THE MISSISSIPPI LEGISLATURE

The Joint Committee on

Performance Evaluation and Expenditure Review

Report # 490

A Review of the Lauderdale County Emergency Communications District’s Request for an Increase in Emergency Telephone Service Charges

Executive Summary

Background

The purpose of PEER’s review was to determine whether the Legislature should increase emergency telephone service charges for the Lauderdale County Emergency Communications District.

Conclusions

While an increasing gap between the Lauderdale County Emergency Communications District’s expenditures and revenues from emergency telephone service charges is projected for fiscal years 2006 through 2008, the Legislature should not increase emergency telephone service charges at the present time based on the district’s financial situation. Arguments supporting this conclusion include the following:

• opportunities exist for reducing the district’s expenditures;
• local governments are obligated to support public safety functions, including emergency services, financially; and,
• the potential exists for additional revenues through more comprehensive enforcement of emergency telephone service charge collections and amendment of existing laws.

The District’s Revenue Sources and the Gap Between Emergency Telephone Service Charge Revenues and Expenditures

The primary sources of revenue to the district from FY 2000 through FY 2005 have been emergency telephone service charges and payments from Lauderdale County and the City of Meridian.

In a 2001 Memorandum of Understanding between the district, the City of Meridian, and Lauderdale County, the city and county agreed to provide equal amounts of funding for the district of up to $225,000 each ($450,000 combined) per fiscal year.

By the end of Fiscal Year 2005, the district had to turn to the city and county for financial assistance to meet its expenses. The projected gap in emergency telephone service charge revenues and expenditures for the Lauderdale County Emergency Communications District will range from $346,893 in FY 2006 to $395,832 in FY 2008.

In early 2006, the governing bodies of the City of Meridian and Lauderdale County made public their desire to increase the district’s emergency telephone service charges to cover all expenses of the district rather than to rely on the continued financial support of the local governments as provided for in the Memorandum of Understanding.

Opportunities for Reducing the District’s Expenditures

The district operated economically in FY 2000 through FY 2005. The district’s expenditures remained fairly steady in those years, increasing by only 8%. Also, the district has made economical choices in the location and furnishing of its office.

While the district has made a conscious effort to operate economically, other opportunities to reduce expenditures may exist. Based on a methodology used by a communications consultant for staffing 911 dispatch operations in Georgia, PEER calculates that the district could eliminate three of its dispatch operator positions, reducing the district’s annual expenditures by approximately $97,000.

The district should also consult with the Mississippi Department of Information Technology Services to determine whether more cost-effective alternatives exist when making upcoming computer and technology-related purchases.

Even if the district reduces its annual expenditures by $97,000, it will have a projected gap ranging from approximately $250,000 to approximately $299,000 annually between revenues from emergency telephone service charges and expenditures for fiscal years 2006 through 2008 based on the current fee structure. For the reasons noted in the following section of this summary, the local governments should continue to honor the Memorandum of Understanding and should provide revenue of up to $450,000 annually for the district.

Why Local Governments Should Fund the Projected Gap Between Revenues and Expenditures

PEER believes that local governments should fund the projected gap in revenues from emergency telephone service charges and expenditures of the Lauderdale County Emergency Communications District because:

• Local governments have an obligation to support public safety functions (including emergency services) financially.
• The City of Meridian and Lauderdale County have a legal agreement to support the district financially.
• Local governments’ financial participation in the district should increase oversight of the district’s expenses.
• The Legislature did not contemplate that emergency telephone service charges would be the sole means of financial support for emergency communications districts.
• The district provides services and use of equipment to the city and county that are not within the scope of 911 operations and therefore should not be funded with emergency telephone service charges.
• Because the emergency telephone service charges are set in general law, they cannot be increased solely for the Lauderdale County Emergency Communications District (i.e., they would be increased statewide, regardless of other districts’ financial positions).

Potential for Additional Revenues Through More Comprehensive Enforcement of Emergency Telephone Service Charge Collections and Amendments to State Law

The district could be entitled to receive possible uncollected emergency telephone service charge revenues from the following potential sources:

• unknown service suppliers that may not be remitting emergency telephone service charges;
• service suppliers that could be underpaying; and,
• new modes of telecommunications such as VoIP that are possibly not covered by current laws specifying emergency telephone service charges.

While PEER determined that emergency telephone service charges are probably undercollected, the absence of audited service data makes it impossible to estimate the amount of additional revenue that could be available to the district from this source. However, PEER does not believe that the potential revenues from this source would totally fill the gap discussed previously.

Recommendations

1. To ensure that emergency telephone service charges are being properly collected and remitted, the Legislature should amend MISS. CODE ANN. Section 19-5-313 (1972) to provide the following:
   
   
   • for the fiscal year beginning October 1, 2007, and the following fiscal year, each service supplier shall provide each emergency communications district with a sworn copy of an emergency telephone service charge billing history for the district detailing, by month: the number of residential and commercial customers; the amount billed in emergency telephone service charges; any adjustments, amounts uncollectable, and administrative fees; any other items related to the collection and remittance of emergency telephone service charges; and the net total remitted to the district;
   • for the fiscal year beginning October 1, 2009, each service supplier shall provide to each emergency communications district an audit, conducted by an independent certified public accounting firm, of the service supplier’s books and records with respect to the collection and remittance of the emergency telephone service charge;
   • for the following fiscal years, each service supplier shall adhere to the following ongoing three-year cycle: sworn reports for two fiscal years followed by an audit report from an independent certified public accounting firm every third year.
   The Legislature should also amend this section to provide that counties issue a formal demand, via certified mail, for the statutorily required audits and authorize a civil fine of $50,000 against any service supplier that fails to provide a copy of the audit so requested. Further, the amendment should authorize the Attorney General or the district attorney of the county to assist in the collection of such fines.
2. To ensure that emergency telephone service charges are being properly collected and remitted, the Legislature should provide the Commercial Mobile Radio Services (CMRS) Board with a mechanism for funding the audits of service suppliers that are authorized in state law. As recommended in PEER’s 2001 review of the CMRS Board, the Legislature should amend MISS. CODE ANN. Section 19-5-333 (1972) to require that the suppliers bear the costs of such audits. The amendment should also give the CMRS Board the discretion to decide whether the audit costs are reimbursable as part of recurring costs under the board’s cost recovery mechanism.
3. To assist in assessing and collecting emergency telephone service charges, the Legislature should amend MISS. CODE ANN. Sections 19-5-303 and 19-5-313 (1972) to include broadband communications as a type of communications subject to an emergency telephone service charge levied by the board of supervisors. Also, the Legislature should amend MISS. CODE ANN. Section 19-5-333 (1972) to direct the CMRS Board to impose emergency telephone service charges on customers who pay for commercial mobile radio services prospectively--i.e., prepaid customers.
4. The district should share the purchase and operating costs of its equipment with all entities using the equipment (e.g., tower antennae space, T1 line) based on usage.
5. The City of Meridian and Lauderdale County should continue to provide financial support to the Lauderdale County Emergency Communications District as specified in the Memorandum of Understanding. Also, the Lauderdale County Emergency Communications District Commission should negotiate a Memorandum of Understanding with the Town of Marion to set a fair and reasonable amount to compensate the Lauderdale County Emergency Communications District for emergency services that it renders for the Town of Marion.

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