Bill Text: NH SB191 | 2015 | Regular Session | Amended
Bill Title: Relative to the use of the state's procurement card services.
Spectrum: Slight Partisan Bill (Republican 9-3)
Status: (Passed) 2015-07-15 - Signed by the Governor on 07/13/2015; Chapter 0253; Effective 09/11/2015 [SB191 Detail]
Download: New_Hampshire-2015-SB191-Amended.html
SB 191-FN - AS AMENDED BY THE SENATE
03/12/2015 0733s
2015 SESSION
15-0440
05/04
SENATE BILL 191-FN
AN ACT relative to use of the state’s procurement card services.
SPONSORS: Sen. Stiles, Dist 24; Sen. D'Allesandro, Dist 20; Sen. Reagan, Dist 17; Sen. Cataldo, Dist 6; Sen. Carson, Dist 14; Sen. Boutin, Dist 16; Sen. Morse, Dist 22; Rep. L. Ober, Hills 37; Rep. F. Rice, Rock 21; Rep. Sherman, Rock 24; Rep. Emerick, Rock 21; Rep. Ford, Graf 3
COMMITTEE: Executive Departments and Administration
This bill provides for expansion of the state’s procurement card services through the department of administrative services, division of procurement and support services.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/12/2015 0733s
15-0440
05/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT relative to use of the state’s procurement card services.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Department of Administrative Services; Additional Purchasing Authority. Amend RSA 21-I:17-a, I to read as follows:
I. The director of procurement and support services may, upon written application of the governing board of any agency, authorize such governing board, or one or more individuals designated by such board, to purchase supplies for the agency directly from vendors by the use of field purchase orders, or by the use of procurement cards issued for that purpose; provided, however, that no such field purchase order or procurement card shall be used where a total expenditure of more than $500 is involved unless such use is otherwise allowed by law. The form and use of such field purchase orders or procurement cards shall be prescribed by rules adopted by the commissioner of administrative services pursuant to RSA 541-A in consultation with the state treasurer, or in the department’s manual of procedures described in RSA 21-I:14, I. Rules or procedures adopted by the commissioner relative to procurement cards shall include processes for monitoring the use of such cards. Procurement cards shall be used only for [the] state purposes [permitted under this paragraph]. Unauthorized use of a procurement card may result in disciplinary action up to and including termination of employment. Any person who knowingly uses a procurement card in violation of this section shall be guilty of a misdemeanor. Agencies’ use of procurement cards shall be subject to the limitations of the amounts appropriated by the legislature.
2 New Paragraph; Additional Purchasing Authority; Credit Card Services. Amend RSA 21-I:17 by inserting after paragraph I the following new paragraph:
I-a. In the case of contracts entered into by the director of procurement and support services for credit card services intended to facilitate state procurement, the director may, if he or she believes that to do so would be advantageous to the state:
(a) Include terms in such contracts that require a card issuer to make such services available to the legislative or judicial branches, or to any city, town or other non-state entity which is an employer as defined by RSA 100-A:1, IV, on terms that are the same as or similar to those offered to the executive branch of the state; provided, however, that such use or continued use shall be subject to the approval of the division of procurement and support services. Any procurement of supplies or services by the legislative or judicial branches, or by any city, town, or other non-state entity using cards secured under this subparagraph shall be made independently and distinctly from the director’s purchases under this chapter. Any charges, fees, or other costs associated with the use of such cards shall be the responsibility of the entity which incurred them and the state shall assume no responsibility for the use of cards by entities other than the state. The director shall not be required to enter into any contractual or other arrangement for the use of cards by the legislative or judicial branches, or any city, town, or other non-state entity which is an employer as defined by RSA 100-A:1, IV, or to assume any responsibility or liability with respect to the use of such cards or with respect to any procurements of supplies or services made by those entities using such cards.
(b) Enter into contracts which, in addition to allowing for use of credit card services by the executive branch, also allow for use by the legislative or judicial branches in order to pay for their purchases in a manner similar to executive branch agencies. If the legislative or judicial branches elect to make such direct use of contracts secured by the division of procurement and support services under this subparagraph, they shall do so according to procedures established by the department of administrative services, in RSA 21-I:17-d, II and III. The use or continued use of such contracts by the legislative or judicial branch shall be subject to the approval of the division of procurement and support services. The director shall not be required to enter into any contractual or other arrangements for the use of credit card services by the legislative or judicial branches, and may also, or in the alternative, include terms in his or her contracts which allow for participation by those branches on the terms set forth in subparagraph (a).
3 New Section; Use of Procurement Cards for Purchase of Commodities or Services. Amend RSA 21-I by inserting after section 17-c the following new section:
21-I:17-d Use of Procurement Cards for Purchase of Commodities or Services.
