The RRB is committed to fulfilling its fiduciary responsibilities to the rail
community. We have established four objectives that direct our focus on this
Strategic Objective II-A:
Ensure that trust fund assets are projected, collected, recorded and reported
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
To accomplish this commitment, we will:
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.
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
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.
to carry out the RRB's debt management
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.
to accurately and, in a timely manner, determine
the experience-based contribution rates required
under the unemployment and sickness insurance
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.
that payroll taxes are fully collected and
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
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:
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.
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.
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
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
- 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
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
our ability to control and monitor information
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.
to seek ways to increase competitive sourcing
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.
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
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
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,
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.
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
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.