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CC - Item 4E - Authorization to Participate in State of CA Cal-Card Program• TO: HONORABLE MAYOR AND MEMBERS ROSEMEITY COUNCIL FROM: BILL CRO , CITY MANAGER DATE: APRIL l9, 2005 • RE: AUTHORIZATION TO PARTICIPATE IN THE STATE OF CALIFORNIA CAL-CARD PROGRAM Staff has been made aware of the State of California's CAL-Card program which allows government agencies to issue restricted use credit cards to elected officials and qualified managers. The program allows the participating organization a more efficient way to process travel and meeting expenses. Attached is a list of program benefits, frequently asked questions and a partial list of participants that use this program. RECOMMENDATION It is recommended that the City Council authorize staff to submit an application and required documentation for any Council member who may desire to participate. It is further recommended that Council set a maximum monthly per card limit of $5,000. cdllvCIL AGUNDA APR 2 ;'03 2005 ITEM No • • CAL-Card Program Benefit Sheet Participants • VISA acceptance allows for an expanded supplier base • Suppliers paid promptly • Obtain goods and services when needed • Walk-in, telephone, fax and e-procurements • Reduces the number of purchase orders • Eliminates petty cash • Eliminates travel expense claims (local agencies only) • Opportunity buys • Validated controls for the Cardholder Coordinators Approving Official and Agency Program • No membership or administrative fees • No minimum card count or spend • Invoices due 45 days from invoice date • Free standard, optional and ad hoc management reports, electronic and hardcopy • Visa dispute rights, fraud protection and VISA Waiver Liability coverage • Streamlines the accounts payable process by reducing the number of checks issued • Prompt payment rebate revenue • Pilot program indicates average processing savings of $24.49 per transaction • Save an additional 1 % on the State Master Purchase Agreement for office supplies • Late payment interest penalty based on annual State Prompt Payment Act, FY03/04, 2.532% Merchants • Eliminates multiple invoices and all related administrative costs with typical invoice processing costs of $20 or more • Eliminates collection efforts • Eliminates delays in payment, which are typically 30 to 60 days from receipt and invoicing of service or goods. For small businesses, where access to cash is often limited, the value of this goes beyond the 2% cash float calculation. With purchase cards, payment is received in 1 to 3 days • Bank fees are negotiable 8/16/2004 i CAL-Card • Frequently Asked Questions 1. Is there a minimum card count or spend required to start a program? There are no minimum card count or dollar spend requirements within the CAL-Card Program. 2. What are the terms for payment? Payment terms are 45 days from the date of each monthly statement of account/invoice. 3. What is the interest rate? This program is set up for accounts to be paid in full each invoice/billing period. For unpaid, undisputed balances 46 days or older, there is a late payment interest rate established annually by the State of California, Department of Finance according to the State's Prompt Payment Act. The current annual rate is 2.532%. If the accrued monthly penalty amount is seventy-five dollars ($75) or less per invoice (R060), the penalty shall be waived and not paid by the agency, (SAM 8474.3). State agencies are required to report late payment to Department of General Services. 4. Does the CAL-Card have a rebate program? Yes, the CAL-Card offers a Payment Performance Rebate, which is calculated on a monthly basis and refunded to each agency that has met the full invoice payment requirement within 61 days of the calendar end of each quarter. Full invoice payment is defined as total invoice payment received by U.S. Bank, minus any disputed transactional dollars, fraudulent charges, charge backs and amounts charged-off by U.S. Bank. To calculate the Payment Performance Rebate, count the number of days from cycle date to the date the payment is issued. For example, an invoice for $10,000 is received with a cycle date December 22nd and the payment is issued on January 10th. Payment was issued by the 19th day. Looking at the schedule on the next page, 19 days would qualify for 35 (0.35°/x) Basis Points. The amount of the Payment Performance Rebate would be calculated at follows: 0.35% x $10,000 = $35.00 8/16/2004 • 0 Payment Performance Rebate Schedule Receipt of Payment from Invoice Date Basis Points 1 to 7 days 62 (0.62°/x) 8 to 12 days 48(0.48%) 13 to 16 days 41 (0.41%) 17 to 20 days 35(0.35%) 21 to 24 days 28(0.28%) 25 to 28 days 22(0.22%) 29 to 32 days 15(0.15%) 33 to 36 days 9 (0.09%) ? to 40 days 2 (0 .02%) 5. What are the established cardholder transaction increments per card? The cardholder transaction limits can be set in $50 increments per transaction and in $100 increments for the monthly total. 