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Detailed Information on the
Rail Industry Pension Fund Assessment

Program Code 10009030
Program Title Rail Industry Pension Fund
Department Name Railroad Retirement Board
Agency/Bureau Name Railroad Retirement Board
Program Type(s) Direct Federal Program
Assessment Year 2007
Assessment Rating Effective
Assessment Section Scores
Section Score
Program Purpose & Design 100%
Strategic Planning 100%
Program Management 86%
Program Results/Accountability 87%
Program Funding Level
(in millions)
FY2007 $10,092
FY2008 $10,404
FY2009 $10,739

Ongoing Program Improvement Plans

Year Began Improvement Plan Status Comments
2007

Modernizing the delivery of customer service by implementing a nationwide toll-free telephone system that can automatically route calls to available representatives.

Action taken, but not completed This initiative helps the program improve the management of customer calls to claims representatives. It is particularly important in light of projected declines in the rail population and beneficiaries over the next 10 years, and anticipated reductions in the agency??s staff and budgetary resources. Next steps include the expansion of the program??s interactive voice response system.
2007

Expanding the document imaging system currently used in agency headquarters to field offices, reduces paperwork, improves efficiency and effectiveness, and helps protect personally identifiable customer information within a secure electronic environment.

Action taken, but not completed This initiative provides for faster, more efficient and effective service to the public by making copies of important claims documents available electronically for immediate processing. It also reduces the frequency of mailings containing personally identifying information to headquarters.
2006

Improving the information systems infrastructure through database conversion and data optimization initiatives, which will enable further modernization of claims processing systems in the future.

Action taken, but not completed During 2006 and 2007, RRB completed a major infrastructure improvement project to change its database environment from a sequential database to a relational database, which allows for development of more effective and efficient systems. In 2008, the RRB is optimizing the data in the new relational environment to enable various system modernization initiatives in subsequent years.

Completed Program Improvement Plans

Year Began Improvement Plan Status Comments

Program Performance Measures

Term Type  
Long-term/Annual Outcome

Measure: Recurring Payment Accuracy - Initial Award Actions


Explanation:Percentage of dollars paid correctly as a result of adjudicative action. Initial activities are those associated with the processing of applications for employee, spouse, widow(er) and disability benefits. Since the program's primary mission is to provide benefits for rail employees, their spouses, widows and families, ensuring that their benefits are computed without material error is one of the critical goals of the program.

Year Target Actual
2001 99.60% 99.89%
2002 99.80% 99.97%
2003 99.50% 99.91%
2004 99.80% 99.36%
2005 99.00% 99.62%
2006 99.00% 99.91%
2007 99.00% 99.82%
2008 99.50%
2009 99.75%
2010 99.75%
2011 99.90%
2012 99.90%
2013 99.90%
Long-term/Annual Outcome

Measure: Timeliness of Disability Determinations


Explanation:Percentage of determinations within 100 days of filing an application. The disability program provides benefits to railroad workers and their dependents during periods of disability. Determining these disability cases as quickly as possible is crucial so that if an individual is found to be disabled, payments can begin.

Year Target Actual
2001 62.0% 56.5%
2002 67.0% 53.7%
2003 55.0% 56.3%
2004 65.0% 55.9%
2005 55.0% 67.9%
2006 55.0% 65.9%
2007 63.0% 69.6%
2008 68.0%
2009 70.0%
2010 70.0%
2011 75.0%
2012 75.0%
2013 78.0%
Long-term/Annual Output

Measure: Number of Electronic Services Available to Beneficiaries


Explanation:Number of services available through electronic media. These services include allowing rail employees to estimate annuities, and view service and compensation history statements online, and for beneficiaries to request duplicate Medicare cards, tax statements, and letters of income verification.

Year Target Actual
2004 N/A 12
2005 15 14
2006 17 16
2007 17 16
2008 18
2009 18
2010 19
2011 21
2012 21
2013 22
Long-term/Annual Output

Measure: Number of Electronic Services Available to Rail Employers


Explanation:Number of services available through electronic media. These services include automated reporting of employee compensation by employers, which help ensure that wage records are correctly recorded.

Year Target Actual
2004 3 4
2005 6 4
2006 6 6
2007 6 7
2008 9
2009 18
2010 21
2011 25
2012 27
2013 29
Long-term/Annual Efficiency

Measure: Employer participation in on-line services


Explanation:Percentage of rail employers that use on-line services to exchange various types of information with the RRB. As more wage reporting is done electronically, this significantly decreases the processing time for posting wages to benefit records.

Year Target Actual
2004 30% 52%
2005 55% 55%
2006 60% 58%
2007 60% 62%
2008 65%
2009 73%
2010 76%
2011 90%
2012 90%
2013 90%
Annual Outcome

Measure: Timeliness of employee and spouse initial annuity payment (advance filed)


Explanation:Percentage adjudicated within 30 days after the annuity beginning date. Applicants can file for an annuity up to 90 days in advance. Railroad retirees and spouses are eligible for retirement annuities. This measure captures the time that a retiree or spouse waits before receiving a decision on their application.

Note: due to systems limitations, performance is tracked through the end of the adjudicative process, and does not include time (usually several days) between the end of the adjudicative process and certification of the payment to the Department of the Treasury.

In addition the RRB's OIG found a reporting flaw in the measurement process for certain 3rd party payment cases which affected 2 out of 150 sample cases.

Until such time as the systems are corrected, these limitations will continue to be disclosed in agency reports.

Year Target Actual
2005 92.0% 93.1%
2006 92.0% 92.9%
2007 92.0% 92.8%
2008 92.0%
2009 92.75%
2010 92.75%
Annual Outcome

Measure: Timeliness of employee and spouse initial annuity payment (if not advanced filed)


Explanation:Percentage adjudicated within 60 days after the application filing date or the annuity beginning date, whichever is later. Railroad retirees and spouses are eligible for retirement annuities. This measure captures the time that a retiree or spouse waits before receiving a decision on their application.

Note: due to systems limitations, performance is tracked through the end of the adjudicative process, and does not include time (usually several days) between the end of the adjudicative process and certification of the payment to the Department of the Treasury.

In addition the RRB's OIG found a reporting flaw in the measurement process for certain 3rd party payment cases which affected 2 out of 150 sample cases.

Until such time as the systems are corrected, these limitations will continue to be disclosed in agency reports.

Year Target Actual
2005 94.0% 97.3%
2006 94.0% 96.2%
2007 95.0% 96.8%
2008 96.0%
2009 96.8%
2010 96.8%
Annual Outcome

Measure: Timeliness of initial survivor annuity payments


Explanation:Percentage adjudicated within 60 days after the annuity beginning date or the date the application was filed whichever is later. Survivor's benefits are paid to dependents of rail employees after the primary worker is deceased. The applications must be quickly processed so that payments can be made to eligible widows, widowers and other family members.

Year Target Actual
2001 79.0% 80.9%
2002 79.0% 81.4%
2003 75.0% 86.0%
2004 80.0% 84.5%
2005 80.0% 92.8%
2006 80.0% 93.2%
2007 90.0% 93.3%
2008 94.0%
2009 94.0%
2010 94.0%
Annual Outcome

Measure: Timeliness of spouse-to-widow(er) conversion annuity payments


Explanation:Percentage adjudicated within 30 days of receipt of the notice of the employee's death. When a primary worker dies, the former spouse may be eligible to receive a higher benefit payment. This measure captures the amount of time before the widow/widower receives their adjusted benefit.

