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USPS Board Takes Stance on Reform Legislation

The U.S. Postal Service Board of Governors spelled out its vision of reform legislation in a letter sent last month to the leaders of congressional committees with jurisdiction over the USPS.

The letter went Feb. 23 to Sen. Susan Collins, R-ME, who chairs the Senate Committee on Homeland Security and Governmental Affairs, and Rep. Tom Davis, R-VA, chairman of the House Committee on Government Reform.

It was written after the board last month directed management to prepare a rate case filing with the Postal Rate Commission to cover an escrow requirement of $3.1 billion resulting from changes set forth in the Postal Civil Service Retirement System Funding Reform Act of 2003. The escrow must be established by Sept. 30, 2006.

Many in the mailing industry expect a 6 percent across-the-board rate case to be filed by the governors with the PRC this month, with implementation Jan. 1, 2006.

In its letter, the board wrote, “in the Board meetings of Jan. 11, 2005, and Feb. 16-17, 2005, we reviewed with Postmaster General [John E.] Potter the [USPS'] operations, the need for remedial action, and the current state of the legislative process. We believe strongly that to be successful the reform package must incorporate the following elements.” They include:

· The escrow requirement for the so-called savings in payments to the CSRS should be removed.

· The portion of CSRS benefits for USPS employees attributable to their military service should not be borne by the postal service. “The requirement that military service count toward USPS retirement is a Federal policy and a national obligation,” the letter said.

· The bill should incorporate improvements in the labor area, “which accounts for nearly 80 percent of USPS costs,” the letter said.

· The USPS should have more rate flexibility and authority to introduce new postal services. The board also said that the consumer price index would be an “acceptable, albeit very challenging, price cap on rates.”

· Any future changes in the scope of the postal monopoly should be considered within the context of the USPS' universal service mission and other social policy obligations. “We believe that Congress and the Administration, not the regulator, are best positioned to set national policy striking a balance among these dimensions,” the board wrote.

· The USPS should be held fully accountable for the governance of the postal service, but the board should be granted requisite authority.

· Though some of these issues are incorporated in a bill reintroduced in January by Rep. John McHugh, R-NY, others are not. The Postal Accountability and Enhancement Act of 2005 was reintroduced with sponsors Davis; Rep. Henry Waxman, D-CA, ranking minority member of the Government Reform Committee; and Rep. Danny Davis, D-IL.

It calls for replacing the provision in the 2003 act requiring that money owed to the USPS because of an overpayment into the CSRS fund be held in an escrow account. Repeal of that would free up $78 billion over 60 years, letting the postal service pay off debt to the U.S. Treasury, fund its healthcare liabilities and mitigate rate increases.

The bill also would return responsibility for funding CSRS pension benefits related to the military service of postal retirees — a $27 billion obligation — to the Treasury Department. No other federal agency has to make this payment.

It also calls for ensuring that rate increases generally do not exceed the annual change in the CPI.

However, the bill calls for granting the PRC subpoena power and a broader scope for regulation and oversight.

A Senate postal reform bill has not been reintroduced this session, though it is expected soon.

Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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