Bill Summary – FastDemocracy

Fiscal Note
                                       Fiscal Services Division
SF 367 – Criminal Surcharge, Court Fees (LSB1174SV.3)
Staff Contact: Laura Book (515.205.9275) laura.book@legis.iowa.gov
Fiscal Note Version – Final Action
Description
Senate File 367 relates to certain financial obligations under the consumer credit code and the
criminal and juvenile justice system by modifying criminal and civil surcharges, fines, fees,
costs, and court debt. The Bill makes several technical corrections related to the collection of
fines and civil fees. Senate File 367 expands the debts of which the county attorney may not
collect a percentage to include all current surcharges.
Senate File 367 amends the definition of court debt to mean all restitution as defined in Iowa
Code section 910.1, fees, forfeited bail, and other debt paid to or collected by the clerk of the
district court. The Bill requires the Iowa Department of Revenue (IDR) receive 15.0% of each
court debt payment as a processing fee on cases assigned to the IDR for collection, with the
remainder of the court debt to be collected by the clerk of the district court for distribution in
accordance with applicable law. The IDR collection fee must not include the amount of court
debt collected for restitution involving pecuniary damages, the Victim Compensation Fund, the
crime services surcharge, the domestic and sexual abuse crimes surcharge, the agricultural
surcharge, or the sex offender civil penalty.
Senate File 367 provides that payments made by a person between January 1, 2021, and
January 1, 2022, which added the IDR processing fee to the debt owed, shall be calculated as if
the payment had been made and the IDR fee shall be applied to such a payment. The IDR
processing fee added to the debt shall be deducted from the amount of court debt owed. If a
payment made by a person owing court debt during this specified time reduces the total amount
owed to zero, the clerk of court shall issue a refund to the person in the amount of the
processing fee. This provision is repealed on January 1, 2023.
Senate File 367 rescinds Iowa administrative rule 701—155.1(602) on January 1, 2022.
Section 2 of the Bill, which makes a conforming change to Iowa Code section 602.8105, is
effective upon enactment and also applies retroactively to July 15, 2020. Section 4 of the Bill,
which relates to the collection of court debt by the IDR and the 15.0% processing fee collected
by the Department, is effective on January 1, 2022.
Background
Prior to July 1, 2015, delinquent court debt was assigned to the Centralized Collection Unit
(CCU) of the IDR at the time of delinquency. The CCU charged a 10.0% processing fee in
addition to the delinquent debt. The CCU was removed from the collections process beginning
in FY 2016, and debt was assigned to the private collector Linebarger, Goggan, Blair, and
Sampson, L.L.P. (Linebarger), at the time of delinquency. In FY 2017, further changes to the
court debt collection system were implemented. The collections timeline was modified to allow
the county attorneys to begin collecting after 30 days from assessment or the due date of an
installment payment. If a county attorney has filed a notice of full commitment to collect
delinquent court debt and a Memorandum of Understanding (MOU) with the clerk of the district
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Court, the debt is assigned to the county attorney. If not, the debt is assigned to the designated
private debt collector.
During the 2020 Legislative Session, SF 457 (Criminal Fines and Surcharges) was enacted,
which removed the private debt collector from the court debt collection process and replaced it
with the CCU of the IDR beginning in January 2021. Currently, the IDR is permitted to collect a
processing fee in addition to the delinquent debt in order to cover administrative costs. The fee
is set by administrative rule at 15.0%. If enacted, this Bill will repeal the IDR administrative rule.
Assumptions
• The IDR collections will be similar to the average Linebarger collections from the last three
   fiscal years. The average annual collection by Linebarger was approximately $9.7 million.
   In FY 2021, the IDR will collect half of the average annual Linebarger collection since IDR
   began collecting court debt halfway through the fiscal year.
• Based on the FY 2020 court debt collections, 82.0% of all fines and fees collected by and
   owed to the State will have a processing fee applied and collected from those fees. Court
   debt is comprised of: 22.0% attorney fees, 17.0% court costs, 33.0% fines, 10.0% jury and
   witness fees, and 18.0% surcharges.
• The 15.0% processing fee will cover all administrative costs incurred by the IDR while
   collecting court debt.
Fiscal Impact
Senate File 367 is estimated to have a fiscal impact of approximately $1.2 million annually
beginning in FY 2022. It is estimated that the IDR will collect approximately $1.2 million in
processing fees and as a result, the State General Fund and city and county budgets will
experience a combined revenue reduction of the same amount. This processing fee will cover
any IDR administrative costs. It is unknown at this time how the $1.2 million negative impact
would be divided between the State, cities, and counties. Table 1 provides the annual State
collection categories and the fees estimated to be collected from each category beginning in
FY 2022.
        Table 1 — IDR Estimated State Collections and Fees Beginning in FY 2022
                                             Annual Estimated          Est. Fees
                                               Collections*             (15.0%)
                      Attorney Fees          $         2,132,000   $      319,800
                      Court Costs                      1,647,000          247,050
                      Jury and Witness                  969,000           145,350
                      Fines                            3,198,000          479,700
                      Surcharges                       1,744,000              N/A
                      Total                  $         9,690,000   $ 1,191,900
                      *Does not include victim restitution or other amounts not
                      owed to the State.
The IDR began collecting court debt on January 1, 2021, and currently collects the processing
fee in addition to the amount owed. If between the time the IDR began collecting and
January 1, 2022, a person pays off their court debt, including the processing fee, the clerk of
court is required to refund the additional processing fee. It is estimated that the IDR will collect
$600,000 in processing fees in FY 2021, but it is unknown how much of this will be collected
and qualify for refund on January 1, 2022. This may have a fiscal impact on the State General
Fund and city and county budgets, but the impact is unknown at this time.
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Sources
Judicial Branch
Iowa Department of Revenue
LSA analysis
                                                                        /s/ Holly M. Lyons
                                                                          June 28, 2021
Doc ID 1221584
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
                                            www.legis.iowa.gov
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Statutes affected: 
Introduced: 537.1301, 692A.110, 602.8107, 421.17, 814.6, 708.2A
Reprinted: 537.1301, 692A.110, 602.8107, 421.17, 814.6
Enrolled: 537.1301, 692A.110, 602.8107, 421.17, 814.6