The attempts to drive those savings into the budget range from top- to-bottom audits that rethink a government's fleet needs to ways of making better use of an aging fleet. The bottom line for fleet managers is this: They'll have to come up with smarter ways to manage assets. Kansas: Cleaning House
A team of budget scrutinizers made an interesting discovery about the Kansas fleet: No one knew how many cars the state owned, the best guess being 1,500. When auditors followed up with a thorough inventory, they toted up nearly 8,700 cars. Worse, they came across 135 brand-new, never-used state vehicles purchased for the central motor pool that were sitting in a remote parking lot.
The unused cars were embarrassing, but they masked a larger problem: The state was buying vehicles to replace old ones that were about to hit their retirement mark--without questioning whether the existing cars or trucks were needed in the first place.
Last September, as she stood in the middle of that infamous lot of unused cars, Kansas Governor Kathleen Sebelius announced sweeping reforms for the Kansas fleet. In addition to a two-year moratorium on the purchase of new vehicles (there are exceptions for public-safety vehicles), Sebelius eliminated the central motor pool and told each agency to control its own vehicles. All that now remains of the central motor pool is a data center housed in the Department of Administration, which is responsible for the licensing and insurance for vehicles. The reforms added up: Savings from decentralization came in at $4.5 million; the moratorium on new purchases, $3 million.
But that isn't all the state did to wring more money out of the fleet. Cabinet secretaries were asked to look at their agency's cars and trucks to determine how extensively they were being used. Turned out that one out of nine was toting up fewer than 12,000 miles per year--indicating low utilization.
In an effort to capitalize on the low use of these cars (and trim the fleet accordingly), the cars were put up for auction--first to nonprofit agencies and local governments and then to the general public and dealers. All totaled, the mature cars brought in $1.6 million--half a million dollars more than the state projected it would get.
More to the point, the fleet reforms have helped transform the way state employees and agencies use and manage their vehicles, says Caleb Asher, of the state's Department of Administration. "People are beginning to look at assets as more of a statewide enterprise," he says, noting that people in the agencies are taking a closer look at how they can be more efficient with their cars. When the moratorium on new purchases ends, Asher expects a rush to buy new vehicles. But he has hopes that it won't result in a purchasing spree. "We need to think differently," says Asher.
While not commenting directly on the Kansas program, Joe O'Neill, executive director of the National Conference of State Fleet Administrators, cautions that without careful management of vehicles extended past their typical replacement age, states and localities run the risk of getting "to a point where you are throwing good money after bad." States can freeze their fleets for one year or even two and see no obvious ill effects, he says, "but under the surface there is a lot of churning going on." Vehicles start breaking down and getting pulled out of service, and then a government has the added inconvenience--and expense--of a crew or employees unable to perform their job without a vehicle. The use of older vehicles, he warns, requires careful management. "The greatest risk," he says, "is that you are not going to be able to deliver services to the public and vehicles to employees safely."
PHILADELPHIA: SHARE HOLDERS
Newspapers were crowing about it. "Philadelphia," a recent Philadelphia Daily News editorial bragged, "has just done something that has made us more progressive and hipper than Berkeley, California."What Philly, which has one of the largest municipal fleets in the country, did is to become the first city in the country to contract with a car-share program to meet the transportation needs of city employees affected by fleet reductions. As of April, city workers may make use of the program's privately owned vehicles for short trips or meetings. By providing access to vehicles that may be shared rather than assigning vehicles permanently to agencies that might have a need, the city has been able to reduce the number of vehicles it owns, leases, insures and maintains.
Philly got to car-sharing the usual way: budget pressure. The city had owned or leased 6,500 vehicles, but the fleet management office's core budget was slashed by $2 million and its fleet acquisitions budget by another $2 million. According to Robert Fox, director of administrative services for the office of fleet management, the only way to balance the budget was to eliminate 400 cars. The city hired a financial management company with expertise in fleet management to assist in developing a rational strategy for the reductions. "They performed a zero-based analysis of the entire fleet to look at what to reduce and not just take a meat-ax to it," Fox says. Underused cars and take-home vehicles that were not absolutely necessary were assigned to the auction block.
Although the cars had to go, Fox knew that city departments still needed access to vehicles. So his office designed several strategies to, as he puts it, "take some sting out of the cuts." One of those was the car-sharing program. The city partners with PhillyCarShare, a local nonprofit that has its own fleet of hybrid gas-electric sedans and fuel-efficient station wagons. City employees have 24/7 access to the vehicles, which are parked in several different locations around the city. Employees enrolled in the program are given their own key fob. They can then make reservations via phone or on the Internet to use a car for as little as 15 minutes or as long as a day. With a reservation in hand, the employee gains entry to the car with his or her fob and is off and driving. Through the personalized fob, the driver's identity and mileage are tracked. The city is charged $3.90 an hour and 39 cents a mile for usage--PhillyCarShare charges the same rate for citizens belonging to the service. These charges cover PhillyCarShare's expenses for maintenance, insurance and gas. As of June, the city had access to nine vehicles, but Fox said he expects that "this number will rise exponentially as everyone begins to use it."
So far, the program has been reliable. Cars are available where and when they are supposed to be; the key fobs work; the cars start. "Those were things that people worried about," Fox says.
While the new program isn't a replacement for having a government car at one's beck and call, it has helped keep up morale during adjustments to the new reality. "We sold it as a cushion, something that would help the fall," he says. And, the car-share program has started a trend; in California, both Berkeley and San Francisco are working on similar programs.
SOUTH CAROLINA: AGING GRACEFULLY
Like so many states in the dark budget days of 2002, South Carolina targeted its fleet as a prime source for saving money. Out of that dynamic, fleet officials came up with the Golden Car$ program, which takes vehicles that have aged beyond their normal projected lifecycle and offers them as an option to agencies that lease cars.Under Golden Car$, agencies may choose to lease one of these older cars at a reduced mileage rate. For example, an agency will have two choices if it wants to lease a full-size sedan. A new sedan would cost about $300 a month. If the agency opted to lease a full-sized sedan in the "Golden Car$" program, the monthly cost would be around $200.
Critics argue that extending the life of old vehicles offers no real cost savings because the maintenance costs go up as a vehicle's mileage increases. But Golden Car$ gets around those losses by managing individual vehicles closely. Fleet administrators are aware that individual maintenance remains low per vehicle until there's a major failure--then those costs soar. When a Golden Car$ vehicle needs a major repair, the whole vehicle is replaced rather than an engine or a transmission. South Carolina's fleet management section has built this concept into their lease agreements. Customers can keep cars as long as they fulfill their needs. However, if a vehicle is deemed unsafe, or if the cost of a repair is not economical, state fleet managers can take that vehicle out of service and replace it with a vehicle of the same class.
The program is catching on. Some agencies have donated their agency- owned vehicles to the state and now lease them back under the Golden Car$ program. As for the fleet managers, they see the concept as a model for other states and localities seeking efficient ways to extend the life of their fleet in a controlled manner. 10,000
Number of miles some states are adding to their criteria for replacing cars and light pick-up trucks. The standard had ranged up to 125,000 miles per vehicle.
