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Ohio Attorney General Collections Enforcement Unit Operational Assessment Report FINAL RECOMMENDATIONS REPORT | DECEMBER 2012

Ohio Attorney General Collections Enforcement Unit Final Operational Assessment Report

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Table of Contents Management Summary ....................................................................................................................... 4

Project Scope and Objectives .......................................................................................................... 4

Project Approach ............................................................................................................................. 5

Summary Findings and Results ....................................................................................................... 6

Major Recommendations .................................................................................................................... 7

Clarify Financial Goal ....................................................................................................................... 7

Maximize and Simplify Debtor Interactions ..................................................................................... 8

Incorporate Business Data .............................................................................................................. 9

Reduce Unnecessary Re-work Activities ......................................................................................... 9

Overall SWOT Analysis ..................................................................................................................... 11

Strength: Strategic Direction .......................................................................................................... 11

Strength: Organizational Alignment ............................................................................................... 12

Strength: Legal Operations ............................................................................................................ 12

Weakness: Manual Processes ...................................................................................................... 13

Weakness: Work Prioritization ....................................................................................................... 13

Weakness: Number of Handoffs .................................................................................................... 14

Weakness: Accounting .................................................................................................................. 15

Opportunity: Uncollected Debt ....................................................................................................... 16

Opportunity: Open Marketplace ..................................................................................................... 16

Threat: Reduction in Certifications................................................................................................. 16

Threat: Pre-Certification Collections .............................................................................................. 16

“As Is” Processes .............................................................................................................................. 18

“To Be” Processes ............................................................................................................................. 22

Principles ....................................................................................................................................... 24

Debt Allocation Strategy ................................................................................................................ 24

Technology .................................................................................................................................... 25

Reallocation of Staffing .................................................................................................................. 27

Collections ..................................................................................................................................... 28

Written Resolution Unit .................................................................................................................. 29

Legal Operations ........................................................................................................................... 29

Finance .......................................................................................................................................... 29

External Relations .......................................................................................................................... 30

Business Analysis .......................................................................................................................... 30

Key Items for Consideration .......................................................................................................... 30

Appendix A: Issues and Opportunities Matrix ................................................................................... 32


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Project Overview ............................................................................................................................ 33

Summary Findings and Results ..................................................................................................... 33

Appendix B: As-Is Process Maps ...................................................................................................... 55

Appendix C: To-Be Process Maps .................................................................................................... 66

Appendix D: Proposed Action Plan ................................................................................................... 72

Appendix E: Proposed CEU Organizational Chart ............................................................................ 82

Appendix F: Recommended Implementation Governance Structure ................................................ 86


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Management Summary The Ohio Attorney General’s Office’s Collections Enforcement Unit is authorized by ORC 131.02. The law identifies that payments due to the State of Ohio for more than 45 days becomes the responsibility of the Attorney General to collect those funds. Once the debt is certified to the Attorney General’s Office (AGO), the AGO is required to notify the debtor of the amount and the nature of the debt. The AGO has the authority to collect the debt in any number of ways and there are three primary strategies that are used – in house collections, third party vendors, and special counsel. The AGO retains the uncollectible debt for a period of 40 years. Currently, all debt under the authority of the AGO is $27.7 billion. The AGO works with more than 150 clients (bureaus, agencies, universities, local governments, etc.). Account types include taxes, fines, penalties, fees, worker’s compensation debts, loans, and unpaid hospital receivables.

In fiscal year ending 2012, the AGO received $4.5 billion in certifications while the AGO collected $467 million. Most of the collections ($368 million) were returned to the other agencies of the State. The remainder was paid to special counsel ($41 million) or third party vendors ($14 million) in the form of fees for their work and the AGO retained a portion ($45 million) for managing the program.

The CEU has 140 positions. Its primary operation is in Columbus but also has employees in Youngstown, Toledo, Cincinnati, and Cleveland. It is organized by specialty and includes the following major work groups:

Business Operations – including accounting, quality assurance

Internal Collections – including 36 claims account representatives organized by type of debt

Special Counsel/ Third Party Vendor Oversight – including 12 claims account representatives aligned into two groups: third party vendor and special counsel

Legal Operations – organized by specialty (mainly bankruptcy work)

The CEU has undergone several improvements in the recent past and has invested in numerous new technology systems including a new case management system, a new document imaging system, new phone system with interactive voice recorder (IVR), and reorganizing work within the CEU. The CEU engaged Plante Moran to conduct a thorough objective, third-party review of key business processes with the intent of identifying opportunities to maximize the collection of debt owed to the State of Ohio.

PROJECT SCOPE AND OBJECTIVES The Attorney General issued a request for proposal to review the effectiveness of the CEU and make recommendations for improving efficiency related to internal processes. Specific attention was sought for review of collections letters, telephone and interactive voice recognition (IVR) system, assignment of accounts, payments on-line, how payments are posted, and the overall way in which work is organized.

Plante Moran was selected as the vendor for this effort and the project kick-off commenced in early October, 2012 after project scope was finalized. The final scope included a review of operations with the intent of improving processes throughout the CEU in anticipation of maximizing the benefits that would be received from several planned technology upgrades. The CEU’s current collections system, CUBS (Columbia Ultimate Debt Collection System), is at the end of its useful life and a full replacement is scheduled. A vendor has been selected and the new system is currently scheduled to be fully implemented, although an implementation plan with dates has not been developed either


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for this or the other technology improvements. The vendor contract for the new collections system was signed in early December.

Recommendations included in this report are based on observations and analysis of the business side of the AGO operations – we make no evaluation of the legal side of the operation. As an elected office, the Attorney General may have practical reasons to not implement some of the recommendations contained in this report.

PROJECT APPROACH The Plante Moran team of consultants met with Collections Enforcement Unit (CEU) leadership and received several documents related to the CEU. Key documents reviewed included:

CEU Organizational Chart

Collection letter series

Specifications related to the IVR system

Internal reports related to productivity and case management

Performance and benchmark standards and objectives

Current operating budget

Operating policies and procedures, where applicable

Process and function descriptions/ handbooks

Workflow documentation/ flowcharts

Other data as requested

The Plante Moran team then had in depth interviews with management to gain insight into the current CEU operations and its key issues and challenges. These interviews occurred on-site in Columbus and involved members from every facet of the CEU. Some from the Attorney General’s offices in other cities also participated via phone, but it was determined that the regional operations were essentially similar to the central operations.

Stakeholder and staff interviews were also conducted over the course of eight days. During this time, Plante Moran met with employees ranging from line staff to director level which enabled us to explore a thorough cross-section of the organization. Other stakeholders interviewed by phone included the lock box manager, a third party vendor, a special counsel, and a sampling of clients. These interviews gave the consulting team information to document the current state processes as well as issues and opportunities that the CEU and its stakeholders are facing. Many of the findings and recommendations were uncovered as a result of these stakeholder interviews.

Plante Moran then met with leadership in a validation review session during which time the summarized issues and opportunities were presented for consideration and discussion. The current business practices of other organizations were also compiled and presented to leadership to help identify trends that are occurring within the collections industry.

Finally, key business processes were mapped and captured in Visio format for review and consideration. Improved “to be” high level process maps were also developed to identify ways to reduce redundancy, minimize implementation time, and maximize revenue. These processes are also matched with the functionality of the new technology as described to Plante Moran. While a vendor has been selected and a contract has been signed, there was insufficient time for Plante Moran to review the product or speak with the vendor. Functionality recommendations are made from the standpoint of specifications sought, not from functionality observed.


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SUMMARY FINDINGS AND RESULTS Debts are received by the Attorney General in the form of accounts from other parts of Ohio government. The Attorney General uses three primary methods of collecting debt – an in-house collections unit which includes Attorney General employees, third party vendors who are contracted to collect debt on behalf of the Attorney General, and special counsel who also collect debt and may take legal action to help ensure debt payment. Accounts generally flow from in-house to third party vendor to special counsel as the account ages, so legal action is improbable unless the debtor has ignored several other opportunities to pay.

As an elected office, changes in leadership can be common. For the Ohio Attorney General, this has been frequent over the past several years, as there have been five individuals to hold that post in the last seven years. Each Attorney General has the opportunity to appoint leadership in key positions and adjust the strategic direction of the office. For the CEU, this reality has created substantial changes in how work is prioritized and the extent to which accounts are allocated to outside counsel, third party vendors, and in-house collections.

Current leadership within the CEU has instituted several improvements within the department by improving operations within the accounting functions, technology and process improvements. Reorganization of the CEU has also sought to integrate legal staff and collections staff. While these efforts have resulted in positive changes for the CEU, additional improvements were uncovered through the review and are needed to optimize the operations of the CEU.

The overall effectiveness of the CEU has been hampered by constraints of the current technology. Efforts to correct problems have become permanent work-around processes. Often, these processes do not address the root cause of the problem and the work-around becomes ingrained in the organization. Each of these issues can be addressed and several of the recommendations, if implemented, can achieve significant returns quickly with relatively little invested. For full transformation of the CEU to maximize the functionality of the new collections system, significant changes – including a reorganization of work – will be required. The success of this transformation will depend largely upon the CEU’s capacity to manage change and the ability of leadership to articulate a future vision that motivates CEU employees.


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Major Recommendations CLARIFY FINANCIAL GOAL The mission of the CEU is “to provide debt resolution services to state agencies and debtors so they can resolve financial obligations and comply with Ohio law.” This mission is achieved when debt is collected in a courteous and professional manner.

There are three methods that are employed to collect debt: an in-house collections operation, contracting with third party vendors, and contracting with special counsel who may take legal action against a debtor to ensure compliance. The primary measure used by CEU leadership to determine the extent to which this mission is realized is what the collections for the CEU have been – the cumulative effort for the three for FYE 2012 was $467 million. Below is a breakdown of total collections for FYE 2012 for each of the three methods:

Amount Collected % of Total

In-house CEU 188,932,774 40%

Special Counsel 191,928,151 41%

Third Party Vendor 85,797,547 18%

TOTAL FYE 2012 466,658,472

Compensation for collecting debt varies by collection method. Third party vendors are compensated by retaining 21 percent of the debt they collect while special counsel retains 33 1/3 percent of most collected debt (there is a sliding scale that applies to amounts above $25,000 and some debt types have different fees associated with them). For each of these as well as for in-house collections, the Attorney General retains 10 percent of collections for managing the efforts. The remainder is sent back to the state agency/ client who forwarded the debt to the Attorney General. For some accounts, collection fees are also collected thereby making clients whole on some accounts. Below is a breakdown of the approximate amounts retained by each of the three methods for most accounts:

AGO Retained Vendor

Retained Total Retained

In-house CEU 10% N/A 10%

Third Party Vendor 10% 21% 31%

Special Counsel 10% 33 1/3% 43 1/3%

For third party vendors and special counsel, the AGO retains 10 percent of the collection amount with relatively little effort – the basic cost to the AGO is in terms of contract management and oversight. In-house collections require additional effort, as staff, technology, space, supervision, and training must be procured through the budget process. Because of this, the AGO retains more funding as a result of the activities of third party vendors and special counsel ($25.7 million) than it does from in-house collections ($18 million). The AGO fee, along with third party vendor fees and special counsel fees add to $99 million. This is the total cost of collecting the $467 million in debt. Below is a breakdown of amounts retained for FYE 2012:


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Amount Retained % of Total

AGO (10% of total) 44,659,249 45%

Third Party Vendor 13,736,127 14%

Special Counsel 40,648,076 41%

TOTAL FYE 2012 99,043,452

The total cost of gathering $467 million owed to the State is $99 million - $367,615,020 (79% of collections) was remitted to clients. Clients would prefer an increase in this figure. Doing so may increase the costs to the AGO, because in-house collections cost the AGO more. The AGO should determine whether the overarching goal should be the total amount collected or the total amount remitted to clients. Having clear direction on this key point will impact how best to structure the business, as the costs for collecting the debt vary according to each of the three methods.

MAXIMIZE AND SIMPLIFY DEBTOR INTERACTIONS The core process through which debts are assigned is as follows:

1. Accounts from clients are certified to the Attorney General;

2. They remain in-house for approximately 180 days for collection;

3. If they are uncollected during that time, they are randomly sent to a number of third party vendors for a period of 360 days;

4. After that, they are forwarded to an outside counsel for two years;

5. If they remain uncollected, they are then forwarded to a second outside counsel for another two years;

6. The final collection effort is via one of two distressed debt vendor for one year;

7. If it still has not been collected, the account is returned to the CEU and classified as “uncollectible write-off”;

8. Recently, an additional step was added, as an in-house debt recycle program was instituted and appears to be moderately successful – collecting $300,000 in its first year.

For steps 2 through 6, the responsible party is likely to send out multiple letters and make multiple telephone contact attempts with the debtor. From the debtor’s perspective, this can lead to significant confusion – particularly if the debtor has multiple accounts in which case, they may receive multiple calls from multiple organizations who are each collecting on behalf of the AGO.

All aspects of the CEU should be restructured to increase chance of payment by a debtor. Work should be simplified so that communication is frequent and appears seamless from the debtor’s perspective. This means minimizing the handoffs, maximizing the frequency of phone interactions, coordinating interactions with key points in the collections process, and ensuring professional standards on all interactions are high. The “face” of the AGO is the letter series and the “voice” of the AGO is the phone calls. Both of these needs to meet the standards of the office and this will require significant improvement to meet this standard. Automatic e-mail notifications could also be used to enhance likelihood of payment and these should also incorporate the professional standards of the office.

Efforts should be made to assign the debt to the right collector (in-house or vendor supported) as quickly as possible. Similarly, collectors should have the opportunity to identify whether they


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believe a debt is collectible within their resources – CARs should flag an account to be transferred to an external collector if sufficient reason exists. If one vendor is unwilling or unable to collect on a debt, the debt should be transferred to a vendor who is better suited. Accounts should be actively monitored to determine what accounts should be forwarded to another vendor.

Additionally, a debtor may have their debts of different types spread across multiple collectors. By having one collector “own” all of their debt, the number of correspondences with that debtor can be reduced and made more effective.

CAR staff currently both receive calls and make calls. Reorganizing work so that some CARs specialize in incoming calls and some specialize in outgoing calls will maximize the opportunities for debtor interaction by automating parts of the calling process.

The in-house collection unit has hours of operation between 8:00 am to 5:00 pm Monday through Friday with time off for State-recognized holidays. It is closed on evenings and weekends – a fact that several CARs acknowledged is a time when many debtors are likely to be reachable by phone. Hours of operation should be determined by hours when a debtor is most reachable, not by hours that are most convenient for the AGO.

INCORPORATE BUSINESS DATA Best practice organizations prioritize their work according to a number of factors including age of debt and ability to pay. Prioritization of debt is an important step in workload allocation – staff time should be targeted to those accounts that have the highest rate of return. Many debt collection software systems include a prioritization component in their database. Others may use credit reports or similar data so that time is spent on debt type that is most collectable. Work incentives – including fee structures for vendors – should be based on the collectability of the debt.

