State of Illinois
91st General Assembly

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HB1433 Engrossed                               LRB9100270DHpk

 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 5.490 as follows:

 7        (30 ILCS 105/5.490 new)
 8        Sec. 5.490.  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.   Scope  of  the  Act.  This  Act applies to all
14    accounts or claims owed to "State agencies", as that term  is
15    defined  in  the Illinois State Auditing Act, except that the
16    debt collection and write-off provisions of  this  Act  shall
17    not apply to the Illinois State Scholarship Commission in the
18    administration  of  its student loan programs.  To the extent
19    that some other statute prescribes procedures for  collection
20    of  particular  types  of  accounts  or  claims owed to State
21    agencies in conflict with the provisions of  this  Act,  such
22    other  statute  shall continue in full force and effect.  The
23    debt collection and write-off provisions of this Act  may  be
24    utilized  by  the General Assembly, the Supreme Court and the
25    several  courts  of  this  State,  and  the  constitutionally
26    elected State Officers,  at  their  discretion,  except  that
27    Section  10  applies  to  all State agencies unless otherwise
28    specified in that Section.   However  reporting  requirements
29    established by the comptroller shall be followed by all State
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 1    agencies.   The  provisions  of this Act shall be utilized at
 2    all  times  by  all  departments,  agencies,  divisions,  and
 3    offices under the jurisdiction of the Governor.
 4    (Source: P.A. 85-814.)

 5        (30 ILCS 210/4) (from Ch. 15, par. 154)
 6        Sec. 4.  Comptroller; rules; reports.
 7        (a) The Comptroller shall  provide  by  rule  appropriate
 8    procedures  for  State agencies to follow in establishing and
 9    recording within  the  State  accounting  system  records  of
10    amounts  owed  to  the  State  of Illinois.  The rules of the
11    Comptroller shall include, but are not limited to:
12             (1)  the  manner  by  which  State  agencies   shall
13        recognize debts;
14             (2)  systems  to  age  accounts  receivable of State
15        agencies;
16             (3)  standards by which State agencies'  claims  may
17        be  entered  and  removed  from  the Comptroller's Offset
18        System  authorized  by  Section  10.05   of   the   State
19        Comptroller Act;
20             (4)  accounting procedures for estimating the amount
21        of uncollectible receivables of State agencies; and
22             (5)  accounting procedures for writing off bad debts
23        and  uncollectible  claims, subject to the requirement of
24        Section 10 that debts more than 90 days overdue be turned
25        over to the Debt Collection Unit of the Auditor General's
26        Office.
27        (b)  State  agencies  shall  report  to  the  Comptroller
28    information  concerning   their   accounts   receivable   and
29    uncollectible  claims  in  accordance  with  the rules of the
30    Comptroller, which may provide for summary reporting.
31        (c)  The rules of  the  Comptroller  authorized  by  this
32    Section may specify varying procedures and forms of reporting
33    dependent   upon   the  nature  and  amount  of  the  account
HB1433 Engrossed            -3-                LRB9100270DHpk
 1    receivable or uncollectible claim, the age of the  debt,  the
 2    probability  of  collection  and such other factors that will
 3    increase the net benefit  to  the  State  of  the  collection
 4    effort.
 5        (d)  The  Comptroller  shall report annually by March 14,
 6    to the Governor and the General Assembly, the amount  of  all
 7    delinquent  debt  owed to each State agency as of December 31
 8    of the previous calendar year.
 9    (Source: P.A. 86-515.)

