Congress passed legislation Tuesday that limits the amount of money the Postal Service puts into the Civil Service Retirement System and freezes postal rates until 2006.
The legislation, H.R. 735, does not affect postal workers' pensions and locks in current postal rates until 2006 by reducing contributions to CSRS by $2.9 billion, allowing the Postal Service to pay down nearly $15 billion in debt to the Treasury Department. House legislators approved the measure Tuesday and the Senate passed similar legislation last Thursday. President Bush is expected to sign the bill quickly.
"We now have before us an agreement that sets up a brighter future for the Postal Service," said Rep. John McHugh, R-N.Y., chairman of the House Government Reform Committee's Special Panel on Postal Reform and Oversight. "I am thrilled so many members of Congress, on both sides of the aisle, realized the importance of this legislation and put it on the fast track to success."
Last fall, the Office of Personnel Management discovered that the Postal Service was putting too much money into the federal employee pension plan, which covers employees who joined the government workforce before 1984. This revelation gave Postal officials an opportunity to reassess how it could better use the funds and in February, McHugh introduced his legislation in an effort to help remedy the situation and put the agency on better financial footing.
"The passage of this legislation is good news not just for the Postal Service, but for everyone who uses the mail," Postal officials said in a statement Tuesday. "It will enable postage rates to remain stable until 2006, which will provide a much needed boost for the $900 billion mailing industry and the economy in general." Government agencies, the Postal Service and postal unions all support the legislation.
The money saved on pension contributions in fiscal years 2003, 2004 and 2005 will go toward the Treasury debt. After 2005, the Postal Service and OPM would recalculate the amount owed.
The legislation also requires the Postal Service to work with the General Accounting Office to come up with a plan for the funds, which could include continuing to pay down the debt, covering retiree health benefits or making capital improvements. The extra money cannot be used to pay executive bonuses.