Erie County government has been passing up millions of dollars in overdue bills -- from ECMC to child-support penalties -- because it lacks the expertise of a collection agency to pursue money that it's owed.
That comes from the Giambra administration's own money managers, who say that the lost income probably amounts to tens of millions of dollars but that they just aren't sure.
Their solution: Set up the county's own collection unit, with the help of a consultant who would charge $185 an hour plus travel expenses. The contract would be worth $120,000.
Is it a good idea?
County Executive Joel A. Giambra thinks so. He saw the value of a similar office in City Hall when he was Buffalo's comptroller.
"It's penny-wise and pound-foolish for anyone to question what we are trying to do," Giambra said. "For years, they have been leaving millions of dollars on the table, and no one has said boo about it."
In trying to close a $130 million deficit forecast for next year, Giambra advocates raising the sales tax by a penny on the dollar, and he has told department heads to increase user fees when possible. With angry taxpayers suspecting that his government harbors waste and inefficiency, Giambra says, he wants to collect every dollar owed.
The county executive says the problem predates his arrival in 2000. County departments lack the time or resolve to chase down late payers. Eventually, the debt is forgotten, to the tune of $1.5 million a year, he said.
But County Comptroller Nancy A. Naples told lawmakers that the few concrete examples of potential income do not yet justify a $120,000 investment in a consultant.
"It would appear that this is a consulting engagement the county might be able to do without," she told Legislator Albert DeBenedetti, D-Buffalo, chairman of the Finance and Management Committee, in a letter written weeks ago, after Giambra started pushing the idea.
The county government was owed $14.3 million at the end of 2003, said Budget Director Joseph Passafiume, who told his staff to set up the "Cadillac" of collections programs.
Erie County Medical Center, he said, wrote off $6 million in bad debt last year and will probably identify a similar amount this year.
Giambra hired Joseph R. Ciffa to direct the county's new collections unit. He is a former official with the Niagara Frontier Transportation Authority who also worked for years in the collections industry.
Ciffa says county officials often fail to bill Medicaid or private insurers for prescription drugs provided to county inmates or for their care at ECMC. He also said the Probation Department could do more to collect fees for supervision, drug testing and electronic monitoring.
ECMC could do more to collect fees that it is owed by patients, Ciffa said, and the Child Support Unit of the Department of Social Services has failed to collect a quarter of the money due, about $20 million. That cash would be passed to families, but the government could keep late-payment penalties.
The Health Department now hires a collections agency but could drop that contract and instead use the new collections office, which would be available to towns and villages as well, Ciffa said.
Giambra and Ciffa figure that there are other pockets of forgotten cash and want industry expert Lawrence W. Smith of Naperville, Ill., to help find them. Smith used to work with Ciffa at a firm called Financial Collection Agencies, which had several local clients, including the City of Buffalo.
Smith's resume says he has helped companies and governments, also including cities such as Albany, Atlanta and Houston, set up systems to manage accounts receivable.
"It is an industry fact that for every dollar of direct cost that you spend in a collection center, it's typical to recover 4 to 5 dollars," Smith said.
Once Smith has analyzed how each department works, he can set up methods to collect their money. In short, he would engineer the system that Ciffa and county workers would operate.
Smith's services would cost taxpayers $120,000, but before legislators approve a contract, they want answers to questions such as:
Doesn't the county already have experts to collect overdue money?
Doesn't the comptroller's office track money owed?
And if the officials aren't truly certain how much is out there, how will they know whether Smith's fee has been worthwhile?
One of Naples' analysts, Thomas W. Mazur, told lawmakers this week that the comptroller's office never received the information needed from departments to truly say how much had gone uncollected and how serious the problem had become.
Some lawmakers were angry that Naples had never brought it to their attention and that the staff in several departments had not pursued so much money.
"This money has been identified as not being collected," said an angry Legislator Timothy M. Wroblewski, D-West Seneca. "That means somebody is not doing their job."