Monday, September 24, 2007

Accounts Receivable Operational Review

The final Operational Review Team report on Accounts Receivable has been completed. The Operational Review Oversight Committee has yet to accept the report or make revisions, but the preliminary goals and recommendations are summarized below.

Accounts receivables are taxes due to the Commonwealth that have not yet been collected. Collecting these taxes can result in mllions on dollars in additional revenue. In 2003, 98.3 million was collected as a result of renewed efforts by the Department of Taxation.This report is an update to the Governor’s Commission on Efficiency and Effectiveness Final Report published in late 2002.

That report made the following recommendations:

  • Standardize collections management across all Commonwealth agencies;
  • Shorten the time period for declaring accounts delinquent;
  • Use multiple collection agencies to foster competition; and
  • Consider legislation enabling the use of “debt sales” to provide cash.

The first three recommendations have already been implemented and are resulting in improved state revenue flow. Accounting policies and procedures were revised, and the deliquency designation was shortened from 90 to 60 days. Private collection agencies were also contracted to strengthen collection efforts. The fourth recommendation of the Governor's 2002 report will be harder to implement. There are significant constitutional and legislative barriers to debt sales. Before this can be accomplished, the General Assembly and Office of the Attorney General must address the legal issues.

There is still work to be done as Virginia adapts to new technologies and economic uncertainty. The report notes that Virginia needs to maximize collections from accounts receivable in order to offset declining cash flows from several revenue streams that are showing the effects of falling markets. The most effective way to do this is to use the new technologies to speed up collections and simultaneously reduce collection costs.

The Operational Review team has identified six areas where small investments could yield large returns in maximizing collections:

  • Enhance agencies’ abilities to skip trace. Several agencies, notably the Department of Social Services, now access current address and other contact information from new data sources including cell phone records, cable user records and insurance company records. These new information sources should be identified and made available to all agencies and institutions, including local governments.
  • Revise setoff procedures to stop uncompleted matches. Currently, debtors are informed of their rights of due process at the time a payment or refund is intercepted. This after-the-fact approach has cost approximately a million dollars a year in lost setoff payments. The current methodology should be changed. Debtors should be notified what the debt is and what their rights are as soon as claims are submitted to the setoff programs. The responsibility for exercising the identified rights should be placed on the debtor, not the State agencies. This way, successful matches will be final and available for timely deposit.
  • Establish one master database of debtors’ contact information. Information from TAX, Virginia Employment Commission, State Corporation Commission, Motor Vehicles and several other license-granting agencies should be selectively combined in one secure database that other agencies and institutions would have read-only access to. Combine repositories into one new “debtors’ database.
  • Do not issue business or personal licenses to delinquent debtors. Match state and local government permits, licenses (both business and personal), and registrations against setoff records. This would be facilitated by using a central database. Debtors would be encouraged to pay the entire amount or follow signed payment plans in order to retain current permits and licenses or apply for new ones.
  • Leverage the economies of scale and specialization for smaller agencies. Small and medium sized state agencies have a disadvantage when it comes to collecting accounts receivable. They lack the capacity to dedicate full time positions to the business of collecting money from slow or non payers. This disadvantage can be overcome by outsourcing delinquent accounts to a vendor that would receive all of the debt files from the agencies, distribute the files to the private collection agencies under State contract, and monitor the ongoing efficiency of those private collection agencies. Good experience has resulted from the operation of a centralized payroll services bureau which has covered the cost of its operation through users’ fees. This model can be used to build a receivables management bureau from resources created through service arrangements made between smaller agencies and larger agencies to provide administrative and business functions.
  • Measure agencies’ efficiency and effectiveness at collecting receivables. Measure individual state agency performance in collecting the dollars they have billed. The agencies’ performances should be disclosed and reported quarterly. One measure is Collections as a percentage of Billings. This measure shows the effectiveness of agencies in getting paid for providing services when the service is provided. The second measure is the percentage of Delinquent (over 60 days past-due) Receivables compared to Gross Receivables. This measures the efficiency of agencies in following up on unpaid billings and obtaining subsequent payments. These two measures would reflect the agencies’ efficiency and effectiveness at managing their accounts receivable and help ensure the Virginia Debt Collection Act is being followed.

Thanks again to everyone who contributed their time and work to this report. Participants include Robert Meinhard Department of Accounts, Deborah Madison Department of Corrections, Karen Stephenson Department of Medical Assistance Services, Jerry Lewis Department of Social Services, Thodore Darden Department of Social Services, David Jordan Department of Taxation, and Wendell Vest Virginia Polytechnic Institute and State University.

