News

Audit: Third of Palo Alto's city cars underused

Palo Alto freezes vehicle-replacement program after audit shows 38 percent of cars failing to meet city's usage threshold

Palo Alto officials have halted the city's vehicle-replacement program after an audit found that more than a third of the vehicles in the city's fleet were underused in fiscal year 2009, according to a new report from City Auditor Lynda Brouchoud's office.

The report, which was released Wednesday afternoon, reviewed the mileage data for 120 transport vehicles (sedans, vans and light pick-up trucks) in the city's fleet and found that 38 percent of them were driven less than 2,500 miles -- the city's threshold for "minimal utilization."

The city's policy requires departments to obtain exemptions for all vehicles that don't meet the minimal utilization criteria. The policy, according to the audit, is designed to justify the continued use of these vehicles.

The city's high percentage of underutilized vehicles is particularly startling given that Palo Alto's 2,500-mile threshold is much lower than those in other nearby cities. Redwood City has a 5,000 annual-mile minimum (much like Palo Alto, before it changed to 2,500 in 1995), while San Jose has a 10,000-mile threshold for city-owned sedans and pick-up trucks. One of the audit's recommendations, in fact, is "increasing the standards to more cost-effective levels."

Palo Alto's underutilized vehicles cost the city about $396,000 in fiscal year 2009, which ended June 30, the audit found.

To avoid more unnecessary expenditures on unused vehicles, Palo Alto officials decided to freeze the city's replacement program for non-emergency vehicles once the auditor's office shared its preliminary results. The new audit recommends that the Public Works Department's fleet management continue this freeze until it can "reduce the size of the fleet and increase utilization."

By freezing its vehicle replacement program in 2010, the city refrained from spending about $2.5 million (about $948,000 of which would have funded underutilized vehicles). The audit recommends that the freeze continue until the fleet-management team comes up with a better plan for vehicle usage.

"In our opinion, fleet underutilization should be addressed before spending City resources on additional replacements and additions," the report states. "Public Works fleet management should develop an action plan to increase fleet utilization and ensure the City has the optimal size fleet and use of fleet resources."

The recommendation is one of 22 in the new audit, which was conducted by Senior Auditor Edwin Young. One of its most significant recommendations is replacing the current system, under which each department is allocated a certain number of vehicles, with a citywide vehicle pool that would be accessible to all departments.

A citywide pool would make it easier for departments to share vehicles and would improve fleet utilization, the audit argues. But the proposal has previously encountered resistance from some departments, which apparently didn't feel like sharing their cars with outsiders.

"Throughout the audit, PWD fleet management noted difficulty in encouraging departments to share vehicles or equipment, and a lack of authority to reassign or redistribute vehicles," the audit stated. "Once assigned a vehicle or equipment unit, individual departments maintain control over the use."

The audit also uncovered lax security at some city vehicles, including one unlocked Utilities Department truck that was left parked at the Stanford Medical Center with the keys in the ignition. An auditor also physically inspected 26 randomly selected city vehicles and found 10 Utilities Department trucks with doors unlocked and keys in the ignition at the Municipal Services Center lot.

The auditor shared these findings with the Utilities Department, which directed staff to cease this practice, according to the report. A follow-up inspection last year found all utilities trucks secured with keys removed except one (the lone offender subsequently removed the keys and locked the truck).

The audit cites one case in October 2007 when an unlocked Community Services Department truck with keys in the ignition was stolen from the Municipal Services Center (it was later recovered). In another case, $16,000 worth of equipment was stolen from three utilities services trucks.

The audit recommends that fleet management "include requirements for securing vehicles and equipment within the fleet policies and procedures" and "ensure compliance by employees."

According to the audit, the city's fleet has about 461 units of "rolling stock," which includes transport vehicles, public safety vehicles and heavy machines such as loaders and backhoes. The report also identifies 169 units of "non-rolling stock," which includes equipment such as trailers, compressors and generators.

