Audit report reveals insufficient fleet replacement fund in Berkeley

An audit report published Wednesday detailed how Berkeley’s Equipment Replacement Fund is underfunded by millions of dollars, which could prevent the city from reaching its goal of an all-electric fleet by 2030.

City departments make monthly payments to the replacement fund for the eventual renewal of the city’s vehicles and large equipment, according to city auditor Jenny Wong. The audit report showed that the replacement fund is $7.2 million short of recommended funding levels from the American Public Works Association.

“The City’s fleet replacement funding model is not working to ensure sufficient funding for timely replacement,” the audit report reads. “If the Replacement Fund is not sufficient to replace vehicles and equipment on time, it can cost the City more in the long run due to the excess maintenance and repair costs to keep an aging fleet running.”

In the 2020 fiscal year, Berkeley’s fleet consisted of 486 vehicles, including police sedans, fire engines and refuse trucks, according to the audit report. Wong noted that Berkeley’s fleet also includes large equipment such as trailers, generators and grass mowers. The vehicles and equipment in Berkeley’s fleet are used to provide services such as public safety and park maintenance, she added.

According to Wong, the audit report found that the money in the replacement fund was used for personnel costs and the customization of vehicles, which had not been accounted for in payments to the fund. Money from the fleet replacement fund was also used to pay for vehicles that were not covered through the replacement fund, and some money was issued to different funds without being replaced.

“This funding model has made it possible for the City to use the Fund for several purposes other than the direct cost of replacement,” Wong said in an email. “As a result of these expenditures over the years, there was $18.6 million less in the Fund in FY 2020 than what departments have contributed.”

Wong noted that Berkeley has declared a climate emergency and aims to operate with 100% electric vehicles by 2030. She added that this may not be possible with an inadequate fleet replacement fund.

According to Wong, the city’s public works department is responsible for managing the fleet replacement fund. The audit report includes several recommendations for the department to better control funds, including determining an optimal fleet size, identifying accurate costs of fleet replacement and adjusting the current funding model to prevent the replacement of unfunded vehicles.

“Audits are an important part of ensuring that we examine our operations and look for ways to improve,” said city spokesperson Matthai Chakko in an email. “We agreed with all of the Auditor’s recommendations and we have developed implementation plans for each (recommendation).”

Contact Amudha Sairam at [email protected] and follow her on Twitter at @AmudhaSairam.

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