At one point, Nevada was preparing to cancel nearly 3,000 credit cards issued to state workers for official expenses after some employees left Diners' Club with more than $71,000 in bad debts.
But now, all but $4,000 of that total has been paid off. And Betty Jo Hewlett in the state's purchasing office is keeping her eye on any state worker who fails to pay the tab after being reimbursed for official expenses.
"She runs a list every month of those debts over 60 days," said Greg Smith, who supervises the credit card program. "These days, that report generates probably 15 to 20 names out of 2,200 cards."
He said each one of those employees gets a letter reminding them the Diners' Club bill is due.
"By the time the next report comes out, usually 17 of those 20 names have dropped off the list," he said. "The two or three left, we send another letter to the employee and a letter to their department or division administrator. That almost every single time takes care of it."
When state workers don't pay off the card for 90 days, Smith said, it's automatically suspended until they do.
In addition, the rules on cash advances have been changed, limiting employees to no more than $200 per week in cash.
The card system was created about four years ago by State Treasurer Brian Krolicki as a way to replace the system of giving state employees a cash advance to pay travel and other such business costs.
The problem was that, since the cards are actually issued by Diners' Club to the individual, not the state, no system was set up to make sure those workers used their reimbursement checks to pay off the credit cards. A number of them didn't and ran up large, unpaid tabs, causing Diners' Club to threaten to withdraw from the program or begin charging the state up to $15 per card.
That's when the program was turned over to state purchasing and Smith, who promised Gov. Kenny Guinn he would fix the debt and keep a much closer eye on future expenses.
"Almost everyone who was on that original list has paid it off," he said.
Smith said those who still owe on their old Diners' Club debts, even former employees, are making payments.
When purchasing took over the program, all Diners' Club was willing to give the state was a one-year probationary renewal of the contract. Smith said. The program is now so well run that Diners' Club suggested the three-year contract he is now preparing for the Board of Examiners.
And as long as the amount of delinquent payments stays low, the state will continue to get the cards without an annual fee.
"The whole thing is rapidly becoming a nonissue," he said.
Smith said he expects no more problems with the program, especially since purchasing is continually removing unused or seldom used cards from circulation.
"We're down from 3,000 to about 2,200 cards and a number of those cards have not been used in the last 12 months," he said. "Every one of those cards is a potential disaster for me so we're sending those people letters suggesting they terminate the account if they're not being used."
"Some other states that are bigger than Nevada have less than half the number of cards in their program," he said. "We've got to get to that number."