OIG Report #21-01 The Office of Inspector General’s Report on the Railroad Retirement Board’s Financial 

November 16, 2020 Statements begin on page 111 of the RRB’s FY 2020 Performance and Accountability Report 

RAILROAD RETIREMENT BOARD

PERFORMANCE AND 

ACCOUNTABILITY REPORT

FISCAL YEAR 2020 
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i 

Railroad Retirement Board 

Performance and Accountability Report 

Fiscal Year 2020 

TABLE OF CONTENTS

PAGE

Message from the Board Members...................................................................... 3 

Management’s Discussion and Analysis ............................................................. 7 

Overview of the Railroad Retirement Board (RRB) ...................................................... 7 

Mission..................................................................................................................... 7

Major Program Areas............................................................................................... 7 

Railroad Retirement Act ...................................................................................... 8 

Railroad Unemployment Insurance Act .............................................................. 9 

Reporting Components ............................................................................................ 10 

RRB Organizational Structure ................................................................................. 11 

Performance Goals, Objectives, and Results ............................................................... 13 

Summary of Achievement by Strategic Goal ................................................................ 13 

Strategic Goals and Objectives .................................................................................... 14 

Analysis of Financial Statements and Stewardship Information ................................... 21 

Comparison of Net Cost of Operations and Financing Sources .............................. 23 

Railroad Retirement Investments at Treasury ......................................................... 27 

National Railroad Retirement Investment Trust ....................................................... 28 

Social Insurance: Key Measures ................................................................................. 29 

Coronavirus Aid, Relief, and Economic Security Act (CARES Act) .............................. 31 

Analysis of Systems, Controls and Legal Compliance ................................................. 32 

Management Assurances ........................................................................................ 32 

Management Control Review Program .................................................................... 34 

Financial Statement Audit ........................................................................................ 34 

Federal Information Security Modernization Act ...................................................... 35 

Financial Management Systems Strategy ............................................................... 36 

Forward-Looking Information ................................................................................... 36 

Information Technology Modernization ........................................................................ 36 

Human Capital Management ................................................................................... 37 

Summary of Actuarial Forecast ............................................................................... 37 

Limitations of the Financial Statements .................................................................... 38 

Performance Section .................................................................................................... 41 

 Government Performance and Results Act Report .......................................................... 41 
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TABLE OF CONTENTS

PAGE

Financial Section.................................................................................................... 59 

Consolidated Balance Sheet ......................................................................................... 59 

Consolidated Statement of Net Cost ............................................................................. 60 

Consolidated Statement of Changes in Net Position .................................................... 61 

Combined Statement of Budgetary Resources ............................................................. 63 

Statement of Social Insurance ...................................................................................... 64 

Statement of Changes in Social Insurance Amounts .................................................... 65 

Notes to the Financial Statements ................................................................................ 66 

Required Supplementary Information ............................................................................ 95 

Social Insurance ...................................................................................................... 95 

Program Financing ............................................................................................. 95 

 Benefits ...............................................................................................................95 

Program Finances and Sustainability ................................................................. 96 

Combining Statement of Budgetary Resources ........................................................ 105 

Auditor’s Report ............................................................................................................. 107 

Other Information ................................................................................................... 141 

Inspector General’s Statement on Management and Performance Challenges ........... 143 

Management’s Comments ............................................................................................ 159 

Payment Integrity .......................................................................................................... 170 

Summaries of Financial Statement Audit and Management Assurances ..................... 188 

Civil Monetary Penalty Adjustment for Inflation ............................................................. 188 

Appendices ............................................................................................................. 191 

Glossary of Acronyms and Abbreviations ..................................................................... 191 

RRB Board Members, Inspector General, and Executive Committee ........................... 194 

RRB’s fiscal year 2020 Performance and Accountability Report is available online at: www.RRB.gov 
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MESSAGE FROM THE BOARD MEMBERS 
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Message from the Board Members 

This fiscal year 2020 Performance and Accountability Report highlights the goals and 

accomplishments of the Railroad Retirement Board (RRB) in achieving its mission of 

administering the retirement, disability, and survivor benefit programs provided under the 

Railroad Retirement Act (RRA), and the unemployment and sickness insurance benefit 

programs provided under the Railroad Unemployment Insurance Act (RUIA). This report 

describes our continuing efforts to provide timely and useful information to RRB managers, the 

Office of Management and Budget (OMB), Congress, and our constituents. We are proud of the 

agency’s dedicated employees whose achievements are reflected in this report. 

Under provisions of the Budget Control Act of 2011 (BCA), across-the-board cuts in Federal 

spending took effect March 1, 2013. While railroad retirement, survivor and disability payments 

are not affected by this measure, unemployment and sickness insurance benefits payable 

October 1, 2019 through September 30, 2020, were reduced by 5.9 percent. The reduction was 

required by the sequestration order issued by the President in accordance with the BCA. For 

fiscal year 2021, a sequestration reduction of 5.7 percent was applied starting October 1, 2020. 

We believe the performance and financial data presented in this report are complete and 

reliable in accordance with OMB guidance. The adequacy and effectiveness of our 

management controls and the compliance of our financial management systems with 

government-wide requirements are delineated in the Systems, Controls and Legal Compliance 

part of the Management’s Discussion and Analysis section. That part also provides status of 

actions we are taking and progress we are making to correct internal control deficiencies 

identified by the Office of Inspector General (OIG). While we disagree that those deficiencies 

rise to the level of material weakness, we continue to strengthen internal controls and 

implement solutions that enhance our operational effectiveness and efficiency. 

We will continue to apply information technology and innovation to provide excellent customer 

service to the railroad employers, railroad employees, and the beneficiaries whom we serve. 

We are also committed to prudent stewardship over the agency trust. 

Original signed by:

Erhard R. Chorlé, Chairman

John Bragg, Labor Member

Thomas Jayne, Management Member

November 16, 2020
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MANAGEMENT’S DISCUSSION AND ANALYSIS 
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Management’s Discussion and Analysis

Overview of the Railroad Retirement Board

Mission 

The RRB is an independent agency in the executive branch of the Federal Government. The 

agency’s mission statement is as follows:

The RRB’s mission is to administer retirement/survivor and unemployment/sickness 

insurance benefit programs for railroad workers and their families under the Railroad 

Retirement Act and the Railroad Unemployment Insurance Act. These programs provide 

income protection during old age and in the event of disability, death or temporary 

unemployment and sickness. The RRB also administers aspects of the Medicare 

program and has administrative responsibilities under the Social Security Act and the 

Internal Revenue Code. In carrying out its mission, the RRB will pay benefits to the right 

people, in the right amounts, in a timely manner, and will take appropriate action to 

safeguard our customers’ trust funds. The RRB will treat every person who comes into 

contact with the agency with courtesy and concern, and respond to all inquiries promptly, 

accurately and clearly.

Major Program Areas 

The RRB was created in the 1930s by legislation establishing a retirement benefit program for 

the nation’s railroad workers. Private industrial pension plans had been pioneered in the 

railroad industry; the first industrial pension plan in North America was established on a railroad 

in 1874. By the 1930s, pension plans were far more developed in the rail industry than in most 

other businesses or industries, but these plans had serious defects, which were magnified by 

the Great Depression. 

The economic conditions of the 1930s demonstrated the need for retirement plans on a national 

basis because few of the nation’s elderly were covered under any type of retirement program. 

While the social security system was in the planning stage, railroad workers sought a separate 

railroad retirement system which would continue and broaden the existing railroad programs 

under a uniform national plan. The proposed social security system was not scheduled to begin 

monthly benefit payments for several years and would not give credit for service performed prior 

to 1937, while conditions in the railroad industry called for immediate benefit payments based 

on prior service. 

Legislation was enacted in 1934, 1935, and 1937 to establish a railroad retirement system 

separate from the social security program legislated in 1935. Such legislation, taking into 

account particular circumstances of the rail industry, was not without precedent. Numerous 

laws pertaining to rail operations and safety had already been enacted since the Interstate 

Commerce Act of 1887. Since passage of the Railroad Retirement Acts of the 1930s, 

numerous other railroad laws have been enacted. 

While the railroad retirement system has remained separate from the social security system, the 

two systems are closely coordinated with regard to earnings credits, benefit payments, and 

taxes. The financing of the two systems is linked through a financial interchange under which, 
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in effect, the portion of railroad retirement annuities that is equivalent to social security benefits 

is coordinated with the social security system. The purpose of this financial coordination is to 

place the social security trust funds in the same position they would be in if railroad service were 

covered by the social security program instead of the railroad retirement program. 

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 private pensions paid 

over and above social security benefits in other industries. 

The railroad unemployment insurance system was also established in the 1930s. The Great 

Depression demonstrated the need for unemployment compensation programs, and State 

unemployment programs had been established under the Social Security Act in 1935. While the 

State unemployment programs generally covered railroad workers, railroad operations which 

crossed State lines caused special problems. Unemployed railroad workers were denied 

compensation by one State because their employers had paid unemployment taxes in another 

State. Although there were cases where employees appeared to be covered in more than one 

State, they often did not qualify in any. 

A Federal study commission, which reported on the nationwide State plans for unemployment 

insurance, recommended that railroad workers be covered by a separate plan because of the 

complications their coverage had caused the State plans. Congress subsequently enacted the 

RUIA in June 1938. The RUIA established a system of benefits for unemployed railroad 

workers, financed entirely by railroad employers and administered by the RRB. Sickness 

insurance benefits were added in 1946. 

Railroad Retirement Act

Under the RRA, retirement and disability annuities are paid to railroad workers with at least 10 

years of service. Such annuities are also payable to workers with 5 years of service if 

performed after 1995. 

Full age annuities are payable at age 60 to workers with 30 years of service. For those with 

less than 30 years of service, reduced annuities are payable at age 62 and unreduced annuities 

are payable at full retirement age, which is gradually rising from 65 to 67, depending on the year 

of birth. Disability annuities can be paid on the basis of total or occupational disability. 

Annuities are also payable to spouses and divorced spouses of retired workers and to 

widow(er)s, surviving divorced spouses, remarried widow(er)s, children, and parents of 

deceased railroad workers. Qualified railroad retirement beneficiaries are covered by Medicare 

at age 65, or earlier if disabled, in the same way as social security beneficiaries. 

Jurisdiction over the payment of retirement and survivor benefits is shared by the RRB and the 

Social Security Administration (SSA). The RRB has jurisdiction over the payment of retirement 

benefits if the employee had at least 10 years of railroad service, or 5 years if performed after 

1995. For survivor benefits, there is an additional requirement that the employee’s last regular 

employment before retirement or death was in the railroad industry. If a railroad employee or 

his or her survivors do not qualify for railroad retirement benefits, the RRB transfers the 

employee’s railroad retirement credits to SSA, where they are treated as social security credits. 
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Payroll taxes paid by railroad employers and their employees are the primary source of funding 

for the railroad retirement and survivor benefit programs. By law, railroad retirement taxes are 

coordinated with social security taxes. Employees and employers pay tier I taxes at the same 

rate as social security taxes. In addition, both employees and employers pay tier II taxes which 

are used to finance railroad retirement benefit payments over and above social security levels. 

Tier II taxes are based on the ratio of certain asset balances to the sum of benefit payments and 

administrative expenses. Historically, railroad retirement taxes have been considerably higher 

than social security taxes. 

Revenues in excess of benefit payments are invested to provide additional trust fund income, 

and legislation enacted in 2001 allows for Railroad Retirement (RR) Account funds transferred 

to the National Railroad Retirement Investment Trust (NRRIT) to be invested in nongovernmental assets, as well as in governmental securities. Funds transferred from the Social 

Security Equivalent Benefit (SSEB) Account to the NRRIT are allowed to be invested only in 

governmental securities. The legislation also established the NRRIT, whose Board of seven 

trustees oversees these investments. The Board of Trustees is comprised of three members 

selected by rail labor, three members selected by rail management, and one independent 

member selected by a majority of the other six members. 

Another major source of income to the railroad retirement and survivor benefit program consists 

of transfers from the social security trust funds under a financial interchange between the two 

systems. The financial interchange is intended to place the social security trust funds in the 

same position in which they would have been had railroad employment been covered by the 

Social Security Act and Federal Insurance Contributions Act. In fiscal year 2020, the RRB trust 

funds realized a net of $4.8 billion, representing 44 percent of RRB financing sources (excluding 

transfers to/from the NRRIT and the change in NRRIT net assets), through the financial 

interchange. 

Other sources of income currently include revenue resulting from Federal income taxes on 

railroad retirement benefits (tier I, tier II, and vested dual benefits), and appropriations from 

general Department of the Treasury (Treasury) revenues provided after 1974 as part of a 

phase-out of certain vested dual benefits. 

Railroad Unemployment Insurance Act

Under the RUIA, unemployment insurance benefits are paid to qualified railroad workers who 

are unemployed but ready, willing, and able to work, and sickness insurance benefits are paid to 

railroad workers who are unable to work because of illness, injury, or pregnancy. The RRB also 

operates a placement service to assist unemployed railroad workers in securing employment. 

A new unemployment and sickness insurance benefit year begins every July 1, with eligibility 

generally based on railroad service and earnings in the preceding calendar year. Up to 26 

weeks of normal unemployment and 26 weeks of sickness insurance benefits are payable to an 

individual in a benefit year. Additional extended benefits are payable for up to 13 weeks to 

persons with 10 or more years of service. 

The railroad unemployment and sickness insurance benefit program is financed by taxes on 

railroad employers under an experience rating system initiated in 1991. Each employer’s 

payroll tax rate is determined annually by the RRB on the basis of benefit payments to the 

railroad’s employees. 
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Reporting Components 

The RRB, as an independent agency in the executive branch of the U.S. Government, is 

responsible for administering the RRA and the RUIA. The financial statements include the 

accounts of all funds under the control of the RRB and the OIG. These funds consist of three 

administrative funds, four trust funds, three general funds, one American Recovery and 

Reinvestment Act of 2009 fund, one Worker, Homeownership, and Business Assistance Act of 

2009 funds, and five Coronavirus Aid, Relief, and Economic Security Act of 2020 funds. 

RRB Organizational Structure 

The RRB is headed by three Board Members appointed by the President of the United States, 

with the advice and consent of the Senate. One member is appointed upon recommendation of 

railroad employers; one is appointed upon recommendation of railroad labor organizations; and 

the third, who is the Chairman, is appointed to represent the public interest. The Board 

Members’ terms of office are 5 years and are scheduled to expire in different years. The 

Chairman of the Board is Erhard R. Chorlé, the Labor Member is John Bragg, and the 

Management Member is Thomas Jayne. The President also appoints an Inspector General for 

the RRB; the Inspector General is Martin J. Dickman. 

The primary function of the RRB is the determination and payment of benefits under the 

railroad retirement and survivor and the unemployment and sickness insurance programs. To 

this end, the RRB employs field representatives to assist railroad personnel and their families 

in filing claims for benefits, examiners to adjudicate the claims, and information technology staff 

to ensure equipment and programs maintain earnings records, calculate benefits, and process 

payments. The RRB also employs actuaries to predict the income and outlays of the agency’s 

trust funds and accounts, statisticians and economists to provide vital data, and attorneys to 

interpret legislation and represent the RRB in litigation. Internal administration requires a 

procurement staff, a budget and accounting staff, quality assurance staff, and personnel 

specialists. The Inspector General employs auditors and investigators to detect waste, fraud, 

or abuse in the benefit programs. 

The RRB’s headquarters is located at 844 North Rush Street in Chicago, Illinois. The RRB field 

structure is comprised of 53 offices located throughout the United States as shown on page 12.
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Performance Goals, Objectives, and Results 

During fiscal year 2020 (ended September 30, 2020), benefit payments totaled $13.6 billion, net 

of recoveries and offsetting collections. Of this amount, benefit payments for the railroad 

retirement and survivor benefits program totaled $13.2 billion, for the railroad unemployment and 

sickness insurance benefits program totaled $198.9 million, for the CARES Act programs totaled 

$154.8 million, and vested dual benefits program totaled $14.1 million, net of recoveries and 

offsetting collections. During fiscal year 2020, the RRB also paid benefits on behalf of SSA (for 

which the RRB is reimbursed) amounting to $2.0 billion to about 127,000 beneficiaries.

In fiscal year 2020, the RRB continued to focus its efforts on providing excellent customer 

service to current and former railroad workers and their family members. Our regular workloads 

in fiscal year 2020 included: 

 Providing payments to about 528,000 retirement and survivor beneficiaries.

 Providing payments to about 25,000 unemployment insurance beneficiaries.

 Providing payments to about 17,000 sickness insurance beneficiaries.

 Providing payments to about 7,000 vested dual benefit beneficiaries.

 Processing 15,940 retirement, survivor, and disability applications for benefits (through

April 30, 2020).

 Processing 138,504 applications and claims for unemployment and sickness insurance

benefits (through April 30, 2020).

 Issuing 244,278 certificates of employee railroad service and compensation (mailed on

June 15, 2020).

During fiscal year 2020, the RRB used 28 specific program performance objectives, including 

several with multiple indicators, to manage and track progress in meeting its long-term strategic 

plan goals. These objectives were accomplished with a direct appropriation of $123,500,000, 

where $113,500,000 was for ongoing administration of the RRB and $10,000,000 was for the 

agency’s IT modernization program. (A breakdown of administrative expenses by strategic goal 

is not available at the time of this report.) Agency performance with respect to the key 

performance indicators is covered in the following section. For most performance measures, 

actual full-year performance results for fiscal year 2020 were not available at the time this report 

was published. For those objectives, we reported part-year performance information for fiscal 

year 2020, if available. We also reported actual results from prior years, as applicable.

Summary of Achievement by Strategic Goal for Fiscal Year 2020 

Strategic Goal I: Modernize Information Technology (IT) Operations to sustain mission 

essential services. For fiscal year 2020, we reorganized our efforts to accomplish the IT 

Modernization from seven distinct initiatives to a comprehensive three-phased approach. During 

fiscal year 2020, we continued efforts in the Stabilize phase to leverage current technologies 

within RRB’s infrastructure, which will serve as the foundation for the next phase, Modernize. 

Strategic Goal II: Provide Excellent Customer Service. For fiscal year 2020, we met or 

exceeded most of timeliness goals and maintained the level of Internet services available to 

employers. 

Strategic Goal III: Serve as Responsible Stewards for Our Customers’ Trust Funds and 

Agency Resources. In fiscal year 2020, the RRB continued to fulfill its fiduciary responsibilities 

to the rail community. Additionally, benefit payment accuracy rates met or exceeded targets. 
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Strategic Goals and Objectives

For fiscal year 2020, the three overriding strategic goals were Modernizing Information 

Technology (IT) operations, providing excellent customer service and serving as responsible 

stewards of our customer’s trust funds. The IT operations initiative involved utilizing a threephased approach to enable RRB is accomplish its mission essential functions in a secure, 

reliable enterprise IT environment, streamline core business processes, and achieve more 

efficient and effective benefits administration. The service initiative involved continuing to 

achieve our customers’ expectations for customized, high quality service as well as position the 

agency to achieve rising customer expectations for new and improved services in the future. 

The stewardship initiative was multifaceted and involved protecting the trust funds, fulfilling 

responsibilities, ensuring the accuracy and integrity of benefit payments as well as addressing 

efficacy of security operations. The three strategic goals are summarized below: 

STRATEGIC GOAL I: Modernize Information Technology (IT) Operations to Sustain 

Mission Essential Services 

Significant investment is essential to update the agency’s outdated IT systems, reduce 

cybersecurity risk, and sustain mission operations. Our performance plan, submitted as a 

component of the FY 2020 Budget submission, reflected the strategic objective that focused on 

achieving this goal. 

Strategic Objective I-A: Legacy Systems Modernization

During fiscal year 2020, the RRB reorganized its efforts to accomplish the IT Modernization from 

seven distinct initiatives to a comprehensive three-phased approach. The shift to a three-phased 

approach afforded the RRB the opportunity to holistically capture, plan, and implement a strategy 

that addresses all of its needs concerning modernization. The phases are: 

 Phase 1 – Stabilize: this phase allows the RRB to leverage current technologies within its

infrastructure which serve as the foundation for the next phase.

 Phase 2 – Modernize: during this phase the RRB will undertake the modernization and

optimization of mission-essential applications and systems across people, process, and

technology areas.

 Phase 3 – Perform: this phase ensures the successful integration and transition of

modernized applications and systems into the RRB enterprise.

In addition to reorganizing the IT modernization effort overall, the RRB determined new 

strategic objectives going forward that better align to the three-phased approach discussed 

above. They are presented in the Performance section of this document. 

STRATEGIC GOAL II: Provide Excellent Customer Service

We aim to satisfy our customers’ expectations for quality service both in terms of service delivery 

options and levels and manner of performance. Our performance plan, submitted as a 

component of the FY 2020 Budget submission, reflected the following two strategic objectives 

that focused on the specifics of achieving this goal. 

Strategic Objective II-A: Pay benefits timely. 

Strategic Objective II-B: Provide a range of choices in service delivery methods. 
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STRATEGIC GOAL III: Serve as Responsible Stewards for our Customers’ Trust Funds 

and Agency Resources

The RRB is committed to fulfilling its fiduciary responsibilities to the rail community. Our 

performance plan, submitted as a component of the FY 2020 Budget Submission, reflected the 

following four objectives that focused on achieving this goal. 

Strategic Objective III-A: Ensure that trust fund assets are protected, collected, 

recorded, and reported appropriately. 

Strategic Objective III-B: Ensure the accuracy and integrity of benefit programs. 

Strategic Objective III-C: Ensure effectiveness, efficiency, and security of operations. 

Strategic Objective III-D: Effectively carry out responsibilities with respect to the 

NRRIT. 

Validation of Performance Information. The RRB has implemented comprehensive 

administrative procedures to ensure that reported performance information is accurate and valid. 

Administrative Circular RRB-2 establishes standards and assigns responsibility for collecting, 

documenting, validating, certifying, reporting and retaining information related to the actual 

performance data reported for objectives in the RRB’s Annual Performance Budget and 

Government Performance and Results Act Report.

The procedures require that reporting managers develop and maintain written procedures for: 

 Collecting data related to each objective, 

 Testing and validating performance data to ensure accuracy, 

 Retaining source documents for future reference, and 

 Attesting to the accuracy of performance information reported.

Members of the RRB’s Executive Committee review performance issues related to their areas of 

responsibility and assign follow-up action, as necessary. The Executive Committee also reviews 

and approves performance reports before releasing the drafts for approval by the Board 

Members. 

______________ ______________ ______________ ______________ 

The following begins a discussion of our key performance indicators. 

 
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Discussion of Key Performance Indicators

The RRB has identified the following 10 key performance indicators, which represent our most 

important responsibilities. 

Key performance indicator 1: Timeliness of initial railroad retirement annuity payments, 

when advanced filed (Objective II-A-1)

FY 2020 goal: 94.0% 

Our FY 2020 performance: 95.8% 

through the 2nd quarter 

We are achieving our goal. Automation plays a 

key role in assuring benefit payment timeliness 

for this performance indicator. 

FY 2019 goal: 94.0% 

Our FY 2019 performance: 95.4% 

Data definition: This goal is included in the 

RRB Customer Service Plan.

Key performance indicator 2: Timeliness of initial railroad retirement annuity payments, 

if not advanced filed (Objective II-A-2)

FY 2020 goal: 94.0% 

Our FY 2020 performance: 97.4%

through the 2nd quarter 

We are achieving our goal. Automation plays a 

key role in assuring benefit payment timeliness 

for this performance indicator. 

FY 2019 goal: 94.0% 

Our FY 2019 performance: 96.5% 

Data definition: This goal is included in the RRB 

Customer Service Plan. 

FY17 FY18 FY19 FY20

Goal 95.0% 94.0% 94.0% 94.0%

Actual 95.0% 94.9% 95.4% 95.8%

85%

90%

95%

100%

The RRB makes a decision to pay or 

deny a railroad retirement employee or 

spouse initial annuity application within 

35 days of the annuity beginning date, if 

advanced filed.

(FY 20 actual is through 3-31-20)

FY17 FY18 FY19 FY20

Goal 95.0% 94.0% 94.0% 94.0%

Actual 95.5% 96.5% 96.5% 97.4%

85%

90%

95%

100%

The RRB makes a decision to pay or 

deny a railroad retirement employee or 

spouse initial annuity application within 

60 days of the date the application was 

filed.

(FY 20 actual is through 3-31-20)
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Key performance indicator 3: Timeliness of new survivor benefit payments 

(Objective II-A-3)

FY 2020 goal: 94.0% 

Our FY 2020 performance: 95.5% 

through the 2nd quarter 

We are achieving our goal. Automation plays 

a key role in assuring benefit payment 

timeliness for this performance indicator. 

FY 2019 goal: 94.0% 

Our FY 2019 performance: 96.0% 

Data definition: This goal is included in the 

RRB Customer Service Plan.

Key performance indicator 4: Timeliness of spouse to survivor benefit payment 

conversions (Objective II-A-4)

FY 2020 goal: 94.0% 

Our FY 2020 performance: 95.1% 

through the 2nd quarter 

We are achieving our goal. Automation 

plays a key role in assuring benefit payment 

timeliness for this performance indicator. 

FY 2019 goal: 94.0% 

Our FY 2019 performance: 96.6% 

Data definition: This goal is included in the 

RRB Customer Service Plan. 

FY17 FY18 FY19 FY20

Goal 94.0% 94.0% 94.0% 94.0%

Actual 96.9% 96.2% 96.0% 95.5%

85%

90%

95%

100%

RRB makes a decision to pay, deny or 

transfer to SSA an initial annuity 

application for a retirement survivor not 

already receiving a benefit within 60 days 

of the annuity beginning date or date filed 

(whichever is later).

(FY 20 actual is through 3-31-20)

FY17 FY18 FY19 FY20

Goal 94.5% 93.5% 94.0% 94.0%

Actual 96.1% 96.5% 96.6% 95.1%

85%

90%

95%

100%

RRB makes a decision to pay, deny or 

transfer to SSA an initial annuity 

application for a survivor already receiving 

benefits as a spouse within 30 days of the 

RRB's receipt of first notice of the 

employee's death. 

(FY 20 actual is through 3-31-20)
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Key performance indicator 5: Timeliness of unemployment or sickness insurance 

payments (Objective II-A-6)

FY 2020 goal: 98.5% 

Our FY 2020 performance: 99.9% 

through the 2nd quarter 

We are achieving our goal. Automation plays 

a key role in assuring benefit payment 

timeliness for this performance indicator. 

FY 2019 goal: 98.0% 

Our FY 2019 performance: 99.9% 

Data definition: This goal is included in the 

RRB Customer Service Plan. 

Key performance indicator 6: Timeliness of disability decisions (Objective II-A-7)

FY 2020 goal: 70.0% 

Our FY 2020 performance: 15.0% 

through the 2nd quarter 

We are not achieving our goal. 

FY 2019 goal: 70.0% 

Our FY 2019 performance: 12.5%

Initial disability decision timeliness performance 

was below the goal of 70% within 100 days for 

multiple reasons, including a continued effort in 

the Disability Benefits Division (DBD) to finalize 

decisions on cases that were greater than 2 

years old. At the start of Fiscal Year 2019, cases 

with filing dates 2017 and earlier was 36.1% of 

the total workload balance. At the end of the 

fiscal year, this balance was significantly 

reduced to approximately 5.8% of the pending 

work, an 85% reduction. At the start of FY 2019, there were over 2,100 cases 

pending. However, at the end of FY 2019, the total pending balance decreased by 8% and more 

than 70% of the cases pending had 2019 filing dates. 

In an effort to reduce the number of pending cases and improve timeliness, DBD hired additional 

initial claims examiners. The initial training phase takes approximately 8 months. The new hires 

will begin production in FY 2020. They will focus on the more current applications and this will 

be reflected in the Division’s overall performance. 

FY17 FY18 FY19 FY20

Goal 99.5% 98.0% 98.0% 98.5%

Actual 99.9% 99.9% 99.9% 99.9%

85.0%

90.0%

95.0%

100.0%

RRB certifies a payment or releases a 

letter of denial of UI or SI benefits 

within 10 days of the date the RRB 

receives the claim. 

(FY 20 actual is through 3-31-20)

FY17 FY18 FY19 FY20

Goal 70.0% 70.0% 70.0% 70.0%

Actual 14.7% 11.3% 12.5% 15.0%

5%

30%

55%

80%

The RRB makes a decision to pay or deny 

a benefit for a disabled applicant or family 

member within 100 days of the date the 

application is filed. 

(FY 20 actual is through 3-31-20)
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Data Definition: This goal is included in the RRB Customer Service Plan. 

Key performance indicator 7: Initial recurring retirement payment accuracy 

(Objective III-B-1a) 

Our overall strategic goal is to achieve a railroad retirement benefit payment recurring accuracy 

rate of at least 99 percent on our initial processing of applications for retirement (employee, 

spouse and widow) benefits. 

FY 2020 goal: 99.50% 

Our FY 2020 performance: 99.94% 

through the 2nd quarter 

FY 2019 goal: 99.60% 

Our FY 2019 performance: 99.99% 

 through 2nd quarter FY 2019 

We are achieving our goal. 

Automation plays a key role in assuring initial 

benefit payment accuracy by reducing the number 

of erroneous payments. Automation will become 

more critical in this area as experienced personnel 

retire in the coming years. 

Data definition: This is the percentage of the 

dollar value of initial recurring retirement benefit 

payments paid correctly as a result of adjudication 

actions performed, based on a review of a sample of cases. 

FY17 FY18 FY19 FY20

Goal 99.60% 99.50% 99.60% 99.50%

Actual 98.89% 99.87% 99.99% 99.94%

98%

99%

100%

Initial Retirement Payment 

Accuracy

(FY 19 actual is through 3-31-19 and 

FY 20 actual is through 3-31-20)
- 20 -

Key performance indicator 8: Unemployment insurance payment accuracy 

(Objective III-B-2a)

Our overall strategic goal is to achieve a railroad 

unemployment insurance benefit payment accuracy 

rate of at least 99 percent. 

FY 2020 goal: 96.50% 

Our FY 2020 performance: 99.89% 

through the 2nd quarter

We are achieving our goal. Automation plays a 

key role in assuring benefit payment timeliness for 

this performance indicator. 

FY 2019 goal: 97.00% 

Our FY 2019 performance: 96.23% 

Data definition: This is the percentage of the 

dollar value of unemployment insurance benefit payments paid correctly as a result of 

adjudication actions performed, based on a review of a sample of cases.

Key performance indicator 9: Sickness insurance payment accuracy (Objective III-B-2b)

Our overall strategic goal is to achieve a railroad 

sickness insurance benefit payment accuracy rate of 

at least 99 percent. 

FY 2020 goal: 97.50% 

Our FY 2020 performance: 98.25% 

through the 2nd quarter 

We are achieving our goal. Automation plays a key 

role in assuring benefit payment timeliness for this 

performance indicator. 

FY 2019 goal: 97.50% 

Our FY 2019 performance: 97.93%

Data definition: This is the percentage of the dollar value of sickness insurance benefit 

payments paid correctly as a result of adjudication actions performed, based on a review of a 

sample of cases. 

FY17 FY18 FY19 FY20

Goal 99.60% 97.00% 97.00% 96.50%

Actual 97.24% 96.09% 96.23% 99.89%

94%

96%

98%

100%

Unemployment Insurance Payment 

Accuracy

(FY 20 actual is through 3-31-20)

FY17 FY18 FY19 FY20

Goal 99.50% 99.50% 97.50% 97.50%

Actual 99.08% 100.00% 97.93% 98.25%

94%

96%

98%

100%

Sickness Insurance Payment 

Accuracy

(FY 20 actual is through 3-31-20)
- 21 - 

Key performance indicator 10: Return on investment in program integrity activities 

(Objective III-B-5)

FY 2020 goal: $ 3.85: $1 

Our FY 2020 performance: Not Available 

FY 2019 goal: $3.85: $1 

Our FY 2019 performance: $6.66: $1 

We achieved our goal.

Our fiscal year 2019 goal was to achieve a 

return of $3.85 for each dollar spent on 

program integrity activities. We achieved a 

rate of return of $6.66 for each dollar spent. 

As part of our fiduciary responsibilities to the rail community, we must ensure that the correct 

benefit amounts are being paid to the right people. We match our benefit payments against 

SSA’s earnings and benefits database, the Centers for Medicare & Medicaid Services’ (CMS) 

utilization and death records, the Office of Personnel Management’s benefit records, and State 

wage reports, usually via data exchange files, and administer other benefit monitoring programs 

to identify and prevent erroneous payments. We also refer some cases to the OIG for 

investigation. After investigation, the OIG may pursue more aggressive collection methods, 

which include civil and criminal prosecution. 

Data definition: This is the ratio of the sum of the dollar recoveries and savings, to the labor 

dollars spent. 

Analysis of Financial Statements and Stewardship Information 

Amounts in the RR Account not needed to pay current benefits and administrative expenses are 

transferred to the NRRIT whose Board of seven trustees is empowered to invest NRRIT assets 

in non-governmental assets, such as equities and debt, as well as in governmental securities. 

Amounts in the SSEB Account not needed to pay current benefits and administrative expenses 

are transferred to either the RR Account or the NRRIT. 

Shown on the following page are snapshots of the net position, financing sources, and benefit 

payments (before elimination of inter-fund transactions) for the RRB accounts. All dollar 

amounts are in millions. 

 

FY17 FY18 FY19 FY20

Goal $3.85 $3.85 $3.85 $3.85

Actual $3.70 $3.44 $6.66 $0.00

$0.50

$2.50

$4.50

$6.50

Achieve a return of at least $3.60 for each 

dollar spent on program integrity 

activities.

(FY 20 Not Available)
- 22 -

Net Position, Financing Sources, and Benefit Payments 

(In millions) 

2020 2019 

NET POSITION AT SEPTEMBER 30 

Social Security Equivalent Benefit Account $662.4 $772.4 

Railroad Retirement Account 1/ 24,686.9 25,481.1 

Railroad Retirement Administrative Fund 47,1 46.5 

Railroad Unemployment Insurance Trust Fund - 

Benefit Payments (7.9) 127.4 

Administrative Expenses 11.7 9.2 

Limitation on the Office of Inspector General 7.2 5.9 

Dual Benefits Payments Account 7.6 7.6 

Federal Payments to the Railroad Retirement Accounts 0.9 0.8 

American Recovery and Reinvestment Act of 2009 

Railroad Unemployment Insurance Extended Benefit Payments – Recovery Act (no year dollars) 9.7 9.7 

Worker, Homeownership, and Business Assistance Act of 2009 

Administrative Expenses, Railroad Unemployment Insurance Extended Benefit Payments - - 

Coronavirus Aid, Relief, and Economic Security Act of 2020 

Railroad Unemployment Insurance Extended Benefits (no year dollars) 1a/ 120.7 134.2 

Railroad Unemployment Insurance Enhanced Benefit Payments (no year dollars) 289.8 - 

Railroad Unemployment Insurance Waiver of 7 Day Period 43.9 - 

Payment to Limitation on Administration 4.0 - 

Administrative Expenses - - 

Total $25,884.0 $26,594.8 

FINANCING SOURCES FOR FISCAL YEAR 

Social Security Equivalent Benefit Account $7,535.0 $7,612.4 

Railroad Retirement Account 2/ 4,804.0 4,459.7 

Railroad Retirement Administrative Trust Fund 146.0 146.1 

Railroad Unemployment Insurance Trust Fund - 

Benefit Payments 63.5 120.0 

Administrative Expenses 2.5 0.1 

Limitation on the Office of Inspector General 11.0 11.2 

Dual Benefits Payments Account 14.1 17.3 

Federal Payments to the Railroad Retirement Accounts 3/ - 

American Recovery and Reinvestment Act of 2009 

Railroad Unemployment Insurance Extended Benefit Payments – Recovery Act (no year dollars) - - 

Worker, Homeownership, and Business Assistance Act of 2009

Administrative Expenses, Railroad Unemployment Insurance Extended Benefit Payments - - 

Coronavirus Aid, Relief, and Economic Security Act

Railroad Unemployment Insurance Extended Benefits (no year dollars) 1a/ 13.6 0.3 

Railroad Unemployment Insurance Enhanced Benefit Payments (no year dollars) 135.2 - 

Railroad Unemployment Insurance Waiver of 7 Day Period 6.1 - 

Payment to Limitation on Administration 5.9 - 

Administrative Expenses - - 

Total $12,736.9 $12,367.1 

BENEFIT PAYMENTS FOR FISCAL YEAR 4/ 

Social Security Equivalent Benefit Account $7,645.0 $7,553.0 

Railroad Retirement Account 5,598.9 5,594.8 

Railroad Unemployment Insurance Trust Fund - 

Unemployment Insurance 131.4 40.3 

Sickness Insurance 67.5 52.9 

Dual Benefits Payments Account 14.1 17.3 

American Recovery and Reinvestment Act of 2009 

Railroad Unemployment Insurance Extended Benefit Payments – Recovery Act (no year dollars) - - 
- 23 -

Worker, Homeownership, and Business Assistance Act of 2009 

Administrative Expenses, Railroad Unemployment Insurance Extended Benefit Payments - - 

Coronavirus Aid, Relief, and Economic Security Act

Railroad Unemployment Insurance Extended Benefits (no year dollars) 1a/ 13.5 0.2 

Railroad Unemployment Insurance Enhanced Benefit Payments (no year dollars) 135.2 - 

Railroad Unemployment Insurance Waiver of 7 Day Period 6.1 - 

Payment to Limitation on Administration - - 

Administrative Expenses - - 

Total $13,611.7 $13,258.5

1/ NRRIT-held net assets are a financing source and are included in the Railroad Retirement Account above. 

1a/ Funds were reported in FY2019 as Worker, Homeownership, and Business Assistance Act of 2009. 

2/ Change in NRRIT-held net assets is included in the Railroad Retirement Account above. 

3/ Includes funds subsequently transferred to other accounts. Such inter-fund transfers are eliminated in the 

preparation of the consolidated statements. 

4/ Net of recoveries and offsetting collections; excludes SSA benefit payments.

The RRB’s financial statements are comprised of: Balance Sheet and Statements of Net Cost, 

Changes in Net Position, Budgetary Resources, and Social Insurance, Changes in Social 

Insurance Amounts, and notes which are an integral part of the statements. We also present, as 

required supplementary information, a discussion of the actuarial outlook for the railroad 

retirement program, and the Disaggregate of Budgetary Resources. 

Comparison of Net Cost of Operations and Financing Sources 

The net cost of operations for fiscal years 2020 and 2019 was $13,767.0 million and $13,398.4 

million, respectively. The details of the net cost of operations by type, amount, increase or 

decrease, and percentage change from fiscal year 2019 to fiscal year 2020 are shown below. 

Additional information regarding the net cost of operations and financing sources for fiscal years 

2020 and 2019 is shown on the following pages. 

NET COST OF OPERATIONS

(In millions) 

FY 2020 FY 2019 

Amount of

Increase

(Decrease)

Percent of

Increase

(Decrease)

Interest expense – Treasury borrowing $111.9 $113.8 $(1.9) (1.7)%

Salaries and expenses 171.4 164.2 7.2 4.4% 

Benefits expense 13,478.1 13,111.4 366.7 2.8% 

Other expenses 35.2 40.1 (4.9) (12.2)% 

Subtotal 13,796.6 13,429.5 367.1 2.7%

Less: Earned revenues (29.6) 31.1 (60.7) (195.2)% 

Net cost of operations $13,767.0 $13,398.4 $368.6 2.8% 
- 24 - 

Totals $13,796.6 million, excluding reimbursements, and earned revenues of $(29.6) million. 

Totals $13,429.5 million, excluding reimbursements and earned revenues of $31.1 million. 

Interest Expense 

$111.9

0.8%

Salaries and 

Expenses 

$171.4

1.2%

Benefits Expense 

$13,478.1

97.7%

Other Expenses 

$35.2

0.3%

FY 2020

NET COST OF OPERATIONS

(In millions)

Interest Expense 

$113.8

0.8%

Salaries and 

Expenses 

$164.2

1.2%

Benefits Expense 

$13,111.4

97.7%

Other Expenses 

$40.1

0.3%

FY 2019

NET COST OF OPERATIONS

(In millions)
- 25 -

The following table shows financing sources (excluding changes in unexpended appropriations) 

by type, amount, increase or decrease, and percentage change from fiscal year 2019 to fiscal 

year 2020.

FINANCING SOURCES

(in millions)

FY 2020 FY 2019 

Amount of 

Increase 

(Decrease) 

Percent of 

Increase 

(Decrease) 

Budgetary Financing Sources: 

Appropriations used $866.6 $ 753.5 $113.1 15.0%

Taxes and other non-exchange revenues: 

Payroll taxes 5,172.9 6,219.5 (1,046.4) (16.8)% 

Interest revenue and other income 35.1 45.3 (10.2) (22.6)%

Carriers refunds – principal (104.8) (130.1) 25.3 19.4%

Railroad Unemployment Insurance (RUI) Revenue 82.7 137.3 (54.6) (39.8)%

Subtotal $6,052.5 $7,025.5 $(973.0) (13.8)% 

Transfers in: 

Financial Interchange, net 4,854.6 4,709.7 144.9 3.1%

NRRIT 2,280.0 1,794.0 486.0 27.1% 

Subtotal $7,134.6 $6,503.7 $630.9 9.7%

TOTAL BUDGETARY FINANCING SOURCES $13,187.1 $13,529.2 $(342.2) (25.3)% 

Other Financing Sources : 

Imputed financing 7.2 8.4 (1.2) (15.2)% 

Change in NRRIT net assets (593.7) (1,180.6) 586.9 49.7%

Gain/(Loss) in Contingency 136.3 10.1 126.2 1,248.1%

TOTAL OTHER FINANCING SOURCES (450.2) (1,162.1) 711.9 61.3% 

TOTAL FINANCING SOURCES $12,736.9 $12,367.1 $369.8 3.0% 

The most significant difference between the RRB’s financial statements for fiscal year 2019 and 

fiscal year 2020 was the change in NRRIT net assets and decrease in Payroll Taxes. The 

decrease in NRRIT net assets of about $593.7 million is due to market fluctuations during the 

past year. There is a section later in this publication that describes the NRRIT, and the NRRIT 

net assets balances for 2019 and 2020 are shown in the RRB’s Financial Section of this 

publication.
- 26 -

Total Financing Sources $12,600.6 million, excluding $136.3 million gain contingency.

Total Financing Sources $12,357.0 million, excluding $10.1 million gain contingency. 

$7,134.6

$866.6

$5,185.8

$7.2 ($593.7)

(4,000)

(2,000)

0

2,000

4,000

6,000

8,000

10,000

Transfers In Appropriation

Used

Tax and other

Non‐Exchange

Revenue

Imputed

financing

Change in NRRIT

Net Assets

FINANCING SOURCES (In Millions)

FY2020
- 27 -

Railroad Retirement Investments at Treasury 

The book value of all railroad retirement investments, including accrued interest, decreased to 

$1,252.7 million as of September 30, 2020, from $1,792.5 million on September 30, 2019 

(excludes NRRIT net assets). The graph below reflects the book value of the railroad retirement 

investments from September 30, 2016, through September 30, 2020. 

The following chart shows the portfolio of the railroad retirement investments as of 

September 30, 2020. 

$1,378.0 $1,312.8 

$1,671.3 

$1,792.5 

$1,252.7 

$1,200.0

$1,300.0

$1,400.0

$1,500.0

$1,600.0

$1,700.0

$1,800.0

2016 2017 2018 2019 2020

INVESTMENT BALANCES HELD AT TREASURY (BOOK VALUE)

AT SEPTEMBER 30, 2016-2020

(In millions, excluding NRRIT net assets)

RR Account

$307.3

24.5%

SSEB

Account

$945.4

75.5%

RAILROAD RETIREMENT INVESTMENTS HELD AT TREASURY

AS OF SEPTEMBER 30, 2020

AT BOOK VALUE

Total $1,252.7

(In millions, excluding NRRIT net assets)
- 28 -

Railroad Retirement Account: On September 30, 2020 and 2019, the book values of the RR 

Account investments, excluding NRRIT assets, including accrued interest, totaled $307,323,788 

and $698,701,028, respectively. The balance on September 30, 2020, consisted of 

$306,847,000 in 3.000 percent par value specials (with market value equal to face value) 

maturing on October 1, 2020, and $476,788 in accrued interest. The balance on September 30, 

2019, consisted of $697,794,000 in 3.000 percent par value specials (with market value equal to 

face value) maturing on October 1, 2019, and $907,028 in accrued interest. Par value specials 

mature on the first working day of the month following the month of issue and have a yield based 

on the average yield of marketable Treasury notes with maturity dates at least 3 years away. 

Social Security Equivalent Benefit Account: On September 30, 2020 and 2019, the book values 

of the SSEB Account investments, including accrued interest, totaled $945,386,040 and 

$1,093,823,176, respectively. The balance on September 30, 2020, consisted of $944,036,000 

in 3.000 percent par value specials maturing on October 1, 2020, and $1,350,040 in accrued 

interest. The balance on September 30, 2019, consisted of $1,091,977,000 in 3.000 percent par 

value specials maturing on October 1, 2019, and $1,846,176 in accrued interest.

National Railroad Retirement Investment Trust

The NRRIT was established by the Railroad Retirement and Survivors’ Improvement Act of 2001 

(RRSIA). The sole purpose of the NRRIT is to manage and invest railroad retirement assets. 

The NRRIT is a tax-exempt entity, independent from the Federal Government and not subject to 

Title 31, United States Code (USC). The NRRIT is domiciled in and subject to the laws of the 

District of Columbia. 

The NRRIT is comprised of a Board of seven trustees; three selected by railroad labor unions 

and three by railroad companies. The seventh trustee is an independent member selected by 

the other six. Members of the Board of Trustees are not considered officers or employees of the 

Government of the United States. 

The RRSIA authorizes the NRRIT to invest railroad retirement assets in a diversified investment 

portfolio in the same manner as those of private sector retirement plans. Prior to the RRSIA, 

investment of railroad retirement assets was limited to U.S. Government securities.

