NORTH CAROLINA STATEWIDE ACCOUNTS RECEIVABLE REPORT. For the Year Ended June 30, 2013

Transcription

1 NORTH CAROLINA STATEWIDE ACCOUNTS RECEIVABLE REPORT Fr the Year Ended June 30, 2013 Nrth Carlina Office f the State Cntrller David McCy, State Cntrller

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3 DAVID T. MCCOY STATE CONTROLLER State f Nrth Carlina Office f the State Cntrller February 26, 2014 The Hnrable Pat McCrry, Gvernr The Hnrable Phil Berger, President Pr Tempre f the Senate The Hnrable Thm Tillis, Speaker f the Huse f Representatives Dear Sirs: Attached please find the Nrth Carlina Statewide Accunts Receivable Reprt fr the fiscal year ended June 30, The Statewide Accunts Receivable Reprt includes all receivables at the fiscal year s end reprted t the Office f the State Cntrller (OSC) by state agencies. This legislatively mandated reprt is prepared in accrdance with Article 6B f Chapter 147 f the Nrth Carlina General Statutes. As prescribed by statute fr the statewide accunts receivable prgram, the term state agency des nt include a cmmunity cllege, an area mental health, develpmental disabilities and substance abuse authrity, r the General Curt f Justice. The receivables disclsed in this reprt are based n generally accepted accunting principles (GAAP) and reflect a snapsht f amunts wed t the State at the cnclusin f the fiscal year. This reprt als disclses additinal infrmatin abut the State s receivables at fiscal year-end such as: an aging f receivables which indicates the degree t which receivables are past due and write-ffs which are receivables that agencies will nt, r mst likely will nt, cllect and have therefre deducted frm their accunting recrds. I trust yu will find this reprt bth infrmative and useful. If yu have questins related t this reprt, my staff r I can be reached at (919) Finally, I encurage yur review f ther statewide financial reprts lcated n the OSC website at: With regards, I am Sincerely, David McCy cc: Members f the Nrth Carlina Jint Legislative Cmmissin n Gvernmental Operatins Chief Fiscal Officers MAILING ADDRESS: 1410 Mail Service Center, Raleigh, Nrth Carlina STREET ADDRESS: 3512 Bush Street, Raleigh, Nrth Carlina Phne (919) ~ Fax (919) ~~ An EEO/AA/AWD Emplyer

4 2013 Statewide Accunts Receivable Reprt Intrductin The Statewide Accunts Receivable Reprt includes all receivables at June 30, 2013, reprted t the Office f the State Cntrller (OSC) by state agencies. As defined by the Nrth Carlina General Statutes, a receivable is an asset f the State f Nrth Carlina (State) reflecting a debt that is wed t the State that has nt been received by the state agency servicing the debt. A state agency is defined by statute as any department, institutin, bard, cmmissin, cmmittee, divisin, bureau, fficer, fficial r any ther entity fr which the State has versight respnsibility including any university. As prescribed by statute fr the statewide accunts receivable prgram, the term state agency des nt include a cmmunity cllege, an area mental health, develpmental disabilities and substance abuse authrity, r the General Curt f Justice. The receivables disclsed in this reprt are based n generally accepted accunting principles (GAAP) and reflect a snapsht f amunts wed t the State at June 30, the cnclusin f the State s fiscal year. This reprt als disclses additinal infrmatin abut the State s receivables at fiscal year-end such as: an aging f receivables which indicates the degree t which receivables are past due and write-ffs which are receivables that agencies will nt, r mst likely will nt, cllect and have therefre deducted frm their accunting recrds. Hw the State Cllects Debt State agencies invice businesses and individuals fr services rendered thrugh many different billing and receivable systems. State plicy prvides that receivable systems f state agencies shuld: Bill accunts n a timely basis, whether the receivables are due frm private entities, the federal gvernment, lcalities, r state agencies and institutins; Maintain an accurate recrd f receivables transactins; Effectively interface with ther applicable agency-based accunting systems; Prvide an aged trial balance f receivables; Prvide infrmatin relative t specific cllectin effrts n each past-due accunt; Prvide realistic estimates f, and prperly accunt fr, dubtful accunts; Prperly accunt fr receivables that are written ff; Recgnize and reprt receivables in accrdance with generally accepted accunting principles (GAAP); Cmply with federal and ther cntractual regulatins; Maintain a recrd f year-end receivable balances; and Prvide fr the accrual f interest and penalties as allwed r as required by law. Page 2

