On June 24, 1937, the President signed the Railroad Retirement Act of 1937, which increased the administrative burden of the Railroad Retirement Board to a very considerable degree. In the first place, it required us to pay pensions to about 48,000 pensioners, of whom we had taken no previous account, administratively, since the 1935 act does not provide for pension payments, who had been before that time on the pension rolls of the railroads. In determining upon the number of 48,000 persons as being entitled to be on the roll under the Railroad Retirement Act, we had to collect information from the railroads and secure the data on the type of plans they had in effect, and we had to analyze those plans to determine what individuals were involved who would be entitled to come under the Railroad Retirement Act, and what amount they were entitled to, and the amount that they had been paid, and we had to make an adjudication of those cases. The Board was required in each instance to determine under which act, if either, each individual claim was to be adjudicated. The CHAIRMAN. That involved a world of investigation, did it not? Mr. LATIMER. It involved quite a considerable investigation, for two reasons. In the first place, we do not pay the same amount that the railroads had been paying. We were authorized to restore reductions that had already been made. That was a rather complicated task, because the reductions in the last few years had been made on a basis of an assumed formula, and sometimes no formula at all, and we had to check that against a prior formula to determine whether our restoration was correct. Then, if the railroads wanted to he was incompetent, or to his son, they were perfectly free to do so. those transactions. pay the money to a man's wife, if or in whatever method they chose, They had the right to control all When we took it over, we had to have legal authority for making payments other than to the individual entitled to them. We have had a number of cases which we could not settle for some time because of that difficulty. I think we now have every single pension case straightened out. We were authorized to pay pensions to persons who were receiving them on July 1 and who had been receiving them on March 1. We found large numbers of cases where payment had been stopped because of various circumstances. The railroads may have thought that the man was spending too much money or that he was confined in an institution and was not spending it, and the pension had been stopped. We have had a large number of legal questions as to whether a man was on the pension roll on March 1 or July 1, because payment was stopped at the same time. There are a number of instances of that character. There were also cases involving the question as to whether a man was actually on the pension roll on March 1. A number of railroads have rules which provide that in case a man is retired and entitled to a pension he is placed on the pension roll. If he also may receive a settlement under the Employers' Liability Act, they would withhold the pension for a time, corresponding to the period over which he would get the lump-sum settlement under the Employers' Liability Act at the monthly rate of compensation he was receiving at the time he was injured. We have had various situations of that kind, to determine when the pension should start. Some men on the railroads have gone on relief, under a railroad relief (insurance) system, and they have found that the relief money they got was larger than the pension. So they go on relief. Then the relief drops down under the pension, and the man goes back on the pension. We have had numerous individual cases much more complex than that in dealing with 48,000 cases. In addition to the 48,000 cases of individuals who had been retired permanently before the enactment of the Retirement Act, there were about 6,000 who had been granted pensions since the enactment date. They were all entitled to annuity grants, rather than pensions, since they were in active service after the date of the enactment of the act, and there were a number of those who had qualified under the railroad pension plans. The railroads make exceptions. They may give a pension to a man who has been in active service 15 years, 45 years old, although usually they do not do that. We have investigated each of those cases to determine whether such a man was eligible to be on an annuity or a pension. The regular administrative appropriation for the Railroad Retirement Board for the fiscal year 1938 is $2,325,000, inclusive of printing and binding. This appropriation was granted for the administration of the 1935 Retirement Act only. That act requires that the Board shall adjudicate the claims for retirement annuities of employees of carriers subject to the Interstate Commerce Act, and of employees of certain other "employers" whose business is directly connected with the railroad industry, in accordance with standards of eligibility therein prescribed with respect to age, service, compensation, disability, and other factors. At the time the estimates for the fiscal year 1938 were submitted to Congress and the appropriation made, reference was had solely to the cost of administering the 1935 act, under which it was estimated that the Board would not have to handle more than 65,000 claims during the year. Subsequent to the granting of the appropriation, and just 1 week prior to the beginning of the new fiscal year, the Railroad Retirement Act of 1937 was passed by Congress at the joint request of the carriers and their employees. The 1937 act continued the 1935 