The Check Is in the Mail

An integrated printing and mailing system helps Virginia Treasury Department produce checks more quickly and earn postal discounts.

by / September 5, 2002
Having just gone through another postal rate increase, governments more than ever are looking for ways to trim their mailing costs. Virginia's Department of Treasury has found some.

An integrated check-printing and distribution system helps the department prepare and mail checks more efficiently, allowing it to get more done without adding staff. And by helping Virginia take better advantage of automation discounts from the U.S. Postal Service (USPS), the system has reduced postage costs by $180,000 to $200,000 per year.

The Department of Treasury prepares and distributes checks for six state agencies: Social Services, Taxation, Accounts, Motor Vehicles, the Virginia Employment Commission and the Virginia Retirement System.

For many years, the state's Comptroller's Office used two Troy impact printers to produce these checks. Someone then carried the checks from the Comptroller's second-floor office to the Treasury Department on the third floor, where the checks were signed and inserted in envelopes. Then, in the basement, a mail preparation system added bar codes to the envelopes and sorted the pieces to qualify for USPS discounts.

With this highly manual process, it generally took one to two days to print a set of checks and send them out the door, said Kristin Reiter, director of the Treasury's Operations Division.

The search for a more efficient solution began when Treasury decided to move from impact to laser printing. The Troy printers were antiquated and maintenance was expensive, said Robert Farley, director of information systems at the Treasury Department.

Once Treasury decided to buy new hardware, the search began for up-to-date software. Not only did the department want to keep up with the times; it also needed to make its systems Y2K compatible.

Don't Touch Legacy Systems
Millennial concerns also dictated a major criterion for the new system: It had to work with the state agencies' legacy systems exactly as they were.

"We did not want to require a lot of software changes on the part of the check-producing agencies, because they were just not staffed at the time to do that. All their focus was on Y2K," Reiter explained.

The system the Treasury Department chose in 1999 included two 4135 MICR printers from Xerox and equipment from Moore Business Systems to fold and seal the self-mailing check stock. It also included print formatting software from Red Titan Ltd. and postal automation software from Firstlogic. Enterprise Document Distribution Associates (EDDA) served as the systems integrator.

Virginia implemented the system in two stages. From July 1999 through June 2000 it introduced the Xerox and Moore equipment but continued to use its old mail preparation system. Then, from February to June 2001, it added Firstlogic's Postalsoft automation system.

The new system receives check data from the agencies in exactly the same format as before.

"The EDDA and Red Titan Software sort of reverse engineered the old printing codes out of the Troy print stream and put it in a format that the Xerox printers would accept," Farley said. "That required no programming changes from the agencies, other than changing the method of delivery from writing it to tape to sending us the files."

One Click Process
Instead of requiring three separate operations to print checks and prepare them for mailing, the new system does it all in a single process.

Once the software prepares the check file, "a single selection of a file and a single click of a button cause everything else to happen," said David Hunt, president of EDDA in Marietta, Ga.

Postalsoft compares the city, state and ZIP code for each address to a current database and makes any necessary corrections. It sorts the check records by ZIP code and carrier route so the printed mail pieces come out in the right order, ready to place in trays. The system also prints a report listing the number of pieces bound for each carrier route and giving the total cost of the mailing, Hunt said.

Postalsoft was an optional feature in the proposal from Xerox and its partners. After running the new system for some time without it, Treasury added the Firstlogic software in order to save money for two of its internal customers.

Treasury prints and mails child-support payments for the Department of Social Services and unemployment checks for the Virginia Employment Commission - about 3 million checks in all each year. Those agencies require their checks to be printed and mailed in a single day.

"We could not meet that requirement using our Central Mail Services," Reiter said.

That meant the agencies had to forego automated presorting and pay full postal rates. It takes a powerful system to do a USPS presort for a big mailing on a tight schedule. The requirements are complex, according to Farley.

"They're pretty unforgiving in terms of how you give them the mail to be done," he said. "The regulations are strict, and they'll send it back if it's not exactly right."
"Or they'll charge you full postage," Reiter added. The mailer might expect to spend 28 cents per piece, "and if you send something over wrong, you're mailing 50,000 or 100,000 pieces of mail and it's going to cost you 34 cents," she said in an interview conducted before the first-class rate rose to 37 cents on June 30.

At some facilities, the USPS has deployed technology to measure the quality of mail pieces. "And if it's not prepared in the right manner, they may deny certain discounts," said Christopher Lein, senior market manager at Firstlogic in LaCrosse, Wis. Errors that could sabotage a discount include poorly formatted address blocks and unreadable bar codes, he said.

Informative Stubs
Besides making the process more efficient and cutting postage costs, the new system helps Virginia's agencies communicate with citizens more effectively. The new checks provide a larger stub area than the old ones did. Agencies use that space to print messages to recipients.

"Where previously they were having to send out separate documents or letters, they are able now to put that information right on the stub of the check," Reiter said.

The Department of Taxation, for example, uses check stubs to explain to some taxpayers why their tax refunds are smaller than expected. This can happen when a taxpayer owes money to a state agency - for an unpaid fine, for example - and the Department of Taxation deducts that sum from the refund.

In the past, people who received these reduced payments flooded the Taxation Department with questions, Farley said. Now, EDDA has written software to match the check information with corresponding stub information. When a taxpayer receives a reduced refund, the stub explains why and gives the phone number of the agency that can provide further information.

Treasury could gain even more efficiencies if it goes through with a plan to print the addresses of individual agencies on checks mailed to vendors. As a holdover from the days when it stuffed checks in pre-printed envelopes, Treasury uses its own return address on all checks. When a check is returned - often due to an incorrect address - Treasury has to redeposit the payment, Reiter said. The issuing agency then has to research the problem and cut a new check.

In the future, when a check comes back in the mail, it will return directly to the issuing agency, Reiter said. Once the agency corrects the address, it can re-send the original check.

"It should cut down on the number of additional checks we have to process, and it should help get that check to the vendor on a more timely basis," she said.
Merrill Douglas Contributing Writer