MS. SPRAGUE: Thank you. Good afternoon. As the Deputy Assistant Secretary for Passport Services in the Bureau of Consular Affairs, I am delighted to be here this afternoon to tell you about our upcoming Passport Day in the USA. In addition, I want to take advantage of this session to brief you on our proposed passport fee increases and to share with you the good news about the expansion of our domestic passport network.
One of the reasons we have been expanding our passport network is to facilitate travel for Americans who live along our northern and southern borders, and who, under the Western Hemisphere Travel Initiative, now have different document requirements to cross in and out of Canada and Mexico.
As you know, thousands of Americans traveled to Vancouver for the Olympics last month to cheer on our U.S. citizen athletes. Our passport agency in Seattle was especially active in accommodating Americans’ travel dates in the neighborhood of Vancouver. So while the athletes brought home the gold, we like to say those of us in the passport business brought home the athletes.
But even Olympians have to pay for their travel documents. Just as the DMV charges for driver licenses, we collect passport application fees to cover our costs of producing passports with the latest security technology. That little blue passport that you tuck in your pocket when you travel is one of the most valuable documents in the world. We are committed to protecting it and protecting you when you travel abroad.
This time of year, Americans begin to plan for their spring break and summer travel abroad. We know that Americans lead very busy lives, so we want to make the process of obtaining or renewing a U.S. passport as convenient as possible. That is why we designate one Saturday in March – this year, it’s March 27th – as Passport Day in the USA. On March 27th, all of our regional passport agencies will open to the public for extended Saturday hours. Passport seekers around the country will be able to walk into any of our passport agencies without appointments and without needing to show proof of imminent travel. In addition, thousands of passport acceptance facilities, including those operated by the U.S. Postal Service, will be open for extended hours to assist travel-hungry customers.
We held our first such Passport Day last year. That day, we received more than 57,000 passport applications. This year, with the addition of new passport agencies in Detroit, Dallas, Minneapolis, and Tucson, we expect even more Americans to join us in celebrating Passport Day in the USA. Each passport facility is publishing details of their events in their local communities. Customers can find addresses of the nearest passport agency or participating passport acceptance facility at travel.state.gov.
Over the last five years, the demand for passports has increased to an average of 15 million applications per year. On February 9th, the State Department published a proposed rule in the Federal Register to increase certain fees related to U.S. passport and passport card applications. The proposed fee change is based on a comprehensive cost-of-services study, completed in June, 2009, that was the most detailed and exhaustive study the U.S. State Department has ever conducted of its for-fee services, and updates the schedule of fees from four years ago.
We have provided you with a fact sheet that lists the proposed fees currently in the Federal Registers. The proposed fees will not be implemented until after the public comment period, which ends on March 11th, and after the Department has had an opportunity to carefully consider the comments received and make any changes necessary to the fee rule. And finally, the Office of OMB will give final clearance.
Under the proposed fee schedule, the total cost for a first-time applicant aged 16 and older, who is applying for a passport book will be have $135. For those younger than 16, the price will be $105. The cost of a passport card for a first-time applicant 16 or older is $55. And for those younger than age 16, the price is $40. Passport books and cards for people who are 16 or older are valid for 10 years, books and cards issued to individuals younger than 16 are available for five years.
Prior to full implementation of the Western Hemisphere Travel Initiative last year, the Department expanded the passport network to provide better services to communities that have been particularly affected by the changed land border requirements. By spring 2011, we will have 23 passport agencies providing emergency passport services to the general public, three high-volume application processing centers, and two large-scale document print centers, for a total of 28 facilities. This expanded service, with its attendant cost increases, permits us to provide more timely service to the traveling public, maintain high standards for adjudication in accordance with U.S. citizenship law and deter fraud.
Passport fees are critically important to our keeping up with the latest developments in technology. Research and development, production, and implementation of new technologies for use in our U.S. passport books and cards must be an ongoing priority if we are to keep one step ahead of the resourceful and technologically savvy criminals, terrorists groups, and subversive elements bent on doing our nation harm. The fees cover the costs of fraud prevention initiatives such as facial recognition to help us to detect look-alike fraud and data-sharing programs that permit us to verify the validity of social security numbers, driver’s licenses, birth records, and naturalization certificates. Passport fees also help to cover the costs of providing emergency services for American citizens overseas in crises situations, something that our U.S. citizens stranded in Haiti undoubtedly appreciated.
We estimate that one third of the U.S. population already hold passports. The reality is that the U.S. passport book and card are not just for travel anymore. They serve as proof of a bearer’s identity as well as of U.S. citizenship, something other portable documents do not do. Having a U.S. passport book or card means that wherever you go domestically or internationally, you can prove that you are a U.S. citizen entitled to the many benefits of U.S. citizenship. So call me biased, but I think owning a U.S. passport book or card may be one of the best 10-year investments our citizens can make. Now, I’m happy to take your questions.
QUESTION: Peter Green from Bloomberg News. A question and then a quick follow-up, if I may. The fee is obviously pretty darn high. What exactly is the cost of producing the book out of all the other things that are covered by the fee. What is the cost of producing each book?
MS. SPRAGUE: The book itself?
QUESTION: That’s right.
MS. SPRAGUE: Costs about $16.
QUESTION: $16. Are you at all concerned, and if you are, are you taking any measures to correct this, that the cost, $135 for instance, might actually discourage American citizens from traveling, it might discourage them from exercising their right to travel freely around the world?
