CHECKS STILL IN MAIL FOR BENEFICIARIES.

Byline: Jim Landers The Dallas Morning News

Today was a worrisome date for 32 million Americans, the day the government was to eliminate paper checks for federal benefit recipients.

Not to worry. The check is in the mail.

The federal Debt Collection Improvement Act, passed two years ago when balancing the budget preoccupied Congress, set today as the day when all benefit payments were to be made through direct deposit.

Stung by complaints, the Treasury Department changed direction.

``It's a date without real significance,'' said Don Hammond, the Treasury Department's fiscal assistant secretary. ``Nothing is going to happen except the regulation is in effect. Recipients won't see any changes.''

Hammond said the Treasury is satisfied with a slower pace because of a change in philosophy. With the federal budget in surplus, consumer convenience rather than cutting the deficit is now guiding the program.

``We've learned lessons,'' he said. ``The biggest is there are two models government tends to follow. One is to push people to do something; the other is to pull them in.

``Pulling them in is a much better way to go about it. It's unreasonable to expect people to change their behavior unless there's an advantage to it.''

The federal government pays benefits to 66.3 million Americans, including the disabled on Supplemental Security Income, civil servants and retirees getting Social Security, railroad pensions and veterans benefits. Two years ago, half of those payments were made by check, with processing and postage costs estimated at $100 million a year.

Sponsors of the Debt Collection Improvement Act figured moving everyone to direct deposit would save the government $500 million over five years. Some estimates put the savings even higher, at $195 million a year, because of additional costs for fraud and reissuing stolen checks.

Enactment of the law so far has helped move 13 million people to accept electronic deposits rather than checks for their federal benefits, and as of November, only 29 percent of the benefit payments sent out by the Treasury, or 19.1 million, were in the form of mailed checks.

But a surprising number of Americans - one in every five households - don't have bank accounts. And between 8 million and 10 million federal benefit recipients don't have one, Hammond said.

The debt collection law includes a provision for the Treasury Department to set up bank accounts for benefit recipients who don't have them, but officials have found that many Americans simply distrust banks and resent bank fees.

``The significant piece we have to be concerned about is explaining fees,'' Hammond said. ``For those people without banking accounts today, the feeling they have toward banking is fairly intense.''

The Treasury has allowed recipients who don't want checks deposited into bank accounts to opt out of the system through a series of self-certifying waivers. If geography, bank fees, language barriers or disabilities make banking difficult, recipients can continue to get checks.

In practice, recipients don't even need a reason. If they don't ask for a change, checks will continue to be mailed, Treasury officials said.

The Treasury's proposal calls for banks, credit unions and savings-and-loan institutions to administer special accounts that would accept only electronic federal payments, charge no more than $3 a month and allow customers a minimum of four free withdrawals a month. The accounts are called electronic transfer accounts.

Banks agreeing to participate would get $12.60 from the Treasury for each account to cover start-up costs. Hammond said the accounts likely would be available in the fall, though it could be as soon as summer if things go smoothly.

Until then, the Treasury Department is sending brochures to everyone still receiving benefit checks, encouraging them to move to direct deposit, either now or when the electronic transfer accounts become available.