The
UNC Policy Manual
600.4.1.2[G]
Adopted
01/22/80
Amended
12/04/80
In 1989, the General Assembly passed the State Employee Debt
Collect Act (N.C.G.S. Chapter 143, Article 60).
This act promotes payment of a debt owed the State by an employee,
official, or legislator of the State through the threat of sanctions (e.g.,
discharge of employment) if the debt is not paid.
This act was written to assist in the collection of debts owed the
State by employees, public officials, and legislators of the State. The definition of "public official"
includes those members of State boards, commissions, councils, committees, and
other State agencies "created by law" whose personnel positions are
not salaried by the State. "Public
officials," therefore, would include members of the Board of Governors,
the Boards of Trustees of the constituent institutions, the Boards of Trustees
of the institutional endowment funds, the Board of Directors The University
North Carolina Hospitals at Chapel Hill, the Board of Directors of the State
Education Assistance Authority, and the Board of Trustees of the University of
North Carolina Center for Public Television.
Where an individual is both a salaried State employee and a nonsalaried member of a State agency, the individual should
be treated procedurally as a State employee, not as a "public
official" (e.g., the President of the University, who is both a State
employee and ex officio a trustee of
The University of North Carolina Center for Public Television).
Debts
collectible under the act.
Any "delinquent" debt owed the State by a State
employee, public official, or legislator may be pursued under the act.
Method
of debt collection.
The means of inducing debt payment by State employees is the
threat of termination of employment. Similarly, public officials are faced with
termination of appointment for nonpayment.
Nonpaying legislators, however, are to be dealt with by the Legislative
Ethics Commission.
Responsibilities
of State agencies.
In basic outline, the act requires (1) identification of
employees, officials, or legislators of the State who are indebted to the
State, (2) transmission of notice of the identity of the debtor and the fact of
indebtedness to the entity that employs the debtor (or that appointed the
official or that is responsible for superintending the conduct of legislators),
and (3) actions by the debtor's employer relative to the debtor and the
indebtedness, including ultimately the possibility of terminating the State
employment of the debtor.
Reporting
debtors.
The various components of State government, are responsible for
identifying delinquent debtors to the State who also are employees, officials,
or legislators of the State.
In recognition of the difficulty likely to be encountered by a
State governmental entity in identifying debtors to it who also are employees
of another State entity, the State Department of Budget and Management has
prescribed a system for addressing the basic reporting responsibility. Using the University context for purposes of
illustration, the system requires a constituent institution to report to the
Office of State Budget and Management all "past due accounts" for
which "satisfactory provisions for repayment" have not already been
made. That agency in turn will compare
the list supplied with the comprehensive list of State employees and identify
those debtors who are State employees.
The constituent institution then will be given the name of any debtor to
the institution who also is an employee of the State; and the constituent
institution then is responsible for notifying the employer that one of the
entity's employees is indebted to the institution.
The "representative" of the entity responsible for
reporting debtors to the employer of the debtor is not defined by the
legislation. The term reasonably appears
to suggest that a designated official of the State entity (e.g., vice
chancellor for finance) should be identified and authorized to perform the
reporting requirement.
The act establishes no timetable for periodic reportings
of debtors to the entities responsible for acting on such reports. However, the State Budget Office has directed
that it be sent the names and social security numbers of "individuals with
past due accounts" for which no satisfactory provisions for repayment has
been made. In short, each constituent
institution should send to the State Budget Office a list of delinquent debts
for which the constituent institution has not been able to induce the debtor to
repay or to begin to repay.
Privacy
act concerns.
The State Budget Office has called for providing to it the
debtor's social security number. The
act, however, contains no statutory authorization for such a disclosure and
use. In fact, the act expressly
states: “Nothing in this Article is
intended to conflict with any provision of federal law . . . If the exchange
among employing entities of information necessary to effectuate the provisions
of this Article would conflict with this intention, the exchange of information
shall not be made.” In light of these
circumstances, the State Budget Office has agreed that an agency need not
transmit to the State Budget Office the social security number of an individual
debtor if that number was received by the entity under conditions that would
cause the federal Privacy Act of 1974 to prohibit its disclosure. For purposes of applying this policy, the following
guidelines seem required by the Privacy Act of 1974:
(1) The transfer from a constituent institution to the State
Budget Office of an individual's social security number in the process of
debtor/State employee identification is a "disclosure" of that number
within the meaning of the Privacy Act of 1974 and is conditioned by that act.
(2) Any individual who is asked to make
initial disclosure to an institution of a social security number in the context
of this act must be told that
(a) such disclosure is voluntary,
(b) such request for disclosure is
incident to State administrative procedures for debt collection, and
(c) the number, upon disclosure, would be
available to effect debt collection.
(3) Any individual whose social security number has been
disclosed to an institution in a manner other than according to condition (2),
above, without informing the individual of possible use of the number for debt
collection, must be informed of such possible use before transfer of the number
to the State Budget Office. (The time
lapse between informing the individual of the intended or potential use and the
transfer of the number is not stated by the Attorney General to be important so
long as the individual is, in fact, informed before the transfer.)
The Attorney
General's opinion of November 21, 1980, establishes two principles of which
special note should be made.
(a) It is not significant whether an
institution obtained a social security number before December 31, 1974 (the
effective date of the Privacy Act of 1974).
The Privacy Act conditions use of any social security number.
(b) It is important whether an institution
obtained the social security number for use under the act (a) by initial
disclosure from the individual (see condition (2), above) or (b) from
pre-existing institutional records or from a third party (see condition (3),
above).
