HomeMy WebLinkAboutMINUTES - 01252005 - C50 :�-- - . ontr
TO: BOARD OF SUPERVISORS .,,' j r� - :,*
FROM: INTERNAL OPERATIONS COMMITTEE Costa
DATE: DECEMBER 6, 2004 Co nty
SUBJECT: RECOMMENDATION ON PROPOSAL TO ESTABLISH AN
INTERNAL SERVICES FUND FOR FLEET MANAGEMENT
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
1. ACKNOWLEDGE that the proposal to establish an Internal Services Fund (ISF) for fleet
management promises to improve the quality of the County's fleet at little or no additional
long-term cost.
2. ACKNOWLEGE that the ISF concept was proposed by the General Services Department
in March 2004, just prior to the severe budget reductions of fiscal year 2004/05.
3. RECOGNIZE that sufficient funds are not available in the upcoming budget year and,
likely, the following year, to finance the level of new vehicle purchases necessary to start
up the Fund and sustain it through long-term maintenance cost savings.
4. REJECT the proposal to establish an Internal Services Fund for fleet management
beginning with the 2005/06 fiscal year.
5. RECONSIDER the proposal in 18 months, at which time the County can reasonably begin
planning for fiscal recovery, and DIRECT the County Administrator to consider the
proposal in any long-range budget planning.
CONTINUED ON ATTACHMENT: YES SIGNATURE.
RECOMMENDATION OF COUNTY ADMINISTRATOR jde:JFtCOMME TION OF BOARD COMMITTEE
L.,---APPROVE OTHER
lie
SIGNATURE(S):
YI IF MARK DeSAULNIERLE B. tJWX15_MA, CHAIR
ACTION OF BOARD ON APPROVE AS RECOMMENDED0/1 V ER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT
COPY OF AN ACTION TAKEN AND ENTERED
,V UNANIMOUS(ABSEN ON THE MINUTES OF THE BOARD OF SUPERVISORS
ON THE DATE SHOWN
AYES: NOES: ATTESTED: January 25 , 2005
ABSENT: ABSTAIN: JOHN SWEETEN,CLERK OF THE BOARD OF
SUPERVISORS AND SOU NTY ADMINISTRATOR
CONTACT: JULIE ENEA(925)335-1077 BYq<,.J DEPUTY
CC: INTERNAL OPERATIONS COMMITTEE STAFF
COUNTY ADMINISTRATOR
GENERAL SERVICES DIRECTOR
1 ,
Internal Services Fund for Fleet Management December 20, 2004
Internal Operations Committee Page 2
BACKGROUND
Concept. On March 15, 2004, in the context of a report on underutilized vehicles, the
Fleet Services Manager proposed to the Internal Operations Committee the concept of
establishing an Internal Services Fund (ISF) for accounting and management of the County
fleet. This proposal was introduced prior to the adoption of the FY 2004/05 County Budget,
which eliminated over$4 million from the Fleet Services budget. The Committee asked the
County Administrator to study this suggestion and report back with any recommendations.
The premise of the ISF concept is that it is more efficient in the long run to spend
money on the purchase of new vehicles than on repairing and maintaining old vehicles.
Newer vehicles tend to have fewer and less expensive maintenance problems and are often
covered by manufacturers' warranties for up to three years, resulting in little or no repair costs
to the County. In addition, new vehicles tend to be safer and more economical to operate. In
concept, the ISF method promises to improve the quality of the fleet with little or no additional
cost.
The ISF, as proposed by the General Services Department, would account for both
vehicle replacement purchases and vehicle operating costs. All General Fund departments
would be included in the Fund except possibly Community Services' and Probation's 20 grant-
funded vehicles. The ISF would include* licensed equipment with odometers and exclude
miscellaneous equipment (mowers, boats, trailers and specialized equipment). All
replacement vehicles for General Fund departments would be.purchased with funds from the
ISF. The purchase costs covered by the ISF would include any get-ready expenses (decals
and equipment).