Year Target Actual
2001 89.5% 91.1%
2002 91.5% 91.3%
2003 89.0% 91.8%
2004 89.0% 94.1%
2005 90.0% 94.6%
2006 90.0% 95.7%
2007 93.0% 94.8%
2008 94.0%
2009 95.1%
2010 95.1%
Annual Efficiency

Measure: Return on cost of program integrity efforts


Explanation:Dollar recoveries and savings compared to dollars spent on program integrity activities.

Year Target Actual
2001 $3.60:$1.00 $5.47:$1.00
2002 $3.80:$1.00 $5.48:$1.00
2003 $3.80:$1.00 $5.68:$1.00
2004 $4.50:$1.00 $4.84:$1.00
2005 $3.80:$1.00 $5.11:$1.00
2006 $3.80:$1.00 $5.36:$1.00
2007 $3.80:$1.00 $5.48:$1.00
2008 $5.00:$1.00
2009 $5.36:$1.00
2010 $5.48:$1.00

Questions/Answers (Detailed Assessment)

Section 1 - Program Purpose & Design
Number Question Answer Score
1.1

Is the program purpose clear?

Explanation:

The Railroad Retirement Act (RRA) program purpose is clear: to provide retirement and survivor benefits for eligible railroad workers and their families.

Established in the 1930's, the RRA provided railroad workers with a separate, nationwide retirement system. This program provided continuity for rail employees, ensuring benefits even if they moved from one company to another or if their employers merged.

Today, the RRA program continues to provide a comprehensive retirement program for rail employees, their families and their survivors.

Evidence:

Railroad Retirement Act -- see U.S.C. §§ 231-231v:45 http://www.access.gpo.gov/uscode/title45/chapter9_subchapteriv_.html

RRB Mission Statement -- "The Railroad Retirement Board's mission is to administer retirement/survivor and unemployment/sickness insurance benefit programs for railroad workers and their families under the Railroad Retirement Act and the Railroad Unemployment Insurance Act. These programs provide income protection during old age and in the event of disability, death or temporary unemployment and sickness. The Railroad Retirement Board also administers aspects of the Medicare program and has administrative responsibilities under the Social Security Act and the Internal Revenue Code.

In carrying out its mission, the Railroad Retirement Board will pay benefits to the right people, in the right amounts, in a timely manner, and will take appropriate action to safeguard our customers' trust funds. The Railroad Retirement Board will treat every person who comes into contact with the agency with courtesy and concern, and respond to all inquiries promptly, accurately and clearly."

For a more detailed explanation, please see the Profile of the Railroad Retirement Board on pages 50 to 53 of the RRB Strategic Plan via the following link: http://www.rrb.gov/pdf/strategicplan/strategicplan2006.pdf

CRS Report for Congress, "Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits," updated January 16, 2007

YES 20%
1.2

Does the program address a specific and existing problem, interest, or need?

Explanation:

Yes, the Railroad Retirement Act provides a uniform, nationwide retirement and survivor benefit package for eligible railroad workers and their families. The need for such a program is as great today as it was in the 1930's when the program was created to provide a certain level of post-retirement income security for employees in the railroad industry when private pension plans of railroad employers were failing. Although the social security system was in the planning stages in the 1930's, railroad workers sought a separate retirement system that would continue and broaden the existing railroad pension plans under a uniform national program. Legislation was enacted in 1934, 1935, and 1937 to establish a railroad retirement system separate from the social security program legislated in 1935. The railroad retirement program, unlike the social security program, provided for crediting service prior to 1937 to meet the need of employees who had been covered by private railroad pension plans.

Like the social security system, one aspect of the railroad retirement program is the provision of social insurance benefits for railroad workers and their families. However, the railroad retirement system goes beyond provision of social insurance benefits and provides retirement/survivor/disability benefits designed to meet the needs of railroad employees and their families.

The railroad retirement system is an entitlement program that provides income security to railroad retirees and their families after long careers in the railroad industry. The railroad retirement system is highly valued by railroad employees, railroad retirees, and their families. As noted above, in addition to providing social insurance benefits for railroad workers and their families, the railroad retirement system addresses the needs of retired and disabled railroad workers and their families by providing benefits above and beyond social insurance benefits. Examples of such benefits are the provision of occupational disability annuities and full retirement benefits at age 60 for career railroad employees who have at least 30 years of railroad service. These benefits are very important to railroad employees, many of whom work their entire career in occupations that involve strenuous physical activity. The railroad retirement system also provides higher benefits than those provided under the Social Security Act. Based on a restructuring of the railroad retirement system in 1974, benefit amounts in excess of social security level benefits are generally referred to as tier II benefits. Tier II benefits are based on an employee's years of railroad service and average compensation during the high five years of service.

In order to fund railroad retirement benefits, railroad employers and railroad employees have paid taxes in excess of taxes paid by employers and employees covered by the Social Security Act. When the railroad retirement system has faced financing issues in the past, railroad employers and railroad labor have worked together, often at the direction of Congress, to address the funding issues through increases in tax rates and/or reductions in benefits. Agreements reached by railroad employers and railroad labor concerning financing and benefit issues, when enacted into law, have contributed significantly to the current favorable financial condition of the railroad retirement system.

Evidence:

During fiscal year 2006, retirement-survivor benefits of nearly $9.4 billion were paid to about 619,000 beneficiaries. See page 1 of the Railroad Retirement Board Agency Overview via the link: http://www.rrb.gov/opa/agency_overview.asp

The RRA program is financed by taxes paid by both railroad employees and employers. Tax rates are applied up to an annual maximum amount. The 2006 tier one tax rate was 7.65 percent for both employers and employees. The 2006 tier two tax rates were 12.6 percent and 4.4 percent for employers and employees respectively. For more historical information on RRA tax rates please use the link: http://www.rrb.gov/pdf/act/TAXRATE.pdf

Public Law 97-35, Title XI, Subtitle D, 95 Stat 628 (1981)
Public Law 98-76, 97 Stat. 411
Public Law 91-377, 84 Stat. 791 (1970)
Public Law 100-203, Title IX, Section 9033, 101 Stat. 1330-296 (1987)

YES 20%
1.3

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation:

The RRA program is a unique program available solely to railroad workers and their families and does not duplicate benefits provided under other government programs or private pensions. There are provisions in the law to prevent overlapping retirement and survivor benefits from the Social Security Administration (SSA) and the Office of Personnel Management (OPM). There is also a provision in the law providing for a reduction in the amount of a supplemental annuity payable to a retired railroad worker if he or she is also receiving a private pension payment from a railroad which is funded entirely by contributions made by the railroad employers.

The railroad retirement system was completely restructured in 1974 to coordinate benefits under the railroad retirement and social security systems where employees had sufficient employment credits to be covered by both systems. The restructured system, which remains in existence today, provides for a two-tier railroad retirement benefit, with tier I being a social security level benefit, which is based on combined railroad retirement and social security employment, and tier II which is based solely on railroad service. The tier I benefit component of a railroad retirement annuity is reduced by the amount of any social security benefit payable to an annuitant to avoid duplication of benefits based on the same creditable service. Under the restructured RRA of 1974, benefits in excess of the social security equivalent benefit amount are generally payable as tier II benefits. These benefits are also closely coordinated with social security benefits to avoid duplication of benefits on the same service record.

Although some aspects of the railroad retirement program are similar to the social security program, there are many differences that have developed between the systems to address specific needs of the railroad industry. Tier I benefits are computed using social security benefit formulas, but eligibility requirements under the two systems are different. Interfund transfers occur between the Railroad Retirement Trust Funds and the Social Security Trust Funds. This interchange is designed to place the Social Security program in the same financial position in which it would have been if railroad employment had not been excluded from Social Security coverage.