The current practice of the CEU is that the prioritization categorizations (platinum, gold, silver, and bronze) are not used by CEU staff – several CARs stated that they do not use the categorization to prioritize their work for the day. Further, they were unable to explain the data elements that are used to make the prioritization. This classification is a good concept that is not deemed useful by collectors, so it is not used. However, it does impact the amount of time that an account remains in-house before being forwarded to a third party vendor.

From a business perspective, each account has a value of debt associated with it along with a likelihood of collecting. Taken together, the value of debt and the likelihood of collecting will equal the expected rate of return for that debt. Because likelihood of collecting may vary according to which organization is collecting, it makes sense to assign certain debt cases to vendors immediately rather than waiting for the debt to age, as is the current practice.

Business analytics can examine past rates of success to identify which collection methods are better at collecting certain types of debt. This information should be used to allocate types of debt to various components of the system. It should also be used to prioritize internal workload of the in-house collectors.

REDUCE UNNECESSARY RE-WORK ACTIVITIES One of the purposes behind the review was to identify processes that could be improved within the CEU. It was recognized by leadership that the CEU has many activities that can be streamlined, automated or eliminated. The review identified several such activities – the restructuring of which are included in other sections of this report.

From a process improvement perspective, unnecessary re-work are activities that would not need to be undertaken if they had been done correctly earlier on in the process. For example, all CARs


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verify the lock box payments made within their accounts. This occurs after the lock box had already imaged and indexed checks to add account information.

Collectively, these activities consume a lot of time and focus of the CEU. Reducing or eliminating these activities will allow staff to focus on the value-added components of work such as increasing collections. It is important for the AGO to recognize that making changes in various processes will free up time for staff to work on additional value-added activities.


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Overall SWOT Analysis The CEU is a section of the Ohio Attorney General’s Office. It includes 140 positions – many of whom were interviewed by Plante Moran consultants as a part of this project. There is a common understanding of the overarching goal of the CEU – all staff who were interviewed could articulate that the mission of the CEU is to increase the amount of collections that come through the office and many could identify that $467 million was collected during the previous fiscal year. Others believed that collections would not reach that level this fiscal year, as the number of accounts certified has been down.

It is managed by a section chief and organized into four major areas of operation: Business Operations, Special Counsel & Third Party Vendors, Internal Collections, and Legal Operations. Each of these four areas is managed by a director who has deputy directors as direct reports. The deputy directors oversee specialized areas of the operation and have supervisors as direct reports. A supervisor can oversee as many as twelve employees.

The SWOT analysis offered below is Plante Moran’s overall impression of CEU. SWOT is an acronym that refers to:

Strengths: qualities within an organization that are assets. Recommendations should build on these assets.

Weaknesses: qualities within an organization that detract from the organizations value or mission. Corrective action is often needed to overcome these detriments.

Opportunities: factors that exist external to an organization that can be harnessed to help an organization add value or achieve its mission.

Threats: factors external to an organization that may harm an organization’s mission. Recommendations should mitigate these risks.

STRENGTH: STRATEGIC DIRECTION The elected office of Attorney General has changed hands several times in the recent past. Each elected official may view collections differently which can impact how work is allocated. Although the current leadership mostly appears to share common strategy for the CEU and operations have been relatively stable for a year, remnants of past policies can still be observed.

The office is undergoing a significant change at this time. Three new investments in technology will help bring the internal collections up to the same playing field (or greater) as others in the collections business. The first and most significant is the replacement of CUBS (Columbia Ultimate Debt Collection System) – the CEU’s collections system. CUBS was developed decades ago and has been adjusted and customized through the years, but has clearly outlived its usefulness. Indeed, many manual processes that are currently in place at the CEU are a result of limitations in the CUBS system. The second major investment will be a change to the CEU’s document management system which is used to retain images of payments, correspondence, agreements and other pertinent work process documents. These two systems are used conjunctively for monitoring most components of the operations. However, they do not interact with one another and significant staff time is wasted in an effort to reconcile information contained between the two. The third major investment will be to replace the telephone/ Interactive Voice Response (IVR) system. Once this is implemented, it should enable debtors to get key information such as balance inquiry or payment instructions without needing to interact with CEU staff. The three systems will complement and


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share data with each other, which will significantly increase efficiency of the CEU. The timetable for implementation of these three systems has not been developed.

The CEU has also undertaken several improvement efforts during the recent past. Three of these were led by internal staff – an operational review of accounting, a strategic review of information technology, and a Kaizen improvement process designed to streamline the accounting process. Each of these led to improvements within the organization.

In addition to the efforts that have already been implemented and the investments that are in the process of being implemented, AGO leadership engaged in this review with the understanding that doing so could provide guidance in transformational change. Efforts of this magnitude are not simple endeavors and will require a lot of effort on the part of the entire CEU and especially leadership.

The changes that are planned are significant because they demonstrate a shift in approach for the operations. In the past, evaluation of investments such as staffing and technology appears to have been done on a cost-basis. For example, debtors receive letters requesting payment. Most organizations that request a payment (either debt or donation) by mail will provide a self-addressed envelope to increase the rate of return. Doing so has the added benefit of ensuring that the payment reaches the appropriate destination. If it is stamped with account information, it will also ensure that the payment gets posted to the correct account. CEU management has considered the provision of envelopes in the past but decided against it due to cost considerations – the benefit side of the equation appears to have been absent from the analysis. The fact that new technologies are being implemented demonstrates that current leadership evaluates some costs as investments that will pay off in the long run. Several recommendations are built on this assumption.

STRENGTH: ORGANIZATIONAL ALIGNMENT Often, organizations that undergo an organizational review exhibit misaligned goals or distrust in the workplace. Employees in the CEU exhibited neither of these qualities. Through interviews and observation, employees of the CEU demonstrated pride in their work and dedication to their employer. All expressed clear consistency with what the mission of the CEU is and how their work contributes to that mission. Most could also share the amount collected during the previous fiscal year. Collectors could also share what their work expectation was – demonstrating clear alignment between organizational goals and individual work. Individual work effort for many employees is monitored by supervisors in the form of “work expectation” and for collections employees, the individuals were well aware of what their monthly expectation was. This showed clear alignment between individual work plan and department level business goals. Individuals in more specialized areas such as bankruptcy could also articulate how their work contributes to the betterment of the department.

The operational review was treated as an opportunity for continuous improvement within the CEU by all parties we interacted with. We heard consistent feedback related to operational challenges associated with technology and accounting. In both of these cases, staff identified issues that either prevent or distract them from doing their core work well. Also, staff empathized with the difficulties that are faced by these two areas of the CEU and clearly viewed other sections as part of their “team.”

STRENGTH: LEGAL OPERATIONS This analysis focuses on the business side of operations and offers no observations about legal processes or caseload other than identifying that legal staff also have a leadership role in the operations and their expertise in the intricacies of resolving obligations is valued by the collections


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staff. This appreciation is reciprocated by the legal staff who expressed support for the difficult tasks that collections staff undertake.

The work difficulties expressed by the legal staff during interviews were primarily directed at the CUBS software and how it inadequately addressed certain components of operations. As an example, joint and several liability is credited to multiple accounts creating a situation in which the sum of accounts is greater than the sum of debt certified. One minor role that legal staff play is to liaise between outside counsel and clients in settlement issues and much of this responsibility can be simplified by improving service level agreements by specifying authorization controls – clients interviewed indicated that it is uncommon for them to “overrule” a recommendation made to them about settlements.

WEAKNESS: MANUAL PROCESSES One of the greatest issues faced by CEU is that many processes are unnecessarily labor intensive. The following cases were observed:

Approximately 65% of payments that are received through the lock box are viewed by CARs, verified that account information is correct, and then pushed to accounting. This is a time consuming activity that detracts from value-added activities such as contacting debtors. Data integrity scans and indexes between 700 – 1,000 recorder liens each week when they are received by a county.

Workers compensation liens are entered manually.

In the event of a tax settlement, all monetary components must be entered manually into CUBS to apply to the proper account. This includes the application of payment toward principal, interest, and fees.

The errors from manual data entry and missing payment information result in large volume of errors within the collection system which are captured in daily error sheets. These error sheets are hand delivered daily to supervisors who are responsible for correcting errors.

Many of these and other manual processes can be automated but the current collections system impedes this automation. Similarly, accounting (see page 21) is unnecessarily manual. Actions to replace the current collections system have already taken place.

WEAKNESS: WORK PRIORITIZATION Each collections representative is assigned accounts when the accounts are certified. These accounts remain with the CAR until they are either closed (paid in full) or transferred outside of the CEU usually to a third party vendor after a period of six months. (Variation in timeframe exists by account type and extent of interaction with the debtor during this timeframe.) Over the course of the six month timeframe, the CAR is expected to make efforts to contact the debtor so that the account becomes paid in full. Because some accounts are closed, new accounts are added regularly and older accounts are aged out, the size of the assignment varies from day-to-day. One CAR whose workload information was reviewed had 2,575 accounts assigned with a total value of $7,349,301. Some CARs may be responsible for more than 6,000 accounts. By assigning work to individual CARs, work is prioritized mainly by the CARs instead of the system or unity supervisors. When a CAR is out of the office, their accounts simply do not get worked.

Trying to collect on this many accounts is time consuming for several reasons. First, information is not always accurate or valid – people move, businesses close, contact information changes, etc. To address this, a portion of time is spent researching various databases, personal contacts, or business associates to attempt to gather the correct information. Second, most outgoing calls are


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not answered in which case the CAR logs the contact attempt, and the debtor might or might not call back (CARs indicated that return calls are the exception, not the norm) but if they do call back, they might or might not reach the CAR because the CAR might be assisting another debtor or it might be after work hours. So, much of the CAR time is spent doing rework that could be reduced if successful contact occurred sooner.

Due to volume, CARs need to choose which accounts should be worked first and which to postpone. To assist the CARs in identifying debt prioritization, CARs have two tools. First, supervisors allocate priority assignments regularly that appear in the CAR’s “Work in Progress” report, which the supervisor uses judgment and experience to identify accounts for which contact should be made. It is important to note that the number of accounts that appear in WIP is too vast for a CAR to address within the time allocated. The second tool is a scoring system. Each account has a classification of platinum, gold, silver or bronze in which platinum is greater than gold, etc. The methodology for this classification was developed during a previous administration. As a general rule, account prioritization is a best practice. However, the tool that is currently used is not understood by either staff or management. Because it is not understood, it is not valued; because it is not valued, it is largely ignored.

It is important to note that both the supervisor’s work assignment and the scoring system can be automated. Ideally, the collectability of an account would be estimated by algorithmic calculations based on prior experience. Prioritization scoring would be a function of amount of debt and the likelihood of collecting. In turn, likelihood would be a function of a variety of components including type of debt, age of debt, ability to pay as indicated by credit score or other proxy measure, whether multiple accounts exist, and possibly demographic information such as marital status. The factor that is likely to have the greatest weight in this algorithm is the age of the debt. Development of this algorithm is a feature that should be addressed in the replacement of the CUBS software which should be linked with the IVR’s direct dial feature. Ultimately, the algorithm would identify the most collectible account, transfer the account information to the direct dialer, and a CAR would have the account information on their screen when someone answers the phone. When the phone number is inactive, the account would be flagged for skip-tracing without the CAR’s involvement. When the call is forwarded to voice mail, an automated message could be left.

Accounts that fail to meet a certain threshold of collectability would never be kept in-house but instead would be transferred immediately to a third party vendor. This would enable others the opportunity to address the debt while it is still “fresh”.

Debtors calling into the system would use the IVR to enter their account information. This would transfer them to the next available account representative who would have the account information sent to them by the CUBS replacement. Callers whose accounts have been transferred to a third party vendor could also have their call automatically transferred so that a willing payer has the opportunity to pay on their first phone call.

WEAKNESS: NUMBER OF HANDOFFS Several of the processes reviewed have unnecessary handoffs. These detract value from an organization because each handoff is a new opportunity to introduce error. Also, each handoff requires some degree of review, research, and judgment which may or may not add value. It can also cause confusion around accountability and hinder successful resolution of issues. Each additional handoff creates less efficiency in the overall process due to the non-value added “wait” time that is incurred.

While recommendations around key process are included in this report, consider an issue related to account reconciliation to illustrate why handoffs should be minimized. As noted earlier, an account


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can be transferred several times to up to seven different organizations having accountability for that debt (agency, in-house, third party vendor, special counsel 1, special counsel 2, distressed debt vendor, then back in-house). This creates problems for the debtor in terms of understanding who is the responsible collector. It also causes problems for accounting reconciliation of the fees owed to the successful collector.

To illustrate this point, the following scenario was observed by Plante Moran. An account was assigned to special counsel #1 for collection. They received payment for the account in the beginning of March and sent the check to the lockbox in 1-2 business days. The lockbox received the check properly and immediately scanned it into Content Manager. The check was automatically sent to an account representative’s work list in Content Manager, but according to records in CUBS, the payment was not posted until August of the same year (a five month delay). In the meantime, the account in CUBS did not show any activity or payment on it, so the account was automatically de-forwarded from Special Counsel #1 and assigned to Special Counsel #2 in May of the same year. When the payment got posted in August, it was credited to Special Counsel #2 because that was whom the account was assigned to at the time of posting. Special Counsel #2 then got paid the forward fee for an account that was collected by Special Counsel #1.

This error was discovered over a year later through an account reconciliation request by Special Counsel #1, who had noticed that he never received payment for the account. An Account Clerk 3 (AC3) was required to research the payments on the account to determine why Special Counsel #1 never got paid, which this resulted in the aforementioned discovery. Following this, the AC3 was then required to fill out a misapplication form to remove the payment from the account so that it could be reapplied and credited to Special Counsel #1. Per the misapplication process, the misapplication form was then emailed to the A/P inbox to be resolved in 3 business days – per the A/P inbox standards – by an Account Clerk 2. The AC3 also needed to have a collections supervisor reassign the account back to Special Counsel #1 so that when the payment reposted, it would be credited properly. All of this unnecessary re-work could have been avoided by timely application of the initial payment by accounting instead of a CAR.

WEAKNESS: ACCOUNTING Two significant improvements have occurred in accounting. First, accounting has been reorganized into account payable/ account receivable where it had been specialized by debt type in the past. Second, an effort to reduce handoffs and process steps was undertaken earlier in 2012 under leadership provided within the CEU – impressively reducing the number of steps and handoffs in the process. While the evaluation of neither of these efforts was included in this organizational review, both of these efforts have been favorably received by staff.

Yet problems still persist because of the remaining non-value added steps that cause delays and re-work in the current environment. Some of the problems are the result of timing delays, some are organizational issues, some are process issues, but for many issues the root of the problem is that the CEU simply does not have an accounting system. Instead, they use a combination of Excel, Quick Books, and Great Plains. A collections system that enables accounting and reporting of the business side of collections would resolve many issues.

One finding that surprised the Plante Moran consultants is that there is not an interface between accounts payable and CUBS. When a debtor overpays an account, the process for returning the overpayment can take 6-8 weeks. During this time, CARs are likely to field questions from the debtor about the timetable to receive the overage. The root cause of this is that CUBS is not designed with an accounts payable module nor does it interface with other invoicing software. Accounting had been using Quick Books for accounts payable but is now in the process of


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migrating fully to Great Plains software, but there are a limited number of licenses within so access to the software is limited.

