1. 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))

2. 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.

3. 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

4. Scope  Represented $940 million in debt for CY 1995  Collected $100 million of the $940 during the calendar year (11%).

5. 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%

6. 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.

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

8. Recommendations Establish a vendor offset program

9. Recommendations Request authority to perform administrative garnishments

10. Recommendations Use a statewide master contract to hire private collection firms

11. Recommendations Review autodialing system and determine whether use would be beneficial

12. Other Recommendations Pilot project to test how PCFs can be better utilized Get approval to access “new hire” data Expand use of technology

13. 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.

14. Agencies Involved  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

15. Scope  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%).

16. 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.

17. Findings  Prior audit finding implemented with the exception of the vendor offset

18. Findings 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%

19. Findings 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.

20. Findings Strengthen Oversight of Private Collection Agencies  Lack of periodic review of accounts assigned to confirm that adequate collection efforts are performed.

21. Findings 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.

22. 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.

23. Scope 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.

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

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

26. Findings Revenue’s OAA could be helpful to Universities with collecting written-off debt.

27. 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