Tier I benefits are payable to certain beneficiaries who would not receive a benefit under the social security system. For example, railroad employees who have at least 30 years of railroad service may retire under the railroad retirement system with full benefits, whereas age reduced benefits are not payable under the Social Security Act until age 62. Another example is the occupational disability annuity under the RRA, a benefit not available under the Social Security Act. Finally, as noted above, the RRA provides for payment of a tier II benefit over an above the amount of any social security equivalent level benefit that may be payable under the RRA to a retired or disabled railroad employee and the employee's family. Tier II benefits have some similarity to private pensions paid by employers, but they are closely coordinated with social security and railroad retirement tier I benefits to avoid possible duplication of benefit payments. Combining tier I and tier II benefits in a single annuity payable by the Railroad Retirement Board (1) means that railroad retirement beneficiaries need only look to one entity to meet their retirement needs; (2) greatly simplifies the application process for beneficiaries; and (3) reduces paperwork.

Occupational disability annuities and unreduced annuities at age 60 for railroad employees with at least 30 years of service are very important to railroad employees, many of whom have worked their entire career in occupations that involve strenuous physical activity.

Evidence:

Proposals have been made in the past to phase out the railroad retirement system and replace it with coverage under the social security system and some sort of private plan. Independent commissions have been established by legislation with direction to review and recommend possible restructuring of the system. See Public Laws 91-377 and 100-203. Recommendations have been made by commissions for changes in the system, including the restructuring that occurred in 1974. Moreover, commissions have recommended changes that have been incorporated into agreements between railroad employers and railroad labor for financing and benefit changes that have then been enacted into law. Changes agreed to between railroad employers and railroad labor have contributed significantly to the financial condition of the railroad retirement system being more favorable than that of the SSA OASI system at the present time.

Railroad Retirement Act - Sections 2-4 - 45 U.S.C. § 231a - 231c, see http://www.access.gpo.gov/uscode/title45/chapter9_subchapteriv_.html .

YES 20%
1.4

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation:

There are no major flaws that limit the RRA program's effectiveness or efficiency. Over the years, the program's design has been updated through legislation generally resulting from agreements between rail labor and rail management. The most recent example is the Railroad Retirement and Survivors' Improvement Act (RRSIA) of 2001, (Public Law 107-90), which adjusted benefit formulas and eligibility criteria. RRSIA also revised the financing of the railroad retirement system by adding a tax ratchet to raise or lower taxes as needed and by establishing the National Railroad Retirement Investment Trust (NRRIT) to manage and invest railroad retirement assets.

The agency continually pursues opportunities for improvement identified in its programmatic reviews. As a result, the RRA program has realized efficiencies, providing a high level of service with fewer resources.

Finally, the design of the RRA program provides for effective and efficient delivery of benefits and services to the intended beneficiaries, who require retirement, survivor and disability support. While there are aspects of the program that are similar to other federal and state programs, the RRA program is uniquely set up to provide combined services to railroad employees in an efficient manner, and has a low administrative cost of about 1%.

Evidence:

Section 15(j) of the Railroad Retirement Act - 45 U.S.C. §231n, see http://www.access.gpo.gov/uscode/title45/chapter9_subchapteriv_.html .

Public Law 107-90

CRS Report for Congress, "Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits," updated January 16, 2007

See the 2006 Annual Performance Report on pages 45-52 of the Fiscal Year 2006 Performance and Accountability Report via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

See agency staffing history on page 15 of the RRB's Justification of Budget Estimates for Fiscal Year 2008 via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

YES 20%
1.5

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation:

The Railroad Retirement program provides for near universal coverage for retirement and survivor benefits for railroad workers and their families. It does not duplicate other programs, but coordinates with them to ensure that there is no overlap.

As of the end of fiscal year 2006, the RRA program provided $9.5 billion in benefits to approximately 619,000 retirement and survivor beneficiaries. Administrative costs for this and the Railroad Unemployment Insurance program together are about 1 percent, a very efficient targeting of program resources to the actual beneficiaries.

The RRB adjudicates all applications for benefits and pays only those that are verified through rail employer reports of service and compensation and supported by other proofs required to show entitlement under the law. Also, the agency has educational programs to help target active railroad employees and make pre-retirement counseling available to them.

The RRB conducts numerous, comprehensive monitoring programs, (e.g., annual representative payee monitoring, student monitoring, centenarian contact program) to ensure benefits are being paid to the correct beneficiaries.

The fact that the level of RRA improper payments is below the threshold defined in federal guidance as "significant" further demonstrates that benefits are reaching the intended beneficiaries.

The high rate of RRA annuitants participating in the EFT program (87%) gives further assurance that payments are reaching beneficiaries in a safe and secure manner.

As stated in response to an earlier question, the railroad retirement program is financed almost entirely through taxes paid by railroad employers and employees into the Railroad Retirement Trust Fund. There are two aspects of financing which are sometimes perceived as subsidies to this program. Both support the mission of the program and are not unintended. The first, the Vested Dual Benefit provision, has been addressed through legislation, and is being phased out over time. The second relates to the treatment of income taxes on Railroad Retirement benefit payments which are returned to the Railroad Retirement Trust Funds. This treatment of income tax revenues for Tier 1 benefits is parallel and consistent with the tax treatment under the Social Security Act.

Evidence:

See the Program Integrity key performance indicator on page 29 of the Fiscal Year 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

Improper Payments Information Act (IPIA) Reporting Details on pages 105-108 of the Fiscal Year 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

Public Law 98-21, 97 Stat. 65, Social Security Amendments of 1983, April 20, 1983

Public Law 98-76, 97 Stat. 411, Railroad Retirement Solvency Act of 1983, August 12, 1983

Public Law 103-296 , 108 Stat. 1464, Social Security Independence and Program Improvements Act of 1994, August 15, 1994

CRS Report for Congress, "Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits," updated January 16, 2007

YES 20%
Section 1 - Program Purpose & Design Score 100%
Section 2 - Strategic Planning
Number Question Answer Score
2.1

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation:

The purpose of the agency, and of the RRA program itself, is clearly stated in the agency mission statement:

"In carrying out its mission, the Railroad Retirement Board will pay benefits to the right people, in the right amounts, in a timely manner, and will take appropriate action to safeguard our customers' trust funds. The Railroad Retirement Board will treat every person who comes into contact with the agency with courtesy and concern, and respond to all inquiries promptly, accurately and clearly."

The most important outcomes, as stated clearly in the mission, are that individuals receive their benefits correctly, and on time. This is also reflected in RRB's Strategic Plan, which states the two primary strategic long-term goals of the agency:

?? To provide excellent customer service
?? To serve as responsible stewards for customer trust funds and agency resources.

Nested within these goals are 5 performance measures which indicate progress towards achieving the goals. The long-term timeliness and accuracy measures focus on outcomes that directly impact the customer - specifically how quickly the customer receives payments due and how accurately those payments are computed. These goals provide meaningful indicators of the RRB's achievement of its fundamental purpose and mission of providing benefits to the right people, in the right amounts in a timely, efficient manner:

?? Maintaining a high benefit accuracy rate. This includes the performance measure for payment accuracy of initial entitlement recurring payments
?? Achieving improvement in the timeliness of disability determinations

The last long-term goal focuses on outputs and efficiency; progress is gauged by 3 performance measures related to information technology improvements:
?? Increasing the number of electronic service options available for beneficiaries
?? Increasing the number of electronic service options available for rail employers
?? Increasing the percentage of employers who use available electronic service options.

Evidence:

See Program Performance Measures Section of this assessment.

