7 . / 87 2d Session* 8 } COMMITTEE PRINT DOC. - YU,P8U/11 : B64/962 BONDING OF FEDERAL EMPLOYEES FISCAL YEAR ENDED JUNE 30, 1962 COMMITTEE ON POST OFFICE AND CIVIL SERVICE UNITED STATES SENATE 40 7T W V M y?£>l .\(W/f(/2- LETTER OF TRANSMITTAL The Secretary of the Treasury, Washington, October 1, 1962. Hon. Lyndon B. Johnson, President oj the Senate , Washington, D.C. Dear Mr. President: In compliance with the specific require¬ ments of section 14(c) of the act of August 9, 1955 (6 U.S.C. 14), I have the honor to transmit herewith a report of operations by Federal departments and establishments in connection with the bonding of officers and employees under the provisions of that act, for the fiscal year ended June 30, 1962. Sincerely yours, Douglas Dillon. m «• . : -.' v; ... , . - «. • . ■: 4 ■ . .... V .Q i.. o:. . *. / , ' •. ’ rj REPORT OF OPERATIONS IN CONNECTION WITH THE BONDING OF GOVERNMENT OFFICERS AND EMPLOYEES UNDER THE ACT OF AUGUST 9, 1955, FISCAL YEAR ENDED JUNE 30, 1962 Public Law 323, 84th Congress, 1st session, approved August 9, 1955, requires the Secretary of the Treasury to transmit to Congress on or before October 1 of each year a comprehensive report of opera¬ tions under the act during the preceding fiscal year. Pursuant to regulations promulgated by the Treasury Department in accordance with the above act, reports containing specific informa¬ tion concerning fidelity bonding are submitted to the Treasury De¬ partment by executive departments, independent offices, agencies, and establishments, and certain offices of the legislative and judicial branches. The tables in this report summarize the information submitted to the Treasury Department. NUMBER OF EMPLOYEES COVERED As of June 30, 1962, there were 1,007,581 employees covered by fidelity bonds, an increase of 2,626 over the number of employees covered as of June 30, 1961. The Post Office Department, with 931,500 employees covered by a blanket bond, accounted for 92 per¬ cent of the total number of employees bonded as of June 30, 1962. The following summary statement shows the number of employees covered, by type of bond, at the close of fiscal year 1962 as compared with the number covered as of June 30, 1961: Executive Number of employees Total Type of bond Legislative Judicial 1962 1961 1962 1961 1962 1961 1962 1961 Position schedule_ Blanket_ 39,311 966,649 99 37, 543 965, 983 87 176 175 51 1,284 10 50 1,102 14 39,538 967,933 110 37, 768 967,085 102 Individual. 1 1 Total. 1,006,059 1,003,613 177 176 1,345 1,166 1,007, 581 1,004, 955 1 2 BONDING OF FEDERAL EMPLOYEES The following comparative statement for the years 1961 and 1962 lists department and agencies in the executive branch with coverage in excess of 1,000 employees: 1962 1961 Increase (+) or decrease (—) Post Office Department-..... 931,500 931,500 0 Department of State. ---- - 23, 734 23,385 +349 Federal Housing Administration_ _ 7, 240 7, 422 -182 Department of the Army _-___ 6,048 6, 003 +45 Department of Agriculture. _ 5 ,846 5, 245 +601 Department of the Interior _ __ . 4,918 4,392 +526 Treasury Department_ ____ __ 4, 612 4, 260 +352 Department of the Navy ____ 4,395 4, 213 +182 Small Business Administration____ 3,165 2,795 +370 Veterans’ Administration_ ____ _ 2, 426 2.364 +62 Department of the Air Force______ 2,183 2,188 -5 Department of Justice__ __ 2,179 2,150 +29 U.S. Information Agency..__ 1,766 1,506 +260 Federal Aviation Agency_ ___ 1,347 1, 791 -444 Total------- 1, 001,359 999, 214 +2,145 Employees NUMBER AND TYPE OF BONDS PROCURED There were 211 bonds in force as of June 30, 1962, as compared with 203 as of June 30, 1961, and 700 as of June 30, 1957, the first full year for which reports were received. The decrease in the num¬ ber of bonds in force since 1957 resulted from the use of blanket or position schedule bonds to cover a number of employees formerly covered by individual bonds. Type of bond Executive Legislative Judicial Total 1962 1961 1962 1961 1962 1961 1962 1961 Position schedule.. 89 88 3 3 3 3 95 94 Blanket..___ . 5 6 1 1 6 7 Individual.... 