Agenda Packets - 1997/03/03 - Laserfiche WebLink

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City of Mounds View Staff Report • /I February 27, 1997 Page 4 It is proposed that the vehicle and equipment be converted to in internal service fund 1111 whereby users of the vehicle or equipment pay a rental fee. Under this proposal, all vehicles and larger pieces of equipment for the City would be purchased by this Fund. Initially, all existing vehicles and equipment would be transferred into this fund, along with the balance in the Vehicle and Equipment Fund. On a monthly basis, each program that utilizes vehicles/equipment would be charged a rental fee. This rental fee would cover gas, oil,repairs, and maintenance, along with a charge for the eventual replacement of the equipment. Advantageous: removes large fluctuations in yearly budgets due to the need to purchase vehicles & equipment, improves long term financial planning by having all the large equipment in one fund,thereby simplifying the analysis, better matches costs to programs by allocating costs based upon usage verses when an item is purchased, and eliminates the need to keep multiple records for one piece of equipment when such item is purchased from several funding sources. This change would result in charges to various department budgets and at the present time actual usages are not readily available; also, we do not presently have estimated rental fees nor a system to log and charge usage. As such, I would propose that we use 1997 to collect the data and to establish procedures necessary to make this proposed change and that we implement this suggestion in 1998. Special Projects Fund. • Presently,this fund is accounted for as a capital Project Fund, which by definition are to be used to account for acquisition or construction of major capital assets in non- enterprise operations,particularly when such projects are financed and/or are constructed over more than a one year period. Routine purchases should not be reported in such a fund. Historically, the majority of the items financed with special project funds have been for equipment items, smaller capital projects @ark improvements), routine items such as seal coating, etc. We will continue to work towards preparing a long term capital plan which is coordinated with this and other associated funds to insure that we have a financial plan which provides for the long term capital needs of the City. Other Establish an Administrative Fund which would be similar to a vehicle and equipment pool, but would be used to account for the costs associated with Finance, Administrative Services (Administrator, Human Resources,Public Information, MIS, Central Services, City Hall, etc.). These functions basically provide services to the other City programs. If other City programs did not use them, the programs would have to obtain them from other sources at a cost to that program. To determine the true cost of a program, programs should be charged a fee for the Administrative functions. Such fees could be based upon factors including number of employees, square footage of building used, number of invoices or bills processed, etc. The end result would be a truer accounting and reporting of the actual costs of running a program. •