RD148 - Department of Motor Vehicles Report on Customer Service, December 1, 2008


Executive Summary:
Senate Bill 116 was passed by the 2008 Session of the General Assembly with the intent to further promote the operational efficiency at the Department of Motor Vehicles (DMV). The bill included two main provisions: 1) an increase in the validity period of Virginia driver's licenses, and 2) an incentive based fee structure for vehicle registration renewals.

DMV implemented the requirement for an eight year validity period for driver's license renewals and original driver's licenses in July 2008. Not all Virginians will qualify for the extended license period; however, the new validity period will result in fewer customer visits over the long term since customers won't be required to return to DMV to renew as often. The full benefits will not be realized for 5 years, at which time individuals who otherwise would normally be scheduled for a renewal will not be required for three more years.

The extension of the validity period permits the Department to collect the fee for eight years upfront even though the annual license fee did not increase. This revenue windfall allows the Department to maintain service levels despite declines in overall transportation revenues for a period of time. After five years, the Department will have to reduce its operating costs substantially or identify other revenue sources in order to offset the decline in driver-related transactions and revenue until renewals resume in earnest after year eight. The decline in revenues will occur starting in FY 2014 and will result in substantially fewer financial resources for DMV to support day to day operations and without action will result in a significant shortfall.

To generate cost savings and reduce customer traffic in DMV's service centers, the law established an incentive based fee structure was established for vehicle registration renewals. Vehicle registration renewals are among the simplest transactions performed at DMV and are available to citizens through a wide variety of options. The bill included a combination of discounts and surcharges to drive transactions to lower cost delivery channels. For customers who choose to renew their vehicle registration in person, a $5 service fee is assessed. For customers who choose to renew by mail, DMV Select, online dealers, Internet, or automated telephone, no service fee is assessed. For customers who renew by internet, a $1 discount is also applied. Furthermore, customers who renew for two years receive an additional $2 discount. DMV has modified its renewal notice to inform customers of the changes and has undertaken a public information effort with notices in newspapers and on the radio. Additionally, the department has placed signage in all its service centers to ensure customers know these requirements prior to completing their transaction.

From July 1, 2008 to September 30, 2008, the Department has seen a 30 percent reduction in customer service center vehicle registration renewals when compared to the same time period in 2007. Most noteworthy is the 50 percent increase in Internet transactions. For the first time, Internet volumes now exceed those of the customer service centers. Furthermore, in the first quarter, the Department has seen a 17.8 percent increase in overall multi-year renewals and a 61.8 percent increase in multi-year renewals over the Internet. The Department is working to expand multi-year renewal options which will result in more options for customers and reduced transaction load for DMV. For the Department, this is important because multi-year renewals yield savings on subsequent postage and processing costs that will contribute to the Department's effort to reduce operational costs. Even with these positive results, there have been complaints from customers. DMV is tracking the complaints and responding to customers who offer formal complaints. Given the number of customers served at DMV, the number of complaints is not significant and should decline as customers become accustomed to the new law.

Overall the reduction in customer traffic and reduced cost will allow the department to allocate staff resources to meet the needs of customers who require face-to-face assistance for more complex issues. The Department will continue to monitor the progress of this program. This will be increasingly important considering the impact on customer service centers from the implementation of the Federal Real ID Act of 2005.