Failure to collect on such items as parking tickets has meant many millions to Los Angeles |
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LA losing millions of dollars on uncollected parking tickets, other fines and fees
City Controller Wendy Greuel audited six departments - police, fire, housing, transportation, sanitation and building and safety
by
Patrick J. McDonnell
Los Angeles Times
July 1, 2010
EDITOR'S NOTE: Please see full Wendy Greuel report and audit below.
On a day when Los Angeles laid off more than 200 employees , a new audit released Thursday revealed that the city is losing tens of millions of dollars in revenue because of collection practices that barely capture half of parking ticket fines and other fees.
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"I don't know of any business that would stand for such a low collection rate," said City Controller Wendy Greuel, who released the audit of six departments -- police, fire, housing, transportation, sanitation and building and safety. "It's simply not sustainable, and the city cannot and should not allow this to continue."
The audit, which looked at fiscal year 2008-09, showed that only 53% of some $553 million in city billings were collected. That's a loss of $260 million annually—enough, said City Councilman Paul Koretz, to have helped fill a budget gap that has led to hundreds of layoffs, reduced library hours and other service cuts.
Among the most "egregious" examples, the city auditor said, were parking citations and Emergency Management Services billing accounts. The city only collected 53% of the money it is owed on parking citations, the audit found, and 38% owed in emergency service billings.
"We need to do better, because otherwise the situation is grim," said Koretz, who chairs the council's audits and governmental efficiency committee and joined Greuel at a press conference outside City Hall. "There's a sword of Damocles that hangs heavy over countless city employees who fear their jobs might be the next ones lost."
The audit is a follow-up to a similar study three years ago. The city controller found some improvement, but said it was "outrageous and unacceptable" that Los Angeles had not made more progress.
Under-collection of revenue is a problem at every level of government, and officials acknowledge that not all billings are ultimately collectible. For instance, some vehicle owners will never pay their tickets, while indigent patients may never reimburse the city for ambulance fees. How Los Angeles' collection rate compares to other cities was not known, the controller said.
However, Greuel said there was ample room for improvement, and pushed for several reforms. Among her recommendations were the creation of a centralized billing process and a mandate that police and fire departments expeditiously refer delinquent accounts to outside collection agencies.
To view the complete Audit, please click here
July 1st , 2010
CITY CONTROLLER RELEASES AUDIT SHOWING CITY ONLY COLLECTS 53% OF BILLS OWED
Hundreds of Millions of Dollars Uncollected, Widening City's Budget Deficit
(LOS ANGELES) – In her continued attempt to reduce the City's budget deficit, City Controller Wendy Greuel released her audit today of the City's billings and collections practices, which found that for the Departments sampled, only 53% of the City's bills were collected.
“In three years since the previous audit was released, the City has gone from a 52% collections rate to a 53% collections rate – that's not acceptable,” said City Controller Wendy Greuel.“Collecting more money wouldn't close the entire budget deficit, but it would help save the City money and protect critical services for Angelenos.”
The Departments surveyed in this audit billed a total of $553.4 million for fiscal year 2008-09, and only collected $293 million, which is an under-collection of $260.4 million annually. Among the most egregious examples of uncollected funds are parking citations and Emergency Management Services (EMS) billing accounts, where the City is only collecting 53% and 38% of the money it is owed, respectively.
“I don't know of any business that would stand for such a low collection rate, particularly a business the size of the City of Los Angeles. It's simply not sustainable, and the City cannot and should not allow this to continue.” said Controller Greuel.“The Mayor and the City Council now have two audits and a consultants report to guide them to centralizing the billing process, which will save the City millions of dollars each year.”
This audit is a follow-up to a 2007 Controller audit which found the City's billing and collections practices to be out of date. The major finding of the previous audit – to centralize the City's billing process - remains unimplemented, while hundreds of millions of dollars the City should receive – and desperately needs - remain uncollected.
Some of the key findings of the audit include:
- The City still has not created a centralized billing process under the Office of Finance, which should result in millions in increased collections.
- While the City finally hired a consulting firm to provide a blueprint for implementing a centralized process, no action has been taken to implement the proposals. More than three years later, the City should have made more progress.
- It is important to note that the consultant's report is overly optimistic about how much the City could generate from centralization. The consultant estimates an additional $274 million could be collected over the next six years; however, most of that would come from outsourcing EMS billings, not from increased centralization.
- The Police Commission and Fire Department do not refer delinquent accounts to the Office of Finance or an outside collection agency quickly enough.
- The Fire Department had not referred 60% of the accounts within 45 days, which is the Department's policy.
- The Police Commission sat on nearly $500,000 worth of delinquent accounts, even though many were two to four years old.
- The Fire Department needs to hire a contractor to ensure that accurate billing information is collected when an EMS service is provided, which they have been talking about for over 3 years.
- The Department was in the process of preparing a Request for Proposal for a contractor in June 2007, yet no contractor has been hired.
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