Explanation of 1982 Request This is the seventh request for appropriations authorized by the Railroad Retirement Act of 1974 to cover the cost of the windfall portion of benefits received by persons covered by both the railroad retirement system and the social security system, until the windfall can be phased out. The rationale behind an appropriation from the general funds is that the existence of dual benefits has caused the railroads to pay more for social security benefits than have other private employers. Social security taxes are the entire cost of social security benefits to other private industries, whereas the railroad industry has paid the dual benefits as well as the social security taxes. The rationale goes on to say that this is a flaw in the law (which the 1974 Act is phasing out); therefore, the financial consequences should be borne by the general funds, not the railroad industry. The Railroad Retirement Act of 1974 authorizes annual appropriations on a level cost basis from 1976 through the year 2000 for costs of phasing out the windfall portion of dual benefits. The original appropriation was based on estimates made prior to enactment of P. L. 93-445. The original estimates indicated that the dual benefits would cost $285 million per year over the 25-year period and that $35 million additional per year would be gained over the period due to the new investment provisions. Accordingly, $250 million was requested and appropriated for fiscal 1976 and 1977. P. L. 93445 also provides that the Board shall, at the time of each actuarial valuation prior to the fiscal year 2000, determine whether an adjustment should be made in this appropriation. The thirteenth actuarial valuation, however, indicated that the level appropriation starting with fiscal 1977 should have been $350 million ($360 million gross less $10 million additional investment income). Since only $250 million was appropriated for 1977 and 1978, the $350 million was increased to $363 million starting with fiscal 1979 to make up for the $200 million snortage in 1977 and 1978 and the loss of interest on that $200 million. proposed In fiscal 1979 and 1980, the Administration legislation to no longer index for cost-of-living the initial windfall benefit and to eliminate the use of a minimum benefit in the windfall amount for workers who retired after December 31, 1978, which reduced the 1979 and 1980 requests to $313 million. The legislation was not introduced and the amount appropriated in both 1979 and 1980 was $313 million. The fourteenth actuarial valuation conducted in 1979 indicated $500 million would be needed on a level basis through the year 2000 to fund the windfall. In 1981, the Administration proposed legislation which would limit the windfall appropriation to $350 million, regardless of cost. In conjunction with this proposal, the 1981 request was for $350 million. That amount was made available under the Continuing Resolution. In 1982, the Administration intends to propose legislation which will limit the amount of the windfall appropriation to $350 million annually through the year 2000 regardless of actual experience as to the amount of windfall benefit payments. Explanation of Increases/Decreases in 1982 The program level remains constant at 266,000 from 1981 to 1982. While the 1981 program was financed entirely from unobligated balances carried forward from 1980, the 1982 program is primarily financed by new budget authority. SEC. 109. (a) Section 14(c) of the Milwaukee Railroad Restructuring (1) by inserting "and the Rock Island Railroad Transition and Explanation of 1982 Request $250,000 Introduction This appropriation funds administrative expenses incurred by the Board in carrying out its responsibilities under both the Milwaukee Railroad Restructuring Act and the Rock Island Railroad Transition and Employee Assistance Act. Appropriations for the amounts payable for benefits under these two Acts are sought by the Department of January 1981 Transportation, and, upon enactment, are transferred to the Board for disbursement. The Board's responsibilities under the Milwaukee Road Act will be summarized first, and then the somewhat different responsibilities under the Rock Island Act will be described. Milwaukee Railroad Restructuring Act Supplementary Unemployment Insurance Supplementary unemployment insurance is payable to Milwaukee Road employees (1) who are employed by the restructured Milwaukee Road and are separated from that employment because of a reduction in service occurring before April 1, 1984, or (2) who are separated from Milwaukee Road employment because of a restructuring transaction, and obtain employment before April 1, 1981 with another rail carrier, and then are separated from that employer before April 1, 1984. The amount of supplementary unemployment insurance payable is 80 percent of the average monthly normal compensation from Milwaukee Road employment between June 1, 1977 and November 4, 1979, MINUS any benefits payable for the month under the Railroad Unemployment Insurance Act or under any State unemployment insurance program and any earnings during the month from employment or self-employment of any kind. An employee who has received a separation allowance from the Milwaukee Road under an employee-protection agreement entered into under Section 9 of the Milwaukee Railroad Restructuring Act may also be entitled to new career training assistance. If an employee is eligible for new career training assistance, he may receive reimbursement for the actual expenses involved in training, up to a limit of $3,000.00. Actual expenses include the amount paid for tuition, room, board, fees and educational material. The Board's Role in Administering Benefits The Board will receive and adjudicate applications for supplementary unemployment insurance. The Act provides a formula shown above based upon prior compensation, by which benefits are to be calculated. The Board makes the payments from advances made by the Department of