Under the ISF, vehicle operating costs would be charged out to departments based
upon monthly rates established for each class of vehicle. These rates would comprise a
monthly fixed cost and a variable cost charge based on mileage usage. The fixed cost or
"monthly lease fee"would be calculated annually by class and include insurance, overhead
costs, depreciation, and an approximately 2% replacement fee. The variable cost would be
based on the average labor, parts, and fuel expenses by vehicle class.
Analysis. The County Administrator(CAO) convened a series of discussions involving
the General Services Department and the Auditor-,Controller's Office to flesh out the ISF
concept as outlined by the Fleet Services Manager and to estimate-the fiscal impacts of the
change in accounting methods and fleet management policies that would be necessary to
secure the benefits of the ISF. As a result of those initial discussions, the CAO concluded
that:
■ An ISF, if properly managed, would ensure a source of funds that allows for the long-
term strategic planning that may ultimately reduce fleet costs by lowering the average
age and maintenance costs of the fleet.
Internal Services Fund for Fleet Management December 20, 2004
Internal Operations Committee Page 3
■ After an additional first year investment, an ISF or a similar change in fleet
management policies could result in a higher quality, newer fleet at a comparable or
possibly lower cost than the current fleet.
■ Establishment of an ISF could help to create the necessary culture to promote
efficiencies in the fleet, i.e., the fleet is a County asset and departments rent/lease
vehicles from the fleet.
■ An ISF or similar accounting method would help to "smooth" monthly charges to
departments by emphasizing long-term financial planning and minimizing unforeseen
costs.
■ Proper management of an ISF would require that a high level of authority be vested in
the Fleet Services Manager.
After making a preliminary report to the IOC, the CAO convened meetings with the
following large fleet customers to discuss the first-year and ongoing impacts and potential
benefits of an ISF, and to obtain their input: the Sheriff, Employment and Human Services,
and Animal Services Departments. Based upon these meetings, we learned that the primary
concerns of these customers (primarily the Sheriff) were the loss of budgetary discretion over
fleet costs and potentially new costs for accidents in which a County employee was at fault.
The CAO asked the General Services Department accounting team to prepare fiscal
analyses showing the ideal ISF scenario (without regard to budgetary constraints) and a
practical ISF scenario that relied on current budgetary provisions. Those fiscal analyses are
attached.
The ideal ISF fleet plan for 2004105 would require astart-up investment of about $1.5
million to fund afirst-year buy of 173 vehicles, and an ongoing annual fund requirement of
between $4 and $5 million, with the average cash ISF balance of about$2.5 million. Fund
expenses would be replenished through monthly vehicle/equipment lease and mileage
charges to departments, which would be calculated anew each year to cover current
expenses and future replacement purchases.
The practical ISF fleet plan cannot support the large up-front vehicle purchase
necessary to generate the long term maintenance savings that are the foundation of a viable
ISF. Current budget provisions can support a first year buy of only 70 vehicles, which is no
more than the County would purchase absent an ISF. Moreover, the plan relies on monthly
departmental lease payments that are not currently in the base operating budgets and may
not be feasible next fiscal year. Based on the long range budget forecast, it may take several
years before the County can afford the level of vehicle purchases needed to "jumpstart" an
ISF.
Departments' concerns about the impact of an ISF on their operations are valid. In
times of tight budgets, departments and, ultimately, the Board of Supervisors must make
Internal Services Fund for Fleet Management December 20, 2004
Internal Operations Committee Page 4
judgments about service priorities. While many departments rely on fleet services to facilitate
service delivery, fleet services are but one factor in the budget equation and must be
prioritized within the greater context of each department's primary mission. When basic
department services have been compromised or eliminated due to budget cutbacks, it is
prudent to maintain maximum flexibility and discretion over departmental resources in order to
preserve vital department services.
