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HomeMy WebLinkAboutM-80-06320 ClrtMANAGE • c.rr'r cF• r�in�ai. r•�.urinn II TL 1�'•S' i '''iC.: "C.!.IUF?ANDIJi�I '60 AUG 19 ! 20 Joseph R. Grassie, August 18, 1980 City Manager r Agenda Item; Sava gs Bond Program for City of Miami Theodore R. Gibson Employees- 1979 Campaign _f _.':'CN 7a:c7 City Commi Sion r It has been brought to my attention by the Miami Area Manager, U. S. Department of. the Treasury, Savings Bond Division, that their 1979 Campaign,for 4,160 City of Miami employees, fell short of success due to a lack of co-ordination by the Administration. Mr. John L. Mastrogiovanni, contends that the decision by the Commission to institute the Savings Bond Program, was not carried out with clear and concise direction from your office. He makes a strong argument for a deliberate attempt on your part to minimize the City's participation in the Savings Bond Program. We cannot ignore the fact that the program was unsuccessful in the 1979 campaign. But, should the program continue in the City, a co-ordinated schedule of promotion and distribution of information is essential, and must be centralized from the Finance Director's office. I am asking that Mr. Mastrogiovanni be given the opportunity to voice his concerns regarding the existence of the Savings Bond Program in the City of Miami, please place Mr. John Mastrogiovanni on the agenda for a personal appearance on September �15,1980. In his capacity as Area Manager of the Savings Bond Division, Mr. Mastrogiovanni would like to clear up this unfortunate situation. Please confirm with my office as soon as possible. 80-F>^2 Report to , w�. CO*,%DIISSIONER GIBSON 1979 U.S. SAVINGS BONDS CAMPAIGN for the employees of TIME CITY OF MIAIMI Prepared by , John L. Mastrogiovanni Miami Area iMana'ger UNITED STATES DEPARTMENT OF THE TREASURY Savings Bonds Division ' 80-6f432 ,t:AV ar:� DEPARTMENT OF THE TREASURY p �.I \\y9 lfiNvv., U. S. SAVINGS BONDS DIVISION OFFICE OF STg1I*' S W -.T C lrs t Avenue, Room #222 Miami, Florida 33130 July 3, 1980 City Commissioner Theodore Gibson THE CITY OF MIAMI - 3500 Pan American Drive Miami, Florida 33133 Dear Commissioner Gibson: In our report to you of October 2, 1979 (see Attachment #1), we discussed details commencing with the Board of Commissioners' . unanimous approval of a 1979 United States Savings Bonds campaign for the employees of the City of Miami. During the period up to that point we also described what has been apparently at best an autonomous approach to the wishes of the Board of Commissioners, citing various difficulties, abusive correspondence, and the bare minimum of cooperation from our contacts with the City Manager's office. . Our purpose in this current report will be to demonstrate to you how the decreased participation that occurred during the 1979 campaign is the result of a negative approach by the City Manager's office ostensibly due to his alleged philosophy of remaining aloof from assisting in the promotion of any programs to the City's employees wherein the City might be construed to be influencing an employee's decision, As you will see, this works both ways, Certainly a copy of the results we finally received in April 1980 (see Attachment #2) bears out the failure of our best efforts within the framework in which we were permitted to work during the campaign period, You are already aware of the letter of October 1, 1979 (see Attach— ment #3), we received from John P. Bond, III, former Assistant City Manager, in which tie acknowledged reluctantly and with open discourtesy, campaign dates and a Department Directors meeting in the City Commission Chambers set for 4:30 P.M. last October 22, 1979. The Department Directors meeting took place as scheduled. The interest expressed by those present was very encouraging. Keep Freedom in Your Future lt'ith U.S. Savings Boiuk 0 11 Those who attended were as follows: Chief C. E. Moye, District 1B Fire Department ` Lieutenant Dan Le May, Personnel Officer, Fire Chief's Office Major James Reese, Section Commander, Police Department James C. Kindl, Department of Solid Waste Kemper McCue, Personnel Administration, Department of Human Resources Paul Young, Assistant Director, Department of Stadiums and Marinas Jorge Quintero, Chief Programmer, Department of Communications and Computers :} Jim Leukanech, Construction Division, Department of Public Works Chris Macy, Department of Parks and Recreation Frank R. May, Administrative Assistant, Department of Building and Vehicle Maintenance The United States Treasury Department maintains the Savings Bonds program here in South Florida intentionally with only two represen- tatives and no support staff whatsoever. it is the Treasury Department's mission and objective to utilize the staff it maintains in Miami as actively as its limited budget permits in order to recruit support and effort throughout the Five County South Florida area so that this important Debt Management tool may be presented to the public in a cost effective manner and to everyone's mutual benefit. Once we have achieved the committed support of the manage- ment of an organization we then request a strong coordinator. His role is to work within his organization to coordinate efforts at all levels in order to achieve a successful campaign; our role is to guide the coordinator through each stage of the bond campaign. Needless to say, during the 1979 City of Miami campaign we had no such coordinator to speak of. Even though the Board of Commissioners appointed the City ;Manager to Mr. Carl W. Blake, our Area Director, as the individual for us to work with when he,asked on July 11, 1979, who that would be, at no time did Mr. Crassie himself meet with us, nor did he ever clarify who the coordinator would be. w Those listed above present at the Department Directors meeting were ready and most willing to present this program to their employees, but they had no central direction or coordination from the. City Manager's office. 