Railroad Retirement Board:� Status of Amounts Transferred Pursuant to, B-287158, October 10, 2002

B-287158 Oct 10, 2002 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights The attendant "windfalls" were benefits in excess of what the individuals would have received had they worked exclusively within one system. Payments authorized under section 401 of the Railroad Retirement Solvency Act of 1983 were intended to recompense the railroad retirement system for having covered the appropriation shortfall in paying the windfall benefits between 1974 and 1981. " were to be repaid only to the extent that funds were appropriated for that purpose. Since it was not intended that the Railroad Retirement Board repay the transferred amounts from its accounts. It is not under any legal obligation regarding these funds absent an appropriation for such purpose. " would be "repaid to the general fund to the extent sums are appropriated for the purpose." 45 U.S.C. View Decision Railroad Retirement Board: Status of Amounts Transferred Pursuant to Section 401 of the Railroad Retirement Solvency Act of 1983, B-287158, October 10, 2002 DIGEST DECISION The Bureau of the Public Debt, Department of the Treasury (Treasury) requests our legal opinion concerning the treatment of $2.1 billion transferred from the general fund to the Railroad Retirement Board (RRB) in three installments pursuant to section 401 of the Railroad Retirement Solvency Act of 1983 (the 1983 Act), 45 U.S.C. Sec. 231n. Under the 1983 Act, the transferred amounts, called "loans," would be "repaid to the general fund to the extent sums are appropriated for the purpose." 45 U.S.C. Sec. 231n(d)(6). In the 16 years since the last amount was transferred, the Congress has not appropriated funds for the purpose of repayment of the amounts transferred. Treasury maintains that the transferred amounts are loans to RRB that RRB must repay to the Treasury's general fund. Treasury insists that the RRB should either perfect the loans by requesting a repayment appropriation or request the Congress to forgive the loans. RRB considers the amounts not loans but payments to RRB for shortfalls in its appropriations for certain retirement benefits paid out of the Railroad Retirement Account between 1974 and 1981. RRB asserts that it is under no obligation to repay the amounts, nor does it have a legal obligation to take either of the actions Treasury has proposed. For the reasons stated below, we agree with RRB's position regarding these payments. BACKGROUND The RRB is an independent agency within the executive branch of the federal government charged with administering retirement-survivor and unemployment-sickness benefit programs for railroad workers and their families. Railroad Retirement Act of 1974 (the 1974 Act), 45 U.S.C. Secs. 231-231u, 351-369 (1988); see generally, 69 Comp. Gen. 483, 484 (1990). Initially, as established in the 1930s, the railroad program was financed by contributions from rail employers and employees. However, numerous subsequent legislative changes increased federal financial involvement. See GAO, Railroad Retirement, Federal Financial Involvement (GAO/HRD 86-88, May 9, 1988, at 10-16). Under laws in effect prior to 1975, individuals with sufficient earnings under both the railroad retirement and social security programs could qualify for both railroad retirement and social security benefits, termed "dual benefits." The attendant so-called "windfalls" were benefits in excess of what individuals would have received had they worked exclusively within only one system. These dual benefits' windfalls were paid out of and seriously eroded the financial viability of the railroad retirement trust fund for years. Id. at 14. See also Givens v. Railroad Retirement Board, 720 F.2d 196, 198 (1983); H.R. Rep. No. 98-30 Part I, 98th Cong., 1st Sess. 19-20 (March 9, 1983), reprinted in 1983 U.S.C.C.A.N. 729. In response, the 1974 Act restructured the railroad retirement system by eliminating future accruals of dual benefits except for persons vested or "grandfathered in" as of December 31, 1974. /1/ The 1974 Act also authorized annual appropriations to fund this phase-out of dual benefits over a 25-year period (i.e., for fiscal years 1976-2000, then estimated at around $250 million annually). /2/ However, prior to fiscal year 1982, appropriations were not adequate to fully fund the total amount of vested dual benefit/windfall payments. Since the payment of these benefits was not limited to the amounts appropriated, the RRB continued to pay the windfall benefits from the railroad retirement account, which strained that account and contributed to a financial crisis in the system. This situation was stopped in fiscal year 1982, when 1981 amendments to the 1974 Act provided that dual benefits were to be paid from a separate dual benefits payments account and vested dual benefits were to be reduced so as not to exceed the annual appropriation.