The advisory board putting together the new state debt collection agency (that’s the “Obligation Recovery Center” created with no small contention by House Bill 1228 this year) meets Tuesday to secretly review bids from private companies to manage the new program. The request for proposals, which closed August 3, focuses on software and services for the central office; third-party debt collectors are told to wait for a later RFP to bid for their chance to put their brass knuckles to work for the state.
The RFP summarizes debts owed to some major state agencies totaling over $54 million:
| Agency | Number of Accounts | Value of Accounts | Approximate Age |
| Department of Corrections | 4,370 | $9,192,464.92 | 2005 and newer |
| Department of Revenue | 77 | $178,352.35 | Less Than 1 Year |
| Department of Revenue | 151 | $340,410.05 | 1 to 2 Years |
| Department of Revenue | 161 | $392,337.49 | 2 to 3 Years |
| Department of Revenue | 155 | $587,287.51 | 3 to 4 Years |
| Department of Revenue | 193 | $1,246,195.79 | 4 to 5 Years |
| Department of Revenue | 171 | $1,271,935.60 | 5 to 6 Years |
| Department of Revenue | 177 | $1,276,066.24 | 6 to 7 Years |
| Department of Revenue | 140 | $921,190.12 | 7 to 8 Years |
| Department of Revenue | 126 | $773,000.04 | 8 to 9 Years |
| Department of Revenue | 132 | $751,635.51 | 9 to 10 Years |
| Department of Revenue | 91 | $651,985.10 | 10 to 11 Years |
| Department of Revenue | 118 | $1,292,199.49 | 11 to 12 Years |
| Department of Revenue | 115 | $584,477.00 | 12 to 13 Years |
| Department of Revenue | 100 | $868,265.65 | 13 to 14 Years |
| Department of Revenue | 402 | $3,589,282.61 | 15 Years and older |
| Dept. Revenue Total | 6,679 | $23,917,085.47 | |
| Department of Social Services | Unknown | $5,600,000.00 | 10 years and newer |
| Unified Judicial System – Fines | 31,638 | $9,183,445.00 | 1 year |
| Unified Judicial System – Restitution | $7,589,859.00 | ||
| UJS Total | 31,638 | $16,773,304.00 | |
| Board of Regents | 26 | $22,045.05 | 15+ Years |
| Board of Regents | 58 | $78,654.50 | 10-15 Years |
| Board of Regents | 1,212 | $2,125,050.65 | 5-10 Years |
| Board of Regents | 3,049 | $6,018,647.65 | 0-5 Years |
| BOR Total | 4,345 | $8,244,397.85 | |
| GRAND TOTAL | 42,662 | $54,534,787.32 |
The Obligation Recovery Center RFP says the above agencies “would utilize the center.” But back in June, the Board of Regents didn’t sound too eager to get tied into the new debt collection agency:
The Board of Regents was asked by Commissioner Dilges to support the bill during session. The Executive Director agreed to do this knowing that the bill included permissive language about whether or not BOR utilized the center. Past experience with a previous state collection operation was not positive and concerns were raised by the campuses and the BOR office that the collection methods proposed seemed very heavy-handed. While the structure being proposed for this center is very different, there were concerns raised during testimony about the collection authorities and that the private sector could accomplish the same results. In fact, the center will contract with private firms after the 180 day accounts receivable cycle provided to the center for collections.
State law currently allows agencies to submit debt that is at least two years old and that has been through collections to the State Board of Finance to be written-off. The campuses are being informed that all debt write-off requests are being held for processing because the state currently is processing a request for proposal for a new collection agency and will be revising the process. Requests for write offs are to be held until this process is completed. When this was questioned, the message was that holding write-offs would be used as an incentive to utilize the new debt recovery center. Similar to the previous debt collection operation, the Board of Finance would not allow anything to be written off until it had been through the state collection center.
While there are likely to be instances where the universities would choose to use the Obligation Recovery Center, there are also times where the receivable is small or the circumstances warrant writing the debt off. Given the concerns that were raised internally during session and now on-going concerns of the universities, we will continue to monitor the situation and report to the Board on how this plays out [South Dakota Board of Regents, Agenda Item 13, meeting documents, June 10–11, 2015].
According to the draft minutes of that June meeting, VP-admin Monte Kramer told the Regents that “while there were initial assurances that the public university system would not be required to participate in this new debt collection process, it seems more likely now that higher education’s participation is desired or might be compelled.”
Governor Dennis Daugaard really, really wanted this new debt collection agency; he apparently really, really wants the Regents and every other agency to use it.
Related: The Affiliated Group of Rochester, Minnesota, holds the current state debt collection contract. They get 15% of the amount collected on primary placements of debt (i.e., they are the first agency to try to collect), 22.5% on secondary placements of debt (i.e., some other collection agency tried and failed to collect), and 35% on debts that require calling in the lawyers.
More Deeply Related: HB 1228, passed on the final day of the South Dakota Legislature, looks very much like the model proposal the American Legislative Exchange Council considered at a July task force meeting and now recommends as a model policy.
Pay your bills, people. It really chafes my rear that taxpayers would write off debt owed to state government.
What kind of libbie, communist society is this that we would let a bunch of cheapskate freeloaders off the hook.
Want to avoid the knuckle-busters and the leg breakers coming in a black state Suburban? Pay your bills, people.
In the banking world we called it the dead fish file. New loan officer trainees were given the dead fish file to see if they could collect any of the money. Glad to see the State at least has a list. I am not as exuberant as theanonymous first poster who rants and raves under the cloak of anonymity. I think it would be funny to find your name on the list Mr/Ms Grudz.
Tried hard to stop this and would have succeeded had not there been sneaky last minute rule changing gymnastics to get around the 2/3 vote requirement. It was one of the five things this past Session that soured me.
