calls to earn 25 points, and that they believe their interpretation is consistent with the statute. Our view is that the statute could be interpreted the way the FD has developed its point system, but clearly a sponsor could face criticism from the OSC for taking this approach, as the OSC has consistently interpreted the statute this way
Additionally, there was inconsistency in the mathematical calculation of the minimum number of calls needed to earn 25 points for department responses. The report stated that the FD responded to 82 fire calls, and the OSC calculated that eight (8) calls were needed to earn 25 points. That is not correct, as eight (8) calls is only 9.76%. The correct calculation is nine (9) calls.
Department Responses: Fire & Ambulance Calls
The OSC did not, in our opinion, accurately reflect the statutory language when describing the department responses point system category, which creates confusion as to when a sponsor should or should not break out the two types of calls – fire and ambulance.
In one section of the report, the OSC stated “when a LOSAP sponsor has an ambulance squad (emphasis added) it may (emphasis added) also award volunteers an additional 25 points for responding to a certain percentage of emergency rescue and ambulance calls.” First, the statute does not use the terminology ambulance squad, rather emergency rescue and first aid squad (ambulance calls). Further, the use of the word “may” implies it is optional, which is contrary to past audit reports that stated if a department provided ambulance transport, it was required to award 25 points for those types of calls in addition to the 25 points for fire calls.
Conclusion
Clearly, there is a lot to digest in this audit report! These are our initial impressions of the report findings, and we will delve deeper into each of these four general topics in upcoming posts. In the meantime, if you have questions, please contact us or forward this to your legal counsel for additional advice regarding your point system.
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