Thursday, September 20, 2007

Printer, Copier, and Paper Operational Review

The final Operational Review Team report on Printer, Copier and Paper has been completed. The Operational Review Oversight Committee has yet to accept the report or make revisions, but the preliminary goals and recommendations are summarized below.

We all recognize that printers, copiers and paper are essential to government operations. At first glance, they might not sound like a major expense, but when you consider the number of printers and copiers purchased and maintained by the state and the amount of paper those devices consume, the cost adds up. Virginia departments and agencies currently have a printer inventory of 34,221 and thousands more copiers. In FY06 the state spent $7,499,837 on paper, stationery and forms (carbon paper, employment application forms, ledger sheets, letter sheets, mailing envelopes, other informational and record forms, other paper, and similar stationery items).

In addition to the printer, copier, and paper expenditures, the state spent $37,702,417 on printing services that include designing, printing, collating, and binding.

The Printer, Copier, and Paper Operational Review Team was formed to accomplish these goals:

  • Goal 1: Research and document the current environment as related to statewide printer and copier inventory, regulation, cost, and utilization within the state.
  • Goal 2: Research and document the current environment as related to paper standards, regulation, and cost within the state.
  • Goal 3: Research and document the current environment as related to print services and print management (outsourcing printers, copiers, fax machines, paper, and consumables) within the state.
  • Goal 4: Research and document best practices as related to printer, copier and paper procurement, utilization, and consumption within the state--best practices that can be leveraged across the enterprise to bring about operational efficiencies and effectiveness, bargaining power, and cost savings.
  • Goal 5: Document findings and make recommendations for achieving operational efficiencies and effectiveness and cost savings as related to printer, copier and paper procurement, utilization, and consumption within the state.

After completing the review, the team offered the following recommendations:


  • Recommendation 1: Promote a printer, copier, and paper savings awareness campaign—promoting print efficiencies, cost-savings, and best practices.
  1. promote print best practices,
  2. promote paper recycling and paper standards,
  3. educate the agencies and departments about print management,
  4. encourage agencies and departments to document their current print environment and to envision their future print environment,
  5. encourage agencies to develop and implement a plan for realizing their future print environment,
    reduce agency and state cost of print and,
  6. place the right printer and copier (or multifunction machine) at the right place, at the right time, and for the right purpose.
  • Recommendation 2: Implement print management best practices
  1. Replace standalone copiers, faxes, and printers with multifunctional products
  2. Rent copiers, printers, and multifunctional products (instead of purchase)
  3. Centralize the procurement of copiers, faxes, printers, and multifunctional machines
  4. Establish print manager roles (print output czar) in each agency
  5. Develop policy aimed at reducing paper consumption and printer/copier consumables
  6. Implement document management systems (electronic records) for reducing paper consumption and printer/copier consumables
  • Recommendation 3: Move toward phasing out fax machines. Personal computers and multifunction machines now have the capability to fax documents. Significant cost reduction could be realized by eliminating fax machines and performing these functions on personal computers or multifunction machines.
  • Recommendation 4: Move toward or transition to the implementation of managed print services--as appropriate for meeting agency and department mission and goals. Managed print services (MPS) are services offered by an external provider to optimize or manage an organization’s document output. A MPS contract can include assessment services, asset management, output management services, and support services. The external service provider either owns or leases the hardware, with the customer paying a monthly or quarterly fee—based on a cost per page or cost per seat. Gartner suggests that candidates for MPS are midsize or large organizations with 100 or more employees. Agencies and departments should document their print needs and determine if the use of managed print services would reduce their print cost.
  • Recommendation 5: Encourage agencies use of high-volume print shops for large print jobs. Virginia Correctional Enterprises (VCE), a printing service within the state, continues to demonstrate its ability to produce quality and timely print for state agencies and departments—at a cost savings. In addition, state procurement regulation mandates that goods and services produced or manufactured by state correctional facilities be purchased by all departments, institutions, and agencies of the Commonwealth (there are some waivers to this regulation).

Thanks again to everyone who contributed their time and work to this report. Participants included Senator Fred Quayle, Delegate Dave Nutter, Gwen Baily Assistant Clerk of the Senate, Linda Belflower of the Virginia Employment Commission, Paula Dehetre of the Office of Workforce Development, Fred Duball of VITA, David Nims of the Department of General Services, Tiffany Moklebust of Gartner Group, Stephanie Holt of Xerox, and Jim Dougherty and Tony Williams of Virginia Correctional Enterprises.

