The General Accounting Office is expected to report on the U.S. Postal Service's funding of a retirement plan by Jan. 30, a GAO official confirmed last week.
A review by the Office of Personnel Management in October found that the USPS has almost fully funded future obligations for Civil Service Retirement System postal employees and retirees. As a result, officials said lower retirement contributions could help keep postal rates steady until 2006.
Pension contributions are fixed by law, however, and changing them would require congressional approval. A lower contribution level has support in Congress, but members asked the GAO to confirm the OPM's math. In 2001, the GAO added the postal service's long-term outlook to its high-risk list of government programs that are susceptible to waste, fraud, abuse and mismanagement. One of the reasons it added the agency was because of increases in retirement-related expenses.
Sen. Susan Collins, R-ME, who is expected to head the Senate Governmental Affairs Committee, has reportedly prepared a bill to change the funding but has held off on introducing it in case the GAO report contradicts the OPM.
With the changed contributions to the retirement program, the USPS said it could save $2.9 billion in fiscal year 2003 and $2.6 billion in FY 2004.
If introduced, swift passage of a bill is not a given. Congress may decide it would have to cut an equivalent amount somewhere else in the budget. Quick passage is critical, however, because the USPS has said it will submit a new rate case request with the Postal Rate Commission as early as April if the law is not changed. Without the lowered pension contributions, the postal service has said, the next rate increase would occur next year.
Preliminary work has already begun on the next case. Postal officials also have confirmed that it may include phased rates — lower increases over two years instead of one big increase. If the case were to include phased rates, the USPS would file with the Postal Rate Commission as early as April. If not, it could be delayed until October.
The postal service will have a meeting Jan. 24 in Washington to discuss rate phasing. Attendees to the last two Ratemaking Summits are on the mailing list to receive invitations.
According to the invitation, the meeting would “provide an opportunity to consider further how phased rates might be structured and implemented. It could also clarify any misunderstandings that might exist concerning the phasing concept and the postal service's objectives. If general agreement over phasing were possible, we would like to work toward a settlement agreement that would remove that issue from major contention, once the rate case is filed.”