By State Treasurer John Kennedy

You have probably heard the term lock-box used to describe a way to safeguard assets, especially funding for government programs that are important to the public. A lock-box in the banking world, however, is a newer technology that can help government agencies increase the efficiency and accuracy of their deposits.

A public agency can set up a lock-box by opening a special post office box with the state’s central depository bank. When citizens pay for various public services, they send their checks and related paperwork to this post office box instead of to the government agency. This enables public employees to focus more of their time on serving citizens and less time on processing paperwork.

The state’s central depository bank retrieves mail from the lock-box several times a day, processes receipts and other paperwork for the public agency, and makes deposits without delay into the State Treasury’s bank account. As a result, agencies can deposit checks more quickly, and the Treasury can earn more money by taking advantage of the immediate investment of state funds.

The Department of Public Safety is the latest state agency to begin using a lock-box for its check collection efforts. The departments Office of Motor Vehicles is now using a lock-box to collect more than 50 percent of motor vehicle registrations and more than 25 percent of drivers license renewals paid by check.

Before implementing a lock-box, the OMV would manually collect, process and deposit mail-in renewals from a centralized office at its headquarters. The process usually took five to 10 days to deposit funds into the Treasury upon receipt. The OMV’s new lock-box now processes checks and other paperwork and makes deposits into the Treasury several times a day. It also provides electronic files of all transactions for the OMV to use for record-keeping and accounting purposes.

In addition to the Department of Public Safety, other state agencies are using lock-boxes as cash management tools. The Louisiana Department of Wildlife and Fisheries uses a lock-box to shorten the processing time of boat registration renewals, and the Office of Student Financial Assistance uses one to handle student loan repayments. The Department of Health and Hospitals uses its lock-box to collect third party liability checks from insurance companies and certain fees from nursing homes, pharmacies and other facilities.

I encourage more government agencies to look into lock-boxes and other banking technologies that can improve disbursements and deposits. For more information, contact the Treasury’s Fiscal Division at (225)342-0049.