Trends in State Courts <> 25th Anniversary Edition. A nonprofit organization improving justice through leadership and service to courts.

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1 Trends in State Courts <> th Anniversary Edition A nonprofit organization improving justice through leadership and service to courts.

2 OREGON COURTS TURN CRISIS INTO OPPORTUNITY David T. Moon Division Director, Business and Fiscal Services Division, Oregon Judicial Department The Oregon Judicial Department (OJD) is a unified system of state trial courts and appellate courts, including the Oregon Supreme Court, Court of Appeals, and Tax Court. There are 36 Oregon Circuit Courts in 27 judicial districts. Early in 2010, in response to widespread and long-term budget reductions, which involved laying off 8 percent of the state court workforce, Oregon s chief justice created the Court Reengineering and Efficiencies Work Group (CREW), which comprised a cross-section of judges and staff from around the state, and the Judicial Council s Collections Work Group to identify ways to improve business processes and create further efficiencies in trial and appellate courts. Members of the judiciary and OJD employees were asked to suggest efficiencies that could be implemented statewide to benefit the entire judicial department while considering the current constraints of budget cuts and reduced staffing. CREW reviewed more than 1,400 responses. TREND The economic downturn and state budget cuts have left the Oregon Circuit Courts with inadequate funding for essential services. This crisis creates an opportunity for court leaders to look closely at court processes and make systemic changes to reengineer the court business model to be more efficient and sustainable long-term. As a result of this effort, CREW recommended that higher-level court-accounting functions and many collection activities be moved from local trial courts to the State Court Administrator s (SCA s) office in Salem, thereby freeing courts to focus their limited resources on delivering judicial services. This recommendation was made while fully considering concerns expressed by presiding judges and court administrators. Moving accounting functions away from local trial courts was seen by some as diluting local control. Presiding judges and their trial court administrators are statutorily responsible for the administration of their courts, and outsourcing some of their business functions to the SCA s office makes management oversight more difficult. Some courts felt working with a remote central office would slow down or compromise accurate case financial processing. These concerns were barriers to implementing successful, statewide central accounting and collections programs, and each concern was addressed with solutions that allowed for local court metrics for measuring the quality of work. Developing relationships facilitated good communications between local court staff and central accounting staff. Designing new workflow and business processes, which took advantage of electronic document management and new case and financial Turning Crisis into Opportunity 51

3 The best time to be a court administrator is when we have the resources to do what needs to be done. But when there are budget limitations you need to look at the work in an organization-wide way, and see what you can do with what you have. It moves you out of business as usual mode and helps determine the priorities of tomorrow, rather than today. -Richard Moellmer Trial Court Administrator Washington County Circuit Court management software (ecourt), helped ensure a smooth transition for centralizing accounting functions and providing transparent accountability to court administrators. The Central Services Unit was created to be an ancillary service provider to the courts. Responsibility for accounting functions is delegated to the Central Services Unit, but ultimately the court maintains authority and control. This unit uses fewer staff to process court financial business more efficiently, consistently, and accurately. Oregon ecourt implementation began in June 2012 and is scheduled to continue over the next four years, with rollout to all courts completed by June Oregon ecourt provides an additional opportunity to leverage technology to provide virtual courthouse services like efiling, epayments, and further centralization of court accounting, central printing, and collections functions. The Oregon ecourt system was configured to take advantage of efficiencies and best practices that have been developed over the past two years. CENTRAL SERVICES UNIT In April 2010, the new Central Services Unit was formed to analyze the potential benefits of centralizing or automating accounting functions, check printing, collection processes, and violations bureau activities. The directive was to determine if it was possible to increase efficiency, improve internal controls, and relieve some of the workload of the courts. Accounting. Centralizing high-level accounting functions was the first project and began in August Josephine County Circuit Court piloted central accounting by transitioning disbursements, adjustments, return check processing, end-of-month close, the escheatment process, and bankruptcies. The Josephine County pilot proved that OJD could provide Monthly Hours by Accounting Duties a 65 percent overall savings in staff time by 69 transferring these accounting functions from the 23 local court level to the Central Services Unit. Verification and Balancing Adjustments Disbursements and Check Printing Fund Transfers Month-End Processing Division of State Lands Miscellaneous Josephine Central Services 66 Twenty courts transitioned their accounting functions to Central Services in the first two-anda-half years. The remaining courts will follow in the next few years (through mid-2016), as they prepare to transition to ecourt following the implementation schedule set by the ecourt executive sponsors. Before the Central Services effort, OJD spent full-time equivalents (FTEs) performing the 52 Trends in State Courts 2013

