Bonding the Fire Service

Posted by Steve Lumry on 08/09/2016

Bonding the Fire Service

Oklahoma has made significant strides in advancing the administration of our fire departments. Year after year, we see some form of education or clarity make its way into these administrative roles creating consistency. This year the focus seems to be on the relationship with county purchasing and the distribution of “fire” sales tax money collected on a county wide basis.

Before this last legislative session, Oklahoma State Statute did not include the language it needed to properly address the process of distributing levied sales taxes to non-county employees via purchase orders. HB2360 authored by Representative Rousselot addresses these issues by including new statute language allowing, “two individuals who are not county employees to act as receiving and requisitioning officers”.  Additional language was added stating that, “any non-employee of the county designated… shall provide evidence of an employee dishonesty bond”; this was done to mirror the bond  requirement for county employees .

So what do we need to know? This first thing to understand is that HB2360 didn’t change anything, it actually added additional options. Before requisition officers and receiving agents should only have been county employees, now they can be non-county employees. This creates two options to choose from. In our state every county is run different from the next. These decisions will end up being different for many of you depending on how your county has historically operated and the individual decision made county by county.

What to Consider

Does your department want a county employee (Clerk, Emergency Manager) to act as the receiving or requisition officer for our department? There are a couple of counties in Oklahoma that have operated in this fashion. For these counties there is nothing to do because they fit into the existing statute of a “county employee” who is currently bonded as a county employee. There is one major drawback in this arrangement outside of the co-mingling of interests of the county in the departments. The drawback is what is at the root of bonding.  It should be protecting the interest of the county sales tax. Employee dishonesty bonds will repay monies lost in the dishonest acts of a “covered/bonded” individual. Dishonest acts can be considered any act where an individual uses money or property for personal financial gain. So for example, if your department choses to name the Clerk as your requisition officer and receiving agent, then your department purchases radios with the county sales tax money. The assistant chief pawns those radios 2 months later and keeps the monies for himself. Your bonding of the Clerk will do nothing to repay the monies embezzled by the assistant chief. Regardless if you choose to name the Clerk or any other county employee, your department should still consider bonding its Fire Department employees/volunteers as well.

Does your department want to name a department member as the requisition and/or receiving officer? The majority of departments have chosen this route in defining their relationship with the county. This is where HB2360 comes into play. It allows you to name two individuals to act as the requisition officer and receiving agent in your departments. Now all you have to do is see that they are bonded to meet the requirement in naming individuals not employed by the county.  This is your best option for many reasons. The person bonded will be a department member and dishonesty coverage will apply to those individuals. Also bonds can extend out to other individuals and or positions providing coverage for them as well.

How much of a bond do we need? Historically, statues like this should be accompanied with a mechanism to determine the limit of the bond. Since HB2360 does not contain this information department need to use sound judgement in setting these limits. It is suggested that the bond limit should be set to be 12 months of levied taxes. So if you receive 2,000 a month on average, then a $24,000 bond would essentially provide the coverage your department needs for the theft exposure.

Who should be bonded? HB2360 by statute mandates that if you have a Requisition Officer or a Receiving Officer apart of your service then they should  be bonded. In Oklahoma State Statute Title 19 it stated that treasurers of County Fire Services and Fire Protection Districts shall bond their treasurers for how much money comes in and out of their hands and conditioned to faithful performance. As you can see below only Title 18 departments in a county not receiving tax money are the only fire services not required to be bonded.

Required by Statute - Receiving County Tax Money

Title 11 101 City Municipal 1.Recieving Officer 2. Requisition Officer 3.Clerk (Already Bonded)

Title 19.351 County Fire Service 1.Recieving Officer 2. Requisition Officer 3.Tresurerer

Title 19.901 Fire Protection Districts 1.Recieving Officer 2. Requisition Officer 3.Tresurerer

Title 18.593 Volunteer Fire Associations 1.Recieving Officer 2. Requisition Officer

Required by Statute - Not Receiving County Tax Money

Title 11.101 City Municipal 1.Clerk (Already Bonded)

Title 19.351 County Fire Service 1.Tresurerer

Title 19.901 Fire Protection Districts 1.Tresurerer

Title 18.593 Volunteer Fire Associations 1.NONE

How to get bonded? Getting a bond is a quick and easy process. Costs for bonding are between $117 for a $10,000 bond and $370 for a $100,000 bond covering up to 5 positions. These figures are estimated  as every company has different rates and coverages. Many insurance agencies across the state do bonds for different industries. If you choose a local agency to handle your bonds, be sure they have a working knowledge of the fire service and the current statues that shape how your bonds should be issued and the language of the bond fits the statute. 

VFIS of Oklahoma has spent several months constructing the best possible bonding program for Oklahoma. We have special authority to instantly produce a bond for your service and the total process takes less than 5 minutes by phone. We currently write hundreds of bonds in just about every county and have many bonds that have been in place for over 30 years. You’ll find no other that will work harder for you and your service. 

Jerrad Van Coots / VFIS of Oklahoma

918.341.2196

800.553.5762