Public Papers

Message to the Congress Transmitting the Annual Report of the Railroad Retirement Board


To the Congress of the United States:

I hereby submit to the Congress the Annual Report of the Railroad Retirement Board for Fiscal Year 1989, pursuant to the provisions of section 7(b)(6) of the Railroad Retirement Act, enacted October 16, 1974, and section 12(l) of the Railroad Unemployment Insurance Act, enacted June 25, 1938.

The Railroad Retirement Board (RRB) serves over 900,000 railroad retirees and their families and 290,000 railroad employees who rely on the system for retirement, unemployment, disability, and sickness insurance benefits. Beneficiaries depend on the financial integrity of the pension fund for payment of their benefits.

Unfortunately, the long-term financial outlook for the rail pension system remains bleak, primarily because of steady drops in rail employment. Time and again, refinancing legislation has been enacted to address the Board's chronic solvency crises, yet the trust funds still have a billion unfunded liability.

In 1987, the Congress acknowledged the problems faced by the system, and the rail sector was given a chance to address them with the creation of the seven-member legislative advisory Commission on Railroad Retirement Reform. The Commission was directed to examine different ways to resolve the long-term stability of the railroad pension system that do not include continued general fund subsidies. I urge the Commission to adhere to the Congress' wishes and propose ways to put the total cost of current and future rail pensions on a sound basis financed solely with rail sector resources.

In 1983, the rail sector was granted a limited rail pension subsidy by a diversion of Federal income tax payments to the rail fund. The temporary subsidy expires at the end of fiscal year 1990. Extending the subsidy would set an undesirable and threatening precedent. In the long run, railroad workers will be served best by stable rail sector funding. The condition of our budget calls for restraint on Federal spending. I therefore strongly oppose renewal of the diversion of Federal income taxes to the rail pension.

While the Commission has been examining the financial solvency of the Railroad Retirement Board, the Office of Management and Budget (OMB) has been scrutinizing its operations and recently completed a Management Review of programs run by the Board. Based on that review, OMB and the Board are developing a joint plan to address RRB's management weaknesses. I am particularly pleased that the Board's Inspector General has in recent weeks identified million owed the Government. This good management work will benefit both railroad retirees and taxpayers generally. The Congress has also shown an interest in this review, and we would like to work with its Members on solutions to problem areas that could be improved with legislative changes.

George Bush

The White House,

September 11, 1990.