U n i t e d S t a t e s G o v e r n m e n t

MEMORANDUM

FORM G-U5f(1-92)

R a i l r o a d R e t i r e m e n t B o a r d

L-2000-28

September 13, 2000

TO Kenneth P. Boehne 

Chief Financial Officer

FROM : Steven A. Bartholow^

General C o u n s e l'-^’

SUBJECT : Repayment of Amounts Transferred Pursuant to Section

15(d)(2) of the Railroad Retirement Act

This is in reply to your inquiry of August 28, 2000, regarding amounts transferred to 

the Railroad Retirement Account pursuant to section 15(d)(2) of the Railroad 

Retirement Act. Ms. Debra L. Hines, Assistant Commissioner, Office of Public Debt 

Accounting, Bureau of the Public Debt, in an August 24, 2000, letter to you, 

contends that these amounts were loans which are required to be repaid by 

appropriated funds.

This question arises under the Railroad Retirement Act of 1974 and the Railroad 

Retirement Solvency Act of 1983. The 1974 Act provided that the vested dual 

benefit components of annuities were to be funded from general revenues. 

However, the payment of the vested dual benefit was not limited to the amounts 

appropriated and consequently railroad retirement taxes were, for several years, 

used to cover the shortfall in the appropriation from general revenues.1 The 

Railroad Retirement Solvency Act of 1983 authorized funding to repay the Railroad 

Retirement Account by the amount previously expended from railroad retirement 

funds. It is this repayment mechanism that is in issue.

Section 15(d)(2) of the Railroad Retirement Act (as added by section 401 of the 

Railroad Retirement Solvency Act of 1983) provides that:

1 The 1981 amendments to the Railroad Retirement Act provided that in the future,

vested dual benefits were to be reduced so as not to exceed the annual appropriation.
- 2-

The Secretary of the Treasury—

(i) shall transfer from the general fund as a loan to the Board on 

January 1,1984, one-third of the special amount described in subdivision (3) 

of this subsection;

(ii) shall transfer from the general fund as a loan to the Board on 

January 1,1985, one-third of the special amount described in subdivision (3) 

of this subsection, plus an amount equal to the interest that one-third would 

have earned had it been in the Railroad Retirement Account since January 1, 

1984; and

(iii) shall transfer from the general fund as a loan to the Board on 

January 1,1986, the final one-third of the special amount described in 

subdivision (3) of this subsection, plus an amount equal to the interest that 

one-third would have earned had it been in the Railroad Retirement Account 

since January 1,1984.

Section 15(d)(6) of the Act provides that:

The amounts transferred as loans under subdivision (2) of this 

subsection shall be repaid to the general fund to the extent sums are 

appropriated for that purpose, and there are hereby authorized to be 

appropriated, in addition to any other sums authorized to be appropriated for 

the purposes of this Act and from any sums in the Treasury not otherwise 

appropriated, such sums as may be necessary to make such repayments.

The House of Representatives Report on the Railroad Retirement Solvency Act of 

1983 (H.R. Rep. No. 30, 98th Cong., 1st Sess. 54 (1983)) stated that “All sums 

borrowed would be repayable to the extent sums were appropriated for that 

purpose. The bill authorizes the appropriation of such sums as are necessary for 

that purpose.” Accordingly, any repayment of the loans would be made from 

general revenues.

Ms. Hines, relying on legal opinions by the Office of the Chief Counsel of the Bureau 

of Public Debt, contends that the payments made to the Railroad Retirement 

Account pursuant to section 15(d)(2) of the Railroad Retirement Act are loans from 

general revenues, and that the RRB has “the obligation and the responsibility to 

request the necessary appropriations to repay these loans or, as an alternative, 

request Congress to forgive repayment of the loans.”
The position of the Bureau of Public Debt that the payments were loans is not 

unreasonable based on the language of section 15(d)(2). However, both section 

15(d)(6) and the legislative history clearly state that repayment would be made to 

the extent funds are appropriated for that purpose. The statutory language clearly 

does not impose any obligation on Railroad Retirement trust funds, nor does it 

impose any obligation on the Board to request appropriations from general revenues 

or, for that matter, on Congress to appropriate funds from general revenues to repay 

the “loans." As was noted by the Board’s Executive Director in a memorandum 

dated September 1,1983, which you provided with your submission, the money to 

repay the loans from general revenues would be appropriated from general 

revenues, so that repayment would “not serve any practical financial purpose." That 

memorandum recommended that the RRB budget contain a request for such an 

appropriation only if OMB or Congress wants the loans repaid. It is my opinion that 

the RRB does not have a legal obligation to request a repayment appropriation or 

forgiveness of the debt.

MCLitt:cmw

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