By Stephen Barr
Washington Post Staff Writer
Monday, August 3, 1998; Page A10

PHILADELPHIA – The eight printing machines at a Treasury Department outpost here clatter away, producing 12,000 Social Security checks each hour. Computers tell the machines what names, addresses and dollar amounts to print on each check.

The Philadelphia programmers for the Treasury's Financial Management Service (FMS) have no doubt their computers will be up and running on Jan. 1, 2000. The FMS and the Social Security Administration began testing their Year 2000 fixes in March and the tests appear to be going as planned. In trial runs fake checks have been successfully printed with the date "00" near the upper left corner.

At this federal factory, the vaunted Y2K challenge "is no big deal," said Joanne Zupon, a 31-year FMS veteran.

Zupon's assessment runs counter to recent criticism directed at the FMS, an obscure Treasury agency that plays a central role within the government. The FMS pumps out not only Social Security checks but veterans benefits and tax refunds. Overall the FMS sends more than 850 million payments with a dollar value of more than $1 trillion into the economy each fiscal year.

The scope of its electronic connections – receiving payment instructions from agencies, printing up checks, mailing them and forwarding direct deposit data to the Federal Reserve and bank clearing houses – has brought FMS increased scrutiny as Year 2000 deadlines near.

Earlier this year Rep. Stephen Horn (R-Calif.), co-chairman of the House task force monitoring Y2K readiness, gave the Treasury Department a "C" on his latest report card, saying the department was "held back by the dismal performance" of the FMS.

But FMS Commissioner Richard Gregg said his agency will produce and deliver Social Security checks, veterans benefit payments and tax refunds. "There is no question that we're going to make it. Period."

Mike Colarusso, the FMS regional director here, said the Philadelphia center turned the corner on the date-conversion problem about 18 months ago. That's when the processing centers quit using old mainframes and set up a new system called Multiple Virtual Storage on new IBM 3090 mainframes that are certified as Y2K compliant.

Other FMS centers in Hyattsville and Austin, Tex., also will use the new mainframes, allowing work to be shifted among the centers in an emergency.