99 87 1 1 10 14 no 102 Total__ 193 181 4 4 14 18 211 203 AMOUNTS OF PREMIUMS PAID FOR BONDS The total premium cost of bonds in force as of June 30, 1962, was $282,866. This compares favorably with prior year costs of $287,857 for 1961; $280,298 for 1960; $273,699 for 1959; $297,953 for 1958; and $378,858 for 1957. The Post Office Department advises that an ex¬ pected dividend of $62,937 on its 2-year bond will serve to reduce the premium cost. The amount of the expected dividend has not been included in the tables. The following summary statement shows the computed annual premium cost for bonds in force as of June 30, 1962, as compared with June 30, 1961. Most of the bonds, other than individual bonds, run for a period of 2 years. Premium costs on these bonds are shown BONDING OF FEDERAL EMPLOYEES 3 on the basis of the proportionate cost for 1 year, together with the premium costs on 1-year bonds, in order to arrive at an annual cost. Type of bond Computed annual cost of premiums on bonds in effect on June 30,1962 Total as of June 30, 1961 Executive Legislative Judicial Total Position schedule.. $66,091 213, 761 923 $317 $334 1,191 182 $66, 742 214,952 1,172 $83,041 204,018 798 Blanket_ _ Individual.... 67 Total..... 280, 775 384 1,707 282,866 287,857 CLAIMS AGAINST SURETY COMPANIES The following summary statement prepared on a cumulative basis covers the period from January 1, 1956, to June 30, 1962. In the fiscal year 1962, claims were filed against sureties in the amount of $284,447 as compared with $216,912 filed in 1961. Recoveries from sureties amounted to $225,831 in 1962 as compared to $206,474 in 1961. Cumulative, Jan. 1,1956, to June 30, 1961 Fiscal year 1962 Cumulative, Jan. 1, 1956, to June 30, 1962 Claims filed with sureties..... $921,966 793, 408 128, 558 $284,447 225, 831 58,616 $1,206, 413 1,019,239 187,174 Recoveries from sureties_ Pending against sureties. . ____ ADMINISTRATIVE EXPENSES Administrative costs of surety bond procurement and related oper¬ ations for the fiscal year 1962, for all agencies reporting, amounted to $45,877. This includes expenses in connection with handling, ex¬ amination, filing, maintenance of records, and correspondence. During fiscal year 1962 there was substantial bond procurement activity as most of the 2-year bonds expired December 31, 1961. The procurement of new bonds during fiscal year 1962 resulted in an increase of $6,767 in administrative expenses over the preceding year. The following summary table shows administrative costs for the years 1955 through 1962: Fiscal year Personal services Printing and reproduction Other expenses Total 1955 1 .. $502,961 65,692 19,615 27,229 24,460 33, 577 37,549 44,089 $1,638 1,940 546 $2,501 1,834 587 $507,100 1956 2. 69, 736 20, 748 29, 506 1957...... 1958.... 896 1,381 990 1959..... 623 26, 073 1960..... 1,205 775 861 35, 643 1961.. 786 39; 110 1962..... 1,489 299 45,877 1 Last fiscal year prior to Public Law 323. a Covers 9-month period from August 1955 to Apr. 30, 1956, for the first bonds procured under the act. 4 BONDING OF FEDERAL EMPLOYEES SUMMARY * • ,* • • •' ' r \ ^ ’*’ • During fiscal year 1962^operations under the act of August 9, 1955, resulted in benefits to the Government as compared with operations prior to the inception of the act. Savings in administrative costs during the fiscal year 1962, as compared to 1955, the last full fiscal year prior to the inception of the act, amounted to $461,223. These savings exceed the annual premium cost of $282,866 for bonds in force as of June 30, 1962, by $178,357 which represents the net tangi¬ ble savings to the Government. In addition, employees were relieved of paving premiums which, during fiscal year 1955, amounted to $1,732,748. The following statement reflects the savings in cost and the increase in coverage experienced under the act. Bonds in force Dec. 31, 1955, not procured under act of Aug. 9, 1955 i Bonds procured under the act of Aug. 9, 1955, in force as of June 30, 1962 Increase (+) or decrease (—) Number of officers and employees covered.. Aggregate penal sum___ Annual premium rate: Paid by employees... Paid by U.S. Government_ 909,808 $2,056,954, 540 $1,732,748 1,007,581 $3, 550,016,250 0 $282,866 $45,877 +97,773 +$1,493,061, 710 -$1,732,748 +$282,866 -$461,223 Administrative expenses paid by U.S. Govern¬ ment_ $507,100 1 Includes employees of Internal Revenue Service who were formerly covered under bonds procured under sec. 7803(c) of the internal Revenue Code of 1954. There is attached a detailed statement showing for each reporting agency the number of bonds procured, number of officers and em¬ ployees bonded, amount of premiums paid, and total penal sum relating to bonds in force as of June 30, 1962. The individual reports received from agencies are available in the Treasury Department. 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