Too Many State Cars?

A Cost Analysis of
Vehicles Operated by Select State Agencies
October 2023

SHAD WHITE
State Auditor

Logan Reeves
Director, Government Accountability Division
Executive Summary

Mississippi state agencies and other government offices own thousands of vehicles purchased with
taxpayer money. From fire trucks to passenger sedans, these taxpayer-owned vehicles represent millions
of dollars of spending—both to purchase and maintain vehicles over time. Due to the significant taxpayer
cost of owning and operating this massive fleet of vehicles, the Mississippi Office of the State Auditor
(OSA) has evaluated whether state agencies could save taxpayer money spent on operating vehicles. This
evaluation shows state agencies can save money by accurately projecting how frequently vehicles will be
used instead of focusing only on how many miles they will be driven. By considering the intended use of
the vehicles, state agencies can project usage frequency and determine whether deploying taxpayer-
owned, taxpayer-rented, or personal vehicles is more cost effective.

Though each state agency operates vehicles with autonomy, the state—through the Department of
Finance and Administration’s Bureau of Fleet Management (BFM)—sets the policies for the “purchase,
lease, rental, acquisition, use, maintenance and disposal of vehicles by state agencies.”1, 2 Analysts engaged
BFM to compare actual operating expenses from calendar year 2022 to the projected rental expense of
similar vehicles. Put differently, analysts looked to see if it would be cheaper for the state to own,
rent, or allow employees to use personal cars. Analysts sampled vehicles operated by both large and
small state agencies to evaluate a variety of vehicle usage trends. This comparison only includes the two
types of passenger sedans because the state has negotiated fixed rental rates for these vehicles.3 Figure 1
shows the total number of vehicles and sedans owned by the 10 state agencies sampled by analysts.

Figure 1
State Agency Total Vehicles Passenger Sedans
Agriculture and Commerce 153 5
Corrections 602 259
Employment Security 14 5
Environmental Quality 155 8
Information Technology Services 10 0
Medicaid 18 11
Mental Health 1 1
Rehabilitation Services 140 12
Wildlife, Fisheries, and Parks 577 8
State Aid Road Construction 15 2

1
See Miss. Code Ann. §25-1-77.
2
No traditional lease terms have been recorded by BFM or other state agencies.
3
According to the state’s current rental agreement, “[a] mid-size rental car is normally the largest rental that will be reimbursed.”
Vehicle operating expenses vary by frequency of use.

Analysts compared the per-mile operating expense of taxpayer-owned vehicles, taxpayer-rented

Figure 2
Usage Type Mid-Size Sedan Full-Size Sedan
Taxpayer-Owned Vehicle $0.26 /mile $0.32 /mile
1-day Rental $0.25 /mile $0.32 /mile
2-day Rental $0.38 /mile $0.47 /mile
Taxpayer-
3-day Rental $0.51 /mile $0.61 /mile
Rented Vehicle
4-day Rental $0.64 /mile $0.76 /mile
5-day Rental $0.77 /mile $0.90 /mile
Personal Vehicle $0.625 /mile4

Benefits and drawbacks of the state owning, renting, or allowing employees to use a personal vehicle are:

• When the state allows employees to use their personal vehicles, the only cost to the state is the
standard per-mile rate established by the federal government. This must be paid to the employee.
• When the state owns a vehicle, the state must pay the cost of maintaining the vehicle.
• When the state rents a vehicle, the expense depends on how many days the vehicle is reserved. In
other words, a taxpayer-owned vehicle generally does not accrue operating expenses when it is
parked, but taxpayers are charged a daily fee regardless of whether a rented vehicle is cranked.

Figure 3 summarizes these tradeoffs and shows how analysts calculated operating expenses.

Figure 3
𝑅𝑒𝑛𝑡𝑎𝑙 𝐶𝑜𝑠𝑡
(𝑅𝑒𝑛𝑡𝑎𝑙 𝐷𝑎𝑦(𝑠) × 𝐷𝑎𝑦 ) + 𝐹𝑢𝑒𝑙 𝐶𝑜𝑠𝑡
= 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑬𝒙𝒑𝒆𝒏𝒔𝒆 𝒐𝒇 𝑻𝒂𝒙𝒑𝒂𝒚𝒆𝒓-𝒓𝒆𝒏𝒕𝒆𝒅 𝑽𝒆𝒉𝒊𝒄𝒍𝒆(𝒔)
𝑀𝑖𝑙𝑒(𝑠) 𝐷𝑟𝑖𝑣𝑒𝑛

𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑒𝑛𝑐𝑒 𝐶𝑜𝑠𝑡 + 𝐹𝑢𝑒𝑙 𝐶𝑜𝑠𝑡

$0.625
𝑀𝑖𝑙𝑒(𝑠) 𝐷𝑟𝑖𝑣𝑒𝑛 × = 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑬𝒙𝒑𝒆𝒏𝒔𝒆 𝒐𝒇 𝑷𝒆𝒓𝒔𝒐𝒏𝒂𝒍 𝑽𝒆𝒉𝒊𝒄𝒍𝒆(𝒔)
𝑀𝑖𝑙𝑒

4
The 2022 IRS mileage rate changed from $0.585 /mile to $0.625 /mile on July 1, 2022. The current rate is $0.655 /mile.
State agencies can save taxpayer money by having a plan.