5 2013 Statewide Accunts Receivable Reprt Types f Receivables Taxes - Primarily cnsists f individual incme tax, sales and use tax, and lcal sales tax cllectins. Accunts - Primarily cnsists f student, patient and medical prvider payments. Intergvernmental - Primarily cnsists f funds due frm federal and lcal gvernments. Ntes - Primarily cnsists f student lans, husing mrtgage lans and EPA revlving lans that will be cllected n a predetermined cntractual basis. Interfund - Primarily cnsists f funds mving between different state fund types. Other - Primarily cnsists f participant cntributins t the health and pensin plans and State Treasurer investment earnings (distributins) wed t thse funds (trust, special) that earn interest. Aging f Receivables An aging f receivables indicates the degree t which receivables are past-due. State agencies prvide OSC an aged trial balance f receivables each fiscal year-end. The chart belw summarizes past due receivable activity at year-end (in thusands) Past Due Ttal Past Due Receivables by Type 1-30 Days Days Days Days Over 120 Days Past Due Taxes Receivable $125,359 $47,429 $138,898 $58,140 $946,545 $1,316,371 Accunts Receivable 236, ,461 64,861 60, , ,510 Intergvernmental Receivable 4,027 4,868 1,744 1,230 7,892 19,761 Ntes Receivable 254, ,969 69,521 64, , ,696 Interfund Receivable 1,539 2, ,239 Other Receivable 11,285 3,249 6,364 2,383 18,383 41,664 $633,680 $288,032 $281,744 $187,144 $1,562,641 $2,953,241 Accunts past-due at year-end 2013 ttal $3 billin f ttal receivables. The Nrth Carlina Department f Revenue (NCDOR), the Nrth Carlina Department f Cmmerce (NCDOC), UNC Hspitals, the Department f Health and Human Services (DHHS), State Educatin Assistance Authrity (SEAA), Husing Finance Agency (HFA), and the UNC System accunt fr $2.9 billin, r 97 percent, f these past due receivables. Each f these entities emplys specific cllectin techniques t aggressively cllect past due accunts receivables. Appendix A details the aging amunts by agency fr fiscal Page 3

6 2013 Statewide Accunts Receivable Reprt The chart belw summarizes aging amunts fr fiscal years 2013, 2012, 2011: Billins Aging f Receivables $ $ $ $ $ $.800 $.600 $.400 $.200 $ past due past due past due past due ver 120 past due Year-end Amunts The State s Cmprehensive Annual Financial Reprt (CAFR) disclsure f receivables includes bth estimated receivables and inviced receivables, net f allwance fr dubtful accunts as f June 30. The chart belw summarizes CAFR ttal receivables by type fr fiscal years 2013, 2012, 2011: Ttal Receivables by Type - Fiscal Years 2013, 2012 and 2011 (in thusands) Change FY12 t FY Amunt Percent Ntes Receivable... $ 5,289,036 $ 5,685,461 $ 6,174,295 $ (396,425) (7.0)% Taxes Receivable... 2,225,097 2,062,247 1,898, , % Intergvernmental Receivables... 1,316, , , , % Accunts Receivable... 1,629,366 1,554,383 1,576,858 74, % Interfund Receivables , , ,700 4, % Cntributins, Premiums, Other Receivables , , ,434 (6,697) (1.0)% Interest Receivable... 10,905 12,326 17,183 (1,421) (11.5)% Ttal Receivables... $ 11,568,177 $ 11,284,436 $ 11,581,577 $ 283, % As shwn in the table abve, receivables ttaled $11.6 billin fr fiscal 2013, $11.3 billin fr fiscal 2012 and $11.6 billin fr fiscal Ttal receivables fr 2013 grew by $284 millin r 2.5 percent. Of the $163 millin increase in taxes receivable, $155.2 millin was fr individual incme taxes. In additin, intergvernmental receivables increased by $446 millin in part due t DHHS Divisin f Medical Assistance (DMA) accruing federal receipts which were received in the fiscal year. Page 4

