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Public Debt's Strategic Plan 1997-2001

Public Debt's Strategic Direction

Program Directions

Our Approach to Management

Public Debt's Strategic Direction

Heritage

"The United States debt, foreign and domestic, was the price of liberty. The faith of America has been repeatedly pledged for it … Among ourselves, the most enlightened friends of good government are those whose expectations of prompt payment are the highest. To justify and preserve their confidence; to promote the increasing respectability of the American name; to answer the calls of justice; to restore landed property to its due value; to furnish new resources, both to agriculture and commerce; to cement more closely the Union of the States; to add to their security against foreign attack; to establish public order on the basis of an upright and liberal policy; these are the great and invaluable ends to be secured by a proper and adequate provision, at the present period, for the support of public credit." — Alexander Hamilton, 1790 First Report on the Public Credit

Mission

The mission of Public Debt is to borrow the money needed to operate the Federal Government and to account for the resulting debt.

Authority

Article I, Section 8 of the Constitution empowers the Congress to borrow money on the credit of the United States. This authority has been delegated to the Secretary of the Treasury. As an organizational entity within the Fiscal Service, the Bureau of the Public Debt is authorized to conduct such borrowing for the Federal Government.

Program Goals

Strategies

To accomplish these goals, Public Debt will:

Assumptions

This strategic plan and our program directions for the next five years are based on two fundamental assumptions:

Achieving Our Goals

The Bureau of the Public Debt is responsible for achieving the goals in this strategic plan. We will accomplish the goals through the combined efforts of Public Debt employees, Federal Reserve Banks, savings bond issuing and paying agents, and savings bond program volunteers.

Public Debt's responsibilities are accomplished through six program areas:

A description and strategic direction for each of these programs is provided in Program Directions.

As part of reaching our goals, we will effectively regulate the primary and secondary Treasury securities markets, ensure that reliable systems and processes are in place for purchasing and transferring Treasury securities, annually auction and issue $2 trillion of marketable securities, issue and redeem more than 100 million savings bonds each year, maintain more than $380 billion in securities accounts directly for investors, and provide timely and accurate information on the debt of the Federal Government.

Federal Reserve Banks, acting as Treasury's fiscal agents, provide critical systems that support our programs, perform a wide range of customer service functions for us, and are essential to our mission accomplishment. We also direct and rely on financial institutions and other organizations which provide indispensable front-line transaction services to purchasers of savings bonds at more than 40,000 locations. Our savings bond marketing efforts are leveraged substantially by the considerable support we receive from thousands of organizations that voluntarily support the savings bond program.

We rely extensively on computer processing and telecommunication systems to accomplish our functions and program goals. Our data processing environment is comprised of a mainframe computer, minicomputer configurations, and personal computers that are networked throughout Public Debt and linked to networks and computer systems within the Federal Reserve. We operate automated securities processing and financial accounting systems that service and maintain customer accounts, authorize billions of dollars in customer payments, and process accounting transactions to record and report on the public debt of the United States.

Our operations are funded by an annual appropriation for Administering the Public Debt and permanent-indefinite appropriations for Federal Reserve Bank services and Interest on the Public Debt.

While most Public Debt employees are in two locations, Parkersburg, West Virginia and Washington, DC, we have savings bond marketing personnel located in field offices throughout the country.

Importance of Program Goals to Annual Planning

Public Debt's goals are fundamental, nondiscretionary, and essential to the efficient conduct of government operations. The goals are the basis for our program structure, our organization, and for the specific objectives that we include in our annual performance plan.

Key External Factors for Public Debt Operations

The primary external factors that affect Public Debt's operations and our ability to accomplish our goals are general interest rate levels, events occurring in the financial markets, and the statutory limit on the amount of debt that the Federal Government can incur.

The level of interest rates and changes in rates can affect our programs, especially the Public Debt and Federal Reserve workload in our Direct-Access Program. Our experience has shown that increases in interest rates generally result in increased consumer awareness of investment alternatives and then an increase in investments held with Treasury in our TREASURY DIRECT system. The converse, however, is not true. As interest rates fall, the level of investment in TREASURY DIRECT tends to hold fairly constant.

