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Utah taxpayers could save between $365,000 and $585,000 a year if state government would centralize and consolidate its mailing services, according to an audit released Tuesday by Legislative Auditor Wayne Welsh.

The state mail operations can save approximately $190,000 annually by increasing the efficiency of the existing mail operations through centralization, a direct result of reduced labor costs. Centralization would also reduce postal rates, saving taxpayers $65,000 to $285,000 a year.Another $75,000 would be saved by more efficiently processing incoming mail.

The U.S. Postal Service currently offers discounted mail rates of up to 20 percent to users willing to print a bar code on the mail and to presort the mail by ZIP code so the post office doesn't have to.

State agencies currently presort their mail to get a portion of the discount, but only the Bureau of Central Mail Services, a division within the Department of Administrative Services, has the capacity to put bar codes on the mail.

Most state agencies use Central Mail Services, but two of the largest - the State Tax Commission and the Department of Human Services - have their own mailing departments. Both "have been unwilling to place their mail in Central Mail's custody because they are concerned with past Central Mail problems and they do not want to lose autonomy."

In addition, the University of Utah generates huge volumes of mail and is close enough to use Central Mail but has chosen not to "benefit from greater automation and centralization."

Perceptions of poor performance by Central Mail and high cost are frequently cited by employees throughout state government as a reason why the services are not used or are used reluctantly. The audit states those problems result in a "credibility problem that can damage efforts to centralize mail services."

In responding to the audit, the Tax Commission and Human Services both stated they are not categorically opposed to using Central Mail but have deep reservations about the quality and timeliness of service.

"The primary concerns are quality of service and cost," wrote Kerry Steadman, executive director of the Department of Human Services. "We must have a mail system that is flexible and able to meet issuance and delivery schedules and requirements; be responsive to customer needs on very short notice; and otherwise maintain a totally responsive system to customer demands, including timeliness and security."

Administrative Services Executive Director Raylene Ireland agreed with the findings of the audit but also told the legislative Audit Committee "there is no ques-tion if we do not have the Tax Commission and Human Services as full partners, consolidation will not succeed."

The audit also states that agencies can do a better job of reducing duplication of mailing and courier services. One example of duplication is equipment used to insert letters in envelopes, called inserters.

"Each of the three major (processing) centers has an insert and perceives the need for updated equipment. None has the inserting volume necessary to justify new equipment purchases on their own," the audit states.

The mail services audit is the second in 16 months, and the most recent audit found "little progress has been made in meeting prior recommendations."

To address the perception of poor administrative services, the audit recommends that a committee of mail users be formed; the committee would include an independent consultant, as well as representatives of the Tax Com-mis-sion and Human Services, which have balked at using Central Mail.

The audit also looked at whether the private sector could provide the mail services cheaper than the state. Auditors concluded the state services are competitive with private vendors and that savings to the state would be minimal.