‘‘(B) When computing the net amounts of reductions
in new budget authority and in outlays resulting from
amendments agreed to by the House of Representatives
or the Senate to an appropriation bill, the chairmen of
the Committees on the Budget shall only count those por-
tions of such amendments agreed to that were so des-
ignated by the Members offering such amendments as
amounts to be credited to the House or Senate Reserve
Balance, as applicable, or that fall within the last sentence
of paragraph (1).
‘‘(3) The chairmen of the Committees on the Budget
shall, upon the engrossment of Senate amendments to any
appropriation bill, credit to the applicable Joint House-
Senate Reserve Balance the amounts of new budget au-
thority and outlays equal to—
‘‘(A) an amount equal to one-half of the sum of
(i) the amount of new budget authority in the House
Reserve Balance plus (ii) the amount of new budget
authority in the Senate Reserve Balance for that
bill; and
‘‘(B) an amount equal to one-half of the sum
of (i) the amount of outlays in the House Reserve
Balance plus (ii) the amount of outlays in the Sen-
ate Reserve Balance for that bill.
‘‘(4) CALCULATION OF RESERVE SAVINGS IN SEN-
ATE.—For purposes of calculating under this section the
net amounts of reductions in new budget authority and
in outlays resulting from amendments agreed to by the
Senate on an appropriation bill, the amendments reported
to the Senate by its Committee on Appropriations shall
be considered to be part of the original text of the bill.
‘‘(d) DEFINITION.—As used in this section, the term
‘appropriation bill’ means any general or special appro-
priation bill, and any bill or joint resolution making sup-
plemental, 
deficiency, 
or 
continuing 
appropriations
through the end of a fiscal year.
‘‘(e) TALLY DURING HOUSE CONSIDERATION.—The
chairman of the Committee on the Budget of the House
of Representatives shall maintain a running tally of the
amendments adopted reflecting increases and decreases
budget authority in the bill as reported. This tally shall
be available to Members in the House of Representatives
during consideration of any appropriations bill by the
House.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents set forth in section 1(b) of the Congressional Budget
and Impoundment Control Act of 1974 is amended by in-
serting after the item relating to section 317 the following
new item:
‘‘Sec. 318. Spending accountability reserve ledger.’’.
SEC. 233. DOWNWARD ADJUSTMENT OF SECTION 302(a) AL-
LOCATIONS AND SECTION 302(b) SUBALLOCA-
TIONS.
(a) ALLOCATIONS.—Section 302(a) of the Congres-
sional Budget Act of 1974 is amended by adding at the
end the following new paragraph:
‘‘(6) ADJUSTMENT
OF
ALLOCATIONS.—Upon
the engrossment of Senate amendments to any ap-
propriation bill (as defined in section 318(d)) for a
fiscal year, the amounts allocated under paragraph
(1) or (2) to the Committee on Appropriations of
each House upon the adoption of the most recent
joint resolution on the budget for that fiscal year
shall be adjusted downward by the amounts credited
to the applicable Joint House-Senate Reserve Bal-
ance under section 318(c)(2). The revised levels of
new budget authority and outlays shall be submitted
to each House by the chairman of the Committee on
the Budget of that House and shall be printed in the
Congressional Record.’’.
(b) SUBALLOCATIONS.—Section 302(b) of the Con-
gressional Budget Act of 1974 is amended by adding at
the end the following new sentence: ‘‘Whenever an adjust-
ment is made under subsection (a)(6) to an allocation
under that subsection, the Committee on Appropriations
of each House shall make downward adjustments in the
most recent suballocations of new budget authority and
outlays under this subparagraph to the appropriate sub-
committees of that committee in the total amounts of
those adjustments under section 318(c)(2). The revised
suballocations shall be submitted to each House by the
chairman of the Committee on Appropriations of that
House and shall be printed in the Congressional Record.’’.
SEC. 234. PERIODIC REPORTING OF LEDGER STATEMENTS.
Section 308(b)(1) of the Congressional Budget Act
of 1974 is amended by adding at the end the following
new sentence: ‘‘Such reports shall also include an up-to-
date tabulation of the amounts contained in the ledger and
each entry established by section 318(a).’’.
SEC. 235. DOWNWARD ADJUSTMENT OF DISCRETIONARY
SPENDING LIMITS.
The discretionary spending limits for new budget au-
thority and outlays for any fiscal year set forth in section
251(c) of the Balanced Budget and Emergency Deficit
Control Act of 1985, shall be reduced by the amounts set
forth in the final regular appropriation bill for that fiscal
year or joint resolution making continuing appropriations
through the end of that fiscal year. Those amounts shall
be the sums of the Joint House-Senate Reserve Balances
for that fiscal year, as calculated under section 302(a)(6)
of the Congressional Budget Act of 1974. That bill or joint
resolution shall contain the following statement of law:
‘‘As required by section 302(a)(6) of the Congressional
Budget Act of 1974, for fiscal year [insert appropriate fis-
cal year] and each outyear, the adjusted discretionary
spending limit for new budget authority shall be reduced
by $ [insert appropriate amount of reduction] and the ad-
justed discretionary limit for outlays shall be reduced by
$ [insert appropriate amount of reduction] for the fiscal
year and each outyear.’’. Notwithstanding section 904(c)
of the Congressional Budget Act of 1974, section 306 as
it applies to this statement shall not apply. This adjust-
ment shall be reflected in reports under sections 254(e)
and 254(f) of the Balanced Budget and Emergency Deficit
Control Act of 1985.
SEC. 236. REDUCTION IN REVENUES.
The level of total revenues set forth in the concurrent
resolution on the budget shall be reduced by the amounts
set forth in the final regular appropriation bill for that
fiscal year or joint resolution making continuing appro-
priations through the end of that fiscal year shall be re-
duced by the amount by which the discretionary spending
limit for outlays is reduced for that fiscal year pursuant
to section 235. At the same time, such amount shall be
credited to the pay-as-you-go scorecard pursuant to sec-
tion 252(d) of the Balanced Budget and Emergency Def-
icit Control Act of 1985 for purposes receipts legislation
only. This adjustment shall be reflected in reports under
sections 254(e) and 254(f) of such Act. To the extent that
the amount so credited is not used for purposes of receipts
legislation enacted during such fiscal year, it shall be re-
moved from such scorecard.
Subtitle D—Enhanced Rescissions
of Budget Authority Identified
by the President as Wasteful
Spending
SEC. 251. SHORT TITLE.
This title may be cited as the ‘‘Enhanced Rescissions
Act of 2002’’.
SEC. 252. ENHANCED CONSIDERATION OF CERTAIN PRO-
POSED RESCISSIONS.
(a) IN GENERAL.—Part B of title X of the Congres-
sional Budget and Impoundment Control Act of 1974 (2
U.S.C. 681 et seq.) is amended by redesignating sections
1013 through 1017 as sections 1014 through 1018, re-
spectively, and by inserting after section 1012 the fol-
lowing new section:
‘‘ENHANCED CONSIDERATION OF CERTAIN PROPOSED
RESCISSIONS
‘‘SEC. 1013. (a) PROPOSED RESCISSION OF BUDGET
AUTHORITY IDENTIFIED AS WASTEFUL SPENDING.—The
President may propose, at the time and in the manner
provided in subsection (b), the rescission of any budget
authority provided in an appropriation Act that he identi-
fies as wasteful spending. If the President proposes a re-
scission of budget authority, he may also propose to reduce
the appropriate discretionary spending limits for new
budget authority and outlays flowing therefrom set forth
in section 251(c) of the Balanced Budget and Emergency
Deficit Control Act of 1985 by an amount that does not
exceed the amount of the proposed rescission. Funds made
available for obligation under this procedure may not be
proposed for rescission again under this section.
‘‘(b) TRANSMITTAL OF SPECIAL MESSAGE.—
‘‘(1) The President may transmit to Congress a
special message proposing to rescind amounts of
budget authority and include with that special mes-
sage a draft bill that, if enacted, would only rescind
that budget authority unless the President also pro-
poses a reduction in the appropriate discretionary
spending limits set forth in section 251(c) of the
Balanced Budget and Emergency Deficit Control
Act of 1985. That bill shall clearly identify the
amount of budget authority that is proposed to be
rescinded for each program, project, or activity to
which that budget authority relates.
‘‘(2) In the case of an appropriation Act that
includes accounts within the jurisdiction of more
than one subcommittee of the Committee on Appro-
priations, the President in proposing to rescind
budget authority under this section shall send a sep-
arate special message and accompanying draft bill
for accounts within the jurisdiction of each sub-
committee.
‘‘(3) Each special message shall specify, with
respect to the budget authority proposed to be re-
scinded, the following:
‘‘(A) The amount of budget authority
which he proposes to be rescinded.
‘‘(B) Any account, department, or estab-
lishment of the Government to which such
budget authority is available for obligation, and
the specific project or governmental functions
involved.
‘‘(C) The reasons why the budget authority
should be rescinded, including why he considers
it to be wasteful spending.
‘‘(D) To the maximum extent practicable,
the estimated fiscal, economic, and budgetary
effect (including the effect on outlays and re-
ceipts in each fiscal year) of the proposed re-
scission.
‘‘(E) All facts, circumstances, and consid-
erations relating to or bearing upon the pro-
posed rescission and the decision to effect the
proposed rescission, and to the maximum extent
practicable, the estimated effect of the proposed
rescission upon the objects, purposes, and pro-
grams for which the budget authority is pro-
vided.
‘‘(F) A reduction in the appropriate discre-
tionary spending limits set forth in section
251(c) of the Balanced Budget and Emergency
Deficit Control Act of 1985, if proposed by the
President.
‘‘(c) PROCEDURES
FOR
EXPEDITED
CONSIDER-
ATION.—
‘‘(1)(A) Before the close of the second legisla-
tive day of the House of Representatives after the
date of receipt of a special message transmitted to
Congress under subsection (b), the majority leader
or minority leader of the House of Representatives
shall introduce (by request) the draft bill accom-
panying that special message. If the bill is not intro-
duced as provided in the preceding sentence, then,
on the third legislative day of the House of Rep-
resentatives after the date of receipt of that special
message, any Member of that House may introduce
the bill.
‘‘(B) The bill shall be referred to the Com-
mittee on Appropriations. The committee shall re-
port the bill without substantive revision and with or
without recommendation. The bill shall be reported
not later than the seventh legislative day of that
House after the date of receipt of that special mes-
sage. If that committee fails to report the bill within
that period, that committee shall be automatically
discharged from consideration of the bill, and the
bill shall be placed on the appropriate calendar.
‘‘(C) A vote on final passage of the bill shall be
taken in the House of Representatives on or before
the close of the 10th legislative day of that House
after the date of the introduction of the bill in that
House. If the bill is passed, the Clerk of the House
of Representatives shall cause the bill to be en-
grossed, certified, and transmitted to the Senate
within one calendar day of the day on which the bill
is passed.