act in full force and effect with respect to certain annuity claims (generally speaking, the claims of individuals who had retired prior to June 24, 1937); and provided radically different standards to be applied to the adjudication of other annuity claims. The Board was thus required in each instance to determine under which act, if either, each individual claim was to be adjudicated. Moreover, the 1937 act made many thousands of employees eligible either under its own terms or under those of the 1935 act who would not otherwise have been eligible. Instead of a maximum of 65,000 cases to be handled during the entire fiscal year 1938, therefore, the Board within 3 months was confronted with 75,000 cases awaiting adjudication under the two acts. At the close of business on December 31, the number of claims was 87,165. By the end of the current fiscal year this total will doubtless exceed 100,000 cases. In addition to this substantial increase in annuity claims as a result of the passage of the 1937 act, section 6 of that act also required the Board to take over from the carriers some 54,000 private pension cases. Approximately 6,000 of this number were eligible for annuities and the act provided that no pensions should be paid to such individuals after October 1, 1937, thus in effect giving the Board a little over 3 months to adjudicate these 54,000 cases at least to the point of determining in each instance if the individual were eligible for an annuity, or was to continue to receive a pension from the Board based upon entirely different standards than the annuities. Other administrative obligations imposed by the 1937 act, the assumption of which could not be postponed, were: 1. It increased the number of employers with whom the Board was obliged to deal, from a possible 1,300 employers under the 1935 act to a combined possible total under the two acts, of 20,000: 2. It set up new eligibility standards, and required the Board to determine in each case whether these standards or those of the 1935 act should apply; 3. It changed the employment relation status, thereby making it necessary for the Board to reexamine claims ineligible under the 1935 act falling in this category, and to devise new procedures in determining eligibility on this basis; 4. It provided radically different disability qualifications, materially increasing the administrative burden with respect to such cases; 5. It completely altered the death benefit provisions and increased the annual load with respect thereto by approximately 700 percent; in addition to adjudicating these death benefits, it will make it necessary for the Board to canvass approximately 1,900,000 individual employees to permit them to make designations of beneficiaries; 6. It provided mandatory procedures governing elections of joint and survivor annuities, and made it necessary for the Board to canvass some 170,000 employees prior to January 1, 1938, in order to permit them to make such elections without being subject to a 5-year limitation or medical examination prior to retirement; 7. It necessitated the maintenance of separate record systems for the two acts; 8. It required employers to file, and the Board to maintain, reports of monthly compensation and service of all employees under the act; and in this connection made it necessary for the Board to prepare and distribute to every employee (about 1,800,000 individuals) an annual statement of the compensation and service thus credited to him on the records of the Board, with opportunity to make inquiries concerning or to protest the correctness of such credits. Like the 1935 act, the 1937 act is self-supporting in that it is predicated, so far as funds both for administrative expense and for the account from which annuities and pensions are paid, on the coexistence of the Carriers Taxing Act of 1937 under which taxes are levied on both employers and employees subject to the Retirement Act. The Railroad Retirement Board is required to estimate on an actuarial basis the annuity and pension-fund requirements, and the administrative cost incident to the administration of the retirement act. During the conferences between the railroads and labor, and subsequent congressional hearings, the estimates of administrative costs were $2,750,000 annually or 2.25 percent of total premium payments (taxes). The Retirement Act of 1937 was passed late in the Seventy-fifth session of Congress, and there was insufficient time for the submission 42311-38-2 and approval of supplemental appropriation estimates of the immediate additional administrative expenditures which the new act would necessitate, even had the Board been in possession of all the information requisite to this kind of estimate. The Board, therefore, had no other recourse but to administer the two retirement acts from the funds previously appropriated for but one act, to the extent permitted by, and so long as, those funds would last. The litigation which had seriously affected the work of the Board under the 1935 act without relieving it of its administrative obligations had resulted in an accumulation of some 45,000 unadjudicated cases at the time the 1937 Retirement Act became law and further litigation ended by mutual agreement of the parties concerned. These 45,000 cases represented in many instances claims which had been before the Board for 6 to 12 months or more. Of the 30,000 additional claims filed within the first 3 months after the passage of the 1937 act, many thousands were from employees who had retired some time previously. Generally speaking, these claimants were almost entirely dependent