Glenn Roberts, director of the Public Works Department, wrote in a response to the audit that staff agrees with all 22 of the audit's recommendations, including a new policy for securing vehicles. The department has already initiated a review of underutilized vehicles, Roberts wrote. Four such vehicles have already been voluntarily returned by departments, he noted.

Roberts also said the city's vehicle policy "will be revised to detail a more stringent review and approval process." He also agreed with the audit's recommendation on a citywide vehicle pool. Staff has already begun to implement a "centralized, automated pool reservation system" at the Municipal Service Center -- a project he expects to be completed this summer. Vehicles parked at the City Hall garage are scheduled to be added to the automated system by June 2011.

City staff will also seek outside assistance to further analyze vehicle utilization and evaluate cost-saving measures such as car pools, mileage reimbursement and the "outsourcing of specialized equipment needs," Roberts wrote.

"The goal of this effort will be to maximize the utilization of fleet resources, and to improve the cost-effectiveness of the City Fleet in support of City programs, while assuring reliable service delivery," Roberts wrote.

Bouchoud said she was pleased with staff's response to the audit's preliminary data, particularly with the decision not to spend $2.5 million on the vehicle-replacement program. City Manager James Keene is also including $483,000 in projected budget savings in the Vehicle Fund for fiscal year 2011.

"We're really happy that they took the information and were proactive in addressing it," Brouchoud said. "We had $2.5 million in savings in 2010 and another $483,000 in 2011 -- that's definitely progress."

Comments

 +   Like this comment
Posted by Michael
a resident of Crescent Park
on Apr 15, 2010 at 8:13 pm

What about finding the guy who lowered the minimum to 2500 miles in 1995 and firing him?


 +   Like this comment
Posted by Bob
a resident of Community Center
on Apr 15, 2010 at 9:46 pm

How many more incidents in Public Works and other departments will occur under the 'watchful eyes of various officials" before they are outright fired or ousted into a generous retirement? From the composting fires at the Baylands which the head of PW knew nothing about and other well publicized scandals - like test certification in Utilities to this waste of money. City Council, wake up..


 +   Like this comment
Posted by Terry
a resident of Midtown
on Apr 15, 2010 at 10:32 pm

So do you want someone dumb enough to leave keys in an unlocked truck to work on your utility system? It is time to clean house in the Utility Department.


 +   Like this comment
Posted by Another Scandal?
a resident of another community
on Apr 16, 2010 at 8:18 am

Yet another scandal in City of Palo Alto municipal government? What a huge surprise.


 +   Like this comment
Posted by Lineman for the City
a resident of another community
on Apr 16, 2010 at 9:50 am

Another Scandal?

Could you please point out the scandal? Do you believe someone forgetting their keys in a truck is a scandal? This looks like the City is tweaking it's vehicle replacement policies to reduce it's costs. Now, another poster here vilifying Palo Alto employees, there's a huge surprise!

I don't agree with the pool vehicle recommendation. It will inevitably reduce the personal accountability for the vehicles. When an employee is assigned a vehicle they're responsible for making sure it's running well and kept in good shape. How many of us have returned a rental car and the agent notices a scratch and tries to blame you for it?


 +   Like this comment
Posted by Former E
a resident of Green Acres
on Apr 16, 2010 at 9:59 am

Smells of Lahaie and Roberts EWW!


 +   Like this comment
Posted by Garden Gnome
a resident of Crescent Park
on Apr 16, 2010 at 10:43 am

C'mon, neighbors:

At least these vehicles aren't about to retire early and collect generous pensions.

I'm sure some enterprising utilities department manager is trying to negotiate for their participation in a sequel to Cars (hey, what do you mean it's a cartoon?)


 +   Like this comment
Posted by Observer
a resident of another community
on Apr 16, 2010 at 11:56 am

Sell the cars and have employees use the shuttle! Oh, wait! The shuttle was eliminated due to budget constraints!


