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TREASURY, POSTAL SERVICE, AND GENERAL
GOVERNMENT APPROPRIATIONS FOR

FISCAL YEAR 1985

HEARINGS

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES

NINETY-EIGHTH CONGRESS

SECOND SESSION

SUBCOMMITTEE ON THE TREASURY, POSTAL SERVICE, AND GENERAL

GOVERNMENT APPROPRIATIONS

EDWARD R. ROYBAL, California, Chairman
JOSEPH P. ADDABBO, New York

CLARENCE E. MILLER, Ohio
DANIEL K. AKAKA, Hawaii

ELDON RUDD, Arizona
STENY H. HOYER, Maryland

HAROLD ROGERS, Kentucky
EDWARD P. BOLAND, Massachusetts
CLARENCE D. LONG, Maryland

AUBREY A. GUNNELS and C. WILLIAM SMITH, Staff Assistants

PART 1

DEPARTMENT OF THE TREASURY

Printed for the use of the Committee on Appropriations

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1984

32-274 0

COMMITTEE ON APPROPRIATIONS

JAMIE L. WHITTEN, Mississippi, Chairman EDWARD P. BOLAND, Massachusetts

SILVIO O. CONTE, Massachusetts WILLIAM H. NATCHER, Kentucky

JOSEPH M. McDADE, Pennsylvania NEAL SMITH, Iowa

JACK EDWARDS, Alabama JOSEPH P. ADDABBO, New York

JOHN T. MYERS, Indiana CLARENCE D. LONG, Maryland

J. KENNETH ROBINSON, Virginia SIDNEY R. YATES, Illinois

CLARENCE E. MILLER, Ohio DAVID R. OBEY, Wisconsin

LAWRENCE COUGHLIN, Pennsylvania EDWARD R. ROYBAL, California

C. W. BILL YOUNG, Florida LOUIS STOKES, Ohio

JACK F. KEMP, New York TOM BEVILL, Alabama

RALPH REGULA, Ohio BILL CHAPPELL, JR., Florida

GEORGE M. O'BRIEN, Illinois BILL ALEXANDER, Arkansas

VIRGINIA SMITH, Nebraska JOHN P. MURTHA, Pennsylvania

ELDON RUDD, Arizona BOB TRAXLER, Michigan

CARL D. PURSELL, Michigan JOSEPH D. EARLY, Massachusetts

MICKEY EDWARDS, Oklahoma CHARLES WILSON, Texas

BOB LIVINGSTON, Louisiana LINDY (MRS. HALE) BOGGS, Louisiana BILL GREEN, New York NORMAN D. DICKS, Washington

TOM LOEFFLER, Texas MATTHEW F. McHUGH, New York

JERRY LEWIS, California WILLIAM LEHMAN, Florida

JOHN EDWARD PORTER, Illinois JACK HIGHTOWER, Texas

HAROLD ROGERS, Kentucky
MARTIN OLAV SABO, Minnesota
JULIAN C. DIXON, California
VIC FAZIO, California
W. G. (BILL) HEFNER, North Carolina
LES AUCOIN, Oregon
DANIEL K. AKAKA, Hawaii
WES WATKINS, Oklahoma
WILLIAM H. GRAY III, Pennsylvania
BERNARD J. DWYER, New Jersey
WILLIAM R. RATCHFORD, Connecticut
BILL BONER, Tennessee
STENY H. HOYER, Maryland
BOB CARR, Michigan
ROBERT J. MRAZEK, New York

KEITH F. MAINLAND, Clerk and Staff Director

TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 1985

WEDNESDAY, FEBRUARY 22, 1984.

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

WITNESSES

DONNA POPE, DIRECTOR OF THE MINT
JOSEPH M. WAGNER, ASSISTANT DIRECTOR FOR BUDGET AND FINANCE
KATHERINE D. ORTEGA, TREASURER OF THE UNITED STATES
DAVID E. PICKFORD, ACTING ASSISTANT SECRETARY FOR ADMINISTRA-

TION
ARTHUR D. KALLEN, DIRECTOR, OFFICE OF BUDGET AND FINANCE
GENE ESNER, DEPUTY DIRECTOR OF THE MINT

Mr. ROYBAL. The committee will now hear from the Bureau of the Mint with regard to their budgetary request for 1985.

First of all, Mrs. Ortega, we would like to welcome you. This is your first appearance before this committee. I want to assure you this is a very friendly committee, and we will do everything we possibly can to cooperate with you, and wish you continued success in the position that you now hold.

Ms. ORTEGA. Mr. Chairman, I do have a brief statement to make, and then Bob Leuver and then Donna Pope has a statement.

Mr. ROYBAL. Will you please proceed.
Ms. ORTEGA. Thank you.

Mr. Chairman and members of the committee, it is a pleasure to testify on the fiscal year 1985 budgets of the Bureau of Engraving and Printing and the U.S. Mint. I am proud of the accomplishments of these two Bureaus and believe they will continue to meet in an outstanding fashion their responsibilities of producing our Nation's currency and coinage.

I am accompanied by Directors Robert J. Leuver and Donna Pope, who will testify on their budgets in more detail.

