[Federal Register Volume 70, Number 220 (Wednesday, November 16, 2005)]
[Notices]
[Pages 69613-69614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22724]


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RAILROAD RETIREMENT BOARD


2006 Railroad Experience Rating Proclamations, Monthly 
Compensation Base and Other Determinations

AGENCY: Railroad Retirement Board.

ACTION: Notice.

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SUMMARY: Pursuant to section 8(c)(2) and section 12(r)(3) of the 
Railroad Unemployment Insurance Act (Act) (45 U.S.C. 358(c)(2) and 45 
U.S.C. 362(r)(3), respectively), the Board gives notice of the 
following:
    1. The balance to the credit of the Railroad Unemployment Insurance 
(RUI) Account, as of June 30, 2005, is $113,140,562.89;
    2. The September 30, 2005, balance of any new loans to the RUI 
Account, including accrued interest, is zero;
    3. The system compensation base is $3,174,496,243.69 as of June 30, 
2005;
    4. The cumulative system unallocated charge balance is 
($269,505,519.27) as of June 30, 2005;
    5. The pooled credit ratio for calendar year 2006 is zero;
    6. The pooled charged ratio for calendar year 2006 is zero;
    7. The surcharge rate for calendar year 2006 is 1.5 percent;
    8. The monthly compensation base under section 1(i) of the Act is 
$1,195 for months in calendar year 2006;
    9. The amount described in section 1(k) of the Act as ``2.5 times 
the monthly compensation base'' is $2,987.50 for base year (calendar 
year) 2006;
    10. The amount described in section 2(c) of the Act as ``an amount 
that bears the same ratio to $775 as the monthly compensation base for 
that year as computed under section 1(i) of this Act bears to $600'' is 
$1,544 for months in calendar year 2006;
    11. The amount described in section 3 of the Act as ``2.5 times the 
monthly compensation base'' is $2,987.50 for base year (calendar year) 
2006;
    12. The amount described in section 4(a-2)(i)(A) of the Act as 
``2.5 times the monthly compensation base'' is $2,987.50 with respect 
to disqualifications ending in calendar year 2006;
    13. The maximum daily benefit rate under section 2(a)(3) of the Act 
is $57 with respect to days of unemployment and days of sickness in 
registration periods beginning after June 30, 2006.

DATES: The balance in notice (1) and the determinations made in notices 
(3) through (7) are based on data as of June 30, 2005. The balance in 
notice (2) is based on data as of September 30, 2005. The 
determinations made in notices (5) through (7) apply to the 
calculation, under section 8(a)(1)(C) of the Act, of employer 
contribution rates for 2006. The determinations made in notices (8) 
through (12) are effective January 1, 2006. The determination made in 
notice (13) is effective for registration periods beginning after June 
30, 2006.

ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 Rush 
Street, Chicago, Illinois 60611-2092.

FOR FURTHER INFORMATION CONTACT: Marla L. Huddleston, Bureau of the 
Actuary, Railroad Retirement Board, 844 Rush Street, Chicago, Illinois 
60611-2092, telephone (312) 751-4779.

SUPPLEMENTARY INFORMATION: The RRB is required by section 8(c)(1) of 
the Railroad Unemployment Insurance Act (Act) (45 U.S.C. 358(c)(1)) as 
amended by Public Law 100-647, to proclaim by October 15 of each year 
certain system-wide factors used in calculating experience-based 
employer contribution rates for the following year. The RRB is further 
required by section 8(c)(2) of the Act (45 U.S.C. 358(c)(2)) to publish 
the amounts so determined and proclaimed. The RRB is required by 
section 12(r)(3) of the Act (45 U.S.C. 362(r)(3)) to publish by 
December 11, 2005, the computation of the calendar year 2006 monthly 
compensation base (section 1(i) of the Act) and amounts described in 
sections 1(k), 2(c), 3 and 4(a-2)(i)(A) of the Act which are related to 
changes in the monthly compensation base. Also, the RRB is required to 
publish, by June 11, 2006, the maximum daily benefit rate under section 
2(a)(3) of the Act for days of unemployment and days of sickness in 
registration periods beginning after June 30, 2006.

Surcharge Rate

    A surcharge is added in the calculation of each employer's 
contribution rate, subject to the applicable maximum rate, for a 
calendar year whenever the balance to the credit of the RUI Account on 
the preceding June 30 is less than the greater of $100 million or the 
amount that bears the same ratio to $100 million as the system 
compensation base for that June 30 bears to the system compensation 
base as of June 30, 1991. If the RUI Account balance is less than $100 
million (as indexed), but at least $50 million (as indexed), the 
surcharge will be 1.5 percent. If the RUI Account balance is less than 
$50 million (as indexed), but greater than zero, the surcharge will be 
2.5 percent. The maximum surcharge of 3.5 percent applies if the RUI 
Account balance is less than zero.
    The system compensation base as of June 30, 1991 was 
$2,763,287,237.04. The system compensation base for June 30, 2005 was 
$3,174,496,243.69. The ratio of $3,174,496,243.69 to $2,763,287,237.04 
is 1.14881153. Multiplying 1.14881153 by $100 million yields 
$114,881,153. Multiplying $50 million by 1.14881153 produces 
$57,440,577. The Account balance on June 30, 2005, was $113,140,562.89. 
Accordingly, the surcharge rate for calendar year 2006 is 1.5 percent.

