Building a Strong Government Collection Program that Works!

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

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

3. 1. Getting Started!

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

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

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

7. 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

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

9. 2. How to Get Results!

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

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

12. Collection Program Annual Revenue History

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

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

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

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

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

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

20. 3. Maximize Benefitand Minimize Cost!

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

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

23. Treasurer’s 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

24. 4. Leverage Technology!

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

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

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

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

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