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NEWS

FOR IMMEDIATE RELEASE
September 14, 2012
Contact: Michael DiResto, 225-342-7000

Division of Administration releases RFP to help implement state debt collection plan

BATON ROUGE – Commissioner of Administration Paul Rainwater announced today that the Division of Administration has released a Request for Proposals to engage private-sector expertise in data collection and analysis of debts owed to the state and to help implement a plan to improve state government debt collections.

A copy of the RFP can be viewed at http://wwwprd.doa.louisiana.gov/osp/lapac/AGENCY/PDF/05209700.pdf. 

At a meeting today of the Cash Management Review Board, Commissioner Rainwater highlighted the importance of the RFP for strengthening debt collection efforts.

Commissioner Rainwater said: “We will take a data-driven approach in implementing a comprehensive plan that protects taxpayers by aggressively and persistently pursuing money owed to the state.”

Commissioner Rainwater’s Three-Point Framework for Improving State Debt Collection

This strategy to improve state debt collection is focused on improving state debt functions, strategically recognizing where third party entities should support state work, and more aggressively pursuing delinquent debts. The Division of Administration has issued an RFP to conduct a review of outstanding debt and the assets the state has in place in order to implement the following three point plan.

  1. Consolidate, centralize, coordinate: Improving and supporting state debt function.
    • Streamline agency collection efforts for recently delinquent debts. Instead of having agency accountants operating by different rules, we will standardize the policies and procedures by which they pursue recently outstanding accounts receivable.
    • Consolidate state level efforts and utilize third-party support. Once debts have reached adolescence, evaluate debts to be either tasked to a group of fulltime collection agents in a consolidated state entity, outsourced to third-party debt collection experts or addressed via public-private debt collection partnership.
  2. Trigger early action for delinquent payments. We will institute a standardized timeline for when outstanding accounts receivable follow different recoupment procedures. These deadlines will send a debt from agency accountants to state collection agents or third-party collection entities so that no debt falls through the cracks. For debts that may be the cause of disputed invoices, we will expedite the hearing and arbitration process and the negotiation of settlements. 
  3. Strengthen enforcement. In order to ensure maximum payment, we will establish and/or enhance penalties, fees, and fines, including offsets such as withholding tax refunds or unclaimed property, and a freeze on any further state work or payments for any entity with outstanding state debt. We will improve the management and coordination of state tracking and management of accounts receivables to reflect the status of each, such as amount owed, debtor, and agency. We will also increase the use of electronic payment methods to make it easier for people to pay in the first place.

Another option being evaluated by the state, per Act 500 of the 2012 legislative session, is the Sale or Securitization of Old Debt.  While the three-point framework focuses on improving state debt collections, we are also evaluating the financial effectiveness and potential return on investment of selling or securitizing older debts.

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