The NRRIT and the RRB are separate entities. The RRB remains a Federal agency and 

continues to have full responsibility for administering the railroad retirement program, including 

eligibility determinations and the calculation of benefit payments. The NRRIT has no powers or 

authority over the administration of benefits under the railroad retirement program. Under the 

RRSIA, the NRRIT is required to act solely in the interest of the RRB, and through it, the 

participants and beneficiaries of the programs funded under the RRA. The RRSIA does not 

delegate any authority to the RRB with respect to day-to-day activities of the NRRIT, but the 

RRSIA provides that the RRB may bring a civil action to enjoin any act or practice of the NRRIT 

that violates the provisions of the RRSIA or to enforce any provision of the RRSIA. 

Under the RRSIA, the financial statements of the NRRIT are required to be audited annually by 

an independent public accountant. In addition, the NRRIT must submit an annual management 

report to the Congress on its operations, including a Statement of Financial Position, a Statement 

of Operations, a Statement of Cash Flows, a Statement on Internal Accounting and 

Administrative Control Systems, the independent auditor’s report, and any other information 

necessary to inform the Congress about the operations and financial condition of the NRRIT. A 

copy of the annual report must also be submitted to the President, the RRB, and the Director of 

OMB. 
- 29 -

Social Insurance: Key Measures 

Balance Sheet: The Balance Sheet displayed in the Financial Section presents our assets, 

liabilities, and net position. Total assets for fiscal year 2020 are $32.2 billion, a 1.8 percent 

decrease over last year. Of the total assets, $ 24.8 billion relates to funds held by the NRRIT. 

The net asset value of funds held by the NRRIT decreased from fiscal year 2019 by 2.3 percent. 

Our investments totaled $1.3 billion and we invest those funds not needed to pay current 

expenses or benefits in interest bearing Treasury securities. A chart of investment balances held 

at Treasury can be found on page 27. Total liabilities for fiscal year 2020 are $6.3 billion. 

Liabilities increased by $136.7 million or 2.2 percent in fiscal year 2020. Also, benefits due 

increased by $9.5 million. By statute, benefits due in September are not paid until October.

Statement of Net Cost: The Statement of Net Cost displayed in the Financial Section presents 

the annual cost of operating our two major programs: 1) railroad retirement and 2) railroad 

unemployment and sickness insurance. In fiscal year 2020, our net cost of operations was 

$13,767 billion, an increase over last year of $368.6 million, or 2.8 percent. A table for the net 

cost of operations for fiscal years 2020 and 2019 can be found on page 23.

Statement of Changes in Net Position: The Statement of Changes in Net Position displayed in 

the Financial Section reflects the changes that occurred within cumulative results of operations 

and unexpended appropriations. Total net position for 2020 is $25.9 billion. The statement 

shows a decrease in the net position of the agency of $1,030 million attributable to the change in 

cumulative results of operations. Total financing sources for 2020 are $12.7 billion. A table for 

financing sources for fiscal years 2020 and 2019 can be found on page 25.

Statement of Social Insurance: Federal accounting standards require the presentation of a 

Statement of Social Insurance (SOSI) as a basic financial statement. The SOSI presents the 

present values of estimated future revenue and expenditures of the Railroad Retirement 

program. The SOSI covers a period of 75 years in the future, and the information and 

disclosures presented are deemed essential to the fair presentation of this statement. 

The open group as of the valuation date includes current participants who have attained 

retirement age under the Railroad Retirement program, current participants who have not yet 

attained retirement age, and those expected to become participants, or new entrants. The 

closed group as of the valuation date includes only current participants: (1) those who have not 

yet retired but are active workers paying payroll taxes, (2) those who have retired and are 

receiving benefits, and (3) those who are not currently working but have sufficient service to be 

eligible for future benefits. The closed group measure represents a reasonably good estimate of 

the extent to which benefits of the closed group are funded by members of the closed group. The 

open group measure is inherently more sensitive to assumptions about the distant future than 

the closed group measure. The open group measure gives a more complete assessment of the 

long-term financial stability of the program because it includes all those who are projected to be 

participants in the program over the given projection period, whether paying payroll taxes or 

receiving benefits. 

The net present value (NPV) of estimated future expenditures less estimated future revenue (net 

expenditures) for all participants over the next 75 years (open group) changed from $26.9 billion 

as of September 30, 2018 to $26.0 billion as of September 30, 2019, a net change in the open 

group measure of ($0.9) billion, when rounded. Note that the Social Insurance information in the 

Table of Key Measures shows future expenditures less future revenue, while the Statement of 

Social Insurance shows future revenue less future expenditures. This change in presentation in 
- 30 - 

the Table of Key Measures is done to eliminate any ambiguity in the interpretation of percentage 

changes in negative amounts. 

As can be seen on the Statement of Changes in Social Insurance Amounts, a change in the 

open group measure of about $1.7 billion is due to changes in economic data, assumptions, and 

methods. Select assumptions for the Cost of Living Adjustment (COLA), wage increase, and 

investment return were updated in 2019, as described in the footnotes to the Statement of 

Changes in Social Insurance Amounts. The change in the valuation period (from fiscal years 

2019-2093 to fiscal years 2020-2094) resulted in a change of $(2.8) billion in the open group 

measure. There were no changes in the demographic assumptions, but there were updates to 

demographic data. Changes in demographic data, assumptions, and methods resulted in a 

change of $0.2 billion in the open group measure. This year there were no changes in law, 

policy, or methodology and programmatic data. 

The financial statements are based on the selection of accounting policies and the application of 

significant accounting estimates, some of which require management to make significant 

assumptions. Further, the estimates are based on conditions that may change in the future. 

Actual results could differ materially from the estimated amounts. The financial statements 

include information to assist in understanding the effect of changes in assumptions to the related 

information. 

TABLE OF KEY MEASURES 

Dollars in Millions As reported in 

FY 2020 

As reported 

in FY 2019 Increase / (Decrease) 

$ % 

COSTS

Total Financing Sources $12,736.9 $12,367.1 369.8 3.0 

Less: Net Cost $13,767.0 $13,398.4 368.6 2.8 

Net Change of Cumulative Results of Operations $(1,030.1) $(1,031.3) 1.2 0.2 

NET POSITION 

Assets $32,188.3 $32,762.3 (574.0) (1.8) 

Liabilities $6,304.3 $6,167.5 136.8 2.2 

Net Position (Assets minus Liabilities) $25,884.0 $26,594.8 (710.8) (2.7) 

Dollars in Billions 10/1/2019 10/1/2018 Increase / (Decrease) 

$ % 

SOCIAL INSURANCE

Social Insurance Net Expenditures (Open Group)1 $26.0 $26.9 (0.9) (3.4) 

1Source: Statement of Social Insurance (SOSI). In prior years, social insurance amounts covered calendar 

year timeframes January 1 through December 31. Beginning in 2016, social insurance amounts are on a 

fiscal year basis, from October 1 through September 30. Amounts equal estimated present value of 

projected revenues and expenditures for scheduled benefits over the next 75 years. The SOSI shows future 

revenue less future expenditures while the Key Measure above shows future expenditures less future 

revenue. This change in presentation is done to eliminate any ambiguity in the interpretation of percentage 

changes in negative amounts. Note that detail may not add to total due to rounding.
- 31 -

Coronavirus Aid, Relief, and Economic Security Act or the CARES Act

On March 27, 2020, President Trump signed Public Law (P.L.) 116-136, Coronavirus Aid, 

Relief, and Economic Security Act of 2020 (CARES Act). The CARES Act is a law meant to 

address the economic fallout of the 2020 coronavirus pandemic in the United States. It includes 

3 provisions that impact the payment of benefits under the Railroad Unemployment Insurance 

Act, each having a separate Treasury appropriation for the payment of those benefits. 

Section 2112 of the CARES Act provides for the waiver of the 7-day waiting period for both 

unemployment and sickness benefits for registration periods beginning March 28, 2020 through 

periods beginning December 31, 2020. This provision is funded by a separate Treasury 

appropriation of $50M and is payable until the end of a person’s entitlement or until the 

appropriation runs out, whichever comes first. 

Section 2113 of the CARES Act provides for the payment of enhanced unemployment benefits 

in the amount of $1,200.00 for registration periods beginning on or after April 1, 2020 through 

periods beginning July 31, 2020. This provision is funded by a separate Treasury appropriation 

of $425M and is payable until the end of a person’s entitlement or until the appropriation runs 

out, whichever comes first. 

Section 2114 of the CARES Act provides for the payment of extended unemployment benefits 

for anyone who received regular unemployment benefits in the benefit year that began July 1, 

2019 and ending June 30, 2020. Employees with less than 10 years of service are entitled to 

65 days of extended unemployment benefits and employees with 10 or more years of service 

are entitled to 65 additional days of extended unemployment benefits through registration 

periods beginning December 31, 2020. This provision is funded by a separate Treasury 

appropriation of using remaining funds previously appropriated under P.L. 111-5, American 

Recovery and Reinvestment Act of 2009 and P.L. 111-92, Worker, Homeowner, Business 

Assistance Act of 2009 of approximately $142M. These benefits are payable until the end of a 

person’s entitlement or until the appropriation runs out, whichever comes first. 

As of September 30, 2020, the RRB has implemented Sections 2112, 2113 and 2114 and has 

expended $5,307,495, $134,767,510, $12,713,804 respectively. 

Additionally, the CARES Act provided an additional $5M for the RRB’s Limitation of 

Administration account to remain available until September 30, 2021. The funding provided 

therein is to prevent, prepare for, and respond to coronavirus, including the purchase of 

information technology equipment to improve the mobility of the workforce and provide for 

additional hiring or overtime hours as needed to administer the Railroad Unemployment 

Insurance Act. As of September 30, 2020 the RRB has obligated $4,130,099 of the $5M. 
- 32 -

Analysis of Systems, Controls and Legal Compliance 

Management Assurances 

The Railroad Retirement Board states and assures that, to the best of our knowledge: 

1. In accordance with OMB Circular No. A-123, Management’s Responsibility for Internal

Control, Section VI, we are issuing a modified statement of assurance as the Office of

Inspector General (OIG) has asserted material weaknesses exist as described in

paragraph 6. Except as indicated under paragraph 6, we provide reasonable assurance that

this agency’s system of internal control is functioning and sufficient to ensure the: efficiency

and effectiveness of programs and operations; reliability of financial and performance

information; and compliance with laws and regulations. These controls satisfy the

requirements of the Federal Managers’ Financial Integrity Act of 1982 (FMFIA) §2.

2. In accordance with the Federal Information Security Modernization Act of 2014 (FISMA), this

agency has established an Information Security Program and practices, and has

implemented controls to support the Cybersecurity framework; however, additional work is

needed to achieve a rating of effective. This agency’s financial management system is

managed under contract and is a comprehensive proprietary software application from CGI

Federal – Momentum Enterprise Solution – that resides on a cloud hosting service and is

discussed in detail in the Financial Management Systems Strategy Section. As a result, the

agency’s FISMA overall maturity level does not directly impact its financial management

system.

3. The financial management systems of this agency maintain accountability for assets and

provide reasonable assurance that obligations and costs are in compliance with applicable

laws, and that performance data and proprietary and budgetary accounting transactions

applicable to the agency are properly recorded and accounted for to permit the timely

preparation of accounts and reliable performance information. The financial management

systems at this agency satisfy the requirements of the FMFIA §4.

4. The financial management systems of this agency provide the agency with reliable, timely,

complete, and consistent performance and other financial information to make decisions, and

efficiently operate and evaluate programs and substantially satisfies the requirements of the

Government Performance and Results Act of 1993 and OMB Circular No. A-11, Preparation,

Submission and Execution of the Budget.

5. In accordance with Office of Management and Budget (OMB), M-18-16, Appendix A to OMB

Circular No. A-123, Management of Reporting and Data Integrity Risk, we can provide

reasonable assurance that the Data Quality Plan and its associated internal controls

substantially support the reliability and validity of this agency’s account-level and award-level

data reported for display on USASpending.gov in compliance with the Digital Accountability

and Transparency Act of 2014 (DATA Act).
- 33 -

6. For fiscal year 2020, the OIG has asserted that material weaknesses existed in (1) financial

reporting and that the agency has (2) deficient internal controls at the agency-wide level. We

disagree that the asserted deficiencies rise to the level of material weakness. These matters

are discussed further in the Financial Statement Audit portion of this section.

Original signed by:

Erhard R. Chorlé, Chairman

John Bragg, Labor Member

Thomas Jayne, Management Member
- 34 -

Management Control Review Program 

Internal control is a process effected by an entity’s oversight body, management, and other 

personnel that provides reasonable assurance that the objectives of the entity will be met. We 

have a well-established agency-wide management control program as required by the Federal 

Managers’ Financial Integrity Act of 1982 (FMFIA). To achieve the goals of the FMFIA, RRB 

program and administrative activities incorporate internal controls that ensure 1) accountability 

for mission accomplishment, 2) continual monitoring and periodic control testing, 3) weaknesses 

are identified and corrected, and 4) appropriate levels of management are informed and 

positioned to act timely to prevent or correct problems and initiate improvements. 

Our managers are responsible for ensuring effective internal control in their areas of operation. 

Those managers provide annual certifications that attest to the effectiveness of their controls and 

operations. Organizational heads also submit annual certifications to the Board providing 

reasonable assurance that 1) obligations and costs are in compliance with applicable law; 

2) funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or

misappropriation; 3) revenues and expenditures applicable to agency operations are properly

recorded and accounted for to permit the preparation of accounts and reliable financial and

statistical reports and to maintain accountability over the assets; and 4) programs are efficiently

and effectively carried out in accordance with applicable laws and management policies. Our

Management Control Review Committee ensures our compliance with FMFIA and other related

legislative and regulatory requirements.

Financial Statement Audit

For fiscal year 2020, the Office of Inspector General (OIG) will again render a disclaimer of 

opinion on the RRB’s financial statements, as has been done since fiscal year 2013. As a basis 

for the disclaimer of opinion, the OIG contends that they require access to the National Railroad 

Retirement Investment Trust’s auditor in order to comply with American Institute of Certified Public 

Accountants (AICPA) group financial statement auditing standards. 

The Agency will continue to cooperate with the OIG and provide all NRRIT related information 

within its possession which the OIG requests. The Agency does not have the authority to compel 

the NRRIT auditors to provide their work papers to, or speak with the OIG. Additionally, the 

NRRIT and the United States Government Accountability Office (GAO) entered into an MOU 

giving GAO access to information and including NRRIT’s financial information in the governmentwide financial statements.1 Therefore, the RRB disagrees with the OIG’s inclusion of this matter 

as both a basis for a disclaimer of opinion and as a component of the financial reporting material 

weakness. 

For fiscal year 2020, the OIG asserts that two material weaknesses exist; the first relates to 

financial reporting, which the OIG revised due to the closure of the ineffective controls aspect of 

the material weakness, and now includes the following two components (1) communication with 

the NRRIT’s auditor and (2) social insurance valuation methodology. The OIG will again report a 

second material weakness related to deficient internal controls at the agency wide level. In fiscal 

year 2018, the OIG asserted this material weakness existed because four of the five components 

1 MOU for the NRRIT Inclusion in Government-Wide financial Statements and GAO Access to Information, entered into 

by the National Railroad Retirement Investment Trust (NRRIT) and the U.S. Government Accountability Office (GAO), 

dated October 31, 2018 (on file at RRB).
- 35 -

of internal control were not assessed by the RRB in conformance with GAO and OMB 

requirements at the agency wide level. In fiscal years 2019 and 2020, the OIG expanded this 

material weakness to include information technology security and financial reporting controls; 

compliance with indirect laws, regulations, contracts, treaties, and international agreements; 

compliance with Railroad Retirement Act benefit payment provisions; and controls over railroad 

service compensation.2 

We continue to make improvements to internal controls through policy, procedure revisions, 

emphasis on employee development and organizational realignment. With respect to financial 

reporting, in addition to the NRRIT item discussed above, the OIG’s major concern has related to 

processing of journal or standard vouchers used to record transactions in the financial system. 

Along with significantly strengthening internal controls over voucher processing, we enhanced 

our quality assurance (QA) activities. For the first, second, and third quarters of fiscal year 2020, 

the QA review, which covered 100% of journal vouchers and one-third of standard vouchers 

processed with individual amounts ranging from $5 million to $5 billion, found no procedural or 

substantive errors. As such, the error rate since the third quarter of fiscal year of 2019 through 

the third quarter of fiscal year 2020 has been 0%. These actions have improved the accuracy 

and completeness of recorded amounts and the overall effectiveness of financial reporting 

internal controls. The OIG recognized the effectiveness and efficiency of these corrective 

actions and closed the ineffective internal controls component of the previously cited financial 

reporting material weakness. 

Further, the agency has continued making strides in implementing Enterprise Risk Management 

(ERM) at the RRB by leveraging the Management Control Review (MCR) infrastructure already in 

place. In fiscal year 2020, we incorporated an ERM based reporting structure into the MCR guide 

aimed at enhancing our ability to identify potential events that may affect the agency and manage 

the related risks within our risk appetite. In fiscal year 2021, we will fully implement the new ERM 

based MCR reporting along with training of responsible officials. We are committed to strong 

internal controls and will move forward with the next phase of ERM implementation. 

Federal Information Security Modernization Act 

The Federal Information Security Management Act of 2002 (FISMA), as amended by the Federal 

Information Security Modernization Act of 2014, requires agencies to ensure adequate security 

protections for Federal information systems and information. Preliminary audit results for the FY 

2020 FISMA audit indicate that Kearney & Company will assess our overall maturity at Level 2 – 

Defined, maintaining the rating from 2019. The RRB realized fifteen significant improvements 

across each of the eight domains, improving several lower level ratings to Consistently 

Implemented, which is one-step lower than Level 4 – Managed and Measurable. Additionally, for 

the Configuration Management domain, the Agency improved from Level 1 – Ad-Hoc to Level 2 – 

Defined, and for the Data Protection and Privacy domain, the Agency improved from Level 2 – 

Defined to Level 3 – Consistently Implemented.

The preliminary FY 2020 audit results further demonstrate progress in improving our information 

security program and practices across the Agency as required by FISMA, OMB policy and 

guidelines, and National Institute of Science and Technology standards and guidelines. The RRB 

will continue to make incremental steps to reach the overall maturity goal of Level 4 – Managed 

and Measurable. 

2 Memorandum from Debra Stringfellow-Wheat, Assistant Inspector General for Audit, OIG to Shawna Weekley, Chief 

Financial Officer, RRB, October 30, 2020 (on file at the RRB). 
- 36 - 

Financial Management Systems Strategy 

The RRB is committed to an integrated and automated financial management system that 

focuses on the agency’s mission and accountability. Our goals are to (1) achieve compliance 

with applicable laws, regulations, standards and requirements; (2) identify requirements for 

financial systems support; (3) improve and facilitate user access to financial information; 

(4) reduce redundant data entry, storage and processing; and (5) improve security, control and 

disaster recovery capability for information processed and stored on remote servers, mainframe, 

local area network and personal computer systems. 

The RRB’s financial management system is a comprehensive proprietary software application 

from CGI Federal – Momentum Enterprise Solution – that resides on a cloud hosting 

service. The RRB’s system is referred to as the Financial Management Integrated System 

(FMIS). Momentum meets the core financial system requirements set by the Financial Systems 

Integration Office (FSIO) and is Federal Enterprise Architecture compliant. The hosting service 

is also provided by CGI Federal which is a commercial shared service provider for financial 

system services. Its cloud system has achieved compliance with the General Services 

Administration’s (GSA) FedRAMP security requirements and is an authorized cloud service 

provider. As such, FMIS is separate and distinct from RRB’s internally managed Agency 

Enterprise General Information Systems (AEGIS), Benefit Payment Operations (BPO) and 

Financial Interchange (FI) system. 

FMIS supports the RRB’s budget formulation and execution, general ledger and trust fund 

accounting, procurement, contract management, fixed assets, accounts payable and both 

administrative and program accounts receivable requirements. The RRB and CGI Federal 

successfully implemented an upgrade of the FMIS software (Momentum Financials) from version 

7.03 to version 7.6 in March 2020. The project was a major component of the RRB’s systems 

modernization initiative. 

The RRB currently utilizes both commercial and Federal shared service providers for other EGovernment functions, including payroll (GSA), travel (CWTSatoTravel) and employee relocation 

services (Bureau of the Fiscal Service). The RRB’s human resources shared service provider is 

IBM (i.e. GSA, RRB’s previous provider, transitioned the functions to IBM in FY 2019). The 

payroll and travel functions are integrated with FMIS through electronic interfaces. 

Forward-Looking Information

Information Technology Modernization

Our mission essential programs are straining under the burden of being maintained by legacy 

computer systems built 40 years ago. To continue providing the excellent service to our 

beneficiaries, our IT modernization efforts are being leveraged to transform these legacy 

systems and build modern digital services while safeguarding information anywhere, anytime, in 

all ways throughout the information life cycle. As part of modernization, we have the opportunity 

to leverage more efficient and effective technologies that will positively impact our infrastructure 

and use of software applications and data to provide timely and accurate services to our 

customers. The modernization will require an updated architecture to directly address our 

service delivery from a managed cloud services perspective. With ever increasing IT security 

and privacy risks, we aim to make our systems and processes more robust with advanced 

privacy and security controls. This IT modernization is a three-phased, iterative and incremental 

approach to confirm program integrity and meet operational performance standards, all while 

improving our customer’s experiences with our services. 
- 37 -

The RRB has been and is currently contracting re-platform services and software to transition 

mission essential programs from the end-of-life mainframe hardware. During fiscal year 2020, 

however, we faced some challenges with our re-platform approach, which caused the RRB to 

pause the contract to ensure sufficient mitigation of operational, schedule and cost risks incurred 

during Q2 and Q3 this fiscal year. Additionally, during fiscal year 2020, the RRB completed the 

contract, which assessed RRB’s core current businesses and developed a To-Be Blueprint for 

modernization. That contractor also delivered a proposed transition plan towards the To-Be 

State. During fiscal year 2020, we began tailoring our next steps towards modernization based 

on these results, as well as agency priorities and available resources. Additionally, the RRB 

began planning to identify core business processes to receive direct positive impact as a result of 

modernization of applications and systems, setting the course to complete the Stabilize Phase 

and enter the Modernize Phase in fiscal year 2021. In fiscal year 2021, we plan to continue IT 

Modernization efforts executing the tailored blueprint, outsourcing non-core services, and reengineering the agency’s core benefit processing and payment systems. 

Human Capital Management 

The agency’s dedicated and experienced employees have been the foundation for our 

outstanding track record in customer service and satisfaction. However, we recognize that there is 

an ongoing need and responsibility to effectively manage our human capital resources. This is 

particularly important given the number of RRB employees who have recently retired and those 

who are eligible for retirement over the next four years. We have been working closely with OPM, 

as well as OMB, to develop long-range plans that will position the agency for continued success in 

administering our programs. 

In particular, the RRB has been focusing on strategic management of human capital. The RRB is 

developing a comprehensive plan, which outlines the agency’s human capital policies, programs 

and practices as they support this Strategic Plan. This will also include a detailed analysis of the 

demographic features of the RRB workforce and the skills needed to fulfill our mission. It also will 

establish a framework of actions over the planning period that will assist the RRB in recruiting, 

retaining and developing talented employees. Key challenges facing the agency include an aging 

workforce, employee attrition and the increasing complexity of information technology needs. 

Summary of Actuarial Forecast 

The Statement of Social Insurance (SOSI) presents an actuarial analysis of the financial position 

of the railroad retirement system as of October 1, 2019, under our intermediate employment 

assumption. The Required Supplementary Information presents sensitivity analyses showing the 

impact of changes in employment and investment return assumptions. Although under our 

intermediate assumption no cash flow problems arise during fiscal years 2020-2094, the 

sensitivity analyses show that, under the current financing structure, actual levels of railroad 

employment and investment return over the coming years will determine whether additional 

corrective action is necessary. 

Section 7105 of the Technical and Miscellaneous Revenue Act of 1988 requires the RRB to 

submit an annual report to Congress on the financial status of the railroad unemployment 

insurance system. Projections were made for the various components of income and outgo 

under each of three employment assumptions for the 11 fiscal years 2020-2030. The results 

indicate that, except for small short-term cash flow problems in fiscal years 2020 and 2021 under 

all employment assumptions and in fiscal year 2022 under the pessimistic assumption, the 

Railroad Unemployment Insurance (RUI) Account will be solvent during the 11-year projection 

period. 
- 38 -

Based on the May 2020 Section 7105 report, the short-term cash flow problem ranges from $120 

million to $179 million over the course of FY 2020 through FY 2022. This results in loans from 

the RR account to the RUIA account primarily due to increased unemployment from the global 

COVID-19 pandemic. The system resolves itself when excess RUIA account taxes are collected 

through a combination of experience rating surcharges and lower unemployment/sickness 

benefits, which leads to the loans being paid off with interest no later than FY 2023. 

Limitations of the Financial Statements

The limitations of the principal financial statements are as follows: 

The principal financial statements are prepared to report the financial position and results of 

operations of the reporting entity, pursuant to the requirements of 31 U.S.C. § 3515(b). The 

statements are prepared from the books and records of the entity in accordance with Federal 

Generally Accepted Accounting Principles and the formats prescribed by OMB. Reports used to 

monitor and control budgetary resources are prepared from the same books and records. The 

financial statements should be read with the realization that they are for a component of the U.S. 

Government. 
PERFORMANCE SECTION 
PAGE INTENTIONALLY LEFT BLANK
- 41 -

PERFORMANCE SECTION 

Government Performance and Results Act Report 

The following performance report is based on the major goals and objectives for fiscal year 

2020 from the RRB’s Annual Performance Plan. The indicators we developed support our 

mission and communicate our intentions to meet challenges and seek opportunities for greater 

efficiency, effectiveness and economy. 

To achieve our performance goals, the RRB holds managers accountable for achieving program 

results and improving program effectiveness by focusing on results, service quality and 

customer satisfaction. In addition, the annual performance plan is used to help managers 

improve service delivery by requiring that they plan for meeting program objectives and by 

providing them with information about program results and service quality. To provide 

reasonable assurance that the reported performance information is relevant and reliable, 

performance goals are incorporated into performance standards for managers and supervisors 

and monitored on an agency-wide basis. 

The following is a consolidated presentation of our actual performance for fiscal years 2017 

through March 31, 2020 (except as noted), followed by a discussion of our unmet performance 

goals and objectives for fiscal year 2019. At the time this report was prepared, actual fiscal year 

2020 information was unavailable. Unmet fiscal year 2020 goals and indicators will be 

presented in next year’s report. This performance report was prepared by RRB employees. 

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/

)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

STRATEGIC GOAL I: Modernize Information Technology (IT) Operations to Sustain Mission Essential Services

Strategic Objective: Legacy Systems Modernization 

Goal leader: Terryne F. Murphy, Chief Information Officer 

I-A-1. Transform Tax and EDM systems

(3 million lines of legacy COBOL) from

the mainframe to distributed architecture.

New Goal 

for 

FY 2018 

Tax: 

100% 

EDM: 

new 

strategic 

direction, 

See I-A-4 

I-A-2. Deliver online retirement forms (AA1, AA-3) as citizen-centric digital

solutions.

New Goal 

for 

FY 2018 

AA-1: 

100% 

AA-3: 

80% 

AA-1: 

Complete 

AA-3: 80% 

AA-3: new 

strategic 

direction, 

moved to 

Modernize 

phase 

AA-1: 

Complete 

AA-3: new 

strategic 

direction, 

moved to 

Modernize 

phase 

I-A-3. Transition Mission Essential

Programs from the End-of-Life Mainframe

hardware.

New Goal 

for 

FY 2019 

10% 50% 50%
- 42 - 

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/

)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

I-A-4. Complete the assessment for reengineering Mission Essential Programs. 

New Goal 

for 

FY 2019 

50% 100% 100% 

I-A-5. Complete the migration of agency 

network and telecommunication services 

to new services in EIS. 

New Goal 

for 

FY 2019 

0% 50% 50% 

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/

)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

STRATEGIC GOAL II: Provide Excellent Customer Service 

Strategic Objective: Pay benefits timely.

Goal leader for objectives II-A-1 through II-A-5; II-A-7 and II-A-8: Crystal Coleman, Director of Programs 

Goal leader for objective II-A-6: Daniel Fadden, Director of Field Service/Senior Executive Officer 

Goal leader for objective II-A-9: Rachel L. Simmons, Director of Hearings and Appeals 

II-A-1. RRB makes a decision to pay 

or deny a railroad retirement 

employee or spouse initial annuity 

application within 35 days of the 

annuity beginning date, if advanced 

filed. 

(Measure: % ≤ 35 days) 

95.0% 94.9% 95.4% 94.0% 95.8% 

II-A-2. RRB makes a decision to pay 

or deny a railroad retirement 

employee or spouse initial annuity 

application within 60 days of the date 

the application was filed. 

(Measure: % ≤ 60 days) 

95.5% 96.5% 96.5% 94.0% 97.4% 

II-A-3. RRB makes a decision to pay, 

deny or transfer to SSA an initial annuity 

application for a railroad retirement 

survivor not already receiving a benefit 

within 60 days of the annuity beginning 

date, or date filed (whichever is later). 

(Measure: % ≤ 60 days) 

96.9% 96.2% 96.0% 94.0% 95.5% 
- 43 - 

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/

)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

II-A-4. RRB makes a decision to pay, 

deny or transfer to SSA an initial annuity 

application for a railroad retirement 

survivor already receiving benefits as a

spouse within 30 days of the RRB’s 

receipt of first notice of the employee’s 

death. 

(Measure: % ≤ 30 days) 

96.1% 96.5% 96.6% 94.0% 95.1% 

II-A-5. RRB makes a decision to pay or 

deny a lump sum death benefit within 

60 days of the date the application was 

filed. 

(Measure: % ≤ 60 days) 

97.5% 98.2% 97.3% 97.0% 97.3% 

II-A-6. RRB certifies a payment or 

releases a letter of denial of UI or SI 

benefits within 10 days of the date RRB 

receives the claim. 

(Measure: % < 10 days) 

99.9% 99.9% 99.9% 98.5% 99.9% 

II-A-7. RRB makes a decision to pay or 

deny a benefit for a disabled applicant or 

family member within 100 days of the 

date the application is filed. 

(Measure: % ≤ 100 days) 

14.7% 11.3% 12.5% 70.0% 15.0% 

II-A-8. RRB makes a payment to a 

disabled applicant within 25 days of the 

date of decision or earliest payment 

date, whichever is later. 

(Measure: % < 25 days) 

92.5% 91.5% 85.2% 94.0% 86.4% 

II-A-9. Reduce the number of days 

elapsed between the date the appeal is 

filed and a decision is rendered. 

(Measure: average elapsed days) 

217 217 207 207 207 

Strategic Objective: Provide a range of choices in service delivery methods.

Goal leader: Crystal Coleman, Director of Programs 

II-B-1. Offer electronic options to our 

customers, allowing them alternative 

ways to perform primary services via the 

Internet or interactive voice response

systems. 

(Measure: Number of services 

available through electronic media) 

19 services

available 

19 services

available4/ 

19 services

available4/ 

22 services

available 

19 services 

available4/ 
- 44 -

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/

)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

II-B-2. Enable employers

to use the Internet to

conduct business with the

RRB, in support of the

Government Paperwork

Elimination Act.

(Measures: percentage of 

employers who use the 

on-line ERS; number of 

services available through 

electronic media) 

a) Employers

using ERS:

b) Internet

services:

99.0% 99.3% 99.2% 99.0% 99.6% 

29 Internet 

services 

available 

30 Internet 

services

available 

30 Internet 

services

available 

31 Internet

services

available 

30 Internet 

services

available 
- 45 - 

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

STRATEGIC GOAL III: Serve as Responsible Stewards for Our Customers’ Trust Funds and Agency Resources

Strategic Objective: Ensure that trust fund assets are protected, collected, recorded, and reported 

appropriately.

Goal leader: Shawna R. Weekley, Chief Financial Officer 

III-A-1. Debts will be collected through 

billing, offset, reclamation, referral to 

outside collection programs, and a variety 

of other collection efforts. 

(Measure: total overpayments recovered 

in the fiscal year / total overpayments 

established in the fiscal year.) 

92.14% 91.70% 91.70% 85.00% 94.33% 

Strategic Objective: Ensure the accuracy and integrity of benefit programs. 

Goal leader III-B-1(a)(b) and III-B-3, 4, and 5: Crystal Coleman, Director of Programs 

Goal leader III-B-2a: Daniel Fadden, Director of Field Service 

Goal leader III-B-2b: Micheal Pawlak, Director of Unemployment Payment Support Division 

III-B-1. Achieve a 

railroad retirement 

benefit payment 

accuracy rate 5/ of at 

least 99%. 

(Measure: percent 

accuracy rate) 

a) Initial 

 payment 

b) Sample 

post 

recurring 

payments 

98.89% 99.87% 

99.99% 

(through 2nd

quarter FY 

2019)

99.50% 99.94% 

99.94% 99.56% 

99.94% 

(through 2nd

quarter FY 

2019)

99.50% Not 

Available 

III-B-2. Achieve a 

railroad 

unemployment/sickness 

insurance benefit 

payment accuracy rate 5/ 

of at least 99%. 

(Measure: percent 

accuracy rate) 

a) Unemployment 

b)  Sickness 

97.24% 96.09% 96.23% 96.50% 99.89% 

99.08% 100.00% 97.93% 97.50% 98.25% 

III-B-3. Overall Initial Disability 

Determination Accuracy. 

(Measure: % of Case Accuracy) 

94.40% 94.40% Not Available 95.00% Not 

Available 

III-B-4. Maintain the level of RRA 

improper payments below the OMB 

threshold. 

(Measure: prior to fiscal year 2014, 

below 2.5%; beginning fiscal year 2014, 

below 1.5%) 

Reporting 

relief 

granted by 

OMB

Reporting 

relief 

granted by 

OMB 

Reporting 

relief 

granted by 

OMB 

1.00% Not 

Available 
- 46 - 

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

III-B-5. Achieve a return of at least 

$3.60 for each dollar spent on 

program integrity activities. 

(Measure for fiscal year 2011: recoveries 

and savings per dollar spent. Measure 

for fiscal years 2012 and following: 

recoverables and savings per dollar 

spent) 

$3.70: $1.00 $3.44:$1.00 $6.66: $1.00 $3.85: $1.00 Not 

Available 

Strategic Objective: Ensure effectiveness, efficiency, and security of operations.

Goal leader: Terryne F. Murphy, Chief Information Officer 

III-C-1. Complete modernization of 

RRB processing systems in 

accordance with long-range planning 

goals. 

(Measure: Meet target dates for the 

project. Yes/No) 

Complete Complete Complete Complete Complete 

III-C-2. Deliver – Deliver on Budget. 

Percent of IT Projects costs within 

10% of budgeted costs. 

100% 85% 100% 85% 100% 

III-C-3. Deliver – Meet 

Customer 

Expectations. 

RRB.gov online 

services, continuous 

availability 

experienced by end 

users. 

a. Continuous 

availability 

target 

b. Hours of 

outage 

allowed per 

month 

99.20% 98.92% 98.99% 95.00% 99.55% 

6.52 hours 7.77 hours 7.38 hours 7 hours 3.22 hours 

III-C-4. Innovate – Design for Modularity. 

Strategy for Continuity of Operations 

Improvements. Not 

Completed 

Yes. 

Completed 

applying 

HTTPSonly 

standard to 

www.rrb.gov. 

Cloud based 

enterprise 

test lab: No. 

Implement 

cloud-based 

enterprise 

test lab – 

Yes 

Implement 

cloudbased 

enterprise 

test lab – 

No 

III-C-5. Innovate – Adopt New 

Technologies. Percentage of 

investments that evaluated cloud

alternatives. 

50% 99.93% 100% 98.5% 100% 
- 47 - 

Railroad Retirement Board

Fiscal Year 2020 Performance Plan

2017 Actual 

(At $113.5m)

2018 Actual 

(At $123.5m)

2019 Actual 

(At $123.5m2/6/)

2020 Planned 1/

(At $123.5m 3/)

2020 Actual 1/

(At $123.5m 3/)

III-C-6. Protect – Email Data Loss 

Prevention. Percentage of 

externally bound emails and their

attachments automatically 

encrypted that contain personally 

identifiable or credit card 

information. 

99.82% 99.93% 100% 99% 100% 

III-C-7. Protect – Percentage of agency 

employees required to use a Personal 

Identity Verification card to 

authenticate. 

74% 77% 73% 

Unprivileged 

Network 

Users > 85% 

Privileged 

Network 

Users 100% 

66% 

Unprivileged 

Network 

Users > 63% 

Privileged 

Network 

Users 100% 

Strategic Objective: Effectively carry out responsibilities with respect to the National Railroad Retirement 

Investment Trust.

Goal leader: Ana M. Kocur, General Counsel 

III-D-1. Timely review information 

reported by the National Railroad 

Retirement Investment Trust to carry out 

RRB’s oversight responsibility under 

section 15(j) (5) (F) of the Railroad 

Retirement Act. Reports are to be 

reviewed within 30 days of receipt. 

(Measure: Yes/No) 

Yes Yes Yes Yes Yes 

Footnotes: 

1/ Planned amounts reflect the fiscal year 2020 performance targets shown in the RRB’s Congressional 

Justification of Budget Estimates, released on February 10, 2020. Unless otherwise noted, actual results 

represent status as of March 31, 2020, and as reported in the RRB’s FY 2022 Budget Submission, dated 

September 14, 2020. 

2/ Public Law 115-245, Department of Defense and Labor, Health and Human Services, and Education 

Appropriations Act, 2019 and Continuing Appropriations Act, 2019, provided $123,500,000 in funding and 

includes $10,000,000 devoted specifically to RRB information technology investment initiatives. The 

$10,000,000 will remain available until expended. 

3/ Public Law 116-94, the Further Consolidated Appropriations Act, 2020, provided $123,500,000 in funding and 

includes $10,000,000 devoted specifically to RRB information technology investment initiatives. The 

$10,000,000 will remain available until expended. 

4/ The actual services available for goal II-B-1 was incorrectly reported in the FY 2018 and FY 2019 

Performance and Accountability Reports. The Retirement Application form AA-1 pilot program went into 

production in late FY 2018; however, full implementation of this new service is presently on hold. The correct 

number of actual services available for FY 2018, FY 2019, and mid-year FY 2020 is 19. 

5/ The payment accuracy rate is the percentage of dollars paid correctly as a result of adjudication actions 

performed. 

6/ The amounts reported in the 2019 Performance and Accountability Report for 2019 Actual results were 

reported as of March 31, 2019 unless otherwise noted. 
- 48 - 

 Discussion of Unmet Performance Goals and Indicators for Fiscal Year 2019 

INDICATOR DISCUSSION OF VARIANCE 

Performance Indicator I-A-2. Deliver online retirement 

forms (AA-1, AA-3) as citizen-centric digital solutions. 

We originally planned on completing the Form AA-3 

(100%) in FY 19. 

We have now decided to move the completion of the form 

to the Modernized phase of the overall IT Modernization 

project in order to take advantage of the integration with 

other modernized benefit processes and the enhanced 

customer experience. 

Performance Indicator II-A-7 The RRB makes a decision 

to pay or deny a benefit for a disabled applicant or family 

member within 100 days of the date the application is 

filed. (Measure: % ≤ 100 days)

Our fiscal year 2019 goal was 70.0%, and the actual was 

12.5%. 

DBD did not reach its goal of 70% initial filings rated 

within 100 days due to DBD’s significant reduction of 

cases with filing dates prior to 2017. At the start of the 

fiscal year, there were nearly 900 cases with filing dates 

2017 and earlier. At the end of the fiscal year, there were 

158 cases, which equates to an 82.3% decrease. At the 

end of FY 2019, approximately 8% of the pending 

workload was from 2017. DBD’s elimination of cases 

from 2015, 2016, and the significant reduction in the 

cases with filing dates in 2017, impacted DBD’s 

timeliness. 
- 49 - 

INDICATOR DISCUSSION OF VARIANCE 

Performance Indicator II-A-8 RRB makes a payment to 

a disabled applicant within 25 days of the date of 

decision or earliest payment date, whichever is later. 

(Measure: % ≤ 25 days) 

Our fiscal year 2019 goal was 94.0% and the actual was 

85.2%.

This payment goal is shared by both RBD and SBD 

Divisions. Both RBD and SBD had staff to adjudicate 

the initial disability payments but the combination of 

loss of staff, promoting newly trained inexperienced 

staff, and overall low staffing levels to authorize the 

payments attributed to RSBD not meeting the goal. 

RBD has not been sufficiently staffed in our Legal 

Partition section which also awards initial disability 

applications. During fiscal year 2019 one experienced 

claims examiner received a promotion leaving this 

section with only two experienced examiners. During 

fiscal year 2019 a request was released to all eligible 

examiners in RBD to secure a volunteer to lateral over 

to the Legal Partition/Garnishment Unit. One employee 

volunteered; however, the required training lasted 

approximately 4 to 5 months which took resources 

away from actual case processing. This section has 

been short staffed since the beginning of fiscal year 

2016 causing delays in payments and adjustments. 

RBD also initiated a new process to assist in meeting 

the customer service payment goal for initial disability 

cases involving Legal Partition, yet we still remain short 

staffed. 

The survivor disability initial application volume 

represents on average approximately 10% of the initial 

disability applications received annually. Since the 

volume is small, one missed payment can lower the 

overall payment percentage. During the first quarter of 

fiscal year 2019, a mechanical system processing error 

was identified and corrected. This caused delays in 

processing the payments for initial survivor disability 

cases. 

Performance Indicator II-B-1 Offer electronic options to 

our customers, allowing them alternative ways to 

perform primary services via the Internet or interactive 

voice response systems. (Measure: Number of 

services available through electronic media) 

Our fiscal year 2019 goal was 22 services available and 

the actual was 19 services available.

Policy and Systems did not meet the goal for actual 

services available in FY 2019 due to higher priority 

projects including re-platforming and re-engineering. 
- 50 - 

INDICATOR DISCUSSION OF VARIANCE 

Performance Indicator III-B-2a. Achieve a railroad 

unemployment insurance benefit payment accuracy rate 

of at least 99%. (Measure: percent accuracy rate) 

Our fiscal year 2019 goal was 97.00%, and the actual 

was 96.23%.

Field Service has continued to see high staff attrition 

rates over the last few years. While we were able to 

hire 20 new Claim Representatives very late in FY 

2019 (2 have since left for other Federal jobs), they 

have only recently completed their 6-month Initial 

Training Period. Since the start of FY 2019, we have 

lost a total of 60 FTEs in Field Service and given the 

current COVID-19 Pandemic, it is questionable at this 

time whether we will able to add any additional new 

hires in FY 2020. The continued loss of experienced 

Field Service employees, in addition to limited hiring of 

staff replacements, are both directly attributable to the 

slight decrease seen in the unemployment payment 

accuracy rate. 

Performance Indicator III-C-7. Protect – Percentage of 

agency employees required to use a Personal Identity 

Verification (PIV) card to authenticate. 

Our fiscal year 2019 goal was Network Users > 85% 

and the actual was for Network Users 73%. 

Variance due to delays in staff receiving the replacement 

for expiring PIV cards from GSA. In addition, the agency’s 

approach to use temporary smart cards cannot work for 

those individuals who also telework. These challenges 

caused some of our users to be un-enforced, which 

dropped the unprivileged network users to 73%. 

We have now started using a different solution called 

CyberArk for tracking and protecting the network for 

both privileged and unpriviledged network users. We 

anticipate to be on track for the next reporting period to 

meet or exceed the goals. 
- 51 - 

Program Evaluations 

PROGRAM EVALUATION RESULTS IN FISCAL YEAR 2020 

Federal Managers’ Financial 

Integrity Act Reports 

See “Analysis of Systems, Controls and Legal Compliance” in the 

“Management’s Discussion and Analysis” section. 

Annual actuarial report 

required by the Railroad 

Retirement Act of 1974 and 

the Railroad Retirement 

Solvency Act of 1983 

The report, which was completed in June 2020, concludes that, barring a 

sudden, unanticipated, large drop in railroad employment or substantial 

investment losses, the railroad retirement system will experience no cash flow 

problems during the next 25 years under any of the three employment 

assumptions. The report did not include any recommendations for financing 

changes. 

Railroad Unemployment 

Insurance System, annual 

report required by section 

7105 of the Technical and 

Miscellaneous Revenue Act of 

1988 

The report, which was released in June 2020, addresses the 11 fiscal year period 

2020 through 2030. The report indicated that even as maximum benefits are 

expected to increase 44 percent from 2019 to 2030, except for small short-term 

cash flow problems in fiscal years 2020-2022, experience-based contribution 

rates are expected to keep the unemployment insurance system solvent. The 

report did not include any recommendations for financing changes at this time. 

Customer service 

performance reports 

The RRB continuously monitors the timeliness and accuracy of our performance 

in managing program workloads. These results are reflected in the performance 

objectives shown in the charts within this Performance Section, and published on 

our website at www.RRB.gov. 

Program integrity report Our most recent program integrity report was for fiscal year 2019. It showed that 

program integrity activities resulted in the establishment of about $12.9 million in 

recoverables, benefit savings of $919,016, and 52 cases referred to the Office of 

Inspector General. 

Quality assurance reviews 

and special studies 

RRA and RUIA adjudicative and payment accuracy is measured in regular 

diagnostic reviews conducted by quality assurance staff within the RRB’s 

Program Evaluation and Management Services (PEMS) component. Initial 

disability determination accuracy is evaluated by quality assurance staff within 

PEMS and by an external contractor (Juncture). PEMS also evaluates policies 

and processes through special studies, as needed. PEMS reports to the Director 

of Programs. 

PROGRAM EVALUATION RESULTS IN FISCAL YEAR 2020 

Occupational disability 

reviews 

Advisory doctors, representing the rail industry (labor and management), are 

authorized by law to review agency medical decisions. Case review audits were 

completed in 2000, 2008, and 2018. 

Performance budget 

monitoring 

Results of performance budget monitoring are shown in the chart of performance 

objectives on the following pages. Actual performance data are reviewed, 

validated and certified prior to inclusion in this report. Validation and certification 

processes are documented as part of the RRB’s management control review 

process. 

Computer security and privacy 

assessment 

RRB continues to make progress toward achieving full certification and compliance 

with the Federal Information Security Management Act (FISMA), Office of 

Management and Budget directives and National Institute of Standards and 

Technology guidance for its information systems as evidenced in the documented 

improvements in FISMA metrics for FY2020.
- 52 - 

PROGRAM EVALUATION RESULTS IN FISCAL YEAR 2020

Electronic government 

(e-Gov) activities 

See pages 53 through 54 of this section. 

