Connecticut ASBO’s Payment Card Service (partnering with IL ASBO) Procurement Cards – p-Cards – have existed in the private and public sectors for many years. They represent an evolution of the credit card brought about by applying new technology to an emerging e-commerce world that now includes schools. The purpose of this presentation is to provide information about a unique p-Card application created to maximize the benefits for schools and potentially also help Associations. These purposes are specifically: To describe how p-Cards operate in today’s environment to improve the efficiency and effectiveness of the school business office and schools as they go about acquiring products and services needed to support teachers teaching and students learning. The unique nature of a multi-state program created by Illinois ASBO will be explained and the advantages of the economy of scale such a system provides will be explained. The basic steps for schools to participate will be outlined, and, The process for local school district implementation and monitoring of card usage will be illustrated. p-Cards for Schools: NOW more than EVER 2016

We are all so busy doing our jobs we don’t take the time to think about what our job is and what it is becoming.

School Business Management is about the continuous improvement of COST EFFECTIVE SCHOOLS!

STATE ASBO AFFILIATES exist to increase the efficiency and effectiveness of school business managers and school district business operations

Some basic school business operations “rules of thumb” 70 -75% of budget funds employee salaries and benefits. 58 – 60% of non payroll checks are for less then $500. 80% of non payroll expenditures are made by 20% of the employees.

FACT: QUESTION? It costs money to spend money What does it actually cost to process a P.O. from beginning to end?

What are the Experts Saying? “The average cost of processing a purchase order manually is between $75 - $200. Automating procurement reduces that cost to between $10 - $40... The Return-On-Investment (ROI) is amazing.” Deloitte Consulting The research and articles published on the subject of what does it cost from start to finish to obtain and pay for every item we need to operate the schools is clear. The research is surprisingly consistent regardless of the source like: Deloitte Consulting, Accenture, US Bank, Fifth/Third Bank, American Express, CPS, Rockford SD and Elgin SD U-46. NOT ONLY DO THESE DIFFERENT SOURCES REVEAL SIMILAR RESULTS, THEY ALSO CONFIRM THAT THE STEPS AND COSTS ARE THE SAME REGARDLESS OF THE DOLLAR VALUE OF THE TRANSACTION. Every purchase that involves a PO carries a sur-charge from $40 - @00. To illustrate, assume that in our SD it costs us $100. Then to buy a $200 piece of equipment, REALLY costs us $300. A $2500 piece of furniture REALLY costs us $2600 and a $25 box of graph paper really costs $125. Clearly the smaller the purchase, the larger the percentage the surcharge is.

Bench Marking Questions How many non-payroll checks are written each month? What percentage are for less than $500? What do we know about the checks that are used to pay our monthly bills? There are 3 basic questions that if haven’t asked already thought about, you should. How many non-payroll checks are written each month? What percentage are for less than $100? What percentage are for less than $500?

How many of these small transactions each month could be consolidated into one payment? (check or ACH) What would have to change in your business operations to significantly reduce the number of these small transactions and what savings in time and money could result. How could these savings be deployed in other needy areas? What if a large majority of these small obligations could be consolidated into ONE monthly check – ONE MONTHLY CHECK!

In p-Card the “p” stands for PAYMENT

NOT All p-Card programs are alike!

Key to Consolidating Small Purchases into one payment: As a minimum - Get p-Cards into the hands of as many employees as you can who are currently making small purchases/ generating PO’s of less than $1,000. This seems simple enough but experience demonstrates that some districts that currently have a few credit cards in use and replace these with p-Cards will not generate the savings and efficiencies talked about earlier. p-Cards for 1 or 2 top administrators will NOT change the procurement process. It is not about getting p-Cards into the hands of 2-3 employees who make 5 or 6 purchases per month totaling $5-10,000. It IS about finding the 20% or more of your employees who make 100’s of purchases each month each of which is for less than $2500.

