Collections: “It’s Not Rocket Science”

1. Collections:“It’s Not Rocket Science” Texas Municipal Courts Education Center Collections Webinar Jim Lehman Office of Court Administration

2. Texas Office of Court Administration • State Agency • Created in 1977 • Chief Justice - Texas Supreme Court • Provides Administrative & Technical Support • Serves approximately 2,600 courts in the state • (512) 463-1625

3. Five Part Presentation • The Concept of Change • Collections Perspectives • The Importance of Court Collections • General Attitudes About Court Collections • Proactive Strategies

4. Solving the Puzzles • Think! • Think differently. • Think like designer of the puzzle • Think Outside of the Box

5. “In Order to Grow We Must Make A Conscious Decision to CHANGE!”

6. “Change is often not easily embraced but is almost always inevitable.” • ATTITUDE • KNOWLEDGE • TIME • HAM FACTOR

7. The Ham Factor

8. COLLECTIONS PERSPECTIVES “Public & Private Sector Views”

9. OPERATING CYCLE CASH ACCTSREC INVENTORY SALES Private Sector

10. Private Sector Characteristics • Purpose Well Defined • Clear Line of Responsibility/Accountability • Significant Investment in Quality Staffing • Significant Investment in Strategy/Planning • Creativity is Encouraged

11. “Every Day A Debt Remains Uncollected the Likelihood It Will Remain Uncollected Increases.”

12. DEPRECIATION – “The Incredible Shrinking Dollars.”

13. Private SectorCollections Targets • ACA 90% • D&B 85% • MED 70-80%

14. Current - 30 Days 31- 60 Days 61-120 Days 120 Days + 85% Collected 10% Collected 3% Collected 2 % Collected Charge Off/Write Off Private Sector Account Management In-House In-House In-House Outside

15. JUSTICE CYCLE LAW ENFORCEMENT CRIME PENALTY Justice System

16. Public Sector Characteristics • Purpose Often Generic, General, & Broad • Lines of Responsibility/Accountability Often Vague and/or Overlapping • Staffing Often Limited By Resources & Politics • Strategy/Planning Often Short Range & Stop Gap • Maintaining the Status Quo Is The Norm

17. USUALLY NO CONSIDERATION OF: RISK DEPRECIATION

18. Public SectorCollections Targets • 50% - 60%??? Survey Question #1

19. Current - 60 Days 61-180 Days 181 Days + 25% Collected 65% Collected Warrant Issued 10% Collected Court Case Management In-House In/Out? Outside

20. GREATEST DIFFERENCE: “One is driven by profit, one is driven by politics” GREATEST SIMILARITY: “Both provide goods and services.”

21. How Important Is Court Collections!!!

22. On A Scale from One to Ten… 10 1 Survey Question #2

23. General Attitudes About Court Collections • Court Philosophy “These people can’t pay and its not my job.” • Community Perception “They don’t expect us to pay and nobody cares.” • Government “We don’t have the time or money to invest.”

24. Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective COMMON SIDE-EFFECTS Survey Question #3

25. Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective COMMON SIDE-EFFECTS

26. Presumptions "an attitude or belief dictated by probability"

27. Whatcha See 1 2 3

28. Case Study No.#1 State of Texas vs Joe Truitt Joe Truitt and his wife Jodie shared a textbook history of domestic violence: black eyes, broken bones, and broken promises. Joe already had served three years probation for pulling a gun on his older sister. He had spent time in jail for two misdemeanor assaults against his wife, and another two cases were pending. Once, in a fit of rage, Jodie says, he pushed her from a speeding car. Joe has pled guilty to a third assault charge. He broke Jodie’s jaw. The maximum fine is $10,000.00.

29. QUESTIONS: 1. As the Judge, would you impose the maximum fine? 2. If the maximum fine is imposed, can Joe pay it? 3. If less than the maximum is imposed, why?

30. Case Study No. 2 • Out of California • 3rd Grade Ed • Age: 65-70 • Unemployed • Lives w/relatives • Owes $5K

31. Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective COMMON SIDE-EFFECTS

32. WHO CAN'T PAY? "who are we dealing with"

33. Criminals & Crime CRIMINAL 1: one who has committed a crime CRIME 1: an act or the commission of an act that is forbidden or the omission of a duty that is commanded by a public law and that makes the offender liable to punishment by that law;

34. Criminals

35. Criminals • There were 10.6 million new criminal cases filed in the state of Texas in 2003. • Of these new cases, only 11.9% were at the county and district court level. • As of 2002 (the latest figures available), there were 438,202 (2% of the state’s population) offenders on supervised probation in Texas.

36. Criminals • There are approximately 150,000 (or less than 1 tenth of 1% of the state’s population) adult prison inmates in the state of Texas. • 59% of all prison inmates have a high school diploma or equivalent. • Two-thirds of all prison inmates were employed the month before they were arrested for their current offense.

37. Criminals

38. Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective COMMON SIDE-EFFECTS

39. WHY??? "can't they pay"

40. Show Me The Money! • Housing………………….28% • Transportation…………...24% • Food……………………..19% • Clothing…………………..5% • Medical…………………...5% • Insurance………………….5% • Other/discretionary………14% American Collectors Association

41. Discretionary Dollars • It is estimated Texas Courts Assessed Approximately $1.1B in Fines and Fees in FY 03 or about $52 for every person in the State. • In FY 03 the State of Texas reported approximately $2.96B in gross lottery ticket sales or about $142 for every person in the State.

42. Discretionary Dollars • It is estimated that in FY 2003, the average per case assessment for Texas courts was approximately $104. • A recent study of state lotteries found that lottery players with incomes below $10,000 spend an estimated $597 per year playing the lottery. • The same study found that lottery players with incomes between $50,000 and $100,000 spend an estimated $225 per year playing the lottery. NASPL

43. Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective COMMON SIDE-EFFECTS

44. RANDOM TERMS • All Fines & Cost At Pleading/Judgment • All Court Cost At Pleading/Judgment • Pay Over Length of Probation • Pay Out Before Expiration Of Probation • Minimum Payouts from $10-$50 per month

45. Six Common Reasons for Non-Payment • Negligent • Confused • Temporary financial difficulty • Seasonal • Unexpected disaster • Deliberate 70% 10%

46. Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective COMMON SIDE-EFFECTS

47. PLAYERS IN THE PROCESS Court Judge(s) Enforcement Court Administrators Court Clerks Probation Pre-trial Marshals Sheriffs Warrant Officers Bailiffs Offenders Law Violators

48. JUSTICE FOR SALECatch- 22 • Texas Government Code 420.14 – “Says a judge may be cited forjudicial misconduct if a reasonable effort is not made to collect cost…” • Opinion No. 105 of the Code of Judicial Conduct • “Says a judge should not personally be involved in collecting fees…”

49. Court’s Collectors Court Administrators Court Clerks Probation Officers Pre-trial Staff Marshals Sheriffs Warrant Officers Bailiffs Whoever

50. The Image of Collectors True or False- “Collectors continually hassle people who cannot pay.” True or False- “All collectors are the same.” True or False- “Tough, threatening collectors are the most effective.”