The Howard County School System has implemented a new program to collect on insufficient-funds checks.
On Aug. 1, the school system started using the Federal Automated Recovery Systems for the electronic collection of checks. Officials said the new system will allow for a higher rate of recovery at no additional cost to the school system.
The school system receives more than 800 insufficient-funds checks each year, according to Howard County officials. The process of collecting the checks is an "arduous task," according to Beverly Davis, the school system's director of finance.
"It eliminates the bad check problem," Davis said. "Our taxpayers shouldn't bare the burden for individuals who do not pay. We expect to see a decrease in bad checks and a change in behavior."
Each school receives an average of about 10 bad checks a year. The additional bad checks are received at the school system's central offices, according to Davis. The checks are usually small, and are usually intended to pay for field trips and summer school.
"It's not like we are losing a lot of money," Davis said, estimating that the school system annually pays up to $5,000 in bank fees from bounced checks. "It is the loss of time and there are costs involved."
The new program uses an electronic recovery process for bad checks that attempts to recoup money from the check writer's account. In addition to the amount of the check, the program recoups a $35 fee from the check writer's account. The new program, which is allowed by both state and federal laws, does not cost the school system any money, according to Davis. The recovery company receives a portion of the $35 fee tacked onto the bad check writer.
"The individual pays, which is why the behavior will change," Davis said.
"In this day and age, using the recovery services is best practices," Davis said.