17he several meetings we held with their respective departments had no back-up from the city management structure for such simple questions as to how allotments would be handled during the transition to the new Series GC Savings Bonds. Our only recom- mendation to your department heads during this period was to refer such questions to the office'oO the Director of Finance, which, as you will see,was not very effective. III In view of this apparent confusion, we contacted the Director of Finance with a copy of a letter (see Attachment #4) designed to minimize Payroll's problems during the transition period, The letter served to notify all employees of the relatively simple steps Payroll would take to convert current participants to the new program without the need to contact each and every one, This "negative response" approach left any changes up to Payroll's convenience unless the employee desired otherwise. ITS EFFCCTIVENCSS RESIDED IN THE PACT THAT NO ALLOTMENT NEED BE DISTURBED WERE IT THE EMPLOYEE'S DESIRE TO KEEP IT SO, THEREBY INSURING MINIMUM CANCELLATIONS. We likewise �* consulted with the Director of the Department of Computers and Communications to establish affirmatively that the "negative response" approach would create no problems technically with the computer for that department to deal with, Since Mr, Gunderson questioned the legality of such a procedure, we sent him a letter on November 30) 1979 (see also Attachment Wo establishing the precedent set by the Comptroller General of the United States, as well as references for his verification that would enable him to consult the attorney who had established the legality of this issue. It is not clear as to whether or not Mr. Gunderson chose to ignore our assistance or had other procedures in mind for the transition to the new Series EC Bonds program encompassing his own objectives. In any case, a few more confusing facts surfaced through Payroll during December which were rather curious, appearing to be based'upon incorrect information at best, even though copies of the same materials sent to Mr. Gunderson's office went to Mr. David Krasny in Payroll as well, During December, a representative from the Police Department contacted us to notify us of word from Payroll, stating that although the minimum denomination for a Series EE Savings Bond would now become $50.00, its purchase price would remain at $37,,50 rather than the new and correct price of $25.00. Since more information was supposed to be forthcoming via memorandum to all employees, we requested copies as they became available. Meanwhile, we contacted Mr. David Krasny in Payroll to attempt to determine the cause of the confusion. It,wns his own incorrect impressions that were the source. We suggested to Mr, Krasny to get in touch with his supervisors so that he could avail himself of correct and official information concerning Savings Bonds, Next, the same representative from the Police Departmant contacted us once again, concerned about many employees cancelling allotments in response to an announcement (see Attachment #5) stating that 80- 632 0 IV the minimum bond deduction would become $25.00 and that all allotments would be automatically increased to this amount. Apparently this feedback of cancellations reached Mr. Gunderson's office, since, on December 10, 1979, an amended version to all Departmental Payroll,Clerks instructing them that "a $50.00 Bond at maturity* costs $25.00" and that employees "may pay a minimum amount bi-weekly of $6.25." (see Attachment #6) By this time the damage was done, for many cancellations had already occurred. The $6.25 minimum bi-weekly'allotment, in addition, eliminated completely those employees at lower salary levels from being able to choose to participate. We have indicated on these pages not only what has taken place during the 1979 Savings Bonds Campaign for the City of Miami and the confu- sion that resulted without adequate internal coordination, but more importantly, we have attempted to underscore the need for a strong commitment by the Board of Commissioners that will not be ignored by the office and stafff of the City Manager. We have also attempted to underscore the need for a committed, conscientious, City Savings Bonds Coordinator to bring this program enthusiastically to all levels of City employees, and most essentially to those at the lowest income levels, whose alternative to thrift is indebtedness. We are deeply concerned about the Savings Bonds Program for the em- ployees of the City of Miami. If this past year's experience with the City Manager's philosophy of aloofness is a bellweather at all, it is not only negative but injurious as well to the interests of the many employees who have had to drop out. The sacrifice to afford to continue to participate simply grew out of their reach. Yours truly, _/ W�,�70 John L. Mastrogiovanni Miami Area Manager jlm encl *Possibly Mr. Gunderson means to say "face value" rather than "at maturity". ' P'Fs' 0, (3:3.2 ��I��IIIII ai.LAL;IirlhNl ,ri ij DEPARTMENT OF THE TREASURY • U. S, SAVINGS E30NDS DIVISION OFFICE OF STA'TC DIRECTOR 51 S.W. First Avenue, Hoom 222 Miami. Florida 33130 October 2, 1979 City C(maAsnioner Theodore Gibson