‘‘(2)(A) A motion in the House of Representa-
tives to proceed to the consideration of a bill under
this section shall be highly privileged and not debat-
able. An amendment to the motion shall not be in
order, nor shall it be in order to move to reconsider
the vote by which the motion is agreed to or dis-
agreed to.
‘‘(B) Debate in the House of Representatives
on a bill under this section shall not exceed 4 hours,
which shall be divided equally between those favoring
and those opposing the bill. A motion further to
limit debate shall not be debatable. It shall not be
in order to move to recommit a bill under this sec-
tion or to move to reconsider the vote by which the
bill is agreed to or disagreed to.
‘‘(C) Appeals from decisions of the Chair relat-
ing to the application of the Rules of the House of
Representatives to the procedure relating to a bill
under this section shall be decided without debate.
‘‘(D) Except to the extent specifically provided
in the preceding provisions of this subsection, con-
sideration of a bill under this section shall be gov-
erned by the Rules of the House of Representatives.
It shall not be in order in the House of Representa-
tives to consider any rescission bill introduced pursu-
ant to the provisions of this section under a suspen-
sion of the rules or under a special rule.
‘‘(3) A bill transmitted to the Senate pursuant
to paragraph (1)(D) shall be referred to its Com-
mittee on Appropriations. That committee shall re-
port the bill without substantive revision and with or
without recommendation. The bill shall be reported
not later than the seventh legislative day of the Sen-
ate after it receives the bill. A committee failing to
report the bill within such period shall be automati-
cally discharged from consideration of the bill, and
the bill shall be placed upon the appropriate cal-
endar.
‘‘(4)(A) A motion in the Senate to proceed to
the consideration of a bill under this section shall be
privileged and not debatable. An amendment to the
motion shall not be in order, nor shall it be in order
to move to reconsider the vote by which the motion
is agreed to or disagreed to.
‘‘(B) Debate in the Senate on a bill under this
section, and all debatable motions and appeals in
connection therewith (including debate pursuant to
subparagraph (C)), shall not exceed 10 hours. The
time shall be equally divided between, and controlled
by, the majority leader and the minority leader or
their designees.
‘‘(C) Debate in the Senate or any debatable mo-
tion or appeal in connection with a bill under this
section shall be limited to not more than 1 hour, to
be equally divided between, and controlled by, the
mover and the manager of the bill, except that in
the event the manager of the bill is in favor of any
such motion or appeal, the time in opposition there-
to, shall be controlled by the minority leader or his
designee. Such leaders, or either of them, may, from
time under their control of the passage of a bill,
allot additional time to any Senator during the con-
sideration of any debatable motion or appeal.
‘‘(D) A motion in the Senate to further limit
debate on a bill under this section is not debatable.
A motion to recommit a bill under this section is not
in order.
‘‘(d) AMENDMENT AND DIVISIONS PROHIBITED.—No
amendment to a bill considered under this section shall
be in order in either the House of Representatives or the
Senate. It shall not be in order to demand a division of
the question in the House of Representatives (or in a Com-
mittee of the Whole) or in the Senate. No motion to sus-
pend the application of this subsection shall be in order
in either House, nor shall it be in order in either House
to suspend the application of this subsection by unanimous
consent.
‘‘(e) REQUIREMENT TO MAKE AVAILABLE FOR OBLI-
GATION.—Any amount of budget authority proposed to be
rescinded in a special message transmitted to Congress
under subsection (b) shall be made available for obligation
on the day after the date on which either House rejects
the bill transmitted with that special message.
‘‘(f) DEFINITIONS.—For purposes of this section:
‘‘(1) The term ‘appropriation Act’ means any
general or special appropriation Act, and any Act or
joint resolution making supplemental, deficiency, or
continuing appropriations.
‘‘(2) The term ‘legislative day’ means, with re-
spect to either House of Congress, any day of ses-
sion.
‘‘(3) The term ‘rescind’ means, with respect to
an appropriation Act, to reduce the amount of budg-
et authority appropriated in that Act, and reducing
budget authority shall include reducing obligation
limitations set forth in that Act.’’.
(b) EXERCISE OF RULEMAKING POWERS.—Section
904 of the Congressional Budget Act of 1974 (2 U.S.C.
621 note) is amended—
(1) in subsection (a), by striking ‘‘and 1017’’
and inserting ‘‘1012, and 1017’’; and
(2) in subsection (d), by striking ‘‘section
1017’’ and inserting ‘‘sections 1012 and 1017’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 1011 of the Congressional Budget
Act of 1974 (2 U.S.C. 682(5)) is amended by re-
pealing paragraphs (3) and (5) and by redesignating
paragraph (4) as paragraph (3).
(2) Section 1014 of such Act (2 U.S.C. 685) is
amended—
(A) in subsection (b)(1), by striking ‘‘or
the reservation’’; and
(B) in subsection (e)(1), by striking ‘‘or a
reservation’’ and by striking ‘‘or each such res-
ervation’’.
(3) Section 1015(a) of such Act (2 U.S.C. 686)
is amended by striking ‘‘is to establish a reserve or’’,
by striking ‘‘the establishment of such a reserve or’’,
and by striking ‘‘reserve or’’ each other place it ap-
pears.
(4) Section 1017 of such Act (2 U.S.C. 687) is
amended—
(A) in subsection (a), by striking ‘‘rescis-
sion bill introduced with respect to a special
message or’’;
(B) in subsection (b)(1), by striking ‘‘re-
scission bill or’’, by striking ‘‘bill or’’ the second
place it appears, by striking ‘‘rescission bill with
respect to the same special message or’’, and by
striking ‘‘, and the case may be,’’;
(C) in subsection (b)(2), by striking ‘‘bill
or’’ each place it appears;
(D) in subsection (c), by striking ‘‘rescis-
sion’’ each place it appears and by striking ‘‘bill
or’’ each place it appears;
(E) in subsection (d)(1), by striking ‘‘re-
scission bill or’’ and by striking ‘‘, and all
amendments thereto (in the case of a rescission
bill)’’;
(F) in subsection (d)(2)—
(i) by striking the first sentence;
(ii) by amending the second sentence
to read as follows: ‘‘Debate on any debat-
able motion or appeal in connection with
an impoundment resolution shall be limited
to 1 hour, to be equally divided between,
and controlled by, the mover and the man-
ager of the resolution, except that in the
event that the manager of the resolution is
in favor of any such motion or appeal, the
time in opposition thereto shall be con-
trolled by the minority leader or his des-
ignee.’’;
(iii) by striking the third sentence;
and
(iv) in the fourth sentence, by striking
‘‘rescission 
bill 
or’’ 
and 
by 
striking
‘‘amendment, debatable motion,’’ and by
inserting ‘debatable motion’;
(G) in paragraph (d)(3), by striking the
second and third sentences; and
(H) by striking paragraphs (4), (5), (6),
and (7) of paragraph (d).
(d) CLERICAL AMENDMENTS.—The table of sections
for subpart B of title X of the Congressional Budget and
Impoundment Control Act of 1974 is amended by redesig-
nating the item relating to sections 1014 through 1018
as items 1015 through 1019, respectively, and by inserting
after the item relating to section 1012 the following new
item:
‘‘Sec. 1013. Enhanced consideration of certain proposed rescissions.’’.
Subtitle E—Extension of Discre-
tionary Spending Limits and
Paygo
SEC. 261. AMENDMENTS TO SECTIONS 251, 252, AND 275 OF
THE BALANCED BUDGET AND EMERGENCY
DEFICIT CONTROL ACT OF 1985.
(a) ADJUSTMENTS
TO DISCRETIONARY SPENDING
LIMITS.—In the matter that precedes subparagraph (A)
of section 251(b)(2) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985, strike ‘‘through 2002’’.
(b) DISCRETIONARY
SPENDING
LIMIT.—Section
251(c) of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended as follows:
(1) Strike paragraphs (1) through (5) and re-
designate paragraph (6) (which relates to fiscal year
2002) as paragraph (1).
(2) Redesignate paragraph (7) (which relates to
fiscal year 2003) as paragraph (2) and in such re-
designated paragraph strike subparagraph (A), re-
designate subparagraphs (B) and (C) as subpara-
graphs (C) and (D), respectively, and before sub-
paragraph (C), insert the following new subpara-
graphs:
‘‘(A) 
for 
the 
discretionary 
category:
$754,900,000,000 in new budget authority and
$704,230,000,000 in outlays;’’
‘‘(B) 
for 
the 
highway 
category:
$27,728,000,000 in outlays;’’.
(3) Redesignate paragraph (8) as paragraph (3)
and in such redesignated paragraph strike ‘‘with re-
spect to fiscal year 2004’’, redesignate the remaining
matter as subparagraph (B), and before such redes-
ignated matter insert the following:
‘‘(3) with respect to fiscal year 2004—
‘‘(A) 
for 
the 
discretionary 
category:
$775,020,000,000 in new budget authority and
$706,970,000,000 in outlays; and’’.
(4) Redesignate paragraph (9) as paragraph (4)
and in such redesignated paragraph strike ‘‘with re-
spect to fiscal year 2005’’, redesignate the remaining
matter as subparagraph (B), and before such redes-
ignated matter insert the following:
‘‘(3) with respect to fiscal year 2005—
‘‘(A) 
for 
the 
discretionary 
category:
$801,560,000,000 in new budget authority and
$779,810,000,000 in outlays; and’’.
(5) Redesignate paragraph (10) as paragraph
(5) and in such redesignated paragraph strike ‘‘with
respect to fiscal year 2006’’, redesignate the remain-
ing matter as subparagraph (B), and before such re-
designated matter insert the following:
‘‘(5) with respect to fiscal year 2006—
‘‘(A) 
for 
the 
discretionary 
category:
$828,600,000,000 in new budget authority and
$793,650,000,000 in outlays; and’’.
(6) Redesignate paragraphs (11) through (16)
as paragraphs (7) through (12) and after paragraph
(5) insert the following new paragraph:
‘‘(6) with respect to fiscal year 2007 for the
discretionary category: $862,500,000,000 in new
budget authority and $812,000,000,000 in outlays;’’.
(c) EXTENSION
OF
PAY-AS-YOU-GO
REQUIRE-
MENT.—(1) Section 252(a) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended by
striking ‘‘2002’’ and inserting ‘‘2007’’.
(2) Section 252(b)(1) of such Act is amended by
striking ‘‘2002’’ and inserting ‘‘2007’’.
(d) EXPIRATION.—Section 275(b) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is
amended by striking ‘‘2002’’ and inserting ‘‘2007’’ and
by striking ‘‘2006’’ and inserting ‘‘2011’’.
