Chapter Twenty

THE SAVINGS BOND OPERATIONS OFFICE

As the 1980s began, the Savings Bond Operations Office (SBOO), which had responsibility for all administrative activities associated with savings bonds, operated through five divisions: Data Recording and Search, Data Processing, Accounts and Reconcilement, Transactions and Rulings, and Management Services. These Divisions were supported by the three staff branches: Management Analysis, Financial Management and Personnel.

Processing Savings Bonds

The initial entry point for the processing of savings bonds during this time was the Division of Data Recording and Search. Bonds were received in a variety of forms: batched punchcard stubs or magnetic tape for new issues, and batched punchcards or paper bonds for redemptions. All bonds received, in no matter what form, were transformed to a microfilm record with duplicates made for storage outside of the Parkersburg Office. In addition, a computer tape record was made of the microfilm location of issued bonds, using a master file based on the purchaser's social security number. 1 Under the system, information concerning the bond's denomination, serial number and series was pre-punched on the stub and could be handled by automatic card readers. Transmittal data, issue data and social security number had to be entered by keypunch operators. Data search to provide photos of bonds took place using high-speed microfilm readers which also had photographic capability. At this time, the SBOO savings bond files

1

1 Bureau of the Public Debt, Functional Chart, Savings Bond Operations Office, February 1981, 1-9.

191

contained 1.2 million reels of microfilm. 2

The main element in the data processing system was the Univac 1110 computer. As a fairly advanced system for its time, the Univac 1110 permitted several programs to be operated at the same time and set priorities as to which program should be completed first. The computer was actually a part of the Division of ADP of the Washington Office. But the Division of Data Processing at SBOO maintained some 35,000 reels of magnetic tape as its computer master file.

Whenever a bond owner had an account-related problem, such as a lost or destroyed bond, employees of the Division of Transactions and Rulings dealt with it. More than 200,000 cases a year were being processed by this division. The letter writing involved with processing claims of bond owners was typed by employees in the Correspondence Processing Branch using word processing equipment hooked up to the central computer and linked to high speed printers. 3

The processing system for savings bonds worked well. It should be noted, for example, that by the end of fiscal year 1983, 100 issuing agents were reporting sales of savings bonds by tape, accounting for 37.4 million items or approximately 52 percent of total transactions and 60 percent of payroll sales. 4

Branch Reorganization

Nevertheless, some organizational changes took place at SBOO during the 1980s. On October 30, 1983, several branches in SBOO, namely the Financial Management Branch, Personnel Management Branch, Management Analysis Branch and the Program Analysis Branch were combined with the Division of Management Services (renamed the Administrative Services Branch) to form the Division of Administration. The purpose of the reorganization was to place the several support functions represented by the different Branches into one area. 5 In 1987 a portion of the Office of Automated Information Systems moved from Washington to Parkersburg. With

2 Bureau of the Public Debt, "In Almost Heaven", PD News, October 1982, 3.

3 BPD, "In Almost Heaven", PD News, 10/82, 4.

4

BPD Savings Bond Operations Office, Annual Report, (Washington, D.C.: Fiscal Year 1983), 12.

5 Bureau of the Public Debt, "SBOO Reorganization", PD News, Spring 1984, 2.

the new IBM mainframe being located in Parkersburg, the move was designed to locate the computer applications effort closer to users. "Centralization of many of our current functions is one goal of the relocation," said Richard Miller, Assistant Commissioner of the Office of Automated Information Systems (OAIS), "and Parkersburg is the logical location for this activity.” 6

This shift of computer expertise also signalled that SBOO, like the operations connected with the marketable securities side of the Bureau, was making changes in terms of how savings bonds were handled.

OCR Technology

In April 1985 Commissioner William Gregg told of plans to automate the processing of savings bonds by using the technology of Optical Character Recognition (OCR) and Magnetic Ink Character Recognition (MICR)). Under this system, information relating to each individual savings bond is printed on the bond itself and translated into computer storage by special readers. The new system would permit the elimination of the punchcard savings bond and its replacement with a paper bond. 7 In December 1987 Commissioner Richard Gregg was able to announce the completion of the project to convert from a punchcard to a paper bond, at an estimated annual saving in bond stock costs of $1.2 million. 8

The transformation of bonds to paper and the use of OCR/MICR technology had other advantages. On December 16, 1987, the Bureau announced a new system that would allow authorized paying agents for savings bonds to process bonds in a way similar to that in which they process checks. Under the new system, called E-Z CLEAR, paying agents would be able to encode their own MICR information on the bonds for forwarding them to the Federal Reserve Bank in their area. Previously, bonds had to be sent to the Federal Reserve Banks separate from other items. Based on pilot tests, the new system was found to reduce costs for the Bureau and the Federal

Cindy Springer, "Realignment Adds to SBOO's Responsibilities", Field Notes, Summer 1987.

7 Bureau of the Public Debt, Progress Report on Major Projects—first half of FY 1984, (Washington, D.C.: April 28, 1984), Memo from W.M. Gregg, Commissioner of the Public Debt to Carole Jones Dineen, Fiscal Assistant Secretary. Located in BPD files.

8 Bureau of the Public Debt, Monthly Status Report For December 1987, BPD files,

item 10.

Reserve System and was widely accepted by financial institutions. 9 The pilot test included 67 financial institutions with 813 separate branch operations. 10 When the system started up, the number of bonds processed reached 13,215 per day from 144 financial institutions during January 1988. 11 By April 1988, a daily average of 20,458 bonds from 302 participating institutions were going through the E-Z CLEAR system. 12 At the end of Fiscal Year 1988, the system was judged a success and the decision was made to extend and expand its use. Regulations to make E-Z CLEAR available to all financial institutions were put into place in October 1988.

Ohio Project

Another pilot project for handling bond sales was announced in July 1987. Under this program, bond purchasers in the Cleveland district of the Federal Reserve System would have their savings bonds delivered to them by mail. Starting on October 1, 1987, bond purchasers at over 3,000 financial institutions in Ohio would still order and pay for their bonds at their financial institutions as they had in the past. But they would not have to wait for their applications to be processed and their bonds prepared for them. Under the new system, the applications would be sent to the Pittsburgh Branch of the Cleveland Federal Reserve Bank. There the applications would be processed, the bonds issued and mailed to the purchaser, with receipt within 3 weeks. 13

In the first month of operation of the Ohio Project, about 36,000 applications were sent to the Pittsburgh Branch, 40 percent more than had been expected. The applications averaged 1.5 bonds each, and 39,000 bonds were inscribed and mailed during the month. 14 In December 1987, 113,000 applications were received at Pittsburgh, three times the original estimate; many of these applications were for gifts of low denomination bonds during the Christmas season, and

9 U.S. Treasury, Treasury News Press Release, December 16, 1987.

10 Bureau of the Public Debt, Monthly Status Report for September 1987, BPD Files, item 10.

11 Bureau of the Public Debt, Monthly Status Report for September 1987, BPD files,

item 6.

4.

12 Bureau of the Public Debt, Monthly Status Report for April 1988, BPD files, item

13 U.S. Treasury, Treasury News Press Release, September 22, 1987.

14

Bureau of the Public Debt, Monthly Status Report for September 1987, BPD files, item 5.