August 11, 2026

Key Findings

Growth of Expenses Outpaces Contract Growth Rates

• Under the intergovernmental agreements between Denver Fire Department and Englewood and Glendale, the revenue to DFD has increased at 3% per year while the wages of firefighters in Colorado increased by an average of 4.5% per year.
• A 2025 congressional statement from the International Association of Fire Fighters noted that the cost of firetrucks has recently grown at an average of 11% per year, more than triple the 3% escalator built into Denver’s Englewood and Glendale contracts.

Services at Risk

• In the adopted budget for the city of Denver, there are no funds allocated for the 2026 Denver Fire recruitment class.
• Only 49% of DFD’s calls from May 2023 through March 2024 met the department’s total response time target of 6 minutes and 30 seconds. Actual response time was 10 minutes and 7 seconds for 90% of incidents. Out of 71,423 incidents during this period, just 34,000 were compliant with response time targets.
• Slower response times track directly with worse fire outcomes: research on national fire incident data finds longer response times correlate with a rising share of incidents that escalate into extreme-damage events.
• A secondary, more speculative risk: partner cities carry no independent insurance rating and are covered under Denver’s own Class 1 score, reassessed only once every five years. It’s unclear if or when response-time shortfalls would translate into higher insurance premiums for residents.

Denver Auditor’s Findings

• An audit report finds the renewal process for these agreements to be “informal and undocumented” and that when they renewed the Sheridan contract in 2025, there was no cost-benefit analysis.
• The same report finds that Denver Fire did not collect interest on late payments or reimbursement for building-related repair expenses from parties to the agreements.
• Denver Fire is not tracking the actual costs to the city associated with the four intergovernmental agreements; department officials said they do not have the time to track expenses by fire station.

Intergovernmental Agreements

An intergovernmental agreement (IGA) is a formal contract that lets government entities share services or infrastructure instead of each building duplicate capacity. The Denver Fire Department (DFD) maintains IGAs with several smaller neighboring municipalities, including Englewood, Glendale, Sheridan, and the Skyline Fire Protection District, under which the DFD provides fire suppression and emergency response coverage to these partner cities in exchange for a negotiated recurring payment. These arrangements exist largely because of geography and scale: the partner cities are small enough that contracting with DFD should be more cost-effective than funding and staffing independent fire departments of their own. But alongside that potential for mutual benefit, there is also a risk that payment terms drift out of step with the actual cost of the service, to the detriment of both parties.

The Denver Fire Department is roughly halfway through fulfilling contracts with Englewood (2015-2035) and Glendale (2018-2038), in which they provide fire services in those cities, in exchange for monthly payments. As shown in the text of the Englewood contract, payments are to increase 2% in the first year, then 3% for every following year of the contract.[1] In this report, CSI takes a closer look at the fiscal impact and underlying costs associated with these agreements.

Fiscal Context: Budgetary Pressure

In 2026, the city of Denver faces a major budget shortfall driven primarily by a sustained slowdown in General Fund revenue. The city’s main revenue source, sales and use tax collections, has flattened as residents pull back on discretionary spending on dining, retail, and downtown visits. According to the city’s 2026 Final Budget, sales and use tax revenues in 2025 came in $37.6 million short of the original budget forecast. City officials describe core sales and use tax growth as ending 2025 at a muted 0.3% annual pace, down sharply from the 5.9% average seen in the pre-pandemic years of 2016 to 2019.[2]

On the expenditure side, city leadership has attributed the shortfall to more than a decade of government spending growth outpacing revenue. Mayor Johnston has said the city’s employee count grew roughly 40% to about 15,000, while contracts and services grew 70%, together producing an 83% increase in expenditures since 2012. Personnel accounts for roughly 70% of city spending. Reserves have been drawn down rather than replenished, and the city has set a goal of rebuilding them to 15% over the next several budget cycles.[3]

To address these challenges, there is an expected 5.8% decrease in General Fund expenditures and 9.8% decrease in staffing in 2026,[4] representing 169 layoffs, along with the elimination of over 665 vacant positions.[5] The General Fund squeeze is already showing up in DFD’s headcount and staffing plan. The department is cutting 9 uniform positions and 9 civilian support (CSA) positions through attrition, reallocating some staff to the Wildland Special Revenue Fund, and skipping a recruit academy class in 2026. Chief Fulton estimated the personnel reductions would produce about $4.5 million in savings.[6]

Audit Report of Denver Fire’s IGAs

The Denver Auditor’s Office released a report on these contracts in April 2026, raising concern as to how well they steward tax revenue. Key findings of the report include:

