Legislative Action

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Legislative Action
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USPS Losses for 2010 YTD (in millions)
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PAEA Pre-funding
Payments from USPS to RHBF Payments from USPS to RHBF
5.4 billion September 30,2007
5.6 billion September 30,2008
5.4 billion September 30,2009
5.5 billion September 30,2010
5.5 billion September 30,2011
5.6 billion September 30,2012
5.6 billion September 30,2013
5.7 billion September 30,2014
5.7 billion September 30,2015
5.8 billion September 30,2016
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OIG StudyUSPS share of CSRS Pension
Responsibility
The USPS OIG commissioned the actuarial firm Hay
Group to review the allocation of CSRS
liabilities between the USPS and the federal
government. For employees with service both
before and after the Postal Services
establishment, the federal government and the
Postal Service share responsibility for CSRS
pensions. The federal government pays for
service through 1971, and the Postal Service pays
for service after 1971.
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OPM Methodology
Under OPMs methodology, the Postal Service is
responsible for all pay increases since 1971.
OPM assumes no responsibility for inflationary
increases to salaries from the Post Office
Department era. OPM calculates the governments
share for these employees as if they retired in
1971 at their 1971 salaries.
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Pension Allocation
Federal Government Pension contribution calculated based on the June 30, 1971 salary
USPS Pension contribution calculated based on overall career highest 3 consecutive salaries
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OIG Finding
Had the more equitable years-of-service
allocation methodology been used to determine the
value of the Postal CSRS Fund, the OIG estimates
its value on September 30,2009, would have been
approximately 273 billion rather than 198
billion -- a difference of 75 billion.
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It has been determined that a 10 billion
unfunded liability currently exists for the CSRS
pension fund. Reducing the 75 billion
overpayment by 10 billion still leaves a 65
billion surplus.
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The 100 billion balance in the retiree health
benefits fund would be more than sufficient to
cover the 87 billion OPM estimates the Postal
Service has accrued in retiree health liability
as of the end of 2009. No further payments to
the fund would be needed to cover this liability.
OIG PRHBF
65 billion 35 billion
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CSRS Basic Annuity Formula CSRS Basic Annuity Formula
Years of Service What You Receive
First 5 Years of Service 1.5 of your high-3 average salary for each year
Second 5 years of service Plus 1.75 of high-3 average salary for each year
All years of service over 10 Plus 2 of high-3 average salary for each year
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Example 1(High-3 of 30,000, 30 years service)
Accrual of Pension Benefit Accrual of Pension Benefit Accrual of Pension Benefit
AccrualPercentage Years of Service BenefitAccrual
1.50 5 7.50
1.75 5 8.75
2.00 20 40.00
Total 30 56.25
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Example 2High-3 of 30,000, 30 years of
service(15 years USPOD, 15 years USPS, 19,165
in 1971)
Accrual of Pension Benefit Accrual of Pension Benefit Accrual of Pension Benefit
AccrualPercentage Years of Service BenefitAccrual
1.50 5 7.50
1.75 5 8.75
2.00 5 10.00
Total 15 26.25
OPM Method 26.25 X 19,165 5,031
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16,875 - Pension
-5,031 - OPM Share
11,844 - USPS Share
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Pension Allocation
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P.L. 93-349
The purpose of this legislation is to clearly
establish the responsibility of the U.S. Postal
Service to finance increases in the liability of
the Civil Service Retirement and Disability Fund,
caused by administrative action of the Postal
Service...
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USPS appealed to the CSRS Board of Actuaries on
the use of frozen 1971 salaries for the
allocation of obligations between the U.S. Post
Office Department and USPS. The Board noted that
the approach used was common in the private
sector and upheld the use of the OPM methodology.
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P.L. 93-349
The situation with respect to the Postal Service
is quite unique and results from passage of the
Postal Reorganization Act. The Congress now has
no control -- no oversight whatsoever -- with
respect to the pay machinery in the Postal
Service. Since each future pay raise, negotiated
or otherwise granted to employees in the Postal
Service, will result in a specific unfunded
liability and a new drain on the retirement fund.
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CSRS Board of Actuaries to USPS
When private sector plans are transferring
participants to a new employer, it is common
practice to allocate liabilities by using a
method which reflects the fact that all
obligations arising from future salary increases
are the responsibility of the new employer. We
find this approach to be the most appropriate way
to determine the obligations of the Postal
Service and further confirm our finding that this
method clearly follows the intent of Congress in
Public Law 93-349.
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Off-budget
On-budget
Postal Retiree Health BenefitsFund
USPS
5.6 billion
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Both Accounts On-Budget
Civil Service Retirement Disability
Fund ----- Postal EmployeesFederal
EmployeesMilitary Retirement 65 billion
Postal Retiree Health Benefits Fund
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Total Pension Fund Postal Service
Assets for CSRS FERS 764.8 273.6
Liabilities for CSRS FERS 1,454.7 276.4
Unfunded Liability 689.9 2.8

