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Decision Tree "C" --The RRB Medicare Program Program The Medicare program, as administered by the RRB for qualified railroad retirement beneficiaries, includes entitlement determinations, enrollments, disenrollments, premium collection, inquiry responses, records maintenance, coordination with the Health Care Financing Administration (HCFA) and SSA, and contracting with a Medicare carrier. Is this program critical to the agency's mission based on "customer" input? No. When Medicare legislation was enacted in 1966, certain functions were delegated to this agency as a matter of convenience. Our customers are well satisfied with our service and should probably oppose change. However, most functions should be the responsibility of the Health Care Financing Administration. Can the program be administered as well or better at the State or local level? No. The RRB Medicare program while transferrable to another Federal agency, cannot be administered as well or better at the state or local level. Is there any way to cut costs or improve performance by introducing competition? No. The RRB's Bureau of Law has determined that the adjudication functions performed under the RRA, including the collection of Medicare premiums, are inherently Government functions and cannot be transferred or contracted out without legislative authority. In FY 1992, we competed the Medicare carrier's contract which resulted in improved service and savings. We will continue to look for opportunities to improve our operations and customer service. How can NPR principles be applied to put customers first, cut red tape and empower employees? The RRB will continue to reinvent its Medicare operations by aggressively utilizing technology and streamlining the adjudicative process. We have recently implemented one new major on-line system and we are in the process of developing another. 29 OPTION C-1 TERMINATE RRB MEDICARE INVOLVEMENT PRO RRB would realize an annual reduction of 70 FTE's. Would eliminate redundant programs with SSA/HCFA. CON Beneficiaries would no longer receive annuity benefits and Medicare from the same agency. They would have to deal with another agency for their Medicare. Since Medicare premiums would no longer be deducted from railroad retirement annuities, direct billing would have to be instituted for those annuitants not entitled to social security benefits. This will increase the costs for the agency handling Medicare. Canadian hospital insurance claims are currently paid for out of the Railroad Retirement Account. Different reimbursement and processing systems would need to be established by HCFA, SSA or some other entity. 30 Summary Cost Information - Medicare Program - Option C-1 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 1,916 d/ 0 0 d/ Discretionary Budget Outlays 1,916 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsᵇ FTE Changes 25 d/ (-24) (-23) d/ FOOTNOTES - Option C-1 a/ Administrative funds include the Limitation on Administration. Excludes an estimated $3.7 million to be reimbursed by the Health Care Financing Administration (HCFA) for Medicare activities. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA) and the Social Security Equivalent Benefit Account (SSEB). c/ Excludes 44 FTE's to be reimbursed by HCFA for Medicare activities. d/ Undetermined. Presumes termination in FY 1996. 31 OPTION C-2 TRANSFER RRB MEDICARE CARRIER ACTIVITIES TO HEALTH CARE FINANCING ADMINISTRATION (HCFA) PRO It is likely this will occur as a result of technological advances in HCFA's claims processing systems. Potential cost savings have been presented previously. In 1979, the GAO estimated that $6.6 million could be saved because of the lower processing costs of the HCFA carriers. In 1984, GAO estimated that about $7 million could be saved in 1983. In 1990, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) estimated that annual savings of $9.1 million would be achieved. However, in 1991 the RRB OIG estimated that the savings estimate of $9.1 million would not be achieved because of unlikely predictions, obsolete cost differentials and incorrect assumptions. RRB would realize savings of approximately 2 FTE's because contract oversight would no longer be necessary. Reduces functional redundancy between Federal agencies. Eliminates disparate handling of Medicare claims because HCFA area carriers apply different medical review standards to claims. CON Potential increased costs to the Federal government because the FY 1994 RRB carrier total unit cost is $1.49 versus the national average of $1.66.¹ Customer service could be negatively impacted during transition. Problem resolution negatively impacted by dealing with 29 carriers; Contrary to high levels of satisfaction expressed in customer survey and focus groups. 'RRB Medicare contract has been competitively awarded, a process which may be advisable for all HCFA contracts. 32 Summary Cost Information - Medicare Program - Option C-2 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 1,916 1,812 1,707 1,595 8,418 Discretionary Budget Outlays 1,916 1,812 1,707 1,595 8,418 Mandatory Outlays Governmental Receiptsb FTE Changes 25 23(-2) 22(-3) 21(-4) 110(-15). GAO and the HHS-OIG have estimated annual administrative savings of $6.6 million to $9.1 million. These estimates have been criticized by the RRB-OIG as being too high. We estimate that since October 1987, the RRB carrier has saved the Federal government $32 million in benefit payments because of historically higher payment accuracy rates than the national average of all area carriers. FOOTNOTES - Option C-2 a/ Administrative funds include the Limitation on Administration. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA) and the Social Security Equivalent Benefit Account (SSEB). 33 OPTION C-3 RESTRUCTURE THE RRB MEDICARE PROGRAM PRO Continued high levels of service and customer satisfaction. Continued sole source accountability. Close, effective coordination between Medicare program and other RRA retirement/survivor programs. Internal streamlining - continued automation of record corrections and of exception referral control. CON Continued redundancy in functions by Federal agencies. Continued disparate treatment between railroad beneficiaries and other Americans. Summary Cost Information - Medicare Program - Option C-3 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 1,916 1,916 1,811 1,699 8.936 Discretionary Budget Outlays 1,916 1,916 1,811 1,699 8,936 Mandatory Outlays Governmental Receiptsᵇ FTE Changes 25 25 (0) 24 (-1) 23 (-2) 120 (-5) 34 FOOTNOTES - Option C-3 a/ Administrative funds include the Limitation on Administration. Excludes an estimated $3.7 million to be reimbursed by the Health Care Financing Administration (HCFA) for Medicare activities. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA) and the Social Security Equivalent Benefit Account (SSEB). c/ Excludes 44 FTE's to be reimbursed by HCFA for Medicare activities. 35 Decision Tree "D" for the Administration of the Railroad Unemployment Insurance Act Program Program The railroad unemployment insurance program is provided under the Railroad Unemployment Insurance Act (RUIA). The Act provides for the payment of bi-weekly unemployment benefits to qualified railroad employees who are unemployed, but able to work and available for work. It also provides for the payment of bi-weekly sickness benefits to qualified railroad employees who are unable to work because of illness, injury or maternity. Is this critical to the agency's mission based on "customer" input? Yes. The program is an essential part of the agency's mission. Can it be done as well or better at the State or local level? Yes. Individual State unemployment systems now cover all other American workers. Is there any way to cut costs or improve performance by introducing competition? Introducing competition would not cut costs or improve performance. If not, how can NPR principles be applied to put customers first, cut red tape, and empower employees? During fiscal year 1994, customer satisfaction surveys and focus groups were conducted and a customer service plan was developed. Performance is tracked against customer service standards and actions are taken to improve performance, when necessary. Action plans have been developed to improve quality and timeliness and implement cost-saving concepts. In addition, reengineering efforts are underway as part of the agency's streamlining plan to improve operations. 36 OPTION D-1 TRANSFER THE RAILROAD UNEMPLOYMENT INSURANCE ACT PROGRAM TO THE DEPARTMENT OF LABOR/STATE SYSTEM PRO Eliminates functional redundancy between State and Federal agencies. Claimants residing in some States would receive a higher weekly benefit under the State systems compared to benefits currently payable under the RUIA. The State systems have either no waiting period or a 1-week waiting period compared to the 2- week waiting period currently required under the RUIA. RRB involvement would be eliminated. The rail industry would be treated the same as other industries. Eliminates the need for Congress to have to deal with a separate railroad unemployment system. CON Terminates a program which is designed as a daily benefit, consistent with the industry's intermittent employment practices, whereas State programs are based on unemployment measured by weeks instead of days. Eliminates the consistent treatment of railroads and their employees. Coverage by State programs would result in different benefit levels, eligibility criteria, etc. based on State of residence. Railroads operating in more than one State would have to comply with applicable requirements of the unemployment programs in each of the States. This would result in a greater administrative burden than currently exists with a single system. Only 5 States pay sickness benefits. There is no reason to believe the other 45 States would want to operate a sickness insurance program for railroad employees. Sickness benefits would have to be addressed by rail labor and management negotiations. 37 Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-1 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 17,633 d/ 0 0 d/ Discretionary Budget Outlays 17,633 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsb FTE Changes 266 d/ 0 (-261) 0 (-225) d/ Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-1 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 68.900 d/ 0 () d/ Governmental Receipts 32.800 d/ () 0 d/ FTE Changes 38 Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-1 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 17,633 d/ 0 0 d/ Discretionary Budget Outlays 17,633 d/ 0 0 d/ Mandatory Outlays 68,900 d/ 0 0 d/ Governmental Receipts 32,800 d/ 0 0 d/ FTE Changes 266 d/ 0 (-261) 0 (-225) d/ FOOTNOTES - Option D-1 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Includes outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 RUIA benefit estimate is $102.6 million. d/ Undetermined. Presumes transfer in FY 1996. 39 OPTION D-2 PRIVATIZE/FRANCHISE THE RAILROAD UNEMPLOYMENT INSURANCE ACT PROGRAM PRO Federal government involvement would be eliminated or reduced. Employer/employee representatives would be free to negotiate changes in benefit programs without regard to Federal/State legislation. CON Ability to detect and prevent fraudulent benefit claims may be reduced. Opportunities/sources available to Federal agencies for recovery of overpayments could not be used. Customer surveys and focus groups indicate a high level of satisfaction with the existing program. Less liberal sickness benefits would be available in the current state UI system. 40 Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-2 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 17,633 d/ 0 0 d/ Discretionary Budget Outlays 17,633 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsb FTE Changes 266 d/ 0 (-261) 0 (-225) d/ Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-2 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 68,900 d/ () () d/ Governmental Receipts 32.800 d/ () 0 d/ FTE Changes 41 Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-2 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 17,633 d/ 0 0 d/ Discretionary Budget Outlays 17,633 d/ 0 0 d/ Mandatory Outlays 68,900 d/ 0 0 d/ Governmental Receipts 32,800 d/ 0 0 d/ FTE Changes 266 d/ 0 (-261) 0 (-225) d/ FOOTNOTES - Option D-2 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Includes outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 RUIA benefit estimate is $102.6 million. d/ Undetermined. Presumes privatization in FY 1996. 42 OPTION D-3 RESTRUCTURE THE CURRENT RAILROAD UNEMPLOYMENT INSURANCE ACT PROGRAM PRO Customers support continuing the existing program. Maintains a system which is responsive to conditions in the railroad industry. No additional costs incurred for transition to alternate program. Administrative costs and staffing have been reduced while program performance has improved. CON Federal government involvement is still required. 43 Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-3 Administrative Receipts and Expendituresᵃ (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 17,633 17,633 17,206 16,142 84,329 Discretionary Budget Outlays 17,633 17,633 17,206 16,142 84,329 Mandatory Outlays Governmental Receiptsb FTE Changes 266 266 (0) 261 (-5) 225 (-41) 1,237 (-93) Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-3 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 68,900 68,900 67,700 69,800 344,300 Governmental Receipts 32,800 32,800 41,000 115,600 399,600 FTE Changes 44 Summary Cost Information - Railroad Unemployment Insurance Act Program - Option D-3 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 17,633 17,633 17,206 16,142 84,329 Discretionary Budget Outlays 17,633 17,633 17,206 16,142 84,329 Mandatory Outlays 68,900 68,900 67,700 69,800 344,000 Governmental Receipts 32,800 32,800 41,000 115,600 399,600 FTE Changes 266 266 (0) 261 (-5) 225(-41) 1,237 (-93) FOOTNOTES - Option D-3 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Includes outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 RUIA benefits estimate is $102.6 million. 1. Describe any recommendations offered by the OMB/NPR advisory teams that may have been considered but rejected. Briefly explain why they were rejected. A. NPR 1 recommended: "Transfer the functions of the Railroad Retirement Board to other agencies." In its September 1994 status report it reported: "NPR's recommendation to restructure the management of railroad industry benefits programs has been deferred indefinitely, and the Railroad Retirement Board has committed to acting on a series of management improvements." 2. List programs, functions, subsidies, or regulatory efforts that are not being considered for Phase II reinvention. Briefly explain why they are being excluded. A. None have been excluded from the Railroad Retirement Board's recommendations. Further cost benefit analyses will be necessary depending on the specific recommendations adopted. ### UNITED STATES OF AMERICA AMILOAD RETIREMENT BOARD RAILROAD RETIREMENT BOARD 844 N RUSH ST CHICAGO IL 60611-2092 U.S.A. V.M. SPEAKMAN, JR. OFFICE OF LABOR MEMBER LABOR MEMBER February 24, 1995 The National Performance Review 750 17th Street, N.W. Suite 200 Washington, D.C. 20006 Attn: Marv Voskhul, Jay Friedman, Jerry Nikolaus Gentlemen: As Labor Member of the Railroad Retirement Board, representing the interests of the 1.3 million active and retired railroad workers served by this system, the "customers" of our agency, I am submitting to you, unedited, the assessment of our operations and programs as prepared by our agency managers in response to your request. It is readily apparent that the majority of the Board wishes to use this assignment for their own purely political motives and does not provide the Administration with the objective evaluation of our programs needed to make an informed decision relative to our operations. The agency team members assigned to respond to your request for an Options Paper are the experts on the Railroad Retirement System. The original document, which I am sending you, reflects decades of collective knowledge as to how our system currently operates and how our programs could be handled differently. Our team members' work was literally gutted by the Management Member of the Board and replaced with purely partisan opinions, without regard to the team members' expertise or customer input. This revision, which has been agreed to by the Chairman of the Board, completely ignores the views of the hundreds of thousands of individuals and families who are served by the railroad retirement system. It is my opinion that the majority is deliberately misleading the Administration, particularly in the areas of budgetary impact, legislative complexity, and past service liability for the 800,000 plus current beneficiaries of our system, by radically changing our managers' objective analysis to reflect either purely personal views or the views of certain railroad companies. I can assure you that it does not reflect the views of the 1.3 million men and women who depend on this system to protect them from the economic hardships associated with old age, sickness, unemployment and death. -2- The majority submission will be viewed by those customers of this system as another attempt to circumvent the collectively bargained retirement system for which they have made great sacrifices during the past 60 years, to preserve, protect and improve. The majority submission is nothing more than a blatant attempt to circumvent and/or eliminate many obligations railroad employers now have to their employees. It glosses over the complexity of the suggested changes, minimizes the political backlash that will occur should attempts be made to implement their views, totally disregards the instability that will be created, and does not adequately address the unfunded liability question; that liability presently stands at $37.6 billion. Nor does it adequately emphasize the projected increase in the Federal deficit, which will amount to $4.6 billion during the period of fiscal year 1996 through fiscal year 2000. While it is indeed unfortunate that I must make a separate submission, we firmly believe that NPR II is an inappropriate forum to advance purely personal or partisan objectives, and doing so disregards the Administration's mandate of putting customers first and promoting efficiency and economy in government. Therefore, I would be derelict in my duties if I did not provide the Administration with the unedited views of our agency managers in response to your assignment. It is important to note that the agency's managers' submission was prepared without influence or interference of either labor or management representatives and represents a non-partisan assessment. While rail labor would not necessarily agree with all aspects of this report and its emphasis in certain areas, it does represent a balanced evaluation of our agency's mission and how that mission can be accomplished. Please do not hesitate to contact me if I can provide you with any further information. Sincerely, VM SpeakmanJr V. M. Speakman, Jr. Enclosure Railroad Retirement Board Option Papers NPR Phase II Overview The Railroad Retirement Board (RRB) is an independent agency in the executive branch of the Federal Government administering comprehensive retirement, survivor, disability, and unemployment and sickness benefit programs for the nation's railroad workers and their families, under the Railroad Retirement and Railroad Unemployment Insurance Acts. In connection with the retirement program, the RRB has administrative responsibilities under the Social Security Act for certain benefit payments and railroad workers' Medicare coverage. During fiscal year 1994, retirement-survivor benefits of almost $8 billion were paid to over 870,000 beneficiaries, while unemployment-sickness benefits of $66 million were paid to over 40,000 claimants. Agency administrative expenses have historically averaged about one percent of benefit payments. Origins. The RRB was created by New Deal legislation enacted in the mid-1930's to consolidate and federalize the nation's private railroad pension plans, which were then far more developed than pension plans in other industries but had been adversely affected by the Great Depression. Rail unemployment insurance legislation followed at the end of the decade because of administrative problems that interstate rail employment caused the new State unemployment insurance plans. Organization and Staff.