Subtitle F—Paygo Requirements
and the On-Budget Surplus
SEC. 271. PAYGO REQUIREMENTS AND THE ON-BUDGET
SURPLUS.
(a) SEQUESTRATION.—(1) Section 252(b)(1) of the
Balanced Budget and Emergency Deficit Control Act of
1985 is amended by inserting ‘‘, minus the amount for
the budget year, if any, estimated under paragraph (3)’’
after ‘‘as calculated under paragraph (2)’’.
(2) Section 252(b) of such Act is amended by adding
at the end the following new paragraph:
‘‘(3) ESTIMATE
OF
ON-BUDGET
SURPLUS
IN
EXCESS OF SOCIAL SECURITY SURPLUS.—OMB esti-
mates for the budget year of the amount (if any) of
the budget surplus as set forth in the OMB seques-
tration preview report as calculated pursuant to sec-
tion 254(c)(3).’’.
(b) REPORTS.—Section 254(c)(3) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is
amended by adding at the end the following new subpara-
graph:
‘‘(D) The estimated excess of receipts over
outlays for the budget year (if any).’’.
Subtitle G—Treatment of Extra-
neous Appropriations in Omni-
bus Appropriation Measures
SEC. 281. TREATMENT OF EXTRANEOUS APPROPRIATIONS.
(a) IN GENERAL.—Title III of the Congressional
Budget Act of 1974 (as amended by section 232)) is fur-
ther amended by adding at the end the following new sec-
tion:
‘‘TREATMENT OF EXTRANEOUS APPROPRIATIONS IN
OMNIBUS APPROPRIATION MEASURES
‘‘SEC. 319. (a) POINT OF ORDER.—It shall not be
in order in the House of Representatives or the Senate
to consider an omnibus appropriation measure, or any
amendment thereto or conference report thereon, that ap-
propriates funds for any program, project, or activity that
is not within the subject matter jurisdiction of any sub-
committee of the Committee on Appropriations of the
House of Representatives or Senate, as applicable, with
jurisdiction over any regular appropriation bill contained
in such measure.
‘‘(b) DEFINITIONS.—As used in this section:
‘‘(1) The term ‘omnibus appropriation measure’
means any bill or joint resolution making continuing
appropriations for a fiscal year and that is com-
prised of more than one regular appropriation bill.
‘‘(2) The term ‘regular appropriation bill’
means any annual appropriation bill making appro-
priations, otherwise making funds available, or
granting authority, for any of the following cat-
egories of projects and activities:
‘‘(A) Agriculture, rural development, and
related agencies programs.
‘‘(B) The Departments of Commerce, Jus-
tice, and State, the judiciary, and related agen-
cies.
‘‘(C) The Department of Defense.
‘‘(D) The government of the District of
Columbia and other activities chargeable in
whole or in part against the revenues of the
District.
‘‘(E) The Departments of Labor, Health
and Human Services, and Education, and re-
lated agencies.
‘‘(F) The Department of Housing and
Urban Development, and sundry independent
agencies, boards, commissions, corporations,
and offices.
‘‘(G) Energy and water development.
‘‘(H) Foreign assistance and related pro-
grams.
‘‘(I) The Department of the Interior and
related agencies.
‘‘(J) Military construction.
‘‘(K) The Department of Transportation
and related agencies.
‘‘(L) The Treasury Department, the U.S.
Postal Service, the Executive Office of the
President, and certain independent agencies.
‘‘(M) The legislative branch.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents set forth in section 1(b) of the Congressional Budget
and Impoundment Control Act of 1974 is amended by in-
serting after the item relating to section 318 the following
new item:
‘‘Sec. 319. Treatment of extraneous appropriations in omnibus appropriation
measures.’’.
TITLE 
III—BUDGETING 
AND
MANAGING 
FOR 
RESULTS:
FULL FUNDING FOR FEDERAL
RETIREE COSTS
Subtitle 
A—Accrual 
Funding 
of
Pensions and Retirement Pay
for Federal Employees and Uni-
formed Services Personnel
SEC. 301. CIVIL SERVICE RETIREMENT SYSTEM.
(a) CIVIL SERVICE RETIREMENT AND DISABILITY
FUND.—Chapter 83 of title 5, United States Code, is
amended—
(1) in section 8331—
(A) in paragraph (17)—
(i) by striking ‘‘normal cost’’ and in-
serting ‘‘normal cost percentage’’; and
(ii) by inserting ‘‘and standards
(using dynamic assumptions)’’ after ‘‘prac-
tice’’;
(B) by amending paragraph (18) to read
as follows:
‘‘(18) ‘Fund balance’ means the current net as-
sets of the Fund available for payment of benefits,
as determined by the Office in accordance with ap-
propriate accounting standards, but does not include
any amount attributable to—
‘‘(A) the Federal Employees’ Retirement
System; or
‘‘(B) contributions made under the Federal
Employees’ Retirement Contribution Temporary
Adjustment Act of 1983 by or on behalf of any
individual who became subject to the Federal
Employees’ Retirement System;’’
(C) by amending paragraph (19) to read
as follows:
‘‘(19) ‘accrued liability’ means the estimated ex-
cess of the present value of all benefits payable from
the Fund to employees and Members, and former
employees and Members, subject to this subchapter,
and their survivors, over the present value of deduc-
tions to be withheld from the future basic pay of em-
ployees and Members currently subject to this sub-
chapter and of future agency contributions to be
made in their behalf;’’
(D) in paragraph (27) by striking ‘‘and’’
at the end;
(E) in paragraph (28) by striking the pe-
riod at the end and inserting a semicolon; and
(F) by adding at the end the following
paragraphs:
‘‘(29) ‘dynamic assumptions’ means economic
assumptions that are used in determining actuarial
costs and liabilities of a retirement system and in
anticipating the effects of long-term future—
‘‘(A) investment yields;
‘‘(B) increases in rates of basic pay; and
‘‘(C) rates of price inflation; and
‘‘(30) ‘unfunded liability’ means the estimated
excess of—
‘‘(A) the actuarial present value of all fu-
ture benefits payable from the Fund under this
subchapter based on the service of current or
former employees or Members, over
‘‘(B) the sum of—
‘‘(i) the actuarial present value of de-
ductions to be withheld from the future
basic pay of employees and Members cur-
rently subject to this chapter pursuant to
section 8334;
‘‘(ii) the actuarial present value of the
future contributions to be made pursuant
to section 8334 with respect to employees
and Members currently subject to this sub-
chapter;
‘‘(iii) the Fund balance, as defined in
paragraph (18), as of the date the un-
funded liability is determined; and
‘‘(iv) any other appropriate amount,
as determined by the Office of Personnel
Management in accordance with generally
accepted actuarial practices and prin-
ciples.’’;
(2) in section 8334—
(A) in subsection (a)(1)—
(i) by striking the last two sentences;
(ii) by redesignating that subsection,
as so amended, as (a)(1)(A); and
(iii) by adding at the end the fol-
lowing new subparagraphs:
‘‘(B) Except as provided in subparagraph
(E), each employing agency having any employ-
ees or Members subject to subparagraph (A)
shall contribute from amounts available for sal-
aries and expenses an amount equal to the sum
of—
‘‘(i) the product of—
‘‘(I) the normal cost percentage,
as determined for employees (other
than employees covered by clause (ii)),
multiplied by
‘‘(II) the aggregate amount of
basic pay payable by the agency, for
the period involved, to employees
(under subclause (I)) who are within
such agency; and
‘‘(ii) the product of—
‘‘(I) the normal cost percentage,
as determined for Members, Congres-
sional employees, law enforcement of-
ficers, firefighters, air traffic control-
lers, bankruptcy judges, Court of Fed-
eral Claims judges, United States
magistrates, judges of the United
States Court of Appeals for the
Armed Forces, members of the Cap-
itol Police, nuclear materials couriers,
and members of the Supreme Court
Police, multiplied by
‘‘(II) the aggregate amount of
basic pay payable by the agency for
the period involved, to employees and
Members (under subclause (I)) who
are within such agency.
‘‘(C) In determining the normal cost per-
centage to be applied under subparagraph (B),
amounts provided for under subparagraph (A)
shall be taken into account.
‘‘(D) Contributions under this paragraph
shall be paid—
‘‘(i) in the case of law enforcement of-
ficers, firefighters, air traffic controllers,
bankruptcy judges, Court of Federal
Claims judges, United States magistrates,
judges of the United States Court of Ap-
peals for the Armed Forces, members of
the Supreme Court Police, nuclear mate-
rials couriers and other employees, from
the appropriations or fund used to pay
such law enforcement officers, firefighters,
air traffic controllers, bankruptcy judges,
Court of Federal Claims judges, United
States magistrates, judges of the United
States Court of Appeals for the Armed
Forces, members of the Supreme Court
Police, nuclear materials couriers and
other employees, respectively;
‘‘(ii) in the case of elected officials,
from an appropriation or fund available for
payment of other salaries of the same of-
fice or establishment; and
‘‘(iii) in the case of employees of the
legislative branch paid by the Clerk of the
House of Representatives, from the contin-
gent fund of the House.
‘‘(E) In the case of the United States
Postal Service, the Metropolitan Washington
Airports Authority, and the government of the
District of Columbia an amount equal to that
withheld under subparagraph (A) shall be con-
tributed from the appropriation or fund used to
pay the employee.’’; and
(B) in subsection (k)—
(i) in paragraph (1)—
(I) in subparagraph (A) by strik-
ing ‘‘the first sentence of subsection
(a)(1) of this section’’ and inserting
‘‘subsection (a)(1)(A)’’; and
(II) by amending subparagraph
(B) to read as follows:
‘‘(B) the amount of the contribution under
subsection (a)(1)(B) shall be the amount which
would have been contributed under such sub-
section if this subsection had not been en-
acted.’’; and
(ii) in paragraph (2)(C)(iii) by strik-
ing ‘‘the first sentence of subsection
(a)(1)’’ 
and 
inserting 
‘‘subsection
(a)(1)(A)’’; and
(3) in section 8348—
(A) by repealing subsection (f);
(B) by amending subsection (g) to read as
follows:
‘‘(g)(1)(A) Not later than June 30, 2003, the Office
of the Actuary shall determine the unfunded liability of
the Fund, as of September 30, 2002, attributable to bene-
fits payable under this chapter and make recommenda-
tions regarding its liquidation. After considering such rec-
ommendations, the Office shall establish an amortization
schedule, including a series of annual installments com-
mencing October 1, 2003, which provides for the liquida-
tion of such liability by October 1, 2042.
‘‘(B) The Office shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year, for
each fiscal year beginning after September 30, 2002,
through the fiscal year ending September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability by October 1, 2042.
