SmartLeaseVehiclePro gram10 25 06

Smart Lease Vehicle ProgramOctober 25, 2006: 

Smart Lease Vehicle Program October 25, 2006 Office of Administration State Fleet Management Cindy Dixon State Fleet Manager Cindy.Dixon@oa.mo.gov 573-751-4534

Agenda: 

Agenda Smart Lease Vehicle Program Overview Master Lease Contract Gary Eggen, OA Purchasing Presentation by Banc of America Implementation Plan Questions

What is Smart Lease?: 

What is Smart Lease? Program to generate immediate cost savings in agency operating budgets Transfer business miles for certain employees from mileage reimbursement to a lower cost, lease-purchased vehicle Estimated to save 44% in mileage reimbursement expenditures

Smart Lease Website: 

Smart Lease Website http://www.oa.mo.gov/gs/fm/smartlease.htm Links to: Vehicle Contracts Master Lease Services Contract Smart Lease Agreement SAM II Procedures for Master Lease Contract

Smart Lease Program Overview: 

Smart Lease Program Overview Agencies identify employees that are candidates for the program Agency & OA complete agreement on number of Smart Lease vehicles Agency provides employee with a Smart Lease vehicle State Vehicle Contract Pricing Finance through Master Lease Contract Agency redirects the employee business miles from mileage reimbursement to a Smart Lease vehicle

Cost of Mileage Reimbursement: 

Cost of Mileage Reimbursement State employees were reimbursed over 37.8 million miles in FY’06 at a cost of over $14.2 million

Number of Business Miles: 

Number of Business Miles

Cost of Various Travel Options: 

Cost of Various Travel Options State owned vehicles are the least costly travel option on a per mile basis

Annual Savings Potential: 

Annual Savings Potential Savings calculated at 18.2 ¢ per mile.

Potential Candidates by Agency: 

Potential Candidates by Agency

Breakeven Point: 

Breakeven Point Number of business miles driven per year at which... Cost of employee mileage reimbursement is Equal to Cost of providing a Smart Lease Vehicle

Breakeven Point Components : 

Breakeven Point Components Annual Fixed Cost Principal & Interest Liability State Fleet Fee Variable Cost Fuel Maintenance & Repair Break Even Point Formula: Annual Fixed Cost of a 5 Year Lease Mileage Reimbursement Rate – Variable Cost Per Mile

Estimated Breakeven Point***will change when 2007 vehicle contracts are awarded***: 

Estimated Breakeven Point ***will change when 2007 vehicle contracts are awarded*** BREAKEVEN POINT 10,300 MILES Mid Size Sedan Annual Fixed Cost: $2,861 Standard Mileage Reimbursement Rate: 41.5 ¢ Variable Cost Per Mile: 13.7 ¢ (fuel & maintenance) Annual Fixed Cost Based on 2006 Model Year Vehicle Pricing Variable Cost Per Mile: Based on FY’06 fuel and maintenance cost from State Fleet Information System.

Which Employees Are Candidates For Smart Lease?: 

Which Employees Are Candidates For Smart Lease?

State Vehicle Policy Requirements: 

State Vehicle Policy Requirements Minimum utilization requirements in SP-4 still apply 15,000 mile average for pool vehicles 15,000 mile minimum for vehicles assigned to individuals Pool Smart Lease vehicles if at all possible to maximize their use State average for pool vehicles over 16,500 miles

Agency Review of Data: 

Agency Review of Data Review FY’06 mileage reimbursement data from SAM II Financial Things to keep in mind.... Employee still in same position? FY’07 estimated miles? Do you expect change in job duties? Document your analysis of FY’06 data Document why you didn’t include ‘eligible’ employee in the Smart Lease program

Smart Lease Agreements: 

Smart Lease Agreements Agency will submit draft agreement to State Fleet Management, completed and signed by the appropriate agency representative Key features of the agreement List employees/positions included in program Transfer of business miles to a state vehicle Purchase vehicles in accordance with procedures Meet minimum policy requirements in SP-4 Regularly monitor use of Smart Lease vehicles and reassign if necessary

Master Leasing: 

Master Leasing Equipment financing strategy utilized by many state and local governmental entities Leverage purchasing power of all agency lease purchase agreements to obtain lower interest rates Tax-exempt financing resulting in lower interest rates Subject to annual appropriation Equipment is licensed/titled to the state immediately Equipment remains property of the State after lease is fully paid 2,3,5,7 or 10 year terms

Smart Lease Vehicle Program & the Master Lease Contract: 

Smart Lease Vehicle Program & the Master Lease Contract Awarded July 1, 2006. Agencies use existing fleet contracts to purchase vehicles but the Master Lease Contractor (Banc of America) will make payment for the vehicles to the dealership on contract Agencies will enter SAM II Purchase Orders in the amount of $1.00. Purchase order should instruct dealership to invoice the state agency and notify them that payment will be remitted by Banc of America. Equipment received, agency requests disbursement of funds from Banc of America to the vehicle dealership Agencies will maintain lease purchases in SAM II Financial according to existing SAM II procedures

Master Lease - Interest Rate: 

Master Lease - Interest Rate 5 year lease - 76.40% of Base Rate shown on the U.S. Treasury website at http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml fixed rate for the entire term of the individual lease schedule inclusive of all costs

IT Employees: 

IT Employees Upon review of your FY’06 employee reimbursement data, please identify IT staff transferred to OA and provide a list of IT employee names and FY’06 miles to: Russ Craighead OA ITSD russ.craighead@oa.mo.gov

Action Plan: 

Action Plan