7 2013 Statewide Accunts Receivable Reprt Write-ffs Write-ffs are receivables that agencies will nt, r mst likely will nt, cllect and have been deducted frm their accunting recrds. Write-ffs are caused by bad debt adjustments (unsuccessful cllectin effrts), cntractual adjustments r indigent care adjustments. Write-ffs fr year-end 2013 ttaled $4.4 billin cnsisting f $443 millin fr bad debt, $3.4 billin fr cntractual adjustments and $614 millin fr indigent care. Ttal write-ffs fr 2012 were $4.2 billin. UNC Hspitals, including Rex Healthcare, Chatham Hspital, High Pint Hspital, Caldwell Hspital, UNC Hspital Partnerships, and Triangle Physicians Netwrk, reprted write-ffs f $3.1 billin f receivables based n Medicare and Medicaid adjustments, indigent care prvider adjustments, and managed care cntractual adjustments. NCDOR reprted write-ffs f $207 millin. UNC Chapel Hill (UNC CH) and East Carlina University (ECU) reprted write-ffs f $458 millin and $251 millin, respectively. Appendix A details ttal agency write-ffs during fiscal 2013 by receivable type. The chart belw summarizes agency write-ffs by type fr fiscal years 2013, 2012, Billins Ttal Write-Offs $4.0 Bad Debt Write-ffs Cntractual Adjustments $3.5 $ % 75.9% Indigent Care Write-ffs 77.5% $2.5 $2.0 $1.5 $1.0 $ % 13.9% 11.6% 12.5% 8.1% 14.4% $ Cntractual Adjustments - The differences between revenue at established rates and the amunts realizable frm third-party payers under cntractual agreements. These adjustments are made t custmer, patient, r business accunts as the result f a cntractual agreement t prvide certain services r prducts at a previusly negtiated price. The cntractual adjustment is the difference between the value assigned by the state prvider/supplier f the prduct r service and the predetermined price as negtiated with a third-party payer (example: insurance cmpany). Indigent Care Adjustments - The differences between revenue at established rates and the amunts realizable frm the financially respnsible party fr thse receiving the state prduct r service. In this instance, the write-ff is the result f the financially respnsible party being unable t meet the financial bligatins due t pverty r a lack f subsistence. Page 5

8 2013 Statewide Accunts Receivable Reprt Bad Debt Adjustments - All write-ffs f bad debts ther than thse fr cntractual r indigent care reasns. Cst f Cllectin State agencies, excluding NCDOR, reprted cllectin activity csts ttaling ver $62 millin during Agencies als reprted a ttal f 650 full-time equivalent (FTE) state emplyees dedicated t receivable activities during A large percentage f ttal cllectin csts and FTE reprted by state agencies is attributable t patient accunts and student accunts, including student lans. UNC Hspitals, part f the UNC Health Care System, reprted 2013 cllectin csts f $18 millin and 150 FTE. The UNC-CH Physicians and Assciates, als part f the UNC Health Care System, reprted cllectin csts f $16.7 millin, and FTE f 204. ECU reprted cllectin csts f $4 millin fr its medical faculty practice and FTE f 79. Regarding student lans, SEAA reprted that lan administratin and cllectin are ut-surced fr a cst f $11.1 millin fr Appendix B details by agency the cllectin csts and the FTE f state emplyees dedicated t cllectin activities. Cllectin Activity Attrney General State agencies are required by G.S (e)(4) t frward unpaid billings t the Attrney General fr cllectin. Statewide plicy specifies the unpaid billings be turned ver n mre than 60 days after the due date f the billing. The Nrth Carlina Department f Justice (NCDOJ) then sends a letter t debtrs demanding payment. If payment is nt made within 30 days, the department recmmends t agencies that unpaid billings be submitted t a state cntracted cllectin agency. As f July 1, 2013, NCDOJ has cntracts with nine cllectin agencies. During fiscal year 2013, a ttal f $93.7 millin was submitted t the Attrney General fr cllectin n behalf f state agencies. During fiscal year 2013, $51.3 millin was submitted by state agencies t cllectin agencies, and $8.3 millin was cllected at a cst f $1.3 millin. Setff Debt Cllectin Prgram Activity NCDOR cntinues t administer the State s Setff Debt Cllectin Prgram that requires NCDOR and state agencies t cperate in identifying debtrs wh we mney t the State and wh qualify fr refunds frm the NCDOR. The prcedure fr setting ff against any refund the sum f any debt wed t the State resulted in $77.6 millin f net refunds t claimant agencies during the 2013 calendar year fr the 2012 tax year. G.S. 105A, the Setff Debt Cllectin Act, requires all claimant agencies and the NCDOR t cperate in identifying debtrs wh we mney t the State thrugh its varius agencies and wh qualify fr refunds frm the NCDOR. It further requires that prcedures be established fr setting ff against any refund the sum f any debt wed t the State. G.S. 105A, als requires a State agency t register with the NCDOR and OSC. Each State agency must reprt annually t OSC the amunt f debts wed t the agency fr which the agency did nt submit a claim fr setff and the reasn fr nt submitting the claim. OSC reviews this infrmatin annually t cnfirm prgram participatin cmpliance. Page 6