OPPORTUNITY: UNCOLLECTED DEBT The total debt for the CEU is growing. The current total debt inventory is $27.7 billion and is expected to increase to approximately $31.7 billion by the close of current fiscal year. The AGO is able to collect approximately ten percent of the amount certified each year which means that 90 percent of debt is rolled over into the following year. Increasing debt collected from 10 percent of annual certification to 11 percent would result in an increase of $45 million – a goal that is likely attainable by improving account allocation, workload prioritization, and debtor interactions.

OPPORTUNITY: OPEN MARKETPLACE Unlike much of State government, the CEU is in a relatively unique position in that it can contract with private vendors to handle much of its workload – at the most basic level the services offered in-house are very similar to the services offered through private vendors. This provides the CEU with the opportunity to manage caseload within the CEU such that whenever workload becomes unmanageable, new accounts can immediately be outsourced. The CEU can also decide which types of accounts should be handled in-house and which should automatically be outsourced. As an example, habitual debtors might be better handled by outside counsel if they get the account immediately rather than waiting 18 months as is the current practice. Being able to outsource provides the Attorney General with both freedom and flexibility. Deciding which accounts would be best handled should be based on business analytics, but the overarching goal should be to get an account into the hands of the organization that has the highest chance of collecting at the lowest cost as quickly as possible.

Because the market is open, the CEU should consider membership into some of the collection agency associations that other collection agencies are. This will enable the CEU to become better informed of industry trends, debtor behavior, tools to increase collections, as well as potentially access to benchmark data. Examples for consideration include ACA International (American Collections Association) and Commercial Collection Agency Association.

THREAT: REDUCTION IN CERTIFICATIONS Overall certifications are lower than what they were one year ago. Reasons for this could include that there are fewer debts that agencies are incurring or that agencies are retaining debt longer than the 45 day window they are allotted by statute or because agencies are doing a better job of collecting within their 45 day window. The CEU should work with clients to improve their understanding of this dynamic and adjust operations accordingly. It might be that certifications are down because people are paying their debts sooner, which would be a good thing for the State of Ohio. Many CEU staff believe that this will result in lower collections this year. This threat can be mitigated by employing new techniques as outlined in this report.

THREAT: PRE-CERTIFICATION COLLECTIONS The Ohio Department of Administrative Services (DAS) is undergoing an effort to improve internal operations across State government. One of the focuses of this effort is streamlining common processes. This initiative should result in greater value for Ohioans overall. However, one component of this initiative may impact the CEU.

One process that is common across many State agencies is collections prior to certification to the Attorney General. The DAS issued a request for proposal for vendors who wish to bid on these pre-collection services. According to the RFP, vendors are asked to supply a platform that will be necessary to facilitate these collections including implementation, support, and collections services.


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Should a vendor receive an award, they may become responsible for a portion of State debt for some of the 45 days prior to the debt being certified which will likely result in less certifications for the AGO. The Attorney General is monitoring this closely and has indicated that it may bid on the RFP, which requests proposals to be submitted by December 26, 2012.


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“As Is” Processes The internal operations of the CEU are overly dependent on manual processes. This is due to a combination of old technology that does not adequately support current desired business practices as well as a failure to address root causes of problems which cause work to be more complicated in other parts of the department.

Core CEU business processes were reviewed as a part of this engagement. The Plante Moran team of consultants interviewed several members of the CEU team, reviewed documents and existing workflow diagrams to develop process maps, which are included in Appendix B. These were also presented to CEU leadership and reviewed for accuracy. Overall, processes are overly manual in large part because of the functionality of CUBS and involve too many hand-offs in part due to CEU policy. Key processes documented include:

High level: certification through collection

Account intake process

Account assignment

Cash application

Lock box process

Account reconciliation – third party vendor and special counsel

Account reconciliation – client

High level: Certification through Collection. The core process for the CEU involves the distribution of accounts for collections. This process determines the workload for in-house collections, special counsel, and third party vendors. The internal document that guides this process is the “forward master” which determines which accounts get assigned to which parties at which points in the process. With a few exceptions, accounts begin with in-house collections and are assigned to individual CARs depending upon debt type and a dealing strategy that is designed to assign “collectable” accounts equally among the CARs. If they are unsuccessful after approximately 180 days, it is forwarded to a third party vendor based on a random selection. Over the course of six years, seven different organizations could be responsible for collecting the debt.

A random dealing strategy is built into much of this process. This is probably by design in order to ensure equity throughout the process. However, a cost of doing so is that it sacrifices specialization and desirability of accounts. For example, one third party vendor might be exceptional at collecting university debt yet receives an equal number of accounts as other third party vendors do.

The main variable that drives this process is elapsed time – accounts get reassigned as they age. This is of concern because it is commonly known in the industry that as debt ages, the likelihood of collecting it diminishes. A debt that in-house has determined is uncollectible should immediately be forwarded to a third party vendor who might identify it as collectible. Also, some workload should be assigned to outside vendors immediately upon certification to the AGO due to the inability of in-house collections to address the volume of accounts in a timely fashion.

Finally, this creates navigation difficulties for the debtor who might be willing to pay to one organization but is unable to do so because the account has been transferred. Also, a debtor who has multiple debts is likely to be required to work with multiple agencies so various organizations working on behalf of the Attorney General are in competition for the same dollars.


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Account Intake. Claim certifications are sent by client to the Attorney General’s Office for certification. Since the CEU works with over 150 clients, there is not consistency in how the accounts are received. Most (95%) are transferred to the CEU via an FTP server and most of these are loaded “automatically” into CUBS by IT operations. All automated and manual accounts require involvement of the data integrity team or IT operations.

The Ohio Revised Code clearly states that the Attorney General has the authority to determine the method in which accounts are received so automating can be mandated. However, this is not practical for some. Efforts should continue to be made to ensure automatic loading of accounts. The service level agreement is the appropriate tool to capture this detail. Agencies that do not comply should receive a reduction in amount returned to them due to the increase in workload caused to the Attorney General.

Account Assignment. Internal accounts are assigned to in-house collections teams according to debt type. A dealing strategy ensures that an equal number of similar accounts are sent to each CAR – platinum accounts are distributed equally. This is to ensure a uniform balance of work among team members. The CAR is responsible for this account until sufficient time passes after which it is removed and sent to a third party vendor. A CAR might have as many as 6,000 active accounts at any given time.

Although much of this assigning is automated, it does raise concerns. First is one of workload – 6,000 is too many accounts to be effective. Over the course of 180 days, a CAR could spend a total of ten minutes on 6,000 accounts if account management were their only responsibilities. A second concern is accountability – when a CAR is absent from work, the accounts go untouched. Third, CARs are responsible for both incoming and outgoing calls so multiple lines are used. Debtors who are willing to pay may be on hold while the CAR works with another debtor, rather than being transferred to an available CAR.

Cash Application. Debtors have several options to make a payment but some of the options are more susceptible to errors than others. Those that are more error prone result in an increased need for reconciliation and should be discouraged. Options available include:

On Line Payment – The website includes two options for making a payment on-line: GovOne and Speedpay. The options have a different convenience fee structure associated with them. The majority of payments are made through GovOne. The online payment does not currently allow for a debtor to automatically set up monthly withdrawals from their bank account.

Phone Payment – A debtor gives the CAR his/ her credit card information and the CAR inputs the payment information into GovOne on behalf of the debtor.

Walk in Payment – Debtors who reside near one of the cities with an Attorney General office have the opportunity to make payments in person. Staff identified that these payments tend to be error free. However, they are quite labor intensive and a single payment can account for five percent of a CAR’s day, as it requires a break in daily work.

Mail Payment (disputed) – If a payment is disputed, the check will be held at the AGO’s office until the dispute is resolved. Then, they get forwarded to the lockbox.

Mail Payment (not disputed) – These checks are processed at a lock box where checks are imaged and scanned for deposit. (Details are below.)

Western Union Quick Collect – Payments made through a Western Union branch can cause considerable work, as they frequently lack account information. These checks are


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printed in accounting and then forwarded via mail to the lock box where they are imaged and scanned.

Quick Check Payments Over Phone (discontinued) – This option had been available in the past but the rate of returns due to non-sufficient funds was high which caused additional reconciliation work, so the practice has been discontinued.

Currently, on-line payment is the method that results in the least amount of reconciliation work and the one that results in the fastest deposit. However, it is also the one that costs the debtor the most – a convenience fee is charged for on-line transactions. The other payments can be made without a convenience fee. Adjusting incentives to encourage use of on-line payment will decrease the need for account reconciliation.

Payment Process – Lock Box. Because 60 percent of payments come through the lock box, and it was a source of contention during staff interviews, additional time was spent exploring this process. Some checks are received with account information barcoded while some have account information handwritten on the check while others do not have account information at all. Those that have barcode information are scanned while lockbox personnel will manually key account information when it is handwritten on the checks, resulting in two opportunities for error (once by the debtor and once by the lockbox staff). Payments that do not have account information involve investigation by accounting to match the payment to the appropriate account.

Once the payment matches the account information – and if the payment has not been automatically sent to bookkeeping as determined by verify-push business rules – the CAR for the account verifies the payment and “pushes” the payment to bookkeeping. This manual process is done for about 65 percent of lock box payments. An error report is hand delivered to collections supervisors so that the errors can be hand-corrected. The errors on this report can total between $300,000 and $1,000,000 daily. The verify-push and error reporting are instituted largely because of the frequency of having inadequate account data at the lock box. If all payments had accurate account information, neither of these would be needed. It is also worth noting that the verify-push and the error reporting are not a top priority for staff, causing delays and ultimately much more reconciliation than necessary due solely to timing issues associated with cash application.

The letter series present a potential solution to this problem. Letters are sent are automatically sent at key stages of the collection process – the first is sent when the debt is certified. Some but not all letters include barcode information so that the account information can be entered without a chance for error at the lock box. In cases where the barcode is available, the debtor must use scissors to remove the coupon from the letter – making it more difficult for the debtor to make the CEU’s job easier. A detachable payment coupon like what most credit card companies use would enhance the likelihood of use for those debtors who wish to settle. Another method to increase the likelihood of payment is to provide a self-addressed envelope with the letters.

Account Reconciliation –Special Counsel. Many Special Counsel have debtor payments forwarded directly to them. This is so that they can verify payment before it is sent to the lock box for processing.1 Once payments are processed, information is stored in Compass which is used to generate reports for Special Counsel to reference.

1 This practice should be eliminated. It exists in large part because outside counsel wants to have proof of payments to ensure fair compensation. However, this delays the account from being credited and increases the chance a check is returned for non-sufficient funds. It also has an issue with cash control – checks could be cashed by the vendor without the account being credited.


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When they receive credit for a payment, they compare the credit to the accounts they believe to have been paid. If there is a discrepancy, they may request account reconciliation from Accounting who then run a CUBS report to analyze accounts. If adjustments are required, accounting makes the adjustments in CUBS so that correct credit is assigned. The comparison is reported back to the Special Counsel which often includes detailed notes as well as additional action needed from the Special Counsel.

Account Reconciliation – Client. Some payments are sent directly to the debtor instead of to the AGO. In these cases, the CEU invoices clients for collection fees. However, they have discretion to adjust the fee off an account but doing so means that client accounts no longer match AGO accounts. The client will include an adjustment form with their fee payment which is then researched and amended, if warranted. If the AGO declines to adjust the fee, the client might have future payments withheld.

Since 90% of debt for a given year is uncollected, this account may be returned to the CEU and designated uncollectible.


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“To Be” Processes Plante Moran reviewed processes, interviewed stakeholders and conducted root cause analysis to develop proposed processes that will support a future state for the CEU. We envision that the CEU be restructured to use resources more efficiently. These “to-be” process maps appear in Appendix C. They convey a future state that can be attained soon – the CEU does not need to wait for the new collections system to be implemented before making these changes. Some comments included in the recommendations below identify how operations could be improved even further when the collections system is replaced.

Payment Processing. Having multiple options for payment is a good customer service practice. Much of the time that is spent processing payments is due to error rate. Across all payments, we do recommend that cash application be centralized to finance and that the new collections system incorporate automatic application of lockbox transactions (evaluating whether the cost of incorporating this functionality into CUBS prior to migrating from it may also be of benefit).

Online Payment – No changes to this process are recommended, as it is very efficient from a processing perspective. It results in payments loaded that are virtually errorless. For this reason, it would benefit the CEU to promote this payment method as much as possible. Adding functionality to the on-line option, such as monthly payment plans, would increase its use. Reducing or eliminating the convenience fee that is charged will also increase use as will making this payment option the most prominent in correspondence. To further simplify the process, the AGO might wish to reduce the on-line payment options to one. Because the two payment options provide different fee structures, it causes unnecessary complexity. Consolidating could give the AGO additional leverage for negotiating a cost reduction. The AGO might also consider use of marketing materials near public computers in libraries and/ or DMV in order to encourage the public to make an inquiry on-line to see if they owe a debt for which they were not aware.

Phone Payment – Currently, CARs enter debtor payments directly into GovOne – one of the online options. No immediate change to this is recommended. However, the replacement of CUBS should include functionality such that payments can be entered through the IVR directly into the system and be deposited. Doing so will accomplish the same purpose as GovOne but eliminate the daily download to apply the payment, as payment will be made instantly.

Mail Payment – Using a lock box is a sound business practice but it is not having the desired results for the CEU in large part because account information does not always accompany the check. Improving the letter series so that bar code information is included with all payments will allow the lock box to improve functionality. The AGO should strive to ensure that all lock box payments include bar codes. AGO should also automate the lockbox process and incorporate account application into CUBS and/ or the new collections system.

Western Union Quick Collect – No changes are recommended to this process immediately. Once the CUBS replacement is put in place, a report could be developed so that credits can be downloaded in the CUBS replacement for account crediting.

Outbound Call Center. The process map included in the appendix demonstrates the process that could be put into effect immediately. CARs would be dedicated to make calls based on account prioritization. Accounts would be assigned to the unit and not to individuals and prioritization of calls and the highest priority calls would be placed first. If the phone number is not good, it would


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be flagged for skip tracing by another unit. If contact is made, they will proceed with their approach as is currently the practice.

Once the new system and IVR are installed, account assignment can be done via a prioritization algorithm in combination with the predictive dialer. Based on factors that indicate collectability, the algorithm would order all accounts in a scoring system. Accounts with the highest factor would be called first and accounts with lower factors would be later in the queue. The predictive dialer will dial the number for the account, and if the call is answered, the information would appear on the available CAR’s monitor. If the call is forwarded to voice mail, a pre-recorded message would be left. If the phone number has been disconnected, the account would be flagged for follow up through skip tracing.