• Denver Fire’s IGA renewal process is “informal and undocumented”
• There was no cost-benefit analysis for the 2025 renewal of the Sheridan contract
• Denver Fire is not collecting interest owed on late partner-city payments
• From September 2020 to September 2025, DFD collected more than $60 million from four partner jurisdictions (Englewood, Glendale, Sheridan and the Skyline Fire Protection District).[7]

Given the fiscal situation Denver now faces, these findings carry more weight than they would in a flush budget year: a 3% annual escalator that once looked like a reasonable long-term hedge has instead locked the city into 20-year revenue streams that are no longer keeping up with rising labor costs, equipment prices, and inflation, potentially leaving Denver taxpayers to make up the difference.

The 20-year contracts create significant budget risks for Denver, a structural mistake acknowledged by the Fire Chief. The city’s own approach to the Sheridan renewal shows some course correction in response: rather than another long-term lock-in, Denver opted for a shorter three-year deal running through 2028 with escalating annual increases of 4% and 5% when that agreement came up in 2025.[8]

Beyond the escalator mismatch, the audit also identified a second, more direct leak in the arrangement: when municipality payments arrive late, interest is owed under the contract terms, but Denver Fire has not been collecting that interest, citing concern that doing so might “impact relationships” with the municipalities. Auditor Timothy O’Brien characterized that approach as prioritizing relationships with other municipalities over Denver taxpayers’ money.

Another cause for concern within the audit report was a lack of documentation and cost tracking. The agreement with Sheridan was renewed in 2025, and the audit found that there was no cost-benefit analysis conducted. The only cost-related information required for the renewal by DFD was Sheridan’s budget, according to a Sheridan representative. Similarly, it was found that DFD was not reimbursed for repairs and maintenance that should have been paid for by the other governments. There was no formal system in place to track costs. The city cites “staffing limitations and task complexity” to answer for these issues. This lack of documentation throughout the process of these agreements means a lack of accountability to Denver residents who are footing the bill for fire services in these other areas.

Pricing the Gap: Escalators vs. Actual Cost Growth

The audit identified a process problem: an “informal and undocumented” renewal practice with no cost-benefit analysis attached to at least one recent renewal. The escalator structure embedded in Denver’s two longest-running fire service contracts raises a related but distinct question: even where the renewal process worked as designed, did the pricing mechanism itself keep pace with the actual cost of providing the service?

Both the Englewood and Glendale agreements use a fixed compounding escalator, 2% in the first year followed by 3% annually thereafter, to adjust the base payment over the life of a 20-year contract. A flat escalator of this kind is only cost-neutral to Denver if 3% approximates the annual growth rate of the underlying cost of providing fire protection over that period.

Measured against BLS public sector wage statistics, it has not. The Englewood contract’s base year (Q1 2015, BLS index value 125.4) to present (Q1 2026, BLS index value 178.506) shows cumulative wage growth of 42.4%, an average annual rate of approximately 3.26%, against a contracted 3.00%. The Glendale contract, with a later base year (Q1 2018, index value 134.8), shows cumulative growth of 32.4% to present, an average annual rate of approximately 3.57% against the same 3.00% contracted rate.[9] In both cases, the gap between contracted and actual cost growth is modest in any single year, but compounds over a 20-year term.

The average gap, however, understates the exposure. A fixed annual escalator has no mechanism to absorb a volatile year, and public-sector compensation costs have not grown at a steady rate over the term of either contract. BLS statistics show a 4.5% annual growth rate in average firefighter salaries from 2020 through 2025 across the state of Colorado.[10] The city of Denver’s own salary tables show an average annual salary increase of 3.8% for firefighters.[11] While this variation may appear manageable, a single year in which actual cost growth outpaces the contracted rate by more than two percentage points (such as the anticipated 5.1% salary growth from January 2026 to January 2027) does not average out so easily.[12] Without a catch-up provision, the shortfall from that year compounds forward for the remainder of the contract term.

According to Chief Fulton’s 2026 budget presentation, 97% of Denver Fire Department’s budget is personnel costs. Other costs may be growing at a much higher rate. A 2025 congressional statement by the International Association of Fire Fighters noted that the price of firetrucks has climbed sharply in recent years, with sample cases showing engines and ladder trucks growing at an average annualized rate of roughly 11% a year, more than triple the 3% escalator built into Denver’s Englewood and Glendale fire service contracts.[13]

Are the Mutual Savings Holding Up?