--The RRB is headed by three members appointed by the President of the United States, with the advice and consent of the Senate. One member is appointed upon the recommendation of railroad employers, one is appointed upon the recommendation of railroad labor organizations and the third, who is the Chairman, is appointed to represent the public interest. Reporting to the Board are the General Counsel, Director of Programs and Director of Administration. Reporting to them are a total of 20 headquarters bureaus and/or offices. The RRB currently employs about 1,100 full-time equivalent employees in its Chicago headquarters. A field office staff of approximately 400 employees in 90 locations throughout the United States provides direct services to customers. Administrative costs in the current fiscal year are approximately $94,000,000. Mission and Goals The RRB's mission is to administer the retirement/survivor and unemployment/sickness insurance benefit programs for railroad workers and their families under the Railroad Retirement Act, the Railroad Retirement Tax Act and the Railroad Unemployment Insurance Act. The RRB also administers some aspects of the Medicare program for qualified railroad retirement beneficiaries. and has other administrative responsibilities under the Social Security Act and the Internal Revenue Code. While the railroad retirement program has remained separate from the social security system, the two programs are closely coordinated with regard to earnings credits, benefit payments, and taxes. Legislation enacted in 1974 restructured railroad retirement benefits into two tiers, SO as to coordinate them more fully with social security benefits. The first tier is based on combined railroad retirement and social security credits, using social security benefit formulas. The second tier is based on railroad service only and is comparable to the pensions paid over and above social security benefits in other industries. The unemployment and sickness benefit program operates independently of the Federal/State systems. In carrying out its mission, the RRB strives to pay benefits to the right people, in the right amounts, in a timely manner, treat every person who comes into contact with the agency with courtesy and concern, and respond to all inquiries promptly, accurately and clearly. The performance goals we plan to meet by fiscal year 2000 are to: Meet or exceed the timeliness standards in the RRB's Customer Service Plan (attached) for processing retirement, survivor and disability annuity payments. Complete all processing for mass adjustments, such as annual cost-of-living increases to the retirement, survivor and disability benefit rolls, within 6 months of the adjustment, and to improve the average time for processing post-award adjustments. Maintain the accuracy of retirement, survivor and disability payments above 99.6 percent, and strive for and continuously move toward 100 percent accuracy. Meet or exceed the standards in the RRB's Customer Service Plan for processing unemployment and sickness insurance benefits by sending a claim form or making a decision within 15 days of receiving an application, and paying or making a decision within 15 days of receiving a subsequent biweekly claim form. Maintain the accuracy of unemployment and sickness insurance benefit payments above 99 percent, and strive for and continuously move toward 100 percent accuracy. Assessment of Key Functions Assessment of the key functions for the agency as a whole follows. Assessments of major programs, individually, are attached. In summary, customer surveys and focus groups have indicated that these programs are critical to the agency's mission. Customers have been very satisfied with the service rendered by the agency. ii The Railroad Retirement Board recog- nizes that all its services are financed by our customers: the railroad workers and employers. They are entitled to expect high-quality services, responsive to their needs, provided efficiently at a reasonable cost. This has been recognized in the adop- tion of the following Policy Statement on U.S. Railroad Retirement Board Quality: In carrying out our mission, the Railroad Retirement Board will strive to pay benefits Custome to the right people, in the right amounts, in a timely manner, treat every person who comes into contact with the agency with courtesy and concern, and respond to all Service inquiries promptly, accurately, and clearly. The Railroad Retirement Board will main- tain a work environment characterized by teamwork, respect, and a commitment to Plan doing the job right the first time. This Customer Service Plan is centered on the following principles of public service: standards, openness, accessibility and accountability. In arriving at this plan, we have considered the findings of a customer satisfaction survey, the results of focus group research, and the responses received on point-of-service evaluation forms. This Customer Service Plan will be published BOARD RAILROAD * RETIREMENT nationally and posted in each office of the RRB in order to communicate these stan- dards to our customers and to reinforce U.S.A. * them with our employees. There is a clear presumption that our service will progres- U.S. Railroad Retirement Board sively improve as our operations become 844 North Rush Street more efficient. The plan will be reviewed Chicago, Illinois 60611-2092 and updated periodically as we gain more experience with it and as we compare our RRB Form IB-3 September 1994 service with the best in the private sector. Decision Tree for the Railroad Retirement Board as a Whole Programs The Railroad Retirement Board (RRB) administers the provisions of the Railroad Retirement and Railroad Unemployment Insurance Acts as well as certain provisions of the Medicare program. It pays retirement and survivor benefits to railroad employees and their families and unemployment or sickness insurance benefits to railroad employees only. Are these programs critical to the agency's mission based on "customer" input? Yes. History has shown that RRB customers and interest groups are very supportive of the agency and are keenly aware of and sensitive to any proposed changes to the programs or to service delivery. Railroad employees consider the railroad retirement system vital to their old age security and have historically identified the agency with the program. Customer surveys and focus groups show that customers are very satisfied with the delivery of the programs. Can the programs be administered as well or better at the State or local level? No. Some programs could be transferred to other Federal agencies and one program could be transferred to State agencies. However, there is no evidence that such transfers will result in better service. In some instances they may result in a deterioration in service from the level currently provided by the RRB. One- time costs to effect such moves require detailed analyses and input from gaining agencies. Legislation would be required to make such changes. Is there any way to cut costs or improve performance by introducing competition? No. The adjudicative functions performed by the RRB are inherently Government functions and cannot be contracted out or transferred without legislative authority. At the same time, the RRB has successfully improved performance and cut costs by competitively letting contracts for other than inherently Government functions. How can NPR principles be applied to put customers first, cut red tape and empower employees? The RRB is aggressively pursuing NPR principles by carrying out its streamlining plans and its reengineering efforts, by implementing recommendations advanced by an in-house task force to improve the timeliness and quality of claims processing, and by implementing specific cost saving suggestions. Customer surveys and focus groups gave high marks to the service provided by the employees of the RRB. iii OPTION 1 TERMINATE THE RAILROAD RETIREMENT BOARD PRO Eliminate small independent agency from the Federal system. If programs are privatized, removes Federal Government involvement in railroad labor/management issues by removing such items from the Federal sector. If programs transferred to other agencies, potentially increases service to the public and reduces administrative overhead to the extent that functions are transferred to larger agencies that have more resources at their disposal. Railroad retirement trust fund assets would no longer be invested solely in Treasury securities. CON Over 800,000 beneficiaries are now on the Board's rolls. If privatized, retirement/survivor program would require Employment Retirement Income Security Act (ERISA) coverage which would increase contributions costs over a 30-year period with an initial increase of approximately 50%. Disposition of $13 billion reserve would also be problematic.² Increase the Federal deficit as the excess of Governmental receipts over mandatory outlays (projected as $4.6 billion for FY's 1996 to 2000) is removed from the Federal budget. Create multiple agencies instead of one for the customers to contact for information and benefits. Legislative action would be required to terminate and transfer/privatize major programs which would be opposed by railroad retirement beneficiaries. Customer surveys and focus group reports indicate customers are very satisfied with current service. Little or no administrative cost savings because these costs are borne almost entirely by the railroad industry. (See Footnotes on following page.) iv 1 Aspects of this concept are addressed in various scenarios presented in the options papers attached. 2 If the railroad retirement system were to be privatized with ERISA coverage, an unfunded actuarial accrued liability estimated at $37.6 billion under ERISA standards would be created which would need to be amortized. In addition to the normal cost of 6.46 percent of taxable pay, the unfunded actuarial accrued liability would have to be amortized by level annual payments over a 30-year period. If this unfunded actuarial accrued liability were to be funded by railroad management and labor, the current combined railroad retirement tax rate would initially need to be increased from 21 percent to 31 percent. After 30 years the contribution rate would drop to the 6.46 percent normal cost rate. The unfunded actuarial accrued liability reflects the amount needed together with future contributions at the normal cost rate to fully fund benefits for current and former employees. The costs under ERISA would be higher if plan changes were made to conform to ERISA requirements. For example, (i) current employees who permanently leave the rail industry with less than 120 months of service forfeit the right to a benefit based on the employee's own contribution whereas under ERISA this benefit is nonforfeitable; and (ii) currently all employees are subject to 10 year vesting whereas under ERISA employees not subject to a collective bargaining agreement would be subject to either 5 year vesting or graded 3 to 7 year vesting. Further problems with privatization include a (i) significant potential liability to the Pension Benefit Guaranty Corporation, (ii) difficulty in assessing a withdrawal liability to railroads that choose to withdraw from the plan and (iii) significant resources may be devoted to cost shifting behavior on the part of of the railroads because of the inability to enforce coverage determinations. Under its existing structure, the system's ability to meet its obligations at the current 21 percent tax rate is illustrated in annual cash flow projections and summarized in the calculation of the actuarial surplus/deficiency based on the following assumptions over a 75-year period: (1) ERISA standards would not have to be applied (2) the current 21 percent combined employer/employee contribution rate would continue, and (3) taxes of both current and future employees, as well as other sources of income to the retirement system. would be used to fund all benefit and administrative costs. Under these assumptions, the actuarial surplus/deficiency of the railroad retirement system under current law as of September 30. 1994, would range from a deficiency of $3.0 billion to a surplus of $15.3 billion, depending on the employment assumption used. Under the moderate employment assumption, there is a surplus of $5.9 billion. V Summary Cost Information - Option 1 FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 333,359 d/ 0 0 d/ Discretionary Budget Outlays 333,359 d/ 0 0 d/ Mandatory Outlays 11,398,000b d/ 0 0 d/ Governmental Receipts 12,200,400 d/ 0 0 d/ FTE Changes 1,393 d/ 0 (-1,335) 0 (-1,146) d/ a/ Administrative funds include the Limitation on Administration and the Special Management Improvement Fund but exclude $6.7 million for the Limitation on the Office of Inspector General and an estimated $3.7 million to be reimbursed by the Health Care Financing Administration (HCFA) for Medicare activities. Funding of administrative expenses is provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB), the Railroad Retirement Supplemental Account (RR SUP), and the Railroad Unemployment Insurance Account (RUIA). b/ Includes outlays for the RRA, the SSEB, the RR SUP, and the RUIA. SSEB outlays include the repayment of the financial interchange advances. c/ Excludes 44 FTE's to be reimbursed by HCFA for Medicare activities. d/ Undetermined. Presumes termination in FY 1996. vi OPTION 2 RESTRUCTURE THE RAILROAD RETIREMENT BOARD3 PRO Maintain programs that are financially stable and where the costs of the programs' benefits and administration are borne primarily by the railroad industry through payroll taxes and where programs are managed efficiently and effectively. Under existing funding provisions, substantial payroll tax increases are not now recommended by actuarial valuation. Maintain agency where customers are very satisfied with service as shown by results of customer surveys and focus group reports. Retain program expertise and systems to accomplish mission without interruptions in service to customers. Does not increase the Federal deficit as the excess of Government receipts over mandatory outlays (projected as $4.6 billion for FY's 1996 to 2000) remains in the Federal budget. Maintains $13 billion reserve in trust funds held by U.S. Treasury. CON Perpetuate small independent agency in the Federal system. Fail to capitalize on economies of scale offered by transfer of functions to larger agency. Maintain historical Federal government involvement in railroad labor/management issues that may no longer be deemed appropriate. 3 Restructuring the RRB includes carrying out streamlining plans. reengineering efforts. automation plans, cost saving suggestions, and specific improvements in the timeliness and quality of claims processing. It also involves reducing the agency-wide staffing level by over 300 additional employees. vii Summary Cost Information - Option 2 FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 333,359 333,359 314,558 260,957 1,484,389 Discretionary Budget Outlays 333,359 333,359 314,558 260,957 1,484,389 Mandatory Outlays" 11,398,000 11,398.400 11.550,000 12,050,100 58,592,700 Governmental Receipts 12,200,400 12,200,400 12,420,900 13,099,600 63,232,900 FTE Changes 1,393 1.393 (0) 1.335 (-58) 1,146 (-247) 6,336 (-629) a/ Administrative funds include the Limitation on Administration and the Special Management Improvement Fund but exclude $6.7 million for the Limitation on the Office of Inspector General and an estimated $3.7 million to be reimbursed by the Health Care Financing Administration (HCFA) for Medicare activities. Funding of administrative expenses is provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB). the Railroad Retirement Supplemental Account (RR SUP), and the Railroad Unemployment Insurance Account (RUIA). b/ Includes outlays for the RRA, the SSEB, the RR SUP. and the RUIA. SSEB outlays include the repayment of the financial interchange advances. c/ Excludes 44 FTE's to be reimbursed by HCFA for Medicare activities. viii Attachment Decision Tree "A"-- The Retirement/Survivor Benefit Program Program The Railroad Retirement Board administers a comprehensive program of retirement and survivor benefits for eligible railroad workers and their families. In addition, the agency has administrative responsibilities under the Social Security Act for certain benefit payments. Is the program critical to the agency's mission based on "customer" input? Yes. The administration of the retirement-survivor benefit program for eligible railroad workers and their families is critical to the agency's mission based on customer input through statistical surveys and focus groups. A second customer group, the rail industry, is, however, uncertain about the agency's program status. Testimony received by the Commission on Railroad Retirement Reform in 1989 and 1990, from industry interest groups, expressed a variety of opinions on the structure of the programs the agency administers. In its Final Report, the Commission considered this "customer" input and recommended the development of alternative systems for newly hired railroad employees only, and proposed transition rules to encourage the development of satisfactory individual company and/or multi-employer pension plans for such new employees. The Commission recommended the continuation of the existing system for existing railroad employees. Since legislation was never introduced to enact these recommendations, the remaining decision points are responded to in the context of the existing system. Can the program be administered as well or better at the State or local level? No. The railroad retirement program is similar to a multi-employer pension plan. The administration of a multi-employer private pension plan by a State or local governmental agency is unprecedented. Such a transfer to the State or local level would involve the development of 50 State agencies created for the sole purpose of administering a multi-employer private pension plan. In addition, an oversight bureaucracy would be needed to coordinate financing and to ensure consistency. Is there any way to cut costs or improve performance by introducing competition? No. The Deputy General Counsel has determined that the adjudication functions performed under the Railroad Retirement Act are inherently governmental functions which cannot be transferred or contracted out without legislative authority. However, certain additional administrative and support functions may be accomplished through competitive contracting. These alternatives will be considered by the agency's internal Reengineering Team. How can NPR principles be applied to put customers first, cut red tape and empower employees? These principles are being actively pursued along two fronts. A benchmarking study is currently underway to compare the initial retirement age and service annuity application process to the "best-in- business" of organizations performing analogous functions. The study team has identified benchmarking partners and will be conducting site visits during March 1995. A final report, describing the performance gaps identified with recommendations and action plans to close those gaps, will be issued after the site visits. A second effort underway is being conducted by an in-house Reengineering Team. This team is about to begin a review of the entire claims handling process, covering all benefit programs, to determine whether any Reengineering principles can be applied. The agency has already conducted comprehensive self analyses in increasing the effectiveness and efficiency of processes. There are action plans in place to implement recommendations made by a Streamlining Task Force and a Task Force on Timeliness and Quality. A separate set of recommendations resulting in cost saving initiatives is also being implemented. 