‘‘(C) The Office shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year for
each fiscal year beginning after September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability over five years.
‘‘(D) Amortization schedules established under this
paragraph shall be set in accordance with generally accept-
ed actuarial practices and principles, with interest com-
puted at the rate used in the most recent valuation of the
Civil Service Retirement System.
‘‘(2) At the beginning of each fiscal year, beginning
on October 1, 2003, the Office shall notify the Secretary
of the Treasury of the amount of the first installment
under the most recent amortization schedule established
under paragraph (1). The Secretary shall credit that
amount to the Fund, as a Government contribution, out
of any money in the Treasury of the United States not
otherwise appropriated.
‘‘(3) For the purpose of carrying out paragraph (1)
with respect to any fiscal year, the Office may—
‘‘(A) require the Board of Actuaries of the Civil
Service Retirement System to make actuarial deter-
minations and valuations, make recommendations,
and maintain records in accordance with section
8347(f); and
‘‘(B) use the latest actuarial determinations
and valuations made by such Board of Actuaries.’’;
(C) in subsections (h), (i), and (m) by
striking ‘‘unfunded’’ and inserting ‘‘accrued’’
each time it appears; and
(D) by adding at the end the following new
subsection:
‘‘(n) Under regulations prescribed by the Office, the
head of an agency may request reconsideration of any
amount determined to be payable with respect to such
agency under section 8334(a)(1)(B)–(D). Any such re-
quest shall be referred to the Board of Actuaries of the
Civil Service Retirement System. The Board of Actuaries
shall review the computations of the Office and may make
any adjustment with respect to any such amount which
the Board determines appropriate. A determination by the
Board of Actuaries under this subsection shall be final.’’.
(b) GOVERNMENT CONTRIBUTIONS.—Section 8423
of title 5, United States Code, is amended—
(1) in subsection (a)(2) by striking ‘‘section
8422’’ and inserting ‘‘section 8422(a)’’; and
(2) in subsection (b)(2) by striking ‘‘equal an-
nual installments’’ and inserting ‘‘annual install-
ments set in accordance with generally accepted ac-
tuarial practices and principles’’.
SEC. 302. CENTRAL INTELLIGENCE AGENCY RETIREMENT
AND DISABILITY SYSTEM.
The Central Intelligence Agency Retirement Act,
Public Law 88–643, (50 U.S.C. 2001 et seq.), 78 Stat.
1043, as amended, is further amended—
(a) in section 101 (50 U.S.C. 2001)—
(1) by amending paragraph (5) to read as
follows—
‘‘(5) UNFUNDED
LIABILITY.—The term ‘un-
funded liability’ means the estimated excess of—
‘‘(A) the actuarial present value of all fu-
ture benefits payable from the Fund under title
II of this Act based on the service of current
or former participants, over
‘‘(B) the sum of—
‘‘(i) the actuarial present value of de-
ductions to be withheld from the future
basic pay of participants currently subject
to title II of this Act pursuant to section
211;
‘‘(ii) the actuarial present value of the
future contributions to be made pursuant
to section 211 with respect to participants
currently subject to title II of this Act;
‘‘(iii) the Fund balance, as defined in
paragraph (4), as of the date the unfunded
liability is determined; and
‘‘(iv) any other appropriate amount,
as determined by the Director in accord-
ance with generally accepted actuarial
practices and principles.’’;
(2) in paragraph (6)—
(A) by striking ‘‘ ‘normal cost’ ’’ and
inserting ‘‘ ‘normal cost percentage’ ’’; and
(B) by inserting ‘‘and standards
(using dynamic assumptions)’’ after ‘‘prac-
tice’’; and
(3) by adding at the end the following
paragraph:
‘‘(10) DYNAMIC ASSUMPTIONS.—The term ‘dy-
namic assumptions’ means economic assumptions
that are used in determining actuarial costs and li-
abilities of a retirement system and in anticipating
the effects of long-term future—
‘‘(A) investment yields;
‘‘(B) increases in rates of basic pay; and
‘‘(C) rates of price inflation.’’;
(b) in section 202 (50 U.S.C. 2012) by adding
at the end the following: ‘‘The Fund is appropriated
for the payment of benefits as provided by this
title.’’;
(c) by amending section 211(a)(2) (50 U.S.C.
2021) to read as follows:
‘‘(2) AGENCY
CONTRIBUTIONS.—The Agency
shall contribute to the Fund the amount computed
in a manner similar to that used under section
8334(a) of title 5, United States Code, pursuant to
determinations of the normal cost percentage of the
Central Intelligence Agency Retirement and Dis-
ability System by the Director. Contributions under
this paragraph shall be paid from amounts available
for salaries and expenses.’’; and
(d) in section 261 (50 U.S.C. 2091)—
(1) by repealing subsection (c) and (d) and
redesignating subsection (e) as subsection (c);
(2) by amending subsection (c), as redesig-
nated, to read as follows:
‘‘(c)(1) Not later than June 30, 2003, the Director
shall cause to be made actuarial valuations of the Fund
that determine the unfunded liability of the Fund, as of
September 30, 2002, attributable to benefits payable
under this title and make recommendations regarding its
liquidation. After considering such recommendations, the
Director shall establish an amortization schedule, includ-
ing a series of annual installments commencing October
1, 2003, which provides for the liquidation of such liability
by October 1, 2042.
‘‘(2) The Director shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year, for
each fiscal year beginning after September 30, 2002,
through the fiscal year ending September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability by October 1, 2042.
‘‘(3) The Director shall redetermine the unfunded li-
ability of the Fund as of the close of the fiscal year for
each fiscal year beginning after September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability over five years.
‘‘(4) Amortization schedules established under this
subsection shall be set in accordance with generally accept-
ed actuarial practices and principles, with interest com-
puted at the rate used in the most recent valuation of the
Civil Service Retirement and Disability System.’’; and
(3) by adding at the end the following new
subsection:
‘‘(d) At the beginning of each fiscal year, beginning
on October 1, 2003, the Director shall notify the Secretary
of the Treasury of the amount of the first installment
under the most recent amortization schedule established
under subsection (c). The Secretary shall credit that
amount to the Fund, as a Government contribution, out
of any money in the Treasury of the United States not
otherwise appropriated. For the purposes of Section 504
of the National Security Act of 1947, this amount shall
be considered authorized.’’; and
(e) by adding at the end of the Central Intel-
ligence Agency Retirement Act (50 U.S.C. 2001 et
seq.) the following new section 308:
‘‘§ 308. Full funding of Retiree Costs for Employees
Designated under Section 302
‘‘(a) In addition to other government contributions
required by law, the Agency shall contribute to the Civil
Service Retirement and Disability fund (hereinafter in this
section referred to as the ‘Fund’) amounts calculated in
accordance with section 8423 of title 5, United States
Code, based on the projected number of employees to be
designated pursuant to section 302 of this Act. In addi-
tion, the Agency, in a manner similar to that established
for employee contributions to the Fund by section 8422
of title 5, United States Code, will contribute an amount
equal to the difference between that which would be con-
tributed by the number of employees projected to be des-
ignated under section 302 and the amounts that are actu-
ally being deducted and contributed from the basic pay
of an equal number of employees pursuant to section
8422. The amounts of the Agency’s contributions under
this subsection shall be determined by the Director of the
Office of Personnel Management, in consultation with the
Director, and shall be paid by the Agency from funds
available for salaries and expenses. Agency employees des-
ignated pursuant to section 302 of this Act shall, com-
mencing with such designation, have deducted from their
basic pay the full amount required by section 8422 of title
5, United States Code, and such deductions shall be con-
tributed to the Fund.
‘‘(b)(1) The Director of the Office of Personnel Man-
agement, in consultation with the Director, shall deter-
mine the total amount of unpaid contributions (govern-
ment and employee contributions) and interest attrib-
utable to the number of individuals employed with the
Agency on September 30, 2003, who are projected to be
designated under section 302 of this Act, but are not yet
designated under that section as of that date. The amount
shall be referred to as the section 302 unfunded liability.
‘‘(2) Not later than June 30, 2004, the Director of
the Office of Personnel Management, in consultation with
the Director, shall establish an amortization schedule, set-
ting forth a series of annual installments commencing
September 30, 2004, which provides for the liquidation of
the section 302 unfunded liability by September 30, 2011.
‘‘(3) At the end of each fiscal year, beginning on Sep-
tember 30, 2004, the Director shall notify the Secretary
of the Treasury of the amount of the annual installment
under the amortization schedule established under para-
graph (2) of this subsection. Before closing the accounts
for that fiscal year, the Secretary shall credit that amount
to the Fund, out of any money in the Treasury of the
United States not otherwise appropriated.
‘‘(c) Amounts paid by the Agency pursuant to this
section are deemed to be specifically authorized by the
Congress for the purposes of section 504 of the National
Security Act of 1947.’’.
SEC. 303. FOREIGN SERVICE RETIREMENT AND DISABILITY
SYSTEM.
Chapter 8 of Title I of the Foreign Service Act of
1980, Public Law 96–465, (22 U.S.C. 4041 et seq.) 94
Stat. 2071, as amended, is further amended—
(a) in section 804 (22 U.S.C. 4044)—
(1) by amending paragraph (5) to read as
follows:
‘‘(5) ‘normal cost percentage’ means the entry-
age normal cost computed in accordance with gen-
erally accepted actuarial practice and standards
(using dynamic assumptions) and expressed as a
level percentage of aggregate basic pay;’’;
(2) by amending paragraph (14) to read as
follows:
‘‘(14) ‘unfunded liability’ means the estimated
excess of—
‘‘(A) the actuarial present value of all fu-
ture benefits payable from the Fund under this
part based on the service of current or former
participants, over
‘‘(B) the sum of—
‘‘(i) the actuarial present value of de-
ductions to be withheld from the future
basic pay of participants currently subject
to this part pursuant to section 805;
‘‘(ii) the actuarial present value of the
future contributions to be made pursuant
to section 805 with respect to participants
currently subject to this part;
‘‘(iii) the Fund balance, as defined in
paragraph (7), as of the date the unfunded
liability is determined, excluding any
amount attributable to the Foreign Service
Pension System, or contributions made
under the Federal Employees’ Retirement
Contribution Temporary Adjustment Act
of 1983 by or on behalf of any individual
who became subject to the Foreign Service
Pension System; and
‘‘(iv) any other appropriate amount,
as determined by the Secretary of the
Treasury in accordance with generally ac-
cepted actuarial practices and principles.’’;
and
(3) by adding at the end the following new
paragraph:
‘‘(15) ‘dynamic assumptions’ means economic
assumptions that are used in determining actuarial
costs and liabilities of a retirement system and in
anticipating the effects of long-term future—
‘‘(A) investment yields;
‘‘(B) increases in rates of basic pay; and
‘‘(C) rates of price inflation.’’;
(b) in section 852 (22 U.S.C. 4071a)—
(1) in paragraph (4)—
(A) by striking ‘‘normal cost’’ and in-
serting ‘‘normal cost percentage’’; and
(B) by striking ‘‘by the Secretary of
State’’;
(2) in paragraph (7)—
(A) by striking ‘‘supplemental’’ and
inserting ‘‘unfunded’’;
(B) in subparagraph (B)(i) by strik-
ing ‘‘(I)’’ and ‘‘and (II) contributions for
past civilian and military service’’; and
(C) in subparagraph (B)(ii) by insert-
ing before the semicolon ‘‘with respect to
participants currently subject to this part’’;
and
(3) by adding at the end the following new
paragraph:
‘‘(9) ‘dynamic assumptions’ means economic as-
sumptions that are used in determining actuarial
costs and liabilities of a retirement system and in
anticipating the effects of long-term future—
‘‘(A) investment yields;
‘‘(B) increases in rates of basic pay; and
‘‘(C) rates of price inflation.’’;
(c) 
in 
section 
805(a)(1) 
(22 
U.S.C.
