U.S. GOVERNMENT PRINTING OFFICE

71–742 DTP WASHINGTON : 2001

OVERSIGHT OF THE IMPLEMENTATION OF THE

DEBT COLLECTION IMPROVEMENT ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

JUNE 8, 2000

Serial No. 106–216

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250

Mail: Stop SSOP, Washington, DC 20402–0001

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COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

LISA SMITH ARAFUNE, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

RANDY KAPLAN, Counsel

BRYAN SISK, Clerk

MICHELLE ASH, Minority Counsel

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C O N T E N T S

Page

Hearing held on June 8, 2000 ................................................................................. 1

Statement of:

Cloyd, Barry G., vice president, sales and marketing, C.B. Accounts,

Inc.; chairman, government services program, American Collectors Association, Inc. ................................................................................................. 76

Engel, Gary T., Associate Director of Government Wide Accounting and

Financial Management Issues, Accounting and Information Management Division, General Accounting Office, accompanied by Kenneth

Rupar, Assistant Director ............................................................................ 8

Gregg, Richard L., Commissioner, Financial Management Service, U.S.

Department of the Treasury ........................................................................ 45

Jackson, Yvette S., Deputy Commissioner for Finance, Assessment and

Management, Social Security Administration ............................................ 67

Powell, Edward A., Jr., Assistant Secretary for Financial Management

and Chief Financial Officer, Department of Veterans Affairs .................. 56

Letters, statements, etc., submitted for the record by:

Cloyd, Barry G., vice president, sales and marketing, C.B. Accounts,

Inc.; chairman, government services program, American Collectors Association, Inc., prepared statement of ......................................................... 80

Engel, Gary T., Associate Director of Government Wide Accounting and

Financial Management Issues, Accounting and Information Management Division, General Accounting Office, prepared statement of ........... 11

Gregg, Richard L., Commissioner, Financial Management Service, U.S.

Department of the Treasury, prepared statement of ................................. 49

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 3

Jackson, Yvette S., Deputy Commissioner for Finance, Assessment and

Management, Social Security Administration, prepared statement of .... 70

Powell, Edward A., Jr., Assistant Secretary for Financial Management

and Chief Financial Officer, Department of Veterans Affairs, prepared

statement of ................................................................................................... 59

Turner, Hon. Jim, a Representative in Congress from the State of Texas,

prepared statement of ................................................................................... 6

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OVERSIGHT OF THE IMPLEMENTATION OF

THE DEBT COLLECTION IMPROVEMENT ACT

THURSDAY, JUNE 8, 2000

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding.

Members present: Representatives Horn, Turner, Owens, Ose,

and Maloney.

Staff present: J. Russell George, staff director and chief counsel;

Randy Kaplan, counsel; Bonnie Heald, director of communications;

Bryan Sisk, clerk; Elizabeth Seong, staff assistant; Will Ackerly

and Chris Dollar, interns; Michelle Ash and Trey Henderson, minority counsel; and Jean Gosa, minority assistant clerk.

Mr. HORN. The Subcommittee on Government Management, Information, and Technology will come to order.

The Debt Collection Improvement Act of 1996 created a process

for Federal departments and agencies to collect tens of billions of

dollars in delinquent non-tax related debts owed to the Federal

Government. These delinquencies arise from a variety of Federal

loan programs for home buyers, small business owners and students. The delinquencies also stem from agency overpayment made

to Federal beneficiaries and vendors.

This law created a variety of tools and programs designed to improve the Federal Government’s dismal record of collecting its delinquent debts. The act centralized the debt collection process by

requiring that Federal departments and agencies refer debts that

are over 180 days delinquent to the Department of Treasury for

collection.

At a 1995 hearing to consider this legislation, our subcommittee learned that the Federal Government was owed almost $50 billion

in non-tax related debts. Despite enactment of the law, however,

that debt grew to $59.2 billion by the end of fiscal year 1999. The

Treasury Department’s Financial Management Service operates

two programs aimed at collecting delinquent, non-tax related debt,

an offset program and a cross-servicing program.

Under the offset program, the Federal payments, including salary and benefit payments, can be intercepted to satisfy delinquent

debts, such as defaulted home loans or small business loans. The

Treasury Department’s cross-servicing program allows the DepartVerDate 11-MAY-2000 08:48 Jul 10, 2001 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\71742.TXT HGOVREF1 PsN: HGOVREF1
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ment to collect directly from the debtor, or refer the debt to a private collection agency.

For these programs to work, however, agencies must refer their

delinquent debts to Treasury in a timely fashion. That’s not always

the case. The Department of Veterans Affairs, for example, has referred only 1 percent of the Department’s eligible delinquent debts

to the Department’s cross-servicing program. The Social Security

Administration has referred none of its eligible delinquent debts for

cross-servicing collection.

Today we will hear from witnesses who represent these agencies,

as well as witnesses representing the Treasury Department’s Financial Management Service who will discuss the implementation

of the debt collection program. The General Accounting Office will

also present the results of its comprehensive study of the crossservicing program which was requested by this subcommittee.

As part of this study the GAO reviewed the Treasury Department’s efforts to promote timely debt referrals by Federal agencies.

General Accounting Office investigators also reviewed the Department’s allocation of delinquent debts to private collection agencies.

In addition to our Government witnesses, we have a representative

of the private collection agencies that are working with the Government in its debt collection effort.

[The prepared statement of Hon. Stephen Horn follows:]

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Mr. HORN. We welcome our witnesses and we look forward to

their testimony. And I now yield to the gentleman from Texas, the

ranking member, Mr. Turner, for his opening statement.

Mr. TURNER. Thank you, Mr. Chairman.

We know that billions of dollars in non-tax debt are owed to the

Federal Government. Recognizing that our collection practices were

inadequate, this subcommittee under the leadership of Chairman

Horn in 1996 passed the Debt Collection Improvement Act. This

law expanded existing tools and established new tools to assist the

Government in collection of debt.

I certainly want to commend the chairman, who’s due much credit for the work that has been done in this area. Chairman Horn has

been very diligent in trying to provide the Federal Government

with greater capacity to collect debt.

I also would like to commend the leadership of my colleague from

New York, Congresswoman Carolyn Maloney, who has continued in

her efforts, initiated back with the chairman, as the ranking Democrat on this subcommittee, in an effort to improve our debt collection practices.

As a result of their efforts and the efforts of many people who

are in this room today, we are beginning to reap the benefits of a

more centralized debt collection system. Within the last 3 years,

the Federal Government’s centralized debt collection activities at

the Financial Management Service has begun to work. In fiscal

year 1999, increased management attention by program agencies

and improved use of debt collection tools by the Treasury resulted

in major advancements in our debt collection efforts.

Collection by the Treasury on non-tax debt for the year totaled

$2.6 billion. Tax refund offset collections totaled $2.6 billion as

well. That is an increase of more than $570 million over 1998.

So far this year, we’ve collected $2.4 billion in non-tax collections

through the offset of income tax refunds. Clearly, there has been

improvement in the Government’s debt collection efforts, and I

commend the Treasury and the agencies for their work.

However, as we will hear, many challenges remain ahead of us.

I am concerned to learn many agencies have not done a thorough

job of referring all of their eligible debt to the FMS for collection

activities. Additionally, the delinquent debts agencies refer to FMS

are generally much older than the 180 days required by law, and

therefore makes recovery more difficult.

Questions have also arisen concerning the manner in which FMS

is referring debts to the private collection agencies under contract

with the Government. As a part of our oversight responsibility, this

subcommittee is meeting today to discuss Federal agency implementation and compliance with the Debt Collection Act. It is my

hope that as a result of this hearing we will be closer to meeting

our goal of having an efficient, effective and equitable Federal debt

collection system.

Again, I commend the chairman for his focus on this issue, and

I welcome each of our witnesses here today.

[The prepared statement of Hon. Jim Turner follows:]

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Mr. HORN. I thank the gentleman, and you’ll be hearing about

his legislation in the months ahead.

And I now yield to the gentleman from New York, Major Owens,

for an opening statement.

Mr. OWENS. No statement, Mr. Chairman.

Mr. HORN. OK, thank you very much.

You know, I think most of you have been here before. But the

process here is that when we introduce you along this agenda line,

your full written statement is automatically part of the record. We

would like you to summarize that position in about 5 minutes so

we can have a dialog between the Members and the witnesses and

among the witnesses as to how we might improve the act and what

we’re doing either on the Hill and in the administration.

And all witnesses, since this is a Government Reform Subcommittee, all witnesses have to take the oath in order to testify.

So if you will stand, raise your right hands. And if there’s any

backup assistance, have them stand, too. Clerk will take their

names. So let’s get all the oaths at once.

OK, we have one, two, three, four, five backup, one, two, three,

four, five, six witnesses.

[Witnesses sworn.]

Mr. HORN. The clerk will note all have affirmed. And make sure

we have the names.

Thank you very much. And we will now start with Gary T.

