B-138072, JUN. 14, 1961

B-138072: Jun 14, 1961

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THAT FOR ENSUING YEARS THE AMOUNT AVAILABLE THEREFOR TO THE RETIREMENT SYSTEM WOULD BE FURTHER REDUCED AS THE OLD AGE AND SURVIVORS AND DISABILITY INSURANCE EMPLOYER CONTRIBUTION IS INCREASED. AS IS NOW OR MAY HEREAFTER BE PROVIDED BY THE SOCIAL SECURITY ACT. YOU SAY THAT THE BUDGET PROPOSAL IS PREDICATED ON THE CONCEPT THAT THE EMPLOYER CONTRIBUTIONS TO THE STATE RETIREMENT SYSTEM WOULD BE REDUCED BY THE AMOUNT REQUIRED AS EMPLOYER CONTRIBUTIONS UNDER THE SOCIAL SECURITY ACT AND SUGGEST THAT THE PROPOSAL IS THUS INCONSISTENT WITH OUR DECISION OF MARCH 2. TO THE EFFECT THAT EMPLOYERS' CONTRIBUTIONS TO A STATE RETIREMENT SYSTEM UNDER THE CIRCUMSTANCES HERE INVOLVED ARE NO DIFFERENT IN PRINCIPLE FROM EMPLOYER CONTRIBUTIONS UNDER THE SOCIAL SECURITY ACT.

B-138072, JUN. 14, 1961

TO MR. WILLIAM M. SERBINE:

YOUR LETTER OF APRIL 20, 1961, WITH ENCLOSURES, CONCERNS THE PROPOSAL OF THE BUREAU OF THE BUDGET TO LIMIT TO 6.5 PERCENT OF THE SALARIES OF AFFECTED PERSONNEL THE TOTAL FEDERAL EMPLOYER'S CONTRIBUTION TO BE PAID INTO STATE RETIREMENT SYSTEMS ON BEHALF OF CIVILIAN EMPLOYEES OF THE NATIONAL GUARD.

YOU SAY THAT UNDER SUCH LIMITATION THE REQUIRED EMPLOYER CONTRIBUTION OF 5 PERCENT TO THE MINNESOTA STATE RETIREMENT SYSTEM WOULD NOT BE PAID IN FULL BECAUSE, AFTER DEDUCTING THE FEDERAL OLD AGE AND SURVIVORS, AND DISABILITY INSURANCE CONTRIBUTION OF 3 PERCENT, ONLY 3.5 PERCENT OF THE REQUIRED 5 PERCENT WOULD BE AVAILABLE TO THE STATE RETIREMENT SYSTEM, LEAVING A DEFICIT THEREIN FOR THE COMING FISCAL YEAR OF 1.5 PERCENT OF SALARY OF EACH EMPLOYEE, OR APPROXIMATELY $75,000, AND THAT FOR ENSUING YEARS THE AMOUNT AVAILABLE THEREFOR TO THE RETIREMENT SYSTEM WOULD BE FURTHER REDUCED AS THE OLD AGE AND SURVIVORS AND DISABILITY INSURANCE EMPLOYER CONTRIBUTION IS INCREASED, AS IS NOW OR MAY HEREAFTER BE PROVIDED BY THE SOCIAL SECURITY ACT.

YOU SAY THAT THE BUDGET PROPOSAL IS PREDICATED ON THE CONCEPT THAT THE EMPLOYER CONTRIBUTIONS TO THE STATE RETIREMENT SYSTEM WOULD BE REDUCED BY THE AMOUNT REQUIRED AS EMPLOYER CONTRIBUTIONS UNDER THE SOCIAL SECURITY ACT AND SUGGEST THAT THE PROPOSAL IS THUS INCONSISTENT WITH OUR DECISION OF MARCH 2, 1959, B-138072, TO THE EFFECT THAT EMPLOYERS' CONTRIBUTIONS TO A STATE RETIREMENT SYSTEM UNDER THE CIRCUMSTANCES HERE INVOLVED ARE NO DIFFERENT IN PRINCIPLE FROM EMPLOYER CONTRIBUTIONS UNDER THE SOCIAL SECURITY ACT.