I. The director of procurement and support services may, upon written application of an agency, authorize the agency, or one or more individuals designated by the agency, to purchase commodities or services secured by or through the division using procurement cards issued for that purpose; provided, however, that no such card shall be used for an expenditure which is greater than the amount allowed by the division for purchases under the applicable contract, or the price allowed by the division for the commodity or service, and provided further that use of such cards shall be in accordance with paragraphs II and III.
II. Use of a procurement card under paragraph I shall not alter any other purchasing requirements which may apply to the agency or to the type of purchase at issue, including but not limited to any restrictions or limitations contained in contracts entered into by the division of procurement and support services and any processes, rules, or manual of procedures provisions adopted by the department of administrative services which are applicable to the purchase. Agencies’ use of procurement cards shall be subject to the limitations of the amounts appropriated by the legislature.
III. The form and use of credit cards to conduct or pay for purchases under paragraph I shall be prescribed by rules adopted by the commissioner of administrative services pursuant to RSA 541-A in consultation with the state treasurer, or in the department’s manual of procedures described in RSA 21-1:14, I. Rules or procedures adopted by the commissioner shall include processes for monitoring the use of cards. Cards shall be used only for state purposes. Unauthorized use of a card may result in disciplinary action up to and including termination of employment. Any person who knowingly uses a card in violation of this section shall be guilty of a misdemeanor.
4 New Sections; State Credit Card Contracts. Amend RSA 9-D by inserting after section 1 the following new sections:
9-D:2 Card Rebates.
I. Rebates received from contracts for credit card services entered into by the division of procurement and support services under RSA 21-I shall be applied in the following manner:
(a) Amounts which are paid to the state as rebates for its purchases shall be deposited in the payment and procurement card fund established in RSA 9-D:3.
(b) Amounts which represent the added rebate benefit attributable to the consolidation of calculations under contracts allowing for the independent participation of the legislative or judicial branches, or the independent participation of non-state entities under RSA 21-I:17, I-a(a) shall be applied as follows:
(1) Fifty percent of the amount shall be paid by the card issuer directly to the branches or non-state entities which independently participated in the purchases; and
(2) Fifty percent of the amount shall be deposited in the payment and procurement card fund established in RSA 9-D:3, which fund may pay up to this amount to the board of trustees of the New Hampshire retirement system dedicated to an annual reduction in the retirement system’s unfunded liability determined under RSA 100-A:16, II.
II. Contracts for credit card services entered into by the division of procurement and support services under RSA 21-I shall contain such provisions as are necessary to apply rebates, if any, in the manner specified under paragraph I. Application of rebates in the foregoing manner shall not be required in the case of cards:
(a) Intended only for the procurement of fuel;
(b) Entered into by the division of procurement and support services which relate to a specific seller of goods or services;
(c) Obtained by the division under contracts specifically providing for another method of handling or applying rebates; or
(d) Entered into prior to the effective date of this section.
9-D:3 Payment and Procurement Card Fund.
I. There is hereby established in the office of the state treasurer the payment and procurement card fund, which shall be a revolving fund administered by the department of administrative services. The fund shall be nonlapsing and continually appropriated to the department of administrative services. The department of administrative services may make expenditures of up to $100,000 in anticipation of revenue which may be received by this fund.
II. The fund established under paragraph I may be maintained at such a level as to cover the necessary costs of the administration and management of the credit, payment, or procurement card programs handled by the department of administrative services, to cover other amounts which may be payable under paragraph III and to allow the accumulation of a working capital reserve which is no greater than $25,000. The department of administrative services is authorized to establish one or more positions to administer and manage the procurement card program. No position shall be staffed unless and until sufficient funds exist in the fund established under paragraph I to cover the necessary costs of the administration and management of the program, including the funding of such positions.
III. All funds accumulated from rebates under RSA 9-D:2, I(a) or (b)(2) shall be deposited in the fund established in paragraph I. Expenditures from the fund shall be restricted to the following purposes:
(a) Paying the necessary costs of administration and management of the credit, payment or procurement card programs handled by the department of administrative services and maintaining a working capital reserve in an amount, not to exceed $25,000, which is deemed sufficient by the division of procurement and support services to cover the costs of the programs and to pay amounts under subparagraph (b)(1).
(b) After deducting the foregoing amounts, making such payments, if any, that the department of administrative services concludes are appropriately payable:
(1) By an entity which is part of the state to any credit, payment, or procurement card issuer under contracts secured by the division of procurement and support services pursuant to RSA 21-I, including but not limited to payments for purchases and payments which must be made in order for the state to obtain available rebates, or to avoid incurring, or to pay, interest, penalties, or other costs imposed on the state by issues of credit, payment, or procurement cards.
