Looking Back On An Audit: Actions Taken On Recommendations from the 1997-77 Audit Findings.

1. Modernizing Government Debt Collection Symposium Looking Back On An Audit: Actions Taken On Recommendations from the 1997-77 Audit Findings. Responses are an accumulation of actions reviewed or taken that were documented up to CY 2005. The red font at the bottom is a current observation or action update. IMG Collection Symposium

2. Completing the Audit Actions Taken On 1997-77 Findings State agencies form a statewide collection committee to foster interagency coordination on collection issues and sharing of best practices, The Accounts Receivable Core Committee (ARCC) meets twice per months and is made up of representatives from numerous state agencies. Collection and accounting, staff and management are encouraged to participate. The group helps shape state policies, establish and share best practices, and develop legislative concepts. For communication, a list server was originally used to distribute ARCC minutes, along with the updates from subcommittees. It was also useful to solicit additional information from an even wider group of agency contacts. The Statewide Accounts Receivable Management (SWARM) web site was created in February 2000 for an even broader distribution of ARCC issues and as a means to solicit additional responses. An “agency contact list” database is maintained to communicate urgent messages or direct agency personnel to important new postings on the SWARM webpage. Update > SWARM/ARCC was created and operated for some 9 years. It was disbanded circa 2009 due to staff reductions and budget cuts. IMG Collection Symposium

3. Completing the Audit Actions Taken On 1997-77 Findings including establishing a statewide vendor payment offset program, Options in this regard were explored by the Debt Collection committee (the predecessor to the current ARCC group) during 1997 and early 1998. Documentation indicates that there was qualified approval by the AG’s office, and some study of potential changes to SFMS to facilitate the process. This included work on some rough cost estimates looking at what such a system may cost to operate. The documentation suggested that the project could be a significant undertaking. Visiting the issue again during an internal audit, SFMS produced a report in October 2001 suggesting only a modest return for the high cost of implementing and operating such a statewide endeavor. Considering the cost and return of a vendor offset system versus the emphasis and concentration of effort being made in using the Department of Revenue and Private Collection Firms, at this time, resources could be better deployed elsewhere. Previous work involved the study of an automated solution, some states are using manual check capturing (check or warrant hold) systems to facilitate the payment-offset operation. There may be a potential for cost savings, greater simplicity, and access to a higher volume of checks/warrants, by exploring a more “low-tech” solution such as capturing and holding the warrant at the point of printing. Certainly, there are additional statutory and financial control issues to be studied. A final suggestion under review is to institute a “garnishment like” process through a small claims court. (For a further discussion, see the warrant/garnishment recommendation.) Update > The Federal TOPs offering provides another opportunity to study the viability of this process. IMG Collection Symposium

4. Completing the Audit Actions Taken On 1997-77 Findings using a statewide master contract to hire private collection firms, A statewide collection contract was put in place on August 1, 2000 for all state agencies and some 300 local governments. Following the contract date, two training sessions were held to instruct state agencies on establishing an agreement with one or more of the eight collection firms. A “Collection Firm” website was created that introduced all eight firms, and provided contact names, business addresses, email addresses, a one page bio, and a link to their business website. The site also contains information and presentations about setting up the contract agreement, a complete copy of the agreement and all attachments, rate information, etc. are all available. OAMs were drafted and made available to assist in creating a proper agreement. The state as recently completed a second offering on a statewide collection contract building upon the experience generated during the years of the current contract. The new contract will be awarded on November 7th, with a start date of November 15th, 2002. Update > The state needs to study the financial viability of this process. IMG Collection Symposium

5. Completing the Audit Actions Taken On 1997-77 Findings doing pilot tests on different ways of assigning accounts to private firms, Some state agencies and private collection firms have already implemented automated electronic assignment processes including reporting features. A group is being planned to accumulate the processes that have already been developed and implemented, work with agencies and firms to standardize those processes, and then share the standardized process to create greater efficiencies for everyone. With a new contract being deployed, we expect to see more progress in this area. We will continue to work collectively with state agencies and the private firms to explore new ways to offer even greater future efficiencies, while still maintaining proper levels of controls. Update > The trade-off continues to rest on the ability to monitor and move the accounts through the collection process in a safe and efficient fashion. Also of note > Audit 2004-24 suggest improved oversight of PCF performance and also brought into question the use of PCFs by state agencies with a dedicated professional collection section. IMG Collection Symposium

6. Completing the Audit Actions Taken On 1997-77 Findings and seeking legislative authority to access information maintained by other state agencies. Some inroads have been made… as is seen in the information supplied under DMV data offered below. In studying this issues and drafting concepts for the 2003 session, we still see that the data agencies would like to most have access to is not being offered by the agencies that have the data. (i.e. Employment, Revenue, Division of Child Support)   In some cases, federal and state laws limit disclosure of client information held by a state agency with other agencies. Further, sharing certain information that is voluntarily provided by clients may risk damaging client relationships and the loss of said voluntary information to the original agency recipient. Issues surrounding the sharing of social security numbers continue to raise concerns regarding both identity theft and the State’s obligations under the Privacy Act of 1974 (5 USC Section 552a). Many of the large agencies already have access to skip tracing tools. In an effort at improving access to other state agency, the SWARM website offers various online search websites to augment their other processes. Update > Is the problem finding the debtor (skip tracing), identifying the collection resources of the debtor (ability to pay), or actually collecting the funds from the debtor? Each of these actions suggests a different solution set. IMG Collection Symposium

