Report to Mayor and City Council
Tuesday, April 17, 2018
Consent
SUBJECT:
Title
CONSIDER THE CAL-CARD PURCHASING CARD PROGRAM FOR THE CITY OF CARSON (CITY COUNCIL)
Body
I. SUMMARY
The CAL-Card Program is a State of California program, through the Department of General Services, Procurement Division (DGS PD) that allows for Purchase Cards (P-Cards) to be used by State, County and Local Agencies for government sanctioned purchases. This program is administered through U.S. Bank, who is the affiliated banking partner of the CAL-Card program and handles all the banking and credit card logistics backend processes of this program.
The purpose of the program is to allow for an Agency’s management to streamline the purchasing process, while maintaining financial controls and monitor Staff use of the P-Cards, while still allowing for the flexibility of credit card purchasing. The program has built-in safeguards and monitoring tools allowing each Agency to adjust and customize usage of the P-Cards.
Staff is seeking conceptual approval from the City Council tonight. If staff is directed to move forward, the City Council will be presented with the full agreement at a later date.
II. RECOMMENDATION
Recommendation
DIRECT Staff to begin the application process for the CAL-Card Program for the City of Carson.
Body
III. ALTERNATIVES
TAKE other action deemed appropriate by City Council.
IV. BACKGROUND
The Purchasing Division within the Finance Department has been in the process of streamlining operations, first with the modernized Purchasing Ordinance adopted by the City Council in February 2016, then with issuance of an updated Purchasing Administrative Policy & Procedure in January 2018. Purchasing Workshops were held for staff in February and March. The City is in process of implementing the new Tyler Munis system, which is expected to modernize outdated cumbersome work processes.
In continuing with the efficiencies that are expected to be gained from the new ERP system, the CAL-Card program will allow for a further reduced strain on the Purchasing Division by moving many of the small and routine charges to P-Cards, thus avoiding the redundant paperwork and delays associated with creating Requisitions and Purchased Orders for the many, recurring small charges that are clogging up the Division’s time and workload. P-Cards also allow more flexibility with vendors that do not invoice the City and require immediate payment (e.g. online purchases and software). The chart below shows that in the first 9 months of the fiscal year 2017-18, there were 1,635 Purchase Orders issued. Of those issued, 37%, or 598, were less than $500. Also in this analysis, we found that of 14 vendors with the most purchase orders, 9 of the vendors’ transactions could have been completed with a P-Card. A single blanket Purchase Order would be issued, and each individual transaction managed with a P-Card.
While the CAL-Card system introduces many efficiencies, it also allows for close monitoring by the supervisors and management in order to make sure that purchasing with the City issued cards are for government use only and can have various restrictions place upon so they are not misused. The following below is an outline of the controls available to maintain fiscal restraint over the use of City-issued P-Cards
Available Spending Control Parameters
• Cardholder Single Purchase Limit: maximum dollar amount that will be authorized for any one transaction or purchase for a specific account or cardholder (required).
• Cardholder 30-Limit: maximum dollar amount that can be spent per month or cycle for a specific account or cardholder (required).
• Cardholder Dollar Limit per Quarter: maximum dollar amount that can be spent per quarter for a specific account or cardholder (optional).
• Cardholder Dollar Amount per Year: maximum dollar amount that that can be spent per year for a specific account or cardholder (optional).
• Cardholder Transactions per Day: maximum number of purchases that can be made per day for a specific account or cardholder (optional).
• Cardholder Transactions per Month: maximum number of purchases that can be made per month or cycle for a specific account or cardholder (optional).
• Merchant Category Code (MCC): purchasing card expenditures can be limited by MCC through U.S. Bank purchasing spending controls.
The maintenance and monitoring policy of the City can be administered through the CAL-Card online portal which allows for the above changes, alongside the City’s Purchasing policies to be adhered. In addition, the monthly statements can be reconciled with the receipts that would need to be provided by the Cardholder, in order to maintain financial controls over all the City-issued P-Cards.
The CAL-Card Program, through the State of California’s affiliate banking partner, U.S. Bank, does not impose any fees on the issuance of Purchase Cards, no annual fees, no NSF fees, or logo embossing fees. There are foreign transaction fees, but the City does not purchase items from vendors in foreign currency, so this fee will not impact the City. There are delinquency fees if the bills are not paid within 60 days of the close of the cycle.
V. FISCAL IMPACT
There will be no fiscal impact to the General Fund.
VI. EXHIBITS
1. CAL-Card Program Administration Guide: pgs. 5 - 28
2. Purchase Order Report for Fiscal Year 2017/18: pg. 29
3. Resolution No. 81-242 - Resolution Authorizing the City Management and Mayor to sign Credit Card Applications: pg. 30
4. City of Carson APP Regarding the Issuance and Use of City Purchasing Cards: pgs. 31 - 34
5. CAL-Card Agency Enrollment Terms: pgs. 35 - 64
6. CAL-Card Enrollment Terms Addendum 1: pg. 65
Prepared by: Peter Kakos, Budget Analyst