Till CITY OV 11IAtil 3500 Pan Atnerican Drive Miami, Florida 33133 Dear Commissioner Gibson: Nany thattku kor the plEnsa.,c up-iortunity to meet with yrni this morning to discuuu the progrova of the United States Savings Bonds program for, the City of Iliaali. :Since our first ninetiut; in June and the unanimous approval of the Guard of Convnivaionors on July 11, Lllu eurlieut dot++ Hr. Ornasi'u ocFicu had bQun able to ucltudttle a wcetiu,; for me with hint wflu Aui;uut• 15. Upon ar•rlvin6 at tilc appuinted time I was infaruted that unfortunotuly Mr. Graaui WAN not available as planned. Mr. Jack Load, ilia aosiutailt, lla(: scan .Sut+iai+attd Lu utc+et with me in his place. Durin& this iiiLmsstin); S vt+rious uahgctu and roquirenloaLu for the pvoput;cd ca,1,)aL,;n. ill Liku 114ht oZ the upcoming change:+ in the United States Savings lionds hrograw that would have a profound effect upon the undurutanding of City employees towarda tbair holdings, I asked Mr. Loud what the titao frame would be for the City's campaign, on+pl+asiiing my request for dates as early as possible. His response was to tell we t'Art he Faa werely in for Mr, Grassi in his absence. lie hallono information for me as to campaign dates nor even who would be ansi6ncd to work with me to coordinate the pro6ratn for the City, citin4 upcoming budget planning in the month of September as turcutost current priorities. It wan ngroed between; us, however, that sir. Uond would contact me by Augt&at 29 Keep Fradom in Your future 117lth U.S. Savings Borub II with more information, adding as a comment to this commitmant the remark, "Just to keep me honeotl" Not having heard from Mr. Bond as of August 31, I left a call with his office for him to call rile. On September 4 lie informed me by pl►one that the proposed plane were now for the end of September and that either himself or 'Mr. lluniuerto Cortina, Assistant City Manager, would be assigned to work with me. Mr. Bond then stated that final plans would be in the mail to me by the end of that week. . As September progresoed.and the letter appeared not to be forthcoming, I aasun;A budget concerns naturally rulagatc:d campaign priorities to a secondary status. Towards the middle of September, and in view of my own official coumit►,,ants, I decided to contact Mr. Bond's office in an attempt to be prepared with the necondary materials should organizing a full sends campai.g,n be required on short notice. , For thin reason, I loft the followin;; four questions with Mr. Bond's secretary for him to answer aH noon as hu could, through her if it would he more conver•iant for him; 1. 1v1iat is the total number of people employed by the City? 2. who hue been. choaen for me to work with?. 3. Vlhot are the proupective camq'ai Ln dates? 4. 4.'hat is the dates and time for rile to be avc►ilablo to vent with the City department heads? To date, I have not yet had n response to these questions after several follow-up attempts. Currently, and as I pointed out to you this morning, Washin;;ton hay now ndvisad Mr. illahe and myaelf that materials are becoming available in late October or early November on the new Scirins Er, Savins;3 Ronda. So far I have not been ablil to convey this infurmation to Mr. Bond or whoever will be working will► me, but this presents an earlier opportunity than formerly anticipated to inform City empli�yeee of the changes involved, and at the saute time for sae to be of assiotance in providin.- the noccouary information required to administer a amuoth tranuition from 5eriva E to Series EK Bonds by the Citv'a otarr. To put it UnoLhor way, I have been unable up to now to let it be known that the dog could uow be clone with one c�usp►tii�n in;staad of two (the second campaign bacoruin,; neeans(iry during the first six months of next year so that the tranaition from E to LE Ronda may occur smoothly). olk IM III I sincerely hope tliio report provides you with details sufficient to deacribe the City's campaign prol;reas to date, as well as the responaiveneaa of the City leIanaO rIa staff to the wishes of the Board of Commissioners. Yours truly, z-�� Julin L. Has tro,;iovanni Miami Area Manager ATTACHPENT2 1. t ow f e\� OUA�► 1'n'ING. ^f�l d • t Return this form too., John L. Ymlaget' .,U.S. Savings Bonds 10ivision ' Federal, ?huilding, Room 222 ' 51 S.W. First Avenue Miami, Florida 33130 The results of your promotion will assist us In giving you the credit you deserve in support of the U.S. Savings Bonds Program. Please complete the information and figures requested and return to me at the address above. Thank you for your cooperation. Total Company rhployment ( CITY OF MIAIV 4160 Number of rnployees on Plan at Start of Promotion JOjil79. 662 (10-6-79 P/R) Number of Employees on Plan at Paid of Promotion 9Ji/so: 51.6 (3-8-80 P/R) Mzber of Dnployees Who Increased Allotment -146 Deorease. During Promotion Where are your ponds issued: Anent - Coconut Grove Bank 2700 S. Bayshore I 33x33• A CITY OF MZAML ' ompnny rune P-O- Box 330703, Coconut Grove Station, MiRmi, Florida 33133 Ca cy 579-6350 Y.r. J. I•:- Gunderson, Finance 1%reetor. ourName) i 1M c ATTACMIENT u3 I. t I CL Ok' 01 R. �� _n [Mgm of October 1, 1979 Mr. John L. Mastrogiovanni Area Manager U. S. Savings Bonds Division Federal Building, Room 222 51 Southwest First Avenue Miami, Florida 33130 Dear Mr. Mastrogiovanni JOSEPH R. CRASSIE City Manager Notwithstanding the fact that I personally find your approach and personality somewhat overbearing and not conducive to full cooperation, I nonetheless, confirm our meeting of August 15, 1979, as I said I would. If you will recall, I