7. Completing the Audit Actions Taken On 1997-77 Findings Certain agencies improve their collection processes by requesting legislative authority to perform administrative garnishments, DCBS tried for distraint warrant/garnishment authorization during the 1999 legislative session (SB209). Though the bill passed the senate, it was still in a house committee upon adjournment. One of the main distractions for the bill was a concern expressed by some legislators for adequate due process measures. ARCC developed a legislative concept that proposed offering warrant and garnishment authority for all state agencies. In the pipeline for the 2001 session was a legislative concept for this authority, which was largely based on the DCBS SB209 language and included special wording to highlight due process awareness. Again, the draft language attempted to address the issues regarding due process, which appeared to have been the resistance factor in the house committee. (Because of the failure of the DCBS bill in 1999 and other DAS bills in the pipeline, the 2001 session was deemed to soon to try this concept again. Thus, this bill was placed on hold.) Interest in reviving this concept for 2003 has been expressed. DCBS is working on a bill for the 2003 session. After having an opportunity to review the DCBS bill, DAS will make a decision on its support or other recommendations. (Some of these bills passed.) As to alternative measure, we have explored the use of small claims court to pursue lower dollar delinquencies that are not economically feasible to process through the Department of Justice. The state employee who provided the training session has successfully used this collection method for their agency debts. This approach, coupled with the use of the Department of Revenue’s Other Agency Accounts (OAA) unit, could produce quick financial results through the OAA’s warrant process. Update > The prerequisite for the use of administrative garnishments is a highly trained and knowledgeable workforce. IMG Collection Symposium

8. Completing the Audit Actions Taken On 1997-77 Findings obtaining on-line terminal access to Driver and Motor Vehicle Services data, Oregon DMV records are available to State Agencies via telephone inquiries, (including a 7x24 voice response system), a FAX information request system, and an on-line system featuring direct terminal access. This is a subscription service and fees are associated with each of these options. Update > Last I heard, this service was still working very well for state agencies. IMG Collection Symposium

9. Completing the Audit Actions Taken On 1997-77 Findings improving automation, We are in the continuous process of exploring automation solutions to improve collection techniques… As a result, we subscribe to both paper and electronic periodicals and are able to disseminate information on numerous topics and offer various training opportunities. Some issues are investigated by the ARCC group, for instance, see the next item: autodialing systems. Along with improving automation comes the ability to offer more expeditious payment methods. Electronic payment solutions are being explored (like electronic checks) and new payment vehicles, (like E-Commerce), are already a work-in-progress. These automated payment methods allow state collectors to offer their clients new payment options and the state more reliable payment methods that move the dollars to the bank more swiftly, and in many cases, more safely than cash. Other electronic/automated solutions for payment processing include ACH options. For instance, “TEL” for telephone payment acceptance, “ARC” for payment lockbox applications, and “RCK” for electronic resubmission of NSF checks. These ACH payment options are still relatively new offerings to the market place. For these options, we work with and rely on the expertise of the Oregon State Treasury when conveying information to state agencies. Update > Agencies need to exploit the use of credit cards, debit cards, and ACH/check conversion as effectively as possible. Processes like check conversion (Online Electronic Deposit – OED) speed processing and offer improved internal control. Similarly, accepting online payments reduces payment handling costs. The state needs a payment process that is convenient to use for debtors and does not involve additional costs – i.e. “convenience fees.” Collect the money at the time of the transaction and create no A/R requiring collection action. IMG Collection Symposium

10. Completing the Audit Actions Taken On 1997-77 Findings and using autodialing systems. An ARCC subcommittee produced a report on the viability of autodialing systems. The feasibility of using autodialing is predicated on numerous business, communication, and IT infrastructure issues of the agency. The report may be reviewed at: <<Former Autodialer Report Link>> With the advent and offering of numerous autodialing “countermeasures” provided by phone companies and electronics manufacturers, the luster of these systems has dimmed. However, interest in these systems still continues. First placed on the SWARM website in February 2000, to this day it is not unusual to see 10 – 20 hits a week on this webpage. • Update > • Ironically, several state agencies are dealing with archaic PBX (Private Branch Exchange) phone systems dating back to the 1970s and 1980s that have long since reached their end-of-life. Parts needed to keep some of these systems running are being cannibalized from other agencies or are being purchased off of eBay. VOIP (Voice Over Internet Protocol) systems come with numerous performance management features, but they have a cost and require additional IT resources and knowledge to maintain and operate. • With the massive shift to cell phones since the 1990s, the ability to look-up phone numbers can be difficult. Plus, the “counter measures” available on cell phones provides the debtor greater control in responding to the caller presented on their phone’s screen. More analysis is needed. IMG Collection Symposium

11. Completing the Audit Actions Taken On 1997-77 Findings Audit 2004-24 ~ Progress Made But Opportunities for Improvement Still Exist Two other recommendations from this audit require mentioning: Insufficient Staffing and Large Caseloads Prevent Timely Follow-Up on Delinquent Accounts. The audit discusses the importance of timely follow-ups and improved collections for sections with lower agent caseloads. More Direct Telephone Contact Could Improve Collections Results. Relying on a study from the GAO, the audit suggested that “ telephone calls were much more effective that billing statements at generating additional collections.” IMG Collection Symposium

12. Completing the Audit Actions Taken On 1997-77 Findings • Obstacles and Opportunities: • There is no silver bullet. • Solutions will need to take a holistic “agency” approach. • Solutions will involve technology – improved IT and telephony systems. • Solutions will involve the collectionprogram – improved business processes, customer information, account monitoring, and staff training. • Solutions will involve fiscal – oversight of payment processing and internal controls. November 1, 2013 IMG Collection Symposium 12

13. Modernizing Government Debt Collection Symposium Questions? Jon DuFrene IMG Collection Symposium