© CGI GROUP INC. All rights reserved Process Improvements: How to begin to transform your collections organization Ted London, Vice President, CGI May 5, 2010

Confidential Agenda Background Getting started: Operational review Sample Process Improvement Success Stories Questions

Confidential Realities of today’s environment Tight state budgets Catch-22 for revenue generating projects Government needs revenues Government does not have the dollar it takes to increase revenue by ten dollars (or $100) Goal: Brings in extra revenues without any impact on the general fund

Confidential …but despite these challenges Government will continue to be expected to do more with less Significant accomplishments can be made through Process Improvements True Transformation is Possible

Confidential Agenda Background Getting started: Operational review Sample Process Improvement Success Stories Questions

Confidential Recognizing the need to change Change is inherently difficult – doing nothing is so much easier Therefore, an organization must be motivated to change Game changing improvement in the collection of government debt will not occur until there is a belief that: There are significant opportunities There is a need for additional revenues Current business practices are not compatible with the future vision While there are new technologies to improve collection programs, tools alone will not achieve breakthrough performance improvements

Confidential How to start the transformation? Review of current operations Identify gaps and opportunities Determine level of change needed Determine additional revenue opportunities Gain buy-in (internal and external)Develop business case

Confidential Collections Operational Review Review of current collections functions, tools, AR levels What Is It Look at the operations from top to bottom Goal Identify and perpetuate best practices Identify gaps between current operations and future opportunities Actions Comparison and benchmarking of these statistics to national best practices Actionable set of opportunities Estimate for level and timing of revenue increases Results: 2-3 days (longer if spanning multiple agencies) Typical Length

Confidential Operational Review Results  Provide areas where the agencies’ practices are consistent with or leading current best practices  Provide opportunities for improvement Processes Staff utilization Tools  Provide approaches to achieve the improvement  Provide an estimate of the ROI if recommendations are implemented Estimate would include a timeline for the achievement of benefits

Confidential Operational Review Benefits Provides additional details of what the State is doing as compared to other States Insights Provides a fresh perspective on opportunities (some of which the department could implement on their own) New ideas Provides estimates which could assist with the development of a business case Business Case

Confidential Agenda Background Getting started: Operational review Sample Process Improvement Success Stories Questions

Confidential CGI’s approach to process improvements Right Account Right Resource Right Time Right Tools Right Results

Confidential Sample process improvement success stories 1. Looking for lost cases 2. Gather asset information automatically 3. Large account group 4. Plain-talking letters 5. Revisit collections statutes 6. Mandate electronic funds for payment agreements 7. Credit card payments 8. Consolidated debt collections 9. Predictive modeling 10. Active PCA management

Confidential 1. Looking for lost cases Many collections workflow processes grow over time While cases are worked diligently up-front, productive cases can be under-worked later Through analysis these “lost” cases can be identified Sometimes payment can be made simply by calling the right individual at the right time

Confidential 2. Gather asset information automatically Government typically has many ways to gather asset information for free Other agencies Data supplied to government Historically, gathering asset information has been manual Government typically has many ways to gather asset information for free Other agencies Data supplied to government Historically, gathering asset information has been manual Agencies are now capturing asset information directly from remittance equipment Through automated asset gathering and advanced workflow, cases can be automatically prioritized based on available asset information Agencies are now capturing asset information directly from remittance equipment Through automated asset gathering and advanced workflow, cases can be automatically prioritized based on available asset information

Confidential 3. Large account group  Work large dollar accounts more timely  Give agents additional time to perform skip trace activities on large dollar accounts  Assign fewer cases to these collectors who can therefore focus on them  Often working with attorneys and CPA’s  Assigning the right individuals to this group is key

Confidential 4. Plain-talking letters Letters often written by attorneys – And can only be understood by attorneys Experience has shown letters need to be: – Simple – Straightforward – Focus the debtor on what is owed, how to pay, and what are the consequences of non-payment Significant increase in collections through plain-talking

Confidential 5. Revisit collections statutes Often statutes make collections needlessly difficult (or more expensive) No access to data that is available Certified letters Multiple steps before involuntary actions Given the state of the economy – this is the year to ask Financial Institution Records Match New Employee Registry Additional authority for involuntary collections

Confidential California and Minnesota reduced defaults from the 40-50% range to the 3-5% range California and Minnesota reduced defaults from the 40-50% range to the 3-5% range 6. Mandate electronic funds for payment agreements A number of governments have found that EFT can dramatically reduce the default rate Private sector typically only takes EFT Benefits  Allows departments to increase their “wallet-share”  Can be a customer service benefit  Frees staff to work other cases

Confidential 7. Credit card payments  Allows payment when the taxpayer does not have liquid assets  Vendors will work with Government so the taxpayer pays the credit cards fees  Brings in money quickly and efficiently  Moves the collection risk from the Government to the credit card company

Confidential 8. Consolidated debt collections Collections is a core function for some agencies Most agencies with debt are service agencies, and do not focus on Accounts Receivables A centralized collection operation can: Collect for multiple agencies and debt types Provide economies of scale Eliminate redundant activities on the same debtor Sample successes: Michigan, California and Oregon

Confidential 9. Predictive modeling  Move from “Treating all taxpayers the same” to “Treating all similar taxpayers the same”  Use yield instead of strictly dollar amount  Order cases for phone call based on risk score  Alter rates paid to PCA’s based on risk score  Assign to staff based on risk score

Confidential 10. Active PCA management  Find appropriate usage of PCA’s  Review portfolio for best timing for PCA assignment  Use primary and secondary placements  Alter assignments based on scorecards – Encourages healthily competition – Change percentage of cases going to each PCA each month/quarter  Monitor PCA’s closely and have authority to terminate the contract easily if performance warrants

Confidential Other opportunities True case consolidation Workflow Assignment Integrated Correspondence Enhance your collections case management tools Touch-tone telephone Internet Self-Service Payment agreements

Confidential Agenda Background Getting started: Operational review Sample Process Improvement Success Stories Questions

Confidential 26 Ted London Vice President Tax, Revenue and Collections Center of Excellence (916) ISO 9001 Certified About the Presenter  17 Years with CGI exclusively working with State, Federal and Local tax and collections agencies  Leader of CGI’s Global Tax and Revenue and Collections Practice  Experience with more than 20 different revenue agencies  Experience with enhancing collections, audit and tax accounting systems and business processes  Oversees estimation and measurement for CGI’s benefits funded tax projects Contact Information

Confidential 26,000 IT and BPS professionals 100+ offices serving clients in 16 countries F2009 results: revenue $3.8b End-to-end services 100+ business solutions NYSE: GIB TSX: GIB.A Customer satisfaction score of 8.9 (1) 6 th largest independent IT services provider in North America Founded in 1976 Focused industry expertise About CGI (1)2009 ranking out of 10; part of CGI’s ISO 9001:2000-certified Client Partnership Management Framework

Confidential CGI Experience in Tax and Revenue Internal Revenue Service Grand Total Over $1.6 Billion Grand Total Over $1.6 Billion Missouri $55 Million Missouri $55 Million Canada Revenue Agency Australian Tax Office New York City Over 300 Subject matter experts and delivery personnel 25 Years experience Global presence National, State, Provincial and Local clients Product Agnostic Proven experience generating revenues CGI Tax and Revenue Practice Benefits Funded Collections projects Other Collections projectsOther Tax and Revenue Projects California $570 Million $176 Million $41 Million $37 Million California $570 Million $176 Million $41 Million $37 Million Kansas $182 Million Kansas $182 Million Virginia $231 Million Virginia $231 Million Hawaii $252 Million $73 Million Hawaii $252 Million $73 Million