New Oregon Audit: State debt collections fall short

Liquidated and delinquent debts owed to the State of Oregon have almost doubled since 2008, to nearly $3.2 billion, and the state needs a sustained focus to improve collections performance over time, a new audit released by Secretary of State Jeanne Atkins found.

Collection rates on delinquent receivables have dropped since 2008, according to data agencies report to the Legislative Fiscal Office. The audit found that the recession, a lack of sustained focus on improvement, and Oregon’s highly decentralized approach to collections likely contributed to debt growth and reduced performance.

“This is our sixth collections-related audit since 1997,” Secretary of State Jeanne Atkins said. “Significant improvements identified in those audits have not been implemented, some dating back 18 years. Our state government needs to make delinquent debt collection a consistently high priority.”

Oregon has not implemented some productive collection tools used by other states, has not resolved lingering legal issues that hinder collections, and has allowed inadequate performance measurement to persist.

Some agencies have made collections improvements. However, the audit identified four tools the state has considered for years, but not implemented: vendor offset, expanded levies on debtor bank accounts, a state lien registry, and internet posting of debtors. The audit work on vendor offset identified over 9,000 state debtors on the state vendor list who had received payments from the state or were authorized to receive payments.

The audit included discussions with leading states on debt collection. That work highlighted the importance of having a system “expert” responsible for identifying potential improvements, looking outside the state for new opportunities and reporting to decision makers. The auditors recommended the Department of Administrative Services serve as a statewide strategist on debt collection.

The Audits Division issued an interim report to the Legislature to suggest further legislative changes while the audit was in progress. At the auditors’ recommendation, Senate Bill 55 in the 2015 legislative session charged the Department of Administrative Services with monitoring and improving debt collection. The bill, signed by the governor in July, was initially drafted by the Institute for Modern Government at Willamette University. The Department of Administrative Services also contributed to the bill.

“Collections will not improve overnight, but improvements over time could bring in significant dollars,” Audits Division Director Gary Blackmer said. “If Oregon had collected delinquent debt at a 13.5 percent rate in 2014 – last achieved in 2008 – the state would have brought in nearly $90 million more in collections.

Read the full audit on the Secretary of State website.

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