Agenda Item AGENDA STAFF REPORT ASR
Control 23-000981 |
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MEETING
DATE: |
12/19/23 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
All
Districts |
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SUBMITTING Agency/Department: |
Probation (Approved) |
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Department contact person(s): |
Daniel
Hernandez (714) 645-7001 |
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Tawnya
Medina (714) 645-7013 |
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Subject: Approve Standard Agreement with
State Franchise Tax Board for Debt Collection
ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
Approved
Agreement to Form |
Discussion |
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3
Votes Board Majority |
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Budgeted: Yes |
Current Year
Cost: $37,500 |
Annual Cost: FY 24/25: $75,000 |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: Yes |
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Current Fiscal Year Revenue: $12,500
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Prior Board Action: Yes, 5/25/21 #9, 10/31/2017 #23,
12/9/2014 # 14,12/6/2011 #11 |
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RECOMMENDED
ACTION(S):
Approve the revenue generating Standard
Agreement with the state Franchise Tax Board for the collection of unpaid court
ordered fines, forfeitures and penalties effective January 1, 2024, through
December 31, 2026, and authorize the Chief Probation Officer, or designee, to
execute the Standard Agreement.
SUMMARY:
Approval of the revenue generating
Standard Agreement with the state Franchise Tax Board to provide for collection
services of unpaid court ordered debts that are generally delinquent beyond 90
days and exceed $100 in total will increase the recovery of outstanding debt.
BACKGROUND
INFORMATION:
Revenue and Taxation Code (RTC)
sections 19280-19283 and Penal Code sections 1463.010-1463.012 provide
authority and guidelines for the County to collect fines, state or local
penalties, bail forfeitures, restitution fines, restitution orders or any other
amounts imposed by a Superior Court of the State of California. Specific
direction for the County to refer debts to the Franchise Tax Board (FTB)
Court-Ordered Debt Collections Program for collection of debt that are in
excess of $100 and more than 90 days delinquent is included in RTC sections
19280-198283. As allowed by RTC section 19282(b), the FTB invoices Probation 15
percent of any amounts collected to offset the costs of administering the
program. A reconciliation is made at the end of the year to the actual cost of
collections, and the excess administration fee collected, if any, is returned
to the County.
Since 2004, Agreements have been in
place with the FTB for these services, with the most recent Agreement ratified
by the Board of Supervisors (Board) on May 5, 2021, for the term of January 1,
2021, through December 31, 2023. Included below is a table of debt collected
for the last two Agreement terms:
Standard
Agreement Term |
Amount
Collected |
Board
Date |
ASR
Number |
1/1/18-12/31/20 |
$5,025,513 |
10/31/2017 |
17-000858 |
1/1/21-12/31/23 |
*$2,823,433 |
5/25/2021 |
21-000391 |
*
Debt collected through 10/23/23.
Legislative
impact
Assembly Bill 1869
was passed by the Legislature and signed into law by Governor Newsom in
September 2020. This legislation repeals the authority of counties to charge
defendants for numerous fees imposed in the criminal legal system, including:
administering probation and mandatory supervision, processing arrests and
citations, administering home detention programs, continuous electronic
monitoring programs, work furlough programs and work release programs. The
provisions of the law took effect July 1, 2021.
Assembly Bill 177
was passed by the Legislature and signed into law by Governor Newsom in
September 2021. The legislation further repeals and eliminates the authority of
counties to impose 17 additional administrative fees and/or costs on criminal
defendants and orders vacated any portion of a judgment imposing those fees
and/or costs. It includes, administrative fees related to the collection of
fines, restitution fines, and restitution orders; and the costs of drug testing
during probation. This legislation took effect
January 1, 2022.
These legislative
changes have resulted in a significant decline in debt collected and costs
related to this contract. AB 1869 and AB 177 impacted fines and fees will not
be collected under this agreement.
As required by the state, the
Standard Agreement includes a provision for the County to indemnify, defend and
hold harmless the state, its officers, agents and employees from any and all
claims and losses accruing or resulting to any person, firm or corporation who
may be injured or damaged by County. CEO
Risk Management has reviewed and approved the Indemnification provision.
Sole
Source Justification
The proposed Agreement is a sole
source agreement. There are no public agencies other than FTB that are
authorized by law to accept referrals from counties and to implement the
collection of court-ordered debts. There are third-party/private collections
agencies awarded Master Agreements by the Judicial Council of California that
collect on various court fees in general. Accounts must still be referred to
FTB for collection since these vendors cannot collect on delinquent accounts
directly. These vendors charge collection fees that average 22.5 percent for
administration in addition to the 15 percent FTB administrative fee. FTB
utilizes collection tools (e.g., tax interception, wage garnishment and
accessibility to the state database) to find the locations and employers of the
debtors not available at the local level.
The Orange County Preference Policy
is not applicable to this contract award.
The proposed Standard Agreement is
valid and enforceable only if sufficient funds are made available by the Budget
Act of the current year and/or any subsequent year for the FTB’s-Court-Ordered
Debt Collections Program, and is subject to additional restrictions,
limitations and conditions. The
Agreement also includes a clause that allows either party to terminate the
proposed Standard Agreement for any reason, upon 30-days’ written notice.
FINANCIAL
IMPACT:
Appropriations and Revenue from
this Standard Agreement are included in Probation's FY 2023-24 Budget and will
be included in the budgeting process for future years.
Probation is projecting the amount
collected will be $500,000 per year. Pursuant to Section 19282(b) of the
Revenue Taxation Code, FTB will retain 15% from the amount collected. The
amount of revenue Probation will receive is projected below, with the remainder
going to the state.
Revenue projections for each fiscal
year included in the Agreement are as follows:
FY 2023-24: $ 12,500
FY 2024-25: $ 25,000
FY 2025-26: $ 25,000
FY 2026-27: $ 12,500
STAFFING
IMPACT:
N/A
ATTACHMENT(S):
Attachment
A – Standard Agreement 95999 between Orange County Probation and the State of
California Franchise Tax Board
Attachment B – Penal Code Sections 1463.010-1463.012
Attachment C – Revenue and Tax Code Sections 19280-19283
Attachment D – Assembly Bill 1869
Attachment E – Assembly Bill 177
Attachment F – Risk Assessment or Modification of Insurance Terms
Attachment G - Contract Summary Form