10        (30 ILCS 210/5) (from Ch. 15, par. 155)
11        Sec. 5.  Rules; payment plans; offsets.
12        (a)  State agencies shall adopt rules establishing formal
13    due dates for amounts owing to the State, until July 1, 2000,
14     and for the referral  of  seriously  past  due  accounts  to
15    private   collection  agencies,  unless  otherwise  expressly
16    provided  by  law  or  rule.   Such   procedures   shall   be
17    established in accord with sound business practices.
18        (b)  Until  July  1,  2000,  agencies  may enter deferred
19    payment plans for debtors of the agency and documentation  of
20    this  fact retained by the agency, where the deferred payment
21    plan is likely to increase the net amount  collected  by  the
22    State.
23        (c)  State  agencies  may  use  the  Comptroller's Offset
24    System provided in Section 10.05 of the State Comptroller Act
25    for the collection of debts owed to the agency.   Until  July
26    1,  2000,  all  debts that exceed $1,000 and are more than 90
27    days past due shall be placed  in  the  Comptroller's  Offset
28    System,  unless  the  State  agency shall have entered into a
29    deferred payment plan or demonstrates  to  the  Comptroller's
30    satisfaction that referral for offset is not cost effective.
31        (d)  State  agencies  shall  develop  internal procedures
32    whereby agency initiated  payments  to  its  debtors  may  be
33    offset without referral to the Comptroller's Offset System.
HB1433 Engrossed            -4-                LRB9100270DHpk
 1        (e)  State  agencies or the Comptroller may remove claims
 2    from the Comptroller's Offset System, where such claims  have
 3    been inactive for more than one year.
 4        (f)  Beginning  July  1,  2000, 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,  2000,
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.
18    (Source: P.A. 90-332, eff. 1-1-98.)

19        (30 ILCS 210/6) (from Ch. 15, par. 156)
20        Sec.  6.  Accounts Receivable Funds. The Comptroller with
21    the  approval  of  the  Governor  may  provide  by  rule  and
22    regulation for the creation of a special fund  or  funds  for
23    the  deposit of designated receipts by designated agencies to
24    be known as the Accounts Receivable Fund or Funds.   Deposits
25    shall be segregated by the creditor agency.  No deposit shall
26    be  made  unless  the  collection is of an account receivable
27    more than 120 days 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.
HB1433 Engrossed            -5-                LRB9100270DHpk
 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, 2000.  On that date  any
27    moneys  in  the  Accounts Receivable Funds created under this
28    Section shall be transferred into the General Revenue Fund.
29    (Source: P.A. 86-194.)

30        (30 ILCS 210/7) (from Ch. 15, par. 157)
31        Sec. 7.  Contracts for legal and  collection  assistance.
32    Upon agreement of the Attorney General, agencies may contract
33    for  legal  assistance  in  collecting past due accounts.  In
HB1433 Engrossed            -6-                LRB9100270DHpk
 1    addition, agencies may  contract  for  collection  assistance
 2    where  such  assistance  is determined by the agency to be in
 3    the best economic  interest  of  the  State.    Agencies  may
 4    utilize  monies  in  the  Accounts Receivable Fund to pay for
 5    such legal and collection assistance; provided, however, that
 6    no more than 20% of collections on an  account  may  be  paid
 7    from  the  Accounts Receivable Fund as compensation for legal
 8    and collection assistance on that  account.   If  the  amount
 9    available  for  expenditure from the Accounts Receivable Fund
10    is insufficient  to  pay  the  cost  of  such  services,  the
11    difference,  up  to 40% of the total collections per account,
12    may be paid from other monies which may be available  to  the
13    Agency.
14        This  Section  is  repealed  July  1, 2000.  Any contract
15    entered into under this Section before that date shall remain
16    valid but may not be renewed.
17    (Source: P.A. 85-814.)

