Los Angeles Unified School DistrictProcurement Card Program

Program Overview• Procurement cards (P-cards) work like consumer

credit cards.• P-cards increase efficiency, make purchasing easier,

expedite delivery from vendors, and facilitate vendorpayment process.

• Perfect for low-value transactions.• May be used in conjunction with Imprest funds and

school purchase orders.• According to the State of California, the cost of

issuing a purchase order ranges between $60 and$258.

– A Deloitte & Touche 1998 study in the private sectorshowed significant savings in labor and related costs.

– Another Deloitte & Touche study highly recommendsimplementation of P-card program.

– About 60% of Fortune 500 companies have P-cards.– Merck®, Walt Disney®, Bank of America®.– L.A. County Office of Education, Cal-Trans.– San Diego City Schools, Dade County Public

Schools, Dallas County Schools.

Background

• Advantages– Faster product

delivery.– Lower transaction

costs.

– Improved customerservice.

– Single monthlypayment.

– Sets stage for Internetcommercetransactions.

• Disadvantages– No pre-encumbrance

of funds.– Statement

reconciliation isnecessary.

– Accounting controlmay be diminished.

– Potential for misuse.

Vendors

• Vendors will get paid within three businessdays.

• Merchant and commodity codes areassigned for auditing and control purposes.

• The District and schools can control what isbought and from whom we buy.

• District’s warehouse will be assigned amerchant code for user convenience.

Program Costs

• Cal-Card purchases are interest-free if paidwithin 45 days.

• Cal-Card providers offer on-line statements,customized buying reports, user trainingand cardholder support at no cost.

• California State credit card program (Cal-Card) charges a fee (currently 1/10 of 1%)of monthly volume of purchases.

Encumbrance and Payment

• Pre-encumbrance of funds is not necessary,meaning no requisition or SPO is required.

• Monitoring availability of funds forpayment is responsibility of principal atschool site.

• Billing statement is reconciled bycardholder. Cardholder turns in a monthlypurchase log verifying all purchases toAccounts Payable Section.

Next Steps• Obtain Board approval to piggyback off Cal-

Card program.• Complete Cal-card subscription process.• Implement a training program for pilot

participants.• Commence 6-10 month pilot program with

Principals’ and Business Managers’ Ad-hocCommittee (15 schools, 11 district offices).

• Evaluate and report results to BFAT committee.• Roll out program District wide.