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1 O FFICE OF THE NEW YORK STATE COMPTROLLER DIVISION OF LOCAL GOVERNMENT & SCHOOL ACCOUNTABILITY Town of Hartland Fleet Management Report of Examination Period Covered: January 1, 2010 September 21, M-239 Thomas P. DiNapoli

2 Table of Contents Page AUTHORITY LETTER 2 INTRODUCTION 3 Background 3 Objective 3 Scope and Methodology 3 Comments of Local Officials and Corrective Action 3 FLEET MANAGEMENT 4 Recommendations 5 APPENDIX A Response From Local Officials 6 APPENDIX B OSC Comments on the Town s Response 13 APPENDIX C Audit Methodology and Standards 14 APPENDIX D How to Obtain Additional Copies of the Report 15 APPENDIX E Local Regional Office Listing 16 DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 11

3 State of New York Division of Local Government and School Accountability March 2012 Dear Town Officials: A top priority of the is to help local government officials manage government resources efficiently and effectively and, by so doing, provide accountability for tax dollars spent to support government operations. The Comptroller oversees the fiscal affairs of local governments statewide, as well as compliance with relevant statutes and observance of good business practices. This fiscal oversight is accomplished, in part, through our audits, which identify opportunities for improving operations and Town Board governance. Audits also can identify strategies to reduce costs and to strengthen controls intended to safeguard local government assets. Following is a report of our audit of the Town of Hartland, entitled Fleet Management. This audit was conducted pursuant to Article V, Section 1 of the State Constitution and the State Comptroller s authority as set forth in Article 3 of the General Municipal Law. This audit s results and recommendations are resources for local government officials to use in effectively managing operations and in meeting the expectations of their constituents. If you have questions about this report, please feel free to contact the local regional office for your county, as listed at the end of this report. Respectfully submitted, Offi ce of the State Comptroller Division of Local Government and School Accountability 2 OFFICE OF THE NEW YORK STATE COMPTROLLER

4 Introduction Background Objective The Town of Hartland (Town) is located in Niagara County and has a population of 4,117. The Town is governed by the Town Board (Board) comprising five elected members, including the Town Supervisor, who serves as the Town s chief financial officer. The Highway Superintendent is an elected official who supervises the repair and maintenance of Town roads and Water Department operations. The Town maintains a fleet of 21 vehicles and heavy equipment costing approximately $2 million. For the 2011 fiscal year, the Board budgeted approximately $2.6 million to fund Town operations. The objective of our audit was to review the Town s fleet operations. Our audit addressed the following related question: Did the Board develop and adopt a fleet management policy to ensure that the Town maintains an appropriate quantity of vehicles and heavy equipment for Town operations? Scope and Methodology We examined various records and documents pertaining to the Town s fleet management operations for the period January 1, 2010 to September 21, We extended the scope period back to 2007 to determine historical levels of equipment usage. We conducted our audit in accordance with generally accepted government auditing standards (GAGAS). More information on such standards and the methodology used in performing this audit are included in Appendix C of this report. Comments of Local Officials and Corrective Action The results of our audit and recommendations have been discussed with Town officials and their comments, which appear in Appendix A, have been considered in preparing this report. Town officials disagreed with some of our findings and recommendations. Appendix B contains our comments on issues raised in the Town s response. The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and forwarded to our office within 90 days, pursuant to Section 35 of the General Municipal Law. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Board to make this plan available for public review in the Town Clerk s office. DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 33

