093_HB0089eng

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 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  4, 5, 6, 7, and 8 and adding
10    Section 10 as follows:

11        (30 ILCS 210/4) (from Ch. 15, par. 154)
12        Sec. 4.   (a)  The  Comptroller  shall  provide  by  rule
13    appropriate  procedures  for  State  agencies  to  follow  in
14    establishing and recording within the State accounting system
15    records  of amounts owed to the State of Illinois.  The rules
16    of the Comptroller shall include, but are not limited to:
17        (1)  the manner by which State agencies  shall  recognize
18    debts;
19        (2)  systems   to   age   accounts  receivable  of  State
20    agencies;
21        (3)  standards by which State  agencies'  claims  may  be
22    entered  and  removed  from  the  Comptroller's Offset System
23    authorized by Section 10.05 of the State Comptroller Act;
24        (4)  accounting procedures for estimating the  amount  of
25    uncollectible receivables of State agencies; and
26        (5)  accounting  procedures for writing off bad debts and
27    uncollectible  claims  prior  to  referring   them   to   the
28    Department of Revenue Collections Bureau for collection.
29        (b)  State  agencies  shall  report  to  the  Comptroller
 
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 1    information   concerning   their   accounts   receivable  and
 2    uncollectible claims in accordance  with  the  rules  of  the
 3    Comptroller,  which  may  provide  for summary reporting. The
 4    Department of Revenue is exempt from the provisions  of  this
 5    subsection  with regard to debts the confidentiality of which
 6    the Department of Revenue is required by law to maintain.
 7        (c)  The rules of  the  Comptroller  authorized  by  this
 8    Section may specify varying procedures and forms of reporting
 9    dependent   upon   the  nature  and  amount  of  the  account
10    receivable or uncollectible claim, the age of the  debt,  the
11    probability  of  collection  and such other factors that will
12    increase the net benefit  to  the  State  of  the  collection
13    effort.
14        (d)  The  Comptroller  shall report annually by March 14,
15    to the Governor and the General Assembly, the amount  of  all
16    delinquent  debt  owed to each State agency as of December 31
17    of the previous calendar year.
18    (Source: P.A. 86-515.)

19        (30 ILCS 210/5) (from Ch. 15, par. 155)
20        Sec. 5.  Rules; payment plans; offsets.
21        (a)  Until July 1, 2004 for the Department of Public  Aid
22    and  July  1,  2005  for  Universities  and  all  other State
23    agencies,  State  agencies  shall  adopt  rules  establishing
24    formal due dates for amounts owing to the State and  for  the
25    referral of seriously past due accounts to private collection
26    agencies, unless otherwise expressly provided by law or rule,
27    except  that  on  and  after  July 1, 2005, the Department of
28    Employment  Security  may  continue  to  refer   to   private
29    collection  agencies  past  due  amounts that are exempt from
30    subsection (g).  Such  procedures  shall  be  established  in
31    accord with sound business practices.
32        (b)  Until  July 1, 2004 for the Department of Public Aid
33    and July  1,  2005  for  Universities  and  all  other  State
 
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 1    agencies,  agencies  may  enter  deferred  payment  plans for
 2    debtors of the agency and documentation of this fact retained
 3    by the agency, where the deferred payment plan is  likely  to
 4    increase  the net amount collected by the State, except that,
 5    on and after July  1,  2005,  the  Department  of  Employment
 6    Security  may  continue  to  enter deferred payment plans for
 7    debts that are exempt from subsection (g).
 8        (c)  Until July 1, 2004 for the Department of Public  Aid
 9    and  July  1,  2005  for  Universities  and  all  other State
10    agencies, State agencies may  use  the  Comptroller's  Offset
11    System provided in Section 10.05 of the State Comptroller Act
12    for  the collection of debts owed to the agency, except that,
13    on and after July  1,  2005,  the  Department  of  Employment
14    Security  may continue to use the Comptroller's offset system
15    to collect amounts that are exempt from subsection (g).   All
16    debts  that  exceed $1,000 and are more than 90 days past due
17    shall be placed in the Comptroller's  Offset  System,  unless
18    the  State  agency shall have entered into a deferred payment
19    plan or demonstrates to the Comptroller's  satisfaction  that
20    referral for offset is not cost effective.
21        (d)  State  agencies  shall  develop  internal procedures
22    whereby agency initiated  payments  to  its  debtors  may  be
23    offset without referral to the Comptroller's Offset System.
24        (e)  State  agencies or the Comptroller may remove claims
25    from the Comptroller's Offset System, where such claims  have
26    been inactive for more than one year.
27        (f)  State  agencies  may  use  the  Comptroller's Offset
28    System to determine if any  State  agency  is  attempting  to
29    collect  debt  from  a  contractor, bidder, or other proposed
30    contracting party.
31        (g)  Beginning July 1, 2004 for the Departments of Public
32    Aid and Employment Security and July 1, 2005 for Universities
33    and other State agencies, State agencies shall refer  to  the
34    Department of Revenue Debt Collection Bureau (the Bureau) all
 
