Speaking for Nevada - July 2001

SEEKING NEVADA’S DUE

CONTROLLER PURSUES MILLIONS OWED STATE

by Kathy Augustine

During the last two and a half years, the State Controller’s office has implemented significant cost-savings procedures. It has initiated monthly, rather than annual reporting and reconciliation of all outside agency bank accounts. I also sponsored a bill during the last legislative session mandating agency receivable reports, which for the first time show complete information about debts owed the state of Nevada. Currently, past-due receivables total almost $145 million. The Controller’s Office eliminated the issuance of manual, hand-typed checks, except in special circumstances and the special year-end paychecks for constitutional officers, Nevada Supreme Court and District Court judges. Our new integrated financial system (IFS) came on line in January of 1999 and continues to proceed on schedule. By mid-2003, all state agencies should be trained in how to use IFS and should be on-line.

Continuing our goal of effectiveness and efficiency, I requested legislation this session that will mandate the state controller to comply with generally accepted accounting principles as interpreted by the Government Accounting Standards Board (GASB), in order to limit the number of housekeeping bills required each legislative session. It would also establish a $25 statewide assessment for returned checks.

New legislation passed this session will enable the state to aggressively pursue past due receivables. Assembly Bill 314 makes classifying, managing and collection of the state’s delinquent receivables consistent. It authorizes the state controller to act as the centralized point of collection for all state agencies, to add the cost of collection when using debt collection services, and to prepare for public inspection and maintain a list of debtors to the state. This bill also establishes a pilot program with the Department of Motor Vehicles and Public Safety (DMV) and the Division of Wildlife of the State Department of Conservation and Natural Resources. This program allows withholding of licenses, permits and services (such as driver’s licenses and vehicle registrations) until a debt to the state is paid.

Those indebted to the DMV will find it difficult to renew licenses and permits until all debts, including penalties, interest, costs and fees are paid. The bulk of all motor vehicle registration fees are passed along to counties and local governments for services. While the DMV has made significant strides in recovering bad debts related to returned checks, this pilot program will provide yet another tool in dealing with citizens who continually defraud the state by passing bad checks.

In April, the Board of Examiners, chaired by Governor Guinn, approved contracts between the state controller and two private debt collection companies: OSI Collection Services, Inc. and Crisis Recovery, Inc. in association with Prime Recovery, Inc., to assist in efforts to recover monies owed the state of Nevada. Crisis and Prime Recovery have extensive experience in the identification of fraud and collection of institutional debt, using forensic loss recovery techniques to recover corporate debts over $25,000. Fees in the contracts are based on a percentage of the collections.

My office also initiated a warrant offset pilot program last year in conjunction with the Department of Taxation to flag accounts of businesses or individuals owing back taxes to the state. If the debtor subsequently requests any state agency to make payment for goods or services, the state controller's office is now advising them that their current billing will be subtracted from their total debt. Since implementing the program, no vendors have contested the offset. This service is now available to all state agencies.

As a result of a booming economy, we have had a budget surplus in the past and no one ever took the time to aggressively pursue receivables. Now, our tax revenue is projected to decrease by $121.5 million over the course of the next biennium, so overlooking debt owed the state is no longer an option. It has become increasingly critical to recover this debt. The Nevada State Controller’s office continues to be the "watchdog" for the state’s finances.