In light of
the foregoing, an agency may delete from the requested debtor list a social
security number whose disclosure is, in effect, prohibited by the Privacy Act
of 1974 but should indicate which deletions are made with reference to the
Privacy Act, as opposed to mere lack of information.
Informing
the employing entity.
When an agency to whom a State debt is owed learns that the debtor
is a State employee, public official, or legislator, the agency must inform the
employer of the debtor or the appointing authority of a public official or the
Legislative Ethics Commission, as the case may be.
Because a debtor to the State may be both a State employee, public
official, or legislator and also a taxpayer due a refund of at least $50 from
the Department of Revenue, some debts of an individual will prove collectible
under both this act and the Setoff Debt Collection Act. When an agency to whom the debt is owed
learns that both acts may pertain to collection of the debt, that agency should
inform the employer of the debtor. This
will help minimize the possibility that sanctions will be imposed under this
act for a debt collected or in the process of being collected under the Setoff
Debt Collection Act.
Debt
resolution.
State employees have an "employing entity" and public
officials have an "appointing authority" to whom notice of the debt
must be made. Once notice is received,
the statutory duties shift from the agency owed the debt to the employing
entity (or appointing authority) of the debtor.
The employer, upon receiving notice of the debt, must initiate debt
resolution.
Depending upon the nature of the employee or public official's
position with the State, the act prescribes the procedure for resolution of the
debt to the State by the employer:
(1) Public officials - "Upon receipt of notification, the
appointing authority shall investigate the circumstances of the claim of money
owed to the State for purposes of determining if a debt is owed and its
amount". The act then provides for
notice of termination of duties unless a repayment plan is fulfilled or
undertaken.
(2) State employees - The act calls for termination of
employment if payment is not effected within a “reasonable period.” However, passage of a reasonable time without
payment is not cause for termination if there is (a) a "genuine
dispute" over the existence or amount of the debt, (b) “an unresolved
issue concerning insurance coverage,” or (c) pursuit by the employee of administrative
or judicial remedies in the matter. And,
as with public officials, a State employee is saved from sanctions if the
employee is undertaking repayment as permitted by the act. With respect to employees, one acceptable
plan is to agree to have periodically withheld for repayments “not less than
ten percent (10%) of . . . net disposable earnings.” “Net disposable earnings” are defined to
constitute salary less statutory deductions such as taxes and State retirement,
which appear to leave subject to dunning that part of an employee's salary
otherwise to be voluntarily paid over to such as retirement funds other than
TSERS and the Optional Retirement Plan.
Unlike public officials, however, State employees, even after
termination, have a right of termination review as provided by N.C.G.S. Chapter
126 if they are subject to the State Personnel Act. The act, reads into its provisions the usual
array of remedies available to an aggrieved member of the University
community. Essentially, it requires a
constituent institution to sit down with its employees who are debtors to the
state to work out repayment; but if the employee contests the debt, the
constituent institution should treat the process of debt collection as a
serious, contested personnel action.
Statutes
of limitations and bankruptcy.
The act provides that where collection of the debt is barred by an
applicable statute of limitations, the act “shall not be construed to revive”
the debt or any part of the debt or to “extend” the statute of limitations. The act contemplates the pursuit by the
debtor of judicial remedies, which could include discharge of the debt in
bankruptcy. Consequently, no employee or
public official of the University should be terminated for nonpayment of debt
whose collection is barred by bankruptcy decree or a statute of limitations.
[This
is a rewrite of Administrative Memoranda #132 and #144.]
Magnetic Tape Past Due Accounts
Format Office of State Budget and Management
The data can be on tape or cards.
If tape, the record length should be 80 characters and blocksize 6400 characters.
The tape should be either IBM standard labeled or non-labeled and should
be 1600 or 6450 BPI.
FORMAT
Column
1 Institution Alpha
Code
A - ASU
I
-PSU
B - ECSU
J
-UNC-A
C - ECU
K
-UNC-CH
D - FSU
L
-UNC-C
E - NCA&T M
-UNC-G
F - NCCU
N
-UNC-W
G - NCSA
O
- WCU
H - NCSU P
-WSSU
Q - UNCH-CH
Column
2 – 10 Social
Security Number
Column
11 - 40 Name
Please
send this information to this office by December 1. Call 733-7061 concerning any questions.
Office of State Budget and
Management Procedures
The 1979 General Assembly enacted House Bill 561 (Chapter 864 of
the 1979 Session Laws) relating to the collection of money owed to the State by
certain public employees. The purpose of
this memorandum is to indicate what procedures to follow in collecting past due
accounts owed to the State by State employees, certain local governmental
employees and public officials.
1. Send a list to
this office of the names and Social Security numbers of individuals with past
due accounts owed to the State. Do not
include names of individuals with past due accounts when satisfactory
provisions have already been made for repayment.
2. This office
will arrange to compare your lists with lists of employees who are members of
the Teachers and State Employees Retirement System or who are on a central
payroll.
3. You will be
notified if any of the individuals on your lists are employed by a State
department, agency or institution, Community College system or by a city or
county Board of Education.
4. You should then
write the agency employing the individual who has a past due account with your
department and State: (a) individual's
name, amount of money owed and for what reason; (b) that a written notice be
sent to the employee stating that full restitution of the amount owed is a
condition of continued employment (Chapter 143, Article 59 of the North
Carolina General Statutes); (c) that the employee obtain and provide written
evidence from the department owed that a satisfactory arrangement for payment
has been agreed upon; (d) that the employee be given a reasonable time period
to accomplish (c) above. If the employee
does not provide this evidence, steps must be taken to terminate employment
unless the employee is pursuing administrative or judicial remedies.