II-A: Trust Fund Assets
Ensure that trust fund assets are projected, collected, recorded and reported appropriately Other Information:
The RRB is committed to prudent management of its trust funds. Our success in this objective is reflected through annual audited
financial statements, actuarial valuations, our financial projections, debt collection, experience-based contribution rates,
and payroll tax and railroad employee compensation reconciliations. To accomplish this commitment, we will: Continue to issue
annual audited financial statements. The RRB has voluntarily published financial statements since calendar year 1987 (covering
fiscal year 1986). The Accountability of Tax Dollars Act of 2002 made the annual issuance of audited financial statements
mandatory for a number of Federal agencies, including the RRB. The RRB’s fiscal year 2005 financial statements were prepared
in accordance with the form and content prescribed by the Office of Management and Budget (OMB) and with the generally accepted
accounting principles and standards prescribed by the Financial Accounting Standards Advisory Board. Continue to perform the
RRB’s actuarial valuations and financial projections. The RRB will continue to monitor the solvency of its trust funds through
a sound program of actuarial valuations and financial projections using different assumptions. Continue to estimate the RRB’s
funding requirements for the Dual Benefits Payments Account. The RRB will ensure that the amount requested to be appropriated
by the Congress each year to fund vested dual benefits is sufficient to pay vested dual benefit obligations for that year.
Continue to carry out the RRB’s debt management policy. Since fiscal year 1996, we reduced the receivable balance from $81.6
million to $32.4 million at the close of fiscal year 2005 (including a reduction for the write-off of currently not collectible
receivables as directed by OMB) -- a reduction of $49.2 million, or 60 percent. The RRB has established a debt management
policy to implement the Debt Collection Act of l982, as amended by the Debt Collection Improvement Act of 1996. This policy
calls for aggressive collection of debts owed the trust funds where such debts are not subject to waiver under the Railroad
Retirement Act or Railroad Unemployment Insurance Act. We will periodically review this policy and make changes when appropriate.
Continue to accurately and, in a timely manner, determine the experience-based contribution rates required under the unemployment
and sickness insurance program. The primary financing source of the railroad unemployment and sickness insurance program is
a payroll tax on railroad employers, based on the taxable earnings of their employees. The employees themselves are not taxed.
Each employer pays taxes at a rate which takes into consideration its employees’ actual incidence of benefit usage. Under
experience rating, employers whose employees have low incidences of unemployment and sickness pay taxes at a lower rate than
those with higher benefit usage. The agency needs to administer this system in a way that provides employers with useful information
in a timely manner. In order to maintain employers’ confidence in the system, we strive to ensure that our notices are released
shortly after the end of the quarter and contain sufficient data to meet employer budgeting needs. To meet these objectives
we worked with employers to design enhanced quarterly and annual notices that we implemented in September and October 2004,
respectively. Verify that payroll taxes are fully collected and properly recorded. We will perform monthly reasonableness
tests comparing railroad retirement taxes deposited electronically, which represent over 99 percent of railroad retirement
taxes, against tax receipts transferred to the RRB trust funds by the Department of the Treasury. These tests provide reasonable
assurance the RRB trust funds are receiving the appropriate amount of taxes. We will also complete annual compensation reconciliations
at least 1 year before the statute of limitations expires. Compensation reconciliations involve a comparison of compensation
reported by covered employers to the RRB for benefit calculation purposes with compensation reported to the IRS for tax purposes.
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