Fleet Fund Policy
and Analysis
Finance Committee Meeting
July 22, 2026
Nicole Gonzales
Finance Director
July 22, 2026 1
Background
August 2024
Fleet Study
Complete by Baker
Tilley
October 2025
Fleet Fund Analysis
& Policy Work by A.
Maze, Inc.
Commenced
April 2026
Fleet Fund
Analysis& Policy
Work Complete
July 2026
Fleet Fund Policy &
Analysis Presented
to Finance
Committee
July 22, 2026 2
Fleet Fund is an Internal Service Fund
What is an Internal Service Fund?
An Internal Service Fund (ISF) A fund used to account for centralized services provided to City departments, with costs recovered through charges to the departments that receive the services. Why is a Fleet Fund ISF Important?
Promotes cost recovery by charging departments for the actual cost of vehicle, including maintenance, fuel, and replacement.
Provides sustainable vehicle replacement funding by collecting replacement costs over the useful life of vehicles, reducing the need for large one-time capital requests. Promotes consistent replacement schedule before maintenance costs become excessive. Minimizes potential disruption to service delivery to the community.
July 22, 2026 3
Fleet
Replacement:
Challenges
and Funding
Needs
Ongoing Fleet Replacement Needs
• City Fleet
• Police Fleet
• Fire Fleet
• City Equipment
Ongoing Operational Needs for Core Services
• Procurement Challenges
• Public Safety Fleet Challenges
• Fire Fleet - Estimated date of delivery is approximately 4-5 years from date of order
Funding Challenges
• Budgetary challenges
• Historic practice of deferring fleet replacement
• Underfunding for future replacements
July 22, 2026 4
Why a Sustainable Fleet Fund
Is Needed
Support Delivery of
Core Services
Minimize Maintenance
& Repair Costs
Improve Financial
Stability
July 22, 2026 5
Key Policy
Highlights
• Fleet Maintenance Fund
• Fleet Capital Replacement Fund
Creation of new funds for better accounting
transparency
• Fleet Maintenance Fund – minimum reserve for this operating fund is hereby established with a reserve target of 20% for annual operating costs
• Fleet Replacement Fund - replacement fund will have a minimum reserve target of the calculated replacement costs that should be recovered by the end of the budgeted fiscal year. Reserve Target of 20% Reserve Targets
• Request for new asset must be provided to the Finance Director and Fleet ISF Administrator to be added to the ISF equipment inventory -- such requests will require the identification and approval of a funding source for the initial acquisition; replacement charges will be assessed; and ongoing operational expenses
New Assets
July 22, 2026 6
Common Funding Approach
• Research yielded no local jurisdictions with a reserve policy for funding fleet capital replacement
• Fleet Capital Replacement Approach - “Pay-As-You Go” Model • Minimal fund balance maintained
• Evaluation and prioritization of replacement needs during budget process • Replacement deferral due to budget constraints
• Interfund transfers from operating funds to build reserves or fund current year replacement needs – Reliance on General Fund
July 22, 2026 7
8 July 22, 2026
9 July 22, 2026
5-Year Fleet Fund Financial Forecast
A B C D E F G
FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032
1 Internal Service Fees $2,500,000 $3,000,000 $3,090,000 $3,182,700 $3,278,181 $3,376,526 2 Interest Income $333,600 $343,600 $353,900 $364,500 $375,400 $386,700 3 Interfund Transfer-In $1,500,000 $1,500,000 $1,500,000 4 TOTAL REVENUE $2,833,600 $4,843,600 $4,943,900 $5,047,200 $3,653,581 $3,763,226 5 6 Salaries & Benefits $666,834 $686,800 $707,400 $728,600 $750,500 $773,000 7 Contractual and Other Services $574,558 $591,800 $609,600 $627,900 $646,700 $666,100 8 Materials and Supplies $708,625 $729,900 $751,800 $774,400 $797,600 $821,500 9 Other Operating Costs $456,890 $470,600 $484,700 $499,200 $514,200 $529,600 10 Operating Subtotal $2,406,907 $2,479,100 $2,553,500 $2,630,100 $2,709,000 $2,790,200 11 Capital Acquisition $610,672 $1,938,793 $3,001,171 $3,656,192 $1,333,523 $2,762,372 12 TOTAL EXPENSES $3,017,579 $4,417,893 $5,554,671 $6,286,292 $4,042,523 $5,552,572 13 Change in Net Position – (Use of Reserves) / Surplus ($183,979) $425,707 ($610,771) ($1,239,092) ($388,942) ($1,789,346) 14 Beginning Balance $2,406,410 $2,222,431 $2,648,138 $2,037,367 $798,275 $409,333 15 Ending Balance $2,222,431 $2,648,138 $2,037,367 $798,275 $409,333 ($1,380,013) Next Steps
January – March 2027
Incorporate financial planning for new Fleet Maintenance and Fleet Capital Replacement Funds as part of the FY 2028-2029 Biennial Budget Process December 2026
Finance Committee Update Provide funding plan with the incorporation of reserve targets October – November 2026
Develop and refine financial forecast tool for reach new fund Incorporate reserve targets to determine revenue needs, including General Fund impacts
August – September 2026
Accounting Changes - Rename / Add New Fleet Funds Process entries to establish new account balances and budget appropriations
10 July 22, 2026
Discussion
and
Feedback
Provide feedback and direction on
reserve targets for Fleet Maintenance
Fund and Fleet Capital Replacement Fund
Feedback will be used to develop funding
models and recommended funding plans
July 22, 2026 11