When Englewood, Glendale, and Sheridan signed their IGAs with Denver, the pitch was straightforward: contracting out fire services would be cheaper than running an independent department. That comparison is most cleanly testable for Englewood, whose population is predominantly residential and comparable in character to the peer suburbs below. Glendale and Sheridan are different cases. Both have a small residential base anchoring a disproportionately large commercial footprint, meaning each city’s per-capita cost reflects DFD coverage of daytime and visitor populations well beyond its resident count. We include both in the table for completeness but don’t lean on them in the comparative argument, since their cost driver is geography and land use rather than the IGA structure itself.

For Englewood, the pattern is worth drawing out on its own terms. Its per-capita cost ($200.16) tracks closely with Aurora and Westminster, two much larger cities whose scale normally drives per-capita costs down. That Englewood matches that price point without the scale to generate it suggests the IGA is a good deal for Englewood, delivering big-city efficiency to a city too small to produce it alone.

The more important dynamic is trajectory rather than a single-year snapshot. As shown above, the actual cost of providing fire service, driven by firefighter salary growth and rising apparatus costs, has consistently outpaced the contract’s 3% escalator. That gap compounds every year of the contract term. Englewood’s good deal is therefore getting increasingly better at Denver’s expense; the price Englewood pays is falling further behind the true cost of the service it receives.

Quality of Public Services at Risk

Denver 911 receives more than 40,000 calls each month for police, fire, and medical services. DFD’s own response time goals follow the National Fire Protection Association (NFPA) 1710 standard, and by the city’s own numbers, it’s missing every one of them.

The Denver Auditor’s December 2024 review of data from May 2023 through March 2024 found 90% of calls were answered within 10 minutes and 7 seconds, more than three and a half minutes slower than DFD’s own standard.[14]

A peer-reviewed analysis of two decades of national fire incident data found that as response times lengthen, fire severity outcomes, including property and contents losses, worsen consistently, driven mainly by a growing share of incidents that escalate into extreme-damage events the longer a department takes to arrive.[15] Response time isn’t a bureaucratic benchmark; it’s a variable that tracks directly with how much of a resident’s home survives a fire.

There’s a second, quieter risk tied to insurance. Englewood, Glendale, and Sheridan carry no independent ISO Public Protection Classification (PPC) rating. Their properties are rated under Denver’s own classification, currently Class 1, the best possible score and one held by only a handful of Colorado departments. Insurers use PPC ratings to help set property insurance premiums; a higher class typically means lower rates, since it signals stronger local fire protection and less expected loss. Fire department performance makes up half of that score, including staffing, apparatus, and response times.

But ISO ratings aren’t reassessed continuously. They typically come up for review only once every five years. That means a Class 1 rating can persist on paper long after real performance has slipped. If DFD’s response-time shortfalls eventually pull the rating down at the next review, partner-city residents would feel it through higher insurance premiums on top of the IGA payment itself, with no warning until reassessment happens.

The Bottom Line

These 20-year contracts may have looked reasonable when they were signed, but they haven’t held up. Firefighter wages and apparatus costs have both grown faster than the contracts’ fixed escalators, and that gap compounds every year of a two-decade contract term. No one can forecast precise labor and equipment costs across 20 years, which is exactly why a flat escalator is a risky mechanism to lock in for the duration of an extended-term contract.

The Denver Auditor has shown that the exposure isn’t limited to pricing. Denver Fire’s renewal process lacks expense documentation and cost-benefit review, and the department has failed to collect interest owed on late partner-city payments. These are accountability gaps independent of the escalator problem, and they compound it. The city isn’t just underpricing the service; it also fails to track whether collections match what is owed.

The strain shows up on the service side too. As the budget squeeze reaches DFD’s staffing, forcing a canceled recruit class and near-term headcount reduction, the department’s ability to hit its own response-time targets is further at risk. Slower response times track directly with worse fire outcomes, as incidents can escalate into extreme-damage events if the department takes longer to arrive. A contract structure that squeezes DFD’s budget over time isn’t just a fiscal problem for Denver; it’s a service-quality risk for every resident who depends on that response time.

Intergovernmental agreements remain a genuinely useful tool: they let smaller cities buy big-city service without building redundant capacity. But a 20-year contract with a flat escalator, no reopener clause, and no periodic cost-benefit review shifts all the long-term risk onto the provider. Denver’s shift to a shorter, steeper-escalator deal for Sheridan in 2025 suggests the city already sees this. The Englewood and Glendale contracts still don’t reflect it.

