EXPLORING THE FUTURE OF COURT COLLECTIONS

“Public & Private Sector Approaches”Jim Lehman

Texas Office of Court Administration

2

Texas Office of Court Texas Office of Court AdministrationAdministration

State Agency Created in 1977 Chief Justice - Texas Supreme Court Provides Administrative & Technical

Support Serves Approximately 2,600 Courts

in the State (512) 463-1625

Four-Part PresentationFour-Part PresentationThe Concept of ChangeGeneral Attitudes About Court Collections The Importance of Court CollectionsThe Real Issue

““In Order to Grow We Must Make In Order to Grow We Must Make A Conscious Decision to A Conscious Decision to

CHANGECHANGE!”!”

““Change is often not easily Change is often not easily embraced but is almost always embraced but is almost always

inevitable.”inevitable.” ATTITUDEATTITUDE KNOWLEDGEKNOWLEDGE TIMETIME HAM FACTORHAM FACTOR

How Important Is Court Collections,How Important Is Court Collections, and Why? and Why?

General Attitudes About Court General Attitudes About Court CollectionsCollections

Court Philosophy

“These people can’t pay and it’s not my job.”

Community Perception

“They don’t expect us to pay and nobody cares.”

Government

“We don’t have the time or money to invest.”

COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS

Presumption - “Can’t Pay” Randomly Set Terms Weak Follow-Up Warrant As Solution Credit/Recycle

Low Priority - Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective

Case Study No.#1

State of Texas vs Joe Truitt

Joe Truitt and his wife Jodie shared a textbook history of domestic violence: black eyes, broken bones, and broken promises. Joe already had served three years probation for pulling a gun on his older sister. He had spent time in jail for two misdemeanor assaults against his wife, and another two cases were pending. Once, in a fit of rage, Jodie says, he pushed her from a speeding car.

Joe has pled guilty to a third assault charge. He broke Jodie’s jaw. The maximum fine is $10,000.00.

1. As the judge, would you impose the maximum fine?

2. If the maximum fine is imposed, can Joe pay it?

3. If less than the maximum is imposed, why?

QUESTIONS:QUESTIONS:

•Out-of-Towner (say…California)

•3rd Grade Ed

•Age: 65-70

•Unemployed

•Lives w/Relatives

•Owes $5K

Case Study No. 2

Criminals & CrimeCriminals & Crime

CRIMINAL 1 : one who has committed a crime

CRIME 1 : an act or the commission of an act that is forbidden or the omission of a duty that is commanded by a public law and that makes the offender liable to punishment by that law.

CriminalsCriminals There are approximately 1.3 Million (or less than ½

of 1% of the national population) adult prison inmates in the U.S.

In 2003 (latest year with available data) there were 20.5 Million new criminal cases filed in U.S.

59% of all prison inmates have a high school diploma or equivalent.

Two-thirds of all prison inmates were employed the month before they were arrested for their current offense.

Bureau of Justice Statistics

Show Me The Money!Show Me The Money!

American Collectors Association

Housing………………….28%Housing………………….28%

Transportation…………...24%Transportation…………...24%

Food……………………..19%Food……………………..19%

Clothing…………………..5%Clothing…………………..5%

Medical…………………...5%Medical…………………...5%

Insurance………………….5%Insurance………………….5%

Other/Discretionary………14%Other/Discretionary………14%

Discretionary DollarsDiscretionary Dollars

It is estimated U.S. courts assessed approximately $18.3 billion in court costs, fees, and fines in 2005 or about $65 for every person in the Nation.

In 2005, gross lottery ticket sales reported for the United States was approximately $52 billion or about $187 for every person in the Nation.

Discretionary DollarsDiscretionary Dollars It is estimated that in FY 2005, the average per

case assessment for Texas courts was approximately $173.

A study of state lotteries found that lottery players with incomes below $10,000 spend an estimated $597 per year playing the lottery.

The same study found that lottery players with incomes between $50,000 and $100,000 spend an estimated $225 per year playing the lottery.

NASPL

Analyzing the ProblemAnalyzing the Problem

Denial of the IssueDenial of Responsibility/OwnershipBelief that There is No Solution

Embedded Barriers

“Historically there has never been an accounts receivable mechanism in place in the judicial process.”

Practical Diagnosis

Principals of UnderstandingPrincipals of Understanding A fine is punishment and not a “BILL”.

The payment is the defendants responsibility.

It is expected that the defendant must sacrifice to pay.

The defendant must give payment the highest priority.

The defendant must expect consequences if payment is not made.

The defendant needs to understand the consequences.

The payment is a Court Order, a sentence which may not be convenient.

A court is not where people prefer to spend money.But, many people come to court with money.

CASH

ACCTS REC

SALES

INVENTORY

OPERATING CYCLE

Private Sector

Private Sector CharacteristicsPrivate Sector Characteristics

Purpose well-definedClear line of responsibility/accountabilitySignificant investment in quality staffingSignificant investment in strategy/planningCreativity is encouraged

““Every Day A Debt Remains Every Day A Debt Remains Uncollected the Likelihood It Will Uncollected the Likelihood It Will Remain Uncollected Increases.”Remain Uncollected Increases.”

0

10

20

30

40

50

60

70

80

90

100

0 29 Days 30 Days 60 Days 90 Days 6 Months 9 Months 12 Months 24 Months

DEVALUATION – DEVALUATION – “The Incredible “The Incredible

Shrinking Dollars.”Shrinking Dollars.”

0102030405060708090

100

Current 120 Days 270 Day

Private SectorPrivate SectorCollection TargetsCollection Targets

ACA 90%

D&B 85%

MED 70-80%

Private Sector Private Sector Account ManagementAccount Management

Current - 30 Days 31 - 60 Days 61 - 120 Days 120 Days Plus

85% Collected 10% Collected 3% Collected 2% Collected -

Charge Off/Write Off

Collection FocusCollection FocusFront End

$

Private Sector

LAW

ENFORCEMENT

PENALTY

CRIME

JUSTICE CYCLE

Public Sector

Public Sector CharacteristicsPublic Sector Characteristics

Purpose often generic, general, & broadLines of responsibility/accountability often

vague and/or overlappingStaffing often limited by resources &

politicsStrategy/planning often short range & stop

gapMaintaining the status quo is the norm

OFTEN NO CONSIDERATION OFTEN NO CONSIDERATION OF:OF:

RISK DEPRECIATION

Public SectorPublic SectorCollection TargetsCollection Targets

50% - 60%???

Court Case ManagementCourt Case Management

Current - 60 Days 60 - 180 Days 180 Days plus

25 % Collected 65 % Collected - Warrant 10 % Collected

Collection FocusCollection Focus

$Back End

Public Sector

GREATEST SIMILARITY:

“Both provide goods and services.”

GREATEST DIFFERENCE:

“One is driven by profit, one is driven by politics.”

Collections MatrixCollections MatrixPrivate Sector Focus

$

$Public Sector Focus

Court’s CollectorsCourt’s Collectors

Court AdministratorsCourt ClerksProbation OfficersPre-trial StaffMarshalsSheriffsConstablesWarrant OfficersBailiffsWhoever

The Impact of Unpaid FinesThe Impact of Unpaid Fines

Loss of Public Revenues Decrease In Services Increase in Taxes Weaker Government

THE ISSUETHE ISSUE

“Lack of compliance in paying court fines and fees denies a jurisdiction revenue and, more important, calls into question the authority and effectiveness of the court and the justice system.”