Finance committee backs revisions to City of Franklin purchasing-card policy

At a Finance Committee meeting, members voted to recommend revisions to the City of Franklin purchasing-card (P-card) policy intended to tighten controls, reduce sales-tax losses and fraud risk, and allow limited flexibility for certain online purchases.

The proposed changes, put forward by Danielle (Director of Finance and Treasurer), would increase controls on card use, require better documentation for tax-exempt purchases, create a single control point for onboarding new vendors, and add an escalation path for approvals when the mayor cannot be reached.

Committee members said the issue matters because small-dollar transactions done by card can add up to meaningful budget leakage through sales tax or weak controls, while the current check system remains costly. Danielle told the committee the city's P-card program "has been in place since June of 2015" and that the program currently yields a 1% annual rebate from U.S. Bank.

Key details and committee discussion

- Current limits and use: The policy sets routine card limits at $3,500 per cardholder, with a policy maximum of $10,000; the police department has one card set at $5,000. Danielle noted that, looking at 2024 and 2025 transaction data, typical users spent "less than $2,000 per employee that really uses the card." The committee heard there are 21 active cardholders, mainly department heads.

- Sales tax and incidental purchases: Finance reported roughly $1,200 in sales-tax charges for 2024 and about $1,200 so far through May 2025 on card purchases. Committee members said some purchases occur at retailers that do not accept the city's tax-exempt certificate at point of sale (for example, some big-box and online sellers or out-of-state purchases), producing avoidable tax charges. Danielle said postage and check-issuing costs are increasing and that the city has already maxed its postage budget for the year.

- Controls and fraud response: The committee recommended adding a requirement that cardholders immediately contact U.S. Bank if they suspect fraudulent activity and then notify the Director of Finance in writing. Danielle asked that returns or credits be required to be posted back to the cardholder's account rather than issued as cash, and that receipts and account coding be provided monthly to accounts payable.

- Vendor onboarding and 1099/W-9 controls: To reduce risk from "miscellaneous" vendor entries, the committee backed a process where only the accounts-payable clerk may add new vendors and must collect a W-9 before a vendor is activated in the system.

- Enforcement and approvals: The draft changes would set clear documentation expectations, and the committee debated a specific enforcement rule. Members supported an approach that requires full compliance with receipt/documentation rules and provides that after three occurrences of missing required documentation a purchasing card would be revoked for six months. The group also agreed that where the mayor is unavailable, the mayor's written approval could be supplied by the director of administration or the director of finance/treasurer ("or" formulation), to avoid operational delays for small emergency purchases.

- ACH and PO controls: Several committee members urged faster adoption of an ACH policy and broader use of purchase orders for planned or repetitive purchases so the P-card is used primarily for incidental, emergency, or vendor-limited transactions.

Motion and next steps

The committee made a motion to recommend the discussed revisions to the Common Council; the motion was seconded and "motion carries." Danielle said she will incorporate the committee's edits into an updated resolution and forward it to the city attorney and council for consideration.

Ending

The committee did not adopt the policy changes as ordinance at this meeting; it recommended the revisions to the Common Council and directed staff to prepare an updated resolution for council review. Finance will circulate the updated resolution after edits are incorporated.