Payment integrity evaluation See “Payment Integrity” in the “Other Information” section. 

RRB Office of Inspector 

General audits 

See “Inspector General’s Statement on Management and Performance 

Challenges” and “Management’s Comments” in the “Other Information” section. 

 
- 53 - 

 Automation, e-Government and Customer Service Initiatives 

As the RRB continues its commitment to accomplish its top priority – the IT Modernization (or 

RRB Transformation), during fiscal year 2020, there were several enhancements to existing 

applications, which are intended to incrementally improve the services provided to the US 

Railroad Industry. 

The RRB continued to pursue enhancements in fiscal year 2020 with the development and 

implementation of Form G-117a, Designation of Contact Officials. Use of this form will allow 

employers to quickly provide updated information on changes to the responsible officials in their 

organizations. This will add one more service to the system for a total of 31 automated ERSnet 

services. 

In FY 2020, as a part of our Citizen Services Improvements initiative, we worked with the U.S. 

General Services Administration (GSA) Login.gov solution to implement identity proofing and 

multi-factor authentication services at the RRB. The RRB was the first Federal agency to 

partner with Login.gov and provide identity verification to citizens at the higher Identity 

Assurance Level 2 (IAL2). Login.gov has stated the RRB’s contributions were invaluable to their 

success with IAL2. They have since started pilot programs with other Federal agencies to 

identity proof individuals at the same level. This will allow individuals to securely access 

information or services from any Federal agency that has opted to use Login.gov with a single 

sign-on. 

Work continued on SPEED, an automation initiative designed to process post-entitlement 

annuity adjustments in both retirement and survivor cases that result from excess earnings and 

work deductions. SPEED allows the RRB to adjust annuity payments for earnings on a timely 

basis, which minimizes any underpayments or overpayments that may result from changes in 

earnings. SPEED is being built in a multi-phase approach. 

In fiscal year 2020, we completed and placed into production nine enhancements relating to the 

processing of cases. These include enhancements to public service pension referrals, work 

deductions referrals, supplemental annuity transactions, vested dual benefit referrals, partial 

withholding and multiple reports in SPEED and SURPASS. We also implemented measures to 

handle missing USTAR records sent to SPEED, removed erroneous duplicate cases stored in 

SPEED, and migrated SPEED to a new server. 

The agency’s re-platforming and engineering projects starting in fiscal year 2020 have an 

impact on the SPEED project. In consideration of those two higher priorities, in May 2020, we 

determined a tentative priority ranking of deliverables for SPEED after the projects are 

completed. As such, we have deferred any additional SPEED enhancements until completion 

of those higher priority projects. We will continue to work on SPEED, to process awards for the 

most difficult category involving earnings in response to any retirement final work report for an 

employee and his or her associated spouse or divorced spouse. 

In fiscal year 2020, we completed the two phases of the SEARCH Expansion Project. 

(SEARCH is the Service Earnings and Railroad Compensation History). The first phase was 

the table expansion to increase the table from 2020 to 2034 (an additional 14 years) which was 

completed in October 2019. The second phase involved expanding the Average Indexed 

Monthly Earnings (AIME) amount to 99999 and the Tier II contribution amount to $999,999.99 in 

SEARCH and other related systems which was completed in June 2020. The completion of the 

two phases ensures the correct annuity rate calculation. 
- 54 - 

In fiscal year 2021, RRB staff plans to develop on-line ERSNet processes Form RL-13g, Notice 

to Employer of Relinquishment of Rights of Disability Annuitant Who Attained Age 65, and the 

AESOP, Employee Retirement Estimate File. 

 Sequestration of RUIA Benefits

Under provisions of the Budget Control Act of 2011 (BCA), across-the-board cuts in Federal 

spending took effect March 1, 2013. While railroad retirement, survivor and disability payments 

are not affected by this measure, unemployment and sickness insurance benefits payable under 

the RUIA are impacted. Benefits payable October 1, 2019, through September 30, 2020, are 

being reduced by 5.9 percent. The reduction is required by the sequestration order issued by 

the President in accordance with the BCA. For fiscal year 2021, a sequestration reduction of 

5.7 percent will be applied starting on October 1, 2020. 

 Succession Planning and Training 

Strategic Management of Human Capital – Like many agencies, the RRB has an aging 

workforce. Nearly 42 percent of our employees have 20 or more years of service and 35 percent 

of the current workforce will be eligible for retirement by fiscal year 2022. To prepare for the 

expected turnover, the agency is placing increased emphasis on strategic management of 

human capital. The Bureau of Human Resources continues to partner with senior management 

to develop a succession plan methodology and strategy to drive and support RRB’s 

mission. The succession planning process includes analyzing workforce data, trends and 

projected attrition in an effort to evaluate, prioritize and address future staff and skills needed for 

the RRB workforce. The results from the workforce analysis form the basis for formulating 

specific strategies, hiring plans and initiatives that support the agency’s succession plan. 

The Training and Development Section within the Bureau of Human Resources continues to 

utilize the results from training needs assessments and surveys to assist in prioritizing the 

RRB’s training needs. We are also making use of technology in this area, utilizing the LMS, an 

internet-based program which effectively formalizes many aspects of training for all agency 

employees, while also providing self-assessments to the student and feedback to supervisors 

on their progress. In addition, our Field Service supervisors/managers have access to the latest 

webinar technology to facilitate the remote training of new employees, as well as the ongoing 

training of experienced field staff. 

The Workforce Organization Management Section (WOMS) identifies appropriate target 

markets for our recruitment efforts to ensure we receive applications from a talented and diverse 

pool of applicants. Through USAJOBS, we have been able to reach candidates from many 

sectors. In FY 2019, we received over 5300 outside applications. We also utilize different 

recruitment strategies, like resume mining and targeted advertising, to ensure we are attracting 

quality candidates. 

 Systems Security 

We continue to make progress towards a compliant Information Security program to improve the 

RRB's security posture. RRB has implemented an Information Security Continuous Monitoring 

(ISCM) Strategy as outlined in OMB Memorandum M-20-04, Fiscal Year 2019-2020 Guidance 

on Federal Information Security and Privacy Management Requirements. This strategy 

addressed the gaps in the Information Security program. We partnered with the Department of 

Homeland Security (DHS) in the Continuous Diagnostic and Mitigation (CDM) program and 

continue by participating the CDM Dynamic and Evolving Federal Enterprise Network Defense 
- 55 - 

(DEFEND) program. This partnership with DHS will further improve our Information Security 

continuous monitoring compliance towards vulnerability assessment, hardware and software 

management, configuration management, and privileged account management. The RRB 

continues to employ the DHS EINSTEIN-3 Accelerated (E3A) toolset that ensures all of the 

Domain Name System (DNS) and Simple Mail Transfer Protocol (SMTP) are monitored by 

these services. 

We continue to manage the risk of the critical infrastructure considering asset management, 

remote access, identity management, and network protection. Specifically: 

 Assessment Management – we have enrolled in the DHS CDM DEFEND program to 

provide better visibility of current hardware and software and to automatically detect 

unauthorized hardware and software. 

o The RRB has implemented two phases of the CDM program and is forwarding 

RRB data to the CDM Federal Dashboard: 

 Hardware Asset Management “HWAM” to provide visibility into all 

hardware devices on the RRB Network 

 Vulnerability Management “VULN” to provide visibility to known 

vulnerabilities present on the network 

o The RRB will implement these two phases of CDM DEFEND during fiscal year 

2021 

 Software Asset Management “SWAM” to provide visibility into all software 

installed on the RRB network. 

 Configuration Settings Management “CSM” to manage configuration 

settings of assets on the RRB network. 

 Identity Management – The RRB enforces multi-factor authentication for general users 

and have installed a privileged access management system (i.e. CyberArk) for system 

administrators. 

 Remote Access – we deployed managed services for hardware encryption and have 

upgraded our firewalls to strengthen information security controls for remote access. 

Note: enforcement of PIV is instrumental for remote access. 

 Network Protection – as part of the RRB ISCM strategy, we will continue to improve the 

Defense in Depth configuration in place, namely the Intrusion Prevention System (IPS), 

Network Access Control (NAC), and the Security Information and Event Management 

(SIEM). 
PAGE INTENTIONALLY LEFT BLANK
FINANCIAL SECTION 
PAGE INTENTIONALLY LEFT BLANK 
- 59 - 

RAILROAD RETIREMENT BOARD 

CONSOLIDATED BALANCE SHEET 

AS OF SEPTEMBER 30, 2020 AND 2019

(in dollars) 

FY 2020 FY 2019

ASSETS     

Intragovernmental:

Fund Balance with Treasury (Note 3) $646,502,184 $321,397,023 

Investments (Note 4) 1,252,709,829 1,792,524,204 

Accounts Receivable (Note 6) 5,406,228,945 5,172,102,127 

Other 782,709 911,977 

Total Intragovernmental 7,306,223,667 7,286,935,331 

NRRIT Net Assets (Note 5) 24,822,289,000 25,415,964,974 

Accounts Receivable, Net (Note 6) 57,475,334 55,916,918 

General Property, Plant and Equipment, Net (Note 7) 2,275,201 2,984,518 

Other 27,650 543,960 

TOTAL ASSETS $32,188,290,852 $32,762,345,701

LIABILITIES (Note 8)

Intragovernmental:

Accounts Payable $476,596,930 $589,296,929 

Debt 4,423,228,877 3,982,221,827 

Other 1,173,013 1,591,358 

Total Intragovernmental 4,900,998,820 4,573,110,114 

Accounts Payable 2,164,134 29,925,329 

Benefits Due and Payable 1,157,299,611 1,147,844,783 

Other 243,780,812 416,662,924 

TOTAL LIABILITIES $6,304,243,377 $6,167,543,150

COMMITMENTS AND CONTINGENCIES (Note 9)

NET POSITION

Unexpended Appropriations - Funds from Dedicated Collections (Note 16) $908,778 $895,391 

Unexpended Appropriations - All Other Funds 466,890,837 147,544,183 

Cumulative Results of Operations - Funds from Dedicated Collections (Note 16) 25,407,345,556 26,442,457,823 

Cumulative Results of Operations - All Other Funds 8,902,304 3,905,154 

Total Net Position - Funds from Dedicated Collections (Note 16) 25,408,254,334 26,443,353,214 

Total Net Position - All Other Funds 475,793,141 151,449,337 

TOTAL NET POSITION 25,884,047,475 26,594,802,551 

TOTAL LIABILITIES AND NET POSITION $32,188,290,852 $32,762,345,701

The accompanying notes are an integral part of these statements. 
- 60 - 

RAILROAD RETIREMENT BOARD 

CONSOLIDATED STATEMENT OF NET COST 

FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019

(in dollars) 
- 61 - 

RAILROAD RETIREMENT BOARD 

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION 

FOR THE YEAR ENDED SEPTEMBER 30, 2020 

(in dollars) 

 FY 2020 
- 62 - 

RAILROAD RETIREMENT BOARD 

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION 

FOR THE YEAR ENDED SEPTEMBER 30, 2019 

(in dollars) 

 FY 2019 
- 63 - 

RAILROAD RETIREMENT BOARD

COMBINED STATEMENT OF BUDGETARY RESOURCES 

FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019

(in dollars)

FY 2020 FY 2019

Budgetary Resources 

Unobligated balance from prior year budget authority, net (discretionary 

and mandatory) $182,245,726 $180,713,821 

Appropriations (discretionary and mandatory) 9,955,876,628 9,856,490,162 

Borrowing authority (discretionary and mandatory) Note 18 4,752,400,000 4,241,400,000 

Spending authority from offsetting collections (discretionary and 

mandatory 185,297,130 185,474,554 

Total budgetary resources $15,075,819,484 $14,464,078,537 

Status of budgetary resources 

New obligations and upward adjustments (total) $14,573,641,372 $14,288,093,497 

Unobligated balance, end of year 

 Apportioned, unexpired accounts 464,702,756 14,647,257 

 Unapportioned, unexpired accounts 21,874,330 145,954,920 

 Unexpired unobligated balance, end of year 486,577,086 160,602,177 

 Expired, unobligated balance, end of year 15,601,026 15,382,863 

Unobligated balance, end of year (total) 502,178,112 175,985,040 

Total budgetary resources $15,075,819,484 $14,464,078,537 

Outlays, net 

Outlays, net (total) (discretionary and mandatory) $14,464,228,377 $14,030,518,167 

Distributed offsetting receipts (-) (5,530,321,006) (5,430,917,332) 

Agency outlays, net (discretionary and mandatory) $8,933,907,371 $8,599,600,835

The accompanying notes are an integral part of these statements. 
- 64 - 

Railroad Retirement Board

Statement of Social Insurance (Note 13, Note 15)

Actuarial Surplus or (Deficiency)

75-year Projection as of October 1, 2019

(Present values in billions of dollars)

10/1/2019 10/1/2018 10/1/2017 10/1/2016 10/1/2015

Current participants who have attained retirement age:

 Contributions and earmarked taxes $92.3 $98.4 $87.6 $88.2 $85.3

 Expenditures for scheduled future benefits 142.6 151.7 134.6 135.7 131.2

 Present Value of estimated future revenue less estimated future expen (50.3) (53.3) (47.0) (47.5) (45.8)

Current participants not yet having attained retirement age:

 Contributions and earmarked taxes 92.5 100.2 87.3 91.1 92.5

 Expenditures for scheduled future benefits 96.3 104.8 92.3 97.5 99.0

 Present Value of estimated future revenue less estimated future expen (3.8) (4.6) (5.0) (6.5) (6.5)

Net estimated present value of future revenue less future expenditures for

current participants (closed group measure) (54.1) (57.9) (52.0) (54.0) (52.4)

Plus: Treasury securities and assets held by the program 27.3 28.3 27.9 26.6 26.3

Closed group surplus/(unfunded obligation) ($26.9) ($29.5) ($24.2) ($27.5) ($26.1)

Future participants:

 Contributions and earmarked taxes $55.3 $63.2 $52.9 $61.0 $58.0

 Expenditures for scheduled future benefits 27.2 32.3 27.5 31.9 30.2

 Present Value of estimated future revenue less estimated future expen 28.1 31.0 25.4 29.2 27.8

Net estimated present value of future revenue less future expenditures for

current and future participants (open group measure) (26.0) (26.9) (26.6) (24.9) (24.6)

Plus: Treasury securities and assets held by the program 27.3 28.3 27.9 26.6 26.3

Open group surplus/(unfunded obligation) $1.3 $1.4 $1.2 $1.7 $1.7

Detail may not add to totals due to rounding.

The accompanying notes are an integral part of these financial statements.
- 65 - 
- 66 - 

Notes to the Financial Statements: Fiscal Years Ended September 30, 2020 and 2019 

1. Summary of Significant Accounting Policies 

A. Basis of Presentation

Public Law 107-289, the Accountability of Tax Dollars Act of 2002, added the RRB as an 

agency required to prepare audited financial statements for fiscal year 2003, and subsequent 

years. OMB guidance requires that Performance and Accountability Reports for fiscal year 

2020 are to be submitted to the President, the Congress, and the Director of OMB by November 

16, 2020. As required by law, OMB has also prescribed the form and content of financial 

statements under OMB Circular A-136. The RRB’s financial statements were prepared in 

accordance with the form and content prescribed by OMB and with generally accepted 

accounting principles and standards prescribed by the Federal Accounting Standards Advisory 

Board (FASAB). 

The principal statements (prepared on a consolidated basis, except for the Statement of 

Budgetary Resources, which was prepared on a combined basis, and eliminating all significant 

inter-fund balances and transactions) are comprised of the Balance Sheet and Statements of 

Net Cost, Changes in Net Position, Budgetary Resources, Social Insurance, and Changes in 

Social Insurance Amounts. These statements are different from the financial reports, also 

prepared by the RRB pursuant to OMB directives, used to monitor and control the RRB's use of 

budgetary resources. 

The current year balance sheet NRRIT amount is audited and restated. The prior year balance 

sheet unaudited NRRIT amount was within an acceptable materiality amount, not restated and 

used to meet the goal of November 15, 2019 for the release of RRB’s financial statements. The 

prior year balance sheet unaudited NRRIT amount was used in the computations for the SOSI. 

Accounting standards require all reporting entities to disclose that accounting standards allow 

certain presentations and disclosures to be modified, if needed, to prevent the disclosure of 

classified information. 

B. Reporting Entity

The railroad retirement and the railroad unemployment and sickness insurance programs are 

financed through the following accounts: 

● Railroad Retirement Account, 60X8011, funds retirement, survivor, and disability 

benefits in excess of social security equivalent benefits from payroll taxes on employers 

and employees and other income sources. Account 60X8011 is considered a fund from 

dedicated collections. Our authority to use these collections is 45 U.S.C. § 231f(c) (1). 

● Social Security Equivalent Benefit Account, 60X8010, funds the portion of railroad 

retirement benefits equivalent to a social security benefit from various income sources 

related to these benefits. Account 60X8010 is considered a fund from dedicated 

collections. Our authority to use these collections is 45 U.S.C. § 231n-1(c) (1). 

● Dual Benefits Payments Account, 60 0111, funds the phase-out costs of certain vested 

dual benefits from general appropriations. Account 60 0111 is considered a general 

fund. Our authority to use these collections is 45 U.S.C. § 231n (d). 

● Federal Payments to the Railroad Retirement Accounts, 60X0113, was established by 

OMB, not by legislation, and is used as a conduit for transferring certain income taxes on 
- 67 - 

benefits; receiving credit for the interest portion of uncashed check transfers; and funds 

provided by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation 

Act of 2010. Account 60X0113 is considered a fund from dedicated collections. This 

account has no basis in law. 

● Limitation on Administration Account, 60 8237, pays salaries and expenses to 

administer the railroad retirement program and the railroad unemployment and 

sickness insurance program. This account is financed by the RR Account, the SSEB 

Account, and the Railroad Unemployment Insurance Trust Fund, Administrative 

Expenses. Account 60 8237 is considered a fund from dedicated collections. Our 

authority to use these collections is 45 U.S.C. § 231n-1(c) and 45 U.S.C. § 231n (h). 

● Limitation on Administration Account, 60X8237, Public Law 107-217, Sec. 121(d)(3), 

authorizes Federal agencies to retain indefinitely as “no-year money” any unexpended 

portion of the fiscal year appropriated funds, up to the estimated cost of the operation 

and maintenance of the delegated properties. Funds carried over may only be 

expended for operation and maintenance and repair of the facility. In addition, this 

fund contains the Limitation on Administration funds for extended unemployment 

benefits provided under Public Laws 111-92, 112-96, and 112-240. Account 60X8237 

is considered a fund from dedicated collections. 

● Railroad Unemployment Insurance Trust Fund, Benefit Payments, 60X8051.001, funds 

railroad unemployment and sickness insurance benefits from contributions by railroad 

employers. Account 60X8051.001 is considered a fund from dedicated collections. Our 

authority to use these collections is 45 U.S.C. § 360. 

● Railroad Unemployment Insurance Trust Fund, Administrative Expenses, 

60X8051.002, was established to pay salaries and expenses to administer the 

program. Account 60X8051.002 is considered a fund from dedicated collections. This 

fund is financed by contributions from railroad employers. Monies are transferred from 

this fund, based on cost accounting estimates and records, to the Limitation on 

Administration Account (60 8237) from which salaries and expenses are paid for both 

the railroad retirement program and the railroad unemployment and sickness insurance 

program. Our authority to use these collections is 45 U.S.C. § 361. 

● Limitation on the Office of Inspector General, 60 8018, was established to fund the 

administration of the Inspector General's Office. Account 60 8018 is considered a fund 

from dedicated collections. Our authority to use these collections is Public Law 116-

94. 

● Railroad Unemployment Insurance Extended Benefit Payments – Recovery Act, 

60X0114: Funds provided under Public Law 111-5, American Recovery and 

Reinvestment Act of 2009. 

● Railroad Unemployment Insurance Extended Benefit Payments, for Limitation Account – 

60X0118: Funds provided under Public Law 111-92, Worker, Homeownership, and 

Business Assistance Act of 2009, and Public Law 112-96, Middle Class Tax Relief and 

Job Creation Act of 2012, and Public Law 112-240, American Taxpayer Relief Act of 

2012. 
- 68 - 

● Railroad Unemployment Insurance Extended Benefit Payments – 60X0117: Funds 

provided under Public Law 111-92, Worker, Homeownership, and Business Assistance 

Act of 2009. Per Division A of the CAREs Act, section 2114 amends the extended 

benefits that was originally created by ARRA to use of existing appropriation of $133 

million. 

● Railroad Unemployment Insurance Waiver of 7 Day Period – 6020/210123: General fund 

appropriation provided by Division A of the CAREs Act, section 2112. 

● Railroad Unemployment Insurance Enhanced Benefit Payments – 60X0122: General 

fund appropriation provided by Division A of the CAREs Act, section 2113. 

● Payment to Limitation on Administration – 6020/210121: General fund provided by the 

CAREs Act as a pass thru to LOA 6020/218237. 

● Limitation on Administration – 6020/218237: General fund passed thru from 

6020/210121 under CAREs Act 

C. Budgets and Budgetary Accounting

Budget requests are prepared and submitted by the RRB in accordance with OMB Circular 

A-11 and other specific guidance issued by OMB. The RRB prepares and submits to OMB 

Apportionment and Reapportionment Requests (SF-132) in accordance with OMB Circular 

A-11 for all funds appropriated by the Congress or permanently appropriated. Although OMB 

may apportion funds by category, time period, or object class of expense, the RRB controls 

and allocates all apportioned funds by three-digit object class codes of expense. For 

budgetary accounting, all receipts are recorded on a cash basis of accounting and 

obligations are recorded against the object class codes when they are incurred, regardless of 

when the resources acquired are to be consumed. Obligations are amounts of orders 

placed, contracts awarded, services received, and similar transactions during a given period 

that will require payments during the same or a future period. The RRB prepares and 

submits Reports on Budget Execution (SF-133) to OMB, reporting all obligations incurred 

against the amounts apportioned. 

D. Basis of Accounting

As required by law, the Dual Benefits Payment Account is on a cash basis of accounting. 

Payroll taxes and unemployment contributions are recorded on a modified cash basis in 

accordance with Statement of Federal Financial Accounting Standards (SFFAS) No. 7. All other 

transactions are recorded on an accrual basis of accounting and a budgetary basis. Under the 

accrual method, revenues (except payroll taxes and unemployment contributions which are on a 

modified cash basis) are recognized when earned and expenses are recognized when a liability 

is incurred. 

For budgetary accounting, financial transactions are recorded when obligations are incurred, 

regardless of when the resources acquired are to be consumed. 

The accompanying consolidated financial statements of the RRB include all funds maintained 

by the RRB, after elimination of all significant inter-fund balances and transactions. 

E. Concepts

The Fund Balance with Treasury (FBWT) is the aggregate amount of funds on deposit with the 

Department of the Treasury, excluding seized cash deposited. The FBWT is increased by (1) 

receiving appropriations, reappropriations, continuing resolutions, appropriation restorations, 
- 69 - 

and allocations; and (2) receiving transfers and reimbursements from other agencies. It also is 

increased by amounts borrowed from the Bureau of the Fiscal Service, the Federal Financing 

Bank, or other entities, and amounts collected and credited to appropriation or fund accounts. 

The FBWT is reduced by (1) disbursements made to pay liabilities or to purchase assets, 

goods, and services; (2) investments in U.S. securities (securities issued by the Bureau of the 

Fiscal Service or other Federal Government agencies); (3) cancellation of expired 

appropriations; (4) transfers and reimbursements to other entities or to the General Fund of the 

Treasury; and, (5) sequestration or rescission of appropriations. 

F. Funds from Dedicated Collections

SFFAS No. 43, Funds from Dedicated Collections, amends SFFAS No. 27, Identifying and 

Reporting Earmarked Funds. Generally, funds from dedicated collections are financed by 

specifically identified revenues, provided to the government by non-Federal sources, often 

supplemented by other financing sources, which remain available over time. These specifically 

identified revenues and other financing sources are required by statute to be used for 

designated activities, benefits, or purposes, and must be accounted for separately from the 

government’s general revenues. Funds from Dedicated Collections should be shown as a 

separate presentation and disclosure in the financial statements. The three required criteria for 

funds from dedicated collections are: 

 A statute committing the Federal Government to use specifically identified revenues 

and/or other financing sources that are originally provided to the Federal Government by 

a non-Federal source only for designated activities, benefits, or purposes; 

 Explicit authority for the fund to retain revenues and/or other financing sources not 

used in the current period for future use to finance the designated activities, benefits, or 

purposes; and 

 A requirement to account for and report on the receipt, use, and retention of the 

revenues and/or other financing sources that distinguish the fund from the Federal 

Government’s general revenues. 

Refer to Note 16, Funds from Dedicated Collections. 

G. Application of Critical Accounting Estimates

The financial statements are based on the selection of accounting policies and the application of 

significant accounting estimates, some of which require management to make significant 

assumptions. Further, the estimates are based on conditions that may change in the future. 

Actual results could differ materially from the estimated amounts. The financial statements 

include information to assist in understanding the effect of changes in assumptions to the 

related information. 

2. Related Parties 

The RRB has significant transactions with the following governmental and non-governmental 

entities: 

 Treasury collects payroll taxes from the railroads on behalf of the RRB. The taxes 

collected are credited by Treasury to the RRB’s trust fund account via an 

appropriation warrant. In fiscal years 2020 and 2019, net payroll taxes transferred to 

the RRB by Treasury were $5.1 billion and $6.2 billion, respectively. 
- 70 - 

Treasury provides payment services to Federal agencies and operates collections and 

deposit systems. The RRB invests in government account securities through the Bureau 

of the Fiscal Service. In fiscal years 2020 and 2019, investments, including accrued 

interest, totaled $1.3 billion and $1.8 billion, respectively. In addition, Treasury advances 

funds to the RRB for the financial interchange which are repaid annually. The amount 

paid by the RRB to Treasury in fiscal year 2020 due to the financial interchange 

advances during fiscal year 2019 included principal of $4.3 billion and interest of $121.4 

million. The amount paid by the RRB to Treasury in fiscal year 2019 due to the financial 

interchange advances during fiscal year 2018 included principal of $4.1 billion and 

interest of $109.9 million. 

 SSA and RRB participate in an annual financial interchange. The financial interchange 

is intended to place the social security trust funds in the same position in which they 

would have been had railroad employment been covered by the Social Security Act and 

Federal Insurance Contributions Act. In fiscal year 2020, the RRB trust funds realized 

$5 billion through the financial interchange. 

Under Section 7(b) (2) of the Railroad Retirement Act of 1974, the RRB is required to 

pay certain individuals, described in this section, monthly social security benefits on 

behalf of SSA. SSA reimburses the RRB for benefits paid on behalf of SSA. The 

amounts reimbursed were $2.0 billion for fiscal year 2020 and $1.9 billion for fiscal year 

2019. 

 CMS participates in the annual financial interchange in the same manner as described 

for SSA. The RRB transferred $606 million and $570 million to CMS in fiscal years 2020 

and 2019, respectively. 

In addition to the financial interchange transactions, CMS reimburses the RRB for 

certain expenses it incurs associated with administering the Medicare program. The 

amounts reimbursed in fiscal years 2020 and 2019 were $14.2 million and $13.6 million, 

respectively. The fiscal year 2020 amount does not include the funds received for 

purposes of the SMAC contract which are recorded as a transfer and is described 

below. 

Finally, CMS funds are transferred to the RRB for the Specialty Medicare Administrative 

Contractor (SMAC) contract that provides specified health insurance benefit 

administration services. In fiscal year 2018, the transfer was recorded as a 

reimbursement. Effective for fiscal year 2019, amount transferred to fund the SMAC 

contract was recorded as a transfer and totaled $18.3 million. This change was agreed 

to by CMS for proper intragovernmental reporting. This change affected the 

presentation between the RRB’s fiscal year 2018 and fiscal year 2019 Statements of Net 

Cost and Statements of Changes in Net Position. On the fiscal year 2019 Statement of 

Net Cost, the Earned Revenue line was reduced and on the Statements of Changes in 

Net Position, the Transfers In/Out without Reimbursement line was increased by the 

amount transferred for the SMAC contract during fiscal year 2019. 

 

 GSA provides payroll processing and human resources services to the RRB. In 

addition, the RRB paid rent to GSA in the amount of $3.0 million for fiscal year 2020 

and $3.4 million for fiscal year 2019. 

 The Department of Labor invests RUIA contributions. Accounts receivable with the 
- 71 - 

Department of Labor amounted to $10 million and $120.4 million for fiscal years 

2020 and 2019, respectively. 

 NRRIT transfers funds to the RRB for payment of railroad retirement benefits. During 

fiscal years 2020 and 2019, the NRRIT transferred $2,280 million and $1,794 million, 

respectively, to the RR Account. The NRRIT holds and invests funds not immediately 

needed to pay benefits under the RRA. The net assets of the NRRIT are reported on 

the RRB’s balance sheet as a non-governmental investment. The RRB reports this 

information based on information provided by the NRRIT for that purpose. 

3. Fund Balances with Treasury 

Fund balances with Treasury at September 30 consisted of: 

2020 2019 

1. Status of Fund Balance with Treasury 

(1) Unobligated Balance 

(a) Available $464,702,756 $14,647,257 

(b) Unavailable 21,874,330 145,954,920 

(2) Obligated Balance not yet Disbursed 159,925,099 160,794,46 

(3) Non-Budgetary FBWT - - 

Total $646,502,184 $321,397,023 

2. Other Information: The above represents cash held in Treasury. Unobligated and obligated funds not held 

in cash are invested in Treasury securities.

4. Investments 

The investments in Treasury securities represent the investments of two of the RRB’s funds 

from dedicated collections, the RR and the SSEB Accounts.

 Amounts for Balance Sheet Reporting 

 Cost Interest Receivable Investments Net 

Intragovernmental Securities: 

Non Marketable Par Value 2020 $1,250,883,000 $1,826,829 $1,252,709,829 

Non Marketable Par Value 2019 $1,789,771,000 $ 2,753,204 $1,792,524,204 

The balance on September 30, 2020, consisted of investments in 3.000 percent par value 

specials (with market value equal to face value) maturing on October 1, 2020. The balance on 

September 30, 2019, consisted of investments in 3.000 percent par value specials (with market 

value equal to face value) maturing on October 1, 2019. Par value specials mature on the first 

working day of the month following the month of issue and have a yield based on the average 

yield of marketable Treasury notes with maturity dates at least 3 years away. 

The Federal Government does not set aside assets to pay future benefits or other expenditures 

associated with the RR and SSEB Accounts. The cash receipts from the railroads for the RR 

and SSEB Accounts are deposited in the Treasury, which uses the cash for general government 
- 72 - 

purposes. Treasury securities are issued to the RRB as evidence of its receipts. Treasury 

securities are an asset to the RRB and a liability to the Treasury. Because the RRB and the 

Treasury are both parts of the Federal Government, these assets and liabilities offset each other 

from the standpoint of the government as a whole. For this reason, they do not represent an 

asset or a liability in the U.S. government-wide financial statements. 

Treasury securities provide the RRB with authority to draw upon the Treasury to make future 

benefit payments or other expenditures. When the RRB requires redemption of these securities 

to make expenditures, the government finances those expenditures out of accumulated cash 

balances, by raising taxes or other receipts, by borrowing from the public or repaying less debt, 

or by curtailing other expenditures. This is the same way that the Federal Government finances 

all other expenditures. 

5. NRRIT Net Assets 

The balance sheet amounts represent the net asset value of NRRIT assets, at fair value, as of 

September 30, 2020 and 2019. These figures were provided to the RRB by the NRRIT for the 

fiscal years ended September 30, 2020 and 2019. 

Readers of these financial statements should be aware that the Railroad Retirement and 

Survivors’ Improvement Act of 2001 authorizes the NRRIT to invest railroad retirement assets in 

a diversified investment portfolio in the same manner as those of private sector retirement 

plans. 

6. Accounts Receivable

 Intragovernmental 

Accounts receivable - Intragovernmental at September 30 consisted of: 

2020 2019 

Financial Interchange – Principal $5,311,600,000 $4,961,300,000 

Financial Interchange – Interest 84,700,000 90,400,000 

Department of Labor 9,928,945 120,402,127 

Total $5,406,228,945 $5,172,102,127 

 Accounts Receivable, Net 

Accounts receivable, net at September 30 consisted of:

2020 2019 

Accounts receivable – Benefit overpayments $50,220,742 $47,335,742 

Accounts receivable – Past due RUI contributions and taxes 135,467 186,163 

Accounts receivable – Interest, penalty & administrative costs 7,340,769 6,536,286 

Accounts receivable ‐ Criminal Restitution 14,370,275 15,941,273 

 Sub-Total $72,067,253 $69,999,464 
- 73 - 

Accounts receivable ‐ Criminal Restitution ‐ 

 Long Island Railroad 297,187,347 297,760,745 

Total Gross Receivables $369,254,600 $367,760,209 

Less: Allowances for doubtful accounts 13,252,711 12,346,291 

Less: Allowances for doubtful accounts-Criminal Restitution 4,311,083 4,833,995 

Less: Allowances for doubtful accounts‐Criminal Restitution ‐

Long Island Railroad 294,215,472 294,663,005 

Total Net Receivables $57,475,334 $55,916,918 

The allowance for doubtful accounts for the railroad retirement program was calculated, 

including debts classified as currently not collectible and excluding the criminal restitution 

receivables, by averaging the percentages determined from the past five fiscal years of amounts 

due the RRB that would probably not be collected, and applying those percentages against 

accounts receivable. 

The allowance for doubtful accounts for the criminal restitution is estimated at 30%. The 

allowance for doubtful accounts for the criminal restitution – Long Island is estimated at 99% as 

the probability of collecting full restitution is unlikely, given that the large Long Island restitution 

amount due is from four individuals. The percentage is applied against the accounts receivable. 

7. General Property, Plant and Equipment 

These assets are stated at cost less accumulated depreciation/amortization. Beginning with 

fiscal year 2014, acquisitions are capitalized if the cost is $50,000 or more and the service life is 

2 years or greater. Depreciation/amortization is computed on the straight-line method. These 

assets consisted of:

 At September 30, 2020 

Classes of Fixed Assets 

Service 

Lives Cost 

Accumulated 

Depreciation 

Net 

Book Value 

Structures, facilities and leasehold 

improvements 15 years $2,723,793 $2,723,793 $0 

IT software 5 years 28,681,752 27,391,563 1,290,189 

Equipment 5-10 years 6,747,644 6,692,147 55,497 

Internal-Use Software in Development 929,515 929,515 

Total $39,082,704 $36,807,503 $2,275,201 
- 74 - 

 At September 30, 2019 

Classes of Fixed Assets 

Service 

Lives Cost 

Accumulated 

Depreciation 

Net 

Book Value 

Structures, facilities and leasehold 

improvements 15 years $2,723,731 $2,723,731 $0 

IT software 5 years 28,854,099 26,586,238 2,267,861 

Equipment 5-10 years 7,042,610 6,944,430 98,180 

Internal-Use Software in Development 618,477 - 618,477 

Total $39,238,917 $36,254,399 $2,984,518 

8. Liabilities 

Liabilities at September 30 consisted of: 

2020 2019 

A. Intragovernmental: 

(1) Other – Unfunded Federal Employees 

Compensation Act (FECA) Liability $134,946 $226,560 

B. Public: 

(1) Other – Accrued Unfunded Leave 8,034,502 6,909,971 

Total Liabilities Not Covered by Budgetary Resources $8,169,448 $7,136,531 

Total Liabilities Covered by Budgetary Resources 6,293,416,000 6,158,843,995 

Total Liabilities Not Requiring Budgetary Resources 2,657,929 1,562,624 

Total Liabilities $6,304,243,377 $6,167,543,150 

 Debt 

Intragovernmental debt results from borrowing from Treasury to fund benefit payments from the 

SSEB Account. 

2020 2019 

Beginning Balance, Principal $3,933,900,000 $3,725,200,000 

New Borrowing 4,787,300,000 4,301,200,000 

Repayments (4,336,800,000) (4,092,500,000) 

Ending Balance, Principal $4,384,400,000 $3,933,900,000 

Accrued Interest 38,828,877 48,321,829 

Total $4,423,228,877 $3,982,221,827 

 Benefits Due and Payable 

Benefits due and payable are accrued for all benefits to which recipients are entitled for the 
- 75 - 

month of September, which, by statute, are not paid until October. Also, liabilities are accrued 

on benefits for past periods that have not completed processing, such as benefit payments due 

but not paid. The amounts include uncashed checks of $15,902,818 and $15,365,285, at 

September 30, 2020 and 2019, respectively. Under Public Law 100-86, the amount of RRB 

benefits represented by checks which remain uncashed for 12 months after the check issue 

date are credited (including interest thereon) to the accounts from which the checks were 

drawn. The principal amount of uncashed checks must remain in a liability account until the 

RRB determines that entitlement no longer exists or another check is issued to the beneficiary. 

A special workload of approximately 10,686 benefit cases, estimated at $5.3 million, has been 

identified and will be processed over the next few years. 

 Other Liabilities 

Other liabilities at September 30 consisted of: 

Non-Current Current 

2020 

Total 

Intragovernmental: 

Employer Contributions & Payroll Taxes Payable $1,038,066 $1,038,066 

Unfunded FECA Liability 134,947 134,947 

Other Liabilities With Related Budgetary Obligations 

Total Intragovernmental 1,173,013 1,173,013 

 

Accrued Unfunded Liabilities 8,034,502 8,034,502 

Accrued Payroll 3,994,020 3,994,020 

Accrued RRB Contributions – Thrift Savings Plan 386,322 386,322 

Other Unfunded Employment – Related Liability 396,757 396,757 

Contingent Liability (see Note 9 for details) $214,804,525 214,804,525 

Other 16,164,686 16,164,686 

Total Other Liabilities $214,804,525 $30,149,300 $244,953,825 

 Non-Current Current 

2019 

Total 

Intragovernmental: 

Employer Contributions & Payroll Taxes Payable $1,889,067 $1,889,067 

Unfunded FECA Liability (297,709) (297,709) 

Other Liabilities With Related Budgetary Obligations 

Total Intragovernmental 1,591,358 1,591,358 

 

Accrued Unfunded Liabilities 6,909,972 6,909,972 

Accrued Payroll 3,327,843 3,327,843 

Accrued RRB Contributions – Thrift Savings Plan (782,301) (782,301) 

Other Unfunded Employment – Related Liability 755,565 755,565 

Contingent Liability (see Note 9 for details) $351,056,667 351,056,667 

Other 55,395,178 55,395,178 

Total Other Liabilities $351,056,667 $67,197,615 $418,254,282 
- 76 -

9. Commitments and Contingencies

The RRB is involved in the following actions: 

Legal Contingencies: 

 Several Class I railroads have filed claims for refund of taxes with the Internal Revenue

Service (IRS). Of the $23.6 million in claims, the RRB’s legal counsel has determined

that it is probable that the RR and SSEB Accounts are contingently liable for $23.6

million. Under the anti-disclosure provision of the IRS code, we are not permitted to

disclose any details related to these claims. No provision has been made in the

accompanying financial statements regarding the reasonably possible claims other than

this disclosure. Details may not add to totals due to rounding.

 One railroad filed suit requesting a refund of $12.0 million for tax on stock transferred to

its employees upon the exercise of non-qualified stock options and the vesting of

performance stock or restricted stock units. The refund request also includes tax on

relocation benefits for the railroad employees and their families. The RRB’s general

counsel has determined that the likelihood of loss is probable.

Other Contingencies: We also recorded a contingent liability in the amount of $179.2 million, for 

forthcoming adjustments to the financial interchange for military service credits due SSA. 

Commitments: As of September 30, 2020, the RRB had contractual arrangements which may 

result in future financial obligations of $69.3 million. 

Contingent Loss Table

Accrued Liabilities 

Estimated Range of Loss 

FY 2020 Lower End Upper End 

Legal Contingencies: 

 Probable $35,604,525 $35,604,525 $35,604,525

 Reasonably Possible $0 $0 $0 

Other Contingencies: 

 Probable $179,200,000 $179,200,000 $179,200,000 

 Reasonably Possible $0 $0 $0 

Accrued Liabilities 

Estimated Range of Loss 

FY 2019 Lower End Upper End 

Legal Contingencies: 

 Probable $171,356,667 $171,356,667 $171,356,667 

 Reasonably Possible $7,336,520 $7,336,520 $7,336,520 

Other Contingencies: 

 Probable $179,700,000 $179,700,000 $179,700,000 

 Reasonably Possible $0 $0 $0 
- 77 - 

10. Transfers To/From NRRIT 

The RRB received a total of $2,280 million and $1,794 million from the NRRIT during fiscal 

years 2020 and 2019, respectively. These funds were received into the RR Account. Transfers 

were to fund the payment of benefits.

11. Undelivered Orders at the End of the Period 

2020 2019 

Federal Undelivered Orders $0 $0 

Non-Federal Undelivered Orders 34,301,979 31,714,188 

Total Federal/Non-Federal Undelivered Orders $34,301,979 $31,714,188 

 

Paid Undelivered Orders $0 $0 

Unpaid Undelivered Orders 34,301,979 31,714,188 

Total Paid/Unpaid Undelivered Orders $34,301,979 $31,714,188 

 

Total Undelivered Orders $34,301,979 $31,714,188 
- 78 - 

12. Explanation of Differences Between the Combined Statement of Budgetary 

Resources and the Budget of the United States Government 

A reconciliation was completed of budgetary resources, obligations incurred, distributed 

offsetting receipts, and outlays, as presented in the Statement of Budgetary Resources for the 

year ended September 30, 2019, to amounts included in the Budget of the United States 

Government. A reconciliation was not performed for the period ended September 30, 2020, 

since the RRB’s Performance and Accountability Report is published in November 2020, and 

OMB’s MAX system will not have actual budget data available until after the RRB’s P&AR is 

published. 

The Budget of the United States Government and the RRB’s Statement of Budgetary 

Resources differ because of the following transaction types: 

Fiscal Year 2019 (in millions) Budgetary 

Resources 

New 

Obligations & 

Upward 

Adjustments 

(Total) 

Distributed 

Offsetting 

Receipts 

Net Outlays 

 

1. Combined Statement of Budgetary Resources – 

September 30, 2019 $14,464 $14,288 $5,431 $8,600 

2. Expenditure Transfers from Trust Funds (135) 

3. Unobligated Balance, Brought Forward 

October 1, 2018 as adjusted (169) 

4. Recoveries of Prior Year Unpaid Obligations (7) 

5. Sickness Insurance Benefit Recoveries (15) 

6. Administrative Expense Reimbursement (35) 

7. Interfund Transfers: Federal Payment 

 Obligations – Income Taxes Collected 

 on Benefits (0113) 

(736) 

8. Intrafund Transfers: Receipts from the Old-Age and 

Survivors Insurance (OASI) Trust Fund (4,880) 

9. Intrafund Transfers: Receipts from the Disability 

Insurance (DI) Trust Fund (71) 

FINANCIAL INTERCHANGE 

10. Accrued Receipts from the OASI and DI Trust Funds (298) 298 

11. Accrued Transfers to the Federal Hospital Insurance 

Trust Fund 550 (550) 

NRRIT 

12. NRRIT Obligations / Outlays 1,853 1,853 1,853 

13. Intrafund Transfers: NRRIT Transfer to RRA (1,794) 1,794 (1,794) 

14. Proprietary Receipts: NRRIT – Gains and Losses (1,56) 156 (156) 

15. Proprietary Receipts: NRRIT – Interest and 

Dividends (454) 454 (454) 

16. Rounding (1) (1) (1) (1) 

17. Budget of the United States Government FY 2019 

Actuals $7,864 $16,140 $8,086 $7,796 
- 79 - 

13. Social Insurance

 Surplus/ (unfunded obligation) represents combined values for the RR Account, SSEB 

Account, and NRRIT. 

 Estimated future revenue includes tier I taxes, tier II taxes, income taxes on benefits, and 

financial interchange income, where financial interchange income consists of financial 

interchange transfers plus financial interchange advances from general revenues less 

repayment of financial interchange advances from general revenues. 

 Estimated future expenditures include benefit and administrative costs. 

 Detail may not add to totals due to rounding. Employee and beneficiary status are 

determined as of 1/1/2019, whereas present values are as of 10/1/2019. 

 Beginning with the fiscal year 2016 reporting period, the valuation period of the SOSI 

was changed from calendar year to fiscal year. The valuation date for the SOSI was set 

back three months, from January 1, 2016, to October 1, 2015. Although the SOSI 

shows present values for the current year and four previous years, the present values for 

the previous calendar year 2015 are not being restated but will remain on a calendar 

year basis. This change was made because of a request from the NRRIT to adjust the 

valuation period for the SOSI from calendar year to fiscal year for financial and 

administrative purposes. Financially, the NRRIT saves $200,000 per year in contract 

services required to prepare a second financial statement audit covering a three-month 

period (October 1 to December 31) after the first audit is achieved on a fiscal year basis. 

 Due to the use of the Account Benefits Ratios to determine tier II tax rates, higher 

Treasury security and asset balances result in lower tax rates and consequently lower 

future tax income whereas lower Treasury security and asset balances result in higher 

rates and income. 

 Statement of Changes in Social Insurance Amounts: 

 Changes in valuation period: 

• Between 10/1/2017 and 10/1/2018: Changes in the valuation period from 

fiscal years 2018-2092 to fiscal years 2019-2093 resulted in a change of 

about $(0.5) billion in the open group measure between 10/1/2017 and 

10/1/2018. 

• Between 10/1/2018 and 10/1/2019: Changes in the valuation period from 

fiscal years 2019-2093 to fiscal years 2020-2094 had a change of about 

$2.8 billion in the open group measure between 10/1/2018 and 10/1/2019. 

 Changes in demographic data, assumptions, and methods: 

• Between 10/1/2017 and 10/1/2018: Demographic assumptions were not 

changed between the Statement of Social Insurance as of 10/1/2017 and 

the Statement of Social Insurance as of 10/1/2018. Changes in 

demographic data resulted in a minimal change in the in the open group 

measure between 10/1/2017 and 10/1/2018. 
- 80 - 

• Between 10/1/2018 and 10/1/2019: Demographic assumptions were not 

changed between the Statement of Social Insurance as of 10/1/2018 and 

the Statement of Social Insurance as of 10/1/2019. Changes in 

demographic data resulted in a change of about $(0.2) in the open group 

measure between 10/1/2018 and 10/1/2019. 

