MSATA 2006

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MSATA 2006

• Budgeting Toward the Collection Process
• Wayne Cooper
• Iowa Department of Revenue

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(No Transcript)
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Outline

• Why we asked for new budget legislation.
• What it says.
• What is has meant for collections.
• What it may mean for rest of department.
• Survey Results

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Life in the Midwest!

• I live in a semi-rural area. We recently had a
  new neighbor call the local township
  administrative office to request the removal of
  the Deer Crossing sign on our road.
• The reason
• Too many deer are being hit by cars out here! I
  dont think this is a good place for them to be
  crossing anymore.
• - From Kingman, KS

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Iowas Central Collection Unit (CCU)

• Established in 1996 to allow Revenue to collect
  for other state agencies.
• Includes our partner collection agency (OSI) and
  Revenue staff that supports and supplements their
  work.

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Current Collection Partners

• Iowa Department of Revenue
• Iowa College Loan
• Child Support Recovery
• Iowa Judicial System ( all 99 counties )
• Iowa Department of Natural Resources

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Budget

• Currently around 3.4 million per year.
• 1/3 salaries for state employees
• 1/3 pay for collection partner (OSI)
• 1/3 postage, communications, tech support

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We needed software upgrade

• AMS-CGI CACS software (1993)
• Want to upgrade to web enabled version
• Want to add their STRATA package
• Significant cost with no budget to pay
• One of our two CACS programmers retiring in one
  year

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What if

• We request expanding the Central Collection Unit
  to include our Accounts Receivable Section and
  our Department Stage Two Revenue Agents.
• We ask to be self-funded outside the department
  budget.
• We ask to purchase the software upgrade out of
  collections instead of asking for budget to pay
  for the upgrade.
• And in exchange we promise increased collections
  of 2 million on top of the cost in this fiscal
  year.

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What do you do when they say OK!

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Centralized Debt Collection Unit

• 421.17(a)
• To establish, administer, and make available a
  centralized debt collection capability and
  procedure for the use by any state agency or
  local government entity including, but not
  limited to, the department of revenue, along with
  other boards, commissions, departments, and any
  other entity reported in the Iowa comprehensive
  annual financial report, to collect delinquent
  accounts, charges, fees, loans, taxes, or other
  indebtedness owed to or being collected by the
  state.

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The departments collection facilities shall
only be available for use by other state agencies
or local government entities for their
discretionary use when resources are available to
the director and subject to the directors
determination that use of the procedure is
feasible. The director shall prescribe the
appropriate form and manner in which this
information is to be submitted to the office of
the department. The obligations or indebtedness
must be delinquent and not subject to litigation,
claim, appeal, or review pursuant to the
appropriate remedies of each state agency or
local government entity.
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Our Legislation
421.17(27)(j) There is appropriated from the
amount of any debt actually collected pursuant to
this subsection an amount, not to exceed the
amount collected, which is sufficient to
subsection. The director shall report annually
to the legislative fiscal committee and the
legislative services agency on any additional
positions added and the costs incurred during the
previous fiscal year pursuant to this subsection.
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New Collection Enterprise

• Accounts Receivable
• First Stage Collection Partner (OSI)
• Second Stage State Revenue Agents
• OCA Partners (UCB and VanRu)

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Additional Collections Promised

• Increase in budget 5 million
• Additional promised 2 million
• Software Upgrade unknown

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Increasing Collections

• Purchasing CGI-AMS Strata software
• More agent hours for collections
• Better collection tools
• Better sales tax bonding process
• Expedited non-filer program
• More accurate data on collections

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Positives

• No worry of budget cuts
• Ability to purchase expensive software without
  additional funding
• Manage operations with fewer restrictions
• Can hire and purchase without budget restraints

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Challenges

• Accountable directly to the Governor and to the
  legislature annually.
• Increased pressure to meet collection goals
  promised.
• Rest of the department at greater risk should
  budget cuts occur in the future.

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Would this work in your state?
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There are worse jobs in life!