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 1    debt  to  the  State,  provided  that  the debt satisfies the
 2    requirements for referral of delinquent debt  as  established
 3    by rule by the Department of Revenue.
 4        (h)  The  Department  of  Public Aid shall be exempt from
 5    the requirements of this Section with regard to child support
 6    debts,  the  collection  of  which   is   governed   by   the
 7    requirements  of  Title  IV,  Part  D  of  the federal Social
 8    Security Act. The Department of Public Aid  may  refer  child
 9    support debts to the Bureau, provided that the debt satisfies
10    the   requirements   for   referral  of  delinquent  debt  as
11    established by rule by the Department of Revenue. The  Bureau
12    shall  use all legal means available to collect child support
13    debt, including those authorizing the Department  of  Revenue
14    to  collect  debt  and  those  authorizing  the Department of
15    Public Aid to collect debt.  All  such  referred  debt  shall
16    remain  an  obligation  under  the Department of Public Aid's
17    Child Support Enforcement Program subject to the requirements
18    of Title IV, Part D  of  the  federal  Social  Security  Act,
19    including the continued use of federally mandated enforcement
20    remedies and techniques by the Department of Public Aid.
21        (h-1)  The  Department  of  Employment Security is exempt
22    from subsection (g) with  regard  to  debts  to  any  federal
23    account,  including but not limited to the Unemployment Trust
24    Fund,  and  penalties  and  interest   assessed   under   the
25    Unemployment  Insurance  Act.  The  Department  of Employment
26    Security may refer those debts to the  Bureau,  provided  the
27    debt  satisfies  the  requirements for referral of delinquent
28    debt as established by rule by the Department of Revenue. The
29    Bureau shall use all legal means  available  to  collect  the
30    debts,  including those authorizing the Department of Revenue
31    to collect debt  and  those  authorizing  the  Department  of
32    Employment Security to collect debt.  All referred debt shall
33    remain an obligation to the account to which it is owed.
34        (i)  All debt referred to the Bureau for collection shall
 
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 1    remain the property of the referring agency. The Bureau shall
 2    collect  debt  on  behalf  of  the referring agency using all
 3    legal  means  available,  including  those  authorizing   the
 4    Department  of  Revenue to collect debt and those authorizing
 5    the referring agency to collect debt.
 6        (j)  No debt secured by  an  interest  in  real  property
 7    granted  by  the  debtor  in exchange for the creation of the
 8    debt shall be referred to the Bureau. The Bureau  shall  have
 9    no obligation to collect debts secured by an interest in real
10    property.
11        (k)  Beginning  July  1,  2003, each agency shall collect
12    and provide the Bureau information regarding the  nature  and
13    details of its debt in such form and manner as the Department
14    of Revenue shall require.
15        (l)  For  all  debt  accruing  after  July  1, 2003, each
16    agency shall collect and transmit such debtor  identification
17    information as the Department of Revenue shall require.
18    (Source: P.A. 92-404, eff. 7-1-02.)

19        (30 ILCS 210/6) (from Ch. 15, par. 156)
20        Sec.  6.   The  Comptroller  with  the  approval  of  the
21    Governor  may provide by rule and regulation for the creation
22    of a special fund or funds  for  the  deposit  of  designated
23    receipts  by  designated agencies to be known as the Accounts
24    Receivable Fund or Funds.  Deposits shall  be  segregated  by
25    the  creditor  agency.   No  deposit shall be made unless the
26    collection is of an account receivable  more  than  120  days
27    past due.
28        Seventy-five   percent  of  the  amounts  deposited  each
29    quarter into such a special fund shall be transferred to  the
30    General  Revenue  Fund  or  such  other  fund that would have
31    originally received the receipts.  The remaining amounts  may
32    be  used  by  the  creditor  agency  for  collecting  overdue
33    accounts pursuant to appropriation by the General Assembly.
 
