County Officials Say Put It On Plastic
Usually, when you’re $900 million in debt, it’s very difficult to convince a bank to give you a new credit card – much less hundreds of them.
However, Guilford County government has no such problem: Despite the county’s debt, Bank of America is about to issue Guilford County a slew of credit cards that will be handed over to county employees so they can use the cards to buy supplies and equipment, as well as pay for other day-to-day job-related expenses.
Guilford County officials say that distributing credit cards to county employees will save money, and, in the finest penny-pincher tradition, county officials also point to the fact that Guilford County will earn reward points that can be redeemed for cash.
Right now, Guilford County only has two credit cards – one used by the county manager’s office and another issued to the Sheriff’s Department.
That means the entire Guilford County government has one less credit card than the average American adult – but that’s about to change in a big way. Soon, many employees will have county-issued credit cards. County department heads will have a lot of say as to which of their employees get credit cards and which do not.
Recently, the City of High Point made news when questions arose about credit card use among some city employees and it was revealed that City of High Point credit cards were issued to about a quarter of the city’s employees.
High Point City Councilmember Foster Douglas requested years of back bills from the City of High Point’s Finance Department and he questioned some of the charges he found as well as the city’s oversight practices.
Since that program began 12 years ago, two city employees have been let go for misuse of the city credit cards. Now some High Point officials are questioning whether High Point has handed out the cards too freely in the past.
Guilford County officials are very cognizant of those concerns.
Guilford County Manager Marty Lawing said that he, for one, is well aware of the need for the county to keep close tabs on employee credit card use and make certain that all purchases are county-business related.
“It needs to be very controlled,” Lawing said.
Chairman of the Guilford County Board of Commissioners Bill Bencini, the District 2 commissioner who represents much of High Point, said this week that he’s confident the county will keep a close eye on the coming credit card program.
Bencini added that, in his view, a lot of the clamor in High Point over the cards is overblown. He said it has more to do with political squabbling in High Point than it does with credit card misuse.
“There really isn’t a scandal to it,” Bencini said.
While there are risks of abuse, Guilford County officials say there are lots of benefits in switching from a purchase order based system to a credit card program.
Lawing said the credit cards will make it easier for county employees to purchase the items that they need in order to do the work of the county.
According to Lawing, the move to charge cards should help make county government more efficient because, as it stands now, most Guilford County purchases must be made with a purchase order. He said it takes a good deal of staff time to process, issue and track those purchase orders.
Being restricted to purchase orders also makes it a headache for a county employee to purchase even a low-cost item he or she needs to conduct the county’s business.
Lawing said, for instance, some county park workers recently needed a battery for a tractor, and if they’d had a county credit card, they could have just gone to AutoZone and picked up one. However, since they had to use purchase orders, he said, the simple act of buying a battery was much more difficult than it should have been.
County officials also point out that many local governments have adopted employee credit card programs. In addition to the City of High Point, employee credit cards are now in use in many local governments in North Carolina, including the cities of Greensboro, Winston-Salem, Raleigh and Charlotte.
When Guilford County implements its program, it will join the two largest counties in the state in the practice. Mecklenburg County implemented an employee credit card program two years ago, and Wake County has been handing out credit cards to its employees for over a decade. Many other counties in the state provide credit cards to employees as well.
Lawing said that giving county employees credit cards allows for the county to get better deals in many cases because being restricted to purchase orders limits the potential vendors. In some cases, the manager said, stores and other vendors aren’t willing to provide a product or service and then wait weeks or months to be paid.
There will be other benefits as well. For instance, the Guilford County attorney’s office finds itself having to keep cash on hand because the county, like regular citizens, has to pay court fees with a credit card, cash or a certified money order.
Lawing said there will be retribution for employees who make inappropriate charges. He said that misusing the card could result in disciplinary action, or, in egregious cases, termination.
Guilford County Purchasing Director Bonnie Stellfox said that switching employees to credit cards should cut back on the staff time spent dealing with purchasing.
“The purpose of the card is to reduce paperwork,” Stellfox said.
She also said that, unlike with purchase orders, the county would be able to manage accounts in real time and view transactions when they occur.
