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  8.       
City Council Regular Meeting
Meeting Date: 04/05/2022  

BACKGROUND
In the EMS, Utility Billing, and Magazine functions, services are provided to customers up front and billing is settled later. Since services are provided before receiving payment, inevitably the City has customers that do not pay for the services provided.

When this occurs, staff reaches out to the customer to try to collect the outstanding payment including follow-up notices and phone calls to try to reach out to the customer to remind them of the outstanding balance and encourage payment. However, the longer the customer account goes without a payment the less likely that any payment will be received.

Once a customer account reaches 180 days without payment, Staff brings those accounts to the City Council to be “written off”. This process is an accounting procedure following the Generally Accepted Accounted Principles (GAAP), which lays the framework of accounting practices in the U.S. This designation means it is unlikely those outstanding balances will ever be collected. This leads to an accounting adjustment on the City’s Financial Statements to accurately show how much is still outstanding and is reasonable to expect collection.

If a customer’s account has been written off, this does not erase or forgive that debt. The city can and does collect some portion of the amount owed by those customers. This can be through the debt collection agency used by EMS or if the customer returns to the City and requests new services through the Magazine or Utility Billing.

On August 27, 2019, City Council approved the Schertz EMS Charity Care Policy.  Approving the Charity Care Policy benefits our citizens who do not have insurance and do not have the ability to pay for ambulance services.  In the past, these accounts were sent to collections and written off throughout year with little expectation to recover any revenue.    

The resolution authorizes the debt for these areas that is more than 180 days outstanding as of March 1, 2022, to be written off. These write-offs come before council quarterly and last came before council on January 25, 2022.

Previous Write off Amount:
February 2017: $621,138.97
June 2017: $544,944.16
September 2017: $510,516.01
January 2018: $510,637.79
March 2018: $433,427.15
June 2018: $439,627.14
September 2018: $521,281.82
December 2018: $727,307.39
March 2019: $564,227.77
June 2019: $580,155.10
September 2019: $586,664.65
December 2019: $591,829.90
March 2020: $616,900.00
June 2020: $552,157.34
September 2020: $605,161.66
December 2020: $467,802.06
   
With Charity Care  
March 2021: $1,330,234.88
June 2021: $904,511.15
September 2021: $750,502.47
December 2021: $587.362.56
March 2022: $675,977.28

Charity Care for March 2021 was for an entire year, August 2019 through July 2020. For June 2021, Charity Care was for 5 months, August 2020 through December 2021. Going forward, these adjustments will be done quarterly.
GOAL
To approve write-offs of bad debt in accordance with the standards laid out by GAAP.
COMMUNITY BENEFIT
This will show the City's Financial Statements according to national standards and City policy.
SUMMARY OF RECOMMENDED ACTION
Approve Resolution No. 22-R-36 to write off receivables that are older than 180 days.
FISCAL IMPACT
This accounting adjustment will not affect the City’s Budget or financial standing. The amount written off is estimated during the budget process and is accounted for in the revenue estimations and the bad debt expense accounts. The action taken tonight will reduce the amount shown as owed to the City by $675,977.28 and set it equal to the amount seen as still reasonably collectible. The breakdown is as follows:
EMS - $477,084.12
EMS Charity Care - $167,073.00
Utility Billing - $31,820.16
Magazine - $0.00

 
RECOMMENDATION
Staff recommends Council approve Resolution No.22-R-36.
Attachments
Resolution 22-R-36

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