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 1        An  agency,  with  the  approval  of the Comptroller, may
 2    deposit all receipts into the General Revenue Fund  or  other
 3    such  fund  that would have originally received the receipts.
 4    Twenty-five percent of such deposits made  each  quarter  for
 5    accounts  receivable  more  than  120  days past due shall be
 6    transferred to the Accounts Receivable Fund  or  Funds.   The
 7    transferred  amounts  may  be used by the creditor agency for
 8    collecting overdue accounts pursuant to appropriation by  the
 9    General Assembly.
10        In  determining  the  types  of  receipts to be deposited
11    pursuant to this Section the  Comptroller  and  the  Governor
12    shall consider the following factors:
13        (1)  The  percentage  of  such  receipts  estimated to be
14    uncollectible by the creditor agency;
15        (2)  The  percentage  of  such  receipts   certified   as
16    uncollectible by the Attorney General;
17        (3)  The   potential  increase  in  future  receipts,  as
18    estimated by the creditor agency, if 25% of amounts collected
19    are retained for collection efforts;
20        (4)  The impact of the retention of 25%  of  receipts  on
21    the relevant fund balances; and
22        (5)  Such  other  factors  as  the  Comptroller  and  the
23    Governor deem relevant.
24        This Section shall not apply to the Department of Revenue
25    nor the Department of Employment Security.
26        This  Section  is repealed July 1, 2004. On that date any
27    moneys in the Accounts Receivable Funds  created  under  this
28    Section shall be transferred to the General Revenue Fund.
29    (Source: P.A. 86-194.)

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

17        (30 ILCS 210/8) (from Ch. 15, par. 158)
18        Sec. 8.  Debt Collection Board.   There is created a Debt
19    Collection  Board  consisting  of  the  Director  of  Central
20    Management  Services  as chairman, the State Comptroller, and
21    the Attorney General, or  their  respective  designees.   The
22    Board  shall  establish  a centralized collections service to
23    undertake further collection efforts on  delinquent  accounts
24    or  claims of the State which have not been collected through
25    the reasonable efforts  of  the  respective  State  agencies.
26    The  Board shall promulgate rules and regulations pursuant to
27    the Illinois Administrative Procedure Act with regard to  the
28    establishment   of   timetables   and   the   assumption   of
29    responsibility  for  agency accounts receivable that have not
30    been collected by the agency, are not subject  to  a  current
31    repayment  plan,  or have not been certified as uncollectible
32    as of the date specified by the Board.  The Board shall  make
33    a final evaluation of those accounts and either (i) direct or
 
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 1    conduct further collection activities when further collection
 2    efforts  are  in  the  best economic interest of the State or
 3    (ii) in accordance with Section 2 of  the  Uncollected  State
 4    Claims Act, certify the receivable as uncollectible or submit
 5    the account to the Attorney General for that certification.
 6        The  Board  is  empowered  to adopt rules and regulations
 7    subject to the  provisions  of  the  Illinois  Administrative
 8    Procedure Act.
 9        The  Board  is  empowered  to  enter  into  one  or  more
10    contracts with outside vendors with demonstrated capabilities
11    in  the  area  of account collection.  The contracts shall be
12    let on  the  basis  of  competitive  proposals  secured  from
13    responsible proposers.  The Board may require that vendors be
14    prequalified.   All  contracts shall provide for a contingent
15    fee based on the age, nature, amount and type  of  delinquent
16    account.   The  Board  may  adopt a reasonable classification
17    schedule for the various receivables.  The  contractor  shall
18    remit the amount collected, net of the contingent fee, to the
19    respective  State  agency  which shall deposit the net amount
20    received into the fund that would have received  the  receipt
21    had it been collected by the State agency.  No portion of the
22    collections  shall  be  deposited into an Accounts Receivable
23    Fund established under Section 6 of this  Act.     The  Board
24    shall act only upon the unanimous vote of its members.
25        The  authority  granted  the  Debt Collection Board under
26    this Section shall be limited to the administration  of  debt
27    not  otherwise  required by the provisions of this amendatory
28    Act of the 93rd  General  Assembly  to  be  referred  to  the
29    Department of Revenue's Debt Collection Bureau. Upon referral
30    to  and  acceptance of any debt by the Bureau, the provisions
31    of this Section shall be rendered null and void  as  to  that
32    debt and the Board shall promptly deliver its entire file and
33    all  records  relating  to  such debt to the Bureau, together
34    with a status report describing all action taken by the Board
 
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 1    or any  entity  on  its  behalf  to  collect  the  debt,  and
 2    including an accounting of all payments received.
 3    (Source: P.A. 89-511, eff. 1-1-97.)

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

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