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MSATA 2006 MSATA 2006 Budgeting Toward the Collection Process Budgeting Toward the Collection Process Wayne Cooper Wayne Cooper Iowa Department of Revenue Iowa Department of Revenue
MSATA 2006MSATA 2006
Budgeting Toward the Collection ProcessBudgeting Toward the Collection Process
Wayne CooperWayne CooperIowa Department of RevenueIowa Department of Revenue
OutlineOutline
Why we asked for new budget legislation.Why we asked for new budget legislation.What it says.What it says.What is has meant for collections.What is has meant for collections.What it may mean for rest of department.What it may mean for rest of department.
Survey ResultsSurvey Results
Life in the Midwest!Life in the Midwest!
“ “ I live in a semi-rural area. We recently had a new I live in a semi-rural area. We recently had a new neighbor call the local township administrative neighbor call the local township administrative office to request the removal of the Deer office to request the removal of the Deer Crossing sign on our road. Crossing sign on our road.
The reasonThe reason::““Too many deer are being hit by cars out here! I Too many deer are being hit by cars out here! I
don’t think this is a good place for them to be don’t think this is a good place for them to be crossing anymore.”crossing anymore.”
- From Kingman, KS- From Kingman, KS
Iowa’s Central Collection Unit Iowa’s Central Collection Unit (CCU)(CCU)
Established in 1996 to allow Revenue to Established in 1996 to allow Revenue to collect for other state agencies.collect for other state agencies.
Includes our partner collection agency Includes our partner collection agency (OSI) and Revenue staff that supports and (OSI) and Revenue staff that supports and supplements their work.supplements their work.
Current Collection PartnersCurrent Collection Partners
Iowa Department of RevenueIowa Department of Revenue Iowa College LoanIowa College LoanChild Support RecoveryChild Support Recovery Iowa Judicial System ( all 99 counties )Iowa Judicial System ( all 99 counties ) Iowa Department of Natural ResourcesIowa Department of Natural Resources
BudgetBudget
Currently around $3.4 million per year.Currently around $3.4 million per year.1/3 salaries for state employees1/3 salaries for state employees1/3 pay for collection partner (OSI)1/3 pay for collection partner (OSI)1/3 postage, communications, tech support 1/3 postage, communications, tech support
We needed software upgradeWe needed software upgrade
AMS-CGI CACS software (1993)AMS-CGI CACS software (1993)Want to upgrade to “web enabled” versionWant to upgrade to “web enabled” versionWant to add their “STRATA” packageWant to add their “STRATA” packageSignificant cost with no budget to paySignificant cost with no budget to payOne of our two CACS programmers One of our two CACS programmers
retiring in one yearretiring in one year
What if ……………What if …………… We request expanding the Central Collection We request expanding the Central Collection
Unit to include our Accounts Receivable Section Unit to include our Accounts Receivable Section and our Department Stage Two Revenue and our Department Stage Two Revenue Agents.Agents.
We ask to be self-funded outside the department We ask to be self-funded outside the department budget.budget.
We ask to purchase the software upgrade out of We ask to purchase the software upgrade out of collections instead of asking for budget to pay collections instead of asking for budget to pay for the upgrade. for the upgrade.
And in exchange we promise increased And in exchange we promise increased collections of $2 million on top of the cost in this collections of $2 million on top of the cost in this fiscal year.fiscal year.
What do you do What do you do when they say OK!when they say OK!
Centralized Debt Collection UnitCentralized Debt Collection Unit
421.17(a)421.17(a)
To establish, administer, and make available a centralized To establish, administer, and make available a centralized debt collection capability and procedure for the use by debt collection capability and procedure for the use by any state agency any state agency or local governmentor local government entity including, entity including, but not limited to, the department of revenue, along with but not limited to, the department of revenue, along with other boards, commissions, departments, and any other other boards, commissions, departments, and any other entity reported in the Iowa comprehensive annual entity reported in the Iowa comprehensive annual financial report, to collect delinquent accounts, charges, financial report, to collect delinquent accounts, charges, fees, loans, taxes, or other indebtedness owed to or fees, loans, taxes, or other indebtedness owed to or being collected by the state.being collected by the state.
The department’s 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 director’s 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.
Our LegislationOur 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.
New Collection EnterpriseNew Collection Enterprise
Accounts ReceivableAccounts ReceivableFirst Stage Collection Partner (OSI)First Stage Collection Partner (OSI)Second Stage State Revenue AgentsSecond Stage State Revenue AgentsOCA Partners (UCB and VanRu)OCA Partners (UCB and VanRu)
Additional Collections PromisedAdditional Collections Promised
Increase in budget:Increase in budget: $5 million$5 millionAdditional promised:Additional promised: $2 million$2 millionSoftware Upgrade:Software Upgrade: $unknown$unknown
Increasing CollectionsIncreasing Collections
Purchasing CGI-AMS Strata softwarePurchasing CGI-AMS Strata softwareMore agent hours for collectionsMore agent hours for collectionsBetter collection toolsBetter collection toolsBetter sales tax bonding processBetter sales tax bonding processExpedited non-filer programExpedited non-filer programMore accurate data on collectionsMore accurate data on collections
PositivesPositives
No worry of budget cutsNo worry of budget cutsAbility to purchase expensive software Ability to purchase expensive software
without additional fundingwithout additional fundingManage operations with fewer restrictionsManage operations with fewer restrictionsCan hire and purchase without budget Can hire and purchase without budget
restraintsrestraints
ChallengesChallenges
Accountable directly to the Governor and Accountable directly to the Governor and to the legislature annually.to the legislature annually.
