THE MISSISSIPPI LEGISLATURE

Introduction

Effective July 1, 1994, the Legislature authorized the state mileage reimbursement rate to be adjusted automatically in accordance with the federal rate. This allowed a rate increase to 25 cents per mile on that date. Six months later the federal authorities adjusted their rate upward to 30 cents per mile, automatically allowing the same rate to state employees.

The increase in the per mile reimbursement rate from $0.25 per mile to $0.30 per mile (effective January 1, 1995) caused increases in agencies' annual travel expenses. This unexpected growth also prompted legislative concerns over whether the current reimbursement rate is realistic, whether more stringent controls should be applied, and whether alternative travel means would be more economical.

In light of these reimbursement changes, the PEER Committee authorized this review of mileage reimbursement travel expenses for state employees and officers who use their private vehicles for travel.

Overview

For the period July 1, 1994, through June 30, 1995, the state reimbursed 10,479 state employees $12,337,539 for traveling 46,122,361 miles in their privately owned vehicles to conduct state business. The amount of annual costs involved in traveling in private vehicles to conduct state business makes up a substantial part (50.2 percent) of total Fiscal Year 1995 travel expenses of $24,559,268. The stated amounts include expenses for employees and officers of state agencies only, and exclude expenses for institutions of higher learning and community colleges.

Over the past ten years the Legislature has increased mileage reimbursement rates twice, with both of these increases occurring in Fiscal Year 1995. Although the mileage reimbursement rate has increased from $0.20 per mile to $0.30 per mile, the number of miles traveled has not increased significantly. However, mileage reimbursement expenses grew by 31.2 percent during Fiscal Year 1995, when the per mile reimbursement rate increased from 20 cents to 25 cents on July 1, 1994, and to 30 cents on January 1, 1995.

Because of this dramatic growth in expenditures, PEER identified 408 "high-mileage" drivers that incur about one-fourth of the annual miles traveled and examined the size of the annual investment in private vehicle travel in terms of both the direct costs (mileage reimbursements to employees and officers) and the indirect costs (compensation for travel time). Direct costs make up about seventy four percent of the total resources expended for private vehicle travel while indirect costs make up the remaining twenty-six percent.

So that decision-makers can better evaluate future travel needs, PEER examined the purposes of travel and management controls over travel expenses for the "high-mileage" group. Agencies attribute 87 percent of miles traveled by "high-mileage" drivers to duties involving providing client services, conducting audits, or conducting inspections.

Agency controls over use of travel resources were assessed based on a survey of the twenty-three agencies with "high-mileage" drivers. Agencies reported that they had in place procedures governing efficient assignment of state vehicles, employee commuting, and periodic review of mileage reimbursement expenses and travel needs.

As an alternative means of expending travel resources, PEER examined the cost-effectiveness of renting a vehicle from a private rental firm and paying fuel expenses instead of reimbursing private vehicle travel expenses at $.30 per mile. If a driver's daily mileage exceeds 155 miles, renting a vehicle and buying fuel is a more cost-effective means of providing transportation for the employee or officer than reimbursing mileage for using a private vehicle.

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