Public Act 93-0570

SB1923 Enrolled                      LRB093 08780 RCE 09011 b

    AN ACT in relation to State collection of debts.

    Be it enacted by the People of  the  State  of  Illinois,
represented in the General Assembly:

    Section  5.  The  State  Finance Act is amended by adding
Section 5.595 as follows:

    (30 ILCS 105/5.595 new)
    Sec. 5.595. The Debt Collection Fund.

    Section 10.  The Illinois State Collection Act of 1986 is
amended by changing Sections 4, 5, 6, 7,  and  8  and  adding
Section 10 as follows:

    (30 ILCS 210/4) (from Ch. 15, par. 154)
    Sec.  4.   (a)  The  Comptroller  shall  provide  by rule
appropriate  procedures  for  State  agencies  to  follow  in
establishing and recording within the State accounting system
records of amounts owed to the State of Illinois.  The  rules
of the Comptroller shall include, but are not limited to:
    (1)  the  manner  by which State agencies shall recognize
debts;
    (2)  systems  to  age  accounts   receivable   of   State
agencies;
    (3)  standards  by  which  State  agencies' claims may be
entered and removed  from  the  Comptroller's  Offset  System
authorized by Section 10.05 of the State Comptroller Act;
    (4)  accounting  procedures  for estimating the amount of
uncollectible receivables of State agencies; and
    (5)  accounting procedures for writing off bad debts  and
uncollectible   claims   prior   to  referring  them  to  the
Department of Revenue Collections Bureau for collection.
    (b)  State  agencies  shall  report  to  the  Comptroller
information  concerning   their   accounts   receivable   and
uncollectible  claims  in  accordance  with  the rules of the
Comptroller, which may provide  for  summary  reporting.  The
Department  of  Revenue is exempt from the provisions of this
subsection with regard to debts the confidentiality of  which
the Department of Revenue is required by law to maintain.
    (c)  The  rules  of  the  Comptroller  authorized by this
Section may specify varying procedures and forms of reporting
dependent  upon  the  nature  and  amount  of   the   account
receivable  or  uncollectible claim, the age of the debt, the
probability of collection and such other  factors  that  will
increase  the  net  benefit  to  the  State of the collection
effort.
    (d)  The Comptroller shall report annually by  March  14,
to  the  Governor and the General Assembly, the amount of all
delinquent debt owed to each State agency as of  December  31
of the previous calendar year.
(Source: P.A. 86-515.)