Monthly Compensation Base

    For years after 1988, section 1(i) of the Act contains a formula 
for determining the monthly compensation base. Under the prescribed 
formula, the monthly compensation base increases by approximately two-
thirds of the cumulative growth in average national wages since 1984. 
The monthly compensation base for months in calendar year 2006 shall be 
equal to the greater of (a) $600 or (b) $600 [1 + {(A-37,800)/
56,700{time} ], where A equals the amount of the applicable base with 
respect to tier 1 taxes for 2006 under section 3231(e)(2) of the 
Internal Revenue Code of 1986. Section 1(i) further provides that if 
the amount so determined is not a multiple of $5, it shall be rounded 
to the nearest multiple of $5.

[[Page 69614]]

    The calendar year 2006 tier 1 tax base is $94,200. Subtracting 
$37,800 from $94,200 produces $56,400. Dividing $56,400 by $56,700 
yields a ratio of 0.99470899. Adding one gives 1.99470899. Multiplying 
$600 by the amount 1.99470899 produces the amount of $1,196.83, which 
must then be rounded to $1,195. Accordingly, the monthly compensation 
base is determined to be $1,195 for months in calendar year 2006.

Amounts Related to Changes in Monthly Compensation Base

    For years after 1988, sections 1(k), 2(c), 3 and 4(a-2)(i)(A) of 
the Act contain formulas for determining amounts related to the monthly 
compensation base.
    Under section 1(k), remuneration earned from employment covered 
under the Act cannot be considered subsidiary remuneration if the 
employee's base year compensation is less than 2.5 times the monthly 
compensation base for months in such base year. Multiplying 2.5 by the 
calendar year 2006 monthly compensation base of $1,195 produces 
$2,987.50. Accordingly, the amount determined under section 1(k) is 
$2,987.50 for calendar year 2006.
    Under section 2(c), the maximum amount of normal benefits paid for 
days of unemployment within a benefit year and the maximum amount of 
normal benefits paid for days of sickness within a benefit year shall 
not exceed an employee's compensation in the base year. In determining 
an employee's base year compensation, any money remuneration in a month 
not in excess of an amount that bears the same ratio to $775 as the 
monthly compensation base for that year bears to $600 shall be taken 
into account.
    The calendar year 2006 monthly compensation base is $1,195. The 
ratio of $1,195 to $600 is 1.99166667. Multiplying 1.99166667 by $775 
produces $1,544. Accordingly, the amount determined under section 2(c) 
is $1,544 for months in calendar year 2006.
    Under section 3, an employee shall be a ``qualified employee'' if 
his/her base year compensation is not less than 2.5 times the monthly 
compensation base for months in such base year. Multiplying 2.5 by the 
calendar year 2006 monthly compensation base of $1,195 produces 
$2,987.50. Accordingly, the amount determined under section 3 is 
$2,987.50 for calendar year 2006.
    Under section 4(a-2)(i)(A), an employee who leaves work voluntarily 
without good cause is disqualified from receiving unemployment benefits 
until he has been paid compensation of not less than 2.5 times the 
monthly compensation base for months in the calendar year in which the 
disqualification ends. Multiplying 2.5 by the calendar year 2006 
monthly compensation base of $1,195 produces $2,987.50. Accordingly, 
the amount determined under section 4(a-2)(i)(A) is $2,987.50 for 
calendar year 2006.

Maximum Daily Benefit Rate

    Section 2(a)(3) contains a formula for determining the maximum 
daily benefit rate for registration periods beginning after June 30, 
1989, and after each June 30 thereafter. Legislation enacted on October 
9, 1996, revised the formula for indexing maximum daily benefit rates. 
Under the prescribed formula, the maximum daily benefit rate increases 
by approximately two-thirds of the cumulative growth in average 
national wages since 1984. The maximum daily benefit rate for 
registration periods beginning after June 30, 2006, shall be equal to 5 
percent of the monthly compensation base for the base year immediately 
preceding the beginning of the benefit year. Section 2(a)(3) further 
provides that if the amount so computed is not a multiple of $1, it 
shall be rounded down to the nearest multiple of $1.
    The calendar year 2005 monthly compensation base is $1,150. 
Multiplying $1,150 by 0.05 yields $57.50, which must then be rounded 
down to $57. Accordingly, the maximum daily benefit rate for days of 
unemployment and days of sickness beginning in registration periods 
after June 30, 2006, is determined to be $57.

    Dated: November 8, 2005.

    By authority of the Board.
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 05-22724 Filed 11-15-05; 8:45 am]
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