No Rate Hike Till 2006: House Passes CSRS Change

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The House of Representatives passed a bill yesterday allowing the U.S. Postal Service to scale back some of its pension payments and keep rates steady until fiscal 2006.


The bill -- S. 380, the Postal Civil Service Retirement Funding Reform Act of 2003 -- passed 424-0. The Senate unanimously approved S. 380 on April 2.


The bill now goes to President Bush for his signature, which is expected to come before Congress adjourns April 14. The bill has been supported by the Bush administration since its inception.


Without the change, postal officials would have had to start seeking approval for the next rate increase this fall.


"The bill today will go a long way toward boosting economic activities," Rep. John McHugh, R-NY, a member of the House Government Reform Committee and the leading expert on postal issues in Congress, said on the House floor yesterday.


Other committee members also spoke in support of the bill. Carolyn Maloney, D-NY, said it would help "struggling industries, like the magazine industry," which includes many companies in her district. "Magazines such as Mademoiselle, Mode and Brill's Content have [shut down] because of the tough economy and rate [increases]."


"While consumers won't miss their almost-annual trip to the post office for new stamps, this bill is especially important to those nonprofit organizations struggling to raise funds or disseminate information in this slumping economy," said Neal Denton, executive director of the Alliance for Nonprofit Mailers.


"We credit Congress for acting swiftly to correct a shortcoming in USPS finances," Denton said. "However, the long-term viability of the postal service remains extremely precarious. Productivity gains and cost savings through automation remain sluggish, and declining volumes and revenues can't keep pace with growing expenses. We can't squander this brief reprieve. This is borrowed time that must be used to press for long-term reform if we are to protect uniform rates and six-day service."


The move to reduce the contributions came after reviews by the federal Office of Personnel Management and the General Accounting Office found that the USPS was paying too much into the Civil Service Retirement System, which covers employees who joined the agency by 1983. The bill requires the postal service to use the savings to pay down its $11.2 billion debt in fiscal years 2003, 2004 and 2005.


Other savings would be used to continue funding retiree health benefits and hold postal rates steady until 2006. It cannot use the money to pay bonuses to its executives, and Congress still will have to approve the agency's plans for using any additional funds after 2005. The postal service estimates that it would save $2.9 billion in fiscal year 2003 and $2.8 billion in FY 2004 through lower contributions.


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