For these reasons, our Committee recommends that the ISF proposal not be
implemented at this time and that it be reconsidered in 18 months when the County can
reasonably begin planning for fiscal recovery.
•
1`• CN
LO
co co rl%ft 0
�" r M C14 V" CIq
r• V-
Nf r**-* m M16.
4)
C6
E
0
C*4 r*-_ LO Cl m
00 CN CN M co
oft a* oft N. a
cr) 0 co m • co
I.D
CF) CD a
co VMO 0
Go04 9%
00 CM C%4 •E
UL
04
m (D LM
> :3 1
LM
Go Go CO N >
C) co LO
2p Cie) t*ft. co co
am oft
It
LO cle) Go U) 4)
r LO LO CO
Wb m
04
E
C:
Lm. —
CN Lu�ol 0
a 9
r*%- CN
M 6% f 0
to co4.0 �Q
qq- 0) 2)
L O fes• cle) LO CL
toC:
LO N csi
IWO
0
.0-00 co
Im m
CL E
(D Go
a co
ce. 0 0)
04 4% W. a 0 Lir)
0 V) C) LO Lo m
00 N*6 Lc) r4*_ LO rm >0) 0) 0) rl*ft- 0
APb Wb W. M m
4
N n
0 4)
LL 4w
> a CO
sm 0
0 C)
wm 0 LO CIO E
fl*- W) to (6 x
LO C*4 N C) to 4) X
i
4ft r4,,: 0* CT (D CL to 00 C6 flt--
co cle) co E
COco tn tom. >
ca E 4i
CC 0 c0 m
E 0 M C bi :0
'a 0 E <
c 6111116 0
-ow CL x
0
LLM E c m 4)
CL 0
LmO
0 CO
E
O CL
m
m c
9v 0
0
0 C:
E C �. 12)0m= 0 0E C: > 2
m of 0) a
C:
0 0
-Ono
cO�,O 0
: J
0 L
O cc
Z.E
E
o
t4o.
(D
m
> M 4) M 0 ca
CL ch 4 0
0 E
4*0 co
m E r. -0. 0 OEM
0 r. <
0 -0 0
64001%
( cr (LD
40
1) Ono
A09ft 60 r .00-0
%.#.F 0 0 now
CN M
r
Lii CL
c 0 CV) (sD 0
0
< CL
0 0 7& C 4) CL 0
cc >
0 cc 00
CD CL to 0 LO LO C, a. "a
c w CD C) CO)
LV LD LD La
*NNW
Cl
10. 0 c c 2E C %
c cl 3 a 0 E o SO
CD v 10010
L LL z of
c 0 0000*4k
z Z C4 Cl) < 0
•
Lc) c1r) 0 cr) N CN
•
N 0Lr) IT 0 Co r11-- 0) 0 CN co Lf) 0 coi (1)
ct
U) LO 0) Lf) 0 co 00 U") 0 -C
m m m I w -0-0
um 06 cvi qr%r co qqi P%: r%: csi C)" 0) qqi o > >%
E
0Ncz co co 0 cn 0 co LO r%- MCCi CU �" � �0 to
0C*4ft cr
69, c
cc M Cc
E cp
LO cn C) m 0 LO c: (D c
LO UD llqr 0 T� co r.-- 0 0 N co 0 I'll E o
LO cr) t%- 0 co In 0 0 co qq, co < .0
0 Ul) co 04. ft 0. a- 0 cp E
*0 tll%: C4 m 0 V� Ni C6 w (D (D
co C6 C6 qt co co V� 0
0 03 0 CD
LO LO C14 > :3
CLC4 ci P*- c
0 v ?0' x
o 4)
C%4
(A 03 CF) N (1). C
0 V) LO TIM" -C Cc (1)
T .4-0
Ift -0 0 cn
E VM, 0 t1l
CCL. 2 %W
co co 0 co cn c:
0 T- c
o Ift
0 CN E 0
*01.+ tg
CL
C C: 0 4)
