2022 Rate Adjustment FAQ

What are the different rate components for a permanently assigned vehicle?

The rate structure for permanently assigned vehicles is listed below. The rate adjustment that took effect Jan. 1, 2022, is specific to the vehicle cost component only.

Permanently Assigned Rate Structure
Base Fee
Administrative Fee
Interest Expense
Vehicle Cost (Depreciation)
Per Mile
Maintenance
Fuel

Why are rates being adjusted?

The price of vehicles has steadily increased over the last decade. While the cost of vehicles continues to increase, the vehicle component of the rate, which is designed to cover the purchase price of the vehicle, has not been updated for many years. Current rates are only covering about 85% of the actual cost of the vehicles.

When will the new rates be effective?

The rates were adjusted Jan. 1, 2022, and will be every July thereafter

  • Rates will be adjusted each July to ensure the vehicle component of the rate aligns with the average purchase price of vehicles.
  • Rates could increase or decrease depending on the cost of vehicles.

How is the vehicle cost component of the rate calculated?

The rate is set based on the average purchase price of each vehicle class over the last seven years. The average change over the seven-year period is then used as an index to estimate the purchase price of vehicles for the following year.

Year Avg. price 80% of cost to be
recovered by vehicle rate
Annual avg. rate
7 $ 20,000 $ 16,000 $ 2,286
6 $ 22,000 $ 17,600 $ 2,514
5 $ 24,000 $ 19,200 $ 2,743
4 $ 26,000 $ 20,800 $ 2,971
3 $ 27,000 $ 21,600 $ 3,086
2 $ 28,000 $ 22,400 $ 3,200
1 $ 29,000 $ 23,200 $ 3,314

Current
(year 1 average
cost x 7 year average
price change)

$ 30,864 $ 24,695 $ 3,528
Rate for current year (8 year average) $2,955

How is the purchase price of the vehicle calculated?

Vehicle purchase price less 20% divided by seven years.

  • The 20% represents the average salvage value of vehicles when they are sold at surplus.
  • Seven years represents the typical number of years in which the vehicle is depreciated over.

What will the impact be to my agency?

The estimated impact by agency can be found here. The forecasted financial impact is only an estimate based on your agency’s vehicle assignments in June of each year.

Can I make changes to the number of permanently assigned vehicles my agency has?

  • Yes, agencies can return vehicles that are no longer needed to DES at any time during the year.
  • Vehicle mileage minimums for 2020 and 2021 have been waived as a result of the pandemic. Effective Jan. 1, 2022, these mileage requirements were reinstated. More information on waiver requirements.

What other changes can I make to control my fleet costs?

  • Reduce mileage- the mileage component of the rate is based on usage
  • Purchase vehicles that provide greater fuel efficiency
  • Evaluate fleet vehicle types and make adjustments to increase efficiency
  • Return vehicles that are underutilized and no longer needed
  • Utilize DES Daily Rental vehicles where available
  • Utilize pool vehicles when applicable
  • Encourage shared use of vehicles under agency’s control