SENATE BILL REPORT

EHB 1578

BYRepresentatives R. Fisher, McLean, Holland, Silver, H. Sommers and Anderson; by request of Office of Financial Management

Allowing write-offs of uncollectible accounts.

House Committe on State Government

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 30, 1989

Majority Report:  Do pass as amended.

      Signed by Senators McCaslin, Chairman; Thorsness, Vice Chairman; Conner, Sutherland.

Senate Staff:Barbara Howard (786-7410)

                  March 31, 1989

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, MARCH 30, 1989

BACKGROUND:

One of the major recommendations in a study of accounts receivable by the Legislative Budget Committee in 1987 was that the Office of Financial Management, in cooperation with the Attorney General's Office, study the state's control of write- offs, including the Attorney General's role in the process.

OFM has made a number of findings:

      -- The control of write-offs is an appropriate function for agency management, subject to review by the State Auditor for compliance with OFM policies and statutes.

      -- Accounts should be written off whenever an agency finds there is no cost-effective means of pursuing them.  The current standard is "if there are no other available and lawful means" of collecting.

      -- The Attorney General should be involved in write-offs only when necessary to pursue legal action.

OFM is also revising its policies to require that each agency adopt procedures in cooperation with the Attorney General's Office to specify any needed involvement of the Attorney General.

SUMMARY:

The procedures to write off uncollectible accounts receivable in the Departments of Employment Security, Social and Health Services, and Revenue are changed to reflect Office of Financial Management (OFM) guidelines.  In general, write-offs are to be based on the criterion of cost- effectiveness.  The statutes are brought to conformity by eliminating specific criteria such as Attorney General or OFM approval, mandatory waiting periods, pursuit of "all available and lawful means of collection," and dollar limitations.

All state agencies are to report annually to OFM on all accounts written off.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

SUMMARY OF PROPOSED SENATE AMENDMENT:

The section requiring all agencies to provide detailed reports on write-offs is deleted.

Senate Committee - Testified: Bob Jacobs, OFM