Memorandum

City of Lawrence

Finance Department

TO:	Dave Corliss, Interim City Manager
FROM:	Ed Mullins, Finance Director
Date:	May 30, 2006
RE:	2004 Receivable Write-off

The City Commission is requested to authorize the write-off of certain water, sewer, sanitation and miscellaneous receivables deemed uncollectible by the Finance Department.  The period covered is January 1, 2004 through December 31, 2004.  The total requested write-off is $114,018.00 for 753 utility billing customers and $16 820.93 for 52 miscellaneous receivable accounts.

In order to fairly present the financial position of the City of Lawrence, the Finance Department performs an annual review of the status of its accounts receivable.  Since the Department has the capability of disconnecting delinquent active accounts within two months, uncollectible utility accounts are typically unpaid final bills of our inactive customers.  The number of accounts and amount to be written is very close to the amounts from the previous year.  The uncollectible miscellaneous receivables are primarily uncollected billings for building inspections and sanitation roll-offs.  Over $6,400 was uncollected from E & E Specialties as a result of their bankruptcy.

The Finance Department has reviewed the utility accounts to determine if the customers have relocated to another service address within Lawrence.  Delinquent notices have also been sent and the accounts have been turned over to a collection agency.  The collection agency will continue to pursue the accounts.  Utility billing personnel also can sometimes find an individual who has had a prior account written-off when they are signing-up for new service.

The amounts written off in 2001, 2002, 2003, 2004, and 2005 were $78,412.13, $72,026.30, $113,136.65, $189,083.87, and $110,407.49 respectively.

The Finance Department recently contracted with a new collection agency to pursue delinquent accounts.  The number of utility accounts to be written-off represents 2.5% of the total accounts in the City.  A detailed list of utility accounts to be written-off is available upon request.  The list of miscellaneous accounts is attached.

To help locate prior uncollectible accounts, the social security number and driver’s license number of customers are recorded when the account is established.  Delinquent customers are sent to the State of Kansas as part of its set-off program.  If the customer is owed any money from the State of Kansas, the amount due the City is deducted from the amount and paid to us.

In order to be more aggressive in terminating utility service in a timelier manner, the utility billing staff was increased in 2006.  An additional Field Service Representative was hired that will spend the majority of their time on collection activities.  The dollar impact of the new position will not be apparent until the 2006 accounts are written off in 2008.