See the Information Technology Strategy and Benefits section, pages 71-77, of the RRB's Justification of Budget Estimates for 2008. This can be reached via the following link:http://www.rrb.gov/pdf/bfo/JBE08.pdf

YES 12%
2.2

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation:

The targets and timeframes for the RRA program's long-term measures are ambitious because they require improvement or maintenance of existing high performance levels while the program is required to achieve administrative efficiencies. The measure related to on-line services anticipates an increase of employers using the available on-line services from approximately 60% to 90% between 2008 and 2011. Likewise, the program is striving to increase the number of services available to rail employers by 9 and the number of services available to beneficiaries by 3 between 2008 and 2011. The timeliness of disability determinations goal will also increase from 64% in 2008 to 75% in 2011. This goal of 75% is significantly above any recent past performance.

The long-term goal for the accuracy measure is to maintain the high payment accuracy rate that has been achieved three out of the past six years: 99.9%. This goal, while experience has shown it to be achievable, is still difficult to meet, and represents a significant challenge for the program in the coming years as the agency loses much of its experienced staff to retirement.

The RRB's Strategic Plan identifies the management challenges for maintaining excellent performance in a downsized environment. The agency anticipates that budgetary resources will be increasingly limited in the future, yet it must continue to meet customer expectations for high quality service (accurate, timely benefits delivered in an accessible, convenient manner). Long-term measures for benefit accuracy and for disability timeliness help meet that challenge. Long-term plans for developing additional electronic service options for beneficiaries and rail employers address customer expectations for new and improved services and provide innovative ways to operate effectively and efficiently in a downsized environment. All of these targets and timeframes are particularly ambitious and are dependent on IT investments in new system development.

Evidence:

See Strategic Issues and Challenges on pages 4-6 of RRB Strategic Plan 2006-2011. This can be reached via the following link: http://www.rrb.gov/pdf/strategicplan/strategicplan2006.pdf

See agency staffing history on page 15 of the RRB's Justification of Budget Estimates for Fiscal Year 2008 via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

See Exhibit 53 on pages 80-81 of the 2008 Budget Submission. See the following link: http://www.rrb.gov/bfo/budget_submission/2008/intro.asp

YES 12%
2.3

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation:

The RRA has annual measures that address program performance and demonstrate progress toward achieving the program's long-term goals and ultimately the agency mission of paying the right amounts to the right people in a timely, efficient manner. The most important outcomes for beneficiaries, as stated clearly in the mission, are that individuals receive their benefits correctly, and meet their expectations for timely delivery. As discussed in Question 2.1, specific indicators in the annual performance budget are linked to each of the RRB's two strategic goals:

?? To provide excellent customer service
?? To serve as responsible stewards for customer trust funds and agency resources.

Annual performance indicators deal with the accuracy and timeliness of payments, ensuring efficient and effective business transactions with covered railroad employers, and ensuring the integrity of benefit programs.

As further discussed in the response to Question 2.1, each of the long-term goals for the RRA program can be linked to specific indicators in the RRB's annual performance budget that demonstrate progress toward achieving the program's long-term goals.

Evidence:

See the Performance Measures Section of this assessment for information on annual measures.

See RRB's Customer Service Plan at: http://www.rrb.gov/AandT/customer_service_plan.asp

YES 12%
2.4

Does the program have baselines and ambitious targets for its annual measures?

Explanation:

The RRB has well-established baselines for its current annual RRA measures. Most key measurement data for accuracy and timeliness indicators, as well as several other indicators, date back to 2001. Although the program has achieved most of its annual targets in the past, the targets are still ambitious. Also, the targets for 2009 will be increased, to reflect that many of the measures have achieved their targets in recent years. The goal for the payment accuracy measure, which has achieved over 99% in the past, will be increased in 2009.

When evaluating whether these measures are ambitious, one factor that must be considered is the downsizing that the agency has undergone, while performing a caseload of work that declined much less rapidly than the number of staff. The RRB has reduced its staff by over 44% since 1993, while the customer base has declined by only 28%. The program has met their targets in large part due to significant automation and modernization of systems to produce new efficiencies in claims processing.

One annual target, the timeliness of initial survivor payments, is 90% for FY 2007. This was an increase of 10% over the goal of 80% which had been in place for the previous 3 years. Based on actual performance of 92.8%-93.2% for FY 2005 and FY 2006, the annual targets for FY 2008 and FY 2009 will be increased significantly, from 90% to 94%. Other annual targets for FY 2009 will be adjusted similarly.

Into the future, meeting the annual goals for 2009 and beyond will require additional efficiencies, since over 56% of RRB staff is eligible for retirement within the next 5 years. To achieve similar targets in the future, the program will require realizing significant gains in productivity and identification of further efficiencies through additional automation initiatives with fewer and less experienced staff in the out years.

Evidence:

See agency FY 2008 Final Performance Budget section on pages 43-57 of the RRB's Justification of Budget Estimates for Fiscal Year 2008. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

See agency staffing history on page 15 of the RRB's Justification of Budget Estimates for Fiscal Year 2008 via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

YES 12%
2.5

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation:

Annual and long-term goals of the RRA program involve accurate and timely payment of benefits to entitled beneficiaries. These are supported through agreements and partnerships with other federal agencies, including the Social Security Administration (SSA), the Centers for Medicare & Medicaid Services (CMS), the Office of Personnel Management (OPM), the Internal Revenue Service (IRS) and the Department of Treasury. The RRB also partners with two contractors, QTC Medical Services Inc. (QTC) and Consultative Medical Examinations, LTD (CEL), to assist with disability benefits under the RRA program. The RRB has contracts or formal written agreements with these partners; their performance contributes to the RRB's success in achieving the RRB's disability timeliness goal.

Evidence:

Agreements with SSA to maintain system-to-system computer exchanges of data, to disclose death record information to the RRB, and to provide RRB access to SSA databases

Agreement with CMS to disclose RRB payment data

Agreement with OPM to disclose civil service benefit data to the RRB

Procedures established with IRS to send RRB tax statements to IRS for review and approval, to file 3 required tax returns, and to make electronic deposits of withheld taxes

Procedures established with Treasury (FMS) to issue benefit payments

Agreement with Treasury to use Pay.Gov for debt collections under the RRA

Contract with QTC (QTC Medical Services, Inc.) sets standards for timely contractor performance

Contract with CEL (Consultative Medical Examinations, LTD.) sets standards for timely contractor performance

YES 12%
2.6

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation:

There are a number of evaluations which address different components of the RRA program, including the financial status, the actuarial soundness of the program, the administrative costs, payment accuracy and timeliness, the disability determination process, and overall customer satisfaction with the program. These various evaluations are conducted yearly or as needed.

The RRB has a statutory Inspector General who reports to the Chairman of the Board and submits separate budget and performance information to OMB and Congress. The Office of Inspector General (OIG) regularly conducts a wide variety of reviews and audits of the RRA program, on topics ranging from compliance with the laws and regulations to specific requirements of program entitlement and eligibility. The OIG has audited the RRB's use of the Employment Data Maintenance database, which provides a basis for eligibility under the railroad retirement program, and conducted audits on performance reports measures. In addition, the OIG conducts a comprehensive financial statement audit, which includes a review of the RRB's administrative costs, annually. The RRB reviews all OIG reports and is in the process of addressing issues raised in them.