Engel, the Associate Director of Government Wide Accounting and

Financial Management Issues of the Accounting and Information

Management Division of the U.S. General Accounting Office, which

are the eyes and ears of the legislative branch in both programmatic and fiscal matters and now debt matters. Mr. Engel is

accompanied by Kenneth Rupar, the Assistant Director.

Mr. Engel.

STATEMENT OF GARY T. ENGEL, ASSOCIATE DIRECTOR OF

GOVERNMENT WIDE ACCOUNTING AND FINANCIAL MANAGEMENT ISSUES, ACCOUNTING AND INFORMATION MANAGEMENT DIVISION, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY KENNETH RUPAR, ASSISTANT DIRECTOR

Mr. ENGEL. Mr. Chairman and members of the subcommittee,

good morning, thank you.

It is a pleasure to be here today to discuss our review of Treasury’s progress in implementing the cross-servicing provision of the

Debt Collection Improvement Act of 1996. As you know, OMB has

designated implementation of this legislation, which this subcommittee was highly instrumental in passing, one of the Government’s priority management objectives to modernize and improve

Federal financial management.

You asked that we address the effectiveness of Treasury’s use of

the cross-servicing tool, which involves the transfer of non-tax debt

over 180 days delinquent to Treasury’s Financial Management

Service. I will briefly focus on four issues. First, the success of

FMS’ program significantly depends on agencies identifying and

promptly referring eligible debt. While FMS has taken several

steps, including various outreach efforts, to encourage agencies to

refer eligible debt, thus far the results have been limited.

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Since inception of the program in September 1996 through May

1999, almost half of the dollar amount of referred debts were over

4 years delinquent. Industry experience shows that the likelihood

of recovering amounts owed decreases dramatically as debts age.

The old adage that ‘‘time is money’’ is very relevant in the debt collection area.

Collection possibilities are also hampered by the low percent of

debts eligible for cross-servicing. Of the $59.2 billion of delinquent

debt reported as of September 30, 1999, about 89 percent has been

excluded from cross-servicing requirements. FMS reported that

through April 2000 only $3.7 billion has been referred to it since

inception of the program.

Even when agencies referred debts, the debts were not always

valid or legally enforceable, and thus not eligible for cross-servicing. Based on our analysis of 200 delinquent debts referred to FMS,

we found 22 debts that were invalid or involved debtors that were

either deceased or in bankruptcy.

The second issue in question involved the Treasury’s cross-servicing process for collecting referred debts. Treasury has established

standards for agencies wanting to be a debt collection center and

has granted certain agencies waivers or exemptions which allow

them to perform collection activity for certain of their own debts.

In addition, three agencies applied to Treasury to be governmentwide debt collection centers. But, Treasury determined that these

agencies did not have the needed capabilities, so they were denied

approval.

As such, today, FMS is the sole operator of a governmentwide

cross-servicing debt collection center. FMS’ center had well developed standard operating procedures. But, our tests showed that its

staff did not always follow them. For 96 of the 200 debts we reviewed, we found no evidence that FMS’ collectors tried to contact

the debtors who did not respond to demand letters. For 29 of the

46 demand letters in our sample that were returned as undeliverable, FMS’ debt history files contained no evidence that FMS’ collectors performed the required skip tracing to locate the debtors.

Contributing to these results were some large influxes of debts

that were received by FMS during our test period. Concerning collection agreements, we selected and reviewed 78 compromised

debts and typically found no evidence that FMS collectors adhered

to key requirements, such as analyzing the debtor’s ability to pay

before agreeing to the compromise amount.

FMS also often did not adhere to repayment agreement timeframes. Despite a 3-month repayment limit, the terms of 30 of the

32 compromise agreements that we reviewed exceeded the limit, on

average by 54 months.

The third issue you were interested in involved how FMS distributed debts to private collection agencies. FMS intended its methodology for such distributions to be performance based. Distributions were generally made biweekly by placing all available debts

into a pool and systematically distributing them. Our analysis of

FMS’ distribution of debts to PCAs from February 1998 through

February 2000 showed that 1 of the 11 PCAs had received a significantly higher percentage of the debts with smaller balances. This

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PCA also received a significantly higher percentage of the total

number of debts that were less than 1 year delinquent.

One contributing factor to these distribution results was that the

debts within the distribution pools were generally not homogeneous. Collection industry experience, as well as FMS’ collection

experience, have shown that collection rates are generally higher

on less delinquent debts and those with smaller dollar balances.

Finally, fees charged by FMS to referring agencies have not covered FMS’ estimated fiscal year 1999 cross-servicing costs. Based

on our analysis, cross-servicing collections would have to be over

seven times as much as that for fiscal year 1999 for this program

to operate on a break-even basis.

In summary, for FMS’ cross-servicing program to become a fully

implemented and mature program, challenges lie ahead that FMS

as well as agencies must overcome. These challenges are magnified

since, as delinquent debt ages, the likelihood of collection diminishes. To assist in addressing these issues, we plan to issue a report with recommendations.

Mr. Chairman, this concludes my testimony. I would be pleased

to answer any questions.

[The prepared statement of Mr. Engel follows:]

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Mr. HORN. Well, we appreciate the thoroughness with which

you’ve looked at this matter, and we do look forward to any further

recommendations you want to make.

Next is Richard L. Gregg, the Commissioner of the Financial

Management Service of the Department of the Treasury.

STATEMENT OF RICHARD L. GREGG, COMMISSIONER, FINANCIAL MANAGEMENT SERVICE, U.S. DEPARTMENT OF THE

TREASURY

Mr. GREGG. Mr. Chairman and members of the subcommittee,

thank you for giving me the opportunity to update you on the

progress of the Financial Management Service in implementing the

Debt Collection Improvement Act of 1996. As always, FMS is grateful for the subcommittee’s support for its governmentwide debt collection program.

I am pleased to report that during this past year, FMS has continued to make significant strides in carrying out the provisions of

this landmark legislation. The Treasury Department is firmly committed to the successful operation of the governmentwide debt collection.

Federal debt collection is a highly complex and ever expanding

program, one that requires active participation and support from

Federal program agencies, States and private collection agencies.

In addition to carrying out the requirements of the DCIA, in January, FMS began collecting State income tax debt as mandated by

the 1998 IRS Restructuring and Reform Act.

Next month, FMS will initiate the continuous tax levy program

as authorized by the 1997 Taxpayer Relief Act, to collect delinquent

Federal tax debt. FMS developed these important programs, I

might add, in conjunction with undertaking an intensive 2 year effort that successfully modified FMS’ mission critical systems for a

smooth and uninterrupted transition to the year 2000.

Mr. Chairman, FMS has moved swiftly on each of these major

collection initiatives and has concurrently implemented appropriate

administrative safeguards and controls. Nevertheless, challenges do

lie ahead. This morning, I will provide a status report on FMS’

debt collection efforts using the Treasury Offset Program [TOP],

and the cross-servicing program, including the important contract

work of private collection agencies. Finally, I will discuss our most

recent program enhancements aimed at increasing future collections.

As I reported last year, the Tax Refund Offset and Treasury Offset Programs were successfully merged in January 1999. For calendar year 1999, collections through the offset of income tax refunds totaled $2.6 billion, an increase of more than $570 million

over 1998. An increase of this magnitude in such a short period of

time, I believe, represents a most impressive achievement. This calendar year to date, we have collected almost $2.4 billion. This figure includes almost $1.3 billion in delinquent child support

payments and $1.1 billion in non-tax debt collections. Collecting

$1.3 billion in overdue child support debts, Mr. Chairman, is a reflection of Secretary Summers’ commitment to supporting our children and strengthening American families.

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The dollar amount of delinquent debt referred to TOP by the program agencies continues to increase. As of September 1999, $31.3

billion in Federal delinquent debt was eligible for referral. And as

of May 31 of this year, $25.4 billion, or 81 percent of that amount,

has been referred. This represents an increase of $16.6 billion in

referrals since 1997.

The TOP Customer Assistance Center, located in Birmingham,

AL, provides toll-free telephone customer service 7 days a week.

During peak workload periods, up to 100 center representatives answer questions regarding tax refund and other offsets and provide

agency contact information. The center has already responded to

more than 2 million phone calls during the 2000 tax season. Furthermore, FMS prides itself on its track record of timeliness, fairness and balance in responding to all inquiries.

Mr. Chairman, I will now discuss the newest addition to the TOP

system, the State income tax debt offset program. This program entails offsetting Federal income tax refunds to collect delinquent

State income tax debt. Since launching the State income tax program in January of this year, seven States including Delaware, Illinois, Iowa, Kentucky, Maryland, Missouri, and New Jersey have

referred $362 million in delinquent State income tax debts. As of

May 31, 2000, collections have exceeded $20 million and participating States have been greatly enthusiastic and see enormous potential for growth. Additional States will be added as they become

ready.

Under cross-servicing, agencies refer debt to FMS for collection

that have been delinquent for more than 180 days. Upon receiving

debts for cross-servicing, FMS’ Birmingham Debt Collection Center

attempts to collect the delinquent debt by using a variety of approaches, including demand letters, telephone followup and administrative offset. If, at the end of 30 days, the debt has not been collected or a repayment agreement has not been negotiated, it is referred to 1 of the 11 private collection agencies on FMS’ contract.

