093_HB0089 LRB093 02361 JAM 02707 b 1 AN ACT concerning State collection of debts. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The State Finance Act is amended by adding 5 Section 5.595 as follows: 6 (30 ILCS 105/5.595 new) 7 Sec. 5.595. The Debt Collection Fund. 8 Section 10. The Illinois State Collection Act of 1986 is 9 amended by changing Sections 2, 4, 5, 6, 7, and 8 and adding 10 Section 10 as follows: 11 (30 ILCS 210/2) (from Ch. 15, par. 152) 12 Sec. 2. This Act applies to all accounts or claims owed 13 to "State agencies", as that term is defined in the Illinois 14 State Auditing Act, except that the debt collection and 15 write-off provisions of this Act shall not apply to the 16 Illinois State Scholarship Commission in the administration 17 of its student loan programs. To the extent that some other 18 statute prescribes procedures for collection of particular 19 types of accounts or claims owed to State agencies in 20 conflict with the provisions of this Act, such other statute 21 shall continue in full force and effect. The debt collection 22 and write-off provisions of this Act may be utilized by the 23 General Assembly, the Supreme Court and the several courts of 24 this State, and the constitutionally elected State Officers, 25 at their discretion, except that Section 10 applies to all 26 State agencies unless otherwise specified in that Section. 27 However reporting requirements established by the comptroller 28 shall be followed by all State agencies. The provisions of 29 this Act shall be utilized at all times by all departments, -2- LRB093 02361 JAM 02707 b 1 agencies, divisions, and offices under the jurisdiction of 2 the Governor. 3 (Source: P.A. 85-814.) 4 (30 ILCS 210/4) (from Ch. 15, par. 154) 5 Sec. 4. (a) The Comptroller shall provide by rule 6 appropriate procedures for State agencies to follow in 7 establishing and recording within the State accounting system 8 records of amounts owed to the State of Illinois. The rules 9 of the Comptroller shall include, but are not limited to: 10 (1) the manner by which State agencies shall recognize 11 debts; 12 (2) systems to age accounts receivable of State 13 agencies; 14 (3) standards by which State agencies' claims may be 15 entered and removed from the Comptroller's Offset System 16 authorized by Section 10.05 of the State Comptroller Act; 17 (4) accounting procedures for estimating the amount of 18 uncollectible receivables of State agencies; and 19 (5) accounting procedures for writing off bad debts and 20 uncollectible claims, subject to the requirement of Section 21 10 that debts more than 90 days overdue be turned over to the 22 Debt Collection Unit of the Auditor General's Office. 23 (b) State agencies shall report to the Comptroller 24 information concerning their accounts receivable and 25 uncollectible claims in accordance with the rules of the 26 Comptroller, which may provide for summary reporting. 27 (c) The rules of the Comptroller authorized by this 28 Section may specify varying procedures and forms of reporting 29 dependent upon the nature and amount of the account 30 receivable or uncollectible claim, the age of the debt, the 31 probability of collection and such other factors that will 32 increase the net benefit to the State of the collection 33 effort. -3- LRB093 02361 JAM 02707 b 1 (d) The Comptroller shall report annually by March 14, 2 to the Governor and the General Assembly, the amount of all 3 delinquent debt owed to each State agency as of December 31 4 of the previous calendar year. 5 (Source: P.A. 86-515.) 6 (30 ILCS 210/5) (from Ch. 15, par. 155) 7 Sec. 5. Rules; payment plans; offsets. 8 (a) State agencies shall adopt rules establishing formal 9 due dates for amounts owing to the State and, until July 1, 10 2004, for the referral of seriously past due accounts to 11 private collection agencies, unless otherwise expressly 12 provided by law or rule. Such procedures shall be 13 established in accord with sound business practices. 14 (b) Until July 1, 2004, agencies may enter deferred 15 payment plans for debtors of the agency and documentation of 16 this fact retained by the agency, where the deferred payment 17 plan is likely to increase the net amount collected by the 18 State. 