Managing Travel Expenditures
Executive Summary
In FY 1999, state agencies and Institutions of Higher Learning expended $67 million on travel-related expenditures. While these expenditures represent less than one percent of the state’s budget, state travel costs have increased significantly over the past six years--by sixty-six percent in actual dollars and by forty-seven percent when adjusted for inflation.
State statutes authorize the Department of Finance and Administration (DFA) to manage the state’s fiscal affairs, including effectuating economies in the payment of travel and other expenditures. PEER’s review of the DFA Travel Office found that while current controls over travel expenses are adequate to help ensure legitimate reimbursements, DFA and state agencies could better manage state travel costs through more active travel management. For example, DFA does not routinely collect and analyze travel cost data to identify opportunities for cost reduction. A comprehensive state travel management system would also include legally requiring travel agents to quote the lowest restricted fares such as can be found on the Internet, strengthening and expansion of policies to require state agencies to identify and use the lowest cost travel options, and implementing a statewide program for managing use of state-owned vehicles.
Recommendations
Evaluating the Need for Travel
Collecting Comprehensive Travel-Related Data
DFA should make appropriate changes in the state accounting system to allow identification of the total costs of operating state-owned passenger vehicles.
The Office of the State Auditor should maintain a historical database of the inventory values of passenger and non-passenger vehicles so that trends in growth and purchases can be determined.
DFA, the Board of Trustees of Institutions of Higher Learning, and the State Auditor should develop and implement a travel management information system that captures comprehensive travel-related data in a uniform format.
As required in MISS. CODE ANN. Section 25-1-81, state agencies should include vehicle management data in their annual reports.
DFA contracts should require vendors (e.g., travel agents, fuel management contractors) to maintain management data in electronic format on a historical basis, readily available to DFA and other oversight agencies.
Need for Analysis and Audit of Travel Data
DFA should analyze travel data and vendor information to identify emerging trends in travel costs and develop needed cost controls on a more timely basis.
DFA should explore the feasibility of utilizing available real-time audit programs to determine whether travel agents quote the lowest cost restricted fare to employees.
DFA and state agencies should require personnel using the Fuel Man credit card system to input accurate mileage data into the system when they refuel, so that the data can be used to analyze vehicle usage and to determine vehicle maintenance schedules.
Determining the Most Efficient Mode of Transportation
Need for Control over Airline Fares
DFA should require its reservation agents to always quote the lowest restricted fare for every employee itinerary, in addition to quoting the state’s contract airline fare. DFA should strengthen the language in its contract for travel agent services to state that, for heavily traveled locations, airline agents must quote the lowest air fares among the various airports at those locations.
State agencies should develop internal policies outlining when it will be acceptable to use higher-priced airline fares in place of the restricted non-refundable fares. For instance, an agency might establish a policy to use a non-restricted higher priced fare when:
DFA should require that everyone in state government use e-tickets (paperless tickets) and should re-bid the travel agent contract on this basis.
Vehicle Management
The Legislature should amend MISS. CODE ANN. Section 25-1-85 (1972) to authorize DFA to establish a statewide motor vehicle management system. The law should authorize DFA to:
determine the most effective and efficient method of developing a motor pool or motor pools;
develop a needs-based system for determining the number of vehicles that each agency should own, based upon analysis of vehicle usage patterns and break-even analysis. The "breakeven mileage for purchasing" represents the point at which it is more economical for the employee to drive a state vehicle rather than be reimbursed the state mileage reimbursement rate (32.5 cents a mile as of July 2000); and,
establish policies for use of vehicles by agencies and for maintenance and disposal of vehicles.
In implementing the system of state motor pool(s), DFA should assess the costs and benefits of leasing vehicles to state agencies and also the costs and benefits of contracting with an automobile leasing agency to supply the state’s automobile needs.
Travel Agent Services
DFA should consider the feasibility of implementing an in-house travel agency for state agencies and institutions of higher learning versus the current method of paying transaction or management fees to an outside travel agent or agent(s). Having an in-house travel agency could include:
(a) obtaining a travel agency license and necessary equipment and hiring a full staff of state employees who have the expertise for travel agency accounting and reservation services; or,
(b) entering a management contract with a travel agency to provide reservation agents, equipment, and accounting services.
DFA should choose the option that is most cost-beneficial to the state. If DFA determines that an in-house travel agency is the best option, DFA should:
(a) propose necessary amendments to CODE sections; and,
(b) oversee the daily booking transactions of the reservation agents, including quality control reviews.
If DFA continues to contract for travel agency services, DFA should:
(a) develop a request for proposals for travel agent services with two primary options: bidding on transaction fees on the basis of being a sole travel agent or of being one of multiple travel agencies, and,
(b) maintain a system of oversight of travel agency compliance with state policies, including reviewing whether reservation agents have quoted lowest-price fares for all flights.
The Legislature should amend MISS. CODE ANN. Section 25-3-41 (1972), which deals with the ability of the state to contract with a state travel agency or agencies, to state that the requirement to have the state travel agency or agencies make air travel reservations applies only if the state has an existing travel agent contract in place.
Cost Savings
DFA should study the feasibility of implementing a system of per diem reimbursement for overnight travel (one rate to include lodging, meals, and incidentals). In absence of a system of per diem reimbursement, DFA should actively negotiate lower hotel rates by requiring competition among bidders in those areas of the state where there are sufficient numbers of hotels available for a competitive system, such as Jackson and the Gulf Coast. DFA should then require that agencies use either the contract hotels, hotels with rates lower than the contract rates, or conference hotels when applicable.
DFA should discuss with other states the feasibility of entering group contracts with travel agents and airlines to take advantage of economies of scale in pricing of services.