6. What does "LM.P.A.C."represent? U.S. Bank I.M.P.A.C. Govemment Services, the current Contractor, uses the Service Mark, I.M.P.A.C. These initials stand for International Merchant Purchase Authorization Card. I.M.P.A.C. is the division within U.S. Bank that manages the government purchase card program. 7. Who is responsible for errors, omissions and intentional misconduct by an agency or an employee? The state, each participating university, participating division, or local government agency is responsible for their own errors and omissions. When a card has unauthorized charges, a dispute process procedure is followed freeing the agency from financial responsibility. When an employee makes unauthorized charges, U.S. Bank I.M.P.A.C. Government Services provides VISA Liability Waiver coverage within specific program criteria, provided that the employee is terminated. 8/16/2004 • 0 8. Describe liabilities for the Issuer, Participating Agency and Cardholder for the following: -Fraudulent use of the card by cardholder -In the event a card is stolen, forged or lost -If a merchant accepts a procurement card order without obtaining prior authorization or forces a transaction for the purchase - The Agency is liable for fraudulent use of the card by a Cardholder. However, each CAL-Card has VISA Liability Waiver coverage up to $5,000 per card, if the agency has 1 to 4 valid cards and up to $100,000 per card, if the agency has 5 or more valid cards. VISA Waiver Liability is available upon written request provided the Agency cancels the card account and terminates the employee in a timely manner. - In the case of a lost or stolen card, the agency's liability ends as soon the Cardholder contacts U.S. Bank Customer Services. In addition, the Cardholder should immediately notify their Agency Program Coordinator. - Fraudulent transactions posted to the account are referred to the U.S. Bank's fraud investigation unit. The Cardholder has 60 days from cycle date to report fraudulent charges. - A merchant who does not receive authorization or forces a transaction on a charge is liable for that charge. 9. What does a Cardholder do if their CAL-Card is lost or stolen? The Cardholder should immediately contact U.S. Bank Customer Services and their Agency Program Coordinator to report the lost card. U.S. Bank has a 24-hour a day, 7 days a week, Customer Service number for reporting lost or stolen cards. The number is 1-800-227-6736. A new account will be established and a new card issued. All charges are moved to the new account and unauthorized charges will be cleared by subsequent credits issued by U. S. Bank Fraud Investigative Services. 10. Is there an annual card fee? No. When the CAL-Card program was initially established there were provisions for an annual card fee. However, through contract negotiations the card fee was deleted from the current contract. 11. Where can the CAL-Card be used as a payment mechanism? The CAL-Card can be used anywhere VISA is accepted. Whether placing orders in person, online, via the fax or over the telephone, Cardholders should always request an itemized receipt. Because some Internet merchants do not provide an itemized receipt, Cardholders should do a screen print of the order, which should include product description, unit price, freight cost, tax and total amount to be charged. Remember to use only secured sites when placing orders on the Internet. 12. Which merchants accept the CAL-Card? As stated above, the CAL-Card is a VISA purchase card. Any merchant that can accept a VISA credit card as a form of payment can accept a CAL-Card. 8/16/2004 i • 13. What if the merchant does not currently accept a VISA credit card but desires to become a VISA merchant? The merchant may contact U.S. Bank for merchant/supplier set up by dialing, toll free, at 1-800-3341941. All merchant questions regarding U.S. Bank's card processing will be answered. Also, the merchant should be encouraged to evaluate various bank card-processing programs to determine which financial institution best meets their needs. 14. Who should be involved in the development of an agency's CAL-Card Program procedures? The development of the procedures should include cross-organizational staff. All stakeholders should have a part in the development of your agency's procedures including the Agency Program Coordinator, Approving Official(s), Cardholder(s), staff from Fiscal, Accounting, Purchasing, Receiving and all Budget Managers. 15. What happens if a Cardholder's statement shows an incorrect charge? The Cardholder is responsible for working with the merchant to attempt to resolve the incorrect charge. If the issue cannot be resolved by working with the merchant, the cardholder is required to formally dispute the charge. The Cardholder is responsible for completing and submitting the Cardholder Statement of Questioned Items (CSQI) form to U.S. Bank I.M.P.A.C. Government Services within 60 days from the Statement of Account date for any charges that are to be disputed. A copy of the dispute form (CSQI) is added to the Cardholder Statement packet and a copy is immediately faxed or mailed to U.S. Bank I.M.P.A.C. Government Services. The disputed amount is deducted from the Statement of Account total with the balance approved for payment. 