19 (c) State agencies may use the Comptroller's Offset 20 System provided in Section 10.05 of the State Comptroller Act 21 for the collection of debts owed to the agency. Until July 22 1, 2004, all debts that exceed $1,000 and are more than 90 23 days past due shall be placed in the Comptroller's Offset 24 System, unless the State agency shall have entered into a 25 deferred payment plan or demonstrates to the Comptroller's 26 satisfaction that referral for offset is not cost effective. 27 (d) State agencies shall develop internal procedures 28 whereby agency initiated payments to its debtors may be 29 offset without referral to the Comptroller's Offset System. 30 (e) State agencies or the Comptroller may remove claims 31 from the Comptroller's Offset System, where such claims have 32 been inactive for more than one year. 33 (f) State agencies may use the Comptroller's Offset -4- LRB093 02361 JAM 02707 b 1 System to determine if any State agency is attempting to 2 collect debt from a contractor, bidder, or other proposed 3 contracting party. 4 (g) Beginning July 1, 2004, State agencies other than 5 universities shall determine that a debt is uncollectible in 6 accordance with rules adopted by the Auditor General under 7 Section 10 and shall turn over to the Debt Collection Unit of 8 the Auditor General's Office any debt that is more than 90 9 days overdue to the State. Beginning July 1, 2004, 10 universities may determine that a debt is uncollectible in 11 accordance with rules adopted by the Auditor General under 12 Section 10 and may turn over to the Debt Collection Unit of 13 the Auditor General's Office any debt that is more than 90 14 days overdue to the State. The Department of Revenue is 15 exempt from this subsection with regard to debts the 16 confidentiality of which the Department of Revenue is 17 required by law to maintain. The Department of Public Aid is 18 exempt from the requirements of this subsection with regard 19 to child support debts, the collection of which is governed 20 by the requirements of Title IV, Part D of the federal Social 21 Security Act. The Department of Public Aid may refer child 22 support debts more than 90 days overdue to the State to the 23 Unit. In the event a child support debt is referred to the 24 Unit, the Unit must use any appropriate means for collection 25 of the debt that are normally available to the Unit under 26 State law. The debt, however, remains an obligation owed 27 under the Department of Public Aid's Child Support 28 Enforcement Program subject to the requirements of Title IV, 29 Part D of the federal Social Security Act, including the 30 continued use of federally mandated enforcement remedies and 31 techniques by the Department of Public Aid. 32 (Source: P.A. 92-404, eff. 7-1-02.) 33 (30 ILCS 210/6) (from Ch. 15, par. 156) -5- LRB093 02361 JAM 02707 b 1 Sec. 6. The Comptroller with the approval of the 2 Governor may provide by rule and regulation for the creation 3 of a special fund or funds for the deposit of designated 4 receipts by designated agencies to be known as the Accounts 5 Receivable Fund or Funds. Deposits shall be segregated by 6 the creditor agency. No deposit shall be made unless the 7 collection is of an account receivable more than 120 days 8 past due. 9 Seventy-five percent of the amounts deposited each 10 quarter into such a special fund shall be transferred to the 11 General Revenue Fund or such other fund that would have 12 originally received the receipts. The remaining amounts may 13 be used by the creditor agency for collecting overdue 14 accounts pursuant to appropriation by the General Assembly. 15 An agency, with the approval of the Comptroller, may 16 deposit all receipts into the General Revenue Fund or other 17 such fund that would have originally received the receipts. 18 Twenty-five percent of such deposits made each quarter for 19 accounts receivable more than 120 days past due shall be 20 transferred to the Accounts Receivable Fund or Funds. The 21 transferred amounts may be used by the creditor agency for 22 collecting overdue accounts pursuant to appropriation by the 23 General Assembly. 