 +   Like this comment
Posted by Ray Bacchetti
a resident of University South
on Apr 16, 2010 at 11:56 am

It looks line our Auditor's Office has done a first-rate job of assessing vehicle use and making helpful recommendations. And the Weekly reporter has done an equally good job of reporting on it. The skill and ability to continuously examine and improve some of the complex practices of our complex city is part of good management. Congratulations to all involved.


 +   Like this comment
Posted by Need Public Works Audit
a resident of Evergreen Park
on Apr 16, 2010 at 12:36 pm

"City staff will also seek outside assistance to further analyze vehicle utilization and evaluate cost-saving measures such as car pools, mileage reimbursement and the "outsourcing of specialized equipment needs," Roberts wrote."
So he will hire consultants to find solutions for his own incompetent management.
Public Works is the biggest spender of city funds. Millions and millions. This is the tip of a big iceberg. When will the auditor work on the whole department?


 +   Like this comment
Posted by Another Scandal?
a resident of another community
on Apr 16, 2010 at 12:40 pm

Downsize Public Works, Human Resources, and the City Attorney's Office and replace the management in all three.


 +   Like this comment
Posted by common sense
a resident of Midtown
on Apr 16, 2010 at 12:42 pm

Ray,

I agree that the auditor is doing an excellent job. But it doesn't excuse the highly compensated management staff from looking at their budgets and ensuring that the city is spending it's money frugally or using it's assets effectively. We the citizens are told that we are paying top dollar for hiring these managers via regional or nationwide searches, yet we have seen case after case of simple changes that could saved the city lots of money (in this case millions and millions of dollars since the auto policy was put into effect since 1995).

SEIU credibility has risen in my opinion, when they highlighted the use of these "special funds". Management told the citizens that these funds were reserved for special uses. Yet 3-4 months ago, when poor accounting showed an additional $5 million deficit, guess how they solved the this? by taking money from the "technology" special fund.

I think the auditor should do a review of the entire budget.


 +   Like this comment
Posted by I don't get it
a resident of another community
on Apr 16, 2010 at 12:44 pm

This appears to be one of those typical audit "findings" reports that looks superficially good on the surface, but doesn't always make good sense - even if it does make good headlines - when you dig a little deeper.

Hmmm - 2500 miles a year sounds low, doesn't it? But, when you think about it with some degree of analytical review, it may not be low or "underutilized" at all! There are 250 work days per year, and at 2500 miles per year that's an average of 10 miles per day. Many City vehicles stay in one place all day long on a job to carry the necessary equipment, or are located on site such as at the Golf Course, the Water Quality Control Plant, or other similar facilities. Given Palo Alto's small geographic boundaries it's easy to see how many vehicles could average less than 10 miles a day and still be properly utilized - if one thinks about it rationally instead of screaming "Scandal". Besides, if their annual mileage is low they will last longer and be replaced less often.

Cost savings? The report itself and the news article document that the administration had already saved $2.5 million in 2010 and was planning to save an additional $483 thousand in 2011 - and that before the report was even issued! Scandal???? Sounds like the managers involved should be given recognition - or maybe even, horror of horrors, a bonus for good work! Seems like the audit is trying to take credit for things that mangement had already put in place!

PS - use the shuttle? What a joke! Would you expect a contractor working on your house to use the shuttle and bring their tools along that way? Get real, people. In case you wonder why City employees think they're treated as second class citizens, this is a perfect example. It's not about the pay and benefits, which the non safety employees acknowledge are great and have already taken cuts on, unlike Police and Fire. It is about attitudes and misdirected criticism such as this being deemed "scandal".
PPS - bet you won't see any cuts in Police and Fire vehices even with low mileage. Why? Because the're a necessary part of the job, just are others as well.

OK, the rant is over now!


 +   Like this comment
Posted by Tom H
a resident of Menlo Park
on Apr 16, 2010 at 1:28 pm

The only way I can see to stop all this waste of our hard earned money is to stop giving to them to waste.
Just say NO!


