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Central Services <br /> Finance & Court Services <br /> Financial Services <br /> Budget Office <br /> City of Eugene <br /> 860 West Park, Suite 300 <br /> MEMORANDUM Eugene, Oregon 97401 <br /> (541)682-5021 <br /> (541) 682-5802 FAX <br /> www.ci.eugene.or.us <br /> Date: November 13, 2002 <br /> To: Executive Managers <br /> From: Kitty Murdoch, Budget Manager <br /> Subject: FY04 Fleet Rates <br /> The Fleet Manager will be presenting information regarding the Fleet Fund and a FY04 rate <br /> proposal to you on Thursday. I have worked closely with Fleet Services to review the rate <br /> <br /> .proposal before you and believe that Public Works staff has been doing their utmost to <br /> understand the history of the rate model and the genesis of the current problems facing the fund. <br /> I also believe they are trying hard to improve the service levels and the financial performance of <br /> the operation. This is a complicated situation, where the rates established in the fall at the start <br /> of the budget process, the baseline adjustments given, and department budgets do not coincide. <br /> In trying to preserve freedom in allowing departments to manage their fleets, and at the same <br /> time keeping a tight lid on rate increases, we have created a situation whereby costs are <br /> increasing faster than resources in recent years. <br /> While I agree that the Fleet Fund is in serious difficulty, I cannot yet endorse a rate adjustment <br /> that will result in an ongoing increase to the General Fund of about $313,000 above inflation and <br /> other adjustments in FY04 and an all funds increase of $577,000. Executive Managers approved <br /> an FY03 rate increase of $615,120 (all funds, including inflation) for vehicles and radio <br /> operations and maintenance. The General Fund's share of the FY03 increase above inflation <br /> was about $365,000. If the FY04 rate proposal is approved, fleet rates will have grown by more <br /> than $1.0 million in a 2-year period, with a General Fund cost of $678,000. Fleet now estimates <br /> that their FY03 operations in Vehicles and Radios face a $200,000-$250,000 deficit, which will <br /> use up most all of its remaining Balance Available. This is difficult to understand and the <br /> solution has an impact on every department, especially those using the General Fund. Several <br /> observations are evident: <br /> 1) Departments have not budgeted the rates for which they have received baseline <br /> adjustments in the General Fund. For example, the Police Department was given a FY03 <br /> baseline adjustment of $210,019 to bring their fleet payment up to $1,078,764. Instead, <br /> Police budgeted only $909,243. <br /> 2) Fleet has not charged their full rate to several departments in most years under review. <br /> So, they have not collected their authorized payment. <br /> 3) Communication between departments, fleet, and budget regarding current year and future <br /> budget decisions is poor. The Fleet Fund has not been given budgetary increases for new <br /> budget actions. Department management decisions have resulted in surplus vehicles <br /> Pagej of 3 <br /> <br />