A new report throws a wrench into the Postal Service’s long-standing contention that it has paid too much for employee retirement benefits and could use that money to return to profitability. The news helped propel a dramatically different plan to stabilize the agency through a House committee.
The GAO report says the term “overpayments” is misleading because it “can imply an error of some type-mathematical, actuarial or accounting. We have not found evidence of error of these types.”
If the government returned that money to the Postal Service, it would “increase the federal government’s current and future unfunded pension liability by an estimated $56 billion to $85 billion,” the report said. “This liability would then be funded by the federal government using tax revenue, borrowing or both.” Proponents of a bill to take away much of the Postal Service’s control over its reorganization lauded the report during a House Oversight Committee markup of the bill.
“To be clear: the payment methodology used for the past 40 years is consistent with Congressional intent. There is no overpayment. There is no error. There is no money owed to the Postal Service,” said Rep. Dennis Ross (R-Fla.) Ross cosponsored the legislation, which would set up a Base Realignment and Closure-type of commission to close post offices and another commission to restructure the agency’s financial obligations if it defaulted on its bills.
“Today’s GAO report confirms, once and for all, the only way out of the U.S. Postal Service’s current difficulty is to vastly restructure its operations, reducing the organization’s workforce and labor costs and provide it the tools needed to compete in the 21st Century,” he said. The committee approved his bill, cosponsored by committee chairman Darrell Issa (R-Calif.), 22-18.
Some of its opponents found it hard to believe that the GAO could draw such a wildly different conclusion from previous estimates.
“The report is terribly flawed,” said Rep. Stephen Lynch (D-Mass.)
USPS in June asked the Justice Department to rule on whether it can suspend its payments to CSRS. Justice has not yet decided on the matter.
Calculations made by actuaries contracted by both the Postal Service’s inspector general and the independent Postal Regulatory Commission estimated that the Office of Personnel Management overcharged the Postal Service by $50 billion-to-$85 billion for CSRS benefits since the 1970s.
“The GAO is very nervous about that. The Office of Personnel Management is very nervous about that and they don’t want to be facing that obligation that has accumulated over time,” he said. “But it is what it is, and it’s an overpayment whether they want to call it that or not.”
In light of the GAO report, momentum is growing for solutions that do not rely on returning money that the Postal Service has paid to CRCS.
“The disagreement among the experts over the Civil Service Retirement System overpayment is significant enough that I believe it would be more prudent to set aside this question for the time being in order to focus on the areas of postal reform where we have more consensus,” said Sen. Tom Carper (D-Del.), who has sponsored one of several rescue packages being considering in Congress.
For example, the GAO report supports the Postal Service’s claim that it has overpaid the Federal Employees Retirement System by nearly $7 billion. President Barack Obama and Congressional Democrats support returning that money to the Postal Service so it could offer early retirement incentives to eligible workers.