Owning, renting, and using personal vehicles each provide cost savings to taxpayers in specific
circumstances. For example, since the operating expense of rented vehicles hinges on the number of days
the vehicle is reserved, taxpayers can save money when vehicles are rented for short-term use. However,
taxpayers eventually realize cost savings by purchasing vehicles as both mileage and usage increase.
Taxpayers can even realize savings when agencies reimburse employees for using their own personal
vehicles. Figure 4 and Figure 5 plot the operating expenses per mile for taxpayer-owned vehicles,
taxpayer-rented vehicles per day, and personal vehicles.5

Figure 4 shows the scenarios when purchasing a mid-size sedan is more cost effective than renting or
using a personal vehicle. While the operating expense of a taxpayer-owned vehicle is $0.26 per mile—less
than the per-mile expense for both renting and using a personal vehicle—agencies must first purchase
that vehicle. In the figure, analysts include the $29,300 median purchase price of sampled mid-size sedans
before adding any per-mile operating expenses.6

The operating expense for taxpayers to rent a mid-size sedan climbs from $0.25 per mile if it is reserved
for one day each week to $0.77 per mile when reserved for a full workweek. Consequently, the total

5
Regardless of owning or renting, the fuel costs will be the same for identical vehicles.
6
See Figure 3 for per-mile operating expense formula(s).
operating expense of renting a mid-size sedan exceeds that of owning one when it is used three or
more days each week and is driven over 115,000 miles during its useful life. Figure 4 also shows mid-
size sedan used fewer than two days each week must operate over 200,000 lifetime miles before
ownership becomes more cost effective than renting.

Further, instead of purchasing a mid-size sedan projected to be used fewer than four days each week
or driven less than 75,000 lifetime miles, state agencies can save taxpayer money by reimbursing
employees who use their own personal vehicles.

Figure 5 shows the cost to operate taxpayer-owned, taxpayer-rented, and personal full-size sedans is
also largely influenced by the frequency of use. Again, analysts include the median purchase price of
sampled full-size sedans—$37,285—before the $0.32 per mile operating expense for these taxpayer-
owned vehicles begins accruing. According to Figure 5, taxpayers save money by reimbursing employees
who use their own personal vehicles instead of renting a vehicle more than three days each week or
owning a vehicle driven less than 125,000 lifetime miles. The figure also shows the operating expense for
renting a vehicle one day each week is $0.32 per mile, which grows to $0.90 per mile when a vehicle is
rented for a full workweek. For full-size sedans, state agencies should almost always opt to purchase
vehicles projected to be used more than two days each week and driven over 125,000 lifetime miles
because vehicle usage directly correlates with increased operating expenses for taxpayer-rented
vehicles. This trend underscores the importance of accurately projecting vehicle usage before state
agencies purchase any vehicle.
Conclusion

Figure 6 shows a simplified decision matrix for state agency employees to choose the most cost-effective
way to use a passenger sedan for state business.7 For example, the figure shows renting is always the least
expensive option if the vehicle will be used one or two days each week. However, it also shows the
vehicle’s lifetime mileage more heavily influences the decision to rent, purchase, or allow employees to use
their personal vehicles as the days of vehicle usage per week increase.

Figure 6
Only Only Only Only
All All
Mid-Size Full-Size Mid-Size Full-Size
Sedans Sedans
Sedans Sedans Sedans Sedans

1
Rent Rent Rent Rent Rent Rent
Day

2
Rent Rent Rent Rent Rent Rent
Days of Usage per Week

Days

3 Rent or Rent or
Rent Rent Rent Purchase
Days Purchase Purchase

Personal Personal
4 Personal Personal
Vehicle or Purchase Vehicle or Purchase
Days Vehicle Vehicle
Purchase Purchase
Personal Personal
5 Personal Personal
Vehicle or Purchase Vehicle or Purchase
Days Vehicle Vehicle
Purchase Purchase

<50,000 50,000 – 100,000 100,000 – 150,000 >150,000

Total Lifetime Miles

This analysis shows state agencies should accurately project the frequency a vehicle will be used to
conduct taxpayer business when determining whether owning, renting, or requiring personal use of
vehicles is least expensive. State agencies may also be able to save taxpayer money by executing long-
term vehicle lease agreements, which are allowed by the BFM’s policies. This analysis shows state agencies
can save taxpayers money by having a well-reasoned fleet management plan.

7
When the decision matrix shows two options, consult Figure 4 for mid-size vehicles or Figure 5 for full-size vehicles.