5 Fleet Management 4 OFFICE OF THE NEW YORK STATE COMPTROLLER Good management practice suggests that the Board adopt a fleet management policy to establish guidelines for the acquisition, use, replacement, and disposal of vehicles and equipment. The policy should require a needs assessment before any new vehicles or equipment are added to the fleet, specifying the proposed use of the new vehicle or equipment and requiring annual review of its utilization and consideration of alternatives to purchasing. The policy should also specify the process for determining when a vehicle or equipment needs to be replaced and how it will be disposed of; pertinent records include daily use logs, fuel usage records, and the costs of parts and labor to repair each vehicle and piece of equipment over its service life. These records form the basis for establishing overall cost, and help determine whether the vehicle or equipment is needed in the future. The Board did not adopt a fleet management policy or complete a formal needs assessment before adding new vehicles or equipment to the fleet. The Highway Superintendent did not maintain key records, such as daily use logs and vehicle/equipment repair costs, which the Board would need for conducting a comprehensive review of utilization. As a result, Town officials may be purchasing vehicles and/or equipment that is not fully utilized, and the fleet of vehicles and heavy equipment may be larger than necessary for the Town s needs. The Town s vehicle fleet includes six pickup trucks, six tractors (with various attachments), five dump trucks, two wheel loaders, one excavator, and one backhoe, as well as two trailers, paving equipment, and mowers. The Highway Superintendent supervises one full-time mechanic and four full-time equipment operators. We found that certain equipment was not extensively used. In the absence of daily use and repair records, the Department s fuel records provided some indication of utilization levels. We reviewed the fuel logs for 12 vehicles and heavy equipment. Three 1 of them showed fuel use of less than 100 gallons over the first seven months of 2011, which suggests that they were not used on a routine basis. Further, given the staffing level for the Town s highway and water operations, 2 we question whether the Town can fully utilize all the vehicles and heavy equipment it owns. 1 Two pickup trucks and a bulldozer 2 In addition to the full-time mechanic and four full-time equipment operators, the Town has one part-time employee responsible for water maintenance, one part-time truck driver, one part-time substitute equipment operator, and two seasonal parttime employees.

6 The Town annually disposed of heavy equipment that was infrequently used and purchased new equipment. In 2007, the Town purchased two wheel loaders at a total cost of $231,122. For each of the next four fiscal years (2008 through 2011), the Town sold the one-yearold loaders it owned, and used these proceeds to purchase two new loaders each year, at a cumulative net cost of $232, According to the Highway Superintendent, the two loaders purchased in 2010 were sold with 143 and 169 hours of use; the two loaders purchased in 2009 were sold with 110 and 127 hours; the two loaders purchased in 2008 each had less than 200 hours; and the two loaders purchased in 2007 had 224 and 114 hours of use. Therefore, the wheel loaders that were sold each incurred, on average, 161 hours of use. These utilization levels suggest that the Town may not need two loaders. Furthermore, the Board did not conduct a formal needs assessment or otherwise review the utilization levels of the loaders that the Town owned before they were sold and replacements were purchased. We recognize that the cumulative proceeds from the equipment sold allowed the Town to incur only minimal costs for new loaders each year. However, because the Highway Superintendent did not track vehicle and equipment usage to help Town officials determine whether to keep, replace, or dispose of each vehicle, the Town may be purchasing new vehicles and equipment that it is not fully utilizing. The Highway Superintendent informed us that he believes buying the loaders, keeping them for a year, and selling them provides the Town with new loaders that are always under warranty at little or no cost since they are sold for as much or even more than the Town s cost. The Highway Superintendent provided a schedule of purchases and sales to support his position. This schedule is attached to the Town s response letter in Appendix A of this report. However, there was nothing in the Board minutes to indicate why the Town needed to buy a bigger loader in 2011 at a cost of over $140,000. Even if the loader can be sold in a year for what the Town paid, this is a substantial amount of money to tie up for equipment that is so lightly used, and whose value may depreciate over a year s time. Recommendations 1. The Board should adopt a fleet management policy. 2. The Town should keep records of daily vehicle use, as well as comprehensive maintenance records listing the cumulative costs of parts and labor for each vehicle over its service life. 3. If there is not sufficient use of a vehicle or piece of heavy equipment, the Board should consider reducing its fleet and not replacing certain items. 3 At the exit discussion, Town officials indicated that, with the trade-in value applied to the 2007 equipment, the Town realized a gain of $7,690 over the period we reviewed. DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 55

7 APPENDIX A RESPONSE FROM LOCAL OFFICIALS The local officials response to this audit can be found on the following pages. 6 OFFICE OF THE NEW YORK STATE COMPTROLLER