Inbound Call Center. This call center would also be generalized. A debtor would be routed to the next available call center representative. If a follow up call is required, the information would be logged and forwarded to the outbound call center queue. When the replacement to CUBS is installed, the caller would be requested to enter their account information into the IVR. Some enhancement could be done to automate more transactions through the new IVR and essentially eliminate non-value added work for the CARs. Simple requests for information, such as account balance, could be addressed without staff involvement. If staff involvement is required, the next available representative would have the account information forwarded to their terminal along with the call transfer. Ad needed, managers might wish to shut down one or more outbound call stations and transform them to an inbound call center position if the number of calls in queue exceeds a certain threshold.

Account Assignment. Plante Moran recommends that the CEU invest more discretion into the types of accounts that it handles internally versus the ones that are forwarded immediately to external collections. We note that 91 percent of debt is generated by five clients – two of which are medical collections and are already forwarded externally. The remaining three clients are referred to internally as the Big Three – Tax, ODJFS, and Worker’s Compensation. Focusing in-house efforts on these three and forwarding the remainder to external collections will enable vendors to specialize in other debt types and increase the likelihood of collecting. If the workload for the Big Three is considered too large to handle internally, consider outsourcing ODJFS as the next account for outside parties.

Because the debt being forwarded to vendors would be more recent, the AGO will likely be able to negotiate a lower retainage for these accounts. Additional decision criteria for forwarding accounts to external collections include whether the debtor has multiple accounts and whether the account has a low likelihood of being collected internally based on business analysis. Finally, analysis should be conducted to determine what a desirable in-house workload is so that staff do not become overly burdened with accounts to be effective. Once this threshold is identified, management should consider immediately outsourcing additional accounts so that action can be taken immediately on their collectability.

Internal Account Assignment. Currently, accounts are forwarded to individuals according to debt type and the scoring factor (platinum, gold, etc.). We recommend that all accounts are instead pooled and assigned to the call center collectively. A new scoring system could assign an account when an outbound CAR is available and individuals would work individual accounts throughout the day based on automated prioritization rather than being responsible for a series of accounts.


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Major Strategies and Initiatives PRINCIPLES As recommendations were being considered, the Plante Moran team identified seven principles to shape recommendations. These were presented to CEU leadership in the validation session at which time leadership agreed to the principles in concept.

1. Maximize the amount of collections distributed to clients. The current focus of the organization is the amount collected, so a dollar collected in-house is the same as a dollar collected by a special counsel. From the view of the clients, the two are quite different – a dollar collected in-house results in the client receiving 90 cents while a dollar collected by special counsel results in the client receiving 57 cents. A focus on maximizing the client benefit may shift the analysis behind various strategies and assignment scenarios explored.

2. Time is of the essence. Work to resolve cases quickly. Collections professionals understand that recent debt is more likely to be collectible than older debt. When an account is received, it should go immediately to the place where it has the greatest likelihood of collecting at the lowest cost. The current account assignment strategy allocates largely according to time elapsed and an account may end up in the best hands one or two years after certification when the chance of collectability is impaired.

3. Align collections process with debtors. Ensure a single point of contact for debtors – a “One Stop Shop” for information and payment. A debtor with multiple cases must currently work with different collectors both in-house and with contracted vendors. Worse, a willing payer can be turned away because the account has been transferred. Debtors should never be turned away and should be able to work with just one organization to clear all debts.

4. Establish processes based on the “TACO” concept – “Touch A Case Once.” This will reduce error and reduce time spent on each case.

5. Develop a central repository of information. Data related to clients exists among the various entities that collect funds on behalf of the Attorney General. Centralizing will make it easier to touch a case once and align collections with debtors.

6. Centralize and continue to streamline key business processes. To its credit, the CEU has made improvements to its letter series, accounting, collections, debt recycling, and data integrity. These efforts have improved the CEU considerably and additional efforts will improve operations further.

7. Organize operations in such a way that best promotes the above. Recommendations related to organizing work are made with the understanding that it is a means to achieve one of the other principles.

In addition to the process changes noted above, discrete recommendations are included in the appendix and are addressed here at a conceptual level. They involve technology, reallocation of staffing, and items for consideration during implementation.

DEBT ALLOCATION STRATEGY A recommendation with a high priority that becomes apparent through the analysis of the Collections Enforcement Unit is to simplify the methods through which debt becomes allocated and handled both internally and externally. Currently, when new accounts are received, many are dealt to an outside vendor automatically under if either of two conditions is met: first, the type of debt is


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specialized (Perkins Loan, Medicaid, etc.) or if the debtor already has an account from the client related to a similar debt type. We believe both of these are sound business practices but result in the unintended consequence of many debtors having multiple accounts of different types handled by multiple parties. We recommend that all debt be bundled by debtor so that whenever possible, a debtor receives communication from only one organization. This will result in the need for a debtor to be skip traced just once rather than multiple times by multiple organizations.

Accounts should be allocated in such a way so that it has the highest possible rate of return at a low cost. It is important to recognize that part of the cost that the in-house collections realize is due to an office approach of customizing operations to increase client satisfaction. Due to the number of clients, this practice results in unnecessary complexity.

Employees in the CEU frequently refer to the “Big Three” – the three agencies that account for the majority of accounts and the majority of debts. Collectively, these three make up 80% of accounts and 91% of debt:

Department of Taxation

Bureau of Worker’s Compensation

Ohio Department of Job and Family Services

All Other Clients (approximately 150)

Two of those in the “all other” category include medical center debt. Under current policy, medical debt is immediately outsourced so that the CEU does not need to comply with HIPPA regulations.

Plante Moran recommends that in-house collections focus exclusively on debt associated with the Big Three or even possibly the Big Two by outsourcing ODJFS based on workload constraints. All other debt should be contracted to third party vendors immediately upon certification. Doing so will simplify internal collection efforts because training and expertise can focus on just three clients and in-house could become expert in those three areas. Because third party vendors would receive debt that is recent and therefore more collectible, the compensation related to this debt should be negotiated to a lower price. Within 30 days of receiving debt, the CEU should conduct a review of the debt. If sufficient effort has not been made to contact the debtor, it should be forwarded to another third party vendor. The 30 day target should trigger a review only – debt should not be transferred due exclusively to time elapsed. A different standard should be built for other time periods. But transfers should not occur unless the vendor has indicated that it is not collectible. This choice can be made either through inactivity or by flagging an account as uncollectible (a vendor who has decided not to pursue an account should be allowed to have it removed from their system so that a motivated vendor can pursue it).

TECHNOLOGY The CUBS database is dated and does not support best practices. CUBS has been identified for replacement but the replacement schedule has not been specified and the functional requirements of the new system might require some customization. Although Plante Moran has not had the opportunity to evaluate the software for functionality, we offer some observations about CUBS that should be addressed in the replacement software:

A key design concept is that the database should be designed around the debtor – not an account. Although most accounts are one-to-one with the debtor, many debtors have more than one account and have failed to pay in the past. This information is key in determining how best to address the debtor. This requires the new system to be able to address the one-to-many relationship in its fundamental design and functionality.


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Joint and several liabilities are currently accounted for two or more times in CUBS, as the capacity to address this one-to-many relationship does not exist. This means that a single debt shows up in multiple accounts and that a single payment is credited to multiple accounts. The new system should be able to address the on to many relationship in its fundamental design and functionality.

Integration of the system with IVR is necessary for both the incoming call center and outgoing call center to be fully functional.

A password protected web interface with vendors and clients that would enable them to inquire account status would alleviate the need for account inquiry communications and responses.

The capacity to transfer accounts “electronically” to other databases that are commonly used by vendors is desirable.

Functionality that would allow vendors to purchase limited licenses to have direct availability with live account data would reduce the need to electronically forward accounts. The option of allowing vendors to work directly in the core system with appropriate security measures should also be explored.

Automated queuing and routing of accounts within the system to different people.

Financial components should be transferable from the lock box for immediate deposit in the bank automated application in the system. Essentially, “writing off” exceptions for review in finance in a work queue.

CUBS does not integrate with accounts payable, creating the unnecessary need for a shadow system to write invoices.

Current payments over the phone are accomplished through involvement of a CAR. The IVR should allow these payments to be entered directly into the CUBS replacement for immediate credit and deposit. Both credit card transactions and on-line check options should be enabled through this process.

There is currently limited capacity for queries for key pieces of information, like success rates of vendors. The capacity to write queries and reports that enables business analysis is crucial to the long term success of the CEU. The functionality to schedule useful standard operations reports for performance monitoring would give management additional tools to monitor business operations.

The requirement for the CEU to maintain certain accounts for 40 years may create design issues for the developers – the total debt amount grows by billions each year. They may wish to scale design for qualities that the system will likely have ten years from now.

Integration of financial application components including cash application and accounts payable is necessary.

Accessibility for clients to view data and push updated account information would assist with client communication and skip-tracing.

Scorecard reporting to keep all staff aware of office progress toward collections goals.

Integration between document imaging and collections system.

Ability to attach images to individual accounts in the system so that it can be imaged, indexed and attached to a particular debt and/ or debtor.

Programmable predictive dialer interface between the new system and the IVR.


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Automated prioritization of accounts based on specified criteria that can easily be changed as business priorities change.

Automated routing of individual accounts to CARs based on “available” status in the system. Ability to track centralized notes in the system so that the system can act as a “central repository of information” for all to reference and view. This capacity should be enabled both by debtor and by account.

Call recording for quality assurance purposes in the call center.

Call type tracking in the IVR and phone system to see top reasons why people are calling so that staff training and/ or IVR programming options can be modified.

Ability to create standard collections reports (daily, weekly, monthly, and annually).

Ability to run “ad-hoc” reports for data analytic purposes.

Capacity to export data into statistics and econometric software for business modeling purposes.

Ability to segment and run performance reports by range for:

o Internal collections

o Third party vendors

o Special counsel

o Debt age

o Debt type

o Certification date

o Amount collected

REALLOCATION OF STAFFING The current overall staffing level within the CEU appears appropriate in part because staffing the in-house collections is fluid – it can be increased or decreased depending upon debt allocation priority. So, the size of the operation is largely a function of desire to address debt quickly. Using the principles identified earlier, Plante Moran explored options for reallocating staff in order to achieve maximum returns in both the short term (1-3 year window) and the long term (3+ years). Many of these changes will necessitate that job descriptions be altered. We recommend ranges of positions for consideration in staffing the operation to have five major divisions in comparison to four today. Each division would be led by a director who would report to the Section Chief. The functional chart below identifies the configuration of this proposed arrangement. Proposed CEU organizational charts appear in Appendix E.


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Staffing ranges for each of the areas are included in the appendix but conceptual issues and functional alignment within the CEU is recommended as follows:

COLLECTIONS The overall responsibilities of in-house collections would be similar to the current responsibilities. However, the functionality would shift from specialization to generalization of account and from generalization to specialization of function. Hours of operation would also expand for this group so that positions are staffed from 8:00 am to 8:00 pm. There are a variety of staffing models that would achieve this but one worth consideration is to have one shift that operates M-F from 8:00 am to 5:00 pm as is the current practice and a second shift that operates W-S from until 9:00 am to 8:00 pm in four ten hour days. Other options should be explored but the goal is to staff evenings and weekends in order to reach a section of the debtor population that is currently not reachable due to the current hours of operation.

Two distinct call centers would be operational. The outbound center would be staffed by CARs who would receive calls forwarded to them through a predictive dialer feature in the IVR. Ultimately, the calls would be linked to prioritization as determined by business analytics. The inbound center would receive calls only. When one of the call centers is experiencing a lag in activity, some positions can be re-purposed to act as backup for the other. The incoming center should always take priority, as an incoming call is at least expressing an interest in paying the debt. The incoming call center would also handle calls from third party vendors and special counsel. It is recommended that a separate line be established to distinguish these callers. All callers would be asked to use the IVR to enter account information so that the CAR handling the call will have the account information available at transfer. A call center manager would oversee all operations while each shift would be overseen by a shift supervisor whose primary responsibilities are scheduling, staff evaluation, monitoring efficiency, and sharing departmental communications with staff.


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Both call centers would handle all accounts within the unit rather than their individual assigned accounts as is the current practice. Specialization of account assignment to individuals would also be reduced, as account assignment would be simplified so that the in-house collections only handle the Big Three – accounts from other clients would be outsourced. (The Attorney General might choose to keep other debt types in house to ensure responsiveness – liquor licenses are one possible example – or because of technical expertise involved – WELE as an example.) As staff transitions from the current state to the proposed arrangement, initial calls might need to be escalated to CARs who have current specialization in accounts as subject matter experts. It is advisable that all calls be monitored and recorded for quality assurance and training purposes.

The attributes that a CAR has might enable them to become more successful in one of the call centers. Incoming callers will tend to be those who are at least expressing a willingness to pay. A CAR would be more successful handling these calls if they have a natural tendency toward customer service and assistance – those who are willing callers are more likely to pay debt if the assistance is helpful. A CAR who clearly articulates accountability and consequences may be better suited for the outbound call center, as this these debtors are more likely to respond to consequences of not paying debt.

WRITTEN RESOLUTION UNIT This part of the organization would be responsible for labor intensive, document-heavy workload of the CEU. The correspondence team would be a pool of administrative staff who would have the responsibility of account certification, mail processing, and imaging/ indexing documents to individual accounts in the system. This team would also be responsible for performing skip-tracing on accounts that have been flagged by the outbound call center CARs. Also, accounts that have been insufficiently transferred to the CEU would require resolution within this group.

The resolution team would be responsible for interacting with the Big Three clients, and handle written correspondence, tax estimations and settlements. Standards for settlements should be solidified in the service level agreement with the Big Three so that the client is not required to approve every settlement. Since it is uncommon for a client to overrule the CEU recommendation, it is not worth the staff time for the CEU or the client to review every case. Cases that meet certain thresholds, such as those in excess of $500, would still require client approval, but standards should be established such that client approval becomes the exception instead of the norm.

LEGAL OPERATIONS Responsibilities in this area would remain largely unchanged. It is possible that as work processes simplify, the legal team might be able to spend more time on legal responsibilities and less time on administrative ones. Use of a case management system for attorneys handling legal cases should be explored to simplify their day-to-day workload. But the positions and functionality would remain as it is currently configured.

FINANCE Business operations as it currently exists would be reconfigured such that the focus on accounting is more acute to ensure greater performance. Centralization of cash application to Finance is a key feature of the new operating environment. In addition, ensuring adequate and flexible financial reporting from the new collections system is a must. This is particularly needed in a transitory period in which the CUBS system is being replaced, as this shift will have a greater impact on accounting than other units of the operation. Accounting currently has no accounting system and developing tools to help improve the management of operations between today and when the system goes live requires great attention. There may be audit and compliance functions that could fall within Finance as well.


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EXTERNAL RELATIONS The CEU has two primary interfaces to others – it liaises with clients and it manages and interfaces with special counsel and third party vendors. Under the recommended configuration, both factions would be jointly managed under the same structure. Since all clients with the exception of the Big Three would be outsourced upon certification, the remainder of the CEU does not need to become involved in either relationship (except for accounting and reconciliation). The key documents that would be used within this team are the service level agreements with clients and the third party vendor/ special contracts with vendors. Both of the documents can be improved upon to add clarification, expectations, performance standards and accountability standards. In addition, ensuring adequate and flexible performance reporting for all parties from the new collections system is a must.