16. Can the CAL-Card be used for emergency purchases? Yes, provided that your agency's procurement rules for emergency purchases are followed. In emergency situations, some agencies elect to temporarily raise card limits to accommodate emergency purchases. For state agencies, as in any instance of emergency, your agency's management approval is likely required. This should be further supported by a justification to maintain the public health, welfare or safety and/or the supplies or services needed in an emergency situation. 17. Can the CAL-Card be used for travel expenses? State Agencies: No. The CAL-Card cannot be used for travel per diem expenses, these include: air or ground transportation, lodging and meals. The State has contracts in place for air travel, car rentals and an American Express travel expense credit card for all other travel expense needs. Local Agencies: Local Agencies can use the CAL-Card for travel expenses, if it falls within the agencies CAL-Card program guidelines. Check with your Agency Program Coordinator or fiscal management for direction. 8/16/2004 • 0 18. What authority is required for State agencies to purchase with the CAL-Card? State agencies are required to have a Department of General Services, Procurement Division assigned purchasing authority prior to participating in the CAL-Card Program. Batched CAL-Card invoices submitted to the State Controller's Office for payment must reference the appropriate purchasing authority number(s) or the contract number(s) with subtotals for each amount listed on the batch. 19. What "tools" are available to agencies wishing to set up a CAL-Card Program? The National Account Managers for U.S. Bank I.M.P.A.C. Government Services provide the contract addendum in either hard copy, electronic copy or on disk. They can walk you through this process, fill in the blanks with your agency information and send you a copy for your editing, review and approval process. In addition, they will help you set up your Cardholders, Approving Officials, Billing Office Contact, Dispute Office Contact and Agency Program Coordinator documentation. On the CAL-Card website, www.pd.dgs.ca.gov/calcard, are required, standardized procedure guidebooks for the Cardholder, Approving Officials, Billing Office, and Program Coordinators. In addition, there are fill and print forms, workshop schedules, PowerPoint Presentations for the Program and Accounting Workshop as well as the agenda for User Group Meetings. The U.S. Bank training video is also available on line. The video provides an overview of the CAL-Card program as well as the responsibilities of the Program Coordinator, Cardholder, Approving Officials and the Billing Office. 20. Is there an on going support group and continuous improvement effort for CAL-Card programs? Yes. CAL-Card has a very active User Group. The group meets on a quarterly basis in northern and southern California to address current CAL-Card issues, conduct case studies and presents guest speakers on procurement card related subjects. These meetings are attended by state and local representatives and hosted by CAL-Card and U.S. Bank representatives. The meeting dates and agendas are posted on the CAL-Card website, www.pd.dgs.ca.gov/calcard. If you are not an Agency Program Coordinator or Billing Officer, but would like to be added to the User Group mailing list, call Judith Burnett of the CAL-Card Team at (916) 375-4578. 21. Can the CAL-Card be used for both commodities and services? Yes. The CAL-Card can be used to procure commodities and services, provided that the purchase is within the authorized CAL-Card dollar limit. The CAL-Card may also be used for purchases from California Multiple Award Schedules (CMAS) and Master Agreements. The purchase must be in accordance with the authorized dollar limits, state laws, rules and Purchasing Authority guidelines, all applicable policies and procedures, specific contract terms, or specific agency requirements. The tracking and reporting of services for 1099 reporting is the responsibility of the participating agency. Taxpayer identification information is available on a quarterly basis via U.S. Bank I.M.P.A.C. Government Services, R900 Merchant Activity report to assist in 1099 reporting. However, it is still the participating agency's responsibility to collect the state agency Std. 204, Payee Data Record form and for local agencies the Internal Revenue Service W-9 form. 8/16/2004 • • 22. Are state agencies required to collect Payee Data Records, Std. 204 form for CAL-Card transactions? Yes. State agencies are required to have a completed Payee Data Record, Std. 204, on file for each supplier. This data is used to prepare 1099 reporting information for the Franchise Tax Board. Agencies are also required to report to the Employment Development Department any spends to a service contractor equaling $600 or more. For more information regarding this requirement you may contact EDD at (916) 657-0529. 