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[House Report 109-569]
[From the U.S. Government Publishing Office]

109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-569

======================================================================

 
         RAILROAD RETIREMENT TECHNICAL IMPROVEMENT ACT OF 2006

                                _______
                                

 July 17, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

     Mr. Young of Alaska, from the Committee on Transportation and 
                Infrastructure, submitted the following

                              R E P O R T

                        [To accompany H.R. 5074]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Transportation and Infrastructure, to whom 
was referred the bill (H.R. 5074) to amend the Railroad 
Retirement Act of 1974 to provide for continued payment of 
railroad retirement annuities by the Department of the 
Treasury, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                       Purpose of the Legislation

    The bill amends the Railroad Retirement Act to authorize 
continuation of the use of the United States Treasury as the 
disbursing agent for certain railroad retirement benefits, 
rather than require the outsourcing of that function to a non-
federal entity.

                Background and Need for the Legislation

    H.R. 5074 was introduced by Mr. Young, Mr. Oberstar, Mr. 
LaTourette and Ms. Brown on April 4, 2006.
    The legislation was suggested by the Railroad Retirement 
Board (RRB), the Federal agency that administers the Railroad 
Retirement Act. This proposal grew out of an analysis of the 
impact of a provision of legislation enacted in the Railroad 
Retirement and Survivors' Improvement Act (RRSIA) of 2001, 
Public Law 107-90. As part of a comprehensive reform and 
modernization package, RRSIA mandated payment of so-called Tier 
II railroad retirement benefits (the functional equivalent of 
an industry-wide pension plan) using an outside contracted 
disbursing agent.
    The RRB and the trustees of the Railroad Retirement 
Investment Trust created by the RRSIA quickly discovered that 
use of an outside contractor for this disbursing function would 
actually cost more than continuing to use the U.S. Treasury 
Department for this purpose. Therefore, as a temporary measure, 
the Board sought and received in each ensuing annual 
appropriations act a legislative waiver of the RRSIA disbursing 
agent requirement, thus allowing the agency to continue to use 
the U.S. Treasury Department.
    The RRB, the trustees of the Railroad Retirement Investment 
Trust, railroad management and railroad labor all concurred 
that switching to a non-Treasury Department disbursing agent 
made no sense, when this change would incur additional 
estimated administrative costs of about $3 million per year. 
Therefore, the Board, with the support of the aforementioned 
parties, proposed that the Railroad Retirement Act be 
permanently amended to designate the U.S. Treasury Department 
as the benefit disbursing agent.

                       Summary of the Legislation

    The legislation amends Section 7(b)(4)(A) of the Railroad 
Retirement Act of 1974 (45 U.S.C. 231f(b)(4)(A)) to designate 
the Secretary of the Treasury as the permanent disbursing agent 
for benefits payable under that Act.

            Legislative History and Committee Consideration

    No hearings were held by the Committee on H.R. 5074. On 
April 5, 2006, the Committee met in open session and ordered 
H.R. 5074 favorably reported by voice vote.

                             Rollcall Votes

    Clause 3(b) of rule XIII of the House of Representatives 
requires each committee report to include the total number of 
votes cast for and against on each rollcall vote on a motion to 
report, and on any amendment offered to the measure or matter, 
and the names of those members voting for and against. There 
were no rollcall votes regarding H.R. 5074.

                      Committee Oversight Findings

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the House of Representatives, the Committee's oversight 
findings and recommendations are reflected in this report.

                          Cost of Legislation

    Clause 3(d)(2) of rule XIII of the House of Representatives 
does not apply where a cost estimate and comparison prepared by 
the Director of the Congressional Budget Office under section 
401 of the Congressional Budget Act of 1974 has been timely 
submitted prior to the filing of the report and is included in 
the report. Such an estimate is included in this report.

                    Compliance With House Rule XIII

    1. With respect to the requirement of clause 3(c)(2) of 
rule XIII of the House of Representatives, and section 308(a) 
of the Congressional Budget Act of 1974, the Committee 
references the report of the Congressional Budget Office 
included below.
    2. With respect to the requirement of clause 3(c)(4) of 
rule XIII of the House of Representatives, the performance 
goals and objectives of this legislation provide for reduced 
operating costs for the Railroad Retirement Board and the 
Railroad Retirement Investment Trust.
    3. With respect to the requirement of clause 3(c)(3) of 
rule XIII of the House of Representatives and section 402 of 
the Congressional Budget Act of 1974, the Committee has 
received the following cost estimate for H.R. 5074 from the 
Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 21, 2006.
Hon. Don Young,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5074, the Railroad 
Retirement Technical Improvement Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Craig Meklir.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 5074--Railroad Retirement Technical Improvement Act of 2006

