ITEM 4. 5
CITY MANAGER' SREPORT
AUGUST 11, 2025 CITY COUNCIL REGULAR MEETING
ITEM: APPROVE WRITE- OFF OF UNCOLLECTIBLE UTILITY
ACCOUNTS FOR FISCAL YEAR 2024/5
RECOMMENDATION: Adopt Resolution to Approve Write -Off of Uncollectible Utility for Fiscal Year ( FY) 2024/5
SUMMARY:
Generally Accepted Accounting Principles ( GAAP) and Governmental Accounting Standards Board ( GASB) require municipalities to evaluate and write- off delinquent accounts that are deemed uncollectible. As part of the annual audit process and in compliance with both GAAP and GASB requirements, the Finance Department has reviewed unpaid delinquent accounts assigned to collections. After a thorough review, staff has determined $ 110, 610 to be uncollectible for FY 2024/5as detailed in Table 1 below:
Table 1.
Customer Account Type
FY 2023/4
Approved
Write - Offs
FY 2024/5
Recommended
Write - Offs
Increase/
Decrease)
wo
No. of
Accounts to
be Written -Off
Utility Customers
Residential and Commercial) 120, 620 110, 610 8. 30%) 213 Totals 120, 620 110, 610 213
The recommended utility write- offs represent 0. 55% of the annual water and sewer charges billed to customers in FY 2024/5. The utility debt includes amounts from customers who have closed their account with the City without settling their final bills. The utility write- off amount in FY 2024/5has decreased by $ 10, 010 or 8. 30%, from the prior fiscal year.
Although these accounts will reflect as " written off" in the City' sfinancial system, additional collection measures are in place to seek repayment. For instance, the collection agency will continue to pursue repayment efforts on these accounts and forward any recovered payments to the City.
Tonight, Staff is requesting Council' sapproval to write- off $110, 610 of uncollectible utility and miscellaneous charges.
CITY MANAGER' SREPORT
AUGUST 11, 2025 CITY COUNCIL REGULAR MEETING
UNCOLLECTIBLE UTILITY ACCOUNTS
BACKGROUND:
PAGE 2
On May 19, 1998, the City Council of the City of Lathrop adopted Resolution 98- 664 regarding the approval and implementation of a revenue collection policy. On October 18, 2010, Council authorized the execution of an agreement with Golden State Collections, LLC.
The collection policy was established to help decrease the number of delinquent accounts ( 60- 90 days). After unsuccessful collection attempts by City staff, the policy allows City staff to refer customers' accounts that remain unpaid for 60- 90 days to the collection agency for collection proceedings. The collection agency operates on a commission - based structure. Their fee is 30% of the total amount collected.
Utility Customer Accounts
Utility customer accounts include charges for water and wastewater who have closed their account with the City without paying their final bill. During FY 2024/5, Golden State Collections, LLC, received claims for further collection processed on 213 delinquent utility customer accounts totaling $ 110, 610. Of the $ 110, 610 assigned to Golden State Collections, LLC, the agency recovered $ 886 from 7 customer accounts recorded on the current and prior year claims. This represents a 0. 80% recovery rate from the total amount referred ( see Table 2).
Table 2.
Utility Customer Accounts FY 2022/3 FY 2023/4 FY 2024/5 Total Utility Customers 9, 895 10, 528 11, 601
Accounts Sent to Collection Agency 198 226 213
Amount Assigned to Collection Agency 184, 313 120, 620 110, 610 Amount Recovered by Collection Agency 4, 658 927 886
Recovery Rate 2. 52% 0. 77% 0. 80%
Total Write - Offs 184, 313 120, 620 110, 610
The utility write- off amount in FY 2024/5 has decreased by $ 10, 010 or 8. 30%. Of the 213 utility customer accounts, there are 75 residential accounts with past due balances of $ 500 or more. These accounts total approximately $ 84 thousand and makes up for 75. 94% of the overall utility write off amount.
Staff will continue to re -enforce current programs that offers payment assistance, such as extending payment due date or granting payment arrangement to utility customers carrying past due balances. In addition, the Finance Department conducts a review of all new customers prior to establishing service to ensure there are no outstanding balances.