NATIONAL ASSOCIATION OF POSTAL SUPERVISORS
LEGISLATIVE AND REGULATORY UPDATE
JULY 22, 2010

POSTAL FINANCIAL REFORM BILL CLEARS FIRST HURDLE

The House postal oversight subcommittee on Wednesday approved legislation to stabilize the finances of the Postal Service by reversing billions of dollars overpaid by USPS into the government’s civil service pension fund and shifting those payments to satisfy future retiree health benefit obligations.

By an 8-1 vote, the subcommittee approved H.R. 5746, the United States Postal Service’s CSRS Obligation Modification Act of 2010, introduced by the panel’s chairman Stephen F. Lynch (D-MA).

The postal financial reform legislation now goes to the full committee — the House Oversight and Government Operations Committee — although the timing of the panel’s action on the bill is uncertain.

A committee vote could get pushed off until early September, with the start of the August Congressional recess looming late next week and the committee still awaiting the “budget score” on the bill from the Congressional Budget Office.

The legislation approved Wednesday is critical to providing a more certain financial footing to the Postal Service, which is on course to post a $7 billion loss this year, much of it due to Congressionally mandated payments for future postal retiree health benefits. The legislation responds to that situation by directing the Office of Personnel Management to more fairly reallocate CSRS retirement benefit liabilities between the Postal Service and the Federal government for employees who worked for both the Post Office Department before 1971 and the Postal Service after that date. The legislation is based upon a consultant’s report to the Postal Regulatory Commission and the USPS Inspector General’s findings that found that antiquated calculation methods were used by OPM in determining the Postal Service’s CSRS payments since 1971, resulting in huge USPS overpayments.

The reallocation of CSRS liabilities — essentially returning to the Postal Service money already paid into the civil service pension fund — could result in the crediting to the Postal Service as much as $75 billion. That recredited amount, under the bill, will be deposited in the Postal Retiree Health Benefits Fund, largely relieving the Postal Service of the immense future retiree health payments required by Congress in the 2006 postal reform law.

Wednesday’s 8-1 vote on a substitute version of the bill fell largely along party lines, with Rep. Brian Bilbray (R-CA) joining the panel’s seven Democrats — Steven Lynch (D-MA), Eleanor Holmes Norton (D-DC), Danny Davis (D-IL), Elijah Cummings (D-MD), Dennis Kucinich (D-OH), William Lacy Clay (D-MO), and Gerry Connolly (D-VA) — to approve the measure. Rep. Jason Chaffetz (R-UT), the top Republican on the subcommittee, cast the lone vote of disapproval, citing concerns over its potential costs.

IMPORTANT: Building greater support among members of the House of Representatives for H.R. 5746 is crucial. Please contact your House Member to support for the bill. CLICK HERE to easily send a message to your House lawmaker to request their cosponsorship.

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Bruce Moyer
NAPS Legislative Counsel
From Bruce Moyer July 17, 2010

What H.R. 5746 Does

 The legislation carries through on recent findings by the Postal Regulatory Commission and the Postal Service Inspector General that show the Postal Service since 1971 has overpaid as much as $55 billion into the federal civil service pension fund for the retirement benefits of employees who worked for both the Post Office Department prior to 1971 and the Postal Service after that time. These overpayments came about through faulty calculation methods used by the Office of Personnel Management.

The legislation directs the Office of Personnel Management to recalculate how much the Postal Service should have paid, using fairer and more actuarially sound formulas, and then transfer that surplus into the Postal Retiree Health Benefit Fund, the account into which the Postal Service already has made $35 billion in payments since 2006.  In essence, H.R. 5746 moves money from one government trust fund (the civil service pension fund) into another government trust fund (the postal retiree health benefits fund) and hopefully should not generate budget scoring issues.

That move, which NAPS has urged Congress to take since February, will provide significant financial relief to the Postal Service, removing the burden imposed by the 2006 postal reform law that has required the Postal Service to put money aside for its future retiree health benefits, to the tune of $5.5 billion a year.  The Postal Service would have remained in the black in 2 of the last 3 years but for these retiree health prefunding payments, costing $5.5 billion per year. The Postal Service once again faces a $7 billion shortfall for the current fiscal year ending September 30, due largely to its retiree health prefunding payments.

The dual reform of the Postal Service’s pension and retiree health benefit liabilities will provide immense relief to Postal Service and assure the continuation of high-quality mail service