FINANCIAL MANAGEMENT/Program helps locals with debt collection
Estimates of debt range from $10 billion to $40 billion each year.
Most local governments do not have a central collection function that recovers delinquent payments for all departments. Rather, the task tends to be relegated to staff members in each department who often lack the tools and training necessary to collect the funds, making debt collection an ineffective process.
To help counties solve the problem, the National Association of Counties has contracted with Bethesda, Md.-based Lockheed Martin IMS to provide a debt collection program for counties that have difficulty collecting delinquent payments. Since its inception in January, the program has helped participating counties collect thousands of dollars in outstanding debt. In addition to recovering debt, participating counties have saved money by purchasing debt collection services through a national contract.
Many elected and appointed local government officials are unaware of just how much money their communities are losing each year by not collecting delinquent payments. Estimates of unpaid debt owed local governments nationwide range from $10 billion to $40 billion each year. The result of not collecting debt is that those who do pay their bills are charged higher fees to make up for the loss.
Under the debt collection program, NACo helps counties identify their debts, assess their internal capabilities and determine when it is appropriate for them to refer their accounts to the company. Counties may opt to refer debts from some or all departments after the debts are only 30 days old, or they might choose to wait until all of their internal resources have been exhausted.
The debt-collection contract can be structured to complement any local efforts to collect debt. Participation in the program requires no budgetary appropriation; all collections are done on a contingency fee basis, depending on the type, age and difficulty of the debt.
Under the contract, debt collection efforts are streamlined. Counties may submit data in multiple formats, ranging from hard copies to electronic downloads. The company follows up with all accounts via telephone and mail; provides the county with electronic access to its database; and offers a variety of standard management reports and customized reports. The reports cover all areas of project activity and show all actions taken on each of the delinquent accounts.
Additionally, the system can locate people who have moved, an attribute that is particularly useful to counties that collect child support, court fines, emergency medical, ambulance or hospital fees. The program also may be helpful in collecting debt that accumulates in:
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building and zoning fees
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burglar/fire alarm services
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business and professional license fees
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housing programs
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library fees
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marina fees
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park and recreation fees
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parking tickets/traffic fines
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police detail services
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returned check fees
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special district charges (water/waste-water, etc.)
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taxes.
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Several local governments — including those in Miami-Dade County, Fla.; Arlington County, Va.; Chattahoochee County, Ga.; and West Palm Beach, Fla. — already are participating in the program. By taking part in the program, those local governments have collected debt that was previously classified as unattainable and have passed the savings on to bill-paying residents. For more information about the program, contact NACo at (202) 661-8824, or e-mail [email protected].
The author is contract manager for NACo Financial Services Center, Washington, D.C.