There are many reasons that some may be on the list. Recall that lack of health care insurance or having inadequate insurance is the leading cause of bankruptcy. Also recall that South Dakota could care less whether its citizens have adequate health care insurance. Other reasons for delinquent bills include but are not limited to: incapacitation, mental illness, incarceration, family needs – too many to care for while earning poverty or near-poverty wages – often despite holding more than 1 job, etc. Don’t throw rocks until you’ve been there, or individually know whether one with delinquent bills is a freeloader.
Mr. Hickey, I hope you tell people in your congregation to PAY THEIR BILLS. It is a Conservative value.
Mr. Pauli, you will not find my name on this list. By the way, where is The List posted in the internet?
Though the $24 million owed to the Department of Revenue must bring pause for it is likely that most of that is the product of the legal fiction that, “corporations are people”. And the further legal fiction that “corporations” can go bankrupt, while the PEOPLE on governing board and the executives get off scot free at tax payer expense, keep their boat, keep their jet ski, keep their house, keep their kids college savings accounts, etc. I’m not advocating a return to debtors prisons, but that real people on governing boards and executives must be made to have THEIR flesh in their business decisions. And when those decisions go south, then the people on those boards and those executives can sell their house/boat/jet ski at a sheriff’s sale and they can be eligible for a Janklow house — BEFORE the tax payers are left on the hook for $24 million of apparent bad business decisions. Sound like, personal responsibility.
$24 million. Talk about socialism. Talk about corporate welfare.
The Regents appear to prefer writing off some of that debt because it’s more trouble than it’s worth. Who wants to spend all week digging around in a pile of dead fish?
Evidently some ALEC members want to dig around in that fish pile, and we’ll give them 20% of the proceeds for their trouble.
Steve, HB 1228 was one; what were the other four sour pills?
Mr. Hickey’s church probably has a pretty low percentage of dead beats, but I hope he turns them in.
Grud- the company our state Govt is in with to collect debts here is the company that gave us the botched Obamacare rollout. Other states like Hawaii said the partnership was a huge mistake and millions were lost and services not performed. We should have been laughing these people out of the Capitol.
The Govrs office and legislative leadership saw our opposition was working and they couldn’t get 2/3 vote. So they pulled a trick to strip out the part requiring a 2/3 vote, got it passed at majority vote and then plugged in the money during with an appropriation amendments. Stunk to high heaven.
I’m for recovery of debt but this is bigger than that- they are allowed to collect 120% of what it owed. People should pay Uncle Sam a nickel more than they owe.
Cory it’s not 20% of the proceeds to help collext as in we collect 100% and the collection agency takes 20%. They collect 120% which is fundamentally different than any other debt collection agency as I understand it.
Has the contract been signed, Mr. Hickey, or are you fear-mongering again? Mr. Mercer says they meet next week to talk about it. Is Mr. Mercer lying?
Penalties should be harsher than 20%. Pay your taxes! I pay mine, I should not have to subsidize yours.
But Grudz, the 20% isn’t really a penalty; it’s gravy for the private debt collectors.
It’s a penalty for the deadbeat and payment for the knuckle breaker that had to go find the tax cheat. If the cheat had just paid up front, there would have been no problem. I wouldn’t even care if Mr. Hickey got his way and we, the taxpayers, gave up 20% of what is due to us just to get the 80% of the nut but the legislatures decided we’re going to put a little vig in this. I’m OK with that.
Pay your bills, people!
Listen to your party’s next great leader, Mr. H:
http://rapidcityjournal.com/news/opinion/columnists/yours-debt-recovery-center-doesn-t-criminalize-residents/article_2478c08f-110d-5d07-b0ff-355ff98fe741.html
My notes on all this went in the trash but one of the reasons the state hasn’t collected these debts is because many of them are not collectable.
We have a state full of the best debt collectors the credit industry has produced. Use them. I don’t want the state in the bill collecting business .
If we cannot collect, Mr. Hickey, then we should at least punish these people by taking away their fishing license. For if they are spending money on gas and beer and own a fancy boat, I say they can pay.
Pay your bills, people!!!
Ah, thank you, Steve, for the clarification. I lose track of my own notes. The state still gets its 100% (assuming there’s any money to be had in these cases, that these folks actually have assets), but the bonus for tracking the money down goes to the private collectors. Should government be privatizing this job? How close is this to bounty hunting?
Hickey, since you’ve made multiple responses on this comment section, perhaps you can answer my earlier question: What is your plan to control the reproduction of hit and run impregnators?
When an older, angry Conservative accuses a preaching politician of promoting fear, it’s better than breakfast. Keep it up you two old crows.
I hope Rounds and Bollen are first on the collections list.
If you buy your fishing license at your local Walmart, won’t you escape the system? Are they somehow linked in to the database? If you do go to get your tags from the Treasurers office and find out your ex-spouse is still on your car title and has a outstanding debt you will have to pay it to get your tags, right?
Not having bought a fishing license at Walmart, I can’t speak to the first question. But to your second question, I’d say your reading is probably correct. HB 1228 says that “No person that owes a debt that is referred to the center may renew, obtain, or maintain (1) Any registration for any motor vehicle, motorcycle, or boat, in which the person’s name appears on the title of the motor vehicle, motorcycle, or boat….” Technically one could argue that the law only applies to the debtor herself, not a some other person who walks into the courthouse to renew/obtain the registration. But the other party’s action means the debtor obtains that registration, and the intent of the law appears to be to stop that from happening. So yeah, get you debt-skipping ex-spouse off your title… or get that ex-spouse to pay those debts!
Don’t red light cameras send the tickets to the vehicle owner regardless of who was driving? Dors not seem fair,but cities get greedy.