4045(a)(i))—
(1) by striking the second sentence;
(2) (by redesignating that subsection, as so
amended, as (a)(1)(A);
(3) by redesignating the last sentence of
that subsection, as so amended as (a)(1)(C);
(4) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) Each employing agency having par-
ticipants shall contribute to the Fund the
amount computed in a manner similar to that
used under section 8334(a) of title 5, United
States Code, pursuant to determinations of the
normal cost percentage of the Foreign Service
Retirement and Disability System. Contribu-
tions under this subparagraph shall be paid
from the appropriations or fund used for pay-
ment of the salary of the participant.’’;
(5) in subsection (a)(2)(A) by striking ‘‘An
equal amount shall be contributed by the De-
partment’’ and inserting in its place ‘‘Each em-
ploying agency having participants shall con-
tribute to the Fund the amount computed in a
manner similar to that used under section
8334(a) of title 5, United States Code, pursu-
ant to determinations of the normal cost per-
centage of the Foreign Service Retirement and
Disability System’’; and
(6) in subsection (a)(2)(B) by striking ‘‘An
equal amount shall be contributed by the De-
partment’’ and inserting in its place ‘‘Each em-
ploying agency having participants shall con-
tribute to the Fund from amounts available for
salaries and expenses the amount computed in
a manner similar to that used under section
8334(a) of title 5, United States Code, pursu-
ant to determinations of the normal cost per-
centage of the Foreign Service Retirement and
Disability System’’;
(d) by repealing sections 821 and 822 (22
U.S.C. 4061 and 4062) and by adding the following
new section:
‘‘§ 821. Unfunded liability
‘‘(a)(1) Not later than June 30, 2003, the Secretary
of State shall cause to be made actuarial valuations of the
Fund that determine the unfunded liability of the Fund,
as of September 30, 2002, attributable to benefits payable
under this subchapter and make recommendations regard-
ing its liquidation. After considering such recommenda-
tions, the Secretary of State shall establish an amortiza-
tion schedule, including a series of annual installments
commencing October 1, 2003, which provides for the liq-
uidation of such liability by October 1, 2042.
‘‘(2) The Secretary of State shall redetermine the un-
funded liability of the Fund as of the close of the fiscal
year, for each fiscal year beginning after September 30,
2002, through the fiscal year ending September 30, 2037,
and shall establish a new amortization schedule, including
a series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability by October 1, 2042.
‘‘(3) The Secretary of State shall redetermine the un-
funded liability of the Fund as of the close of the fiscal
year for each fiscal year beginning after September 30,
2037, and shall establish a new amortization schedule, in-
cluding a series of annual installments commencing on Oc-
tober 1 of the second subsequent fiscal year, which pro-
vides for the liquidation of such liability over five years.
‘‘(4) Amortization schedules established under this
subsection shall be set in accordance with generally accept-
ed actuarial practices and principles, with interest com-
puted at the rate used in the most recent valuation of the
Foreign Service Retirement and Disability System.
‘‘(b) At the beginning of each fiscal year, beginning
on October 1, 2003, the Secretary of State shall notify
the Secretary of the Treasury of the amount of the first
installment under the most recent amortization schedule
established under paragraph (1). The Secretary of the
Treasury shall credit that amount to the Fund, as a Gov-
ernment contribution, out of any money in the Treasury
of the United States not otherwise appropriated.’’;
(e) in section 857 (22 U.S.C. 4071f(b)(1)) by
striking ‘‘equal annual installments’’ and inserting
‘‘annual installments set in accordance with gen-
erally accepted actuarial practices and principles’’;
(f) in section 859 (22 U.S.C. 4071h(b)(1)) by
adding ‘‘percentage’’ after ‘‘normal cost’’;
(g) in section 802 (22 U.S.C. 4042) by adding
at the end the following: ‘‘The Fund is appropriated
for the payment of benefits as provided by this sub-
chapter.’’; and
(h) in section 818 (22 U.S.C. 4058) by striking
‘‘System’’ and inserting ‘‘Systems under this sub-
chapter’’.
SEC. 304. PUBLIC HEALTH SERVICE COMMISSIONED CORPS
RETIREMENT SYSTEM.
(a) IN GENERAL.—Title II of the Public Health Serv-
ice Act (42 U.S.C. 202 et seq.) is amended by adding at
the end the following new part:
‘‘PART C—PUBLIC HEALTH SERVICE
COMMISSIONED CORPS RETIREMENT SYSTEM
‘‘ESTABLISHMENT AND PURPOSE OF FUND
‘‘SEC. 251. There is established on the books of the
Treasury a fund to be known as the Public Health Service
Commissioned Corps Retirement Fund (hereinafter in this
part referred to as the ‘Fund’), which shall be adminis-
tered by the Secretary of Health and Human Services
(hereinafter in this part referred to as the ‘Secretary’).
The Fund shall be used for the accumulation of funds in
order to finance on an actuarially sound basis liabilities
of the Department of Health and Human Services for ben-
efits payable on account of retirement, disability, or death
to commissioned officers of the Public Health Service and
to their survivors pursuant to part A of this title.
‘‘ASSETS OF THE FUND
‘‘SEC. 252. There shall be deposited into the Fund
the following, which shall constitute the assets of the
Fund:
‘‘(1) Amounts paid into the Fund under section
255.
‘‘(2) Any return on investment of the assets of
the Fund.
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 304(c) of the Budget Fraud Elimi-
nation Act of 2002.
‘‘PAYMENT FROM THE FUND
‘‘SEC. 253. There shall be paid from the Fund bene-
fits payable on account of retirement, disability, or death
to commissioned officers of the Public Health Service and
to their survivors pursuant to part A of this title.
‘‘DETERMINATION OF CONTRIBUTIONS TO THE FUND
‘‘SEC. 254. (a)(1) Not later than June 30, 2003, the
Secretary shall determine the unfunded liability of the
Fund attributable to service performed as of September
30, 2002, which is ‘active service’ for the purpose of sec-
tion 212. The Secretary shall establish an amortization
schedule, including a series of annual installments com-
mencing October 1, 2003, which provides for the liquida-
tion of such liability by October 1, 2042.
‘‘(2) The Secretary shall redetermine the unfunded
liability of the Fund as of the close of the fiscal year, for
each fiscal year beginning after September 30, 2002,
through the fiscal year ending September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability by October 1, 2042.
‘‘(3) The Secretary shall redetermine the unfunded
liability of the Fund as of the close of the fiscal year for
each fiscal year beginning after September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability over 5 years.
‘‘(b) The Secretary shall determine each fiscal year,
in sufficient time for inclusion in the budget request for
the following fiscal year, the total amount of Department
of Health and Human Services contributions to be made
to the Fund during the fiscal year under section 255(a).
That amount shall be the sum of—
‘‘(1) the product of—
‘‘(A) the current estimate of the value of
the single level percentage of basic pay to be de-
termined under subsection (c)(1) at the time of
the most recent actuarial valuation under sub-
section (c); and
‘‘(B) the total amount of basic pay ex-
pected to be paid during that fiscal year to
commissioned officers of the Public Health
100
Service on active duty (other than active duty
for training); and
‘‘(2) the product of—
‘‘(A) the current estimate of the value of
the single level percentage of basic pay and of
compensation (paid pursuant to section 206 of
title 37, United States Code) to be determined
under subsection (c)(2) at the time of the most
recent actuarial valuation under subsection (c);
and
‘‘(B) the total amount of basic pay and of
compensation (paid pursuant to section 206 of
title 37, United States Code) expected to be
paid during the fiscal year to commissioned of-
ficers of the Reserve Corps of the Public Health
Service (other than officers on full-time duty
other than for training) who are not otherwise
described in subparagraph (A).
‘‘(c) Not less often than every four years thereafter
(or by the fiscal year end prior to the effective date of
any statutory change affecting benefits payable on account
of retirement, disability, or death to commissioned officers
or their survivors), the Secretary shall carry out an actu-
arial valuation of benefits payable on account of retire-
ment, disability, or death to commissioned officers of the
101
Public Health Service and to their survivors pursuant to
part A of this title. Each such actuarial valuation shall
be signed by an enrolled Actuary and shall include—
‘‘(1) a determination (using the aggregate
entry-age normal cost method) of a single level per-
centage of basic pay for commissioned officers of the
Public Health Service on active duty (other than ac-
tive duty for training); and
‘‘(2) a determination (using the aggregate
entry-age normal cost method) of a single level per-
centage of basic pay and of compensation (paid pur-
suant to section 206 of title 37, United States Code)
of commissioned officers of the Reserve Corps of the
Public Health Service (other than officers on full
time duty other than for training) who are not oth-
erwise described in paragraph (1).
‘‘(d) All determinations under this section shall be in
accordance with generally accepted actuarial principles
and practices and, where appropriate, shall follow the gen-
eral pattern of methods and assumptions approved by the
Department of Defense Retirement Board of Actuaries.
‘‘(e) The Secretary shall provide for the keeping of
such records as are necessary for determining the actu-
arial status of the Fund.