Since the establishment of this program in September 1996,

$63.4 million has been collected and repayment agreements total

$160.4 million. As of May 31 of this year, fiscal year to date, total

collections are $28.6 million, which is more than the $23.5 million

that was collected in all of fiscal 1999.

Currently, 62 percent, or $3.95 billion of the $6.4 billion of delinquent debt eligible for cross-servicing has been referred to FMS.

This represents an increase of approximately $2 billion in referrals

over fiscal 1998. Progress in increasing referrals has been slow;

nevertheless, FMS will continue to press and encourage agencies

on this front and we expect further progress. Attached is a report

on the 10 agencies with the largest dollar amounts eligible for

cross-servicing.

Private collection agencies are an integral and critical part of the

cross-servicing program. Referring debts to the 11 PCAs under contract with the Treasury Department allows these agencies to bring

their unique expertise, systems, and techniques to the cross-servicing program. These specialized skills and methods have not been,

nor should they be, replicated by FMS’ cross-servicing operation.

The contract for the services of private collection agencies is, first

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and foremost, performance based. FMS continues to work diligently

to ensure that the terms of the contract are met.

As the members of the subcommittee are aware, the process by

which delinquent debts are distributed by FMS to the PCAs has

been the subject of some debate. While FMS is agreeable to considering alternative distribution procedures for future contracts, complying with the terms of the current contract, administering the

contract efficiently, and maximizing collections are, without question, FMS’ primary goals.

As I stated earlier, all FMS debt collection programs include

safeguards and controls. FMS monitors the actions of private collection agencies with call monitoring and onsite reviews. Private

collection agencies collected $14.9 million during fiscal year 1999,

and as of May 31 of this year, collections total $13.6 million for this

fiscal year.

Additionally worth noting are the efforts of private collection

agencies in working with debtors to negotiate repayment agreements, resulting in agreements totaling $30 million fiscal year to

date and cumulatively $71.3 million.

At this point, Mr. Chairman, I will focus my remarks on FMS’ other new collection initiatives. FMS is moving forward on the implementation of the program to offset the remaining Federal salary

payments. Based on the results of a test match conducted by FMS,

between $48 million and $80 million can be collected through the

offset of Federal salary payments. Beginning in March 2001, we expect to implement a phase-in of the Federal salary offset program.

With respect to the offset of Social Security benefits, FMS esti- mates that annual collections will be between $37 million and $61

million. While FMS is currently prepared to move forward on implementation, we have been advised the by Social Security Administration that they will not be ready until February 2001. We will

continue to meet with them to resolve implementation issues.

On July 1, 2000, FMS and IRS will launch the continuous tax

levy program. Under the provisions of the Taxpayer Relief Act of

1997, the IRS is authorized to collect overdue Federal tax debts

from individuals and businesses that receive Federal payments by

levying up to 15 percent of each payment until the debt is paid. Initially, IRS will levy vendor and Federal retiree payments disbursed

by FMS, with the levy of Federal salary and Social Security benefit

payments to follow.

At full implementation, GAO projects annual collections of $478

million from the tax levey program, with an estimated annual collection of $312 million from levies of Social Security benefit payments. Although FMS has made the necessary preparations to

move forward with the tax levy program, as of this date, we have

not received a commitment from SSA on an implementation date.

In addition to sharply reducing debt collections, the delay in implementing the programs to offset benefit payments and to levy

benefit payments has significant consequences for overall operations of the program. Specifically, it will result in an $8 million

reduction in reimbursable income to FMS for fiscal year 2001.

Mr. Chairman, in conclusion, FMS’ governmentwide debt collection program continues to experience solid growth. The dollar

amount of collections has increased in all program areas, with total

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collections from fiscal year 1998 to the present amounting to $7.1

billion. FMS is making headway in increasing the delinquent debt

referrals by program agencies. Furthermore, amounts projected to

be collected by expanding the offset and cross-servicing programs

to include tax levy, benefit offset, salary offset, and administrative

wage garnishment should result in significant increases in collections of debt owed to the Federal Government. The efforts to date

of FMS in the governmentwide debt collection arena clearly demonstrate our firm commitment carrying out the express intent and

purposes of the DCIA.

Again, thank you for the opportunity to testify. I would be happy

to answer any questions.

[The prepared statement of Mr. Gregg follows:]

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Mr. HORN. Thank you very much, Commissioner. We appreciate

that. There will be a few questions when we get through the panel.

The next witness is the first of the agency witnesses. Edward A.

Powell, Jr., is Assistant Secretary for Financial Management and

Chief Financial Officer of the Department of Veterans Affairs. Welcome.

STATEMENT OF EDWARD A. POWELL, JR., ASSISTANT SECRETARY FOR FINANCIAL MANAGEMENT AND CHIEF FINANCIAL OFFICER, DEPARTMENT OF VETERANS AFFAIRS

Mr. POWELL. Thank you, Congressman.

Mr. Chairman and members of the subcommittee, it is my pleasure to testify on behalf of the Department of Veterans Affairs [VA]

regarding VA’s implementation of the Debt Collection Improvement

Act [DCIA] of 1996.

As a former banker and business owner, the issue of receivable

collection is one I know to be of critical importance. It is clear the

most important time to collect a receivable is during the first 90

days of its life. We have initiated a coordinated effort in VA directed at receivables management to consolidate all debt collection

activity, with the exception of the vendee home loan program, into

our Debt Management Center in Minneapolis, MN. VA has reduced its outstanding receivables from $4.7 billion at the end of fiscal year 1991 to $3.3 billion as of the end of fiscal year

1999. Much of VA’s success in benefit debt collection can be attributed to the DMC. Utilizing all available tools, including benefit and

salary offset, credit bureau reporting and private collection agency

referrals, compromises and litigation, write-offs and the Treasury’s

Offset Program. DMC has become the cornerstone of our debt management effort.

Even though we have reduced our outstanding debt by 11 percent last year, we continue to emphasize the importance of debt

management. How we deal with our debt is in large part determined by the different types of debt generates. Of the $3.3 billion

debt outstanding at the end of fiscal year 1999, $1.1 billion was delinquent and $937 million was more than 180 days delinquent.

$1.96 billion of the $3.3 billion outstanding are active vendee

home loans. A vendee loan is a mortgage which is generated by the

sale of foreclosed property under the Home Loan Guaranty Program. These mortgages are not delinquent debts per se, but assets

of VA. Periodically, we package and sell vendee loans to the private

markets, which eliminates the mortgage and any obligation owed

to the Government.

The remaining program debt is comprised of compensation and

pension overpayments, defaulted home loans, which by the way are

generally in transition to the vendee loan home program, readjustment benefit overpayments and receivables for the provision of

medical care and services.

My staff works closely with the Department of the Treasury’s Financial Management Service to implement the provisions of the

DCIA. We have worked with FMS to revise the report on receivables due from the public so it will provide better information on

the implementation and effectiveness of the DCIA requirements,

not just for VA, but for all Federal agencies. Last year we worked

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with FMS to refer most of eligible debt from VA to them for offset

and to develop the programming and processes needed to refer

those same debts for cross-servicing.

VA has been a long time participant in all available administrative offset programs, including tax refund offset, Federal salary offset and benefit offset, and has effected many interagency matching

programs. We continue to actively pursue Federal salary offset

pending its inclusion in the TOP. Of the $937 million debt that was more than 180 days delinquent at the end of fiscal year 1999, approximately $329 million was eligible for TOP and $460 million was eligible for cross-servicing.

Many debts are eligible for both administrative offset and crossservicing. The debts not eligible for referral for TOP or cross-servicing are exempt for a variety of reasons, including debt in bankruptcy or foreclosure proceedings, debt in VA’s mandatory waiver/

appellate process, and debt statutorily barred from referral. As of December 8, 1999, VA referred $250 million for TOP. By

the end of this fiscal year, VA expects to implement the new automated file formats required by Treasury and to be in compliance

with the offset referral requirement of the DCIA.

To date, VA’s cross-servicing referrals to Treasury total $4 million worth of debt from the health professional scholarship program. We targeted these debts for referral because they are among

the most collectible of VA’s debts and the easiest to refer. Thus far,

Treasury has collected approximately $225,000 of the $4 million referred since May 1998.

The DMC currently houses approximately 80 percent of VA debt

over 180 days delinquent and eligible for cross-servicing. This debt

will be referred for cross-servicing in September 2000 when Treasury and the DMC will have completed the development of automated processes needed to update each other’s databases. This has

been a joint effort between us and Treasury and is progressing

well.

Although it is taking longer than we had hoped to refer the bulk

of our portfolio for cross-servicing, we have continued to refer our

debts for the Treasury offset program and for Federal salary offset,

both of which have historically proven to be highly effective external sources for collection of VA debt. The subcommittee should

know that the Debt Management Center is a highly efficient and

effective operation which already executes all the functions required of a cross-servicing center. The DMC has generated an average of approximately $10 of cash collections for every dollar of operating cost.

