OPM Reiterates its position at Senate Subcommittee hearing that it does not have Authority to Reallocate USPS CSRS Overpayments

OPM: Finding Solutions to the Challenges Facing the U.S. Postal Service

STATEMENT OF JONATHAN FOLEY
DIRECTOR OF PLANNING AND POLICY ANALYSIS
U.S. OFFICE OF PERSONNEL MANAGEMENT
December 2, 2010

We believe the assertion that OPM has the discretion to make basic changes in the allocation method between the Postal Service and the Treasury goes beyond the intent of and the authority provided to OPM in PAEA. The reconsideration process provided for in section 802(c) of the PAEA allows for appeal and review of OPM’s specific calculations of the annual supplemental liability determination, according to the established Fund allocation methodology. For example, section 802(c) allows for reconsideration of the population or accounting data underlying the annual liability determination, but not of the allocation methodology. Thus, we believe that the question of whether there should be a change in the apportionment responsibility is one that is appropriate for consideration by the Congress.

Our comments on S. 3831 are limited to section 2, which would transfer responsibility to the Treasury for the effects of Postal pay increases on the value of pre-1971 Postal employment in computing annuities under CSRS, a change estimated to be $50-55 billion. In addition, it would permit the resulting Postal CSRS surplus to be used at the discretion of the Postal Board of Governors to satisfy the $5.5 to 5.8 billion annual payments to the Postal Service Retiree Health Benefits Fund (PSRHBP) required under 5 U.S.C. 8909a(d)(3)(A) for fiscal years 2010-2016.

OPM’s principal roles in this matter are those of a program administrator and trust fund fiduciary. As such, our principal concerns must be for the efficient operation and reliable funding of the retirement and insurance programs. As a trust fund fiduciary, our principal relevant concern is with the adequate funding of the program and not with the source of that funding. Since S. 3831 will not change funding levels for CSRS, but only the source of those funds, OPM takes no position at this time as to the substance of section 2.

However, we do have concerns regarding certain technical aspects of that section. The amendment to 5 U.S.C. 8348(h)(2)(B) would require that the annual computation of the Postal surplus or liability be completed by March 31 following the end of each fiscal year. Because not all necessary data is available by that date, we suggest that it be changed to June 30, which will still give the Postal Board of Governors three months for consideration prior to the funds transfer date. There are also internal inconsistencies between the dates specified for calculations and the dates for payments to the PSRHBP. Finally, there are technical problems with the wording of the new 5 U.S.C. 8348(h)(2)(C)(4) in that the required methodology is not supported by available data. We would be pleased to provide the Subcommittee with more detailed explanations and suggested technical revisions that would retain the substantive intent of these provisions.