December 6, 2018

President Trump on December 4 announced his intent to nominate two persons to fill slots on the three-member Railroad Retirement Board.

• Jonathan Bragg, of Strasburg, Virginia, will be nominated to fill the Employee Representative slot on the Board. Originally a conductor and then signalman for CSX, Bragg served as chairman of Teamsters Local 89 in Chicago from 2005-2009 and then in a variety of posts at the Brotherhood of Railroad Signalmen before taking his current post as National Vice Chairman of that union in 2011.
• Thomas Jayne will be nominated to fill the Carrier Representative slot on the Board. Originally from Missouri (where he graduated law school in 1976), he was an attorney at the law firm of Thompson Coburn LLP for almost 33 years until moving to BNSF Railway to serve as Senior General Attorney in 2011.

Bragg and Jayne will fill slots currently held by members whose seats are expiring or soon to expire. The labor and management representatives usually move better through the Senate if paired together. But the President has already nominated a third candidate to the Board to fill the chairmanship slot, which has been vacant for over a year:

• Erhard Chorlé was nominated on July 31 to be chairman of the Board. Chorlé has served in Illinois State Government as Director of the State’s Securities Department, Deputy Secretary of State, and Executive Assistant for Financial and Regulatory Affairs to former Governor Jim Edgar.  Mr. Chorlé also worked in private practice; served as the chairman of the Illinois State Board of Investment; and was a board member of Knight Engineers and Architects. His nomination was approved by the Senate Health, Education, Labor and Pensions Committee last week and is now on the Senate Executive Calendar.

The Railroad Retirement Board is an interesting entity. Railroad labor was able to get the Roosevelt Administration to enact a law creating their own federalized retirement program a year before the Social Security Act was enacted, so railroads generally don’t pay Social Security tax, and railroad employees are generally ineligible to receive Social Security benefits.

Instead, the RRB runs a program with a benefit structure somewhat similar to Social Security, but powered by its own investment fund (which had $26.5 billion in assets under management as of September 30, 2018) in addition to federal appropriations for administrative expenses (their FY 2019 budget request was for $115.2 million and 757 full-time employees).

The National Railroad Retirement Investment Trust has one major – major – difference from the much larger Social Security Trust Fund. The railroad fund can (and does) invest in assets other than special U.S. Treasury securities. (According to their FY 2017 report, their target asset allocation is 24% U.S. equities, 24% non-U.S. equities, 10% private equity, 14% U.S. fixed-income, 4% non-U.S. fixed income, 10% real estate, 4% commodities, 7% absolute return, and 1% cash.)

While the Senate logjam on nominations in general is at an all-time high, if rail labor is enthusiastically behind Bragg’s nomination (thus bringing Democrats on board en masse), then the paired nominations could conceivably move very quickly once the Senate receives the formal paperwork.