COMPTROLLER GETS SERIOUS ABOUT DEBT COLLECTION By Loleta A. Didrickson, Comptroller, State of Illinois

Debt collection, or Illinois' receivables, is a high priority issue in the Office of the Comptroller. I first became aware of this issue as a member of the Governor's cabinet when I was the Director of the Department of Employment Security. We initiated a study on our effectiveness with collecting debt and put in place a series of collection steps. We additionally contracted with a collection agency and a forensic accounting firm to step up our collections.

The Debt Collection Act of 1986 requires state agencies to report quarterly on debt to the Comptroller. In addition to reporting, it is the statutory responsibility of the Comptroller to establish standards and guidelines for collection in our accounting system. One of my first tasks in office was to tally up the uncollected debt . . . $2.9 billion is the amount owed to taxpayers by "deadbeats." "Deadbeats" consist of people and businesses who owe back taxes, students who are delinquent with school loans and parents who do not pay child support.

As of July 1st, 1995, the Comptroller's Office has put into effect new debt collection guidelines. The Centralized Uniform State Accounting System (CUSAS) has been changed to establish a series of suggested minimum debt collection guidelines:

1. phone calls
2. letters
3. face-to-face meetings
4. tracing missing persons
5. predecessor/successor relationships
6. bank levies
7. judgments/liens
8. asset searches
9. notification of credit reporting bureaus

These are measures used by the private sector, which has a much better success rate of collecting its debt. Illinois is not alone in experiencing problems with debt collection; many other states have the same problem and are doing something about it. Virginia, for example, notifies credit agencies, so when someone wants to finance a car or home, the record reflects unpaid debt to the state.

Also under the CUSAS requirements, agencies must now provide detailed information on the type and frequency of collection activity, and specific information on accounts more than 180 days past due that exceed $15,000.

Total receivables reported by all agencies at the end of the second quarter of 1995 were $5.9 billion, up $73 million from the amount published in the Comptroller's Annual Report released in April, which covered calendar year 1994. Debt more than 180 days past due increased by $103 million from $2.9 billion to $3 billion, an increase of 3%.

The trend for gross receivables is such that by the end of calendar year 1998, the state treasury will be owed a projected $9.3 billion, an increase of 57.6 percent.

We often overlook existing sources of revenue, such as the state's receivables. At a time when the state is looking for more money to fund its critical needs, we can no longer afford to let this money go uncollected. Capturing even a fraction of it would mean millions to the Illinois treasury.

September 1995 / Illinois Municipal Review / Page 11