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92_HB0086eng HB0086 Engrossed LRB9200874MWpk 1 AN ACT concerning State collection of debts, amending 2 named Acts. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The State Finance Act is amended by adding 6 Section 5.545 as follows: 7 (30 ILCS 105/5.545 new) 8 Sec. 5.545. The Debt Collection Fund. 9 Section 10. The Illinois State Collection Act of 1986 is 10 amended by changing Sections 2, 4, 5, 6, 7, and 8 and adding 11 Section 10 as follows: 12 (30 ILCS 210/2) (from Ch. 15, par. 152) 13 Sec. 2. This Act applies to all accounts or claims owed 14 to "State agencies", as that term is defined in the Illinois 15 State Auditing Act, except that the debt collection and 16 write-off provisions of this Act shall not apply to the 17 Illinois State Scholarship Commission in the administration 18 of its student loan programs. To the extent that some other 19 statute prescribes procedures for collection of particular 20 types of accounts or claims owed to State agencies in 21 conflict with the provisions of this Act, such other statute 22 shall continue in full force and effect. The debt collection 23 and write-off provisions of this Act may be utilized by the 24 General Assembly, the Supreme Court and the several courts of 25 this State, and the constitutionally elected State Officers, 26 at their discretion, except that Section 10 applies to all 27 State agencies unless otherwise specified in that Section. 28 However reporting requirements established by the comptroller 29 shall be followed by all State agencies. The provisions of HB0086 Engrossed -2- LRB9200874MWpk 1 this Act shall be utilized at all times by all departments, 2 agencies, divisions, and offices under the jurisdiction of 3 the Governor. 4 (Source: P.A. 85-814.) 5 (30 ILCS 210/4) (from Ch. 15, par. 154) 6 Sec. 4. (a) The Comptroller shall provide by rule 7 appropriate procedures for State agencies to follow in 8 establishing and recording within the State accounting system 9 records of amounts owed to the State of Illinois. The rules 10 of the Comptroller shall include, but are not limited to: 11 (1) the manner by which State agencies shall recognize 12 debts; 13 (2) systems to age accounts receivable of State 14 agencies; 15 (3) standards by which State agencies' claims may be 16 entered and removed from the Comptroller's Offset System 17 authorized by Section 10.05 of the State Comptroller Act; 18 (4) accounting procedures for estimating the amount of 19 uncollectible receivables of State agencies; and 20 (5) accounting procedures for writing off bad debts and 21 uncollectible claims, subject to the requirement of Section 22 10 that debts more than 90 days overdue be turned over to the 23 Debt Collection Unit of the Auditor General's Office. 24 (b) State agencies shall report to the Comptroller 25 information concerning their accounts receivable and 26 uncollectible claims in accordance with the rules of the 27 Comptroller, which may provide for summary reporting. 28 (c) The rules of the Comptroller authorized by this 29 Section may specify varying procedures and forms of reporting 30 dependent upon the nature and amount of the account 31 receivable or uncollectible claim, the age of the debt, the 32 probability of collection and such other factors that will 33 increase the net benefit to the State of the collection HB0086 Engrossed -3- LRB9200874MWpk 1 effort. 2 (d) The Comptroller shall report annually by March 14, 3 to the Governor and the General Assembly, the amount of all 4 delinquent debt owed to each State agency as of December 31 5 of the previous calendar year. 6 (Source: P.A. 86-515.) 7 (30 ILCS 210/5) (from Ch. 15, par. 155) 8 Sec. 5. Rules; payment plans; offsets. 9 (a) State agencies shall adopt rules establishing formal 10 due dates for amounts owing to the State and, until July 1, 11 2002, for the referral of seriously past due accounts to 12 private collection agencies, unless otherwise expressly 13 provided by law or rule. Such procedures shall be 14 established in accord with sound business practices. 15 (b) Until July 1, 2002, agencies may enter deferred 16 payment plans for debtors of the agency and documentation of 17 this fact retained by the agency, where the deferred payment 18 plan is likely to increase the net amount collected by the 19 State. 