2 OPTION A-1 TERMINATE THE RETIREMENT/SURVIVOR BENEFIT PROGRAM PRO End Federal involvement in the administration of industrial pension programs payments in excess of social security equivalent benefits such as non-recompensed tier 1, tier 2, supplemental annuities, and vested dual benefits. CON Over 800,000 retired employees and dependents are now on the Board's rolls, and current rail employees have been paying for coverage they are counting on for old age and disability protection. Tier 1 (Social Security equivalent) benefits would still need to be administered, most likely as a part of SSA. Eliminate a program that is financially stable with Federally mandated withholding taxes and where the costs of the program's benefits and administration are borne primarily by the railroad industry and its employees. Existence of $13 billion in trust funds (combined retirement/survivor and disability). Increases the Federal deficit as the excess of Governmental receipts over mandatory outlays (projected as $4.0 billion for FY's 1996 to 2000) is removed from the Federal budget. Customer surveys and focus groups demonstrate that the beneficiaries and workers are very satisfied with current service. The RRB is aggressively modernizing its automated systems and downsizing. Terminating retirement/survivor benefits for current beneficiaries and eliminating the right to future disability benefits for active employees would be unprecedented and subject to legal challenge. 3 Summary Cost Information - Retirement/Survivor Benefit Program - Option A-1 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 59,842 f/ 0 0 f/ Discretionary Budget Outlays 59,842 f/ 0 0 f/ Mandatory Outlays Governmental Receiptsᵇ FTE Changes 894 f/ 0 (-851) 0 (-727) f/ Summary Cost Information - Retirement/Survivor Benefit Program - Option A-1 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 210,500 f/ 0 0 f/ Discretionary Budget Outlays 210,500 f/ 0 0 f/ Mandatory Outlays 9,628.700 f/ 0 0 f/ Governmental Receipts 10,360,900 f/ 0 0 f/ FTE Changes 4 Summary Cost Information - Retirement/Survivor Benefit Program - Option A-1 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 270,342 f/ 0 0 f/ Discretionary Budget Outlays 270,342 f/ 0 0 f/ Mandatory Outlays 9,628,700 f/ 0 0 f/ Governmental Receipts 10,360,900 f/ 0 0 f/ FTE Changes 894 f/ 0 (-851) 0 (-727) f/ Development of accurate costs and savings derived would require coordination with SSA to determine their conversion and on going operational costs, with the Department of the Treasury to determine the budgetary impact of trust fund transfers from the Federal sector to the private sector, and with industry representatives to determine the costs of establishing insurance contracts. Taft-Hartley trust funds or private pension plans. FOOTNOTES - Option A-1 Administrative funds include the Limitation on Administration and the Special Management Improvement Fund. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB) and the Railroad Retirement Supplemental Account (RR SUP). e/ Represents the funding authority and outlay of vested dual benefit payments. d/ Includes outlays for the RRA, the SSEB and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. e/ Does not reflect the potential Amtrak restructuring. The loss of 5,500 Amtrak employees would result in a reduction of annual tier 2 payroll taxes to the RRA, with an initial annual reduction of approximately $40 million. f/ Undetermined. Presumes termination in FY 1996. 5 OPTION A-2 PRIVATIZE THE RETIREMENT/SURVIVOR BENEFIT PROGRAM PRO End Federal involvement in an industrial pension program by privatizing non-social security equivalent benefits, supplemental annuities, and vested dual benefits either through contracts with insurance carriers, or the establishment of a private sector Taft- Hartley trust fund, or individually negotiated private pension plans. Provide greater leeway in setting the administrative budget and determining internal operations by converting the RRB to a private sector corporation, or quasi-governmental corporation, to administer the non-social security equivalent benefits, supplemental annuities, and vested dual benefits. CON Without Federally mandated payroll tax contributions, the system could no longer be funded on a modified pay-as-you-go basis. ERISA protection would likely require increased employer and employee contributions. Privatizing the system's $13 billion (combined retirement/survivor and disability programs) would present equity problems. Increase the Federal deficit as the excess of governmental receipts over mandatory outlays (projected as $4.0 billion for FY's 1996 to 2000) is removed from the Federal budget. One-time costs will be incurred for the privatization and transfer of functions. Without rail labor and management concurrence on privatization. enabling legislation and proper funding would be difficult to achieve. Costs to administer current systems are very low in comparison to benefits paid and are borne primarily by the railroad industry through payroll taxes. System is very complex. Customer surveys and focus groups show that beneficiary and employee customers are very satisfied with current service. Tier 1 (Social Security equivalent) benefits would still need to be administered, most likely as a part of SSA. 6 Summary Cost Information - Retirement/Survivor Benefit Program - Option A-2 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 59,842 f/ 0 0 f/ Discretionary Budget Outlays 59,842 f/ 0 0 f/ Mandatory Outlays Governmental Receiptsᵇ FTE Changes 894 f/ 0 (-885) 0 (-762) f/ Summary Cost Information - Retirement/Survivor Benefit Program - Option A-2 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 210,500 f/ 0 0 f/ Discretionary Budget Outlays 210,500 f/ 0 0 f/ Mandatory Outlays" 9,628,700 f/ 0 0 f/ Governmental Receipts 10,360,900 f/ 0 0 f/ FTE Changes 7 Summary Cost Information - - Retirement/Survivor Benefit Program - - Option A-2 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 270,342 f/ 0 0 f/ Discretionary Budget Outlays 270,342 f/ 0 0 f/ Mandatory Outlays 9,628,700 f/ 0 0 f/ Governmental Receipts 10,360,900 f/ 0 0 f/ FTE Changes 894 f/ 0 (-851) 0 (-727) f/ FOOTNOTES - Option A-2 a/ Administrative funds include the Limitation on Administration and the Special Management Improvement Fund. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB) and the Railroad Retirement Supplemental Account (RR SUP). c/ Represents the funding authority and outlay of vested dual benefit payments. d/ Includes outlays for the RRA, the SSEB and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. e/ Does not reflect the potential Amtrak restructuring. The loss of 5,500 Amtrak employees would result in a reduction of annual tier 2 payroll taxes to the RRA. with an initial annual reduction of approximately $40 million. f/ Undetermined. Presumes privatization in FY 1996. 8 OPTION A-3 TRANSFER RETIREMENT/SURVIVOR BENEFIT PROGRAM TO THE SOCIAL SECURITY ADMINISTRATION PRO Reduce overhead and coordination costs and provide increased service by transferring social security equivalent benefit functions to SSA to be administered as part of Title II. Provide increased service --more field office locations, more resources to draw from-- by transferring the unrecompensed tier 1, tier 2, supplemental annuity and vested dual benefit entitlements to SSA to be administered as a separate program, similar to the Black Lung program. Reduce overhead --and improve coordination-- by combining the RRB with SSA as a Program Service Center for the administration of the unique benefit provisions of the Railroad Retirement Act. CON One-time costs will be incurred for transfer of functions and systems to SSA. The retirement/survivor benefit system is very complex. Without rail labor and management agreement to seek enabling legislation enactment would be difficult to achieve. Costs to administer the retirement/survivor benefit delivery system are very low when compared to benefits paid. Customer surveys and focus groups indicate that the beneficiary and employee customers are very satisfied with the program. 9 Summary Cost Information - - Retirement/Survivor Benefit Program - Option A-3 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 59,842 e/ 0 0 e/ Discretionary Budget Outlays 59,842 e/ 0 0 e/ Mandatory Outlays Governmental Receiptsb FTE Changes 894 e/ 0 0 e/ Summary Cost Information - Retirement/Survivor Benefit Program - Option A-3 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 210,500 e/ 0 0 e/ Discretionary Budget Outlays 210,500 e/ 0 0 e/ Mandatory Outlays 9,628.700 e/ 0 0 e/ Governmental Receipts 10,360.900 e/ 0 0 e/ FTE Changes 10 Summary Cost Information - Retirement/Survivor Benefit Program - Option A-3 Trust and Administrative Fund Receipts and Expenditures" (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 270,342 0 0 e/ Discretionary Budget Outlays 270,342 e/ 0 0 e/ Mandatory Outlays 9,628,700 e/ 0 0 e/ Governmental Receipts 10,360,900 e/ 0 0 e/ FTE Changes 894 e/ 0 (-851) 0 (-727) e/ Based on information developed by the Commission on Railroad Retirement Reform in 1990 and information provided by SSA to that Commission, SSA estimated that the first-year conversion costs for the social security equivalent benefits would range from 1,000 to 1,800 workyears or $32.5 million to $56.5 million. SSA has also estimated that, on an ongoing basis, the processing of railroad retirement beneficiary claims would require 300 to 600 full-time employees; this would increase its administrative costs by $9 million to $18 million annually. Its administrative costs would, however, be offset by the administrative transfers made by SSA in the financial interchange. FOOTNOTES - Option A-3 a/ Administrative funds include the Limitation on Administration and the Special Management Improvement Fund. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB) and the Railroad Retirement Supplemental Account (RR SUP). c/ Represents the funding authority and outlay of vested dual benefit payments. d/ Includes outlays for the RRA, the SSEB and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. e/ Undetermined. Presumes transferred in FY 1996. 11 OPTION A-4 MAJOR RESTRUCTURING OF THE RETIREMENT/SURVIVOR BENEFIT PROGRAM PRO Savings will accrue over time as both personnel and overhead are significantly reduced. Customer needs are better served through the more efficient and effective use of personnel, systems, and equipment. CON Automation programs will require long-term commitment of resources. Continued separate retirement/survivor system for railroad employees operated by a Federal agency. Summary Cost Information - Retirement/Survivor Benefit Program - Option A-4 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 59,842 59,842 57,957 54,372 284,500 Discretionary Budget Outlays 59,842 59,842 57,957 54,372 284,500 Mandatory Outlaysb Governmental Receipts FTE Changes 894 894 (0) 886 (-8) 762 (-132) 4,175 (-295) 12 Summary Cost Information - Retirement/Survivor Benefit Program - Option A-4 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 210,500 210,500 196,100 153,000 908,500 Discretionary Budget Outlays 210,500 210,500 196,100 153,000 908,500 Mandatory Outlays 9,628,700 9,628,700 9,758,600 10,181,500 49,504,200 Governmental Receipts 10,360,900 10,360,900 10,541,200 11,056,000 53,503.900 FTE Changes Summary Cost Information - Retirement/Survivor Benefit Program - Option A-4 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 270,342 270,342 254,057 207,372 1,193,000 Discretionary Budget Outlays 270,342 270,342 254,057 207,372 1,193,000 Mandatory Outlays 9,628,700 9,628,700 9,758,600 10,181,500 49,504,200 Governmental Receipts 10,360,900 10,360,900 10,541,200 11,056,000 53,503.900 FTE Changes 894 894 851 (-43) 727 (-167) 4.036 (-434) 13 FOOTNOTES - Option A-4 a/ Administrative funds include the Limitation on Administration and the Special Management Improvement Fund. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB) and the Railroad Retirement Supplemental Account (RR SUP). c/ Represents the funding authority and outlay of vested dual benefit payments. d/ Includes outlays for the RRA, the SSEB and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. e/ Does not reflect the potential Amtrak restructuring. The loss of 5,500 Amtrak employees would result in a reduction of annual tier 2 payroll taxes to the RRA, with an initial annual reduction of approximately $40 million. 14 Decision Tree "B"-- The Disability Benefit Program Program The RRB administers a program of disability benefits for eligible railroad workers and their families. Active railroad employees, and their surviving spouses and children, are eligible for a disability annuity based on a finding of total and permanent disability from all employment, using similar eligibility requirements as found under the Social Security Act. Also, if the eligibility requirements are met, railroad occupational disabilities can be awarded to employees. Is the program critical to the agency's mission based on "customer" input? Yes. The administration of the disability benefit program for eligible railroad workers and their families is critical to the agency's mission based on customer input through statistical surveys and focus groups. Carrier input is undetermined but testimony received by the Commission on Railroad Retirement Reform in 1989 and 1990, from certain industry interest groups, expressed an opinion on the structure of the occupational disability program. In its Final Report, the Commission considered this "customer" input and recommended that the occupational disability annuity provisions of the Railroad Retirement Act be amended to limit the duration for receipt of such benefits to 24 months. The Commission Chairman dissented because of the number of years the benefits have been in effect and because he felt they were appropriate for this type of program. The Commission did not recommend any changes in the Federal administration of the modified benefit. Since legislation was never introduced to enact this recommendation, and no change had been recommended concerning the administration of the disability program, the remaining decision points are responded to in the context of the existing system. Can the program be administered as well or better at the State or local level? No. The railroad retirement program is similar to a multi-employer pension plan. The administration of a multi-employer private pension plan by a State or local governmental agency is unprecedented. Such a transfer to the State or local level would involve the development of 50 State agencies created for the sole purpose of administering a multi-employer private pension plan. In addition, an oversight bureaucracy would be needed to coordinate financing and to ensure consistency. Under some options, State agencies could be used in a limited capacity to make disability determinations. 15 Is there any way to cut costs or improve performance by introducing competition? No. The RRB's Deputy General Counsel has determined that the adjudication functions performed under the Railroad Retirement Act are inherently governmental functions which cannot be transferred or contracted out without legislative authority. However. certain administrative and support functions may be accomplished through competitive contracting. For example, the RRB recently awarded a nationwide contract to a private firm to perform medical examinations and submit reports adhering to contract- mandated requirements. Competitively bidding this function has improved performance while containing costs. How can NPR principles be applied to put customers first, cut red tape and empower employees? SSA recently completed a Reengineering study of its disability program. The Bureau of Disability and Medicare Operations is reviewing that study to determine whether any recommendations are applicable to the RRB. A second effort underway is being conducted by an in-house Reengineering Team. This team is about to begin a review of the entire claims handling process, covering all benefit programs, to determine whether any Reengineering principles can be applied. Additionally, the RRB recently awarded a contract to a private firm to perform medical examinations and submit reports following strict guidelines within a contract-mandated time frame. The examinations covered under this nationwide contract are performed at a pre-determined cost, effective for the life of the contract. The quality, timeliness and cost containment features of this contract have resulted in real administrative gains. Emphasis continues to be placed on implementing paperless on-line systems and fully utilizing available technologies to control and track the workload to ensure the right work is getting done in the right order. These advances, coupled with the previously mentioned contract, have empowered employees to approve or withhold payment for services rendered based on their quality review of the examination report. This puts more decision making at the employee level while ensuring a high quality product. 16 OPTION B-1 TERMINATE THE DISABILITY BENEFIT PROGRAM PRO RRB would realize an annual reduction of 50 FTE's and $2 million in contract costs. CON Eliminates a program that is financially solvent and where the costs of the program's benefits and administration are borne primarily by the railroad industry through payroll taxes. Terminating disability benefits for current beneficiaries and eliminating the right to future disability benefits for active employees would be unprecedented and subject to legal challenge. Increase the Federal deficit as the excess of governmental receipts over mandatory outlays (projected as $585 million for FY 1996 to 2000) is removed from the Federal budget. Customer surveys and focus groups show that the customers are very satisfied with the current program. Summary Cost Information - Disability Benefit Program - Option B-1 Administrative Receipts and Expendituresᵇ (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 13,968 f/ () 0 f/ Discretionary Budget Outlays 13,968 f/ 0 0 f/ Mandatory Outlays Governmental Receipts FTE Changes 208 f/ 0 (-207) 0 (-179) f/ 17 Summary Cost Information - Disability Benefit Program - Option B-1 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 29,500 f/ 0 0 f/ Discretionary Budget Outlays 29,500 f/ 0 0 f/ Mandatory Outlays 1,700,400 f/ 0 0 f/ Governmental Receipts 1,806,700 f/ 0 0 f/ FTE Changes Summary Cost Information - Disability Benefit Program - Option B-1 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 43,468 f/ 0 0 f/ Discretionary Budget Outlays 43,468 f/ 0 0 f/ Mandatory Outlays 1,700.400 f/ 0 0 f/ Governmental Receipts 1,806,700 f/ 0 0 f/ FTE Changes 208 0 (-199) 0 (-171) f/ Since the work must be performed somewhere. there are undetermined "savings" associated with eliminating the program. Savings, however, may result from handling of the work through other means as identified in Option B-2. 18 FOOTNOTES - Option B-1 a/ Includes disabled employees and survivors, regardless of age. b/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. c/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB) and the Railroad Retirement Supplemental Account (RR SUP). d/ Represents the funding authority and outlay of vested dual benefit payments. e/ Includes outlays for the RRA, the SSEB, and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. f/ Undetermined. Presumes termination in FY 1996. 19 OPTION B- 2 TRANSFER PORTIONS OR ALL OF THE DISABILITY BENEFIT PROGRAM TO THE SOCIAL SECURITY ADMINISTRATION (SSA) PRO Reduces number of Federal agencies involved in administering disability retirement benefits by transferring the tier 1 portion of the total and permanent disability annuity provisions for employees and survivors to the SSA to be administered as part of Title II only, resulting in undetermined FTE and contract savings, or Reduces number of Federal agencies involved in administering disability retirement benefits by transferring the tier 1 and tier 2 (and unrecompensed tier 1) portions of the total and permanent disability annuity provisions to SSA, together with the occupational disability provisions, to be administered as a separate program, similar to the Black Lung program, resulting in undetermined FTE and contract savings, or Reduces government overhead costs by combining the RRB with SSA as a Program Service Center for the administration of the unique provisions of the Railroad Retirement Act. Increases coordination in the payment of benefits. Increases coordination of disability determinations. CON Eliminates a program that is financially solvent and where the costs of the program's benefits and administration are borne primarily by the railroad industry through payroll taxes. Customer surveys and focus groups show that the customers are very satisfied with the current program. Requires legislative change. For presentation purposes, transfer of the entire disability program is considered. 