Smart Lease Vehicle Program October 25, 2006

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Smart Lease Vehicle ProgramOctober 25, 2006

• Office of Administration
• State Fleet Management
• Cindy Dixon
• State Fleet Manager
• Cindy.Dixon_at_oa.mo.gov
• 573-751-4534

2
Agenda

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

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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

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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

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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

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Cost of Mileage Reimbursement

• State employees were reimbursed over 37.8 million
  miles in FY06 at a cost of over 14.2 million

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Number of Business Miles
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Cost of Various Travel Options

• State owned vehicles are the least costly travel
  option on a per mile basis

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Annual Savings Potential
Savings calculated at 18.2 per mile.
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Potential Candidates by Agency
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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

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Breakeven Point Components
Break Even Point Formula Annual Fixed Cost of
a 5 Year Lease Mileage Reimbursement Rate
Variable Cost Per Mile

• Annual Fixed Cost
• Principal Interest
• Liability
• State Fleet Fee
• Variable Cost
• Fuel
• Maintenance Repair

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Estimated Breakeven Pointwill 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 FY06 fuel and
  maintenance cost from State Fleet Information
  System.

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Which Employees Are Candidates For Smart Lease?
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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

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Agency Review of Data

• Review FY06 mileage reimbursement data from SAM
  II Financial
• Things to keep in mind....
• Employee still in same position?
• FY07 estimated miles?
• Do you expect change in job duties?
• Document your analysis of FY06 data
• Document why you didnt include eligible
  employee in the Smart Lease program

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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

18
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

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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

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Master Lease - Interest Rate

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

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IT Employees

• Upon review of your FY06 employee reimbursement
  data, please identify IT staff transferred to OA
  and provide a list of IT employee names and FY06
  miles to
• Russ Craighead
• OA ITSD
• russ.craighead_at_oa.mo.gov

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Action Plan