indicated to you then that September was a very critical month for the entire City administration as it is during the month of September that the preparation of the City's Budget takes place. As I indicated to you in August, I would be in touch with you, hopefully, on or about the first of October to provide you with responses to the -questions you had concerning the City's intention with respect to making information relative to your U. S. Savings Bond activity available to the top City officials. You are hereby notified that you may meet with the Department Directors at 4:30 p.m. on October 22, 1979, in the City Commission Chambers at 3500 Pan American Drive, to show them what you yourself claim is an obsolete film on the, subject of U. S. Savings Bond Program as updated by a letter which you will then provide, It is understood that this meeting will last approximately forty-five minutes and will initiate a two week campaign geared to educate current U. S. Savings Bond holders and solicit new/potential U. S. Savings Bond holders. The total number of City employees funded from 'the City Budget is 3,344. The dates of the actual campaign will be October 22 through November 7, 1979. Be advised that the City will distribute your prepared information announcing the October 22, 1979, meeting and will provide the space for the meeting and process the results of a campaign which we understand to be rather simplistic. Specifically, it is my understanding that all you are requiring -is that we fill In a copy of the attached unknown and otherwise unidentified form. •J i� T OFFICE OF TN° CITY MANAGER 3500 PAn Amehc in Drlva/Mlsml. Florida 33133/(105)579.6040 Ok Mr. John L. Mastrogiovanni If I can be of any assistance to you, please do not hesitate to contact ti me. Sincerely, John P. Bond, III Assistant City Manager Enclosure 1 (i am W y ^ ' on Tho U.S, Savings Bonds Program Return this form to: John L. mstrogiov-anni, Area INa A9V, U.S: Savings Bonds Division Federal Building, Room 222 51 S.11. First Avenue Miami, Florida � 33130 The results of your promotion will assist us in giving you the credit you deserve in support of the U.S. Savings Bonds Program. Please complete the information and figures requested and return to me at the address above. Thant: you for your cooperation. Total Company nnployment Number of Employees on'Plan at Start of Promotion Number of Employees on Plan at End of Promotion h1vmber of Employees Mao increased Allotment During promotion Where are your Bonds issued: BOM-A-MATIC: (Special Plan Allowing Application of FICA to Bond Purchape) Do you offer this option to your employees: Yes . '�• A'o h" r. c If so, how many employees use this Plan: Bcfore;�or . FRCY+1: onFa—hy NEW tree • (city) (Zip), ' lOJle ' our , :a.mo c 1111111I I it (t ATTAUDIENT J4 1 .�.y.��rr1��r. ,116,�' �Y.Y�i.rriYwMMuw.�......rr.nti.M.....ri.Y.r...4���'�1L�J. ,..,�.rwr........ .. ... M.�hr....r41.�wrW�/.. r/Mi1 .►1N VY.��.'�+a' rM.�M r.r �rr.r A M 11,, ' C 1 '�>t • Y• ���1 DEPARTMENT OF THE TREASURY U. S. SAVINGS BONDS DIVISION OrrlCe OF STATE 01RECTOR 51 S.W. First Avenue, Room #222 Miami, Florida 33130 November 30, 1979 , Mr. James E. Gunderson, City Finance Director THE CITY OF MIA%fI P.O. Box #330708 Miami, Florida 33133 " Dear Mr. Gunderson: I am enclosing a revised and more specific model employee letter to supercede the version I sent to you the beginning of this month. Also attached here is a copy of the Comptroller General File #B-195443, dated July 27, 1979, that I had in mind today on the telephone. To help you to establish a precedent for the "negative response" method of transition and the ease implicit in this approach, I would like to call your attention to the conclusions made by the Comptroller General in the last two paragraphs on page three. To substantiate for you references you might find helpful, I have listed below (1) the telephone number and mailing address for the Comptroller General, and (2) the telephone number and mailing address for the attorney who worked on the File, to whom specifically any of your legal inquiries may be directed: l 1. 202-275-5481 Mr. Elmer B, States, Comptroller General of the United States U.S. GENERAL ACCOUNTING OFFICE 441 "G" Street, N.Sq. ,Washington, D.C. 20548 2. 202-275-6410 Mrs, Leslie L. Wilcox, Senior Attorney, Office.of the General Counsel U.S. GENERAL ACCOUNTING OFFICE 441 "G" Street, N.W. Washington, D.C. 20548 I am taking the liberty to forward n copy of this letter and its attachments to Mr. William Smith, Director, Department of Computers and Communications so that you and he may confer conveniently upon this subject, and I am nlso sending; a copy of the above referred to , revised employna letter to Mr, David Krasny in your Accounting De- partment as per I►is request. 80-632 bb.�..r��.6 r.•rrir.. Ji r��.rr.r u�.r�...r•.r•n r..u� �•. «. •...w.....w«....�.... �.w''.n.:e .....w.... ..... .. ., e..•, �.u•�....a.�..�Y.w....�ru�lf.. u�:.r.rr..ir�.+r�.•�. ... . nl .. I sincerely hope you will find this information helpful towards accomplishing the transition of your payroll allotments smoothly and with a minimum of problems. Please don't hesitate to get in Couch with me should you, your staff, or Mr. Smith's staff have any questions. Lf I haven't got an answer readily, I will do my best to get one for you. Yours truly, •; rat i :j;'•J�!'t:�!' t./�7�...�' 0000 John L. Ma strogiovanni Miami Area Manager j Im ENCL Ok .L.r.'+...,lr.w.. ,i /.�'_ _ •rwri..w........,.a n.,, ..... ............d.w...4����;.4. i. ,..: r.... ....... .. ....•.........u....i..�rr..wr..ih,..iu�N.�4..r+y.......w ..