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MSATA 2006

MSATA 2006. Budgeting Toward the Collection Process Wayne Cooper Iowa Department of Revenue. Outline . Why we asked for new budget legislation. What it says. What is has meant for collections. What it may mean for rest of department. Survey Results. Life in the Midwest!.

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MSATA 2006

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  1. MSATA 2006 Budgeting Toward the Collection Process Wayne Cooper Iowa Department of Revenue

  2. Outline • Why we asked for new budget legislation. • What it says. • What is has meant for collections. • What it may mean for rest of department. • Survey Results

  3. Life in the Midwest! “ I live in a semi-rural area. We recently had a new neighbor call the local township administrative office to request the removal of the Deer Crossing sign on our road. The reason: “Too many deer are being hit by cars out here! I don’t think this is a good place for them to be crossing anymore.” - From Kingman, KS

  4. Iowa’s Central Collection Unit (CCU) • Established in 1996 to allow Revenue to collect for other state agencies. • Includes our partner collection agency (OSI) and Revenue staff that supports and supplements their work.

  5. Current Collection Partners • Iowa Department of Revenue • Iowa College Loan • Child Support Recovery • Iowa Judicial System ( all 99 counties ) • Iowa Department of Natural Resources

  6. Budget • Currently around $3.4 million per year. • 1/3 salaries for state employees • 1/3 pay for collection partner (OSI) • 1/3 postage, communications, tech support

  7. We needed software upgrade • AMS-CGI CACS software (1993) • Want to upgrade to “web enabled” version • Want to add their “STRATA” package • Significant cost with no budget to pay • One of our two CACS programmers retiring in one year

  8. What if …………… • We request expanding the Central Collection Unit to include our Accounts Receivable Section and our Department Stage Two Revenue Agents. • We ask to be self-funded outside the department budget. • We ask to purchase the software upgrade out of collections instead of asking for budget to pay for the upgrade. • And in exchange we promise increased collections of $2 million on top of the cost in this fiscal year.

  9. What do you do when they say OK!

  10. Centralized Debt Collection Unit 421.17(a) To establish, administer, and make available a centralized debt collection capability and procedure for the use by any state agency or local government entity including, but not limited to, the department of revenue, along with other boards, commissions, departments, and any other entity reported in the Iowa comprehensive annual financial report, to collect delinquent accounts, charges, fees, loans, taxes, or other indebtedness owed to or being collected by the state.

  11. The department’s collection facilities shall only be available for use by other state agencies or local government entities for their discretionary use when resources are available to the director and subject to the director’s determination that use of the procedure is feasible. The director shall prescribe the appropriate form and manner in which this information is to be submitted to the office of the department. The obligations or indebtedness must be delinquent and not subject to litigation, claim, appeal, or review pursuant to the appropriate remedies of each state agency or local government entity.

  12. Our Legislation 421.17(27)(j) There isappropriated from the amount of any debt actually collectedpursuant to this subsection an amount,not to exceed the amount collected, which is sufficient to subsection. The director shall report annually to the legislative fiscal committee and the legislative services agency on any additional positions added and the costs incurred during the previous fiscal year pursuant to this subsection.

  13. New Collection Enterprise • Accounts Receivable • First Stage Collection Partner (OSI) • Second Stage State Revenue Agents • OCA Partners (UCB and VanRu)

  14. Additional Collections Promised • Increase in budget: $5 million • Additional promised: $2 million • Software Upgrade: $unknown

  15. Increasing Collections • Purchasing CGI-AMS Strata software • More agent hours for collections • Better collection tools • Better sales tax bonding process • Expedited non-filer program • More accurate data on collections

  16. Positives • No worry of budget cuts • Ability to purchase expensive software without additional funding • Manage operations with fewer restrictions • Can hire and purchase without budget restraints

  17. Challenges • Accountable directly to the Governor and to the legislature annually. • Increased pressure to meet collection goals promised. • Rest of the department at greater risk should budget cuts occur in the future.

