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Friday, March 16, 2012

Bulk of $182k Nashua charged in 2011 done by schools

NASHUA – Just as electronic communication has become quicker and easier over the last decade, so has electronic monetary exchange.

The city’s increasing use of credit cards is no exception.

In February, The Telegraph requested access to all city credit card records dating back to January 2011, along with a record of which departments and individuals can use the cards.

In 2011, the city paid $182,492.13 for purchases on its credit cards. The city’s largest department – the schools – was responsible for roughly half of all city credit card charges in 2011.

For about 10 years, the city’s use of credit cards have been covered by a brief set of general guidelines written by Treasurer David Fredette. The guidelines, authored in February 2002, are meant to ensure that the city’s plastic is used “sparingly and in a responsible manner.”

Fredette’s half-page policy spells out three reasons to spend with a city credit card and how they are to be used.

And despite thousands upon thousands of purchases, department heads responsible for authorizing credit card payments say they have never had to deny a charge made by their employees.

It is the duty of department heads to ensure that their employees charge responsibly, according to the policy.

Who’s using city plastic

The city has nine Citizens Bank credit cards distributed among five departments, with combined monthly credit limits totalling $85,000.

Credit card payments are generally applied to department operating budgets, Fredette said, though many of the city’s charges are covered by grants that departments receive for training or conferences. City records also show instances where payments were made from bond accounts or trust fund accounts.

All of the city credit cards are issued under the name of a department head or division leader, but only two of the nine – issued to Mayor Donnalee Lozeau and Police Chief John Seusing – are issued for individual use only. Lozeau and Seusing’s cards each have a $5,000 monthly credit limit.

The other seven city credit cards are shared among the city’s departments – financial services, police, information technology and the school department. Two cards distributed to the financial services department, through Fredette and Chief Financial Officer John Griffin, are shared by divisions that do not have their own credit card. Each has a $10,000 monthly credit limit month.

Fredette decides which departments get credit cards, he said.

“It was based on the amount of usage they would have,” Fredette said. “The fire department doesn’t really (use one). The police, you can see, uses it a lot. They do a lot of training, things like that. … The school department uses theirs very heavily, as you can see.”

Three credit cards are issued to the school department for its use only – two with $10,000 monthly limits and one with a $15,000 limit.

One of the police cards is issued to Seusing for the department’s shared use, with a $10,000 monthly credit limit. Another card with the same limit is issued to IT Director John Baker for his department.

When a credit card bill comes in, departments fill out a payment authorization form, with the invoice or documentation backing up what was purchased and to which account the payment will be billed, which is ultimately filed with Fredette’s office.

Fredette said he was not aware of ever denying a payment authorization filed with his office for a credit card purchase.

Ultimately, Fredette’s staff makes a record of the credit card payments made to Citizens Bank in the city warrant and includes an additional, detailed list of the departments, vendors and accounts involved.

The city’s monthly credit card charges barely approach their credit limits, records show, and Fredette said no department has ever overcharged – though the school department has “run close” in the past.

“They have a huge department,” Fredette said. “That’s why they have three” credit cards.

The guidelines specify that credit cards should only be used for purchasing hotel rooms for conferences, purchasing airline tickets for conferences or business trips, or for specialty purchases. Specialty purchases occur “when the product can only be purchased through the Internet, when time constraints or a cost saving may not allow using the normal purchasing process of a (purchase order),” or “when the vendor will not take a purchase order.”

The only payment authorization occurs after a charge is made, and, according to the guidelines, notification of all card use should be made to city Revenue Coordinator Susan Martinelli.

There are checks on how employees access city credit cards to ensure that their charges are acceptable beforehand, though, Fredette said.

Department employees who do not have a designated credit card – such as those in the fire, planning, public works and public health departments – get permission to charge purchases with the financial services credit cards from their department heads or division directors, who then retrieve credit card information from Fredette or Griffin before the purchase.

“I don’t remember saying ‘no’ to anybody,” Fredette said. “We have guidelines, and we follow the guidelines.”

Similarly, the school, police and IT credit cards are kept at each department’s headquarters and are shared with employees only with department head approval.

Only the mayor and the police chief keep their credit cards on them, Fredette said, and do not need to get permission before spending with them. However, their purchases are reviewed and authorized by Griffin and police department Business Manager Karen Smith, respectively, Fredette said.

What they buy on credit

Records show that the majority of purchases made with city credit cards cover travel. Along with the city’s credit card guidelines, travel-related expenses are further regulated through a five-page policy.

Included in the policy is the approval process for trip expenses exceeding $1,000, or travel extending more than three days. It also highlights how an employee may request vacation leave combined with conference attendance, and which methods of travel and lodging are the most “advantageous” to the city.

Travel-related meal reimbursement is limited to certain prices, and it is only eligible for employees who are away from their workplace for more than 12 hours. Employees are prohibited from using city funds on alcoholic beverages, according to the policy.

“Everybody tries to do their best to seek the most effective way of attending a conference and securing a deal,” Griffin added.

City credit cards do not accrue points or rewards for purchases, Fredette said. Also, the city pays its credit bills in full each month and does not carry balances on any of the cards.

About 80-90 percent of the school department’s credit card purchases last year were travel-related, Chief Operating Officer Dan Donovan said.

“It’s rather difficult to do that kind of purchasing other than with a credit card,” Donovan said.

In some cases, the school department’s cards were used to make specialty purchases such as supplies for a new art course (three $900-$1,000 purchases to JewelrySupply.com in Roseville, Calif.) or for booking visits to museums or bowling alleys for the district’s after-school programming, Donovan said.

The school department tightened up on its approval process for travel-related charges in recent years, Donovan said, after questions swirled around former Superintendent Julia Earl’s use of the cards for travel. Every school department employee now fills out a professional visitation request form anytime one makes a trip, Donovan said, which includes where and why someone is going and is approved by Assistant Superintendent Althea Sheaff.

Superintendent Mark Conrad said he also has declined keeping a credit card for his individual use, and all of his out-of-state travel arrangements are approved by the school board.

“It’s a very public process,” Conrad said.

Records show that most of the purchases made with the Police Department’s shared credit card in 2011 covered travel, registration or lodging related to training. Specialty purchases, such as software orders, were “limited,” Smith said.

Smith said the Police Department has a travel division that checks the department’s budget and approves employees’ trips and conferences before they are booked.

As for the chief’s individual credit card, former Police Chief Donald Conley’s records show that he used his credit card just six times in 2011 for meal purchases for purposes such as FBI meetings and a “U.S. Attorney Gang Conference.” Seusing, who was sworn in as chief at the end of 2011, has yet to use his credit card, Smith said Monday.

Records show that school and police department credit card payments are split fairly evenly between department budgets and grants.

The majority of the IT department’s credit card use falls under specialty purchases, covering software and hardware, Barker said. Vendors such as Best Buy, Amazon.com, Office Depot and Sears come up several times in city records.

“In a lot of cases, IT-related vendors do not want to deal with purchase orders,” Barker said. “The world is turning to credit cards, and these folks are the leaders with that.”

Maryalice Gill can be reached at 594-6490 or mgill@nashuatelegraph.com. Follow Gill on Twitter (@Telegraph_MAG).