The Railroad Retirement Board administers a regular railroad retirement system which provides monthly benefits to employees who retire because of age or disability, and to the eligible spouses of such employees. The disability annuities are payable both to employees not able to do any regular work and to career railroad employees not able to work at their regular railroad job. In addition, the system provides for monthly and lump-sum benefits to widows/ers, children, and parents. There is also a provision for a residual payment designed to insure that an employee and his family receive at least as much in benefits as the employee contributes in railroad retirement taxes before 1975. Finally, railroad employees with concurrent social security employment can, under certain conditions, receive tax refunds for taxes paid before 1975. all benefits except the residual payment, a basic requirement is that the employee have at least 10 years of creditable railroad service, including service before 1937. For The Board also administers a program for the payment of supplemental annuities under certain conditions to career railroad employees awarded retirement annuities after June 1966. The supplemental annuity paid to employees is in addition to the regular annuity. Under the provisions of the Social Security and Railroad Retirement Acts, the Board participates in the administration of the hospital and medical insurance programs for persons covered by the Railroad Retirement Act. Also, railroad employees and members of their families insured under both systems who applied for social security benefits after December 31, 1974, have their benefits paid and adjusted by the Railroad Retirement Board. The Social Security Administration determines eligibility to benefits under the Social Security Act. The Board also administers a system for the payment of unemployment and sickness benefits to qualified railroad workers, and an employment service for placing unemployment benefit claimants in jobs. The Board also administers two programs for which the Department of Transportation seeks appropriations, and then transfers the funds to the Board for disbursement. The first of these, the Regional Rail Reorganization Act of 1973 (P. L. 93-236), provides for various benefits to protected employees adversely affected in the establishment of the Midwest and Northeast rail system provided by that Act. The Board reimburses the railroad organization paying these benefits, up to the limit of the funds transferred from the Department of Transportation. The second of these programs provides various benefits to protected employees adversely affected by the reorganizations of the Milwaukee Railroad and the Rock Island Railroad. The Milwaukee Railroad Restructuring Act (P. L. 96-101), authorizes supplementary unemployment insurance and new career training assistance to eligible employees. The Rock Island Railroad Transition and Employee Assistance Act (P. L. 96-254) authorizes new career training assistance to eligible employees. In both these cases, appropriations for benefit payments are sought by the Department of Transportation, and then January 1981 transferred to the Board for disbursement. The Board, however, seeks directly appropriations for administrative expenses incurred in disbursing benefits under these two Acts in a single request included in this budget. Organizational Structure of the Railroad Retirement Board The Railroad Retirement Board is administered by a three-member Board appointed by the President, by and with the advice and consent of the Senate -- one member upon the recommendation of representatives of employees, one upon recommendation of representatives of employers, and one without designated recommendation. The Board's administrative organization is designed to integrate the administration of the programs conducted by the Board without duplication of facilities or operations. Means of Financing The regular railroad retirement system is financed by taxes paid by railroad workers and employers. The Railroad Retirement Account is credited with the taxes and annuity payments are made from the Account. Funds held in reserve earn interest which is used to help finance future benefit costs of the railroad retirement system. The supplemental annuity program is financed by a tax paid by employers based on the number of man hours for which they pay compensation. This tax is deposited in a separate trust account titled Railroad Retirement Supplemental Account from which the supplemental annuities are paid.. The amounts needed for administrative expenses of these programs, as authorized by Congress in annual appropriation Acts, are derived from these trust accounts. The Social Security Administration reimburses the Railroad Retirement Board for the administrative costs incurred for certain Medicare activities. The unemployment and sickness insurance system is financed by contributions paid wholly by employers. Of the total contributions paid for this purpose, the portion represented by 0.50 percent of the taxable payroll on a $400 monthly base is permanently appropriated to the Board to cover the administrative costs of the system, with the remainder being credited to the Railroad Unemployment Insurance Account in the unemployment trust fund for the payment of benefits. Payments to Railroad Retirement Account for Dual Benefits Under the Railroad Retirement Act of 1937, an individual engaging in covered employment under both the Railroad Retirement Act and Social Security Act could, under certain conditions, receive benefits under both Acts. Recipients of such benefits are referred to as dual beneficiaries. Because of a financial interchange arrangement between the Railroad Retirement Board and the Social Security Administration whereby the latter reinsures benefits paid by the Board, the costs of such dual benefits are borne solely by the Railroad Retirement Account. Furthermore, the costs are exacerbated by the fact that the weighting factors inherent in the social security benefit formula produce a proportionately higher benefit for low earnings and short term employees, dual beneficiaries receive a proportionately higher return for their taxes since in most instances the social security coverage is only supplementary to their regular railroad employment. The Railroad Retirement Act of 1974 provides