4 high-level accounting functions for 20 courts (Coos and Curry courts are combined into one judicial district). The Central Services Unit is currently spending 6.28 FTEs on the same functions. This represents a total savings of FTEs (65 percent). Statewide implementation of Central Services will save an additional FTEs for a total statewide savings of FTEs. To provide perspective, in the circuit courts lost FTEs due to budget reductions, and many of those positions may never be restored. Cumulative Full Time Equivalent (FTE) Savings Josephine Lincoln Tax Appellate Malheur Union Wallowa Jefferson Crook Polk Clatsop Tillamook Coos/Curry Linn Douglas Washington Deschutes Jackson Yamhill Central Services also reconciles electronic payments, accepts phone payments by credit card and cash-tender payments by mail, corrects processing errors, and provides help-desk support to the users of the epayment system. The bulk of this work is still performed by each individual circuit court; however, by providing these services centrally, OJD can leverage efficiencies from an economy of scale and create consistency and standardization in our business process. Check Printing. OJD also studied the practice of printing checks, court notices, and financial reports at the courts to identify ways to streamline processes and reduce costs. OJD reviewed the option of contracting with the Oregon Department of Administrative Services (DAS) to print and mail all court-generated notices and checks and found there could be significant cost savings and efficiencies to print checks through DAS. In 2012 all 36 state courts started the transition to central check printing. The statewide annual savings from this change is staff hours and $22,344 in postage, check stock, and envelopes. OJD is currently studying options to print all court notices through DAS. Collections. Currently, the OJD has $1.4 billion in total outstanding receivables. This amount includes debt for which collection efforts have been exhausted, as well as debt that has current payment plans or has been assigned to a third party for collection. In response to a detailed revenue management study in 2009 to improve debt and collections management, the OJD has centralized most of the debt management We passed the work to the SCA s office and the transition was seamless. However reluctant our supervisor was to move to the centralized accounting model, within a few months she reported that the work was done quickly and consistently without any errors. -Bonnie Savage Trial Court Administrator Lincoln County Circuit Court Turning Crisis into Opportunity 53

5 Another huge time saver for my court.... I think that this could be an even bigger time saver for courts than central accounting has been. -Bonnie Savage, Trial Court Administrator Lincoln County Circuit Court During the past two years, OJD Tax Intercept Revenue 260% Increase From to $6,346,936 began exploring options to manage the delinquent debt portfolio more effectively. As local collections staff were reduced or eliminated because of budget reductions, OJD began to develop automated systems that could outsource delinquent debt to the Oregon Department of Revenue $2,408,105 (DOR) and private collection agencies with less court intervention. Cases with delinquent debt are now kept in a perpetual collections cycle until the judgment remedies expire. Before the implementation of these automated collection processes, delinquent debt would be returned from a third party as uncollectible and would not automatically be sent to another third-party agency that might be able to collect the debt. Consequently, courts accumulated a large volume of stale debt that had no collection activity for years. Courts simply did not have the staff resources to work old, uncollectible debt and to refer the cases back to third-party agencies. Because of these efforts and the efficiencies created through automation, the OJD has nearly 76 percent of the outstanding debt portfolio assigned to third-party agencies for collections ($960 million as of June 2012, as reported to the Legislative Fiscal Office of the Oregon State Legislature). The relatively small percentage of debt that is retained at the court is for debtors who enter into a voluntary payment plan with the court and keep current on their payments. In addition to automating the referral of delinquent debt to DOR and private collection agencies, OJD is now managing the volume and type of debt assigned to each thirdparty agency. Load balancing of the debt portfolio assigned to each third-party agency allows OJD to gauge collection performance more accurately and evaluate which agency performs the best on different types of debt. The central debt management effort has created efficiencies by using technology to automate processes that were once done manually by court staff. This has allowed OJD to keep most of its delinquent debt portfolio assigned to third-party agencies, rather than remaining at the court with no collection activity. If the debt is not being worked it cannot be collected. OJD is projecting a $9 million increase in third-party collections over the biennium, $3.9 million of which is projected to be collected through tax intercepts, a process of sending all debt to the Department of Revenue to intercept state tax refunds. Changes to automate the tax-intercept referrals have resulted in more than a 260 percent 54 Trends in State Courts 2013

6 THIRD-PARTY COLLECTIONS REVENUE IN DOLLARS: VS (PROJECTED) PARTIAL BIENNIUM JULY DEC Tax Intercept Department of Revenue Biennium Data Regular Collections Program Department Alliance One Municipal Line Barger of Revenue Services Bureau Total Third-Party Collections (actual) 2,408,105 47,594,581 8,017, , ,974 58,476, (projection) 6,346,936 49,256,851 7,703,632 2,224,114 1,637,212 67,168,745 Quarterly Trends Tax Intercept $3.0 Tax Season $2.0 $1.0 Dept of Revenue Regular Collection Program $10.0 $7.5 $5.0 Tax Season Dept of Revenue $0.5 $0.3 Municipal Services Bureau $2.5 $1.5 $1.0 $0.5 Alliance One $0.5 $0.3 Line Barger Turning Crisis into Opportunity 55