“It will simplify and expedite the purchase,” Stellfox said.
All of the cards will be issued through Bank of America.
Guilford County Register of Deeds Jeff Thigpen said recently that he wished he’d had a county credit card on him given the situation he found himself in when he went to Best Buy to purchase a Dragon speech recognition program, which converts speech to written text.
“I went to Best Buy and got the exact cost, which was around $210 with taxes,” he said. “I went back to the office and did a purchase order and sent it to purchasing. The next day I went back to Best Buy with a $210 check from the county – and the product had gone on sale for around $129. So I had to go back and do another purchase order with a different amount. I saved money but it was a bit of a run around.”
If Thigpen had had a county credit card, that price change wouldn’t have been an issue. On the other hand, if Thigpen had had a county credit card with him, he probably would have just bought the item the first time he went out to Best Buy, missing the sale entirely.
“I think it goes to show that credit cards would have made that kind of transaction easier,” the register of deeds said.
Like Lawing and Bencini, Thigpen cautioned that the program will need a lot of supervision.
Guilford County Finance Director Reid Baker said that, before charges even make it to his department for payment by the county, those purchases are approved by either a department director or someone else in that department.
“There is someone in those departments who is responsible,” he said.
Baker said that, if an unusual charge comes through his department for payment, it might raise red flags for finance officials. However, he added, in most cases the departments must be the ones who vet the bills.
“Other than for the expenses in the Finance Department,” Baker said, “I wouldn’t know.”
All Guilford County employees who receive a county credit card will have to sign an agreement that goes into a great deal of detail about how the credit card can and can’t be used. One condition of the agreement states, “I agree to use the card for approved purchases only and agree not to charge personal purchases. I further agree to be personally responsible for the repayment of any undocumented or unauthorized purchases that I make or that I permit anyone else to make. I understand that the amount of these charges will be withheld from my payroll check.”
The agreement also states that credit card purchases cannot be broken up into smaller purchases so that the charges come in under maximum per charge limits assigned by the county.
According to a county report from the Guilford County Purchasing Department on the new credit card program, the county will be able to manage all transactions online, and there’s a great deal of leeway for county administrators for limiting how credit cards are used. For instance, single transaction limits can be applied to each card. Also, on a card by card basis, specific merchants can be blocked using a code. In addition, Guilford County will also be able to control the day of the week on which a card can be used and a maximum amount per day that can be charged on a card.
According to the report, the credit card data can be synched with the county’s Lawson computing system, which will hopefully make integration of the credit cards into the existing purchasing structure a relatively straightforward matter.
Also a plus according to the report, the county’s vendors will receive payment in a matter of two or three days rather than, as is sometimes the case now, 30 or 60 days. The report states that that helps in “building vendor-customer relationships,” and also provides better service to vendors in the county.
The cards will eliminate “petty cash” programs that currently exist in many county departments, and it will also mean fewer out of pocket expenses for employees. It’s also expected to make it much easier for employees who travel to conferences and incur expenses on other trips related to county business.
If rogue employees do go wild with their cards, the county will have free liability coverage for misuse of up to $100,000.
According to Stellfox, the move should greatly reduce the amount of employee hours spent processing low-dollar purchase orders.
Guilford County constantly makes changes that staff say will increase efficiency, but there never seems to be any cuts in positions as a result of these newfound efficiencies. For instance, years ago the county implemented the Lawson computing software, which was supposed to make the county much more efficient, and the only actual result that seemed to come from that was more information technology workers having to work overtime so that they could help staff figure out how to use the new and complicated system.
Stellfox said that the new credit card system will save money as well: Credit card purchases are estimated to save about 75 percent of the cost of traditional purchase orders.
As an added bonus, the county will now get a rebate on all its credit card purchases. In fiscal 2012-2013, Guilford County processed 3,081 purchase orders of $500 or less, which amounted to just over $637,000 in purchases. If the county had put those charges on Bank of America credit cards, it would have gotten a rebate of 1.76 percent, which would have come to $11,213. The county might even get more than that if it is willing to accept payment rebate in Applebee’s gift cards.
BY Scott D. Yost
February 6, 2014
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