Transcript Title of Presentation

How Smart Government
Collects Debt
Michelle Burk
CIO
Ohio Attorney General Mike DeWine
Debra Gates
CAO
Shelby County Trustee
© 2014 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
Starting the Discussion
 Ohio
is implementing Debt Manager, and Shelby County is looking back on two
years of live production using Debt Manager.
 We'll
start the discussion with Michelle and Sharukh, and the motivations they had
for selecting and implementing a new platform.
© 2014 Fair Isaac Corporation. Confidential.
Goals—Mission Impossible?
► While
each revenue agency is unique, there are
three common basic strategic goals:
Clients
► Maximizing
revenues
► Improving constituent services
► Maximizing agency efficiency
► Reduce
expenses
► Improve
Technologies
Processes
Central
Collection
Process
Technology
3
© 2014 Fair Isaac Corporation. Confidential.
People
State of Ohio
► Ohio’s
centralized collection environment in which economies of scale are
present, significant efficiencies are gained allowing government to collect more of
the liabilities that are owed
► Ohio
has implemented a robust centralized collection division with the necessary
tools and state statutes to efficiently process delinquent debts
► Ohio
is continuing to build upon the current collection environment by improving
and implementing current industry tools, technologies and processes
►
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Individual government agencies, cities and counties lack the economies of scale
to bring the tools, workflow processes, and technologies needed to materially
improve collections. Ohio statute enables centralized debt collections through
Ohio Attorney General's Office
© 2014 Fair Isaac Corporation. Confidential.
Compliance Management—The Evolving Landscape
The evolving landscape with regulatory agencies. Will have a serious impact on the
Accounts Receivable Management (ARM) industry for all areas of accounts
receivables
► CFPB,
Consumer Financial Protection Bureau
► TCPA,
Telephone Consumer Protection Act
► FDCPA,
Fair Debt Collection Practices Act
► IRS
1075 security requirements and the focus on augmenting the collection
process
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© 2014 Fair Isaac Corporation. Confidential.
Automation in Collection Management
► Centralizing
the debt collection process in conjunction with accounting and other
debtor/constituent services
► Changes
►
Increased ability to use newer communication channels—Instant messaging,
Web portals, Web services, telephone dialers, IVRs, Email, Text Messaging
► Auto
► Tax
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in technologies
Fund withdrawals, improved payment processing methods
offsets will reduce basic costs to collect
© 2014 Fair Isaac Corporation. Confidential.
IRS 1075 Security Requirements
► The
Co-mingling of IRS FTI data vs. Non-FTI data
is a significant challenge
► The
labeling, masking and tracking the FTI to the
database element is a necessary process
► Security
is very important to all levels of
Government
►
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State and local governments will experience
increased demands on budgets to meet security
demands of taxpayer/constituent to secure
personal and business information
© 2014 Fair Isaac Corporation. Confidential.
Debt Collection At State Level—Regulations and Budgets
► Federal
regulations, polices, laws, established by the IRS and or by state and
local government continue to be implemented
► Increased
business requirements for security as well as compliance standards
that influence the profitability for collection agencies and law firms will result in
increases in collection fees as well as reduced collection performance on various
types of industry debts
► Receivables
such as local government revenues, court fees, traffic fines,
operational licenses and fees, permits, taxes
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© 2014 Fair Isaac Corporation. Confidential.
CIMS Roadmap—Increasing Debt Collection
Through Automation
Implementing State of the Art
► IVR
Inactive Voice Response systems
► Aspect Automated
Dialer processing
► SAGE Accounting
Systems and Ledger
► Customer
► Client
and External resource portals
► Supply
► Skip
Chain Management
Tracing Services and Resources
► Reporting
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Payment Portals
and Dashboard capabilities
© 2014 Fair Isaac Corporation. Confidential.
More About Us…
► Trustee
is known as the Treasurer in some states
► Banker
► Over
$2.6 billion cash receipts/disbursements
► Investor
► Current
► Bills
portfolio—$467 million
and collects property taxes
► Represents
60% of the county’s $1.2 billion budget
► 2013—$758 million
► Collects for 6 other municipalities, including City of Memphis
► Collection Rate
►
95% of current year taxes for the 1st year
► 99% within three years
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© 2014 Fair Isaac Corporation. Confidential.