Z3 N cn
C: -0-0
LO E
co
0 0P-� C>
i.., co CO X
*00 a CD E. =41 c C;) cn
c
> cCC
cr
r4%_ co N CO O co (0 N_ LO 03 x
co LO cr) co C) N 0) 0) 0) 0 m co
0
U) Lo co 0) T— co tom- 0) 0
Ll. AW (:6 m C 0 c
(A C6 co (6 14i CO 0) 03 C6 V: (6 co 1,*-- -4-0 0
T11- V� (1) (1) cn
0 N N 0) 0) qw� T� m P-- qcr cn t'� N < c:
LO OR LO N in LO E
6. C6 "Wo m 0. 8
0 CVCD 0.
C
(D v w
"a -0-0
LL 0 N0 0 co Nco 0 co co r%- LO 0
co LO co 0 N m 0 03 0 T- 0 V� cn
0 LO co co co 0 r%_
co co m co co co w cn t:f •
.00
0) lrTr% T (9 m 0
LO co LO CV CD to a L. L�
C4 N: CL
cn cn
00
60"*
(9 4"a> c 0 4) c
U3
o
603k E
cc 0 Cc cn
4W cm 0
CL CL T. 40-0
am 0 0 0 0 0 w6_0
X *V 2
LQ 0 JC <
w ro c;)
to (D L.
q6mp
o C:
cl.
�,T � � t�. i .*.+ � N cn � � � yC
0) X U)
> LO
CL C:
4) qqr C) 0 CN V) Cc
v o 0 w III
CL (D 4-0 >
(D
>
C) 04 ce. (1) Lm L.
U-) = 8 Co
ii
LO -0 "a
CD 0 CN C> C>
C:
"Nov. C> LO 0 0 m 0 Uft) 0 0
10 ca U)
to C> (1)
ok a. 4. < 0 0 0 (1) C;) 0
> LLM CD LO co qlqr r%: Ld T` CIO 0) co 0 4mmo L.
C'e) z Cl) C
0 0) N Lf) LO
V— LO
LO 0cn
AW (0) C4e) CO :3
0 csi *NO
1qqt 0)= cn Lf) 0
C) r, >% C))
c >%a--
C) C) U�
C) 0 C) C) C) c
0 C) =3
2 E
LO
Ln tqqr 0 0) r*-C
s o. o. ft 0 E ca- 0 LL (D
w m Tco qqi 162
0 0) C) m 0 TC) w = -0-0 w
U"') IT 41T C14 < 0
CD 0 ft "6-0 w 0
CD C6 rl*_ 8 n
Clq 0 c 10-0 j
0 C
(D (n <
E W -0-0 1 >
CN Tow CO 44T (D CU m 0
0 co C> LO co 0 LO a 0
E
co 0 LO Co Co j
w. L- X cu C4,e) lw� (3) CL
CL 0 LO 0) Cy) =3 (1) 8
cc c
(
C
04 CNI C CL a (D
U) 1) C:%4 40 (1)
(o -<-� :3 (L)
CL 0 z U.
C
t? i
0 0
U.
CL 8 co 0 UJ
-0 C cn
0 Cl) 0 0 D
.0 E
0 Jp co 0CC%4 0 0 qq* 0 E 'o
m :3 Cr
c 0
un c LL
(D
Ca
U) L. C'''a L-
:3N(D
(D ::3
CL m
o o 0 c
r
LL La CL
un LL C: a c 0)
7
U) 0 Q
U) c (i) L. a) :3 06
LL
Lm La *� in
a) i>
0 < cle)
c U) 2 Lf)
( A itU (1) V**saw c cf)
Q
0 L. U)
U) %%No 4-0 c (1) CO
• (n
4) E Co Cb 0 C>
< c
co 0 p.