20 Summary Cost Information - Disability Benefit Program - Option B-2 Administrative Receipts and Expendituresᵇ (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 13,968 f/ 0 0 f/ Discretionary Budget Outlays 13,968 f/ 0 0 f/ Mandatory Outlays Governmental Receipts FTE Changes 208 f/ 0 (-199) 0 (-171) f/ Summary Cost Information - Disability Benefit Program - Option B-2 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 29,500 f/ 0 0 f/ Discretionary Budget Outlays 29,500 f/ 0 0 f/ Mandatory Outlays 1,700,400 f/ 0 0 f/ Governmental Receipts 1,806,700 f/ 0 0 f/ FTE Changes 21 Summary Cost Information - Disability Benefit Program - Option B-2 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000 levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 43,468 f/ 0 0 f/ Discretionary Budget Outlays 43,468 f/ 0 0 f/ Mandatory Outlays 1,700,400 f/ 0 0 f/ Governmental Receipts 1,806,700 f/ 0 0 f/ FTE Changes 208 f/ 0 (-199) 0 (-171) f/ Cost/saving estimates would require coordination with SSA to determine its conversion and on- going operational costs and with the Department of the Treasury to determine the budgetary impact of trust fund transfers from the RRB to SSA. FOOTNOTES - Option B-2 a/ Includes disabled employees and survivors, regardless of age. b/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. c/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB), and the Railroad Retirement Supplemental Account (RR SUP). d/ Represents the funding authority and outlays of vested dual benefit payments. e/ Includes outlays for the RRA, the SSEB, and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. f/ Undetermined. Presumes transfer in FY 1996. 22 OPTION B-3 PRIVATIZE PORTIONS OF THE DISABILITY BENEFIT PROGRAM PRO Reduces government overhead costs by converting the RRB to a private sector, or quasi-government corporation, to administer the occupational disability annuity program, or Reduces RRB involvement in the disability retirement program by requiring the railroad industry (management and labor) to establish a method to administer the occupational disability provisions, either through contracts with insurance carriers, establishment of a private sector Taft-Hartley trust fund, or privately negotiated plans, or Reduces RRB involvement (and FTE's and overhead) in administering disability retirement benefits by amending the Railroad Retirement Act to allow the RRB to use the same State agencies used by SSA for the determination of total and permanent disability. CON Privatizes a program that is financially solvent and where the costs of the program's benefits and administration are borne primarily by the railroad industry through payroll taxes. Customer surveys and focus groups show that the customers are very satisfied with the program. Requires legislation. Increases coordination and potential contract costs in dealing with State agencies. Increases the Federal deficit as the excess of governmental receipts over mandatory outlays (projected as $585 million for FY 1996 to 2000) is removed from the Federal budget. For presentation purposes, privatization of the entire disability program is considered. 23 Summary Cost Information - Disability Benefit Program - Option B-3 Administrative Receipts and Expendituresᵇ (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 13,968 f/ 0 0 f/ Discretionary Budget Outlays 13,968 f/ 0 0 f/ Mandatory Outlays Governmental Receipts FTE Changes 208 f/ 0 (-199) 0 (-171) f/ Summary Cost Information - Disability Benefit Program - Option B-3 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 29,500 f/ 0 0 f/ Discretionary Budget Outlaysd 29,500 f/ 0 0 f/ Mandatory Outlays 1,700,400 f/ 0 0 f/ Governmental Receipts 1,806,700 f/ 0 0 f/ FTE Changes 24 Summary Cost Information - Disability Benefit Program - Option B-3 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 43,468 f/ 0 0 f/ Discretionary Budget Outlays 43,468 f/ 0 0 f/ Mandatory Outlays 1,700,400 f/ 0 0 f/ Governmental Receipts 1,806,700 f/ 0 0 f/ FTE Changes 208 f/ 0 (-199) 0 (-171) f/ FOOTNOTES - Option B-3 a/ Includes disabled employees and survivors, regardless of age. b/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. c/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB) and the Railroad Retirement Supplemental Account (RR SUP). d/ Represents the funding authority and outlay of vested dual benefit payments. e/ Includes outlays for the RRA, the SSEB, and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. f/ Undetermined. Presumes privatization in FY 1996. 25 OPTION B-4 RESTRUCTURE THE DISABILITY BENEFIT PROGRAM PRO Customer surveys and focus groups show that the customers are very satisfied with the current program. RRB will continue to realize greater internal administrative efficiencies through use of on-line applications. Administrative costs will continue to be controlled as a result of a recently awarded contract with a private firm. This contract requires medical examination reports to be of high quality and submitted timely at a pre-determined cost level for the life of the contract. This unique, nationwide contract has improved service while containing costs. CON Continuation of a separate disability benefit program administered by a small independent Federal agency. Summary Cost Information - Disability Benefit Program - Option B-4 Administrative Receipts and Expendituresᵇ (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 13,968 13,968 13,584 12,744 66,624 Discretionary Budget Outlays 13,968 13,968 13,584 12,744 66,624 Mandatory Outlays Governmental Receipts FTE Changes 208 208 (0) 199 (-9) 171 (-37) 943(-97) 26 Summary Cost Information - Disability Benefit Program - Option B-4 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 29,500 29,500 27,900 23,000 131,500 Discretionary Budget Outlays 29,500 29,500 27,900 23,000 131,500 Mandatory Outlays 1,700,400 1,700,400 1,723,700 1,798,800 8,744,200 Governmental Receipts 1,806,700 1,806,700 1,838,700 1,928,000 9,329,400 FTE Changes Summary Cost Information - Disability Benefit Program - Option B-4 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 43,468 43,468 41,484 35,744 198,124 Discretionary Budget Outlays 43,468 43,468 41,484 35,744 198,124 Mandatory Outlays 1,700,400 1,700,400 1,723,700 1,798,800 8,744,200 Governmental Receipts 1,806,700 1,806,700 1,838,700 1,928,000 9,329,400 FTE Changes 208 208 (0) 199(-9) 171 (-37) 943 (-97) RRB would continue to realize savings through increased efficiency in the administration of the disability benefit program. These include cost containment in the area of developing medical evidence and the increased use of on-line applications. 27 FOOTNOTES - Option B-4 a/ Includes disabled employees and survivors, regardless of age. b/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. c/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA), the Social Security Equivalent Benefit Account (SSEB) and the Railroad Retirement Supplemental Account (RR SUP). Excludes 44 FTE's to be reimbursed by HCFA for Medicare activities. d/ Represents the funding authority and outlay of vested dual benefit payments. e/ Includes outlays for the RRA, the SSEB and the RR SUP. SSEB outlays include the repayment of the financial interchange advances. 28 Decision Tree "C" --The RRB Medicare Program Program The Medicare program, as administered by the RRB for qualified railroad retirement beneficiaries, includes entitlement determinations, enrollments, disenrollments, premium collection, inquiry responses, records maintenance, coordination with the Health Care Financing Administration (HCFA) and SSA, and contracting with a Medicare carrier. Is this program critical to the agency's mission based on "customer" input? Yes. The administration of the Medicare program for qualified railroad retirement beneficiaries is critical to the agency's mission based on customer input as well as customer needs and satisfaction. History has shown that RRB beneficiaries and interest groups are keenly aware of, and sensitive to, proposed changes relating to the Medicare program and those concerns are effectively communicated to the RRB. Can the program be administered as well or better at the State or local level? No. Applying Medicare premium deductions is an integral and essential part of the benefit payment and adjudication function. Separating this phase of the overall adjudication process would result in processing inefficiencies, lower overall quality, erroneous payments and poorer customer service. Duplicative administrative oversight and added bureaucracy would be needed to effect proper coordination with HCFA. The current high level of administrative efficiency and customer satisfaction is due in large part to the highly centralized administration of the Medicare program and the coordination of this program with the other Railroad Retirement Act (RRA) programs. Separating these inherently Government functions would negatively impact the effective administration of all RRA programs and the high levels of service currently being provided to our customers. Is there any way to cut costs or improve performance by introducing competition? No. The RRB's Bureau of Law has determined that the adjudication functions performed under the RRA, including the collection of Medicare premiums, are inherently Government functions and cannot be transferred or contracted out without legislative authority. In FY 1992, we competed the Medicare carrier's contract which resulted in improved service and savings. We will continue to look for opportunities to improve our operations and customer service. How can NPR principles be applied to put customers first, cut red tape and empower employees? The RRB will continue to reinvent its Medicare operations by aggressively utilizing technology and streamlining the adjudicative process. We have recently implemented one new major on-line system and we are in the process of developing another. 29 OPTION C-1 TERMINATE RRB MEDICARE INVOLVEMENT PRO RRB would realize an annual reduction of about 70 FTE's.' RRB beneficiaries would be treated the same as other Medicare beneficiaries. CON Beneficiaries would no longer receive annuity benefits and Medicare from the same agency. They would have to deal with another agency for their Medicare. HCFA costs would increase as they would serve a larger number of beneficiaries. Since Medicare premiums would no longer be deducted from railroad retirement annuities, direct billing would have to be instituted for those annuitants not entitled to social security benefits. This will increase the costs for the agency handling Medicare. Canadian hospital insurance claims are currently paid for out of the Railroad Retirement Account. Different reimbursement and processing systems would need to be established by HCFA, SSA or some other entity. Legislative change would be required. Summary Cost Information - Medicare Program - Option C-1 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 1,916 d/ 0 0 d/ Discretionary Budget Outlays 1,916 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsᵇ FTE Changes 25 d/ (-24) (-23) d/ 30 FOOTNOTES - Option C-1 a/ Administrative funds include the Limitation on Administration. Excludes an estimated $3.7 million to be reimbursed by the Health Care Financing Administration (HCFA) for Medicare activities. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA) and the Social Security Equivalent Benefit Account (SSEB). c/ Excludes 44 FTE's to be reimbursed by HCFA for Medicare activities. d/ Undetermined. Presumes termination in FY 1996. 31 OPTION C-2 TRANSFER RRB MEDICARE CARRIER ACTIVITIES TO HEALTH CARE FINANCING ADMINISTRATION (HCFA) PRO Potential cost savings have been presented previously. In 1979, the GAO estimated that $6.6 million could be saved because of the lower processing costs of the HCFA carriers. In 1984, GAO estimated that about $7 million could be saved in 1983. In 1990, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) estimated that annual savings of $9.1 million would be achieved. However, in 1991 the RRB OIG estimated that the savings estimate of $9.1 million would not be achieved because of unlikely predictions, obsolete cost differentials and incorrect assumptions. RRB would realize savings of approximately 2 FTE's because contract oversight would no longer be necessary. CON Potential increased costs to the Federal government because the FY 1994 RRB carrier total unit cost is $1.49 versus the national average of $1.66. Potential increase in FTE's needed to respond to inquiries or complaints because of the involvement of 29 separate Medicare carriers instead of the current one. Customer service will be negatively impacted. Problem resolution negatively impacted by dealing with 29 carriers; Contrary to high levels of satisfaction expressed in customer survey and focus groups; and Disparate handling of Medicare claims because HCFA area carriers apply different medical review standards to claims. Loss of sole source accountability because 29 carriers will process claims. Loss of carrier performance evaluation as it pertains directly to RRB beneficiaries because the RRB would not have the resources to evaluate 29 carriers and RRB beneficiary claims would not be separately identified. Legislative change would be required. 32 Summary Cost Information - Medicare Program - Option C-2 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 1,916 1,812 1,707 1,595 8,418 Discretionary Budget Outlays 1,916 1,812 1,707 1,595 8,418 Mandatory Outlays Governmental Receiptsᵇ FTE Changes 25 23(-2). 22(-3) 21(-4) 110(-15) GAO and the HHS-OIG have estimated annual administrative savings of $6.6 million to $9.1 million. These estimates have been criticized by the RRB-OIG as being too high. We estimate that since October 1987, the RRB carrier has saved the Federal government $32 million in benefit payments because of historically higher payment accuracy rates than the national average of all area carriers. FOOTNOTES - Option C-2 a/ Administrative funds include the Limitation on Administration. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA) and the Social Security Equivalent Benefit Account (SSEB). 33 OPTION C-3 RESTRUCTURE THE RRB MEDICARE PROGRAM PRO Continued high levels of service and customer satisfaction. Continued sole source accountability. Focused contract oversight. Claims processing consistency. Meets customer requirements. Close, effective coordination between Medicare program and other RRA retirement/survivor programs. Internal streamlining - continued automation of record corrections and of exception referral control. No legislative change required. CON Continued involvement of RRB in the Medicare program. Summary Cost Information - Medicare Program - Option C-3 Administrative Receipts and Expenditures" (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 1,916 1,916 1,811 1,699 8,936 Discretionary Budget Outlays 1,916 1,916 1,811 1,699 8,936 Mandatory Outlays Governmental Receipts" FTE Changes 25 25 (0) 24(-1) 23(-2) 120(-5) 34 FOOTNOTES - Option C-3 a/ Administrative funds include the Limitation on Administration. Excludes an estimated $3.7 million to be reimbursed by the Health Care Financing Administration (HCFA) for Medicare activities. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Retirement Account (RRA) and the Social Security Equivalent Benefit Account (SSEB). c/ Excludes 44 FTE's to be reimbursed by HCFA for Medicare activities. 35 Decision Tree "D" -- the Administration of the Railroad Unemployment Insurance Program Program The railroad unemployment insurance program is provided under the Railroad Unemployment Insurance Act (RUIA). The Act provides for the payment of bi-weekly benefits to qualified railroad employees who are unemployed, but able to work and available for work. Is this critical to the agency's mission based on "customer" input? Yes. In addition to being statutorily mandated under the RUIA, the railroad unemployment insurance program is supported by the RRB's customers - railroad labor and railroad management. Results of surveys and focus groups conducted during fiscal year 1994 indicate a high degree of satisfaction with the agency's administration of the program. Can it be done as well or better at the State or local level? No. Proposals to transfer the railroad unemployment insurance program to the State systems were considered and discussed on several occasions in the past. The most thorough review of the advantages and disadvantages of such a proposal was conducted in 1984 by the Railroad Unemployment Compensation Committee, a committee established by the Railroad Retirement Solvency Act of 1983 to review all aspects of the unemployment and sickness benefit system. The members of the committee included two representatives from railroad labor, two representatives of railroad management and a public member. In its report, the committee favored maintaining an independent railroad unemployment insurance system. The Congressional Research Service also provided a report for Congress in October 1993, entitled, "Railroad Retirement Board: Background and Analysis of Issues Raised by Proposals to End Federal Administration." The report identifies the various impediments to ending Federal administration of railroad employee benefits. Such impediments include the fact that the railroad unemployment insurance program is designed as a daily benefit, which is consistent with the industry's intermittent employment practices, whereas State programs are based on unemployment measured by weeks instead of days. In addition, the costs of the programs' benefits and administration are borne by the railroad industry through payroll taxes; transfer of the program to the States would not save money for the taxpayers. 36 Is there any way to cut costs or improve performance by introducing competition? Introducing competition would not cut costs or improve performance. If not, how can NPR principles be applied to put customers first, cut red tape, and empower employees? During fiscal year 1994, customer satisfaction surveys and focus groups were conducted and a customer service plan was developed. Performance is tracked against customer service standards and actions are taken to improve performance, when necessary. Action plans have been developed to improve quality and timeliness and implement cost-saving concepts. In addition, reengineering efforts are underway as part of the agency's streamlining plan to improve operations. 37 OPTION D-1 TRANSFER THE UNEMPLOYMENT INSURANCE PROGRAM TO THE DEPARTMENT OF LABOR/STATE SYSTEM PRO Claimants residing in some States would receive a higher weekly benefit under the State systems compared to benefits currently payable under the RUIA. The State systems have either no waiting period or a 1-week waiting period compared to the 2-week waiting period currently required under the RUIA. RRB involvement would be eliminated. The rail industry would be treated the same as other industries. CON Eliminates a program that is financially solvent and where the costs of the program's benefits and administration are borne solely by the railroad industry through payroll taxes. Terminates a long established and coordinated program which is designed as a daily benefit, consistent with the industry's intermittent employment practices, whereas State programs are based on unemployment measured by weeks instead of days. Eliminates the consistent treatment of railroads and their employees. Coverage by State programs would result in different benefit levels, eligibility criteria, etc. based on State of residence. Creates the potential for dual taxation of railroads during a transition period. Railroad employers would, in all likelihood, experience increased tax liability under the State systems. Railroads operating in more than one State would have to comply with applicable requirements of the unemployment programs in each of the States. This would result in a greater administrative burden than currently exists with a single system. Eliminates the possibility of making future legislative changes to the unemployment system based on changing conditions in the railroad industry. Transfer is not favored by the agency's customers. Legislative action would be required. 