Several members of Congress joined together Wednesday to introduce legislation to change the system under which the Postal Service makes payments into the Civil Service Retirement System on behalf of its employees.
The bills, introduced in both the House and Senate on a bipartisan basis, are aimed at fixing a problem that came to light last November. The Office of Personnel Management found that under the current system, the Postal Service would pay about $71 billion more than it needed to cover the future costs of CSRS enrollees' pensions. OPM conducted the review at the request of the General Accounting Office, which has been trying to get a better handle on the Postal Service's retirement and health care liabilities.
Sponsors of the bills include Senate Governmental Affairs Committee Chairwoman Susan Collins, R-Maine, and House Government Reform Committee Chairman Tom Davis, R-Va.
If enacted this year, the House and Senate bills would enable the Postal Service to pay down some of its $11 billion debt and hold mailing rates steady until 2006. Without the change, the agency would have to increase rates next year.
Changing the payment formula would drop the Postal Service's liability by $2.9 billion this year alone. Retiree benefits would not be affected.
Both the House and Senate bills would require the Postal Service to use the money saved on pension contributions to pay down its debt to the Treasury Department in fiscal years 2003, 2004 and 2005. After 2005, the Postal Service and OPM would have to recalculate the amount owed.
The legislation requires the Postal Service, in conjunction with GAO, to come up with a plan to use the funds after 2005, according to Robert Taub, chief of staff for Rep. John McHugh, R-N.Y., a co-sponsor of the House bill. That could include continuing to pay down the debt, cover retiree health benefits or make capital improvements. The only thing the money can't be used for is to pay for executive bonuses.
If Congress fails to approve the Postal Service's plan by 2005, the House bill would keep the money in escrow until such action is taken. Rep. Henry Waxman, D-Calif., ranking member of the House Government Reform Committee, pushed for the escrow account. The Senate bill is silent on the issue.
Although he had yet to see the legislation, Postal Service Chief Financial Officer Richard Strasser said he was pleased that Congress was moving on the issue.
No timetable has been set yet for action on either piece of legislation.