 Changes in economic data, assumptions, and methods:  

• Between 10/1/2017 and 10/1/2018: Ultimate economic assumptions were 

not changed between the Statement of Social Insurance as of 10/1/2017 

and the Statement of Social Insurance as of 10/1/2018, but there were 

changes in select economic assumptions. The actual COLA of 2.8% was 

used for 2019 in place of the 2.6% COLA assumed for 2019 in the prior 

year’s report. A 1.4% COLA was assumed for 2020 instead of a 2.6% 

COLA, and a 2.0% COLA was assumed for 2021 instead of a 2.6% COLA. 

The actual rate of investment return for the quarter ending 12/31/2018 was -

7.1%. Changes in economic data and assumptions resulted in a change 

about $0.2 billion in the open group measure from 10/1/2017 to 10/1/2018. 

• Between 10/1/2018 and 10/1/2019: Ultimate economic assumptions were 

not changed between the Statement of Social Insurance as of 10/1/2018 

and the Statement of Social Insurance as of 10/1/2019, but there were 

changes in select economic assumptions. The actual COLA of 1.6% was 

used for 2020 in place of the 1.4% COLA assumed for 2020 in the prior 

year’s report. A 0.5% COLA was assumed for 2021 instead of a 2.0% 

COLA, and a 1.5% COLA was assumed for 2022 instead of a 2.6% COLA. 

A 2.0 wage increase assumption was used for 2020 instead of a 3.6% wage 

increase assumption. The actual rate of investment return for the quarter 

ending 12/31/2019 was 5.3%. Finally, a 0% investment return was 

assumed for 2020 instead of the 7% ultimate investment return. Changes in 

economic data and assumptions resulted in a change about $(1.7) billion in 

the open group measure from 10/1/2018 to 10/1/2019. 

 There were no changes in law or policy. 

 There were no changes in methodology and programmatic data. 

 Medicare healthcare and other healthcare assumptions are not applicable to the 

Railroad Retirement program. 

14. Sustainability Financial Statements Disclosure 

The sustainability financial statements are based on management’s assumptions. These 

sustainability financial statements present the actuarial present value of the RRB’s estimated 

future income to be received and future expenditures to be paid using a projection period 

sufficient to illustrate long-term sustainability. The sustainability financial statements are 

intended to aid users in assessing whether future resources will likely be sufficient to sustain 

public services and to meet obligations as they come due. The Statements of Social Insurance 

and Changes in Social Insurance Amounts are based on income and benefit formulas in current 

law and assume that scheduled benefits will continue after any related trust funds are 

exhausted. The statements of long-term fiscal projections are based on the continuation of 
- 81 - 

current policy. The sustainability financial statements are not forecasts or predictions. The 

sustainability financial statements are not intended to imply that current policy or law is 

sustainable. In preparing the sustainability financial statements, management considers and 

selects assumptions and data that it believes provide a reasonable basis to illustrate whether 

current policy or law is sustainable. Assumptions underlying such sustainability information do 

not consider changes in policy or all potential future events that could affect future income, 

future expenditures, and sustainability, for example, implementation of policy changes to avoid 

trust fund exhaustion or unsustainable debt levels. Because of the large number of factors that 

affect the sustainability financial statements and the fact that future events and circumstances 

cannot be estimated with certainty, even if current policy is continued, there will be differences 

between the estimates in the sustainability financial statements and the actual results, and 

those differences may be material. 

To estimate the 2020 investment return for the long-term projections needed for the Statement 

of Social Insurance, a benchmark consisting of 65% invested in the Federal Thrift Savings Plan 

(TSP) C Fund and 35% invested in the TSP F Fund with monthly rebalancing was used. 

Through April 30, 2020, this portfolio return was -4.2%. This was the latest available market 

data at the time. The actual asset return for the combined NRRIT, RR, and SSEB accounts has 

been over 95% correlated with an investment portfolio of the C-Fund and F-Fund with a 

65%/35% allocation. A 95% correlation indicates that the returns have historically been very 

similar and provide a reasonable and appropriate basis to develop the assumed return for 

2020. For the last eight months of 2020, the 7% long-term interest rate assumption was used, 

resulting in a return of 4.6%. This yields an estimated average investment return for 2020 of 

0.2%, which was rounded to 0.0%. Using this assumption for 2020, the open group surplus as 

of October 1, 2019, is $1.26 billion (rounded to $1.3 billion in the Statement of Social 

Insurance). In the past, the ultimate long-term interest rate assumption has generally been 

used for all years of the projection. Had the ultimate long-term interest rate of 7% been used for 

2020, the open group surplus as of October 1, 2019, would have been $1.21 billion (rounded to 

$1.2 billion and shown in Table 2 of the Required Supplementary Information). 

In calculating the 75-year projections of income and expenditures for the Statement of Social 

Insurance, the actual rate of return for the period 10/1/2019–12/31/2019 was used rather than 

the long-term investment return assumption of 7%. The actual rate of return for this period is a 

significant fact that was taken into account, as it was known at the time the projections were 

calculated. 

Because of the way the RUI experience rating system is structured, there is no long-term 

financial impact on the Trust funds due to the loans from the RR account to the RUI account. 

15. Significant Assumptions 

The estimated future revenue and expenditures in the SOSI and Required Supplementary 

Information are based on the assumption that the program will continue as presently 

constructed. The calculations assume that all future transfers required by current law under the 

financial interchange will be made. 

The estimated future revenue and expenditures are also based on various economic, 

employment, and other actuarial assumptions. The ultimate economic assumptions are a 7.0 

percent investment return, a 2.6 percent annual increase in the cost of living, and a 3.6 percent 

annual wage increase. 
- 82 - 

The employment assumption for the SOSI is employment assumption II, the intermediate 

employment assumption, as used in the 2020 Section 502 Report. Under employment 

assumption II, starting with an average 2019 employment of 214,000, (1) railroad passenger 

employment is assumed to remain level at 48,000, and (2) the employment base, excluding 

passenger employment, is assumed to decline at an annual rate of 8.0 percent for the first year, 

at a constant annual rate of 2.0 percent for the next 24 years, at a reducing rate over the next 

25 years, and remain level thereafter.. 

Actuarial assumptions are those published in the Technical Supplement to the “Twenty-Seventh 

Actuarial Valuation of the Assets and Liabilities Under the Railroad Retirement Acts as of 

December 31, 2016.” This may be found on the RRB’s website, www.RRB.gov. 

Actuarial assumptions published in the Twenty-Seventh Actuarial Valuation include: 

Table S-1. 2013 Base Year RRB Annuitants Mortality Table

Table S-2. 2013 Base Year RRB Disabled Mortality Table for Annuitants with Disability 

Freeze

Table S-3. 2013 Base Year RRB Disabled Mortality Table for Annuitants without Disability 

Freeze

Table S-4. 2012 RRB Active Service Mortality Table

Table S-5. 2013 Base Year RRB Spouse Total Termination Table

Table S-6. Probability of a retired employee having a spouse eligible for railroad retirement 

benefits

Table S-7. 2013 RRB Mortality Table for Widows

Table S-8. 1997 RRB Remarriage Table

Table S-9. 2004 RRB Total Termination Table for Disabled Children

Table S-10. 2013 RRB Mortality Improvement Scale

Table S-11. Calendar year rates of immediate age retirement

Table S-12. Rates of immediate disability retirement and of eligibility for disability freeze

Table S-13. Calendar year rates of final withdrawal

Table S-14. Service months and salary scales

Table S-15. Family characteristics of railroad employees assumed for the valuation of 

survivor benefits

 
‐ 83 ‐ 
‐ 84 ‐ 
- 85 - 

17. Terms of Borrowing Authority Used 

The RRB, Social Security Administration and Centers for Medicare and Medicaid Services are 

parties to a financing arrangement described as the “financial interchange”. 

The financial interchange between the railroad retirement and social security systems is intended 

to put the Social Security Old-Age, Survivors, and Disability Insurance and Hospital Insurance 

trust funds in the same position they would have been had railroad employment been covered 

under the Social Security and Federal Insurance Contributions Acts. 

Financial interchange transfers are made in a lump sum for a whole fiscal year in the June 

following the close of a fiscal year. The Railroad Retirement Solvency Act of 1983, as amended, 

provided for monthly advances of the financial interchange from the U.S. Treasury general fund to 

be repaid when the financial interchange is settled each June. Each advance/loan is equal to an 

estimate of the transfer the RRB would have received in the preceding month if the financial 

interchange with social security were on an up-to-date basis, with interest adjustments. The RRB 

must repay these advances/loans when it receives the transfer from social security against which 

the money was advanced. 

Section 7(c)(4) of the 1974 RRA, as amended, provides the rules for repayment of the financial 

interchange advances and references Section 7(c)(3) for the interest rate to be used. 

The interest rate on the repayment of the advances is the same as that used in the actual financial 

interchange determination from the close of the prior fiscal year until the date of the transfer. 

18. Available Borrowing Authority, End of the Period 

The amount of RRB available borrowing authority at the end of the period associated with financial 

interchange advances is $4,752,400,000. 

19. Legal Arrangements Affecting Use of Unobligated Balances 

The portion of RRB trust fund receipts collected in the current fiscal year that exceed the amount 

needed to pay benefits or other valid obligations remain in the RRB trust funds as unobligated 

balances. These receipts can become available in the current year if needed for valid obligations. 

RRB receipts are assets of the trust fund and available for obligation as needed in the future. 

20. Subsequent Events 

There was a decrease of $593.7 million in NRRIT net assets from the SOSI, October 1, 2019, 

valuation date and the September 30, 2020, balance sheet date. Other than this event, no other 

material events or transactions have occurred subsequent to September 30, 2020 of which we are 

aware. We have evaluated subsequent events through November 16, 2020, the date the financial 

statements were released. 

21. Permanent Indefinite Appropriations 

In fiscal year 2020, the Railroad Retirement Board had the following permanent indefinite 

appropriations that were available until expended: 

a. 60X0113 – Federal Payments to the Railroad Retirement Accounts, 60X0113, was 

established by OMB, not by legislation, and is used as a conduit for transferring certain income 
- 86 - 

taxes on benefits; receiving credit for the interest portion of uncashed check transfers; and funds 

provided by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 

2010. Account 60X0113 is considered a fund from dedicated collections. This account has no 

basis in law. 

b. 60X0122 – Railroad Unemployment Insurance Enhanced Benefit Payments, 060X0122, 

funds railroad unemployment insurance benefits provided by the Coronavirus Aid, Relief, and 

Economic Security Act, or the CARES Act of 2020, P.L 116-136. Our authority to use these 

collections is P.L. 116-136. 

c. 60X8010 – Social Security Equivalent Benefit Account, 60X8010, funds the portion of 

railroad retirement benefits equivalent to a social security benefit from various income sources 

related to these benefits. Account 60X8010 is considered a fund from dedicated collections. Our 

authority to use these collections is 45 U.S.C. § 231n-1(c) (1). 

d. 60X8011 – Railroad Retirement Account, 60X8011, funds retirement, survivor, and 

disability benefits in excess of social security equivalent benefits from payroll taxes on employers 

and employees and other income sources. Account 60X8011 is considered a fund from dedicated 

collections. Our authority to use these collections is 45 U.S.C. § 231f(c) (1). 

e. 60X8051.001 – Railroad Unemployment Insurance Trust Fund, Benefit Payments, 

60X8051.001, funds railroad unemployment and sickness insurance benefits from contributions by 

railroad employers. Account 60X8051.001 is considered a fund from dedicated collections. Our 

authority to use these collections is 45 U.S.C. § 360. 

f. 60X8051.002 – Railroad Unemployment Insurance Trust Fund, Administrative Expenses, 

60X8051.002, was established to pay salaries and expenses to administer the program. Account 

60X8051.002 is considered a fund from dedicated collections. This fund is financed by 

contributions from railroad employers. Monies are transferred from this fund, based on cost 

accounting estimates and records, to the Limitation on Administration Account (60 8237) from 

which salaries and expenses are paid for both the railroad retirement program and the railroad 

unemployment and sickness insurance program. Our authority to use these collections is 45 

U.S.C. § 361. 

22. Budget and Accrual Reconciliation 

Budgetary and financial accounting information differ. Budgetary accounting is used for planning 

and control purposes and relates to both the receipt and use of cash, as well as reporting the 

federal deficit. Financial accounting is intended to provide a picture of the government's financial 

operations and financial position so it presents information on an accrual basis. The accrual basis 

includes information about costs arising from the consumption of assets and the incurrence of 

liabilities. The reconciliation of net outlays, presented on a budgetary basis, and the net cost, 

presented on an accrual basis, provides an explanation of the relationship between budgetary and 

financial accounting information. The reconciliation serves not only to identify costs paid for in the 

past and those that will be paid in the future, but also to assure integrity between budgetary and 

financial accounting. The analysis below illustrates this reconciliation by listing the key differences 

between net cost and net outlays. 

The increase in net cost over the previous year is due to higher benefit payments in Fiscal Year 

2020, including CARES Act payments. The year over year difference in accounts receivable is 

due to an increase in the annual Financial Interchange (FI) settlement from Social Security 

Administration (SSA). The large increase of accounts payable compared to last year is due to 

annual settlement of FI loan interest. The decrease in other liabilities is due to less payables owed 
- 87 - 

to Centers for Medicare and Medicaid services (CMS). The decrease in other is due to the net 

effect of higher warrants received in Fiscal Year 2020 offset by higher delivered orders unpaid in 

Fiscal Year 2020. 

 
- 88 - 

Budget and Accrual Reconciliation for 

For the year ended September 30, 2020 

Intragovernmental With the public Total FY 2020 

NET COST $135,362,139 $13,631,658,865 $13,767,021,004 

 

Components of Net Cost That Are Not Part 

of Net Outlays: 

Other 

 

Increase/(decrease) in assets: 

Accounts receivable (5,466,847,003) 828,645 (5,466,018,358) 

Investments 

Other assets (129,267) (1,225,626) (1,354,893) 

 

(Increase)/decrease in liabilities: 

Accounts payable (111,900,987) 18,328,681 (93,572,306) 

Salaries and benefits (47,034) (927,237) (974,271) 

Insurance and guarantee program liabilities 

Environmental and disposal liabilities 

Other liabilities 627,816,344 (780,445) 627,035,899 

 

Other financing sources: 

Federal employee retirement benefit costs 

paid by OPM and imputed to the agency (7,152,527) (7,152,527) 

Transfers out (in) without reimbursement 684,320,504 684,320,504 

Total Components of Net Cost That Are 

Not Part of Net Outlays (4,273,939,970) 16,224,018 (4,257,715,952) 

 

Components of Net Outlays That Are Not 

Part of Net Cost: 

Effect of prior year agencies credit reform 

subsidy re-estimates 

Acquisition of capital assets 

Acquisition of inventory 

Acquisition of other assets Debt and equity 

securities 

Other (575,397,681) (575,397,681) 

Total Components of Net Outlays That Are 

Not Part of Net Cost (575,397,681) (575,397,681) 

 

Other Temporary Timing Differences 

NET OUTLAYS ($4,138,577,831) $13,072,485,202 $8,933,907,371 
- 89 - 

Budget and Accrual Reconciliation for 

For the year ended September 30, 2019 

Intragovernmental With the public Total FY 2019 

NET COST $121,333,613 $13,277,031,074 $13,398,364,688 

 

Components of Net Cost That Are Not Part 

of Net Outlays: 

Other 

 

Increase/(decrease) in assets: 

Accounts receivable (5,379,028,997) 9,000,028 (5,370,028,969) 

Investments 

Other assets 911,976 2,808,311 3,720,288 

 

(Increase)/decrease in liabilities: 

Accounts payable (113,772,840) (77,268,069) (191,040,910) 

Salaries and benefits (479,415) (479,415) 

Insurance and guarantee program liabilities 

Environmental and disposal liabilities 

Other liabilities 684,922,386 (746,147) 684,176,240 

 

Other financing sources: 

Federal employee retirement benefit costs 

paid by OPM and imputed to the agency (8,439,391) (8,439,391) 

Transfers out (in) without reimbursement 719,020,216 719,020,216 

Total Components of Net Cost That Are 

Not Part of Net Outlays (4,096,386,649) (66,685,291) (4,163,071,941) 

 

Components of Net Outlays That Are Not 

Part of Net Cost: 

Effect of prior year agencies credit reform 

subsidy re-estimates 

Acquisition of capital assets 

Acquisition of inventory 

Acquisition of other assets Debt and equity 

securities 

Other (632,032,435) (632,032,435) 

Total Components of Net Outlays That Are 

Not Part of Net Cost (632,032,435) (632,032,435) 

 

Other Temporary Timing Differences (3,659,476) (3,659,476) 

NET OUTLAYS ($3,975,053,037) $12,574,653,872 $8,599,600,835 

 
- 90 - 

23. Reclassification of Balance Sheet, Statement of Net Cost, and 

 Statement of Changes in Net Position for FR Compilation Process 

 

To prepare the Financial Report of the U.S. Government (FR), the Department of the Treasury 

requires agencies to submit an adjusted trial balance, which is a listing of amounts by U.S. 

Standard General Ledger account that appear in the financial statements. Treasury uses the trial 

balance information reported in the Government-wide Treasury Account Symbol Adjusted Trial 

Balance System (GTAS) to develop a Reclassified Balance Sheet, Reclassified Statement of Net 

Cost, and a Reclassified Statement of Changes in Net Position for each agency, which are 

accessed using GTAS. Treasury eliminates all intragovernmental balances from the reclassified 

statements and aggregates lines with the same title to develop the FR statements. This note 

shows the Railroad Retirement Board’s (financial statements and Railroad Retirement Board’s 

reclassified statements prior to elimination of intragovernmental balances and prior to aggregation 

of repeated FR line items. A copy of the 2019 FR can be found here:

https://www.fiscal.treasury.gov/reports-statements/ and a copy of the 2020 FR will be posted to 

this site as soon as it is released. The term “intragovernmental” is used in this note to refer to 

amounts that result from other components of the Federal Government. 

The term “non-Federal” is used in this note to refer to Federal Government amounts that result 

from transactions with non-Federal entities. These include transactions with individuals, 

businesses, non-profit entities, and State, local, and foreign governments. 

 
- 91 - 

Reclassification of Balance Sheet to Line Items Used for the Government-wide 

Balance Sheet as of September 30, 2020 
- 92 - 

Reclassification of Statement of Net Cost to Line Items Used for the Government-wide 

Statement of Net Cost for the Year Ending September 30, 2020 
- 93 - 

Reclassification of Statement of Changes in Net Position to Line Items Used for 

Government-wide Statement of Operations and Changes in Net Position for the Year Ending 

September 30, 2020
- 94 - 

24. Covid-19 Activity 

Public Law (P.L.) 116-136, Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES 

Act) was enacted in fiscal year 2020 and it is meant to address the economic fallout of the 2020 

coronavirus pandemic in the United States. It includes 3 provisions that impact the payment of 

benefits under the Railroad Unemployment Insurance Act, each having a separate Treasury 

appropriation for the payment of those benefits. 

Section 2112 of the CARES Act provides for the waiver of the 7-day waiting period for both 

unemployment and sickness benefits for registration periods beginning March 28, 2020 through 

periods beginning December 31, 2020. This provision is funded by a separate Treasury 

appropriation of $50M and is payable until the end of a person’s entitlement or until the 

appropriation runs out, whichever comes first. 

Section 2113 of the CARES Act provides for the payment of enhanced unemployment benefits in 

the amount of $1,200.00 for registration periods beginning on or after April 1, 2020 through periods 

beginning July 31, 2020. This provision is funded by a separate Treasury appropriation of $425M 

and is payable until the end of a person’s entitlement or until the appropriation runs out, whichever 

comes first. 

Section 2114 of the CARES Act provides for the payment of extended unemployment benefits for 

anyone who received regular unemployment benefits in the benefit year that began July 1, 2019 

and ending June 30, 2020. Employees with less than 10 years of service are entitled to 65 days of 

extended unemployment benefits and employees with 10 or more years of service are entitled to 65 

additional days of extended unemployment benefits through registration periods beginning 

December 31, 2020. This provision is funded by a separate Treasury appropriation using 

remaining funds previously appropriated under P.L. 111-5, American Recovery and Reinvestment 

Act of 2009 and P.L. 111-92, Worker, Homeowner, Business Assistance Act of 2009 of 

approximately $142M. These benefits are payable until the end of a person’s entitlement or until 

the appropriation runs out, whichever comes first. 

As of September 30, 2020, the RRB has implemented Sections 2112, 2113 and 2114 and has 

expended $5,307,495, $134,767,510, $12,713,804 respectively. 

Additionally, the CARES Act provided an additional $5M for the RRB’s Limitation of Administration 

account to remain available until September 30, 2021. The funding provided therein is to prevent, 

prepare for, and respond to coronavirus, including the purchase of information technology 

equipment to improve the mobility of the workforce and provide for additional hiring or overtime 

hours as needed to administer the Railroad Unemployment Insurance Act. As of September 30, 

2020 the RRB has obligated $4,130,099 of the $5M. 

The accounts established for the CARES Act funds are listed in note 1 to the financial statements. 
- 95 - 

Required Supplementary Information 

Social Insurance 

Program Financing 

Payroll taxes paid by railroad employers and employees are the primary source of funding for the 

railroad retirement-survivor benefit programs. Railroad retirement taxes, which have historically 

been higher than social security taxes, are calculated, like benefit payments, on a two-tier basis. 

Railroad retirement tier I payroll taxes are coordinated with social security taxes so that employees 

and employers pay tier I taxes at the same rate as social security taxes. In addition, both 

employees and employers pay tier II taxes that are used to finance railroad retirement benefit 

payments over and above social security levels. The tier II tax rate is based on the ratio of certain 

asset balances to the sum of benefit payments and administrative expenses. 

Revenues in excess of benefit payments are invested to provide additional trust fund income. The 

NRRIT oversees most investments, including all investments in non-governmental assets. 

Additional trust fund income is derived from the financial interchange (FI) with the social security 

trust funds, revenues from Federal income taxes on railroad retirement benefits, and 

appropriations from general treasury revenues provided after 1974 as part of a phase-out of 

certain vested dual benefits. 

The financial interchange between the railroad retirement and social security systems is intended 

to put the Social Security Administration (SSA) Federal Old-Age, Survivors, and Disability 

Insurance (FOASI/DI) trust funds and the Centers for Medicare and Medicaid Services (CMS) 

Federal Hospital Insurance (FHI) trust fund in the same position they would have been had 

railroad employment been covered under the Social Security and Federal Insurance Contributions 

Acts. It follows that all computations under the FI are performed according to social security law. 

Placing the social security trust funds in the same position they would have been had railroad 

employment been covered under social security since its inception involves computing the 

additional amount of social security payroll and income taxes that social security would have 

received and computing the amount of additional benefits that social security would have paid to 

railroad retirement beneficiaries during the same fiscal year. In the computation of the latter 

amount, credit is given for any social security benefits actually paid to railroad retirement 

beneficiaries. When benefit reimbursements exceed payroll and income taxes, the difference, with 

an allowance for interest and administrative expenses, is transferred from the social security trust 

funds to the SSEB Account. If taxes exceed benefit reimbursements, a transfer would be made in 

favor of the social security trust funds. 

On a present value basis, funds provided through the FI are expected to equal $85.9 billion, or 

35.8% of the estimated future revenue of $240.1 billion. Although the contributions and 

expenditures related to the FI have historically been included in the SOSI, they are in effect 

primarily contributions and expenditures of SSA that are administered by the RRB. 

Benefits 

Full age annuities are payable at age 60 to workers with 30 years of service. For those with less 

than 30 years of service, reduced annuities are payable at age 62 and unreduced annuities are 

payable at full retirement age, which is gradually rising from 65 to 67, depending on year of birth. 

Disability annuities can be paid on the basis of total or occupational disability. Annuities are also 

payable to spouses and divorced spouses of retired workers and to widow(er)s, surviving divorced 
- 96 - 

spouses, partitioned surviving spouses, partitioned surviving divorced spouses, remarried 

widow(er)s, children, and parents of deceased railroad workers. Qualified railroad retirement 

beneficiaries are covered by Medicare in the same way as social security beneficiaries. 

Jurisdiction over the payment of retirement and survivor benefits is shared by the RRB and SSA. 

The RRB has jurisdiction over the payment of retirement benefits if the employee had at least 10 

years of railroad service, or five years if performed after 1995; for survivor benefits, there is an 

additional requirement that the employee’s last regular employment before retirement or death 

was in the railroad industry. If a railroad employee or his or her survivors do not qualify for railroad 

retirement benefits, the RRB transfers the employee’s railroad retirement credits to SSA, where 

they are treated as social security credits. 

Program Finances and Sustainability 

The RRB must submit to the President and the Congress a report on the actuarial status of the 

railroad retirement system. Projections are made of the various components of income and outgo 

under three employment assumptions. 

The SOSI presents an actuarial analysis of the financial position of the railroad retirement system 

as of October 1, 2019. The figures in the table are based on the 2020 Section 502 Report 

extended through fiscal year 2094. The present values of estimated future revenue and 

expenditures in the table are based on estimates of revenue and expenditures through the fiscal 

year 2094. The estimates include revenue and expenditures related to future participants as well 

as to former and present railroad employees. The present values are computed on the basis of 

economic and demographic assumptions and employment assumption II, the intermediate 

employment assumption, as used in the 2020 Section 502 Report. Under employment 

assumption II, starting with an average 2019 employment of 214,000, (1) railroad passenger 

employment is assumed to remain level at 48,000, and (2) the employment base, excluding 

passenger employment, is assumed to decline at an annual rate of 8.0 percent for the first year, a 

constant annual rate of 2.0 percent for the next 24 years, at a reducing rate for the next 25 years, 

and remain level thereafter. 

Actuarial Estimates: Actuarial estimates of the long-range financial condition of the railroad 

retirement program are presented here. Throughout this section, the following terms will generally 

be used as indicated: 

 Revenue: sources of revenue are payroll taxes, income taxes, investment income, and 

financial interchange transfers. 

 Revenue excluding interest:a revenue, as defined above, excluding the investment 

income from assets of the trust fund. 

 Expenditures: benefit payments and administrative expenses.

 Cashflow: either (1) revenue excluding interest or (2) expenditures, depending on the 

context, expressed in nominal dollars.

 Net Cashflow: revenue excluding interest less expenditures, expressed in nominal 

dollars.

a Interest income in this section refers to total investment income including dividends and capital 

 gains. 
- 97 - 

The SOSI and the required supplementary information are based on actuarial and economic 

assumptions used in the 2020 Section 502 Report extended through fiscal year 2094, the RRA, 

and the Railroad Retirement Tax Act and, for the Financial Interchange, the Social Security and 

Federal Insurance Contributions Acts. The charts in the required supplementary information are 

on a calendar year basis. This information includes: 

(1) actuarial present values of future estimated expenditures for and estimated revenue from, 

or on behalf of, current and future program participants; 

 

(2) estimated annual revenue excluding interest and expenditures in nominal dollars and as a 

percentage of taxable payroll; 

(3) the ratio of estimated annuitants to estimated full-time employees, showing the 

relationship between the program’s benefit recipients and taxpayers; and 

(4) an analysis of the sensitivity of the projections to changes in selected assumptions, which 

is included in recognition of the inherent uncertainty of those assumptions. 

Estimated future revenue and expenditures are generally based on a 75-year projection period. 

Estimated future revenue and expenditures extending far into the future are inherently uncertain, 

with uncertainty increasing with time. 

Cashflow Projections – Chart 1 shows actuarial estimates of railroad retirement annual revenue,

revenue excluding interest, and expenditures for 2020-2094 in nominal dollars. The estimates are 

for the open-group population, which includes all persons projected to participate in the railroad 

retirement program as workers or beneficiaries during the period. Thus, the estimates include 
- 98 - 

payments from, and on behalf of, those who will be employed by the railroads during the period as 

well as those who already have been employed at the beginning of the period. They also include 

expenditures made to, and on behalf of, such workers during that period. 

As Chart 1 shows, annual revenue exceeds annual expenditures in the years 2037, 2044 through 

2047, and 2051 through 2094. Without investment income, however, annual expenditures are 

greater than annual revenue throughout most of the period, except in 2056 through 2059. 

Reasons for this pattern include participant demographics, the assumed drop in railroad 

employment, and the automatic tier II tax rate adjustment mechanism. The combined balance of 

the NRRIT, RR Account, and SSEB Account never becomes negative largely because (i) a 

sufficient balance exists at the beginning of the projection period and (ii) tier II tax rates respond 

automatically to changing account balances. 

Percentage of Taxable Payroll – Chart 2 shows estimated annual revenue excluding interest, and 

expenditures for the railroad retirement program expressed as percentages of taxable payroll. 

Expenditures as a percentage of payroll remain relatively stable, ranging between 72% and 78% 

through 2057, after which the percentage decreases until reaching 52% in 2093. This is largely 

due to the projected decline in the number of annuitants per full-time employee. Except for the 

revenue from tier I payroll taxes, the sources of revenue vary as a percentage of payroll. 

Sensitivity Analysis: The projections of the future financial status of the railroad retirement 

program depend on many economic and demographic assumptions including rail employment, 

inflation, wage increase, investment return, age retirement, disability retirement, withdrawal, active 

service mortality, beneficiary mortality, spouse total termination, probability of spouse, remarriage, 

family composition, disability freeze, service patterns, and salary scales. Because perfect longrange projections are impossible, this section is included to illustrate the sensitivity of the longrange projections to changes in certain key assumptions that have the greatest impact on the 
- 99 - 

results. All present values are calculated as of October 1, 2019, and are based on estimates of 

revenue and expenditures during the fiscal years 2020-2094 projection period. 

Employment: Average employment in the railroad industry has been in decline for decades. 

Although employment was relatively stable between 2000 and 2015, it began to decrease again in 

2015 and is generally expected to continue declining in future years. Since employment is a key 

consideration, projections of revenue and expenditures using three different employment 

assumptions have been made. The SOSI uses employment assumption II, the intermediate 

assumption, but this section compares results under the three assumptions. For all three cases, 

the average employment for the calendar year 2019 is equal to 214,000. Employment 

assumptions I and II, based on a model developed by the Association of American Railroads, 

assumed that (1) passenger employment will remain at the level of 48,000 and (2) except as noted 

below, the employment base, excluding passenger employment, will decline at a constant annual 

rate (0.5 percent for assumption I and 2.0 percent for assumption II) for 25 years, at a reducing 

rate over the next 25 years, and remain level thereafter. Employment assumption III differed from 

employment assumptions I and II by assuming that (1) passenger employment will decline by 500 

per year until a level of 40,000 is reached and then remain level, and (2) the employment base, 

excluding passenger employment, will decline at a constant annual rate of 3.5 percent for 25 

years, at a reducing rate over the next 25 years, and remain level thereafter. In 2020, an 

additional decline in freight employment of 5, 6 or 7 percent between 2019 and 2020 is assumed 

to recognize a decline in employment to 197,000 in January 2020. The assumed declines in 

freight employment for 2020 are thus 5.5 percent, 8 percent, and 10.5 percent under employment 

assumptions I, II and III, respectively. Employment assumptions I, II, and III are intended to 

provide an optimistic, moderate, and pessimistic outlook, respectively. 

Table 1 shows the excess of assets and the estimated present value of revenue over the 

estimated present value of expenditures for the three employment assumptions. 

Table 1 

Excess of Assets and Estimated Present Value of Revenue over Estimated Present Value of 

Expenditures for Three Employment Assumptions, 2020-2094 

(in billions) 

Employment Assumption I II III 

Present Value $2.3 $1.3 $(2.4) 

Average Tier II tax ratea 17.6% 19.8% 21.7% 

aAverage combined employer/employee tier II tax rate is calculated by dividing the present value of 

tier II taxes by the present value of tier II payroll. 
- 100 - 

Chart 3a shows the combined balance of the accounts under each of the three employment 

assumptions. Note that the combined account balance is positive throughout the entire period for 

assumptions I and II but becomes negative in 2046 for assumption III and remains so throughout 

the remainder of the period. Negative after-transfer balances under employment assumption III 

indicate the amount that would be owed, including interest, if unreduced benefits were paid by 

borrowing. 
- 101 - 

Chart 3b shows the tier II tax rate under these employment assumptions. The tax rate reaches 14 

percent in 2077 under employment assumption I and remains at that level through the end of the 

projection period. Under employment assumption II, the tax rate first increases to 27 percent in 

2051 through 2059 and then decreases until it reaches 18 percent in 2078, remaining at that level 

through the end of the projection period. Under employment assumption III, the tax rate reaches 

the maximum of 27 percent in 2039, remaining at that level through the rest of the 75-year period. 

The tier II tax rate for each year is determined by the average account benefits ratio, which is the 

average for the ten most recent fiscal years of the ratio of fair market value of assets in the RR 

Account and NRRIT to the total benefits and administrative expenses paid from the RR Account 

and the NRRIT. Therefore, the tier II tax rate will be affected by employment assumption. The tier 

II tax rate adjustment mechanism reduces but does not eliminate the risk of insolvency. The tier I 

tax rate does not vary by employment assumption. 

Investment return: Since investments may include non-governmental assets such as equity and 

debt securities as well as governmental securities, it is worthwhile to examine the effects of future 

rates of investment return. In addition to the investment return of 7 percent used for our 

projections, we show the effect on the combined accounts of an investment return of 4 percent 

and an investment return of 10 percent. Table 2 shows the excess of assets and the estimated 

present value of revenue over the estimated present value of expenditures for the three 

investment return assumptions. If the tier II tax rate were fixed, the actuarial surplus would 

increase with increasing investment return. However, the tier II tax rate adjusts to changing 

account balances, resulting in the highest average tax rate under the 4 percent scenario and the 

lowest average tax rate under the 10 percent scenario. 
- 102 - 

Table 2 

Excess of Assets and Estimated Present Value of Revenue over Estimated Present Value 

of Expenditures for Three Investment Return Assumptions, 2020-2094 

(in billions) 

Investment Return 

Assumption 

4% 7% 10% 

Present Value $5.7 $1.2 $0.8 

Average Tier II tax 

rate

22.2% 19.4% 16.0% 

Chart 4a shows the combined account balance under the three investment return assumptions for 

the projection period. At a 4 percent investment return, the account balance remains positive, 

reaching its lowest value in 2036, and then increases until 2056, decreases for the next two years, 

and then increases again through the remainder of the projection period. With a 7 percent 

investment return, the account balance decreases through 2052, after which it increases again 

through the remainder of the projection period. A 10 percent investment return results in a 

combined balance that increases throughout the projection period. Although the 4 percent 

scenario shows the lowest account balance at the end of the projection period, the concurrent use 

of a 4 percent discount rate results in the highest surplus on January 1, 2020. 
- 103 - 

Chart 4b shows the tier II tax rate under the same three investment return assumptions. With a 4 

percent investment return, the maximum tier II tax rate of 27 percent applies in 2037 through 2056. 

With the 7 percent investment return, the maximum tax rate applies in 2053 through 2061. With a 10 

percent investment return, the maximum tax rate is never applicable, and the minimum tax rate of 8.2 

percent is paid beginning in 2048. As mentioned above, the tier II tax rate is determined based on the 

ratios of asset values to benefits and administrative expenses, so it will be affected by investment 

return, but tier I tax rates will not. 
- 104 - 

Ratio of Beneficiaries to Workers: Chart 5 shows the estimated number of annuitants per full-time 

employee under all three employment assumptions. The average number of annuitants per 

employee for employment assumption I is highest in 2020. For assumption II, the ratio is 

approximately 2.5 through 2056 before it decreases. For assumption III, the ratio increases until it 

is highest in 2050 before decreasing. For all three employment assumptions, the average number 

of annuitants per employee declines to between 1.7 and 1.8 at the end of the projection period. 

The convergence in number of annuitants per employee at the end of the projection period results 

primarily from level employment projected in the latter years under all three employment 

assumptions. 

 
- 105 - 

 

RAILROAD RETIREMENT BOARD 

COMBINING STATEMENT OF BUDGETARY RESOURCES 

FOR THE YEAR ENDED SEPTEMBER 30, 2020 

(in dollars) 

 

COMBINED 

RAILROAD 

RETIREMENT 

PROGRAM 

COMBINED 

RAILROAD 

UNEMPLOYMENT 

AND 

SICKNESS 

INSURANCE 

PROGRAM 

LIMITATION ON 

THE OFFICE OF 

INSPECTOR 

GENERAL 

COMBINED 

TOTALS 

Budgetary Resources 

Unobligated balance from prior year budget authority, 

net (discretionary and mandatory) $34,122,460 $144,055,288 $4,067,978 $182,245,726 

Appropriations (discretionary and mandatory) 9,261,557,970 694,318,658 - 9,955,876,628 

Borrowing authority (discretionary and mandatory) 

Note 18 4,752,400,000 - - 4,752,400,000 

Spending authority from offsetting collections 

(discretionary and mandatory) 157,578,588 14,871,790 12,846,752 185,297,130 

Total budgetary resources $14,205,659,018 $853,245,736 $16,914,730 $15,075,819,484 

Status of budgetary resources 

 

New obligations and upward adjustments (total) $14,170,562,965 $391,035,922 $12,042,485 $14,573,641,372 

Unobligated balance, end of year 

 Apportioned, unexpired accounts 11,771,462 452,931,294 - 

 

464,702,756 

 Unapportioned, unexpired accounts 12,070,046 9,278,520 525,764 21,874,330 

 Unexpired unobligated balance, end of year 23,841,508 462,209,814 525,764 486,577,086 

 Expired unobligated balance, end of year 11,254,545 - 4,346,481 15,601,026 

Unobligated balance, end of year (total) 35,096,053 462,209,814 4,872,245 502,178,112 

Total budgetary resources $14,205,659,018 $853,245,736 $16,914,730 $15,075,819,484 

Outlays, net 

 

Outlays, net (total) (discretionary and mandatory) $14,104,865,389 $361,234,972 ($1,871,984) $14,464,228,377 

Distributed offsetting receipts (-) (5,530,321,006) - - (5,530,321,006) 

Agency outlays, net (discretionary and mandatory) $8,574,544,383 $361,234,972 ($1,871,984) $8,933,907,371 
- 106 -

PAGE INTENTIONALLY LEFT BLANK 
UNITED STATES RAILROAD RETIREMENT BOARD

OFFICE OF INSPECTOR GENERAL

844 N RUSH STREET CHICAGO IL 60611-1275 Printed on recycled paper 

Independent Auditor’s Report

To Board Members:

Report on the Financial Statements

We were engaged to audit the accompanying balance sheet of the Railroad 

Retirement Board (RRB) as of September 30, 2020 and 2019; the related 

statements of net cost, changes in net position, budgetary resources for the years 

then ended, the related notes to the financial statements, and the sustainability 

financial statements. The sustainability financial statements are comprised of the

statement of social insurance as of October 1, 2019, October 1, 2018, 

October 1, 2017, October 1, 2016, and October 1, 2015, the statement of changes 

in social insurance amounts for the period ended September 30, 2019; and the 

related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these 

financial statements in accordance with accounting principles generally accepted in 

the United States of America; this includes the design, implementation, and 

maintenance of internal control relevant to the preparation and fair presentation of 

financial statements that are free from material misstatements, whether due to 

fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based 

on an audit conducted in accordance with auditing standards generally accepted 

in the United States of America. As described in the Basis for Disclaimer of 

Opinion paragraphs we were not able to obtain sufficient appropriate audit 

evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

The National Railroad Retirement Investment Trust (NRRIT) was established 

pursuant to the Railroad Retirement and Survivors’ Improvement Act of 2001 

(Public Law 107-90). Under that law, the NRRIT is not a department, agency or 

instrumentality of the government of the United States. In addition, the law 

specifically exempts the NRRIT from compliance with Title 31, United States 

Code, which governs the monetary and financial operations of the federal 

government. The law also provides that the NRRIT annually engage an 

independent, qualified public accountant to audit the financial statements of the 

NRRIT. The Office of Inspector General (OIG) has not audited the books and 

- 107 -
Independent Auditor’s Report Page 2 

records of the NRRIT, nor had any input into the selection of the independent 

accountant retained by the NRRIT. The financial statements of the NRRIT were 

audited by other auditors, whose audit reports were received within the 

timeframes established for the audit of the RRB’s financial statements. Pursuant 

to the group financial statement audit requirements promulgated by the American 

Institute of Certified Public Accountants (AICPA) in AICPA Professional 

Standards in AU-C section 600, Special Considerations - Audits of Group 

Financial Statements, on July 27, 2020, we made an inquiry to the NRRIT’s Chair 

requesting communication with and cooperation from NRRIT auditors. We did not 

receive a response to our inquiry for the current fiscal year. In prior years, RRB 

management stated that they do not have the authority to grant the access 

needed to enable cooperation and communication between OIG and NRRIT 

auditors. Consequently, we were unable to perform the specified AU-C section 

600 group audit procedures and have determined that undetected 

misstatements, which could be material and pervasive, could exist.1 

The net assets of the NRRIT represent approximately $24.8 billion and 

$25.4 billion or 77 and 78 percent of the total assets reported for the RRB for 

fiscal years 2020 and 2019, respectively. NRRIT assets also represent 

approximately 91 and 90 percent of the Treasury securities and assets held by 

the Railroad Retirement program as of October 1, 2019 and October 1, 2018, 

respectively. Related changes in the net value of investments held by the NRRIT 

are reported as a source of financing which contributed a net loss of 

approximately $594 million during fiscal year 2020 and a net loss of $1.2 billion

during fiscal year 2019. 

In fiscal year 2018, we notified RRB management, and in fiscal year 2019 we 

informed both RRB management and the NRRIT Chair that NRRIT auditors’ 

system of quality control had received a peer review rating of pass with 

deficiency, for the year ended March 31, 2017 that remained in effect at the time 

of our audit. This created a situation in which the independent public accountant 

(IPA) might not have reasonable assurance of performing or reporting in 

conformity with applicable professional standards. The deficiency was identified 

in the IPA’s system of quality control whereby actions by senior audit 

management and other individuals failed to comply with the firm’s quality control 

policies and procedures related to its leadership responsibilities, relevant ethical 

1 Misstatements in the National Railroad Retirement Investment Trust net assets could be both 

material and pervasive. American Institute of Certified Public Accountants (AICPA) AU-C 705A.06 

defines pervasive as, “[a] term used in the context of misstatements to describe the effects on the 

financial statements of misstatements or the possible effects on the financial statements of

misstatements, if any that are undetected due to an inability to obtain sufficient appropriate audit 

evidence.” In context to the RRB’s financial statements, the “[p]ervasive effects on the financial 

statements are those that, in the auditor’s professional judgment” are confined to specific 

elements, accounts, or items of the financial statements, and “represent or could represent a 

substantial proportion of the financial statements.”

- 108 -
Independent Auditor’s Report Page 3 

requirements and monitoring and potentially negating the reasonable assurance 

of performing or reporting in conformity with applicable professional standards.

We also informed the NRRIT Chair and RRB management that the Public 

Company Accounting Oversight Board’s (PCAOB) 2015 Inspection of the 

NRRIT’s auditors, identified deficiencies in the IPA’s audit work and defects or 

potential defects in its system of quality controls and determined that the IPA had 

not obtained sufficient appropriate audit evidence to support its opinions. 

Deficiencies related to control testing and substantive testing were identified in 

the audits inspected. Of notable concern to the NRRIT, the IPA’s procedures 

related to the valuation and disclosure of investments and derivatives were not 

sufficient even where a fraud risk was identified. 

PCAOB inspection reports released in January 2019 for 2016 and 2017 and 

April 2020 for 2018 indicated that the previously reported 2015 deficiencies 

remained largely unchecked. 

According to the United States Government Accountability Office’s (GAO) 

Government Auditing Standards, “[a]n audit organization’s system of quality 

control encompasses the audit organization’s leadership, emphasis on 

performing high quality work, and policies and procedures designed to provide 

reasonable assurance of complying with professional standards and applicable 

legal and regulatory requirements.”2 

RRB OIG auditors are required to obtain an understanding of, “[a] component 

auditor's professional competence” in accordance with AICPA standard 

AU-C section 600.22 (b), Understanding a Component Auditor.

GAO’s Financial Audit Manual (FAM) provides guidance in responding to a peer 

review rating of pass with deficiencies: 

Where the other auditors’ or specialists’ firm receives a peer review or 

inspection report rating of pass with deficiencies or fail, the auditor should 

evaluate whether the quality control system has since been strengthened 

to allow the auditor to use the other auditors’ or specialists’ work. The 

auditor may review the firm’s action plan for improving quality controls and 

inspection results in determining whether quality controls have improved 

since the peer review. The auditor should evaluate the effect of remaining 

weaknesses in determining the nature and extent of procedures to be 

performed.3

2 United States Government Accountability Office (GAO), Government Auditing Standards, 2018 

Revision, GAO-18-568G, Paragraph 5.03 (Washington, D.C.: July 2018).

3 GAO and Council of Inspectors General on Integrity and Efficiency (CIGIE), Financial Audit Manual 

(FAM), GAO-18-625G, Section 615.20 (Washington D.C.: April 2020).

- 109 -
Independent Auditor’s Report Page 4 

To facilitate the OIG’s evaluation of the IPA’s quality control system, we 

requested that either RRB or NRRIT provide the IPA’s action plan for improving 

its quality controls, the current status of its efforts, and the results of its 

inspections subsequent to the peer review. In addition, we requested an 

explanation of the IPA’s post-inspection progress and corrective actions 

addressing the quality control deficiencies and defects reported by PCAOB and 

identify those specific actions which serve to strengthen reliance on the IPA’s 

financial reporting. In July 2019, we requested that this information be provided 

by RRB and NRRIT. The NRRIT did not respond to our request or indicate that 

any information was available. In November 2019, RRB management informed 

RRB OIG auditors that they had some information pertaining to IPA corrective 

actions and per our request the information was provided on July 29, 2020 and 

September 14, 2020. From a meeting summary provided by NRRIT to the RRB, 

we learned that while NRRIT’s audit committee believed that a heightened level 

of concern existed which required close monitoring, NRRIT had opted to retain its 

auditor. The materials provided and the NRRIT’s audit committee determination 

did not sufficiently alleviate our concerns to warrant removal of this audit 

concern. The cited peer review rating had also not been updated and therefore 

our audit concerns continue to exist. 