•.. DEPARTMENT OF THE TREASURY U. S. SAVINGS BONDS DIVISION OPPICE OF STATE DIRECTOR 51 S.W. First Avenue, Room #222 Miami, Florida 33130 November 30, 1979 Mr. Janes E. Gunderson, City Finance Director THE CITY OF MIAMI P.O. Box #330708 Miami, Florida 33133 " Dear Mr. Gunderson: I am enclosing a revised and more specific model employee letter to supercede the version I sent to you the beginning of this month, Also attached here is a copy of the Comptroller General File #B-195443, dated July 27, 1979, that I had in mind today on the telephone. To help you to establish a precedent for the "negative response" method of transition and the ease implicit in this approach, I would like to call your attention to the conclusions made by the Comptroller General in the last two paragraphs on page three. To substantiate for you references you might find helpful, I have listed below (1) the telephone number and mailing address for the Comptroller General, and (2) the telephone number and mailing address for the attorney who worked on the File, to whom specifically any of your legal inquiries may be directed: 1. 202-275-5481 Mr. Elmer 11. Stnats, Comptroller General of the United States U.S. GENERAL ACCOUNTING OFFICE 441 "G" Street, N.jq, ,Washington, D.C. 20548 2. 202-275-641.0 Mrs, Leslie L. Wilcox, Senior Attorney, Office.of the General Counsel U.S. GENERAL ACCOUNTING OFFICE 441 "G" Street, N.W. Washington, D,C, 20548 I am taking the liberty to forward n copy of this letter and its attachments to Mr. William Smith, Director, Department of Computers and Communications so that you and tie may confer conveniently upon this subject, and I am also sending a copy of the above referred to revised Plilploynp 1.Otter to M,r, David Krasny in your Accounting De- partment as pur his request, 8o-C 2 Dear Fellow Employee: As you may already have heard through the news media, Former Treasury Secretary W. Michael Blumenthal announced last January LO, 1979, the introduction of the new Series EE ("Double E") Savings Bond that will replace the current Series E Bond effective January 2, 1980. The "Double E" Bond, so named because it will double in value between its purchase and maturity dates, will have the following new features: ,u.Q. 1. . The purchase price will be one half the face value (that is,' $25,00 will purchase a $50.00). 2, The lowest available denomination will be $50.00 (the familiar $25,00 Savings Bond will no longer be available). 3. The interest curve to 6i% in five years remains, while the term to maturity will be eleven years, 4. The new Double E Bonds will become eligible -foe redemption six months after issue, rather than two months as with the Series E Bond, 5. The requirement that a bond beneficiary must consent to a change in the bond will be eliminated. For those among us who areecurrent•ly participants in the Payroll Savings Plan, this means that effective the first payday in 1980, payroll allotments will start purchasing the new Series "Doubla E" Savings Bonds, Your bond records will be changed automatically as follows, UNLESS YOU NOTIFY US OTHERWISE: a, If you areecurrently purchasing a $25,.00 Series E Bond, your record will be changed to issue you a $50.00 "Double E" Bond when your payroll allotments have accumulated to $25.00. b. It you were are currently purchasing a $50.00, $75.00, $100.00, etc., Series E Bond, you will be issued a Series "Double E" Savings Bond bused upon the new purchase price of one half the face value (see examples below). ' BOND DENOMINATION FOTi,,,S1:R PURCHASE PRICE NEW PURCHASE PRICE $50.00 $37.50 $25.00 $75.00 $56.25 $37.50 $100.00 $75.00 $50.00 $200.00 $150.00 $100.00 TWC COiViP'iMOLLCIa GUNrIPAL ©CC6o-- ION ;: ,1' 012 TH G LIN IT0 o' tITAT98 i `�� 'A�,l `. WAnMINOYON� OI,iQt GOg463 • , •� •' fir',, .I '�Iflr •1, ,1,;� 'Ir Ir . I FILE:— 8-195.443 ; •DATE: „July, 270 19'19 ' MAri TEA OF: Department of the'Treasury.-• Allotments for Series EE Savings Bonds DIGEST: Incident to introduction of Series'EE Savings Bonds to replace, Series E Bonds being purchased by payroll allotment,' 'Treasury proposes to substitute Series E1, Bonds based on a "negative -response" method,, whereby the Series EE Bonds will be substituted unless the employee terminates his allotment. Since 'the Series EE Bonds are a continuation without major ' substantive change of the Series E Bonds, the r,.eg�tive-response method of conversion is a proper,: means of continuing the employee's voluntary allot- niont under the Payroll SavingsPlan.- The proposal" is approved. On January 10, 1979, the Secretary of the Treasury announced the introduction of new, Series EE and 91-1 U.S. Savings Bonds to replace the current Series E and II Bonds, During the period from January 2 through June 30, 1980, pay roll sales of Series E Bonds for Federal employees will be converted to the new Series EE Bonds. The Treasurer of the United States, by letter of July 16, 1979, has asked that this Office consider the legal sufficiency of the Department's pro- , posal to use a "negative -response" method of automatic con- version whereby an employee who is currently being issued Serz es E Bonds under the Payroll Savings Plan will instead be issued Series EE Bonds unless the employee takes affirmative action'to terminate the allotment. The Payroll Savings Plan is administered under Executive Order 9135, April 16, 1972. To accomplish 'the conversion to Series EE Bonds, Treasury proposes to require that each individual employee be notified of the upcoming changes by means of a message to appear on or as an al,tachment to his Leave and Earnings Statement for at least four consecutive pay periods prior to the conversion date. During the same period a well-ptanne,d publicity campaign will be conducted to inform all Americans of the features of the new EE Boncts. We assume that Federal agencies will be advised than; absent a Leave and Earnings Statement alternative methods should, be used to inform employcc4 of the change, and that rlyhlw..