Potter to Congress: USPS Needs Legislative Change

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Postmaster General John E. Potter said yesterday at a congressional hearing on postal reform that the U.S. Postal Service's "underlying business model remains problematic and compels legislative change."

The special panel for postal reform and oversight is chaired by Rep. John M. McHugh, R-NY, and reports directly to House Government Reform Committee chairman Tom Davis, R-VA.

Potter said Congress should build upon the five reform principles that President Bush outlined to Congress last year:

· Implement best practices. Ensure that the postal service's governing body is equipped to meet the responsibilities and objectives of an enterprise of its size and scope.

· Transparency. Ensure that information on product costs and performance are measured accurately and made available to the public in a timely manner.

· Flexibility. Ensure that the postal service's governing body and management have the authority to reduce costs, set rates and adjust key aspects of its business.

· Accountability. Ensure that a USPS operating with greater flexibility has appropriate independent oversight to protect consumer welfare and universal mail service.

· Ensure that a USPS operating with greater flexibility is financially self-sufficient, covering all of its obligations.

A sixth principle should be added, Potter said: "a commitment to a strong collective bargaining process."

He also said that two issues remain regarding last year's Civil Service Retirement System legislation.

One involves shifting from the postal service to the Treasury Department the retirement liability costs of USPS employees' military service before they became postal employees. Potter said that this obligation transferred payment of more than $27 billion from taxpayers to ratepayers.

"We believe these military service obligations should be returned to the Treasury and not be the responsibility of postal ratepayers," he said.

Further, Potter said, "we propose that the funds required to finance the $27 billion military service costs be allocated to fund our long-term obligation in retiree healthcare benefits, estimated to be between $47 [billion] and $57 billion. We believe it has greater priority than funding military service costs that have no linkage to operating the postal service."

The other issue involves a part of the CSRS legislation that requires the postal service to put CSRS savings into escrow pending congressional review beginning in fiscal year 2006.

In effect, "in 2006, the requirement could negate the benefits the CSRS legislation made possible by putting postal customers back where they were before the legislation was enacted," Potter said. "We need to deal with this escrow fund and put it to bed."

Also speaking at the hearing were Brian C. Roseboro, acting undersecretary for domestic finance at the Treasury Department; George A. Omas, chairman of the Postal Rate Commission; and David M. Walker, comptroller general at the General Accounting Office.

The hearing is the first of three to be conducted by the panel. The next takes place Feb. 5 in Chicago to hear testimony by leaders of postal labor and management groups. On Feb. 11, chief executives of USPS business customers and competitors will testify before the panel in Washington.

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