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Home My WebLink AboutAgenda Report - April 20, 2022 C-19CITY OF Igo c � i CALIFORNIA AGENDA ITEM 0 /9 COUNCIL COMMUNICATION AGENDA TITLE: Adopt Resolution Approving Annual Write -Off Policy for General Billing Bad Debts and Authorizing City Manager to Approve a Total Write -Off Amount of $350,301.37 for Fiscal Year 2022 MEETING DATE: April 20, 2022 PREPARED BY: Revenue Manager RECOMMENDED ACTION: Adopt resolution approving Annual Write -Off Policy for General Billing Bad Debts and authorizing City Manager to approve a total write-off amount of $350,301.37 for Fiscal Year 2022. BACKGROUND INFORMATION: The Finance Department/Revenue Division is responsible for bad debt and writing off bad debt once considered uncollectable. Collections and write- offs on general billing debt have not been done since the conversion to Tyler ERP in 2016. Several departments utilize the general billing for fees, fines, and charges of services rendered. This policy applies to general billing debts that have been billed in Tyler ERP for all departments. The uncollectible items in General Ledger accounts cause improper reporting of financial data. The write-off policy instructs departments to conduct a monthly collection process, including the following processes; in-house collection, external debt collection, and write-off. Debt will be collected through general billing for 45 days after due date. After 45 days have passed, the debt will be referred to an outside collection agency. The external collection agency will send letters for 45 days; on the 46th day, active collections will be implemented. Using an outside collection agency may increase collection before the write-off and lessen the amount to write-off. After four years of non-payment, the debt will be written off in Tyler ERP following the write- off policy There are various additional circumstances where difficulty may be experienced with recovering a debt. The debt collection process can reach a point where it is inappropriate, overly expensive, or uneconomic to pursue further action. It would be more cost-effective for Council or City Manager to write off these debts in these situations rather than pursuing further action. At the discretion of the Council or City Manager, Debt will be written off in the following circumstances: a) The debtor has left the address given and cannot be traced; or b) The amount is too small for legal action to be taken, or is not economically viable to pursue further; or APPROVED: si !r (Apr 12, 2022 07:09 PDT) Stephen Schwabauer, City Manager c) The debtor is deceased, and the amount is uncollectable; or d) The debtor has become bankrupt; or e) Recommendation of the Revenue Division that the amount is not collectible; or f) The debt is subject to a legal judgment or court order decision. The total write-off for the years 2015-2017 is $350,301.37. The amount to write-off is an accumulation of bad debt from the conversion of the Tyler ERP to the current write-off year of 2017. With the implementation of consistent collections efforts, the write-off totals in future years should be lower. Fiscal Impact: The current year write-off (2022) is $350,301.37. Funding Available: N/A r Andrew Keys Deputy City Manager/Internal Services Director Twha Saw1fel- -- Tarra Sumner (Apr 11, 2022 07:24 PDT) Tarra Sumner Revenue Manager CITY OF LODI ADMINISTRATIVE POLICY AND PROCEDURE MANUAL SUBJECT: COLLECTIONS AND WRITE-OFF OF UNCOLLECTABLE GENERAL BILLING DATE ISSUED: April 20, 2022 REVISED DATE(S): SECTION 1: PURPOSE The purpose of this policy is to ensure that all reasonable effort has been used to collect accounts receivable general billing, improve measurement of the City's accounts receivable and ensure the most efficient use of City revenue collection resources. SECTION 2: POLICY City of Lodi's policy is to actively pursue collection of past -due accounts receivable, regularly review the status of past -due accounts, and write-off amounts determined to be uncollectable. A write-off of uncollectable accounts receivable from the City's accounting records does not constitute forgiveness of the debt or gift of public funds. SECTION 3: SCOPE This policy applies to all City departments and funds. SECTION 4: PROCEDURES C_nllpr_tinnc Collection procedures are established by the departments responsible for the receivable amounts and shall be conducted monthly. Responsibilities are as follows: Departments 1. Run an aging report that includes the following information: a. Account number; and b. Property Address c. Mailing Address d. All account holder identifying information; and e. Invoice Date; and f. Original Due Date; and g. Time lapsed, measured in years from Original Due Date to Report Date; and h. Original amount due; and i. Cumulative penalties or interest assessed; and i. Total amount due. CITY OF LODI ADMINISTRATIVE POLICY AND PROCEDURE MANUAL 2. Verify that all items on the report are less than four (4) years aged from Original Due Date to Report Date. 3. Send excel spreadsheet to the Revenue Department separated into in house collections including billed items outstanding and aged less than 45 days past the Original Due Date and outside collections including items aged 45 days or more past the Original Due Date. Revenue Department 1. Shall review data given and compare to utility accounts to find additional customer identifying information such as Social Security Numbers, Driver License Numbers, or other identifying information. 