  18. Would this work in your state?

  19. There are worse jobs in life!

  20. SURVEY RESULTS

  21. Life in the Midwest My daughter went to a local Taco Bell and ordered a taco. She asked the person behind the counter for “minimal lettuce.” He said he was sorry, but they only had iceberg. - Yep… From Kansas City

  22. Key Collection Measures • IA – Net recovery rate – major taxes • IA - % of billed accounts resolved • IA - % of recoveries per non tax $ placed • IA - % expenses to total collections • KS – AR recovery / Discovery results / Legal action results

  23. Measurements - cont • MI – Assessments issued • MI – Value of Assessments • MI – Payments received • MI – 3rd Party garnishments received • MI – Outstanding balance • MI – Outstanding number of accounts

  24. Measurements – Cont • MO – Dollars Collected • MO - # of Accounts Resolved • MO – Length of time to resolve • MO - # of new Delinquencies • MN – Currently revamping

  25. Measurements – Cont. • NE - # and Amount of collections • NE - # and type of enforcement actions • OK – Collections by tax type by source • OK – Backlog reports • OK – Cost per collection ratio

  26. Measurements - Cont • WI – Collections • WI – Account adjustments • WI - # of accounts assigned and # closed • WI - # of Agreements and # compromises • WI – Amount written off • WI – Stats on timely and appropriate follow-up on accounts.

  27. Staff • IN – Tax Analyst $25,000 (avg) • IA – Revenue Agent 1,2 or 3 $27,102 - $57,582 • KS – Customer Reps $34,000 (avg) • MI – Acct Examiner $30,971 - $45,282 • MO – Taxpayer Service Rep $23,688 - $36,480 • MN – Rev Coll Officers 1-5 $30,000 - $60,0000 • NE – Revenue Agent $29,377 - $49,165 • OK – Rev Compliance Off $26,400 - $32,400 • WI – Revenue Agent 1-4 $15.729 - $31.824

  28. Employee Comparison

  29. I made my goal!

  30. Collection Inventory

  31. Collections

  32. Collections vs Inventory

  33. Collections per Dept FTE

  34. Life in the Midwest “When my husband and I arrived at an automobile dealership to pick up our car, we were told the keys had been locked in it. We went to the service department and found a mechanic working feverishly to unlock the drivers side door. As I watched from the passenger side, I instinctively tried the door handle and discovered that it was unlocked. “Hey, I announced to the technician, “its open!” His reply, “I know – I already got that side!”

  35. Current Challenges • IA – Increasing collections with ROI • KS – Motivation with no raises / rewards • MI – Keeping big org coordinated • MN – Revamping entire org structure • NE – Keeping on top of coll inventory • OK – Accuracy of data and account flow • WI - Pace of change – New systems

  36. Admin wage levy Admin bank levy Offset state refunds Offset fed refunds Offset vendor pmts Block vehicle plates Block drivers license Block prof licenses 9 yes 0 no 7 yes 2 no 9 yes 0 no 8 yes 1 no 8 yes 1 in process 1 yes 8 no 1 yes 8 no 8 yes* 1 no *wide diff in specifics Collection Tools

  37. Charge collection fee File liens on all acct Assess RP’s Web self pay plans Acct info on Web Offer in Compromise Outside Agencies List w/ Credit Bureaus Use auto dialer 1 yes 8 no 1 yes 8 no 5 yes 4 no 2 yes 7 no 1 yes 8 no 7 yes 2 no 8 yes 1 no 0 yes 9 no 4 yes 5 no More Comparisons

  38. Most effective tools • IN – Check by phone • IA – Vehicle Plate Blocks • MI – AWL’s and Liens • MO – Liens, License Rev, Prof License blocks, offsets • NE – Levies, Assessments, Liens, EFT • OK – Minimum billing option for income • WI – Levy’s, Installment plans, offsets

  39. Life in the Midwest “I was at the airport, checking in at the gate when an airport employee asked, “Has anyone put anything in your baggage without your knowledge?” To which I replied, “If it was without my knowledge, how would I know?”

  40. It pays to look ahead!

  41. Thanks for your help with the survey! Wayne Cooper, Executive Officer Iowa Department of Revenue 401 SW 7th Street Suite C Des Moines IA 50309 Wayne.cooper@iowa.gov 515-725-0229

  42. WHY?

  43. ROI • IA – $12 / $1 • KS – $16 / $1 • MI – NA • MO – $13 / $1 • MN – $21 / $1 • NE – NA • OK – 13.17% • WI - .09

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