38 Summary Cost Information - - Unemployment Insurance Program - Option D-1 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 10,073 d/ 0 0 d/ Discretionary Budget Outlays 10,073 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsᵇ FTE Changes 152 d/ 0 (-149) 0 (-130) d/ Summary Cost Information - Unemployment Insurance Program - Option D-1 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 44,500 d/ 0 0 d/ Governmental Receipts 21,200 d/ 0 0 d/ FTE Changes 39 Summary Cost Information - Unemployment Insurance Program - Option D-1 Trust and Administrative Fund Receipts and Expenditures" (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 10,073 d/ 0 0 d/ Discretionary Budget Outlays 10,073 d/ 0 0 d/ Mandatory Outlays 44,500 d/ 0 0 d/ Governmental Receipts 21,200 d/ 0 0 d/ FTE Changes 152 d/ 0 (-149) 0 (-130) d/ FOOTNOTES - Option D-1 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 unemployment benefit estimate is $78.6 million. 40 OPTION D-2 PRIVATIZE/FRANCHISE THE UNEMPLOYMENT INSURANCE PROGRAM PRO Federal government involvement would be eliminated or reduced. Employer/employee representatives would be free to negotiate changes in benefit programs without regard to Federal/State legislation. CON Railroad workers would be a singular employee occupational group without Federal/State unemployment insurance. A suitable private industry provider must be obtained. Legislative change would be required. If RUIA is repealed, an exemption from State law would be required. Railroads may pay higher costs because administration would be performed by a profit-based entity. Ability to detect and prevent fraudulent benefit claims would be reduced. Opportunities/sources available to Federal agencies for recovery of overpayments could not be used. Customer surveys and focus groups indicate a high level of satisfaction with the existing program. 41 Summary Cost Information - Unemployment Insurance Program - - Option D-2 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 10,073 d/ 0 0 d/ Discretionary Budget Outlays 10,073 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsb FTE Changes 152 d/ 0 (-149) 0 (-130) d/ Summary Cost Information - Unemployment Insurance Program Option D-2 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 44,500 d/ 0 0 d/ Governmental Receipts 21,200 d/ 0 0 d/ FTE Changes 42 Summary Cost Information - Unemployment Insurance Program - Option D-2 Trust and Administrative Fund Receipts and Expenditures" (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 10,073 d/ 0 0 d/ Discretionary Budget Outlays 10,073 d/ 0 0 d/ Mandatory Outlays 44,500 d/ 0 0 d/ Governmental Receipt 21,200 d/ 0 0 d/ FTE Changes 152 d/ 0 (-149) 0 (-130) d/ FOOTNOTES - Option D-2 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 unemployment benefit estimate is $78.6 million. 43 OPTION D-3 RESTRUCTURE THE CURRENT UNEMPLOYMENT INSURANCE PROGRAM PRO Maintains a financially solvent system with no cost to individual taxpayers. Continued high levels of service and customer satisfaction. No legislative change required. Customers support continuing the existing program. Maintains a system which is responsive to conditions in the railroad industry. No additional costs incurred for transition to alternate program. Administrative costs and staffing have been reduced while program performance has improved. CON Federal government involvement is still required. 44 Summary Cost Information - Unemployment Insurance Program - Option D-3 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 10,073 10,073 9,961 9,345 48,686 Discretionary Budget Outlays 10,073 10,073 9,961 9,345 48,686 Mandatory Outlays Governmental Receiptsb FTE Changes 152 152 (0) 149 (-3) 130 (-22) 710 (-50) Summary Cost Information - Unemployment Insurance Program - Option D-3 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 44,500 44,500 43,700 45,000 222,200 Governmental Receipts 21,200 21,200 26,500 74,500 257,900 FTE Changes 45 Summary Cost Information - Unemployment Insurance Program - Option D-3 Trust and Administrative Fund Receipts and Expenditures" (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 10,073 10,073 9,961 9,345 48,686 Discretionary Budget Outlays 10,073 10,073 9,961 9,345 48,686 Mandatory Outlays 44,500 44,500 43,700 45,000 222,200 Governmental Receipts 21,200 21,200 26,500 74,500 257,900 FTE Changes 152 152 149 (-3) 130 (-22) 710 (-50) FOOTNOTES - Option D-3 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 unemployment benefit estimate is $78.6 million. 46 Decision Tree "E"-- The Administration of the Railroad Sickness Insurance Benefit Program Program The railroad sickness insurance program is provided under the Railroad Unemployment Insurance Act (RUIA). The Act provides for the payment of bi-weekly benefits to qualified railroad employees who are unable to work because of illness, injury or maternity. Is this critical to the agency's mission based on "customer" input? Yes. In addition to being statutorily mandated under the RUIA, the railroad sickness insurance program is supported by the RRB's customers - railroad labor and railroad management. Results of surveys and focus groups conducted during fiscal year 1994 indicate a high degree of satisfaction with the agency's administration of the program. Can the program be administered as well or better at the State or local level? No. Only five States provide for the payment of sickness benefits. When proposals to transfer the unemployment insurance program to the State systems were advanced in the past, the recommendation was to retain an independent sickness insurance program. In 1984, the Railroad Unemployment Compensation Committee was established by the Railroad Retirement Solvency Act of 1983 to review all aspects of the unemployment and sickness benefit system. The members of the committee included two representatives from railroad labor, two representatives of railroad management and a public member. In its report, the committee favored maintaining an independent railroad sickness insurance system. Is there any way to cut costs or improve performance by introducing competition? Introducing competition would not cut costs or improve performance. If not, how can NPR principles be applied to put customers first, cut red tape, and empower employees? During fiscal year 1994, customer satisfaction surveys and focus groups were conducted and a customer service plan was developed. Performance is tracked against customer service standards and actions are taken to improve performance, when necessary. Action plans have been developed to improve quality and timeliness and implement cost-saving concepts. In addition, reengineering efforts are underway as part of the agency's streamlining plan to improve operations. 47 OPTION E-1 TRANSFER THE SICKNESS INSURANCE PROGRAM TO THE STATE SYSTEM PRO RRB involvement would be eliminated. CON Only five States pay sickness benefits. There is no reason to believe the other 45 States would want to operate a sickness insurance program for railroad employees. Eliminate a program that is financially solvent and where the costs of the program's benefits and administration are borne solely by the railroad industry through payroll taxes. No constituency exists that would be interested in this option. Complex legislative action would be required. Ability to recover benefit overpayments from annuity accruals payable under the Railroad Retirement Act would be lost. (This process results in the recovery of approximately $10 million annually.) Summary Cost Information - Sickness Insurance Program - Option E-1 Administrative Receipts and Expendituresᵃ (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 7,560 d/ 0 0 d/ Discretionary Budget Outlays 7,560 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsᵇ FTE Changes 114 d/ 0 (-112) 0 (-95) d/ 48 Summary Cost Information - Sickness Insurance Program - Option E-1 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 24,400 d/ 0 0 d/ Governmental Receipts 11,600 d/ 0 0 d/ FTE Changes Summary Cost Information - - Sickness Insurance Program - Option E-1 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 7,560 d/ 0 0 d/ Discretionary Budget Outlays 7,560 d/ 0 0 d/ Mandatory Outlays 24,400 d/ 0 0 d/ Governmental Receipts 11,600 d/ 0 0 d/ FTE Changes 114 d/ 0 (-112) 0 (-95) d/ 49 FOOTNOTES - Option E-1 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 sickness benefit estimate is $24.0 million. d/ Undetermined. Presumes transfer in FY 1996. 50 OPTION E-2 PRIVATIZE/FRANCHISE THE SICKNESS INSURANCE PROGRAM PRO Insurance companies such as Provident Life and Trustmark currently pay supplemental sickness benefits to railroad employees. Presumably, an insurance company could develop and administer a benefit package to replace what is provided under the RUIA. Federal government involvement would be eliminated or reduced. If the administrator of the program is also a supplemental benefit insurer, employers and employees would have only one entity to deal with. CON Railroads may pay a higher cost because administration would be performed by a profit-based entity. Ability to detect and prevent fraudulent benefit claims would be reduced. Opportunities/sources available to Federal agencies for recovery of overpayments could not be used. Eliminates a program that is financially solvent and where the costs of the program's benefits and administration are borne solely by the railroad industry through payroll taxes. Legislative change required. Customer surveys and focus groups indicate a high level of satisfaction with the existing program. Ability to recover benefit overpayments from annuity accruals payable under the Railroad Retirement Act would be lost. (This process results in the recovery of approximately $10 million annually.) 51 Summary Cost Information - - Sickness Insurance Program - - Option E-2 Administrative Receipts and Expendituresᵃ (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 7,560 d/ 0 0 d/ Discretionary Budget Outlays 7,560 d/ 0 0 d/ Mandatory Outlays Governmental Receiptsᵇ FTE Changes 114 d/ 0 (-112) 0 (-95) d/ Summary Cost Information - - Sickness Insurance Program - - Option E-2 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 24,400 d/ 0 0 d/ Governmental Receipt 11,600 d/ 0 0 d/ FTE Changes 52 Summary Cost Information - Sickness Insurance Program - Option E-2 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 7,560 d/ 0 0 d/ Discretionary Budget Outlays 7,560 d/ 0 0 d/ Mandatory Outlays 24,400 d/ 0 0 d/ Governmental Receipts 11,600 d/ 0 0 d/ FTE Changes 114 d/ 0 (-112) 0 (-95) d/ FOOTNOTES - Option E-2 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Includes outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 sickness benefit estimate is $24.0 million. d/ Undetermined. Presumes transfer in FY 1996. 53 OPTION E-3 RESTRUCTURE THE CURRENT SICKNESS INSURANCE PROGRAM PRO Maintain a financially solvent system with no cost to individual taxpayers. Continued high levels of service and customer satisfaction. No legislative change required. Customers support continuing the existing program. Maintain a system which is coordinated with the supplemental benefit programs administered by the railroads and insurance companies. No additional costs incurred for transition to alternate program. CON Federal government involvement is still required. Summary Cost Information - Sickness Insurance Program - Option E-3 Administrative Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 7,560 7,560 7,245 6,797 35,643 Discretionary Budget Outlays 7,560 7,560 7,245 6,797 35,643 Mandatory Outlays Governmental Receiptsb FTE Changes 114 114 (0) 112 (-2) 95 (-19) 527 (-43) 54 Summary Cost Information - Sickness Insurance Program - Option E-3 Trust Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority Discretionary Budget Outlays Mandatory Outlays 24,400 24,400 24,000 24,800 122,100 Governmental Receipts 11,600 11,600 14,500 41,100 141,700 FTE Changes Summary Cost Information - Sickness Insurance Program - Option E-3 Trust and Administrative Fund Receipts and Expenditures (in thousands of dollars) FY 1996 Estimated Estimated Estimated 5-year cumulative program resulting resulting resulting (FY 1996-2000) levels in levels for levels for levels for budget FY 1996 FY 1997 FY 2000 Discretionary Budget Authority 7,560 7,560 7,245 6,797 35,643 Discretionary Budget Outlays 7,560 7,560 7,245 6,797 35,643 Mandatory Outlays 24,400 24,400 24,000 24,800 122,100 Governmental Receipts 11,600 11,600 14,500 41,100 141,700 FTE Changes 114 114 (0) 112 (-2) 95 (-19) 527 (-43) Staff has been reduced by 28% over the past 3 years through automation and restructuring. 55 FOOTNOTES - Option E-3 a/ Administrative funds include the Limitation on Administration. Excludes $6.7 million for the Limitation on the Office of Inspector General. b/ Funding of administrative expenses provided through a transfer of funds from the Railroad Unemployment Insurance Account (RUIA). c/ Outlays for the RUIA. Does not reflect the potential Amtrak restructuring. If Amtrak eliminates 5,500 employees by April 1, 1995, the fiscal year 1996 sickness benefit estimate is $24.0 million. 56 1. Describe any recommendations offered by the OMB/NPR advisory teams that may have been considered but rejected. Briefly explain why they were rejected. A. NPR 1 recommended: "Transfer the functions of the Railroad Retirement Board to other agencies." In its September 1994 status report it reported: "NPR's recommendation to restructure the management of railroad industry benefits programs has been deferred indefinitely, and the Railroad Retirement Board has committed to acting on a series of management improvements." 2. List programs, functions, subsidies, or regulatory efforts that are not being considered for Phase II reinvention. Briefly explain why they are being excluded. A. None have been excluded from the Railroad Retirement Board's recommendations Further cost benefit analyses will be necessary depending on the specific recommendations adopted. ### REINVENTION PROPOSALS JANUARY 24, 1995 RALIROAD RETIREMENT * U.S.A.* BOARD Office of Inspector General Railroad Retirement Board INTRODUCTION The Office of Inspector General (OIG) and agency management are partners in the design of a railroad retirement system that provides the highest level of customer service at the lowest cost. In order to advance the process of change at the Railroad Retirement Board (RRB), the OIG has reviewed and evaluated the reorganization that was recently approved by the Board Members. This document presents the results of that analysis as well as recommendations that build upon the agency's restructuring actions. ISSUE ONE The revised organizational structure of the agency remains bureaucratic and reflects no significant reduction in the number of bureaus or offices that will alter daily operations. In order to comply with the reinvention principles and streamlining directives established by the Administration, agency management must recognize the critical need to reduce managerial and supervisory oversight and to align programs with similar functions and missions. In addition, the RRB should radically reduce the number of field offices. The development and aggressive use of new computer and telecommunications technology offers a significant opportunity to improve services and reduce costs. Background From the 1930s through the 1960s, agencies of the Federal government followed the lead of corporate America in creating large, top-down, centralized bureaucracies. This type of structure had proven effective for organizations functioning in stable environments with routine technology. This methodology encourages a focus on individual goals and routine tasks, not on the basic mission of the organization. Conflict often results between bureaus and offices as each attempts to maximize its production without consideration of the impact upon others. These bureaucracies have proven to be extremely rigid and inflexible. The RRB, too, developed an organizational structure that supported formal lines of communication, the separation of tasks assigned to independent bureaus and offices with individually defined rules and regulations. However, in today's environment, this operating design no longer meets the needs of the agency or its customers. Improvements in information technology are tremendous, and the power of personal computers is doubling almost every 1 eighteen months. Through the use of computers and telecommunications, the agency can eliminate layers of managers, reduce the number of supervisors and permit better information sharing among all employees. Current Organizational Structure The 1993 National Performance Review directed Federal agencies to shed their outdated structures, management practices and relationships. All government agencies are reviewing their organizational structures and implementing significant changes to adapt to the current environment. In December 1994, three cabinet departments (Transportation, Energy and Housing and Urban Development) and two major agencies (General Services Administration and the Office of Personnel Management) announced restructuring plans that will save approximately $24 billion over five years. One agency is combining 60 programs into four and another plans to consolidate its facilities and restructure its management. In addition, the Department of Agriculture is eliminating 1200 field offices. As a result of findings cited in Arthur Andersen's 1993 financial statement audit report, the Board Members recognized that the RRB's organizational structure was no longer effective. Arthur Andersen and Company identified the organization of the RRB as a major weakness in agency operations. The present structure does not align similar functions but perpetuates a fragmented environment. The existence of over twenty bureaus and offices results in an atmosphere that fosters individual operating bureau goals rather than the overall mission of the agency. Bureaus compete against each other for limited resources rather than identifying ways to improve coordination and cooperation for better customer service. The report stated that the agency lacked adequate lines of communication among bureaus to address problems or resolve current operational issues. On November 15, 1994, The Board Members approved a reorganization of the auditors. agency, effective January 3, 1995, to address those weaknesses cited by the Reorganization The Office of Inspector General has reviewed the recent reorganization plan, and has concluded that the agency should implement additional, more radical changes to streamline operations and create a more flexible structure which will reduce unnecessary managerial and supervisory oversight. 