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Oregon A/R and Collection Practices. 1997 Secretary of State Audit, Opportunities to Improve #97-77 2004 Secretary of State Audit, Debt Collections #2004-24 2005 Secretary of State Audit, OUS Written-off Debt #2005-10

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oregon a r and collection practices

Oregon A/R and Collection Practices

1997 Secretary of State Audit, Opportunities to Improve #97-77

2004 Secretary of State Audit, Debt Collections #2004-24

2005 Secretary of State Audit, OUS Written-off Debt #2005-10

Chuck Hibner, Administrator, DHS’s Office of Payment Accuracy and Recovery

((former Director Oregon Audits Division (2006 – 2009))

1997 audit opportunities to improve delinquent debt collection

Audit Purpose – to identify and recommend ways in which the state could improve its processes for collecting delinquent debts.

1997 Audit – Opportunities to Improve Delinquent Debt Collection
agencies involved

Transportation – Weight-mile taxes

  • Human Service – Benefit overpayments
  • Employment – Benefit overpayments and insurance taxes
  • Consumer and Business Services – Workers’ comp taxes, penalties and worker claim costs
  • Revenue – Other Agency Account unit & Income Taxes
Agencies Involved
scope

Represented $940 million in debt for CY 1995

  • Collected $100 million of the $940 during the calendar year (11%).
Scope
findings appendix a

Collection Percentage

    • Revenue (OAA) = 2.4%
    • Revenue (PIT) = 23.9%
    • Human Services (benefits) =11.7%
    • Employment (benefits) =14.4%
    • Consumer & Business =6.3%
    • Employment (taxes) : Unavailable
    • Employment (benefits) = 14.4%
    • Transportation (weight-mile tax) = 13.7%
Findings – Appendix A
findings

In 1995 collection process decentralized.

  • State, federal laws and regulation grant unique collection powers and impose restrictions on specific agencies.
  • Private firms’ small percentage of total occurs partly because some state agencies believe their own efforts are more cost effective.
  • Decentralized collection results limited information sharing regarding best practices and individual debtors.
Findings
recommendations

State agencies form a statewide collection committee to foster interagency coordination on collection issues and sharing of best practices.

Recommendations
other recommendations

Pilot project to test how PCFs can be better utilized

  • Get approval to access “new hire” data
  • Expand use of technology
Other Recommendations
2004 audit progress made but still opportunities

Purpose –

  • Follow up on the 1997 audit and;
  • Determine if state agencies could improve their collection of delinquent debt.
2004 Audit – Progress Made But Still Opportunities
agencies involved1

Transportation – Weight-mile taxes

  • Judicial – Criminal fines and other fees
  • Human Service – Benefit overpayments
  • Employment – Benefit overpayments and insurance taxes
  • Environmental Quality – Civil penalties
  • Consumer and Business Services – Workers’ comp taxes
  • Revenue – Other Agency Account unit
Agencies Involved
scope1

Represented $237 million of the $1.2 billion in delinquent debt in fy 2002 (20%).

  • Collected $45 million of the $237 during the fiscal year (19%).
Scope
three primary approaches

Agencies have their own internal debt collection units (Employment, Human Services, Transportation, and Consumer and Business Services)

  • Primarily use Revenue’s Other Agency Accounts Unit
  • Primarily contract for service of private collection agencies.
Three Primary Approaches
findings2

Insufficient Staffing and Large Caseloads Prevent Timely Follow-up

  • Activity = Collection
    • Revenue: Activity = 13% & Collection =9%
    • Human Services: Activity = 43% & Collection =17%
    • Employment (benefits): Activity = 82% & Collection =32%
    • Consumer & Business: Activity = 92% & Collection =75%
    • Employment (taxes) : Activity = 82% & Collection =32%
Findings
findings3

Direct Telephone Contact Could Improve Collection Results

  • General Accountability Office report concluded early telephone contact increased chances of collection, and more effective than billing statements.
Findings
findings4

Strengthen Oversight of Private Collection Agencies

  • Lack of periodic review of accounts assigned to confirm that adequate collection efforts are performed.
Findings
findings5

Questioned Cost Effectiveness of Further Assigning Debt After It Has Been Worked by an Internal Collection Unit

  • Cost to monitor a private collection firm may be more than the state’s return.
Findings
2005 audit ous written off debt review

Purpose –

  • Determine if previously written-off debt should be reassessed due to the changing income circumstances of the debtors.
2005 Audit – OUS: Written-off Debt Review
scope2

Written-off debt is debt determined to be uncollectable after all reasonable efforts to collect have been undertaken; and

  • Note: the debt is still owed to the state.
Scope
findings6

From FY 2004 data identified 4,700 debtors with over $1.12 million written-off that earned wages during the year.

Findings
findings7

If a debt previously written-off becomes collectable, state law requires state agencies to proceed with collection.

Findings
slide27

Question?

Charles A. Hibner, CPA

Administrator, Office of Payment Accuracy and Recovery

Director, Office of Program Integrity

Oregon Department of Human Services

2850 Broadway Street NE

Salem , OR  97303

503-378-3584