Increased pressure to meet collection Increased pressure to meet collection goals promised.goals promised.
Rest of the department at greater risk Rest of the department at greater risk should budget cuts occur in the future.should budget cuts occur in the future.
Would this work in your state?Would this work in your state?
There are worse jobs in life!There are worse jobs in life!
SURVEY RESULTSSURVEY RESULTS
Life in the MidwestLife in the Midwest
My daughter went to a local Taco Bell and My daughter went to a local Taco Bell and ordered a taco. She asked the person ordered a taco. She asked the person behind the counter for “minimal lettuce.” behind the counter for “minimal lettuce.” He said he was sorry, but they only had He said he was sorry, but they only had iceberg.iceberg.
- Yep… From Kansas City- Yep… From Kansas City
Key Collection MeasuresKey Collection Measures
IA – Net recovery rate – major taxesIA – Net recovery rate – major taxes IA - % of billed accounts resolvedIA - % of billed accounts resolved IA - % of recoveries per non tax $ placedIA - % of recoveries per non tax $ placed IA - % expenses to total collectionsIA - % expenses to total collections
KS – AR recovery / Discovery results / KS – AR recovery / Discovery results / Legal action results Legal action results
Measurements - contMeasurements - cont
MI – Assessments issuedMI – Assessments issuedMI – Value of AssessmentsMI – Value of AssessmentsMI – Payments receivedMI – Payments receivedMI – 3MI – 3rdrd Party garnishments received Party garnishments receivedMI – Outstanding balanceMI – Outstanding balanceMI – Outstanding number of accountsMI – Outstanding number of accounts
Measurements – ContMeasurements – Cont
MO – Dollars CollectedMO – Dollars CollectedMO - # of Accounts ResolvedMO - # of Accounts ResolvedMO – Length of time to resolveMO – Length of time to resolveMO - # of new DelinquenciesMO - # of new Delinquencies
MN – Currently revampingMN – Currently revamping
Measurements – Cont.Measurements – Cont.
NE - # and Amount of collectionsNE - # and Amount of collectionsNE - # and type of enforcement actionsNE - # and type of enforcement actions
OK – Collections by tax type by sourceOK – Collections by tax type by sourceOK – Backlog reportsOK – Backlog reportsOK – Cost per collection ratioOK – Cost per collection ratio
Measurements - ContMeasurements - Cont
WI – CollectionsWI – CollectionsWI – Account adjustmentsWI – Account adjustmentsWI - # of accounts assigned and # closedWI - # of accounts assigned and # closedWI - # of Agreements and # compromisesWI - # of Agreements and # compromisesWI – Amount written offWI – Amount written offWI – Stats on timely and appropriate WI – Stats on timely and appropriate
follow-up on accounts.follow-up on accounts.
StaffStaff
IN – Tax Analyst IN – Tax Analyst $25,000 (avg)$25,000 (avg) IA – Revenue Agent 1,2 or 3 IA – Revenue Agent 1,2 or 3 $27,102 - $57,582 $27,102 - $57,582 KS – Customer Reps KS – Customer Reps $34,000 (avg)$34,000 (avg) MI – Acct Examiner MI – Acct Examiner $30,971 - $45,282$30,971 - $45,282 MO – Taxpayer Service Rep MO – Taxpayer Service Rep $23,688 - $36,480$23,688 - $36,480 MN – Rev Coll Officers 1-5 MN – Rev Coll Officers 1-5 $30,000 - $60,0000 $30,000 - $60,0000 NE – Revenue Agent NE – Revenue Agent $29,377 - $49,165$29,377 - $49,165 OK – Rev Compliance Off OK – Rev Compliance Off $26,400 - $32,400$26,400 - $32,400 WI – Revenue Agent 1-4 WI – Revenue Agent 1-4 $15.729 - $31.824 $15.729 - $31.824
Employee ComparisonEmployee Comparison
Employees by State (Department, Collection and Accounts Receivable)
0
500
1000
1500
Dept FTE 0 365 1150 1330 1286 1240 403 930 1065
Coll FTE 14 41 92 172 245 45 114 159
AR FTE 13 24 183 172 35 245 40
IN IA KS MI MO MN NE OK WI
I made my goal!