What are p-Cards? ( P stands for payment) They look and operate similar to credit cards. They do not carry a revolving line of credit. Usage and authorization parameters can be reviewed and managed via the internet by district administration-in real time One must be careful NOT to confuse true p-Cards with a standard credit card or a business card issued by a bank. A p-Card is not just another fancy name for the credit cards we already use. True p-Cards – especially those customized to fit the legal requirements governing public sector spending – passes these basic characteristics and capabilities: They operate like a credit card in that when it is used and the vendor asks whether the card is a credit or debit – the correct response is credit. They do not carry a revolving line of credit – the monthly balance must be paid in full each month. Each card is customized to limit the purchasing authority and spending levels. Most p-Card programs give 24/7 access to daily card activity using internet access.

Specific card use parameters can be established for each card Transaction limits per charge Monthly limits Preferred Supplier Restriction Other commonalities of competing p-Card look-alikes are: Transaction limits per charge Monthly limits Preferred supplier restrictions Blocking card uses only to specific countries

Customized Card design can display: Card holder name School District name and number and/or Tax ID 2 Lines, 24 characters each, per card Ghost Cards There are 2 lines of 24 characters including spaces which districts can put on the cards. For MOST school districts, the 1st line will be used for the name of the card holder. It may contain 24 characters, including spaces. The 2nd line is for the name of the school and/or school district and the tax ID number if the district chooses. This will be a maximum of 21 characters. IF THE SCHOOL QUALIFIES FOR THE TAX RELIEF. If you have other ideas as to what information you would like as the card, these can be discussed with your implementation officer when you are trained how to order cards.

Advantages of an Association Sponsored Program Single Contract Creates a user group/support network Negotiation clout Due diligence costs eliminated No Costs No Fees No Charges Rebates While the afore mentioned slides highlighted the similarities of p-Card look-a-likes – the program offered by Illinois ASBO for Illinois schools and partners from other states is unique and provides the following added benefits and advantages: Single Contract covering all participating districts Creates a user group/support network (currently in excess of 200 districts) Negotiation clout Due diligence costs eliminated No annual fees on the cards Free access to internet information No minimum numbers of cards/no set up charges No charge for Fraud Protection Insurance No special hardware or software needed; just internet access No charges/fees for monthly statement preparation/delivery No fees or costs PERIOD

Rebate Distribution Rebates are calculated in April on the total amount of spend from April 1 – March 31(all 900+ districts) and the rebate is distributed in May to Illinois ASBO. Illinois ASBO then distributes to each partner their share – 100% of rebate generated by their schools per the Memorandum of Understanding While the rebates are calculated individually on each school participant, ONE reimbursement payment is made to Illinois ASBO. Our rebate year is May 1 – April 30. During May, the rebate is sent to Illinois ASBO. In June, the state partners receive 100% of their generated share. Each partnering affiliate will determine its own policies and procedures for distributing rebates to districts and determining how much it will retain for marketing and administration expenses and non-dues revenue for the Association. Whatever that amount might be, keep in mind that what remains will still be higher than if the participating school was going it alone.

Billing Cycle Requirements School District may choose a billing cycle cut-off of the 5th or the 20th. Payment is due at Harris Bank within chosen grace (7,14,21 or 27) days of billing cycle cut-off. Originally our p-Card provider wanted the last day of the month to be standard for every school district and then each district would choose to settle its bill within 21 days. Because boards of education that meet later in the month would have been closed out of this service, the contract was written that allows schools to select either the 5th or the 20th of each month and then based on the board meeting calendar, determine if they could guarantee payment within 7, 14 or 21 days of the 5th or 20th. This is not a hard decision to make, but it is critical that payments BE RECEIVED ON TIME because there are late payment penalties that amount to PRIME RATE plus 7%.

Only 3 Possible costs to participating school Late fee ATM Charge – IF cash advance option is selected Interest owed on any cash advance Earlier in this presentation, the benefits of the Illinois programs were enumerated. These included: No costs, No fee, No out of district cash payments to be involved – THIS IS TRUE FOR THE TOTAL PROGRAM, however; there are three service charges a district MAY create. The first is the late payment penalty. The other two involve a feature of the card that districts DO NOT NEED TO USE unless they want. This feature is the CASH ADVANCE. Currently zero districts allow card holders to have cash advances, the feature is there. The district agrees to pay the ATM fee per advance (usually $1-2) and they pay the prevailing interest rate on the money borrowed/advanced from the day of withdrawal to the date the next payment is received. Other than these three charges, everything else is at NO COST TO THE DISTRICT – I REPEAT – NO COST.

