Strategic Objective II-A: Ensure that trust fund assets are projected, collected, recorded and reported appropriately

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..

Strategic Objective II-B: Ensure the integrity of benefit programs

In fiscal year 2005, the RRB invested over 24 full-time equivalent staff years at a cost of approximately $1.93 million, in program integrity efforts. This resulted in $9.1 million in recoveries, $770,000 in benefits denied, and the referral of 215 cases to the Office of Inspector General for investigation. We achieved approximately $5.11 in savings for each dollar invested in these activities.

As part of our fiduciary responsibilities to the rail community, we must ensure that the correct amount of benefits is being paid to the right people. Through automation, we match our benefit payments against the Social Security Administration’s earnings and benefits database, the Centers for Medicare & Medicaid Services’ utilization and death records, the Office of Personnel Management’s benefit records, and State wage reports, and we administer other benefit monitoring programs to identify and prevent erroneous payments. We also refer some cases to the RRB’s Office of Inspector General for investigation. After investigation, the Inspector General may pursue more aggressive collection methods, which include civil and criminal prosecution.

We measure the effectiveness of the matching programs each year by comparing the dollars collected or saved through these initiatives to their cost.

To accomplish this objective, we will conduct comprehensive and integrated monitoring activities to identify and prevent erroneous payments:

• Maintain established matching programs.

  Our plan is to continue our wage matches with all 50 States, the District of Columbia and Puerto Rico to ensure that employees are not working while drawing unemployment or sickness insurance benefits. During fiscal year 2005, the State wage match program identified nearly $1,180,814 in recoverable benefits and effected recovery of $1,443,394 previously identified through the program. In addition, we will continue to coordinate our benefit payments with the Social Security Administration’s Master Benefit Record to ensure the proper payment of benefits under both programs. We will continue to monitor our benefit payments against social security wage reports to ensure that our benefit payments are correctly adjusted for post-retirement earnings. We will also continue to compare our beneficiary records with the Centers for Medicare & Medicaid Services’ files to prevent incorrect payment of benefits after an annuitant’s death.
   

• Continue our program integrity reviews.

  We will continue to seek information from annuitants through questionnaires and to conduct reviews to ensure correct payment of benefits. We will ensure that all annuitants continue to be entitled to benefits, through programs such as continuing disability reviews and other entitlement-monitoring initiatives. These efforts, consistent with the President’s Management Agenda, help us minimize the possibility of payments to ineligible beneficiaries.

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

How we do our business is a critical component of good stewardship. The RRB is committed to effective, efficient and secure internal operations. Many factors and programs contribute to this goal. We have ongoing programs which help us assess our performance in these areas. We use our management control review process as a means of reviewing critical agency processes in order to provide reasonable assurance of the effectiveness and efficiency of our programs and operations. If material weaknesses are detected, we take swift, aggressive corrective action. In addition we perform a variety of quality assurance activities to ensure that our benefit programs comply with established policies, standards and procedures. We consider the findings from these reviews as we make our information technology plans.

In addition to these ongoing programs, we have set particular goals regarding our human capital, information technology and computer security, procurement, and performance management programs, as described below.

• Continue to develop an effective human capital planning program.

  While there is a wealth of institutional knowledge and practical experience among the current RRB staff, more than a third of them will be eligible for retirement by 2009. Effective human capital planning will help to ensure that the benefit of this knowledge and experience can be passed on by our more senior employees before they retire. At the same time, effective training and development programs will prepare the remaining employees to assume leadership roles necessary for effective program administration and management.

To address this need, we will continue structured human capital planning activities in the following areas:

• Improve training capabilities, particularly in the areas of managerial and supervisory skills, through a combination of internal and external programs, including expanded use of video-based presentations on the agency Intranet.
• Identify core competencies for key positions, with an emphasis on those with unique needs and/or potential for high turnover.
• Assess the skill level of employees currently in the same or related career tracks and develop enhancement programs to close any identified competency gaps.
   
• Ensure the privacy and security of our customers’ transactions with the RRB.

  We will provide close oversight to safeguard our customers' privacy and enable them to conduct business with the RRB in a secure environment with trust and confidence. The RRB has made notable progress in strengthening and improving the control and protection of information and is committed to addressing deficiencies identified in the area of computer security. We continue these efforts in critical areas, such as:

• Conducting periodic vulnerability assessments on critical assets;
• Updating our business continuity plan to ensure that essential functions continue during an emergency;
• Deploying advanced security technologies and integrating security into our business processes to protect against physical and cyber-security threats;
• Providing security and privacy awareness training to sensitize all employees to potential security and privacy issues within their particular functional areas, and specialized security training for those individuals with significant security responsibilities;
• Developing risk assessments, security plans, and security control refinements for major applications and support systems; and,
• Including privacy impact assessments for applications that use sensitive data. 
   
• Improve our ability to control and monitor information technology investments.

