Reform of Postal Service retirement system needed

By Dorothy Ramienski
Internet Editor
Federal News Radio

This week on Your Turn, Senior Correspondent Mike Causey brings you updates about the United States Postal Service and a recent report regarding the Senior Executive Service.

Five Day Delivery in Your Future?

Federal News Radio has been telling you about the fact that the Postal Service is facing some pretty serious challenges as it looks ahead at operating in the 21st century.


A recent report from the Government Accountability Office says additional cuts are needed, and Postmaster General John Potter testified on Capitol Hill about planned changes, including a movement to five day delivery.

Several other changes have also been proposed in order to keep USPS financially viable.

Fred Rolando is President of the National Association of Letter Carriers said, first and foremost, he wants to make it clear that the Postal Service does not make its money from the taxpayer.

“Their revenue does not come at all from taxpayer money. It’s strictly revenue from postage. . . . The Postal Service, like many companies, has been through a lot of changes in the last couple of years due, of course, to the recession and the electronic alternatives to hard copy in general, which has affected a lot of industries. In addition to that, the Postal Service has had to deal with the [retirement system] funding requirement.”

He explained that USPS has to adapt in terms of its long term business model, but it also has to rework its retirement system funding with Congressional approval and find a win-win solution with the unions in terms of collective bargaining.

Rolando added that fixing the Postal Service is complicated and could take time, which is something he wants the general public to understand.

“Unfortunately, what the public hears about is [that] $238 billion that the Postal Service will lose in 10 years and the elimination of six day delivery — and the public is okay with it. That’s quick news. It doesn’t tell the whole story, but that’s what has gotten out in the last few weeks. . . . That $238 billion that you read about — deficit over the next 10 years that’s projected — assumes that absolutely nothing is done. It’s a worst-case scenario, and that was totally disclosed in the House subcommittee hearing two weeks ago.”

He also explained that he wants to dispel the myth that the general public is fine with the elimination of six day delivery. In his experience, that’s just not the case.

“If you tell the public the real story, I think you get different results. If you ask the public — ‘Would you like to pay more money for postage? Would you like to give up your first born, or would you like to give up Saturday delivery?’ I think they’re going to have a tendency to go with Saturday delivery. But, if you tell them the truth and you give them the real options, and some of the other things that we can do, I think you get a totally different result.”

In addition, Rolando said that getting rid of Saturday delivery would do address the real problems that USPS is facing.

He explained that it will simply make the Postal Service less attractive to those who want to send something during the weekend, and eliminate future revenue generation.

The five day delivery option is just one that has been proposed.

There is also the matter of reforming the funding mechanism for the retirement system. Rolando said, if Congress gives the go-ahead on this, it might not be necessary to eliminate Saturday delivery.

The story as to why the law was passed is complicated:

“There was a law passed in 2006 which required that the Postal Service pre-fund their future retiree health benefits. Everybody is funding their current retiree health benefits, but this requirement was to pre-fund future retiree health benefits for the next 80 years. No other federal agency is required to do that. No other private business is required to do that. . . . In dollars, that means about $5.5 billion a year to pre-fund. The fund was setup with a surplus in the Civil Service Retirement System. It was found years ago that the Postal Service put too much money into [CSRS]. So that surplus, as calculated by OPM at the time, was transferred to this pre-funded retirement fund, and it was calculated what it would take to fund [it] for the next 80 years in addition to that. That’s where the $5.5 billion comes from.”

The situation is even further embroiled by a recent OIG report which showed that the transfer of the money from the CSRS surplus that should have gone to the pre-funded retirement system was short by about $75 billion.

Thus, the reform of the pre-funded retirement system would involve taking that $75 billion from CSRS and moving it to the USPS system.

If this is done, Rolando explained, USPS would no longer need to funnel $5.5 billion into its pre-funded retirement system every year. They would only have to concentrate on funding their current retirees, which could amount to a savings of up to $8 billion.

Rolando reiterated that the Postal Service itself cannot make any changes; it must wait for Congress in order to act.

Who Needs the SES?

Federal News Radio has also been telling you about a recent report from the Senior Executives Association, which showed that more needs to be done by the federal government in order to attract employees to the Senior Executive Service.

Carol Bonosaro is President of the SEA and explained that they got almost 12,000 responses, or about 10 percent of the total number GS-14 and 15s in the federal government.

A list of questions was also sent to agency CHCOs in order to get their perspective, and Bonosaro said these feds have concerns, as well.

“About half of them are indeed concerned about their ability to fill vacancies that are going to rise because of retirements, and over 70 percent of those responding said they had vacancies that had been unfilled for more than six months.”

Many of the GS-14s and 15s that responded said that the detractors outweigh the benefits of being a member of the SES; however, according to the results, about 50 percent of respondents said they were interested in considering the move.

On top of that, Bonosaro said part of the problem has to do with the fact that a lot of federal employees don’t really understand what an SESer does, “We had a couple of interesting comments from 14s and 15s who said, you know, I’ve learned more from this survey about these positions than I have from my agency. That was a real eye-opener.”

One of the biggest issues has to do with money and quality of life. She said many of the respondents said that they thought the level of compensation wasn’t equal to the amount of work required of an SES member.

“The biggest negative was work-life balance, which tells us [about] another generation. There are lots of Senior Executives who are basically on call 24/7. . . . [current] 14s and 15s see senior executives in these positions. They’re not oblivious to what it takes, and a lot of them did write extensive comments about their concerns about the impact on their families and their ability to, not only work like that — but they just don’t see the payoff in it.”

Bonosaro did point out, however, that the survey is a bit incomplete because the SEA didn’t get responses from large agencies, such as the Department of Veterans Affairs and the Homeland Security Department.

She said the SEA is going to continue to work with federal agencies in order to look at fixing some of the perceived problems with the SES.

Read the survey here.