24 In determining the types of receipts to be deposited 25 pursuant to this Section the Comptroller and the Governor 26 shall consider the following factors: 27 (1) The percentage of such receipts estimated to be 28 uncollectible by the creditor agency; 29 (2) The percentage of such receipts certified as 30 uncollectible by the Attorney General; 31 (3) The potential increase in future receipts, as 32 estimated by the creditor agency, if 25% of amounts collected 33 are retained for collection efforts; 34 (4) The impact of the retention of 25% of receipts on -6- LRB093 02361 JAM 02707 b 1 the relevant fund balances; and 2 (5) Such other factors as the Comptroller and the 3 Governor deem relevant. 4 This Section shall not apply to the Department of Revenue 5 nor the Department of Employment Security. 6 This Section is repealed July 1, 2004. On that date any 7 moneys in the Accounts Receivable Funds created under this 8 Section shall be transferred into the General Revenue Fund. 9 (Source: P.A. 86-194.) 10 (30 ILCS 210/7) (from Ch. 15, par. 157) 11 Sec. 7. Upon agreement of the Attorney General, agencies 12 may contract for legal assistance in collecting past due 13 accounts. In addition, agencies may contract for collection 14 assistance where such assistance is determined by the agency 15 to be in the best economic interest of the State. Agencies 16 may utilize monies in the Accounts Receivable Fund to pay for 17 such legal and collection assistance; provided, however, that 18 no more than 20% of collections on an account may be paid 19 from the Accounts Receivable Fund as compensation for legal 20 and collection assistance on that account. If the amount 21 available for expenditure from the Accounts Receivable Fund 22 is insufficient to pay the cost of such services, the 23 difference, up to 40% of the total collections per account, 24 may be paid from other monies which may be available to the 25 Agency. 26 This Section is repealed July 1, 2004. Any contract 27 entered into under this Section before that date shall remain 28 valid but may not be renewed. 29 (Source: P.A. 85-814.) 30 (30 ILCS 210/8) (from Ch. 15, par. 158) 31 Sec. 8. Debt Collection Board. There is created a Debt 32 Collection Board consisting of the Director of Central -7- LRB093 02361 JAM 02707 b 1 Management Services as chairman, the State Comptroller, and 2 the Attorney General, or their respective designees. The 3 Board shall establish a centralized collections service to 4 undertake further collection efforts on delinquent accounts 5 or claims of the State which have not been collected through 6 the reasonable efforts of the respective State agencies. 7 The Board shall promulgate rules and regulations pursuant to 8 the Illinois Administrative Procedure Act with regard to the 9 establishment of timetables and the assumption of 10 responsibility for agency accounts receivable that have not 11 been collected by the agency, are not subject to a current 12 repayment plan, or have not been certified as uncollectible 13 as of the date specified by the Board. The Board shall make 14 a final evaluation of those accounts and either (i) direct or 15 conduct further collection activities when further collection 16 efforts are in the best economic interest of the State or 17 (ii) in accordance with Section 2 of the Uncollected State 18 Claims Act, certify the receivable as uncollectible or submit 19 the account to the Attorney General for that certification. 20 The Board is empowered to adopt rules and regulations 21 subject to the provisions of the Illinois Administrative 22 Procedure Act. 23 The Board is empowered to enter into one or more 24 contracts with outside vendors with demonstrated capabilities 25 in the area of account collection. The contracts shall be 26 let on the basis of competitive proposals secured from 27 responsible proposers. The Board may require that vendors be 28 prequalified. All contracts shall provide for a contingent 29 fee based on the age, nature, amount and type of delinquent 30 account. The Board may adopt a reasonable classification 31 schedule for the various receivables. The contractor shall 32 remit the amount collected, net of the contingent fee, to the 33 respective State agency which shall deposit the net amount 34 received into the fund that would have received the receipt -8- LRB093 02361 JAM 02707 b 1 had it been collected by the State agency. No portion of the 2 collections shall be deposited into an Accounts Receivable 3 Fund established under Section 6 of this Act. The Board 4 shall act only upon the unanimous vote of its members. 