• .•-. , �+•++1.�,•r• ,,Y r.� r ♦r •r•�rr••w •r•r•. .r....r •.r •.h ,,r. ,N w..���r•r- • ,r, I•+M " ...•. � 1 .+��l�•.���f� A Ok Dear Fellow Employee: As you may already have heard through the news media, former Treasury Secretary W. Michael Blumenthal announced last January LO, 1979, the introduction of the new Series HE ("Double E") Savings Bond that will replace the current Series E Bond effective January 2, 1980. The "Double E" Bond, so named because it will double in value between its purchase and maturity dates, will have the following new features: 1. The purchase price will be one half the face value (Chat is,' $25.00 will purchase a $50.00). 2. The lowest available denomination will be $50.00 (the familiar $25,00 Savings Bond will no longer be available). 3. The interest curve to 6,% in five years remains, while Lhe term to maturity will be eleven years. 4. The new Double E Bonds will become eligible for redemption six months after issue, rather than two months as with the Series E Bond. 5. The requirement that a bond beneficiary must consent Co a change in the bond will be eliminated. For those among us who iiieecurrently participants in the payroll Savings Plan, this means that effective the first payday in 1980, payroll allotments will start purchasing the new Series "Double E" Savings Bonds. Your bond records will be changed automatically as follows, UNLESS YOU 'NOTIFY US OTHERWISE: w.wt se a. If you 'are currently purchasing a $25,.00 Series E Bond, your record will be changed to issue you a $50.00 "Double E" Bond when your payroll allotments have accumulated to $25,00. were b. If you are currently purchasing a $50.00, $75.00, $100.00, etc., Series E Bond, you will be issued a Series "Double E" Savings Bond based upon the new purchase'price of one half the face 'value (see examples below). / BOND DENOMINATION FOR;3ER PURCHASE PRICE NEW PURCHASE PRICE $50.00 $37.50 $25.00 $75.00 $56.25 $37.50 $100.00 $75.00 $50.00 4200.00 $150.00 $100,00 l ..�.rr.�lur«rrr.•..6;�`------jrl.a..,w.�rw.�er«,•.r:�w,....,`...'r.i,•au.i,..1.1..«..�.. v.. w.., ....,,n.,.r..r,...r..r. ----'Mdi�Iw6wr.r..rL.,�J r..ww..+.r........, B-195443 supplemental notification procedures maybe used to the extent, deemed necessary, Any employee who is dissatisfied with the terms of the conversion may cancel his participation in the Payroll Savings Plan or may adjust his allotment. The Treasurer, states that the Series EE Bonds are substantially, similar to the Series E 13onds, with the interest rate and interest curve iden- tical. She summarizes the main differences between the two series as follows; •4, "Series EE Bonds will sell for 50 percent face value, compared to 75 percent for Series E Bonds. ' 'The minimum denomination of Series EE Bonds will be $50. The current $25 E Bond will be eliminated. "Due to the increased discount purchase price the EE Bond will mature in 11 years, compared to five , years for the current E Bond. "The retention period for Series EE Bonds will be increased to six months from the current two months for E 13onds. " Under the proposed conversion, Bond inscriptions on the Series EE Bonds would remain identical to those on the Series E Bonds the employee had been receiving, allotment amounts would remain the same or be decreased and, except in the case of employees now purchasing $25 Series E Bonds, employees would receive Series EE, Ponds of the same purchase price or less, Also. the interest rate and interest curve will remain the same. With respect to those employees now purchasing $115 Series E Bonds, the 'Treasurer explains; "* * 94 A'$25 Series E Bond is curredtly purchased for $18. 75. however, the minimum denomination Series EE Bond will be .$50, selling for $25. , .Although in this case the purchase price of a Bond would be increased by $6.25, -the allotment amount a nrr pay period will never be increased. " On June 28, 1979, the Department of the Treasury published in the Pederal Reglister proposed regulations governing Savings Bonds. Series EE and NIL The Department intends the new - 2 - B-195443 Bonds'to be'a continuation of the old Bonds',' -without major substantive changes. As stated at 44 Fed. Reg. 37826.(1979)1 is the intention and -expectation of the Depart-. ; ment of the Treasury that -these new series of savings bonds -will be treated similarly to the other.., '. 'series of.savings bonds '� In other words,• as mentioned, the new bonds are a' continuation,'1with- out major substantive change, of the old bonds,. Thechanges that are. proposed td-be 'rhade generally': affect 'the ways in which owners mAy facilitate transactions involving bonds; rather than w,ith the substantive property rights.' ' �• ���� , The Treasurer believes that the notice period of at least months will give sufficient opportunity to any employee who is not satisfied with the terms of the conversion to cancel or adjust his allotment by submitting a new authorization for Standard Form 1192. The Treasurer requests our approval of -the conversion plan on the basis of the foregoing information, .As precedent for. the use of a negative -response system where an allotment is continued under different terms, the Treasurer refers to 5 C. F. R. § 800. 