ADMINISTRATIVE UNIT REVIEW  RECOMMENDATION #3E

 

Title:                             Depreciation Refund

Description:                  Develop method to refund over collected depreciation

Team Leader:               Barbara Greene

Team:                           Barbara Greene

Identified Issues:           Fleet Services has over-collected depreciation on specialized vehicles.  This money has been collected in Fleet's operating account. The money should be refunded to departments as soon as possible.  Departments should also be informed that Fleet will no longer fund additional specialized vehicles.

Fleet Proposal:             Determine which specialized vehicles have finished their depreciation cycle.  Immediately reduce the individual vehicle rate taking into account the completed depreciation cycle.  There are fourteen departments and 38 vehicles in this circumstance totaling $269,040.96 in refunds. 

Fleet will no longer be funding additional specialized vehicles.  Departments will need to front the money for these vehicles. Fleet will collect depreciation for the vehicles if the department wants the vehicle replaced.  Have this discussion with the department in case there is an immediate need for an additional vehicle.  If so, the depreciation refund/rebate can be used to offset the cost for these vehicles. 

Develop a plan to determine when a specialized vehicle is fully depreciated.  Reduce the monthly rate as soon as the vehicle is depreciated out. 

Justification:                  Except for planning guidelines, Fleet rates have not been adjusted for five years.  The rates for specialized vehicles have therefore not been adjusted by depreciation factors.  This leads to over collecting of depreciation. 

Impact:                         Fleet will be collecting approximately $8,000/month or $96,000/annually less each year in the operating account.  Departments will have immediate cost savings of this same amount. 

                                    None of the departments in question were in need of an additional specialized vehicle with the exception of Facilities Services.  Facilities Services' management will determine whether the money will be used to fund their new vehicle requirements.  Therefore the money has been refunded to all departments.

                                    There is an automated process in place at Fleet to notify management when a vehicle is fully depreciated.  The vehicle rate will immediately be reduced to reflect the lower cost.