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l~EMORANI)UM
<br /> Date: November 6, 2002
<br /> To: Executive Managers
<br /> From: Public Works, Fleet Services
<br /> Subject: FY04 Fleet Rates '
<br /> The proposed FY04 Fleet Maintenance rates are attached for your review. FY04 rates are calculated using FY02
<br /> actual vehicle expenses (Labor, parts, fuel, insurance, contract services, etc.) plus the FY04 City's Central Services
<br /> Allocation, and other marginal cost increases related to PERS, Health Insurance, Risk Rates, and inflation.
<br /> BACKGROUND
<br /> Fleet Services provides for the operation, maintenance, and replacement of the City of Eugene's fleet. The City's
<br /> Fleet is valued at $25 million, with the General Fund portion valued at $12.6 million. In FY98, Fleet operating and
<br /> maintenance rates were reduced by 10 percent and then held constant until a rate increase was approved in FY03. In
<br /> FY03, General Fund vehicle rates did increase, but did not fully recover actual costs. The methodology used to set
<br /> the FY03 General Fund rates was to recover General Fund vehicle actual costs over atwo-year period.
<br /> Fleet rates should be set to recover actual vehicle expenses, which should also equal the fleet budget. In previous
<br /> years, this methodology (rates =expenditures =fleet budget) did not occur. Fleet rates were intentionally set below
<br /> expenses to minimize the impact of the Ballot Measure 47/50 reductions. Fleet's balance available was used to fund
<br /> the shortfall between revenues and expenditures.
<br /> FY98 FY99 FY00 FY01 FY02 FY03
<br /> Actuals Actuals Actuals Actuals Actuals Budget
<br /> O & M Revenue $2,698,220 $2,618,762 $2,712,410 $2,881,836 $2,787,468 $3,426,364
<br /> O & M Expenses $2 755 750 $2 867 944 $2 963 158 $3 221 294 $3 319 662 $3 674 203
<br /> Surplus (Deficit) ($57,530) ($249,182) ($250,748) ($339,458) ($532,194) ($247,839)
<br />
<br /> . PROPOSED OPTIONS
<br /> Currently, FY04 Rates have been set to equal FY04 Fleet vehicle expenditures, which equal the FY04 proposed
<br /> Fleet budget. This actual cost recovery method results in a $313,000 General Fund deficit to meet the Fleet baseline
<br /> budget. There are two possible options for ensuring that the FY04 Fleet Rates equal FY04 vehicle expenditures,
<br /> which will equal the FY04 Fleet budget.
<br /> • Option 1 -maintain current service levels by allocating more General Fund resources to cover expenditures
<br /> • Option 2 -reduce General Fund vehicles and associated expenses within the Fleet budget
<br /> Option 1-Rates =Expenses = Budget
<br /> General Fund FY03 Budgeted Revenue FY04 Recommended Budget
<br /> 21 -Office of City Mgr. $ - $ 3,020
<br /> 44 -Central Services $ 12,300 $ 12,205
<br /> 52 -Fire & Emer. Serv. $ 426,924 $ 524,745
<br /> 53 -Planning & Dev. $ 11,040 $ 12,432
<br /> 56 -Police $ 809,748 $1,074,480
<br /> 57 - LRCS $ 70,608 $ 54,396
<br /> 58 -Public Works $ 254,976 . $ 269,904
<br /> Total $1,585,596 $1,951,182
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