RD291 - Virginia Department of Motor Vehicles DMV Select Study - October 2011


Executive Summary:
The DMV Select Program is a partnership, authorized under § 46.2-205 of the Code of Virginia, between the Department of Motor Vehicles and local agents to offer limited service outlets to supplement full-service DMV Customer Service Centers (CSCs). There are currently 57 Select locations, the majority of which (30) are in partnership with Constitutional Officers, e.g. Commissioners of the Revenue or Treasurers. Of the remaining locations, 16 are run by private for-profit entities, 10 are operated by town governments, and 1 is in partnership with a Director of Finance. Select Agents offer a range of vehicle transactions, and are paid based on a percentage of annual gross revenue collections (*1). This partnership has existed in various forms since 1928.

During the 2011 session, a number of legislative proposals were forwarded that would have altered the financial and service-delivery arrangement between DMV and its Select partners. While none of those proposals were successful, Senate Transportation Committee Chairwoman Yvonne Miller directed DMV to conduct a study on the Select Program. To that end, DMV has gathered information regarding the Select Program, including the purpose of the DMV Select Program, the importance of this partnership, the evolution of program operations and funding, the role of Selects in DMV’s current service delivery model, and future funding options for program sustainability.

DMV took a number of steps to ensure that Select Agents, as stakeholders in this study, were involved in the process. Over the course of several months, Commissioner Rick Holcomb visited all Selects; additionally, a survey was distributed to all Select Agents to gather information about operations, and opinions on the future direction and funding of the program. Finally, a Technical Resource Panel, comprised of 17 Select Agents representing a broad cross-section of the program, was convened to discuss potential funding options that would place the program on sustainable financial footing, along with the results of the survey. All Select Agents were kept apprised of the progress of the study via email and staff-level conversations.

Between 1994 and 2010, the Select Program grew tremendously. The number of Selects increased by 148% from 23 to 57, the number of transactions increased by 146% (approximately 402,000 to 989,000), and annual gross revenue collected increased by 281% from $23.1M to $88M. However, the increase in the cost of the program far outpaced growth in these other categories, skyrocketing by 690% over that same period. The program now costs the agency over $4.3M in annual payments, representing a significant underfunded and unsustainable liability, at a time when the agency is facing a substantial budget shortfall due to the implementation of the 8 year drivers license.

DMV recognizes that the Select program is a valuable part of its customer service delivery model. However, in order to ensure the continuation of the Select program, a dedicated sustainable funding source must be found. Based on information gathered, along with feedback from our Select partners, DMV suggests the following legislative package:

• Add a $5 walk-in fee for vehicle registration renewals at Selects to match what is charged at a CSC, which would generate $1,800,000

• Increase the fee to remove stops placed by localities by $10 (from $20 to $30) to generate $3,200,000

• Charge a $10 fee for 1 month vehicle registration extension when a locality stop is in place, generating $300,000 (possibly more)

This package would create a sustainable funding source of at least $5.3M annually for the Select Program, which is sufficient to fund the 57 current Selects. The Commissioner would retain his authority to choose the number and location of Selects, as well as the option of partnering with either government or private entities, to ensure that any future expansion of the program is based on the business needs of the agency.

After discussion of this package at the meeting of the Technical Resource Panel, there was a general consensus in favor of the items listed above. After the meeting of the Panel, this package was distributed to all of the Select partners for input. While some Selects expressed concern with individual portions of the package, almost all recognized the need for a comprehensive and wide-ranging funding solution, and overall the response was positive.
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(*1) Under the current payment scheme, Selects are paid 4.5% for the first $500,000 in gross annual revenue collected, and 5% for gross annual revenues over $500,000. Each Select is paid individually, based on its own performance.