102
‘‘PAYMENTS INTO THE FUND
‘‘SEC. 255. (a) From amounts available to the De-
partment of Health and Human Services for salaries and
expenses, the Secretary shall pay into the Fund at the end
of each month the amount that is the sum of—
‘‘(1) the product of—
‘‘(A) the level percentage of basic pay de-
termined using all the methods and assump-
tions approved for the most recent (as of the
first day of the current fiscal year) actuarial
valuation under sections 254(c)(1) (except that
any statutory change affecting benefits payable
on account of retirement, disability, or death to
commissioned officers or their survivors that is
effective after the date of that valuation and on
or before the first day of the current fiscal year
shall be used in such determination); and
‘‘(B) the total amount of basic pay accrued
for that month by commissioned officers of the
Public Health Service on active duty (other
than active duty for training); and
‘‘(2) the product of—
‘‘(A) the level percentage of basic pay and
of compensation (paid pursuant to section 206
of title 37, United States Code) determined
103
using all the methods and assumptions ap-
proved for the most recent (as of the first day
of the current fiscal year) actuarial valuation
under section 254(c)(2) (except that any statu-
tory change affecting benefits payable on ac-
count of retirement, disability, or death to com-
missioned officers or their survivors that is ef-
fective after the date of that valuation and on
or before the first day of the current fiscal year
shall be used in such determinations); and
‘‘(B) the total amount of basic pay and of
compensation (paid pursuant to section 206 of
title 37, United States Code) accrued for that
month by commissioned officers of the Reserve
Corps of the Public Health Service (other than
officers on full-time duty other than for train-
ing).
‘‘(b) At the beginning of each fiscal year, beginning
on October 1, 2003, the Secretary shall certify to the Sec-
retary of the Treasury the amount of the first installment
under the most recent amortization schedule established
under section 254(a). The Secretary of the Treasury shall
pay into the Fund from the General Fund of the Treasury
the amount so certified. Such payment shall be the con-
tribution to the Fund for that fiscal year.
104
‘‘INVESTMENTS OF ASSETS OF FUND
‘‘SEC. 256. The Secretary may request the Secretary
of the Treasury to invest such portion of the Fund as is
not, in the judgment of the Secretary, required to meet
the current needs of the Fund. Such investments shall be
made by the Secretary of the Treasury in public debt secu-
rities with maturities suitable to the needs of the Fund,
as determined by the Secretary, and bearing interest at
rates determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding
marketable obligations of the United States of comparable
maturities. The income on such investments shall be cred-
ited to and form a part of the Fund.
‘‘IMPLEMENTATION YEAR EXCEPTIONS
‘‘SEC. 257. (a) To avoid funding shortfalls in the first
year should formal actuarial determinations not be avail-
able in time for budget preparation, the amounts used in
the first year in sections 255(a)(1)(A) and 255(a)(2)(A)
shall be set equal to those estimates in sections
254(b)(1)(A) and 254(b)(2)(A) if final determinations are
not available. The original unfunded liability as defined
in section 254(a) shall include an adjustment to correct
for this difference between the formal actuarial determina-
tions and the estimates in sections 254(b)(1)(A) and
254(b)(2)(A).’’.
(b) CONFORMING AMENDMENTS.—
105
(1) CONDITION OF DETAIL.—Section 214 of the
Public Health Service Act (42 U.S.C. 215) is
amended by adding at the end the following new
subsection:
‘‘(e) The Secretary shall condition any detail under
subsection (a), (b), or (c) upon the agreement of the exec-
utive department, State, subdivision, Committee of the
Congress, or institution concerned to pay to the Depart-
ment of Health and Human Services, in advance or by
way of reimbursement, for the full cost of the detail in-
cluding that portion of the contributions under section
255(a) that is attributable to the detailed personnel.’’.
(2) EXEMPTION FROM SEQUESTRATION.—Sec-
tion 255(g)(1) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 (2 U.S.C.
905(g)(1)) is amended—
(A) in subparagraph (A), by inserting after
the item relating to ‘‘payment to the foreign
service retirement and disability fund’’ the fol-
lowing item: ‘‘Payment to the Public Health
Service Commissioned Corps Retirement Fund
(75–0380–0–1–551);’’; and
(B) in subparagraph (B), by inserting
after the item relating to the ‘‘Pensions for
former Presidents’’ the following item: ‘‘Public
106
Health Service Commissioned Corps Retirement
Fund (75–8274–0–7–602);’’.
(c) TRANSFER OF APPROPRIATIONS.—There shall be
transferred on October 1, 2004, into the fund established
under section 251 of the Public Health Service Act, as
added by subsection (a), any obligated or unobligated bal-
ances of appropriations made to the Department of Health
and Human Services that are currently available for bene-
fits payable on account of retirement, disability, or death
to commissioned officers of the Public Health Service and
to their survivors pursuant to part A of title II of the Pub-
lic Health Service Act, and amounts so transferred shall
be part of the assets of the Fund.
SEC. 305. NATIONAL OCEANIC AND ATMOSPHERIC ADMIN-
ISTRATION COMMISSIONED OFFICER CORPS
RETIREMENT SYSTEM.
(a) IN GENERAL.—The Coast and Geodetic Survey
Commissioned Officers’ Act of 1948 is amended by insert-
ing after section 8 (33 U.S.C. 853g) the following new
section:
‘‘SEC. 8A. (a) ESTABLISHMENT AND PURPOSE OF
THE NOAA COMMISSIONED OFFICER CORPS RETIRE-
MENT FUND.—(1) There is established on the books of
the Treasury a fund to be known as the National Oceanic
and Atmospheric Administration Commissioned Officer
107
Corps Retirement Fund (hereinafter in this section re-
ferred to as the ‘Fund’), which shall be administered by
the Secretary of Commerce (hereinafter in this section re-
ferred to as ‘the Secretary’). The Fund shall be used for
the accumulation of funds in order to finance on an actu-
arially sound basis liabilities of the Department of Com-
merce under military retirement and survivor benefit pro-
grams for the commissioned officers corps of the National
Oceanic and Atmospheric Administration (hereinafter in
this section referred to as ‘NOAA’).
‘‘(2) The term ‘military retirement and survivor ben-
efit program’ means—
‘‘(A) the provisions of this Act and title 10,
United States Code, creating entitlement to, or de-
termining, the amount of retired pay;
‘‘(B) the programs under the jurisdiction of the
Department of Defense providing annuities for sur-
vivors and members and former members of the
armed forces, including chapter 73 of title 10, sec-
tion 4 of Public Law 92–425, and section 5 of Pub-
lic Law 96–202, as made applicable to the NOAA
Commissioned Officer Corps by section 3 of the Act
of August 10, 1956 (33 U.S.C. 857a).
108
‘‘(b) ASSETS OF THE FUND.—There shall be depos-
ited into the Fund the following, which shall constitute
the assets of the Fund:
‘‘(1) Amounts paid into the Fund under sub-
section (e).
‘‘(2) Any return on investment of the assets of
the Fund.
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 305(c) of the Budget Fraud Elimi-
nation Act of 2002.
‘‘(c) PAYMENTS FROM THE FUND.—There shall be
paid from the Fund benefits payable on account of mili-
tary retirement and survivor benefit programs to commis-
sioned officers of the NOAA Commissioned Officer Corps
and their survivors.
‘‘(d)(1)(A) DETERMINATION OF CONTRIBUTIONS TO
THE FUND.—Not later than June 30, 2003, the Secretary
shall determine the unfunded liability of the Fund attrib-
utable to service performed as of September 30, 2002,
which is ‘active service’ for the purpose of this Act. The
Secretary shall establish an amortization schedule, includ-
ing a series of annual installments commencing October
1, 2003, which provides for the liquidation of such liability
by October 1, 2042.
109
‘‘(B) The Secretary shall redetermine the unfunded
liability of the Fund as of the close of the fiscal year, for
each fiscal year beginning after September 30, 2002,
through the fiscal year ending September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on September
30 of the subsequent fiscal year, which provides for the
liquidation of such liability by October 1, 2042.
‘‘(C) The Secretary shall redetermine the unfunded
liability of the Fund as of the close of the fiscal year for
each fiscal year beginning after September 30, 2037, and
shall establish a new authorization schedule, including se-
ries of annual installments commencing on October 1 of
the second subsequent fiscal year, which provides for the
liquidation of such liability over 5 years.
‘‘(2) The Secretary shall determine each fiscal year,
in sufficient time for inclusion in the budget request for
the following fiscal year, the total amount of Department
of Commerce contributions to be made to the Fund during
that fiscal year under (e). The amount shall be the product
of—
‘‘(A) the current estimate of the value of the
single level percentage of basic pay to be determined
under subsection (e) at the time of the most recent
actuarial valuation under paragraph (3); and
110
‘‘(B) the total amount of basic pay expected to
be paid during that fiscal year to commissioned offi-
cers of NOAA on active duty.
‘‘(3) Not less often then every four years (or by the
fiscal year end prior to the effective date of any statutory
change affecting benefits payable on account of retire-
ment, disability, or death to commissioned officers or their
survivors), the Secretary shall carry out an actuarial valu-
ation of benefits payable on account of military retirement
and survivor benefit programs to commissioned officers of
the NOAA Commissioned Officer Corps and to their sur-
vivors. Each such actuarial valuation shall be signed by
an enrolled Actuary and shall include a determination
(using the aggregate entry-age normal cost method) of a
single level percentage of basic pay for commissioned offi-
cers of NOAA on active duty.
‘‘(4) All determinations under this section shall be in
accordance with generally accepted actuarial principles
and practices, and, where appropriate, shall follow the
general pattern of methods and assumptions approved by
the Department of Defense Retirement Board of Actu-
aries.
‘‘(5) The Secretary shall provide for the keeping of
such records as are necessary for determining the actu-
arial status of the Fund.
111
‘‘(e)(1) 
PAYMENTS
INTO
THE
FUND.—From
amounts appropriated to the National Oceanic Atmos-
pheric Administration for salaries and expenses, the Sec-
retary shall pay into the Fund at the end of each month
the amount that is the product of—
‘‘(A) the level percentage of basic pay deter-
mined using all the methods and assumptions ap-
proved for the most recent (as of the first day of the
current fiscal year) actuarial valuation under sub-
section (d) (except that any statutory change affect-
ing benefits payable on account of military retire-
ment and survivor benefit programs to commissioned
officers of the NOAA Commissioned Officer Corps
and to their survivors that is effective date after the
date of that valuation and on or before the first day
of the current fiscal year shall be used in such deter-
mination); and
‘‘(B) the total amount of basic pay accrued for
that month by commissioned officers of NOAA on
active duty.
‘‘(2)(A) At the beginning of each fiscal year, the Sec-
retary shall determine the sum of—
‘‘(i) the amount of the payment for that year
under the amortization of the original unfunded li-
ability of the Fund;
112
‘‘(ii) the amount (including any negative
amount) for that year under the most recent amorti-
zation schedule determined by the Secretary for the
amortization of any cumulative actuarial gain or loss
to the Fund, resulting from changes in benefits; and
‘‘(iii) the amount (including any negative
amount) for that year under the most recent amorti-
zation schedule determined by the Secretary for the
amortization or any cumulative actuarial gain or loss
to the Fund resulting from changes in actuarial as-
sumptions and from experience different from the
assumed since the last valuation.
