Collins And Carper Introduce Bipartisan Bill To Fix Postal Service’s Overpayment To Retiree Fund, Stave Off Rate Increases
Higher than expected yields on pension investments due to cause massive overpayments to system; bill encourages USPS to delay postal rate increases until at least 2006 with savings from Collins's bill
WASHINGTON, D.C. – Governmental Affairs Committee Chairman Susan Collins (R-ME) and Senator Tom Carper (D-DE) today introduced bipartisan legislation that would correct a funding mechanism problem that could cause the U.S. Postal Service to over-fund its contributions to the Civil Service Retirement Fund by $78 billion. The legislation encourages the Postal Service to use the savings to avoid postal rate increases until at least 2006 and to begin paying off its debt to the U.S. Treasury. “Although I was initially skeptical of the claim that the U.S. Postal Service’s finances are in better order than previously thought, multiple government agencies and independent experts have confirmed the good news,” said Senator Susan Collins. “Congress ought to approve this legislation swiftly, and the Postal Service ought to use the savings to avoid an imminent postal rate hike.” “This bill is of vital interest to the future of the Postal Service and enjoys the strong support of postal management, postal employees and postal customers,” Senator Tom Carper said. “With this bill the Postal Service should be able to hold the price of postage steady until at least 2006. This is important because, while what the Postal Service charges for its services is still a bargain when compared to the prices charged by most foreign posts, postal customers have absorbed multiple rate increases in recent months that have raised the price of postage by more than the rate of inflation. At a time when the economy is weak and modes of communication like e-mail and electronic bill pay are more popular than ever, another rate increase this year could be a disaster for the Postal Service. The legislation Senator Collins and I introduced today will keep mail in the system and give mailers the opportunity to increase the amount of business they do with the Postal Service.” Recently, the Office of Personnel Management discovered that higher than expected yields on pension investments by the Department of Treasury were causing the Postal Service to dramatically over-fund its contributions to the Civil Service Retirement System (CSRS). If Congress acts on the Collins- Carper legislation, the Postal Service’s CSRS retirement expenses would be reduced by $2.9 billion in FY 2003, and another $2.8 billion in FY 2004. The Collins-Carper legislation would allow the Postal Service to realize these reductions by correcting the statutory funding mechanism for the Civil Service Retirement System. The bill also directs the Office of Personnel Management (OPM) to determine a new amortization schedule that will pay off the Postal Service’s existing unfunded CSRS liability of $5 billion. In addition, the legislation encourages the Postal Service to use the savings resulting from this legislation to fulfill the its commitment to hold postal rates unchanged until at least 2006, and to pay a portion of their massive unfunded health care liabilities. It also stipulates that the savings not be used to pay bonuses to Postal Service executives. “Congress has an additional obligation to enact postal reform legislation this year that will help the Postal Service and General Potter continue the transformation necessary to make the Postal Service viable in the electronic age, ” Senator Tom Carper said. “President Bush’s Commission on the United States Postal Service will release a set of postal reform proposals this summer that I hope will offer some fair, balanced recommendations that we can use to begin drafting legislation. I plan to put forward a proposal of my own this year that maintains universal service and current delivery standards while giving the Postal Service the kind of flexibility its private sector competitors have to set prices and cut costs. I look forward to working with Chairman Collins and all of my colleagues on the Governmental Affairs Committee in getting a postal reform bill signed into law during the 108th Congress.” Rep. Tom Davis (R-VA), Chair of the House Government Reform Committee, and Rep. John McHugh (R-NY), head of the House Postal Reform Commission, introduced a similar bill for consideration by the House of Representatives today along with Government Reform Committee Ranking Member Rep. Henry Waxman (D- CA) and Rep. Danny Davis (D-IL). The Committee on Governmental Affairs, which Sen. Collins’s chairs, oversees the United States Postal Service.