2 The organizational charts that follow clearly indicate that the recently approved plan is more cosmetic than substantive. The revised structure remains bureaucratic and fragmented, and reflects no significant changes that will alter day-to-day operations. Continued reductions in staffing and funding mandate that agency management identify new and more efficient ways to operate. The goal must be to eliminate layers of management, not to simply shift managers among bureaus. RRB ORGANIZATION EFFECTIVE SEPTEMBER 23, 1991 INSPECTOR SECRETARY GENERAL THE BOARD TO THE BOARD WASHINGTON OFFICE OF PUBLIC LEGISLATIVE/ GENERAL AFFAIRS LIAISON OFFICE COUNSEL OFFICE BUREAU OF LAW OFFICE OF ADMINISTRATION EQUAL AND EMPLOYMENT OPERATIONS OFFICE BUREAU OF HEARINGS AND APPEALS OFFICE OF BUREAU OF BUREAU OF RETIREMENT DISABILITY UNEMPLOYMENT AND SURVIVOR BUREAU OF AND MEDICARE BUREAU OF OFFICE OF AND PROGRAMS THE FISCAL OPERATIONS ADMINISTRATIVE SICKNESS ACTUARY OPERATIONS SERVICES INSURANCE BUREAU OF RETIREMENT BENEFITS BUREAU OF PERSONNEL BUREAU OF BUREAU OF BUREAU OF BUREAU OF BUREAU OF TAXATION RESEARCH AND FIELD SERVICE DATA SYSTEMS EMPLOYMENT PROCESSING INITIATIVES ACCOUNTS BUREAU OF SURVIVOR BUREAU OF BENEFITS QUALITY ASSURANCE REGIONAL OFFICES (5) BUREAU OF INFORMATION RESOURCES ORGANIZATIONAL STRUCTURE INCLUDES MANAGEMENT 24 OFFICES/BUREAUS 17 REPORT TO ONE KEY EXECUTIVE BUREAU OF SUPPLY AND SERVICE 3 REVISED ORGANIZATION EFFECTIVE JANUARY 3, 1995 INSPECTOR GENERAL THE BOARD OFFICE OF OFFICE OF OFFICE OF PROGRAMS GENERAL ADMINISTRATION COUNSEL BUREAU OF OFFICE OF SECRETARY BUREAU OF UNEMPLOYMENT BUREAU OF LEGISLATIVE TO THE INFORMATION AND TAXATION AFFAIRS BOARD SYSTEMS SICKNESS INSURANCE BUREAU OF OFFICE OF BUREAU OF BUREAU OF DISABILITY RETIREMENT BUREAU OF LAW FISCAL RESEARCH AND AND MEDICARE AND SURVIVOR OPERATIONS EMPLOYMENT OPERATIONS PROGRAMS ACCOUNTS BUREAU OF BUREAU OF BUREAU OF BUREAU OF BUREAU OF HEARINGS AND SUPPLY AND QUALITY FIELD SERVICE RETIREMENT APPEALS SERVICE ASSURANCE BENEFITS OFFICE OF REGIONAL BUREAU OF BUREAU OF PUBLIC OFFICES SURVIVOR PERSONNEL AFFAIRS (3) BENEFITS BUREAU OF OFFICE OF THE EQUAL ACTUARY OPPORTUNITY REVISED STRUCTURE INCLUDES 22 OFFICES/BUREAUS (EXCLUDING SECRETARY TO THE BOARD) AND TWO KEY EXECUTIVES (DIRECTOR OF PROGRAMS AND DIRECTOR OF ADMINISTRATION) VERSUS PRIOR ONE 4 Recommendation The Office of Inspector General recommends an organizational structure that groups programs with similar functions and missions into five independent bureaus. These bureaus are (1) Benefit Payment Programs, (2) Financial Operations, (3) Information Systems, (4) Legal Affairs, and (5) Administrative Services. PROPOSED ORGANIZATONAL STRUCTURE INSPECTOR GENERAL THE BOARD BENEFIT PAYMENT FINANCIAL INFORMATION LEGAL ADMINISTRATIVE PROGRAMS OPERATIONS SYSTEMS AFFAIRS SERVICES 1. Benefit Payment Programs This office would serve as the agency's principal bureau and include retirement, survivor, disability, medicare, unemployment and sickness insurance benefit programs and field services. 2. Financial Operations This office directed by the Chief Financial Officer, would include the current Bureau of Fiscal Operations, Research and Employment Accounts and the Actuary. This realignment would centralize all financial and statistical operations. 5 3. Information Systems This bureau would combine the functions of the Bureaus of Data Processing, Systems Initiatives, and Information Resources Management, with the exception of the Freedom of Information Act activities which would move to Legal Affairs. 4. Legal Affairs All matters relating to legal issues would be consolidated, and would include the Offices of General Counsel and Legislative Affairs, the Bureaus of Law and Hearings and Appeals, and Freedom of Information Act activities. 5. Administrative Services The support functions of the agency would be included in this bureau: Personnel, Supply and Service, Equal Employment Opportunity, and Public Affairs. The realignment of bureaus into a smaller number of functional areas will permit employees to work more closely, identify ways to operate more efficiently and eliminate overlap between similar systems. The elimination of unnecessary layers of management oversight will increase employee motivation and productivity. This restructuring will also promote cooperation among employees and permit them to be the decision makers in their respective areas of responsibility. This environment will provide front-line employees with a greater sense of job security and personal accomplishment. These employees are best positioned to identify improved methods to deliver the best customer service. Both the Administration and Congress have directed Federal agencies to reduce the number of government managers and supervisors, particularly at the GS-14, GS-15 and Senior Executive Service levels. The recommended organizational structure will increase the span of control above the level proposed in the agency's streamlining plan. Fewer organizational boundaries will result in a focus on agency goals rather than competition for diminishing agency resources. 6 Adoption of the OIG's proposed organizational structure could result in savings of approximately $9.7 million in salaries and benefits through the reduction of 167 FTEs. The majority of the personnel reductions would involve mid-level management positions and administrative support staff. The consolidation of similar functions would eliminate the need for these positions. Appendix 1 presents a list of positions suggested for elimination by organizational component. Because Federal regulations regarding reductions in force are complex, this analysis does not include an estimated cost related to eliminating the positions. Costs would vary by the method of reduction use, and the specific individuals involved. The agency could consider proposing various methodologies to fully accomplish the reorganization to the Administration and Congress. ISSUE TWO The RRB must reengineer the field office structure and service delivery methods to reflect its current customer base and fully utilize current and new computer and telecommunications technology. Background The current field structure can be traced to its design in the late 1930s. At that time, the field offices were created in main rail communities to handle the claims filed under the Railroad Unemployment Insurance Act. From the 1940s until today, the structure has remained relatively unchanged except for a reduction in the number of regions from nine in 1942 to five in 1994. During this time, the nature of the field offices' work, the customer base, the methods of transportation, the types and availability of communications have changed dramatically. In 1942, the RRB had 93 field offices to service almost 2.5 million active railroad workers. The RRB currently has a headquarters field office staff, five regional offices and 86 field offices to service 270,000 active railroad workers and 930,000 beneficiaries. The agency has one field office for every 14,000, one of the highest ratios in the Federal government. 7 The work performed at the district offices has changed from predominantly processing unemployment claims to processing retirement and maintenance work for all benefit programs. In 1949, the RRB paid unemployment/sickness insurance benefits to over 435,000 beneficiaries. In 1993, approximately 42,000 beneficiaries received these benefits. The number of retirement applications declined from almost 67,000 in 1949 to 43,000 in 1993. Current Structure The agency currently maintains five regional offices, each with a regional director, and a deputy regional director, except region 5 which has no deputy. A review of the field offices shows 13 offices with two employees, generally a manager and one other employee and six offices with only one employee, two of which are managers with no staff. With few exceptions, most of the offices have a manager, with larger offices having clerical support staff. The methods for performing field service work are changing dramatically. Computer and telecommunications developments in the 1960s and 1970s made more information available in the field offices. Further advancements in the 1990s are enabling employees to perform their work regardless of location - from government office space to a shopping mal, from a railroad employer's personnel office to a union local office. Recent customer satisfaction surveys and focus groups have shown that beneficiaries prefer to handle most of their contacts with the agency by telephone, except for filing the initial retirement application. In addition, the number of retirement applications filed each year is declining. Most of the active railroad employees who will be filing applications in the future are concentrated in specific geographic areas. Contact representatives working from approximately ten district offices could provide service to these future beneficiaries. The chart on the following page shows that nine states have more than 25,000 beneficiaries, seven states have more than 10,000 workers, and six states have over 25,000 beneficiaries and over 10,000 workers. 8 Distribution of Railroad Employees and Beneficiaries 9 California 8 Texas 7 Missouri 6 California Illinois 5 Texas California 6 Ohio Nebraska Texas 4 New York Illinois Illinois 3 Ohio Pennsylvania Ohio 2 Virginia New York New York 1 Pennsylvania Pennsylvania Florida 0 States with more States with more than States with more than 25,000 than 25,000 Beneficiaries & 10,000 10,000 Railroad Employees Beneficiaries Railroad Employees Recommendation RRB management should develop a plan to reengineer the field service delivery processes and reduce the number of field offices. Based upon demographics, and through the use of alternative methods of service delivery, the agency should eliminate regional offices and significantly reduce the number of field offices from 86 to 10. These reductions will eliminate unnecessary offices and one layer of management, resulting in cost savings estimated in excess of $10.6 million in salaries and benefits (255 FTEs) and $1.3 million in rental charges annually. Most of the reductions would be mid-level (district office ) managers, regional office managers and administrative support staff in regional and district offices. These positions could be eliminated as a result of the consolidation of the field offices. Appendix 2 presents the number of positions which could be eliminated in each region. As in the previous recommendation concerning agency organization, the projected cost savings do not include costs related to reductions in force. The agency should also consider submitting various strategies to the Administration and Congress to accomplish this streamlining proposal. As part of its plan, the RRB should consider innovative methods of providing effective customer service that do not require the full-time offices. For example, more customer service representatives could provide itinerant service at various locations. A majority of the states with over 10,000 active railroad employees serve as the headquarters location for one or more major railroads. Contact representatives could schedule specific days to process retirement applications at these major railroad offices. Forming this type of partnership with railroad companies would benefit their employees and reduce the costs of the retirement program. The RRB should also explore the possibility of locating terminals at Social Security Administration offices for use by contact representatives, sharing space with other Federal agencies, and using portable computers to maintain communication access with headquarters. The agency should study other technologies such as desktop video conferencing and electronic kiosks to provide service to more locations and significantly reduce the need for permanent office space. Based on the overall needs of the organization, the agency may be able to redirect some of the savings from streamlining the field service into a technology investment fund which could be used for purchasing new technology as it becomes available. 10 CONCLUSION The Office of Inspector General is providing these recommendations to assist Board management in streamlining the RRB and improving the overall control environment. A review of the recent agency reorganization indicates that the new structure is very similar to the previous one. Only one of the twenty-four bureaus and offices was eliminated, two key manager positions replace the previous one, and the only major consolidation was in the information systems area. The RRB has taken but a single step in the process to eliminate the bureaucracy that still exists. RRB management must seize the opportunity to reinvent operations and implement changes that will be far-reaching. The RRB must also initiate action to significantly increase the involvement of agency personnel in reviewing policies and procedures and making decisions on proposed solutions. In simple terms, management must rethink the way agency benefit programs are administered. Implementation of the recommendations contained in this document could yield annual savings of $21.6 million and eliminate 422 full-time equivalent positions. These changes will not be easy to achieve, and will require much study and planning. However, the OIG believes that, through the recommended reorganization of the agency, particularly the field service, RRB management can demonstrate its commitment to genuine change and truly alter the way it conducts business. 11 HEADQUARTER POSITIONS ELIMINATED/MODIFIED PER 12/31/94 POSITION INDEX Office Old New Old New Salary Number Office / Bureau No. Title Grade Grade Salary Salary Savings 400 Office of Secretary to the Board 0 500 Office of General Counsel 0 600 Bureau of Hearings and Appeals 0 700 Office of Legal Affairs 0 800 Office of Public Affairs 0 1100 Office of Director of Administration 1 Executive Assistant GS-15 82,329 82,329 1 Executive Assistant GS-14 69,990 69,990 1 Administrative Alde GS-10 37,827 37,827 1170 Office of Equal Opportunity 0 1200 Bureau of Quality Assurance 1 PC Technical Specialist GS-12 49,808 49,808 1500 Bureau of Personnel 0 1600 Bureau of Fiscal Operations 2 Deputy Financial Officer GS-15 82,329 164,658 1 Administrative Officer GS-09 34,348 34,348 1 Computer Specialist GS-13 59,227 59,227 1 Financial Management Specialist GS-13 GS-12 59,227 49,808 9,419 1 Computer Specialist GS-12 49,808 49,808 1 Debt Recovery Manager GS-15 GS-14 82,329 69,990 12,339 1 Computer Specialist GS-12 49,808 49,808 1 PC/LAN Technical Specialist GS-12 49,808 49,808 1 Computer Specialist GS-12 49,808 49,808 1700 Bureau of the Actuary 1 Computer Programmer Analyst GS-12 49,808 49,808 1800 Bureau of Information Resources Management 1 Administrative Specialist GS-10 37,827 37,827 1 Computer Specialist GS-14 69,990 69,990 1 Computer Specialist GS-13 59,227 59,227 1 Computer Specialist GS-13 59,227 59,227 2100 Office of Retirement & Survivor Programs 1 Trust & Collections Analyst GS-13 59,227 59,227 1 Administrative Officer GS-12 49,808 49,808 2 Administrative Clerk GS-05 22,670 45,340 1 Management Analyst GS-12 49,808 49,808 1 Supervisory Railroad Retirement Claims Specialist GS-13 59,227 59,227 7 Railroad Retirement Claims Specialist GS-11 41,557 290,899 1 Rallroad Retirement Claims Specialist GS-11 41,557 41,557 1 Rallroad Retirement Claims Specialist GS-09 34,348 34,348 1 Investigations Clerk GS-05 22,670 22,670 1 Chief, Programs Procedures & Projects Analysis GS-14 69,990 69,990 1 Program Benefits Analyst GS-13 59,227 59,227 1 Supervisory Rallroad Retirement Claims Specialist GS-13 59,227 59,227 HEADQUARTER POSITIONS ELIMINATED/MODIFIED PER 12/31/94 POSITION INDEX Office Old New Old New Salary Number Office / Bureau No. Title Grade Grade Salary Salary Savings 4 Program Analyst GS-12 49,808 199,232 5 Claims Policy & Operations Specialist GS-12 49,808 249,040 1 Secretary (Office Automation) GS-06 25,267 25,267 1 Office Automation Clerk GS-04 20,260 20,260 6 Systems Applications Specialist GS-12 49,808 296,848 2300 Bureau of Retirement Benefits 1 Deputy Director of Retirement Benefits GS-14 69,990 69,990 1 Administrative Officer GS-12 49,808 49,808 1 Customer Service Leader GS-11 41,557 41,557 4 Customer Service Representative GS-10 37,827 151,308 1 Supervisory Rallroad Retirement Claims Specialist GS-13 59,227 59,227 5 Claims Policy and Operations Speciallst GS-12 49,808 249,040 2 Claims Specialist (Training) GS-12 49,808 99,616 1 Supervisory Rallroad Retirement Claims Specialist GS-12 49,808 49,808 1 Claims Policy and Operations Specialist GS-12 49,808 49,808 1 Management Analyst GS-11 41,557 41,557 2 Railroad Retirement Claims Specialist GS-11 41,557 83,114 1 PC Production Coordinator GS-10 37,827 37,827 1 Office Automation Clerk GS-04 20,260 20,260 2 Statement of Dutles GS-11 41,557 83,114 1 Statement of Duties GS-06 25,267 25,267 1 Quality Control Analyst GS-11 41,557 41,557 2400 Bureau of Survivor Benefits 1 Claims Processing Analyst GS-12 49,808 49,808 1 Administrative Officer GS-11 41,557 41,557 3 Customer Service Representative GS-10 37,827 113,481 1 Customer Service Representative GS-10 37,827 37,827 1 Supervisory Rallroad Retirement Claims Specialist GS-13 59,227 59,227 4 Claims Policy and Operations Specialist GS-12 49,808 199,232 1 Rallroad Retirement Claims Specialist GS-12 49,808 49,808 1 Railroad Retirement Claims Specialist GS-11 41,557 41,557 1 Quality Control Analyst GS-10 37,827 37,827 1 Quality Control Analyst GS-11 41,557 41,557 2500 Bureau of Disability & Medicare Operations 1 Deputy Director of Disability & Medicare Operations GS-14 69,990 69,990 1 Systems Applications Specialist GS-12 49,808 49,808 1 Administrative Officer GS-11 41,557 41,557 1 Administrative Officer GS-09 34,348 34,348 1 Lead Clerk GS-05 22,670 22,670 2901 1 Medicare Control Operations Specialist GS-13 59,227 59,227 HEADQUARTER POSITIONS ELIMINATED/MODIFIED PER 12/31/94 POSITION INDEX Office Old New Old New Salary Number Office / Bureau No. Title Grade Grade Salary Salary Savings 1 Assistant Chief, Medicare Programs GS-12 49,808 49,808 1 Supervisory Claims Specialist (Health Insurance Benefit) GS-10 37,827 37,827 1 Supervisory Claims Specialist (Health Insurance Benefit) GS-10 37,827 37,827 1 Chief, Claims Policy & Procedures GS-13 59,227 59,227 5 Claims Policy & Operations Specialist GS-12 49,808 249,040 1 Claims Policy & Operations Specialist GS-11 41,557 41,557 3 Railroad Retirement Claims Specialist (Disability) GS-12 49,808 149,424 1 Office Automation Clerk GS-04 20,260 20,260 3000 Bureau of Supply and Service 1 Administrative Officer GS-11 41,557 41,557 1 Lead Mall Clerk GS-05 22,670 22,670 1 Assistant Chief of Files Records & Supplies GS-10 37,827 37,827 6000 Bureau of Research & Employment Accounts 1 Program Benefits Analyst GS-14 69,990 69,990 1 Assistant to the Director GS-12 49,808 49,808 1 Management Analyst GS-12 49,808 49,808 1 Financial Interchange Operations Analyst GS-12 49,808 49,808 1 Communications Specialist GS-12 49,808 49,808 2 Compensation Reporting Speciallst GS-12 49,808 99,616 1 Chief, Methods and Procedures Section GS-13 59,227 59,227 1 Management Analyst GS-12 49,808 49,808 1 Methods & Procedures Analyst GS-11 41,557 41,557 1 Methods & Procedures Assistant GS-08 31,094 31,094 8000 Bureau of Unemployment & Sickness Insurance 1 Director of Unemployment & Sickness Insurance ES-04 GS-15 114,725 82,329 32,396 1 Deputy Director of Unemploymnet & Sickness Insurance GS-15 82,329 82,329 1 PC Technical Specialist GS-13 59,227 59,227 1 Administrative Officer GS-12 49,808 49,808 1 Management Analyst GS-11 41,557 41,557 1 Administrative Officer GS-09 34,348 34,348 1 Administrative Clerk GS-05 22,670 22,670 1 Experience Rating Operations Analyst GS-12 49,808 49,808 1 Deputy Director of Program Operations GS-13 59,227 59,227 2 Claims Examiner (Unemployment) GS-09 34,348 68,696 1 Claims Examiner (Unemployment) GS-08 31,094 31,094 1 Director Program Policy Planning & Evaluation GS-15 82,329 82,329 1 Deputy Director - Program Policy Planning & Evaluation GS-14 69,990 69,990 1 Computer Speciallst GS-12 49,808 49,808 1 Unemployment & Sickness Claims Specialist GS-12 49,808 49,808 1 Secretary (Office Automation) GS-06 25,287 25,267 Appendix 1, Page 3 of L HEADQUARTER POSITIONS ELIMINATED/MODIFIED PER 12/31/94 POSITION INDEX Old New Old New Salary Office Number Office / Bureau No. Title Grade Grade Salary Salary Savings 1 Office Automation Assistant GS-05 22,670 22,670 2 Adjudication & Procedure Specialist GS-12 49,808 99,616 1 Deputy Director of Debt Management GS-13 59,227 59,227 1 Debt & Recovery Analyst GS-12 49,808 49,808 2 Recovery Management Specialist GS-11 41,557 83,114 9000 Bureau of Data Processing 1 Deputy Director Bureau of Data Processing GS-15 82,329 82,329 1 Supervisory Management Analyst GS-13 59,227 59,227 3 Management Analyst GS-12 49,808 149,424 Computer Specialist GS-13 59,227 59,227 1 1 Computer Specialist (Instruction) GS-12 49,808 49,808 Administrative Officer (Budget) GS-11 41,557 41,557 1 1 Administrative Officer GS-09 34,348 34,348 1 Supervisory Computer Program Analyst GS-14 69,990 69,990 1 Database