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. He 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). 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. 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. 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. Note.--Full-time equivalent employees (FTE's) for improving the railroad FUNDING FOR IMPROVEMENT ACTIVITIES Senator HARKIN. I am trying to listen to that and I am trying to think. If you are just going to use $3.2 million this year, in the coming year, I do not understand why you need $13.9 million. Why can you not, next year, come up with the next amount. Mr. BOWER. Obviously, Mr. Chairman, that is up to the Congress to determine whether we actually get to do that. But it is based upon, as I say, a contractual agreement where OMB has actually said, we are going to go forward and urge the Congress to appropriate this money over the course of the next 5 years, if you, the Railroad Retirement Board will agree to make certain improvements. And it is not just an agreement. There are absolute measurements that are built into the system and the inspector general of the Railroad Retirement Board is going to be responsible, under the agreement, and he certainly agrees to, to see that we are in fact meeting those marks. And he will be filing reports every 6 months on this. Mr. REARDON. Senator, I might add that basically, this $13.9 million program is a singular program and we feel that in order to have the appropriate comfort level that this solution will work, the continuity of the program has to be guaranteed. That is the most desirable approach, rather than get $3.2 million this year and then perhaps not get the balance of the package in future years, and therefore be unable to meet those targets. It is a singular type of program. Mr. BOWER. I might add that the Office of Management and Budget has made it very clear to us, if this is appropriated and if we do not meet the targets, that they will not apportion the money to us in the following years. DETAILED WORK PLAN FOR IMPROVEMENT ACTIVITIES Senator HARKIN. Do you have a more detailed work plan to supplement this master plan? Do you identify specific target dates, milestones, expenditures for these operational improvements? Do you have a backup plan that spells these out? Mr. BOWER. I believe that we have provided your office with a copy of our agreement. Senator HARKIN. That is just the agreement. Do you have the backup work planned to implement the agreement? Mr. BOWER. I am certain that we can get that information to you. We have it obviously. Senator HARKIN. We would like to have that and I would like to have it fairly soon before we mark up. As I said, I am going to be here and I want to make sure these goals continue to be met. And I will just tell you that I have a bit of a problem with forward funding everything. You have got these goals. I would like to see if we are meeting those year after year, rather than going back trying to reprogram money. Mr. REARDON. Senator, I might also add, coming in relatively new, I had a high level of discomfort that we might be throwing good money after bad. One of the check points along the way at these various milestones, to insure that we do meet the goals the Chairman and the Board have devised, will be to tie these goals to the personal bonuses of the department heads who are responsible for execution of the game plan. Consequently, they have a vested interest in its success. MEDICARE Senator HARKIN. Another issue that has come up, I would like for you to be able to talk to me about. The Board has had the same Medicare carrier since 1966. This contract has never been competitively bid, allegedly, I understand. During fiscal year 1990, the cost paid to the carrier was $21 million. That cost rose to $23 million in 1991. A recent health and human services inspector general study stated that the Government would save considerable funding and staff resources if HCFA were to take over the management of this contract. What are your views on that? Mr. BOWER. Mr. Chairman, soon after I received the copy of the report from HHS's inspector general, I asked our own inspector general to review, and validate, and offer his own opinions on that report, and additional research as to what he thought the advisability of such an approach would be. And he has assured me that we will have his report in the very near future. Senator HARKIN. So nothing has happened. You just asked him to do his own study. Mr. BOWER. We asked him to review the study that was already done and to expand upon that. Senator HARKIN. And based upon that, then you will decide what kind of action you need to take. Is that right? Mr. BOWER. Yes. Mr. REARDON. In addition, Senator, in our February meeting of the Board, we also instructed the Board staff to prepare an analysis of what would be required to put this out for competitive bidding. Senator HARKIN. Is this going to be done? Mr. REARDON. We instructed them to have it completed no later than June of this year. Senator HARKIN. And you will communicate that to us? Mr. BOWER. Certainly. Senator HARKIN. Mr. Bower, we covered, for the record, a couple of major things I wanted to do. I want to make sure we get a copy of, not this one, but the backlog and cases reduction and we will keep it on hand here. Mr. BOWER. I think I have already provided that to your staff, but we will be happy to give you another copy. QUESTIONS SUBMITTED BY THE SUBCOMMITTEE Senator HARKIN. That is all right, if we have got it here. And you will send that other stuff up on the Medicare bidding thing. We have some other questions I want to cover with you on mainframe acquisition and all that, but we can do that in writing. Thank you very much. There will be some additional questions which will be submitted for your response in the record. |