SUMMARY OF CHANGES Originally approved by Congress for 1973 Proposed budget amendment because of new legislation (P.L. 92-336, 92-460, and 92-603) . $19,822,000 1/ 1,558,000 21,380,000 21,330,000 -50,000 1/ The appropriation for this account for 1973 had not been enacted at the time these justifications were prepared. 1/ Although there is no change in permanent positions, there is a decrease of 62 man years in temporary employees and in overtime to be used. 1/ The appropriation for this account for 1973 had not been enacted at the time these justifications were prepared. 2/ Budget amendment submitted to Congress. There is hereby authorized to be appropriated from time to time such sums as may be necessary to provide for the expenses of the Board in administering the provisions of this Act and the Kailroad Retirement Act of 1935. Limitation on Salaries and Expenses (Trust Fund) General The amounts needed for administrative expenses of the railroad retirement system, as authorized by Congress in annual appropriation Acts, are derived from the Railroad Retirement Accounts (trust funds). The amount requested for 1973 originally was $19,822,000, but a budget amendment was submitted to increase the request by $1,558,000 to a revised request of $21,380,000. The increase is required because laws enacted subsequent to the transmission to Congress of the original request require expenditures beyond administrative control. The amount requested for fiscal year 1974 is $21,330,000. The 1974 request includes $500,000 to be available for use only to the extent necessary to process workloads not anticipated in the budget estimates. This contingency amount is included for the reasons given in the summary and highlights section of these justifications. The laws which made it necessary to request a budget amendment for 1973 are Public Law 92-336, approved July 1, 1972, Public Law 92-460, approved October 4, 1972, and Public Law 92-603 (H.R. 1), approved October 30, 1972. These laws created added work for the Railroad Retirement Board of both a nonrecurring and a continuing nature, Principal Effects of New Legislation The principal provisions of the three public laws enacted since the start of fiscal year 1973 and how they affect beneficiaries under the railroad retirement system are described below. Public Law 92-603 Medicare for the Disabled One of the important provisions of Public Law 92-603 extends Medicare coverage for hospital insurance and supplementary medical insurance to social security and railroad retirement disability beneficiaries under age 65. Coverage becomes effective July 1, 1973, for persons entitled to disability benefits for 24 consecutive months. Although, railroad retirement disability beneficiaries are eligible for this coverage, they must meet Social Security Administration standards and requirements for disability benefits to qualify. This creates a special problem for the Board because of some differences in disability standards under the railroad retirement and social security systems. Under the Social Security Act, a widow is determined to be disabled only if her impairment is of a severity sufficient to preclude her from engaging in any gainful activity. An employee, on the other hand, can be determined to be disabled not only on the severity of his impairment but also on such vocational factors as the individual's age, education and work experience. Under the Railroad Retirement Act, no such distinction is made. A widow can qualify for a disability annuity on the same factors that qualify an employee. A difference also exists with respect to disabled children. There also is the complicating situation of persons on the rolls of the Board receiving annuities on the basis of occupational disability who now may be able to meet Social Security Act requirements. Because of differences in disability criteria of the two systems, it will be necessary for the Board to reexamine initially and on a continuing basis many of the cases of persons receiving disability benefits to determine whether they meet Social Security Act disability criteria and thus become eligible for Medicare coverage. There are 51,000 beneficiaries under age 65 who are currently receiving railroad retirement benefits based on disability. We estimate we can rely on mechanical and clerical processes to handle 33,000 of these cases, but must provide for the reexamination of 18,000 cases. In addition to beneficiaries currently receiving disability annuities, there are 45,000 beneficiaries under age 65 currently receiving benefits not based on disability, but who in fact may be disabled. Extension of Medicare coverage is expected to generate 6,000 applications to establish disability from those individuals. Aged Widow's Increase Under Public Law 92-603 widows on our rolls may get up to 100% of the employee's primary insurance amount, instead of the previous 82%. An age reduction of 19/40 of 17% is applied for each month the widow is under 65 when her benefit begins. We estimate that 170,000 of the increases in benefits stemming from this provision can be handled by the computer and that 15,000 cases must be developed manually. Special Minimum Primary Insurance Amount A new minimum primary insurance amount has been added and applies if it is higher than the regular amount. The new minimum PIA is $8.50 times the "years of coverage" in excess of 10 but not in excess of 30. It will be possible to make mechanical computations of the new primary insurance amounts after a tape of social security wages is secured and mechanically combined with railroad compensation tapes. Where an increase is due, it should be possible to make the adjustment mechanically unless the beneficiary is working and earning in excess of $2,100 a year. This provision of law requires the computation of some 700,000 new minimum primary insurance amounts, resulting in 20,000 increases in benefits. Other Provisions There are various other provisions that collectively will create many new added complexities and result in work of consequence. They include the provision for delayed retirement credits, filing disability applications after death, childhood disability benefits for persons disabled before age 22, benefits for grandchildren, benefits for students after age 22, benefits after adoption, and other provisions. Public Laws 92-336 and 92-460 Public Law 92-336, enacted July 1, 1972, amended the Social Security Act to provide a 20% increase in benefits effective September 1, 1972. Under a coordinating provision in the Railroad Retirement Act, some 250,000 of the 990,000 beneficiaries on the rolls of the Railroad Retirement Board also became entitled to this increase. Public Law 92-460, enacted October 4, 1972, amended the Railroad Retirement Act to provide a temporary 20% increase in benefits retroactive to September 1, 1972, for the 740,000 railroad retirement beneficiaries who did not receive increases under the provisions of Public Law 92-336. This temporary 20% increase in benefits as well as the temporary 10% and 15% increases provided by Public Laws 92-46 and 91-377 are scheduled to expire June 30, 1973. When Congress provided the temporary 20% increase, it directed representatives of employees and retirees and representatives of carriers to submit by March 1, 1973, a plan by which all three temporary increases could be financed soundly on a permanent basis. The Railroad Retirement Board and the Administration are to submit comments on the plan by April 1, 1973. The maintenance of earnings accounts includes the work of processing of employers' reports of employees' compensation and service, for use in making claims payment determinations. Information must be accumulated for every railroad employee to identify the actual calendar months worked and the creditable earnings from January 1937 to date. In addition, railroad service rendered prior to 1937 must also be developed when claimed, since such service often is creditable under the Act. Employers covered by the Railroad Retirement Act submit annual reports to the Board on compensation and service for each of their employees. The number of individual earnings records to be processed by the Board is estimated to be 760,000 in 1973 and 735,000 in 1974. The estimated manpower required to perform this work decreases from 28 man years in 1973 to 27 man years in 1974, in line with the decrease in the volume of earnings records to be processed. This activity covers work involved in processing applications for regular retirement and survivor benefits, applications for supplemental annuities, and applications to establish eligibility for medicare. The work involved includes time in field offices spent in assisting the persons in completing their applications; securing necessary proofs of age and relationship; explaining rights and obligations of the applicant; explaining various restrictions if benefits are to continue, including complete forfeiture of the supplemental annuity if there is any return to compensated service to a railroad employer no matter how brief the |