7 increase in tax-intercept revenue this biennium. This would possibly increase further with the creation of federal legislation to allow states to intercept federal tax refunds. Court Debt Collection and New Media Courts feel increased pressure to collect fines, costs, and restitution due to the economic downturn coupled with a decreased ability to pay for most offenders. New media could provide a way for courts to improve their debt collection. Cell Phones and Smart Phones. Mobile devices allow people to be reached almost anytime, anywhere. Nebraska uses texting, with the permission of the defendant, to send a reminder of payments due or obligations to be met. This has reduced the number of no-shows at court. Blogs and Wikis. The Government Revenue Collection Association operates a blog with discussion threads on various topics, such as collector performance measures and new legislation. Court-debt-collection agents of a state or large jurisdiction could also do this to share information. Microblogging. Just as texting can remind a court debtor, a court could broadcast messages on compliance-related matters via a service like Twitter. Social Networking. Facebook could provide courts with another avenue for sharing general information about collections and compliance. Collectors in a state or large jurisdiction could use a Facebook page to share ideas and information. Video Sharing. Michigan has developed collection video training for judges and collection staff on the judiciary Web site. This training could be posted on a site such as YouTube, along with other collectionand-compliance-related information. John Matthias, National Center for State Courts Central Violations Bureau Pilot. The newest project for the Central Services Unit is a centralized violations bureau, which is currently being piloted in one circuit court. Oregon Circuit Courts use local violation bureaus to reduce fines using a uniform fine schedule and then accept payment by phone, mail, or in person. Centralizing the violations bureau functions provides one statewide number for the public to request a fine reduction and pay their fine over the phone, online, or by mail. This approach provides a convenient and uniform enduser experience for the public, reduces court workload, and decreases the overall number of staff needed to operate the violations bureau for all 36 circuit courts. OBSTACLES TO IMPLEMENTATION Even with the successful implementation of these programs, there remain significant staffing and cultural obstacles to statewide adoption of centrally provided services. OJD has lost 201 permanent FTEs since the biennium, a 12 percent reduction in staff. Centralizing many accounting and collections functions that were previously done at the courts was a necessary reorganization of our workload that allowed us to maintain some of our current functions with less staff. After wringing out all possible efficiencies, the current central office staff has now reached its capacity to take on more courts, so additional funding is required to provide resources for centralized accounting functions to support Oregon ecourt processes and for a central violations bureau. These services generally become the new standard of operations as courts go live on the new Oregon ecourt system, creating efficiencies across the department and allowing circuit courts to support their increased workload associated with added functionality and public-access abilities. Without additional staffing, complete statewide adoption of even these highly efficient programs will be difficult to achieve. 56 Trends in State Courts 2013

8 CONCLUSION Ongoing budget reductions have devastated many OJD programs and operations. In an effort to respond, survive, and thrive in the future, the chief justice established the Court Reengineering and Efficiencies Workgroup (CREW) as a vehicle to continually evaluate, assess, and improve. Using ideas brought to CREW s attention through solicitation of feedback from judges and staff and operating under the OJD s guiding principles, mission, and vision, the CREW is tasked with generating, proofing, and piloting innovative ideas. This has resulted in the centralization of higher-level accounting functions and many collections activities, which has allowed courts to focus their limited resources on delivering judicial services. These programs are well on their way to saving the department 3 percent of current staff resources and generating $9 million in additional revenue. Barriers to creating these types of programs and realizing success are more cultural than technological, but can be overcome by creative solutions, open communication, and demonstrated success that highlights advantages for all of the parties involved. This change management process, while uncomfortable, has allowed OJD to make innovative and far-reaching improvements that directly benefit the communities we serve and the state as a whole. 25 YEARS AGO Court Collection of Fines and Fees Twenty-five years ago, courts in twelve states (Alaska, Arkansas, California, Colorado, Hawaii, Maine, Nevada, New Jersey, North Dakota, Ohio, Virginia, and Washington) accepted credit cards as payment for court fines, fees, and bail forfeitures. Dade County, Florida and Lansing, Michigan both attempted to simplify fine payment by installing drive-in windows in their courthouses. Despite efforts to be more accommodating, courts still faced problems collecting delinquent fines. As such, California passed legislation permitting the Department of Motor Vehicles to stop issuing driver s licenses to applicants with outstanding parking tickets. Turning Crisis into Opportunity 57