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Home My Public Portal AboutExhibit MSD 84O - Collection Process and Bad Debt ExpenseExhibit MSD 840 Q24.a.i Actual Bad Debt Expense FY10 FY11 FY14Oi 42100 -SSC Doubtful Accounts (10,574,6821 (6,273,875) (7,052,648) (2,845,298) 7,080,659 42200 - Mlsc SSC Doubtful Accounts 387,174 25,194 140,799 190,654 129,663 Total II/ (10,187,508) (6,248,681) (6,911,849) (2,654,644) 7,210,322 Q24.a.11 Actual write-offs FY10 r�11 FY12 FY13 FY14 1,048,018 1,182,334 1,692,788 3,011,030 1,309,913 Q2A,a.iv End of Year Bad Debt Balances =1 FY11 DU FY14 11302 - Sewer Service Allowance (51,752,548) (55,642,128) (61,091,846) (61.131,571) (51,689,211) 11305 - Sewer Service Allowance - Other (838,368) (770,429) (685,593) (568,806) (406,024) Total (52,590,916j (56,412,557) (61,777,439) - (61,700,377) (32,093,235) Q24.c Forecasted Expense Related to the Customer Assistance Program !M FY16 EY1Z fYlg low Income Credits (I) (592,570) (798,032) (1,052,755) (1,389,357) (1,832,388) (2,417,998) Q24.d Actual Expense Related to the #a> w-Inoeme Customer Assistance Program i FY31 FY1214 FY as FY14 Low Income Credits (286,769) (247,817) (370,553) (421,993) (447,333) (1) Refer to Exhibit MSD 21, page 30 of the 2010 CAFR; Exhibit MSD 22, page 28 of the 2011 CAFR; Exhbit 23, page 17 of the 2012 CAFR; Exhibit 24, page 16 of the 2013 CAFR; and Exhibit 25, page 19 of the 2014 CAFR to find these numbers. (2) Refer to Exhibit MSD 1- Rate Change Proposal, Appendix 7.3.1. included in that appendix is a Bad Debt Memo which explains the significant change from FY13 to FY14. (3) Refer to Exhibit MSD 79 - Rate Model. 0.; R [25, W125 of the 'Revenue Proof' tab of the Rate Model. (4) Refer to Exhibit MSD 79 - Rate Model. Cells 0125:Q125 of the 'Revenue Proof tab of the Rate Model Metropolitan St. Louis Sewer District Delinquency Aging FY10 - FY14 MSD Customer Accounts Delinquency Aging FY10 - FY14 Fiscal Year Aging Category Service Charges Wastewater I Stormwater Late Fees Other Fees (1) Total 8 Accounts I $$$ FY10 (>= 3 mths & <6 mths) $ 2,733,185 $ 456,421 $ 75,988 $ 45,933 20,885 $ 3,311,526 (>6 mths) 3,766,694 631,182 144,307 90,441 14,954 4,632,625 (>1 yr) 8,920,290 1,237,086 604,983 297,774 18,528 11,060,134 (>2 yrs) 8,814,198 1,404,504 1,253,138 804,540 14,572 12,276,380 (>3 yrs) 12,705,324 698,787 2,943,232 632,822 8,954 16,980,165 (>5 yrs) 11,197,254 415,123 5,406,997 907,638 5,598 17,927,012 (>10 yrs) 3,446,153 73,189 3,348,804 449,852 920 7,317,997 j>15 yrs) 5,442 124 6,198 90 2 11,854 FY10 Total 51,588,539.85 $ 4,916,417 $ 13,783,647 $ 3,229,099 84 413 $ 73,517,692 FY11 (>. 3 mths & <6 mths) $ 3,273,384 $ 26,080 $ 116,571 $ 55,889 20,509 $ 3,492,433 (>6 mths) 4,989,497 89,824 230,300 99,541 12,885 5,4.22,047 (>1 yr) 9,217,894 288,829 839,607 330,836 16,331 10,693,497 (>2 yrs) 9,552,240 303,243 1,342,489 528,693 10,723 11,737,388 (>3 yrs) 13,274,786 689,836 3,515,049 1,252,869 12,946 18,745,486 (>5 yrs) 10,282,293 58,430 5,088,461 764,513 5,414 16,199,111 (>10 yrs) 2,916,693 13,313. 2,907,355 295,601 792 6,133,754 (>15 yrs) 6,373 11 5,501 318 2 12,205 FY11 Total - 53,513,160.00 $ 1,469,566 $ 14,045,333 $ 3,328,260 79,602 $ 72,435,921 FY12 ()= 3 mths & <6 mths) $ 3,268,179 $ 21,639 $ 78,364 $ 112,230 18,464 $ 3,480,412 (>6 mths) 4,667,713 33,606 221,287 76,574 14,280 4,999,180 (>1 yr) 15,909,464 128,471 1,233,784 373,403 17,786 17,645,122 (>2 yrs) 9,230,170 284,253 1,002,561 748,539 11,938 11,265,523 (>3 yrs) 13,244,990 947,839 2,989,427 1,991,566 14,948 19,173,822 (>5 yrs) 11,728,582 67,255 5,340,628 1,721,608 6,196 18,858,073 (>10 yrs) 3,118,700 14,706 3,049,547 546,673 838 6,729,626 (>20 yrs) 18,388 112 26,526 3,532 5 48,558 FY12 Total 61,186,186.00 $ 1,497,881 $ 13,942,124 $ 5,574,125 84,455 $ 822,7.00,316 FY13 (>= 3 mths & <6 mths) $ 2,777,148 $ 19,706 $ 95,702 $ 63,805 15,565 $ 2,956,361 (>6 mths) 5,118,498 37,390 236,196 139,295 15,123 5,531,379 (>1 yr) 10,275,985 74,507 621,296 650,771 17,871 11,622,559 (>2 yrs) 14,046,896 151,758 1,588,389 991,796 9,204 16,778,839 (>3 yrs) 11,539,775 555,767 1,991,579 1,726,542 13,546 15,813,663 (>5 yrs) 12,038,768 686,972 5,134,298 2,390,813 10,364 20,250,851 (>10 yrs) 2,470,803 9,660 2,356,023 606,222 698 5,442,708 (>20 yrs) 31,469 64 43,338 3,805 8 78,676 FY13 Total 58,299,342.00 $ 1,535,824 �$ $ 12,066,821 $ 6,573,049 82,379 �$ 78,475,036 FY14 (>= 3 mths & <6 mths) $ 4,838,329 18,060 $ 149,567 $ 67,930 13,488 $ 5,073,886 (>6 mths) 5,368,346 33,899 194,208 108,313 14,179 5,704,766 (>1 yr) 10,709,511 71,856 691,469 613,153 17,702 12,085,994 (>2 yrs) 7,794,697 54,684 670,235 1,106,122 10,021 9,625,738 (>3 yrs) 16,020,584 100,083 2,436,278 1,492,735 15,425 20,049,180 (>5 yrs) 10,196,821 61,882 3,675,514 2,018,781 8,670 15,952,998 (>10 yrs) 1,221,768 