YOU ALSO SUGGEST THAT THE PROPOSED LIMITATION IS INCONSISTENT WITH THE PROPOSED AGREEMENT FOR EXECUTION BY THE SECRETARY OF DEFENSE AND THE STATE OF MINNESOTA. THE PROPOSED AGREEMENT STATES THAT THE EMPLOYER CONTRIBUTION REQUESTED BY THE STATE FROM THE FEDERAL GOVERNMENT WILL NOT EXCEED THE EMPLOYER CONTRIBUTION REQUIRED OF THE STATE OR ITS DEPARTMENTS ON BEHALF OF A STATE OR DEPARTMENTAL EMPLOYEE RECEIVING THE SAME COMPENSATION AND THAT THE RATE OF CONTRIBUTION WILL BE CALCULATED FOR NATIONAL GUARD CIVILIAN EMPLOYEES AS FOR ALL OTHER MEMBERS OF THE STATE RETIREMENT SYSTEM.

YOUR LETTER CONCLUDES BY REQUESTING OUR COOPERATION TO THE END THAT THE AMOUNT BUDGETED THEREFORE BE RAISED SUFFICIENTLY TO PERMIT PAYMENT IN FULL OF THE FEDERAL CONTRIBUTION TO THE MINNESOTA STATE RETIREMENT SYSTEM.

THE BUREAU OF THE BUDGET HAS EXPLAINED THE PROPOSED 6.5 PERCENT LIMITATION ON PAGE 511 OF "THE BUDGET FOR FISCAL YEAR 1962" AS FOLLOWS:

"FOR 1962, FUNDS HAVE BEEN INCLUDED IN THE AMOUNT OF 2.8 MILLION TO INITIATE PAYMENT OF THE EMPLOYER'S CONTRIBUTION TO STATES WHICH AUTHORIZE CIVILIAN EMPLOYEES PAID FROM THIS APPROPRIATION TO PARTICIPATE IN THEIR RETIREMENT SYSTEMS. SINCE THE PAY RATES OF SUCH EMPLOYEES ARE EQUATED TO THOSE OF COMPARABLE FEDERAL EMPLOYEES, THE TOTAL EMPLOYER'S CONTRIBUTION TO BE PAID FROM FEDERAL FUNDS IS LIMITED TO THE RATE AUTHORIZED FOR FEDERAL EMPLOYEES PARTICIPATING IN THE CIVIL SERVICE RETIREMENT SYSTEM.'

FURTHERMORE, AS POINTED OUT IN OUR DECISION OF MARCH 2, 1959, B 138072, THE PROVISIONS OF 32 U.S.C. 709 PROVIDE THE SECRETARIES OF THE ARMY AND AIR FORCE WITH THE STATUTORY AUTHORITY TO FIX THE COMPENSATION OF CIVILIAN EMPLOYEES OF THE NATIONAL GUARD, WHICH INCLUDES THE AUTHORITY TO DETERMINE THE AMOUNTS, IF ANY, OF FEDERAL CONTRIBUTIONS TO STATE RETIREMENT SYSTEMS, SUBJECT TO THE SUFFICIENCY OF APPROPRIATED FUNDS THEREFOR. UNDER SUCH CIRCUMSTANCES THE MATTER IS PLACED SPECIFICALLY WITHIN THE DISCRETION OF THE DEPARTMENTS OF THE ARMY AND AIR FORCE OF THE EXECUTIVE BRANCH OF THE GOVERNMENT AND THE CONGRESS OF THE UNITED STATES. WE THUS SEE NO INCONSISTENCY BETWEEN OUR DECISION OF MARCH 2, 1959, AND THE BUDGET PROPOSAL AND FEEL THAT THE EXTENT TO WHICH THE FEDERAL GOVERNMENT SHOULD CONTRIBUTE TO THE STATE RETIREMENT SYSTEMS IS NOT A MATTER WITHIN OUR JURISDICTION.

ACCORDINGLY, AND SINCE WE HAVE NO SPECIAL INFORMATION ON THIS MATTER WE ARE UNABLE TO ACCEDE TO YOUR REQUEST.