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OPM to resubmit bill on Postal Service retirement payments

Bush administration officials said Wednesday that they are redrafting a bill to change how the Postal Service pays into the Civil Service Retirement System. A draft is likely to be finished within a couple of days and then shipped to the Office of Management and Budget for review.

Administration officials declined to identify any members of Congress who may sponsor the legislation. Sen. Susan Collins, R-Maine, chairman of the Senate Governmental Affairs Committee, previously expressed an interest in moving such a bill. In fact, she had legislation prepared, but pulled it back late last month after separate analyses from the General Accounting Office and the Congressional Budget Office presented lawmakers with significant policy decisions.

Last November, the Office of Personnel Management estimated that the Postal Service would pay about $71 billion more than it actually needed to cover all the future costs of CSRS enrollees' pensions. OPM drafted legislation that would have changed the way the Postal Service pays into the fund, thus allowing it to save $2.9 billion this year. As a result, the Postal Service could keep mailing rates flat until 2006 and pay down its $11 billion debt. Without the change, the agency would have to implement a rate increase next year.

A GAO review of the legislation, however, noted that it did not reflect current practice. In particular, OPM's analysis included costs for military service of Postal Service employees who started work after 1971 when the agency was reorganized. Under current law, the Treasury Department covers the military portion, not the Postal Service. Based on current law, the overpayment would total $103.1 billion.

Administration officials said they included the military costs to bring the payment methodology in line with the Federal Employees Retirement System, under which the Postal Service pays a retiree's full pension. The new legislation will make the same recommendation.

Lawmakers will also have to come to terms with a Congressional Budget Office analysis estimating that the legislation could increase the deficit by $10 billion to $15 billion between 2003 and 2007. That is based on the assumption that the Postal Service won't raise rates next year. In its forecast for 2004 and beyond, CBO projected a three-cent increase in First Class postage stamp prices in 2004.