USDANEWS
by Ron Hall, Office of Communications
You probably noticed that the "Remarks Box" on your "Statement of Earnings and Leave" for Pay Period No. 15 contained the following message:
"As required by Debt Collection Improvement Act of 1996, Department of Treasury has started to offset travel reimbursement payments to USDA employees with delinquent federal debts. If you are impacted, you should immediately make arrangements with debtor agency to establish payment agreement."
"USDA is the largest lender in the federal government."
--Dick Guyer
Earlier in the year, a similar message appeared in the "Statement of Earnings and Leave" for Pay Period No. 5 as follows:
"Beginning in PP07 NFC will start taking salary offsets for the collection of delinquent child support payments and federal debts, under the Treasury Offset program of the Debt Collection Improvement Act of 1996."
These are but two of the techniques which USDA is using to help ensure compliance from its employees who have delinquent federal debts or who are delinquent in child support payments.
According to Dick Guyer, director of the Fiscal Policy Division in the Office of the Chief Financial Officer, the Debt Collection Improvement Act of 1996 was passed to provide the federal government with additional tools to employ, in order to both speed up and maximize collection of delinquent debts owed to it.
The program was subsequently expanded to cover delinquent child support payments as well.
Guyer explained that the term 'offset' is the buzzword which is used to describe the procedure in which an employee's salary can be 'garnished,' or reduced, by a certain amount each pay period, until the delinquent federal debt or the delinquent child support payment has been paid in full.
"However, if an employee's salary is going to be 'offset' or reduced to make that delinquent payment," he pointed out, "the amount of the reduction cannot exceed 15 percent of the employee's gross pay, each pay period."
"But, in contrast," he advised, "the Debt Collection Improvement Act does permit the confiscation--in its entirety--of an employee's federal income tax refund, a payment for a cash award, or a reimbursement for official travel, in order to pay off that debt."
...during the 180-day period, USDA tries to resolve the debt
situation by looking for ways to "work things out."
Guyer noted that delinquent federal debts aren't just owed by government employees. The financial debt to USDA is also from such activities as rural single or multi-family housing loans to borrowers, farm ownership or operating loans to borrowers, loans for rural utilities, over-issuances of food stamps, and fines levied against arsonists in U.S. national forests.
He added that the 'entities' which owe money to USDA can be an individual, partnerships, corporations, retailers, or even an entire community.
"USDA is the largest lender in the federal government," he underscored.
Guyer pointed out that the U.S. Department of the Treasury is the 'collection and enforcement arm' for these collection measures. USDA's role is to make sure that the accurate and proper debt amounts are forwarded to the Treasury Department, prior to the beginning of Treasury's collection efforts. Primary players in that role for USDA include OCFO's Fiscal Policy Division, the Financial Services Division at the National Finance Center in New Orleans, and the Program Management Division in the Rural Development mission area's Finance Office in St. Louis.
"But the proverbial bottom line is that we believe that every
debt to USDA should be repaid in accordance with
the terms under which it was made."
--Ron Bernhard
"The Treasury Department assumes the responsibility for collecting on a loan that is over 180 days delinquent," noted Ron Bernhard, director of NFC's Financial Services Division. "But USDA stays involved before that 180-day-mark is reached."
He explained that, during the 180-day period, USDA tries to help resolve the debt situation by looking for ways to "work things out."
"We'll suggest such measures as staggered payments, refinancing delinquent loans as appropriate, searching for other sources of payment, or creating some other method of payment agreement," Bernhard said. "In fact, when the delinquent debt is a loan, we don't even refer to that loan as 'delinquent' until we've exhausted all of the servicing requirements which are part of that particular USDA loan program."
"But the proverbial bottom line is that we believe that every debt to USDA should be repaid in accordance with the terms under which it was made."
The Jan.-Feb. 1998 issue of the USDA News carried a story on the various methods that USDA's customers can use to make payments they owe to the Department.
And how successful have USDA's efforts been in helping to collect on debts owed to it?
OCFO asset management team leader Dale Theurer said that since the Debt Collection Improvement Act of 1996 went into effect in July 1996, an estimated $100 million--that was owed to USDA but that was considered otherwise uncollectible--was, in fact, ultimately paid back to the federal treasury, from an estimated 51,000 delinquent "entities." He pointed out that the $100 million figure included $47 million in FY 1997 and $53 million thus far in FY 1998.
And how about comparable statistics on the amount of delinquent child support payments, and the number of USDA employees who have been delinquent in those payments?
"Unlike the statistics on delinquent federal debts and the accompanying delinquent federal debtors," he advised, "statistics concerning individual delinquent child support payments--and on those individual delinquent payers--are considered private information."
"In fact," added Bernhard, "at USDA, even though we help process, for the Treasury Department, the collection efforts for delinquent child support payments of our employees, we don't even know who those employees are by name, how many there are, or how much money they owe."
Regarding debt collection, how does the Department compare to the rest of the federal government?
"...we think that, regarding the collection of delinquent debts
to USDA, we're doing something right."
--Dale Theurer
Theurer advised that the average delinquent rate across the federal government is 20 percent--but the average delinquent rate across USDA is 7.2 percent. "This means," he explained, "that, of all of the monetary payments due annually to USDA, 7.2 percent is delinquent."
"And," he added, "when you factor in the fact that about 5 percent of all payments due might be considered uncollectible--such as in defaults, foreclosures, bankruptcies, or litigation, or in payments due from some foreign countries--then we calculate that 'only' about 2.6 percent of all payments due to USDA, which are considered collectible, are delinquent."
"So we think that, regarding the collection of delinquent debts to USDA, we're doing something right." ¤
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