Applications Specialist GS-13 59,227 59,227 1 Supervisory Computer Program Analyst GS-14 69,990 69,990 1 Computer Programmer Analyst GS-13 59,227 59,227 1 Database Applications Specialist GS-13 59,227 59,227 1 Deputy Division Chief GS-14 69,990 69,990 1 Lead Data Base Administration Specialist GS-13 59,227 59,227 170 Total Positions Salary Savings 8,074,713 167 Positions Eliminated Benefit Savings - 20% 1,614,943 3 Positions Modified Total Savings 9,689,656 Appendix 1, Page 4 of 4 Appendix 2 BUREAU OF FIELD SERVICE (BFS) SAVINGS - SALARY & BENEFITS Number Number Total to to Salary & Grade Number Allocate Eliminate Salary Benefits Savings GS-4/5 30 6 24 $18,949 $22,739 $545,736 GS-6 18 12 6 $23,632 $28,358 $170,148 GS-7 6 0 6 $26,259 $31,511 $189,066 GS-8 160 75 85 $29,082 $34,898 $2,966,330 GS-9 6 0 6 $32,125 $38,550 $231,300 GS-10 92 43 49 $35,379 $42,455 $2,080,295 GS-11 23 0 23 $38,867 $46,640 $1,072,720 GS-12 44 0 44 $46,584 $55,901 $2,459,644 GS-13 13 5 8 $55,394 $66,473 $531,784 GS-14 4 5 0 $65,460 $78,552 $0 GS-15 5 0 4 $77,001 $92,401 $369,604 Totals 401 146 255 $10,616,627 Note: BFS headquarters employees are excluded. Employees and savings relate to BFS field personnel only. RAILBOAD RETIREMENT HER INDEPENDENT AGENCIES Federal 1047 Total liabilities 52.328.729 52.377.047 56.964.483 58.817.483 42.00 Transferred from other accounts 5 10 9 POSITION: Invested capital 3,034,052 3.033.881 3.033.881 3,033,881 43.00 Appropriation (total) 277,005 261.010 240,009 Cumulative results of oper- ations -8.081.784 -8.995.345 -9.205.364 -9.153.364 Relation of obligations to outlays: 71.00 Total obligations 269.365 261.010 240,009 Total net position -5.047.732 -5.961,464 -6,171,483 -6.119.483 90.00 Outlays 269,365 261.010 240.009 Total liabilities and net po- sition 47,280.997 46.415.583 50.793.000 52.698.000 This appropriation is a Federal subsidy to the rail industry pension for costs not financed by the railroad sector. The Object Classification (in thousands of dollars) American taxpayer subsidy is about $1,000 per rail employee. dification code 18-4020-0-3-372 1994 actual 1995 est. 1996 est. Personnel compensation: FEDERAL PAYMENTS TO THE RAILROAD RETIREMENT ACCOUNTS 11.1 Full-time permanent 22,895.357 24,276,848 25.259.482 11.3 Other than full-time permanent 3.620.732 3.474.202 3,706.582 For payment to the accounts established in the Treasury for the 15 Other personnel compensation 4,264,914 4.126.928 4.021.573 payment of benefits under the Railroad Retirement Act for interest 13 11.8 Special personal services payments 13 13 earned on unnegotiated checks, $300,000, to remain available through 11.9 Total personnel compensation 30.781.016 31.877.991 32.987.650 September 30, [1996] 1997, which shall be the maximum amount 12.1 Civilian personnel benefits 7,764,982 8.797.114 9,404,487 available for payment pursuant to section 417 of Public Law 98- 13.0 Benefits for former personnel 1.103.326 1.159.489 1.268.897 76. (Departments of Labor, Health and Human Services, and Edu- 21.0 Travel and transportation of persons 149.734 155,468 164.787 cation, and Related Agencies Appropriations Act, 1995.) 22.0 Transportation of things 3,856,950 4.097,701 4.340.283 23.1 Rental payments to GSA 37.984 38,688 39.687 Program and Financing (in thousands of dollars) 23.2 Rental payments to others 558.118 600.930 646.128 23.3 Communications. utilities. and miscellaneous charges 489.744 532.798 573.100 Identification code 60-0113-0-1-601 1994 actual 1995 est. 1996 est. 24.0 Printing and reproduction 90.144 132.677 159.475 25.2 Other services 1.660.306 1.955.248 1.629.059 Program by activities: 26.0 Supplies and matenals 954,461 1.026.715 10.00 Total obligations (object class 42.0) 3,459,415 3,331,390 3.422.691 1.207.566 31.0 Equipment 571.023 2.428.016 1.353.390 Financing: 32.0 Land and structures 1.011.709 1.143.980 805.399 21.40 Unobligated balance available. start of year: Treasury 42.0 Insurance claims and indemnities 133.290 98.158 101.411 balance -174 -174 Interest and dividends: 24.40 Unobligated balance available. end of year: Treasury 43.0 Notes and bonds 777.867 644.721 709.233 balance 174 174 174 43.0 Civil Service unfunded liabilities 1.336.354 1.362.400 1,549,389 39.00 Budget authority 3,459.589 3.331.390 3,422,691 99.9 Total obligations 51.530.113 55.979.840 56.759.090 Budget authority: Current: Personnel Summary 40.00 Appropriation 300 300 300 41.00 Transferred to other accounts -5 -10 -9 Identification code 18-4020-0-3-372 1994 actual 1995 est. 1996 est. 43.00 Appropriation (total) 295 290 291 Total compensable workyears: 5005 Full-time equivalent of overtime and holiday hours 70,982 65.055 59.865 Permanent: 60.05 Appropriation (indefinite) 3,459,294 3,331,100 3,422.400 5011 Exempt Full-time equivalent employment 786.608 802.176 813.599 Relation of obligations to outlays: 71.00 Total obligations 3.459.415 3.331.390 3,422,691 RAILROAD RETIREMENT BOARD 90.00 Outlays 3,459,415 3,331,390 3.422.691 Federal Funds This account funds interest on uncashed checks, military General and special funds: service credits, financial interchange advances, taxes on Tier [DUAL BENEFITS PAYMENTS ACCOUNT] FEDERAL WINDFALL SUBSIDY I railroad retirement benefits, and a direct Federal subsidy For payment to the Dual Benefits Payments Account. authorized to the rail pension fund. under section 15(d) of the Railroad Retirement Act of 1974, [$261,000,000] $240,000,000. which shall include amounts becoming available in fiscal year [1995] 1996 pursuant to section 224(c)(1)(B) SPECIAL MANAGEMENT IMPROVEMENT FUND of Public Law 98-76; and in addition, an amount, not to exceed To effect management improvements, including the reduction of 2 percent of the amount provided herein. shall be available propor- backlogs, accuracy of taxation accounting, and debt collection, tional to the amount by which the product of recipients and the [$1,640,000] $659,000, to be derived from the railroad retirement average benefit received exceeds [$261,000,000] $240,000,000: Pro- accounts and railroad unemployment insurance account: Provided, vided, That the total amount provided herein shall be credited in That these funds shall supplement, not supplant. existing resources 12 approximately equal amounts on the first day of each month devoted to such operations and improvements. (Departments of Labor, in the fiscal year. (Departments of Labor, Health and Human Serv- Health and Human Services, and Education, and Related Agencies ices, and Education, and Related Agencies Appropriations Act, 1995.) Appropriations Act, 1995.) Program and Financing (in thousands of dollars) Program and Financing (in thousands of dollars) Identification code 60-0111-0-1-601 1994 actual 1995 est. 1996 est. Identification code 60-0200-0-1-601 1994 actual 1995 est. 1996 est. Program by activities: Program by activities: 10.00 Total obligations (object class 41.0) 269.365 261.010 240.009 10.00 Total obligations 3.195 1.640 659 Financing: Financing: 25.00 Unobligated balance expiring 7.640 25.00 Unobligated balance expiring 105 39.00 Budget authority 277.005 261.010 240.009 40.00 Budget authority (appropriation) 3.300 1.640 659 Budget authority: Relation of obligations to outlays: 40.00 Appropriation 277 000 261.000 240.000 71.00 Total obligations 3.195 1.640 659 1048 -Continued THE BUDGET FOR FISCAL YEAR General and special funds-Continued 00.02 Administrative expenses 16,828 17,031 17 FEDERAL PAYMENTS TO THE RAILROAD RETIREMENT ACCOUNTS- 10.00 Total obligations 83.252 87,131 86.500 Continued Financing: SPECIAL MANAGEMENT IMPROVEMENT FUND-Continued 39.00 Budget authority 83,252 87.131 86 Program and Financing (in thousands of dollars)-Continued Budget authority. Current: Identification code 60-0200-0-1-601 1994 actual 1995 est. 1996 est. 40.26 Appropriation (trust fund. definite) 16.828 17.031 17 Permanent: 72.40 Obligated balance. start of year: Unpaid obligations: 60.27 Appropriation (trust fund. indefinite) 66.424 70.100 68.900 Treasury balance 119 119 74.40 Obligated balance. end of year: Unpaid obligations: Relation of obligations to outlays: Treasury balance -119 -119 -119 71.00 Total obligations 83,252 87,131 86 90.00 72.40 Outlays 3,076 1,640 659 Obligated balance. start of year: Unpaid obligations: Treasury balance 1.423 1.422 1.422 74.40 Obligated balance. end of year: Unpaid obligations: Object Classification (in thousands of dollars) Treasury balance -1.422 -1.422 -1.422 Identification code 60-0200-0-1-601 1994 actual 1995 est. 1996 est. 90.00 Outlays 83,253 87,131 86,500 Personnel compensation: Note.-Appropriations language for the FY 1996 request for administrative expenses a included with the limitation 11.1 Full-time permanent 1.992 1.124 528 on administration of the Rail Industry Pension Fund. 11.3 Other than full-time permanent 22 12 11.5 Other personnel compensation 474 110 The Board administers a separate fund for unemployment 11.9 Total personnel compensation 2.488 1.246 528 and sickness insurance payments. Administrative exper 12.1 Civilian personnel benefits 459 281 124 are financed from employer unemployment taxes. 25.1 Advisory and assistance services 18 25.2 Other services 12 10 1 WORKLOAD 26.0 Supplies and materials 43 5 1990 1993 31.0 1994 Equipment 1995 est 1996 est. 193 80 actual actual actual Unemployment claims 300.351 206.509 190.950 170.000 166 99.9 Total obligations 3.195 1.640 659 Cumulative workload decline (%) -31% -36% -43% -45% Sickness Claims 269,926 201.977 205.528 195.000 191 Personnel Summary Cumulative workload decline (%) -25% -24% -28% -29% Identification code 60-0200-0-1-601 Object Classification (in thousands of dollars) 1994 actual 1995 est. 1996 est. Total compensable workyears: Identification code 60-8051-0-7-603 1994 actual 1995 est. 1996 est. 1001 Full-time equivalent employment 58 31 14 1005 Full-time equivalent of overtime and holiday hours 42.0 10 3 Insurance claims and indemnities 66,424 70,100 68 93.0 Limitation on expenses 16.828 17.031 17.600 99.9 Total obligations 83.252 87.131 86.500 REGIONAL RAIL TRANSPORTATION PROTECTIVE ACCOUNT Program and Financing (in thousands of dollars) Personnel Summary Identification code 60-0110-0-1-603 1994 actual 1395 est. 1996 est. Identification code 60-8051-0-7-603 1994 actual 1995 est. 1996 est. Total compensable workyears Relation of obligations to outlays: 1001 71.00 Total obligations Full-time equivalent employment 293 280 1005 72.40 Obligated balance. start of year: Unpaid obligations: Full-time equivalent of overtime and holiday hours 1 Treasury balance 9 5 5 74.40 Obligated balance. end of year: Unpaid obligations: Treasury balance -5 -5 -5 RAIL INDUSTRY PENSION FUND 90.00 Outlays 4 Program and Financing (in thousands of dollars) Under the Regional Rail Reorganization Act, this appropria- Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. tion provides the Railroad Retirement Board with funds to administer certain aspects of an employee protection agree- Program by activities: ment, benefit schedule, and other functions. 10.00 Total obligations 2.948.244 2.962.663 2 100 Financing: Unobligated balance available. start of year Trust Funds 21.40 Treasury balance 15.025 9,540 U.S. Securities: RAILROAD UNEMPLOYMENT INSURANCE TRUST FUND 21.41 Par value -10.677.999 -10.596,378 -10.586.838 [LIMITATION ON RAILROAD UNEMPLOYMENT INSURANCE 21.42 Unrealized discounts 80.172 ADMINISTRATION FUND] Unobligated balance available. end of year: 24.40 Treasury balance -9.540 [For further expenses necessary for the Railroad Retirement Board, U.S. Securities: for administration of the Railroad Unemployment Insurance Act, not 24.41 Par value 10.596.378 10.586.838 10 838 less than $17,031.000 shall be apportioned for fiscal year 1995 from 24.42 Unrealized discounts moneys credited to the railroad unemployment insurance administra- tion fund.] (Departments of Labor, Health and Human Services, and 39.00 Budget authority (gross) 2.952.280 2.962.663 2.985.100 Education, and Related Agencies Appropriations Act, 1995.) Budget authority: Program and Financing (in thousands of dollars) 60.27 Appropriation (trust fund. indefinite) 3.092.596 3,364,096 3.408.351 60.45 Portion precluded from obligation -144.352 -405.133 -426.951 Identification code 60-8051-0-7-603 1994 actual 1995 est. 1996 est. 63.00 Appropriation (total) 2.948.244 2.958.963 2.981.400 68.00 Program by activities: Spending authority from offsetting collec- tions 00.01 Benefit payments 4.036 66.424 70.100 68.900 3.700 3.700 RAILESAB RETIREMENT -Continued OTHER INDEPENDENT AGENCIES Trust Continued 1049 Relation of obligations to estlays: costs of such workloads within the remainder of the existing limita- D Total obligations 2.948.244 2,962,663 2.985.100 tion has been achieved: Provided further, That for fiscal year 1995 0 Obligated balance. start of year: Unpaid obli- only, notwithstanding any other provision of law, no portion of this gations: Treasury balance 215.092 217.563 219,863 limitation shall be available for payments of standard level user 74.40 Obligated balance. end of year: Unpaid obli- gations: Treasury balance -217.563 -219.863 -222.563 charges pursuant to section 210(j) of the Federal Property and Admin- istrative Services Act of 1949, as amended (40 U.S.C. 490(j); 45 U.S.C. 87.00 Outlays (gross) 2.945.773 2.960.363 2.982.400 231-231u)]. (Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 1995.) Adjustments to gross budget authority and out- lays: Program and Financing (In thousands of dollars) 88.00 Offsetting collections from: Federal sources -4.036 -3.700 -3,700 1994 actual 1995 est. 1996 est. 89.00 Budget authority (net) 2,948,244 2.958,963 2.981,400 90.00 Outlays (net) 2,941,737 2.956,663 2.978.700 Program by activities: Direct program: Rail Industry Pension Fund: Railroad retirees generally receive the equivalent to a social Total. Rail Industry Pension Fund 46.286 45,981 46,900 Railroad Social Security Equivalent Benefit: security benefit and a rail industry pension collectively bar- Total. Railroad Social Security Equivalent Benefit 24,784 25.600 26,100 gained like other private pension plans but embedded in Fed- Supplemental Annunity Pension Fund: eral law. Some 169,000 individuals also receive a "windfall" Total. Supplemental Annunity Pension Fund 2.082 2.100 2,100 benefit. Railroad Unemployment Insurance Trust Fund: Total. Railroad Unemployment Insurance Trust Fund 17,600 Status of Funds (in thousands of dollars) Total. direct program 73.152 73,681 92.700 Reimbursable program 4.036 3.700 3,700 Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. Total obligations 77.188 77,381 96,400 Unexpended balance. start of year: Financing: 0100 Treasury balance -15.025 Offsetting collections from: Trust funds -4.036 -3,700 -3.700 U.S. Securities: Unobligated balance expiring 639 200 0101 Par value 10,456,576 10.596.378 11.071,045 0102 Unrealized discounts -80.172 -33.763 -52.987 Limitation 73.791 73.881 92.700 0199 Total balance. start of year 10.361.379 10.562.615 11.018.058 Relation of obligations to outlays: Cash income during the year: Obligations incurred. net 73.152 73.681 92.700 Governmental receipts: Obligated balance. start of year 6.900 6.900 0200 Refunds. Rail Industry Pension Fund -28.250 -14.000 -7.500 Obligated balance. end of year -6.900 -6.900 -6.900 0201 Taxes. Rail Industry Pension Fund 2.263.302 2.314.800 2.325.000 0202 RUI Repayment Taxes. Rail Industry Pension Fund 32.645 Outlays from limitation 66.252 73.681 92.700 Intragovernmental transactions: 240 Interest and profits on investments in public debt securities. Rail Industry Pension Fund 525,481 933.200 938.900 The table below shows the continued decline anticipated 0242 Federal payments to railroad retirement trust in major workloads. funds. Rail Industry Pension Fund 384.046 178.106 200.106 Offsetting collections: 1992 1993 1994 1995 est. 1996 est. actual actual actual 0280 Rail Industry Pension Fund 4.036 3.700 3.700 Pending. start of year 17.001 16.710 12.437 11.937 12.237 0297 Income under present law 3.181.260 3.415,806 3.460.206 New Railroad Retirement applications 67.086 59.606 56,267 60.000 56.000 New Social Security certifications 7.956 7.353 6.951 7.000 7.000 0299 Total cash income 3,181,260 3.415.806 3.460.206 Total dispositions (excluding partial Cash outgo during year: awards) 75.333 71.232 63.718 66.700 64.040 0500 Rail Industry Pension Fund -2.945,773 -2.960.363 -2.982.400 Pending. end of year 16.710 12.437 11.937 12.237 11.197 0645 Repayment adjustment -34.251 Unexpended balance. end of year: As shown below, the Board projects this workload will con- U.S. Securities: 0701 Par value 10.596.378 11.071.045 11.578.796 tinue to decline, as the number of beneficiaries on the rolls 0702 Unrealized discounts -33.763 -52.987 -82.932 continues to decline. 1980 1990 1993 1994 1995 est. 1996 est 0799 Total balance. end of year 10.562.615 11.018.058 11.495.864 actual actual actual actual Total beneficiaries 1.009.500 894.196 843.204 819.931 800.400 777.300 Object Classification (in thousands of dollars) In recognition of the continuing decline in virtually all its Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. major workloads, the Board will explore and adopt new ap- proaches to improve service to beneficiaries. Direct obligations: 42.0 Insurance claims and indemnities 2.848.942 2.874.600 2.895.600 Object Classification (in thousands of dollars) 43.0 Interest and dividends 15.452 4.000 4.000 93.0 Administrative expenses (see separate schedule) 79.814 80.363 81.800 Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. 99.0 Subtotal. direct obligations 2,944,208 2.958.963 2.981.400 Limitation Acct-Direct Obligations: 99.0 Subtotal. direct obligations 4.036 3.700 3.700 Personnel compensation: 11.1 Full-time permanent 45.620 46.079 58.212 99.9 Total obligations 2.948.244 2.962.663 2,985,100 11.3 Other than full-time permanent 1.073 1.181 1.075 11.5 Other personnel compensation 741 621 788 11.9 Total personnel compensation 47,434 47.881 60.075 12.1 Civilian personnel benefits 9.403 9.691 12.573 LIMITATION ON ADMINISTRATION 13.0 Benefits for former personnel 847 122 150 For necessary expenses for the Railroad Retirement Board[. 21.0 Travel and transportation of persons 571 658 896 22.0 Transportation of things 149 204 $73,881,000] in administering the Railroad Retirement Act and the 188 231 Rental payments to GSA 4.700 2.680 3.653 Railroad Unemployment Insurance Act, $92,700,000, to be derived 23.3 Communications. utilities. and miscellaneous charges 2.788 3.399 4 389 as authorized by section 15(h) of the Railroad Retirement Act and 24.0 Printing and reproduction 357 411 608 section 10(a) of the Railroad Unemployment Insurance Act, from the 25.1 Advisory and assistance services 475 452 450 accounts referred to in those sections (from the railroad retirement 25.2 Other services 5.135 6 491 7.852 accounts: Provided, That $200,000 of the foregoing amount shall be 26.0 Supplies and matenals 862 1.181 1.400 available only to the extent necessary to process workloads not antici- 31.0 Equipment 392 566 450 93.0 Limitation on expenses -73.152 -73.681 -92.700 pated in the budget estimates and after maximum absorption of the 1050 -Costinued Treat rende-Continute THE BUDGET FOR FISCAL YEAR 1996 LIMITATION ON ADMINISTRATION-Continued 31.0 Equipment 91 20 14 93.0 Limitation on expenses -6,662 -6,682 -5.700 Object Classification (in thousands of dollars)-Continued 99.0 Subtotal. limitation account-direct Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. 99.0 Subtotal. limitation acct-direct obligations Personnel Summary Limitation Acct-Reimbursable Obligations: Personnel compensation: Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. 11.1 Full-time permanent 2,765 2.512 2.520 8001 Total compensable workyears: Full-time equivalent 11.3 Other than full-time permanent 30 30 30 employment 92 90 85 11.5 Other personnel compensation 40 40 40 11.9 Total personnel compensation 2.835 2.582 2.590 12.1 Civilian personnel benefits 555 515 517 21.0 Travel and transportation of persons 45 45 45 SUPPLEMENTAL ANNUITY PENSION FUND 22.0 Transportation of things 25 25 25 23.3 Communications. utilities. and miscellaneous charges 255 233 233 Program and Financing (in thousands of dollars) 24.0 Printing and reproduction 30 25.2 Other services 231 240 240 Identification code 60-8012-0-7-601 1994 actual 1995 est. 1996 est. 26.0 Supplies and materials 40 40 35 31.0 Equipment 20 20 15 Pregram by activities: 93.0 Limitation on expenses -4.036 -3.700 -3.700 10.00 Total obligations 94,008 91.200 86,700 99.0 Financing: Subtotal. limitation acct-reimbursable obligations Unobligated balance available. start of year: 21.40 Treasury balance 1.645 230 Personnel Summary 21.41 U.S. Securities: Par value -49.538 -42.327 -42.097 Unobligated balance available. end of year: Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. 