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7.4. SR 05-15-2006 City of Elk River REQUEST FOR COUNCIL ACTION Agenda Section Meeting Date Administration Ma 15,2006 Item Description Consider Ado tin Credit Card Polic Item Number 7.4. Prepared by Lori ohnson, Ci Administrator Reviewed by Introduction In 2001, the Minnesota Legislature approved a law authorizing cities to use credit cards. The law requires that the city adopt a credit card policy prior to obtaining a credit card. The city currently does not have a credit card for general use; however, due to increased internet purchasing, most hotels and businesses no longer accepting purchase orders, and the ability to obtain products at the lowest price possible through vendors who require payment in advance, staff is requesting authorization to obtain a city credit card. The League of Minnesota Cities recently started offering a credit card program through USBank. This program, unlike others we have researched in the past, allows credit cards to be issued in individual names using the city's credit and tax information. This will allow us to track purchases to individuals without using their personal information. Discussion Attached is a credit card policy outlining the types of purchases for which the credit card may be used and the procedures that each person assigned a credit card must use. Credits cards will be assigned only to department heads and employees who frequently make purchases requiring a credit card. These employees will be responsible for the payment of any unauthorized purchases and purchases without proper documentation. Financial Impact None Attachments · Credit card policy · Cardholder's agreement · League of Minnesota Cities information sheet on credit card program Action Reauested The City Council is asked to adopt the credit card policy as attached. Council Action Motion by _ Second by _ Vote Follow Up S:\Council\Lori\2006\Credit Card Policy. doc Credit Card Policy INTRODUCTION Minnesota Statute 471.382 authorizes cities to make purchases using credit cards. The use of credit cards has been proven to provide an efficient, cost-effective method of purchasing and paying for small-dollar purchases. Some travel and training costs may also be handled best through the credit card process. POLICY The purpose of this policy is to provide a procedure in the purchasing process for the use of credit cards for small-value purchases (less than $750 per item unless otherwise authorized). SCOPE The use of the credit card is limited to the following circumstances: . The items and/or services to be purchased are for the official business of the City of Elk River. . The types of items and/or services to be purchased are those established by the department head and approved by finance. . The cost of the proposed purchase does not exceed the purchase order transaction limit ($750) unless authorized in writing or by a signed purchase order prior to purchasing. . The use of the U.S. Bank One Card should be restricted to purchases where there is no City account already established or where purchase orders are not accepted. PROCEDURES For the credit card process to operate efficiently, a timely response to each of the elements of this policy is required from those concerned. Failure to do so will result in past due transactions appearing on the statements and cards being rejected because of limits being exceeded. Employee absences should be anticipated and arrangements put in place so that the process flow will not be delayed. . The Finance dept. is responsible for issuing, accounting for, monitoring, retrieving and generally overseeing compliance with the city's credit card policy. . Employees who use a city credit card must sign documentation verifying agreement to conditions of use. . An employee who is issued a credit card is responsible for its protection and custody. If a credit card is lost or stolen, the Finance dept. shall be notified immediately. An employee who is issued a credit card shall return the credit card to the Finance dept. upon termination of his /her employment with the city. . The cardholder will retain vendor receipts and reconcile the monthly statement received with the receipts. Each credit card statement shall be reviewed as soon as possible to ensure that transactions comply with this policy. Any transactions that appear on the statement that are not documented with a credit card slip shall be investigated immediately and will not be paid until documentation is received. If documentation is not received by the Finance Department, the employee will be responsible for payment of the transaction. It is the responsibility of the cardholder to assign the correct account code to each transaction and sign the statement as correct. . Payment to the credit card company shall not be approved until all transactions have been verified. The statement and receipts should be forwarded to the department head for approval. . The department head will ensure that sufficient funds are available to pay for every purchase. The credit card statement shall be signed for payment approval by the department head or individual authorized to approve such purchases and be submitted to the Finance dept. on a timely basis. . The balance of the credit card statement shall be paid in full by the due date. . Employees who use a city credit card in a manner contrary to this policy shall be subject to the following disciplinary actions, as deemed appropriate by the city administrator: ~ verbal/written reprimand ~ suspension ~ termination ~ reimbursement to the city for unauthorized or undocumented expenditures Cardholder's Agreement I will be expected to use the credit card issued to me as directed by the approved credit card policy. No personal use of the credit card is permitted. I will be responsible for the protection and custody of the U.S. Bank One Card issued to me. Any such purchases made with my card will be considered to have been made by me and will be my responsibility. If the credit card is lost or stolen, I will report its loss immediately to the Finance Dept. I understand that my personal credit will not be affected by any use of the U.S. Bank One Card. I understand that in the event of termination of my employment with the City of Elk River, my final payroll check will be retained subject to the return of the credit card. The use of the U.S. Bank One Card to purchase goods and services for other than the official business ofthe City of Elk River is fraudulent use and is subject to disciplinary action and/or termination of employment as may be determine by the city administrator; as well as to legal action to recover losses incurred by such use. I have read, understand, and agree to the conditions above: Card Account Number Cardholder Name (Please Print) Cardholder's Signature Card Manager's Signature Date Card Returned Date Issued to Cardholder Introducing the 4M Fund/U.S. Bank One Card Program The 4M Fund and us. Bank are pleased to offer a no fee One Card solution designed specifically to help Minnesota communities manage their purchasing transactions. With one easy process, the One Card provides the purchasing flexibility needed to increase efficiencies and decrease costs - with a potential for rebates back to your community. Sponsored by the League of Minnesota Cities as part of the 4M Fund, the One Card is another unique 4M Fund service to Minnesota public entities. Benefits Because of the 4M Fund's ability to pool government purchasing activities, the 4M Fund/US. Bank One Card program offer numerous benefits to participants, such as: · Increased potential for rebates · Flexibility to offer multiple cards · Transaction and merchant category Controls · Comprehensive online reporting How It Works To participate, each city will need to complete a US. Bank One Card application. This application requires three years of audited financial statements and credit approval as a stand-alone entity. Participating cities with an annual card volume of $500,000 or more will be eligible for an annual rebate if the overall combined 4M Fund One Card program criteria are met: · Total combined annual spend for all participating cities is $5,000,000 or more · Combined average transaction size for all participating cities is $150 or more Each city is responsible for the management of their individual One Card program. All payments and program maintenance will be supported through a designated Account Manager and Customer Service relationship with US. Bank. For More Information To find out more about the 4M Fund/US. Bank One Card Program, please contact Kevin Herbert, US. Bank Government Banking Division, at (651) 466-8602 or by email at kevin.herbert@usbank. com, or Pat Harris from the 4M Fund at (612) 376- 7017 or by email atpharris@voyageur.net. Sponsor League of Minnesota Cities 145 University Avenue West St. Paul, MN 55103-2044 (651) 281-1200 · wwwAMFund.com * if a single community uses under 200 cards, no fees apply. if more than 200 cards are issued, the program fee is waived when annual card volume exceeds $1,000,000; otherwise, a $40 per card annualfee will be implemented.