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BIOGRAPHY OF GLEN L. BOWER

Glen L. Bower was appointed Chairman in April 1990 to complete a term ending in August 1992. An attorney, Mr. Bower had been Assistant Director of the Department of Revenue for the State of Illinois since 1983, and during part of his tenure, he also served as General Counsel, and as Chairman for the Revenue Board of Appeals. Mr. Bower has served on the U.S. Economic Advisory Board, 1982-85, and as Chairman of the Attorneys and Tax Appeals Section of the National Association of Tax Administrators, 1986-88. Member of the Illinois House of Representatives, 1979-83, and was the State's Attorney of Effingham County, Illinois, 1976-79. alumnus of Southern Illinois University (B.A. 1971), and the Illinois Institute of Technology/Chicago-Kent College of Law (J.D. 1974), Mr. Bower is a U.S. Air Force Reserve Major in the Judge Advocate General's Department.

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STATEMENT OF C.J. CHAMBERLAIN

Mr. Chairman and Members of the Committee, we are once again honored to have the opportunity to appear before you to answer your questions and concerns relating to the appropriation request for the Railroad Retirement Board. As Labor Member of the Board, I would like to make a few personal observations regarding our agency's budget submission for fiscal year 1992. As you know, the expenses for administering our system are paid entirely by the employees and employers of the railroad industry. The expressed desires of the railroad community for efficient, effective administration of the applicable laws have long been reflected by the Railroad Retirement Board in deciding the level and quality of service provided and the measures necessary to maintain the integrity of our benefit payment programs. This is consistent with our understanding of past Congressional concern that decisions as to the scope and costs of government programs should be made by those who pay for, and are served by those programs.

The President's proposed budget for the administration of our agency during fiscal year 1992 represents a responsible, prudent package that adequately addresses not only our on-going workload and beneficiary service commitments,

but also provides much needed support for improvements in our operating efficiency. The proposed limitation on administration before this committee will provide a sound basis for continuing the good record of service our beneficiaries expect, and allows us to look to the future needs of our agency. The Railroad Retirement Board fully recognizes our responsibility to the Railroad Retirement System and the beneficiaries we serve. We will continue our concern with improving the financial health of the trust fund through measured improvements in all areas within our administrative responsibility. In this regard, we would also like to take this opportunity to commend the Board's Inspector General and his staff for their continuing efforts in auditing employer retirement tax collection and reporting, as well as working with Treasury and the IRS to ensure proper accounting and handling of our agency's trust fund accounts.

As the Member of the Board who serves as a representative of railroad labor, I would also urge Congress to continue their efforts to provide full funding for vested dual benefits. The rail labor community looks forward to your continuing support and recognition of the reasonable expectations of the hundreds of thousands of families and individuals who depend on our retirement system.

Once again, I would like to thank you for your past support for reasonable levels of funding and staffing and I look forward to working with you during the coming year.

BIOGRAPHY OF CHARLES J. CHAMBERLAIN

Charles J. Chamberlain was first appointed to the Board by President Carter upon the unanimous recommendations of railway labor organizations in October 1977 to complete a term ending in August 1979. He was then reappointed by President Carter in 1979 for a 5-year term through 1984; by President Reagan for a 5-year term through 1989; by President Bush for a 5-year term through 1994. Prior to his first appointment, he was President of the Brotherhood of Railroad Signalmen, and had also served as Chairman of the Railway Labor Executives' Association, a coordinating and policymaking body on legislative and other matters affecting railroad workers. In addition, he served on the High Speed Ground Transportation Advisory Committee, the

Railroad Safety Research Board, and the Railroad Industry Labor-Management Committee. Mr. Chamberlain began his railroad career as a signalman for the Chicago and North Western Railroad in 1938. He immediately became active in the railroad labor movement and held numerous union offices before becoming President of the Brotherhood of Railroad Signalmen in 1967.

BIOGRAPHY OF ANDREW F. REARDON

Appointed by President Bush and confirmed by the United States Senate in 1990, Andrew F. Reardon is the Management Member of the three-member U.S. Railroad Retirement Board. This Federal agency, having an $8 billion dollar annual budget is charged with administering retirement, sickness and

unemployment benefits to the nation's rail workers.

