Fringe Benefits Provided for Officers and Employees of United States Railway Association

B-175155, JUL 1, 1976

PRECIS-UNAVAILABLE

MR. LEWIS:

WE REFER TO YOUR LETTER OF JUNE 18, 1976, REQUESTING OUR OPINION AS TO WHETHER, IN VIEW OF THE PROVISIONS OF SECTION 202(A)(5) OF THE REGIONAL RAIL REORGANIZATION ACT OF 1973, FRINGE BENEFITS ADMINISTRATIVELY PROVIDED FOR OFFICERS AND OTHER EMPLOYEES OF THE UNITED STATES RAILWAY ASSOCIATION IN THE FORM OF RETIREMENT BENEFITS AND REIMBURSEMENT OF COMMUTATION COSTS, WOULD BE ACCEPTED AS A NORMAL BENEFIT OF EXECUTIVE LEVEL I OFFICIALS AND, THEREFORE, CONSTITUE LEGAL PAYMENTS.

THE REGIONAL RAIL REORGANIZATION ACT OF 1973, APPROVED JANUARY 2, 1974, PUB. L. NO. 93-236, WHICH IN MAJOR PART APPEARS AT 45 U.S.C. SEC. 701 ET SEQ. (SUPP. IV, 1974), ESTABLISHED THE UNITED STATES RAILWAY ASSOCIATION AS AN INCORPORATED NONPROFIT ASSOCIATION WHOSE POWERS INCLUDE THE PREPARATION AND IMPLEMENTATION OF A FINAL SYSTEM PLAN FOR RAIL SERVICE IN THE MIDWEST AND NORTHEAST REGIONS OF THE UNITED STATES. ITS EMPLOYEES ARE NOT EMPLOYEES OF THE FEDERAL GOVERNMENT. 45 U.S.C. SECS. 711, 712(A)(1).

SECTION 202(A)(5) OF THE ACT, 45 U.S.C. SEC. 712(A)(5), PROVIDES IN PERTINENT PART, AS FOLLOWS (QUOTING FROM THE CODE):

"(5) APPOINT, FIX THE COMPENSATION, AND ASSIGN THE DUTIES OF SUCH ATTORNEYS, AGENTS, CONSULTANTS, AND OTHER FULL AND PART-TIME EMPLOYEES AS IT DEEMS NECESSARY OR APPROPRIATE; EXCEPT THAT (1) NO OFFICER OF THE ASSOCIATION, INCLUDING THE CHAIRMAN, MAY RECEIVE COMPENSATION AT A RATE IN EXCESS OF THAT PRESCRIBED FOR LEVEL 1 OF THE EXECUTIVE SCHEDULE UNDER SECTION 5312 OF TITLE 5***."

THE COMPENSATION LEVEL CITED IS THAT PROVIDED BY STATUTE AS THE PAY SCHEDULE FOR CABINET MEMBERS (CURRENTLY $63,000 PER YEAR).

SPECIFICALLY, THE ASSOCIATION PROPOSES TO ESTABLISH A DEFERRED COMPENSATION ACCOUNT FOR EACH EMPLOYEE EFFECTIVE JULY 1, 1976, WITH THE ASSOCIATION CONTRIBUTING AN AMOUNT EQUAL TO 9 PERCENT OF THE EMPLOYEE'S BASE COMPENSATION, PROBABLY UTILIZING THE ICMA RETIREMENT CORPORATION. EACH EMPLOYEE WOULD BE GIVEN THE OPPORTUNITY TO MATCH ALL OR PART OF THE USRA CONTRIBUTION. THESE ACCOUNTS WOULD EARN THE INTEREST OR DIVIDEND PAID BY THE TRUSTEE AND THIS ADDED AMOUNT WOULD ALSO BE CREDITED TO THE EMPLOYEE'S FUND. ARRANGEMENTS WOULD BE MADE WITH THE TRUSTEE TO ALLOW EMPLOYEES TO WITHDRAW THE ACCUMULATED AMOUNT UPON TERMINATION OR TO RETAIN THIS AMOUNT IN A DEFERRED ACCOUNT WHICH WOULD BE PAID OUT AT A LATER DATE AS A RETIREMENT ANNUITY. ALL REGULAR FULL TIME OFFICERS AND EMPLOYEES WOULD BE COVERED BY THE PLAN. IT IS THE STATED PURPOSE OF THIS APPROACH TO ESTABLISH A PLAN THAT COULD SERVE TO FACILITATE SAVINGS OR ALTERNATIVELY BE RETAINED FOR RETIREMENT PURPOSES.

WE NOTE THAT THIS PROPOSED PLAN DIFFERS MATERIALLY FROM USUAL RETIREMENT PLANS IN THAT IT WOULD ALLOW THOSE COVERED TO WITHDRAW THE EMPLOYER'S CONTRIBUTION IN ADDITION TO ACCRUED INTEREST OR DIVIDENDS (IN ADDITION TO ANY CONTRIBUTION THE EMPLOYEE MIGHT VOLUNTARILY ELECT TO MAKE) IMMEDIATELY AT THE TIME OF TERMINATION OF EMPLOYMENT AND DOES NOT REQUIRE ANY MINIMUM SERVICE FOR BENEFITS TO VEST.

