Bills to Lower USPS Contributions Hit Both Houses

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Though legislation has been introduced that would let the U.S. Postal Service save billions of dollars by lowering pension contributions to the Civil Service Retirement System, nothing was included in the $397.4 billion Omnibus Appropriations bill.

This will likely hurt chances of CSRS legislation passing and lead to the postal service filing a rate case in April or August.

"There's a huge price tag involved with correcting this payment schedule, and even though it clearly is the right thing to do, huge price tags are going to be difficult to move on Capitol Hill this year," said Neal Denton, executive director of the Alliance of Nonprofit Mailers. "We are disappointed that the issue couldn't have been resolved in the FY03 Appropriations bill. Now, this is going to have to go through a long, arduous process."

There's still hope, Denton said, if mailers would contact their lawmakers and urge that the changes be made.

"If we don't get behind these guys and try to move this forward, we are going to be looking at a race case filing perhaps as early as April," he said, though more likely a case will be filed in August that doesn't include provisions for phased rates.

If Congress acts on the legislation, the postal service could reduce payments to the fund by $2.9 billion in fiscal year 2003 and $2.8 billion in FY 2004. The bills call for the USPS to use the savings to pay down some of its $11 billion debt to the Treasury Department in fiscal years 2003, 2004 and 2005, fund retiree health benefits and hold mailing rates steady until 2006. Both bills also stipulate that the savings not be used to pay bonuses to postal service executives.

Efforts to lower the pension contributions came after a review last year by the federal Office of Personnel Management found that the USPS would overfund its obligations to the Civil Service Retirement System by $71 billion based on current contribution levels. A General Accounting Office report last month went even further, stating that the postal service already has overfunded the CSRS by $4.1 billion.

Pension contributions are fixed by law, however, and cannot be changed without congressional approval.

The House legislation, H.R. 735, was sponsored by Government Reform Committee chairman Tom Davis, R-VA; and committee members John McHugh, R-NY; Henry Waxman, D-CA; and Danny Davis, D-IL. The Senate bill, S. 3801, was sponsored by Governmental Affairs Committee chairwoman Susan Collins, R-ME, and committee member Tom Carper, D-DE.

"Although I was initially skeptical of the claim that the [postal service's] finances are in better order than previously thought, multiple government agencies and independent experts have confirmed the good news," Collins said. "Congress ought to approve this legislation swiftly, and the postal service ought to use the savings to avoid an imminent postal rate hike."

Beyond 2005, the bills would require the postal service and OPM to calculate the difference between the cost to fund CSRS under the bill and the cost under the old law. The House bill calls for this amount to be held in escrow until Congress acts on a USPS proposal outlining what should be done with the funds. The Senate bill does not address this issue.

Robert Taub, McHugh's chief of staff, said the bills are modeled on the OPM approach to handling the changes.

The postal service is "grateful that the legislation has been introduced," USPS spokesman Gerry Krienkamp said.

No timetable has been set for action on either piece of legislation, and no decisions have been made on hearings, but Taub said McHugh and Davis "plan expeditious action on this. They realize they have to move quickly. This is definitely not something they are hanging back on."


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