Senators found a way Wednesday to stave off postal rate hikes by using a $78 billion surplus in the Postal Service retirement plan to plug holes in the service's budget.
The Senate Governmental Affairs Committee approved by voice vote legislation (S. 380) that the bill's sponsors say will prevent postal rate hikes until at least 2006.
Chairwoman Susan Collins, R-Maine, said the Office of Personnel Management had discovered that higher-than-expected yields on investments meant the Postal Service was paying more into the retirement account than necessary. As a result, she said, unless adjusted, the overfunding will be $78 billion more than needed to pay retirement benefits over the next 60 years.
By making formula changes to reduce what the Postal Service pays into the Civil Service Retirement Fund, she said, the service can use savings to reduce its debt to the Treasury by about $3 billion this year and postal rate hikes can be avoided for three years.
The bill will not affect postal workers' pensions and has the backing of government agencies, the Postal Service and postal unions. The bill "makes a lot of sense," Sen. Ted Stevens, R-Alaska, said.
The bipartisan bill was a substitute offered by Collins. It is essentially the same as the original measure except to require reports to Congress by the Postal Service at least eight months before proposed rate hikes.