The DMC’s recent collection rates for overpayment debts are approximately 67 percent for compensation and pension debt and over

95 percent for education debt. We believe the DMC collects a high

percentage of debt before it becomes seriously delinquent.

As for the remaining 20 percent of eligible VA debt not managed

by the DMC, VA staff and Treasury’s FMS staff are now determining how we can best achieve referral. We are also considering

whether VA should request the Secretary of the Treasury to exercise his authority to exempt most of this debt from the referral requirements, since it may not be cost effective to refer certain VA

types for cross-servicing.

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For example, VA’s first party medical debts are especially problematic and expensive to refer, as explained in my full written

statement. The first party medical debt and the debt management

of the DMC comprise most VA debt potentially eligible for referral.

Therefore, once the DMC has referred its debt in September, VA

will be over 90 percent compliant with the cross-servicing requirements of the DCIA. The remaining debt is made up of a few smaller benefit programs not managed by the DMC, and miscellaneous

VHA debt such as vendor debt, employee debt and non-Federal

sharing agreement debt. We plan to refer all appropriate debt for

cross-servicing during the fiscal year 2001.

This concludes my statement, and I will be happy to answer any

questions that the subcommittee may have.

[The prepared statement of Mr. Powell follows:]

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Mr. HORN. Thank you very much. We appreciate that presentation. And we now move to the next agency and that’s going to

be represented by Yvette Jackson, the Deputy Commissioner for Finance, Assessment and Management of the Social Security Administration. Ms. Jackson.

STATEMENT OF YVETTE S. JACKSON, DEPUTY COMMISSIONER

FOR FINANCE, ASSESSMENT AND MANAGEMENT, SOCIAL SECURITY ADMINISTRATION

Ms. JACKSON. Thank you, Mr. Chairman and members of the

subcommittee.

Thank you for the opportunity to come here today to discuss the

Social Security Administration’s efforts to implement the Debt Collection Improvement Act of 1996 that I will refer to as the DCIA.

We particularly appreciate your leadership, Mr. Chairman, and

that of this subcommittee, in enactment of this legislation which

has enabled SSA to improve our debt management program.

As you will see, we have already implemented a significant number of debt collection improvements. We will implement five more

debt collection tools in the year 2001. When we finish with these

tools, we will turn our attention to the remaining provisions to be

implemented. The public’s trust in the Social Security program is

absolutely critical. Even a perception of a lack of program integrity

can threaten this trust. SSA is dedicated to program stewardship

and program integrity. We must remain vigilant if we are to fulfill

our role as capable stewards of the public trust.

SSA has undertaken significant initiatives over the past several

years to prevent and detect Social Security program overpayments.

Our stewardship responsibilities require that we recover as much

of the debt owed as possible. We have a high degree of success in

collecting debts owed by people on the rolls, achieving a collection

rate of more than 90 percent. If the debtor is no longer on the rolls,

the tools provided by the DCIA give us the enforcement capability

we need to collect from delinquent debtors.

SSA has made substantial progress toward implementing the

debt collection tools authorized by the DCIA, as well as other legislation enacted during the 1990’s. This has greatly improved SSA’s

ability to collect its debt.

In January 1992, we began receiving our first collections from

the tax refund offset in which debts are recovered directly from

Federal tax refunds before the refunds are sent to taxpayers. We

expanded the tax refund offset twice, in 1995 and again in 1998,

to add new classes of debtors, such as SSI debtors, and to make

use of the Treasury offset program which allows us to collect delinquent debts from Federal payments in addition to tax refunds.

These tools have resulted in collections of $370 million.

In 1995, we began using credit bureau locator services to help

track down delinquent debtors who moved and left no forwarding

address. And in 1998, we began reporting our delinquent Social Security debtors to credit bureaus as a way of inducing them to repay

their debts and therefore clear their credit records. To date we

have located more than 200,000 debtors using the credit bureau locator services.

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We have been busy over the last year developing the debt collection tools that we think will have the most payoff. Our choices are

governed by deciding which tools will give us the most return earliest in the process of collecting the debt. Of course, for the last few

years, much of our systems resources were devoted to the year

2000 changeover during which SSA reviewed all of its systems supported by more than 35 million lines of in-house computer code and

all vendor products. We accomplished this changeover without additional resources.

In January 2001, we will implement mandatory cross program

recovery or the collection of an SSI debt from the debtor’s Social

Security benefits. We estimate that it will yield about $175 million

in extra collections over the next 5 years.

Also in January 2001, we plan to implement two additional tools

to collect delinquent SSI debts. These tools are administrative offset, which is the collection of a delinquent debt from a Federal payment in addition to a tax refund, as well as credit bureau reporting.

In February 2001, SSA, in partnership with the Financial Management Service, plans to implement benefit payment offset. This

is the reduction of Social Security benefits to collect delinquent

debts owed to other Federal agencies. While this tool will not contribute to SSA’s debt collections, it will benefit the Federal Government by enabling the Treasury Department to collect an estimated

$40 million to $60 million in delinquent debt. Treasury estimates

that about 400,000 Social Security beneficiaries per year will incur

a reduction of their benefits as payment toward another Federal

debt.

We have been working with the Financial Management Service

since July 1998 to develop a program that gives maximum collections at minimum cost to the Federal Government. As you can

imagine, we had many issues to resolve, such as concerns about

adequate notification of Social Security beneficiaries who will incur

an offset. We want to make sure that the right people are offset

for the correct amount. We also want to ensure that the people who

are offset under this program understand why it is happening and

who they can contact if they have questions.

We have worked out these issues with the Financial Management Service and our agencies are in the final phase of our development of our payment benefit offset. In less than 1 year, we expect payment benefit offset to start generating debt collections for

the Federal Government.

In June 2001, we plan to implement administrative wage garnishment, a DCIA authorized tool, as one more tool for collecting

delinquent Social Security and SSI overpayments. In addition, we

will focus on another DCIA provision, Federal salary offset. Treasury plans to incorporate Federal salary offset into the Treasury offset program after the third quarter of fiscal year 2001.

We will also implement another DCIA provision, Treasury’s

cross-servicing program, in which Treasury acts as a debt collector

for Federal agencies. An important aspect of cross-servicing involves the use of private collection agencies which is on our list of

debt collection tools to implement after we finish the tools that are

currently being implemented.

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Interest charging is another provision of DCIA that we plan to

implement. Our priorities are such that we will begin developing

interest charging as early as the year 2002. While interest charging

is a valuable tool, we believe it will yield collections in the form of

voluntary payments by people who will perceive it as something to

avoid.

In conclusion, our agency has accomplished much in implementing the new debt collection tools authorized for us. SSA is committed to implementing the provisions of DCIA and other relevant

debt collection laws. Our record of achievement in implementing

the tax refund offset, administrative offset and credit bureau reporting shows our commitment to debt management.

Thank you for the opportunity to testify before you today. I will

be glad to answer any questions that you may have.

[The prepared statement of Ms. Jackson follows:]

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Mr. HORN. Thank you, Commissioner. That’s very helpful.

Our last witness this morning is Barry G. Cloyd, the chairman

of the Government Services Program for the American Collectors

Association, Inc.

STATEMENT OF BARRY G. CLOYD, VICE PRESIDENT, SALES

AND MARKETING, C.B. ACCOUNTS, INC.; CHAIRMAN, GOVERNMENT SERVICES PROGRAM, AMERICAN COLLECTORS

ASSOCIATION, INC.

Mr. CLOYD. Thank you, Chairman Horn, subcommittee members,

good morning.

My name is Barry Cloyd, and I am vice president of sales and

marketing for C.B. Accounts, Inc., which is a private debt collection

agency based in Peoria, IL. I appear before you this morning as

chairman of the Government Services Program [GSP], which was

formed in 1996 to promote active participation by debt collectors in

developing new collection opportunities in the specialized area of

Government collections and to assist members serving Government

entities.

GSP is part of the American Collectors Association [ACA], which

is an international trade association comprised of 5,000 credit and

collection organizations and companies. The Association’s mission

is to help members comply with a strict code of ethics and applicable State and Federal laws and regulations through a variety of

means, including educational material, seminars, research, legislative updates and guidance with individual problems.

On behalf of all ACA members, who represent approximately one

half of third party collection agencies in the United States and

their 65,000 employees, I want to express our appreciation to you,

Mr. Chairman, for holding this hearing and for giving us the opportunity to present this statement.

As you are well aware, Chairman Horn, the Debt Collection Improvement Act, which is Public Law 104–13, affects private collection agencies [PCAs], and the services they provide. The act was

designed to accomplish three goals: maximize collection of delinquent debts owed to the Government by ensuring quick action to

enforce recovery of debts and the use of all appropriate collection

tools. No. 2, minimize debt collection costs by consolidating related

functions and activities and utilizing interagency teams. No. 3, rely

upon the experience and expertise of private sector professionals to

provide debt collection services to Federal agencies.