24.40 Treasury balance -230 24.41 U.S. Securities: Par value 42.327 42.097 42.097 Limitation account-direct Total compensable workyears: 60.27 Budget authority (appropriation) (trust fund. indefi- 6001 Full-time equivalent employment 1.221 1.193 1,386 nite) 88.212 91.200 86,700 6005 Full-time equivalent of overtime and holiday hours 3 1 1 Limitation account-reimbursable: Relation of obligations to outlays: 7001 Total compensable workyears: Full-time equivalent 71.00 Total obligations 94,008 91.200 86.700 employment 44 44 44 72.40 Obligated balance. start of year: Unpaid obligations: Treasury balance 2.129 1.587 1.587 74.40 Obligated balance. end of year: Unpaid obligations: Treasury balance -1.587 -1.587 -1.587 90.00 Outlays 94,550 91.200 86.700 LIMITATION ON THE OFFICE OF INSPECTOR GENERAL For expenses necessary for the Office of Inspector General for audit. investigatory and review activities, as authorized by the Inspector In addition to rail social security, rail industry pensions General Act of 1978, as amended, not more than [$6,682,000] and special windfalls, the Railroad Retirement Board pays $6,700,000, to be derived from the railroad retirement accounts and supplemental annuities to rail workers retiring at age 60 railroad unemployment insurance account. (Departments of Labor, with 30 years of creditable rail service or at age 65 with Health and Human Services, and Education, and Related Agencies 25-29 years of creditable service. Monthly benefit amounts Appropriations Act, 1995.) are calculated from a base of $23, adding $4 for every year of service over 25, up to a maximum monthly benefit of $43. Program and Financing (in thousands of dollars) Employers finance benefits on a pay-as-you-go basis by a 1994 actual 1995 est. 1996 est. cents-per-hour tax, currently established at 33 cents per hour. Program by activities: Status of Funds (in thousands of dollars) Operations (total obligations) 7.012 7.094 7.225 Financing: Identification code 60-8012-0-7-601 1994 actual 1995 est. 1996 est. Offsetting collections from trust funds -350 -412 -525 Unobligated balance expiring 80 Unexpended balance. start of year: 0100 Treasury balance 3.794 6,912 9.661 Limitation 6,742 6,682 6,700 0101 U.S. Securities: Par value 49.538 42.327 36.781 0199 Total balance. start of year 53.332 Relation of obligations to outlays: 49.239 46,442 Obligations incurred. net 7.012 7.094 7.225 Cash income during the year: Obligated balance. start of year 640 Governmental receipts: 640 0200 Obligated balance. end of year -640 -640 -640 Supplemental annuity taxes. Supplemental Annuity Pension Fund. RRB 89.847 86,400 83.800 Outlays from limitation 6.372 7.094 7.225 0201 Refunds. Supplemental Annuity Pension Fund. Re- funds -1.699 -800 -500 Intragovernmental transactions: Object Classification (in thousands of dollars) 0240 Interest and profits on investments in public debt securities. Supplemental Annuity Pension Fund. Identification code 60-8011-0-7-601 1994 actual 1995 est. 1996 est. RRB 2.307 2.800 2,400 0241 Unnegotiated checks. Supplemental Annuity Pen- Personnel compensation: sion Fund. RRB 2 3 3 11.1 Full-time permanent 4,483 4.757 4.770 0297 Income under present law 90.457 88.403 85.703 11.5 Other personnel compensation 99 105 93 0299 Total cash income 90,457 88.403 85.703 11.9 Total personnel compensation 4.582 4.862 4.863 Cash outgo during year: 12.1 Civilian personnel benefits 1.189 1.285 1,254 0500 Supplemental Annuity Pension Fund -94,550 -91.200 -86.700 21.0 Travel and transportation of persons 430 370 447 Unexpended balance. end of year: 22.0 Transportation of things 12 10 8 0700 Treasury balance 6,912 9.661 11.924 23.3 Communications. utilities. and miscellaneous charges 16 10 10 0701 U.S. Securities: Par value 42.327 36.781 33,521 24.0 Printing and reproduction 2 25.2 Other services 299 105 78 0799 Total balance. end of year 49.239 46.442 45,445 26.0 Supplies and materials 41 20 26 RESOLUTION CORPORATION OTHER INDEPENDENT AGENCIES Federal Funds 1051 Object Classification (in thousands of dollars) 0299 Total cash income 8,059,325 8,443,581 8,623,082 Cash outgo during year: 1994 actual 1995 est. 1996 est. 0500 Railroad social security equivalent benefit account -7.917.276 -8.148.400 -8.347.000 code 60-8012-0-7-601 Unexpended balance. end of year: 42.0 Insurance claims and indemnities 93.109 90,400 86,500 0700 Treasury balance 11.792 55.640 83,774 43.0 Interest and dividends 899 800 200 0701 U.S. Securities: Par value 1,564,247 1,815,580 2.063.528 1.576.039 1.871.220 2.147,302 99.9 Total obligations 94,008 91.200 86.700 0799 Total balance. end of year Object Classification (in thousands of dollars) RAILROAD SOCIAL SECURITY EQUIVALENT BENEFIT ACCOUNT Identification code 60-8010-0-7-601 1994 actual 1995 est. 1996 est. Program and Financing (in thousands of dollars) 42.0 Insurance claims and indemnities 4,828,494 4,903,500 4,985,500 43.0 Interest and dividends 2.723 1.000 1.000 Identification code 60-8010-0-7-601 1994 actual 1995 est. 1996 est. 92.0 Repayment of benefit advances and loans 3.153.257 3.343.100 3.412,200 99.9 Total obligations 7,984.474 8,247,600 8.398.700 Pregram by activities: 10.00 Total obligations 7,984,474 8.247,600 8,398.700 Financing: Unobligated balance available. start of year: 21.40 Treasury balance -20,772 11.613 RESOLUTION TRUST CORPORATION 21.41 U.S. Securities: Par value -1.531.862 -1,564,247 -1.552,634 Unobligated balance available. end of year: Federal Funds 24.40 Treasury balance -11.613 24.41 U.S. Secunties: Par value 1,564,247 1.552.634 1.552.634 General and special funds: OFFICE OF INSPECTOR GENERAL 39.00 Budget authority 7,984,474 8,247,600 8.398.700 For necessary expenses of the Office of Inspector General in carry- Budget authority: ing out the provisions of the Inspector General Act of 1978, as amend- 60.27 Appropriation (trust fund. indefinite) 8.061.573 8.415.637 8.594.948 ed; [$32,000,000] $11,400,000. (Departments of Veterans Affairs and 60.45 Portion preciuded from obligation -77.099 -168.037 -196.248 Housing and Urban Development, and Independent Agencies Appro- 8,247.600 8.398.700 priations Act, 1995.) 63.00 Appropriation (total) 7,984,474 Program and Financing (in thousands of dollars) Relation of obtigations to outlays: 71.00 Total obligations 7,984,474 8.247,600 8.398.700 Identification code 22-1500-0-1-373 1994 actual 1995 est. 1996 est. 72.40 Obligated balance. start of year: Unpaid obligations: Treasury balance 31.582 98.780 197.980 Pregram by activities: Obligated balance. end of year: Unpaid obligations 10.00 Total obligations 30.193 32,000 11.400 Treasury balance -98.780 -197.980 -249.680 Financing: 90.00 Outlays 7,917,276 8,148,400 8.347.000 25.00 Unobligated balance expiring 4.121 40.00 Budget authority (appropriation) 34.314 32.000 11.400 All railroad retirees receive the equivalent of a social secu- rity benefit, and they may also receive other add-ons includ- Relation of obligations to outlays: ing rail industry pension payments, windfall payments, and 71.00 Total obligations 30.193 32.000 11.400 72.90 Obligated balance. start of year: Fund balance 8.166 6,110 8.670 supplemental annuities. Social security benefits for former 73.00 Obligated balance transferred. net -5,600 railroad employees are funded by the social security trust 74.90 Obligated balance. end of year: Fund balance -6.110 -8.670 funds, and rail industry pension payments are the responsibil- 77.00 Adjustments in expired accounts -1.438 ity of the rail sector. 90.00 Outlays 30.811 29,440 14.470 Status of Funds (in thousands of dollars) Office of Inspector General activities include audits and Identification code 60-8010-0-7-601 1994 actual 1995 est. 1996 est. investigations, and the prevention and detection of fraud, Unexpended balance. start of year: waste, and mismanagement in the disposition of insolvent 0100 Treasury balance -20.773 11.792 55,640 0101 U.S. Securities: Par value 1,454,763 1,564,247 1.815.580 savings and loan institutions and their assets by the Resolu- tion Trust Corporation (RTC). The Office of Inspector General 0199 Total balance. start of year 1.433.990 1,576,039 1.871.220 (OIG) was established in April 1990 in accordance with the Cash income during the year: Inspector General Act of 1978, as amended and the Financial Governmental receipts: 0200 Railroad Soc. Sec. equivalent ben. acct.. Taxes 1.807.957 1.854.600 1,871,000 Institutions Reform, Recovery, and Enforcement Act. 0201 Railroad Soc. Sec. equivalent ben. acct.. Receipts The fiscal year 1996 budget is for the final three months transferred to Federal hospital insurance trust of the RTC OIG through December 31, 1995. After the RTC fund -394.400 --356.000 -364.000 sunsets on December 31, 1995, all RTC assets and liabilities 0202 Railroad Soc. Sec. Equivalent Ben. Acct.. Refunds -14.488 -4.000 -4.000 will be transferred to the FSLIC Resolution Fund and the Intragovernmental transactions: 0240 Railroad Soc. Sec. equivalent ben. acct.. Interest RTC OIG's operations will merge with the FDIC OIG. and profits on investments in public debt secu- rities 77.902 115.700 128.500 Object Classification (in thousands of dollars) 0241 Railroad Soc. Sec. equivalent ben. acct.. Income tax credits 56.073 39.181 51.182 Identification code 22-1500-0-1-373 1994 actual 1995 est. 1996 est. 0242 Railroad Soc. Sec. equivalent ben. acct.. Interest Personnel compensation transferred to Federal hospital insurance trust 11.1 Full-time permanent 16.885 18,174 4.982 fund -18.531 -36.000 -38.000 11.5 Other personnel compensation 777 727 216 13 Railroad Soc. Sec. equivalent ben. acct. Receipts from Federal old-age survivors ins. trust fund 3.419.562 3,669.000 3,773.000 11.9 Total personnel compensation 17.662 18.901 5.198 0244 Railroad Soc. Sec. equivalent ben. acct.. Receipts 12.1 Civilian personnel benefits 6.086 6.224 3,060 from Federal disability ins. trust fund 105.955 47,000 34,000 Benefits for former personnel 1.605 13.0 0245 Railroad Soc. Sec. equivalent ben. acct.. Advances 21.0 Travel and transportation of persons 1.893 2.337 546 from the general fund 3.019.295 3.114.100 3.171,400 22.0 Transportation of things 129 184 250 0297 Income under present law 8,059.325 8,443,581 8.623.082 23.2 Rental payments to others 1.306 1550 360 Clinton Presidential Records Digital Records Marker This is not a presidential record. This is used as an administrative marker by the William J. Clinton Presidential Library Staff. This marker identifies the place of a tabbed divider. Given our digitization capabilities, we are sometimes unable to adequately scan such dividers. The title from the original document is indicated below. I Divider Title: UNITED MINE WORKERS OF AMERICA BENEFIT FUNDS DESCRIPTION: The UMWABF were established by the Coal Industry Retiree Health Benefit Act of 1992 to take over paying for medical care for a selected group of retired miners and their dependents who were eligible for health care from the private United Mine Workers of America Benefit Plans. The Fund's trustees represent the UMWA and various coal companies. The Fund is financed by assessments on current and former signatories to labor agreements with the UMW; transfers from an overfunded UMW pension fund; and commencing in 1996, transfers from the Abandoned Mine Land Reclamation Fund. FY 1996 BUDGET PROPOSAL: The UMWA Combined Benefit Fund has a FY 1996 budget authority of $333.152 million, a decrease of $7.886 million from FY 1995. The UMWA 1992 Benefit Plan has a FY 1996 budget authority of $10.632 million, an increase of $263,000 from FY 1995 authorities. UMWABF has no FTE. AGENCY PROPOSAL: UMWABF argues that it is not a federal agency subject to the NPR phase II review. UMWABF argues that the Coal Act specifically recognizes these trusts as private, multi-employer plans as described in Section 302(c)(5) of the Labor Management Relations Act and employee welfare benefit plans within the meaning of the Employee Retiree Income Security Act. The trusts are administered by boards of trustees who are appointed by private persons and entities. DECISION OPTIONS: A. Accept the UMWABF position and drop the funds from the NPR review. B. Review the UMWABF position further and reschedule for later Steering Committee review. ADVISORY GROUP RECOMMENDATION: A. Accept the UMWABF position and drop the funds from the NPR review. RATIONALE: The fund does not appear to be a Federal agency. STEERING COMMITTEE DECISION i:\phaseinsateam\session4\recumwbf.dod UMWA HEALTH AND RETIREMENT FUNDS 4455 Connecticut Avenue, NW Washington, DC 20008 Telephone: (202) 895-3700 BY MESSENGER February 21, 1995 The National Performance Review 750 17th Street, N.W. Suite 200 Washington, DC 20006 Gentlemen: As I discussed on the phone with Jerry Nikolaus on Friday, February 17, the UMWA Health & Retirement Funds has now received two faxes from your organization requesting our participation in the National Performance Review as a small Federal agency. The first fax, received on February 9, 1995, concerned an agency liaison meeting on February 13. I called your office on February 10 and left a voice mail message requesting information about the meeting but received no response. No representative of the Funds attended the meeting. On February 17, we received a fax directing submission of an option paper (no instructions provided) by close of business today. The Funds are a collection of collectively-bargained Taft- Hartley trusts that provide pension and health benefits to retired coal miners and their eligible beneficiaries. The UMWA Combined Benefit Fund, and the UMWA 1992 Benefit Plan, two of the health benefit trusts that comprise the Funds, were created pursuant to the Coal Industry Retiree Health Benefit Act of 1992. However, Sections 9702 and 9712 of the Coal Act specifically recognize these trusts as a private, multiemployer plans as discribed in Section 302 (c) (5) of the Labor Management Relations Act and employee welfare benefit plans within the meaning of the Employee Retiree Income Security Act. These trusts are administered by boards of trustees who are appointed by private persons and entities. The Funds' health benefit trusts also have entered into arrangements with the Health Care Financing Administration and the Department of Labor to provide Medicare Part B and Federal black lung services to Funds' beneficiaries; however, neither arrangement makes the Funds a Federal agency for any purpose. Enclosed please find a copy of the Funds' most recent annual report, which describes the Funds' organization and financial The National Performance Review Page 2 status. As I told Mr. Nikolaus, the Funds do not believe that they are a small Federal agency subject to the National Performance Review and will not participate in the review until there is an appropriate explanation of the need to do SO. If you have any further questions, please contact me. My direct dial number is (202) 895-3751. Sincerely, Margaret m. Topp Toppywa Margaret M. Topps Deputy General Counsel MMT:as (mt\NPR) Enclosure OTHER INDEPENDENT AGENCIES 1067 THOMAS JEFFERSON COMMEMORATION Relation of obligations to outlays: 71.00 Total obligations 275.450 341.038 333.152 COMMISSION 90.00 Outlays 275,450 341.038 333.152 SALARIES AND EXPENSES Program and Financing (in thousands of dollars) The Fund was established by the Coal Industry Retiree Health Benefit Act of 1992 to take over paying for medical Identification code 48-0961-0-1-808 1994 actual 1995 est. 1996 est. care of retired miners and their dependents who were eligible for health care from the private 1950 and 1974 United Mine Pregram by activities: 10.00 Total obligations 108 Workers of America Benefit Plans. The Fund's trustees rep- resent the United Mine Workers of America and coal compa- Financing: 21.40 Unobligated balance available. start of year: Treasury nies. The Fund is financed by assessments on current and balance -90 -44 former signatories to labor agreements with the United Mine 24.40 Unobligated balance available. end of year: Treasury Workers; transfers from an overfunded United Mine Workers balance 44 pension fund; and, commencing in 1996, transfers from the 25.00 Unobligated balance expiring 44 Abandoned Mine Land Reclamation Fund. 40.00 Budget authority (appropriation) 62 Summary of Receipts (in thousands of dollars) Relation et obligations to outlays: 1994 actual 1995 est. 1996 est. 71.00 Total obligations 108 Premiums 205.450 271.038 263.152 72.40 Obligated balance. start of year: Unpaid obligations: Transfers from UMWA pension plan. combined benefit fund 70.000 70,000 Treasury balance 1 26 Transfers from Abandoned Mine Land Reclamation Fund 70.000 74.40 Obligated balance. end of year: Unpaid obligations: Treasury balance -26 Total receipts 275.450 341.038 333.152 90.00 Outlays 83 26 UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN The Thomas Jefferson Commemorative Commission was es- Program and Financing (in thousands of dollars) tablished by P.L. 102-343 to honor the 250th anniversary of Thomas Jefferson's birth. The Commission planned and Identification code 95-8260-0-7-551 1594 actual 1995 est. 1996 est. developed activities to commemorate the anniversary. The Commission expired in 1994. Pregram by activities: 10.00 Total obligations (object class 42.0) 10.510 10.369 10.632 Object Classification (in thousands of dollars) Financing: 60.27 Budget authority (appropriation) (trust fund. indefi- trfication code 48-0961-0-1-808 1994 actual 1995 est. :996 est. nite) 10.510 10.369 10.632 Personnel compensation: 11.1 Full-time permanent 24 Relation et obligations to outlays: 5 71.00 Total obligations 10.510 10.369 10.632 11.3 Other than full-time permanent Total personnel compensation 29 90.00 11.9 Outlays 10.510 10.369 10.632 12.1 Civilian personnel benefits 7 21.0 Travel and transportation of persons 4 The Plan was established by the Coal Industry Retiree 23.2 Rental payments to others 5 23.3 Communications. utilities. and miscellaneous charges 3 Health Benefit Act of 1992. It pays for health care of miners 24.0 Printing and reproduction 3 retired between July 21, 1992 and September 30, 1994, and 25.3 Purchases of goods and services from Government their dependents. who are eligible for benefits under an em- accounts 20 ployer plan and cease to be covered. usually because an em- 26.0 Supplies and matenais 1 41.0 Grants. subsidies. and contributions 36 ployer is out of business. Plan trustees are appointed by the United Mine Workers of America and the Bituminous Coal 99.9 Total obligations 108 Operators Association. a coal industry bargaining group. The Plan is supported by signatories to the 1988 labor agreement Personnel Summary with the United Mine Workers of America. Identification code 48-0961-0-1-808 1994 actual 1995 est. :996 est. Summary of Receipts (in thousands of dollars) 1001 Total compensable workyears: Full-time equivalent 1994 actual 1995 est. 1996 est. 1 Premiums 10.510 10.369 10.632 employment Total receipts 10.510 10.369 10,632 UNITED MINE WORKERS OF AMERICA UNITED STATES ENRICHMENT BENEFIT FUNDS CORPORATION Trust Funds Federal Funds UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND Public enterprise fund: Program and Financing (in thousands of dollars) UNITED STATES ENRICHMENT CORPORATION FUND Identification code 95-8295-0-7-551 1994 actual 1995 est. 1396 est. Program and Financing (in thousands of dollars) Program by activities: identification code 95-4054-0-3-271 1994 actual 1995 est. 1996 est. 10.00 Total obligations (object class 42.0) 275.450 341.038 333.152 Program by activities: Financing: 00.01 Operating Expenses 1.418.749 1.211.700 1.320.143 60.27 Budget authority (appropriation) (trust fund. inden- 00.02 Capital Expenses 46.500 41.300 40.000 nite) 275.450 341.038 333.152 10.00 Total obligations 1.465.249 1.253.000 1.350.143