Billing and Payment Monthly Billing Statements Available online Payment Methods Automated Clearing House Check When the school district sets up its contract for p-Card services, it can elect to have a consolidated bill mailed to the district p-Card administrator monthly or simply go on line, and download it. This is the preferred method. You can have each individual user download their own and reconcile it themselves if you prefer. IT’S YOUR CHOICE. Payment choices are pretty simple send ONE check or set-up an ACH payment system. This is preferred – it is the best way to assure payment is received ON TIME.

Online Capabilities (24/7) “details online” Online Program Management Submit, approve, and cancel Card accounts Instant Account Activation Adjust spending limits/manage Cardmember profiles View Cardmember charges Change accounting information Online Information Services View/Manage Program Information Access to Web reporting tools Every school district will select a p-Card administrator and probably an assistant or 2 as back-up who will have access to all school district p-Card activities on a 24/7 basis. These people will be the ones responsible and capable of setting up and ordering cards, monitoring their usage, change spending parameters, shutting a card down – permanently or temporarily – generating reports from the on-line management information system specific to the district. These tools and access to the information when needed will help the school become better buyers and decision makers as well as help with better budget control, cash flow and better investing plans.

Vendor Benefits Reduces paper processing/billing Reduces vendors’ time/costs of processing/depositing payments Reduces vendor transaction costs Vendor paid by BMO within 48 hours of shipment/pick-up Reduces the issues of partially filled orders Reduces vendors time/costs of processing & depositing of payments But the schools are not the only beneficiaries. This is good business for vendors. It costs vendors money to process your orders and payments. p-Cards get them paid within 48 hours of shipping or the items being picked-up. No longer will vendors need to wait until the next board meeting OR later to get paid. Keep in mind that they are also processing your SMALL purchases. The cost to the vendor is in the transaction fee they have already negotiated with MC and MOST OF THE BUSINESSES YOU ALREADY DEAL WITH ACCEPT THE MC.

Benefits of a p-Card Program for Management Easier on Accounts Payable Submit one monthly payment vs. multiple payments to multiple vendors Reduction in paperwork Fraud indentification, prevention and protection through the Bank and MasterCard Detailed reporting available 24 x 7 Easy online administration and dedicated customer support Control on spending limits and accepted vendors The items listed on this screen basically review the major points of interest we have tried to make in this presentation.

How to Get Started Download documents www.illinois-pcard.com Submit resolution to local board of education for purchasing card participation Identify local p-Card administrators Complete application packet – send to: See Check List on Website for your State So how hard is it to become a participant? It is pretty simple and user friendly. Click on the link on the power point to access all documents. Have your Board of Education adopt a resolution to participate (make up your own or use/modify the one in the packet). Next, identify who the p-Card administrator and back-up personnel will be. Complete the other application documents and send them along with your last 3 years of financial audits to the Headquarters Office of your state ASBO affiliate. See the next slide.

For more information, word documents and other tools, or to download all available files, please go to: www.illinois-pcard.com. We have on our website additional information you may find helpful. Your state affiliate may also have additional p-Card information for your use.

Free Upcoming Webinars How To Implement Completing the Application Developing a p-Card User Handbook (unique to your district)

Holly Wallace 815.753.9083 (tel) 815.753.9367 (fax) hwallace@iasbo.org

Connecticut ASBO’s Payment Card Service (partnering with IL ASBO) Procurement Cards – p-Cards – have existed in the private and public sectors for many years. They represent an evolution of the credit card brought about by applying new technology to an emerging e-commerce world that now includes schools. The purpose of this presentation is to provide information about a unique p-Card application created to maximize the benefits for schools and potentially also help Associations. These purposes are specifically: To describe how p-Cards operate in today’s environment to improve the efficiency and effectiveness of the school business office and schools as they go about acquiring products and services needed to support teachers teaching and students learning. The unique nature of a multi-state program created by Illinois ASBO will be explained and the advantages of the economy of scale such a system provides will be explained. The basic steps for schools to participate will be outlined, and, The process for local school district implementation and monitoring of card usage will be illustrated. p-Cards for Schools: NOW more than EVER 2016