Now, PCAs work very hard to return money to Government

agencies that could otherwise be lost. And most financial management, FMS contractors, are ACA members. Since the first Government contracts were placed with private collection agencies shortly

after the Debt Collection Act of 1982, literally billions of dollars

have been collected, including more than $3.2 billion for the Department of Education from fiscal year 1986 to the present.

PCAs continue to improve the amount that they return to the

Government, which of course also benefits American taxpayers.

PCAs collected $265 million in fiscal year 1998, and in fiscal year

1999, they returned $536 million. And so far through 9 months in

fiscal year 2000, PCAs have collected $445 million and look well positioned to surpass last year’s record.

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We would hope that DOE’s success could be replicated by the Department of Treasury’s FMS contract. The FMS, which has been

working with PCAs since March 1998 reported that PCAs have collected slightly more than $30 million for the agency according to

figures tallied through April 30, 2000. In addition, referrals of accounts total 272,127, with a value of more than $4 billion for those

accounts.

The important work of this subcommittee in fashioning the DCIA

under your able leadership, Mr. Chairman, has been very significant. But we would respectfully suggest several modifications that

we believe would allow PCAs to return more money to the Government and ultimately to the taxpayer.

In preparing this testimony, ACA asked member agencies that

had been under contract with FMS to provide suggestions for improving the implementation of and compliance with the DCIA.

Those contractors suggested three important improvements for

achieving better results from the DCIA relating to timeliness and

number of accounts that are referred, current delays in resolving

accounts, and the inefficiency of multiple contractors contacting the

same debtor.

First, we feel that accounts aren’t being referred to PCAs on a

timely basis. In order to maximize collection of delinquent debts,

Federal agencies must comply with the DCIA and forward to the

Department of Treasury all non-tax debt that is more than 180

days delinquent. At this time many accounts which ACA members

receive are far more than 180 days old, so the ability to collect on

them is greatly decreased.

And as the old saying goes, which was echoed earlier this morning, time is money, and that saying couldn’t be more appropriate

for today’s hearing. There is a direct correlation between the time

a debt is turned over to a debt collector for collection and the

amount of dollars that are recovered. Simply put, the longer a debt

remains unpaid, the less likely recovery becomes.

And per a recent Price Waterhouse survey, as well as my association’s research, we find evidence for those statements. If an account

is referred to a collection agency when it is 180 days past due, it

has a much better chance of being collected than if it’s referred,

say, 2 or 3 years later. A debt that is 181 to 210 days delinquent

has a 23 percent chance to be collected. But for items that are more

than 421 days past due, the ability to collect decreases to 4 percent.

Now, these results, which show how time affects debt collection,

were backed by a portfolio analysis conducted by Price Waterhouse

which found that only 1 percent of debts are collectible after 2

years of delinquency. Obviously, time plays an important role in

the recovery of these debts.

And another important factor to consider is approximately how

many referring agencies are participating in the referrals of delinquent debt to the Department of Treasury. According to some estimates of ACA members that contract with Government agencies,

the number of participating referring agencies is only around 40

percent. According to a June 5, 1998 General Accounting Office report, literally $26.4 billion of reported non-tax debt over 180 days

delinquent has not been referred to Treasury and was unlikely to

be referred in the near future.

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While our members feel that Treasury within its current boundaries is doing a very commendable job, they realize that the Department doesn’t have the necessary power to enforce the DCIA.

Accordingly, we believe that Treasury must be given enforcement

power to bring non-participating referring agencies into compliance

with the act’s provision, stipulating that all non-tax debt over 180

days old be referred to Treasury for collection.

Bringing more accounts to our members in a more timely manner

will only work to the advantage of all parties involved. And this

would clearly help the Government attain one of those goals of the

act, to ensure quick action on recovery of debts. To be perfectly

frank, the sooner PCAs receive delinquent accounts, the sooner

they will be able to return delinquent money to Government agencies.

Second, multiple contractors contacting the same debtor is of

course inefficient.

Another modification we respectfully suggest concerns the transfer of accounts. Now, we believe that multiple debts for the same

debtor should be consolidated and placed with only one contractor.

Placing a debtor’s various debts with different contractors through

the same or different referring agencies, which is currently the

process, is unproductive. It’s also confusing for debtors, because

many different contractors are contacting them, which some debtors even interpret as harassment.

Now, we strongly recommend that FMS adopt an account referral

policy that consolidates all transfers for the same debtor and places

them with a single contractor. We also suggest that any additional

debts that are referred to FMS for these debtors should be flagged

and referred to that same contractor so all of the debts can be

maintained together. Very common practice, particularly in private

and State sectors.

Based on our members’ extensive experiences, consolidating the

debts would provide a much better chance to resolve that debt, as

well as reduce the possibility of a complaint. And third, there are

unnecessary delays in resolving accounts. PCAs must undergo a

cumbersome process when seeking account information from referring Federal agencies. And as such, PCAs would like the authority

to approve repayment agreements, and compromise directly with a

referring agency. PCAs desire this direct contact with referring

agencies, especially in regard to compromises, to ensure that cases

will get resolved in a timely manner.

As a case in point, if a debtor says that he or she has just entered a payment arrangement with a referring agency, the PCA

would be able to quickly verify that claim and speed up the process. Several contractors have mentioned that it currently takes up

to 6 months to resolve accounts, which makes the accounts more

difficult to collect. The expedience a PCA can offer in this situation

results in efficiency as well as good customer service, which is a

primary focus of the very successful education contract.

Contact with referring agencies would also result in debtor sensitivity and likely a higher percentage of collectible debts. Overall,

resolving debts more quickly will allow PCAs to collect and return

money sooner to Government agencies. If the recommendation for

direct compromises with referring agencies cannot be met, we reVerDate 11-MAY-2000 08:48 Jul 10, 2001 Jkt 000000 PO 00000 Frm 00082 Fmt 6633 Sfmt 6633 C:\DOCS\71742.TXT HGOVREF1 PsN: HGOVREF1
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spectfully suggest that Federal agencies be strongly encouraged to

respond on a more timely basis to inquiries they receive from PCAs

via Treasury.

We believe these changes, as well as the others I have mentioned

earlier, would provide several benefits to both PCAs and to the

Federal agencies they collect on behalf of. The improvements we

recommend would meet the goals of the DCIA to maximize collection of delinquent debts allowed to Government agencies by ensuring quick action on accounts, and minimize collection cost through

consolidation. In addition, we believe that these changes would promote increased competition among PCAs that contract with Government agencies.

At the current time, we believe that healthy competition is not

being fostered among contractors due to incomplete data and unequal distribution of accounts. By making the changes that ACA

suggests, referred accounts would be distributed more evenly by

volume and better partnerships would result.

Thank you very much, Chairman Horn and subcommittee members, for the opportunity to present this testimony. I will be happy

to answer any questions you may have.

[The prepared statement of Mr. Cloyd follows:]

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Mr. HORN. Well, we thank you, thank you for coming and making that perspective.

We now go to the questions and answers. We’re going to have 5

minutes per member, alternating the membership between the majority and the minority. I will first yield 5 minutes for questioning

to the ranking member, Mr. Turner of Texas.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. Engel, I want to address a portion of your testimony. It’s

pretty clear that we are collecting more of our outstanding Government debt. That’s the good news. The bad news seems to appear

on page 4 of your statement, and I believe you shared this with us

in your oral presentation, which says the FMS has not covered its

cross-servicing costs through related fees collected and is not likely

to do so in the near future.

Based on FMS’ own estimated cross-servicing costs and using the

current fee structure, and FMS fiscal year 1999 collection experience, we determined that collection volume would need to rise over

sevenfold to put this operation on a full cost recovery basis. In common language, what are you saying there?

Mr. ENGEL. What we’re talking about there is that under the act,

distribution centers such as FMS are allowed to charge fees to the

referring agencies. Typically they’ll charge 3 percent if the debt

that comes in ends up going to a private collection agency and

there’s a collection on it. If instead FMS collects on those funds,

they charge the referring agency 18 percent.

What we were saying is that we went through and calculated,

based on FMS’ estimated costs to run the cross-servicing program, which for fiscal year 1999 was about $11 million, based on that and

their collection experience as to which percent was collected by the

private collection agencies and themselves, and using the fees that

they charged at that time, that in order to cover the $11 million

of costs, they would have to have about $173 million of collections,

which was well more than what they actually collected during a

year.

Mr. TURNER. So are you saying we’re losing money on this deal?

Mr. ENGEL. Well, not in total as it relates to collections coming

in and total for the Federal Government and just what FMS’ costs

are. However, we only know what FMS’ costs are for this program,

you’d have to add to that agency costs. But what we’re talking

about is for their program itself, what it’s costing them to run the

program, the fees that they’re charging, whether the fee rates could

be increased or their costs could go down, something would have

to happen for them to be able to break even and it would have to

happen in quite a large amount, as we said, sevenfold, the collections would have to be.

Mr. TURNER. Well, do we need to consider some adjustments in

the fees that are charged? Or are we simply considering those appropriate and the only answer is to increase the volume to show

the agency’s paying its way?

Mr. ENGEL. Actually, FMS has had a contractor look at this area,

not just in the cross-servicing. And there are some suggestions to

consider increasing the fee rate.

