Agriculture Department pledges to step up debt collection efforts

At a House Subcommittee hearing Wednesday, Agriculture Department officials said they would reduce the department's delinquent debt by the end of next year. Government Efficiency, Financial Management and Intergovernmental Relations Chairman Stephen Horn, R-Calif., called the hearing to allow Agriculture Department Deputy Secretary James Moseley a chance to report on his agency's efforts to comply with the 1996 Debt Collection Improvement Act. Moseley was unable to testify at an October hearing on the same topic. The act requires agencies to refer nontax debts that have been delinquent for more than 180 days to the Treasury Department. Nontax related debts include defaults on loans provided to students, small businesses and homebuyers. Delinquent debts also result when an agency overpays federal beneficiaries and vendors. "The Agriculture Department has been severely deficient in implementing the Debt Collection Improvement Act's key requirements and in taking advantage of the law's other tools," Horn said. The Agriculture Department is the federal government's largest provider of direct credit, offering loans that finance water and waste management, affordable housing, electric and telephone utilities, rural businesses, farm ownership and emergency disaster assistance. The agency collected more than $870 million in bad debt in fiscal 2001 and will collect the remaining $6.2 billion in delinquent receivables by Dec. 31, 2002, Moseley said. "Collections of delinquent USDA debt using [Debt Collection Improvement Act] tools have more then quadrupled since 1996," Moseley told the lawmakers. "We are continuing to work with Treasury, the Office of Management and Budget and the Federal Credit Policy Working Group to make sure we are fully exercising all of our debt-collection tools." General Accounting Office and Treasury officials testified that Agriculture Department agencies are not referring all eligible debt to the Treasury Department's cross-servicing program, which allows the department to collect debts for other agencies directly from debtors or refer them to private collection agencies. Treasury's Financial Management Service (FMS) runs the cross-servicing program and also recovers delinquent debt through other programs. As of Sept. 30, 22 percent of the Agriculture Department's delinquent debts that are eligible for collection have been referred to Treasury, whereas the governmentwide average for such cross-servicing referrals is 73 percent, said FMS Commissioner Richard Gregg. Gregg said FMS will devote special attention to monitoring the Agriculture Department's debt referral efforts. "I believe that any barriers to participation can be overcome providing it is a USDA priority," he said. FMS and the Agriculture Department are working together to set goals for fiscal 2002, which include developing Debt Collection Improvement Act implementation plans, Gregg said. Moseley told lawmakers the Agriculture Department's collection and compliance efforts would be greatly improved by the end of 2002. "This issue commands the highest priority and attention," he said.