The Secretary shall promptly certify the amount of the
sum to the Secretary of the Treasury.
‘‘(B) Upon receiving the certification pursuant to
paragraph (1), the Secretary of the Treasury shall
promptly pay into the Fund from the General Fund of
the Treasury the amount so certified. Such payment shall
be the contribution to the Fund for that fiscal year.
‘‘(f) INVESTMENT OF ASSETS OF THE FUND.—The
Secretary may request the Secretary of the Treasury to
invest such portion of the Fund as is not, in the judgment
of the Secretary, required to meet the current needs of
the Fund. Such investments shall be made by the Sec-
retary of the Treasury in public debt securities with matu-
113
rities suitable to the needs of the Fund, as determined
by the Secretary, and bearing interest at rates determined
by the Secretary of the Treasury, taking into consideration
current market yields on outstanding marketable obliga-
tions of the United States of comparable maturities. The
income of such investments shall be credited to and form
a part of the Fund.
‘‘(g)(1) IMPLEMENTATION YEAR EXCEPTIONS.—To
avoid funding shortfalls in the first year should formal ac-
tuarial determinations not be available in time for budget
preparation, the amounts used in the first year in section
105(a)(1) shall be set equal to the estimate in section
104(b)(1) if final determinations are not available. The
original unfunded liability as determined in section 104(a)
shall include an adjustment to correct for this difference
between the formal actuarial determinations and the esti-
mates in section 104(b)(1).’’.
(b) EXEMPTION FROM SEQUESTRATION.—Section
255(g)(1)(B) of the Balanced Budget and Emergency
Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(B)) is
amended by striking ‘‘National Oceanic and Atmospheric
Administration retirement (13–1450–0–1–306);’’ and in-
serting ‘‘National Oceanic and Atmospheric Administra-
tion Commissioned Officer Corps Retirement Fund;’’.
114
(c) TRANSFER OF APPROPRIATIONS.—There shall be
transferred on October 1, 2004, into the fund established
under section 8A(a) of the Coast and Geodetic Survey
Commissioned Officers’ Act of 1948, as added by sub-
section (a), any obligated and unobligated balance of ap-
propriations made to the Department of Commerce that
are available as of the date of the enactment of this Act
for benefits payable on account of military retirement and
survivor benefit programs to commissioned officers of the
NOAA Commissioned Officer Corps and to their survivors,
and amounts so transferred shall be part of the assets of
the Fund, effective October 1, 2004.
(d) EFFECTIVE DATE.—Subsection (c) (relating to
payments from the Fund) and (e) (relating to payments
into the Fund) of section 8A of the Coast and Geodetic
Survey Commissioned Officers’ Act of 1948, as added by
subsection (a), shall take effect on October 1, 2004.
SEC. 306. COAST GUARD MILITARY RETIREMENT SYSTEM.
(a) ACCRUAL FUNDING FOR COAST GUARD RETIRE-
MENT.—
(1) IN
GENERAL.—Chapter 11 of title 14,
United States Code, is amended by adding at the
end the following new subchapter:
115
‘‘SUBCHAPTER V—COAST GUARD MILITARY
RETIREMENT FUND
‘‘§ 441. Establishment and purpose of Fund; defini-
tions
‘‘(a) ESTABLISHMENT OF FUND; PURPOSE.—There
is established on the books of the Treasury a fund to be
known as the Coast Guard Military Retirement Fund
(hereinafter in this subchapter referred to as the ‘Fund’),
which shall be administered by the Secretary. The Fund
shall be used for the accumulations of funds in order to
finance on an actuarially sound basis liabilities of the
Coast Guard under military retirement and survivor ben-
efit programs.
‘‘(b) MILITARY RETIREMENT AND SURVIVOR BEN-
EFIT PROGRAMS DEFINED.—In this subchapter, the term
‘military retirement and survivor benefit programs’
means—
‘‘(1) the provisions of this title and title 10 cre-
ating entitlement to, or determining the amount of,
retired pay;
‘‘(2) the programs providing annuities for sur-
vivors of members and former members of the
armed forces, including chapter 73 of title 10, sec-
tion 4 of Public Law 92–425, and section 5 of Pub-
lic Law 96–402; and
116
‘‘(3) the authority provided in section 1048(h)
of title 10.
‘‘(c) SECRETARY DEFINED.—In this subchapter, the
term ‘Secretary’ means the Secretary of Transportation
when the Coast Guard is not operating as a service in the
Navy and the Secretary of Defense when the Coast Guard
is operating as a service in the Navy.
‘‘§ 442. Assets of the Fund
‘‘There shall be deposited into the Fund the fol-
lowing, which shall constitute the assets of the Fund:
‘‘(1) Amounts paid into the Fund under section
445 of this title.
‘‘(2) Any return on investment of the assets of
the Fund.
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 306(d) of the Budget Fraud Elimi-
nation Act of 2002.
‘‘§ 443. Payments from the Fund
‘‘(a) IN GENERAL.—There shall be paid from the
Fund the following:
‘‘(1) Retired pay payable to persons on the re-
tired list of the Coast Guard.
‘‘(2) Retired pay payable under chapter 1223 of
title 10 to former members of the Coast Guard and
the former United States Lighthouse Service.
117
‘‘(3) Benefits payable under programs that pro-
vide annuities for survivors of members and former
members of the armed forces, including chapter 73
of title 10, section 4 of Public Law 92–425, and sec-
tion 5 of Public Law 96–402.
‘‘(4) Amounts payable under section 1048(h) of
title 10.
‘‘(b) AVAILABILITY OF ASSETS OF THE FUND.—The
assets of the Fund are hereby made available for payments
under subsection (a).
‘‘§ 444. Determination of contributions to the Fund
‘‘(a) INITIAL UNFUNDED LIABILITY.—(1) Not later
than June 30, 2003, the Secretary shall determine the un-
funded liability of the Fund attributable to service per-
formed as of September 30, 2002, which is ‘active service’
for the purposes of section 212. The Secretary shall estab-
lish an amortization schedule, including a series of annual
installments commencing October 1, 2003, which provides
for the liquidation of such liability by October 1, 2042.
‘‘(2) The Secretary shall redetermine the unfunded
liability of the Fund as of the close of the fiscal year, for
each beginning after September 30, 2002, through the fis-
cal year ending September 30, 2037, and shall establish
a new amortization schedule, including a series of annual
installments commencing on October 1 of the second sub-
118
sequent fiscal year, which provides for the liquidation of
such liability by October 1, 2042.
‘‘(3) The Secretary shall redetermine the unfunded
liability of the Fund as of the close of the fiscal year for
each fiscal year beginning after September 30, 2037, and
shall establish a new amortization schedule, including a
series of annual installments commencing on October 1
of the second subsequent fiscal year, which provides for
the liquidation of such liability over five years.
‘‘(b) ANNUAL CONTRIBUTIONS FOR CURRENT SERV-
ICES.—(1) The Secretary shall determine each fiscal year,
in sufficient time for inclusion in the budget request for
the following fiscal year, the total amount of Department
of Transportation, or Department of Defense, contribu-
tions to be made to the Fund during that fiscal year under
section 445(a) of this title. That amount shall be the sum
of the following:
‘‘(A) The product of—
‘‘(i) the current estimate of the value of
the single level percentage of basic pay to be de-
termined under subsection (c)(1)(A) at the time
of the most recent actuarial valuation under
subsection (c); and
‘‘(ii) the total amount of basic pay ex-
pected to be paid during that fiscal year to
119
members of the Coast Guard on active duty
(other than active duty for training).
‘‘(B) The product of—
‘‘(i) the current estimate of the value of
the single level percentage of basic pay and of
compensation (paid pursuant to section 206 of
title 37) to be determined under subsection
(c)(1)(B) at the time of the most recent actu-
arial valuation under subsection (c); and
‘‘(ii) the total amount of basic pay and
compensation (paid pursuant to section 206 of
title 37) expected to be paid during that fiscal
year to members of the Coast Guard Ready Re-
serve (other than members on full-time Reserve
duty other than for training) who are not other-
wise described in subparagraph (A)(ii).
‘‘(2) The amount determined under paragraph (1) for
any fiscal year is the amount needed to be appropriated
to the Department of Transportation for that fiscal year
for payments to be made to the Fund during that year
under section 445(a) of this title. The President shall in-
clude not less than the full amount so determined in the
budget transmitted to Congress for that fiscal year under
section 1105 of title 31. The President may comment and
make recommendations concerning any such amount.
120
‘‘(c) PERIODIC ACTUARIAL VALUATIONS.—(1) Not
less often than every four years (or before the effective
date of any statutory change affecting benefits payable on
account of retirement, disability, or death to members of
the Coast Guard or their survivors), the Secretary shall
carry out an actuarial valuation of the Coast Guard mili-
tary retirement and survivor benefit programs. Each actu-
arial valuation of such programs shall be signed by an en-
rolled actuary and shall include—
‘‘(A) a determination (using the aggregate
entry-age normal cost method) of a single level per-
centage of basic pay for members of the Coast
Guard on active duty (other than active duty for
training); and
‘‘(B) a determination (using the aggregate
entry-age normal cost method) of single level per-
centage of basic pay and of compensation (paid pur-
suant to section 206 of title 37) for members of the
Ready Reserve of the Coast Guard (other than mem-
bers on full-time Reserve duty other than for train-
ing) who are not otherwise described in subpara-
graph (A).
‘‘(2) Such single level percentages shall be used for
the purposes of subsection (b) and section 445(a) of this
title.
121
‘‘(d) USE
OF GENERALLY ACCEPTED ACTUARIAL
PRINCIPLES AND PRACTICES.—All determinations under
this section shall be in accordance with generally accepted
actuarial principles and practices and, where appropriate,
shall follow the general pattern of methods and assump-
tions approved by the Department of Defense Retirement
Board of Actuaries.
‘‘(e) RECORDS.—The Secretary shall provide for the
keeping of such records as are necessary for determining
the actuarial status of the Fund.
‘‘§ 445. Payments into the Fund
‘‘(a) MONTHLY ACCRUAL CHARGE FOR CURRENT
SERVICES.—From amounts appropriated to the Coast
Guard for salaries and expenses, the Secretary shall pay
into the Fund at the end of each month as the Department
of Transportation, or Department of Defense, contribution
to the Fund for that month the amount that is the sum
of the following:
‘‘(1) The product of—
‘‘(A) the level percentage of basic pay de-
termined using all the methods and assump-
tions approved for the most recent (as of the
first day of the current fiscal year) actuarial
valuation under section 444(c)(1)(A) of this
title (except that any statutory change in the
122
military retirement and survivor benefit systems
that is effective after the date of that valuation
and on or before the first day of the current fis-
cal year shall be used in such determination);
and
‘‘(B) the total amount of basic pay accrued
for that month by members of the Coast Guard
on active duty (other than active duty for train-
ing).