23. What should I do if a merchant does not charge sales tax? If a merchant is registered to do business in the State of California but did not charge sales tax, you may request a new invoice with sales tax included or your agency may declare the tax on the reporting document to the State Board of Equalization. If the merchant is located in another state and not registered to do business in the State of California the merchant should not collect sales tax; however, they may collect use tax as a courtesy to your agency. If the merchant charged a use tax, your agency does not need to report the amount to the Board of Equalization. If your agency was not charged the use tax, you do need to report the use tax amount to the Board of Equalization. The use tax rate should be the same as the sales tax rate at the location where the goods are used or consumed. 24. What should/ do if the sales tax rate charged is different than the rate at my location? If a merchant is registered in the State of California but ships from an out of state location they should charge the sales tax rate at the location where the goods are used or consumed. You may request a new invoice or your agency can report the correct rate to the Board of Equalization. If the merchant charges 7.25% and your rate is 8.25% your agency is responsible for reporting and paying at the 8.25% rate. Questions? - - Board of Equalization 1-800-400-7115 Mon.- Fri. 8:00- 5:00 25. Can more than one person charge on a single card? No. Cards are issued in the individual Cardholder's name with a signature required on the reverse side of the card. If an attempt to purchase is made by a person other than the Cardholder, the transaction can be declined and the card can be confiscated. 26. Can a Cardholder be restricted in the types of merchants? Yes. The CAL-Card Program contract has an established Merchant Category Code Table. Each card can have access to specific categories according to purchasing needs. The Agency Program Coordinator can contact U.S. Bank I.M.P.A.C. Government Services to alter Merchant Category Codes, real time, as needs change. 27. How can a Cardholder be prevented from over spending? Each card can be set up with a maximum single transaction, daily, monthly, quarterly and annual maximum spending limits, not to exceed the assigned state purchasing authority or $25,000. Higher limits are available upon approval of the Department of General Services (for state agencies) and U.S. Bank. In addition, limits can be placed on the number of transactions per day and per month for each cardholder. If established limits are exceeded, the transaction will automatically be declined. 8/16/2004 • 28. What if there is a need to increase a single transaction or monthly total expenditure amount? Your Agency Program Coordinator can contact U.S. Bank I.M.P.A.C. Government Services, Customer Services, 24 hours per day 7 days a week to change cardholder limits and controls. These changes can also be made electronically real time by the Agency Program Coordinator via the Customer Automation Reporting Environment (C.A.R.E.). 29. Can the Cardholder or an Approving Official change merchant category codes, transaction limits or monthly expenditure limit amounts? No. Only the Agency Program Coordinator or Sub Agency Program Coordinator can establish a new Cardholder, delete Cardholders or make any changes to established card limits and merchant category codes. 30. Can the CAL-Card be used for cash advances? No. The CAL-Card cannot be used for cash advances. Cash advances and other high risk or cash- related merchant category codes are excluded from the CAL-Card Program. These include: • Air Phone • Wire Transfers/Money Orders • Direct Marketing Insurance Services • Financial Institutions: Manual Cash Advance • Financial Institutions: Automatic Cash Advance • Non-Financial Institutions: Foreign Currency, Money Orders, Travelers Checks • Security Brokers/Dealers • Savings Bonds • Timeshares • Betting, Casino Gaming Chips, Off Track Betting • Political Organizations • Religious Organizations • Court Costs, Alimony, Child Support • Fines • Bail and Bond Payments • Tax Payments • Government Loan Payments If an attempt is made to purchase one of these high-risk cash-related items, the transaction will automatically decline. A management information report is generated each cycle providing information on each card-declined activity. 