State Charge Card Helps Governments Save While They Earn
Brenda Fuller remembers a time when a $20 auto part cost Round Rock six times that.
“When you figured the cost of the man hours and paperwork each purchase order cost us $100,” says Fuller, a buyer in the Central Texas city’s purchasing department.
The days of the small-ticket items masquerading as big-ticket ones are gone for the taxpayers of the nation’s second-fastest-growing large city. Thirteen years ago, Round Rock began using the Comptroller’s TPASS (Texas Procurement and Support Services) Purchasing Card Program, and not only is the process more convenient and economical, but the city has developed an unlikely revenue stream.
By using the card, which allows 250 city employees to quickly buy needed supplies costing up to $1,000, Round Rock has received rebates of almost $30,000 annually. For the first half of fiscal year 2009, Round Rock spent $1.26 million using the TPASS card and got a $13,362 rebate, Fuller says.
Money Back Guarantee
Rebates are paid annually to clients that spend at least $125,000 and semi-annually to those who buy more than $750,000. Round Rock requires employees to key in limited and specific, job-related purchasing codes to prevent excessive or abusive spending.
The rebates are issued by J.P. Morgan Chase, which runs the State of Texas Payment Card Rebate Program.
Fuller says the card, which works like a debit card, is an easy sell to vendors.
“They might have to pay a small fee, but they get their money instantly instead of having to wait 30 days while a check is processed,” she said.
Before Grapevine adopted TPASS in 2002, the North Texas city had three employees dedicated to processing up to 500 small purchases a month. Now one employee handles all the purchase orders, and instead of receiving 70 bills a month, the city only gets one.
Making TPASS Work for You
Membership in the State of Texas Cooperative Purchasing Program is the only requirement to participate.
Programs should be simple to design and use, but governments should exercise certain controls.
Among them:
- Contracts with banks that include fee schedules, processing procedures and security requirements.
- Codified staff policies and procedures, including those covering responsibilities, training, limits, receipt reconciliation, security, Merchant Category Codes, disputed charges, periodic audits and lost cards.
- Security of purchasing cards and records.
- Separation of payment approval, accounting and reconciliation duties.
- Methods to ensure compliance with IRS 1099 reporting regulations.
Small Governments can Benefit
“The TPASS purchasing card really been a benefit for us,” Fuller says. “It helps a city like us, growing as fast as we are, keep things going forward. We couldn’t ever go back.”
Fuller said even small governmental bodies can benefit from using the card.
“There are rebates, so it’s a good way to bring in revenue,” she says. “That, and the money saved, definitely offsets the cost of the program. In the current economic climate, it definitely is a win-win, save-save kind of thing.”
Resources for Purchasing Departments:
Government Finance Officers Association purchasing card guidelines
Texas Comptroller state charge card program administration guide