2. Shall submit the data to our outside collection agency for Rapid Letters. Rapid Letters shall be sent for 45 days, after which full collections shall commence. 3. After four (4) years, the accounts shall automatically be removed from full collection status. Write -Off The write-off process shall be conducted by the Revenue Department yearly. 1. Run Over/Short adjustment program for write-offs. 2. Provide report to all departments with General Ledger account numbers and amounts to be written off. 3. Revenue department shall perform write-off of all amounts in the data sets after Department Head and City Manager sign off on the amount to be written off. Department 1. Each Department Head is to sign off on the write-off amount. If the Department Head does not want to write off a specific amount, an explanation needs to be given in a memo format as to why the amount should not be written off. City Manager or Council Write Off Allowances If the total aggregate amount to write off is more than $100,000 in a given Fiscal Year, the City Manager must receive City Council approval to execute the write off. 2. The City Manager can approve write off all annual amounts that total in aggregate under $100,000. Liens If the outstanding balance can become a lien against real property per applicable state law and Lodi Municipal Code, the responsible department shall initiate the lien process. CITY OF LODI ADMINISTRATIVE POLICY AND PROCEDURE MANUAL Liens shall be placed quarterly on all lien -able amounts owed that are 90 days past due. Each quarter, the department sends the Revenue Department a list of all liens forwarded to the County. The report shall have the following information: 1. Name of Customer 2. Property Address 3. Mailing Address 4. Amount of the Lien 5. Date of the Lien 6. File date of the Lien 7. 10 Year expiration Date of the Lien a. Ten years from the filing date RESOLUTION NO. 2022-100 A RESOLUTION OF THE LODI CITY COUNCIL APPROVING ANNUAL WRITE-OFF POLICY FOR GENERAL BILLING BAD DEBTS AND AUTHORIZING THE CITY MANAGER TO APPROVE A TOTAL WRITE-OFF AMOUNT OF $350,301.37 FOR FISCAL YEAR 2022 WHEREAS, the Finance/Revenue Division is responsible for bad debt and the writing off of bad debt once considered uncollectible; and WHEREAS, collections and write-offs on general billing debt has not been done since the conversion to Tyler ERP in 2016; and WHEREAS, several departments utilize the general billing for fees, fines, and charges of services rendered; and WHEREAS, this policy applies to general billing debts that have been billed in Tyler ERP for all departments; and WHEREAS, the write-off policy instructs departments to conduct a monthly collection process, including the following processes: 1) In-house collection; or 2) External; debt collection; or 3) Write-off; and WHEREAS, debt will be collected through general billing for 45 days after due date. After 45 days, the debt will be referred to an outside collection agency who will send letters for 45 days and on the 46th day, active collections will be implemented. After four years of non-payment, the debt will be written off in Tyler ERP following the write-off policy; and WHEREAS, additional circumstances where difficulty may be experienced with recovering debt and the collection process can reach a point where it is inappropriate, overly expensive, or uneconomic to pursue further action. It would be more cost-effective for the Council or the City Manager to write off these debts in these situations rather than pursuing further action; and WHEREAS, at the discretion of the Council or the City Manager, debt will be written off in the following circumstances: a) The debtor has left the address given and cannot be traced; or b) The amount is too small for legal action to be taken, or is not economically viable to pursue further; or c) The debtor is deceased and the amount is uncollectible; or d) The debtor has become bankrupt; or e) Recommendation of the Revenue Division that the amount is not collectible; or f) The debt is subject to a legal judgement or court order decision; and WHEREAS, the amount to write-off is an accumulation of bad debt from the conversion of the Tyler ERP to the current write-off year of 2017 in the amount of $350,301.37. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council approves the Annual Write -Off Policy for General Billing Bad Debts and authorizes the City Manager to approve a total write-off amount of $350,301.37 for Fiscal Year 2022. Dated: April 20, 2022 I hereby certify that Resolution No. 2022-100 was passed and adopted by the City Council of the City of Lodi in a regular meeting held April 20, 2022 by the following vote: AYES: COUNCIL MEMBERS — Hothi, Khan, Kuehne, Nakanishi, and Mayor Chandler NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — None ABSTAIN COUNCIL MEMBERS — None WA�� OLIVIA NASHED City Clerk 2022-100