20 (c) State agencies may use the Comptroller's Offset 21 System provided in Section 10.05 of the State Comptroller Act 22 for the collection of debts owed to the agency. Until July 1, 23 2002, all debts that exceed $1,000 and are more than 90 days 24 past due shall be placed in the Comptroller's Offset System, 25 unless the State agency shall have entered into a deferred 26 payment plan or demonstrates to the Comptroller's 27 satisfaction that referral for offset is not cost effective. 28 (d) State agencies shall develop internal procedures 29 whereby agency initiated payments to its debtors may be 30 offset without referral to the Comptroller's Offset System. 31 (e) State agencies or the Comptroller may remove claims 32 from the Comptroller's Offset System, where such claims have 33 been inactive for more than one year. HB0086 Engrossed -4- LRB9200874MWpk 1 (f) Beginning July 1, 2002, State agencies other than 2 universities shall determine that a debt is uncollectible in 3 accordance with rules adopted by the Auditor General under 4 Section 10 and shall turn over to the Debt Collection Unit of 5 the Auditor General's Office any debt that is more than 90 6 days overdue to the State. Beginning July 1, 2002, 7 universities may determine that a debt is uncollectible in 8 accordance with rules adopted by the Auditor General under 9 Section 10 and may turn over to the Debt Collection Unit of 10 the Auditor General's Office any debt that is more than 90 11 days overdue to the State. The Department of Revenue is 12 exempt from this subsection with regard to debts the 13 confidentiality of which the Department of Revenue is 14 required by law to maintain. The Department of Public Aid is 15 exempt from the requirements of this subsection with regard 16 to child support debts, the collection of which is governed 17 by the requirements of Title IV, Part D of the federal Social 18 Security Act. The Department of Public Aid may refer child 19 support debts more than 90 days overdue to the State to the 20 Unit. In the event a child support debt is referred to the 21 Unit, the Unit must use any appropriate means for collection 22 of the debt that are normally available to the Unit under 23 State law. The debt, however, remains an obligation owed 24 under the Department of Public Aid's Child Support 25 Enforcement Program subject to the requirements of Title IV, 26 Part D of the federal Social Security Act, including the 27 continued use of federally mandated enforcement remedies and 28 techniques by the Department of Public Aid. 29 (Source: P.A. 90-332, eff. 1-1-98.) 30 (30 ILCS 210/6) (from Ch. 15, par. 156) 31 Sec. 6. The Comptroller with the approval of the 32 Governor may provide by rule and regulation for the creation 33 of a special fund or funds for the deposit of designated HB0086 Engrossed -5- LRB9200874MWpk 1 receipts by designated agencies to be known as the Accounts 2 Receivable Fund or Funds. Deposits shall be segregated by 3 the creditor agency. No deposit shall be made unless the 4 collection is of an account receivable more than 120 days 5 past due. 6 Seventy-five percent of the amounts deposited each 7 quarter into such a special fund shall be transferred to the 8 General Revenue Fund or such other fund that would have 9 originally received the receipts. The remaining amounts may 10 be used by the creditor agency for collecting overdue 11 accounts pursuant to appropriation by the General Assembly. 12 An agency, with the approval of the Comptroller, may 13 deposit all receipts into the General Revenue Fund or other 14 such fund that would have originally received the receipts. 15 Twenty-five percent of such deposits made each quarter for 16 accounts receivable more than 120 days past due shall be 17 transferred to the Accounts Receivable Fund or Funds. The 18 transferred amounts may be used by the creditor agency for 19 collecting overdue accounts pursuant to appropriation by the 20 General Assembly. 