‘‘(2) The product of—
‘‘(A) the level percentage of basic pay and
compensation (accrued pursuant to section 206
of title 37) determined using all the methods
and assumptions approved for the most recent
(as of the first day of the current fiscal year)
actuarial valuation under section 444(c)(1)(B)
of this title (except that any statutory change
in the military retirement and survivor benefit
systems that is effective after the date of that
valuation and on or before the first day of the
current fiscal year shall be used in such deter-
mination); and
‘‘(B) the total amount of basic pay and of
compensation (paid pursuant to section 206 of
title 37) accrued for that month by members of
123
the Ready Reserve (other than members of full-
time Reserve duty other than for training) who
are not otherwise described in paragraph
(1)(B).
‘‘(b) ANNUAL PAYMENT FOR UNFUNDED LIABIL-
ITIES.—(1) At the beginning of each fiscal year, beginning
on October 1, 2003, the Secretary shall certify to the Sec-
retary of the Treasury the amount of the first installment
under the most recent amortization schedule established
under section 254(a). The Secretary of the Treasury shall
promptly pay into the Fund from the General Fund of
the Treasury the amount so certified. Such payment shall
be the contribution to the Fund for that fiscal year.
‘‘§ 446. Investment of assets of the Fund
‘‘The Secretary may request the Secretary of the
Treasury to invest such portion of the Fund as is not,
in the judgment of the Secretary, required to meet the
current needs of the Fund. Such investments shall be
made by the Secretary of the Treasury in public debt secu-
rities with maturities suitable to the needs of the Fund,
as determined by the Secretary, and bearing interest at
rates determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding
marketable obligations of the United States of comparable
124
maturities. The income on such investments shall be cred-
ited to and form a part of the Fund.’’.
(2) TECHNICAL AMENDMENTS.—Such chapter
is further amended—
(A) by amending the center heading after
the table of sections to read as follows:
‘‘SUBCHAPTER I—OFFICERS’’;
(B) by amending the center heading after
section 336 to read as follows:
‘‘SUBCHAPTER II—ENLISTED MEMBERS’’;
(C) by amending the center heading after
section 373 to read as follows:
‘‘SUBCHAPTER III—GENERAL PROVISIONS’’;
and
(D) by amending the center heading after
section 425 to read as follows:
‘‘SUBCHAPTER IV—SPECIAL PROVISIONS’’.
(3) CLERICAL AMENDMENTS.—The table of sec-
tions at the beginning of such chapter is amended—
(A) by striking ‘‘OFFICERS’’ at the begin-
ning of the table and inserting ‘‘SUBCHAPTER
I—OFFICERS’’;
(B) by striking ‘‘ENLISTED
MEMBERS’’
after the item relating to section 336 and in-
125
serting 
‘‘SUBCHAPTER
II—ENLISTED
MEM-
BERS’’;
(C) by striking ‘‘GENERAL
PROVISIONS’’
after the item relating to section 373 and in-
serting ‘‘SUBCHAPTER
III—GENERAL
PROVI-
SIONS’’;
(D) by striking ‘‘SPECIAL
PROVISIONS’’
after the item relating to section 425 and in-
serting 
‘‘SUBCHAPTER
IV—SPECIAL
PROVI-
SIONS’’; and
(E) by adding at the end the following:
‘‘SUBCHAPTER V—COAST GUARD MILITARY RETIREMENT FUND
‘‘441. Establishment and purpose of Fund; definitions.
‘‘442. Assets of the Fund.
‘‘443. Payments from the Fund.
‘‘444. Determination of contributions to the Fund.
‘‘445. Payments into the Fund.
‘‘446. Investment of assets of the Fund.’’.
(b) IMPLEMENTATION YEAR EXCEPTIONS.—To avoid
funding shortfalls in the first year of implementation of
subchapter V of chapter 11 of title 14, United States
Code, as added by subsection (a), if formal actuarial deter-
minations are not available in time for budget preparation,
the amounts used in the first year under sections
445(a)(1)(A) and 445(a)(2)(A) of such title shall be set
equal to those estimates in sections 444(b)(1)(A)(i) and
444(b)(1)(B)(i), respectively, of such title if final deter-
minations are not available. The original unfunded liabil-
ity, as defined in section 444(a) of such title, shall include
126
an adjustment to correct for this difference between the
formal actuarial determinations and the estimates in sec-
tions 444(b)(1)(A)(i) and 444(b)(1)(B)(i) of such title.
(c) CONFORMING AMENDMENT.—Subparagraph (B)
of section 255(g)(1) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1))
is amended by striking ‘‘Retired Pay, Coast Guard (69–
0241–0–1–403)’’ and inserting ‘‘Coast Guard Military Re-
tirement Fund (69–0241–01–403)’’.
(d) TRANSFER OF EXISTING BALANCES.—
(1) TRANSFER.—There shall be transferred into
the Fund on October 1, 2003, any obligated and un-
obligated balances of appropriations made to the De-
partment of Transportation that are currently avail-
able for retired pay, and amounts so transferred
shall be part of the assets of the Fund.
(2) FUND
DEFINED.—For purposes of para-
graph (1), the term ‘‘Fund’’ means the Coast Guard
Military Retirement Fund established under section
441 of title 14, United States Code, as added by
subsection (a).
(e) EFFECTIVE DATE.—Sections 443 (relating to
payments from the Fund) and 445 (relating to payments
into the Fund) of title 14, United States Code, as added
by subsection (a), shall take effect on October 1, 2003.
127
Subtitle 
B—Accrual 
Funding 
of
Post-Retirement Health Benefits
Costs for Federal Employees
SEC. 311. FEDERAL EMPLOYEES HEALTH BENEFITS FUND.
(a) Section 8906 of title 5, United States Code, is
amended—
(1) by redesignating subsection (c) as sub-
section (c)(1) and by adding at the end the following
new paragraphs:
‘‘(2) In addition to Government contributions
required by subsection (b) and paragraph (1), each
employing agency shall contribute amounts as deter-
mined by the Office to be necessary to prefund the
accruing actuarial cost of post-retirement health
benefits for each of the agency’s current employees
who are eligible for Government contributions under
this section. Amounts under this paragraph shall be
paid by the employing agency separate from other
contributions under this section, from the appropria-
tions or fund used for payment of the salary of the
employee, on a schedule to be determined by the Of-
fice.
‘‘(3) Paragraph (2) shall not apply to the
United States Postal Service or the Government of
the District of Columbia.’’; and
128
(2) by amending paragraph 1 of subsection (g)
to read:
‘‘(1) Except as provided in paragraphs (2) and (3),
all government contributions authorized by this section for
health benefits for an annuitant shall be paid from the
Employees Health Benefits Fund to the extent that funds
are available in accordance with section 8909(j)(6) and,
if necessary, from annual appropriations which are au-
thorized to be made for that purpose and which may be
made available until expended.’’.
(b) Section 8909 of title 5, United States Code, is
amended by adding at the end the following new sub-
section:
‘‘(j)(1) Not later than June 30, 2004, the Office shall
determine the existing liability of the Fund for post-retire-
ment health benefits, excluding the liability of the United
States Postal Service for service under section 8906(g)(2),
under this chapter as of September 30, 2003. The Office
shall establish an amortization schedule, including a series
of annual installments commencing September 30, 2004,
which provides for the liquidation of such liability by Sep-
tember 30, 2041.
‘‘(2) At the close of each fiscal year, for fiscal years
beginning after September 30, 2003, the Office shall de-
termine the supplemental liability of the Fund for post-
129
retirement health benefits, excluding the liability attrib-
utable to the United States Postal Service for service sub-
ject to section 8906(g)(2), and shall establish an amortiza-
tion schedule, including a series of annual installments
commencing on September 30 of the subsequent fiscal
year, which provides for liquidation of such supplemental
liability over 30 years.
‘‘(3) Amortization schedules established under this
paragraph shall be set in accordance with generally accept-
ed actuarial practices and principles.
‘‘(4) At the end of each fiscal year on and after Sep-
tember 30, 2004, the Office shall notify the Secretary of
the Treasury of the amounts of the next installments
under the most recent amortization schedules established
under paragraphs (1) and (2). Before closing the accounts
for the fiscal year, the Secretary shall credit the sum of
these amounts (including in that sum any negative
amount for the amortization of the supplemental liability)
to the Fund, as a Government contribution, out of any
money in the Treasury of the United States not otherwise
appropriated.
‘‘(5) For the purpose of carrying out paragraphs (1)
and (2), the Office shall perform or arrange for actuarial
determinations and valuations and shall prescribe reten-
130
tion of such records as it considers necessary for making
periodic actuarial valuations of the Fund.
‘‘(6) Notwithstanding subsection (b), the amounts de-
posited into the Fund pursuant to this subsection and sec-
tion 8906(c)(2) to prefund post-retirement health benefits
costs shall be segregated within the Fund so that such
amounts, as well as earnings and proceeds under sub-
section (c) attributable to them, may be used exclusively
for the purpose of paying Government contributions for
post-retirement health benefits costs. When such amounts
are used in combination with amounts withheld from an-
nuitants to pay for health benefits, a portion of the con-
tributions shall then be set aside in the Fund as described
in subsection (b).
‘‘(7) Under this subsection, ‘supplemental liability’
means—
‘‘(A) the actuarial present value for future post-
retirement health benefits that are the liability of
the Fund, less
‘‘(B) the sum of—
‘‘(i) the actuarial present value of all fu-
ture contributions by agencies and annuitants
to the Fund toward those benefits pursuant to
section 8906;
131
‘‘(ii) the present value of all scheduled am-
ortization payments to the Fund pursuant to
paragraphs (1) and (2);
‘‘(iii) the Fund balance as of the date the
supplemental liability is determined, to the ex-
tent that such balance is attributable to post-re-
tirement benefits; and
‘‘(iv) any other appropriate amount, as de-
termined by the Office in accordance with gen-
erally accepted actuarial practices and prin-
ciples.’’.
SEC. 312. FUNDING UNIFORMED SERVICES HEALTH BENE-
FITS FOR ALL RETIREES.
Title 10, United States Code, is amended—
(1) in the title of chapter 56, by striking ‘‘DE-
PARTMENT OF DEFENSE MEDICARE-
ELIGIBLE’’ 
and 
inserting 
‘‘UNIFORMED
SERVICES’’;
(2) in section 1111—
(A) in subsection (a)—
(i) by striking ‘‘Department of De-
fense Medicare-Eligible’’ and inserting
‘‘Uniformed Services’’;
(ii) by striking ‘‘Department of De-
fense under’’; and