BUSINESS ANALYSIS Ultimately, the basis of the business needs to be built on data and analytics to enable leadership to strategize about how best to change operations to meet changes in business needs and debtor behaviors. There are facets to this concept that require different skill sets that need to be closely interlinked for full functionality. This unit would assist with the strategic operations and continuous improvement of CEU activities.

One desired skill set is data analysis and capacity to develop mathematical models and algorithms that enable complex data sets to drive theories about how to determine the likelihood of collectability of debt. Creating, monitoring, and adjusting this model is one crucial component of the overall success of the CEU which is why the team would report directly to the section chief. There is also a technology component to this business intelligence function. Other functions housed in this area would include the overall quality of data, process improvement, and to coordinate various projects that cross functional areas of the CEU. Upgrading the skill set and/ or minimum qualifications for these positions would likely be necessary.

KEY ITEMS FOR CONSIDERATION The recommended changes in structure and process improvements for the CEU are considerable and a full list is included in the appendix along with suggested timing in the form of an action plan. Based on observations and findings in this report, CEU leadership may identify additional opportunities that should also be addressed in the action plan, which should be an organic document that serves the purpose of ensuring that changes occur by identifying the action step, the timing of implementing each step, and the parties responsible for ensuring that appropriate changes are implemented.

Several recommendations can be implemented soon while other changes, such as staff reconfiguration, should be done after careful consideration and determination of strategic direction. Organizational recommendations should also be staggered so that the amount of change instituted at any given time is manageable by both staff and CEU leadership. Finally, some recommendations are going to be dependent upon changes implemented within CUBS or its replacement, and coordinating the implementation of the new technology with other departmental changes will be paramount in order to assure the success of all departmental initiatives.

The leadership, project management, and change management expertise that will be required of the CEU is significant and requires much out-of-the-box thinking. Executing the items outlined in this document could over-tax current resources and focus if the efforts are not coordinated, managed and aligned. It is therefore advisable that the work be parsed into workgroups or committees for further analysis and implementation. Under this arrangement, a Transition Oversight Committee would meet periodically to review progress and ensure that efforts are


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consistent with the goals and vision of the Attorney General. A technical change management team would meet more frequently and report to the Transition Oversight Committee to make recommendations around the timing and scope of various efforts. In addition, a series of teams would be responsible for instituting changes within their specific disciplines. Some of the committees could include:

Strategy and Direction – to recommend goals and direction for the CEU and to institute changes in the organizational structure of the CEU;

Technology Transformation – to ensure that the replacement of all key CEU systems, including CUBS, results in a successful, transformational transition.

Process Improvement – to further refine process changes, including initial focus on changes to the letter series, and ensure that centralized, simplified processes get instituted with the replacement of CUBS and other technologies;

External Relations – to restructure the SLAs and institute other recommendations related to clients; and to evaluate and implement recommendations made in relation to third party vendors and special counsel;

Change Management – to proactively manage the change process for successful transformation of CEU operations, processes and technological advancements to transition to a state-of-the-art collections operation.

A recommended implementation governance structure appears in Appendix F for consideration.


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Appendix A: Issues and Opportunities Matrix


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PROJECT OVERVIEW The Ohio Attorney General’s Collections Enforcement Unit (CEU) retained Plante & Moran to review operations and recommend improvements. This review is within the context of an anticipated technology upgrade to the CEU’s primary collections system – CUBS, which was first used in the 1990’s. Several recommendations are made in anticipation of replacing the CUBS system. This replacement might not be fully implemented for some time. Some of the recommendations are intended to be implemented when this change occurs. Other recommendations can occur sooner. Coordinating the implementation of recommendations with the replacement of CUBS will be necessary.

SUMMARY FINDINGS AND RESULTS Since its inception, the CEU has grown incrementally over time. Last year, the Attorney

General collected $467 million. Most of this ($368 million) was returned to other agencies of the State. The remainder paid fees for special counsel ($41 million), third party vendors ($14 million) and Attorney General’s fees ($45 million).

The total collections inventory certified to the Attorney General during 2012 was $4.5 billion which exceeds the amount collected by a 10:1 ratio. The total inventory (current debt plus retired debt) for the CEU grows from year to year and currently stands at $27.7 billion.

CEU is substantially different from other government operations, as it produces revenue that supports the remainder of State operations. This revenue generation is a function of how work is organized as well as the resources used to fuel those operations. Certain costs should be viewed as investments to achieve greater returns.

Cases pass through too many hands and are too manual. Significant time could be freed for staff to focus on value-added activities if manual processing and errors are reduced.

The CEU organizes its work according to specialization of debt to be collected. This specialization does not allow for collections account representatives to be as productive as they would be if debt was generalized and functions specialized.

Success for the CEU and its three means of collecting (in-house, third party vendors and special counsel) is measured in terms of dollars collected and not in terms of dollars distributed to clients. Changing the key measure of success and holding outside parties accountable to specific performance criteria may change how work is allocated.

Detailed observations and recommendations are included in this report. Principles that were used to develop the recommendations include:

Maximize the amount of collections distributed to clients.

Time is of the essence. Work to resolve cases quickly.

Align collections process with debtors. Ensure a single point of contact for debtors – a “One Stop Shop” for information and payment.

Establish processes based on the “TACO” concept – “Touch A Case Once.” This will reduce error and reduce time spent on each case.

Develop a central repository of information.

Centralize and continue to streamline key business processes.

Organize operations in such a way that best promote the above.


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Rating Priority Effort High Priority – Requires

immediate attention Requires Significant

Effort and / or resources Medium Priority –

Should be addressed Requires Moderate Effort

and / or resources Low Priority – Address

as time/resources permit

Requires Minimal Effort and / or resources


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Priority Effort

Organizational Alignment

Observations: Employees share a well-defined goal for the CEU of increasing collections. They are aware not

just of their individual goals but are also aware of collections target for the CEU as a whole.

Overall, staff expressed dedication to their work and a clear understanding of their job duties. Most are proud of their work.

Performance expectations for line staff are clearly defined in their monthly “expectation” or collections targets. The CEU focuses its efforts on total amount collected and establishes targets for this. Supervisors compare current year collection realization with amount collected in the previous year.

Several staff indicated that they do not have the authority to do what they believe is in the best interest of the CEU, such as chasing “good debt” versus completing daily work-in-process.

Staff is aligned by specific client account types (tax, workers’ compensation, unemployment, university, etc.) which allow them to gain expertise in a type of debt but does not allow for efficient allocation of work.

Third party vendors and special counsel train their account representatives to handle all types of debt.

Staff is required to perform multiple work functions intermittently throughout the work day which is not the most effective or efficient use of resources. Interruptions in dedicated tasks are common, causing room for error and excessive use of time familiarizing account information. “Skip tracing” to clarify inconsistent or missing account information is an example.

The staff operates on a single shift from 8AM to 5PM daily with a typical 5 day workweek.

Capital and operating expenses are evaluated based on their impact on individual cost centers. Increased profitability for the CEU could be achieved if certain expenses were viewed as investments. An example of this is that supplying return envelopes is a common practice for those seeking payment (whether debt or donation) because it results in greater returns, even though it costs more.

Opportunity: Expand the targets for the CEU to include not just expected collections, but also accounts cleared

and age of debt. Because debt that is more recent is more collectible, additional efforts should be made to focus efforts on this type of debt.

Organize Account Representatives into a call center model by creating two separate call centers – one for incoming calls and one for outgoing calls. The incoming unit would be responsible for all calls that come in to the CEU while the outgoing unit would be responsible for proactive collections for new accounts.

Consider a flexible work model in which account representatives are allowed to work from home, provided that standards of production are met.

Establish a skip tracing unit whose sole responsibility is to clarify data for accounts and keep data up to date. This will allow others to focus time on debt that is most collectible.

Extend the hours of operation to include evenings and weekends. This could be accomplished by having each working day divided into two shifts (for example, shifts of 8AM through 5PM and Noon through 9PM). Alternatively, the CEU could operate on a 7 day workweek with 12 hour shifts


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Priority Effort

Organizational Alignment

following a model similar to law enforcement and public safety (alternating schedules of 4 days on, 3 days off, 3 days on, 4 days off). Adjusting the CEU’s workday and workweek would increase the likelihood of contacting debtors when they are most likely to be home. A part time pool of employees should also be considered as a staffing option.

Apply the concept of profit centers in place of cost centers, where applicable, as the revenue-generating feature of the CEU is distinctly different from the remainder of the Attorney General’s Office. Be cognizant of the fact that a capital or operating expense may return significantly more money in the short- to long-term versus the initial or ongoing cost of the investment.

Refocus the efforts of the CEU – the primary measure for the CEU should be amount distributed to clients rather than amount collected from debtors. While maximizing revenues is one of the ways to achieve this, it is not the only way – decreasing the cost per collection will also result in greater returns to clients.


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Priority Effort

Allocation of Work

Opportunity: Cross train CEU team to handle multiple types of accounts so that an individual’s debts can all be

handled by the same collector. (This should not apply to a few specialized accounts such as bankruptcy which should continue to be assigned to a specialized team.)

Apply additional logic to the assignment of accounts to in-house collectors. Factors that should be considered in account assignment include collectability, value of account, collector’s “conversion” ratio, and current workload.

Distribute accounts at the Unit level rather than at the desk level. This will ensure that accounts and workload are proactively managed on a daily basis and continue to receive attention when employees are away from work.

Refine the scoring system for new debts (platinum, gold, silver, bronze) so that it becomes a trustworthy source for account assignment as well as a more accurate reflection of collectability. Factors should include age of debt, type of debt, whether debtor has multiple accounts, size of debt, credit rating, and accuracy of address and phone number.

Periodically review and adjust the account scoring system so that it remains accurate in real-time.

Adjust the timing of assigning accounts externally based on institutional knowledge of collectability and workload. If the number of accounts exceeds CEU capacity internally in a timely fashion, then new debt should immediately be assigned to contracted vendors.

Refine the forward master logic so that when a debtor has multiple accounts, ensure that they all get assigned to the same external collector.

Consider extending the term of contracting for third party vendors and special counsel to a longer term, up to five years. This should allow a reduction in the resources needed for contract management. The Attorney General would retain the right to terminate for non-performance without cause. The Attorney General should also exercise the development of a service level agreement (SLA) with specific performance parameters and use that as a criteria for contract renewal and allocating accounts.

Consider allowing third party vendors to “bid” on specific account types as a mechanism to reduce the contingency fee. Alternatively, restructure the contingency fees so that more desirable debt receives a lower contingency fee than less desirable debt. Establish incentives such that the reimbursement rate for debt deemed more collectible has a lower reimbursement rate associated with it.


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Priority Effort

Manual Procedures

Observations: Efforts have been made to automate many procedures over the years. However, the structure of

the CUBS database has not kept pace with the complexity of work, requiring significant manual review for data integrity purposes.

In some cases, the Data Integrity Team manually inputs certifications from the client template into the upload template so that IT Operations can load claims into the collections system.

Several other procedures are manually performed within the office, including:

o Data Integrity scans and indexes Recorder liens once they are received from a county (approximately 700 – 1000 per week).

o Data Integrity receives some claims through the mail or email and enters them into the collections system for various clients. Depending on the client, claims can be sent to the CEU in quantities ranging from tens to hundreds at a time.

o Workers’ Compensation liens are entered manually.

o System has the capability to manually send certain collection letters which are sent by claim account representatives or collections supervisors.

o When a special counsel determines that a debt is uncollectable, they will return it to in-house collections where a claim account representative must manually reassign it.

o The current collections system has the capability for the claim account representative to manually set an account as Priority 1 so that it shows up at the top of their worklist.

o In the event of a tax settlement, all individual monetary components of the settlement must be manually applied to the proper part of the account. This includes the application of payment towards principal, interest, and fees.

o Joint and several liability cases must have their monetary components manually adjusted in the collections system by claim account representatives.

The errors from manual data entry and missing payment information result in a large volume of errors within the collections system which are captured in the daily error sheets.

The Data Integrity supervisor does not receive regular reports of the errors in manual certification entry process.

There are manual processes built to accommodate and resolve the errors that are inherent with manual data entry. For example, errors in manual data entry are caught in the daily error sheets, and these error sheets must then be hand-delivered each morning by IT Operations to the managers and supervisors whose teams are responsible for correcting the errors.

Opportunity: Full automation of several procedures might not be possible until CUBS is replaced.

Eliminate manual entry of claims into the collections system by standardizing and enforcing claim certification standards for all clients. Enforcing certification standards is necessary for automating the upload of claims into the collections system.

Build the FTP process to be more robust so that it will operate more reliably. Reduce the possible points of user entry error in the certification templates so that errors are less frequent. This will eliminate the need to have a team manually review all new certifications that are to be uploaded


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Priority Effort

Manual Procedures into the collections system.

Ensure all letters to debtors have a removable coupon for payments. Make it clear that the coupon should accompany payment and that the coupon include bar code information. This will reduce keying at the lock box and reduce error.

Automate the filing of all liens so that manual intervention is only required in rare cases. Ensure that the entire lien filing process is automated from the initiation of the lien within the CEU to the point where the lien is filed with the county clerk or recorder, along with all feedback along the way (i.e. the acknowledgement from the county clerk that the lien has been filed).

Simplify the returned debt components of contracts so that debt is returned on a regular basis only. Quarterly is recommended.

Certification standards are in many ways designed to simplify the client’s job at the expense of the Attorney General’s. Standardizing certifications among the clients will simplify the download and reduce the need for skip-tracing. Since staff will have more time available in collecting, this should result in an increase in collections, which is in the client’s best interest.


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Priority Effort

Payment Processing – Receiving Payments (Lock Box)

Observations: Use of a lock box has improved payment processing but is viewed negatively by many staff who

believe that the lock box does not image all documents included at time of payment.

Bar code use reduces the probability of error. However, it is not standard for debtors to include the bar code with their payments.

Special counsel and third party vendors have payments forwarded to them, where they are bundled and sent in packages to the lock box. Some will image checks and documents before sending them to the lock box. This is done so that there is proof of collection, as they believe they have not received credit for past collections.

Many payments lack bar code information or account information. These are hand-keyed by processors which increases probability of error.

Many payments are credited to incorrect accounts. There are two root causes of this. First, incorrectly entered account information (either because the data was mis-keyed or because the account was inaccurately copied by the debtor). Second, a debtor making a payment to multiple accounts might not include account information with payment, leading account representatives to interpret the debtor’s intent.

Opportunity: Monitor and enforce lock box standards to ensure that all documentation received with a payment

is imaged into the document management system.

Expand the use of bar codes on payments to all payments received in the lock box to reduce manual entry errors.

Normalize the procedure for third party vendors and special counsel. For example, require them to attach bar code information to payments sent to the lock box.

Ideally, payments should go directly from the debtor to the lock box without being intercepted by third party vendors or special counsel, as this causes delay and errors. It also increases the possibility that a written check does not clear due to insufficient funds. The CEU should work toward this goal but it is unlikely that it will be received favorably by third party vendors or special counsel.