The RRA requires periodic reviews of the actuarial soundness of the railroad retirement system. The Railroad Retirement Act of 1974 authorizes the establishment of a three-member Actuarial Advisory Committee comprised of independent representatives from railroad labor, management and the public, who are required to belong to the American Academy of Actuaries and are qualified in the evaluation of pension plans. In planning and carrying out the actuarial valuation for the railroad retirement system, the committee counsels with the Chief Actuary as to the structure, actuarial methods, actuarial assumptions, and procedures of the valuation and as to the scope and content of his report. The committee helps the agency to serve as a responsible steward for customer trust funds by ensuring that the amounts in the funds are projected and reported accurately.

The American Customer Satisfaction Index (ACSI), independently conducted by the Claes Fornell International Group, periodically evaluates RRA customers' satisfaction in areas such as the accuracy and clarity of information, the ease of applying for benefits, and timeliness in receiving service, as well as their confidence in the RRB's ability to handle their complaints and do a good job in the future. This instrument also evaluates customer satisfaction with the professionalism and courtesy of RRB personnel and provides comparative data with other agencies and organizations that provide similar services.

Advisory doctors, representing rail industry (labor and management), are authorized by law to review agency medical decisions. An audit was done in 2000; another audit is underway during 2007. In addition, consulting physicians from Consultative Medical Examinations, LTD (CEL) perform a quarterly quality review of disability documentation to ensure it is adequate to support medical decisions.

RRA adjudicative and payment accuracy is measured in regular reviews conducted by quality assurance staff within the RRB's Assessment and Training component. Assessment and Training also evaluates policies and processes through special studies, as needed. Assessment and Training reports to the Director of Programs and is independent of the organizations it assesses. The quality assurance review process used by Assessment and Training has been independently inspected by the OIG.

Evidence:

The Inspector General Act of 1978, as amended, 5 U.S.C. Appendix 3 http://www.access.gpo.gov/uscode/title5a/5a_2_.html

See the Office of Inspector General's recent Semiannual Reports: such as September 2006, March 2006: http://www.rrb.gov/oig/library.asp

An overview of the American Customer Satisfaction Index (ACSI) can be reached via the following link: http://www.theacsi.org/

Results of the 2006 ACSI Survey of the disability benefit process can be accessed via the following link: http://www.rrb.gov/opa/pr/pr0603.asp

Results of the 2005 ACSI Survey of the survivor benefit process and of the 2001 ACSI Survey of the retirees are available upon request.

Twenty-third Actuarial Valuation (October 2006); see http://www.rrb.gov/pdf/act/valuation.pdf

Section 220.10(b) of the Board's regulations (20 CFR 220.10(b)), in accordance with section 2(a)(2) of the Railroad Retirement Act (45 U.S.C. § 231a(a)(2) )

Fiscal Year 2006 Performance and Accountability Report; see: http://www.rrb.gov/pdf/bfo/par2006.pdf

YES 12%
2.7

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation:

The RRB budget request explicitly ties all administrative expenses to the agency's two strategic goals:

?? To provide excellent customer service
?? To serve as responsible stewards for customer trust funds and agency resources

The RRB has also developed annual performance goals that directly relate to the long-term goals in the Strategic Plan. Further, each of the annual performance goals is linked to specific performance measures.

The annual performance budget for program administration shows the variations in results attainable at different budget levels for each of the annual performance goals and reflects the agency's ability to support the RRA mission at various funding levels. The performance budget is based on current workload projections and reflects the impact of recent and planned improvements to the agency's information systems.

The RRB's performance budget includes all direct and indirect costs. When RRB generates costs for other programs, it reimburses those other programs for those costs. It presents detailed performance goals, performance indicators, and production target levels, and also shows the effect of varying levels of resources (including funding for IT investments) on performance and production. The performance budget also supports other programmatic and functional plans, such as the Customer Service Plan and Information Technology Capital Plan.

When the agency anticipates that budgetary resources will be limited in the future, the budget and performance plans still reflect long-term improvement in, or at least maintenance of, high program performance levels in spite of fewer resources.

Evidence:

See the Budget Authority by Strategic Goal discussion on page 14 of the RRB's Justification of Budget Estimates for Fiscal Year 2008. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

See Final Performance Budget section on pages 29-57 of the RRB's Justification of Budget Estimates for Fiscal Year 2008. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

YES 12%
2.8

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation:

The RRB continuously assesses, evaluates and improves its strategic planning effort to prevent planning deficiencies. The Planning Council oversees both mid-year and year-end monitoring of the RRB's annual performance budget. A separate committee reviews and updates the Strategic Plan every three years. In the 2006 Strategic Plan update, the agency expressed its long-term goals more clearly. In addition, the RRB has updated the annual performance budget to more clearly focus on outcome measures.

Evidence:

Administrative Circular (REF) RRB-2, updated on October 17, 2006, describes the purpose, composition, authority and frequency of meeting of the Planning Council.

YES 12%
Section 2 - Strategic Planning Score 100%
Section 3 - Program Management
Number Question Answer Score
3.1

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation:

RRA benefit accuracy and timeliness data are collected on a regular basis. Managers validate this data through a documented process, certify its accuracy and disclose any limitations about the data. This performance information is used to make adjustments in resource allocation and workload management and to identify training needs and opportunities for further improvements through automation and procedural improvements.

Performance of partners, such as QTC Medical Services Inc. (QTC) and Consultative Medical Examinations, LTD (CEL), is evaluated monthly to ensure that contractual obligations are being met.

In 2005, the RRB's Inspector General (IG) identified deficiencies and inconsistencies in how the agency tracks timeliness data for 3 key performance indicators. (This includes 2 indicators for retirement benefits and 1 for survivor benefits.) As a result, the RRB withdrew published performance data for previous years for 2 of these indicators. The agency has corrected some of the problems identified by the IG and has action plans in place for the remaining issues.

Evidence:

The RRB conducts annual analytical quality assurance (QA) case reviews, which not only identify individual case exceptions but also determine underlying causes and whether systemic problems are a contributing factor. QA findings are summarized, shared and discussed with agency staff semi-annually. The staff works together to develop solutions which are compiled in an annual report published internally on the agency's intranet and shared with the Board Members and the Office of Inspector General. Pending solutions are tracked until implemented. Examples of changes made as a result of this process include improved system edits to prevent errors in annuity calculations and the creation of case referrals to ensure proper documenting and crediting of military service.

Timeliness data is collected twice a year and compared to the agency's Customer Service Plan (CSP), as well as the annual performance targets. The CSP can be accessed via the following link: http://www.rrb.gov/pdf/ib3.pdf.

A summary of the data, as well as charts showing trends and volumes over time is published on the agency's intranet, and released internally to program managers who make adjustments as needed to ensure that targets will be met. Once a year, information about the percentage of customers receiving the service promised in the CSP is published via press releases, posters and on the agency web site. See http://www.rrb.gov/. As an example, managers track and analyze any retirement applications that did not make the timeliness standard promised in the CSP, so that they can determine causes, and monitor similar cases in the future to ensure that the standards are being met. They also use pending lists to monitor active cases, to ensure timely handling.

See OIG Report "Review of Customer Service Performance Measures for Timeliness of Initial Railroad Retirement Annuity Payments", Report 05-05, May 17, 2005 at http://www.rrb.gov/pdf/oig/REPORTS/0505.pdf and "Accuracy and Reliability of GPRA Performance Measures: Timeliness of Non-Disability Survivor Annuity Payments", Report 06-03, January 30, 2006 at http://www.rrb.gov/pdf/oig/REPORTS/0603.pdf . These reports point out problems with how certain performance measurement data were tracked and reported. Since these reports were issued, the agency has corrected one system problem, requested system changes to correct the remaining problems, and modified the wording of the performance goals and measures to more fully reflect what was actually being reported and measured. For those areas where performance data might still be inaccurate in some situations, the performance measures involved are footnoted to explain the limitations. Finally, the agency has taken steps to improve the internal controls over the process of collecting, validating, documenting and reporting performance data.

