Audit Division

Audit Summary


Department of Administration

Buildings and Grounds Division

State Mail Services


Report LA02-01

Results in Brief


          The State has realized significant savings from consolidating and automating its mail operations in Carson City.  For the 1999-2000 biennium, Mail Services saved more than $1 million in postage costs by taking available discounts over the full first-class postage rate.  Most of these savings have occurred because of Mail Services’ efforts to consolidate and automate its operations, as recommended in our 1993 audit.  By acquiring mail processing equipment from the Department of Motor Vehicles and Public Safety during the consolidation, Mail Services has been able to automate its process to take advantage of postage discounts offered by the United States Postal Service (USPS).  Opportunities for additional savings are possible through further consolidation in northern Nevada and by seeking greater postage discounts.

Principal Findings


·            In fiscal year 2000, Mail Services saved about $623,000 by taking automation discounts on 8.7 million pieces of mail.  In contrast, Mail Services did not take any automation discounts on about 2.6 million pieces of mail it processed in 1992.  At that time, Mail Services contracted with a presort company to process its outgoing mail.  Although this company offered postage discounts, the State realized savings of only $24,000 in fiscal year 1992 after paying the presort company’s fees.  (page 6)


·            Our 1993 audit estimated the State could save $380,000 per biennium if Mail Services obtained a barcoder and the state’s mail operations in Carson City were consolidated.  This savings estimate has been exceeded because of 1) a significant increase in volume of state mail, 2) improvements in the percentage of mail that is machine readable, and 3) greater discounts offered by the USPS for entities that automate their mail operations.  (page 8)


·            Further consolidation opportunities exist with the University and Community College System of Nevada, which generates mail volume of about one million pieces annually in northern Nevada.  The University of Nevada, Reno, pays 30.5 cents to mail its first-class letters through a presort vendor, whereas Truckee Meadows and Western Nevada Community Colleges pay the full rate of 33 cents.  (page 10)


·            Other consolidation opportunities include entering into agreements with the Public Employees’ Retirement System of Nevada, state contractors, and non-profit entities that provide services to Nevada.  For instance, the Public Employees’ Benefits Program third-party administrator, UICI Administrators, mails hundreds of thousand of first-class letters annually at the full rate of 33 cents.  Because Mail Services did not process this mail, the opportunity to share about $35,000 in discounts was lost during fiscal year 2000.  (page 11)


·            Additional savings are possible if Mail Services takes steps to achieve greater discounts than currently taken.  During fiscal year 2000, only 20% of first-class letters were sorted by a 5-digit ZIP code and mailed at the 5-digit automation rate of 24.3 cents per piece.  Instead, most letters were sorted by the first three digits of the ZIP code and mailed at a higher rate of 26.1 cents.  The State could realize additional discounts of $48,000 annually if 50% of the first-class letters are sent at the lower 5-digit rate.  (page 12)



Department of Administration

Buildings and Grounds Division

State Mail Services


Agency Response

to Audit Recommendations




      Number                                                                                                                               Accepted     Rejected


            1               Determine the feasibility of processing mail for other state agencies,

                             universities, major state contractors, and non-profit organizations

                             providing services to the State.                                                                       ___X___   ______


            2               Analyze the costs and benefits of sorting a greater percentage of mail

                             to 5-digits.                                                                                                    ___X___   ______


                                 TOTALS                                                                                                   ___2___    ___0___