The employers are to make the payments to protected employees. They are to certify to the Board the amounts paid in protective allowances and separation payments and will be reimbursed by the Board from a separate Treasury account, the "regional rail transportation protective account."

Annul appropriations will be made to the "protective account" with the aggregate of the appropriations not to exceed $250 million. Additional appropriations will reimburse the Board for any increase in administration expenses resulting from its function with respect to the payments to employers.

2. Estimate of $55 million for separation and protective payments combined to employees who are working for affected midwestern and northeastern railroads. Of this amount $35 million is for separation allowance and $20 million for displacement payments.

The following assumptions were made:

1. There will be 8,000 employees with less than 3 years of service separated in the first 12 months after the reorganization takes place.

2. About 20 percent of those eligible for prenormal age retirement will accept separation allowance as inducements to resign in the first 12 months after the reorganization takes place. This yields an estimate of 2,000 separations, from 8,000 employees aged 60-64 with 30 years of service and 2,000 aged 62-64 with 10-29 years of service.

3. In addition to those separated, there may be 15,000 to 20,000 employees in the first year who received displacement allowances for one or more months.

4. Payments made by the railroads in the 1976 fiscal year will probably not cover more than 6 months of the first 12 after the reorganization takes place. In this period we expect separations to precede displacements generally in the actions taken by the railroads. to adjust employment to their actual needs. Also, because of the timing, the average separation allowances will probably be larger than the average per employee for displacement allowances paid in the year. Thus, payments for separations will tend to be a larger proportion of the total in the fiscal year than might be expected from the number of people involved in the 12 months after the reorganization takes place.

Mr. FLOOD. All right.

When did you say you are required to begin making these payments to protected employees?

Mr. COWEN. Whenever the Regional Rail Reorganization Act goes into effect and employees start getting laid off. Until that time there will not be any that will be payable.

Mr. FLOOD. Let me ask you this. Are you convinced now that you have a need for the full $55 million in fiscal 1976 to make these payments? Couldn't you start out with less?

Mr. COWEN. I have a recollection that our original estimate for a 12month period was something like $75 million, so that we are starting out with less than for a full year.

In addition, there are two different types of benefit payments. There are protective payments, which are replacement of wages until the man is 65, and then there are separation allowances. The separation allowances are paid as a single lump sum at the time the employee is

52-899 O 75-78

separated from service. So those are all paid at once and there is not a spreading as with the separation allowances.

The $55 million is made up of both types of payments.

Mr. FLOOD. Couldn't you start with less?

Mr. COWEN. As I said, we figure a 12-month period would take $75 million so we are starting with less.

APPROPRIATION LANGUAGE

Mr. FLOOD. In your appropriation language you are asking that this $55 million, and let me quote your phrase, "remain available until expended."

Why is that necessary?

Mr. CowEN. As I said, the Regional Rail Reorganization Act has a $250 million limit over the years. If this $55 million were not used up in fiscal 1976, we would carry it over into fiscal 1977 or into the interim period and lessen the amounts we would request at that time. If this were to revert back we would then have to come in for another full appropriation for fiscal year 1977.

Mr. FLOOD. Section 509 of the Regional Rail Reorganization Act does not appear to us to authorize that kind of appropriation language. This is an Appropriations Committee. We don't act without law and we don't like language in an appropriation bill.

In interpreting that language it doesn't appear to us that you have authorization. Do you think you do? Take a look at that.

Mr. COWEN. I would like to read down

Mr. FLOOD. If you think it does then you cite for us the language in that section that you think accomplishes what you are talking about. Mr. COWEN. I will read about the seventh line from the bottom. "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 million."

Mr. FLOOD. I have that marked, but do you see anything in there which says to "remain available until expended?"

Mr. COWEN. No: that I don't see.

Mr. FLOOD. I don't either.

Mr. COWEN. But as I said, the only purpose of that is to reduce the following year's appropriation.

Mr. FLOOD. We have been sitting here a long time. We know what the purpose is. If the committee decided to delete this extended availability for these funds, what would be the effect?

