Budget Proposal Calls for Big Cuts to Reform Postal Service

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By on May 30, 2017 in Agency News with 0 Comments

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The White House’s 2018 budget proposal contains a number of suggested reforms to restore financial solvency to the financially ailing Postal Service.

The Postal Service has been reporting substantial losses for 10 years in a row with its most recent quarterly results showing a net loss of “only” $562 million, a significant improvement over the previous year in which it lost $2 billion.

The budget proposal offers the following operations reforms to aid the Postal Service:

  1. Authority to reduce mail delivery frequency where there is a business case for doing so;
  2. Allowing the Postal Service to leverage its resources by increasing collaboration with State and local governments;
  3. Allowing the Postal Service to begin shifting to centralized and curbside delivery where appropriate;
  4. Enhancing Postal Service governance to ensure sound financial management;
  5. Requiring the future rate structure for the Postal Service to provide enough flexibility to ensure both the stability of Postal operations and the ability of the Postal Service to meet its statutory obligations for retiree health and pension costs.

The estimated cost savings of these reforms are $47 billion over 10 years.

The budget also says that another $33 billion could be saved over 10 years by reforming the pension and health insurance costs for Postal employees to mirror proposed changes that would affect the rest of the federal workforce.

On retirement benefits, the budget proposal adds this:

To better reflect the true cost of the Postal workforce, the Budget proposes to require that OPM calculate any unfunded liabilities and resulting amortization payments for the Civil Service Retirement System (CSRS) and the Federal Employee Retirement System (FERS) using factors (including investment returns, salary growth rates, and cost of living adjustments granted to Postal retirees) specific to the demographics of the Postal Service workforce. These changes will reduce Postal Service costs by $3.4 billion over the Budget window.

Some of the reforms the White House is proposing mirror suggestions from Postal reform legislation that recently passed a House committee. Like the budget, it proposes a shift in calculations for pension costs and liabilities that are specific to Postal Service employees.

The bill also would allow for a 1 cent price increase for first class stamps, authorize the Postal Service to provide non-postal services to state, local, and tribal governments and other federal agencies, and would automatically enroll Medicare eligible Postal Service retirees and family members in Medicare Part A and B.

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

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