BUREAU OF ENGRAVING AND PRINTING As you are aware, the Bureau of Engraving and Printing is the world's largest security manufacturing establishment. It produces U.S. currency, postage stamps, and various other security documents. The Bureau is not requesting an appropriation for fiscal year 1985, as its operations are financed by means of a revolving fund.

In fiscal year 1983, the Bureau delivered 4.6 billion currency notes and 35.6 billion postage stamps. The deliveries of currency notes represented the highest annual volume in Bureau history. This increased production was achieved despite a reduction in fulltime equivalent positions. The high volume currency requirement will continue in the upcoming years due to the Federal Reserve's effort to upgrade the quality of money in circulation.

The Bureau has met increasing currency demand without increases in personnel because of enhanced productivity and strong management. As you are probably aware, the Bureau was selected as the winner of the 1982 Productivity Awards Program, which was jointly sponsored by the Printing Industries of America and Roberts and Porter, Inc. I am confident that BEP will continue to build on their excellent record of productivity.

Besides enhanced productivity to meet increased demands for currency in the future, the Bureau is involved in an extensive technological improvement program. This program will convert the Bureau from a labor-intensive operation to a modernized capital-intensive facility. The technological changes will alter dramatically the required skill mix of employees over the next 10 years. The Bureau has instituted an employee relations program to assist employees whose jobs will be affected by these changes.

Counterfeiting has been, and will continue to be, of paramount concern to Treasury and BEP. We are continually monitoring the threat of counterfeiting. In fact, Secretary Regan has established an interagency committee, of which I am the chairperson, to determine the threat of counterfeiting of U.S. currency by modern reprographic equipment. Based upon our study, we will recommend to the Secretary the appropriate response to meet the threat. This committee has been offered a briefing of our study to date.

The improvement of the internal security of BEP is also one of our highest priorities. Since the highly publicized theft in the late 1970s, we have taken numerous steps to improve security. The Bureau is also developing automated product and accounting systems to increase security and accountability in our production proc

esses.

U.S. MINT

The U.S. Mint's salaries and expenses appropriation request for fiscal year 1985 is $47.758 million and 1,078 average positions. This is a reduction from the fiscal year 1984 continuing resolution of $1,242,000 and 57 average positions. This request will allow the Mint to produce 19.1 billion coins. Combined with a 1-billion-coin inventory drawdown, this production will satisfy the Federal Reserve's projected requirements of 20.1 billion coins. The Mint has been able to meet a high demand for coins without increases in personnel through streamlined operations and sound management.

Streamlined operations include the reorganization of Mint Headquarters, consolidation of the San Francisco Old Mint and the San Francisco Assay Office, the discontinuation of the Philadelphia Mint strip operations, and the development of additional private sector suppliers of coinage strip. The conversion to a zinc penny has resulted in substantial savings due to the lower cost of zinc metal. Further, one-cent coin production is no longer subject to the volatile changes in copper prices.

We are all proud of the Mint's numismatic efforts. Through aggressive marketing, the George Washington commemorative halfdollar program has been a resounding success. We are confident that the Olympic coin program will be as successful. In fact, as of today, we have already delivered about $32 million in surcharges to the U.S. Olympic Committee and the Los Angeles Olympic Organizing Committee. This is the most money ever generated by the sale of Olympic coins by any country.

The Mint is planning ahead to continue their outstanding record of meeting coinage demand in a cost-effective manner. The 7-day workweek experiment, conducted in fiscal year 1983, will help to ensure that increased coinage demand will not necessitate as great an increase in permanent personnel, as has previously been the case. The Mint plans to update its long-range ADP plan and develop a new ADP system. In conjunction with this effort, the Mint will fully automate its customer order processing system. Finally, the Mint will improve and expand the Denver Mint to allow for more efficient use and increased production capacity.

Mr. Chairman, in closing, I would like to thank you and your committee for your continued support, and I look forward to working with you to build upon our achievements.

Mr. RoYBAL. Thank you. The Chair recognizes Mrs. Pope.
Ms. POPE. Thank you, Mr. Chairman.

I am pleased to present for your consideration the 1985 appropriation request for operations of the U.S. Mint. With me today is Mr. Joe Wagner, my Assistant Director for Budget and Finance, and also Mr. Gene Essner is somewhere here, who is my relatively new Deputy Director.

I do have a longer formal statement submitted for the record. And I will verbalize a briefer one.

Mr. ROYBAL. Without objection, that will appear in the record at this point. Please proceed.

Ms. POPE. Thank you, Mr. Chairman.

Before outlining our request, I want to tell you that we have changed our name. At my request, Secretary Regan, approved the title United States Mint instead of the Bureau of the Mint. I felt that "Bureau" was a confusing word to the public. Our numismatic products have been identified as United States Mint products for several years. The term "Bureau" really did not identify us. For instance, there is the British Royal Mint, the Royal Canadian Mint, the Swiss Federal Mint. There is only one mint in the United States, so why not call us that? I am very pleased we are now officially the United States Mint.

FISCAL YEAR 1985 BUDGET REQUEST Our request is for $47,758,000 and 1,078 average positions for salaries and expenses. I would like to reemphasize that our budget request reflects a decrease of approximately $1.2 million and 57 aver

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