Bill to address current financial problems with long-term solutions
Sep 23 2010
WASHINGTON - Today, Sen. Tom Carper (D-Del.) introduced the Postal Operations Sustainment and Transformation (POST) Act of 2010. The POST Act addresses the current budget issues plaguing the U.S. Postal Service by proposing a series of provisions including: easing postal employee pension and retiree health costs; addressing postal employee wages and benefits; allowing partnerships with state and local governments; and giving the Postal Service leeway to close post offices, market certain non-postal items, and eliminate Saturday delivery.
"For decades, Americans have taken the Postal Service for granted. We've assumed that it would always be there. But our troubled economy - coupled with the continued migration to electronic forms of communication - is putting the future of the Postal Service in jeopardy," said Sen. Carper. "If we do nothing, we face a future without the valuable services the Postal Service provides. However, if we act quickly, we can turn things around by passing this necessary bill that would give the Postal Service the room it needs to manage itself and avoid it becoming the latest victim of Congressional gridlock.
"Under the leadership of Postmaster General Potter, the Postal Service has made tremendous efforts to cut costs. They've also put forth a plan that shows a commitment to further cost cutting and efforts to make their business relevant during these changing times. Achieving these goals will require a shared sacrifice on the parts of the Postal Service, postal employees, and major postal customers."
"Legislation introduced today by Senator Tom Carper is a roadmap to recovery for the Postal Service," said Postmaster General John E. Potter. "It incorporates many of the key elements we have identified as necessary and essential to allow the Postal Service to meet the changing needs of its customers.
"This legislation is creative in that it alleviates our retiree health benefit burden while bringing resolution to the pension overpayment dilemma we've faced. It permits us to step into the 21st Century by enabling elemental reforms to our network, our infrastructure, and our labor relations and it reduces the number of days we provide door to door delivery service to more closely align our costs and the needs of our customers.
"We commend Senator Carper for his leadership and thank him for his continued support of the Postal Service and his recognition of the vital role we play in the lives of the American people."
Sen. Carper's bill attempts to permanently address the pension and retiree health issues that have been a drain on postal finances over the years. The Postal Service currently pays into the old Civil Service Retirement System (CSRS) using a formula that recent studies by the Postal Service's Inspector General, the Postal Regulatory Commission, and at least two outside consulting firms found resulted in gross overpayments. In addition, the Postal Service since FY2007 has been required to pay between $5.5 billion and $5.9 billion a year in an effort to prefund its future retiree health obligations. Sen. Carper's bill would require the Office of Personnel Management to recalculate the Postal Service's CSRS obligations using a modern formula that more fairly divides responsibility for pension costs related to pay increases granted to former Post Office Department employees who transitioned to the Postal Service between the Postal Service and the federal government. This recalculation would result in a finding that the Postal Service has overfunded CSRS by about $50 billion. Sen. Carper's bill would give the Postal Service more than $5 billion each year from this $50 billion overpayment to help it make its retiree health payments.
Another provision of Sen. Carper's bill would reaffirm the Postal Service's authority to reduce delivery frequency when it felt like doing so was necessary. Based on the Postal Service's proposal to eliminate Saturday delivery, such authority could save the Postal Service $3 billion or more a year. The bill would also eliminate several provisions in law that force the Postal Service to maintain post offices that are no longer necessary, allowing the Postal Service to open cheaper, more convenient retail options such as automated kiosks or postal stations located in grocery stores or other places where people go every day.
Under current law, the Postal Service is prohibited with a few exceptions from offering "non-postal" products and services; however, Sen. Carper's bill would revise the prohibition, allowing the Postal Service to offer non-postal products that are in the public interest and make use of the existing postal network. Additionally, the new bill would allow the Postal Service to ship wine and beer, a service UPS and FedEx already provides, and to work with state and local governments seeking to use postal retail locations to serve citizens seeking to access services such as voter registration or driver's license renewal.
Finally, Sen. Carper's legislation seeks to reform the way in which Postal employees' wages and benefits are determined. Wages and benefits currently account for roughly 80 percent of the Postal Service's expenses. On top of this, the Postal Service is required under the law to pay its employees wages and benefits that are comparable to those paid in the private sector. At times, arbitrators have awarded postal employees what they believe are comparable pay and benefits without taking the Postal Service's financial condition into account. Recognizing that this situation cannot continue in a world where the Postal Service operates under a rate cap and faces stiffer competition from electronic communication, the bill requires arbitrators to take the Postal Service's financial condition into account along with other factors such as the comparability requirement and the details of the rate system.
The POST Act would provide relief starting in the next fiscal year, FY11. Since the Postal Service will be unable to make the retiree health payment due on September 30 of this year, however, Congress will need to enact legislation to prevent a Postal Service default or a disruption in postal operations as it did in FY09. Sen. Carper's bill aims to permanently end the need for similar one-year fixes.