THEREFORE, THIS PLAN APPEARS TO BE ONE OF DEFERRED COMPENSATION. TO THE EXTENT THAT SUCH PAYMENTS EXCEED THE STATUTORY LIMITATION, IT IS OUR OPINION THAT THEY WOULD BE IN VIOLATION OF THE STATUTE.

ON THE QUESTION OF THE PROPRIETY OF VARIOUS RELOCATION EXPENSES, YOU STATE THAT:

"*** USRA HAS PAID SUBSTANTIAL RELOCATION EXPENSES FOR OFFICERS AND EMPLOYEES ON OCCASION AND SUCH PAYMENTS, WHEN ADDED TO SALARY, COULD EXCEED THE EXECUTIVE LEVEL I SALARY LIMITATION.

WE ALSO HAVE A POLICY IN USRA OF PAYING COMMUTATION COSTS OF CERTAIN OFFICERS AND EMPLOYEES WHO COULD HAVE RELOCATED TO WASHINGTON BUT PREFERRED TO RETAIN THEIR OUT-OF-TOWN RESIDENCE. IN EACH CASE, WE HAVE LIMITED COMMUTATION PAYMENTS TO THE AMOUNT ESTIMATED AS THE COST OF AN ACTUAL RELOCATION OF THE OFFICER OR EMPLOYEE. OUR INTERPRETATION OF GAO POLICY IS THAT THESE TYPES OF PAYMENT FOR ACTUAL EXPENSES INCURRED IN RELOCATING OR IN COMMUTING FROM A RESIDENCE ARE NOT ADDITIONAL COMPENSATION. ***"

YOU HAVE PROVIDED OUR OFFICE WITH A COPY OF USRA ORDER 1974-1, TRAVEL AND RELOCATION ALLOWANCES, SECTION 6(E) OF WHICH PROVIDES AS FOLLOWS:

"E. OFFICERS OR EMPLOYEES WHO ELECT TO TRAVEL BACK AND FORTH BETWEEN THEIR USRA PLACE OF EMPLOYMENT AND THEIR PRE-EMPLOYMENT RESIDENCE MAY BE PAID FOR THE TRAVEL AND SUBSISTENCE EXPENSES INCURRED. REIMBURSEMENT FOR SUCH TRAVEL WILL BE IN ACCORDANCE WITH THE BUSINESS TRAVEL ALLOWANCES SET FORTH IN PARAGRAPH 5 OF THIS ORDER PROVIDED THE TOTAL AMOUNT CLAIMED FOR SUCH TRAVEL AND SUBSISTENCE DOES NOT EXCEED THE SUM OF THE FOLLOWING:

"(1) $4,000 IN LIEU OF MISCELLANEOUS RELOCATION AND SUBSISTENCE EXPENSES;

"(2) A PRE-DETERMINED AMOUNT IN LIEU OF COST OF SALE OF RESIDENCE; AND

"(3) A PRE-DETERMINED AVERAGE COST OF MOVE IN LIEU OF COST OF SHIPMENT AND STORAGE OF HOUSEHOLD GOODS. AVERAGE COSTS FROM REPRESENTATIVE AREAS ARE MAINTAINED IN THE COMPTROLLER'S OFFICE.

"THE MAXIMUM ALLOWABLE REIMBURSEMENT UNDER THE PROVISIONS OF THIS PARAGRAPH WILL BE PRE-DETERMINED IN EACH CASE AT THE TIME OF EMPLOYMENT. THE PRE-DETERMINED AMOUNT MUST BE APPROVED BY THE VICE PRESIDENT FOR ADMINISTRATION AND WILL BE SHOWN IN THE 'REMARKS' SECTION OF THE PERSONNEL ACTION FORM."

OUR EXAMINATION OF THE LEGISLATIVE HISTORY OF PUBLIC LAW 93-236 FAILS TO DISCLOSE ANY DISCUSSION DIRECTLY ON POINT, BUT IN VIEW OF THE FACT THAT THE COMPENSATION LEVEL CITED IS THAT PROVIDED FOR CABINET MEMBERS WE NOTE THAT CABINET MEMBERS RECEIVE CERTAIN BENEFITS IN ADDITION TO THE COMPENSATION PROVIDED BY SECTION 5312 OF TITLE 5, UNITED STATES CODE. ALSO NOTE THAT RELOCATION BENEFITS ARE NOT CONSIDERED TO BE COMPENSATION TO FEDERAL EMPLOYEES FOR PURPOSES OF THE STATUTORY CEILING ON THEIR COMPENSATION UNDER TITLE 5, UNITED STATES CODE.

IT WOULD APPEAR, THEREFORE, THAT THE DECISION OF WHETHER TO AUTHORIZE COMMUTATION COSTS IN LIEU OF RELOCATION EXPENSES WITHIN THE FRAMEWORK SET FORTH ABOVE IS A MATTER FOR ADMINISTRATIVE DETERMINATION.

FOR THE REASONS STATED IT IS OUR VIEW THAT THE VALUE OF THE RELOCATION EXPENSES OR COMMUTATION EXPENSES, AS OUTLINED ABOVE, NEED NOT BE CONSIDERED AS "COMPENSATION" WITHIN THE MEANING OF THAT TERM AS USED IN THE COMPENSATION LIMITATION PROVISION OF THE ABOVE-QUOTED PROVISION OF LAW.