Privatization considered for state’s mail system

CARSON CITY — Nevada’s longtime state mail delivery service could become by next year a private operation, eliminating 21 government jobs and saving up to $400,000 a year.

State Budget Director Andrew Clinger said an analysis is under way to firm up the potential savings of privatizing the state mail system.

If the numbers pencil out with the vendor chosen by the state for detailed talks on a contract, the deal will become part of Gov. Jim Gibbons’ budget for consideration by the 2009 Legislature, Clinger said.

Clinger, who declined to identify the Reno-based vendor by name, said the plan would be to phase in the privatization effort starting in July 2009.

Every effort would be made to find other positions for the state workers, he said. The employees are aware that privatization is being considered.

“The preliminary numbers that I was given showed potentially it could save us $400,000 a year,” Clinger said. “It won’t balance the budget, but over 10 years, it will save some money.”

The state mail system processes 15 million pieces of mail a year and an additional 367,000 deliveries between different state agencies. The agency contracts with a private company to make the interdepartmental deliveries between Northern and Southern Nevada on an overnight basis five days a week.

The state agency has 15 workers in Carson City and six in Las Vegas. Two positions are vacant.

The state released a request for proposals and received a handful of replies, Clinger said.

The early estimate of potential savings was generated by a review of the state mail room operations by the Division of Internal Audits.

The agency’s total fiscal-year 2006-07 budget was about $7 million and is supported from charges to agency users, according to the audit, released in May 2007.

The audit said the savings could be achieved in the processing of “dirty” mail, defined as individual letters and packages created by state workers and sent to individuals and businesses.

That is different from “clean mail,” which are mass mailings such as license renewal notices.

“Dirty mail is a manual process that utilizes three times the number of staff as clean mail,” the audit said.

The analysis suggested that a private operator could process such mail at 35 cents a piece versus 43 cents by the state operation.

But the audit found that the state could process more cheaply the clean mail and the interdepartmental mail, and the audit called for further study of the privatization idea.

That is why the state went forward with a request for proposals, Clinger said, to get more detailed information on potential benefits from privatization.

Clinger said the state must consider other issues besides cost, including security and timeliness of delivery.

Agencies such as the Department of Motor Vehicles send notices such as insurance verifications that must be delivered on time, he said.