Transportation. There is an aggregate limit, in the Act, of $5 million on such appropriations. New Career Training Assistance The Board will receive and adjudicate applications for new career training assistance. The Act provides a list of eligible activities, and limits the aggregate payment to any one employee to $3,000.00. The Board makes the payments from advances made by the Department of Transportation. There is an aggregate limit, in the Act, of $3.0 million on such appropriations for both the Milwaukee and Rock Island programs. The Board's Role in Administering Special Hiring Rights The Act provides special hiring rights for those individuals who were employees January 1981 of the Milwaukee Road on September 30, 1979, and are separated or furloughed (other than for cause) before April 1, 1981, because of a reduction in service. The Board must prepare and maintain two reemployment lists through December 31, 1984. The first list will consist of the names of any separated Milwaukee Road employee who asks to be included on it. The Board will distribute this listing to all rail carriers upon their request. The second list will be a list of employment opportunities, by class and craft, currently available with rail carriers. This list will be used by the Board to assist separated employees who are seeking reemployment. The Board's Role Under the Employer-Employee Agreement Signed Pursuant to Section 9(b) The Milwaukee Road and several labor organizations signed an agreement under the provisions of Section 9(b) of the Act. This agreement covers such matters as: interim employee assistance, moving expenses, employee incentive compensation, and separation allowances. The Board's role is to settle disputes between the employee and the Milwaukee Road which arise under the Employee Protection Agreement. The Board is to arrange a meeting of the employee and a representative of the Milwaukee Road, and, at the option of the Board, a representative of the Board. If the dispute is not resolved, it may be submitted to the Board. Some disputes will then be resolved by the Board. Other disputes will be submitted to arbitrators or appraisers for settlement. Rock Island Transition and Employee Assistance Act Special Note on Present Litigation At this writing, a Federal District Court injunction is in effect, enjoining implementation of the employee protection agreement negotiated pursuant to Section 106 of the Act. This injunction stops the Board's role under the agreement (described below) and the payment by the Board of benefits for new career training assistance, as those benefits are dependent upon an employee election under the employee protection agreement. The nature and timing of resolution of this litigation is uncertain. Supplementary Unemployment Insurance There is no provision for supplementary unemployment insurance in the Rock Island Act. This is the Act's major difference from the Milwaukee Railroad Restructuring Act. Career Training Assistance The Act provides that an employee who elects to receive a separation allowance from the Rock Island under the employee protection agreement negotiated pursuant to Section 106 may be reimbursed for certain educational expenses. The employee must have exhausted any Federal educational benefits available to him. Up to a limit of $3,000, an eligible employee may receive reimbursement for actual expenses paid for tuition, fees, room, board and educational material. The Board's Role in Administering Benefits The Board will receive and adjudicate applications for new career training assistance. The Act provides a list of eligible activities, and limits payment to any one employee to $3,000. The Board will make the payments from advances made by the Department of Transportation. There is an aggregate limit in the Milwaukee Railroad Restructuring Act of $3.0 million on such appropriations for the Milwaukee Act and this Act. The Board's Role in Administering Special Hiring Rights The Act provides special hiring rights for those individuals who were employees of the Rock Island on August 1, 1979, and are separated or furloughed (other than for cause) prior to January 1, 1981 as a result of a reduction in service from the Rock Island or from another carrier providing temporary service over the lines of the Rock Island. The Board must prepare and maintain two unemployment lists. The first list will consist of the names of any separated Rock Island employee who asks to be included January 1981 on it. The Board will distribute this listing to all rail carriers upon their request. The second list (identical to that prepared for the Milwaukee Road Act) will consist of a list of employment opportunities, by class and craft, currently available with rail carriers. The Board will use this list to assist separated employees who are seeking reemployment. The Board's Role Under the Agreement Pursuant to Section 106 We ex Due to the court injunction described above, the Board's role under the employer-employee agreement required by Section 106 is uncertain at this writing. pect the role to be quite similar to that described above under the Milwaukee Road agreement signed pursuant to Section 9 (b) of that Act. JUSTIFICATION OF ESTIMATES For expenses necessary for the Railroad Retirement Board $54,000,000, of which $8,500,000 for automation activities shall remain ́available until expended, to be derived from the railroad retirement accounts: Provided. That $500,000 of the foregoing amount shall be available only to the extent necessary to process workloads not anticipated in the budget estimates and after maximum absorption of the costs of such workloads within the remainder of the existing limitation has been achieved: Provided further. That notwithstanding any other provisions in law, no portion of this limitation shall be available for payments of standard level user charges pursuant to section 2100) of the Federal Property and Administrative Services Act of 1949, as amended (40 USC 1900), 15 USC 228 a-ri |