However, I think an important point to make is again that as we

pointed out, much of the debt that’s coming over is extremely old

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by the time it comes over. And as the American Collection Association representative has said, you can expect a very small fraction

of those dollars to be collected because they are so old.

So unless we start getting more current debts coming over from

the agencies, it will be very difficult for FMS to generate the collections that would be needed to cover those costs. So I’d say a fee

increase may be something to consider, but the fees would have to

be increased, I think the one study that was done, one of the fees

would have to increase from the 18 percent they currently charge

to 106 percent, which would be more than you’re even collecting,

which is obviously unrealistic.

Mr. GREGG. If I might, Congressman Turner, may I respond to

that?

From my perspective at FMS, there’s a couple issues. First of all,

we’re still rolling out this program. As I indicated in my testimony,

we’re about halfway there in the amount of referrals coming into

cross-servicing. So that’s one element. And as part of that element,

there’s a lot of cleanup work that’s going on within FMS and with

the private collection agencies on just how good some of that debt

is.

Now, in many cases, we don’t collect a fee, but it actually is a

benefit to the Government, because there’s a lot better information

on what’s collectible and what’s a good debt and what’s not a good

debt. So that’s part of our process.

The other thing from my perspective, is that our overall debt collection program, not just at the cross-servicing. And if you look at

the total amount that we brought in last year, of $2.6 billion, and

we’re spending about $30 million, the return is great. Whether or

not we should charge an additional fee or higher fee in cross-servicing, I’m not sure. We have to be careful not to go overboard there.

But that’s really part of the whole process. It’s tied in very closely with our top system. From my perspective, just to look at the

cross-servicing and the fee income you are only looking at part of

the picture.

Mr. TURNER. Thank you. Thank you, Mr. Chairman.

Mr. HORN. We’ll have 5 minutes, I yield to myself for the purpose

of questioning, and then we’ll have Major Owens.

This is directed to Commissioner Gregg. A few agencies, including the Department of Veterans Affairs, have applied to the Treasury to be debt collection centers. However, their applications have

been denied. Currently, the Financial Management Service is the

only agency with this status. Why were these agency applications

denied?

Mr. GREGG. The primary reason that they have been denied is

based on our own reading of the DCIA, plus hearings that have

taken place over the last 3 years. I think it was clear to us that

a high standard had to be established in order to be debt collection

centers. And we, in looking at different applications that we did receive, tried to apply those standards and make up our own determination whether or not we thought that they would either for

their own debts or for governmentwide debts be an organization do

an outstanding job. That’s really the threshold that we set. We

want someone who can do a good job.

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In some cases, we did authorize agencies to continue the work

that they’d been doing, because we felt that they were doing well.

For example, the Department of Education, has done, in my view,

an outstanding job in collecting delinquent student debts and they

continue to perform that work.

In other cases, we didn’t feel that agencies really had their act

together, if you will, in coming to us. Because when we started asking questions about how well they were doing on their own debts,

at least in some cases, they couldn’t give us the information that

made us comfortable that they’d be able to continue that role.

So the standard has been high. And that we also have refined

the process which was taking way too long when the program first

started, to expedite it and set some clearer standards on what our

expectations are.

Mr. HORN. Well, I guess I want to ask the question here, what

do you have to do to have a governmentwide debt collection center

in the future if all of these applications have been turned down?

Mr. GREGG. I think first of all it’s to demonstrate that you can

do an excellent job. I think it’s a responsibility of the agencies to

demonstrate to us and show that they can do that. The other thing

is that this program is still in its early stages. And we’re not opposed to granting additional debt collection centers, whether it’s for

their internal debts or for governmentwide debts.

At the same time, there is an obligation on us as performing this

governmentwide function to look at it very broadly. That’s what we

try to do.

There’s also an issue of first of all, walking before you run. The

walking part is, have only half of the cross-servicing debt referred

to us. And the process of going through that I think is very beneficial. Also, some of the debt we get is very old. I think if an agency

came to us and made a very strong case and a good case to be a

debt collection center for their own debts or for others, maybe we

would approve it.

Mr. HORN. Secretary Powell, how do you feel about the VA application to become a debt collection center, and do you think it was

appropriately denied?

Mr. POWELL. I’m reminded I’m under oath, is that correct?

Mr. HORN. That’s right. [Laughter.]

Mr. POWELL. What Mr. Gregg has said, I don’t take a great deal

of exception with when we first applied. We’ve come a long way

from that point, I think as evidenced in my testimony. I do think

there’s a case to be made for continuity in the collection efforts for

some of these debts, as we heard. There is an issue of having multiple contact points disrupting the continuity.

The VA in particular, as you know, is fairly sizable relative to

most of the departments. We have significantly improved our debt

collection efforts. We feel we are fully capable of being an effective

debt collection center. TOP delay for us is really a software issue.

It’s not a lack of willingness on our part to comply.

I think Treasury does a credible job. We have no argument with

the effort that they make, especially on these very old debts. I

think the point is well taken that as this program evolves, you’ll

see the process become more effective. I know from many arguments and discussions within CFO Council, there is a real problem

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distinguishing those debts that are collectible from those which actually should be written off, removing them from the Government’s

balance sheets as you would do in the private sector.

I think over time, it would be appropriate for VA to reapply and

make the case for certification as a debt collection center. That will

take a natural course, and hopefully we will receive a favorable ruling.

Mr. HORN. Well, do we know, Commissioner Gregg, the degree

to which someone has to redo their denial? I mean, is it the supervision of the employees, if they haven’t been trained yet, or just

what is it that turns people down? Now, the aging debt you and

I have talked about, because that to me is, I just can’t believe it.

But when they tried the first IRS bit, before the law, well, the law

had just started, and they gave us several year old debts.

Now, I’d like to know from GAO who’s got most of the old debts.

Is it the FMS, the Financial Management Service in Treasury? Is

it some of the agencies that are just letting it accumulate? And we

all agree, I think, the evidence shows that when you have ancient

debt, don’t expect to collect very much. Because everybody thinks

it’s a grant by that time, certainly if you’re in the Department of

Education, and they forget it’s a loan.

So what’s your feeling on looking at it?

Mr. GREGG. Well, as it relates to the debts that have been referred over to FMS, they do have a significant portion that is extremely old, as I had pointed out.

Mr. HORN. So they’re dumping it on the Treasury, you’re saying?

Mr. GREGG. Yes. Most of what is coming over to FMS is very old

debt.

Now, as far as how much debt is still sitting at the other agencies that have not yet been referred over, I can’t really speak to the

age of those. I don’t know.

Mr. HORN. Well, how do you feel, Commissioner Gregg? I mean,

are you the dumping ground for the aged debt? [Laughter.]

Mr. GREGG. Well, it goes with the territory. I think that you can’t

make progress in this area unless you go through what we’re going

through. If you have I don’t know how many years of having debt

sit there and some agencies take a very aggressive stand on collections, others not, and then pass the DCIA and expect a magical

transformation, I think we’d all be misleading ourselves. I think

from my perspective, whether it’s considered a dumping ground or

not isn’t so important. But it’s to look at the debt, figure out whether there is documentation actually go after the debt. In some cases

that isn’t there, and in some cases there are delinquencies that

weren’t identified.

So I think it’s an important process. And as I envision it, in the

next few years, when we get through this and agencies are able to

send their debts to us that are delinquent, 180 days and do that

quickly, then we’ll be looking at a different picture. And I think

this is, from my own view, something we have to work through.

Mr. HORN. Well, I’ve overtaken my time here. But we might have

an exchange in writing, for at this point in the record, without objection.

I now yield 6 minutes to Major Owens, the gentleman from New

York for questioning.

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Mr. OWENS. When you collect debts, where does the money go,

the money you’ve collected, what do you do with it?

Mr. GREGG. It does back to the agencies.

Mr. OWENS. The agencies get the money back? So they have a

great incentive for you to collect debts.

Mr. GREGG. Well, it goes back, but I’m not sure that they can use

it in their ongoing appropriations. It goes back so they can clear

out their books. But I think for the most part, maybe with some

exceptions, it goes back into the general fund of the Treasury and

there may be some exceptions to that.

Mr. OWENS. Which is it now? It’s an important question. Does it

go to the general fund or can they just recycle it and spend it? Do

they have any incentive for collection of debts?

Mr. GREGG. It really does depend on the program. And I’ll have

to give you a specific answer in writing.

Mr. OWENS. Most of it goes to the general fund, doesn’t it?

Mr. GREGG. In some cases it does go to the general fund. But it

has to go back to the agencies so they know the debt has been collected. In some cases, I think the agency can keep some of it.

Mr. OWENS. Does GAO know the answer to that question?

Mr. ENGEL. Well, one thing I would add to that is that the

amount that goes back to the agency is net of the fees that FMS

charges the agencies.

Mr. OWENS. So they do have some incentive for cooperating in

getting their debts collected, great incentive, the money goes back

to them?

Mr. ENGEL. The portion that they can apply toward the receivable itself, yes, they would want to have that money back.