(2) To the board of trustees of the New Hampshire retirement system, to be dedicated to an annual reduction in the retirement system’s unfunded liability determined under RSA 100-A:16, II. Such amount shall not exceed the amount, if any, made available to the payment and procurement card fund under RSA 9-D:2, I(b)(2).
(3) To the state’s general fund or any special, restricted, dedicated or other fund, as a share of rebates obtained on credit card contracts under RSA 9-D:2. The department of administrative services shall pay such rebate amounts as it concludes are payable to the general fund to the revenue stabilization reserve account established under RSA 9:13-e.
IV. In the event that any entity which is part of the state fails to make or authorize required payments to any credit, payment, or procurement card issuer which has been secured through the department of administrative services, regardless of whether such failure has or may result in the imposition of interest, penalties or other costs, or loss of rebates, the commissioner of administrative services is authorized to charge the amount owed, plus any interest, penalties, or other costs, against any money appropriated to the agency to pay for the goods or services purchased; to transfer those funds to the payment and procurement card fund; and to pay from that fund the amount necessary to avoid or address the agency’s failure.
V. At the end of each fiscal year, the state treasurer shall credit the payment and procurement card fund with interest and any other income earned.
9-D:4 Limitations on Procurement of Credit Card Contracts. The department of administrative services, division of procurement and support services, shall consult with the office of the state treasurer before entering into contracts for credit card services intended to facilitate the process by which the state conducts and pays for its purchases or transactions. Agencies shall not independently enter into single agency service contracts for credit card services to pay for purchases or transactions, including but not limited purchases for commodities or services intended solely for use of a single agency, without the approval of the office of the state treasurer and the department of administrative services. If approved to use credit card services secured by or through the division of procurement and support services, an agency shall not use other cards unless authorized to do so by the division or granted a waiver under RSA 21-I:17-c.
5 New Subparagraph; Dedicated Fund. Amend RSA 6:12, I(b) by inserting after subparagraph (326) the following new subparagraph:
(327) Moneys deposited in the payment and procurement card fund under RSA 9-D:3.
6 Retirement System; Method of Financing; Annual Offset Against Unfunded Accrued Liability. Amend RSA 100-A:16, II(e) to read as follows:
(e) Immediately following the actuarial valuation prepared as of June 30 of each fiscal year, the board shall have an actuary determine the amount of the unfunded accrued liability for each member classification, proportionally reduced using sums dedicated as provided in [RSA 21-I:95, II] RSA 9-D:2, I(b)(2), as the amount of the total liabilities of the state annuity accumulation fund on account of such classification which is not dischargeable by the total of the funds in hand to the credit of the state annuity accumulation fund on account of such classification, and the aforesaid normal contributions to be made on account of the members in such classification during the remainder of their active service. The amount so determined with respect to each member classification shall be known as the “unfunded accrued liability” with respect to such classification. On the basis of each such unfunded accrued liability, the board shall have an actuary determine the level annual contribution required to discharge such amount over a period of 30 years or the maximum period allowed by standards adopted by the Government Accounting Standards Board, whichever is less.
7 Effective Date. This act shall take effect 60 days after its passage.
LBAO
15-0440
Amended 04/02/15
SB 191-FN FISCAL NOTE
AN ACT relative to use of the state’s procurement card services.
FISCAL IMPACT:
The Department of Administrative Services and the New Hampshire Retirement System state this bill, as amended by the Senate (Amendment #2015-0733s), may increase state revenues by $267,444 in FY 2016, $659,048 in FY 2017, $1,217,654 in FY 2018, and $1,654,806 in FY 2019, may increase local revenues by $4,500 in FY 2016, $40,300 in FY 2017, $60,800 in FY 2018, and $93,750 in FY 2019, may increase county revenues by an indeterminable amount in FY 2016 and each year thereafter, and may increase state expenditures by $53,120 in FY 2016, $85,718 in FY 2017, $89,804 in FY 2018, and $94,081 in FY 2019. There will be no fiscal impact on county and local expenditures.
METHODOLOGY:
The Department of Administrative Services and the New Hampshire Retirement System state this bill expands the State’s procurement card services. The Department of Administrative Services indicates this bill will allow it to purchase commodities or services with procurement cards. Additionally, the bill permits municipalities, the Legislative and Judicial Branches, and non-state entities, as defined under RSA 100-A:1, IV, to join the Department’s procurement card program which should allow them to obtain more competitive rebate rates on credit card purchases. The Department of Administrative Services anticipates state revenues will increase because the State will purchase more commodities with credit cards which will result in additional rebates. Further, rebate rates should increase as the amount purchased increases.