9 2013 Statewide Accunts Receivable Reprt Summary data frm NCDOR fr the prir five tax years is reflected belw (whle dllars). Debt Setff Activity fr Tax Years Tax Year Debt Setff Occurs in Calendar Year Grss amunt f Refunds Setff $79,178,212 $73,640,930 $67,889,978 $60,575,209 $57,376,802 Cllectin Assistance Fees applied Based n Actual Expenses ($1,492,065) ($1,380,525) ($1,294,975) ($1,129,410) ($1,098,000) Net Amunt f Refunds Paid t Claimant Agencies $77,686,147 $72,260,405 $66,595,003 $59,445,799 $56,278,802 DOR Administrative Expenses - Current Year $567,448 $556,175 $537,355 $479,667 $1,091,720 Ttal Setffs 330, , , , ,045 (includes cmpleted, denied, and cancelled setffs) Number f Cmpleted Setffs 326, , , , ,830 Average Grss Setff Amunt $ $ $ $ $ Average Cst per Setff $1.72 $1.79 $1.85 $1.85 $4.31 Average Net Amunt f Refunds Setff $ $ $ $ $ The cst f cllecting child supprt debts is nt charged against the taxpayer s refund. Instead, the grss amunt f the refund is applied t the debt and the NCDOR receives a cllectin assistance fee fr these debts frm individual incme tax cllectins. Fr the calendar year 2013, cllectin assistance fees fr child supprt debts cllected thrugh setff were $142,025 bringing the ttal cllectin assistance fees received by the NCDOR t $1,634,090. A flat cllectin assistance fee f $5.00 is impsed fr each debt cllected thrugh setff. Agency Cmpliance with Statewide Accunts Receivable Prgram Since the 2007 fiscal year, OSC has required each state agency t cmplete an attestatin dcument signed by the agency s chief executive fficer and chief financial fficer. All state agencies must and have returned a signed letter stating that: Management is respnsible fr cmplying, and has cmplied, with requirements f Article 6B f Chapter 147 and Chapter 105A f the Nrth Carlina General Statutes. Management is respnsible fr establishing and maintaining, and has established and maintained, effective internal cntrl ver cmpliance with the requirements f Article 6B f Chapter 147 and Chapter 105A f the Nrth Carlina General Statutes. Infrmatin submitted t OSC fr preparatin f the Statewide Accunts Receivable Reprt is materially crrect and verifiable t agency recrds. The ability t charge interest and penalty n past due accunts receivable is a manual prcess that is nt supprted by sme billing and accunts receivable systems currently perating within state gvernment. Future business infrastructure prjects shuld incrprate the ability t calculate interest n past due accunts. Page 7

10 2013 Statewide Accunts Receivable Reprt Vendr Attachment OSC and NCDOR in September 2010 implemented a vendr attachment prgram. The prgram is authrized by G.S (b) and G.S Phase I invlves state agencies using the Nrth Carlina Accunting System (NCAS). The prgram identifies vendr payments fr attachment due t uncllected taxes. In Vendr Attachment, OSC prvides NCDOR a file each night f vendrs wh are t be paid thrugh NCAS. NCDOR cmpares the file against utstanding cllectins cases. As matches are discvered, the prcess generates an attachment and garnishment ntice and the funds are redirected t NCDOR befre the vendr receives the payment. The funds are applied t the vendr s tax debt. As f December 31, 2013, the prgram has cllected apprximately $7.2 millin in unpaid taxes due t the state. Page 8