While corrective actions have progressed, the IPA’s peer review rating, its failure 

to perform sufficient audit procedures, and the material significance of its PCAOB 

reported quality control and testing deficiencies continue to directly impact the 

RRB’s reporting of its fiscal year 2015 through 2020 financial statements

including its Statement of Social Insurance, and other NRRIT supported financial 

information.

Disclaimer of Opinion

Due to the significance of the matters described in the Basis for Disclaimer of 

Opinion paragraphs, we have not been able to obtain sufficient appropriate audit 

evidence to provide a basis for an audit opinion on the financial position of the 

RRB, its consolidated net cost of operations and changes in net position, and 

combined budgetary resources as of September 30, 2020 and 2019; and the 

financial condition of the Railroad Retirement program as of October 1, 2019, 

October 1, 2018, October 1, 2017, October 1, 2016, and October 1, 2015, and 

changes in the financial condition of the program for the period ended 

September 30, 2019. Accordingly, we do not express an opinion on these 

financial statements.

Emphasis of Matter

As discussed in Note 14 to the financial statements, the sustainability financial 

statements are based on management’s assumptions. These sustainability 

financial statements present the actuarial present value of the RRB’s estimated 

future income to be received and future expenditures to be paid using a 

- 110 -
Independent Auditor’s Report Page 5 

projection period sufficient to illustrate long term sustainability. The sustainability 

financial statements are intended to aid users in assessing whether future 

resources will likely be sufficient to sustain public services and to meet 

obligations as they come due. The Statements of Social Insurance and Changes 

in Social Insurance Amounts are based on income and benefit formulas in 

current law and assume that scheduled benefits will continue after any related 

trust funds are exhausted. The statements of long term fiscal projections are 

based on the continuation of current policy. The sustainability financial 

statements are not forecasts or predictions. The sustainability financial 

statements are not intended to imply that current policy or law is sustainable. In 

preparing the sustainability financial statements, management considers and 

selects assumptions and data that it believes provide a reasonable basis to 

illustrate whether current policy or law is sustainable. Assumptions underlying 

such sustainability information do not consider changes in policy or all potential 

future events that could affect future income, future expenditures, and 

sustainability, for example, implementation of policy changes to avoid trust fund 

exhaustion or unsustainable debt levels. Because of the large number of factors 

that affect the sustainability financial statements and the fact that future events 

and circumstances cannot be estimated with certainty, even if current policy is 

continued, there will be differences between the estimates in the sustainability 

financial statements and the actual results, and those differences may be 

material. However, during fiscal year’s 2019 and 2020, the actuarial consultant 

identified an issue that resulted in material differences in the present values of 

social insurance income and expenditures. This matter is discussed in the 

Material Weaknesses section of this report.

The RRB discloses transactions with related parties in Note 2 to the financial 

statements. The RRB, Social Security Administration, and Centers for Medicare 

and Medicaid Services are parties to a financing arrangement described as a 

financial interchange. Under this arrangement, transfers from the Social Security 

Administration’s Old Age and Survivors Insurance and Disability Insurance trust 

funds and transfers to the Federal Health Insurance trust fund represented 

approximately $4.8 billion (net), or about 36 percent of the financing sources 

reported on the RRB’s statement of changes in net position for fiscal year 2020

before considering the change in the reported value of NRRIT net assets. For 

fiscal year 2019, financial interchange transfers of approximately $4.7 billion (net) 

represented about 35 percent of the financing sources reported before 

considering the reduction in the reported value of NRRIT assets. Our opinion is 

not modified with respect to this matter.

- 111 -
Independent Auditor’s Report Page 6 

Other Matters 

Required Supplementary Information

Accounting principles generally accepted in the United States of America require 

that the following required supplementary information be presented to 

supplement the basic financial statements: Management Discussion and 

Analysis section beginning on page 7, Social Insurance beginning on page 95, 

and Combining Statement of Budgetary Resources on page 105. Such 

information, although not a part of the basic financial statements, is required by 

the Federal Accounting Standards Advisory Board, which considers it to be an 

essential part of financial reporting for placing the basic financial statements in an 

appropriate operational, economic, or historical context. We have applied certain 

limited procedures to the required supplementary information in accordance with 

auditing standards generally accepted in the United States of America, which 

consisted of inquiries of management about the methods of preparing the 

information and comparing the information for consistency with management’s 

responses to the auditor’s inquiries, the basic financial statements and other 

knowledge the auditor obtained during our audit of the basic financial statements. 

We do not express an opinion or provide any assurance on this information 

because the limited procedures do not provide us with sufficient evidence to 

express an opinion or provide any assurance.

Other Information

The RRB’s other information contains a wide range of information, some of which 

is not directly related to the financial statements. This information is presented for 

purposes of additional analysis and is not a required part of the financial 

statements or the required supplementary information. We read the other 

information included with the financial statements in order to identify material 

inconsistencies, if any, with the audited financial statements. Our audit was 

conducted for the purpose of forming an opinion on the RRB’s financial 

statements. We did not audit and do not express an opinion or provide any 

assurance on the other information. 

Report on Other Legal and Regulatory Requirements

We conducted our audit in accordance with auditing standards generally 

accepted in the United States of America; the standards applicable to financial 

audits contained in U.S. Government Auditing Standards, issued by the 

Comptroller General of the United States; and Office of Management and Budget 

(OMB) Bulletin No. 19-03, Audit Requirements for Federal Financial Statements.

- 112 -
Independent Auditor’s Report Page 7 

Report on Internal Control over Financial Reporting 

Management’s Responsibility

RRB management is responsible for (1) maintaining effective internal control 

over financial reporting, including the design, implementation and maintenance of

internal control relevant to the preparation and presentation of financial 

statements that are free from material misstatements, whether due to fraud or 

error, and (2) evaluating the effectiveness of internal control over financial 

reporting, based on criteria established under the Federal Managers’ Financial 

Integrity Act (FMFIA). 

Auditor’s Responsibility

In planning and performing our audit, we considered the RRB’s internal control 

over financial reporting to design audit procedures that are appropriate to 

express an opinion on the financial statements, but not for the purpose of 

expressing an opinion on the effectiveness of internal control. Accordingly, we do 

not express an opinion on the effectiveness of internal control over financial 

reporting. We did not consider all internal controls relevant to operating 

objectives as broadly established under FMFIA, such as those controls relevant 

to preparing performance information and ensuring efficient operations. 

Our audit procedures would not necessarily identify all deficiencies in internal 

controls, including those that might be material weaknesses or significant 

deficiencies.4 Although not considered to be material weaknesses or significant 

deficiencies, we will report other matters involving internal control and its 

operation to RRB management in a separate letter.

Inherent Limitations of Internal Control over Financial Reporting 

Because of inherent limitations, internal control over financial reporting may not 

prevent, or detect and correct, misstatements due to fraud or error. We also 

caution that projecting any evaluation of effectiveness to future periods is subject 

to the risk that controls may become inadequate because of changes in 

conditions or that the degree of compliance with policies or procedures may 

deteriorate. 

4 A material weakness is a deficiency, or combination of deficiencies, in internal control, such that 

there is a reasonable possibility that a material misstatement of the entity’s financial statements will 

not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, 

or combination of deficiencies, in internal control that is less severe than a material weakness, yet 

important enough to merit attention by those charged with governance.

- 113 -
Independent Auditor’s Report Page 8 

Intended Purpose of Report on Internal Control over Financial Reporting

The purpose of this report on internal control over financial reporting is solely to 

describe the scope of our consideration of internal control over financial 

reporting, and the results of our procedures, and not to provide an opinion on the 

effectiveness of internal control over financial reporting. This report on internal 

control over financial reporting is an integral part of an audit performed in 

accordance with U.S. generally accepted government auditing standards. 

Accordingly, this report on internal control over financial reporting is not suitable 

for any other purpose.

Material Weaknesses

Financial Reporting

• Ineffective Controls

This material weakness was initially reported in fiscal year 2014 as part of the 

overall material weakness for financial reporting and we made recommendations 

for improvement.5 This material weakness has been closed due to RRB 

management’s corrective actions. The three remaining recommendations were 

closed during the current fiscal year. RRB OIG also observed that the financial 

impact of inadequate supporting documentation declined from $14.2 billion in 

fiscal year 2016 to $503 million in fiscal year 2017 to $0 in fiscal years 2018 and 

2019. The corrective actions taken by RRB management included:

• BFO’s Accounting Section developed and published a new Preparation of

RRB Financial Statements – Standard Operating Procedure (SOP) in the

Accounting Procedure Guide. The SOP addresses the RRB’s core

financial statements and includes detailed how-to steps, controls and flow

charts.

• BFO’s Accounting Section updated and issued Accounting Procedures

Guide, Exhibit 2E, Preparation of Standard Voucher (SV) or Journal

Voucher (JV), and Exhibit 2M, SV’s and JV’s Documentation List. In

addition, a Voucher Status Report was established to monitor the

completion of monthly accounting vouchers and a new control was

implemented that required each preparer to perform monthly JV/SV

secondary reviews and certifications. The changes led to improved

voucher accuracy and more timely preparation and during BFO’s third

quarter fiscal year 2019 quality assurance evaluation, no substantive

5 Railroad Retirement Board (RRB) Office of Inspector General (OIG), Audit of the Business Process 

Controls in the Financial Management Integrated System, Report No. 14-10, Recommendation Nos. 

1 & 2 (Chicago, IL: August 1, 2014); and Fiscal Year 2014 Financial Statement Audit Letter to 

Management, Report No. 15-05, Recommendation No. 2 (Chicago, IL: March 31, 2015).

- 114 -
Independent Auditor’s Report Page 9 

errors or procedural errors were found. In addition, no substantive errors 

or procedural errors were found during our fiscal year 2020 audit.

• Communication with the National Railroad Retirement Investment Trust’s

(NRRIT) Auditor

RRB Office of Inspector General (OIG) auditors have rendered disclaimer 

opinions on the RRB’s financial statements since fiscal year 2013. Although 

AICPA Group 600 guidance requires that the group auditor (OIG) communicate 

with and receive cooperation from the component auditor (NRRIT’s auditor), RRB 

management previously cited section 15 (j) of the Railroad Retirement Act as the 

basis for denial. On November 12, 2019, RRB management stated that they do 

not have the authority to grant the access needed to enable cooperation and 

communication between OIG and NRRIT auditors. NRRIT did not respond to our 

July 27, 2020 letter request pertaining to its auditors. This lack of cooperation 

and communication with NRRIT auditors prevents OIG auditors from obtaining 

sufficient appropriate audit evidence regarding the RRB’s financial statements. 

As discussed later in this letter, the need for identification of treaties and 

international agreements further enforce the need for this communication with 

NRRIT. This is because international agreements may be directly or indirectly 

impacting NRRIT investment decisions without RRB management’s knowledge 

or awareness.

Our concerns with RRB management’s lack of knowledge and awareness 

concerning NRRIT investment decisions heightened as the RRB received an 

inquiry on July 7, 2020 from the White House National Security Advisor and the 

Director of the National Economic Council. The letter stated that the NRRIT was 

believed to have been investing hundreds of millions in railroad worker’s 

retirement assets in investments directly supporting the People’s Republic of 

China. The letter also indicated that these investments appear to support 

increased Chinese militarization, human rights violations, religious oppression, 

and violate existing U.S. sanctions. In addition to being a national security risk, 

the investments are also considered to be of much greater economic risk to 

railroad retirees as the Chinese government has prevented compliance with U.S 

security laws and impeded PCAOB and SEC oversight and inspections leaving 

these railroad retiree assets vulnerable and exposed to significant and 

unnecessary financial risks and fiduciary concerns. RRB responded on 

July 8, 2020 that the NRRIT’s investment authority is not subject to direct 

oversight or approval by the RRB; however, RRB will make further inquiries 

concerning the risk of NRRIT’s investments. On July 30, 2020, NRRIT responded 

to the RRB that it had not invested in the two Chinese companies cited in the 

letter. NRRIT further stated that it relies on the Office of Foreign Assets Control 

to identify sanctioned companies and noncompliance with SEC and PCAOB 

reporting requirements would not be a deterrent to investing in Chinese and other 

foreign companies. NRRIT also noted that its investments in Chinese companies 

- 115 -
Independent Auditor’s Report Page 10

have been justified by their return performance. RRB OIG has no audit authority 

to validate the accuracy of the NRRIT’s statements regarding its investments.

The OIG had previously identified and reported related concerns including 

NRRIT’s more than $2 billion in secretive offshore investments, its failure to 

address investment compliance with international law and other geopolitical risks, 

and NRRIT’s lack of disclosure of more than 71 percent of its assets totaling 

more than $17 billion in offshore, international, and private investments. The 

RRB responded that they had no knowledge of these investments and had not 

inquired due to their arm’s length oversight relationship with the NRRIT.6

Further complicating these matters, on March 21, 2018, the NRRIT’s component 

auditor received a peer review rating of pass with deficiency, for the year ended 

March 31, 2017, as previously discussed in this letter.

On June 17, 2019, the Securities and Exchange Commission (SEC) issued a 

cease and desist order censuring the NRRIT’s auditor and assessed a civil 

monetary penalty in the amount of $50 million. The matter involved two courses 

of misconduct that resulted in violations of the fundamental requirement that 

auditors act with integrity. The NRRIT’s auditor admitted to the facts and 

acknowledged its conduct. The SEC concluded that the NRRIT’s auditor willfully 

violated PCAOB ethics standards, failed to maintain integrity as described in the 

AICPA’s Code of Professional Conduct, committed an act discreditable to the 

profession, and failed to comply with PCAOB Quality Control Standards. The 

SEC has imposed remedial sanctions which are ongoing. 

We previously recommended that an independent committee be established to 

identify a functional solution that would enable communication between OIG and 

NRRIT’s auditors. Although RRB management did not concur with this 

recommendation, we will continue to cite this issue and the need for corrective 

action.7

Management’s Comments and Our Response

RRB management continues to disagree with our material weakness and 

disclaimer of opinion in response to our inability to communicate with the 

NRRIT’s auditor as required by the AICPA’s group audit requirements. RRB 

management stated that it does not have the authority to compel the NRRIT 

auditors to provide their work papers to, or speak with the OIG. They also believe 

they have provided the OIG access to NRRIT related information in accordance 

with the 2002 Memorandum of Understanding between the RRB, NRRIT, 

6 RRB OIG, Management Information Report, Limited Oversight of the National Railroad Retirement 

Investment Trust Puts Railroad Retirement Assets at Risk, Report No. 19-04 (Chicago, IL: 

December 19, 2018). 7 RRB OIG, Fiscal Year 2014 Financial Statement Audit Letter to Management, Report No. 15-05 

(Chicago, IL: March 31, 2015).

- 116 -
Independent Auditor’s Report Page 11

Department of the Treasury, and the OMB and all other information related to 

NRRIT in their possession and control that the OIG requested in support of its 

audit. Management’s comments regarding this issue are also discussed in 

another section of this report. 

We note that the 2002 Memorandum of Understanding was crafted many years 

prior to AICPA group 600 audit requirements, which is the basis for our request 

to communicate with the NRRIT’s auditor. We continue to see the need for the 

disclaimer and the material weakness subcomponent that are the result of the 

lack of communication with the NRRIT’s auditor.

• Social Insurance Valuation

RRB’s Statement of Social Insurance (SOSI) contains inaccurate amounts in the 

open group surplus, which is an indicator of the long term financial stability of the 

program for the 75 year projection period. The RRB OIG contracts for the limited 

scope audit of the RRB’s statements of social insurance and actuarial projection 

process. The OIG’s actuarial contractor identified inaccurate reported amounts, 

which RRB OIG auditors determined are material differences for the RRB SOSI 

statements. 

o During fiscal year 2019, the Bureau of Actuary and Research (BAR)

began using the actual rate of return for the first quarter of the fiscal year

for the discounting of the income and expenditure cash flows. The

actuarial auditor identified this inappropriate adjustment and OIG

concluded that the resulting overstatements in the reported present values

of income and expenditures were material. These differences resulted in a

material $2.3 billion understatement in the open group surplus.

o In fiscal year 2020, BAR also began using an estimated rate of return for

the first 4 months of 2020 with an assumed rate of return for the remaining

8 months. The actuarial auditor reported that the net effect of discounting

the cash flows using the estimated rate of 0 percent for 2020, rather than

the assumed rate of 7 percent, understated the unreported open group

surplus by $1.7 billion, as of January 1, 2020, and these combined

differences understated the SOSI reported open group surplus by

$0.7 billion as of October 1, 2019.

o In addition, OIG found that BAR’s estimated rate of return for the first

4 months of 2020 was materially overstated by 5 percent when compared

with the RRB’s actual investment return on combined assets. As a result,

Note 14 to the financial statements contains inaccurate amounts and the

underlying SOSI reported open group surplus was understated by

$68 million as of October 1, 2019. BAR did not disclose the investment

return difference and monetary impact of its use of estimated versus

actual investment rates of return.

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Independent Auditor’s Report Page 12

FAM Section 941.07 requires obtaining, “sufficient appropriate audit evidence 

about whether accounting estimates in the financial statements are reasonable 

and related disclosures in the financial statements are adequate,” identifying and 

assessing, “the risks of material misstatement for accounting estimates,” and 

determining, “how management has assessed the effect of estimation 

uncertainty.”

BAR valued the social insurance open group surplus using an actual rate of 

return on combined assets for the last 3 months of 2019, an estimated rate of 

return for the first 4 months of 2020, and an assumed rate of return for the 

remainder of the 75 year projection period. BAR explained that they used Thrift 

Savings Plan rates of return as estimates for their calculations because the 

actual rate of return on combined assets for the four month period was not 

available at the time of preparation of the Section 502 report.8 However, we 

found that the rates of return for the four months were available as of 

June 4, 2020, approximately one month prior to the July 1, 2020 mandated 

release of the Section 502 report. Although not part of the financial statements, 

inaccurate published rates in the Section 502 report impact the accuracy of social 

insurance and financial statement reporting.

Amounts and investment returns in the Section 502 report are presented using a 

calendar year basis. As a result, BAR has to adjust amounts from calendar year 

reporting to fiscal year reporting, for the SOSI. Both reports were previously 

prepared using the calendar year presentation. However, beginning in 2016, 

RRB management permitted the SOSI statement presentation to be changed to 

fiscal year reporting, as requested by the NRRIT.9 While there was no immediate 

significant impact of making that change, the SOSI statement was materially 

impacted last year and similar impact is expected to continue in future years.

The actuarial auditor believes it is inappropriate for BAR to use the actual or the 

estimated investment return for discounting the present values of income and 

outflow because plan liabilities are unrelated to and would not be impacted by 

changes in plan assets and recommended the use of BAR’s 7 percent long term 

assumption.10 Management in BAR disagreed with the actuarial contractor’s 

findings.

BAR’s comingling and use of actual, estimated, and assumed rates of return 

impact the integrity of its actuarial model and introduce market fluctuations and 

8 While BAR informed us of a 95 percent correlation between RRB’s actual investment return and the 

estimated Thrift Savings Plan C Fund (65 percent) and F fund (35 percent) rates of return, significant 

variances in this correlation can occur by year. For calendar year 2020, this variance resulted in a 

Section 502 reported investment return of 0 percent rather than RRB’s actual -5 percent investment 

return on combined assets. 9 RRB OIG, Fiscal Year 2016 Financial Statement Audit Letter to Management, Report No. 17-03 

(Chicago, IL: February 16, 2017). 10 RRB, Twenty-Seventh Actuarial Valuation of the Assets and Liabilities Under the Railroad 

Retirement Act as of December 31, 2016, Pages 8-11 (Chicago, IL: June 5, 2018).

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Independent Auditor’s Report Page 13

unnecessary volatility, not normally present in BAR’s prior social insurance 

valuations. The resulting unpredictable consequences in each reporting year will 

impact Section 502 Congressional reporting on the actuarial status of the railroad 

retirement system and Tier II tax rate projections over the 75 year period. 

Material differences in the reported present values of social insurance income 

and expenditures impact the determination of the net open group surplus or 

deficit and such differences in future years could result in an actual deficit being 

reported as a surplus or vice versa. Users of the financial statements such as 

Congress are presumed to rely on the RRB’s social insurance statements for 

budgetary planning, social security research, and other national strategic 

analysis and such material differences may result in inaccurate policy making 

decisions. A prior year recommendation was made that BAR implement the 

recommendation of the actuarial auditor to strengthen the accuracy of the RRB’s 

social insurance valuation and reporting.

11 BAR management did not concur with 

our prior year recommendation. We continue to see the need for our 

recommended corrective action and therefore this audit recommendation 

remains open.

Recommendation 

1. We recommend that the Bureau of the Actuary and Research use the

Railroad Retirement Board’s actual rate of return on combined assets for

adjustment period calculations rather than the estimated Thrift Savings Plan

rates of return, as the secondary default where the actuarial contractor’s

recommended assumed rate of return will not be used.

Management’s Comments and Our Response

BAR management continues to disagree and reject the social insurance 

component of the financial reporting material weakness. BAR believes the 

actuarial consultants’ method is technically flawed. BAR stated that the incorrect 

computations produced by the consultants’ method do not provide reliable 

estimates and should not be relied upon by Congress, rail labor, or rail 

management. The fundamental difference between BAR’s method and the 

consultants’ method lies in the interest rate used to calculate the surplus position.

While BAR believes its method and choice of interest rate is correct, it has not 

accepted the actuarial contractor’s professional logic that is commonly used in 

actuarial practice. The actuarial contractor has had extensive exposure to 

common actuarial practices in varying environments and the actuarial auditor has 

stated that it is inappropriate for BAR to use the actual or the estimated 

investment return for discounting the present values of income and outflow 

because plan liabilities are unrelated to and would not be impacted by changes in 

plan assets. 

11 RRB OIG, Report on the RRB’s Financial Statements, Fiscal Year 2019, Report No. 20-02 

(Chicago, IL: November 15, 2019). 

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Independent Auditor’s Report Page 14

With regard to the use of TSP rates of return rather than actual rates of return, 

BAR management partially concurred and stated that known actual return 

experience for the combined NRRIT, RRA, and Social Security Equivalent 

Benefit Account should be considered when selecting the return assumption. 

BAR will continue to consider actual return experience of the combined accounts 

contingent on availability.

While BAR agreed that actual returns rather than TSP estimated returns should 

be used, it did not consider using a three month versus a four month timing 

adjustment to utilize the actual returns rather than placing reliance on the 

estimated returns based on availability of actual which are potentially subject to 

significant variances each year as discussed in our report. We continue to 

recommend the use of actual over estimated returns when making timing 

adjustments where the actuarial contractor’s recommended assumed rate of 

return will not be used.

Deficient Internal Controls at the Agency Wide Level

This material weakness was originally reported in fiscal year 2018.

• Ineffective Standards for Internal Control

GAO’s Standards for Internal Control in the Federal Government identify the five 

required components of internal control:

o Control Environment - The foundation for an internal control system. It

provides the discipline and structure to help an entity achieve its objectives.

o Risk Assessment - Assesses the risks facing the entity as it seeks to achieve

its objectives. This assessment provides the basis for developing

appropriate risk responses.

o Control Activities - The actions management establishes through policies

and procedures to achieve objectives and respond to risks in the internal

control system, which includes the entity’s information system.

o Information and Communication - The quality information management and

personnel communicate and use to support the internal control system.

o Monitoring - Activities management establishes and operates to assess the

quality of performance over time and promptly resolve the findings of audits

and other reviews.

The five components represent the highest level of the hierarchy of standards for 

internal control in the federal government. The five components of internal control 

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Independent Auditor’s Report Page 15

must be effectively designed, implemented, and operating, and operating 

together in an integrated manner, for an internal control system to be effective.12

Although the RRB’s control environment was assessed at the agency wide level, 

we have other concerns with the control environment. The control environment 

had been identified in prior audit opinions beginning in fiscal year 2016 as a 

separate material weakness. In fiscal year 2018, it was included in the overall 

material weakness for deficient internal controls at the agency wide level. The 

remaining four components, Risk Assessment, Control Activities, Information and 

Communication, and Monitoring, had not been assessed by the RRB in 

conformance with GAO and OMB requirements at the agency wide level. 

Because each of the required components of internal control were not designed, 

implemented, and operating effectively, consistent with GAO and OMB guidance, 

we were required to conclude that the overall system of internal control was not 

operating effectively and an entity-level control material weakness was 

reported.13 This material weakness continues to exist.

Management’s Comments and Our Response

RRB management indicated that it continues to make strides implementing 

Enterprise Risk Management (ERM) at the RRB by leveraging the Management 

Control Review (MCR) infrastructure already in place and disagrees that this 

contributes to a material weakness affecting the preparation and fair presentation 

of the financial statements. In fiscal year 2020, RRB incorporated an ERM based 

reporting structure into the MCR guide aimed at enhancing its ability to identify 

potential events that may affect the agency and manage the related risks within 

our risk appetite. In fiscal year 2021, RRB plans to fully implement the new ERM 

based MCR reporting along with training of responsible officials. RRB stated that 

they are committed to strong internal controls and will move forward with the next 

phase of ERM implementation, which will address this OIG concern. While 

management indicates that some corrective actions have been taken and others 

are in progress, this area remains an audit concern and our finding remains 

unchanged. 

• Information Technology Security and Financial Reporting Controls

Increasing the seriousness and significance of this material weakness is the 

determination that each of the eight Federal Information Security Modernization 

Act (FISMA) metric domains and their corresponding cybersecurity framework 

functions were assessed as “Not Effective” for fiscal year 2019 and 2018 and that 

12 Government Accountability Office (GAO), Standards for Internal Control in the Federal

Government, GAO-14-704G, Section OV2.04 (Washington, D.C.: September 2014).

13 Office of Management and Budget, Circular No. A-123, Management's Responsibility for 

Enterprise Risk Management and Internal Control, M-16-17, Section IV.D (Washington, D.C.: 

July 2016).

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Independent Auditor’s Report Page 16

the RRB was noncompliant with FISMA legislation and OMB guidance.14 This 

shortfall in information technology security controls resulted in a total of 50 

recommendations. As such, information system control risk must be assessed as 

“high” in accordance with GAO’s FAM guidance.15 This agency wide assessment 

of high risk directly impacts the RRB’s controls supporting the agency’s financial 

reporting system. Certain financial reporting control objectives can be achieved 

only if the RRB’s controls assumed in the design of the financial reporting system 

are suitably designed and operating effectively. Such RRB controls are referred 

to as complementary controls. The ability to rely on the opinion of the RRB’s 

Statement on Standards of Attestation Engagements, No. 18 reports for its 

financial management and payroll accounting and reporting systems is also 

directly impacted by the uncertainty of these complementary controls.

Management’s Comments and Our Response 

RRB management continues to disagree with the OIG’s assertion that the 

Agency’s FISMA maturity level directly impacts the financial reporting system and 

contributes to a material weakness affecting the preparation and fair presentation 

of the financial statements. RRB management believes its Financial 

Management Integrated System (FMIS) is separate and distinct and indicated 

that its review of the recommendations and results associated with the fiscal year 

2018 and 2019 FISMA audit reports and consideration of the preliminary FY 

2020 FISMA audit results did not find any impactful risk to the FMIS. During 

FY 2020, the RRB focused its efforts on addressing open findings and related 

recommendations identified in years prior to the FY 2019 FISMA audit. The RRB 

realizes there remains much progress to be made in improving the overall 

security posture of the Agency, but it is committed to continue to make 

incremental steps to reach its goal.

As stated in our report, certain financial reporting control objectives can be 

achieved only if the RRB’s controls assumed in the design of the financial 

reporting system are suitably designed and operating effectively. We continue to 

see the need for this portion of the material weakness. We will consider and 

evaluate the impact of the new information and results provided in RRB 

management’s comments during next year’s financial statement audit.

• Compliance with Indirect Laws, Regulations, Contracts, Treaties, and

International Agreements

RRB management has also not established effective policies and procedures for 

preventing agency noncompliance with indirect laws, regulations, and contracts, 

14 RRB OIG, Performance Audit of RRB’s Compliance with the Federal Information Security 

Modernization Act of 2014 - Fiscal Year 2019, Report No. 20-04 (Chicago, IL: December 18, 2019). 

and RRB OIG, Performance Audit of RRB’s Compliance with the Federal Information Security 

Modernization Act of 2014 - Fiscal Year 2018, Report No. 19-03 (Chicago, IL: December 19, 2018).

15 GAO and CIGIE, FAM, GAO-18-601G, Section 295 J. 

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Independent Auditor’s Report Page 17

and for identifying treaties and international agreements impacting the RRB or its 

component NRRIT. As previously discussed, the RRB is noncompliant with 

FISMA legislation, this is one example of the RRB’s noncompliance with an 

indirect law and regulation. 

RRB referenced agency policies and procedures and Federal Manager’s 

Financial Integrity Act statements of assurance but did not identify the relevant 

policies or procedures or provide an affirmative statement that the RRB is in 

compliance with indirect laws, regulations, and contracts. Further, it relies on the 

Office of Legislative Affairs for notification of treaties or international agreements 

impacting the NRRIT, but has not established policy and procedure to obtain 

Department of State assurance that no such impact exists.

Policies and procedures for ensuring compliance with indirect laws, regulations, 

and contracts are required per FAM guidance.16 Treaties and other international 

agreements may lead to commitments or contingencies that should be 

recognized or disclosed in the financial statements, in accordance with federal 

financial accounting standards.17 Prior year recommendations were made that 

the Executive Committee establish policies and procedures for ensuring agency 

compliance with indirect laws, regulations, and contracts; and for identifying 

treaties and international agreements impacting the RRB or its component, the 

NRRIT.

18 RRB management did not concur with our prior year recommendations. 

We continue to see the need for our recommended corrective actions and 

therefore these audit recommendations remain open.

Management’s Comments and Our Response

RRB management continues to disagree with our recommendation and believes 

that compliance with laws and regulations is intertwined throughout various 

agency policy and procedure documents, such as administrative circulars and 

others, as well as throughout the extensive documentation compiled to comply 

with the FMFIA. The Agency’s Management Control Review (MCR) program 

directly fulfills the requirements of FMFIA and is an example of a well-established 

policy and procedure to help ensure compliance with indirect laws, regulations, 

and contracts.

RRB management also indicated that with regard to FISMA compliance, the 

results from the fiscal year 2019 FISMA audit, as well as the preliminary fiscal 

year 2020 FISMA audit results, continue to demonstrate ongoing progress in 

improving our information security program and practices across the Agency.

16 GAO and CIGIE, FAM, GAO-18-601G, Section 245.08(a).

17 Federal Accounting Standards Advisory Board, Handbook of Federal Accounting Standards and 

Other Pronouncements, as Amended, SFFAS No. 5, Accounting for Liabilities of the Federal 

Government, as amended by SFFAS No. 12, Recognition of Contingent Liabilities Arising from 

Litigation (Washington, D.C.: June 30, 2018).

18 RRB OIG, Report on the RRB’s Financial Statements, Fiscal Year 2019, Report No. 20-02 

(Chicago, IL: November 15, 2019). 

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Independent Auditor’s Report Page 18

RRB management also believes its current policies and procedures are effective 

with regard to international agreements impacting the RRB or NRRIT. RRB 

management further believes that policies and procedures that provide for 

regular monitoring and reporting of actions in Congress would necessarily result 

in the identification of either type of agreement. The RRB monitors for changes in 

laws through the Office of Legislative Affairs, which “monitors legislation and 

notifies RRB officials of new developments.” Such monitoring specifically serves 

to notify the General Counsel of any treaties and/or international agreements 

involving and/or affecting the RRB or NRRIT. 

RRB OIG auditors continue to see the need for this portion of the material 

weakness. If such policies and procedures for ensuring compliance with indirect 

laws, regulations, and contracts, and for identifying treaties and international 

agreements are actively in place, they should be specifically identified and 

documented to address GAO’s financial audit requirements and to ensure 

compliance is maintained. We reiterate that RRB management has not affirmed 

compliance or provided the policies and procedures that they state are in place.

• Compliance with Railroad Retirement Act Benefit Payment Provisions

Last year, we could not determine whether the RRB was in compliance with the 

Railroad Retirement Act (RRA) for fiscal year 2019 as RRB’s quality assurance 

reviews supporting agency compliance with RRA benefit payment provisions had 

not been completed within the required audit timeframe. The quality assurance 

review process consisted of approximately 26,500 adjudicated cases totaling 

approximately $662.1 million in benefit payments. For fiscal year 2020, RRB 

stated that it had completed testing for the first six months of RRA initial cases. 

However, RRB stated that it could not complete its fiscal year 2020 sampling 

plan or finalize its universe and sample sizes because its fiscal year 2019 

accuracy rate had not been determined within the requested and subsequently 

extended timeframe for our audit. 

RRB management also stated that post adjudication cases for fiscal year 2020 

were not reviewed due to pandemic processing limitations. RRB management 

also cited significant staffing shortages and other mission critical priorities as 

challenges to completion. In addition, RUIA third quarter quality assurance 

testing had not been completed that includes the processing of The Coronavirus 

Aid, Relief, and Economic Security (CARES) Act stimulus payments.19

Due to these processing omissions, we could not complete our compliance 

assessments and therefore could not ensure that the RRB is in full compliance 

with the RRA for fiscal years 2019 and 2020 or the CARES Act for fiscal 

year 2020.

19 Pub. L. No.116-136, 134 Stat. 281 (2020). 

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Independent Auditor’s Report Page 19

To comply with the Government Performance and Results Act, the RRB’s policy 

statement on quality, as stated in the RRB’s Strategic Plan, in part, states: “The 

Railroad Retirement Board will pay benefits to the right people, in the right 

amounts, in a timely manner.” The RRB conducts annual quality assurance 

reviews utilizing statistical sampling and focused on initial and post processing 

adjudication of cases and payment accuracy. 

Timely quality assurance reviews are needed to address the RRB’s strategic goal 

to serve as responsible stewards for customer trust funds and agency resources. 

The related objective for this goal is to ensure effectiveness, efficiency, and 

security of operations, and the objective specifically addresses quality assurance 

activities that are performed to ensure that benefit payment programs comply 

with established policies, standards, and procedures.

Recommendation

2. We recommend that the Office of Programs acquire additional staffing and

resources for its quality assurance reviews to ensure timely completion of its

compliance determinations during each fiscal year, in accordance with

financial statement audit requirements.

Management’s Comments 

RRB management concurred with our recommendation and shares the OIG’s 

concern for more staffing in the quality assurance section of the Program 

Evaluation and Management Services Division. RRB management is working to 

fill the losses in this section and indicated that it will continue to work with the 

OIG to achieve the Agency’s mission in an efficient manner.

• Controls Over Railroad Service and Compensation

In fiscal year 2019, RRB’s controls over creditable and taxable compensation 

were found to be inadequate as the RRB is not giving sufficient audit coverage to 

railroad employer compensation reporting. The RRB’s Audit and Compliance 

Section (ACS) conducts audits of railroad employers to determine whether 

creditable compensation and financial reporting requirements of the RRA and 

Railroad Unemployment Insurance Act are being met. ACS determines whether 

compensation has been accurately reported to the RRB and they reconcile 

creditable compensation reported for RRA purposes with taxable compensation 

reported to the Internal Revenue Service for Railroad Retirement Tax Act 

purposes. The RRB’s ACS establishes a program of railroad employer audits 

with the primary objective being the review of the accuracy of railroad service 

and compensation on which payroll taxes are based. However, this program of 

railroad employer audits is not an effective control for ensuring the accuracy of 

compensation which was the basis for approximately $6.2 billion of payroll taxes 

received by the RRB during fiscal year 2019. Since the beginning of fiscal 

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Independent Auditor’s Report Page 20

year 2017, only two audits had been completed by ACS, and as of the end of 

fiscal year 2019, three audits were in progress, out of a universe consisting of 

721 railroad employers, and none of the largest Class 1 railroads had been 

subjected to audit. The limited number of audits being conducted by ACS is due 

to less staff and funding being allotted. We observed that the limited staffing and 

funding had resulted in the expiration of the statute of limitations for one railroad 

and closure of the audit in fiscal year 2018. During fiscal year 2020, two audits 

have been initiated, but neither is a Class 1 railroad. A prior year 

recommendation was made that BFO acquire additional staff and funding to 

increase the Audit and Compliance Section’s coverage of railroad employer 

compensation reporting to ensure that a sufficient quantity of railroad audits are 

conducted to maintain a level of control effectiveness.

20 BFO management 

concurred with our prior year recommendation.

Management’s Comments 

RRB management shares the OIG’s concerns and takes the responsibility for 

ensuring the accuracy of reported Tier I and Tier II creditable service and taxable 

compensation very seriously. RRB has made significant strides to add staff 

resources and increase audit coverage during fiscal years 2019 and 2020. With 

an increase in staffing levels, RRB has several audits in progress and plans to 

include a Class 1 railroad in its fiscal year 2021 audit activity.

Report on Compliance with Laws, Regulations, and Contracts

In connection with our audit of the RRB’s financial statements, we tested 

compliance with selected provisions of applicable laws and regulations consistent 

with our auditor’s responsibility. Contracts were considered for compliance 

testing. Grant agreements are not applicable for RRB operations. We caution 

that noncompliance may occur and not be detected by these tests. We 

performed our tests of compliance in accordance with U.S. generally accepted 

government auditing standards.

Management’s Responsibility

RRB management is responsible for complying with laws, regulations, and 

contracts applicable to the RRB. 

20 RRB OIG, Report on the RRB’s Financial Statements, Fiscal Year 2019, Report No. 20-02 

(Chicago, IL: November 15, 2019). 

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Independent Auditor’s Report Page 21

Auditor’s Responsibility

Our responsibility is to test compliance with selected provision of laws, 

regulations, and contracts that have a direct effect on the determination of 

material amounts and disclosures in the RRB’s financial statements and perform 

certain other limited procedures. Accordingly we do not test compliance with all 

laws, regulations, and contracts applicable to the RRB. 

Results of our Tests of Compliance with Laws and Regulations

Our tests of the RRB’s compliance with selected provisions of laws and 

regulations for fiscal year 2020 disclosed three instances of noncompliance that 

are reportable under auditing standards generally accepted in the United States 

of America. The three cited instances of noncompliance involving the RRA, 

FISMA, and CARES Act were previously discussed in the “Material Weaknesses” 

section of this audit opinion. However, the objective of our audit was not to 

provide an opinion on overall compliance with laws and regulations. 

Accordingly, we do not express such an opinion. Specifically we performed tests 

of compliance with selected provisions of laws and regulations, including laws 

governing the use of budget authority, and other laws and regulations that could 

have a direct effect on the determination of material amounts and disclosures in 

RRB’s financial statements, including:

o Anti-Deficiency Act, as amended;

o provisions of the Railroad Retirement Act governing financing and the

payment of benefits;

o provisions of the Railroad Unemployment Insurance Act governing

financing and the payment of benefits; and

o provisions of the Social Security Act that provide for certification of

benefits to the RRB for payment (42 U.S.C. § 405(i)).

Intended Purpose of Report on Laws, Regulations, and Contracts

The purpose of this report is solely to describe the scope of our testing of 

compliance with selected provisions of laws, regulations, and contracts and the 

results of that testing, and not to provide an opinion on compliance. This report is 

an integral part of an audit performed in accordance with U.S. generally accepted 

government auditing standards in considering laws, regulations, and contracts. 

Accordingly, this report on laws, regulations, and contracts is not suitable for any 

other purpose.

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Independent Auditor’s Report Page 22

RRB MANAGEMENT’S RESPONSE AND OUR COMMENTS

For its overall comments, RRB management believes the OIG has long been 

dissatisfied with its lack of authority and consequent inability to audit the activities 

of the NRRIT and believes the OIG has chosen to evidence dissatisfaction by 

criticizing RRB’s management for failing to exercise authority which, Congress 

chose not to grant to the RRB or its OIG. RRB management indicated that the 

NRRIT and the GAO entered into a Memorandum of Understanding giving GAO 

access to information necessary to support inclusion of NRRIT’s financial 

information in the government-wide financial statements. Therefore, the RRB 

disagrees with the OIG’s inclusion of this matter as both a basis for a disclaimer 

of opinion and as a component of the financial reporting material weakness. 

The OIG’s audit opinion and supporting facts continue to stand. As RRB OIG 

auditors are prohibited by law from auditing the NRRIT, we have not sought to 

audit the NRRIT but have requested only required communication with their 

auditors as necessary to comply with professional auditing standards and to 

enable us to render an audit opinion without a disclaimer. Our findings and 

recommendations are professional, and fully supported by accounting standards. 

RRB management is responsible for oversight of the NRRIT as the legislation 

that created the NRRIT provided RRB management with the authority to bring 

forth a civil action where violations occur, obtain other appropriate relief, and 

enforce provisions of the Act. As a result of this authority, our concerns regarding 

the NRRIT are addressed to RRB management. 

The full text of management’s response follows as an attachment to this report. We 

did not perform audit procedures on the RRB's written response and, accordingly, 

we express no opinion on the response. 

Martin J. Dickman

Inspector General

Chicago, Illinois

November 16, 2020 except for matters

relating to the net assets of the NRRIT as of

September 30, 2020 as to which the date is

November 13, 2020

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 U N I T E D S T A T E S G O V E R N M E N T F O RM G - 1 1 5 f (1 - 92) 

M E M O R A N D U M R A I L R O A D R E T I R E M E N T B O A R D

November 13, 2020

TO: Debra Stringfellow-Wheat

Assistant Inspector General for Audit

FROM: Shawna R. Weekley

Chief Financial Officer

SUBJECT: Fiscal Year 2020 Financial Statement Audit – Draft Auditor’s Report

This response serves to address the disclaimer of opinion and particular components of the cited 

two material weaknesses that fall under my purview.

Management Response: Disclaimer of Opinion

In the referenced report, the Inspector General for the Railroad Retirement Board (RRB), 

expressed a disclaimer of opinion on the RRB’s balance sheet as of September 30, 2020 and 

2019 and the related statements of net cost, changes in net position, budgetary resources for the 

years then ended, the related notes to the financial statements, and the sustainability financial 

statements. The Office of Inspector General (OIG) cites lack of access to the National Railroad 

Retirement Investment Trust (NRRIT) auditors pursuant to the American Institute of Certified 

Public Accountants (AICPA) Professional Standards in AU-C section 600, Special 

Considerations – Audits of Group Financial Statements as both the basis for the disclaimer of 

opinion and as a component of the financial reporting material weakness.

The RRB does not have the authority to compel the NRRIT auditors to provide their work papers 

to, or speak with the OIG. We have provided the OIG access to NRRIT related information in 

accordance with the 2002 Memorandum of Understanding between the RRB, NRRIT, 

Department of the Treasury and the Office of Management and Budget0F

1 and all other information 

related to NRRIT in our possession and control that the OIG requested in support of its audit. 

Without addressing the various mischaracterizations contained in the referenced report, the OIG 

has long been dissatisfied with its lack of authority and consequent inability to audit the activities 

of the NRRIT. It is unfortunate that they have chosen to evidence dissatisfaction by criticizing 

RRB’s management for failing to exercise authority which, quite simply and clearly, Congress 

chose not to grant to the RRB or its OIG.

It is important to note that the NRRIT and the United States Government Accountability Office 

(GAO) entered into a Memorandum of Understanding (MOU) giving GAO access to information

necessary to support inclusion of NRRIT’s financial information in the government-wide financial 

statements.1F

2

 Therefore, the RRB disagrees with the OIG’s inclusion of this matter as both a 

basis for a disclaimer of opinion and as a component of the financial reporting material 

weakness. 

1 MOU for the Budgetary, Accounting, and Financial Reporting Responsibilities Respecting Assets Held by the National Retirement 

Investment Trust entered into by the RRB, NRRIT, Department of the Treasury (Treasury), Office of Management and Budget 

(OMB), October 2002 (on file at RRB).

2 MOU for the NRRIT Inclusion in Government-Wide financial Statements and GAO Access to Information, entered into by the 

National Railroad Retirement Investment Trust (NRRIT) and the U.S. Government Accountability Office (GAO), dated October 31, 

2018 (on file at RRB).

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Page 2 of 2

Management Response: Material Weaknesses

1. Financial Reporting:

a. Ineffective Internal Controls: With respect to financial reporting the OIG’s major

concern related to processing of journal or standard vouchers used to record

transactions in the financial system. To address this concern, we significantly

strengthened internal controls over voucher processing and expanded our quality

assurance activities to cover 100% of journal vouchers and one-third of standard

vouchers with individual amounts ranging from $5 million to $5 billion. Since the third

quarter of fiscal year 2019, we observed no procedural or substantive errors and

maintained an error rate of 0%. In addition, the OIG found no substantive or

procedural errors during the fiscal year 2020 audit. As such, the OIG recognized the

effectiveness and efficiency of our corrective actions and closed this component of

the financial reporting material weakness.

b. Communication with the NRRIT auditor: See the management response to the

disclaimer of opinion included above.

2. Deficient Internal Controls at the Agency-wide Level:

a. Ineffective Standards for Internal Control: We continue to make strides implementing

Enterprise Risk Management (ERM) at the RRB by leveraging the Management

Control Review (MCR) infrastructure already in place. In fiscal year 2020, we

incorporated an ERM based reporting structure into the MCR guide aimed at

enhancing our ability to identify potential events that may affect the agency and

manage the related risks within our risk appetite. In fiscal year 2021, we will fully

implement the new ERM based MCR reporting along with training of responsible

officials. We are committed to strong internal controls and will move forward with the

next phase of ERM implementation, which will address this OIG concern. We will

continue to move forward implementing ERM and disagree that this contributes to a

material weakness affecting the preparation and fair presentation of the financial

statements.

b. Controls Over Railroad Service and Compensation: The OIG has observed that the

Audit and Compliance Section (ACS) of the Bureau of Fiscal Operations (BFO) has

conducted a limited number of railroad employer audits, none of which included Class

1 railroads, due to less staff and funding being allotted. We share the OIG’s concerns

and take our responsibility for ensuring the accuracy of reported Tier I and Tier II

creditable service and taxable compensation very seriously. To that end, we have

made significant strides to add staff resources and increase audit coverage during

fiscal years 2019 and 2020. As previously reported, we retrained and transitioned an

existing employee into an audit role in fiscal year 2019. Additionally, in fiscal years

2019 and 2020 we were able to hire four seasoned auditors from outside of the

Agency. These actions increased the audit staff from one to six. Finally, with

increased staffing levels we have several audits in progress and plan to include a

Class 1 railroad in our fiscal year 2021 audit activity.

