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U.S. Postal Retirement System Payments Suspended

Sweeping Reform Legislation Introduced

Congressman Daryl Issa (R-49-CA), Chairman of the House Committee on Oversight and Government Reform with jurisdiction over the United States Postal Service (Postal Service or USPS), has introduced sweeping legislation that would bring about the most comprehensive overhaul of the Postal Service since its modern-day inception in the early 1970s. This came only two days after the Postal Board of Governors announced that effective June 24 it was suspending USPS employer payments to the defined benefit portion of the Federal Employees Retirement System (FERS), estimating a savings of $800 million between then and the end of the fiscal year on September 30, in order to avert a Postal Service shut down in October. The Governors cited a $6.9 billion surplus in the FERS account as the basis for the action.

This startling turn of events, beyond what even U.S. Postmaster General Patrick R. Donahoe had projected just a week earlier when meeting with NPES industry and association leaders who were in Washington, D.C., June 14-15 for the first-ever coordinated NPES/Printing Industries of America Capitol Hill Fly-in, seems precipitated by the rapidly deteriorating USPS financial position stemming from the dramatic decline in mail volume in the first quarter of the year.

If Chairman Issa’s new legislation, H.R. 2309, was law now the Postal Governors’ action would have triggered a solvency authority provision that would put the USPS into a form of receivership, with management transferring to a financial control board until the Postal Service operates in the black for two consecutive years, and submits a financial plan for the future that is approved by the control board. The 132-page bill contains many additional provisions, the highlights of which include:

  • Creation of a Postal Reorganization Commission to oversee closing post offices,
  • Allowing the USPS to move to 5-day mail delivery
  • Putting USPS compensation on par with the private sector, and
  • Putting USPS health and life insurance benefits on par with other federal workers.

The Coalition for a Twenty-first Century Postal Service, of which NPES is an active leader, has been evaluating the new Issa legislation, and on first reading seemingly could support much of its content. One area that is lacking, however, is any provision that would recognize and repatriate any or all of more than $50 billion that the Postal Service has been required by current law to pay into the federal Civil Service Retirement System (CSRS). The mailing industry believes these funds—postage paid by mailers, not taxpayer dollars—to be in excess of what modern actuarial practice would require, and therefore monies that should be accessible by the Postal Service to help meet its immediate cash shortage while long-term structural changes are made to its business model. This view is also supported by the Postal Service, postal unions and independent auditors who have studied the issue, and is recognized in legislation sponsored by Senators Tom Carper (D-DE), and Susan Collins (R-ME). However, these views are not shared by Chairman Issa at this time.

For more information contact NPES Government Affairs Director Mark J. Nuzzaco at phone: 703/264-7235 or e-mail: mnuzzaco@npes.org.