11 2013 Statewide Accunts Receivable Reprt Appendix A Past Due Receivable Summary Aging Reprt Fiscal Year Ended June 30, 2013 (in thusands) Past Due Receivables by Past Due Ttal Ttal Department/Institutin 1-30 Days Days Days Days Over 120 Days Past Due Write-ffs Secretary f State $8 $5 $5 $2 $36 $56 $30 Office f the State Auditr 7 7 State Treasurer 1,817 3,756 1, ,939 35,863 Public Instructin 4 4 Justice 2, , Agriculture Labr ,511 5, Insurance Administratin ,585 6 Office f State Cntrller 1 1 Transprtatin 2,586 1,471 5,903 1,992 17,759 29, ENR , Wildlife Public Safety ,335 4,462 1,480 DHHS 94,337 36,506 14,760 5, , , ,592 ITS 349 (1) (201) Cmmerce 11,154 9,284 7,841 7, , ,894 20,902 Revenue 121,611 43, ,581 56, ,331 1,244, ,477 Cultural Resurces UNC Hspitals 72,883 43,472 25,052 29,003 50, ,223 3,134,799 Educatin Lttery Husing Finance Agency 68,336 20,678 8,721 21,831 23, ,666 1,710 Nrth Carlina Bard f Nursing Glbal TransPark (4) NC Prts Authrity 4,342 3, , State Educatin Assistance Authrity 187,785 95,511 60,976 43, , , UNC - Chapel Hill 44,047 16,621 11,110 8,870 35, , ,767 Nrth Carlina State Univ 6,780 3,399 1,806 1,747 7,165 20,897 1,164 UNC - Greensbr ,462 4, UNC - Charltte 1,426 1, ,984 4,951 2,089 UNC - Asheville , UNC - Wilmingtn (62) 1,034 1, East Carlina Univ 7,452 4,226 2,989 1,635 15,690 31, ,027 NC A & T State Univ 1, ,781 3, Western Carlina Univ , Appalachian State Univ ,474 4, UNC - Pembrke ,121 1, Winstn-Salem State Univ ,945 4, Elizabeth City State Univ , Fayetteville State Univ ,523 2, Nrth Carlina Central Univ ,838 4,129 10,021 1,400 Nrth Carlina Schl f the Arts Nrth Carlina Schl f Science and Math $633,680 $288,032 $281,744 $187,144 $1,562,641 $2,953,241 $4,422,308 Page 9

12 2013 Statewide Accunts Receivable Reprt Appendix B Cst f Cllecting Receivables by Agency Fiscal Year Ended June 30, 2013 (Whle Dllars) Cllectin Agency Cllectin Unit Cst # FTE Secretary f State Accunts Receivable Department $50,533 1 Office f the State Auditr Agency/Divisin Budget/Fiscal Office 25 Public Instructin Other 19,048 Agriculture Agency/Divisin Budget/Fiscal Office 64,895 7 Agriculture Cllectin Agency/Outsurced 27,731 1 Labr Accunts Receivable Department 333,404 5 Labr Cllectin Agency/Outsurced 1,581 Labr Other 386,196 5 Insurance Agency/Divisin Budget/Fiscal Office 16,286 1 Transprtatin Accunts Receivable Department 354, Transprtatin Cllectin Agency/Outsurced 608,712 ENR Agency/Divisin Budget/Fiscal Office 379,664 2 Wildlife Accunts Receivable Department 2,150 Public Safety Accunts Receivable Department 120,967 3 Public Safety Cllectin Agency/Outsurced 745 Public Safety Payrll Sectin 7,783 DHHS Accunts Receivable Department 2,422, DHHS Cllectin Agency/Outsurced 361 DHHS Other 162,199 1 DHHS Tax Department 8,960 ITS Accunts Receivable Department 115,651 2 Cmmerce Accunts Receivable Department 541,022 8 Cmmerce Tax Department 1,370, Revenue * (see nte belw) Agency/Divisin Budget/Fiscal Office UNC Hspitals Cllectin Agency/Outsurced 7,249,901 UNC Hspitals Patient Accunts 10,708, Educatin Lttery Accunts Receivable Department 113,087 3 Educatin Lttery Cllectin Agency/Outsurced 2,012 Office f Administrative Hearings Accunts Receivable Department 2 1 Husing Finance Agency Agency/Divisin Budget/Fiscal Office 45,000 Nrth Carlina Bard f CPA Examiners Agency/Divisin Budget/Fiscal Office 2,143 1 NC Prts Authrity Accunts Receivable Department 6,990 State Educatin Assistance Authrity Other 11,067,300 State Educatin Assistance Authrity Student Accunts 104,836 3 UNC - Chapel Hill Cllectin Agency/Outsurced 34,355 UNC - Chapel Hill Patient Accunts 16,705, UNC - Chapel Hill Student Accunts 43,178 1 UNC - Chapel Hill Student Lans 1,008 1 Nrth Carlina State Univ Agency/Divisin Budget/Fiscal Office 161,882 3 Nrth Carlina State Univ Accunts Receivable Department 53,544 1 Nrth Carlina State Univ Cllectin Agency/Outsurced 143,793 Nrth Carlina State Univ Grants Office 53,544 1 Nrth Carlina State Univ Student Accunts 53,544 1 Nrth Carlina State Univ Student Lans 53,544 1 Page 10