Collection InventoryCollection Inventory
Work Inventory (Dollar amount of Collecion Inventory)
$0
$1,000
$2,000
$3,000
$4,000
Mil
lio
ns
$ Acct 359,904,929 3,021,200,000 948,000,000 344,353,654 36,000,000 985,000,000 1,164,488,573
IN IA KS MI MO MN NE OK WI
CollectionsCollections
Annual Collections
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
$ Collected 107,213,079 108,000,000 341,600,000 264,400,000 181,400,000 181,400,000 47,831,325 147,219,807
IN IA KS MI MO MN NE OK WI
Collections vs InventoryCollections vs Inventory
Inventory and Annual Collections
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
$ Collected 107,213,079 108,000,000 341,600,000 264,400,000 181,400,000 181,400,000 47,831,325 147,219,807
$ Acct 359,904,929 3,021,200,00 948,000,000 344,353,654 36,000,000 985,000,000 1,164,488,57
IN IA KS MI MO MN NE OK WI
Collections per Dept FTECollections per Dept FTE
Annual Collections per Collection FTE
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$ / FTE $0 $2,614,953 $1,173,913 $1,986,047 $2,115,200 $740,408 $4,031,111 $419,573 $925,911
IN IA KS MI MO MN NE OK WI
Life in the MidwestLife in the Midwest
““When my husband and I arrived at an automobile When my husband and I arrived at an automobile dealership to pick up our car, we were told the dealership to pick up our car, we were told the keys had been locked in it. We went to the keys had been locked in it. We went to the service department and found a mechanic service department and found a mechanic working feverishly to unlock the drivers side working feverishly to unlock the drivers side door. As I watched from the passenger side, I door. As I watched from the passenger side, I instinctively tried the door handle and instinctively tried the door handle and discovered that it was unlocked. “Hey, I discovered that it was unlocked. “Hey, I announced to the technician, “its open!” His announced to the technician, “its open!” His reply, “I know – I already got that side!” reply, “I know – I already got that side!”
Current ChallengesCurrent Challenges
IA – Increasing collections with ROIIA – Increasing collections with ROIKS – Motivation with no raises / rewardsKS – Motivation with no raises / rewardsMI – Keeping big org coordinatedMI – Keeping big org coordinatedMN – Revamping entire org structureMN – Revamping entire org structureNE – Keeping on top of coll inventoryNE – Keeping on top of coll inventoryOK – Accuracy of data and account flowOK – Accuracy of data and account flowWI - Pace of change – New systemsWI - Pace of change – New systems
Collection ToolsCollection Tools
Admin wage levyAdmin wage levy Admin bank levyAdmin bank levy Offset state refundsOffset state refunds Offset fed refundsOffset fed refunds Offset vendor pmtsOffset vendor pmts Block vehicle platesBlock vehicle plates Block drivers licenseBlock drivers license Block prof licensesBlock prof licenses
9 yes 0 no9 yes 0 no 7 yes 2 no7 yes 2 no 9 yes 0 no9 yes 0 no 8 yes 1 no8 yes 1 no 8 yes 1 in process8 yes 1 in process 1 yes 8 no1 yes 8 no 1 yes 8 no1 yes 8 no 8 yes* 1 no8 yes* 1 no
*wide diff in specifics*wide diff in specifics
More ComparisonsMore Comparisons
Charge collection feeCharge collection fee File liens on all acctFile liens on all acct Assess RP’sAssess RP’s Web self pay plansWeb self pay plans Acct info on WebAcct info on Web Offer in CompromiseOffer in Compromise Outside AgenciesOutside Agencies List w/ Credit BureausList w/ Credit Bureaus Use auto dialerUse auto dialer
1 yes1 yes 8 no8 no 1 yes1 yes 8 no8 no 5 yes5 yes 4 no4 no 2 yes2 yes 7 no7 no 1 yes1 yes 8 no8 no 7 yes7 yes 2 no2 no 8 yes8 yes 1 no1 no 0 yes0 yes 9 no9 no 4 yes4 yes 5 no5 no
Most effective toolsMost effective tools
IN – Check by phoneIN – Check by phone IA – Vehicle Plate BlocksIA – Vehicle Plate BlocksMI – AWL’s and LiensMI – AWL’s and LiensMO – Liens, License Rev, Prof License MO – Liens, License Rev, Prof License
blocks, offsetsblocks, offsetsNE – Levies, Assessments, Liens, EFTNE – Levies, Assessments, Liens, EFTOK – Minimum billing option for incomeOK – Minimum billing option for incomeWI – Levy’s, Installment plans, offsetsWI – Levy’s, Installment plans, offsets
Life in the MidwestLife in the Midwest
““I was at the airport, checking in at the gate I was at the airport, checking in at the gate when an airport employee asked, “Has when an airport employee asked, “Has anyone put anything in your baggage anyone put anything in your baggage without your knowledge?” without your knowledge?”
To which I replied, “If it was without my To which I replied, “If it was without my knowledge, how would I know?”knowledge, how would I know?”
It pays to look ahead!It pays to look ahead!
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
515-725-0229
WHY?WHY?
ROIROI
IA – $12 / $1IA – $12 / $1KS – $16 / $1KS – $16 / $1MI – NAMI – NAMO – $13 / $1MO – $13 / $1MN – $21 / $1MN – $21 / $1NE – NANE – NAOK – 13.17%OK – 13.17%WI - .09WI - .09
