SENATE BILL REPORT

SB 5580

BYSenators McCaslin and DeJarnatt; by request of Office of Financial Management

Allowing write-offs of uncollectible accounts.

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 14, 1989; February 20, 1989

Majority Report:  Do pass.

      Signed by Senators McCaslin, Chairman; Pullen, Sutherland.

Senate Staff:Barbara Howard (786-7410)

                  March 9, 1989

AS PASSED SENATE, MARCH 9, 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:

Uncollectible accounts or other debts may be written off if there is no other cost-effective means of collecting the amounts due for all accounts of the Department of Revenue and several accounts of the Departments of Employment Security and Social and Health Services.

Mandatory approval by the Attorney General and the Office of Financial Management is removed, as are two mandatory waiting periods before the write-off process can begin.  In the Department of Revenue a $100 limit on the amount of write-off is deleted.  Two special methods of write-offs for the Department of Social and Health Services -- cancellation of hospital charges for the mentally ill and waiver of collections of overpayments of assistance -- are repealed.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: Bob Jacobs, OFM (pro)