Just as businesses and corporations of all types and sizes have taken advantage of the benefits and conveniences of purchasing card (P-Card) programs, so have higher education institutions. Some of the challenges and concerns of universities and colleges are identical to those of the business sector — but some are unique to higher education.
Communicating Government Requirements
Unlike private sector businesses, when it comes to spending, public universities and colleges often have unique demands placed upon them by both state and federal governments. These requirements can include:
- Where money is to be spent (that is, certain and specific vendors).
- How much money can be spent (that is, spend limitations and government-dictated budgets).
- What sort of things can be bought… and at what percentage. For example, a state might mandate that at least 25 percent of all purchases must be “green” or “sustainable” products. Or, it might insist that 80 percent of all service-based purchases are provided by businesses that reside within that particular state.
Such requirements need to be reflected in the policies and procedures of the existing P-Card program — and the sheer number and variation of these requirements can be difficult to communicate to users.
According to a 2008 audit report by the University System of Georgia (USG), most of the issues found within the university’s P-Card program were not out-and-out cases of fraud, but instead, misunderstanding of the appropriate procedures on the part of both employees and their managers. For many of these higher education institutions, there is simply a lot to know and remember regarding the use of their P-Cards.
Tracking RFP Thresholds
Very often, state governments require prior authority be given to certain procurement decisions. According to a 2010 survey by the American Association of State Colleges and Universities (AASCU) together with the National Association of Education Procurement (NAEP), 37 states had purchase spend thresholds and commodity types that first needed to be approved by the state before the purchase could be made.
These approvals often require Requests for Proposals (RFP) for competitive bids from vendors. In fact, nearly all the institutions reporting (88 percent) to the aforementioned survey had cost thresholds requiring a formal bidding process.
The immense amount of circulating RFPs, their corresponding cost thresholds, and the specific vendor and product requirements that need to be followed can present an enormous challenge to higher education — in particular, when attempts are made to track all that information. This can be especially true when P-Cards are used (or possibly misused) to close these transactions.
Rebates: The Fear of Leaving Money on the Table
In addition to how they spend money, there’s also a great deal of government pressure on public colleges and universities to save money. One way of doing so is by making money, which can be achieved through procurement rebates.
In June 2016, the New York State Association of School Business Official (NYSASBO) P-Card program — a national P-Card program for school business officials — rewarded $15,740.77 in rebates to seven school districts. School officials earned these rebates simply by using their NYSASBO P-Cards for everyday purchases, such as school supplies, travel expenses, and even utility bills.
The opportunity to earn rebates is available to higher education institutions as well — but the only way to really know what P-Card companies are offering such rebates is through research. Many banks offer “cash back” on P-Cards for organizations, but diligence on the part of the organization is key to find out who is making such offers and how those offers manifest via real, daily transactions. Unfortunately, banks rarely volunteer this information. Of course, such research takes both time and personnel — and that can translate into costs as well.
The cost of ignoring “the mundane” solutions
The USG audit identified 22 cases of P-Card fraud; the case with the highest amount of fraud equaled $318,324.
According to the audit, missing from most programs were clear, detailed policies and adequate training programs to implement those policies.
Also lacking was sufficient review within the programs. A number of transactions were missing approval signatures. Receipts were missing. In general, there was a lack of consistency in regards to the recording of transactions. Lastly, card users were often not following government regulations — nor did overseers enforce them.
In the audit, USG Chancellor Erroll B. Davis Jr. stated, “We cannot expect the public to support the great work we do in teaching, research, and service if they cannot depend upon us to handle the mundane responsibilities well.”
The solutions to the unique challenges that higher education has with P-Cards might indeed be mundane — and because they aren’t so exciting, perhaps that’s all the more reason why those solutions aren’t being applied. But these solutions are also quite achievable, especially when Card Integrity provides them.
While immense size and numbers might seem to be large part of higher education’s P-Card issues, they aren’t problems for Card Integrity. Our solutions are designed to handle up to five million card transactions a month.
And the solutions provided by Card Integrity are exactly what higher education needs to face its unique challenges:
- Compiling complete and thorough policies and procedures that include all government requirements.
- Creating and administering adequate training, so that everyone knows and understands how to use P-Cards correctly and how to oversee the P-Card program.
- Improved tracking of the often overwhelming amount of RFPs — as well as the vendor/product information they contain — to ensure compliance with government demands.
- Better reviewing of all spending to prevent the violation of any cost threshold.
To learn how Card Integrity’s solutions can be specifically designed to address the needs of your higher education institution or system, contact us via our website, join us at an upcoming webinar, or call us at 1-630-501-1507.