Financial market events that cause investors concern about the safety of their savings and investments can also affect Public Debt programs. Both our Direct-Access and Savings Securities programs are attractive to investors because their investments are held directly with Treasury. In periods of market uncertainty or following publicity about financial institution soundness, our workload can increase dramatically as investors seek not only quality instruments, such as Treasury securities, but become more selective in choosing their custodians or holding systems.

With one exception, we are permitted to borrow what is necessary to operate the Federal Government. The exception is the statutory debt limit which specifies a maximum amount for the public debt. Periodically, the limit must be increased by Congress to permit necessary borrowing and the continued funding of government operations. If this increase does not occur timely, our financing operations can be substantially disrupted.

Our Use of Program Evaluations

A number of ongoing and one-time program evaluations have influenced the directions and objectives in this strategic plan. The more significant evaluations are briefly described.

Program Directions

Introduction

This section describes the future directions and areas of emphasis for our six securities and accounting programs.

Commercial Book-Entry Securities Direction

This program includes all Public Debt, Federal Reserve Bank (FRB), and private sector activities related to the original sale of marketable Treasury securities. This includes publishing and interpreting regulations covering the sales, conducting sales through auctions, and issuing the awarded securities to successful bidders. In addition, the program includes regulating, servicing, and accounting for marketable Treasury securities held in the commercial book-entry system.

The successful accomplishment of our borrowing responsibilities depends on comprehensive auction rules and an efficient and reliable process for selling Treasury securities. In support of these responsibilities, we will continue to strive for flawless auction performance. We will keep the regulations current and complete, monitor compliance, render timely interpretations, and take actions to ensure that auction rules are enforced.

Over the next several years, we will enhance the Treasury Automated Auction Processing System (TAAPS) so that it will calculate auction results, prepare press releases, automate confirmation notices to successful submitters, and deliver awarded securities. In addition, we will encourage all auction participants to submit bids by computer and we will consolidate processing of tenders from institutional investors into three Federal Reserve sites. These enhancements will fulfill Treasury's goal of fully automating the announcement, auction, and issuance of securities.

Public Debt will continue to work closely with and support the Federal Reserve in implementing a centralized account maintenance and securities transfer system. Public Debt will also ensure that the commercial book-entry securities system continues to satisfy Treasury's financing requirements and that the new system strengthens our ability to quickly and efficiently introduce new instruments and make system changes and enhancements.

Another program priority is to clarify the rights and obligations of market participants. We will ensure that sufficient information is available to allow investors to understand the commercial book-entry structure and the regulatory approach adopted by Treasury that governs the holding and transferring of securities in this system. We will publish the regulations and information necessary to accomplish these objectives.

We will continue to strengthen our direct working relationships with the financial community, market participants, and industry representatives. This will improve our ability to assess the impact of Treasury and Federal Reserve proposals and decisions on the securities market and Treasury's financing programs.

Direct-Access Securities Direction

This program encompasses Public Debt, FRB, and private sector activities related to establishing and maintaining book-entry accounts of marketable Treasury securities in TREASURY DIRECT. It also includes servicing and redeeming definitive marketable Treasury notes and bonds. TREASURY DIRECT provides an alternative to the commercial book-entry system for investors who wish to hold bills, notes, and bonds directly with Treasury.

The direct-access investment option is valuable to investors and to the Federal Government. TREASURY DIRECT, an automated book-entry system for Treasury bill, note, and bond accounts, will continue to be Public Debt's primary system for providing efficient direct-access securities services. The system will be maintained and enhanced to provide high-quality and secure services which are responsive to the needs of investors and system users. We will continue to take advantage of opportunities to promote the availability and features of TREASURY DIRECT. In addition, we will provide our customers with the opportunity to make investments, access account information, and directly process transactions using home computers or other electronic means.

We continue to pursue vigorously the elimination of marketable registered and bearer securities by 2000. To achieve this goal, we will actively publicize the advantages of book entry, respond to investors' transaction requests by issuing book-entry securities, and provide a new option to permit the conversion of principal components of stripped definitive securities to book entry. We will also implement regulatory, procedural, and financial incentives to accelerate the conversion of definitive securities to book entry.

Savings Securities Direction

This program includes all Public Debt, FRB, and agent activities involved in marketing, issuing, servicing, and redeeming savings bonds. Savings bonds finance a sizable amount of the public debt and play a unique and important role in Treasury's debt financing. The program provides more than 50 million people with a safe, convenient savings mechanism and routinely saves the Federal Government hundreds of millions of dollars a year in borrowing costs.