  Information technology not only provides the underlying support for the agency’s current day-to-day operations, but we also rely on it as a strategic means of improving the cost-effectiveness of our operations in the future. Therefore, we are continually striving for improved ways to plan and control our information technology investments, to ensure that they perform as expected, provide a meaningful return, and are delivered on time and within budget. In 2004, the agency embarked on multi-year project to replace the agency's mainframe-based project time management system with a network server-based enterprise project management system. The enterprise project management system allows us to estimate, track and monitor total costs and time schedules for information technology investments throughout the project life cycle. The enterprise project management system incorporates both web-based and mainframe-based projects and investments. The initial rollout of the system to over 200 users was completed in October 2005. Further plans include expanding its use for non-information technology projects and the number of people who will use it.
   

• Continue to seek ways to increase competitive sourcing opportunities.

  The RRB will continue to follow the requirements of the Federal Activities Inventory Reform Act of 1998 (the FAIR Act), which requires agencies to prepare and submit an inventory of their commercial activities performed by Federal employees. The RRB has inventoried its positions, identified those that are commercial in nature and published the report on the Internet, as required. In 2005, the RRB listed 7 commercial activities on its FAIR Act report, a decline from 10 the previous year. This also reflected reduced staffing levels from the previous year, as the 2005 inventory had 119 FTE’s engaged in these areas – down from 141 the prior year. These positions were placed into the following categories: library services; occupational health (nurse); storage and warehousing; printing and reproduction; administrative support services; data processing services; and systems design, development and programming services.
   

• Make greater use of performance-based contracts.

  Performance-based services contracting (PBSC) emphasizes objectives and measures performance requirements and quality standards in developing statements of work, selecting contractors, and determining contract type and incentives.

  In September 2004, OMB issued guidance on expanded use of PBSC, setting a goal for agencies to award at least 40 percent of service contract dollars, on contracts exceeding $25,000, using PBSC techniques. In recent years, the RRB has awarded about that percentage of contract dollars using PBSC methods, and has been able to achieve increases in terms of the numbers of contracts and percentages of dollars awarded. Over the next 5 years, we will continue to make maximum use of this technique and meet government-wide goals for eligible service contracts.
   

• Expand our participation in E-Government initiatives.

The RRB currently uses electronic commerce to fulfill many of its operational requirements. For example, the RRB’s purchasing staff publishes all required and many optional procurement notices to the government-wide, point-of-entry web-site www.FedBizOpps.gov. The notices include pre-solicitation and award notices, as well as market surveys. The agency also has an agreement with an office-supply vendor that provides Internet-based ordering with next-day delivery.

The RRB continues to participate in the E-Gov Business Gateway Initiative. The E-Forms Catalog provides citizens and businesses with a common access point to Federal agencies and business forms. It provides these parties with the ability to search for forms needed to interact with the Federal government. This catalog is a first step in a project whose goal is to provide a single site where citizens and businesses can not only locate a form, but fill it out and submit it electronically.

The RRB has already completed an initiative to migrate our independent payroll system to a consolidated payroll service provider as part of a government-wide cost-saving effort. We are also participating in the E-Gov Travel initiative, which is managed by the General Services Administration, to implement an automated, integrated and web-based approach to consolidating travel services for Federal agencies. We have selected a vendor to provide E-Gov Travel services and we expect to fully implement the new system by the end of fiscal year 2006. In addition, we are working with the Department of the Treasury to implement Pay.gov. Pay.gov enables individuals and railroad employers to securely and easily send electronic payments to the Federal government. Pay.gov's service allows them to pay by debit/credit card or to authorize an Automated Clearing House debit from a savings or checking account.
 

• Comply with new security requirements for employee identification.

  Federal agencies were directed to develop more sophisticated employee identification cards under the terms of Homeland Security Presidential Directive 12 (HSPD-12). Not only will the cards have a common format across the Federal government, they will also contain an embedded chip with biometric data to confirm the identity of the cardholder. Agencies were also directed to implement procedures for personal identity verification (PIV). Under PIV, a combination of background checks and multiple levels of review will achieve this end.

  The RRB has taken steps to comply with the initial phase of PIV, reinforcing its current review procedures to meet the new guidance. The agency also entered into a memorandum of understanding with GSA to utilize a shared-services agreement for production of the actual identification cards. All current RRB employees should have the new identification cards by the end of fiscal year 2008. At the same time, the RRB will continue to work on implementation of the second phase of PIV, which calls for use of the embedded chip to gain access to buildings as well as computer systems.

Strategic Objective II-D: Effectively carry out the responsibilities of the Railroad Retirement Board under the Railroad Retirement and Survivors’ Improvement Act of 2001 with respect to the activities of the National Railroad Retirement Investment Trust

Although the RRB is no longer responsible for the investment of the trust fund monies held by the NRRIT, it continues to have responsibilities in ensuring that the NRRIT, and its seven-member Board of Trustees, comply with the provisions of the Railroad Retirement Act. This responsibility is fulfilled through periodic meetings between the RRB’s three-member Board and the NRRIT’s trustees, more frequent meetings between the agency’s General Counsel and the officials of the NRRIT and the Counsel to the NRRIT, review of the monthly reports submitted by the NRRIT, review of the annual management reports prepared by the NRRIT, and review of the annual audit reports of the NRRIT’s financial statements.

The RRB has authority to bring civil action should these reviews indicate any violation of the Railroad Retirement Act or non-compliance with any of the provisions of the Act.