Previously, Mr. Reardon was Sr. Vice President-Law and Administration of Illinois Central Transportation Company, a transportation and real estate concern headquartered in Chicago. In that position, he managed the law department together with the claims and security departments. Mr. Reardon's prior experience in the rail industry was with Burlington Northern where he served as Senior Tax Counsel. A tax lawyer by background, Mr. Reardon commenced his legal career with the firm of Thompson & Mitchell in St. Louis. He is a member of the Bar in five states and numerous Federal courts. authored "Leasing Under the Economic Recovery Tax Act of 1981," which was published by the Practicing Law Institute. He is a member of the American Bar Association and was formerly Chairman of its Depreciation and Credits Committee.

Mr. Reardon graduated from the University of Notre Dame (B.A., 1967) where he was an NROTC scholarship student; the University of Cincinnati Law School, (J.D., 1974); and Washington University Law School (L.L.M. in Taxation, 1975). He served as a lieutenant in the U.S. Navy, 1967-71, which included service aboard the aircraft carrier, USS Wasp (CVS-18).

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BACKLOG CASES

This backlog of cases, this is something that has been festering for a long time since I took chairmanship of this subcommittee and even before that when I was on the subcommittee. And I keep hearing, well, we are going to get a handle on it. We are going to get a handle on it and nothing ever seems to happen.

I like the progress that that looks good there. But again, how much additional staff do you need to get it on that track then? Mr. BOWER. Thirty-nine for the claims processing.

Senator HARKIN. That's part of the 77?

Mr. BOWER. That is correct, sir. That is the biggest part.
Senator HARKIN. Thirty-nine of those are for the backlog?

Mr. BOWER. You can see in fiscal year 1995, we would be at normal workload levels if our funding request is granted.

Senator HARKIN. Well, I am going to be here in 1995. I am going to hold you to it.

Mr. BOWER. If it is my privilege to be here, I certainly hope to report positively that that has, in fact, happened.

Senator HARKIN. We will have you here next year and we will take a look at that chart and we will see if it reaches the goals. Mr. BOWER. I would be happy to address that and you have my pledge that we are going to meet it.

Senator HARKIN. All right. Good enough.

SOLVENCY OF THE TRUST FUNDS

Now the other thing. I keep hearing among a lot of railroad retirees, now, that there are a lot of rumors running around, in fear that something about the retirement fund is being used up. There is not going to be enough money there to meet the needs of retirees, that money has gone out of the fund for other purposes.

I do not know if this comes as a shock to you or not, but there are a lot of rumors like that running around. How do you respond to that, that the retirement fund has been used for other purposes and the money has not come back in?

Mr. BOWER. I think retirees of any system are always concerned that their futures are secure. Obviously, the Board only spends the funds that are appropriated by Congress. And as I think you are probably aware, Senator, the Commission on Railroad Retirement Reform reported last September on the status of the trust funds as they found them and determined that, in their opinion, the trust funds were secure for at least the next 25 years and quite likely, well beyond that.

FUNDING FOR IMPROVEMENT ACTIVITIES

Senator HARKIN. Good. You need a total of $13.9 million for 1992 for the 77 FTE's.

Mr. BOWER. That is the proposed total funding through 1996.
Senator HARKIN. Why do you need it next year then?

Mr. BOWER. We do not need to spend all of it next year. The Office of Management and Budget and the Board, for nearly the last year, have been examining the Agency's needs and shortcomings. Based upon OMB's assessment of our needs and discussing

with us how we thought we could resolve the problems, we entered into this contractual agreement.

It is significant that both OMB and their team included expert people from many Federal agencies. The review team and the Board and the Board staff believe most of these problems cannot be resolved overnight, or in a single year.

Under this agreement, we have a 5-year plan to address six major problem areas. Some of these are certainly problems, particularly in the area of backlogs and in the tax accounting system, that are going to take several years to resolve. And what we want to do is begin assembling the staff because it takes new claims examiners several months before they are up to speed. Only then can we address the problems. And then it will start, the head count will start attriting in later years.

ADDITIONAL STAFFING FOR IMPROVEMENT ACTIVITIES

In fact, we have a chart that I think demonstrates what our plan is in that regard. In the area of enhanced debt collection and the wage matches with the States, these are programs that we sincerely believe are going to easily bring back to the trust funds, more than we are going to spend by quite a bit. As you will note from the chart, in 1992 is when we start staffing up and then it drops off in each year thereafter.

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Note.--Full-time equivalent employees (FTE's) for improving the railroad
retirement tax accounting system will be determined in FY 92, based on analysis
to be completed in September 1991.

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