Municipal Court Firing Debt Collector

The Milwaukee Municipal Court is firing Duncan Solutions, the firm responsible for collecting unpaid court fines and forfeitures.

“We have not gotten all of the requirements of the contract fulfilled,” said Sheldyn Himle, the chief court administrator, to members of the Common Council’s Finance & Personnel Committee Wednesday morning.

She said there were delays associated with reporting and reconciling debts. In at least two different situations, an assistant city attorney submitted a record to the council regarding a proposed property sale on which Duncan was unresponsive.

“An earnest effort was made on both sides, but we feel it is time to move on,” she said.

Duncan was scheduled to start on the contract in early 2020, but the city postponed collection once the pandemic took hold through July. The company took until August to begin collecting.

“It starts with COVID and moves into a number of other factors,” said Brian Dunn, senior vice president at Duncan, of the why the breakdown occurred.

He said the company was 90% ready to go with its solution in March, but work was halted. By the time the work resumed the company’s implementation manager was no longer employed by Duncan and other employees, some of whom were out of state, took “longer than it should have” to get up to speed.

Himle said the court’s debt collection process is complicated. “It is not simply a matter of placing it with a collection agency and letting them take it from there,” she said, noting that there were many layers involved. The city has multiple debt collection streams, including others for property taxes, parking citations and emergency services.

The company will keep its contract as the Department of Public Works’ collection agent for parking tickets. Parking citations that ultimately get referred to the court would be impacted.

Alderman Michael Murphy asked Dunn if Duncan had the expertise to perform court debt collection.

Dunn said the company did through its parent, Navient. He said Navient’s other subsidiaries had held court debt collection contracts.

Milwaukee’s court debt collection contract was previously held by Harris & Harris, but the city awarded a new contract in 2019 through a request-for-proposals process.

The 2021 city budget calls for the court to raise $2.5 million in revenue from fines and forfeitures, down from $2.6 million in 2019 and $3.3 million in 2020.

After a slow start, Duncan did start collecting in 2020 according to the city budget office. “Duncan seems to be performing similar to the prior vendor,” said budget and police manager Eric Pearson of the fourth quarter 2020 statistics.

The 2021 budget for the court does not take into account the issue. Budget director Dennis Yaccarino said a bigger revenue issue would be seen from a decline in police-issued citations.

“We expect that we will transition to a new vendor that will hopefully improve things,” said Yaccarino. He said the city would move quickly to issue a new request for proposals.

Comptroller Aycha Sawa, at Murphy’s request, said she would explore with the court and budget office if a “mini audit” was necessary of Duncan’s cash handling. Representatives from each entity said they did not have reason to be concerned.

Ald. Nik Kovac pushed for the city to seek a collector that would integrate community service into their offerings. “It’s not going to be great for our bottom line, but there is a social value,” he said.

“I don’t think they get paid by community service,” said Murphy.

The court, which has three elected municipal judges, does offer community service as a payment option.

A July 2020 Comptroller’s report shows the city ended 2019 with $31.8 million in uncollected court debt, down from $40.6 million in 2016. The report says the court has a collection percentage of 19.6%, the lowest of any listed by city entities. The city collected 80.5% of all parking citations by dollar value in 2019.

The report says the city had $133.5 million in uncollected debt at the end of 2019, with 24% from the Municipal Court. Unpaid property taxes are the biggest source (31%) of uncollected debt.

The 2019 RFP process yielded a deal where Kohn Law Firm and Duncan Solutions were responsible for all debt collections. The Duncan contract will be amended to only parking-related collections a new RFP will be issued for the court collections. Kohn’s work will continue.