301W which provides that when one option of a particular health benefits plan is discon- tinued, enrolled employees who do not change'plans will be co-asidered enrolled in the remaining option of the plan. While the Health'-lenefits Registration Form executed by an employee to anroli, ox change enrollment in a health benefit plan differs ;rom tl,e St ndard Form 1192 executed by'employees for pur- chase of U. , Savings Bonds in that the latter is specific as to the dollar a; count to be alloted each pay period and as to the Bond denon- nation and series', we believe that it is proper to treat subst tution of Series EE Bonds for Series Z Bonds in a similar manner. By his execution of a Standard Form 1192 for the Series E ;Bond, the employee has expressed hts desire to participate in the Payroll Savings Plan. Since the Series E Bonds will no :ioniser be issued, the employee's participation will be termi- ,nated unless his allotment is converted to the Series EE Bond. Because the Series .EE Bond is a continuation without major substantive change of tha Series E Bonds, we believe that the negative -response method'of• conversion proposed by the r , 1 . ..3".' ..... w. ......... ..�........o.rw.�..�..�.,M.. >q •..•............,.. .... . .. . ... . w•w.►p•H•MA1•..r .... ••...r.r-rw.--w�r�r"wwM., B-195443 ' Department of,Treasury is proper insofar as proper steps ' are taken to notify the employees of the conversion plan. Cf. 42 Comp. Gen. 663 (1963) 1 ; There will undoubtedly be some cases in which employees „ do not receive notice in time to permit them to cancel their allotment because of dissatisfaction with the terms of the Series EE Bonds. Therefore, we believe that for a -reasonable temporary period employees should be permitted' to redeem ' Series EE Bonds at any time after the 2-month. retention period required for Series E Bonds and prior to expiration of the 6-month redemption period for Series EE fonds. The proposal of the Department of Treasury for automatic conversion of payroll allotments from Series E Bonds to Series EE Bonds is approved in accordance with the foregoing. „ Deputy Comptroller General rel; of the United States ATTAcyumEN-T r5 j I ^' PLEASE BL ADVISED THAT EFFECTIVE ON 'rtiE PAYROLL, ENDING 12-29-70, THE MINIMUM PAYROLL BOND DEDUCTION WILL BE ;�25.00 BIWEEKLY.+ YOUR PAYROLL DEDUCTION WILL BE AUTOMATICALLY INCREASED. THIS WILL PURCHASE A $50.00 BCSD. I 4 IL' CITY OF MIAMI, FLORIDA INTER-OFi iCE MEMORANDUM ' to. All Departmental Payroll Clerks DAM December 10, 1979 File: SUBJECT: Savings Bonds FROM: Ji nos E. Gunderson REFf.RENCCS: ' Director of Finance � iNCL05UAE81 A $50.00 BOND AT MATURITY COSTS $25.00. YOU MAY PAY A MINIMUM AMOUNT BI-WEEKLY OF $6.25. JEG:im r� M L. E. Past President April 24, 1980 To: Attached List Dear Southem Bel! Hurt Budding, P. 0. Box 2211 Atlanta. Georgia 30301 Phone (404) 629-7277 In my capacity as a private citizen, President of one of Georgia's largest employers and as Volunteer Georgia State Chairman for U. S. Savings Bonds, I take this method to convey to you my feelings on a subject that should be of great concern to all thinking Americans. You know it has become popular in recent years for certain elements in our society to try their best to impede, if not destroy, government institutions that have served America and Americans well. The U. S. Savings Bonds Program is now under attack by those who evidently don't understand or do not wish to ' convey to the citizens of America the --proper role Bonds have played (and will continue to play) in our American system of economics. You may have read editorials that have been highly critical of the Bond Program and the U. S. Industrial Payroll Savings Committee, headed by Mr. E. Robert Kinney, Chairman of the Board of. General Mills. One such editorial appeared in Barron's on February 11, 1980. I am enclosing letters in response to this article from Bob Kinney and Roy Anderson, Chairman of Lockheed Corporation. I strongly recommend both letters for your reading. Unfortunately, their letters will' not draw the same attention (headline snatcher) as the negative editorials have. With this type of irresponsible reporting it is up to the business leaders of this great country to redouble their efforts to support Bob Kinney and the 1980 U. S. Industrial Payroll Savings Committee. . I ask you to join with many firms in Georgia who are for the first time offering to all of their employees this excellent method of saving through Payroll Savings. Personally I, and my company, have been participants in the Payroll Savings Plan for many years, I can earnestly say that I have no hesitancy in recommending this program to anyone, Admittedly, times like we are experiencing now will make our task difficult, but not impos- sible, It is my hope that you will respond positively when the Savings Bonds Staff contacts you. Best regards. Sincerely, 1 .a � ' r CITY OF MIAMI, F1.017113A INTEROFFICE, MEMORANDUM All Dupartmental Payroll Clerks DATE' December 10, 1979 nLe: SUUJECTS Savings Bonds FROM: • J' nes E. Gunderson REFCRENCES: i Director of Finance ENCLOSURESI A $50.00 BOND AT MATURITY COSTS $25.00. YOU MAY PAY A MINIMUM AMOUNT BI-WEEKLY OF $6.25. JEG:im 0 COPY GENERAL MILLS, INC. 4 EXECUTIVE OFFICES ' 9200 Wayzata Boulevard ' Minneapolis, Minnesota February 22, 1980 The Editor BARRON'S 200 Burnett Road Chicopee, Massachusetts 01021 Dear Sir: E. Robert Kinney Chairman of'the Board Chief Executive Officer The attack on U. S. Savings Bonds in your Editorial Commentary (Barron's, February 11, 1980) seems to me to be both short-sighted and damaging to our nation's best interest. It ignores the fact that