Administrative Circular RRB-2, published October 11, 2006, describes Procedures for Documentation, Validation and Certification of Performance Information.

YES 14%
3.2

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation:

RRB managers at all levels are held accountable for key performance results. In particular, Senior Executive Service (SES) performance plans are linked to the Strategic Plan. Performance plans of responsible managers also include elements and standards that hold them accountable to key performance goals.

Performance of partners, such as QTC Medical Services Inc. (QTC) and Consultative Medical Examinations, LTD (CEL), is evaluated monthly to ensure that contractual obligations are being met. Payment is not made to contractors if the product they deliver does not meet the contractual standards. RRB's relationships with Treasury, SSA, CMS, and other partners are defined by statute, memoranda of understanding, or formal procedures.

Evidence:

The RRB's SES performance appraisal program has received provisional certification from OPM for 2004 through 2006. The Office of Personnel Management encouraged the RRB to request full certification for 2007 because the RRB has consistently met the requirements for certification even when the requirements have been modified.

Contracts with QTC and CEL contain clauses requiring contractor compliance and reporting on cost, schedule and performance.

YES 14%
3.3

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation:

The RRB uses the Federal Financial System (FFS) for core financial operations. The system integrates budget preparation, budget execution, purchasing, accounts payable, automated disbursement, general ledger and supplies management. The program funds are obligated in a manner consistent with the plan and overall design of the program. The RRB's Fiscal Year 2006 Performance and Accountability Report (P&AR) included a management assurance that "The financial management systems of this agency maintain accountability for assets and provide reasonable assurance that obligations and costs are in compliance with applicable law, and that performance data and proprietary and budgetary accounting transactions applicable to the agency are properly recorded and accounted for to permit the timely preparation of accounts ??" The P&AR also included a management assurance that the financial management systems of the agency provide the RRB with reliable, timely, complete, and consistent performance and other financial information to make decisions and efficiently operate and evaluate programs. The Federal Financial System also provides a mechanism for reporting actual expenditures, and ensures that no obligations are issued for which there are not budgetary resources available to pay.

Railroad retirement and survivor benefit payments are mandatory outlays. The RRB's Bureau of the Actuary projects total amounts by fiscal year. In accordance with instructions in OMB Circular A-11, the RRB's Bureau of the Actuary also prepares a schedule of estimated monthly outlays, which includes administrative costs.

Administrative operations are managed in accordance with an annual performance budget prepared in connection with the agency's annual budget request. Initial allocations to the RRB's operating units are approved by the Board Members. Formal budget reviews are conducted during the year and reallocations are made as necessary, consistent with agency priorities. These adjustments are also approved by the RRB's Board Members. End-of-year operations are controlled to prevent wasteful year-end spending. Actual performance for the year is reported in the RRB's Government Performance and Results Act report, which is included in the agency's P&AR. There have always been minor positive unobligated balances at the end of the year, which remain available for 5 years to cover legitimate charges to that fiscal year.

Evidence:

Report on Budget Execution and Budgetary Resources (SF-133)

Financial Section of the Fiscal Year 2006 Performance and Accountability Report, pages 57-78. These can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

Required Supplementary Stewardship Information: Social Insurance Section of the Fiscal Year 2006 Performance and Accountability Report, pages 79-88. These can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

The budget review process which includes a review of initial allocations and a review of the budget at mid-year, third quarter and again at year-end.

Administrative Circular OA-14, Procurement of Goods and Services

YES 14%
3.4

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation:

The RRB continually looks for ways to improve program efficiency and administration of the RRA program, relying heavily on information technology improvements to offset the impact of staffing reductions. The following examples are currently in place and operational:

?? Document Imaging System, which enables many processes to be performed in a paperless, electronic manner;
?? Adjudication and payment systems, which provide consistent, accurate benefit calculations in an automated environment;
?? Comprehensive databases which store key data needed to administer benefits;
?? SPEED, a system designed to automate the processing of work deduction cases (those in which beneficiaries earn in excess of the annual earnings limitations); and
?? RESCUE, a system that automates the processing of service and compensation adjustments received after retirement.

The RRB is also working on several key information technology and telecommunications projects geared to achieve additional efficiencies and cost effectiveness, including:

?? Database conversion, a project to convert an outdated database platform used throughout most of the benefit systems to a more modern and flexible platform, to reduce risk and increase flexibility for future development efforts;
?? E-gov initiatives to improve services to beneficiaries and claimants (including on-line, Web-based applications and other functions);
?? Expanded internet reporting functions for rail employers;
?? Customer contact log, an on-line system to enable consistent tracking of customer contacts throughout the field service and headquarters; this will increase the flexibility of staff to handle customer calls and contacts from any location, regardless of their original point of contact; and
?? Introduction of nationwide toll-free telephone services, based on automated call distribution and including advanced interactive voice response (IVR) capabilities.

The RRA's accuracy and timeliness performance targets also help to achieve efficiency. Cases handled correctly the first time do not need to be reworked, thus saving unnecessary staff time; cases handled timely also prevent follow-up workloads such as phone calls and correspondence requesting status.

Finally, one efficiency measure that the RRB has had for many years is the program integrity ratio. This ratio (the sum of dollar recoveries and savings, per labor dollar spent) measures the cost effectiveness of the RRB's monitoring programs. For FY 2006, this ratio showed that the RRB recovered over $5 for every $1 spent on program integrity efforts.

Evidence:

Please see the program integrity efficiency measure included within the Performance Measures Section of this assessment.

See the Information Technology Strategy and Benefits section, pages 71-77, of the RRB's Justification of Budget Estimates for Fiscal Year 2008. This can be reached via the following link:http://www.rrb.gov/pdf/bfo/JBE08.pdf

See Strategic Goals and Objectives, page 21 of the Fiscal Year 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

YES 14%
3.5

Does the program collaborate and coordinate effectively with related programs?

Explanation:

To administer the RRA program, the RRB collaborates with other federal agencies as described in the examples below:

?? Social Security Administration: payment of social security benefits certified to the RRB; social security/railroad retirement data exchange system; record matches to detect earnings after retirement or notification of death; Financial Interchange of trust fund monies; transfer of jurisdiction and credits; coordination of mass adjustments to pay benefit increases for cost-of-living and earnings adjustments;
?? Centers for Medicare & Medicaid Services: coordination of Medicare enrollments and premium collection, and death matches;
?? Office of Personnel Management: data matching agreement to prevent erroneous payments;
?? Internal Revenue Service: withholding and reporting of income tax; and
?? Department of the Treasury: offset for debt recovery.

The RRA program also coordinates with the Railroad Unemployment and Sickness Insurance Benefit program for offset of benefits to prevent improper payments. Both programs collaborate by sharing data in the RRB's Employment Data Maintenance database, which stores railroad service and compensation data.

Evidence:

Agreements with SSA to maintain certain system-to-system computer exchanges of data, to disclose death record information to the RRB and extend RRB access to SSA databases

Agreement with CMS to disclose RRB payment data

Agreement with OPM to disclose civil service benefit data to the RRB

Procedures established with IRS to send RRB tax statements to IRS for review and approval, to file 3 required tax returns, to make electronic deposits of withheld taxes

Procedures established with Treasury to offset debt recovery

See SSA's 2006 Old-Age and Survivors Insurance Assessment, Response to Question 3.5 at /omb/expectmore/detail/10008001.2006.html

See the Program Financing section of the Fiscal Year 2006 Performance and Accountability Report, page 79. This can be accessed via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

YES 14%
3.6

Does the program use strong financial management practices?

