Ohio AG Sets Record for Debt Collection with $344 million in Fiscal 2008

The office of the Attorney General of Ohio announced Friday that it had exceeded its own goals for debt collection in 2008 by setting a new record for the fiscal year: $344 million in debt collected for various government agencies in the state. More than 47 percent of the total was collected by private, third-party collection vendors and legal counsel.

The state, which saw its 2008 fiscal year end on June 30, relies on the attorney general’s office to collect all of the debt owed to the various offices and agencies in the government.

In fiscal 2007, the state set a then-record for debt collection with $328 million collected. According to Ohio’s Revenue Recovery Services department, a goal of $330 million was set for total debt collection in 2008.

“When I look at that $344 million, I can only think of the obstacles we overcame to collect that debt,” Rae Ann Estep, Chief of Revenue Recovery Services, told insideARM. She said that with the economy in Ohio floundering, it was surprising to exceed the goal.

Slightly less than half of the debt collected in 2008 was attributed to outside vendors, according to data provided to insideARM. Outside legal counsel accounted for $99 million – or 28.8 percent – while private collection agencies accounted for $67 million collected, or 18.3 percent, up from $51.1 million collected in fiscal 2007. The remaining 52.9 percent was collected through in-house collection efforts.

Ohio launched an aggressive program to beef up its debt collection outsourcing in 2007. The state issued a large RFP for collection and legal services last summer (“Ohio Issues RFP for Collection of Old Debt,” August 16, 2007). Estep said that the fruits of that RFP haven’t really been felt yet.

“We only started forwarding collection work to those RFP vendors in the early part of [calendar year] 2008,” she said. “The full impact of that contract will be felt in fiscal 2009.”

Estep is looking for another rise in collections for the 2009 fiscal year, although the bad economy and stretched consumers and businesses are tempering expectations somewhat. Her office has set an official goal of $360 million on debt collection for the year.

There is no indication that a change in the state’s attorney general has had any impact on the debt collection program. In May, Attorney General Marc Dann was forced to resign amid a scandal involving personal infidelity. He was replaced by appointee Nancy Rogers two weeks later. Dann had been a major force in increasing the outsourcing of debt collection in Ohio.

Estep said that she couldn’t predict what would happen when a new attorney general is elected in November – Rogers has said that she will not seek election.