A U.S. Postal Service executive is urging the chairmen and ranking Democrats of the House and Senate Budget committees not to adopt the language regarding Civil Service Retirement System funding from President Bush's budget proposal into their budget resolutions.
Bush's $2.5 trillion fiscal year 2006 budget proposal was announced in February. The Budget committees began writing their resolutions for fiscal 2006 on March 9. The Bush administration said in its budget report that it “proposes to use the pension savings provided to the postal service by the Postal Civil Service Retirement System Funding Reform Act of 2003 that would otherwise be held in escrow in 2006 and beyond, to put the postal service on a path that fully funds its substantial retiree health benefits liabilities.”
Without the 2003 act, the USPS would have overfunded its CSRS obligation by $78 billion.
Ralph J. Moden, senior vice president of government relations at the USPS, wrote a letter this month to Senate Budget Committee chairman Judd Gregg, R-NH, and ranking minority member Kent Conrad, D-ND, as well as House Budget chairman Jim Nussle, R-IA, and ranking minority member John Spratt, D-SC.
In the letter, he said “the president's budget assumes that the escrow account … is abolished and all funds intended for that account are, instead, placed in a newly created retiree health benefit trust fund.” These CSRS payments would total $43.24 billion over the next 10 years, he wrote.
“The trust fund payments would be in addition to the retiree health benefits premiums the postal service is already required to make,” he said. “Those premiums will total $32.104 billion over the same time period.”
Moden said the president's proposal would “deprive American mailers of any continued benefit from this law. Moreover, to layer additional postal service retiree health benefit premiums on top of what would have gone into the escrow [account] would penalize all who use the postal service by increasing rates unnecessarily.”
A postal official said last month that the USPS will file for a rate increase this month only because it must cover a $3.1 billion escrow requirement resulting from changes set forth in the 2003 act. Many in the mailing industry expect a 6 percent across-the-board rate case to be filed, with implementation Jan. 1.
Moden noted that H.R. 22, a postal reform bill introduced in January by Rep. John McHugh, R-NY, requires the USPS to pre-fund its retiree health benefit obligations by 2043 using some, if not all, of the savings created by the CSRS Act.
“While we have some concerns about the amount of 'savings' used in H.R. 22, we believe it strikes a much more appropriate balance between pre-funding retiree health benefits and mitigating future rate increases,” Moden wrote.
Moden urged the congressmen to ensure that their budget resolutions do not adopt the president's budget proposal, “but rather provides for the enactment of legislation similar to H.R. 22.”
In addition, The Washington Post reported that letters were sent to the Budget committees calling for adjustments on USPS pension and healthcare obligations as a way to hold down mailing costs. The Senate Budget Committee received a letter from Sen. Susan Collins, R-ME, who chairs the Senate Homeland Security and Governmental Affairs Committee.
The Mailers Council, Crystal City, VA, issued a statement March 2 encouraging Congress and the White House to help for-profit and nonprofit mailers avoid a postage rate increase by passing legislation eliminating the pension escrow account.
“Recently the postal service's board of governors authorized postal officials to start a regulatory process that will likely result in a 5 [to] 6 percent postage rate increase in spring 2006,” Mailers Council executive director Robert E. McLean said. “The increase is necessary only because, by law, the postal service must make a $3.1 billion payment into an escrow account.”
If the cost of postage rises, he said, “the recent trend in mail volume increases will be reversed. As we have seen repeatedly during the last three decades, when postage prices go up, mailers reduce the number or size of their mailings. The inescapable result is reduced revenue for the postal service.”
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