Explanation:

In spite of ongoing and consistent positive indicators of strong financial management practices cited below, the answer to this question overall is "No" because of 3 material weaknesses in internal controls identified by the OIG. The three areas needing improvement were initially cited in the OIG's "Opinion on the Financial Statements," dated October 27, 2005. They were: information security, performance measures and control over the actuarial projection process. RRB has acknowledged all three weaknesses and has taken active steps toward improving each area. In his "Serious Management Challenges," dated October 6, 2006 and published in the RRB's FY 2006 Performance and Accountability Report, the Inspector General recognized that action is being taken on resolving the material weaknesses, but believes additional work must be done before these issues are resolved.

Otherwise, the RRB has strong and reliable financial management practices as described below:

1) The RRB's financial statements received an unqualified audit opinion in FY 2006 for the seventh consecutive year. During FY 2006, a first-time audit of the Statement of Social Insurance also resulted in an unqualified audit opinion.

2) As required by the Improper Payments Information Act of 2002, the RRB conducts reviews of improper payments. These annual analyses have consistently concluded that the level of improper payments under the RRA falls below the threshold identified as "significant" in the implementation guidance. Agency initiatives to continually reduce, prevent or minimize improper payments are ongoing.

3) The Railroad Retirement Act of 1974 authorizes the establishment of a three-member Actuarial Advisory Committee comprised of independent representatives from railroad labor, management and the public. They are required to belong to the American Academy of Actuaries and to be qualified in the evaluation of pension plans. In planning and carrying out the actuarial valuation for the railroad retirement system, the committee counsels with the Chief Actuary as to the structure, actuarial methods, actuarial assumptions, and procedures of the valuation and as to the scope and content of his report. Therefore, the committee helps the agency to serve as a responsible steward for customer trust funds by ensuring that the amounts in the funds are projected and reported accurately. In the most recent statement, contained in the Twenty-Third Actuarial Valuation as of December 31, 2004 (October 2006), the committee members said that they believed "that the actuarial assumptions are reasonable and that the valuation results present a fair picture of the financial condition of the railroad retirement system."

4) Finally, the RRB received a favorable fiscal year 2005 Performance Measures Scorecard from the Department of the Treasury's Financial Management Service (FMS).

Evidence:

See the Message from the Board Members, page 3 of the FY 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

See the Message from the Chief Financial Officer, page 57 of the FY 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

See the Opinion on the Financial Statements, pages 89-97 of the FY 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

See Management's Comments on page 104 of the FY 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

Twenty-Third Actuarial Valuation (October 2006); see http://www.rrb.gov/pdf/act/valuation.pdf

Department of the Treasury's Financial Management Service (FMS), Performance Measures Scorecard dated March 23, 2006, which includes performance indicators for timeliness, reconciliation of unexplained differences, consistency/integrity, and completeness for the reporting of fiscal year 2005 financial information to FMS. Each performance indicator has performance goals and the RRB has met all the goals listed for the four performance indicators.

NO 0%
3.7

Has the program taken meaningful steps to address its management deficiencies?

Explanation:

The RRB is taking action on the three material weaknesses in internal controls identified by the Inspector General. Action plans are in place, as described in the agency's 2006 Program and Accountability Report.

"Description of OIG-Identified Material Weaknesses:

1. The information technology security program is weakened by deficiencies in risk assessment, testing and evaluation, and access controls in both the general support and major application systems.

The fiscal year 2007 plan is to complete the management control review using controls structure for certification and accreditation testing. In fiscal year 2008, the plan is to resolve the two remaining audit recommendations associated with logical access controls; 23 related recommendations have been resolved to date. (The agency) will then evaluate the Information Technology Security material weakness to determine whether is has been eliminated.

2. The agency performance measurement program is weakened by deficiencies in data validation and the retention of supporting documentation.

The fiscal year 2007 plan is to adopt and implement procedures on data validation and retention of supporting documentation processes. (The agency) expect(s) to complete corrective action on this matter in fiscal year 2007.

3. The actuarial projection process is weakened because it is not supported by formal written policies, procedures and model documentation, and does not provide for a periodic evaluation of compliance with internal requirements.

The fiscal year 2007 plan is to prepare formal written policy and procedures documentation, and provide for a periodic evaluation of compliance with internal requirements. (The agency) expect(s) to complete corrective action on this matter in fiscal year 2007.Progress has been made in each area, specifically including the establishment of a validation process for performance data."

In addition, the RRB monitors progress on implementing recommendations from the program evaluation and quality assurance process, and pursues recommendations from audits by the Inspector General which impact the quality and timeliness of payments.

The RRB also adheres to the requirements of the Federal Managers Financial Integrity Act (FMFIA), assesses annually internal controls to identify any weaknesses in the RRA program and develops action plans for eliminating any identified problems.

Evidence:

Administrative Circular RRB-2, published October 11, 2006, describes Procedures for Documentation, Validation and Certification of Performance Information.

See the Office of Inspector General's recent Semiannual Reports: such as September 2006, March 2006: http://www.rrb.gov/oig/library.asp

See "Management Assurances" on pages 36 and 37, and Management's Comments on page 104 of the FY 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

YES 14%
Section 3 - Program Management Score 86%
Section 4 - Program Results/Accountability
Number Question Answer Score
4.1

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation:

The RRB has continued to make progress on the its long-term goals identified in Question 2.1, while maintaining high performance on annual goals, even as resources have been continually reduced over time.

The RRB is achieving annual targets that lead to achievement of 3 of the 5 long-term performance measures. In the first target, RRA benefit payment accuracy for initial adjudicative actions has consistently remained above 99 percent, and the targets have been met in almost every year. In the second goal, the timeliness of disability benefit decisions is trending upwards, having improved from 56.6% in FY 2001 to 65.9% in FY 2006.

In FY 2006, the RRB achieved the target in 1 of the 3 long-term performance measures related to information technology improvements. It did not meet the specific annual targets in FY 2006 for the other 2 IT measures. As of September 30, 2006, RRB's beneficiaries had 16 electronic services available to them. These include services such as duplicate Medicare cards and tax statements, income verification letters, and statements of service and compensation on-line. Rail employers had the use of 6 services, including the ability to adjust reports of service and compensation and use www.pay.gov to make payments on liens. Although the agency has achieved its goals in these areas in the past, it did not meet the specific annual targets for the long-term goal of increasing electronic service options in FY 2006.

?? In one area (expanding electronic service options available for its beneficiaries), the RRB implemented only 2 of 3 additional electronic services by the end of Fiscal Year 2006. The third new service, the Palmetto project (which will allow authorized Palmetto GBA customer service representatives to report address changes, deaths and requests for replacement Medicare cards directly to the agency over the Internet), was not completed in FY 2006 and is now scheduled to be finished in FY 2007.

?? The RRB also did not achieve its objective for the Employer Reporting System to increase the percentage of users by 2 percent during FY 2006 because plans for additional functionality were not implemented. Implementation is now expected in FY 2008.

Evidence:

See the Fiscal Year Performance and Accountability Report. This can be accessed via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

See Performance Budget section on pages 29-57 of the RRB's Justification of Budget Estimates for Fiscal Year 2008. Thus can be reached via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

See agency staffing history on page 15 of the RRB's Justification of Budget Estimates for Fiscal Year 2008 via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

Information Technology Strategy and Benefits section, pages 71-77 of the RRB's Justification of Budget Estimates for Fiscal Year 2008 via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

LARGE EXTENT 13%
4.2

Does the program (including program partners) achieve its annual performance goals?