21 In determining the types of receipts to be deposited 22 pursuant to this Section the Comptroller and the Governor 23 shall consider the following factors: 24 (1) The percentage of such receipts estimated to be 25 uncollectible by the creditor agency; 26 (2) The percentage of such receipts certified as 27 uncollectible by the Attorney General; 28 (3) The potential increase in future receipts, as 29 estimated by the creditor agency, if 25% of amounts collected 30 are retained for collection efforts; 31 (4) The impact of the retention of 25% of receipts on 32 the relevant fund balances; and 33 (5) Such other factors as the Comptroller and the 34 Governor deem relevant. HB0086 Engrossed -6- LRB9200874MWpk 1 This Section shall not apply to the Department of Revenue 2 nor the Department of Employment Security. 3 This Section is repealed July 1, 2002. On that date any 4 moneys in the Accounts Receivable Funds created under this 5 Section shall be transferred into the General Revenue Fund. 6 (Source: P.A. 86-194.) 7 (30 ILCS 210/7) (from Ch. 15, par. 157) 8 Sec. 7. Upon agreement of the Attorney General, agencies 9 may contract for legal assistance in collecting past due 10 accounts. In addition, agencies may contract for collection 11 assistance where such assistance is determined by the agency 12 to be in the best economic interest of the State. Agencies 13 may utilize monies in the Accounts Receivable Fund to pay for 14 such legal and collection assistance; provided, however, that 15 no more than 20% of collections on an account may be paid 16 from the Accounts Receivable Fund as compensation for legal 17 and collection assistance on that account. If the amount 18 available for expenditure from the Accounts Receivable Fund 19 is insufficient to pay the cost of such services, the 20 difference, up to 40% of the total collections per account, 21 may be paid from other monies which may be available to the 22 Agency. 23 This Section is repealed July 1, 2002. Any contract 24 entered into under this Section before that date shall remain 25 valid but may not be renewed. 26 (Source: P.A. 85-814.) 27 (30 ILCS 210/8) (from Ch. 15, par. 158) 28 Sec. 8. Debt Collection Board. There is created a Debt 29 Collection Board consisting of the Director of Central 30 Management Services as chairman, the State Comptroller, and 31 the Attorney General, or their respective designees. The 32 Board shall establish a centralized collections service to HB0086 Engrossed -7- LRB9200874MWpk 1 undertake further collection efforts on delinquent accounts 2 or claims of the State which have not been collected through 3 the reasonable efforts of the respective State agencies. 4 The Board shall promulgate rules and regulations pursuant to 5 the Illinois Administrative Procedure Act with regard to the 6 establishment of timetables and the assumption of 7 responsibility for agency accounts receivable that have not 8 been collected by the agency, are not subject to a current 9 repayment plan, or have not been certified as uncollectible 10 as of the date specified by the Board. The Board shall make 11 a final evaluation of those accounts and either (i) direct or 12 conduct further collection activities when further collection 13 efforts are in the best economic interest of the State or 14 (ii) in accordance with Section 2 of the Uncollected State 15 Claims Act, certify the receivable as uncollectible or submit 16 the account to the Attorney General for that certification. 17 The Board is empowered to adopt rules and regulations 18 subject to the provisions of the Illinois Administrative 19 Procedure Act. 20 The Board is empowered to enter into one or more 21 contracts with outside vendors with demonstrated capabilities 22 in the area of account collection. The contracts shall be 23 let on the basis of competitive proposals secured from 24 responsible proposers. The Board may require that vendors be 25 prequalified. All contracts shall provide for a contingent 26 fee based on the age, nature, amount and type of delinquent 27 account. The Board may adopt a reasonable classification 28 schedule for the various receivables. The contractor shall 29 remit the amount collected, net of the contingent fee, to the 30 respective State agency which shall deposit the net amount 31 received into the fund that would have received the receipt 32 had it been collected by the State agency. No portion of the 33 collections shall be deposited into an Accounts Receivable 34 Fund established under Section 6 of this Act. The Board HB0086 Engrossed -8- LRB9200874MWpk 1 shall act only upon the unanimous vote of its members. 2 This Section is repealed July 1, 2002. 