Postal Bill Would Save 6-Day Delivery, Nonprofit Rates

November 2, 2011       Mark Hrywna      

Another postal reform bill could have an easier passage than other attempts this year thanks to bipartisan support from members of a key Senate committee.

Four members of the Senate’s Committee on Homeland Security and Governmental Affairs held a press conference Thursday morning to back The 21st Century Postal Service Act of 2011 (P21): Joseph Lieberman (I-Conn.), Susan Collins (R-Maine), Tom Carper (D-Del.) and Sen. Scott Brown (R-Mass.).

Among the provisions in the legislation:

  • Six-day delivery will remain for at least two more years while the United States Postal Service (USPS) continues to cut costs and develop remedies for customers who might be affected disproportionately by eliminating Saturday service. After two years, the Government Accountability Office (GAO) would review the Postal Service’s financial situation and projections to determine if five-day delivery would still be necessary.
  • Approximately $7 billion would be refunded to USPS through the Office of Personnel Management, as overpayment to the Federal Employee Retirement Health System (FERS) for retiree health benefits. About a quarter of that money would be used as retirement incentive buyouts of up to $25,000 (or credit service years toward retirement annuity) to reduce staff by 100,000, and pay down USPS debt.
  • Reform workers compensation benefits. The bill also would reform workers compensation practices. Some 2,000 beneficiaries who are retirement age still receive workers’ comp benefits even though they likely will never return to work, Collins said, citing one case of a 99-year-old employee. Compensation for new enrollees would be set under the Federal Employees Compensation Act (FECA) at 66 2/3 percent of salary at the time of injury until they reach retirement age.
  • Amortize over 40 years, instead of the original 10 years, the schedule for USPS to fund future retiree health benefits, and reduce the pre-fund goal to 80 percent. A $5.5-billion annual payment due Sept. 30 was extended by Congress until November. The Postal Service and its unions would have until September to negotiate a separate USPS health insurance plan.
  • Arbitrators deciding a contract dispute between USPS and unions would take into consideration the financial condition of the Postal Service and the requirement in the law that USPS consider wages and benefits comparable to the private sector.
  • Authorizes USPS by 2015 to deliver to curbside, sidewalk or centralized mailboxes, where feasible, rather than door delivery.

“Too many people still rely on the Postal Service for us to sit back and allow it to collapse,” said Lieberman, adding that USPS still delivered 167 billion pieces of mail last year and its 32,000 post offices means it has more domestic retail outlets than Walmart, Starbucks and McDonald’s combined.

“We’re not crying wolf, said Collins, ranking member of the committee, adding that the postal service will not be able to meet its payroll by next summer unless Congress takes action. USPS is projected to lose $10 million this fiscal year.

Carper likened the situation to the ailing auto industry, which government helped to “right-size” several years ago, and is now flourishing. U.S. auto companies faced similar challenges: they had more plants than they needed, more staff than they needed, and there was a mismatch of the wage structure for the big three automakers and their competition.

The reform bill also answers the question of whether Congress can still govern and tackle big problems, he said.

The senators emphasized that it’s not a bailout of the Postal Service but a refund of a $7-billion in payments to the FERS that originally came from ratepayers. Opposition in the House was largely based on whether $55 billion to the Civil Service Retirement System (CSRS) was an overpayment, said Collins. Two independent actuarial studies commissioned by the Senate said that was an overpayment while the administration contended it was not, she said, adding that the administration agreed on the $7-billion overpayment from FERS, even inserting it into the budget. Even USPS has abandoned its request, Collins said.

“We support this bill. It’s in the right direction and has various components we think are good,” said Tony Conway, executive director of the Alliance of Nonprofit Mailers, adding that it also keeps the nonprofit postal discount alive. The discount had been the target of a bill that was amended by a House committee earlier this fall.

There already are at least three primary postal reform bills in the Senate this session, two sponsored by Carper and Collins, and another introduced this fall by Sen. John McCain (R-Ariz.). “They wanted to move one of them, but in reality I think, they realized they couldn’t. They needed to find a bipartisan approach, some common ground amongst those bills,” said Conway.

With four key members of postal-related committee members supporting P21, Conway said, “portends quite positive things for its likely get through committee.” Since the four lead postal senators back the measure, he believes the likelihood of it moving forward is pretty good.

McCain’s bill (S. 1625) is a companion H.R. 2309, which would phase out the nonprofit postal discount over a decade and is sponsored by Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform.

“In 2006, we did put the Postal Service back on better financial footing for a while,” said Collins. “Unfortunately, what happened, the transition to electronic mail was far more rapid than the Postal Service anticipated, its costs were higher than anticipated, but the situation is so much more dire now than it was in 2006.”