Title
Authorize Renewal Agreement with the California Franchise Tax Board for the Collection of Court-Ordered Debt (Districts: All)
End
Overview
The County of San Diego (County) began participating in the Court-Ordered Debt Collection Program (Program) administered by the California Franchise Tax Board (FTB) in 2000. Through the Program, the County refers qualifying delinquent accounts to the FTB, which has access to information and statewide collection resources not available through the County’s local collection operations. The FTB uses these resources to identify sources of payment and pursue collection.
The County continues to conduct its own collection activities using available local resources. Participation in the FTB Program expands and strengthens the County’s collection efforts by providing an additional resource to pursue delinquent court-ordered debt. This partnership enhances the County’s ability to fulfill court-ordered obligations and expedite restitution to victims, while improving collections performance, maximizing cost recovery, and reinforcing public confidence in the justice system.
Pursuant to California Revenue and Taxation Code Sections 19280-19283, the FTB is authorized to recover its costs of administration by retaining a portion of amounts collected through the Program. The administrative fee is established by statute and reflected in the agreement between the County and the FTB. The FTB deducts that fee from collections prior to distribution of net proceeds to the County. Under the AB 132 Trailer Bill, Revenue and Taxation Code Section 19282 was amended to increase the maximum administrative fee from 15% to 20%. The Governor approved this bill to take effect on July 1, 2025. The administrative fee increase applies to all contracts that are set to renew on or after July 1, 2025. The County’s contract with the FTB is set to expire and subject to renewal on November 30, 2026.
Today’s action will allow for the continued participation in the Court-Ordered Debt Collection Program, which ensures the County can continue leveraging the State’s enhanced collection tools, maintain compliance with statewide collection requirements of a comprehensive collection program, and maximize recovery of court-ordered obligations on behalf of victims and the community.
Body
Recommendation by Chief Administrative Officer:
1) Authorize the Assistant Chief Administrative Officer/Chief Financial Officer to execute a renewal agreement with the California Franchise Tax Board (FTB) for continued participation in the Court-Ordered Debt Collection Program and any extensions in the future so long as the fee charged by the FTB does not exceed maximum permitted by law.
2) Authorize the Auditor and Controller, Office of Revenue and Recovery to continue referring eligible delinquent court-ordered debt to the FTB for collection services
End
Equity Impact Statement
Participation in the Franchise Tax Board Court-Ordered Debt Collection Program promotes equitable enforcement of court-ordered financial obligations by applying consistent, statewide collection practices to all eligible accounts. The program ensures that individuals with delinquent obligations are held accountable in a uniform manner, regardless of location or access to local collection resources. At the same time, the program operates within established legal safeguards, including notice requirements and due process protections, and does not alter the underlying debt or judicial determinations. Participation supports fairness by pursuing collection of legally imposed obligations while maintaining compliance with applicable laws and regulations.
Sustainability Impact Statement
Participation in the Franchise Tax Board Court-Ordered Debt Collection Program supports fiscal sustainability by increasing recovery of existing revenue without requiring additional local resources or significant operational expansion. By leveraging the State’s established collection infrastructure, the County of San Diego reduces the need for increased staffing, materials, and administrative overhead.
Additionally, the program utilizes electronic processes and centralized systems, supporting environmentally responsible business practices.
Fiscal Impact
Funds for this request are not included in the Fiscal Year 2026-27 Operational Plan across various departments in the County of San Diego. If approved, today’s actions would result in lesser receipts based on a 5% rate increase, from 15% to 20%, of collections received through the Franchise Tax Board (FTB) Court-Ordered Debt Collection Program. Pursuant to California Revenue and Taxation Code Sections 19280-19283, FTB retains an administrative fee from amounts collected to cover the cost of administering the program. This fee is deducted prior to distribution of funds to the County of San Diego, Office of Revenue and Recovery (ORR) Collections Revenue Fund. ORR then distributes these collections in accordance with each court order including payments to victims entitled to restitution, appropriate County departments and County funds, and applicable state programs. There will be no change to the General Fund and no change in staff years.
Business Impact Statement
N/A
Advisory Board Statement
N/A
Background
The Auditor and Controller, Office of Revenue and Recovery is responsible for the collection of court-ordered fines, fees, forfeitures, penalties, and restitution imposed by the courts. While the Auditor and Controller, Office of Revenue and Recovery employs a variety of local collection tools and strategies, a portion of these obligations remain delinquent due to limited enforcement mechanisms at the local level and the transient nature of some debtors.
The County of San Diego (County) began participating in the Court-Ordered Debt Collection Program administered by the California Franchise Tax Board (FTB) in 2000. This program enables the County to refer eligible delinquent accounts to the FTB, which utilizes statewide and interstate collection tools not otherwise available at the local level, including wage garnishments, bank levies, and interception of state tax refunds. These enhanced collection activities generate approximately $100,000 in annual collections that would otherwise not be recovered through local efforts alone.
Participation in the FTB Court-Ordered Debt Program (Program) is also a component of the State’s Comprehensive Collection Program, as required under California law, including Penal Code §1463.007. Participation in the FTB program is one of the approved collection activities that helps the County qualify as a comprehensive collection program under Penal Code 1463.007. To meet statutory requirements, the County must complete a set number of approved collection actions in order to deduct its operational costs from revenues collected. Referring delinquent accounts to the FTB is one of these activities. While participation supports compliance and cost recovery, it is not a mandatory requirement on its own. The Program supports the County’s obligation to pursue all reasonable collection efforts for court-ordered debt and enhances compliance with statewide collection standards.
Linkage To The County Of San Diego Strategic Plan
Renewal of the California Franchise Tax Board Court-Ordered Debt Program agreement directly supports the County of San Diego’s 2026-2031 Strategic Plan, Economic Sustainability initiative by maximizing the collection of delinquent court-ordered debt through cost effective, state administered program. The agreement enhances revenue recovery, promotes responsible stewardship of public resources, and increases the collection of court ordered obligations including victim restitution. It also supports a Safe Community initiative by holding offenders financially accountable and helping ensure victims of crime receive restitution ordered by the courts, while improving operational efficiency using a proven statewide collection tool.
Respectfully submitted,
Ebony N. Shelton
Chief Administrative Officer
Attachment(s)
ATTACHMENT A- Client Communication Letter