13 2013 Statewide Accunts Receivable Reprt Appendix B UNC - Greensbr Cllectin Agency/Outsurced 63,057 UNC - Greensbr Grants Office 59,281 1 UNC - Greensbr Student Accunts 25,489 1 UNC - Greensbr Student Lans 54,242 1 UNC - Charltte Cllectin Agency/Outsurced 75,619 UNC - Charltte Student Accunts 24,331 2 UNC - Charltte Student Lans 23,554 2 UNC - Asheville Student Accunts 2,785 UNC - Asheville Student Lans 2,421 UNC - Wilmingtn Accunts Receivable Department 25,625 1 UNC - Wilmingtn Cllectin Agency/Outsurced 72,075 UNC - Wilmingtn Other 2,536 UNC - Wilmingtn Student Accunts 70,540 2 UNC - Wilmingtn Student Lans 39,028 1 East Carlina Univ Cllectin Agency/Outsurced 237,901 East Carlina Univ Grants Office 1,065 1 East Carlina Univ Other 1,410, East Carlina Univ Patient Accunts 3,997, East Carlina Univ Student Accunts 749, East Carlina Univ Student Lans 169,499 2 NC A & T State Univ Accunts Receivable Department 65,729 1 NC A & T State Univ Cllectin Agency/Outsurced 58,683 NC A & T State Univ Student Lans 173,053 2 Western Carlina Univ Student Accunts 5,373 Western Carlina Univ Student Lans 64,528 2 Appalachian State Univ Cllectin Agency/Outsurced 76,981 Appalachian State Univ Grants Office 47,000 1 Appalachian State Univ Student Accunts 119,812 3 Appalachian State Univ Student Lans 25,800 1 UNC - Pembrke Accunts Receivable Department 12,635 UNC - Pembrke Student Accunts 14,044 UNC - Pembrke Student Lans 12,231 Winstn-Salem State Univ Cllectin Agency/Outsurced 507 Winstn-Salem State Univ Student Lans 54,956 1 Elizabeth City State Univ Accunts Receivable Department 46,794 Elizabeth City State Univ Cllectin Agency/Outsurced 22,369 Fayetteville State Univ Cllectin Agency/Outsurced 9,950 1 Fayetteville State Univ Other 61,899 1 Fayetteville State Univ Student Lans 55,940 1 Nrth Carlina Central Univ Cllectin Agency/Outsurced 27, Nrth Carlina Central Univ Student Accunts Nrth Carlina Schl f the Arts Student Accunts 11,054 Nrth Carlina Schl f the Arts Student Lans 34,592 1 Ttal $61,707, #FTE -Full Time Equivalent psitins utilized by an entity fr cllectins One f the cre functins f the NCDOR is the cllectin f state taxes wed t the State f Nrth Carlina. Cllectin activities in the Department are s varied and widespread that it is nt reasnably pssible t determine the prtin f the Department s budget that is directly and indirectly attributable t the cst f cllecting past due taxes (accunts receivables), nr is it reasnably pssible t determine the cst f cllecting taxes that have nt yet been assigned the status f an accunt receivable. Page 11