Pension, health care changes key to Senate postal reform plan

Changes to the way the Office of Personnel Management calculates how much the U.S. Postal Service pays into employees’ retirement plans could help the agency dig itself out of debt by generating a $6 billion surplus.

That’s one of the highlights of the new Senate postal reform bill.

The bipartisan Postal Reform Act of 2013 (S. 1486), introduced Thursday night by Chairman Tom Carper (D- Del.) and Ranking Member Tom Coburn (R-Okla.) of the Senate Homeland Security and Governmental Affairs Committee, aims to help USPS pay some of the $15.9 billion it owes the Treasury in outstanding debt.

USPS also has to address the congressionally-mandated payment of $5 billion-plus that it must make to the Treasury before Fiscal Year 2013 ends on Sept. 30.

The Senate bill contains language to reform USPS in five areas:


  • Pension Reforms – OPM would draw on new data to determine how much USPS pays into the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS).

    Currently, OPM draws on data from the entire federal workforce, which is different than that of the average postal retiree, a committee aide said in a briefing Friday. The bill would require OPM to base its calculations on data specific to the Postal Service workforce.

    The new data would more accurately reflect the differences between non-postal and postal federal employees. It would also generate a surplus from FERS and and a smaller deficit in CSRS for the Postal Service, the committee aide said. USPS would be able pay up to $6 billion in surplus funds generated from the change toward its $15.9 billion in Treasury debt.

    In its 2012 postal reform bill, the Senate called for a buyout plan to encourage postal employees to opt for early retirement. The current bill contains no language about the buyout because USPS determined it doesn’t need additional money for buyouts, the committee aide said.

    Postal unions would now be able to bargain with USPS during contract negotiations over the amount new employees could participate in FERS and the Thrift Savings Program (TSP).

  • Health Care Reforms – USPS’ statutory retiree health pre-funding would be replaced with a 40-year amortization of its retiree health liability. This, combined with language that allows premiums for retirees to come from USPS’ pre- funded health care account, would cut the Postal Service’s health costs for retirees nearly in half.

    A new health plan would be created to address the needs of retirees enrolled in Medicare parts A and B. Some of these employees now pay for full Medicare and Federal Employees Health Benefit Plan (FEHBP) coverage. Those postal retirees not enrolled in Medicare would be able to do so without being penalized.

    Postal unions would also be able to bargain with USPS over a new health plan, which could be either in or outside of FEHBP. If an agreement is not reached, it can be taken to arbitration to be resolved.

  • Service Changes – Last year’s Senate bill called for cuts to overnight delivery. It also called for the closing or consolidation of a large number of mail processing plants. Under the new bill, a two-year moratorium would be placed on standard service changes and plant closings. Saturday service would continue and new requirements for centralized or curbside delivery would be put in place for new addresses or business addresses. The Postal Service would also pursue changing door delivery at residential addresses on a voluntary basis to centralized or curbside delivery.
  • Revenue and Innovation – Several revenue-producing changes would be introduced, including lifting the prohibition on shipping beer, wine and distilled spirits.
  • Federal Workers Compensation Reform – The bill, which includes the Workers Compensation Act of 2013, would bring the compensation levels of older postal employees in line with their retirement benefits.

“The bill that Dr. Coburn and I introduced last night presents a comprehensive and bipartisan solution to the Postal Service’s financial challenges that would prevent collapse, protect millions of mailing industry jobs, and enable this critical institution to serve the American public for years to come,” Carper said in a statement. “This bill isn’t perfect and will certainly change as Dr. Coburn and I hear from colleagues and stakeholders, including postal employees and customers. But the time to act is now. It is my hope that Congress and the Obama Administration can come together to enhance this plan in order to save the Postal Service before it’s too late.”

In the same statement, Coburn echoed Carper’s view that the bill was less than perfect. “This proposal is a rough draft of an agreement subject to change that I hope will move us closer to a solution that will protect taxpayers and ensure the Postal Service can remain economically viable, while providing vital services for the American people,” he said.

A long road still ahead for postal reform

Despite Carper and Coburn’s hopes of bringing this bill forward after Congress returns from its August recess, the road to reaching a final solution to postal reform still may be a long one.

At the end of July, the House Oversight and Government Reform Committee approved the 2013 Postal Reform Act, introduced by Chairman Darrell Issa (R-Calif.), to the full House for consideration on a 22-17 party-line vote.

“While we differ on our approach in many areas, the Senate Postal Reform Act importantly includes provisions allowing for 5-day delivery of mail and delivery point modernization,” Issa said, in a statement Friday. In the House, Democrats decried these common sense reforms as ‘extreme’ and ‘partisan.’ “I look forward to working further with Chairman Carper and Ranking Member Coburn as they advance and improve this legislation. I hope that Oversight Committee Democrats will change course and drop their partisan opposition to these bipartisan provisions and join me in working towards a reasonable, balanced Postal Reform Act.”

Based on Carper and Coburn’s comments, Rep. Gerry Connolly (D-Va.) said the bill appears to be a work in progress. He was hesitant to offer a definitive position on “a legislative proposal that essentially amounts to a discussion draft.”

“S. 1486 is an improvement over the partisan bill that House Republicans jammed through Committee on a party-line vote, particularly with respect to revenue and innovation provisions that authorize the Postal Service to implement promising business transformation initiatives,” Connolly said in an email. “These include leveraging the Postal Service’s national network to develop new non-postal products; partnering with State and local government to enhance citizen services; and allowing USPS to ship beer, wine and distilled spirits under the same rules as the private sector.”

Connolly added he was concerned by several provisions in the bill, including eliminating Saturday mail delivery without giving independent verification of the savings USPS would reap or letting postal employees exiting FEHBP.


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