The Department of Administrative Services indicates the bill establishes the Payment and Procurement Card Fund which will be a nonlapsing and continually appropriated fund administered by the Department. Rebates paid to the State from contracts for credit card services entered into by the Department, pursuant to RSA 21-I, will be deposited into the fund. For any rebate benefit attributable to the consolidation of calculations under contracts 50% of the amount will be deposited into the fund, and 50% will be paid to those entities. The Department states the Payment and Procurement Card Fund may only be used for the following purposes:
• The Department’s costs associated with administering the procurement card programs and maintaining a capital reserve of no more than $25,000;
• Procurement card contracts administered by the Department;
• The New Hampshire Retirement System’s unfunded liability as determined under RSA 100-A:16, II;
• The state general fund, or any special, restricted, dedicated or other fund; and
• The Revenue Stabilization Reserve Account established under RSA 9:13-e.
The table below details the Department of Administrative Services estimates on the amount of state revenue that may be earned through rebates:
FY 2016
FY 2017
FY 2018
FY 2019
Contracting Activity for Major Commodities that could be Purchased with Procurement Cards
$73,040,000
$75,920,000
$92,920,000
$92,920,000
Participation Rate
25%
50%
75%
100%
Amount Subject to Rebate
$18,260,000
$37,960,000
$69,690,000
$92,920,000
Assumed Rebate Rates
1.44%
1.63%
1.66%
1.68%
Total State Revenue
$262,944
$618,748
$1,156,854
$1,561,056
The Department reports that if other entities join the state’s procurement card contracts then all parties should receive more competitive rebate rates. The table below includes the Department’s estimates for the increased rebate amounts municipalities could receive. The Department did not estimate rebate amounts for the Judicial or Legislative Branches or other non-state entities, such as counties.
FY 2016
FY 2017
FY 2018
FY 2019
2 Municipalities with $2,000,000 in Combined Purchases
8 Municipalities with $13,000,000 in Combined Purchases
14 Municipalities with $19,000,000 in Combined Purchases
20 Municipalities with $25,000,000 in Combined Purchases
Current Rebate
$20,800
(1.04%)
$135,200
(1.04%)
$197,600
(1.04%)
$260,000
(1.04%)
New Rebate
$29,800
(1.49%)
$215,800
(1.66%)
$319,200
(1.68%)
$447,500
(1.79%)
Net Municipality Rebate
$9,000
$80,600
$121,600
$187,500
Local (50%)
$4,500
$40,300
$60,800
$93,750
State (50%)
$4,500
$40,300
$60,800
$93,750
The Department of Administrative Services reports it will need to hire a full-time financial analyst to support the program, and anticipates doing so only once funds are available in the payment and procurement card fund established by the bill. The estimated costs associated with hiring a financial analyst are detailed in the table below:
FY 2016
FY 2017
FY 2018
FY 2019
Financial Analyst (LG 28, Step 1,) – Start Date of 12/01/15
$31,820
$55,424
$57,875
$60,425
Benefits
$16,250
$28,944
$30,579
$32,306
Current Expenses
$250
$250
$250
$250
Telecommunications
$300
$600
$600
$600
Equipment
$2,350
$0
$0
$0
Software
$2,000
$200
$200
$200
State Travel
$150
$300
$300
$300
Total
$53,120
$85,718
$89,804
$94,081
The following table includes the revenues projected by the Department of Administrative Services. Additionally, the table details how the Department plans to distribute the anticipated revenues:
FY 2016
FY 2017
FY 2018
FY 2019
Estimated State Revenues
State Revenue
$262,944
$618,748
$1,156,854
$1,561,056
From Municipal Rebates
$4,500
$40,300
$60,800
$93,750
Total State Revenue
$267,444
$659,048
$1,217,654
$1,654,806
Projected Distribution
Retirement Account
$3,449
$34,800
$56,175
$88,343
Federal
$62,482
$165,634
$331,344
$456,019
Highway
$13,095
$26,715
$53,443
$73,552
Turnpike
$4,031
$10,686
$21,377
$29,421
Liquor
$2,016
$5,343
$10,689
$14,710
Other
$70,544
$187,006
$374,098
$514,861
Revenue Stabilization
$52,404
$138,919
$277,901
$382,468
Administrative Costs
$53,120
$85,718
$89,804
$94,081
Reserve
$6,303
$4,227
$2,823
$1,351
The New Hampshire Retirement System states the fiscal impact is indeterminable because additional revenues are dependent upon the distributions made by the Department of Administrative Services.