We will continue our efforts to pay benefits to the right people, in the right amounts, in a timely 

manner, and will take appropriate action to safeguard our customers’ trust funds. We will 

continue to work in good faith with your office to achieve the Agency’s mission in a cost effective 

and efficient manner. 

cc: The Board

Executive Committee

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 U N I T E D S T A T E S G O V E R N M E N T F O RM G - 1 1 5 f (1 - 92) 

M E M O R A N D U M R A I L R O A D R E T I R E M E N T B O A R D

November 13, 2020

TO: Debra Stringfellow-Wheat

Deputy Assistant Inspector General for Audit

FROM: Patricia Pruitt

Acting Chief Actuary

SUBJECT: Fiscal Year 2020 Financial Statement Audit – Draft Auditor’s Report

Thank you for the opportunity to review and comment on the recommendations associated with 

the “Social Insurance Valuation” component of the OIG’s material weakness entitled Financial 

Reporting cited in the above referenced report. 

OIG Recommendation

The OIG recommends, “the Bureau of the Actuary and Research use the Railroad Retirement 

Board’s actual rate of return on combined assets for adjustment period calculations rather than 

the estimated Thrift Savings Plan rates of return, as the secondary default where the actuarial 

contractor’s recommended assumed rate of return will not be used.” 

Management’s Response: Partially-concur

All assumptions, including the investment return, are chosen by actuaries to represent 

reasonable expectations of future events not yet known. Historical experience, current market 

data available at the time the assumption is selected, and actuarial judgment form the basis for 

reasonable assumptions. The OIG recommendation is related to the investment return 

assumption used in the first projected year of the 2020 Section 502 valuation. 

We concur that known actual return experience for the combined National Railroad Retirement 

Investment Trust (NRRIT), Railroad Retirement Account (RRA), and Social Security Equivalent 

Benefit Account (SSEBA) should be considered when selecting the return assumption, and we 

will continue to consider actual return experience of the combined accounts contingent on 

availability. At the time that the assumptions were determined for the Section 502 projections, 

the actual return for the 2020 calendar year related to the combined accounts was not known. 

(It is noted that the 2020 calendar year return is still not known.) Broad stock market indices, 

however, had realized negative returns. In addition, asset returns for the combined accounts 

have historically been over 95% correlated with an investment portfolio of the Thrift Savings 

Plan’s C-Fund and F-Fund with a 65%/35% allocation. The published returns for the highly 

correlated portfolio related to the first quarter of 2020 were considered when developing the 

2020 calendar year assumed return for the combined accounts. 

The NRRIT constitutes the majority of combined accounts, and the applicable asset values are 

available on a lagged basis. The Section 502 Report, which forms the basis of the SOSI surplus 

calculations, is performed prior to June for review and approval by the Actuarial Advisory 

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Committee (AAC) and then provided to the Board in early June for approval. 

The 2020 Section 502 Report used by the actuarial contractor retained by the OIG forms the 

basis of the SOSI surplus calculations and includes 75-year projections of the present value of 

future income, the present value of future expenditures, tax rates, assets, and investment returns 

thereon. There are many steps involved in completing the Section 502 valuation, not limited to 

setting select economic and employment assumptions, independent development of the 

projections, independent reviews, and confirmation of results by the RRB actuaries. In addition, 

these items are performed prior to June for review and approval by the AAC and then provided to 

the Board in early June for approval. Separately, the select economic assumptions, including the 

assumed 0% investment return assumption for the 2020 calendar year, were also included in a

memorandum to the AAC, dated May 21, 2020, and were approved by the AAC without 

objection. The 2020 Section 502 Report, including all assumptions, was approved by the AAC 

and then by the Board. The OIG disagrees with the investment return assumption used for the 

2020 calendar year.

An investment return of 0% was assumed for the 2020 calendar year.

• At the time that the projections for the Section 502 Report were calculated, the actual return

for the combined accounts (NRRIT, RRA, and SSEBA) was not yet known.

• Broad stock market indices had realized negative returns.

• Historically, actual asset returns for the combined accounts have been over 95% correlated

with an investment portfolio of the C-Fund and F-Fund with a 65%/35% allocation.

• An assumed 0% asset return was developed based on a weighting of the published returns

for the C-Fund and F-Fund for the first quarter in 2020 and the 7% long term assumption for

the combined accounts.

The assumed 0% return for the 2020 calendar year is strictly an assumption, as are all of the 

investment returns and numerous other assumptions that are needed for the 75-year 

projections. Assumptions are chosen by actuaries to represent reasonable expectations of 

future events not yet known. The latest available market data available at the time, a highly 

correlated portfolio, and actuarial judgment were used to determine an appropriate assumption 

for the 2020 investment return.

OIG Findings

The OIG contends, “RRB’s Statement of Social Insurance (SOSI) contains inaccurate amounts in 

the open group surplus, which is an indicator of the long term financial stability of the program for 

the 75 year projection period” and indicates that “the RRB OIG contracts for the limited scope 

audit of the RRB’s statements of social insurance and actuarial projection process. The OIG’s 

actuarial contractor identified inaccurate reported amounts, which RRB OIG auditors determined 

are material differences for the RRB SOSI statements.” 

The OIG contends that “BAR valued the social insurance open group surplus using an actual rate 

of return on combined assets for the last 3 months of 2019, an estimated rate of return for the 

first 4 months of 2020, and an assumed rate of return for the remainder of the 75 year projection 

period” and indicates that “we found that the rates of return for the four months were available as 

of June 4, 2020, approximately one month prior to the July 1, 2020 mandated release of the 

Section 502 Report.” 

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Management’s Response: Non-concur

The OIG finding of material weakness is based on our declining to change our actuarial method 

to one preferred by the actuarial consultants in their 2019 and 2020 audit reports of the 

Statement of Social Insurance (SOSI) and our declining to change our assumed investment 

return for the 2020 calendar year that was used in the 2020 Section 502 Report. 

The 2019 actuarial consultants’ report itself states that our “Actuarial assumptions are within 

accepted actuarial practice and are consistent with the RRB’s experience. The actuarial method 

is in accordance with Actuarial Standards of Practice for Social Insurance Systems.”

• To base a finding of material weakness on a method that has been acceptable and used in

the past and continues to be acknowledged as acceptable seems inappropriate.

• To base a finding of material weakness on an investment return assumption when

assumptions where acknowledged to meet the Actuarial Standards of Practice seems

inappropriate.

We reject the finding of material weakness because we believe the actuarial consultants’ method 

to be technically flawed, as explained below. The incorrect computations produced by the 

consultants’ method do not provide reliable estimates and should not be relied upon by 

Congress, rail labor, or rail management. The fundamental difference between our method and 

the consultants’ method lies in the interest rate used to calculate the surplus position.

Background

From 2004 until 2015, we prepared the SOSI on a calendar-year basis (i.e. 1/1-12/31). Starting 

in 2016, we began preparing the SOSI on a fiscal-year basis (i.e. 10/1-9/30) in order to save the 

cost of an additional audit of the NRRIT on a calendar-year basis. Since our actuarial projection 

model produces results on a calendar-year basis, the fiscal-year measurement date amounts 

were produced by setting back the calendar-year projections by three months. 

Note that the OIG 2020 Report on the Financial Statements states, “During fiscal year 2019, 

the Bureau of Actuary and Research (BAR) began using the actual rate of return for the first 

quarter of the fiscal year for the discounting of the income and expenditure cash flows.” In 

fact, BAR has used the actual rate of return for the first quarter of the fiscal year since we 

began setting back the calendar-year projections by three months in order to produce fiscalyear projections in 2016. In 2016, 2017, and 2018, the actuarial consultants agreed with our 

method of setting back the results to a fiscal-year basis and first objected to the method in 2019, 

when the actual rate of return for the first quarter of the fiscal year was negative.

• The OIG has since concluded that the method is a basis for a finding of a material weakness

in the financial statements.

• We believe that the OIG’s conclusion was not based on an objective actuarial or

mathematical principle or precept.

When Congress enacted the Railroad Retirement and Survivors’ Improvement Act of 2001, it 

expanded allowable investments to include investments in equities and other non-governmental 

assets. This law also established a tax rate adjustment mechanism that automatically adjusts 

future tier II payroll tax rates in response to changes in asset balances and expenditures (26 U.S. 

Code § 3241). These adjustments in future tier II payroll tax rates are reflected in the PVFI and 

are expected, within bounds (e.g., minimum and maximum rates), to fully offset the impact of 

both favorable and unfavorable experience.

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The purpose of the SOSI is to determine the surplus or deficiency of the Railroad Retirement 

system. The surplus is determined by the following formula:

SSSSSSSSSSSSSS = AA AAAA + PPPPPPPP − PPPPPPPP

 where PPPPPPPP = pp vvvv oooo ii ii ii , 

 and PPPPPPPP = pp vvvv oooo ee ee . 

The actuarial consultants agreed with our calculation of the surplus as of January 1, 2020, and 

the consultants also agreed with us in the use of actual assets in the surplus calculation on both 

January 1, 2020 and October 1, 2019. They disagreed, however, with the interest rate used to 

set back the PVFI and PVFE from January 1, 2020 to October 1, 2019. The consultants believe 

that these amounts should be set back at a 1.7% rate, which is roughly one-quarter of our 7% 

ultimate investment return assumption. We, however, consider it better not to use assumptions 

for known outcomes and thus set back these amounts to October 1, 2019 using the actual 5.3% 

investment return for the quarter ending December 31, 2019. 

Our method continues to use actual return in the quarter ending December 31. The actuarial 

consultants recommend changing our method to substitute an assumed return for the quarter 

ending December 31 rather than using what we know to be true. We believe that using the 

actual known return for the 4th quarter increases the accuracy and reliability of the estimated 

surplus or deficiency position; however, the use of an actual outcome versus an assumption may 

be considered to be a difference of opinion. 

In choosing to use an assumed investment return for the 4th quarter, however, the actuarial 

consultants’ method does not correctly calculate the surplus position as of October 1, 2019. 

They use actual assets in computing the surplus on both October 1, 2019 and January 1, 2020. 

Since actual assets on these dates are related by the actual 5.3% investment return for the 

quarter, their method effectively sets back the assets using the actual realized return and sets 

back the PVFI and PVFE using an assumed return. 

In addition, the PVFI is affected by the actual return through the tax rate adjustment mechanism 

contained in current law. Lower asset values reduce the Average Account Benefits Ratio, which 

results in higher future tier 2 tax rates, while higher asset values result in lower tier 2 tax rates. 

The actuarial consultants base their calculation of the PVFI on the tax rates projected in the 2020 

Section 502 Report. The Section 502 Report reflects the known 5.3% return and provides the 

best estimate of future tax rates. By discounting the PVFI using a 1.7% rate but projecting future 

taxes with a 5.3% rate, the consultants are not properly recognizing the interaction of asset levels 

and future tax revenue. They failed to recognize a fundamental feature of the railroad retirement 

system, despite their years of auditing the SOSI. This fundamental relationship has been 

described to both the actuarial consultants and the OIG over the past year through numerous 

communications. By not recognizing this tax rate adjustment mechanism, the consultants are

overstating the surplus position (from $1.3 billion to $2.0 billion). This difference of $0.7 billion is 

a clear technical mistake by the consultants. 

cc: The Board

Executive Committee

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U N I T E D S T A T E S G O V E R N M E N T F O RM G - 1 1 5 f (1 - 92) 

M E M O R A N D U M R A I L R O A D R E T I R E M E N T B O A R D

November 13, 2020

TO: Debra Stringfellow-Wheat

Assistant Inspector General for Audit

FROM: Terryne F. Murphy

Chief Information Officer

Shawna R. Weekley

Chief Financial Officer

SUBJECT: Fiscal Year 2020 Financial Statement Audit – Draft Auditor’s Report

This response serves to address the “Information Technology Security and Financial Reporting 

Controls” component of the OIG’s material weakness entitled Deficient Internal Controls at the 

Agency-wide Level. The referenced audit report states that Federal Information Security 

Management Act of 2002 (FISMA), as amended by the Federal Information Security 

Modernization Act of 2014, metric domains and their corresponding cybersecurity framework 

functions were assessed as “Not Effective,” which has led to an “information system control risk” 

assessment of “high.” The OIG asserts that the assessment of high risk directly impacts the 

RRB’s controls supporting the agency’s financial reporting system. We continue to disagree with 

the OIG’s assertion that the Agency’s FISMA maturity level directly impacts the financial 

reporting system. 

As previously communicated to the OIG, the Agency accomplishes its major financial reporting 

objectives through its financial management system, which is a comprehensive proprietary 

software application from CGI Federal – Momentum Enterprise Solution – that resides on a cloud 

hosting service. The Agency’s system is referred to as the Financial Management Integrated 

System (FMIS). CGI Federal has been FedRAMP authorized since January 2013. CGI Federal 

offers its FedRAMP Authorized financial management system as a shared service to the federal 

government and is currently servicing 11 other federal agencies. FMIS is separate and distinct 

from the Agency’s internally managed Agency Enterprise General Information Systems (AEGIS), 

Benefit Payment Operations (BPO) and Financial Interchange (FI) system. 

Particularly, after review of the 31 recommendations associated with the fiscal year (FY) 2018 

FISMA audit report, the results of the FY 2019 FISMA audit as well as consideration of the 

preliminary FY 2020 FISMA audit results, we could not find any impactful risk to the FMIS. 

Therefore, we disagree that this matter contributes to a material weakness affecting the 

preparation and fair presentation of the financial statements. 

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Additionally, during FY 2020, leading up to the execution of the FY 2020 FISMA audit, the RRB 

focused its efforts primarily on addressing open findings and related recommendations identified 

in years prior to the FY 2019 FISMA audit. Through these efforts, we sufficiently addressed and 

closed 63 POAMs and 22 OIG findings during FY 2020. As the RRB continues to develop and 

implement its IT modernization initiatives, we will proactively address the remaining findings and 

recommendations in order to improve the Agency’s security posture and to sustain at acceptable 

levels. 

Further, preliminary audit results for the FY 2020 FISMA audit indicate that Kearney & Company 

will assess our overall maturity at Level 2 – Defined, maintaining the rating from 2019. The RRB

realized fifteen significant improvements across each of the eight domains, improving several

lower level ratings to Consistently Implemented, which is one-step lower than Level 4 – Managed 

and Measurable. Additionally, for the Configuration Management domain, the Agency improved 

from Level 1 – Ad-Hoc to Level 2 – Defined, and for the Data Protection and Privacy domain, the 

Agency improved from Level 2 – Defined to Level 3 – Consistently Implemented. The preliminary

FY 2020 audit results further demonstrate progress in improving our information security program 

and practices across the Agency as required by FISMA, OMB policy and guidelines, and National 

Institute of Science and Technology standards and guidelines. The RRB realizes there remains 

much progress to be made in improving the overall security posture of the Agency, but it is 

committed to continue to make incremental steps to reach the overall maturity goal of Level 4 – 

Managed and Measurable. 

Finally, the Agency understands and takes very seriously the mandate of the FISMA to ensure 

adequate security protections for Federal information systems and information. As the Agency

continues the development and implementation of its IT modernization initiatives, we anticipate 

the cybersecurity posture of the Agency will improve and sustain at acceptable levels.

cc: The Board

Executive Committee

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 U N I T E D S T A T E S G O V E R N M E N T F O RM G - 1 1 5 f (1 - 92) 

 M E M O R A N D U M R A I L R O A D R E T I R E M E N T B O A R D 

November 13, 2020

TO: Debra Stringfellow-Wheat

Deputy Assistant Inspector General for Audit

FROM: Ana M. Kocur on behalf of Daniel Fadden

Senior Executive Officer

SUBJECT: Fiscal Year 2020 Financial Statement Audit - Draft Auditor’s Report

This response serves to address the OIG’s findings first raised during the fiscal year 2019 

financial statement audit and carried forward into its fiscal year 2020 financial statement audit 

report. Specifically, the OIG stated they have determined the RRB has not established effective 

policies and procedures for 1) preventing agency noncompliance with indirect laws, regulations, 

and contracts; and 2) identifying treaties and international agreements impacting the RRB or the 

NRRIT. Our response to these matters is discussed below.

In its findings issued during the fiscal year 2019 financial statement audit, the OIG states that 

“RRB management has not established effective policies and procedures for preventing agency 

noncompliance with indirect laws, regulations and contracts...” We disagree with this statement 

and have previously communicated to the OIG that compliance with laws and regulations is 

intertwined throughout various agency policy and procedure documents, such as our 

administrative circulars and others, as well as throughout the extensive documentation compiled 

to comply with the Federal Manager's Financial Integrity Act of 1982 (FMFIA). The Agency’s 

Management Control Review (MCR) program directly fulfills the requirements of FMFIA and is an

example of a well-established policy and procedure to help ensure compliance with indirect laws, 

regulations, and contracts. 

The OIG specifically cited fiscal year 2018 FISMA audit results as an example of the RRB’s 

noncompliance with an indirect law or regulation. The term “noncompliance” is vastly different 

from the improvement needed that the Agency has already completed and committed to 

continuing each year. The results from the fiscal year 2019 FISMA audit, as well as the 

preliminary fiscal year 2020 FISMA audit results, continue to demonstrate ongoing progress in 

improving our information security program and practices across the Agency as required by 

FISMA, OMB policy and guidelines, and National Institute of Science and Technology standards 

and guidelines.

Additionally, in its findings issued during the fiscal year 2019 financial statement audit, the OIG 

states that “RRB management has not established effective policies and procedures ... for 

identifying treaties and international agreements impacting the RRB or its component NRRIT.” 

We again note the OIG has not cited any specific instance of our failure to identify a treaty or 

international agreement impacting the RRB or NRRIT. Both treaties and international 

agreements are either entered into with the advice and consent of the Senate or reported to 

Congress by the State Department. Accordingly, any policies and procedures that provide for 

regular monitoring and reporting of actions in Congress would necessarily result in the 

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identification of either type of agreement. As noted in the FY 2019 and FY 2020 Financial 

Statement Audit, Laws and Regulations, Cycle Synopsis documents that were provided to the 

OIG, the RRB monitors for changes in laws through the Office of Legislative Affairs, which 

“monitors legislation and notifies RRB officials of new developments.” Such monitoring 

specifically serves to notify the General Counsel of any treaties and/or international agreements 

involving and/or affecting the RRB or NRRIT. It is then within the General Counsel’s regular 

duties to review, analyze, interpret, and provide relevant guidance relating to any law, regulation, 

or policy, to include treaties and international agreements, which impacts the RRB or NRRIT. 

We therefore find that our current policies and procedures are effective and further find it 

unnecessary to establish, as noted by the OIG, a “policy or procedure to obtain Department of 

State assurance” regarding the impact of any treaty or international agreement on the RRB or 

NRRIT as the OIG did not provide any explanation as to why such assurance would be 

necessary in light of the above.

cc: The Board

Executive Committee

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UNITED STATES GOVERNMENT FORM G-115F(01-92)

Memorandum RAILROAD RETIREMENT BOARD

CHICAGO, IL

NOVEMBER 13, 2020

TO: Debra Stringfellow-Wheat

Assistant Inspector General for Audit

FROM: Crystal Coleman 

Director of Programs

SUBJECT: Fiscal Year 2020 Financial Statement Audit – Draft Auditor’s Report

This response serves to address the “Fiscal Year 2020 Financial Statement Audit – Draft Auditor’s 

Report.” Under the section titled “Compliance with Railroad Retirement Act Benefit Payment 

Provisions,” the OIG discusses the 2019 and 2020 RRA and RUIA quality assurance (QA) reviews. 

The RRB typically completes the Railroad Retirement Act QA review by September 30th of each fiscal 

year. As reported last year, due to severe staffing shortages, we provided the RRA report for the first 

six months of 2019 to the OIG one month past their requested date. Understanding the significance 

of the QA, management took proactive steps, including borrowing trained staff from other sections to 

complete the report as quickly as possible. The RRB is in the process of finalizing the full year 2019 

RRA QA report. With respect to the RUIA, the OIG has been provided with the first and second 

quarter QA reports. The RRB began processing payments under The Coronavirus Aid, Relief, and 

Economic Security (CARES) Act in May 2020. The third and fourth quarter RUIA reports are typically 

completed in the following fiscal year. As noted by the OIG, severe staffing shortages and pandemic 

related processing delays have contributed to our ability to complete these reviews more quickly. The 

third quarter RUIA report is expected to be released by the end of November 2020 as opposed to our 

typical target date of September 30th. This report will include the first CARES Act payments.

Recommendation:

We recommend that the Office of Programs acquire additional staffing and resources for its quality 

assurance reviews to ensure timely completion of its compliance determinations during each fiscal year, in 

accordance with financial statement audit requirements. 

Response: Concur.

We share the OIG’s concern and appreciate the support for more staffing in the quality assurance section 

of the Program Evaluation and Management Services Division. We are working to fill losses in this section 

and will continue to work with the OIG to achieve the Agency’s mission in an efficient manner. 

 cc: The Board

The Executive Committee

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PAGE INTENTIONALLY LEFT BLANK 
OTHER INFORMATION 
PAGE INTENTIONALLY LEFT BLANK 
UNITED STATES RAILROAD RETIREMENT BOARD

OFFICE OF INSPECTOR GENERAL

Management and Performance Challenges 

Facing the Railroad Retirement Board 

Introduction

The Reports Consolidation Act of 2000 and Office of Management and Budget (OMB) 

Circular A-136 require the Inspectors General to identify what they consider the most 

serious management challenges facing their respective agency and briefly assess the 

agency's progress in addressing these challenges.

The Railroad Retirement Board (RRB) is an independent agency in the executive 

branch of the Federal Government. The RRB’s primary function is to administer 

comprehensive retirement-survivor and unemployment-sickness benefit programs for 

the nation’s railroad workers and their families, under the Railroad Retirement and 

Railroad Unemployment Insurance Acts. As part of the retirement program, the RRB 

also has administrative responsibilities under the Social Security Act for certain benefit 

payments and railroad workers’ Medicare coverage. 

In fiscal year 2019, the RRB paid retirement-survivor benefits of nearly $13 billion to 

about 535,000 beneficiaries. The RRB also paid net unemployment-sickness benefits of 

$88 million (including recoveries of about $100,000 in expired temporary extended 

unemployment benefits under the American Recovery and Reinvestment Act of 2009, 

the Worker, Homeownership, and Business Assistance Act of 2009, and subsequent 

reauthorizing legislation) to about 23,000 claimants.

This year's management challenges are:

• Improve Agency Disability Program Integrity

• Improve Information Technology Security and Complete System Modernization

• Improve Management of Railroad Medicare

• Improve Payment Accuracy and Transparency

• Financial Management and Reporting Issues

• Compliance Concerns Identified

The challenges this year include items relating to prior Office of Inspector General (OIG) 

concerns or those identified in prior audits, the President’s Management Agenda, and 

areas related to the RRB’s ability to meet its core mission. 

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 Inspector General Statement Page 2 of 16

 Management and Performance Challenges

Challenge 1 - Improve Agency Disability Program Integrity 

Why is this a serious management challenge? The OIG has been concerned about 

fraud and abuse in the disability program for many years and RRB management has not 

been receptive of our recommendations for corrective action. The Government 

Accountability Office (GAO) has also audited the RRB’s disability program and reported 

that “a nearly 100 percent approval rate in a federal disability program is troubling, and 

could indicate lax internal controls in RRB’s decision-making process, weakness in 

program design, or both.”1 The RRB’s approval rate for occupational disabilities was 

97.54 percent during fiscal year 2019.

The RRB adjudicates and processes disability benefit payments to railroad employees 

in support of total and permanent and occupational disabilities. Occupational disabilities 

are awarded if a physical or mental impairment permanently disqualifies the railroad 

employee from performing his or her regular railroad occupation, even though the 

employee may be able to perform other types of work. 

During fiscal year 2019, the RRB paid approximately $643 million to 13,900

occupationally disabled annuitants. The average monthly occupational disability annuity 

was $3,266. 

Management has overall responsibility for establishing internal controls to manage the 

risk of fraud. Fraud can jeopardize an agency’s mission by diverting resources from 

their intended purpose. While the RRB previously had a Fraud Risk Detection Task 

Force, it was not established as a permanent entity with responsibility for continuously 

assessing fraud risk, implementing corresponding corrective actions, and monitoring the 

effectiveness of those actions. As a result, in September 2019, our contracted auditor 

determined that the actions taken as a result of the RRB’s Disability Program 

Improvement Plan (DPIP), were not fully effective in establishing a risk based approach 

to prevent future fraud and abuse in the RRB’s disability programs. Our contracted 

auditor issued three recommendations to: establish a dedicated entity within RRB to 

lead the fraud risk management process, establish a fraud risk assessment process 

specifically for disability programs to routinely determine and update the RRB’s fraud 

risk profile, and establish an ongoing fraud risk monitoring process to evaluate the 

effectiveness of corrective actions and identify new risks.

The Office of Programs concurred with the three recommendations to address these 

weaknesses, but indicated they did not have the authority to take the recommended 

actions and would forward them to the RRB Board. Although OIG has received 

correspondence indicating that the RRB established a Fraud Risk Assessment 

Committee (FRAC) in fiscal year 2020, the OIG has not received any requests to close 

these recommendations to date, and all three remain open.

1 Government Accountability Office (GAO), Railroad Retirement Board: Review of Commuter Railroad 

Occupational Disability Claims Reveals Potential Program Vulnerabilities, GAO-09-821R 

(Washington, D.C.: Sept. 9, 2009). 

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 Inspector General Statement Page 3 of 16

 Management and Performance Challenges

In addition to the above contracted audit, OIG contracted two other disability program 

audits. For one of these audits, our contracted auditor determined that the RRB did not 

effectively consider fraud risk indicators in the disability decision process and provided 

three recommendations. For the other audit, our contracted auditor determined that 

RRB medical experts did not always reach a consistent medical assessment based on 

the medical evidence, and provided two recommendations. RRB management did not 

concur with any of these recommendations. However, all five remain open because we 

continue to see the need for these improvements. 

Because these five recommendations, and many others from other reports remain 

open, the RRB’s disability program continues to be at risk of fraud and abuse. 

This paragraph, and the other paragraphs that follow, summarize some of the actions 

RRB management has taken to address its disability program and related performance. 

In response to our performance and management challenge related to disability 

program integrity outlined in the Fiscal Year 2019 Performance and Accountability 

Report (PAR), RRB management’s comments acknowledged the importance of 

identifying and mitigating fraud risk throughout the programs the agency administers. 

They discussed establishment of the FRAC whose purpose is to assess, and offer 

solutions to mitigate, fraud risk in the administration of all of the RRB’s programs, 

including the disability program.

In August 2020, the RRB issued a press release announcing the appointment of a Chief 

Medical Officer (CMO) who is to provide expert medical guidance to the RRB’s Office of 

Programs and train examiners on medical issues. During fiscal year 2020, the FRAC 

worked with the Board to initiate changes documented in Board Orders 20-23 and 

20-37. The main change was to eliminate the mandatory use of specialist medical

exams for some medical conditions, with additional specific requirements that included

some reviews by RRB staff, contracted medical professionals, and the RRB’s CMO.

The RRB stated that the policy change to eliminate the mandatory use of specialist

medical exams for some medical conditions in initial disability adjudication will save time

and money. While we acknowledge that this policy change would save time and money,

OIG still remains concerned that the policy change could increase the risk of fraud, if the

proposed compensating controls are not fully implemented.

In the fiscal year 2019 PAR, RRB management stated that in 2018, the Disability 

Benefits Division (DBD) lost experienced disability staff due to promotions and 

reassignments to other types of work. They further stated that to assist in managing the 

increased workloads, DBD hired additional staff and a supervisor. However, RRB 

management also stated that it takes two to three years to acquire the knowledge and 

skills required for proficient adjudication, therefore, at the end of the fiscal year, more 

than half of the staff had less than one year of experience. In the Fiscal Year 2021 

Budget Justification, RRB management acknowledged that currently only two initial 

survivor claims examiners have more than three years of experience and only two initial 

retirement claims examiners have more than five years of experience. 

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 Inspector General Statement Page 4 of 16

 Management and Performance Challenges

In addition, RRB Management stated that the performance plan for goal II-A-7 is to pay 

or deny a disability benefit within 100 days of the date the application is filed, but in 

fiscal year 2019, this goal was met only 12.5 percent of the time. RRB Management 

also noted that a study was conducted that showed it takes about 245 days to make a 

disability decision, therefore, RRB is re-baselining the performance goal for this 

measure. 

Although RRB management has taken some actions to address disability program and 

performance, many more improvements are needed, and the RRB’s disability program 

continues to be at risk for fraud and abuse.

Refer to Appendix A for a list of relevant reports for this challenge.

Challenge 2 – Improve Information Technology Security and 

Complete System Modernization

Why is this a serious management challenge? Improving cybersecurity and 

modernizing the RRB’s systems is vital to support the ability to meet its core mission. 

Managing cybersecurity risks is critical to improvement of the security posture of the 

federal networks and critical infrastructure. Executive Order 13800 emphasizes the 

importance of strengthening the cybersecurity of federal networks. In the Fiscal 

Year 2021 RRB Budget Justification, RRB acknowledged that they had a total 

committed/obligated cost of $13,894,709 as of January 21, 2020, towards alignment of 

the information technology (IT) initiatives to the proposed Phased RRB Transformation.

The RRB Transformation Roadmap consists of three phases – Stabilize (fiscal 

years 2020-2021), Modernize (fiscal years 2021-2023), and Perform (fiscal 

years 2023- 2024). In its effort to complete the Stabilize phase and begin work in the 

Modernize phase, the agency is requesting $13,850,000 for fiscal year 2021 and plans 

to request $21,325,000 for fiscal years 2022 and 2023 to complete the Transformation.

RRB is required by the Federal Information System Modernization Act (FISMA) to report 

the status of its information security program to OMB and FISMA metrics to the 

Department of Homeland Security. An annual independent assessment of the agency’s 

IT program is performed for the cybersecurity of RRB networks and critical 

infrastructure. 

In the annual FISMA audits for fiscal years 2019 and 2018, the OIG’s contractor found 

that RRB did not comply with FISMA legislation and OMB guidance and that sampled 

security controls selected from National Institute of Science and Technology Special 

Publication 800-53, Rev.4 demonstrated ineffectiveness, and thus the RRB’s 

Information Security Program (ISP) did not provide reasonable assurance of adequate 

security. 

In fiscal year 2019, the OIG’s contractor determined that policies and procedures were 

not regularly updated and had not been developed for the majority of systems and 

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controls, system owners and IT management failed to communicate with each other 

resulting in missing security controls and processes, and resource constraints had not 

been properly addressed through changes in IT strategy. The contractor also reported 

that the RRB’s ISP was not operating effectively, because the program’s overall 

maturity did not reach Level 4: Managed and Measurable. A total of 19 detailed 

recommendations were made to address these identified weaknesses. RRB 

management concurred with all of the recommendations. RRB management comments 

stated that the Chief Information Officer and the Chief Information Security Officer 

recognized that improvement was required to have an effective ISP. OIG has not 

received any requests to close any of these recommendations, thus all 19 remain open.

For the fiscal year 2018 FISMA audit, although findings were consistent with prior 

FISMA audit results, RRB management disagreed with the conclusion that the RRB’s 

ISP was not providing adequate assurance of adequate security. The report included 

31 recommendations for improvement. The RRB has implemented 8 of these 

recommendations and 23 remain open.

In the Fiscal Year 2019 PAR, RRB management stated that significant investment is 

essential to update the agency’s outdated IT systems, reduce cybersecurity risk, and 

sustain mission operations. They also stated that RRB’s Annual Performance Plan for 

fiscal year 2019 reflects one strategic objective that focuses on the specifics of 

achieving this goal of legacy systems modernization. Also in fiscal year 2019, the Chief 

Information Officer introduced an initiative called “On Track to Tomorrow.” The initiative 

is composed of several IT projects that are designed to help RRB improve efficiency of 

operations, adhere to governance, and provide increased value to the railroad 

community. In the fiscal year 2019 PAR, RRB stated that in fiscal year 2020, they will 

complete the re-platform of legacy mainframe applications currently developed using 

COBOL/CICS/DB2. In addition, the contract, which was to assess RRB’s core current 

businesses and develop a To-Be Blueprint for modernization, has been completed.

However OIG auditors were informed that the contract to complete the re-platform of

legacy mainframe applications was terminated in September 2020 and that a 

replacement contract is not in place.

In the Fiscal Year 2021 Budget Justification Performance Plan, the RRB identified five 

new performance goals for RRB’s Transformation (formerly Legacy Systems 

Modernization), which are all related to the strategic goal to modernize IT operations 

that will sustain mission essential services.

In response to our concerns from the fiscal year 2019 PAR regarding improving the 

RRB’s IT security and system modernization, RRB management’s comments 

acknowledged the OIG’s concern to establish and maintain a secure and reliable IT 

environment for its data, applications, and systems. They stated that they intend to 

comply with FISMA, to ensure adequate security protections for federal information 

systems and information. RRB management anticipates that the cybersecurity posture 

of the agency will improve and be sustained at an acceptable level, as they continue 

with the development and implementation of the IT modernization initiatives. They also 

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stated that the RRB will continue to make incremental steps to reach the overall 

maturity goal of Level 4 – Managed and Measurable. 

Refer to Appendix A for a list of relevant reports for this challenge.

Challenge 3 – Improve Management of Railroad Medicare

Why is this a serious management challenge? The Medicare topic is included on the 

President’s Management Agenda.

Under the Social Security Act, (see 42 U.S.C § 1842(g)) the RRB has the authority to 

administer certain aspects of the Medicare program for qualified railroad beneficiaries.

Some of these provisions include eligibility determination, enrollment or removal from 

enrollment, premium collection, processing state buy-ins, and selection of a contractor 

to process Medicare Part B claims. The RRB administers the Railroad Medicare (RM) 

program for railroad workers and, since 2000, has contracted with Palmetto GBA, LLC 

(Palmetto), to process Medicare Part B claims on behalf of RRB beneficiaries.

2 Within 

the RRB, the Office of Programs (Programs) is responsible for quality assurance and 

contract oversight of the RM contract with Palmetto.

At the end of fiscal year 2019, approximately 465,500 qualified railroad retirement 

beneficiaries were enrolled in RM Part A, and approximately 446,300 were also enrolled 

in Medicare Part B. During fiscal year 2019, Palmetto processed more than 8.5 million 

RM claims, and made approximately $832 million in benefit payments for Part B medical 

services. The Centers for Medicare and Medicaid Services (CMS) 

transferred/reimbursed RRB for $32 million in RM program costs during fiscal 

year 2019. Of that amount, approximately $18.3 million was transferred to fund the 

RRB’s Specialty Medicare Administrative Contractor (SMAC), Palmetto, and 

$13.6 million was reimbursed for RRB expenses incurred for administering the program.

In fiscal year 2018, the transfer was recorded as a reimbursement. Beginning fiscal 

year 2019, the amount transferred to fund the SMAC contract was recorded as a 

transfer rather than a reimbursement. This change was agreed to by CMS for 

intragovernmental reporting. 

Over the years, the OIG has disagreed with RRB as to which RM related responsibilities 

belonged to the RRB, Palmetto, or CMS. In response to our recent audits, agency 

management continued to state that the Medicare program should be treated as one 

program and that CMS is responsible for the overall program, including RM. 

In May 2020, an OIG audit found that the RRB did not publish payment integrity 

information or improper payment data for RM and determined that RRB’s performance 

in reducing RM improper payments was inadequate. Three of the five recommendations 

2 Palmetto GBA is the Railroad Specialty Medicare Administrative Contractor (RRB SMAC) that

processes Part B claims for Railroad Retirement beneficiaries nationwide. As the SMAC, Palmetto has 

administrative responsibility for processing Railroad Retirement beneficiary claims only.

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that OIG made were directly related to RM. RRB disagreed with all three 

recommendations and stated that “...although Section 1842(g) of the Social Security 

Act provides the RRB with the authority to contract with and to oversee a contractor to 

perform Medicare Part B functions, including the functions of determining Medicare 

Part B payment amounts and of making these Medicare Part B payments, CMS and 

RRB agree that Medicare FFS (Fee-for-Service) is one program for improper payment 

reporting purposes.” OIG disagreed and stated that they determined that the RRB 

should continue to separately report RM payment integrity information in its PAR due to 

the unique characteristics of the RRB’s SMAC, its extended enterprise relationship with 

CMS, the lack of transparency for a separate RM program, and the less than optimal 

sampling of the RRB’s SMAC, Palmetto. 

Although RRB disagreed with our findings for this report for the reasons stated above, 

Programs stated that the RRB and CMS were working on an updated Memorandum of 

Understanding (MOU) between RRB and CMS, which would clarify each agency’s 

responsibilities regarding RM reporting of improper payments. At the time of our report 

in May 2020, they stated that they expected the agreement (updated MOU) to be 

finalized by the end of 2020. Programs provided the OIG a recent update which stated 

that several meetings were held with RRB and CMS stakeholders to discuss updates to 

the MOU during the first half of fiscal year 2020 and significant progress was made; 

however, the meetings were postponed due to the shifting of resources to COVID-19 

activities. Programs management indicated that the meetings with CMS will resume in 

the early part of fiscal year 2021 timeframe to finalize the changes. 

Our previous audits identified improper payments that could have been prevented, 

improvements needed for improper payment reporting, and the need for improved 

controls and support to validate the accuracy of reimbursements the RRB receives to 

administer the RM program. In response, RRB management stated that it is not 

responsible for the RM program, they only review Palmetto’s contract performance, and 

they believe that some improper payments related to RM can only be recovered under 

special limited circumstances. Due to RRB management’s stance on this matter, they 

did not concur with many of our previous recommendations. We continue to disagree 

with RRB management that the RRB is not responsible for oversight and reporting 

responsibilities for this program. We stand by the recommendations made in our recent 

audit reports, many of which remain open. It is the RRB OIG’s position that until CMS 

absorbs the administration of RM, including contract oversight of Palmetto, the RRB 

should continue to report RM payment integrity data and implement RM related audit 

recommendations. If not, there is a lack of transparency, as the RRB would not be held 

accountable for its role in maintaining effective oversight of Palmetto. 

Due to the RRB’s indifference to oversight of the RM program and the inefficiency of 

maintaining it as a separate program, there is no practical reason for its existence, thus 

elimination should be considered. 

See Appendix A for a list of relevant reports.

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Challenge 4 - Improve Payment Accuracy and Transparency

Why is this a serious management challenge? The topics of data, accountability and 

transparency are included on the President’s Management Agenda.

One of the key drivers in the President’s Management Agenda is an initiative to improve 

delivery of better results to the public and improving accountability to taxpayers. A 

specific strategy to accomplish this initiative is to improve the data available for 

decision-making and accountability. Fostering accountability and transparency is one 

way to improve data for both internal and external uses. Recent audits have identified 

instances where inaccurate reporting indicates the need to improve transparency at 

RRB.

• Payment Accuracy

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided funding 

for the RRB that consisted of an appropriation of $425 million to pay for the increase in

unemployment benefits, with an additional $50 million provided to cover the cost of 

eliminating a waiting period for unemployment or sickness benefits. CARES Act funding 

also included $5 million to prevent, prepare for, and respond to the coronavirus.

Issuance of these benefits required modifications to RRB systems, training for RRB 

staff, and revisions of RRB procedures. 

Our oversight of CARES Act funds is ongoing, but we issued an interim report to 

discuss our current concerns. We determined that CARES Act benefits are being 

issued without any concurrent checks against state wages and unemployment 

benefits for the same periods. The RRB’s current state wage match program will 

not begin to compare the RRB’s CARES Act payments to state wage and benefit 

data for at least six months depending on the schedule with each particular state. 

RRB management indicated that the state wage match runs, that contain 

payments under the CARES Act, will begin in the spring of 2021 and will be 

completed by the end of calendar year 2021. The RRB’s state wage match 

program is operating based on previously negotiated agreements that are not 

providing wage and unemployment data in a timely manner, and because of the 

timing, it decreases program integrity for CARES Act benefit payments. This 

extensive lag period severely impedes the timely identification of fraudulent 

situations under the CARES Act. To address these concerns, we recommended 

that the RRB obtain state wage match and unemployment data in a timelier 

manner. Agency management did not concur with this recommendation, stating 

that the RRB’s ability to recover fraudulent benefit payments is not diminished 

because of the timing of the state wage match program. The OIG’s finding remains 

unchanged and as such, we continue to see the need for our recommendation to 

be implemented. 

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• Transparency

The transparency issues discussed below represent our most recent concerns for these 

areas, and note that we previously reported challenges for these same audit topics. Our 

previously reported concerns continue to exist and are compounded by these newer 

audit findings.

Agencies are required to report improper payment data for the programs it administers 

in the payment integrity portion of the agency’s PAR. As discussed in Challenge 3, our 

most recent improper payments report determined that the RRB did not publish 

payment integrity information or improper payment data for RM in its fiscal year 2019 

PAR, as required. The RRB did not publish RM improper payment data, citing that CMS 

is responsible for the program as a whole, and is, therefore, responsible for improper 

payment reporting. We disagreed and determined that the RRB is responsible for RM 

reporting. RM improper payment data is not transparent within the overall Medicare data 

reported by CMS. By not reporting RM, the RRB was not transparent in publicly 

reporting several aspects related to RM, the most significant of which was that RM 

improper payments was approximately $107.1 million for fiscal year 2018, that the RM 

improper payment rate had increased considerably, and it exceeded the threshold 

allowable by improper payments legislation. Our audit made four recommendations 

related to action plans to reduce improper payments, reconciliation of data, and 

resuming RM reporting. RRB Management did not concur with three of the four 

recommendations. As stated previously, we disagree with the RRB’s position and 

maintain that the RRB is responsible for RM reporting. We continue to see the need for 

our recommended corrective actions. These four recommendations and other prior 

recommendations remain open. 

Federal agencies are required by the Digital Accountability and Transparency Act 

(DATA Act) to publish transparent financial data. Our recent audit determined that 

improvements are needed in RRB internal controls for the DATA Act. The RRB’s Data 

Quality Plan did not exist when the DATA Act submission was made. As a result, 

associated risks to data quality in the RRB’s spending data might not have been 

identified or managed. In addition, we found that RRB management’s quarterly 

assurance statement did not contain the required statement of accountability to confirm 

the RRB’s efforts to support data quality and assurance for connectivity/linkages across 

all data files. This occurred because agency management was unaware of the 

requirement for an accountability assurance statement. We identified deficiencies in 

RRB policies and procedures for the DATA Act that could impact the completeness, 

accuracy, timeliness, and quality of data submitted. For these specific DATA Act 

findings, we made four recommendations for improvement. RRB management 

concurred with all four recommendations. Three of these recommendations and prior 

DATA Act recommendations remain open. Previously, RRB management stated that

they continue to make great strides in ensuring that the agency’s DATA Act 

submissions are complete, accurate, and agree to applicable source systems. As such, 

they disagreed that this matter contributes to a serious management concern or 

challenge. In order for RRB to provide consistent, reliable, and searchable spending 

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data that are displayed accurately for taxpayers and policymakers, we continue to see 

the need for our recommendations to be implemented in compliance with the DATA Act.

See Appendix A for a list of relevant reports.

Challenge 5 – Financial Management and Reporting Issues

Why is this a serious management challenge? Financial management and reporting 

issues continue to be a challenge for RRB management, as is outlined in many of our 

prior audit reports, as well as our audit concerns discussed in the following paragraphs.

OIG has continued to render a disclaimer audit opinion on the RRB’s financial 

statements since fiscal year 2013, because OIG auditors have not been permitted to 

communicate with the RRB’s component auditor as required by financial statement 

audit guidance. The audit firm employed by the National Railroad Retirement 

Investment Trust (NRRIT) is the RRB’s component auditor. The NRRIT held 

approximately $25.4 billion of the RRB’s $32.8 billion (77 percent) assets as reported in 

the RRB’s fiscal year 2019 financial statements. 

Our audit opinion on the RRB’s fiscal year 2019 financial statements also included two 

material weaknesses that are discussed in this challenge. 

Financial Reporting

This overall material weakness for financial reporting has been reported since fiscal 

year 2014. Within this overall material weakness, we discussed our fiscal year 2019 

financial reporting concerns regarding ineffective controls, communication with the 

NRRIT’s auditor, and social insurance valuation. We continued to find the need for 

internal control improvements for financial reporting. 

Our concerns about our inability to communicate with the NRRIT’s auditor continued.

RRB management stated that they will continue to cooperate and respond to OIG 

requests by providing NRRIT related information within its possession. They also stated 

that it is not within their authority to compel NRRIT auditors to speak with OIG or 

provide them their workpapers. RRB management did not concur with the 

recommendation we made during our fiscal year 2014 financial statement audit that 

called for establishment of an independent committee that would identify a functional 

solution that would enable communication between OIG and NRRIT’s auditor. 

Our actuarial contractor identified a material understatement of $2.3 billion for the open 

group surplus amount shown on the RRB’s Statement of Social Insurance dated 

October 1, 2018. RRB management did not concur with our recommended corrective 

action. 

While RRB management has taken some corrective action to address our financial 

reporting concerns regarding ineffective controls, no corrective actions have been taken 

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to address our recommendations regarding communication with the NRRIT’s auditor 

and social insurance valuation. 

Deficient Internal Controls at the Agency-Wide Level 

In this section, we discuss the second material weakness, deficient internal controls at 

the agency-wide level, which relates to our audit concerns in several areas, including 

compliance concerns, and concerns regarding railroad service and compensation. 

• Ineffective Standards for Internal Control

OMB guidance states that an evaluation of internal controls must be performed for the 

agency as a whole. We determined that the five required components of internal control 

were not designed, implemented, and operating effectively. The five required 

components of internal control consist of: control environment, risk assessment, control 

activities, information and communication, and monitoring. If control principles or 

components have not been fully designed and implemented, they cannot be tested and 

must be considered ineffective. RRB management acknowledged OIG’s concerns and 

stated that they are committed to strong internal control. In addition, they indicated that 

improvements were made and training was provided to responsible officials and agency 

leadership. Corrective actions related to this portion of the material weakness remain 

unimplemented. 

