Building a Strong Government Collection Program that Works! Michael Vogl, Collection Manager, City of San Diego

Why have a Collection Program? Maximize revenue Maximize revenue Motivate public to pay on time Motivate public to pay on time Centralize collection activities/reduce duplication of collection efforts Centralize collection activities/reduce duplication of collection efforts Reduce collection related costs Reduce collection related costs Improve reporting on delinquent amounts and tracking of collection performance Improve reporting on delinquent amounts and tracking of collection performance

1. Getting Started!

Identify What Receivables You Have: Taxes (Business Tax, TOT) Taxes (Business Tax, TOT) Services (Water, Sewer, library) Services (Water, Sewer, library) Risk ( Property damage, medical cost recovery) Risk ( Property damage, medical cost recovery) Enforcement (Parking cites, administrative violations) Enforcement (Parking cites, administrative violations) Permits/inspections Permits/inspections

Other receivables Returned checks Returned checks Emergency response cost recovery Emergency response cost recovery Damaged trees Damaged trees * Identifying additional penalties, damages, and other add-ons increases revenue and elevates the consequences of non-payment.

Authority and Organization Create Authority: Create Authority: City Charter, Resolution, Ordinance City Charter, Resolution, Ordinance Administrative regulation, Policy Administrative regulation, Policy Organizational considerations Organizational considerations Centralized or decentralized? Centralized or decentralized? General fund or internal service fund? General fund or internal service fund? In-house collectors or External Collection Agency? In-house collectors or External Collection Agency?

Actual Performance Comparison City Collections Staff vs. Private Collection Agency City Staff Private Agency Referral $1,200,000 $1,200,000 Gross Revenue $ 33,000 $ 5,500 Less Expenses: Agency Fee $ 0 $ (679) City Staff (PE/NPE) $ (10,000) $ 0 Net Revenue to City $ 23,000 $ 4,821

Staffing and Compliance Staffing Staffing Private sector collection experience Private sector collection experience Clearly identified roles and responsibilities Clearly identified roles and responsibilities Well thought out performance plans and goals Well thought out performance plans and goals Legal Compliance Legal Compliance Fair Debt Collection Practices Act (FDCPA) Fair Debt Collection Practices Act (FDCPA) Robbins-Rosenthal Act Robbins-Rosenthal Act

2. How to Get Results!

Create the Right Perception Develop Support Educate Educate Council members and or Council staff Council members and or Council staff Department front-line staff Department front-line staff Conflicts in missions Conflicts in missions Debtors will attempt to circumvent collection staff Debtors will attempt to circumvent collection staff Partner Partner Department management Department management Key stakeholders Key stakeholders

Set High Expectations Set annual and monthly goals for staff Set annual and monthly goals for staff Collections and Productivity Collections and Productivity Quality and Compliance Quality and Compliance Customer Service Customer Service Track performance at various levels Track performance at various levels Communicate expectations and results regularly Communicate expectations and results regularly Reward success Reward success Address poor performers Address poor performers

Collection Program Annual Revenue History

Create and Escalate Consequences of Non-payment Stop providing service Stop providing service Send collection letters, make telephone calls Send collection letters, make telephone calls Credit reporting Credit reporting File liens, suspend drivers license, impound car File liens, suspend drivers license, impound car State tax refund interception State tax refund interception Legal action Legal action

The Motivation Game Consequences should be communicated in letters, notices, and telephone calls Consequences should be communicated in letters, notices, and telephone calls If the debtor still does not comply, you must follow through with these consequences If the debtor still does not comply, you must follow through with these consequences Spread responsibility to individuals vs. business entities Spread responsibility to individuals vs. business entities

Credit Reporting Government receivables can be credit reported Government receivables can be credit reported Must attempt to notify debtor of derogatory reporting Must attempt to notify debtor of derogatory reporting Information reported must be accurate Information reported must be accurate Requires resources to investigate and respond to disputes Requires resources to investigate and respond to disputes Especially effective when interest rates are low Especially effective when interest rates are low

State Tax Refund Interception Limited to certain types of accounts Limited to certain types of accounts Must have social security number Must have social security number Special limitations on parking citations Special limitations on parking citations Requires minimal resources Requires minimal resources

Legal Action Small Claims Court Small Claims Court $5,000 per case jurisdictional limit $5,000 per case jurisdictional limit City Attorney City Attorney Higher jurisdictional cases Higher jurisdictional cases Parking citation judgments Parking citation judgments Conversion of criminal restitution order to civil judgment Conversion of criminal restitution order to civil judgment

Make it Easy to Pay! Offer a wide variety of payment options Offer a wide variety of payment options Mail, walk-in, telephone, service center Mail, walk-in, telephone, service center Cash, check, credit and debit card Cash, check, credit and debit card Internet Internet Post-dated check plan Post-dated check plan Time extensions/payment plans Time extensions/payment plans Settlement authority Settlement authority

3. Maximize Benefit and Minimize Cost!

Focus Resources on Collections! Collectors Collectors Skiptracing Skiptracing Making and receiving phone calls Making and receiving phone calls Minimize specialization Minimize specialization Must be aggressive Must be aggressive Supervisors Supervisors Minimizing complaints/Improving service Minimizing complaints/Improving service Handling complex cases Handling complex cases Training and re-training Training and re-training General supervision General supervision

Accounts Accounts Target accounts with higher payback and likelihood of successful collection Target accounts with higher payback and likelihood of successful collection Eliminate old or likely uncollectible work from collector workload Eliminate old or likely uncollectible work from collector workload Implement a collection fee and or interest charge on collection accounts Implement a collection fee and or interest charge on collection accounts Automate notice series Automate notice series

Treasurers Collections Program Cost/Revenue Comparison REVENUE COST FY 1993$4,900,000 $ 956,000 FY 2004$16,100,000 $3,700,000 Revenue vs. Cost $4.35 to $1

4. Leverage Technology!

Automation Collection system Collection system Electronic interfaces to billing systems and data providers Electronic interfaces to billing systems and data providers Telephone system Telephone system Voice logging/recording Voice logging/recording Document imaging Document imaging

Access to a Wide Variety of Data Sources Department of Motor Vehicles Department of Motor Vehicles Agency databases Agency databases NCOA, phone directory NCOA, phone directory New internet tools New internet tools Accurint Accurint

5. Provide Excellent Customer Service and Maintain a Positive Agency Perception!

Customer Service Staff should provide accurate information in a pleasant professional manner regardless of the debtors behavior Staff should provide accurate information in a pleasant professional manner regardless of the debtors behavior Listen and Respond timely to requests and inquiries Listen and Respond timely to requests and inquiries Be aware of tone and body language (sarcasm) Be aware of tone and body language (sarcasm) Use We, This office, and Our system rather than I Use We, This office, and Our system rather than I

Inform rather than threaten Inform rather than threaten Voice logging/recording Voice logging/recording External collection agencies will not provide the service expected from government agencies External collection agencies will not provide the service expected from government agencies Educate the media Educate the media Stories on collection efforts educate the public on consequences of late payment Stories on collection efforts educate the public on consequences of late payment Stories generally result in telephone calls and payments Stories generally result in telephone calls and payments