0 0 x
to CL '�' -*mot W 0 C: 0
0 0
ecs
U) 0) c
0 o
..mo-
o m 0 0 0 CM 6. Cl- x C>
` an (. (�► c u� (� = s a. a c�c cry t� a < o E < cu
OFFICE OF THE SHERIFF
CONTRA COSTA COUNTY warren E. Rupf
Technical Services Division Sheriff
30 Glacier Drive
Martinez, CA 94553-0039
(925) 313-2400
DATE: November 30, 2004
to: Internal Operations Committee, Board of Supervisors
FROM: Warren E f, ri
By: comman Jim Nichols
SUBJECT: Internal Service Fund Proposal Response
The following is in response to the Internal Service Fund (ISF) proposal presented by
Mr,, Frank Morgan of the Services Department. Although an ISF is an interesting
concept and appears to have limited advantages, I do have a number of questions
regarding the proposals economic impact to the County as well as my budget. Of
specific concern is what appears to be under represented data relating to mileage and
lease rates.
Mr. Morgan raises numerous points that in all fairness deserve thorough and careful
analysis. Although some form of an ISF may have benefit to the County, 1 believe we
would be remiss to make such a drastic change without this analysis. I am also
concerned that if we do proceed with this proposal and my concerns are realized, that
due to depleted depreciation funds, we would be unable to maintain our current fleet.
cannot recommend adoption of an ISF to the Sheriff or the Board of Supervisors, given
my belief that it would perhaps make "administration" of the fleet easier, but dramatically
increase costs.
Internal Service Fund
Survey
Annette BoonePrepared by Depulli.
Some California Counties That Have Fleet Management ISF Funds
(List Provided By GSD)
COUNTY SHERIFF PARTICffATION RATING 1-10
• Solano Yes 5
• Alpine No Fleet N/A
• Butte Yes 8
• El Dorado Yes 8
• Alameda Yes 5
• San Joaquin Yes 4
• San Diego Yes 5
• Santa Cruz Yes 4
• Humboldt Yes 8
• Kern No N/A
• Kings Yes 9
• Los Angeles Did Not Respond N/A
• Mendocino Yes 7
• Ventura Yes Not Rated
• San Bernardino No N/A
• Madera Yes 4
•
Tulare ' Yes 5
• Yuba Did Not Respond N/A
• Mariposa Yes 7
• Imperial Did Not Respond N/A
• Sonoma Yes 10
• Santa Clara Yes 4
INTERNAL SERVICE FUND SURVEY RESULTS
The Internal Service Fund Survey was conducted by phone. An effort was
made to contact 57 of the 58 Counties in California. Below is a summary of
the Data that was collected.
INTERNAL SERVICE FUND REVIEW
57 Counties were contacted.
53 Counties responded by telephone.
Of the,53 Counties that responded:
40 Counties had Internal Service Funds.
I I Counties did not have an Internal Service Fund.
2 Sheriff's Departments reported not having a fleet.
PARTICIPATION
Of the 40 Counties that have an Internal Service Fund
28 Sheriff's Departments participate fully in their County's Internal Service
Fund.
9 Counties use a combination of an Internal Service Fund and Outside
Vendors
3 Sheriff's Departments do not participate in their County's Internal Service
Fund.
Of the 37 Sheriff's Departments that participate in their County's Internal
Service Fund, ** 5 Departments implemented significant changes to their
County's Internal Service Fund Policy to make it meet the needs of the
Department.
1
RATINGS
The Sheriff's Departments were asked eleven questions pertaining to their
Counties Internal Service Fund regarding its specific effect on their
Department, including rating the Internal Service Fund on a scale of 1-10.
1 being the lowest Score and 10 being the highest. (See Questionnaire and
Spread Sheets for specifics).
The average rating for Sheriff's Departments with an Internal Service Fund
was 5.9.
** Of the five Departments that made significant changes to their County's
Internal Service Funds the average ratings were as follows: Prior to the
changes being made the five Departments (Nevada, Santa Barbara, Sonoma,
Stanislaus, and Mendocino) average rating of their ISF was. 4.2. After
significant changes were made, the average rating was 8.6.