• Information Technology Security and Financial Reporting Controls

Eight FISMA metric domains were assessed not effective by our FISMA contractor for 

the fiscal year 2018 FISMA audit. As a result, during our fiscal year 2019 financial 

statement audit, information system control risk was assessed as high in accordance 

with GAO’s Financial Audit Manual guidance. RRB management disagreed with this 

audit finding. We did not make any recommendations for corrective action due to the 

31 recommendations made by our contracted auditor.

• Compliance with Indirect Laws, Regulations, Contracts, Treaties, and International

Agreements

We determine that the RRB had not established effective policies and procedures for 

1) preventing agency noncompliance with indirect laws, regulations, and contracts; and

2) identifying treaties and international agreements impacting the RRB or the NRRIT.

These policies and procedures are required by Financial Audit Manual guidance. RRB

management did not concur with our recommendations for corrective action. Due to the

significance of these audit concerns, these audit recommendations remain open.

• Compliance with RRA Benefit Payment Provisions

RRB management was not able to ensure compliance with RRA benefit payment 

provisions for fiscal year 2019 within allowable timeframes for our fiscal year 2019 

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financial statement audit. RRB management cited severe staffing shortages as the 

cause for delay. These quality assurance reviews that consisted of a sample of benefit 

payments totaling approximately $662.1 million were not completed until 

October 31, 2019, which was too late for us to complete our review. 

• Controls Over Railroad Service and Compensation

We determined that RRB controls over creditable and taxable compensation were 

inadequate due to insufficient audit coverage. The RRB received approximately 

$4.6 billion in payroll taxes as of June 30, 2019. An insufficient number of railroad audits 

were being conducted and, therefore, railroad employer audits were not effective in 

ensuring the accuracy of payroll tax amounts. RRB management acknowledged the 

need for improvement and explained that the limited number of these audits was due to

staffing and funding constraints. The audit recommendation remains open.

• RRB’s DATA Act Policies and Procedures Need Improvement

OIG conducted an audit of RRB’s DATA Act Submission for First Quarter of Fiscal 

Year 2019, and one of the objectives was to assess the RRB’s implementation and use 

of the governmentwide financial data standards established by OMB and the 

Department of the Treasury. The audit concluded that the RRB’s internal controls over 

DATA Act reporting were generally effective but need improvement. OIG’s concerns are 

discussed below.

Our audit determined that the RRB’s policies and procedures contained minimum 

standards and information for the RRB to manage and facilitate the reporting of financial 

and award data in accordance with the requirements of the DATA Act. Even though the 

procedures included various controls to ensure overall quality of the data, deficiencies 

were identified and improvements were needed. We also found that there were no 

procedures established to ensure File A and B totals matched. According to GAO, 

“[i]nternal control comprises the plans, methods, policies, and procedures used to fulfill 

the mission, strategic plan, goals, and objectives of the entity.” Therefore, management 

is responsible for designing policies and procedures to fit the agency’s situation. We 

made one recommendation and management concurred with our recommendation. The 

recommendation remains open.

Due to these audit concerns, the lack of corrective actions for most of these 

recommendations, and unimplemented corrective actions for prior reports with financial 

management and reporting concerns, agency action is needed to address this 

challenge. 

Refer to Appendix A for a list of relevant reports for this challenge.

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Challenge 6 – Compliance Concerns Identified

Why is this a serious management challenge? Recent OIG audits have determined 

that the RRB has been noncompliant with various guidance. Noncompliance can have a 

far reaching impact on the protection of federal trust funds, assets, information security, 

governmentwide improper payments, and the effectiveness of agency operations.

Our recent audits found that the RRB was noncompliant in several areas, as discussed 

in this challenge. 

• Telework

Our audit of the RRB’s telework program determined that controls over the RRB’s 

telework program were not effective to ensure compliance with applicable telework 

laws, regulations, and policy. Specifically, we identified that 1) RRB’s policy did not 

contain appropriate telework managing officer information, 2) RRB’s privacy 

administrative circulars that support the telework program were outdated, 3) RRB’s

controls were not fully effective for ensuring that telework training and written

agreements were completed, and 4) RRB had not monitored or evaluated its telework 

program in accordance with applicable guidance. Further, we determined that the RRB 

submitted inaccurate and unsupported data to the Office of Personnel Management for 

fiscal years 2017 and 2018.

Adherence to applicable laws and guidance, in addition to a fully effective internal 

control system over the telework program, would help ensure the protection of privacy 

data and agency information used during teleworking. Our audit made five 

recommendations in these specific areas for improving internal controls and compliance 

with teleworking laws and regulations. RRB management concurred with two, and did 

not concur with three. Our recommendations remain as written. All five 

recommendations remain open.

• Improper Payment Reporting

Our mandated improper payments audit determined that the RRB was noncompliant 

with improper payment legislation for the second consecutive year for its RM program. 

We cited the RRB with noncompliance because 1) the RM program had an improper 

payment rate of 12.5 percent according to the improper payment reporting data 

provided by CMS in fiscal year 2019, which exceeded the 10 percent threshold, for 

improper payment reporting, 2) the RRB did not publish a corrective action plan for the 

prior year RM improper payment rate of 10.53 percent, and 3) the RRB did not publish 

an annual reduction target in its payment integrity report or meet the prior year’s 

published rate of 9.93 percent.3

3 The information provided is according to a CMS’s Comprehensive Error Rate Testing (CERT) report 

titled November 2018 Final Report For Contractor RRB. The report included reviewed claims data from 

the sampling period July 2016 through June 2017.

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Although the RRB was required to report RM improper payment data in its payment 

integrity report, it did not report RM data because RRB management determined that 

CMS is responsible for reporting all Medicare data as a whole and, if RRB reported this 

data, it would duplicate the data reported by CMS. However we found that the RRB did 

not have appropriate documentation to support their claim that RM was included in 

CMS’ overall Medicare improper payment reporting. We continue to disagree that CMS 

is responsible for the RM program as discussed in Challenge 3. Because RRB 

management does not agree that they are noncompliant, they did not concur with our 

recommended actions this year or last year. Our recommendations restated corrective 

actions required by improper payment legislation. However, RRB management has not 

taken the corrective actions required by legislation. 

• Information Technology Security

As discussed in Challenge 2, the RRB has been noncompliant with FISMA legislation 

and OMB guidance for two consecutive years. Although agency management 

acknowledged the need for improvement, corrective actions have only been made for

8 of the 50 recommendations issued in the fiscal year 2019 and 2018 FISMA reports. 

Compliance with applicable authoritative guidance continues to be a challenge for RRB 

management as discussed in the audit reports referenced for this challenge, as well as 

other prior compliance audits conducted by our office, or, for our office, through 

contracted audits. Many compliance related recommendations from our prior reports 

remain open, and thus we remain concerned about RRB’s efforts to be compliant with 

authoritative guidance. 

Refer to Appendix A for a list of relevant reports for this challenge.

Through audits, investigations, and other follow-up activities, we will continue our 

oversight of the challenges discussed in this letter. We encourage RRB to take 

meaningful action to address these challenges to prevent fraud, waste, and abuse in 

RRB programs and operations, and to adhere to applicable authoritative guidance. 

Martin J. Dickman 

Inspector General

October 16, 2020

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APPENDIX A-AUDIT REPORTS

Please visit https://www.rrb.gov/OurAgency/InspectorGeneral/Library for our audit 

reports.

Improve Agency Disability Program Integrity

• Railroad Retirement Board (RRB) Office of Inspector General (OIG), Audit of Job

Duty Verification Procedures for Long Island Rail Road Occupational Disability

Applicants, Report No. 13-02 (Chicago, IL: January 15, 2013).

• RRB OIG, Control Weaknesses Diminish the Value of Medical Opinions in the

Railroad Retirement Board Disability Determination Process, Report No. 16-05

(Chicago, IL: March 9, 2016).

• RRB OIG, The Implementation of the Disability Program Improvement Plan at the

Railroad Retirement Board Did Not Result in a Fully Established Fraud Risk

Assessment Process, Report No. 19-15 (Chicago, IL: September 27, 2019).

• RRB OIG, The Railroad Retirement Board Disability Programs Do Not Effectively

Consider Fraud Risk Indicators in the Disability Process, Report No. 19-16

(Chicago, IL: September 27, 2019).

• RRB OIG, The Use of Medical Experts During Disability Determinations at the

Railroad Retirement Board Can Be Improved, Report No. 19-17 (Chicago, IL:

September 27, 2019).

Improve Information Technology Security and Complete System Modernization

• RRB OIG, Performance Audit of RRB's Compliance with the Federal Information

Security Modernization Act of 2014 Fiscal Year 2018, Report No. 19-03 (Chicago, IL:

December 19, 2018).

• RRB OIG, Selected General Information System Controls at the Railroad Retirement

Board Were Not Always Adequate, Report No. 19-07 (Chicago, IL: May 14, 2019).

• RRB OIG, Performance Audit of RRB's Compliance with the Federal Information

Security Modernization Act of 2014 Fiscal Year 2019, Report No. 20-04 (Chicago, IL:

December 18, 2019).

Improve Management of Railroad Medicare

• RRB OIG, Railroad Retirement Board Did Not Calculate Reimbursed Medicare

Costs in Accordance with Federal Requirements, Report No. 16-10 (Chicago, IL:

August 22, 2016).

• RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper

Payments Elimination and Recovery Act in Fiscal Year 2018 Performance and

Accountability Report, Report No. 19-09 (Chicago, IL: May 30, 2019).

• RRB OIG, Railroad Medicare Controls Over Evaluation and Management Services

Were Not Fully Adequate, Report No. 19-10 (Chicago, IL: August 5, 2019).

• RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper

Payments Reporting in the Fiscal Year 2019 Performance and Accountability

Report, Report No. 20-06 (Chicago, IL: May 12, 2020).

• RRB OIG, Controls over Medicare Premium Penalties and Refunds Can Be

Improved, Report No. 20-07 (Chicago, IL: June 4, 2020).

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Improve Payment Accuracy and Transparency

• RRB OIG, Railroad Retirement Board’s Initial DATA Act Submission, While Timely,

Was Not Complete or Accurate, Report No. 18-01 (Chicago, IL: November 8, 2017).

• RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper

Payments Elimination and Recovery Act in Fiscal Year 2018 Performance and

Accountability Report, Report No. 19-09 (Chicago, IL: May 30, 2019).

• RRB OIG, Audit of Railroad Retirement Board's Digital Accountability and

Transparency Acts of 2014 Submission for First Quarter of FY 2019,

Report No. 20-01 (Chicago, IL: November 6, 2019).

• RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper

Payments Reporting in the Fiscal Year 2019 Performance and Accountability

Report, Report No. 20-06 (Chicago, IL: May 12, 2020).

• RRB OIG, Management Information Report: Interim Report Regarding CARES Act

Expenditures and Controls, Report No. 20-08 (Chicago, IL: September 28, 2020).

Financial Management and Reporting Issues

• RRB OIG, Fiscal Year 2014 Financial Statement Audit Letter to Management,

Report No. 15-05 (Chicago, IL: March 31, 2015).

• RRB OIG, Enterprise Risk Management Process At The Railroad Retirement Board

Was Not Fully Effective, Report No. 18-07 (Chicago, IL: July 9, 2018).

• RRB OIG, Report on the Railroad Retirement Board's Financial Statements Fiscal

Year 2018, Report No. 19-01 (Chicago, IL: November 15, 2018).

• RRB OIG, Performance Audit of RRB's Compliance with the Federal Information

Security Modernization Act of 2014 Fiscal Year 2018, Report No. 19-03 (Chicago, IL:

December 19, 2018).

• RRB OIG, Audit of Railroad Retirement Board's Digital Accountability and

Transparency Acts of 2014 Submission for First Quarter of FY 2019,

Report No. 20-01 (Chicago, IL: November 6, 2019).

• RRB OIG, Report on the Railroad Retirement Board’s Financial Statements Fiscal

Year 2019, Report No. 20-02 (Chicago, IL: November 15, 2019).

• RRB OIG, Management and Performance Challenges Facing the Railroad

Retirement Board, Report No. 20-03 (Chicago, IL: November 21, 2019).

Compliance Concerns Identified

• RRB OIG, Performance Audit of RRB's Compliance with the Federal Information

Security Modernization Act of 2014 Fiscal Year 2019, Report No. 20-04 (Chicago, IL:

December 18, 2019).

• RRB OIG, Railroad Retirement Board’s Telework Program Needs Improvement,

Report No. 20-05 (Chicago, IL: April 24, 2020).

• RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper

Payments Reporting in the Fiscal Year 2019 Performance and Accountability

Report, Report No. 20-06 (Chicago, IL: May 12, 2020).

- 158 -
- 159 -

Management’s Comments 

These are Management’s Comments on the Management and Performance Challenges 

identified by the Railroad Retirement Board (RRB) Office of Inspector General (OIG). 

CHALLENGE 1 – IMPROVE AGENCY DISABILITY PROGRAM INTEGRITY 

The OIG asserts that RRB management has not been receptive to its recommendation to 

improve program integrity, and claims that because some recommendations made by the OIG 

or its contractors remain open, the RRB’s disability program is at risk of fraud and abuse. The 

fact that only some of the recommendations remain open is evidence that the RRB has been 

receptive to recommendations to improve program integrity. A decision not to implement a 

recommendation as suggested, after a detailed analysis of that recommendation, does not 

reflect a reticence to implement changes. Rather, such action represents a fulfillment of 

management’s responsibility to implement those changes that are cost effective and will, if 

adopted, actually improve program integrity. The integrity of all of the programs administered by 

the RRB are of the utmost concern to RRB management. 

The OIG’s discussion of the challenges facing the RRB in 2020 begins by again referencing a 

2009 audit performed by the Government Accounting Office (GAO). In that report, now over a 

decade old, an observation was made regarding the approval rate and the possibility that such a 

rate could be indicative of a program problem. However, the OIG fails to note that the GAO did 

not conclude in that report that the rate did, indeed, reflect a program integrity problem, and 

subsequent reports have not raised the approval rate as an indicator of a lack of program 

integrity. As the OIG notes, the RRB administers a disability program for railroad employees 

who are either totally or occupationally disabled and those who are occupationally disabled are 

awarded annuities even though the employee may be able to perform other types of work. Most 

annuities are awarded under the occupational program and the approval rate, which has 

remained steady since the inception of the program in the 1940’s, is more a reflection of the 

statutory requirements for approval than a measure of program integrity. In its 2009 report, the 

GAO provided the following example to highlight this fact: 

“To be occupationally disabled, a worker must have a permanent physical or mental 

condition that prevents him or her from performing his or her railroad job. For example, a 

railroad engineer who cannot frequently climb, bend, and reach, as required by the job, 

may be found occupationally disabled.2

The OIG notes the average occupational disability annuity rate, presumably to draw attention to 

the amount and the fact that the monthly annuity rate is not inconsequential. It is not the 

statutory role of Management to make judgments about how generous the benefit programs are, 

or to attempt to ascertain the motives of applicants, except to the limited extent it may affect the 

merits of their applications. However, management notes that for most, applying for a disability 

annuity results in a loss of income as a result of leaving railroad employment as well as a loss of 

income over time, particularly if the employee applies before acquiring 30 years of service. 

Little to no significance seems to be given to the fact that the occupational disability program is 

available only to career railroad workers, whose average age at application is over 55. In 

addition, railroad employees who retire on disability face a loss of healthcare coverage until they 

are eligible for Medicare. Finally, if the employee is capable of performing other work, the 

2 Government Accountability Office (GAO), Railroad Retirement Board: Review of Commuter Railroad Occupational Disability 

Claims Reveals Potential Program Vulnerabilities, GAO-09-821R, Page 7 (Washington, D.C.: Sept. 9, 2009). 
- 160 -

earnings restrictions for disabled annuitants are considerably stricter than those who retire 

based on age. 

The RRB addressed the concerns identified in the 2009 GAO report and subsequent OIG 

reports. The Disability Tracking of Physicians and Patterns “DTOPP” system was developed to 

identify the issue that occurred in the Long Island Railroad cases where three physicians were 

providing medical evidence in the majority of the cases. The agency is also tracking patterns of 

disability or sickness claims being reported out of a single railroad. 

In addition, the RRB has implemented a number of program integrity changes based on our own 

analysis as well as recommendations made by the OIG. This includes making updates to the 

disability application form and the hiring of a Chief Medical Officer (CMO). The RRB has added 

a second level reviewer for all disability decisions and updated and improved fraud training for 

staff throughout the agency. 

As discussed by the OIG, the RRB eliminated the mandatory use of specialist medical exams. 

This step was taken after Management carefully reviewed the cost and benefit of those exams. 

This review looked at whether the exams were helpful to the claims review process, whether 

they had impacted the approval rate, their cost, and whether they significantly impacted the time 

required for review of applications. Eliminating these exams will result in a significant saving of 

both time and money. Equally important, our review demonstrated this change will not 

adversely impact program integrity. 

In an effort to monitor the impact of this change, Management has instructed the CMO to review 

a sampling of cases each month for which a) the primary impairment is orthopedic or 

psychological; b) no consultative examination was ordered; and c) the CMO did not review the 

medical information prior to adjudication. The CMO will prepare an annual report for the Board 

at the end of February, which will contain the CMO’s findings and any corrective action she took 

related to her findings. Also, our Program Evaluation and Management Services (PEMS) 

division is working with the outside contracted medical professionals to conduct an annual 

review of a sample of orthopedic and psychological disability cases that are adjudicated without 

an Independent Medical Exam or a Specialist Consultative Exam to ensure that the appropriate 

medical evidence was in the file at the time of adjudication. This will help the Director of 

Programs and our CMO determine whether the policy changes require further revisions or 

further staff training. 

The RRB addressed the issue raised by the OIG’s outside contractor concerning the 

establishment of an entity that would assess fraud risk indicators within the Agency’s benefit 

paying programs. To that effect, the RRB created the standing Fraud Risk Assessment 

Committee (FRAC). The purpose of the Committee is not only to assess fraud risk, but to also 

offer solutions to mitigate fraud risk in the administration of the Agency’s programs. While the 

Committee has made some recommendations for improvements in processes, a 

recommendation for closing has not been made to the OIG to date. Experience has shown a 

reluctance on the part of the OIG to close out recommendations without extensive, detailed 

documentation, which some might view as beyond the norm. Nevertheless, given the difficulty 

in successfully closing out other OIG recommendations, before submitting a request for closing, 

the Committee is working to make sure that it compiles the level of detailed documentation 

desired so that the request will be approved. 

In discussing the RRB performance plan, the OIG combines two customer service goals in their 

analysis of the disability program. Customer Service goal II-A-7 states that the RRB will make a 

decision to pay or deny a benefit or a disabled applicant or family member within 100 days of 
- 161 - 

the date of application. Currently, the RRB is making a decision within 100 days 12.5 percent of 

the time. This is different from goal II-A-8 which states that the RRB will make a payment to a 

disabled applicant within 25 days of the date of a decision or earliest payment date, whichever 

is first 94 percent of the time. Our actual performance was 84.1 percent, due to a loss of 

experienced staff in that unit. 

Ultimately, the RRB remains steadfast in its commitment to administering the disability program 

in a manner that will maintain or improve program integrity and protect the National Railroad 

Retirement Investment Trust. Many of the recommendations and suggestions made by the OIG 

for program improvements have been incorporated into the way cases are processed and 

adjudicated. The RRB will continue to perform its due diligence in this area. 

CHALLENGE 2 – IMPROVE INFORMATION TECHNOLOGY SECURITY AND 

SYSTEM MODERNIZATION 

The RRB acknowledges the OIG’s concern with its ability to establish and maintain a secure 

and reliable information technology environment for its data, applications, and systems. We 

understand and take very seriously the mandate of the Federal Information Security 

Management Act of 2002 (FISMA), as amended by the Federal Information Security 

Modernization Act of 2014, to ensure adequate security protections for Federal information 

systems and information. 

Additionally, during fiscal year (FY) 2020, leading up to the execution of the FY 2020 FISMA 

audit, the RRB focused its efforts primarily on addressing open findings and related 

recommendations identified in years prior to the FY 2019 FISMA audit. Through these efforts, 

we addressed and closed 63 POAMs and 22 OIG findings during FY 2020. As the RRB 

continues to develop and implement its IT modernization initiatives, we will proactively address 

the remaining findings and recommendations in order to improve the Agency’s security posture 

and to sustain at acceptable levels. 

Preliminary audit results for the FY 2020 FISMA audit indicate that Kearney & Company will 

assess our overall maturity at Level 2 – Defined, maintaining the rating from 2019. The RRB 

realized fifteen significant improvements across each of the eight domains, improving several 

lower level ratings to Level 3 – Consistently Implemented, which is one-step lower than Level 4 

– Managed and Measurable. Additionally, for the Configuration Management domain, the 

Agency improved from Level 1 – Ad-Hoc to Level 2 – Defined, and for the Data Protection and 

Privacy domain, the Agency improved from Level 2 to Level 3. The preliminary FY 2020 audit 

results further demonstrate progress in improving our information security program and 

practices across the Agency as required by FISMA, OMB policy and guidelines, and National 

Institute of Science and Technology standards and guidelines. The RRB needs to make more 

progress in improving the overall security posture of the Agency and it is committed to continue 

to make incremental steps to reach the overall maturity goal of Level 4. 

The RRB acknowledges that it was not able to relocate its mainframe to a cloud environment 

during FY 2020. During FY 2020, the Agency faced some challenges with the approach it took 

to re-platform its mainframe into a cloud environment. Numerous challenges with our approach 

caused the RRB to issue a stop work order and ultimately terminate its contract with its selected 

vendor. The RRB performed an alternatives analysis, based on industry standards and best 

practices, to identify a more cost-effective and executable plan to modernize its mainframe and 

ultimately its business applications that reside on its mainframe. At this writing, the RRB has 

identified an alternative and efforts are underway to acquire appropriate resources via contract 

to complete the modernization of the mainframe towards a cloud environment. 
- 162 - 

The RRB acknowledges that the initiative, “On Track to Tomorrow,” introduced by a previous 

CIO in 2019, has transitioned to a three-phased approach to IT modernization. The transition to 

a three-phased approach was necessary to account for the numerous activities and projects 

required to modernize nearly every component of the RRB enterprise. The three phases, 

Stabilize – Modernize – Perform, represent the overall phases the RRB will traverse towards a 

comprehensive modernization of its enterprise architecture, infrastructure, legacy systems, 

legacy applications and security architecture. The approach identified by the previous CIO 

focused solely on seven distinct efforts and did not capture fully the extensive modernization 

required. FY 2020 proved a complex period of transition from that previous approach to our 

current comprehensive strategy. The transition through the phased approach continues into FY 

2021 as the RRB seeks to emerge from the Stabilize phase and enter the Modernize phase. 

CHALLENGE 3 – IMPROVE MANAGEMENT OF RAILROAD MEDICARE 

The RRB acknowledges its responsibilities under the Social Security Act to administer certain 

provisions of the Medicare program for the railroad, including the administration of the 

Specialty Medicare Administrative Contractor (SMAC) contract with Palmetto GBA, LLC. 

beneficiaries or providers directly. Notwithstanding the Agency’s specified Medicare 

responsibilities for railroad annuitants, the Centers for Medicare & Medicaid Services (CMS), 

a component of the Department of Health and Human Services (HHS), administers the 

Medicare program as a whole. 

The Memorandum of Understanding between the HHS, CMS, and the RRB (MOU13-61)3 

defines the scope of the relationship for both CMS and RRB regarding roles and 

responsibilities under the SMAC contract to provide specified health insurance benefit 

administration. MOU13-61 addresses the responsibilities of CMS and RRB relating to 

Medicare Part B claims processing and payment services, in support of the Medicare fee-forservice (FFS) program for a nationwide jurisdiction. MOU13-61 dictates that while the RRB 

will assess the SMAC performance, CMS provides overall program guidance. The RRB

confirmed with CMS that CMS is responsible for the Medicare program as a whole, including 

CMS’ responsibility to report on Medicare improper payments in the HHS annual Agency 

Financial Report (AFR). 

The OIG’s audit recommendations asserted that the RRB should report Medicare improper 

payment information associated with the SMAC’s results under CMS’ Comprehensive Error 

Rate Testing (CERT) program. CMS informed RRB that if the RRB reported the SMAC’s 

CERT results, that reporting would be duplicative of reporting already being done by CMS 

and would result in an overstatement of the Medicare improper payment reporting by the 

Federal Government as a whole. Specifically, CMS reports a combined overall error rate that 

includes all Medicare Administrative Contractors (MACs) and the RRB SMAC. As such, CMS 

and RRB agreed that RRB would no longer separately report CERT information. RRB shared 

this decision with OMB. This is not an attempt to mask any significant improper payment 

rates, but rather an effort to ensure correct improper payment reporting consistent with CMS’ 

administration of its Medicare program. Adopting the OIG’s suggestion would lead to 

incorrect and misleading government reporting. 

As part of our continuing contract administration, the RRB is responsible for utilizing improper 

payment information provided by CMS and following their procedures and regulations to help 

                                                            

3 Memorandum of Understanding, MOU13-61, entered into by the Department of Health and Human Services, Centers for Medicare 

& Medicaid Services and the Railroad Retirement Board, April 12, 2013 (on file at RRB).
- 163 - 

reduce FFS program payments. The actions taken by the RRB will continue to include but are 

not limited to: 

 Work with CMS on a regular basis to ensure that the Memorandum of Understanding 

(MOU) is current and accurately reflects each agencies responsibilities, 

 Preparing annual risk assessment to determine SMAC vulnerability, 

 Utilizing the CERT improper payment rate information to prepare annual medical review 

strategies, 

 Require the SMAC to submit an Improper Payment Activities Report (IPAR) after the 

final improper payment rate data is received, and 

 Ensure that the SMAC submits regular updates to the RRB if the improper payment rate 

is not equal to accepted tolerance levels. 

 

CMS and RRB continue their efforts to finalize an MOU by the end of fiscal year 2021.

CHALLENGE 4 – IMPROVE PAYMENT ACCURACY AND TRANSPARENCY 

The RRB fully supports the Data, Accountability, and Transparency Cross-Agency Priority 

(CAP) goal as outlined in the President’s Management Agenda. The RRB takes very seriously 

its responsibility for payment accuracy and transparency to ensure delivery of high quality data 

for internal and external customers. We disagree that the elements discussed, individually or 

collectively, rise to the level of a serious management concern or challenge. 

1. Payment Accuracy for CARES Act: We disagree with the OIG statements and believe 

that RRB’s established process for obtaining wage information from the States is the 

most effective and efficient manner currently available. 

In accordance with our established State Wage Match Program we perform State Wage 

matches two times per year with each State and the District of Columbia. We perform a 

wage match with New York four times per year. No State or the District of Columbia is 

under any obligation to renegotiate the existing contracts we have with them. 

Additionally, renegotiating any of these contracts to perform more frequent wage 

matches is unlikely to result in any additional protection against improper payments. 

Though States may receive wage information from employers on a quarterly basis, it 

takes time for States to then upload this information into their respective systems. 

Performing more frequent wage matches may result in the RRB wasting resources 

without any benefit, because the additional matches may be performed before a State 

has uploaded any additional data. Unemployment payments are issued daily by the 

RRB, based on the date of filing. Implementing the OIG’s recommendation to conduct 

matches concurrently with payment would require daily matching with a State system, 

which is not currently possible and may yield no relevant data. Further, attempting to 

implement a daily matching protocol with each State specifically for CARES Act 

implementation would have deviated from our normal business process and delayed 

payment of CARES Act benefits in contrast to the purpose of the law. 

2. Transparency: The OIG states that agencies are required to report improper payment 

data for the programs it administers in the payment integrity portion of the agency’s 

PAR. As such, the RRB’s payment integrity reporting includes information related to 

benefit programs provided under the Railroad Retirement and the Railroad 

Unemployment Insurance Acts. OIG once again cites the RRB’s decision not to publish 

improper payment data related to the Medicare program. To reiterate and as discussed 

in Challenge 3, the RRB confirmed with CMS that CMS is responsible for the Medicare 
- 164 -

program as a whole, including CMS’ responsibility to report on Medicare improper 

payments in the HHS annual AFR. 

3. DATA Act: We continue to make great strides in ensuring that the Agency’s DATA Act

submissions are complete, accurate and agree with applicable source systems. We will

continue to work with the OIG to close open audit recommendations; however, it is worth

noting that in OIG Audit Report No. 20-01, the IG’s audit results demonstrated that the

RRB achieved the “higher” data quality level validated by an extremely low error rate of

0.43%. Further, the GAO recognized RRB’s DATA Act audit results in their report GAO20-540, where they cited that RRB’s data quality is at the highest level. As such, we

disagree that this matter contributes to a serious management concern or challenge.

CHALLENGE 5 – FINANCIAL MANAGEMENT AND REPORTING ISSUES 

Through this management challenge, the OIG discusses its continued issuance of a disclaimer 

of opinion on the RRB financial statements as well as asserts the need for improvements 

related to two material weaknesses identified in the financial statement audit particularly related 

to 1) financial reporting and 2) deficient internal controls at the agency-wide level. We continue 

to design and implement cost effective internal controls striving toward optimal operational 

efficiency. Though more improvements will come, we disagree with the OIG’s characterization 

and consolidation of these matters into a serious management challenge. Specific comments 

are included below: 

1. Disclaimer Audit Opinion: The Agency will continue to cooperate with the OIG and

provide all NRRIT related information within its possession which the OIG requests. The

Agency does not have the authority to compel the NRRIT auditors to provide their work

papers to, or speak with the OIG. Additionally, the NRRIT and the United States

Government Accountability Office (GAO) entered into an MOU that gives GAO access to

information regarding NRRIT’s annual financial statements and related financial

statement audits in support of the U.S. Government’s consolidated financial statements.4

Therefore, the RRB disagrees with the OIG’s inclusion of this matter as both a basis for a

disclaimer of opinion and as a component of the financial reporting material weakness.

2. Material weaknesses:

a. Financial reporting: The OIG bases this discussion upon fiscal year 2019 financial

statement audit results and included three components: 1) ineffective internal

controls, 2) communication with the NRRIT’s auditor, and 3) social insurance

valuation.

i. Ineffective Controls: The RRB has taken significant corrective actions to

strengthen our voucher processing internal controls, which the OIG recognized

during the fiscal year 2020 financial statement audit, where the OIG closed this

component of the financial reporting material weakness. Therefore, we disagree

that this matter rises to the level of material weakness or serious management

concern.

ii. Communication with NRRIT: As stated above, the RRB does not have the

authority to compel the NRRIT auditors to provide their work papers to, or speak

4  MOU for the NRRIT Inclusion in Government-Wide financial Statements and GAO Access to Information, entered into by the

National Railroad Retirement Investment Trust (NRRIT) and the U.S. Government Accountability Office (GAO), dated October 31, 

2018 (on file at RRB).
- 165 - 

with the OIG. Further, the GAO, through an MOU with the NRRIT, has gained 

access to information regarding NRRIT’s annual financial statements and related 

financial statement audit in support of the U.S. Government’s consolidated 

financial statements. 

iii. Social Insurance Valuation: The OIG has stated that their actuarial contractor 

identified a material understatement of $2.3 billion for the open group surplus 

amount shown on the RRB’s Statement of Social Insurance dated October 1, 

2018. RRB management did not concur with their recommended corrective 

action, which was to adopt the calculation method of the contractor, the reasons 

were detailed in RRB’s response dated November 15, 2019 to the fiscal year 

2019 financial statement audit report.5

The contractor’s 2019 report itself stated that the RRB’s "[a]ctuarial assumptions 

are within accepted actuarial practice and are consistent with the RRB's 

experience. The actuarial method is in accordance with Actuarial Standards of 

Practice for Social Insurance Systems." 

The contractor’s report further stated, “[t]o the extent that we have identified 

areas to be considered, these recommendations should be treated as 

professional opinions to be evaluated and considered by the Bureau of the 

Actuary and Research.” 

The RRB acknowledges that the OIG’s contractor offered a professional opinion 

for the RRB to consider, but finds it inappropriate and unjustified for the OIG to 

use this as the basis for a material weakness in light of the fact that the 

contractor found that the RRB’s methodology was still within accepted actuarial 

practice, and remained consistent with RRB’s experience. 

The RRB further rejects the finding of material weakness because the Bureau of 

Actuary and Research believes that the contractor’s recommended method was 

flawed. In determining the surplus, the contractor based its calculation of the 

present value of future income on the tax rates projected in the 2019 Section 502 

report. The Section 502 report reflected the known 7.1% loss for the period 

10/1/2018-12/31/2018 and thus provided the best estimate of future tier II tax 

rates. By discounting the present value of future income using a 1.7% rate for 

the quarter (which equates to a 7% annual rate) but projecting future taxes using 

actual return, the contractor significantly overstated the surplus position (from 

$1.4 billion to $3.7 billion). The contractor’s recommended method will overstate 

the surplus when actual return is less than their assumption and understate the 

surplus when actual return exceeds their assumption. The methodology chosen 

by the Bureau of Actuary and Research provides a more accurate position of a 

surplus than would result from adopting the OIG contractor’s methodology.

b. Deficient internal controls at the agency-wide level: Again, the OIG bases this 

discussion upon fiscal year 2019 financial statement audit results and included five 

components: 1) implementation of GAO and OMB standards for internal of control; 2) 

information technology security and financial reporting controls; 3) compliance with 

indirect laws, regulations, contracts, treaties, and international agreements; 4) 

                                                            

5 Memorandum from Frank Buzzi, Chief Actuary, RRB, to Debra Stringfellow-Wheat, Deputy Assistant Inspector General for Audit, 

OIG, November 15, 2019 (published on page 124 of RRB’s FY 2019 Performance and Accountability Report, available on RRB’s 

website at: https://www.rrb.gov/sites/default/files/2019-11/par2019.pdf). 
- 166 - 

compliance with Railroad Retirement Act benefit payments provisions; 5) controls 

over railroad service compensation; and 6) RRB’s DATA Act Policies and 

Procedures Need Improvement. 

i. Ineffective Standards for Internal Control: We acknowledge the OIG’s concern 

and have continued making strides in implementing Enterprise Risk Management 

(ERM) at the RRB by leveraging the Management Control Review (MCR) 

infrastructure already in place. In fiscal year 2020, we incorporated an ERM 

based reporting structure into the MCR guide aimed at enhancing our ability to 

identify potential events that may affect the agency and manage the related risks 

within our risk appetite. In fiscal year 2021, we will fully implement the new ERM 

based MCR reporting along with training of responsible officials. We are 

committed to strong internal controls and will move forward with the next phase 

of ERM implementation. 

ii. Information Technology Security and Financial Reporting Controls: We continue 

to disagree with the OIG’s assertion that the RRB’s FISMA maturity level directly 

impacts the financial reporting system. Specifically, the Agency accomplishes its 

major financial reporting objectives through its financial management system, 

which is a comprehensive proprietary software application from CGI Federal – 

Momentum Enterprise Solution – that resides on a cloud hosting service. The 

Agency’s system is referred to as the Financial Management Integrated System 

(FMIS). CGI Federal has been FedRAMP authorized since January 2013. CGI 

Federal offers its FedRAMP Authorized financial management system as a 

shared service to the federal government and is currently servicing 11 other 

federal agencies. FMIS is separate and distinct from the Agency’s internally 

managed Agency Enterprise General Information Systems (AEGIS), Benefit 

Payment Operations (BPO) and Financial Interchange (FI) system. 

Additionally, after review of the 31 recommendations associated with the FY 

2018 FISMA audit report, the results of the FY 2019 FISMA audit as well as 

consideration of the preliminary FY 2020 FISMA audit results, we could not find 

any impactful risk to the FMIS. Finally and as discussed in our response to 

Challenge 2, the preliminary FY 2020 audit results further demonstrate progress 

in improving our information security program and practices across the Agency 

as required by FISMA, OMB policy and guidelines, and National Institute of 

Science and Technology standards and guidelines. 

iii. Compliance with Indirect Laws, Regulations, Contracts, Treaties, and 

International Agreements: In its findings issued during the fiscal year 2019 

financial statement audit, the OIG states that “RRB management has not 

established effective policies and procedures for preventing agency 

noncompliance with indirect laws, regulations and contracts...” We continue to 

disagree with this statement and have previously communicated to the OIG that 

compliance with laws and regulations is intertwined throughout various agency 

policy and procedure documents, such as our administrative circulars and others, 

as well as throughout the extensive documentation compiled to comply with the 

Federal Manager's Financial Integrity Act of 1982 (FMFIA). The Agency’s 

Management Control Review (MCR) program directly fulfills the requirements of 

FMFIA and is an example of a well-established policy and procedure to help 

ensure compliance with indirect laws, regulations, and contracts. 
- 167 - 

In this regard, the OIG specifically cited fiscal year 2018 FISMA audit results as 

an example of the RRB’s noncompliance with an indirect law or regulation. The 

term “noncompliance” is vastly different from the improvement needed that the 

Agency has already completed and committed to continuing each year. The 

results from the fiscal year 2019 FISMA audit, as well as the preliminary fiscal 

year 2020 FISMA audit results, continue to demonstrate ongoing progress in 

improving our information security program and practices across the Agency as 

required by FISMA, OMB policy and guidelines, and National Institute of Science 

and Technology standards and guidelines. 

Additionally, in its findings, the OIG states that “RRB management has not 

established effective policies and procedures ... for identifying treaties and 

international agreements impacting the RRB or its component NRRIT.” We 

again note the OIG has not cited any specific instance of our failure to identify a 

treaty or international agreement impacting the RRB or NRRIT. Both treaties and 

international agreements are either entered into with the advice and consent of 

the Senate or reported to Congress by the State Department. Accordingly, any 

policies and procedures that provide for regular monitoring and reporting of 

actions in Congress would necessarily result in the identification of either type of 

agreement. As noted in the FY 2019 and FY 2020 Financial Statement Audit, 

Laws and Regulations, Cycle Synopsis documents that were provided to the 

OIG, the RRB monitors for changes in laws through the Office of Legislative 

Affairs, which “monitors legislation and notifies RRB officials of new 

developments.” Such monitoring specifically serves to notify the General 

Counsel of any treaties and/or international agreements involving and/or affecting 

the RRB or NRRIT. It is then within the General Counsel’s regular duties to 

review, analyze, interpret, and provide relevant guidance relating to any law, 

regulation, or policy, to include treaties and international agreements, which 

impacts the RRB or NRRIT. We therefore find that our current policies and 

procedures are effective and further find it unnecessary to establish, as noted by 

the OIG, a “policy or procedure to obtain Department of State assurance” 

regarding the impact of any treaty or international agreement on the RRB or 

NRRIT as the OIG did not provide any explanation as to why such assurance 

would be necessary in light of the above. 

iv. Compliance with RRA Benefit Payment Provisions: As cited by the OIG, the first 

half of the 2019 Quality Assurance report was not accomplished on time 

(9/30/19) due to significant staffing shortages in the unit. The report was 

completed and provided to the OIG on October 31, 2019. The RRB is working to 

address the staffing shortages that were caused by retirements and unexpected 

departures early in the year. We will continue to work with the OIG to provide 

accurate and complete information at the earliest possible date. 

v. Controls Over Railroad Service and Compensation: We take our responsibility for 

ensuring that employers accurately report Tier I and Tier II creditable service and 

taxable compensation very seriously. As communicated to the OIG in response 

to fiscal year 2019 financial statement audit report, and in an effort to increase 

audit coverage, we retrained and transitioned an existing employee into an audit 

role as well as hired two seasoned auditors from outside of the Agency. Further, 

in fiscal 2020 we were able to hire two additional external auditors. These 

actions have increased the audit staff from one to six. Finally, the RRB has three 

audits in progress and anticipates finalizing these audits during fiscal year 2021. 
- 168 -

vi. RRB’s Data Act Policies and Procedures Need Improvement: As discussed in

our response to Challenge 4, we continue to make great strides in ensuring that

the Agency’s DATA Act submissions are complete, accurate and agree to

applicable source systems. We will continue to work with the OIG to close open

audit recommendations; however, recent OIG and GAO audit results

demonstrated that the RRB achieved the “higher” data quality level. We disagree

that this matter contributes to a serious management concern or challenge.

CHALLENGE 6 – COMPLIANCE CONCERNS IDENTIFIED 

The OIG has identified a management challenge that asserts that the RRB has been 

noncompliant with various guidance, which could influence the protection of federal trust funds, 

assets, government wide improper payments, and effectiveness of Agency operations. We are 

committed to serving as responsible stewards for our customer’s trust funds and agency 

resources. We disagree with the OIG’s characterization and consolidation of the following 

topics into a serious management challenge. 

1. Telework: The RRB addressed the OIG’s concern regarding compliance with telework

laws, regulations, and policy through modified training for both employees and

managers/supervisors as well as through revisions to its telework policy. The RRB

released revised employee training in March 2020. Additionally, the RRB developed and

published a managerial/supervisory telework training and required RRB managers and

supervisors to complete the mandatory training by August 31, 2020. The employee and

managerial/supervisory automated trainings comply with both the Telework

Enhancement Act of 2010 and RRB Policy. An updated version of the RRB’s telework

policy that is consistent with the Telework Enhancement Act of 2010 and applicable

portions of OPM guidance is currently in our internal review and approval process.

The RRB disagrees with the OIG’s statement that RRB submitted inaccurate and

unsupported data to the Office of Personnel Management (OPM) because the RRB

reports generalized/summarized information to the OPM. The RRB retains the

supporting documentation for its records, but did not provide said data to OPM and was

not required to do so. During FY 2018, the RRB changed automated personnel

processing systems, which unfortunately, led to manual compilation of data from two HR

time and attendance systems in order to complete OPM’s telework report for FY 2018.

The RRB acknowledges that a minor error occurred related to the summary data

provided to OPM, where we inadvertently included some OIG employees in the

consolidated numbers, due to the former time and attendance system’s inability to

distinguish between OIG and RRB employees. The error represented less than 10

employees in the OPM summary data for each fiscal year 2017 and 2018, which

equated to a negligible error percentage (i.e. less than 5%) for each fiscal year. As

communicated to the OIG, this error will not occur in future telework information reported

to OPM for fiscal years 2019 or beyond, given that the new automated personnel system

reports have the capability of excluding OIG employees and the RRB has streamlined its

telework reporting methodology.

The RRB does not fully agree with three OIG recommendations because they were

based on the evaluation of dated systems and practices in place in FY 2017 and FY

2018. Specifically, the OIG’s observations related to their audit scope covering FY 2017

through FY 2018 had already been resolved through revised internal policy, updated

automated training and implementation of a new personnel processing system in May

2018; affecting our telework program in FY 2019 and beyond. We reiterate that the
- 169 - 

revised automated trainings and draft RRB Telework policy comply with the Telework 

Enhancement Act of 2010 and OPM guidance (where applicable). RRB’s updated 

telework policy, data collection tools present during and after FY 2019, and evaluation 

mechanisms are compliant with current telework statutes and applicable OPM 

guidance. Overall, the OIG found our Telework program reasonably implemented 

evidenced by lack of significant findings and recommendations. 

2. Improper Payment Reporting: The OIG asserts that RRB was noncompliant with 

improper payment reporting due to exclusion of Medicare improper payment information 

associated with the SMAC’s results under CMS’ CERT program. As discussed in our 

response to Challenge 3 above CMS is responsible for the Medicare program as a 

whole and they have confirmed for us that the reporting responsibility thereunder is 

theirs alone. As stated in our response to Challenge 3, both the CMS and RRB have 

separate and distinct responsibilities for administering the Medicare FFS program. The 

RRB is responsible for utilizing improper payment information provided by the CMS and 

following their procedures and regulations to help reduce the FFS. CMS and RRB agree 

that Medicare FFS is one program for improper payment purposes. 

3. Information Technology Security: As discussed above in our response to Challenges 

2 and 5, preliminary audit results for the FY 2020 FISMA audit indicate that Kearney & 

Company will assess our overall maturity at Level 2 – Defined, maintaining the rating 

from 2019. The RRB realized fifteen significant improvements across each of the eight 

domains, improving several lower level ratings to Consistently Implemented, which is 

one-step lower than Level 4 – Managed and Measurable. Additionally, for the 

Configuration Management domain, the Agency improved from Level 1 – Ad-Hoc to 

Level 2 – Defined, and for the Data Protection and Privacy domain, the Agency 

improved from Level 2 – Defined to Level 3 – Consistently Implemented. The preliminary 

FY 2020 audit results further demonstrate progress in improving our information security 

program and practices across the Agency as required by FISMA, OMB policy and 

guidelines, and National Institute of Science and Technology standards and guidelines. 
- 170 - 

Payment Integrity 

Introduction

The Improper Payments Information Act of 2002 (IPIA) (Pub. L. 107-300), as amended by the 

Improper Payments Elimination and Recovery Act of 2010 (IPERA) (Pub. L. 111-204), requires 

agencies to annually report information on improper payments to the President and Congress 

through their annual Performance and Accountability Reports. A more recent law, the Improper 

Payments Elimination and Recovery Improvement Act of 2012 (IPERIA) (Pub. L. 112-248), 

amended the IPIA.

The enactment of the IPERIA provided an opportunity for OMB to re-examine existing guidance 

to ensure agencies are able to more efficiently reduce their improper payment rates, while also 

complying with multiple legislative and administrative requirements. The goal of the June 26, 

2018, revised version of Appendix C to OMB Circular No. A-123, OMB M-18-20, is to transform 

the improper payment compliance framework to create a more unified, comprehensive, and less 

burdensome set of requirements. The RRB has benefit paying and non-benefit paying 

programs. The benefit paying programs are: railroad retirement and survivor benefit payments, 

railroad unemployment and sickness insurance benefit payments, and the RRB’s Specialty 

Medicare Administrator Contractor paid Part B Medicare benefits. Non-benefit paying programs 

include vendor payments and employee payments (payroll, travel, and other reimbursable 

expenses). 

In fiscal year 2017, the RRB’s estimated improper payment rate for the RRA and RUIA 

programs was below the statutory threshold for the sixth consecutive year. The RRB requested 

reporting relief for these two programs following the guidance in Circular A-123, Appendix C, 

and Part II.A.3. The OMB granted us reporting relief for these two programs in July 2018. Per 

OMB guidance, the RRB conducted risk assessments for the RRA and RUIA programs in this 

year’s Payment Integrity report. The results of these risk assessments are located in section 

VIII, “Risk Assessment.” 

Additional information on RRB improper payments reporting can be found at 

www.paymentaccuracy.gov. 

 
- 171 -

I. Payment Reporting

In July 2018, OMB granted the RRB reporting relief for the RRA and RUIA programs. 