Mr. HORN. If I might help this question along, because I remember distinctly, we wanted to give an incentive, but I’m told that not

too many agencies, if any, are taking that incentive, because they

feel the appropriators will not give them the money for the next

budget. And they don’t really like that. So that’s part of the problem, I think, and Major has his finger on the right one. And here’s

the Treasury with the general fund, they throw it in there, and the

agency says, you know, I’d like to do it. We wanted an incentive

for them to help improve the debt collection process and computing

and everything else, telephones, you name it.

Mr. OWENS. Thank you, Mr. Chairman.

Mr. HORN. You’re welcome.

Mr. OWENS. Where do patterns of multiple debtors appear? What

agencies is that like? Is that Agriculture, or do you have students

who are multiple debtors in the Department of Education? There

was a discussion of multiple debtors and how it’s difficult to collect

because several people will contact them. Where do those kinds of

patterns appear?

Mr. GREGG. Well, I think it can appear anywhere. There are 24

CFO agencies and what our colleague from the PCA was saying is

that we will refer debt to them from agencies, say from Veterans

Affairs or from somebody else. And that same individual will owe

a debt to the Small Business Administration and we might send it

to another PCA.

Mr. OWENS. Oh, you mean a multiple debtor across agencies?

Mr. GREGG. Yes.

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Mr. OWENS. You don’t mean within? Because we’ve seen situations in the Department of Agriculture where people who are delinquent sit on the credit committees and they were allowed to get additional loans. I call those multiple debtors, and that’s what I

thought you were talking about, within an agency. Is it likely a

student who’s delinquent can get more loans for graduate or postgraduate education in the Department of Education?

Mr. GREGG. Well, I can’t speak for the Department of Education,

but I do know that is an issue that’s been addressed by this subcommittee, the concern that once you have a debtor, whether or not

they can continue to get loans from the Government.

Mr. OWENS. In New York City, we have something called a

VINDEX system, where it’s highly computerized, and if you get a

grant or a contract, it runs through there and they can spit out any

debt you owe to any agency of the city and you’re stopped from getting an additional contract. We don’t have anything similar to that

for the Federal Government, centralized checking system where a

debtor would be picked up? I know it doesn’t apply to the Pentagon, but normal agencies.

Mr. GREGG. Probably the closest thing that we have is the references to credit bureaus, if in fact they were checked.

Mr. OWENS. Private sector credit bureaus?

Mr. GREGG. No, for Government debts, if providing the debts

were reported to credit bureaus and that tool was used by agencies

systematically in granting loans.

Mr. OWENS. So Federal agencies do report debts to credit bureaus?

Mr. GREGG. In most cases, yes.

Mr. OWENS. Is that required, that they must do that?

Mr. ENGEL. There’s a bar provision within the act that individuals that have a delinquent debt to the Federal Government are

not supposed to be given another loan until they’ve cleared that delinquent debt.

Mr. OWENS. That’s a gentleman’s agreement or understanding or

is that a law?

Mr. ENGEL. That’s in law. The agencies are responsible for reporting in information that can be used by other agencies such as

through credit bureau reports. HUD has a system called KAVERS,

where they also track information from agencies as to delinquent

debtors, that agencies can go to and they should be going in and

looking and seeing, before they give a new loan, does that individual have an outstanding delinquent loan to the Federal Government. If they do, under the bar provision, they should not be.

Mr. OWENS. They’ve broken the law, if the Farm Credit Committee gives a loan to someone who’s delinquent, they’ve broken the

law, is that correct?

Mr. ENGEL. Yes, they’ve broken that provision. Now, there are a

few exclusions, and I think disaster loans and, there’s a couple type

of loans that are excluded. But that is what’s supposed to happen.

Mr. OWENS. Is it possible to get a list of persons or corporations

who owe the Department of Agriculture more than $1 million? Can

it be generated? A $1 million debtor, that’s a pretty big debt, isn’t

it? Do some people owe as much as $1 million?

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Mr. GREGG. Congressman, the Department of Treasury would not

have that. Treasury would not. The debts that we get from any

agencies are by definition supposedly delinquent of 180 days or

more.

Mr. OWENS. The Department of Agriculture would have it, right?

Mr. GREGG. Yes.

Mr. OWENS. Is it possible to publicize those? Is there any provision of privacy rights that debtors have that would keep the public

from knowing who owes large amounts of money?

Mr. HORN. Well, that’s a good suggestion, and Mr. Turner is

drafting a bill now, you might want to do it. I think when we had

this discussion before, the small farm area that I grew up in, if you

didn’t pay your taxes, the sheriff printed everybody who hadn’t

paid their taxes. So the next month, everybody paid their taxes.

And I don’t know whether that’s done anywhere in the Government, where they’ve posted these.

But what you’re talking about, they’re not the farmer that’s really working his field, it’s somebody that’s got a loan out of them,

which could be a ski lift, and those have known to be granted over

in Agriculture, or it could be a mansion. With the mansion bit, it

got me motivated to do something about it on these loans. Because

this person in northern California had his mansion, defaulted on

it, the right hand didn’t know what the left was doing, went to

Santa Barbara, rather tiny place, and they got another mansion.

So I think you’re on the right trail.

Mr. OWENS. Let me conclude with this line of questioning, I

know I’m a little over my time.

We’ve asked for documents in the past, and I’m not sure we’ve

gotten them. We’ve been promised lists and summaries. But if it’s

possible to get a list of those who owe more than $1 million, more

than $100,000, is there some how in this very computerized bureaucracy that we can get such lists? For the Department of Education, I’d like to know how many individuals, is there any individ- ual who owes more than $100,000, more than $25,000? And how

many individuals owe less than $10,000? If you look at the amount

for the Department of Education, it looks like they’re one of the big

places where we have a lot of crime being committed in terms of

people not paying their loans.

But I think that represents many, many individuals at very low

rates.

Mr. HORN. In the law, let me just read you these two sentences,

perhaps, section 37(2)(o)(e), dissemination of information regarding

identity of delinquent debtors. A, the head of any agency may, with

the review of the Secretary of the Treasury, for the purpose of collecting any delinquent non-tax debt owed by any person, publish or

otherwise publicly disseminate information regarding the identity

of the person and the existence of the non-tax debt.

So they have the authority to do that. And I now yield to the

ranking member, the gentleman from Texas, Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. Gregg, your report makes it clear that you have noted the

complaints made by the private collection agencies regarding the

distribution of the account debts among the various 11 contractors.

And we’ve heard the testimony today from Mr. Cloyd, who repVerDate 11-MAY-2000 08:48 Jul 10, 2001 Jkt 000000 PO 00000 Frm 00094 Fmt 6633 Sfmt 6633 C:\DOCS\71742.TXT HGOVREF1 PsN: HGOVREF1
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resents the association of private collection agents, and he has

shared with us his concern not only about the distribution based

on the size of the debt and the age of the debt, but he’s also

brought up the point that debts owed by one debtor ought to be referred to the same agency.

Those seem like very sensible suggestions. And I noted a reluctance, Mr. Gregg, in your testimony, what I interpreted as a reluctance, to make these changes, when you said, and I’m reading here

from your statement, while FMS is agreeable to considering alternative distribution procedures for future contracts, complying with

the terms of the current contract, administering the contract efficiently and maximizing collections are without question FMS’ primary goals.

Now, it seems to me that if one of your goals is to maximize collections, you’re going to have to keep the 11 private contractors

who are out there on the playing field trying to collect these debts

happy with the rules of the game. And it seems to me that it would

be appropriate if what I’m hearing is correct, that all of the contractors agree that the current distribution of account of debts is

unfair, that we would all be better off if we revised that distribution system immediately and corrected that problem and renewed

the enthusiasm that I suspect may be lacking in these 11 contractors to collect the debts of the Federal Government.

Mr. Engel, what is your thought on that comment I made?

Mr. ENGEL. Well, based upon our discussions with the 11 PCAs,

what I think they were looking for was what we term as a proportionate mix of accounts being sent to them. In other words, taking

a look at the different characteristics such as age of debt, maybe

the dollar amounts of the debt, maybe the particular agency that

is being referred over. And they felt that more competition would

be in place if there was a proportionate mix, so that each of them

would be getting some proportion of those different types of characteristics of debt.

There was no problem with it being performance based and that

the better performer be rewarded with more of the proportion. But

I think they were hoping to get debts where they might have as

many small type debts, or a proportion of small type debts which

have generally been shown to be a little easier to collect, or the less

delinquent debt, which again has been a little easier to collect.

They’d like to get a proportionate mix of that, so they’re standing

on a similar ground to their competitor.

Mr. TURNER. Well, it’s of course important to preserve the performance based incentives that we have in the system. But it

seems to me that the distribution of accounts as suggested by the

private debt collectors is not inconsistent, in fact may be supportive

of the performance based incentives that we are trying to pursue.

Do you think they’re mutually exclusive?

Mr. ENGEL. No. No, I’m not saying that.

Mr. TURNER. And do you see any reason why the FMS should not

proceed immediately to make that correction, to renew that enthusiasm and that incentive on the part of those 11 collectors?