6,198 929,836 240,878 540 2,398,680 (>20 yrs) 281,657 814 298,444 44,924 65 625,839 FY14Total 56,431,713.00 _$ 347,476 $ 9,045,551 5 5,692,341 81,091 $ 71,517,081 Metropolitan St. Louis Sewer District Collection Remediation Plan Summary In fiscal year 2011 the District revamped its collection procedures to address more of its delinquencies in a timely manner. Below is a description of each phase of the plan. Pre -collect This phase was implemented as a pilot program back in February 2011 and was fully implemented by July of 2011. MSD makes phone calls to customers that are less than 75 days delinquent reminding them of their past due amount and giving them the option to make a payment immediately or to speak with a representative to make payment arrangements. See attached diagram. lae Placement Collection agencies The District is currently contracted with three (3) collection agencies to collect commercial and residential accounts that are greater than 60 days and 75 days delinquent, respectively. With the collection plan an algorithm was implemented that requires that the collection agency collect at least the current charges for the account as well as a percentage of the past due amount in order to maintain the account in their portfolio. The account is systematically reviewed on a monthly basis and if the algorithm is not met the account is automatically sent to the next phase of collections. Total value placed at 1' placement agencies as of February 2015 is $6.6 million. 2"" Placement Collection Agencies The District is currently contracted with two (2) 2nd placement collection agencies to collect commercial and residential accounts that are greater than 285 days delinquent (9.5 months). With the collection plan an algorithm was implemented that requires that the 2nd placement collection agency collect at least the current charges for the account as well as a percentage of the past due amount in order to maintain the account in their portfolio. The account is systematically reviewed on a monthly basis and if the algorithm is not met the account is automatically sent to the next phase of collections. Total value placed at 2nd placement agencies as of February 2015 is $7.8 million. Law firms The District is currently contracted with three (3) law firms to collect commercial and residential accounts that are greater than 550 days (18 months) delinquent. If their collection attempts are unsuccessful they pursue judgments against the owner of the property and more aggressive tools (i.e. Writ of Execution, wage or asset garnishment, cash box levies, etc) to collect the debt. Total value placed at law firms as of February 2015 is $43.7 million. Liens The District has the authority to place a lien on any property that has an account that is greater than 90 days past due. With the collection plan the processing of liens is being outsourced to increase the coverage of lien placement, thereby securing more of the District's delinquencies in the event of a change in ownership. There are currently 4,187 accounts valued at $3 5 million eligible for lien placement. See Exhibit MSD 65 for historical lien placements for FY2011 to FY2014. Customer Assistance Program In an effort to address customers who simply do not have the ability to pay the District, MSD offers Customer Assistance Program (CAP) that provides income eligible customers with a 50% discount on their monthly service charges. There are currently approximately 2,321 customers in the program. See exhibit MSD 1, Appendix 7.4.1 for more detail. PreCollect Analysis & Opportunity �Ypr ' Neside�iftlai Day 40 Day o 1 1 Cus1orn€,r Usage Period Day20 1 Cuslor er Current y o 1 Y R Usage Starts Customer Bill Statement Date i 1 Bill Due Date w .r IT.W'S A Cal i Friendly Reminder - Call' to Top 5 Propensity Account Groups Urgent Reminder- CaII to Bottom 5 Propensity Account Groups 'Ctior s Per.ur,1 l Follow Up Reminder - Top 5 Propensity Account Groups Follow Up Reminder wl i Collections Notice - Bottom 5 Propensity Groups Day 71 1 1 1 Residential Accounts Placed At Agency Collections indent & Final Notice Contact - All Accounts Still in Arrears (C & R) Residential Accounts Mailed Final Notice ./ PreCollect Analysis & Opportunity Day30 DaY 0 Day 10 I Day 26 j lDEN 35 I i Day 451 I I Day 60 CuS orne' LKage PerPGL! Customer Current Ai' .ar , L .: Ieitlons 1 1 Usage Starts Customer Bill Bill Due Statement Date Date Friendly Reminder - Call to Bottom 3 Propensity Account Groups Follow Up Reminder- Top 5 Propensity Account Groups Follow Up Reminder wl Collections Notice -Bottom 5 Propensity Groups 1 m Commercial Accounts Sent to First Collection Agency Collections Intent & Final Notice Contact- All Accounts Still in Arrears (C & R) Commercial Accounts Mailed Final Notice