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Non-General Fund Replacement Reserve <br /> Background <br /> The Non-General Fund fleet is valued at about $12.4 million. Non-General Fund replacement vehicles are <br /> purchased using funds fromthe F1eetReserve.The Non-General Fund Department's make monthly payments <br /> into their respective vehicle accounts over time to ensure revenues are available for future purchases. The <br /> Fleet Reserve for Non-General Fund vehicles is adequate to meet ongoing purchases. Some minor changes <br /> were made to adjust for inflation and more efficient life-cycles for high maintenance equipment. Like the <br /> General Fund, Non-General Fund replacement schedules did not include any associated costs for C.S.A., <br /> vehicle specification, registration/licensing, inspection or preparation. Likewise, Fleet covers these associated <br /> costs from its O&M budget instead of allocating it to replacement. <br /> Proposed Changes <br /> The proposed Fleet replacement forecast method anticipates vehicle inflation and allows for the sale ofthe <br /> disposed assets. The sale of these assets minus disposal costs will be added to both the General and Non- <br /> General Fund Reserves. As done in the past, vehicles and equipment upgrades will be funded by the <br /> re uestin de artment. The ro osed re lacement sch <br /> q g P p edules forecast these chan es with life ex ectanc <br /> P P <br /> g p Y <br /> revisions for some vehicle and equipment categories. The life expectancy was revised for these equipment <br /> categories because of increased operation and maintenance costs, and excessive downtime. The replacement <br /> schedule adjustments will minimize the escalation of operation and maintenance costs, and reduce <br /> department equipment downtime. Furthermore, it will help recover equipment resale value at the optimum <br /> time, while offsetting the accelerated depletion of the General Fund Fleet Reserve. Since this replacement <br /> schedule was proposed after the completion of the FY03 Budget, the Fleet Advisory Board recommends a <br /> supplemental budget adjustment of $360,500 to cover costs associated with the FY03 replacement forecast. <br /> In addition to functioning as a funding source for covering unexpected Fleet purchase expenses ,the General <br /> Fund Fleet Reserve also acts as a safety net for catastrophic damage. Since the City of Eugene is self <br /> insured, any accident damage that is caused by the city or a natural disaster that occurs outside of a city- <br /> owned facility, is not currently covered by the Risk Fund. Risk Management has researched policy coverage <br /> from private insurers, but this has proved cost prohibitive. Therefore, the Fleet Advisory Board recommends <br /> maintaining an minimum amount (ten percent of the General Fund Fleet replacement value) to provide for <br /> unexpected purchase needs. Based upon the General Fund Fleet's current value, the General Fund Reserve <br /> would be approximately $1.2 million. In order to maintain this level, the General Fund transfer amount would <br /> have to be increased to $1,353,900 beginning in FY04. (See the General Fund Fleet Reserve Analysis for <br /> details). <br /> Summary <br /> The attached Fleet Replacement Expenditure Chart (A) indicates the estimated 7 year future replacement <br /> cost by fund. ]n FY03, the Fleet Board has identified General Fund replacement needs of $917,000. The <br /> General Fund budgeted transfer is $813,000, based on a 2.5% increase over FY02. The attached Fleet <br /> Reserve Fund Balance Chart (B) shows the various Fleet Reserve Fund Balances that Fleet Services <br /> maintains for its customers. This is a "snapshot" of the reserve balances at the start of FY02 since <br /> expenditures and revenues flow in and out monthly. The attached General Fund Fleet Reserve Analysis Chart <br /> (C) provides a more detailed view the current fund balance, transfers, interest earnings, sale of assets and <br /> equipment expenditure projections for the next seven years. Part two of this analysis shows the additional <br /> transfer amount needed to maintain a ten percent replacement value in the General Fund Fleet Reserve. If <br /> there are any questions regarding the equipment replacement schedule please feel free to contact your Fleet <br /> <br /> Board representative or the Fleet Manager. <br /> Attachments: <br /> 7-Year Fleet Replacement Expenditure Status Report <br /> Fleet Reserve Fund Balance <br /> General Fund Fleet Reserve Analysis <br /> <br />