    (30 ILCS 210/5) (from Ch. 15, par. 155)
    Sec. 5.  Rules; payment plans; offsets.
    (a)  Until  July 1, 2004 for the Department of Public Aid
and July  1,  2005  for  Universities  and  all  other  State
agencies,  State  agencies  shall  adopt  rules  establishing
formal  due  dates for amounts owing to the State and for the
referral of seriously past due accounts to private collection
agencies, unless otherwise expressly provided by law or rule,
except that on and after July  1,  2005,  the  Department  of
Employment   Security   may  continue  to  refer  to  private
collection agencies past due amounts  that  are  exempt  from
subsection  (g).  Such  procedures  shall  be  established in
accord with sound business practices.
    (b)  Until July 1, 2004 for the Department of Public  Aid
and  July  1,  2005  for  Universities  and  all  other State
agencies, agencies  may  enter  deferred  payment  plans  for
debtors of the agency and documentation of this fact retained
by  the  agency, where the deferred payment plan is likely to
increase the net amount collected by the State, except  that,
on  and  after  July  1,  2005,  the Department of Employment
Security may continue to enter  deferred  payment  plans  for
debts that are exempt from subsection (g).
    (c)  Until  July 1, 2004 for the Department of Public Aid
and July  1,  2005  for  Universities  and  all  other  State
agencies,  State  agencies  may  use the Comptroller's Offset
System provided in Section 10.05 of the State Comptroller Act
for the collection of debts owed to the agency, except  that,
on  and  after  July  1,  2005,  the Department of Employment
Security may continue to use the Comptroller's offset  system
to  collect amounts that are exempt from subsection (g).  All
debts that exceed $1,000 and are more than 90 days  past  due
shall  be  placed  in the Comptroller's Offset System, unless
the State agency shall have entered into a  deferred  payment
plan  or  demonstrates to the Comptroller's satisfaction that
referral for offset is not cost effective.
    (d)  State agencies  shall  develop  internal  procedures
whereby  agency  initiated  payments  to  its  debtors may be
offset without referral to the Comptroller's Offset System.
    (e)  State agencies or the Comptroller may remove  claims
from  the Comptroller's Offset System, where such claims have
been inactive for more than one year.
    (f)  State agencies  may  use  the  Comptroller's  Offset
System  to  determine  if  any  State agency is attempting to
collect debt from a contractor,  bidder,  or  other  proposed
contracting party.
    (g)  Beginning July 1, 2004 for the Departments of Public
Aid and Employment Security and July 1, 2005 for Universities
and  other  State agencies, State agencies shall refer to the
Department of Revenue Debt Collection Bureau (the Bureau) all
debt to the State,  provided  that  the  debt  satisfies  the
requirements  for  referral of delinquent debt as established
by rule by the Department of Revenue.
    (h)  The Department of Public Aid shall  be  exempt  from
the requirements of this Section with regard to child support
debts,   the   collection   of   which  is  governed  by  the
requirements of Title  IV,  Part  D  of  the  federal  Social
Security  Act.  The  Department of Public Aid may refer child
support debts to the Bureau, provided that the debt satisfies
the  requirements  for  referral  of   delinquent   debt   as
established  by rule by the Department of Revenue. The Bureau
shall use all legal means available to collect child  support
debt,  including  those authorizing the Department of Revenue
to collect debt  and  those  authorizing  the  Department  of
Public  Aid  to  collect  debt.  All such referred debt shall
remain an obligation under the  Department  of  Public  Aid's
Child Support Enforcement Program subject to the requirements
of  Title  IV,  Part  D  of  the federal Social Security Act,
including the continued use of federally mandated enforcement
remedies and techniques by the Department of Public Aid.
    (h-1)  The Department of Employment  Security  is  exempt
from  subsection  (g)  with  regard  to  debts to any federal
account, including but not limited to the Unemployment  Trust
Fund,   and   penalties   and  interest  assessed  under  the
Unemployment Insurance  Act.  The  Department  of  Employment
Security  may  refer  those debts to the Bureau, provided the
debt satisfies the requirements for  referral  of  delinquent
debt as established by rule by the Department of Revenue. The
Bureau  shall  use  all  legal means available to collect the
debts, including those authorizing the Department of  Revenue
to  collect  debt  and  those  authorizing  the Department of
Employment Security to collect debt.  All referred debt shall
remain an obligation to the account to which it is owed.
    (i)  All debt referred to the Bureau for collection shall
remain the property of the referring agency. The Bureau shall
collect debt on behalf of  the  referring  agency  using  all
legal   means  available,  including  those  authorizing  the
Department of Revenue to collect debt and  those  authorizing
the referring agency to collect debt.
    (j)  No  debt  secured  by  an  interest in real property
granted by the debtor in exchange for  the  creation  of  the
debt  shall  be referred to the Bureau. The Bureau shall have
no obligation to collect debts secured by an interest in real
property.
    (k)  Beginning July 1, 2003, each  agency  shall  collect
and  provide  the Bureau information regarding the nature and
details of its debt in such form and manner as the Department
of Revenue shall require.
    (l)  For all debt  accruing  after  July  1,  2003,  each
agency  shall collect and transmit such debtor identification
information as the Department of Revenue shall require.
(Source: P.A. 92-404, eff. 7-1-02.)

