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M~~IORANDUM <br /> i <br /> Date: October 11, 2001 <br /> To: Executive Managers <br /> <br /> i <br /> From: Public Works, Fleet Services <br /> Subject: FY03 Fleet Rates <br /> <br /> i <br /> The proposed Fleet Maintenance and Replacement Rates for FY03 are attached for your review. The monthly <br /> maintenance rate has two components. The maintenance portion of the rates covers preventive maintenance, <br /> fuel, insurance, service requests, and overhead costs for each class of vehicle on an annual basis, and are set <br /> to recover the annual Fleet operational costs. The replacement portion of the rates is intended to set aside <br /> sufficient reserves to replace each piece of equipment at the end of its useful life. <br /> BACKGROUND <br /> Fleet and Radio maintenance rates for fiscal years 2001 and 2002 were kept at FY00 levels. Operational <br /> resources such as fuel, automotive parts, supplies, and shipping costs increased significantly during these <br /> periods due to major economic changes, inflation, and growth in City assets. Fuel costs alone accounted for <br /> increases of $190,000 in FY01 and $175,000 in FY02.Overall we experienced over 30 percent rise in fuel <br /> cost during both years. The required revenue to maintain Fleet Operations was taken from our available <br /> balances for this two year period. Fleet's balance available has been significantly reduced to meet City-wide <br /> policy/strategies. <br /> In FY02, the City's 911 Center and Police Department upgraded to digital radio technology. The new digital <br /> radio system is more sophisticated and costs three times the amount of the analog system. As stated <br /> previously, Radio Maintenance rates remained at FYOO levels although a more costly system was introduced. <br /> Their was not an immediate cost increase to Radio maintenance because the system was under warranty until <br /> October 1, 2001. The warranty period has ended and we have contracted with Motorola to provide service <br /> and maintenance support primarily due to the personnel shortages in Radio Maintenance and the scope/level <br /> of technical training needed by our technicians to maintain this new system. This agreement will cost <br /> $75,000 for one year of technical support, and one year of maintenance and repair support. <br /> FY03 is the first year that Fleet and Radio maintenance rates have been adjusted since these significant <br /> changes have occurred. In light of these inflation factors and technology changes, we have determined that <br /> the 2.4 percent inflation factor is inadequate to cover current service levels. Therefore, we have prepared <br /> three options for your consideration for balancing the budget and meeting current service levels. <br /> ASSUMPTIONS• <br /> • Historically, actual Fleet and Radio rate revenues have been below budgeted amounts. So, we <br /> have reduced revenue rate estimates by three percent. <br /> • Considering the instability of the Middle East, fuel prices will inevitably increase again. <br /> • Continued reductions of balance available levels to meet current service levels could jeopardize <br /> future Fleet budgets and equipment replacement schedules. <br /> • Acquiring necessary technical Radio staff to maintain new digital system could take up to a year. <br /> Budget~FY03 Exec Rate Summary.wpd <br /> <br />