the U. S, Savings Bonds program encourages thrift by people who otherwise would be unlikely to save significant amounts. At the same time, it denigrates the opportunity bonds offer to combine personal interest with patriotism. Although you may refer to the program as "wrapped in the flag," it is crucial to management of the national debt in a way that will minimize inflation. The average life of a U. S. Savings Bond is 5.9 years. Because large denominations are held longer than small denominations, the life of the dollar in savings bonds is 8.8 years. In contrast, the dollar life of the government's negotiable securities is only 311 years. Certainly, savings bonds are the most cost-effective way to fund the national debt. They can be administered efficiently, and the new Series EE bonds cost even less to sell and manage than did their predecessors --first because of their 11-year term to full maturity, second because of an increase in their minimum holding period from two months to six months. ' While providing a stable base for a significant part of the national debt, they also draw money from current inflation -producing expenditures, delaying spending to the years ahead. As long as inflation is among the nation's foremost problems, the role of savings bonds in attacking it should be on the minds of every taxpayer and every citizen. Your Editorial Commentarya , it seems to me, equates the U. S. Savings Bond program with an investment program. It is a savings program. The U. S. Industrial Payroll Savings Committee, which I now serve as 1980 National Chairman, seeks to help people put aside small amounts regularly to attain their goals. Anyone with experience in business knows that purchase of bonds through small monthly payroll allocations-- $5, $10, $50,--is the only way in which many people will save. Yet is assures them of a guaranteed interest rate over time, backed by the U. S. Government with funds in liquid form after only six months from date of issue. 80-632 Barron's -2- C, 2/22/80 Higher yielding investment programs, usually with higher minimum deposit require- ments and lengthly holding periods, lose some of their glamour in the face of experience. Three years ago, for example, I invested in municipal bonds of a fine city of Minnesota. When I checked with my broker to learn what would happen if I needed to cash these tax free bonds, he said (1) there is no immediate market and (2) I should have to take a $3,000 loss on a $10,000 investment. In contrast, I know I can redeem my U. S. Savings Bonds for what I have in them plus compounded interest. I have been buying U. S. Savings Bonds since 1941; I continue to buy them today. As savings instruments, U. S. Savings Bonds have interest rates that compare favorably with those offered by banks and savings and loan associations on accounts subject to immediate withdrawal. Because their interest is free from state and local income taxes and because federal income taxes can be deferred, their effective rate should be attractive to anyone interested in long-term savings with liquidity. As in any fixed savings or investment vehicle, the value of dollars in U. S. Savings Bonds is being eroded. The problem is not the rate of return, but the rate of inflation. Raising savings bonds rates, without regard to the rates paid on the billions of dollars in accounts with comparable yield, would seriously disrupt the economy. It is,significant, nevertheless, that the interest on U. S. Savings Bonds has never been reduced and it frequently has been increased. In your Editorial Commentary_, you cast verbal barbs at endorsement of the Savings Bond Program by business leaders. I believe that the broad base of volunteer support --from business, banking, labor, media plus state and local government -- underscores the fact that U. S. Savings Bonds are good for the country and its citizen. Sincerely, E. Robert Kinney Chairman of the Board Chief Executive Officer �1 1 COPY LOCICIEED CORPORATION 1 BURBANK, CALIFORNIA 91520 (213) 847-6452 1 ROY A. ANDERSON Chairman of the Board February 22, 1980 Mr. Robert M. Bleiberg Editor BARROW S 22 Cortlandt Street New York, New York 10007 Dear Mr. Bleiberg: In your February 11, 1980 issue, in the Editorial Commentary, you commented on the investment features of the 7% U. S. Savings Bonds. You referred to the "ringing endorsement" of the 54 American businessmen whose photos were in full -page ads supporting the 1980 U. S. Industrial Payroll Savings Program. In addition to generally deprecating the investment features of savings bonds, you stated: its . . . . that ringing endorsement would have rung*'a lot truer if the corporate bigwigs who lent their names and faces to it had also disclosed their own holdings of savings bonds as well as their future plans to buy (or sell)." You also specifically mentioned in your article, and although I don't consider myself a "corporate bigwig," I thought it appropriate to respond to the disclosure challenge. Specifically, I began buying savings bonds on a regular basis in 1971. Since then I have not cashed any bonds so purchased and currently I hold bonds whose cash value is approximately $50,000. I am currently investing.$225.00 per week in savings bonds and have no current plans to divest bonds held until their approximate maturity date. Why my program? Because I consider savings bonds to be an investment in America -- a country I'm tremendously proud of and one which has given me opportunities that I'm extremely grateful for. Sincerely, Roy A. Anderson cc: President Jimmy Carter The Hon.G. William ;tiller bcc: John X. Macgen-ie