MS. SPRAGUE: Obviously, we are concerned that any cost increase would impact travel in that way. Nevertheless, we have to cover our costs. And the passport that you receive today is not the same passport you got 10 years ago. The book is better, the systems we use to produce it are better, the quality of care we’re able to exercise, the way in which we are able to verify the data, all of that has improved dramatically in the last four years, five years. And that cost is reflected in the cost of the passport. Remember that the 135, $25 of that goes to the acceptance agent. In most cases, that’s the Postal Service. Only $110 of that actually comes to the State Department.
QUESTION: So do we get a discount if we go straight to the State Department office? (Laughter.)
MS. SPRAGUE: No, because you have to pay the $25 anyway, but it goes to Treasury if we collect it.
QUESTION: Thank you.
MS. SPRAGUE: Yes.
QUESTION: You said that the higher fees will go into effect after March 11th. How much after it and how much notice will people have?
MS SPRAGUE: Well, you will have plenty of notice. I don’t know how long it will take us to react to the comments. We have had a number of comments; not an overwhelming number of comments, but we will take them seriously. I would say we probably would not implement before April, but we’ll certainly give people as much notice. That’s one of the reasons that we’re here today, so people have an opportunity to comment on the fees and also so that they’re aware that this change is coming and they can go ahead and perhaps expedite their plans to renew or to obtain a new passport.
QUESTION: Are you planning for sort of a rush on passports before the (inaudible).
MS. SPRAGUE: We are anticipating that there might be an increase in demand and we’re ready to handle it.
QUESTION: I just want to make sure I’m reading this correctly. So the $135 for a first-time U.S. passport book, that’s what went up from $100.
MS. SPRAGUE: That’s correct.
QUESTION: So the last increase was only two years ago and it was $3 and then this most recent increase is $35 just two years later. Why such a dramatic jump? I mean, you mentioned some of the fraud prevention and whatnot. But what else accounts for that?
MS. SPRAGUE: I think there are two things that account for it. One, the cost of services study that we did this time is far more comprehensive. The government has better ways to access their financial data and we’re better able to capture the costs attendant. So it’s just a more complete and comprehensive survey. And the second thing is that we have vastly improved our process. We have an expanded network, but in addition to that, we are performing checks and validity checks that we didn’t do before. All of the increased security and the anti-fraud, anti-counterfeit measures come at a cost.
QUESTION: And you also mentioned that Americans in Haiti would have been happy to get – that this additional money was going towards their relief efforts. I didn’t realize that any money from this bureau went directly to rescuing – I thought that that was all rescue and relief funds from USAID and the military that paid for (inaudible.)
MS. SPRAGUE: The Department of State takes primary responsibility for assisting U.S. citizens who are caught in problems overseas. And so our consular offices and our embassies were on the frontline. There were considerable expenses associated with that that are borne by the Bureau of Consular Affairs.
QUESTION: So it’s fair to say that some of this passport increase – fees increase would go directly towards helping Americans who are being rescued from disasters (inaudible).
MS. SPRAGUE: The cost of the passport book includes the cost of maintaining our presence overseas to assist American citizens.
QUESTION: Ms. Sprague –
MS. SPRAGUE: Yes.
QUESTION: -- can I just follow-up on something that Courtney asked? So if I understand it correctly, part of the increase simply reflects the fact that you are better able to capture what you believe to be the real cost of issuing passports, correct?
MS. SPRAGUE: I would say that, yes.
QUESTION: Can you quantify how much of that is – of the $35 increase, how much of that reflects the better capturing of the cost, and then how much reflects the additional security improvement in processing (inaudible)?
MS. SPRAGUE: I have never seen that breakdown, but I can certainly take it back to our comptroller and ask.
QUESTION: And then one other question, is – to what extent does the increase – the $35 increase reflect the very heavy investments that the State Department had to make to overcome the very long waiting periods – as you know, that there were several years ago for obtaining passports? Does this cost increase, in a sense, end up retroactively paying for some of the investments that the Department had made to get over that?
MS. SPRAGUE: There’s no retroactive, (inaudible) making ourselves whole. But we are now supporting a larger platform than we had before. We have doubled the number of passport specialists that we had on hand in 2007 when we had the infamous passport surge. We’ve gone from about 13 passport facilities to 28. They are, across the board, from book print facilities to passport windows, but in any event, that has also increased. We have far more sophisticated tools at our disposal in terms of better adjudicating, verifying documents, so all of that is added. I don’t know that I can give you a dollar and cents. But there’s no question that that is probably the most significant driving factor. We are doing things better than we were doing them before.
QUESTION: Okay. So in other words, this – it’s not as if this is actually paying for any of the increased investments, but it is paying to continue those operations, correct?
MS. SPRAGUE: Yes, that is correct.
QUESTION: Thank you.
MS. SPRAGUE: Yes.
QUESTION: You said you estimate about 15 million applications a year.
MS. SPRAGUE: Yes.
QUESTION: Is that leveling off? I mean, there was a big ballooning, as I recall, some years ago with the new legislation then. But can you give a breakdown of –
MS. SPRAGUE: Sure.
QUESTION: -- the last few years?
MS. SPRAGUE: In 2005, we did about 8 million passports. In 2006, that was about 12 million passports. In 2007, it was 18.5 million passports. Then we dropped in 2008 to 16 million. Last year was about 14 million and this year we’re on track for 15 million. So when I say an average of 15 million, it is an average.
QUESTION: Thank you.
MS. SPRAGUE: Okay.
MR. CROWLEY: Thank you.
MS. SPRAGUE: You’re welcome.
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