Legal Authority of OMB To Reduce Dual Benefit Payments to Railroad Retirees

GAO was asked for an opinion concerning the legal authority of the Office of Management and Budget (OMB) to reduce dual benefit payments to railroad retirees to a level below that authorized in applicable legislation. Prior to 1975, certain individuals could be eligible on a single employment record for both railroad retirement pensions and social security retirement benefits; they would receive separately calculated benefits from each program. In the Railroad Retirement Act of 1974, the benefits were changed. The act provided that social security insurance benefits be subtracted from railroad retirement benefits. However, Congress reserved dual benefits for certain individuals who met the coverage requirements prior to 1975. Congress further modified the dual benefits provisions by creating a separate Dual Benefits Payments Account for which dual benefits are to be paid and provided that this account be funded by a direct appropriation. Under this arrangement, dual payments would be allocated so that they would not exceed the appropriation. GAO studied the dual payment provisions of the Railroad Retirement Act and concluded that the payments in question are entitlements for which the government must make outlays to eligible retirees. Although the Reconciliation Act made some changes in the funding of the dual payments, these benefits fall within the exception for mandatory obligations and outlays provided in the Impoundment Control Act, and neither the President nor anyone else may withhold any portion of these payments. In response to this opinion, OMB raised two issues: (1) clarification of the GAO view that P.L. 97-35 did not change the essential entitlement nature of the payments; and (2) whether the provisions of 31 U.S.C 1400 establish permanent limitations upon the Impoundment Control Act. GAO responded that: (1) the Railroad Retirement Board has no authority to issue allocation regulations using any amount less than the full amount appropriated to the Dual Benefits Payments Account for a fiscal year; and (2) 31 U.S.C. 1400 should be repealed, because GAO views its purpose as transitional.