Our vision for the savings bond program is focused on the Series EE security. We plan to examine the features of this bond and advocate a new series of bonds that will ensure continued attractiveness to investors and cost-effectiveness for Treasury. Our plan for the Series HH program is to continue to offer the securities as an exchange option for holders of EE/E bonds.

We will continue to evaluate savings bond work currently processed by Public Debt to determine where the work can best be performed. Where appropriate, we will delegate additional authority to Federal Reserve Banks to process a greater variety of cases and transactions involving larger dollar amounts. We do not, however, have a goal of shifting work to the Federal Reserve unless there are meaningful cost or customer service reasons to do so.

Where cost-effective, we will encourage corporate customers and financial institutions to provide automated input for the issuance of payroll and over-the-counter bonds. We will actively evaluate data processing and data communications options that offer opportunities for cost reduction.

Public Debt will continue to rely heavily on its network of financial institutions and other agents to sell and redeem bonds and provide important front-line customer service to investors. We will, however, work to expand our distribution system. We will provide our savings bond customers with the opportunity to obtain information, purchase securities, and conduct transactions electronically. We will also take advantage of changes in the financial services industry to potentially sell bonds through financial services providers and other nontraditional outlets.

To achieve the full benefits of consolidation, electronic reporting, and full truncation, and to substantially update our processing technology, Public Debt will move toward a new operational environment, one which includes a redesigned computer system for processing Series EE/E Savings Bonds. This new system will change the way savings bond work is done in virtually every component of the Savings Bond Operations Office and the way in which Federal Reserve offices interact with us. A major result of this effort will be the establishment, for the first time in the history of the program, of fully automated savings bond issue records. We envision, for example, eliminating the microfilming of issue records as full registration data is captured and retained in machine-processible form using optical disk technology.

Public Debt is dedicated to providing excellent service to our savings bond customers. To improve service and increase customer satisfaction, we will streamline processes, increase our use of automation, remove procedural and regulatory impediments, and provide employees with the tools, training, and authority to better serve customers. These changes will allow us to make dramatic customer service improvements such that we will ultimately be able to respond to at least 90 percent of customer service transactions within four weeks of receipt.

Savings bonds are a unique investment that benefits substantially from a focused promotional effort. We plan to continue to market savings bonds using a dedicated staff of Public Debt employees. We believe, however, that some efficiencies are possible that will allow us to reduce and more effectively target the efforts of our marketing employees. As we make these changes, it is important that we maintain a strong volunteer network, increase public awareness, and continue to promote thrift. By FY 1999, we will have reduced FTE levels applied to marketing by almost 30 percent from FY 1993 levels and reduced budget authority accordingly.

Government Securities Market Regulation Direction

This program implements Treasury's regulatory authority over the government securities market. This market is essential for Treasury to finance the public debt and for the Federal Reserve System to execute domestic monetary policy. This program provides balanced regulation while maintaining the integrity, liquidity, and efficiency of this market and protecting investors in government securities.

Public Debt is committed to ensuring that the investor protection, market liquidity, and market efficiency goals of the Government Securities Act are met. We believe that this can be accomplished most effectively if the Department and Public Debt have a significant, ongoing role in market regulation.

We will look for and take advantage of opportunities to simplify the regulatory structure and reduce the burden placed on market participants without jeopardizing investor protection. We will continue to expand and strengthen our working relationships with Departmental officials, other regulators, market participants, and industry groups so that we can quickly identify and effectively respond to changing market practices.

Further, we will work closely with other regulatory organizations to ensure that their sales practice rules are effective in promoting customer protection, are consistent for all classes of broker-dealers, and do not adversely affect the efficiency of the government securities market.

Special Purpose Securities Direction

This program offers securities services to certain investors having special financing needs. Such investors include state and local governments, foreign governments, Federal agencies, and government-sponsored corporate agencies. Securities transaction and account maintenance services are provided for both Treasury and non-Treasury securities by Public Debt and the Federal Reserve Banks.

Public Debt's Special Purpose Securities Program consists of a wide variety of instruments with unique legal and operational requirements which are diverse and occasionally politically sensitive.

A primary area of attention in this program will be State and Local Government securities. We will develop and operate a new automated State and Local system to strengthen processing controls, improve management information, and increase operational flexibility. We will also actively support the Department as modifications to the SLG program are considered and we will make the operational, regulatory, and systems changes that are required to effectively implement any modifications.

