Study of Selected Aspects of FmHA's System for Depositing County Office Loan Collections

A study of the Farmers Home Administration's (FmHA's) system for depositing county office loan collections in the Federal Reserve Bank concentrated on the time required to make deposits and the additional interest cost which the Treasury may incur because of delayed deposits. During fiscal year 1977, county office loan collections totaled over $2.4 billion and averaged almost $9.8 million a day. An average of 8 days was required to deposit loan collections to the Treasury's account at the St. Louis Reserve Bank. Mail time between county offices and the National Finance Office averaged 3 days, and National Finance Office processing time averaged 5 days. If the daily county office loan collections had been deposited more quickly, Government interest costs could have been reduced by about $642,000 for each day that the deposits were accelerated. After the study was completed, FmHA hired additional personnel to process collections at the National Office. Because mail delays are inherent in the current system and workloads are expected to increase, FmHA should examine alternative ways of depositing county office loan collections. Several systems could decrease the time required to deposit county office collections: use of local bank accounts, the Treasury tax and loan system, lock boxes, and electronic funds transfer techniques. A study, including a cost-benefit evaluation, should be made of each system.