6.1 ERMUSR 11-09-2005 i
Elk River
Municipal Utilities
13069 Orono Parkway phone: 763.441.2020
Elk River,MN 55330 Fax.763.441 8099
October 25, 2005
' To: Elk River Municipal Utilities commission
Jerry Takle
Jim Tralle
John Dietz
' From: Theresa Slominski
' Subject: Outsourcing of Bill Printing
At the last commission meeting, in my staff update, I shared that I was looking into the
possibility of outsourcing our bill printing. Looking at this possibility came about as a
result of a presentation on Bill Flash at the Power Manager(ERMU's billing and
accounting software provider) Users Group conference in September. Bill Flash is an
1. organization whose business is printing and mailing bills for organizations. Power
Manager was contacted by Bill Flash and then formed a partnership. The partnership
entailed customizing the software to create a print file that could be sent to Bill Flash for
' the actual printing and mailing function. As a result of this partnership, the special
programming has been completed and it provides a smooth transition for those utilizing
this service.
' There are a couple of reasons that I would like to implement this service at ERMU. The
first reason would be saving $20,000 by not having to invest in a new folding and
' stuffing machine. We would also be able to save on the mailing machine replacement
because we wouldn't need to purchase such a high volume machine if we weren't using it
for bills.
The second reason would be a better utilization of staff time, switching from a focus of
the manual handling of paper to reviewing and analyzing the bills before they go out.
' This would result in more accurate bills and fewer adjustments.
I want to address an earlier(much earlier) proposition for better utilization of staff time
for the billing process. It is my understanding that the proposition for converting to
cycled billing was done with the desired benefit of easing the workload involved with the
bill processing and printing. My observations are that cycled billing won't reduce the
amount of time involved but it will redistribute the intensity involved(still definitely a
benefit.) Offsite printing will reduce the amount of time involved and it won't pose any
difficulty in still converting to cycled billing in the future.
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Below are the costs that are associated with the current billing and the costs of having it
111111 done offsite. You can tell that the actual cost is very comparable and so the bottom line
of the financials aren't going to be affected. The financial impact is saving $20,000 on a
new piece of equipment.
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Cost Comparison
Current BillFlash
Statements: Number sent monthly 8,000 8,000
I Forms: Stock, waste, S&H, storage $0.03
Envelopes: # 10 window outgoing and #9 return $0.05
Equipment: Printer, folder, inserter, maintenance $0.06
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Printing: Toner, ink $0.02
Postage: 1st Class US Postal Service $0.35 a
Labor: Inventory materials, printing, reviewing,
I folding, stuffing, sealing, metering,
troubleshooting, mailing, error recovery $0.09
Unit Cost $0.60 $0.56
I Monthly Costs $4,800 $4,480
Annual Costs ,_,.$57,600: $53,760
Annual Savings $3,840
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Percentage
Savings 7%
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