18        (30 ILCS 210/8) (from Ch. 15, par. 158)
19        Sec. 8.  Debt Collection Board.   There is created a Debt
20    Collection  Board  consisting  of  the  Director  of  Central
21    Management Services as chairman, the State  Comptroller,  and
22    the  Attorney  General,  or  their respective designees.  The
23    Board shall establish a centralized  collections  service  to
24    undertake  further  collection efforts on delinquent accounts
25    or claims of the State which have not been collected  through
26    the  reasonable  efforts  of  the  respective State agencies.
27    The Board shall promulgate rules and regulations pursuant  to
28    the  Illinois Administrative Procedure Act with regard to the
29    establishment   of   timetables   and   the   assumption   of
30    responsibility for agency accounts receivable that  have  not
31    been  collected  by  the agency, are not subject to a current
32    repayment plan, or have not been certified  as  uncollectible
33    as  of the date specified by the Board.  The Board shall make
HB1433 Engrossed            -7-                LRB9100270DHpk
 1    a final evaluation of those accounts and either (i) direct or
 2    conduct further collection activities when further collection
 3    efforts are in the best economic interest  of  the  State  or
 4    (ii)  in  accordance  with Section 2 of the Uncollected State
 5    Claims Act, certify the receivable as uncollectible or submit
 6    the account to the Attorney General for that certification.
 7        The Board is empowered to  adopt  rules  and  regulations
 8    subject  to  the  provisions  of  the Illinois Administrative
 9    Procedure Act.
10        The  Board  is  empowered  to  enter  into  one  or  more
11    contracts with outside vendors with demonstrated capabilities
12    in the area of account collection.  The  contracts  shall  be
13    let  on  the  basis  of  competitive  proposals  secured from
14    responsible proposers.  The Board may require that vendors be
15    prequalified.  All contracts shall provide for  a  contingent
16    fee  based  on the age, nature, amount and type of delinquent
17    account.  The Board may  adopt  a  reasonable  classification
18    schedule  for  the various receivables.  The contractor shall
19    remit the amount collected, net of the contingent fee, to the
20    respective State agency which shall deposit  the  net  amount
21    received  into  the fund that would have received the receipt
22    had it been collected by the State agency.  No portion of the
23    collections shall be deposited into  an  Accounts  Receivable
24    Fund  established  under  Section  6 of this Act.   The Board
25    shall act only upon the unanimous vote of its members.
26        This Section is repealed July 1, 2000.
27    (Source: P.A. 89-511, eff. 1-1-97.)

28        (30 ILCS 210/10 new)
29        Sec. 10.  Debt Collection Unit of the  Auditor  General's
30    Office.
31        (a)  The  Auditor  General shall establish and maintain a
32    division within his or her office to be  known  as  the  Debt
33    Collection  Unit.   The  purpose  of  the  Unit  shall be the
HB1433 Engrossed            -8-                LRB9100270DHpk
 1    collection of debts more than 90 days overdue to  the  State.
 2    The  Auditor General shall adopt rules for the administration
 3    and procedures of the Unit.
 4        (b)  The  Auditor  General  shall  adopt  rules  for  the
 5    certification of debt collection specialists to  be  employed
 6    by the Unit.
 7        (c)  The   Auditor   General   shall   adopt   rules  for
 8    determining   when  a  debt  owed  to  a  State   agency   is
 9    uncollectible.  The  rules  shall  be  used by State agencies
10    other than universities beginning July 1,  2000  and  may  be
11    used  by  universities beginning July 1, 2000. The Department
12    of Revenue is exempt from those rules with  regard  to  debts
13    the  confidentiality  of  which  the Department of Revenue is
14    required by law to maintain.
15        (d)  Beginning July 1, 2000, a State agency other than  a
16    university  shall  turn over, and a university may turn over,
17    to the Unit for collection any debt that is more than 90 days
18    overdue to the State.  The Department of  Revenue  is  exempt
19    from turning over to the Unit any debt the confidentiality of
20    which  the  Department  of  Revenue  is  required  by  law to
21    maintain. When turning over a debt, the  State  agency  shall
22    also  turn  over  all  documents  and records relating to the
23    debt. In collecting a debt, the Unit may  exercise  the  same
24    rights and powers with regard to debt collection possessed by
25    the State agency that turned over the debt to the Unit.
26        (e)  The  Debt  Collection  Fund  is created as a special
27    fund in the  State  treasury.   Ten  percent  of  the  amount
28    collected  on  each  debt by the Unit shall be deposited into
29    the Debt Collection Fund; the remaining  90%  of  the  amount
30    collected  shall be deposited into the appropriate State fund
31    or funds to which the debt was  owed.   Moneys  in  the  Debt
32    Collection   Fund   shall   be   appropriated  only  for  the
33    administrative costs of the Unit. At the end of  each  fiscal
34    year,  moneys remaining unappropriated in the Debt Collection
HB1433 Engrossed            -9-                LRB9100270DHpk
 1    Fund shall be transferred into the General Revenue Fund.
 2        (f)  The Attorney General  and  State  Comptroller  shall
 3    assist  in  the  debt  collection  efforts  of  the  Unit  as
 4    requested by the Unit.
 5        (g)  The  Auditor  General  shall report semi-annually to
 6    the General Assembly and  State  Comptroller  upon  the  debt
 7    collection efforts of the Unit.  Each report shall include an
 8    analysis of the overdue debts owed to the State.

 9        Section  99.  Effective date.  This Act takes effect upon
10    becoming law.

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