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Extracted from Consolidated Report

This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.

Santa Cruz County Grand Jury • 2008-2009

Comparison of the 2007 Chks data with 2009 Chks data (percent of Scotts Valley High students compared to national

Published: November 15, 2009 12 pages
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Findings 12 findings

F1 Page 38
Purchase orders account for the vast majority of county spending but are the most expensive method of acquisition. In 2008 nearly $28 million in purchases were processed via purchase orders at a cost of over $500,000.
F2 Page 38
Purchasing indicates that a standard industry goal is to maintain processing costs in the $60-$100 range above the cost of goods per purchase order. However, it appears, based on review of the County of Santa Cruz Cost Allocation Plan, that our County’s cost greatly exceeds that range. In 2003-2004, 2,620 purchase orders were processed at a cost of $184 per order. In 2004-2005, 2,570 purchase orders were processed at a cost of $196 per order.
F3 Page 39
Purchasing is aware of the standards for controlling the cost of processing purchase orders; however, the department says it is unable to determine whether they are meeting these standards due to limitations imposed by the archaic mainframe computer system on which Purchasing depends.
F4 Page 39
In making purchasing choices the County is subject to many limitations. These include those imposed externally such as provisions of California law (i.e. the Government Code and the Public Contracts Code), spending guidelines for various funds received from the federal and state governments, and restrictions imposed by the numerous grants and special programs. The County has many self-imposed For Everything Else There’s CAL-Card 29 2008–2009 Santa Cruz County Grand Jury Final Report with Responses
F5 Page 40
All CAL-Cards issued to County employees have single purchase limits under $1,500 and total monthly purchase limits of less than $10,000. CAL-Card, like any Visa card, can be used for any purchase under these dollar limits unless the category of items is prohibited by CAL-Card or County policy. As these are simply a payment mechanism rather than a supplier, the cards can be used to buy virtually anything from handcuffs and inmate toiletries for the Sheriff’s Office to auto parts and gardening tools for Government Services. The County restricts CAL-Card use by policy, decreeing the cards cannot be used to pay for travel, conference registrations, subscriptions, books, computer hardware/software, office supplies or services of any kind. The dollar limits imposed by the County further restrict the usefulness of the cards.
F6 Page 41
Purchasing estimates that purchases using CAL-Card cost roughly 25 percent less to process than a county purchase order and CAL-Card provides cash-back rebates. California studies of CAL-Card use have estimated savings ranging from $25 to $90 per transaction. Other states and counties have documented savings resulting from implementation of such a purchase card system.
F7 Page 41
The County receives cash rebates up to two percent for purchases made using CAL- Cards. For fiscal year 2007-2008 the rebate amounted to $6,500. The rebates are awarded to purchasing, not the department whose CAL-Card usage generated the rebate.
F8 Page 41
The paper-intensive process required by the County for reconciling CAL-Card statements and invoices is prohibitively complex and burdensome. Users are individually required to resolve any questioned charges or items, and may be personally held financially responsible for unresolved charges.
F9 Page 42
The County implemented the CAL-Card program in 1996. Since its original implementation the usage of the CAL-Card has declined. CAL-Card Usage Statistics since 2001: Year Cards Issued Transactions Total Dollars 2001 293 7,148 $1,594,959 2002 298 7,610 $1,754,406 2003 281 6,366 $1,370,683 2004 285 4,839 $972,993 2005 275 4,424 $948,976 2006 251 4,719 $992,597 2007 308 3,861 $907,599 2008 308 2,937 $793,712 2009 283 649 $131,731 (1st Quarter)
F10 Page 42
The somewhat dramatic reduction in CAL-Card use in 2003 and 2004 was a result of the implementation of the single-vendor office supply contract and increased enforcement of its usage requirements.
F11 Page 42
There is no documented case of a county employee being prosecuted or having card privileges revoked for deliberate misuse or abuse of a CAL-Card.
F12 Page 42
U.S. Bank and Visa offer free CAL-Card optimization audits to examine ways the customer can achieve maximum cost savings using the CAL-Card program. The County has never made use of these optimization services.

Recommendations 7