Press Release from the OPM Office Of Inspector General
Study of the Risks and Consequences of the USPS OIG’s Proposals to Change USPS’s Funding of Retiree Benefits: Shifting Costs from USPS Ratepayers to Taxpayers’
Washington, DC – (Feb. 28, 2011) Today, the U.S. Office of Personnel Management (OPM), Office of the Inspector General (OPM OIG), issued a study analyzing certain proposals issued by the United States Postal Service (USPS), Office of Inspector General (USPS OIG), regarding changes in the manner by which the USPS funds both its retiree annuity and health benefit obligations. The OPM OIG paper, A Study of the Risks and Consequences of the USPS OIG’s Proposals to Change USPS’s Funding of Retiree Benefits: Shifting Costs from USPS Ratepayers to Taxpayers, reviews the impact that the proposals would have upon the trust funds and the Federal benefit programs administered by OPM.
In a series of reports containing these proposals, the USPS OIG has estimated that the USPS has “overpaid” these trust funds by as much as $142 billion. The proposals generally envision changing the law governing the manner in which the USPS’s retiree benefit liabilities are determined and funded.
“We felt that the issues surrounding the USPS OIG’s proposals had not been fully explored,” said Inspector General Patrick E. McFarland. “It was important for us to examine not only the effects that the proposals would have upon the USPS, but also their impact upon the Federal retirement system as a whole. We were also concerned that there was a public perception that OPM may have inappropriately calculated the USPS’s liabilities. In fact, our analysis revealed that OPM has fully complied with the law.”
The OPM OIG study also concludes that generally the proposals would have a lasting negative effect upon the retirement programs and trust funds and have little, if any, positive impact upon the USPS’s ultimate long-term profitability. In addition, the result of these proposals would be to shift costs from USPS ratepayers to the American taxpayers.
While the USPS’s financial situation must be addressed, the OPM OIG study cautions against using the Federal retirement program as a vehicle through which to implement policy objectives unrelated to the Federal retiree benefit programs. “The resolution of the USPS’s financial situation should be fully transparent rather than providing an indirect subsidy from the Federal benefits system,” said Inspector General McFarland.
“While our findings do not support the USPS OIG’s proposals,” stated Inspector General McFarland, “we think that our work, combined with theirs, will help the Congress, the Administration, and the USPS to develop the most efficient and effective resolution of the USPS’s current problems.”
Here’s an interesting little tidbit from the report:
Under the FEHB Program, a portion of a retiree’s health care insurance premium is paid for by the Federal Government (or, in the case of USPS retirees, the USPS) through contributions to the Employees Health Benefits (EHB) Fund.The Federal or USPS retiree contributes the remaining amount of the premium to the fund.
As the USPS OIG’s reports have repeatedly pointed out, the Federal Government does not prefund it s retiree health obligations. Instead, the employer and employee contributions pay only for the costs of the program for that particular year. Consequently, the EHB Fund maintains only a small amount of reserves and thus does not have significant assets that remain in the fund from year to year.
It is unclear, however, what the effect would be upon USPS employees’ or retirees’ rights if the USPS ceased making its required payments into the EHB Fund because the fund does not contain sufficient reserves that could be used to “replace” the USPS’s contributions. Consequently, the fund’s assets would be exhausted very quickly.
In such a scenario, the insurance companies would still be legally entitled to the full amount of the premium negotiated under the contract. The OPM would have to take some sort of action because without the USPS’s contributions, the fund simply would not have enough money to pay every FEHB Program participant’s premium.
Absent an emergency appropriation from Congress, it is possible that the OPM would have to exercise its regulatory authority to disenroll USPS employees and retirees as a class in order to continue providing health care coverage to all other FEHB Program participants.
USPS’s Financial Outlook
While various parties have worked diligently to develop business and operational initiatives geared towards improving the USPS’s business model and financial condition, we have yet see a report that contain s viable projections that it will improve its financial situation.
If anything, the Big Bonuses that were issued to the Postmaster General and all of his Subordinates should be taken very seriously and investigated.
Travel Ecpenses and Relocations of Friends, Relatives, Peers addresses should be investigated; Ex: Moves from VA, MD & D.C.- expenses are paid in excessive amounts for relocation.
Freinds inputting friends for bonuses that are not deserved and allocate the expenses elsewhere. The U.S.P.S. is a Joke and should seriously investigated.
Last, false reporting of the Daily Mail Condition Reports & Labor Issues of RIF improperly handled.
The USPS OIG has estimated that the USPS has “overpaid” these trust funds by as much as $142 billion. Wow the Post Office has paid virtually all the money for Federal Retirees and all they can do is rant and rave about the Post Office. Let’s be fair to USPS.
Postal Nag…..I thought it read the same thing you think it did. Are we reading this right????
‘ if the USPS ceased making its required payments into the EHB Fund because the fund does not contain sufficient reserves that could be used to “replace” the USPS’s contributions. ‘ – if I am reading this right, does the USPS contribution pay for ALL federal retirees health benefits?1?
Is this all a prelude to putting the USPS back under the Federal Government? Spend all the prefunded bennies then when the cash cow is too broke to give any more milk, sell off the profitable assets and the rest gets lumped back into the Federal Government. Back to the pre 1970’s Post Office.
The government shell game ! Now that Congress has STOLEN and mismanaged all the money that they had the Postal Service OVERPAY into the retirement and health benefits funds and they, the Congress they are broke, Congress wants to throw all the retirees out of the ealth benefit plans so they do not have to pay???
What a government! How do the postal workers who have faithfully paid for their health benefits for thirty years, then retire and get THROWN OUT of the retirement program because CONGRESS has misspent all the money?
We need a new Congress or a new type of gevernment or something because the people in Congress have organized thievry to a legal level; and since WE HAVE TRUSTED THEM TO MAKE THE RULES THEY CAN STEAL OUR MONEY WITH IMPUNITY.
This is what the Boston Tea Party was really all about.