JUSTIFICATION OF ESTIMATES PAYMENTS TO RAILROAD RETIREMENT TRUST FUNDS For payment to the Railroad Retirement Account, as provided under section 15(b) and 15(d) of the Railroad Retirement Act of 1974, $313,000,000. The report explained that the allowance was for $313 million, the amount of the budget request, and an increase of $63 million over the 1978 appropriation. The Committee further stated that it is aware that this appropriation will quite likely have to be increased in future years, and that it expects the Administration to submit a budget request sufficient to meet the requirements of the Railroad Retirement Act. 1979 Senate Report The report explained that the allowance was for $313 million, the same as the budget request and the House allowance. The Committee further stated that it is aware that the General Accounting Office is presently conducting a review of the Railroad Retirement Board, and because there is still serious question concerning the financial requirements needed to pay for the phase-out of dual benefits, the Committee requested that the General Accounting Office do an independent evaluation. The Committee believed that this was the best approach to determining the soundness of the system and to finding the optimum method of financing the dual benefit payments. GAO was to provide its recom mendations to the Committee by January 15, 1979. No action required The agency cooperated fully with the General Accounting Office in its conduct of an evaluation. The Board detailed actuarial data upon which GAO could base its recommendations. House $250,000,000 $250,000,000 -0- $250,000,000 -0 $250,000,000 $250,000,000 $313,000,000 "(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 neces sary 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 8(h), 4(e), and 4(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 sentence for the purpose of determining the amounts to be appropriated thereunder. Explanation of 1980 Request $313,000,000 This is the fifth 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. Because the social security benefit formula heavily favors persons with short periods of service and low earnings, persons acquiring eligibility under both systems generally receive a proportionately higher return for their taxes since in most instances the social security coverage is only supplementary to their regular railroad employment. Under financial arrangements between the two systems, the excess costs resulting from this higher return have been borne by the railroad retirement system and have been a material factor contributing to its financial problems. The higher return will be phased out starting January 1, 1975. While being phased out, the cost is to be financed by general fund appropriations to the railroad retirement system. 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. 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, indicates 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 has been 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, the Administration intended to propose 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 request to $313 million, which amount was appropriated for 1979. In 1980, the Administration intends to propose the same legislation, with an effective date of the end of June 1979, and therefore, there is no change in the $313 million appropriation request for 1980. JUSTIFICATION OF ESTIMATES REGIONAL RAIL TRANSPORTATION PROTECTIVE ACCOUNT For payment of benefits under section 509 of the Regional Rail Reorganization Act of 1973, to remain available until expended, including not to exceed $75,000 for payment to the Railroad Retirement Board for administrative expenses/$25,000,000]. 1/ Supplemental appropriation enacted for this account in 1977. 2/ Supplemental enacted for this account in 1978. 3/ Supplemental requested for this account in 1979. 6 SEC. 309. The Corporation, the Association (where applicable), and acquiring railroads, as the case may be, shall be responsible for the actual payment of all allowances, expenses, and costs provided protected employees pursuant to the provisions of this title. The Corporation. the Association (where applicable), and acquiring railroads shall then be reimbursed for such actual amounts paid protected employees, not to exceed the aggregate sum of $250,000,000, pursuant to the pro visions of this title by the Railroad Retirement Board upon certification to said Board by the Corporation, the Association (where applicable), and acquiring railroads of the amounts paid such employ ces. Such reimbursement shall be made from a separate account maintained in the Treasury of the United States to be know as the Regional Rail Transportation Protective Account. There is hereby authorized to be appropriated to such protective account annually such sums as may be required to meet the obligations payable hereunder, not to exceed in the aggregate, however, the sum of $250,000,000. There is further authorized to be appropriated to the Railroad Retirement Board annually such sums as may be necessary to provide for additional administrative expenses to be incurred by the Board in the performance of its functions under this section. Benefit payments under this program began in May 1976, and have risen rapidly in each year thereafter. Assuming enactment of the 1979 supplemental request (transmitted under separate cover), the entire $250 million authorization enacted in 1973 will be exhausted. Therefore, there is no appropriation requested for 1980. The Board's role in administering this program has been strictly limited since its beginning by the Comptroller General's opinion B-114817, of August 2, 1976. The Comptroller General stated "Accordingly, the Board's sole duty under these provisions is to make whatever payments are called for by the certifications made to it by the Corporation, Association, or acquiring railroads." (The 1979 supplemental request contains further detailed data on past and future outlays under this Account.) JUSTIFICATION OF ESTIMATES LIMITATION ON SALARIES AND EXPENSES For expenses necessary for the Railroad Retirement Board, [$34,317,000] $39,730,000 to be derived from the railroad retirement accounts: Provided, That $500,000 of the foregoing amount shall be apportioned for use pusuant to section 3679 of the Revised Status, as amended (31 U.S.C. 665), only to the extent necessary to process work loads not anticipated in the budget estimates and after maximum absorption of the costs of such workloads within the remainder of the foregoing limitation has been achieved: Provided futher. That notwithstanding any other provision in law, no portion of this limitation shall be available for payments of standard level user charges pusuant to section 210() of the Federal Property and Administrative Services Act of 1949, as amended (40 U.S.C., 490(j)). |