Improvements to the letter series will help reduce the need for hand-keying information. In particular, increasing the prominence and necessity of the bar code will make it more likely for debtors to include them in their payments.

The lock box management has offered to explain their processing approach to CEU staff. CEU management should organize an educational session, as there is much confusion regarding the role and responsibilities of the lock box among CEU staff.


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Priority Effort

Payment Processing – Receiving Payments (Other)

Observations: Payments are processed through multiple sources at the CEU – either through a lock box (both

directly and indirectly from third party vendors), payments received on-line, over the phone through account representatives, in person at select AG office locations, and at any Western Union office.

Staff report that Western Union payments have a very high error rate because it is uncommon to receive correct account information at the same time.

The Unit had discontinued accepting quick-check payments over the phone. Staff reported that the rate of checks returned with non-sufficient funds was unacceptable.

There are two methods of online payments available to the debtor, GovOne and Speedpay, which have different associated fees that are passed on to the debtor. GovOne is the preferred option in part because staff received training on the system. GovOne also appears to be preferred by debtors, as the majority of accounts are paid through GovOne.

Online payments have a smaller error rate than payments received through the lock box.

Debtor overpayments are commonly refunded in 6-8 weeks. This lag creates additional calls inquiring the status. There is an 8 day hold period for all debtor payments that will require refunds to ensure that the checks clear before a refund is issued.

There is a procedure for applying payments to a debtor’s accounts when a single payment is received for multiple accounts, however this procedure is not well documented.

When a tax offset is applied to a debtor’s account and the client is paid, there are situations where the entire tax offset is paid to the client when only a portion is required to resolve the debt. This situation results in additional accounting actions on the part of the client.

The online payment system does not allow debtors to set up automatic monthly deductions from their bank accounts in correspondence with their payment plans. When a debtor is setup on a payment plan, they must call their account rep to pay or pay online each month.

Opportunity: Because online payments have a lower error rate, the CEU should increase efforts to maximize the

online payments. Consider reducing or eliminating the online payment convenience fee ($4 per transaction for internet checks; $1.50 plus 1.8% for credit card for GovOne) for debt under certain circumstances, such as prompt payment to incentivize use of the online payment mechanism. A waived fee for dollar figures above a threshold may also increase payment amounts.

Reduce the online payment options to make payment easier. GovOne currently receives the most use and should likely be retained. However, the AGO should negotiate in good faith with both vendors and select the one that is best.

Reduce the amount of time that it takes for a debtor to receive a refund when they overpay.

Establish a consistent methodology for applying unspecified payments to a single debtor’s account.

Ensure that there are safeguards in place to correctly pay the client when a tax offset is used to collect payment on an outstanding debt.

Configure the online payment services to accommodate automatic monthly debits for payment plans.


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Priority Effort

Payment Processing – Applying Payments

Observations: Payment processing and application is very manual in the current environment.

Accounting frequently has difficulty reconciling their financial records with their clients’ financial records.

Payments are applied de-centrally across the Office by collectors instead of centrally applying payments by Finance/Accounting.

Accounting receives 300-400 transaction requests via email from various collections staff each week.

The current process contains numerous delays and inefficiencies.

The payment application process and rules are not consistent across the Office.

The CEU applies tax payments in a different order than the Department of Taxation. The CEU applies payments first to principal, then to penalty, and finally to interest. Taxation applies payments first to principal, then to interest, and finally to penalty. This creates overpayments and negative accounts within the CEU.

Approximately 65 percent of lock box payments need to be manually applied by collections staff.

All phone payments must be manually entered by the account representative.

All check numbers on Treasury checks must be manually entered into the system by an Accounting representative.

Lock box must manually key check data into the document management system when there is no barcode included with the mailed payment.

Opportunity: Automate payment processing between the lock box and the collections system.

Move to “exception” processing for lock box payments. The CEU should only handle payments that cannot be applied automatically in the system due to processing or data errors.

Centralize payment “exception” processing within Finance/Accounting to eliminate the CARs from having to manually apply payments. This will also eliminate the 300-400 email requests for erroneous applications in Accounting and inherently increase the quality of work that is done.

Implement standardized barcoding for lock box processing to increase the volume of automated payments.

Ensure that payments are applied consistently throughout the CEU.

Properly document the payment application standards within the CEU.

Adhere to the standards of payment application within the CEU.

Communicate the CEU’s payment application standards with each client.

Quickly communicate the receipt of payments to clients. Encourage clients to share their account information frequently with the CEU so that any issues with reconciliation can be identified early.

Ensure that all payments have proper accompanying documentation that illustrates all details of the payment (account information, payment distribution, date, etc.) so that accounts can be quickly reconciled.


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Priority Effort

Payment Processing – Applying Payments

Centralize the application of payments into a single system of record that is agreed upon between the clients and the CEU.

Priority Effort

Information Technology Systems Observations:

The current collections system does not combine an individual party’s debts unless the debts are of the same type (i.e. personal income tax, workers’ compensation, university, etc.). This causes the party’s debts of different types to be assigned to different collectors. Moreover, this makes it challenging to determine the total outstanding debt that an individual owes.

The current collections system uses many alphanumeric codes (status codes, etc.) that can be applied to accounts. These codes can be hard to interpret for users who are unfamiliar with the code definitions.

The current collections system provides clients, internal collectors, and external collectors access to more accounts than they are actively working, which can compromise the CEU’s IRS Publication 1075 compliance.

The current collections system does not allow for the tracking of a full account audit trail and history.

The current collections system can overstate the total dollars owed in cases of joint and several liability. The system creates an account for each individual party in the claim, and each account that is created is valued at the total dollar amount of the claim. Additionally, these separate accounts can be assigned to separate external collectors, causing multiple collection parties to try to collect on the same debt simultaneously.

Collectors use many external systems as points of reference for additional information on claims (OAKS, ERIC, PACER, LexisNexis, etc.).

The current collections system will be replaced by a new system. The selection of this replacement system is currently in progress.

Opportunity:

Combine an individual party’s debts into a single account so that their debts are not spread across multiple collectors.

When it is necessary to use a coding system for data fields, ensure that the codes are intuitive and well documented so that they can be easily interpreted.

Assign internal security and controls to all users and accounts so that sensitive information can only be viewed by appropriate, specific parties.

Ensure that the CEU and those who perform collections enforcement on behalf of the AG via contract are able to technologically adhere to IRS Publication 1075 guidelines. Contracting organizations that are not in compliance should have their contract cancelled.

Ensure that the new collections enforcement system is setup to record the full audit trail and history of each account.


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Priority Effort

Information Technology Systems

Establish a methodology for handling all cases where there is potential for overstating outstanding debts. Limit situations where multiple collectors are actively collecting a single debt.

Interface with external systems to ensure commonality of data between clients and CEU.

Ensure that the new collections system is configured to meet business needs and desired functionality.


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Priority Effort

Business Intelligence and Continuous Improvement

Observations: Claim account data can be dispersed throughout multiple data systems, making it difficult to quickly

research a claim to establish conclusions.

The current IT systems lack robust, user-friendly reporting capability. This makes it difficult for management to identify whether debts are being managed successfully.

There is no dedicated business analyst on the staff.

Efforts of the Process Improvement team have led to several beneficial changes, particularly within Accounting. However, continuous improvement is largely viewed as being a function that is separate from the remainder of CEU.

Projects for the CEU are tracked on a document called “the scorecard” and staff meet on a monthly basis to discuss project status, accountability, and support needed. Attendance at these meetings is low.

Key inventory information, like number of accounts that have aged 90 days or fewer or total debt assigned to third party vendors, is difficult to gather. Due in part to this difficulty, performance indicators of key business processes are not being used to improve the processes.

Proactive oversight of the workload volumes and timelines of the CEU is not being performed. For example, number of accounts under 90 days old is information that is not readily available.

Workload management is taking place using Excel spreadsheets through the assignment of a division identifier number, and is delayed significantly at the supervisor level.

The “forward master” is the primary document that is used for inventory control. It is designed essentially from standards established by clients which likely make sense when analyzed as a discrete decision. When explored in its entirety, the forward master results in thousands of permutations of accountability for debt with dependencies on type of debt, age of debt, whether it has been “bundled”, third party vendor specialization, etc.

Opportunity: Integrate the new collections system with client systems to ensure accuracy of data across multiple

platforms.

Consolidate business data into a single system of record. The new collections system should be the system of record.

Consider incorporating the skip tracing function into a dedicated work group. Collectively, the group would be responsible for usefulness of information rather than just accuracy.

Establish a monthly scorecard of key metrics. Publish them for discussion at leadership meetings and share the results with staff. Active knowledge of departmental measures will help align individual work with departmental performance.

Create a business analyst position which is dedicated to data mining and reporting information related to departmental performance. Such a position could also be responsible for research and developing performance reports to communicate to clients. (A possible feature of a new system could be automated reporting that is produced regularly for management and clients rather than manually by a business analyst.)

Simplify the forward master to treat debt more consistently as it ages. Some exceptions are


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Priority Effort

Information Technology Systems needed, such as stages of bankruptcy, but an overarching goal of simplifying inventory will make it easier to manage.


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Priority Effort

Letter Series

Observations: Upon certification of debt, the CEU forwards letters to debtors. Debtors receive additional letters at

various points as there are changes to the debt and as it ages.

The format of the letters is outdated. It is not designed to be of similar quality to other AG correspondence. The font, structure, and layout are not of similar caliber to other debt-related correspondence the debtor might receive. (For example, credit card payment information looks much more professional and is much clearer to understand.) In addition, coupons containing bar code information for the lock box are not easily removable and they do not appear on all correspondence.

The content of the letters is not written from a debtor’s perspective. The purpose of the letter, desired action, and other pertinent information is overtaken by reference to Ohio Revised Code. It is difficult to ascertain what the debt is for, which prompts calls for clarification.

Correspondence is not designed to make payment easy. Conflicting information regarding payment instructions can appear on the front and the back of the letter. The debtor must use scissors to detach barcode information and enter mailing address onto envelopes. Lack of barcode or account with payment increases likelihood of manual data entry and mis-keyed information.

It is unclear what happens to letters when they return due to a bad address of the debtor. Bad address information does not appear to be updated in CUBS. It is unclear whether future letters are similarly returned undeliverable.

Once a bankruptcy case has reached judgment, there is no notice sent to the debtor that collections will resume on debts that were not discharged.

Opportunity: Update the letters to debtors to appear as professional as possible. Reorganize the letters to

reflect other debt collectors in the industry, such as credit card companies.

Provide self-addressed envelopes with requests for payments. This will make payment easier, thereby increasing likelihood of payment. Ideally, match the barcode on the return envelope to ensure minimal data entry.

Provide perforated coupons on letters with barcode information included on the coupon. This will increase likelihood of account information included with payment to the lock box which will in turn reduce the necessity to manually research account information when payments are received. It will also make payment easier.

Restructure the letter series so that a similar brand is conveyed among all letters. A more professional appearance will enhance the likelihood that debtors will take the letters more seriously. CEU should consider whether to expand this branding to correspondence sent out by third party vendors and special counsel on the behalf of the Attorney General.


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Priority Effort

Customer Service: IVR Phones

Observations: The logic of the IVR phones is revisited infrequently, and it is not changed in accordance to

business need.

Key data is not available for analysis. Examples include average speed of answer, average talk time, volume of abandoned calls, etc.

The number of steps for the caller is greater than other commonly used phone trees. This can cause caller frustration and dropped calls.

The accountability for the IVR phone system is unclear. It has two components: technical and business. As a technical tool, its responsibility lies with business support. No one appears to be responsible for evaluating whether it matches with the desired business functionality of the CEU.

Based on trial calls by the Plante & Moran team, it appears that there are numerous options available to the caller that seem to do nothing other than direct the caller to the account rep.

The account rep’s first question is “what is your account number?” The IVR is not linked to CUBS.

Information Technology is in the process of purchasing a new phone system that will enable many features not currently used by the IVR.

Opportunity: Redesign the IVR phone system and new system to support an incoming call center including the

following features: 1) integration to the collection system for account information; 2) minimized options for the debtor with only the final option to speak to a collections representative; 3) ability to get account balance information by phone; 4) ability to make a payment by phone (provided it is truly automated); 5) define the phone tree logic so that it is easily accessible; and, 6) assign clear accountability for the upkeep of the IVR system.

The logic should be revisited and updated at least semiannually, according to business need. When a change occurs in internal work assignments, the IVR should be updated accordingly. Similarly, when there is an influx of calls due to seasonal issues (college enrollment and unemployment certifications, for example), temporarily update the phone logic.

Reduce the number of steps that a caller must take to reach the end goal.

With the future system, integrate IVR with CUBS or the new collections system so that call takers have the account information available when the debtor calls. The new system also might have voice recognition features that can be incorporated into the system.

Produce reports and management accountability tools (in real-time and after the fact) that convey key performance information about caller behavior. Adjust the IVR accordingly.


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Priority Effort

Knowledge Base

Observations: There is no centralized repository for reference documentation that can be used by staff, clients,

and third parties.

Account types have variances in policy regarding items such as, but not limited to, their statute of limitations, lien filing, settlements, and bankruptcy discharge.

Collections staff must specialize by client/account type because their position requires them to have a level of expertise in their area.

Collections staff are reliant on the AAGs to guide them in legal matters.

Collections staff have limited tools to determine whether a debtor has a likelihood of payment.

Opportunity: Establish a knowledge base for staff, client, and third party use that contains all information that is

needed in the collections process. This knowledge base could include client intricacies and legal information for reference.

Allow access to credit reports in certain instances, such as if the debt exceeds a dollar threshold. This will help collections staff to determine likelihood of payment. Those cases that have a low likelihood should be transferred to third party vendors or special counsel.

Task the business analyst with developing likelihood estimates so that collections staff can determine what types of debtors are most likely to pay. Use these estimates to update the platinum/ gold/ silver/ bronze classifications.

Give clients the ability to maintain their sections of the knowledge base. The better the information that a client provides, the more tools a collector has to collect the client’s debt. Likewise, as a collector has more information and tools to collect debt, there will be less need for contacting the client as their debt is being collected.


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Priority Effort

Client Perspective

Observations: The document that details the relationship between the CEU and the client is a service level

agreement (SLA). There is significant variance between the various clients, as each SLA is customized for the various client needs. The CEU leaves decisions about collectability and aging requirements for the client to decide. Clients have limited capacity to ascertain the likelihood of collectability.

Clients believe that there are good opportunities for communication with the CEU. They appreciate a consistent, single point of contact concept. Clients commented that communication suffers when that single point of contact is out of the office.

Clients have commented that while they are usually able to contact the CEU, their requests are not always completed in a timely manner.

Clients have noted that the AG’s collections process has continued to improve in recent years.

Clients would like more visibility into the effectiveness of the CEU. Some clients are skeptical of the value of the collections service. Specific mention was made of this in the situations where accounts are immediately sent to external collectors. While clients would like collections to increase, this desire is not informed by an understanding of the industry, such as average success rate.