Revenue Challenge
Debt has long been a persistent reality for government agencies. Uncollected
U. S. outstanding receivables now stand at an estimated $200 Billion and a
significant portion of these accounts are as old as 12 years. In the meantime,
budget gaps continue to expand by the billions and the demand on government
services grows and revenues remain flat.
~ Governing Magazine
September 2014
“Revenue Revival”
© 2014 Fair Isaac Corporation. Confidential.
Goals—Mission Impossible?
► Collect
more money with a declining tax base
► Reduce
Personnel
O&M
expenses
31%
69%
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© 2014 Fair Isaac Corporation. Confidential.
Pre-Automation
► Collection
Department
► No
enterprise-wide system (Microsoft Access/Excel)
► Pre-Tax Sale/Tax Sale
►
4-6 tax sales per year
► Bankruptcy
►
2,500 active cases
► Collect $3.3 Million annually
► Legal
►
Approximately 41,000 delinquent
► Sue 50%—$17.5 Million
► Collection
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activities
© 2014 Fair Isaac Corporation. Confidential.
Collection Activities
► What
we believed
► Aggressive
► 18
collector positions on staff
► Outbound calls with follow-up
► What
was occurring…
► Manual
spreadsheet approach
► House efforts
► Minimal outbound calls
► Administrative support
►
Legal activity was primary driver
► Bankruptcy
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© 2014 Fair Isaac Corporation. Confidential.
Debt Management System
► Affordable
► Integrate
► Simple
► Batch
► Use
importing/exporting of data
or Real-time
in-house programming staff due to monetary constraints
► Convert
► Flexible
► No
data/Develop/Maintain/Upgrade
due to constantly changing demands
forces dependency on vendor for business logic changes
► Use
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with our current system
automation to touch more accounts
© 2014 Fair Isaac Corporation. Confidential.
The Age of Titanium (FICO® Debt Manager™ solution)
► June
2011
► Signed
► June
contract
2012
► Converted
and balanced
►
2.4 Million receivables
► 11.1 Million transaction records
► June
2013
► Workflow
collection strategies
► Automated account assignments
► Monitor and track individual collection efforts
► Measure collection results
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© 2014 Fair Isaac Corporation. Confidential.
The Age of FICO® Debt Manager™ solution
► Professional Advice—FICO
► Operational
Recommendations
► Data Driven Strategy—9 months out
► Results
► Added
focus to 1st 90-120 days
► Established dedicated group of
collectors making only outbound calls
► Goals—monetary and call volume
► Measure and publish results
► Created incentives
► Different channels of communication
(in order of priority)
►
SMS Messaging—548% return
► Email
► Automated calls
► Snail Mail
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© 2014 Fair Isaac Corporation. Confidential.
2013 Revenue Impact
► Additional
► 80
18
$6 million during first 120 days out of delinquency
basis point increase
© 2014 Fair Isaac Corporation. Confidential.
Forecasted Operational Impact
Collection of Delinquent Taxes
First Full Year
2012
FYE 6/30/15
2012
FYE 6/30/14
2011
FYE 6/30/13
Staffing
100
57.11%
91
90
88
78
80
49.97%
75
68
70
66
64
60
49.41%
50
2010
FYE 6/30/12
40
52.12%
30
2009
FYE 6/30/11
56.44%
2008
FYE 6/30/10
20
10
54.72%
0
2007
FYE 6/30/09
45%
19
57.29%
50%
© 2014 Fair Isaac Corporation. Confidential.
55%
60%
2007
FYE
6/30/09
2008
FYE
6/30/10
2009
FYE
6/30/11
2010
FYE
6/30/12
2011
FYE
6/30/13
2012
FYE
6/30/14
2013
FYE
6/30/15
The Foreseeable Future
Refine:
► Compare
new strategies to baseline
► Workflow
automation
► Add
Tax Sale Process
► Foster
a desire to be part of the Elite Collector group
► Improve
collector reporting/statistics
► Automate
the different communication channels
► Now
it is “Manual” Automation
► FICO Adeptra
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© 2014 Fair Isaac Corporation. Confidential.
Questions
21
© 2014 Fair Isaac Corporation. Confidential.
22
Thank You!
Debra Gates
[email protected]
Phone
Michelle Burk
Email
Phone
© 2014 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
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© 2014 Fair Isaac Corporation. Confidential.
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Debra Gates
[email protected]
24
© 2014 Fair Isaac Corporation. Confidential.
Michelle Burk
Ohio Attorney General Mike DeWine
Columbus, Ohio