Proposed Legislation Would Refund $6.9 Billion Postal Service Has Overpaid Into FERS

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By on September 21, 2011 in Current Events with 26 Comments

Reps. Elijah E. Cummings and Stephen Lynch have introduced legislation to address the Postal Service’s dismal financial situation by making numerous changes in an attempt to restore it to financial solvency. One of the provisions of the bill would be to refund the excess money the Postal Service has paid into the Federal Employee Retirement System.

The “Innovate to Deliver” Act (H.R. 2967) implements reforms in three core areas: profitability, personnel, and performance.

The Act gives the Postal Service the flexibility to update its business model and enter into new lines of business. Specifically, the bill:

  • Authorizes the Postal Service to enter into new lines of business, such as check cashing, digital communications, facility leasing, and other activities that leverage the Postal Service’s unique business advantages;
  • Creates a new Chief Innovation Officer to drive the development of innovative products and services;
  • Enhances accountability regarding the success of these new products and services in meeting changing market needs;
  • Requires immediate review of the Postal Service rate cap by the Postal Regulatory Commission;
  • Requires the Postal Service Board of Governors to adjust rates so total revenues are at least equal to total costs;
  • Grants the Postal Service the flexibility to implement variable rates based on the distance mail travels, ensuring that prices more accurately reflect delivery costs.

The Act allows the Postal Service to increase efficiency and profitability by realigning personnel in a responsible way. Specifically, the bill:

  • Refunds $6.9 billion the Postal Service is estimated to have overpaid into the Federal Employee Retirement System (FERS);
  • Requires the Postal Service to use FERS surplus funds to encourage early retirement and voluntary separation to optimize its workforce and maximize the profitability of new ventures;
  • Repeals the current prepayment schedule for Retiree Health Benefits and requires the Office of Personnel Management to establish a more practical and realistic schedule to be amortized over a longer period;
  • Preserves protections for Postal Service workers that were negotiated in good faith with management.

The Act streamlines Postal Service processes and procedures to ensure that its excellent performance record is preserved and improved. Specifically, the bill:

  • Allows the Postal Service to develop new classes of mail products, in addition to existing classes, such as first-class, and standard delivery, so consumers can choose services they prefer;
  • Increases efficiency by allowing the Postal Service to seek approval of service changes with the Postal Regulatory Commission on an expedited basis;
  • Standardizes processes for closing retail facilities and streamlines appeal rights;
  • Requires enhanced reporting to Congress and the Postal Regulatory Commission on the Postal Service’s plans for right-sizing its network by closing and suspending retail and mail processing facilities;
  • Allows the Postal Service and its Inspector General to enter into collaborative agreements to enable each to benefit from the other’s assets and expertise.

“We, as Democrats, realize that changes are necessary and we have embraced that in this legislation,” Lynch said. “However, we also insist that there are responsible ways to reform the Postal Service while protecting the interests of postal customers, employees and retirees. This legislation is part of the comprehensive reform that the Postal Service needs in order to improve its long-term financial viability without sacrificing customer service or placing undue burden on our dedicated postal employees.”

Many of the bill’s provisions have the support of key stakeholders, such as the Postal Service leadership, postal unions, and the Administration.

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About the Author

Ian Smith is one of the co-founders of He enjoys writing about current topics that affect the federal workforce.