COMPLAINTS
Some of the specific complaints regarding the above-mentioned Departments
initial Internal Service Fund Policies were.
1. Sheriff Department Vehicles were not serviced by the County Garage in a
timely manner.
2. The Quality of service received was poor and not efficient.
40
3. The Sheriff's Departments were being overcharged in comparison to other
County Agencies.
4. Using the County Garage was not cost effective.
5. The Sheriff's Departments did not have the ability to determine when their
vehicles were to be replaced and in some cases, they did not have the ability to
choose the type of vehicle to be used as a replacement.
SOLUTIONS
Some solutions that were added to the revised Internal Service Fund Policies
are listed below.
2
1. The Sheriff's Department vehicles are given priority in the County Garage.
All other County vehicles are worked on after the Sheriff Department vehicles
are completed.
2. To solve overcharging the Santa Barbara Sheriff's Department now pays a
set fee per vehicle, per month for a set period. The fee includes depreciation,
licensing, insurance, and replacement. They also pay a mileage fee, which
includes fuel and maintenance. After the set period for payment has expired,
the Department pays only mileage. There is no additional hourly charge for
labor done in the County Garage.
3. Mendocino's Sheriff Department separated their Internal Service Fund from
the Counties General Fund. They now have an Internal Service Fund
specifically for their Departments use. This was to prevent to Sheriff's Office
monies from being used to purchase/maintain other County Agencies vehicles.
4. The Stanislaus Sheriff's Department was instrumental in the removal of the
General Services Fleet Manager. A new Manager was hired. The Sheriff's
Department sat on the oral board. The Department now has a good working
relationship with the General Services Fleet Manager. The Sheriff's
Department also employs a Technician that is a Mechanic; he monitors the
vehicles for quality control and reports to the Department.
5. All Departments now determine when their vehicles are replaced and the
type of vehicle used as a replacement.
6. The Departments note a better overall working relationship with the County
Garage.
BUDGETS
The Survey asked the Departments how the Internal Service Fund affected
their budgets.
5 Sheriff's Departments reported that their County's Internal Service Fund
had a positive effect on their budgets.
10 Sheriff's Departments reported that their County's Internal Service Fund
had a neutral effect on their budgets.
20 Sheriff's Departments reported that their County's Internal Service Fund
had a negative effect on their budgets.
3
4 Sheriff's Departments reported that their County's Internal Service Fund has
saved them money.
9 Sheriff's Departments report that it is unknown if their County's Internal
Service Fund has saved them money.
24 Sheriff's Departments report that they have not saved money by
participating in their County's Internal Service Fund.
CONCLUSION
In Conclusion the most reoccurring complaint that was discussed during the
survey was that participating in a County sponsored Internal Service Fund was
not cost effective for the majority of Departments involved. Many of the
Departments either are exploring the use of or are currently using Outside
Vendors in an effort to save money and provide effective and efficient
maintenance for their fleets.
Some Departments stated that because of their size (often the largest fleet in
their County)they are overcharged to make up for the financial shortcomings
of other County Agencies. In some cases, the Sheriff's Departments were
charged a higher rate and another County Agency was charged a lesser rate
for an identical vehicle.
It should be noted that 17 Sheriff's Departments said the Internal Service
Fund is working for them
12 Stated that the Internal Service Fund is not working for them.
3 stated the Internal Service Fund is satisfactory
2 stated that the Internal Service Fund is functional.
Even though 17 Departments said, their ISF is working for their Department.
Many Departments expressed the desire to use Outside Vendors or Change
their present Internal Service Fund as it pertains to them. However, the fact
that an Internal Service Fund is often a political issue for the Counties
involved makes it hard to secure change. Keep in mind that the Sheriff's
Departments overall ratings for the Internal Service Funds are only an average
of 5.9.
4