Explanation:

In Fiscal Year 2006, the RRB met or exceeded target performance in all but 2 of 10 annual goals (those related to increasing electronic services and employer participation in those services). This is fairly typical of program performance in the past 3 years during which the RRA program met or exceeded all but 2 or 3 of the annual goals.

The performance of key contractors supporting the RRB's disability timeliness goal contributes to the RRB's success in achieving the goal.

Evidence:

See Performance Budget section on pages 29-57 of the RRB's Justification of Budget Estimates for Fiscal Year 2008. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

Monthly performance data related to QTC Medical Services, Inc. (QTC) and Consultative Medical Examinations, LTD (CEL)

LARGE EXTENT 13%
4.3

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation:

The RRA program is achieving or exceeding its goals and maintaining excellent service while experiencing reductions in staff. Since FY 1993, the RRB's staff has been reduced by about 45 percent (from 1,698 FTE's in FY 1993 to 940 FTE's in FY 2006). Technology initiatives have been a major contributing success factor, resulting in significant improvements with fewer staff. While it is true that the RRA customer base of active railroad workers and beneficiaries is gradually declining, the agency's staffing levels have also declined and are expected to decline much more quickly than the customer base. In addition, other workloads resulting from legislative, reporting and regulatory requirements have increased significantly during this same time period, with no corresponding staff increases. For example, new workloads have been created by the Medicare Modernization Act (MMA), the Railroad Retirement and Survivors' Improvement Act of 2001 (RRSIA), the Improper Payments Information Act (IPIA), and the Federal Information Security Management Act (FISMA).

The program integrity ratio (the sum of dollar recoveries and savings, per labor dollar spent) measures the cost effectiveness of the RRB's monitoring programs. For FY 2006, this ratio showed that the RRB recovered over $5 for every $1 spent on program integrity efforts.

Evidence:

Ratios of the RRB's customer base (active railroad workers and beneficiaries) from FY 1993 to 2006, compared to the RRB's workforce (FTE's) for the same period clearly demonstrate improved efficiency in achieving program goals each year. The ratio has trended upward from 656:1 in FY 1993 to 872:1 in FY 2006, and is projected to continue in this direction. This indicates that the rate of decline in the workforce is significantly greater than that of the customer base. Specifically, during the 1993-2006 period, the customer base has decreased by 28%, and the workforce has decreased by 45%. It is notable that the agency has improved its program performance significantly during that same time period.

See agency staffing history on page 15 of the RRB's Justification of Budget Estimates for Fiscal Year 2008 via the following link: http://www.rrb.gov/pdf/bfo/JBE08.pdf

See the Program Integrity key performance indicator on page 29 of the Fiscal Year 2006 Performance and Accountability Report. This can be reached via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

YES 20%
4.4

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation:

RRB's American Customer Satisfaction Index (ACSI) scores have been compared favorably to those of other government and private organizations. ACSI scores for the RRA program have been among the highest in the Federal Government. The agency earned a score of 85 (on a 0-100 scale), 12.7 points higher than the current overall Federal Government score, in the 2006 ACSI survey which focused on the RRB's initial disability process. The score of 90 from the 2005 survey of RRA survivor beneficiaries was the highest in Federal Government (18 points higher than the overall Federal Government score). The 2001 score for retirement beneficiaries was 82, which exceeded the overall Federal score by 11 points.

In addition, the RRA benefit payment accuracy compares favorably with similar measures of the Old Age and Survivors Insurance (OASI) Program at the Social Security Administration. Although the two agencies measure different aspects, with RRA measuring initial and post adjudication, OASI measuring overpayments and underpayments, both programs consistently report in excess of 99% payment accuracy overall.

Evidence:

The agency participated in a survey of disability beneficiaries in 2006. An overview of the American Customer Satisfaction Index (ASCI), as well as a comparison of government agency/segment scores for 2006 and previous years, can be reached via the following link: http://www.theacsi.org/

See SSA Performance and Accountability Report for FY 2006 at http://www.ssa.gov/finance/

YES 20%
4.5

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation:

The RRB has a statutory Inspector General (IG) who reports to the Chairman of the Board and submits separate budget and performance information to OMB and Congress. The RRB's Office of Inspector General (OIG) regularly conducts a wide variety of independent reviews and audits of the RRA program, on topics ranging from compliance with the laws and regulations to specific requirements of program entitlement and eligibility. The OIG has also conducted audits on performance reports and measures. In addition, the OIG conducts a comprehensive financial statement audit, which includes a review of the RRB's administrative costs, annually. In its "Review of Compliance with Provisions of the Railroad Retirement Act Governing the Initial Award of Benefits", Report No 06-05, April 12, 2006, the OIG states: "Our test of controls and transactions determined that the RRB had a reasonable basis for the award of initial retirement, spouse and survivor benefits and has established effective compliance controls. Our tests disclosed no evidence of material non-compliance with the benefit payment provisions of the RRA."

RRB's financial statements, (which include administrative costs), received an unqualified audit opinion from the OIG in FY 2006 for the seventh consecutive year. In FY 2006, the RRB received an unqualified opinion on a first time audit of its Statement of Social Insurance.

The American Customer Satisfaction Index (ACSI), independently conducted by the Claes Fornell International Group, periodically evaluates customer satisfaction. ACSI results also have consistently indicated that the RRA program is achieving results in terms of providing excellent customer service.

Overall adjudicative and payment accuracy of the RRA program is measured in regular, independent reviews conducted by quality assurance staff within the Assessment and Training component of the Office of Programs. Assessment and Training also evaluates policies and processes through special studies, as needed. Assessment and Training reports to the Director of Programs and is independent of the organizations it assesses. The quality assurance review process used by Assessment and Training has been independently inspected by the OIG, which found that Assessment and Training "established a quality control function that provided RRB management with timely information on the accuracy of initial benefit payments."

The RRB tracks and follows up on recommendations for improvement, whether from the OIG, external sources, or in-house quality experts.

In the specific area of disability claims, independent advisory doctors representing the rail industry (both labor and management) periodically review agency medical decisions.

Consulting physicians from Consultative Medical Examinations LTD (CEL) perform quarterly quality reviews of disability documentation to ensure it is adequate to support medical decisions made by the agency's disability examiners.

Taken as a whole, these various audits, reviews and studies clearly demonstrate that the RRA program is effective and achieving results. The RRB's customers are highly satisfied with the service they receive; payment accuracy rates remain above 99 percent and case accuracy rates are in the 94 percent range and above; and the financial status of the program is strong.

Evidence:

The Inspector General Act of 1978, as amended, 5 U.S.C. Appendix 3 http://www.access.gpo.gov/uscode/title5a/5a_2_.html

Office of Inspector General's recent Semiannual Reports: such as September 2006, March 2006: http://www.rrb.gov/oig/library.asp

Office of Inspector General Report 06-05, April 12, 2006 http://www.rrb.gov/pdf/oig/REPORTS/0605.pdf

An overview of the American Customer Satisfaction Index (ASCI) can be reached via the following link: http://www.theacsi.org/

Results of the 2006 ACSI Survey of the disability benefit process can be accessed via the following link: http://www.rrb.gov/opa/pr/pr0603.asp

Results of the 2005 ACSI Survey of the survivor benefit process and of the 2001 ACSI Survey of the retirees are available upon request

Message from the Chief Financial Officer on page 57 of the Fiscal Year 2006 Performance and Accountability Report via the following link: http://www.rrb.gov/pdf/bfo/par2006.pdf

YES 20%
Section 4 - Program Results/Accountability Score 87%


Last updated: 09062008.2007SPR