8/16/2004 0 • 31. How can an Approving Official ensure budget amounts are not exceeded? The Approving Officials should be included in the account setup process for your CAL-Card program and should be involved in establishing a Cardholder's expenditure limits to ensure budgetary control. Approving Officials are automatically provided a Monthly Summary Report (R090) and are required to review and approve each Cardholder Statement of Account. 32. What does a Cardholder do if they have a problem using the CAL-Card? For example, they attempt to use the card at their local merchant and the charge is declined. When a transaction is declined the Cardholder or the Agency Program Coordinator may contact U.S. Bank Customer Services to determine the reason why the transaction was declined. If the decline was due to dollar limits or MAT codes the Agency Program Coordinator may contact U.S. Bank and have those limits changed immediately, "real time" so that the transaction may be completed. The Agency Program Coordinator is the only person authorized to make changes to a Cardholder account. Common reasons for declined transactions include: -Card not activated -Card spend or transaction limits have been reached -Merchant code is blocked -Approving Official limit has been reached Cardholders, working through their Approving Official, should contact their Agency Program Coordinator, if they feel that their merchant activity type (MAT) codes or card limits should be adjusted. 33. If the master contract between the State of California and U.S. Bank I.M.P.A.C. Government Services is amended, must I amend my addendum to the contract also? No. Each addendum to the master contract contains the following language, which incorporates all past and future amendments: "Master Services Agreement DGS MSA 5-00-CC-02 and its amendments are incorporated by reference and made a part of this agreement." 34. Does the Master Service Agreement require participating agencies to complete a new "Addendum" each Fiscal Year? No. Agencies need only complete one Addendum document referencing their starting date through to the end of the Master Service Agreement term, December 22, 2006. If an agency wishes to end the agreement, they simply provide written notice, 30 days in advance of their desired end date. 8/16/2004 0 • 35. What are the real costs to an agency for participating in the CAL-Card program? The CAL-Card is a "no cost" program unless an unpaid invoice has accrued late penalties; late penalties are assessed on day 46 from the invoice date. The CAL-Card has two electronic solutions. One option, SuperTracs, which is a prior generation electronic solution, has a one-time connection fee of $500 to $700. SuperTracs provides a password protected electronic connection with U.S. Bank I.M.P.A.C. Government Services for transmitting billing documents and reporting information. The second option and the newest electronic solution for program maintenance and reporting is the Customer Automation Reporting Environment (C.A.R.E.). C.A.R.E. is a web based password protected program and is cost free. 36. Specify the number of working days, after the signing of a contract, within which the contractor will meet with your agency's staff to discuss the procurement card program. U.S. Bank stands ready to move at whatever pace the agency requires to establish the program once an addendum to the contract is signed and credit review has been completed by U.S. Bank I.M.P.A.C. Government Services. Credit review, for local government agencies, will take no more than 2 weeks. During this time program implementation meetings may take place. 37. Describe capabilities for designing and supplying a card identified as a local agency Procurement Card. The local agency's name can be embossed on each CAL-Card. The agency also has the option of adding their agency seal or logo as a graphic on the card at no cost. 38. Is it possible to place a digitized picture ID on each procurement card? No. This option is not available. 39. Is a report available that tracks purchases by city, state and zip code? Yes, the 998-transaction file. This flat file can be converted to a spreadsheet and data can then be sorted to the agency's needs. 40. What is the term of the current contract? The current contract term is: December 22, 2000, through December 22, 2006 (Two years fixed, plus four, one year options for extension) 41. Is there an option for a multiple billing cycle? Yes. Larger CAL-Card programs can now go to a multiple billing cycle to better disburse workflow in the monthly reconciliation to payments process. U.S. Bank's platform provides multiple billing cycle dates between the third (3`d) and the twenty-seventh (27th) of the month. 