Clients also expressed that they prefer in-house collections to third party vendors or special counsel. This is because a successful collection results in more debt being returned to clients.

Clients would like more visibility into the details of an account. This includes the audit trail (i.e., history) of who took action on an account and when. This also includes a desire for real time visibility into information such as liens and bankruptcies.

Clients expect the AG’s CEU to be a one-stop-shop for all of their debt collections. They feel that they are spending an unnecessary amount of time communicating with their debtors when they expect those communications to be handled almost exclusively by the AGO. This diminishes the value of the AGO’s services from the client perspective.

Clients find it difficult to maintain good relationships with their debtors when debts are sent to multiple internal or external collectors. This also holds true when a single debt is transferred to an external collector.

Some debtors have complained to clients that they have perceived some collectors to be rude. This appears to be stemming from the lack of account information available to the collectors.

Clients mentioned that accounting memos need to be more timely.

Clients are generally dissatisfied with the difficulty of reconciling their financial records with the CEU’s.

Opportunity: Standardize the SLAs in order to improve consistency, case assignment and aging within the CEU.

The SLAs should also include standards for settlement offers in which the CEU has authorization to settle for certain types of debt and/ or dollar figures associated with the debt. For example, a debtor who has multiple debts currently settles with multiple clients. The focus for settlements should be on exceptional cases, not common ones.

Adjust AG fees on a client-by-client basis to incentivize the client to cooperate with SLAs. For


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Priority Effort

Client Perspective instance, charge a lower fee for clients who submit their claims electronically versus those who mail them in.

Share performance metrics with clients so that key data is shared including overall collectability, cases closed, total amount collected, etc.

While clients are satisfied with their single point of contact with the CEU, consider aligning a backup point of contact for each client in the event that the primary contact is unavailable. Ensure that the client is aware of who their primary and secondary points of contact are.

Focus on managing expectations with the client on the amount of time that it will take to complete their requests.

Demonstrate the value of the CEU’s services to the client by making collections information readily available to them. Clients have limited visibility into the actual effectiveness of the CEU, and showing them actual collections data can help manage expectations.

Set expectations with the debtors that they should communicate directly with the CEU instead of the client.

Refine accounting practices so that accounts at the CEU will reconcile with accounts held by the client. This can be accomplished by directly interfacing accounting systems between the CEU and clients, or by jointly agreeing on an accounting system of record.


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Priority Effort

Special Counsel and Third Party Vendors

Observations: Third party vendors and special counsel rely on the CEU to supply them with claim data.

The AGO staff spend a great deal of time tracking down claim information for third party vendors and special counsel.

Some third party vendors have more advanced skip tracing software and techniques than the CEU.

Third party vendor and special counsel contracts are for a period of one year before renegotiation and/ or renewal. According to staff, veteran contractors require little attention while newer contractors can require a great deal of assistance and training.

Some external collectors noted that their collection rate for AGO claims is roughly equivalent to their other clients when they are given good contact information for debtors.

The AGO does not include performance standards in their contracts with third party vendors and special counsel. The contract does include a section indicating that the AGO may conduct a performance review but it is not a requirement of the contract.

Account assignment to external collectors does not take the collector’s historical performance into account.

Account assignment to external collectors does not take into account the number of dedicated resources that the collector has aligned to the AGO’s portfolio.

Opportunity: Focus on supplying the third party vendors and special counsel with all of the information that they

will need to quickly resolve a case.

Include performance standards in contracts with external collectors, and objectively track the performance of external collectors in order to determine if they are reaching the expected level of service. Although a performance review option exists in the contract, it does not specify the expected performance standards.

Structure rewards such that compensation is based on likelihood of debt collectability, such as age of debt. Alternatively, allow vendors to bid on debt by packets of debt to reduce the amount they receive through a contingency fee.

Track the number of dedicated resources that each third party vendor or special counsel has aligned to specifically work on the AGO’s portfolio. Use this information when assigning claims outside of the CEU.

Review contracts with external collectors and consider adjusting fees based on how long the in-house CEU actively worked an account prior to sending it to an external collector.


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Priority Effort

Customer Focus

Observations: Based upon observations of the Plante Moran team, debtors were treated with courtesy and

respect. Staff were helpful and efficient.

CEU had used a predictive dialer to inform debtors of accounts being certified. The predictive dialer was turned off due to the volume of return calls that CEU staff received.

The majority of clients interviewed reported a positive working relationship with open lines of communication and a responsive staff. However, they also report that they receive complaints about collections staff who were either not helpful or discourteous.

Some debtors who called the CEU were given the contact information for a third party vendor who was responsible for that particular debt. A willing payer should never be turned away.

Debtors with multiple accounts can be required to call different places for each account. This makes debt payment unnecessarily complex from the debtor’s perspective.

Debtors roughly fall into two categories: those who are willing to pay and those who are “habitual debtors.” Those who are habitual have several outstanding debts. Currently, it is difficult to determine which accounts belong to habitual debtors.

Debtors who live near one of the Attorney General regional offices (Columbus, Youngstown, Toledo, Cincinnati, and Cleveland) can stop by and make a payment in person. To handle these payments, account representatives leave their desk to handle the transaction. Payments that are received via check are forwarded to the lock box. This is the most labor intensive form of payment.

Opportunity: Establish criteria in third party vendors for partial credit for debt paid through the Collections

Enforcement Unit. Under no circumstances should a debtor who is willing to pay be prevented from paying and given contact information for a third party vendor.

Internal collections should focus on those who are willing to pay. Those who are habitual debtors should be transferred immediately to outside counsel where additional legal steps can be taken. Business intelligence tools should be developed to help inform this determination.

Reinstitute the predictive dialer and dedicate staff to an incoming call center. If the volume of incoming calls is too high for staff to handle, then adjust the number of staff to handle calls accordingly.

Design work allocation from the debtor’s perspective so that one debtor has one call to make for multiple accounts.

Options for debtors for whom English is a second language should be addressed.

Eliminate the option for debtors to make payments in person and instead encourage payments to be made through one of the other lower cost methods.


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Priority Effort

Other Debtor Incentives

Observations: Debtors roughly fall into categories of those who are “honest” and those who are habitual debtors.

The honest ones would pay if they are aware of the debt and if they have the means.

Failure to pay does not currently get reported to credit agencies. Not doing so decreases the likelihood of payment and it also increases the likelihood that future creditors will issue credit to those who are unlikely to pay, thereby creating additional debtor issues for other organizations.

Opportunity: Consider reporting failure to pay under certain circumstances. Examples include if the dollar figure

exceeds a dollar threshold or if the number of debts exceeds a threshold. Doing so will increase likelihood of payment and also will reduce the likelihood of habitual debtors receiving credit from other organizations.

Consider an “amnesty day” where debtors can pay their debts without being charged fees, interest, etc.

Consider a debt sale in which responsibility for retired accounts which have been deemed uncollectible is sold to a third party vendor.

Priority Effort

Bankruptcy

Observations: Although different, other types of debt can be somewhat standardized. Bankruptcy cases require

much greater specialization. Individual uniqueness of cases does not lend itself to process improvement.

In general, the Assistant Attorneys General (AAGs) spend considerable time searching for information on bankruptcy cases. Documentation on these cases does not tend be centralized in a location where it is easily accessible.

Opportunity: Centralizing and standardizing the receipt of documentation for bankruptcy cases would save the

AAGs time when managing their cases. A case management system could provide an ideal location to centralize all case documentation, and it would also allow for controls to be placed on sensitive documents so that they may only be viewed by intended parties.

Due to the uniqueness of bankruptcy cases and their legal requirements, Plante & Moran makes no additional recommendations related to how bankruptcies are handled.

Ohio Attorney General Collections Enforcement Unit Draft Operational Assessment Report

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Appendix B: As-Is Process Maps


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Client certifies claim to the AG

Collections Enforcement Unit

AG’s Office receives the claim and

account gets created in CUBS

- Account goes through the Strategy Master for dealing strategy, letter strategy, and desk assignment.- If the claim is to be sent to an external collector, the account then goes to the Forward Master for assignment.

Three methods:(1) Automatic load through interface(2) Data Flow Management (DFM) process(3) Data Integrity manually inputs data into template for IT Operations to load daily

Account enters the CAR’s WIP to be

worked

WIP organized into:- Payments- Priority 1 accounts- New Business- Today’s Work- Prior Day’s Work- Future Work- TimeOn average, WIP shows the top 500 accounts in the collector’s desk, but depends on debt type

CAR actively works the account.

Account is assigned to a Third Party

Vendor for collection

Payment collected after

180 days*?No

Yes

Certification through Collection

Forward Master uses rules to:(a) Determine the timing for when the account goes to third party vendor(b) Randomly select the vendor based on a defined vendor list


270 days*?

Account is swapped to another Third Party Vendor for

collection

End

Yes

No

Account goes back through the Forward Master to determine whether:(a) The account should be swapped to a second Third Party Vendor(b) The account should be sent to a special counsel


270 days*?

Account is sent to a Special Counsel for

collection

Yes

No

Forward Master sends the account to a separate holding desk for assignment through the Grid, which uses predefined rules to assign accounts to special counsels biweekly through a process that is manually initiated.


360 days*?

Yes

Payment is returned to AGO and decision is made whether or

not to continue collection

No Collection to continue? No

Account is sent to a Distressed Debt

Vendor

Yes

Payment collected?

No

Yes

Account is archived and retained for up

to 40 years

Account is put into a returned account worklist and the decision is made between the client and AGO on whether to continue to pursue the debt or write it off.

Collections EnforcementCurrent High-Level Collection Process Flow pg. 1

Prepared By:

Date: December, 2012

Current State:Ohio Attorney General

Recently, some initiatives have been undertaken by the AGO to attempt to collect on archived debt.

Account is sent to desk 998 or 999

Account gets assigned

InternalCollections

Directly to Third Party VendorDirectly to

Special Counsel

Application

Manual Procedure

Process

Delay

Decision

Certain types of debt are sent directly to external collections:1) Hospital2) Perkins Loan

Accounts will also be assigned to external collections if the external collector is already working the debtor’s other account(s) of the same type.

* The Forward Master dictates the number of days that an account can be collected on by each collector. The typical maximum number of days is 180 for internal collections, 180 for third party vendors, and 360 for special counsel.

Sent to AG via:(1) FTP file transfer(2) Email(3) Mail


360 days*?

No

Account is swapped to another Special

Counsel for collection

Yes


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2. Payment Application

Collections EnforcementCurrent Detailed Payment Process Flow pg. 6

Prepared By:

Date: November, 2012


Payment applied without error? Yes

Mod date is changed on the account so that payment will

repost

IT Operations generates daily error

reports generated for supervisors

No

$300K to $1M daily

Daily batch process (3PM) applies

payment to account in CUBS

Amount of payment equals

balance?

Balance over/under paid?

No

Under

Treasury issues a check and mails

back to AGO

- All error reports go to collections supervisors except the missing information error sheets for account number and client ID, which go to Accounting

Applied to the correct account?

No

Account is released in CUBS2 3

Accounting waits 8 days for check to

clear before issuing refund

Collections continue

Error reports are hand delivered to supervisors by IT

Operations

Accounting reapplies funds to

correct account

CAR notes a refund necessary on the

account.

Accounts Payable sends memo to

Treasury to refund the payer

Errors are manually corrected in Content Manager within 10

days

CAR will fill out the misapplication form

and send to Accounting

CAR pushes payment to book

keeping in Content Manager (“Verify

Push")

Yes

Application

Manual Procedure

Process

Delay

Decision

Over

AGO Accounting records check

information and mails refund check

1


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TPV/SC collected debt?

AG fee portion sent to AG general fund

(419)

Yes

End

Treasury pays TPV/SC (check or ACH) in

weekly batch process

Accounting supervisor is notified

of release in CUBS

Treasury pays client (check or ACH) No

3. Payment Resolution – Clients and TPV/SC

3

- All clients are paid once weekly.

CEU A/P notifies Treasury to pay

client

Accounts payable notifies Treasury to

pay TPV/SC

Collections EnforcementCurrent Detailed Payment Process Flow pg. 7

Prepared By:



Application

Manual Procedure

Process

Delay

Decision


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Conclusion reached? No

Corrective action required? Yes

YesAccounting will add detailed notes to the TPV/SC spreadsheet for each account that has been reviewed. Notes will contain detailed information about the reconciliation conclusion that was reached, as well as any additional action that is necessary from the TPV/SC (such as providing proof of debtor payment).

No

EndAccounting corrects account in CUBS

Accounting enters comments for

account on TPV/SC report

Accounts are typically corrected in the CUBS system to reflect accurate payment information, but corrections can be made in other systems, as well.

Collections EnforcementCurrent Account Reconciliation Process Flow pg. 9

Prepared By:



Application

Manual Procedure

Process

Delay

Decision

Accounting emails TPV/SC report (w/ comments) back to

TPV/SC

A

B

Account Reconciliation – Third Party Vendor (TPV) and Special Counsel (SC) - Continued


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AGO invoices client for AG fee and

forward fee on a client direct

payment

Client pays fees to AGO Fee adjustment? Yes

NoUsed for reconciliation:- Monthly invoice- Weekly Client Activity Report – Direct Payments (from Compass)- Adjustment form (from client)

Client is asked to include the invoice and the adjustment form with their monthly fee payments.

The adjustment form contains a list of any adjustments that the client has made to the assessed AG fees and forward fees.

AGO agrees to adjustment?

No

Yes

No reconciliation necessary

AC3 researches each account that the

client has adjusted

Account Reconciliation – Client

Account reconciliation is only required on payments that the client receives directly from the debtor.

The client may adjust the collection fees on accounts at their discretion.

When a client adjusts a fee off of an account, the client’s account records will no longer match the AGO’s account records, necessitating account reconciliation.

AGO invoices clients for fees on direct payments on a monthly basis.

Communication with the debtor to clarify where they should send their payments can help to alleviate this activity.

AC3 sends email to client that details what adjustments

will not be accepted

AC3 adjusts account in CUBS

Collections EnforcementCurrent Account Reconciliation Process Flow pg. 10

Prepared By:



Application

Manual Procedure

Process

Delay

Decision

End

AC3 will send an email to the client requesting fees to be paid on adjustments that the AGO is not willing to accept.

AC3 requests that client pays unpaid

AG and forward fees

The AGO will request payment for the unpaid fees. A collection letter will be sent to the client to pay within 30 days. If no payment is received, a second collection letter will be sent to the client to pay within 30 days. After the 60 days has elapsed, the AGO will withhold fees from the client until the client has paid the fees.