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SURVEY RESULTS
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Life in the Midwest

• My daughter went to a local Taco Bell and ordered
  a taco. She asked the person behind the counter
  for minimal lettuce. He said he was sorry,
  but they only had iceberg.
• - Yep From Kansas City

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Key Collection Measures

• IA Net recovery rate major taxes
• IA - of billed accounts resolved
• IA - of recoveries per non tax placed
• IA - expenses to total collections
• KS AR recovery / Discovery results /
  Legal action results

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Measurements - cont

• MI Assessments issued
• MI Value of Assessments
• MI Payments received
• MI 3rd Party garnishments received
• MI Outstanding balance
• MI Outstanding number of accounts

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Measurements Cont

• MO Dollars Collected
• MO - of Accounts Resolved
• MO Length of time to resolve
• MO - of new Delinquencies
• MN Currently revamping

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Measurements Cont.

• NE - and Amount of collections
• NE - and type of enforcement actions
• OK Collections by tax type by source
• OK Backlog reports
• OK Cost per collection ratio

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Measurements - Cont

• WI Collections
• WI Account adjustments
• WI - of accounts assigned and closed
• WI - of Agreements and compromises
• WI Amount written off
• WI Stats on timely and appropriate follow-up on
  accounts.

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Staff

• IN Tax Analyst 25,000 (avg)
• IA Revenue Agent 1,2 or 3 27,102 - 57,582
• KS Customer Reps 34,000 (avg)
• MI Acct Examiner 30,971 - 45,282
• MO Taxpayer Service Rep 23,688 - 36,480
• MN Rev Coll Officers 1-5 30,000 - 60,0000
• NE Revenue Agent 29,377 - 49,165
• OK Rev Compliance Off 26,400 - 32,400
• WI Revenue Agent 1-4 15.729 - 31.824

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Employee Comparison
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I made my goal!
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Collection Inventory
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Collections
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Collections vs Inventory
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Collections per Dept FTE
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Life in the Midwest

• When my husband and I arrived at an automobile
  dealership to pick up our car, we were told the
  keys had been locked in it. We went to the
  service department and found a mechanic working
  feverishly to unlock the drivers side door. As I
  watched from the passenger side, I instinctively
  tried the door handle and discovered that it was
  unlocked. Hey, I announced to the technician,
  its open! His reply, I know I already got
  that side!

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Current Challenges

• IA Increasing collections with ROI
• KS Motivation with no raises / rewards
• MI Keeping big org coordinated
• MN Revamping entire org structure
• NE Keeping on top of coll inventory
• OK Accuracy of data and account flow
• WI - Pace of change New systems

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Collection Tools

• Admin wage levy
• Admin bank levy
• Offset state refunds
• Offset fed refunds
• Offset vendor pmts
• Block vehicle plates
• Block drivers license
• Block prof licenses

• 9 yes 0 no
• 7 yes 2 no
• 9 yes 0 no
• 8 yes 1 no
• 8 yes 1 in process
• 1 yes 8 no
• 1 yes 8 no
• 8 yes 1 no
• wide diff in specifics

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More Comparisons

• Charge collection fee
• File liens on all acct
• Assess RPs
• Web self pay plans
• Acct info on Web
• Offer in Compromise
• Outside Agencies
• List w/ Credit Bureaus
• Use auto dialer

• 1 yes 8 no
• 1 yes 8 no
• 5 yes 4 no
• 2 yes 7 no
• 1 yes 8 no
• 7 yes 2 no
• 8 yes 1 no
• 0 yes 9 no
• 4 yes 5 no

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Most effective tools

• IN Check by phone
• IA Vehicle Plate Blocks
• MI AWLs and Liens
• MO Liens, License Rev, Prof License blocks,
  offsets
• NE Levies, Assessments, Liens, EFT
• OK Minimum billing option for income
• WI Levys, Installment plans, offsets

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Life in the Midwest

• I was at the airport, checking in at the gate
  when an airport employee asked, Has anyone put
  anything in your baggage without your knowledge?
  
• To which I replied, If it was without my
  knowledge, how would I know?

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It pays to look ahead!
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Thanks for your help with the survey! Wayne
Cooper, Executive Officer Iowa Department of
Revenue 401 SW 7th Street Suite C Des Moines IA
50309 Wayne.cooper_at_iowa.gov 515-725-0229
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WHY?
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ROI

• IA 12 / 1
• KS 16 / 1
• MI NA
• MO 13 / 1
• MN 21 / 1
• NE NA
• OK 13.17
• WI - .09