Financial Operations
Costs for the railroad unemployment and sickness insurance program during fiscal year 2015 exceeded financing sources by $21.8 million and the net position decreased by $21.8 million from $265.6 million at the end of fiscal year 2014 to $243.8 million at the end of fiscal year 2015. For fiscal year 2015 as compared to fiscal year 2014, total financing sources for the railroad unemployment and sickness insurance program increased by $40.7 million (173.0 percent) to $64.2 million.
RAILROAD UNEMPLOYMENT AND SICKNESS INSURANCE PROGRAM
UNEMPLOYMENT AND SICKNESS INSURANCE PROGRAM
Financing Sources - Fiscal Year 2015 (In Millions)
GROSS TOTAL: $77.4
| 1Less Transfers-Out and carriers' refunds of $13.2 million |
Costs - Fiscal Year 2015 (In Millions)
GROSS TOTAL: $86.3
Financing Sources
The primary ongoing 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 levels of benefit usage. Each employer's rate also has a component for administrative expenses and a component to cover costs shared by all employers. The rate applies to monthly earnings up to an indexed maximum. In calendar year 2015, the taxable earnings base was the first $1,455 of each employee's monthly earnings. The earnings base is indexed each year by a rate which is equal to approximately two-thirds of the annual rate of increase in the maximum base for railroad retirement tier I taxes.
In 2015, the basic tax rates on railroad employers, including covered commuter railroads, ranged from a minimum of 2.15 percent to a maximum of 12.0 percent. There was also a surcharge of 1.5 percent in 2015. Most employers were assessed the minimum rate in 2015. New employers in 2015 paid an initial rate of 4.09 percent.
Employer Payroll Taxes
Payroll taxes by employers totaled $74.7 million during fiscal year 2015. This was an increase of 111 percent or $39.3 million less than the previous year.
Interest
Cash not needed immediately for unemployment and sickness insurance benefits or operating expenses is held in the Federal Unemployment Insurance Trust Fund and invested by the Secretary of the Treasury. The fund earned an average rate of return of 2.3 percent in fiscal year 2015, of which the RRB earned $2.7 million as its pro rata share.
Costs
Total costs for the railroad unemployment and sickness insurance program decreased by $1.4 million (1.6 percent) to $86.0 million.
Benefit Payments
During fiscal year 2015, unemployment insurance benefit payments decreased by $2.2 million (5.8 percent) to $35.7 million. Sickness insurance benefit payments increased by $1.9 million (3.9 percent) to $50.6 million.