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Appendix C: To-Be Process Maps


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Collections EnforcementHigh-Level Payment Process Flow

Prepared By:


Future State:Ohio Attorney General

Application

Manual Procedure

Process

Delay

Decision

Payment is received by Accounting in a Content Manager

worklist

Daily batch process (“Daily Download”) applies payment to

account

End

Payment is automatically

loaded into queue for Daily Download

1. Online Payment

2a. Phone Payment

3a. Mail Payment

Accounting applies payment to the

appropriate account(Verify Push)

Call center representative inputs payment information into

GovOne

1 day delay to receive payment file

from online payment vendors

4. Western Union Quick Collect

Check prints off at Accounting Accounting mails

check to the lockbox

Lockbox images check and keys

details into Content Manager

Payment is received by phone

Payment is made at Western Union Quick

Collect counter at Kroger store

Payment is received through GovOne

Payment is received at lockbox

Existing Technology


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Collections EnforcementOutbound Call Center Flow

Prepared By:



Outbound Call Center

Outbound call center CAR makes

phone call

Good phone number?

No

Debtor answers phone?Yes

CAR informs debtor of their debt(s) and instructs how to pay

Yes

CAR leaves message

No

Payment made over phone?

CAR takes payment over the phone and applies to account

Yes

No

Account sent to Correspondence

Unit for follow-up

End

Debtor has inquiries?

Complexity of Inquiry

Yes

CAR will escalate inquiry to Resolution

Unit

CAR resolves inquiry

Complex(20%)

Simple(80%)

No

All accounts paid in full?

No

Yes

To Correspondence Unit

To Outbound Call Center queue

Outbound call center representatives will receive accounts (bundled by debtor) to make calls on from an outbound call center queue, and accounts will be assigned based on representatives’ availability.

If the debtor has multiple outstanding debts, they will all be addressed in a single phone call.

Most calls will be made for the call center representatives by a predictive dialer, automatically queuing and assigning accounts individually by probability of collection.


Application

Manual Procedure

Process

Delay

Decision

When skip tracing is completed, the account is automatically queued to a representative by the predictive dialer.

CAR flags account for skip tracing

Notes documented in new collection

system of action(s) taken

Call type documented in

phone system for tracking purposes

CAR flags account for future follow-up

call

Resolution Unit resolves inquiry


call


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Collections EnforcementInbound Call Center Flow

Prepared By:



Inbound Call Center

Application

Manual Procedure

Process

Delay

Decision

Debtor calls AGOCall is routed to next

available inbound call center CAR

Type of RequestCAR takes payment over the phone and applies to account

Payment

Account Inquiry

EndComplete any follow-up activities


Follow-up call required? No

Yes


call

Debtor will enter personal/account information into IVR system

Accounts will enter outbound call center queue for follow up after events such as late payments for payment plans, etc.

Complexity of Inquiry

CAR will escalate inquiry to Resolution

Unit

CAR resolves inquiry

Complex(20%)

Simple(80%)

Notes documented in new collection

system of action(s) taken

Call type documented in

phone system for tracking purposes

Resolution Unit resolves inquiry


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Certification is received in

collections system

DebtType

PredictedCollectability

Internal WorkloadRepeat debtor?

Account is packeted with debtor’s other

accounts

To External Collections

All otherBelow

threshold

Abovethreshold

To Internal Collections

Belowworkloadthreshold

Above workloadthreshold

“Big 3”No

Yes

To current collector(Internal or External)

Collections EnforcementAccount Assignment Flow

Prepared By:



Account Assignment - Future

Internal Account Assignment - Future

Internal CollectionsAccount enters the

Outbound Call Center queue


representative contacts debtor


Representative receives debt

payment

Account is prioritized

Account is automatically

assigned to outbound call center

representative

Accounts are assigned in the order of priority, and they are assigned to the first available collector through use of the predictive dialer.

End

Account is prioritized based on collectability, dollar amount, debt type, and other predetermined factors.

Application

Manual Procedure

Process

Delay

Decision

Account is assigned to Internal Collections


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Appendix D: Proposed Action Plan


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Recommendations Timeline Team Stakeholder Notes

1

Expand the targets for the CEU to include not just expected collections, but also accounts cleared and age of debt. Because debt that is more recent is more collectible, additional efforts should be made to focus efforts on this type of debt.

Q3 2013 Strategy and Direction

Staff coordinate with new fiscal year

2

Organize Account Representatives into a call center model by creating two separate call centers – one for incoming calls and one for outgoing calls. The incoming unit would be responsible for all calls that come in to the CEU while the outgoing unit would be responsible for proactive collections for new accounts.



3 Establish a correspondence unit whose responsibilities include skip tracing. This will allow others to focus time on debt that is most collectible.

Q3 2013

Strategy and Direction


4 Extend the hours of operation to include evenings and weekends.

Q3 2013



5

Apply the concept of profit centers in place of cost centers, where applicable, as the revenue-generating feature of the CEU is distinctly different from the remainder of the Attorney General’s Office. Make “investments” where appropriate, with appropriate cost/ benefit analysis.


Management incorporate into new fiscal year budget

6 Refocus the efforts of the CEU – the primary measure for the CEU should be amount distributed to clients rather than amount collected from debtors.

Q2 2013


Management incorporate into new fiscal year budget

7 Cross train CEU team to handle multiple types of accounts so that an individual’s debts can all be handled by the same collector.

Q3 2013




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8

Apply additional logic to the assignment of accounts to in-house collectors. Factors that should be considered in account assignment include collectability, value of account, collector’s “conversion” ratio, and current workload.


Staff temporary measure; replace with random selection

9

Distribute accounts at the Unit level rather than at the desk level. This will ensure that accounts and workload are proactively managed on a daily basis and continue to receive attention when employees are away from work.


Staff

10

Refine the scoring system for new debts (platinum, gold, silver, bronze) so that it becomes a trustworthy source for account assignment as well as a more accurate reflection of collectability.


Management periodically review and adjust so that it remains accurate

11

Adjust the timing of assigning accounts externally based on institutional knowledge of collectability and workload. If the number of accounts exceeds CEU capacity internally in a timely fashion, then new debt should immediately be assigned to contracted vendors.

Q3 2013 External Relations

Vendor

12 Refine the forward master logic so that when a debtor has multiple active accounts, ensure that they all get assigned to the same external collector.

Q2 2013


Management

13 Consider extending the term of contracting for third party vendors and special counsel to a longer term, up to five years.

Q3 2013

External Relations

Vendor

14

restructure the contingency fees so that more desirable debt receives a lower contingency fee than less desirable debt. Establish incentives such that the reimbursement rate for debt deemed more collectible has a lower reimbursement rate associated with it.


Vendor


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15 Eliminate manual entry of claims into the collections system by standardizing and enforcing claim certification standards for all clients.

Q3 2013

External Relations

Client

16

Build the FTP process to be more robust so that it will operate more reliably. Reduce the possible points of user entry error in the certification templates so that errors are less frequent.


Client

17 Ensure all letters to debtors have a removable coupon for payments. Make it clear that the coupon should accompany payment and that the coupon include bar code information.

Q1 2013

Process Improvement

Debtor

18 Automate the filing of all liens so that manual intervention is only required in rare cases.

Q3 2014

Process Improvement

Staff coordinate with new technology

19 Simplify the returned debt components of contracts so that debt is returned on a regular basis only. Quarterly is recommended.

Q4 2014

Process Improvement

Client

20 Standardizing certifications among the clients will simplify the download and reduce the need for skip-tracing.

Q4 2014

External Relations

Client

21 Normalize the procedure for third party vendors and special counsel. For example, require them to attach bar code information to payments sent to the lock box.

Q3 2013

External Relations

Vendor

22 Enforce that payments go directly to the lock box without being intercepted by third party vendor or special counsel.

Q3 2014

External Relations

Vendor

23 Increase the prominence and necessity of the bar code in the letter series to make it more likely for debtors to include them in their payments.

Q2 2013

Process Improvement

Debtor

24 Organize an educational session on lock box operations. Q1 2013 Process Staff


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Improvement

25 Reduce or eliminate on-line payment fee in order to maximize its use.

Q3 2013


Management

26 Eliminate one on-line payment option to simplify payment.


Management

27 Reduce the amount of time that it takes for a debtor to receive a refund when they overpay.

Q4 2014

Process Improvement

Staff may need to coordinate with new technology

28 Establish a consistent methodology for applying unspecified payments to a single debtor’s account.

Q2 2013

Process Improvement

Staff

29 Ensure that there are safeguards in place to correctly pay the client when a tax offset is used to collect payment on an outstanding debt.

Q3 2013

Process Improvement

Staff

30 Configure the online payment services to accommodate automatic monthly debits for payment plans.

Q4 2014


Management

31 Automate payment processing between the lock box and the collections system.

Q1 2013 Process Improvement

Staff

initial discussion is already underway; need to coordinate with new technology

32 Move to “exception” processing for lock box payments and centralize in accounting.

Q4 2014

Process Improvement

Staff This can be done with realignment and improved with technology

33 Properly document and adhere to the payment application standards within the CEU. Communicate standard to each client.

Q2 2013

External Relations

Client


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34 Communicate receipt of payment to clients in a standardized way to manage expectations.

Q2 2013

External Relations

Client

35

Maximize number of payments that have proper accompanying documentation that illustrates all details of the payment (account information, payment distribution, date, etc.) so that accounts can be quickly reconciled.


Client

36 Centralize the debtor information into a single system of record.

Q4 2013

Process Improvement

Client may need to coordinate with new technology

37 Combine an individual party’s debts into a single account so that their debts are not spread across multiple collectors.

Q4 2014

Process Improvement


38 When it is necessary to use a coding system for data fields, ensure that the codes are intuitive and well documented so that they can be easily interpreted.

Q4 2014

Technology Transformation


39 Assign internal security and controls to all users and accounts so that sensitive information can only be viewed by appropriate, specific parties.

Q4 2014

Process Improvement


40 Ensure that the CEU and those who perform collections enforcement on behalf of the AG via contract are able to technologically adhere to IRS Publication 1075 guidelines.

Q1 2013

External Relations

Vendor

41 Ensure that the new collections enforcement system is setup to record the full audit trail and history of each account

Q4 2014


Staff

42 Establish a methodology for handling all cases where there is potential for overstating outstanding debts.

Q2 2013

Process Improvement

Staff

43 Interface with external systems to ensure commonality of data between clients and CEU

Q4 2014


Client


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44 Ensure that the new collections system is configured to meet business needs and desired functionality.

Q2 2013


Staff Coordinate with technology implementation

45 Integrate the new collections system with client systems to ensure accuracy of data across multiple platforms.

Q4 2014


Staff

46 Consolidate business data into a single system of record. The new collections system should be the system of record.

Q4 2014


Staff

47 Establish a monthly scorecard of key metrics. Publish them for discussion at leadership meetings and share the results with staff.

Q2 2013


Management

48 Create a business analyst function which is dedicated to data mining and reporting information related to departmental performance.

Q2 2013


Staff

49 Simplify the forward master to treat debt more consistently as it ages.

Q1 2013


Management

50 Update the letters to debtors to appear as professional as possible. Reorganize the letters to reflect other debt collectors in the industry, such as credit card companies.

Q1 2013

Process Improvement

Debtor

51 Provide self-addressed envelopes with requests for payments.

Q1 2013

Process Improvement

Debtor

52 Provide perforated coupons on all letters with barcode information included on the coupon.

Q1 2013

Process Improvement

Debtor

53 Rewrite letters to be more direct and filled with less jargon


Debtor


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54 Redesign the IVR phone system to support an incoming call center. Integrate the IVR to the new collections system.

Q1 2014


Staff

55 Integrate a predictive dialer to support an outgoing call center.

Q1 2014


Staff

56 Use business intelligence to update the logic used for IVR and to maximize automation of transactions.

Q1 2014


Staff

57 Establish a knowledge base for staff, client, and third party use that contains all information that is needed in the collections process.

Q4 2013

Process Improvement

Staff

58 Allow access to credit reports in certain instances, such as if the debt exceeds a dollar threshold.

Q1 2013


Management

59 Task the business analyst with developing likelihood estimates so that collections staff can determine what types of debtors are most likely to pay.

Q4 2013


Management

60

Standardize the SLAs in order to improve consistency, case assignment and aging within the CEU. The SLAs should also include standards for settlement offers in which the CEU has authorization to settle for certain types of debt and/ or dollar figures associated with the debt.


Client

61 Consider adjusting AG fees on a client-by-client basis to incentivize the client to cooperate with SLAs.

Q2 2013

External Relations

Client

62 Share performance metrics with clients so that key data is shared including overall collectability, cases closed, total amount collected, etc.

Q2 2013


Client

63 Set expectations with the debtors that they should communicate directly with the CEU instead of the client.

Q2 2013 External Client


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Relations

64

Include performance standards in contracts with external collectors, and objectively track the performance of external collectors in order to determine if they are reaching the expected level of service. If not, consider outsourcing to different collectors.


Vendor

65 Structure rewards such that compensation is based on likelihood of debt collectability, such as age of debt.

Q3 2013

External Relations

Vendor

66

Track the number of dedicated resources that each third party vendor or special counsel has aligned to specifically work on the AGO’s portfolio. Use this information as one factor when assigning claims outside of the CEU.


Vendor

67 Review contracts with external collectors and consider adjusting fees based on how long the in-house CEU actively worked an account prior to sending it to an external collector.

Q3 2013

External Relations

Vendor

68 Establish criteria in third party vendors for partial credit for debt paid through the Collections Enforcement Unit.

Q2 2013

External Relations

Vendor

69 Transfer habitual debtors immediately to outside counsel.


Management

70 Design work allocation from the debtor’s perspective so that one debtor has one call to make for multiple accounts.

Q4 2014


Staff May need to coordinate with new technology

71

Options for debtors for whom English is a second language should be addressed. Institute language “certification” to route ESL and “other language” calls to specific collections staff.


Management


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72 Develop and implement a comprehensive implementation plan for implementation of the changes.

Ongoing

Change Management

Staff

73 Develop an internal and external stakeholder strategy for successful transition.

Ongoing

Change Management

Staff/ Vendors

74 Develop status reporting template for proactive management of change process.

Ongoing

Change Management

Staff

75 Identify opportunities for specific, strategic employee engagement.

Ongoing

Change Management

Staff

76 Establish review and approval process for project communications.

Ongoing

Change Management

Staff

77 Draft specific communications as outlined in communication plan .

Ongoing

Change Management

Staff


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Appendix E: Proposed CEU Organizational Chart


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Appendix F: Recommended Implementation Governance Structure


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Implementation ProcessRecommended Governance Structure

Prepared By:


Ohio Attorney General:Collections Enforcement

Implementation Steering Committee

Core Implementation Team / Project Manager

Technology Transformation Process Improvement External Relations Change ManagementStrategy and Direction

Executive leadership meeting regularly to review projects, ensure timeline, and advise a course of action when conflicts arise

Project manager / Core Implementation Team meets routinely to coordinate projects, identify conflicts, identify resource needs, develop communication methods, and consistency of methodology

Implementation teams are intended to address the implementation of all action items pertaining to their topic area. Each should follow a consistent project methodology

including having a project plan with key deliverables, dates, and individual accountability. Plans and execution should be reviewed by the Core Implementation Team to ensure coordination. Meeting frequency depends on individual action items

and project plans.


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Thank You

For more information, contact:

Adam Rujan 248-223-3328

[email protected]

Christine Andrysiak 248-223-3330

[email protected]

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