5 This Section is repealed July 1, 2004. 6 (Source: P.A. 89-511, eff. 1-1-97.) 7 (30 ILCS 210/10 new) 8 Sec. 10. Debt Collection Unit of the Auditor General's 9 Office. 10 (a) The Auditor General shall establish and maintain a 11 division within his or her office to be known as the Debt 12 Collection Unit. The purpose of the Unit shall be the 13 collection of debts more than 90 days overdue to the State. 14 The Auditor General shall adopt rules for the administration 15 and procedures of the Unit. 16 (b) The Auditor General shall adopt rules for the 17 certification of debt collection specialists to be employed 18 by the Unit. 19 (c) The Auditor General shall adopt rules for 20 determining when a debt owed to a State agency is 21 uncollectible. The rules shall be used by State agencies 22 other than universities beginning July 1, 2004 and may be 23 used by universities beginning July 1, 2004. The Department 24 of Revenue is exempt from those rules with regard to debts 25 the confidentiality of which the Department of Revenue is 26 required by law to maintain. The Auditor General may contract 27 with private collection entities and attorneys to pursue the 28 collection of a debt determined to be uncollectable. 29 (d) Beginning July 1, 2004, a State agency other than a 30 university shall turn over, and a university may turn over, 31 to the Unit for collection any debt that is more than 90 days 32 overdue to the State. The Department of Revenue is exempt 33 from turning over to the Unit any debt the confidentiality of -9- LRB093 02361 JAM 02707 b 1 which the Department of Revenue is required by law to 2 maintain. When turning over a debt, the State agency shall 3 also turn over all documents and records relating to the 4 debt. In collecting a debt, the Unit may exercise the same 5 rights and powers with regard to debt collection possessed by 6 the State agency that turned over the debt to the Unit. The 7 Department of Public Aid is exempt from the requirements of 8 this subsection with regard to child support debts, the 9 collection of which is governed by the requirements of Title 10 IV, Part D of the federal Social Security Act. The 11 Department of Public Aid may refer child support debts more 12 than 90 days overdue to the State to the Unit. In the event 13 a child support debt is referred to the Unit, the Unit must 14 use any appropriate means for collection of the debt that are 15 normally available to the Unit under State law. The debt, 16 however, remains an obligation owed under the Department of 17 Public Aid's Child Support Enforcement Program subject to the 18 requirements of Title IV, Part D of the federal Social 19 Security Act, including the continued use of federally 20 mandated enforcement remedies and techniques by the 21 Department of Public Aid. 22 (e) The Debt Collection Fund is created as a special 23 fund in the State treasury. Ten percent of the amount 24 collected on each debt by the Unit shall be deposited into 25 the Debt Collection Fund; the remaining 90% of the amount 26 collected shall be deposited into the appropriate State fund 27 or funds to which the debt was owed. Moneys in the Debt 28 Collection Fund shall be appropriated only for the 29 administrative costs of the Unit. At the end of each fiscal 30 year, moneys remaining unappropriated in the Debt Collection 31 Fund shall be transferred into the General Revenue Fund. The 32 provisions of this subsection do not apply to any child 33 support debt referred to the Unit by the Department of Public 34 Aid under this Section or Section 5. Collections resulting -10- LRB093 02361 JAM 02707 b 1 from the referrals must be distributed and disbursed at the 2 direction of the Department of Public Aid in accordance with 3 the requirements of Title IV, Part D of the federal Social 4 Security Act, applicable provisions of State law, and the 5 rules of the Department of Public Aid. 6 (f) The Attorney General and State Comptroller shall 7 assist in the debt collection efforts of the Unit as 8 requested by the Unit. 9 (g) The Auditor General shall report semi-annually to 10 the General Assembly and State Comptroller upon the debt 11 collection efforts of the Unit. Each report shall include an 12 analysis of the overdue debts owed to the State. 13 Section 99. Effective date. This Act takes effect upon 14 becoming law.