2024-016. Working Capital Reserves in Excess of Federal Guidelines
State Agency: Department of Governmental Operations
Federal Agency: Various
Division of Purchasing and General Services
Cooperative Contract Management Fund – State Purchasing continues to decrease the administrative fees on state co...
2024-016. Working Capital Reserves in Excess of Federal Guidelines
State Agency: Department of Governmental Operations
Federal Agency: Various
Division of Purchasing and General Services
Cooperative Contract Management Fund – State Purchasing continues to decrease the administrative fees on state cooperative contracts as each contract expires and is rebid. This is a slow process since State Purchasing has nearly 1,300 cooperative contracts with an average 5-year term. With only about 20% of the contracts expiring each year, this is an ongoing and slow process. Although State Purchasing is allowed under law to collect up to a 1.0% administrative fee on each cooperative contract, currently the average administrative fee is 0.35%. The excess reserves are also being reallocated to other programs. These allocations are intended to both reduce the excess reserve balance and to create efficiencies within the division to better serve state agencies.
Federal Surplus Property Fund – The excess reserves are to be used in relocating Surplus to the Taylorsville State Office Building in March 2025.
Contact Person: Windy Aphayrath (waphayrath@utah.gov, 801-957-7138),
Director, Division of Purchasing and General Services
Anticipated Correction Date: June 30, 2025
Division of Finance
Purchasing Cards Fund (P-Card) – The system implementation was completed at the end of calendar year 2024. State Finance is working to analyze the annual costs of the system, develop a cost allocation strategy between the travel and P-Card programs, and adjust travel rates to cover the travel program's ongoing costs. The P-Card program will then distribute any remaining P-Card rebates to state agencies respective to their spending, if applicable. This effort will eliminate any excess federal reserves in the P-Card fund by the end of fiscal year 2025.
Contact Person: Allyson Branch (abranch@utah.gov, 801-597-3523),
Assistant Director, Division of Finance
Anticipated Correction Date: June 30, 2025
Division of Risk Management
Workers’ Compensation Fund – The Division of Risk Management has received approval from the Utah Legislature to reduce rates for workers’ compensation in fiscal year 2026. This will take effect on July 1, 2025. The division will also request at the next Legislative session to reallocate excess reserves from the Workers’ Compensation Fund to the Property Fund. This will be completed by July 1, 2026.
Contact Person: Rachel Terry (rachelgterry@utah.gov, 801-702-7445),
Director, Division of Risk Management,
Anticipated Correction Date: July 1, 2026
Division of Technology Services
Communication Services – The Division has worked to reduce the excess reserves and has been successful in decreasing the balance compared to the previous year. In addition, the current year rate was calculated to continue decreasing the excess reserve balance. Next year rates have also been adjusted to further reduce the excess reserve balance. We are working to balance reductions in retained earnings while maintaining services until the products reach the end of their lifecycle.
Network Services – The Division is estimating that excess reserves will decrease as a result of anticipated increases in expenses over fiscal years 2025, 2026, and 2027 to support the migration to a cloud-based platform. We will continue to monitor rates and expenses as the technology environment continually changes.
Printing Services – The Division has set the current year rate to recover costs in order to reduce the excess reserves. The threshold for this program has a small limit for a product with a very high volume. Print demand this year has been low, and we are forecasting this to be fully corrected by the end of fiscal year 2025.
Contact Person: Jake Hennessy (jakehennessy@utah.gov, 385-271-2301),
Executive Finance Director, Department of Government Operations
Anticipated Correction Date: June 30, 2025
Division of Human Resource Management
Human Resources Field Services – A cost allocation plan was developed to better align expenses with the specific service area supported. Field Service rates were lowered for fiscal year 2025. We anticipate continuing to fine tune rates to bring the Field Service reserve balance down.
Contact Person: John Barrand (jbarrand@utah.gov, 801-957-9350),
Director, Division of Human Resource Management
Anticipated Correction Date: June 30, 2025