In recent weeks, the Haddam Board of Finance and the town's volunteer ambulance service have been at an impasse over how much the town should fund the ambulance service when factoring in insurance reimbursements to the service.
At a recent finance board meeting the two sides finally agreed that under the town's proposed budget for fiscal 2011-2012, Haddam will decrease its ambulance service funding from $145,000 to $135,000. At the same time, the ambulance company will return to the town $45,000 in insurance reimbursements for the coming year, for a net funding of $90,000.
The new budget will go to voters in a town meeting on Wednesday.
The Haddam Volunteer Ambulance Service (HVAS) is a privately funded, nonprofit organization founded in 1976 and for the past 35 years has been serving the residents of Haddam and Higganum.
Most of HVAS’s revenue comes from insurance payments with fundraising and dues to supplement insurance payments.
Unlike local fire and police departments, which are paid for through local taxes, most town ambulance services charge by the call and then are paid when they bill the patient's insurance company.
However, a few years ago it became clear during the weekdays it was increasingly difficult to find volunteers to be on call and fill all positions. So in 2006, after discussions between then-First Selectman Anthony Bondi and HVAS Chief Scott Stoppa, a decision was made for the town to contract with a Portland-based Management Service Organization (MSO), Emergency Resource Management (ERM).
An MSO is a company that is hired by a town to complement an existing ambulance service, assisting them with filling hours during the week when it is difficult for volunteers to be on call.
As residents appreciate seeing their local ambulance responding to calls, the MSO provides the daytime staffing in each contracted town, utilizing the existing ambulance service’s vehicles and equipment, while allowing for the ambulance service to continue collecting the insurance revenue from each call.
Last year, approximately 47% of all HVAS calls were covered by the supplemental company, ERM.
In late February, at the onset of this year’s budgeting process, the town's finance board, along with selectmen, met with HVAS for the first time to discuss the $145,000 contract that the town has been funding with ERM for the past six years.
Finance board member Joe Centofanti, who also is an accountant, explained the normal procedure for most ambulance services.
“The town and ambulance work together, but the ambulance usually absorbs all the costs, managing the whole program and contracts, with the ambulance looking to the town to fund the gap if there was a shortage for the year.”
Centofanti explained most other towns also fund their local ambulance service through the five year capital plan, helping with bigger expenses such as new ambulances.
First Selectman Paul DeStefano said the town was revisiting the original contract with ERM because it appears HVAS is functioning on very solid financial ground.
According to their 2009 federal tax return, the ambulance company's had $294,813 in revenue that year, with $220,088 coming from insurance claims and $66,948 from donations and membership dues.
HVAS also posted a cash and savings reserve of $510,090.
“Once we saw how strong you are now from a financial standpoint,” said DeStefano, “we began to ask ourselves if there was still a real need to continue doing this, the town paying for the contract with the insurance payments going back into a program designed for you.”
Currently, when ERM responds to calls during the day, the insurance money received for those calls goes back to ambulance company, not the town.
“In the past, the town wanted the badly-needed local service, and we didn’t want to have to call Middletown,” explained BOF Vice Chair Ed Schwing.
“What we’re saying now is that the ERM coverage is paid for by the town but when they go out for a call the insurance money from the call does not go back to the town, it goes to HVAS,” Schwing continued.
Stoppa said he believes it is the town’s moral obligation to provide ambulance service to its residents.
“We understand the tight times the town faces, but we do believe the town has the responsibility for providing the funding for the service.”
Deborah Olsen, the finance board's chairwoman, expressed gratitude for the HVAS service but said she the town should not be financially responsible anymore for the ambulance company.
“If the expenses you incur to provide the services that we’re all appreciative of, and your revenue doesn’t meet that expense, then you can once again come to the town and we’ll help you,” explained Olsen, “but we truly believe the ERM contract belongs with you instead of with the town because of the revenue that it generates.”
Stoppa offered a compromise: “A reasonable progress would be to budget $115,000 instead of $145,000 and if there is something that we can give back to you we’ll give back.”
In more recent weeks, HVAS responded with an offer to return $16,000 to the town to help defray some of the ERM contract expense; however, the BOF still felt that HVAS should take financial and management ownership of the contract with the town contributing the difference if revenues did not cover the contract expense.
At the final budget planning meeting, the two sides met for the last time to try to reach a mutual financial agreement.
Board member Harlan Frederickson reminded the ambulance company that the finance board's concern is for the taxpayers.
“I want to be fair to the taxpayers and keep you guys providing a great service to the town. But at the same token, to see that you’ve added another $390,000 at the end of four years just doesn’t seem fair to the taxpayers.”
Board member Dave Kapitulik questioned HVAS’s huge cash reserve. “You guys are sitting on half a million dollars, the entire $30 million town budget only has a $2 million surplus. You guys have one quarter of that amount yourselves. We look at that and we need to be responsible to everybody, you guys are taxpayers too.”
Stoppa explained that the ambulance company has many expenses, such as upkeep on their building and property.
“We also have to set aside money for a new ambulance ever five years,” he said.
The board offered to pay for the HVAS ambulances under the town’s capital plan.
Ambulance officials thanked the board, but explained again that they don't need the help.
After the hour and a half long discussion, the ambulance offered to return $43,000 to the town, the percentage of the revenue from the daytime insurance claims, minus HVAS expenses, to help defray the costs of the ERM contract.
The BOF then voted unanimously to fund the ERM service line at $135,000. At the same time, the ambulance company will return to the town $45,000 in insurance reimbursements.