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 letermines, 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(e) 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 entence for the purpose of determining the amounts to be appropriated $350,000,000 March 1981 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. A rationale behind a general fund subsidy is that the existence of windfalls 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 windfalls as well as the social security taxes. This 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 subsidized by the general funds, not the railroad industry. The Railroad Retirement Act of 1974 authorizes annual subsidy appropriations on a level cost basis from 1976 through the year 2000 for costs of phasing out windfalls. The original appropriation was based on estimates made in 1974. The original estimates indicated that the windfall subsidy 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. 93-445 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 shortage in 1977 and 1978 and the loss of interest on that $200 million. In fiscal 1979 and 1980, the Administration proposed 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 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, assuming no inflation and concomitantly low interest rates. In 1981, the Administration proposed legislation which would limit the windfall appropriaton 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 has proposed 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 Based Upon 1981 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 |