    (30 ILCS 210/6) (from Ch. 15, par. 156)
    Sec.  6.   The  Comptroller  with  the  approval  of  the
Governor may provide by rule and regulation for the  creation
of  a  special  fund  or  funds for the deposit of designated
receipts by designated agencies to be known as  the  Accounts
Receivable  Fund  or  Funds.  Deposits shall be segregated by
the creditor agency.  No deposit shall  be  made  unless  the
collection  is  of  an  account receivable more than 120 days
past due.
    Seventy-five  percent  of  the  amounts  deposited   each
quarter  into such a special fund shall be transferred to the
General Revenue Fund or  such  other  fund  that  would  have
originally  received the receipts.  The remaining amounts may
be  used  by  the  creditor  agency  for  collecting  overdue
accounts pursuant to appropriation by the General Assembly.
    An agency, with the  approval  of  the  Comptroller,  may
deposit  all  receipts into the General Revenue Fund or other
such fund that would have originally received  the  receipts.
Twenty-five  percent  of  such deposits made each quarter for
accounts receivable more than 120  days  past  due  shall  be
transferred  to  the  Accounts Receivable Fund or Funds.  The
transferred amounts may be used by the  creditor  agency  for
collecting  overdue accounts pursuant to appropriation by the
General Assembly.
    In determining the types  of  receipts  to  be  deposited
pursuant  to  this  Section  the Comptroller and the Governor
shall consider the following factors:
    (1)  The percentage of  such  receipts  estimated  to  be
uncollectible by the creditor agency;
    (2)  The   percentage   of  such  receipts  certified  as
uncollectible by the Attorney General;
    (3)  The  potential  increase  in  future  receipts,   as
estimated by the creditor agency, if 25% of amounts collected
are retained for collection efforts;
    (4)  The  impact  of  the retention of 25% of receipts on
the relevant fund balances; and
    (5)  Such  other  factors  as  the  Comptroller  and  the
Governor deem relevant.
    This Section shall not apply to the Department of Revenue
nor the Department of Employment Security.
    This Section is repealed July 1, 2004. On that  date  any
moneys  in  the  Accounts Receivable Funds created under this
Section shall be transferred to the General Revenue Fund.
(Source: P.A. 86-194.)

    (30 ILCS 210/7) (from Ch. 15, par. 157)
    Sec. 7.  Upon agreement  of  the  Attorney  General,  the
Bureau   agencies   may  contract  for  legal  assistance  in
collecting past due accounts. Any contract entered into under
this Section before the effective date of this amendatory Act
of the 93rd General Assembly shall remain valid but  may  not
be renewed. In addition, agencies may contract for collection
assistance  where such assistance is determined by the agency
to be in the best economic interest of the State.    Agencies
may utilize monies in the Accounts Receivable Fund to pay for
such legal and collection assistance; provided, however, that
no  more  than  20%  of collections on an account may be paid
from the Accounts Receivable Fund as compensation  for  legal
and  collection  assistance  on  that account.  If the amount
available for expenditure from the Accounts  Receivable  Fund
is  insufficient  to  pay  the  cost  of  such  services, the
difference, up to 40% of the total collections  per  account,
may  be  paid from other monies which may be available to the
Agency.
(Source: P.A. 85-814.)