ENDNOTES

[1] City of Englewood and City and County of Denver, “Intergovernmental Agreement to Provide Fire Protection,” effective June 1, 2015, Colorado Municipal League, https://www.cml.org/docs/default-source/uploadedfiles/issues/public-safety/fire/iga-englewood-denver.pdf.

[2] City and County of Denver, 2026 Final Budget (Denver: City and County of Denver, September 15, 2025), 75.

[3] “Facing $200 Million Budget Shortfall, Denver Announces Furloughs, Hiring Freeze, Cuts,” Denver Gazette, May 22, 2025, https://www.denvergazette.com/2025/05/22/facing-200-million-budget-shortfall-denver-announces-furloughs-hiring-freeze-cuts-c0eb9383-fc74-471c-a0cf-ca0d7701f9cb/.

[4] City and County of Denver, Department of Finance, “City Budget,” accessed July 16, 2026, https://www.denvergov.org/Government/Agencies-Departments-Offices/Agencies-Departments-Offices-Directory/Department-of-Finance/Our-Divisions/Budget-and-Management-Office/City-Budget.

[5] City and County of Denver, Office of Human Resources, “2025 Layoff Evaluation Process,” accessed July 16, 2026, https://www.denvergov.org/Government/Agencies-Departments-Offices/Agencies-Departments-Offices-Directory/Office-of-Human-Resources/2025-Layoff-Evaluation-Process.

[6] “Denver Fire Outlines 2026 Budget with Staff Realignments, Cancelled Recruit Class and New Conveyance Testing,” CitizenPortal.ai, September 23, 2025, https://citizenportal.ai/articles/6702709/Denver-Consolidated-County-and-City/Colorado/Denver-Fire-outlines-2026-budget-with-staff-realignments-cancelled-recruit-class-and-new-conveyance-testing.

[7] Office of the Auditor, City and County of Denver, Intergovernmental Agreements for Fire Support, April 23, 2026, https://denvergov.org/files/assets/public/v/2/auditor/documents/audit-services/audit-reports/2026/intergovernmental-agreements-for-fire-support-april-2026-final.pdf.

[8] City and County of Denver, Eleventh Amendatory Intergovernmental Revenue Agreement between the City and County of Denver and City of Sheridan (FIRES-201208809/FIRES-202581626-11), December 17, 2025, https://denver.legistar.com/View.ashx?M=F&ID=15047542&GUID=DA610CD1-CE60-4C05-B983-B7A6E5EF33BC.

[9] U.S. Bureau of Labor Statistics, “Employment Cost Index: Compensation: State and Local Government: All Workers” (ECIGVTCOM), retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/ECIGVTCOM.

[10] U.S. Bureau of Labor Statistics, “Occupational Employment and Wage Statistics: May 2025 National, State, Metropolitan, and Nonmetropolitan Area Occupational Employment and Wage Estimates,” Occupational Employment and Wage Statistics program, accessed July 16, 2026, https://www.bls.gov/oes/tables.htm.

[11] Denver Firefighters, Local 858, 2026 Denver Fire Captain Examination Study Material for Multiple-Choice Exam, Denver Civil Service Commission, City and County of Denver, https://www.denvergov.org/files/assets/public/v/1/civil-service-commission/documents/fire-promotional/2025/2025-captain/dfd-captain-study-packet.pdf.

[12] Denver Civil Service Commission, City and County of Denver, 2026 Denver Fire Captain Examination Study Material for Multiple-Choice Exam, accessed July 30, 2026, https://www.denvergov.org/files/assets/public/v/1/civil-service-commission/documents/fire-promotional/2025/2025-captain/dfd-captain-study-packet.pdf.

[13] Edward A. Kelly, General President, International Association of Fire Fighters, statement before the Subcommittee on Disaster Management, Senate Committee on Homeland Security and Governmental Affairs, “Fire Apparatus Manufacturing,” September 10, 2025, https://www.hsgac.senate.gov/wp-content/uploads/Kelly-Testimony.pdf.

[14] Office of the Denver Auditor, Emergency Medical Response Time (Denver: City and County of Denver, December 2024), https://www.denvergov.org/files/assets/public/v/2/auditor/documents/audit-services/audit-reports/2024/emergency-medical-response-time-december-2024-final.pdf.

[15] Buffington, T., Ezekoye, O.A. Statistical Analysis of Fire Department Response Times and Effects on Fire Outcomes in the United States. Fire Technol 55, 2369–2393 (2019). https://doi.org/10.1007/s10694-019-00870-4