Percent Funded 53 99
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H. Res. 173
5-day Delivery
Expressing the sense of the House of
Representatives that the United States Postal
Service should take all appropriate measures to
ensure the continuation of its 6-day mail
delivery service.
Rep. Sam Graves, (R-MO) - 49 cosponsors
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FY2010 Senate Appropriation Language
There are services that must be maintained in
fiscal year 2010 and beyond. The Committee
believes that 6-day delivery is one of the most
important services provided by the Federal
Government to its citizens. Especially in rural
and small town America, this critical postal
service is the linchpin that serves to bind the
nation together.
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Presidents FY2011 Budget
Postal Service
Provided further, That 6-day delivery and rural
delivery of mail shall continue at not less than
the 1983 level.
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House Appropriations Committee
Subcommittee on Financial Services and General
Government
Majority Minority
Jose Serrano, (D-NY), Chair Jo Ann Emerson (R-MO)
Debbie Wasserman Schultz John Culberson (R-TX)
Rosa DeLauro (D-CT) Mark Kirk (R-IL)
Chet Edwards (D-TX) Ander Crenshaw (R-FL)
Allen Boyd (D-FL) Jerry Lewis (R-CA)
Chaka Fattah (D-PA)
Barbara Lee (D-CA)
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Senate Appropriations Committee
Subcommittee on Financial Services and General
Government
Majority Minority
Dick Durbin (D-IL) Susan Collins (R-ME)
Mary Landrieu (D-LA) Kit Bond (R-MO)
Frank Lautenberg (D-NJ) Lamar Alexander (R-TN)
Ben Nelson (D-NE) Thad Cochran (R-MS)
Jon Tester (D-MT)
Daniel Inouye (D-HI)
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Total Career Employees
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How Many?
If the Postal Service were to receive additional
freedoms, like six to five-day delivery, the
Postal Service could function with close to
400,000 employees through streamlining its
network and increasing customer access.
USPS CFO Corbett, March 2010
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HR 4865Federal Employees and Uniformed Services
Retirement Equity Act of 2010

• Rep. Stephen Lynch (D-MA)Rep. Jason Chaffetz
  (R-UT)

would allow postal and federal employees to
deposit the value of unused annual leave into
their TSP account.
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HR4735to provide that persons having seriously
delinquent tax debts shall be ineligible for
Federal employment
Rep. Chaffetz (R-UT), Rep. Issa (R-CA), Rep.
Pitts (R-PA), Rep. Hensarling (R-TX), Rep. Bishop
(R-UT)Rep. Foxx (R-NC), Rep. Rooney (R-FL)
...the term serious delinquent tax debt means
an outstanding debt under the Internal Revenue
Code of 1986 for which a notice of lien has been
file in public records...
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Retiree Health Benefits Funding
S. 1507 - A bill to amend chapter 89 of title 5,
United States Code, to reform Postal Service
retiree health benefits funding, and for other
purposes.
HR 22 - To amend title 5, United States Code, to
reduce the amount that the United States Postal
Service is required to pay into the Postal
Service Retiree Health Benefits Fund by the end
of fiscal year 2009.
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Windfall Elimination ProvisionGovernment Pension
Offset
A bill to amend title II of the Social Security
Act to repeal the Government pension offset and
windfall elimination provisions.
S. 484 (Feinstein) has 30 cosponsors and HR 235
(Berman) has 318.
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Mail Network Protection Act
HR1686
Rep. Stephen Lynch (D-MA)

• ...requires USPS to negotiate with the union
  before awarding any contract with a value of more
  than 5,000,000 or involving more than 50
  workyears of work. Contracts in the bill
  include
• mail processing
• mail handling
• surface transportation of mail

18 cosponsors
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