for general fund appropriations to phase out the cost of this higher return. The Act also provided for a triennial valuation to reevaluate the amount of the general fund appropriation. The 13th Actuarial Valuation of the Railroad Retirement System, published in conjunction with the 1976 Annual Report of the Railroad Retirement Board, concluded, after undertaking the reestimating procedure called for by Section 15 (d) of the 1974 Act, that the level annual amount of appropriation should be $350 million from fiscal year 1977 onwards. The 14th Actuarial Valuation, conducted in 1979, concluded the amount of the general fund appropriation on a level basis should be $500 million. Based upon the Administration's intent to propose legislation limiting the windfall appropriation to $350 million, regardless of costs, the 1981 request was for $350 million. This amount has been made available under the Continuing Resolution, P. L. 96-536. The Administration intends to again propose legislation designed to limit the windfall appropriation to $350 million regardless of future valuations or any changes which may accur. January 1981 The 1982 appropriation request for $350,000,000 recognizes this legislative proposal and is being made as a result of P. L. 93-445. It is the seventh of 25 annual appropriation requests designed to phase out the higher return contained in dual bene fits. Milwaukee Railroad Restructuring, Administration This appropriation funds the administrative expenses incurred by the Board in disbursing transferred benefit funds under both the Milwaukee Railroad Restructuring Act (P. L. 96-101) and the Rock Island Railroad Transition and Employee Assistance Act (P. L. 96-254). The Rock Island Act amended the Milwaukee Act to authorize a total of $1.75 million for the expenses of administering both Acts. The Board administers certain provisions of employee protection agreements negotiated pursuant to each Act, maintains lists of eligible employees under the hiring preference provisions of each Act, disburses supplemental employment insurance benefits (Milwaukee Act only) and new career training assistance (presently only Milwaukee Act). At the present time, the implementation of the labor protection agreement negotiated pursuant to the Rock Island Act is under a stay issued by a Federal District Court. Until the litigation between the Rock Island creditors and the employee organizations is resolved, the Board can take no action with respect to the labor protection agreement. Limitation on Administration The request for the Limitation on Administration is a request for authorization to use railroad retirement trust funds in the amount specified for the administrative expenses of the railroad retirement system. The system is financed by taxes paid by railroad workers and railroad employers into these trust funds, with amounts needed for benefit payments and administrative expenses derived from these funds. The amount requested for 1982 for the Limitation on Administration is $54,000,000, which is $15,733,000 more than the comparable amount of $38,267,000 in 1981. Major increases include $3,275,000 for the move of headquarters, $3,747,000 for the increased rental costs of the new headquarters space and $8,500,000 for increased contractual services in the automation area. During fiscal year 1982, the Board expects to process an estimated 87,000 employee age and disability, spouse and survivor applications, plus 14,000 supplemental annuity applications, as well as 25,300 initial social security payments. Total staff years devoted to these activities and maintaining the monthly benefit rolls are estimated at 1,135. Finally, the Board will continue to serve 988,000 railroad retirement beneficiaries in 1982 down slightly from the 1,000,000 level in 1981. Total benefit payments to these beneficiaries will rise to $5.8 billion in 1982, due essentially to anticipated cost-of-living increases. Relocation of Board's Headquarters Offices For a number of years, the Board has been engaged in discussions with GSA on the question of relocating its headquarters offices from the present poorly maintained, obsolete building to more modern and efficient workspace. At present, the Board is evaluating the responses to an invitation for bids issued for new space, and the actual move is scheduled to take place early in fiscal year 1982. This budget request contains one-time requests for the cost of the move itself and for replacement furniture and equipment. It also contains a request for increased rental costs, as the commercial lease for new space will cost substantially more per square foot than the amount the Board is now paying. JUSTIFICATION OF ESTIMATES For payment to railroad retirement, as provided under sections 15(b) and 15(d) of the Railroad Retirement Act of 1974, $350,000,000, which shall be the maximum amount reimbursable for the subsidy for fiscal year 1982 costs. January 1981 1/ No appropriation as yet; continuing resolution (P. L. 96-536) in effect until June 5, 1981. "(d) There is hereby authorized to be appropriated to the Railroad Retirement Account for each fiscal year, beginning with the fiscal year ending June 30, 1976. such sums as the Board determines to be necessary on a level basis to pay before the end of fiscal year 2000 the total of (A) the amounts of the annuities paid and to be paid after 1974 pursuant to the provisions of sections 3(h), ±(e), and (h) of this Act and pursuant to the provisions of sections 204 (a) (3), 204 (a) (4), 206(3), and 207 (3) of title II of this Act, plus (B) any loss in interest to such Account resulting from the payment of such amounts reduced by (C) such amount as the Board determines, on an estimated basis, is equal to the excess of (i) the interest which such account will actually earn in the fiscal years 1976 through 2000 over (ii) the interest which such account would have earned in such fiscal years if the provisions of subsection (e) of this section were identical to the provisions of section 15(c) of the Railroad Retirement Act of 1937. The Board shall, at the time of each actuarial valuation made prior to the fiscal year 2000 pursuant to the provisions of subsection.(g) of this section re-evaluate the amount determined under the preceding sen tence for the purpose of determining the amounts to be appropriated $350,000,000 January 1981 |