 +   Like this comment
Posted by CHinCider
a resident of Downtown North
on Apr 16, 2010 at 3:06 pm

To "Need a Public Works audit" -

You missive is factually incorrect from top to bottom.

Public Works has been continuously audited over the years - contract management, street maintenance, vehicles, etc. Most are positive, with some recommendations for improvement. None have been a "scandal" or found any fiscal impropriety. Your misrepresentation of such borders on slander.

Public Works is far from the largest City Department, or even second or third in size. Utilities is the largest, followed by Community Services, then Fire and Police. Public Works is 5th largest.

What motivates such mistaken vitriolic rhetoric on your part? Who are you, and what is your real agenda?


 +   Like this comment
Posted by Another Scandal?
a resident of another community
on Apr 16, 2010 at 7:04 pm

CHinCider, is your last name "Keene" by any chance?


 +   Like this comment
Posted by The Unknown
a resident of another community
on Apr 16, 2010 at 7:04 pm

I agree with I don't get it's post. How often are those fire trucks, police "cruisers", and EMT vehicles replaced...every two-three years? A fire engine at roughly 6-700K, come on. Do they always have to show up in a flashy new truck?


 +   Like this comment
Posted by fireman
a resident of another community
on Apr 17, 2010 at 6:58 am

Audit? Lets see in the past the auditor made 63 recomendations that city leaders did nothing about? Smoke and mirrors again.


 +   Like this comment
Posted by fireman
a resident of another community
on Apr 17, 2010 at 7:00 am

CHinCider Blanch?


 +   Like this comment
Posted by fireman
a resident of another community
on Apr 17, 2010 at 8:42 am

The fire engines had over 100,000 miles on them, they were falling apart. A huge amount of money was wasted on the 2 transport engines for a program the city does not have. So to cover it up the Fire Department could not spend money to update the equipment. it got so bad that the city had to buy 5 at one time.

If you people only knew half the truth...


 +   Like this comment
Posted by I don't get it
a resident of another community
on Apr 17, 2010 at 9:51 am

To "former E" -

How would you know what LaHaie and Roberts "smell like"?

Where has your nose been?

What part of their anatomy have you been sniffing?


 +   Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Apr 17, 2010 at 10:31 am

Is this another way of saying the City has 3 times too many cars?


 +   Like this comment
Posted by I don't get it
a resident of another community
on Apr 17, 2010 at 12:44 pm

To "resident" above -

Uh, NO! Even maligned City employees are capable of better math fundamentals than your twisted logic.

Even if it were true that 1/3 of the vehicles were "under utilized" (which is highly doubtful, see my prior post above), that would still leave a minimum of 2/3 of them being needed. To put it in basic fractions (which most students learn before High School), 1/3 = 33% more than needed, not 3 times as much, which is 300%! Don't feel bad, you were only off by 267% (that's the 3 times or 300% you stated, minus the correct figure of 33% - just in case you're still confused by numbers).

I'm guessing you must be a product of the "new math". If you are a typical resident, it's no wonder that the Budget is so wildly misunderstood and misrepresented! Good luck balancing your check book - or maybe your accountant does that for you?


 +   Like this comment
Posted by musical
a resident of Palo Verde
on Apr 18, 2010 at 1:46 am

Speaking of new math, maybe someone can help me out on the figures given: 38 percent of 120 vehicles were driven less than 2500 miles. Say 46 vehicles. They cost the city $396,000 in fiscal year 2009. Is that really $8600 each for fewer than 2500 miles? Can the fuel and an oil change be more than $650 of it? Did we lose our good-driver discount on auto insurance? Are we charging ourselves a huge amount for parking? Is the State soaking us on registration? Must be mostly depreciation, which is real money of course, but how fast can these underused vehicles really lose their value? Maybe we just need to drive a harder bargain when we trade them in. Anyway, while trimming the number of vehicles may be a good idea, I wouldn't count on that much savings.


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