Mr. ENGEL. No, I think that your advice of getting together with

the PCAs to get a agreement as to what characteristics, if they’re

going to go down this, or what characteristics the PCAs agree

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should be used, I think that has to happen first. Because you

wouldn’t want to go and start devising something that then again

half of the PCAs don’t agree, or the characteristics that should be

there.

Mr. TURNER. If FMS yielded to the suggestions of the private collectors, do you see anything that we could possibly lose from the

point of view of the Federal taxpayer by following their suggestions

in the way the accounts are distributed?

Mr. ENGEL. Well, it’s hard for me to say that because of the distribution there’s been less collections than there would have been

if the distribution was done differently. Again, I think the belief is,

it fosters more competition if you feel that you’re getting your

share of the debts, and as you pointed out, are going to try harder.

Mr. TURNER. Mr. Gregg, is there any reason why you can’t proceed immediately to make these suggested changes to renew the

fairness of the system as it’s perceived by the debt collectors?

Mr. GREGG. Yes, Mr. Turner, there are a number of reasons.

First of all, this contract has been looked at six ways to Sunday.

And from my perspective, the good news is that we’re complying

with the contract as agreed upon by ourselves and the 11 PCAs.

That’s very important. And it’s been looked at very carefully.

The other thing is that, as I had said in my opening statement,

this is complex business. And we actually have a system set up for

the way that debts are distributed today. And to change that, you

don’t just turn a switch, you have to go through and make programming changes.

What I am willing to do, and we’ve been talking with the PCAs

and with GAO, is to consider these suggestions when we renew the

contract. Next year we’ll have the opportunity to go out for bids

again. And we will certainly consider all of these ideas in looking

at how to structure this.

I would like to make one point, however. And that is that I don’t

know whether you have all 11 PCAs that are unhappy with the

way it’s done. For those that are doing the best, I’m not so sure

that they wouldn’t think it’s pretty good.

But the other thing is that it’s structured in a way where PCAs

can actually improve their status. For example, back in the letter

that the Department of Treasury sent you in October, one of the

agencies, one of the PCAs listed there was at that time I think

ranked No. 10 in how well they were doing. And currently, they’re

tied for first. And you have that, throughout the this fiscal year to

date on how well the PCAs were doing.

And I’m not suggesting that this is proof that a different kind of

distribution methodology would be better. What I am saying is that

it is complex. And the data that I have pulled, the PCA that was

ranked first, and actually, this one’s been ranked first since the beginning, it got out of the blocks very early, has the eighth highest

average distribution of debt for this fiscal year, eighth highest distribution, average distribution of debt. The PCA ranked second has

the 10th highest, 10 of 11.

So again, I’m not saying that there couldn’t be a correlation. But

it is complex, and it’s complex because we don’t know which agencies are going to be referring debt to us at any given time. There’s

no schedule, as we had talked about earlier. We’ve been pushing

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to get debts, and suddenly a block of them show up. Part of our

responsibility, and also something we talked about, is to move

those quickly so that they don’t age further.

And that’s one of the things we’ll have to look at as we think

about the new contract. We don’t want to sit there waiting for a

really good homogeneous blend of debts and let them age another

60 or 90 days. So those are the kinds of things that we would certainly want to consider as we prepare for this next contract.

Mr. TURNER. I think the complaint has been that the private collection agency that was ranked No. 1 was getting the smaller debts

and the fresher debts. Let me just ask you if you’d be willing to

do this. If all 11 collection agencies got together and came up with

an agreement among themselves as to a fair system of distribution,

would you be willing to sit down with them and try to implement

that earlier than the renewal of a new contract? Because at some

point, I think your agency needs to come to grips with this, or otherwise, we’re going to start losing contractors. And I don’t think

that would be a healthy outcome, either.

Mr. GREGG. I think that we have to be careful in doing that. This

is a legal contract that we agreed to with the 11 PCAs. And I’m

not sure that we know enough and really could move any faster

than the renewal of the contract before we take these into consideration and see who, actually we don’t even know whether these

same 11 current PCAs will be the ones that win out in the next

contract.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. HORN. I think you raised a very good question and we need

to maybe hold further hearings on this.

Commissioner Jackson, let me ask you this. According to Financial Management Service, the Social Security Administration has

not referred any of its delinquent debts to the Treasury for crossservicing as required by the Debt Collection Improvement Act. Can

you explain why Social Security isn’t cooperating with the law?

Ms. JACKSON. Mr. Chairman, soon after Treasury issued its

guidelines for Federal debt collection center designations, the Social Security Administration did submit an application to be designated as a debt collection center. We made that application on

May 30, 1997.

We received notification of the denial of our request on May 10,

1999, some 2 years later. We then pursued a request to have some

of our debts, specifically our SSI debts and our debts owed by

former child beneficiaries exempted, and we did receive approval of

that waiver request on November 15, 1999. So these are very recent decisions that we received.

At that point in time, we were very much embroiled in dedicating

almost all of our systems activities to preparing for the year 2000

rollover, and in fact, we were basically barred from any new systems activity until after the rollover period, which continued

through February of this year.

We have continued to work with FMS, have made commitments,

and have worked out our various systems program requirements

with them. We will be testing over the next 6 months for the benefit offset program, and we will be actually implementing that in

February 2001.

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We have also set up meetings, including going down to the Birmingham Debt Collection Center with FMS later on this month. So

we are proceeding, but much of our delay in moving forward was

based on our waiting for the final decision from Treasury on our

request to be designated as a debt collection center for our own

debts.

Mr. HORN. Let me ask Secretary Powell, the Department of Veterans Affairs has referred only 1 percent of its eligible delinquent

debt to the Treasury for cross-servicing. Why is it taking so long

for this debt to be referred?

Mr. POWELL. Congressman, I believe, as I commented, one of the

problems we’ve had has been the computer interface issue. Like

SSI, this effort that was interrupted by the Y2K moratorium. We

now have a September 1 deadline that I believe we are working toward, in which case, at which time that will be resolved. We would

anticipate at that point in time that the flow of data would be

much improved and much more seamless. And we fully expect to

be compliant with the law in the relatively near future.

Mr. HORN. What will happen to the Veterans Administration

debt management center when all of its delinquent debts are referred to the Treasury?

Mr. POWELL. Well, we wouldn’t be referring to them debts under

180 days old. As I mentioned, when you were asking the question

about our designation as a collection center, we are very active

with our management of our debts. We do a number of things to

get in touch with our debtors immediately after the first 30 days.

We begin contacting them and we begin a process of calling and notification. And we do experiment with PCAs as appropriate in certain locales.

We have a number of debts that are also not eligible for crossservicing, such as medical claims, because of their lack of specificity. There’s oftentimes a negotiated amount that ends up being

paid by the insurance companies. And we have with Treasury come

to an agreement that those would not be eligible for cross-servicing.

So we will still have functionality, and as I indicated, hopefully

we will prevail in our application as well at some future date.

Mr. HORN. Any particular view on this, Commissioner Gregg?

Mr. GREGG. The issue on the nimbleness of which Treasury was

reviewing debt collection requests is accurate. When I got to FMS

in 1998, that process had really bogged down. I think it was a matter of other priorities. We have taken steps to certainly streamline

that and make some clear criteria for agencies referring debt.

From our perspective on the cross-servicing, we’d just as soon not

see any debt. The idea of, and I don’t know what’s going to happen,

but the idea of over time the agencies being able to collect all this

within 180 days is really what we’re all interested in. To the extent

that that can happen, then it needs to come to us and we need to

get it to the PCAs as quickly as we can.

Mr. HORN. Well, I don’t want to rush this today, but I think the

best way I’ve heard now about the couple of places where the law

is not being implemented, and we ought to deal with that, and I

think we ought to deal with early time for the collectors, very

frankly. And I think in the next few months, we’ll call another

hearing and maybe with a few different debtors here, if you will.

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And we will get back to what Major Owens has brought up on the

publicity bit, and see where we’re going.

So I’m going to have, as was mentioned earlier, Mr. Ose had a

markup, Mr. Turner had another commitment, both majority and

minority have some questions they’d like to ask, and we’d like

them, without objection, at this point in the record. So we’d appreciate it when they send them to you, back in your office.

I would like to thank the following people that set up this hearing, Russell George, standing there, just came in, staff director,

chief counsel. Randy Kaplan, to my left, your right, has responsibility for this matter. And so you’ll be hearing a lot from him, as

counsel to the subcommittee. Bonnie Heald, director of communications; Bryan Sisk, clerk; Elizabeth Seong, staff assistant; Will

Ackerly, intern; Chris Dollar, first day at work, I think, intern,

highly paid by us, namely nothing. [Laughter.]

And minority staff, Trey Henderson, counsel; and Jean Gosa, minority clerk. And we’ve had the pleasure of the official reporter,

Ruth Griffin, and thank you all.

And with that, we’re going to adjourn this hearing, and we’ll pick

it up about 3 months from now.

[Whereupon, at 12:12 p.m., the subcommittee was adjourned.]

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