County Failed to Collect $1 Billion in Bills Last Year

Los Angeles County failed to collect nearly $1 billion in bad debts last year, including delinquent court fees, hospital bills, library fines and utility charges, according to a first-of-its-kind study released Thursday.

Even more distressing for county officials, the study found that the amount of uncollected debt has increased from $800 million, or 8.4% of the county’s revenue in 1996, to $958 million, or 11.3% last year.

The yearlong study by a team of private financial consultants puts most of the blame for the overdue bills on department heads who do not consider debt collection an important part of their jobs.

“They don’t feel they are in the business of collecting,” said Kenneth Pride, an attorney who was selected to head the study.

The 153-page report found that many of the county’s 37 departments do not even keep track of delinquent bills and do not share information with each other about businesses, individuals and other governments who owe the county money.

The report was presented Thursday to the county’s Citizens’ Economy and Efficiency Commission, a 21-member panel appointed by the Board of Supervisors. The panel unanimously adopted the recommendations of the report and urged the supervisors to do the same.

“I think it’s always alarming when we find there is a lot of our money that is uncollected that could be put to good use,” said Tony Lucente, a member of the efficiency panel.

According to the report, county departments use a hodgepodge of collection systems--some involving highly sophisticated computerized systems, others an ad hoc manual scheme. Still others hire professional collection agencies to do the work.

To improve collections, the study offered 58 detailed recommendations, including the increased use of computer databases and private collection agencies.

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But the key recommendation was to require each department to report its delinquency rate on an annual basis to the Board of Supervisors, who can use the rate to judge the performance of each department manager.

“Our goal is to refocus the department’s attention on something they have not been focusing on for 10 or 20 years,” Pride said.

Several county officials, including Treasurer and Tax Collector Mark Saladino, declined to comment, saying they had yet to read the report.

David Abel, chairman of the efficiency commission, said he is optimistic that many of the report’s recommendations will be adopted by the Board of Supervisors.

“I can’t expect them to adopt every recommendation, but I think we have given the board enough substance for them to raise this discussion to a high level,” he said.

The report does not predict how much more money the county could collect by adopting the recommendations, but the consultants who worked on the report said the adoption of many basic data-keeping recommendations will result in a substantial increase in collections.

“There are a number of windfalls that could take place depending on how many recommendations are implemented,” said Manuel Ramirez, an accountant who worked on the study.

The study did not compare the county to other counties or cities. The Southern California Association of Governments does not keep track of delinquency rates in the region.

But collecting outstanding bills and fees is a problem that all municipalities struggle with.

For example, the city of Los Angeles is currently trying to collect $200 million in outstanding parking tickets, $295 million in delinquent utility charges and $178 million in overdue fees owed by homeowners and government agencies to the city’s sewer construction fund.

The report was requested more than a year ago by Supervisor Zev Yaroslavsky in response to an annual audit that showed 40% of property owners in the county are delinquent on their property taxes, leaving $1.1 billion outstanding.

A spokesman for the supervisor said he had not read the report and could not comment.

The study found that the worst collection rate was at the Probation Department, which is authorized to collect court fines from probationers for restitution to victims and the cost related to their prosecution, parole and monitoring.

Last year, the department took in only $118 million while failing to collect $307 million in outstanding fines.

Part of the problem for the department, the report said, is that it does not have the ability to garnish checks or to intercept tax refunds to pay the fines. In addition, when a court imposes a fine on a juvenile, the department cannot force the juvenile or his parents to pay the fine until they have the ability to pay.

Probation officials conceded that it is difficult to collect fines and fees from probationers. But they said the department is trying to increase its collection rate.

“We are currently implementing new processes and procedures to enhance future collections,” said Alisa Drakodaidis, chief of the department’s administrative services bureau.