Public Debt Accounting Direction

This program accounts for and reports on the public debt of the United States and the related interest cost. Specifically, the program provides accounting controls for the funds received through the sale of securities to finance government operations, for the funds disbursed for interest and redemption payments, and for the principal amount of securities outstanding.

Accounting for the public debt and related interest cost is a fundamental mission responsibility. Our Public Debt Accounting and Reporting System provides us with strong accounting controls and up-to-date accounting methods and complies with prevailing accounting standards. We will ensure that PARS remains an effective and well-controlled system, identify opportunities for an even more tightly controlled accounting environment, and continue to improve operating efficiency.

We will publish annual audited financial statements on the public debt and related interest cost.

We are uniquely positioned to assume a proactive, leadership role in the area of public debt accounting. Our goal is to become the primary source of direction and guidance on debt accounting, reporting, and analysis for the Treasury and the Federal Government. We specifically intend to examine and validate our current accounting practices and to augment our capacity to identify appropriate accounting and reporting alternatives. We also plan to improve our ability to perform comprehensive analyses and evaluations of public debt accounting issues.

In the interest of more realistic reporting of public debt information and to establish more reasonable long-term recordkeeping and claims requirements, we will pursue opportunities to reduce the public debt outstanding by the amount of matured, unredeemed securities that are not likely to ever be paid and to establish a maximum period of time that security records would be maintained and claims honored.

Our Approach to Management

The Fundamentals

Public Debt's mission, to borrow the money needed to operate the Federal Government, is essential and nondiscretionary. Providing quality performance and service is critical to the successful accomplishment of that mission.

We will foster an atmosphere of quality awareness that encourages all employees not to accept things as they are but to look for ways to improve accuracy, timeliness, and customer service. We also expect employees to look for ways to cut costs and improve productivity. Such efficiencies are important to Public Debt and must be actively pursued. However, our ability to accomplish our primary program responsibilities will not be sacrificed in our pursuit of savings.

Integrity is an important element of government service and is particularly important to Public Debt because of the financial nature of our mission and the confidentiality of our investor information. Public Debt highly values integrity in its employees and expects each employee to meet the highest standards of ethical conduct.

How We Plan

Public Debt is managed informally and with the expectation that communication throughout the organization will be open, informal, and candid; that delegations of authority will be made to the lowest practicable levels; and that efforts will be made to reach consensus in decision-making and in establishing program direction.

We will ensure that this informal and candid approach to doing business extends to our general relationship and individual dealings with the National Treasury Employees Union. We recognize that working in partnership with NTEU is important to the efficient accomplishment of our mission. We will involve NTEU in the identification of problems and implementation of solutions to better enable us to accomplish our long-term initiatives and achieve our performance goals. Public Debt managers are expected to deal with NTEU openly and without undue formality, to involve NTEU early in matters of mutual interest, and to actively promote a climate of shared information, mutual trust, and cooperation.

We expect our managers to understand their operations and systems and how they relate to our overall mission. We expect their understanding to be sufficient to allow them to have a constant and accurate sense of the "health" of their operations, to be able to effectively explain their operations to others, and to personally provide direction and leadership for their programs.

Public Debt uses strategic planning as a structured and consistent way of setting directions and establishing priorities. Our planning forms the basis for subsequent management decisions and is a test for new initiatives, since a very important criterion is the degree to which a new idea supports the plan. Public Debt's planning team, which is comprised of senior program officials, develops the strategic and annual performance plans as part of an ongoing planning and program evaluation process. Public Debt managers are expected to use this plan in the overall direction of their day-to-day activities and to contribute to the accomplishment of our objectives whether or not they have direct responsibilities for accomplishing specific action plans.

The Federal Reserve Connection

The Federal Reserve, as our fiscal agent, is a necessary and integral element in the accomplishment of our mission. Public Debt will continue to make effective use of the Federal Reserve's capabilities in accomplishing our responsibilities to individual and institutional investors in Treasury securities.

While our relationship with Federal Reserve Banks is technically one of principal and agent, it is in practice a dynamic, accommodating arrangement based on communication, trust, and common goals. This long-standing relationship, together with the Federal Reserve System's association with financial institutions and its unique set of responsibilities for open market operations, combine to provide the Federal Government with continuous market contact and significant operational flexibility in administering the public debt.