for their livelihood upon the annuities which they were entitled to receive. Moreover, both acts require that an individual must retire from compensated service in order to establish his claim. Many thousands of employees who might otherwise have continued in service, gave up their jobs in the expectation of receiving the annuities which these acts provided. Every additional week of delay, therefore, in receiving their annuity checks works an increasing hardship which soon results in actual want. Under the law, no less than from considerations of simple justice, the Board had no alternative but to increase its staff as rapidly as qualified additional personnel could be recruited and trained, in an effort to handle this great mass of claims as quickly as possible. The carriers for the most part were not adequately equipped to furnish promptly the necessary records, which in most cases must go back 30 years or more, and this added materially to the delay in adjudicating many thousands of claims, making it necessary for the Board to assist these carriers in preparing the records in usable form. At the close of business on December 31, 53,032 of the 54,020 pension cases had been adjudicated, together with 42,377 annuity claims under both the 1935 and the 1937 acts, leaving 44,788 claims in various stages of adjudication. Due to the difficulty which many of the carriers experienced in furnishing the required records promptly, the Board was obliged, with their consent, to institute a short-cut method of partial certification based upon skeleton records which the carriers could supply more readily, so that some immediate payment could be made to claimants. On December 31, 7,695 claims had been adjudicated on this basis, with additional returns being received and adjudicated at the rate of approximately 100 per day. These of course will all have to be readjudicated as soon as complete records can be furnished. In addition to the figures already given, new claims are being filed at the rate of 141 per day (based upon the month of December). Six hundred and twenty-nine claims for death benefits have been adjudicated, with an estimated load of 16,311 to be adjudicated during the balance of the year. The unions are now conducting an extensive campaign to advise beneficiaries of deceased employees of their rights to death benefits, and assisting them to file claims. These are now coming in at the rate of 40 per day and indications are that this rate will materially increase. Disability cases not yet adjudicated, which will require establishment of medical evidence, on December 31, numbered about 7,700, with a total estimate for the year of approximately 10,000 cases. Very few of these have been adjudicated thus far. The increases in personal services necessitated by the 1937 act will result in an estimated deficit in this item by the end of the current fiscal year of $455,839. This figure is based upon a present actual deficit in personal services of $392,339 necessary to carry the present reduced staff, together with $63,500 to be expended during the balance of the fiscal year for approximately 80 additional employees whose services will be essential in order to avoid an unreasonably large carry-over of cases into the next fiscal year. The deficit in "Other expenses" is $25,161; and for printing and binding is $19,000, making a total estimated deficit of $500,000. Mr. LATIMER. We prepared a summary statement of our entire case load for the Bureau of the Budget, and the disposition we believed could be made on the basis of the estimates we submitted for a deficiency appropriation. This statement gives a pretty clear picture of what we have done thus far, and what we still have to do. The statement is as follows: RAILROAD RETIREMENT BOARD-ESTIMATED CASE LOAD, FISCAL YEAR 1938 (1935 AND 1937 RETIREMENT ACTS COMBINED) The following figures show the estimated case load of the Board for the fiscal year 1938 under both the 1935 and the 1937 Retirement Acts, classified by three major types of claims: Pension claims, annuity claims, and benefit claims. These major groups are based upon the various types of claims arising under these two acts. For purposes of summarization, the subgroups under each type are not set out individually. Total cases adjudicated, all groups, July 1 to December 31, 1937-97,026. Group I (a). Pension cases (reported by the carriers as eligible pensioners) (no carry-over from 1937 fiscal year): 54, 020 Number of pension cases filed between July 1 and Dec. 31, 1937- Balance on hand, Jan. 1, 1938. Number of new pension cases estimated to be filed, Jan. 1 to June 30, 1938_ Total to be adjudicated, to June 30, 1938. None None None Group I (b). Adjudicated pension cases requiring readjudication as annuity cases (of 54,020 pension cases adjudicated (group I), there were 6,043 cases reported by the carriers, which later required readjudication on an annuity basis. Between July 1 and December 31, 5,055 of these were readjudicated on an annuity basis, leaving a balance of 988 to be adjudicated. These are all included in group II, below, hence to avoid duplication, no tabulation is shown for this group). Group II (a). Annuity cases (including disability claims, partial certification claims, joint and survivor claims (both original annuitant and survivor), and straight life annuity claims): Number of annuity claims carried over from 1937 fiscal year. 45, 313 41, 852 Total case load from July 1 to Dec. 31, 1937.... Number of group II cases adjudicated on both temporary and final bases, 87, 165 42, 377 Balance group II cases on hand, Jan. 1, 1938_. 44, 788 |