News & Resources

Kansas audit uncovers ineffective debt collection

May 27, 2011 Mike Garretson

A recent audit of six state programs performed by the Kansas Division of Legislative Post Audit uncovered inadequate and inconsistent debt collection practices, according to the Kansas Reporter. In particular, practices within the state's Department of Labor, Corporation Commission and Lottery were found to be lacking or not in place at all, and the technology being employed to track debts was extremely outdated. Despite the Kansas Lottery's policy of revoking retailers' contracts to sell tickets after four unsuccessful attempts to collect weekly payments, the audit found many cases where this was not followed - notably in the case of the owner of a Walton convenience store who owes the state more than $80,000 as a result of 21 failed attempts to collect dues, according to the news source. Communication problems were identified within the Corporation Commission's Conservation Program, which failed to contact some debtors or, after making initial contact, did not follow up. This left outstanding debts from as far back as 2007. Kara Sloan-Ramos, director of communications at KCC, told the news source that her agency still tracks debts the old-fashioned way, which may have contributed to some of the issues. The Conservation Division is considering upgrading to a computerized system that will help workers track debts, generate and send out past due notices and bring up automated reminders to ensure that cases do not slip through the cracks. The Department of Revenue's Retailers Sales Tax program and Kansas State University's Student Receivables division were found to have the strongest record of collecting debts. In order to crack down on uncollected debt, the Los Angeles City Council recently voted to create an inspector general of collections to supervise unpaid bill and ticket recovery across city departments. Additionally, the inspector general will be required to determine how much of the $541 million owed to the city is not collectible, primarily because the debts are too old. Uncollectible debts may make up more than 42 percent of the total, according to the Los Angeles Daily News. An investigation conducted last year found that the Los Angeles Fire Department and Department of Transportation were two of the city's biggest offenders when it came to failed debt collections. The two agencies are owed approximately $248 million - the majority of which is for unpaid ambulance bills - and $213 million in mostly unpaid parking tickets, respectively.