P-Card Transaction Details

Background on the school district purchase cards
A pair of TV news stories has focused on school district purchases made using credit cards assigned to schools and district office departments of the Beaufort County School District.  The district has rigorous internal controls for monitoring P-Card charges, and independent audits verify that each year.  The district posts all P-Card transactions online and archives documentation for all charges.  The information below provides details about the school district’s P-card program, including its advantages and built-in safeguards. 

Superintendent Jeff Moss has recorded a video in which he provides information about specific charges questioned by a community member.

Here is a list of transactionsDr. Moss discusses in his video.

General Purchase Card Information
Why P-cards?
Like many families and businesses in today’s world, the Beaufort County School District makes most of its purchases of goods and services electronically – everything from classroom supplies to school furniture to monthly utility bills.  That procurement process relies on “purchase cards” provided by Bank of America.

Nearly all South Carolina school districts now have “P-card” purchasing programs because they are more efficient and transparent than the old system of completing a requisition form, completing a purchase order form, receiving an invoice from the vendor and preparing a check for mailing.  For small purchases, the cost of the old way of doing business (requisition, purchase order, invoice and paper check) was sometimes greater than the value of the item purchased.  In addition, many vendors no longer accept purchase orders or checks.  Electronic transactions are now the way of the world.

According to the Government Finance Officers Association, P-cards provide an “efficient, cost-effective method of purchasing and paying for small-dollar as well as high-volume purchases.”  GFOA says the benefits of P-cards can include:

  • Simplified purchasing and payment process.
  • Reduced paperwork.
  • Lower transaction processing costs per purchase.  (The association representing the credit card industry estimates that typical savings resulting from P-Card usage are $63 per transaction.)
  • Expedited delivery of goods.
  • Better pricing on goods.
  • Expanded list of merchants from whom purchases can be made.
  • Increased management information on purchasing histories.
  • Decentralized procurement function.
  • Ability to set and control purchasing dollar limits.
  • Ability to control purchases to specific merchant categories and vendors.
  • Receipt of rebates from the bank based upon dollar volume of total purchases.

Cash rebates are an important benefit for the Beaufort County School District, which received more than $300,000 in P-card cash rebates from Bank of America during the 2016-17 fiscal year.  Rebate funds become part of the district’s operating budget.  Because cash rebates are so profitable for the district, efforts are made to use P-Cards to purchase as many goods and services as possible.

Monitoring purchases
While ease of use and decentralized purchasing are important assets, they can also become liabilities unless P-card use is closely monitored and controlled.  The Beaufort County School District has a rigorous system of controls.

Internal controls for P-cards are part of the school district’s annual independent audit that is required by the state.  The state also requires a separate procurement audit every three years that includes a focus on P-Card controls, but the Beaufort County School District, on its own initiative, has commissioned such an audit in each of the last four years.  In both the district’s independent annual audits and procurement audits, there has never been a significant problem found with our internal controls concerning P-card purchases.  In addition, no school district employee has ever been linked to the illegal use of a district P-Card.

Who can use P-cards?
The school district maintains a total of 52 Bank of America P-Cards.  Each school has one (with the school’s name embossed on the card), and each district office department has one.  The Office of Finance also has an “emergency card” that can be used (with the proper approval) to make on-the-spot purchases of urgently needed goods or services.  That could be useful, for example, in a case where a district employee was on an out-of-town trip and needed to make a charge but couldn’t because district cards cannot be taken overnight or out of town.  There are four additional “emergency cards” that are inactive and stored at the district office.

All purchases must be approved in advance by the appropriate supervisor.  For a school staffer, that would be the school’s principal.  For a district office employee, that would be the director of the department named on the P-card.

What about the possibility of fraud?
District P-cards are subject to fraudulent use just as family credit cards are, and 47 times during the 2016-17 fiscal year, individuals who were not district employees illegally made purchases using district P-card numbers.  Each of those 47 cases was monitored and investigated, and in each case, Bank of America reimbursed the full cost of the illegal charge.  The credit cards involved were replaced by Bank of America.

While 47 may seem like a large number, remember that the Beaufort County School District supports 22,000 students and about 3,000 staff.  Although there are thousands of P-Card purchases each year, fraud is rare.  Bank of America reported that during FY2016-17, only 0.0167 percent of Beaufort County School District P-card transactions were fraudulent.

There have been isolated cases when P-card purchases, although not illegal, were made in ways that violated district procurement procedures.  In those cases, the individuals involved were appropriately reprimanded and reminded about the correct procedures to follow.

Staying accountable to taxpayers
The school district posts on its website a monthly “Transparency Report” that lists a transaction number, transaction date, vendor name and dollar amount for each P-card purchase over $100 (as required by state law).  The monthly transparency report is currently being expanded to include:

A listing of all purchases, including those under $100.

Funding sources for all purchases (federal funds, state funds, grant funds, etc.).  Many P-card transactions by schools are paid with student activity funds, which are dollars generated by individual schools through fund-raising drives, booster clubs, PTOs, field trip participation fees and gate receipts from athletics events.

Wrapping up
Like businesses and families, school districts have modernized the ways in which they purchase the goods and services they need.  Electronic purchasing has become a fact of life in America, and as described above, there are numerous benefits to school districts and ultimately to students and taxpayers.  The process is efficient, accountable, transparent and profitable because of significant cash rebates that are used to supplement annual operating budgets.

The Beaufort County School District has a rigorous set of internal P-cards controls that are vetted each year by independent audits.  They are designed to ensure that taxpayers get the financial and operational benefits of P-card purchasing while simultaneously ensuring that purchases are closely monitored and employees are held accountable.