    Summary: The Railroad Retirement and Survivors' Improvement 
Act of 2001 (Public Law 107-90) amended the Railroad Retirement 
Act to require the Railroad Retirement Board (RRB) to use a 
nongovernmental financial institution to serve as the 
disbursing agent for railroad retirement payments to retirees 
and survivors. H.R. 5074 would eliminate that requirement and 
permit the RRB to continue to use the Department of Treasury as 
its disbursing agent for those payments.
    CBO estimates that using the Treasury rather than a 
nongovernmental institution would save about $2 million a year. 
Assuming that appropriations for the RRB's administrative 
expenses reflect that change, CBO estimates the bill would 
reduce outlays by $2 million in 2007 and by $9 million over the 
2007-2011 period. H.R. 5074 would not affect either direct 
spending or revenues.
    H.R. 5074 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5074 is shown in the following table. 
The savings from this legislation fall within the budget 
function 600 (income security).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.............................        0       -2       -2       -2       -2       -2
Estimated Outlays.........................................        0       -2       -2       -2       -2       -2
----------------------------------------------------------------------------------------------------------------

    Basis of Estimate: The Railroad Retirement and Survivors' 
Improvement Act of 2001 requires the RRB to use a 
nongovernmental financial institution as its disbursing agent. 
However, since 2005, annual appropriation acts have prohibited 
the RRB from doing so. Consequently, the board currently relies 
on the Department of Treasury to disburse benefit payments. In 
the absence of further legislation, the RRB would be required 
to switch to a nongovernmental institution starting in 2007.
    An RRB analysis determined that contracting with a private 
financial institution would cost $3.0 million in the first year 
and $2.3 million annually in subsequent years. In comparison, 
the RRB's reimbursements to the Department of Treasury 
currently cost about $800,000 per year for the same services.
    Based on the RRB's analysis, CBO estimates that using a 
nongovernmental financial institution as the RRB's disbursing 
agent would cost $13 million over the 2007-2011 period. The 
cost to the RRB to maintain its current practice would be $4 
million over the same period. Therefore, the bill would reduce 
the RRB's funding needs by an estimated $9 million over the 
2007-2011 period. CBO estimates that, if implemented, the bill 
would reduce outlays by $2 million in 2007 and $9 million over 
the 2007-2011 period, assuming that appropriations are adjusted 
to reflect the bill's requirements.
    Intergovernmental and private-sector impact: H.R. 5074 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Craig Mekir. Impact on 
State, Local, and Tribal Governments: Leo Lex. Impact on the 
Private Sector: Ralph Smith.
    Estimates approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the House of 
Representatives, committee reports on a bill or joint 
resolution of a public character must include a statement 
citing the specific powers granted to the Congress in the 
Constitution to enact the measure. The Committee on 
Transportation and Infrastructure finds that Congress has the 
authority to enact this measure pursuant to its powers granted 
under article I, section 8 of the Constitution.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandate Reform 
Act (Public Law 104-4).

                        Preemption Clarification

    Section 423 of the Congressional Budget Act of 1994 
requires the report of any Committee on a bill or joint 
resolution to include a statement on the extent to which the 
bill or joint resolution is intended to preempt state, local or 
tribal law. The Committee states that H.R. 5074 does not 
preempt any state, local or tribal law.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act are created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms or conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

            SECTION 7 OF THE RAILROAD RETIREMENT ACT OF 1974

                     powers and duties of the board

    Sec. 7. (a) * * *
    (b)(1) * * *

           *       *       *       *       *       *       *

    (4)[(A) The Railroad Retirement Board, after consultation 
with the Board of Trustees of the National Railroad Retirement 
Investment Trust and the Secretary of the Treasury, shall enter 
into an arrangement with a nongovernmental financial 
institution to serve as disbursing agent for benefits payable 
under this Act who shall disburse consolidated benefits under 
this Act to each recipient. Pending the taking effect of that 
arrangement, benefits shall be paid as under the law in effect 
prior to the enactment of the Railroad Retirement and 
Survivors' Improvement Act of 2001.] (A) The Secretary of the 
Treasury shall serve as the disbursing agent for benefits 
payable under this Act, under such rules and regulations as the 
Secretary may in the Secretary's discretion prescribe.

           *       *       *       *       *       *       *

                                  
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