3 (Source: P.A. 89-511, eff. 1-1-97.) 4 (30 ILCS 210/10 new) 5 Sec. 10. Debt Collection Unit of the Auditor General's 6 Office. 7 (a) The Auditor General shall establish and maintain a 8 division within his or her office to be known as the Debt 9 Collection Unit. The purpose of the Unit shall be the 10 collection of debts more than 90 days overdue to the State. 11 The Auditor General shall adopt rules for the administration 12 and procedures of the Unit. 13 (b) The Auditor General shall adopt rules for the 14 certification of debt collection specialists to be employed 15 by the Unit. 16 (c) The Auditor General shall adopt rules for 17 determining when a debt owed to a State agency is 18 uncollectible. The rules shall be used by State agencies 19 other than universities beginning July 1, 2002 and may be 20 used by universities beginning July 1, 2002. The Department 21 of Revenue is exempt from those rules with regard to debts 22 the confidentiality of which the Department of Revenue is 23 required by law to maintain. The Auditor General may 24 contract with private collection entities and attorneys to 25 pursue the collection of a debt determined to be 26 uncollectable. 27 (d) Beginning July 1, 2002, a State agency other than a 28 university shall turn over, and a university may turn over, 29 to the Unit for collection any debt that is more than 90 days 30 overdue to the State. The Department of Revenue is exempt 31 from turning over to the Unit any debt the confidentiality of 32 which the Department of Revenue is required by law to 33 maintain. When turning over a debt, the State agency shall HB0086 Engrossed -9- LRB9200874MWpk 1 also turn over all documents and records relating to the 2 debt. In collecting a debt, the Unit may exercise the same 3 rights and powers with regard to debt collection possessed by 4 the State agency that turned over the debt to the Unit. The 5 Department of Public Aid is exempt from the requirements of 6 this subsection with regard to child support debts the 7 collection of which is governed by the requirements of Title 8 IV, Part D of the federal Social Security Act. The 9 Department of Public Aid may refer child support debts more 10 than 90 days overdue to the State to the Unit. In the event 11 a child support debt is referred to the Unit, the Unit must 12 use any appropriate means for collection of the debt normally 13 available to the Unit under State law. The debt, however, 14 remains an obligation owed under the Department of Public 15 Aid's Child Support Enforcement Program subject to the 16 requirements of Title IV, Part D of the federal Social 17 Security Act, including the continued use of federally 18 mandated enforcement remedies and techniques by the 19 Department of Public Aid. 20 (e) The Debt Collection Fund is created as a special 21 fund in the State treasury. Ten percent of the amount 22 collected on each debt by the Unit shall be deposited into 23 the Debt Collection Fund; the remaining 90% of the amount 24 collected shall be deposited into the appropriate State fund 25 or funds to which the debt was owed. Moneys in the Debt 26 Collection Fund shall be appropriated only for the 27 administrative costs of the Unit. At the end of each fiscal 28 year, moneys remaining unappropriated in the Debt Collection 29 Fund shall be transferred into the General Revenue Fund. The 30 provisions of this subsection do not apply to any child 31 support debt referred to the Unit by the Department of Public 32 Aid under this Section or Section 5. Collections resulting 33 from the referrals must be distributed and disbursed at the 34 direction of the Department of Public Aid in accordance with HB0086 Engrossed -10- LRB9200874MWpk 1 the requirements of Title IV, Part D of the federal Social 2 Security Act, applicable provisions of State law, and the 3 rules of the Department of Public Aid. 4 (f) The Attorney General and State Comptroller shall 5 assist in the debt collection efforts of the Unit as 6 requested by the Unit. 7 (g) The Auditor General shall report semi-annually to 8 the General Assembly and State Comptroller upon the debt 9 collection efforts of the Unit. Each report shall include an 10 analysis of the overdue debts owed to the State. 11 Section 99. Effective date. This Act takes effect upon 12 becoming law.