8/16/2004 • • 42. Can a charge be disputed? If an error in Cardholder billing occurs, or if a problem with merchandise or services billed cannot be resolved between the Cardholder and merchant, the Cardholder must notify U.S. Bank of the dispute by submitting a Cardholder Statement of Questioned Item (CSQI) form. In many cases, it is necessary for the Cardholder to submit supporting documentation, such as a copy of a postal receipt, credit voucher or transaction log. The CSQI must be sent to U.S. Bank within 60 days from the cycle date noted on the Cardholder Statement of Account on which the questioned charge first appeared. Timely attention to a disputed item is essential to ensure that VISA chargeback/dispute rights do not expire. A list of valid chargeback or dispute reasons is printed on the Cardholder Statement of Questioned Item form with the exception of the request for a duplicate receipt. A lost receipt is not a valid reason to withhold payment. The Cardholder Statement of Questioned Item form may also be used to request a copy of a specific sales draft (receipt). This can be useful when a Cardholder has lost his/her copy of the sales draft. This request however, is not considered a dispute and the transaction should be authorized for payment. Cardholder Statement of Questioned Item forms should be directed by mail or fax to: U.S. Bank I.M.P.A.C. Government Services P.O. Box 6346 Fargo, North Dakota 58125-6346 Fax: (701) 461-3466 Cardholders receive an F108, Disputed Transaction Status Report, and the Agency Program Coordinator, Billing Office Contact and the Dispute Office Contact receive a monthly F107, Disputed Transaction Status Report to acknowledge disputes and update pending disputes. When the dispute is resolved, the Cardholder must notify their designated Billing Office Contact, to either apply the credit or pay the amount disputed on the invoice where the payment was originally withheld. If a dispute resolution results in a credit, the Billing Office completes a Notice of Invoice Adjustment form, directing U.S. Bank to apply the credit to the originally disputed invoice. When a dispute is resolved as due and payable, the Cardholder is required to instruct the Billing Office to issue payment on the originally disputed cycle Statement of Account/invoice. When issuing payment, the Billing Office should include the original invoice number and dollar amount to be applied on the payment remittance advice to U. S. Bank. Cardholders may also initiate disputes using C.A.R.E., U.S. Bank's Web-based program management tool. Cardholders can review their statements throughout the month by logging onto C.A.R.E. If they notice a discrepancy, they can classify the transaction as a dispute. Disputes submitted through C.A.R.E. are automatically routed to U.S. Bank's dispute processing unit. 43. Can freight charges be disputed? The Cardholder must approve freight charges before a transaction is completed. When freight is to be charged, a written quote via over-the-counter, mail, fax or Internet screen print is required along with all other itemized charges. If the merchant refuses to provide a firm quote for freight stop the order. Freight charges are not disputable, unless you have a written quote provided by the merchant. 8/16/2004 10 • 44. What is C.A.R.E.? • C.A.R.E., Customer Automation Reporting Environment, is a U.S. Bank web-based solution for CAL- Card program maintenance and reporting. Cardholders, Approving Officials, Merchant Activity Type codes and dollar limits can be added, deleted or changed on a secure website. In addition, Cardholder statements may be downloaded the day after cycle date and the Approving Official Summary (R090) and the payment invoice (R060) can be sent, via an electronic file transfer, three (3) days after cycle date. It is a cost free program. Contact your U.S. Bank National Account Manager to participate in the C.A.R.E. program. 45. What are the Automation interface requirements for Customer Automation Reporting Environment (C.A.R.E.)? C.A.R.E. performance can be impacted by several factors that users can control. C.A.R.E. works best when the following hardware and software requirements are met: Pentium 120 MHz Processor Windows 95, 98, or NT 4.0 or higher 33.6K or higher modem or a LAN connection 32 MB RAM or higher Internet Explorer 4.01 with 128-bit encryption or Netscape Communicator 4.5 or higher For optimal performance within C.A.R.E., it is recommended that you load Microsoft Internet Explorer 4.01 or Netscape Communicator 4.5 or higher. Contact your information technology manager regarding how to access or upgrade these browsers. As with all other large Windows based applications, C.A.R.E. works most efficiently if all other computer applications are closed. Check with your LAN administrator(s) about how to increase your Internet access speed. 8/16/2004 11 0 State of Califorina CAL-Card Program 0 Maximum Organization Transaction Month Alhambra School District $ 400 $ 5,000 Garvey School Distrcit $ 1,500 $ 5,000 Brea, City of $ 1,500 $ 5,000 Burbank City of $ 5,000 $ 15,000 Cerritos, City of $ 5,000 $ 10,000 Commerce, City of $ 2,500 $ 10,000 Downey, City of $ 2,500 $ 30,000 Lawndale, City of $ 3,000 $ 5,000 Los Alamitos, City of $ 3,000 $ 3,000 Norwalk, Ctiy of $ 500 $ 7,500 klo:lexcellcal-card_survey.xls.xis 4119/2005 3:42 PM Page 1