8 DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 77

9 See Note 1 Page 13 See Note 2 Page 13 8 OFFICE OF THE NEW YORK STATE COMPTROLLER

10 See Note 3 Page 13 DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 99

11 10 OFFICE OF THE NEW YORK STATE COMPTROLLER

12 DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 111

13 12 OFFICE OF THE NEW YORK STATE COMPTROLLER

14 APPENDIX B OSC COMMENTS ON THE TOWN S RESPONSE Note 1 We included five purchases and four sales because at any point in time there have to be more purchases than sales in order for the Town to have equipment available for use. Therefore, there is a substantial investment of Town resources to keep loaders on hand. However, we did amend our report to present the Highway Superintendent s position. Note 2 We have added appropriate wording for clarification. Note 3 At the exit discussion, Town officials agreed to document in the Board minutes their annual fleet needs assessment, the reasons for the significant equipment purchases, and any cost/benefit analysis. This record will provide proper transparency to the taxpayers and other interested parties. DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 1313

15 APPENDIX C AUDIT METHODOLOGY AND STANDARDS During this audit, we examined the Town of Hartland s fleet management practices and related records for the period from January 1, 2010 through September 21, To accomplish our objective, we performed the following audit steps: We verified the accuracy of the Town s current vehicle and heavy equipment inventory list. We also reviewed historical costs for the purchases of vehicles and equipment. We interviewed appropriate Town officials and staff to obtain pertinent information on fleet management operations, reviewed available fuel records, and examined other relevant documents. We reviewed the documentation for the annual auction and purchase of wheel loaders. We conducted this performance audit in accordance with generally accepted government auditing standards (GAGAS). Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. 14 OFFICE OF THE NEW YORK STATE COMPTROLLER

16 APPENDIX D HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT To obtain copies of this report, write or visit our web page: Public Information Office 110 State Street, 15th Floor Albany, New York (518) DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY 1515

17 APPENDIX E OFFICE OF THE STATE COMPTROLLER DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY Steven J. Hancox, Deputy Comptroller Nathaalie N. Carey, Assistant Comptroller LOCAL REGIONAL OFFICE LISTING BINGHAMTON REGIONAL OFFICE H. Todd Eames, Chief Examiner State Office Building - Suite Hawley Street Binghamton, New York (607) Fax (607) Muni-Binghamton@osc.state.ny.us Serving: Broome, Chenango, Cortland, Delaware, Otsego, Schoharie, Sullivan, Tioga, Tompkins Counties BUFFALO REGIONAL OFFICE Robert Meller, Chief Examiner 295 Main Street, Suite 1032 Buffalo, New York (716) Fax (716) Muni-Buffalo@osc.state.ny.us Serving: Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming Counties NEWBURGH REGIONAL OFFICE Christopher Ellis, Chief Examiner 33 Airport Center Drive, Suite 103 New Windsor, New York (845) Fax (845) Muni-Newburgh@osc.state.ny.us Serving: Columbia, Dutchess, Greene, Orange, Putnam, Rockland, Ulster, Westchester Counties ROCHESTER REGIONAL OFFICE Edward V. Grant, Jr., Chief Examiner The Powers Building 16 West Main Street Suite 522 Rochester, New York (585) Fax (585) Muni-Rochester@osc.state.ny.us Serving: Cayuga, Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne, Yates Counties GLENS FALLS REGIONAL OFFICE Jeffrey P. Leonard, Chief Examiner One Broad Street Plaza Glens Falls, New York (518) Fax (518) Muni-GlensFalls@osc.state.ny.us Serving: Albany, Clinton, Essex, Franklin, Fulton, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Warren, Washington Counties SYRACUSE REGIONAL OFFICE Rebecca Wilcox, Chief Examiner State Office Building, Room E. Washington Street Syracuse, New York (315) Fax (315) Muni-Syracuse@osc.state.ny.us Serving: Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, St. Lawrence Counties HAUPPAUGE REGIONAL OFFICE Ira McCracken, Chief Examiner NYS Office Building, Room 3A10 Veterans Memorial Highway Hauppauge, New York (631) Fax (631) Muni-Hauppauge@osc.state.ny.us STATEWIDE AND REGIONAL PROJECTS Ann C. Singer, Chief Examiner State Office Building - Suite Hawley Street Binghamton, New York (607) Fax (607) Serving: Nassau and Suffolk Counties 16 OFFICE OF THE NEW YORK STATE COMPTROLLER