Mr. CowEN. At the end of the fiscal year any unobligated moneys in the protective account would revert back to the general funds. However, there would be another year's appropriations request for the following fiscal year and amounts included in the next fiscal year's appropriation request would have to be a little higher.

CERTIFICATION TO BOARD

Mr. FLOOD. Suppose you tell us again, just to be clear now, exactly what type-you talked about it before-of certification the Board is going to require of these organizations such as ConRail that you were talking about that you are going to reimburse for these employee payments!

Mr. COWEN. This has not yet been decided. Our people are going to be in contact with ConRail. We have authorized our director of unemployment and sickness insurance as the contact with ConRail to work out the details.

Mr. FLOOD. In other words, how are they going to certify to you that they are entitled to be reimbursed for a certain amount?

Mr. CowEN. As I said, the details have not been worked out. I would assume that we would get a listing of each individual who received such payments and the period for which the payments were made.

NO ESTIMATE OF EVENTUAL COST

Mr. FLOOD. In your opinion, how much are these payments to protected employees eventually going to cost us?

We know the present law. There is a limit there of $250 million. Laws can always be amended if the need arises. What is this eventually going to cost?

Mr. CowEN. The Board has not been involved in any of these determinations and we have no way of knowing.

NO NEW POSITIONS

Mr. FLOOD. Are you asking for any new permanent positions in 1976? Are you asking for any?

Mr. CowEN. We are asking for an increase of 109 man-years, I believe that is what my statement said.

Mr. FLOOD. Well, how many are you requesting in total in 1976 that are financed by this limitation we are talking about?

Mr. CowEN. I don't think we are asking for any. I believe we are going to absorb it with our current man-years, but our current individuals will be spending part time, not full time on administering these protective payments.

ORGANIZATIONAL CHART AND PERSONNEL COUNT

Mr. FLOOD. I tell you what you do. Give us an up-to-date organizational chart for your agency. This is a good place for it.

Mr. COWEN. Fine. We will submit that.

[The information follows:]

Bureau of Management Control (includes one temporary employee) --Bureau of Supply & Service (includes eight temporary part-time employees)

Bureau of Budget & Fiscal Operations----

18

125

27

Bureau of Personnel (includes one temporary employee and one workertrainee)

34

Bureau of Research (includes one temporary employee).

53

Bureau of Retirement Claims (includes five temporary, four of which are part-time employees) -

651

Bureau of Law---

16

Bureau of Data Processing & Accounts--

200

Bureau of Unemployment & Sickness (includes four, of which two are parttime temporary employees).

150

Atlanta Region___.

132

New York Region_-_

118

Cleveland Region (includes one part-time employee).

120

NOTE. For personnel ceiling purposes, the 21 temporary employees and the workertrainee should be excluded leaving 1,876 employees in full-time permanent positions. Mr. FLOOD. By the way, how many of your employees are out in Chicago and how many are out in the field offices?

Mr. CowEN. We have an authorized 1,900 positions. Of that 1,900, roughly 600 are out in the field and the other 1,300 are in Chicago.

ANNUALIZATION COSTS

Mr. FLOOD. Take a look at page 11 of your justifications.

There you have a list of increases in the 1976 budget. Take a look at item No. 7, $1.4 million for "An increase in manpower due to added workload."

Does that represent an annualization cost for those 90 new jobs that you asked for in that second supplemental?

Mr. COWEN. It is an annualization of that. Actually Public Law 93-445 completely restructured the railroad retirement program and the workload to put that into effect is tremendous.

In addition, the continuing workload because the system is much more complicated now than it was previously is going to continue. Mr. FLOOD. If it does, what about that $1.4 million? Are you sure that figure is accurate as of today?

Mr. CowEN. It is our best estimate at this time.

However, we will try to minimize our costs. As experience with the new law develops and we are better able to evaluate what our costs are, we will adjust our expenditures.

CASE BACKLOG

Mr. FLOOD. I also see that your case backlog is projected to go from 21,000 at the beginning of fiscal year 1975 to 41,200 at the end of fiscal

1975.