    (30 ILCS 210/8) (from Ch. 15, par. 158)
    Sec. 8.  Debt Collection Board.   There is created a Debt
Collection  Board  consisting  of  the  Director  of  Central
Management Services as chairman, the State  Comptroller,  and
the  Attorney  General,  or  their respective designees.  The
Board shall establish a centralized  collections  service  to
undertake  further  collection efforts on delinquent accounts
or claims of the State which have not been collected  through
the  reasonable  efforts  of  the  respective State agencies.
The Board shall promulgate rules and regulations pursuant  to
the  Illinois Administrative Procedure Act with regard to the
establishment   of   timetables   and   the   assumption   of
responsibility for agency accounts receivable that  have  not
been  collected  by  the agency, are not subject to a current
repayment plan, or have not been certified  as  uncollectible
as  of the date specified by the Board.  The Board shall make
a final evaluation of those accounts and either (i) direct or
conduct further collection activities when further collection
efforts are in the best economic interest  of  the  State  or
(ii)  in  accordance  with Section 2 of the Uncollected State
Claims Act, certify the receivable as uncollectible or submit
the account to the Attorney General for that certification.
    The Board is empowered to  adopt  rules  and  regulations
subject  to  the  provisions  of  the Illinois Administrative
Procedure Act.
    The  Board  is  empowered  to  enter  into  one  or  more
contracts with outside vendors with demonstrated capabilities
in the area of account collection.  The  contracts  shall  be
let  on  the  basis  of  competitive  proposals  secured from
responsible proposers.  The Board may require that vendors be
prequalified.  All contracts shall provide for  a  contingent
fee  based  on the age, nature, amount and type of delinquent
account.  The Board may  adopt  a  reasonable  classification
schedule  for  the various receivables.  The contractor shall
remit the amount collected, net of the contingent fee, to the
respective State agency which shall deposit  the  net  amount
received  into  the fund that would have received the receipt
had it been collected by the State agency.  No portion of the
collections shall be deposited into  an  Accounts  Receivable
Fund  established  under  Section  6 of this Act.   The Board
shall act only upon the unanimous vote of its members.
    The authority granted the  Debt  Collection  Board  under
this  Section  shall be limited to the administration of debt
not otherwise required by the provisions of  this  amendatory
Act  of  the  93rd  General  Assembly  to  be referred to the
Department of Revenue's Debt Collection Bureau. Upon referral
to and acceptance of any debt by the Bureau,  the  provisions
of  this  Section  shall be rendered null and void as to that
debt and the Board shall promptly deliver its entire file and
all records relating to such debt  to  the  Bureau,  together
with a status report describing all action taken by the Board
or  any  entity  on  its  behalf  to  collect  the  debt, and
including an accounting of all payments received.
(Source: P.A. 89-511, eff. 1-1-97.)

