Because of serious deficiencies in the federal law that set it up, a $250 million federal fund to protect rail employes from the adverse effects of railroad bankruptcies is nearly exhausted, the General Accounting Office said yesterday.
Although the fund, set up to compensate workers whose jobs were affected by the reorganization of bankrupt lines into the Consolidated Rail Corp., will be depleted by the end of the year, the law requires employers to continue paying eligible employes until about the year 2021, GAO said.
The GAO report was released by Rep. James J. Florio (D-N.J.), chairman of the House subcommittee on transportation and commerce, and Rep. John L. Burton (D-Calif.), chairman of the subcommittee on government activities and transportation.
In it, the GAO concluded that the employe provisions of the Regional Rail Reorganization Act, in operation for three years now, needed drastic revision. Although GAO said they should be taken with a grain of salt, it said current estimates of the total program cost range from $884 million to $1.7 billion.
One of the factors that makes the program costly is the long time employes are eligible for benefits, compared with other federal programs, GAO said. The rail program offers employes protection to age 65-40 years of benefits for some affected employes -- while other federally funded plans limit protection to six years, the report noted.
"Clearly there is a need for a program that provides some financial security to rail employes who were thrown out of work by railroad reorganizations, but excessive federal payments to these employes takes funds away from programs designed to upgrade the rail system, improve safety and provide more rail jobs," Rep. Florio said yesterday, pledging subcommitte action to alter the program.
The GAO cited numerous deficiencies in the federal law that result in "windfall" benefits for some. For instance, more than 10,500 Conrail employes in 1977 received program payments and wages that exceeded their annual protection levels, in some cases by more than $20,000. Those employes got a total of $11 million in federal funds.
Conrail also is not permitted to transfer surplus union employes skilled in certain kinds of work to vacant jobs involving other skills, GAO said, so large numbers of employes who could be retrained are relegated to an unproductive status and collect federal funds.
Although the purpose of the program was to minimize the adverse effects on employes resulting from the reorganization of the bankrupt rails into Conrail, the law permits Conrail and others to pay benefits to employes for reasons not related to the reorganization, GAO said. Under this provision, Conrail has paid out benefits because of adverse economic effects resulting from striking and snowstorms, the report said.