II. Recapture of Improper Payments Reporting.

We have a robust, multi-faceted review process in place that is an effective approach for 

evaluating payment accuracy in the RRA and RUIA programs and identifying and preventing 

improper payments. The RRB notified OMB of our approach in August 2011. Taken as a 

whole, our full range of current activities constitutes an effective alternative to a formal payment 

recapture program. However, despite the agency’s best efforts to prevent improper payments, 

some will always occur, due to lack of timely information, etc. The agency is diligent in its 

recovery efforts for overpayments. 

The RRB collected $68,547,350 under the RRA’s program with an overpayment balance of 

$58,199,750 at the end of fiscal year 2019. For the period of fiscal years 2010 through 2019, the 

RRB recovered $545,781,407 in RRA overpayments. 

The RRB collected $26,120,811 under the RUIA program with an overpayment balance of 

$17,698,101 at the end of fiscal year 2019. For the period of fiscal years 2010 through 2019, the 

RRB recovered $261,291,434 in RUIA overpayments. 

During fiscal year 2019, the RRB waived or determined uncollectable $1,942,682 ($1,571,270 

RRA and 371,412 RUIA) of benefit overpayments based on criteria established in the Code of 

Federal Regulations. The RRB utilizes the criteria contained in Part 31 of the Code of Federal 

Regulations (CFR), Chapter IX - Federal Claims Collection Standards which prescribes 

standards for Federal agency use in the administrative collection, offset, compromise, and 

suspension or termination of collection activity for civil claims. The RRB will determine some 

overpayments to be uncollectible based upon the results of comprehensive collection efforts (to 

include administrative collection, offset, and transfer to the Department of the Treasury’s crossservicing program or Department of Justice). When comprehensive collection activities have 

failed, an uncollectable determination can be made and the debt will be closed as uncollectable. 

In addition to the RRB’s benefit payment programs the RRB’s vendor and employee payment 

programs expend more than $1 million annually. Therefore, we are describing actions we have 

taken to detect and quantify potential improper payments in those programs. Quantifying 

potential improper payments will enable the RRB to determine if a payment recapture audit 

program is cost-effective. The following paragraphs describe on-going quality assurance (QA) 

reviews that are used to identify improper payments. 

The Bureau of Fiscal Operations Financial Compliance Section (FCS) conducts numerous QA 

reviews focused on detecting improper payments in the vendor payments program. Specifically, 

the FCS conducts QA reviews of 1) payment vouchers, 2) potential duplicate invoice payments, 

3) vendors subject to the Prompt Payment Act, 4) compliance with the Prompt Payment Act,

and 5) open obligations review for current and prior fiscal years, among others. The payment

voucher review is intended to determine if payments issued through the RRB’s financial

management system are supported by billing documents. The potential duplicate invoice review

determines if duplicate payments were issued. The FCS’ QA reviews constitute a robust

monitoring program for improper vendor payments. The most recent vendor payment QA

reviews conducted during quarter two of fiscal year 2020 concluded that there were no improper

vendor payments.
- 172 -

Further, the FCS initiated an employee payment QA review to identify potential improper 

employee payments and to quantify the impact of those payments. The most recent employee 

payment QA review conducted in June/July 2020 concluded that there were no improper 

employee payments. 

These QA review results confirm risk assessment estimates that indicate non-benefit paying 

programs are not susceptible to significant improper payments. The FCS will continue 

monitoring efforts for vendor and employee payments to detect improper payments. The QA 

results demonstrate that an improper payment recapture program for vendor and employee 

payments is not necessary, or cost effective, at this time. 

The RRB’s collection program is in full compliance with the Debt Collection Improvement Act of 

1996 and the Digital Transparency Act of 2014. Recoveries are made through offset of benefits, 

reclamation, and return of erroneous benefit payments, and direct payment from debtors. 

Fraudulent payments are referred to the OIG for prosecution through the Department of Justice. 

Delinquent accounts are referred to Treasury for cross-servicing and offset of Federal 

payments. 

* Amounts limited to established overpayments for fiscal year(s) identified.

**Recoveries include debts established prior to fiscal year(s) identified. 

III. Agency Improvement of Payment Accuracy with the Do Not Pay Initiative.

We have determined that our current business processes, data sources, and the Do Not Pay 

Initiative are effective in detecting and preventing both benefit and non-benefit overpayments. 

As a benefit paying agency, the RRB receives pre-payment information regarding benefit 

entitlement at other agencies and wage information. We have ongoing data sources 

established and in use for this information, which includes benefit entitlement and wages from 

SSA, employers, and our application process. We also receive post-payment wage information 

through established sources such as wage matching programs with the fifty states. In addition, 

we receive death data directly from SSA and CMS, which provides us with detailed death 

Overpayments Recaptured Outside of Payment Recapture Audits 

($ in millions)

Agency Source Program

Amount 

Identified 

FY 19

Amount 

Recaptured 

FY 19

Amount 

Identified 

FY 18

Amount 

Recaptured 

FY 18

Cumulative 

Amount 

Identified

FY 10 - FY 19

Cumulative 

Amount 

Recaptured

FY 10-19

Various, 

including post 

payment quality 

reviews, special 

evaluations, OIG 

reviews/audits, 

reports from the 

public, monitoring 

programs, and 

agencyidentified errors. 

No breakdown 

between these 

sources is 

available.

RRA $56.84* $82.73** $50.35* $72.00** $498.11 $545.78 

RUIA $26.71* $26.12** $24.55* $25.49** $274.04 $261.29 
- 173 - 

information. 

We continue to look forward to utilizing SSA’s Prisoner Update System when it becomes 

available in the DNP portal. We are also interested in receiving data from the National New Hire 

Directory should it become available through the DNP Initiative. 

In addition to controls to establish vendor and employee payment eligibility, as described in the 

risk assessments, RRB vendor payment files are screened by the Treasury’s Bureau of the 

Fiscal Service for matches. Results are returned to the agency daily using the Payment 

Application Modernization (PAM) system. No matches were returned in fiscal year 2019. 

IV. Barriers. 

RRA and RUIA programs – not applicable. In July 2018, OMB granted the RRB reporting relief 

for the RRA and RUIA programs. 

V. Accountability. 

RRA and RUIA programs – not applicable. In July 2018, OMB granted the RRB reporting relief 

for the RRA and RUIA programs. 

VI. Agency Information Systems and Other Infrastructure.

RRA and RUIA programs – not applicable. In July 2018, OMB granted the RRB reporting relief 

for the RRA and RUIA programs. 

VII. Sampling and Estimation. 

RRA and RUIA programs – not applicable. In July 2018, OMB granted the RRB reporting relief 

for the RRA and RUIA programs. 

VIII. Risk Assessment. 

IPERIA Background 

The Improper Payment Elimination and Recovery Improvement Act of 2012 (IPERIA) requires 

agencies to follow steps to determine whether the risk of improper payments is significant and 

provide valid annual estimates of improper payments for its programs. Beginning in FY14, 

"significant improper payments" are defined as gross annual improper payments in the program 

exceeding both 1.5 percent of program outlays and $10,000,000 of all program or activity 

payments made during the fiscal year reported or $100,000,000, regardless of the improper 

payment percentage of total program outlays. (For fiscal years prior to FY14, the cut off was 2.5 

percent.) For all programs and activities susceptible to significant improper payments, agencies 

shall determine an annual estimated amount of improper payments made in those programs 

and activities. 

Federal agencies are required to conduct a program specific risk assessment for each program 

or activity that conforms to Section 3321 of Title 31 U.S.C. 

Risk Assessments are prepared in response to IPERA and OMB guidance to evaluate all of our 

payment outlays susceptible to improper payments. We conduct these evaluations in order to 

maintain Improper Payment Governance aligned to our strategic goal to serve as responsible 
- 174 - 

stewards for our customers’ trust funds and agency resources. The RRB’s Risk Assessments 

for the RRA and RUIA benefit paying programs follow below. 

Railroad Retirement Act (RRA) 

Under the Railroad Retirement Act (RRA), retirement and disability annuities are paid to railroad 

workers with at least 10 years of service. Such annuities are also payable to workers with 

5 years of service if performed after 1995. 

Full age annuities are payable at age 60 to workers with 30 years of service. For those with 

less than 30 years of service, reduced annuities are payable at age 62 and unreduced annuities 

are payable at full retirement age, which is gradually rising from 65 to 67, depending on the year 

of birth. Disability annuities can be paid on the basis of total or occupational disability. 

Annuities are also payable to spouses and divorced spouses of retired workers and to 

widow(er)s, surviving divorced spouses, remarried widow(er)s, children, and parents of 

deceased railroad workers. Qualified railroad retirement beneficiaries are covered by Medicare 

at age 65, or earlier if disabled, in the same way as social security beneficiaries. 

Jurisdiction over the payment of retirement and survivor benefits is shared by the RRB and the 

Social Security Administration (SSA). The RRB has jurisdiction over the payment of retirement 

benefits if the employee had at least 10 years of railroad service, or 5 years if performed after 

1995; for survivor benefits, there is an additional requirement that the employee’s last regular 

employment before retirement or death was in the railroad industry. If a railroad employee or 

his or her survivors do not qualify for railroad retirement benefits, the RRB transfers the 

employee’s railroad retirement credits to SSA, where they are treated as social security credits. 

Below are the risk factors assessed in accordance with OMB memorandum M-18-20, 

Transmittal of Appendix C to OMB Circular A-123, Requirements for Payment Integrity 

Improvement, which are likely to contribute to improper payments, followed by RRA specific 

responses. 

1. Whether the program or activity is new to the agency 

The Railroad Retirement Insurance Act was passed in 1935. It is not a new program. 

2. The complexity of the program or activity reviewed, particularly with respect to 

determining correct payment amounts.

The RRB has been following an established methodology for identifying improper payments in 

the RRA benefit payment program. In August 2016, OMB granted the RRB approval to continue 

conducting our RRA Improper Payment analysis according to our established methodology. To 

estimate our RRA improper payments, we identify: 

 Known overpayments from the Accounts Receivable system and underpayments from 

the Payment, Rate and Entitlement History database 

 Estimated overpayments and underpayments - cases we are not currently handling that 

may not be paid correctly 

 Unquantified overpayments and underpayments – from our quality assurance studies 

which provide projections for dollars paid incorrectly, without distinguishing between 

overpayments and underpayments, but are reported in absolute dollars 

The chart below shows RRA dollar amounts of the specific categories included in our analysis. 

The following sections provide a narrative explanation of items in the chart. 
- 175 -

In FY2019, the agency paid approximately $13.0 billion in RRA benefits. The total improper 

payment percentage of 0.57 is below the first OMB threshold of 1.5 percent. 

The estimate of total improper overpayments and underpayments is about $73.60 million, which 

is below the second OMB threshold of $100 million. 

Total Payments (in millions) $ 12,972.32 

Total Known and Estimated Overpayments $57.17 

Total Known and Estimated Underpayments $11.77 

Underpayments and Overpayments Estimated 

from Unquantified Payments $4.66 

Total Improper Payments $73.60 

Total Improper Payment Rate 0.57% 

Known RRA Improper Payments - Resolved Overpayments 

We used all debts from the FMIS Accounts Receivable RRA Debt Report less SSA recovery 

from the LAF-E accruals (Social Security benefits certified to the RRB for payment). This 

reflects the amount of overpayments established during the year. The debts included are, but 

not limited to, debts resulting from: 

 The check reclamation process

 Entitlement to other government benefits

 Customer-driven events, such as working after retirement, change in eligibility (death,

marriage, divorce, child or student status, felon or alien provision, etc.) and duplicate

annuity payments

 Railroad employer adjustments

 RRB system or examiner error

Known RRA Improper Payments - Resolved Underpayments 

We have no system tracking underpayments like the one that records overpayments. 

Therefore, we use the following approach for identifying them. 

The RRA underpayment amount is the accrual payments minus certain categories of proper 

payment accruals (e.g. mass adjustment payments, initial award accruals and survivor lump 

sum benefits). This dollar amount still includes some accruals which are proper, or not 

erroneous, but since our totals are under the threshold anyway, devoting additional resources 

and effort to further refine our review would not be productive. Examples of those payments 

included that would be considered improper are over-withheld temporary work deductions, 

erroneous report of death reinstatements and mass adjustment rejects. 

In 2005, we discussed a new approach to determining the amount of improper payments in this 

category with the Office of the General Counsel (OGC). For the 2005 FY’s report we refined our 

estimates in this category by profiling the accruals reviewed in the quality assurance post 

adjudication study to develop a percentage that we applied to the total out-of-period payments 

made and provided a more precise dollar estimate of improper underpayments. 

In the Audit of the FY 2013 IPERA Report, the Office of the Inspector General (OIG) 

recommended that we include the accruals reviewed in the quality assurance initial adjudication 

study. Beginning with the 2014 preparation of the Improper Payments Report, we include the 

initial quality assurance cases. All material errors are considered improper payments. 
- 176 - 

In the Audit of the FY 2014 IPERA Report, the OIG stated that we were not properly adhering to 

the definition of improper payments as established by IPERA. As a result, we submitted our 

position to the Office of the General Counsel. Per the OGC’s legal opinion, we changed the 

proper/improper determination in two categories of cases. 

Estimated RRA Improper Payments - Unresolved Overpayments and Underpayments 

This category includes Office of Inspector General audits and other special studies made by 

both the Program Evaluation Section and others throughout the Railroad Retirement Board. 

This category is adjusted each year to include any new reviews, updated information from ongoing reviews, and any studies in which the recommendations have now been implemented. 

Estimated RRA Improper Payments - RESCUE 

These are estimates for a workload that we have not yet worked. 

Recalculate for Service and Compensation Updated to EDM (RESCUE) – In FY 2009, a 

program was established to recalculate and update records for reported service and 

compensation on a timelier basis. Previously, a mass adjustment was run once a year, creating 

thousands of cases with potential thousands of dollars of underpayments. Processing is now 

accomplished three times per year and is included as an extension of regular, daily payment 

processing, instead of a special program that needed to be updated each year.

At the time the first regular run was made, not all cases could be processed by the computer 

program. Two backlog categories were created: one for current annuitants and one for 

deceased annuitants. The total of these backlogs was originally established at more than 

14,000 cases. We track the remaining cases each year to determine the number worked and 

the number still outstanding to evaluate the existing potential improper payments. 

With each of the three regular processing runs, there are cases that cannot be processed by the 

computer program. These cases are identified and referrals are issued and stored on USTAR. 

The workload of these cases is such that the examiners have not been able to process them 

timely. Therefore, a backlog exists here as well, constituting a third backlog of RESCUE cases. 

For each of the 3 categories, we calculate a percentage of overpayment and underpayment 

cases from the cases that were processed during the fiscal year. We apply that percentage 

against each of the corresponding backlogs to estimate the number of cases in each backlog 

that are improper payments. We then multiply those estimated numbers by $495, the average 

amount of each payment in the initial RESCUE run. These are the estimated amounts that we 

use in our Improper Payment Report for the RESCUE backlogs. 

Estimated RRA Improper Payments - EDP Policing 

In the 2013 Audit, the OIG recommended that we consider whether or not there were backlogs 

in addition to the RESCUE backlogs that should be included in the Improper Payments analysis. 

Due to the shortage of adjudication examiners, an EDP Policing backlog exists. We calculate 

the amounts processed from the two past years and apply those averages to the cases that 

remain to be processed. We have included an estimate of these backlog cases in the RRA 

Improper Payment analysis of FY 2019 data. 
- 177 - 

Estimated RRA Improper Payments - Unquantified Underpayments and Overpayments 

The initial and post adjudication quality assurance reports include a section on recurring 

payment accuracy which is a projection of incorrect payments to the universe based on the 

sample recurring payment accuracy experience. It includes both underpayments and 

overpayments and the dollar amounts are not netted. 

We have recently completed the quality case reviews of RRA FY 2019 initial and post 

payments. However, in order to provide the final quality assurance data for use in the FY 2019 

RRA Improper Payment analysis, all pending errors must be resolved and solutions determined 

which is dependent on staff availability in other organizations and their focus on other mission 

critical priorities. In addition, we are experiencing significant process limitations during this 

extended WAH period due to Covid-19 and significant staff shortages in the Quality Assurance 

Unit. Therefore, we have used a three-year average of RRA Quality Assurance review results 

data (FY2016 – FY2018). 

There are circumstances in which the agency does not know if an improper payment has 

occurred and cannot be detected by backend controls or program integrity efforts. Examples 

include: 

 Child entitlement termination: Child leaves spouse or young mother’s care 

 Change in marital status but the RRB is not notified: separated spouse divorces; widow 

remarries; child included in annuity computation marries 

 Fraud such as Disability annuitants reporting their self-employment earnings under their 

spouse’s SSN, or unreported deaths 

3. The volume of payments made annually.

In fiscal year 2019, $12,972,318,034 was paid to approximately 634,000 annuitants. 

4. Whether payments or payment eligibility decisions are made outside of the agency, 

for example, by a State or local government, or a regional Federal office 

No, all claims paid under the RRA are adjudicated within the agency. 

5. Recent major changes in program funding, authorities, practices, or procedures 

The RRA has not experienced any major changes in program funding, authorities, practices, or 

procedures. 

6. The level, experience, and quality of training for personnel responsible for making 

program eligibility determinations or certifying that payments are accurate. 

Periodically, new training classes are conducted to replace retiring and promoted examiners. 

The training is extensive, lasting nine months. 

Current claims examiners are provided with procedures and guidance for making correct 

determinations in processing railroad retirement applications. Guidance is available in the 

various manuals housed on the internal electronic library – PRISM. Reviews of the accessibility 

of reference manuals and adjudicative guidance given to claims examiners are conducted 

periodically. Ongoing refresher training is provided to claims examiners to ensure they are up to 

date with the procedures and the work process. Refresher training also helps to reduce 

payment errors and improve improper payment rates. 
- 178 -

7. Significant deficiencies in the audit reports of the agency including, but not limited to,

the agency of the Inspector General or the Government Accountability Office (GAO) audit

report findings, or other relevant management findings that might hinder accurate

payment certification.

There are currently no reported issues or problems regarding the RRA program.

The results of the FY 2020 RRA Risk Assessment demonstrate the program is under the 

threshold of “Significant Improper Payments” as defined by law. According to OMB guidance, 

unless there are major changes to the program that would require an earlier assessment, the 

RRB is now in a three year Risk Assessment cycle and we will not need to report IP data in the 

FY 2021, FY 2022 or FY 2023 P&AR, or ask for reporting relief again. The next RRA Risk 

Assessment will be conducted in FY 2023. 

Railroad Unemployment Insurance Act (RUIA) 

Under the Railroad Unemployment Insurance Act (RUIA), unemployment insurance benefits are 

paid to railroad workers who are unemployed but ready, willing, and able to work; and sickness 

benefits are paid to railroad workers who are unable to work because of illness or injury. 

The RUIA improper payment analysis is conducted at Headquarters. The RUIA Improper 

Payment report goes through a rigorous validation process with well documented procedures of 

that process. 

Below are the risk factors assessed in accordance with OMB memorandum M-18-20, 

Transmittal of Appendix C to OMB Circular A-123, Requirements for Payment Integrity 

Improvement, which are likely to contribute to improper payments, followed by RUIA specific 

responses. 

1. Whether the program or activity is new to the agency.

The Railroad Unemployment Insurance Act was approved in 1938. It is not a new program.

2. The complexity of the program or activity reviewed, particularly with respect to

determining correct payment amounts.

The RRB has been following an established methodology for identifying improper payments in

the RUIA benefit payment program. In February 2014, OMB granted the RRB approval to

continue conducting our RUIA Improper Payment analysis according to our established

methodology. To estimate our RUIA improper payments, we identify:

 Known Total Overpayments

Known total overpayments are located within the Annual RUIA Fiscal Year Debt Report.

This report includes all debts for the fiscal year from the Program Accounts Receivable

(PAR) system. Overpayments found in categories 2 and 4 are considered improper.

These are customer driven debts and debts created by the RRB.

Category 2 - Customer driven debts include:

o State Wage Matches

o Prepayment Claim Verification

o Annual Wage Record Audit

o RR Payroll Match

o Employer Wage Check

o RR Payroll Check Field Office Initiated

o RUIA Employer Protest
- 179 -

o Claimant Information

o Previously Uncollectible Debt

Category 4 - Debts created by the RRB include: 

o Internal Adjustment

o Returned Check

o Over recovery Adjustment

o Information from Anonymous Source/Other

Category 1 [RRA Annuity-RASI] and 3 [12(o) and 2(f)] debts are considered proper. 

 Known and Estimated Total Underpayments

We perform an OLQ to extract all claims processed in the fiscal year that have been

redetermined to pay additional money. We conduct a statistically valid sample review of

these claims and determine whether the cause for each underpayment is proper or

improper.

Using the definition of an “Improper Payment” provided by OMB in the Improper

Payment Act of 2002, we have determined that a Proper Payment is a payment made in

the correct amount in accordance with statutory, contractual, administrative or other

legally applicable requirement (i.e. The Railroad Unemployment Insurance Act).

Examples of proper underpayments include redetermined claims and reconsidered

applications or claims, which resulted in additional money paid out when the initial

payment was correct based on original information.

Examples of improper underpayments include redetermined claims and reconsidered

applications or claims, which resulted in additional money paid out due to computer error

and/or the adjudicating Claims Examiner mishandling the record.

The dollar amount of improper payments found in the review is then projected to the

universe of all UI and SI claims redetermined during the fiscal year.

 Estimated Overpayments

All payment errors found in the UI/SI Claim Quality Assurance Review are used to

determine the estimated overpayments for RUIA. The dollar amount of errors found in

the review is then projected to the universe of all UI and SI claims paid in the fiscal year.

3. The volume of payments made annually.

In fiscal year 2019, the combined amount of unemployment and sickness benefits paid was

$116,111,146 ($42,305,080 in unemployment benefits paid and $73,806,066 in sickness

benefits paid).

4. Whether payments or payment eligibility decisions are made outside of the agency,

for example, by a State or local government, or a regional Federal office.

No, all sickness and unemployment claims paid under the RUIA are adjudicated within the RRB.

5. Recent major changes in program funding, authorities, practices, or procedures.

The Coronavirus Aid, Relief, and Economic Security Act, (CARES Act) signed into law on March

27, 2020, contains three main provisions to enhance unemployment and sickness benefits for

railroad workers impacted by the pandemic.
- 180 -

 Increase the amount of the unemployment benefits by $1,200 per 2-week period. This

amount is in addition to the current biweekly maximum of $733.98 received by most

claimants. This increased amount applies to any 2-week registration period beginning on

or after April 1, 2020, through July 31, 2020.

 Eliminate the 1-week waiting period required before unemployment or sickness benefits

begin. This provision starts with an employee’s first 2-week registration period for a

period of continuing sickness or unemployment beginning after the effective date of the

Law and ends on or before December 31, 2020.

 Extend unemployment benefits to rail workers who received regular unemployment

benefits from July 1, 2019, to June 30, 2020. Provide up to 65 days of additional

unemployment benefits to railroad workers with less than 10 years of service. Railroad

workers with 10 or more years of railroad service may now receive extended

unemployment benefits for up to 130 days. The extended unemployment benefits apply

to any 2-week registration period beginning on or before December 31, 2020.

6. The level, experience, and quality of training for personnel responsible for making

program eligibility determinations or certifying that payments are accurate.

Trainees in the Sickness and Unemployment Benefits Section undergo an extensive nine-month

training program. The most recent training class (completed during FY 2020) resulted with

100% of the trainees successfully finishing the program. Going forward, there are additional

training classes tentatively scheduled to take place in FY 2021 and FY 2022.

Current claims examiners are provided with procedures and guidance for making correct

determinations in processing sickness and unemployment applications and benefit claim

payments. Guidance is available in the Adjudication Instruction Manual (AIM), Division of

Program Operations Manual (DPOM), and Field Operating Manual (FOM). These three

manuals and all other procedures are available on PRISM. Reviews of the accessibility of

reference manuals and adjudicative guidance given to claims examiners are conducted

periodically. Ongoing refresher training is provided to claims examiners to ensure they are up to

date with the procedures and the work process. Refresher training also helps to reduce

payment errors and improve improper payment rates.

7. Significant deficiencies in the audit reports of the agency including, but not limited to,

the agency of the Inspector General or the Government Accountability Office (GAO) audit

report findings, or other relevant management findings that might hinder accurate

payment certification.

Through FY 2019, there were no reported issues or problems regarding the RUIA program. In

FY 2020, Congress enacted the CARES ACT legislation, which directly affects the payment of

unemployment and sickness benefits. The RRB’s Office of Inspector General is currently

conducting an audit regarding the agency’s implementation of the CARES ACT legislation.

Based on the enactment of the CARES ACT legislation in FY 2020, the RRB will report the 

results of the RUIA improper payment analysis in the Payment Integrity section of the FY 2021 

Performance and Accountability Report. 

Risk Assessments for non-benefit paying programs (vendor and employee payments) are 

included below, in accordance with OMB guidance. We have determined that the RRB’s nonbenefit paying programs are not susceptible to significant improper payments based on these 

risk assessments. 
- 181 - 

Non-Benefit Payment Programs and Risk Assessments 

In addition to benefit payment programs, the RRB is responsible for paying its vendors and 

employees. As such, RRB’s reviews payable documents and, when properly authorized, 

processes payment documents through the Financial Management Integrated System (FMIS) 

and Secure Payment System (SPS) to liquidate the RRB’s administrative obligations. These 

payables include vendor payments, travel payments, purchase card usage and other employee 

payments. Employee compensation is handled through the shared service provider vendor. 

The goal of the agency is to perform as responsible stewards for our customers’ trust funds and 

agency resources by paying vendors and employees accurately and timely. The IPERA 

guidance requires that agencies, in performing their risk assessments, take into account those 

risk factors that are likely to contribute to significant improper payments. In accordance with the 

OMB Memorandum, M-18-20, Transmittal of Appendix C to OMB Circular A-123, Requirements 

for Payment Integrity Improvement, we address the individual risk factors qualitatively below. 

For these factors, we have incorporated risk values of High (5), Moderate (3) and Low (1) to 

correlate with the risk values used in the Management Control Review (MCR) risk assessment. 

Additionally, we considered the results from management control reviews and quality assurance 

reviews to further support our IPERA risk assessment. 

IPERA Risk Assessment: Vendor Payments 

1. Whether the program or activity is new to the agency.

The vendor payment activity has existed at the RRB since its inception. The activity has been 

an automated function since 1985 as part of a larger integrated financial system supported by 

software which meets all FSIO – 2009 core financial requirements and is in wide use at many 

other Executive branch agencies. Risk level – Low (1) 

2. The complexity of the program or activity is reviewed, particularly with respect to 

determining correct payment amounts.

The activity is a standard and well-defined administrative business function not only across the 

Federal government but all business entities. The RRB’s proprietary financial software supports 

the various regulations including the provisions of the Prompt Pay Act and incorporates all FSIO 

payment management requirements. Risk level – Low (1) 

3. The volume of payments made annually. 

As of September 20, 2019, the RRB processed approximately 3700 individual vendor 

transactions totaling $38.1 million. In FY 2018, the RRB processed 3460 transactions totaling 

$38.5 million. Give the volume of payments and amounts expended, the risk level is moderate. 

Risk level – Moderate (3) 

4. Whether payments or payment eligibility decisions are made outside of the agency 

(for example by a State or Local government or regional Federal Office). 

All vendor payments are processed by the agency. Vendor payment eligibility determinations 

are made by the staff of the RRB’s contracting officer in accordance with the Federal Acquisition 

Regulation (FAR). All vendors must be registered in GSA’s System for Award Management. 

Risk level – Low (1) 

5. Recent major changes in program funding, authorities, practices, or procedures. 

There have been no recent major changes in the agency’s administrative funding or authority. 

Practices and procedures have remained relatively constant since the advent of an automated 

accounts payable system in 1985 and are subject to periodic management control review 

assessments. Risk level – Low (1) 
- 182 - 

6. The level, experience, and quality of training for personnel responsible for making 

program eligibility determinations or certifying that payments are accurate. 

The Finance Officer, located in the RRB’s Bureau of Fiscal Operations (BFO), oversees the 

accuracy of vendor payment processing and is assisted by three Financial Management 

Analysts. The Finance Officer has several years of experience as an Auditor, Debt specialist 

and System Accountant and one analyst has over fifteen years of experience with accounts 

payable procedures and another analyst having over five years. All have had training in use of 

the RRB’s automated accounts payable system. The Finance Officer also maintains written 

internal procedures for payable processing. The RRB’s Chief of Acquisition Management 

supervises a staff of contracting professionals that make payment eligibility determinations. The 

RRB’s Acquisition Career Manager (ACM), in coordination with the Human Resources Division 

staff, provides the resources, guidance and manages the process for agency Acquisition 

Workforce (AWF) staff to obtain and maintain their appropriate Federal Acquisition Certification 

(FAC), for their position, in accordance with the Office of Federal Procurement Policy (OFPP) 

guidance as administered on the Federal Acquisition Institute’s (FAI) portal. The ACM ensures 

the contracting staff in the Division of Acquisition Management attain and maintain their 

appropriate level of FAC-C (Contracting) certification. The ACM, working with the HR staff as 

well as with managers and seniors leaders in the agency organizations, monitors and supports 

the other appointed agency AWF members to achieve and maintain their respective appropriate 

level FAC certifications as Contracting Officer’s Representatives (FAC-COR) or Program or 

Project Managers (FAC-P/PM) per the OFPP policy as administered on FAI portal. All agency 

AWF staff maintain their achieved FAC certification through biannual completion of an AWF 

position/level-specific number of “continuous learning points” formal training course hours and 

continued demonstration of their AWF position competencies. Risk level – Low (1) 

7. Inherent risks of improper payments due to the nature of agency programs or 

operations. 

The Agency’s vendor payment transactions are not complex and do not require a high degree of 

judgment as they are based on valid invoices that contain the information required for proper 

payment. The invoices are approved by the receiving organizations and the payment vouchers 

also require approval. The RRB’s contracting officer in accordance with the requirements of the 

FAR 52.216-7, Allowable Cost and Payment, makes cost allowability decisions. Risk level – 

Low (1) 

8. Significant deficiencies in the audit reports of the agency including, (but not limited 

to) agency IG or GAO audit report findings, or other relevant management findings 

that might hinder accurate payment certification. 

There have been various audits related to vendor payments performed by the agency’s IG but 

none of the findings have been identified as a significant deficiency that might hinder accurate 

payment certification. Risk level – Low (1) 

9. Results from management control reviews and related risk assessments over vendor 

payments. 

Consistent with the requirements of the Federal Managers’ Financial Integrity Act (FMFIA) and 

the agency’s Management Control Review (MCR) program, the BFO finalized the full MCR for 

the accounts payment assessable unit, responsible for vendor payments, in November 2019. 

The results of the review disclosed no material weaknesses and affirmed that the accounts 

payment assessable unit was compliant with the requirements of FMFIA. No subsequent 

audits, reviews, or events have disclosed information necessitating reconsideration of that 

affirmation. 
- 183 -

In addition to the MCR review referenced above, BFO’s Financial Compliance Section (FCS) 

conducts numerous Quality Assurance (QA) reviews focused on detecting improper payments 

in the vendor payments program. Specifically, the FCS utilizes statistical sampling to conduct 

QA reviews of 1) payment vouchers, 2) potential duplicate invoice payments, 3) vendors subject 

to the Prompt Payment Act, 4) compliance with the Prompt Payment Act, and 5) open 

obligations review for current and prior fiscal years, among others. In particular, the FCS 

sampled five percent of payment vouchers (i.e. invoices) issued during the 3rd and 4th quarter of 

FY 2019 and found no exceptions. All sampled payment vouchers (1) had valid proof of billing 

(2) was paid to the proper payee, and (3) in the proper amount.

MCR Risk Assessment Overview: Vendor Payments 

In accordance with the agency’s MCR program, the RRB performs a risk assessment as a 

component of the full MCR. Consistent the MCR review program schedule, the most recent 

accounts payable MCR risk assessment was completed in November 2019. The most recent 

MCR risk assessment for government purchase cards was completed in July 2020. See MCR 

risk assessment results below for Accounts Payable and Government Purchase Cards. Risk 

level – Low (2) 

The MCR risk assessment represents a determination of an assessable unit’s vulnerability to 

inherent risks associated with accomplishment of its mission and integrity risks associated with 

occurrences of waste loss, unauthorized use, or misappropriation. The MCR risk assessment 

quantifies factors that help to define the potential effect of the assessable unit’s inherent and 

integrity risks. The risk assessments include a compilation and observation of key data to 

determine the vulnerability of transactions to error, which may cause a loss to the Federal 

government or its vendors. 
- 184 - 

IPERA Risk Assessment: Employee Payments 

1. Whether the program or activity is new to the agency. 

The personnel actions and compensation processing activity has existed at the RRB since its 

inception. The activity has been an automated function since 1986, and has been provided by 

GSA served, as RRB’s payroll shared service provider since 2004. GSA has been a crossservice provider of payroll services for over 35 years. GSA has provided a full range of payroll 

services for over 18,600 employees to include GSA and more than 30 independent agencies or 

presidential commissions. RRB transitioned to IBM’s HRLinks in June 2018, as did GSA and its 

other former customer entities. Risk level – Low (1) 

The travel reimbursement activity is not a new activity to the RRB and has been an automated 

function since 2005. Utilizing a GSA master contract, RRB’s travel processing is provided by a 

shared service vendor, CWTSatoTravel (i.e. CW Government Travel, Inc.’s E2 Solutions). 

Risk level – Low (1) 

2. The complexity of the program or activity is reviewed, particularly with respect to 

determining correct payment amounts. 

The salary and benefits compensation activity is a standard and well-defined administrative 

business function in the Federal government. GSA is one of four e-Payroll providers for the 

Federal Government, which is the compensation management component of the Human 

Resources Line of Business (HR LOB) initiative. GSA participates in the Shared Services 

governance, which focuses on ensuring human resource and payroll policy and procedures are 

standardized and easy to understand and administer. Risk level – Low (1) 

Travel reimbursement is also a standard and well-defined administrative business function in 

the Federal government. CW Government Travel, Inc.’s E2 Solutions is a web-based, end-toend travel management service designed by CW Government Travel for use by federal 
- 185 - 

government agencies. The service is vendor-owned, vendor-hosted, and vendor-operated. E2 

Solutions provides self-service and non-self-service travel planning, reservation, cost estimating 

capabilities. The RRB utilizes the E2 Solutions system for travel processing, which incorporates 

the Federal Travel Regulations (FTR). E2 interfaces with the agency’s financial management 

system, FMIS. Risk level – Low (1) 

3. The volume of payments made annually. 

The volume of compensation payments vary depending upon the number of employees. The 

MCR risk assessment assumes a higher volume and dollar value from a conservative 

perspective, considering salary and benefits is a significant portion of the agency’s 

administrative budget. Overall, considering the number of transactions (which are repetitive) and 

the dollar impact, we assess the risk level as moderate. Risk level – Moderate (3.5) 

In FY 2019, the RRB processed 1116 travel vouchers totaling $672K. Given the low volume 

and impact to the agency’s budget, we assess the risk level as low. Risk level – Low (1) 

4. Whether payments or payment eligibility decisions are made outside of the agency 

(for example by a State or Local government or regional Federal Office). 

Federal agencies, including the RRB, are responsible for complying with the law and regulations 

developed and maintained by OPM and following OPM's policies and guidance to administer 

pay policies and programs for its own employees. Payment eligibility begins when an applicant 

is hired by the agency’s human resources office using its prescribed appointment authority as 

defined by employment laws and regulations provided by OPM. Risk level – Low (1)

Travel payment determinations or approvals are made within the RRB, by the respective 

employee’s supervisor. Unless, there is an extenuating circumstance, all travel authorizations 

and vouchers are processed through RRB’s the CW Government Travel, Inc.’s E2 Solutions 

system, which reflects the FTR. Travel reimbursements must contain valid receipts in 

accordance with Internal Revenue Service regulations. Risk level – Low (1) 

5. Recent major changes in program funding, authorities, practices, or procedures. 

In 2018, GSA migrated its payroll time and attendance function to HRLinks, operated by 

International Business Management (IBM), a private Human Resources Line of Business 

(HRLOB) Shared Service Provider vendor. Transition to HRLinks, did not result in major 

changes to payroll practices or procedures. There have been no recent major changes in the 

agency’s administrative funding for either salary and benefits compensation or travel. There 

have been no major changes in guidance provided by either OPM or GSA for authority to pay 

salary and benefits or travel reimbursement. Practices and procedures have remained 

relatively constant since the migration of payroll services to GSA in 2004 and the migration of 

electronic travel services to CW Government Travel in 2005. Risk level – Low (1) 

6. The level, experience, and quality of training for personnel responsible for making 

program eligibility determinations or certifying that payments are accurate. 

The Workforce/Organizational Management Section of the RRB’s Bureau of Human Resources 

is staffed by trained human resources specialists with hiring authority as prescribed by OPM. 

Information pertaining to the employee’s job classification is entered into an automated human 

resources system (HRLinks) which is interfaced with the shared payroll service. The GSA, as 

an approved HR line-of-business shared service provider is responsible for the level, 

experience, and quality of training for personnel responsible for certifying that payments are 

accurate. Authorized RRB staff are responsible for certifying time and attendance through 

HRLinks and GSA is responsible for certifying that the resulting payments to employees are 

accurate. Risk level – Low (1) 
- 186 - 

Travel authorization and reimbursement approvals are applied by managers and supervisors in 

the various business organizations of the RRB using the CW Government Travel, Inc.’s E2 

Solutions system whose controls reflect the FTR. Prior to payment, trained staff RRB’s 

Treasury staff reviews to ensure proper documentation and receipts are attached in accordance 

with Internal Revenue Service regulations. The E2 system interfaces with the agency’s 

automated financial management system to generate the payment. Risk level – Low (1) 

7. Inherent risks of improper payments due to the nature of agency programs or 

operations. 

The payment of salary and benefits compensation to employees is defined by the rules and 

regulations provided by the OPM and are reflected by automated controls built into GSA’s 

shared payroll system which undergoes an annual Statement on Standards for Attestation 

Engagements (SSAE) No. 16, Reporting on Controls at a Service Organization audit, which 

minimizes the level of inherent risk of improper payment. Risk level – Low (1) 

Travel reimbursement is defined by the GSA’s FTR and are reflected in the controls built into 

CW Government travels shared E2 electronic travel system, which is authorized for use under 

GSA’s master contract with CW Government Travel. Risk level – Low (1)

8. Significant deficiencies in the audit reports of the agency including, (but not limited 

to) agency IG or GAO audit report findings, or other relevant management findings 

that might hinder accurate payment certification. 

There has been one OIG audit since 2004 related to time and attendance and another audit in 

2017 related to RRB compliance with the Federal Travel Regulation. No significant deficiencies 

in either audit were identified. Each year, GSA provides RRB with a copy of an Independent 

Service Provider’s Report performed in accordance with Standards for Attestation Engagements 

(SSAE) 16, Reporting on Controls at a Service Organization. The latest report provided 

(prepared by KPMG LLC) is for the period of July 1, 2018 to June 30, 2019, and certified that 

the controls tested provided reasonable assurance that the controls were operating effectively. 

GSA, as the master contract manager with CW Government travel, has not notified us of any 

significant deficiencies in the travel system used by RRB. Risk level – Low (1) 

9. Results from management control reviews and related risk assessments over 

employee payments. 

Consistent with the requirements of the Federal Managers’ Financial Integrity Act (FMFIA) and 

the agency’s Management Control Review (MCR) program, the BFO finalized the full MCR for 

the payroll assessable unit, covering approximately 97% of employee payment in November 

2019. The results of the review disclosed no material weaknesses and affirmed that the 

accounts payment assessable unit was compliant with the requirements of FMFIA. No 

subsequent audits, reviews, or events have disclosed information necessitating reconsideration 

of that affirmation.

In addition to the MCR review referenced above, BFO’s Financial Compliance Section (FCS) 

conducted a Quality Assurance (QA) review focused on detecting potential improper employee 

payments and quantifying the impact of those payments. The most recent employee payment 

QA review was finalized in July 2019 concluded that there were no improper employee 

payments. See Employee Payment MCR risk assessment results below. Risk level – Low (2)
- 187 -

MCR Risk Assessment Overview: Employee Payments (i.e. Payroll) 

In accordance with the agency’s MCR program, the RRB performs a risk assessment as a 

component of the full MCR. Consistent the MCR review program schedule, the most recent 

payroll assessable unit (i.e. employee payments) full review was finalized in November 2019. 

The MCR risk assessment was updated in July 2020 based upon FY 2019 payroll costs data. 

See MCR risk assessment results below for employee payments (i.e. payroll). Risk level – Low 

(2) 

The MCR risk assessment represents a determination of an assessable unit’s vulnerability to 

inherent risks associated with accomplishment of its mission and integrity risks associated with 

occurrences of waste loss, unauthorized use, or misappropriation. The MCR risk assessment 

quantifies factors that help to define the potential effect of the assessable unit’s inherent and 

integrity risks. The risk assessments include a compilation and observation of key data to 

determine the vulnerability of transactions to error, which may cause a loss to the Federal 

government or its vendors. 
- 188 - 

Summaries of Financial Statement Audit and Management Assurances 

SUMMARY OF FINANCIAL STATEMENT AUDIT 

Audit Opinion Disclaimer 

Restatement No 

Material/Weaknesses1 Beginning 

Balance New Resolved Consolidated Ending 

Balance 

Financial Reporting 1 1 

Deficient Internal Controls at 

the Agency Wide Level 1 1 

Total Material Weaknesses 2 2 

SUMMARY OF MANAGEMENT ASSURANCES 

Effectiveness of Internal Control over Operations (FMFIA §2)

Statement of Assurance Modified 

Material/Weaknesses1 Beginning 

Balance New Resolved Consolidated Reassessed Ending 

Balance 

Financial Reporting 1 1 

Deficient Internal Controls 

at the Agency Wide Level 1 1 

Total Material Weaknesses 2 2 

Conformance with Financial Management System Requirements (FMFIA §4)

Statement of Assurance Systems conform 

1 As asserted by the Office of Inspector General (OIG); the RRB disagrees with both the material 

weaknesses and the disclaimer audit opinion. See the Analysis of Systems, Controls and Legal 

Compliance subsection within the Management’s Discussion and Analysis Section. 

Civil Monetary Penalty Adjustment for Inflation 

The RRB published its 2020 civil monetary penalty inflation adjustment on January 13, 2020 

(85 Fed. Reg. 1832). The maximum civil penalty under the Program Fraud Civil Remedies Act 

was increased to $11,665, and the penalty range under the False Claims Act was increased to a 

minimum penalty of $11,665 and a maximum penalty of $23,331.
APPENDICES
PAGE INTENTIONALLY LEFT BLANK 
- 191 -

Appendices 

Glossary of Acronyms and Abbreviations 

A

APG Accounting Procedures Guide

B

BCA Budget Control Act of 2011

BFO Bureau of Fiscal Operations

C

CARES 

CDM

Coronavirus Aid, Relief, and Economic Security 

Continuous Diagnostics and Mitigation

CERT Comprehensive Error Rate Testing

CMS Centers for Medicare & Medicaid Services

COLA Cost-of-Living Adjustment

COR Contracting Officer’s Representative

D

DBD Disability Benefits Division (RRB)

DHS Department of Homeland Security

DNP Do Not Pay

E

EDMA Employment Data Maintenance

EFT Electronic Fund Transfer

ERS Employer Reporting System

F

FAR Federal Acquisition Regulations

FBWT Fund Balance With Treasury

FECA Federal Employees’ Compensation Act

FFS Fee-for-Service (Medicare)

FMFIA Federal Managers’ Financial Integrity Act

FI Financial Interchange

FMIS Financial Management Integrated System

FSIO Financial Systems Integration Office

FTR Federal Travel Regulations

FY Fiscal Year

G

GAO Government Accountability Office
- 192 -

GSA General Services Administration

HCME Human Capital Management Evaluation

I

IT Information Technology

IPERA Improper Payments Elimination and Recovery Act

IPERIA Improper Payments Elimination and Recovery Improvement 

 Act of 2012

IPIA Improper Payments Information Act

IRS Internal Revenue Service

L

LIRR Long Island Rail Road

LMS Learning Management System

M

MCOS Medicare Contract Operations Specialist

MCR Management Control Review

MCRC Management Control Review Committee

MIRTEL Medicare Information Recorded, Transmitted, Edited and Logged

N

NRRIT National Railroad Retirement Investment Trust

O

OGC Office of General Counsel (RRB)

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

R

RBD Retirement Benefits Division (RRB)

RESCUE Recalculate for Service and Compensation Updated to EDM

ROC Retirement On-Line Calculations

RR Railroad Retirement

RRA Railroad Retirement Act

RR Account Railroad Retirement Account

RRB Railroad Retirement Board

RRSIA Railroad Retirement and Survivors’ Improvement Act of 2001

RUI Railroad Unemployment Insurance

RUIA Railroad Unemployment Insurance Act

RUI Account Railroad Unemployment Insurance Account
- 193 -

S 

SFFAS Statement of Federal Financial Accounting Standards 

SI Sickness Insurance

SMAC Specialty Medicare Administrative Contractor 

SOSI Statement of Social Insurance 

SPEED System Processing Excess Earnings Data 

SPS Secure Payment System

SSA Social Security Administration 

SSEB Social Security Equivalent Benefit 

SSN Social Security Number 

T 

Treasury Department of the Treasury 

U 

UI Unemployment Insurance

USC United States Code 
- 194 - 

Railroad Retirement Board

Board Members, Inspector General, and Executive Committee

Board Members

Chairman Erhard R. Chorlé

Labor Member John Bragg 

Management Member Thomas Jayne 

Office of Inspector General 

Inspector General Martin J. Dickman

Executive Committee

Director of Field Service/ 

Senior Executive Officer 

Daniel J. Fadden 

Chief Actuary Vacant 

Chief Financial Officer Shawna R. Weekley 

Chief Information Officer Terryne F. Murphy 

Director of Administration Keith B. Earley 

Director of Programs Crystal Coleman 

General Counsel Ana M. Kocur 
For additional copies of this report, please contact: 

Railroad Retirement Board 

Bureau of Fiscal Operations 

844 North Rush Street, 5th Floor 

Chicago, Illinois 60611-1275 

Telephone: (312) 751-4789 

Available online at: www.RRB.gov