We will maintain an active, executive linkage with the Federal Reserve Board of Governors, Product Offices, Advisory Groups, Fiscal Agency Officers, and others as appropriate to assist us in deciding policy issues, providing program direction, resolving problems, and discussing new ideas. We will continue to involve the Federal Reserve at an early stage on significant issues of mutual concern and expect the Federal Reserve to reciprocate.

Through our oversight program, we will provide the Federal Reserve Banks with standards for quality and expectations for performance, determine appropriate reporting requirements and monitor results achieved, costs, and productivity. In doing so, we will recognize the value of the collaborative relationship, respect the individual responsibilities of the Banks and preserve their flexibility in managing ongoing, day-to-day operations. We will continue to furnish the Federal Reserve Banks with effective and useful feedback concerning operational performance and the quality of securities and debt accounting data provided to us.

Public Debt is responsible for the work that Banks perform on our behalf and, therefore, is accountable for the costs they incur. Accordingly, we intend to strengthen our ability to validate the accuracy and allocation of Federal Reserve costs. We support the principle of reimbursing the Federal Reserve Banks for all costs of activities conducted as fiscal agents. We will reimburse the Banks to the extent authorized and we will report to Congress the full costs incurred of administering the public debt, including Federal Reserve services.

Public Debt decisions regarding the work that we request the Banks to do will continue to be based on our assessment of where work can best be performed. We are committed to having the work done where it can be done most effectively and will try to achieve a balance between efficiency and customer service. As we evaluate our systems and continue to examine our programs, we will consider whether to have services provided by all or only some Federal Reserve offices. Our intent is to direct Banks to perform work for us only when such work is, in our view, clearly appropriate for a fiscal agent.

Our Commitment to Customer Service

Public Debt has a wide variety of customers. We provide service to individual investors in savings bonds and TREASURY DIRECT as well as large institutional investors in marketable securities. Other customers include regulated brokers and dealers in government securities, state and local governments, and a diverse array of market participants and others who rely on our public debt accounting information. We are committed to determining the priorities and expectations of our customers and providing them with the best service possible.

We recognize the importance of our customers to the success of our programs and the accomplishment of our mission. We will, therefore, communicate directly with our customers to identify their expectations and to assess their satisfaction with our performance. Customer service standards have been established for our TREASURY DIRECT customers and over-the-counter savings bond purchasers and a customer survey program has been implemented.

Public Debt will continue to strive to achieve the proper balance between the range of services provided to our customers and the costs of providing those services. Where necessary, in attempting to achieve this balance, we will choose to limit the variety of services offered rather than reduce the quality of service provided.

Managing Information Technology

Public Debt will promote a service-oriented data processing program which is an integral part of our operations and management. Efficient accomplishment of mission requirements should drive our use of technology. To that end, we intend to keep abreast of technological developments, and use new technology as appropriate to accomplish our goals.

Public Debt will continue to operate a computer center in Parkersburg, West Virginia, along with a network of smaller computers distributed throughout Public Debt offices. We will also maintain a data processing environment which remains compatible with the Federal Reserve System's environment and which is directly connected to the Federal Reserve communications network. We will take advantage of opportunities to use this compatibility and communications connection to optimize the exchange of data, to facilitate the sharing of information, and to permit employees in both the Federal Reserve and Public Debt to interact with shared applications in either organization. To accomplish these goals efficiently, we will remain aware of Federal Reserve data processing and information management plans.

The information that Public Debt maintains is a valuable resource and, in many cases, sensitive. Protecting this resource is critical. Therefore, we will continue to take necessary security measures to safeguard our data, protect its confidentiality, and ensure the continued availability of information and processing facilities.

Our Employees Are the Key

The talent, expertise, and dedication of our employees make them Public Debt's most valuable asset. We have high expectations of all our employees and recognize the value of their contributions. We will be sensitive to employee concerns and expectations and manage in a manner that will support recruitment and enhance retention, productivity, and morale. Our employees will be treated with openness and respect; trained to handle the great variety of functions we perform; authorized to meet the needs of our customers; and rewarded for initiating innovative methods to improve service or reduce costs. We will keep employees fully informed and work closely with them to accomplish our program and performance goals and to meet the challenges outlined in this plan.