    (30 ILCS 210/10 new)
    Sec. 10.  Department of Revenue Debt Collection Bureau to
assume collection duties.
    (a)  The Department of Revenue's Debt  Collection  Bureau
shall  serve  as  the  primary debt collecting entity for the
State and in that role  shall  collect  debts  on  behalf  of
agencies  of  the State. All debts owed the State of Illinois
shall be referred to the Bureau, subject to such  limitations
as  the  Department  of  Revenue shall by rule establish. The
Bureau shall utilize  the  Comptroller's  offset  system  and
private  collection  agencies, as well as its own collections
personnel. The Bureau shall  collect  debt  using  all  legal
authority  available  to the Department of Revenue to collect
debt and all  legal  authority  available  to  the  referring
agency.
    (b)  The  Bureau  shall  have  the  sole authority to let
contracts with persons specializing in  debt  collection  for
the  collection  of  debt  referred  to  and  accepted by the
Bureau. Any contract with the debt  collector  shall  specify
that  the collector's fee shall be on a contingency basis and
that the debt collector shall not be entitled  to  collect  a
contingency fee for any debt collected through the efforts of
any State offset system.
    (c)  The  Department of Revenue shall adopt rules for the
certification of debt from referring agencies and shall adopt
rules for the certification of collection specialists  to  be
employed by the Bureau.
    (d)  The  Department  of  Revenue  shall  adopt rules for
determining when a debt referred by an agency shall be deemed
by the Bureau to be uncollectible.
    (e)  Once an agency's debt is deemed by the Bureau to  be
uncollectible,  the  Bureau  shall  return  the  debt  to the
referring agency which shall  then  write  the  debt  off  as
uncollectible or return the debt to the Bureau for additional
collection  efforts.  The  Bureau shall refuse to accept debt
that has been deemed uncollectible absent factual  assertions
from the referring agency that due to circumstances not known
at  the  time the debt was deemed uncollectible that the debt
is worthy of additional collection efforts.
    (f)  For each  debt  referred,  the  State  agency  shall
retain  all  documents  and records relating to or supporting
the debt. In the event a  debtor  shall  raise  a  reasonable
doubt  as  to the validity of the debt, the Bureau may in its
discretion refer the debt back to the  referring  agency  for
further review and recommendation.
    (g)  The  Department  of  Public Aid shall be exempt from
the requirements of this Section with regard to child support
debts,  the  collection  of  which   is   governed   by   the
requirements  of  Title  IV,  Part  D  of  the federal Social
Security Act. The Department of Public Aid  may  refer  child
support debts to the Bureau, provided that the debt satisfies
the   requirements   for   referral  of  delinquent  debt  as
established by rule by the Department of Revenue. The  Bureau
shall  use all legal means available to collect child support
debt, including those authorizing the Department  of  Revenue
to  collect  debt  and  those  authorizing  the Department of
Public Aid to collect debt.  All  such  referred  debt  shall
remain  an  obligation  under  the Department of Public Aid's
Child Support Enforcement Program subject to the requirements
of Title IV, Part D  of  the  federal  Social  Security  Act,
including the continued use of federally mandated enforcement
remedies and techniques by the Department of Public Aid.
    (g-1)  The  Department  of  Employment Security is exempt
from subsection (a) with  regard  to  debts  to  any  federal
account,  including but not limited to the Unemployment Trust
Fund,  and  penalties  and  interest   assessed   under   the
Unemployment  Insurance  Act.   The  Department of Employment
Security may refer those debts to the  Bureau,  provided  the
debt  satisfies  the  requirements for referral of delinquent
debt as established by rule by the Department of Revenue. The
Bureau shall use all legal means  available  to  collect  the
debts,  including those authorizing the Department of Revenue
to collect debt  and  those  authorizing  the  Department  of
Employment  Security to collect debt. All referred debt shall
remain an obligation to the account to which it is owed.
    (h)  The Debt Collection Fund is  created  as  a  special
fund in the State treasury. Debt collection contractors under
this  Act  shall receive a contingency fee as provided by the
terms of their contracts  with  the  Department  of  Revenue.
Thereafter,  20%  of  all  amounts  collected  by the Bureau,
excluding amounts collected on behalf of the  Departments  of
Public  Aid  and  Revenue,  shall  be deposited into the Debt
Collection Fund. All remaining  amounts  collected  shall  be
deposited  into the General Revenue Fund unless the funds are
owed to any State  fund  or  funds  other  than  the  General
Revenue  Fund.  Moneys  in  the Debt Collection Fund shall be
appropriated only for the administrative costs of the Bureau.
On the last day of each fiscal  year,  unappropriated  moneys
and moneys otherwise deemed unneeded for the next fiscal year
remaining in the Debt Collection Fund may be transferred into
the   General  Revenue  Fund  at  the  Governor's  reasonable
discretion. The provisions of this subsection do not apply to
debt  that  is  exempt  from  subsection  (a)   pursuant   to
subsection (g-1) or child support debt referred to the Bureau
by  the  Department of Public Aid pursuant to this amendatory
Act of the 93rd General Assembly.  Collections  arising  from
referrals   from  the  Department  of  Public  Aid  shall  be
deposited into such fund or funds as the Department of Public
Aid shall direct, in  accordance  with  the  requirements  of
Title  IV,  Part  D  of  the  federal  Social  Security  Act,
applicable  provisions  of  State  law,  and the rules of the
Department of Public Aid. Collections arising from  referrals
from the Department of Employment Security shall be deposited
into  the  fund  or  funds  that the Department of Employment
Security shall direct, in accordance with the requirements of
Section 3304(a)(3)  of  the  federal  Unemployment  Tax  Act,
Section 303(a)(4) of the federal Social Security Act, and the
Unemployment Insurance Act.
    (i)  The  Attorney  General and the State Comptroller may
assist in the debt  collection  efforts  of  the  Bureau,  as
requested by the Department of Revenue.
    (j)  The Director of Revenue shall report annually to the
General   Assembly   and  State  Comptroller  upon  the  debt
collection efforts of the Bureau. Each report  shall  include
an analysis of the overdue debts owed to the State.
    (k)  The  Department  of  Revenue  shall  adopt rules and
procedures for the administration of this amendatory  Act  of
the  93rd  General Assembly. The rules shall be adopted under
the Department of Revenue's  emergency  rulemaking  authority
within   90   days  following  the  effective  date  of  this
amendatory Act of the 93rd General Assembly due to the budget
crisis threatening the public interest.
    (l)  The Department of Revenue's Debt Collection Bureau's
obligations  under  this  Section  10  shall  be  subject  to
appropriation by the General Assembly.

    Section 99.  Effective date.  This Act shall take  effect
upon becoming law.

Effective Date: 8/20/2003