State Should Focus on Improving Debt Collection: Auditor

A report from auditors in Washington said that the state is missing could reap about $160 million if it improves debt collection practices and collects just half of their outstanding receivables.

The report, titled “Collection of State Debt” and released Tuesday by Auditor Brian Sonntag, was the result of an audit that examined 10 state programs in six separate agencies for the 2005-2006 fiscal year. Auditors found that eight of the 10 programs should focus on improving their debt collection efforts.

Auditors said that if the programs were to collect half of the debt they are owed, it would bring in an additional $159.7 million for the state.

The report’s recommendations singled out eight best practices that should be adopted by programs and agencies that are deficient in their collections. Among them were making contact with the debtor within 30 days, more phone contact with debtors, sending reminders by letter, providing flexible payment options, and taking legal actions for liens.

Most of the best practices came from two agencies in the audit that were lauded for their debt collection practices: the Department of Revenue’s Tax Collection units and the Employment Security Department’s Benefit Overpayment Recoveries Unit.

The best practices appeared to be effective in at least one instance; the Department of Labor and Industries put them into use while the audit was still under way, and the agency’s collections shot up by 50 percent, to $4.6 million.