Sacramento County officials said this month that more than a half-billion dollars owed to the county will go uncollected because the county is legally barred from recovering it.
Connie Ahmed, Department of Revenue Recovery director, told the Board of Supervisors this month that the department can’t collect from people who don’t meet “ability to pay” requirements and the agency is bound by rules that prioritize which types of payments it does collect. Only about $150 million of the outstanding $750 million identified in a June Sacramento County grand jury report will be collectible over time, Ahmed said.
“One of the key items that we provided clarification was the concept or assumption that all of DRR’s receivables are collectible,” said Ahmed. “The vast majority are not collectible.”
Ahmed was responding to the grand jury’s scathing June report that said “poor collection results were the direct outcome of management failing to focus its efforts on reducing the outstanding debt, as well as the impact of the dysfunctional Debt Management and Collection System.”
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By the department’s calculation, it’s recovering 48 percent of debt this year. By the grand jury’s calculation, it’s 6 percent.
The Department of Revenue Recovery is tasked with collecting fees and penalties owed to the county, victim restitution, overpayment of public aid, fees associated with code enforcement, probation, indigent defense and other obligations, but not property taxes or child support.
The department doesn’t dispute that there are hundreds of millions of dollars in outstanding debt to the county and the number is rising steadily. However, DRR and the grand jury calculated the rate of debt collection differently – DRR’s annual recovery rate is the percentage of debts issued that year that are collected, not the percentage of total outstanding debt to the county.
Supervisor Don Nottoli said he was satisfied with the department’s response. It was important to set the record straight about the differing numbers, he said.
“We acknowledged where we were deficient and, you know, where we need to improve,” he said. “But also credit where credit is due.”
The Department of Revenue Recovery says court-ordered payments comprise $295 million of the debt, and that victim restitution and a state surcharge take priority over debts to county agencies.
In another example, the department said people who agreed to repay general assistance benefits or fees to the Sheriff’s Department, Probation Department, Indigent Defense or other agencies can delay repayment of $216 million until they can meet basic living expenses. Welfare-to-work recipients who received more aid than they were entitled to can avoid paying most of the $90 million they owe Sacramento County while they remain on public assistance.
Across the state, the Legislative Analyst’s Office estimates outstanding criminal fines and fees had grown to $11.2 billion by 2014.
Anita Lee, one of the writers of the LAO report, said a lot of court-ordered debt in the state will never be collectible. Some counties keep their unpaid court-ordered obligations down by discharging debt that won’t be paid, she said, but the Board of Supervisors or presiding judge has to sign off.
Sacramento County’s DRR said it leaves debt on the books for as long as possible to increase the chance of collecting it.
Lee said it would be hard to say where Sacramento County stands in comparison with other counties because of differences in size and a lack of accurate data for some counties. Other counties also have more than one agency that handles collection, making comparisons difficult.
The grand jury also blasted the department’s software system, the Debt Management and Collection System, which was custom-built for the county in the late 2000s after a non-competitive bid process.
DRR said because the previous system began to deteriorate during the recession when funds were tight and DMACS was already partially constructed, it made fiscal sense to move forward with the DMACS. The Department of Technology said the system is reliable and meets all of the department’s business needs.
Jurors reviewed thousands of documents and subpoenaed 23 past and present county employees before writing their report. Ahmed said she wasn’t one of the people interviewed for the investigation and that some of the misunderstandings were a result of employees who only know their part of the process.
The grand jury for 2015-16 has disbanded, so the 2016-17 grand jury will have to review the response submitted by the county. This year’s jury foreman, Michael Micciche, said he cannot comment specifically on DRR’s response until it is officially filed with the grand jury and the jurors get a chance to review it.
Micciche also served on the 2015-16 grand jury and in general, he said, he understands misinformation can be presented and corroborated by witnesses before the jury, but any information provided by witnesses was verified either by documents or additional witness testimony before inclusion in the report.
“Nothing in there is a hypothesis,” he said.