Full Report (PDF) - Office of the Legislative Auditor

Discussion andRecommendationsCHAPTER 4Chapter 1 illustrates the wide variety of systems used by other states to registerand title motorvehic1es and to renew drivers'licenses. To provide accessto the public, states supplement the centml office by using statebranch offices, county or municipal offices, or private agents. Some states useonly one of these types, while other states, including Minnesota, use various combinations.In this chapter, we examine the implications of our findings on the designof Minnesota's system. We discuss the use of public and private agents, stateregulation, fee policy, and corporate sales, and we make recommendations.PUBLIC VS. PRIVATEProponents of an all-public system contend that the private deputy registrars makelarge profits and that replacing them with public deputy registrars would provideadditional revenue that could finance other programs or reduce taxes. Proponentsof an all-private system contend that private deputies are more efficient and providebetter service than public deputies.Neither publicnor privatedeputies have aclear advantagein customerservice.We found that many private deputy registrars, particularly large deputies, do wellfinancially, but this does not necessarily mean that replacing them with publicdeputies would save the taxpayers money. While we found that many public deputyregistrars made money for their city or county, there were many others, particularlysmall deputies, who lost money. Minnesota has 44 public deputy registrarsthat process less than 24,000 transactions per year. We found that 67 percent ofour sample deputies from this group would have lost money even if the 1993driver's license fee increase had been in effect. If a county or city cannot providedeputy registrar services at a reasonable cost, private deputies give the public anotheroption for providing those services. In 1992, Goodhue County closed itsdeputy registrar office in Red Wmg and appointed a private agent because it waslosing money and because many citizens complained about the service. Our resultssuggest that under the current system, replacing private deputies with publicdeputies would tend to cost public resources for small deputy registrars and tendto save public resources for large deputies.Customer service also needs to be considered when comparing public and privatedeputy registrars. Ovemll, we found that neither public nor private deputies havea clear advantage in customer service. Private deputies have slightly better hours,but public deputies have slightly lower error rates. Customer waiting times are