Efforts like this will ensure Virginia remains the best managed state in the nation. If you have any questions or suggestions, contact me at

Wednesday, September 19, 2007

Coming Soon: Operational Review Final Reports

I hope everyone had a great summer. The final Operational Review Team reports are near completion and will be posted here as they become available, beginning tomorrow with the Print, Copy and Paper Operational Review Final Report. I look forward to reviewing the final results and am excited to share our findings with the people of Virginia.

I also want to express my gratitude to everyone involved with the Operational Review Teams for your commitment, time and hard work. Thank you!

Monday, September 10, 2007

Saxman: Serve Virginians Better By Being More Cost Effective
Richmond Times-Dispatch 9/9/07

STAUNTON - The Commonwealth Institute, a newly formed left-wing policy group based in Richmond, recently released its analysis of the state biennial budget. Billing itself as "nonpartisan" and "independent," the institute states that its primary focus is on how Virginia's budget and fiscal policies impact lowerand middle-income residents.

The analysis follows the typical liberal line of thinking that unfortunately pervades most linear minds trapped in two-year budget cycles. The path is this: Government-program growth is outpacing revenues from existing sources so we must prepare to have the courage, once again, to increase rates of taxation so that we may balance the upcoming biennial budget.

Early in its analysis, the institute decries any attempt to reduce spending as "knee-jerk reaction" and "slashing." Again, nothing new in the liberal mindset.

Our executive and legislative branches have worked well together to produce a system of governance here in Virginia that is the model for the nation. We have been recognized as the best-managed state for two years in a row with the best business climate in the nation for the same period. Perhaps the Commonwealth Institute should focus on policies that will help us stay the best in the nation.

Revenues to the commonwealth have increased by more than 50 percent in just three budget cycles - one of which included a recession where revenues were flat-to-declining. The primary concern of the institute's analysis is that projected revenues will not keep up with projected expenditures. When the state budget has been increasing so rapidly the past four years that a greater than 50 percent increase in revenues cannot cover expenditures, then Virginia should not be looking for ways to increase revenue.

If one were to project lower levels of income and expenditure so that one achieves a balanced budget, would one notice a difference in service delivery? Sadly, the left gauges the success of a program by how much is spent rather than what is produced. This line of thinking also assumes that every government agency and department currently is operating at peak efficiency, and that even a slight reduction in spending will negatively impact the delivery of services.

We should challenge ourselves to find ways to improve efficiency, thus better serving Virginia's citizens in a more cost-effective manner. We should be looking at ways to allow our state employees to increase productivity by offering them incentive-based pay packages, and giving them decision-making rights, an understanding of opportunity costs, increased and improved training, and honest opportunities for advancement.

By allowing our state workforce to focus on service delivery and productivity rather than completely spending its budget by the fourth quarter of every fiscal year, we can tap into what is potentially a tremendous level of synergy in our existing workforce.

Further, I would offer areas where savings can be found in the operations of state government:

  • The recommendations of the Wilder Commission;
  • The findings of the bipartisan, bicameral Cost Cutting Caucus and the Kaine administration's Operational Review Teams;
  • The more transparent budget document that was established with HB 1838 in 2003 (think non-state agency grants, which totaled $30 million this fiscal year alone);
  • Examination of reducing the rates of growth in our primary budget drivers - Medicaid and K-12 education. One health care group has estimated that hundreds of millions can be saved each year by reducing the rate of growth in Medicaid from 8 percent to 6 percent - 6 percent being slightly ahead of current population and inflation growth rates.

Wouldn't increased focus on areas like these make more sense than a shortsighted tax increase that potentially harms long-term economic growth?

I agree with the institute when it calls for tax reform. However, we quickly diverge when it comes to the definition of reform. I believe, as do many of my colleagues, that the tax code should strive for a broad base with the lowest rates possible so that the economy is encouraged to grow and that government interference is minimal.

Virginia's place in the world's dynamic economy must not be set by two-year mindsets with statist, linear, and short-term thinking. Virginia's governance model shouldn't just keep up; rather, it should be a model for change and innovation. The key element to that change is working in partnership with the private sector to provide the best possible public-sector services at the lowest cost to the taxpayer so that the burden of taxation does not inhibit economic growth.

Del. Chris Saxman represents Staunton and Highland County, and parts of Augusta and Rockingham Counties. He is the chairman of the General Assembly's Cost Cutting Caucus.

Link to the RTD version