Postal Service Reform Legislation Introduced in Senate

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By on March 26, 2018 in Agency News, Pay & Benefits with 0 Comments

Mail trays sit full waiting to be sorted at the Northside Post Office on Ramstein Air Base, Germany

Legislation has been introduced in the Senate in an attempt to improve the ailing finances of the Postal Service.

The Postal Service is hemorrhaging money, having now reported 11 straight years of financial losses. Its latest financial report showed a $540 million net loss for the first quarter of FY 2018. These losses came amidst the busy Christmas shipping season in which the Postal Service set a record on December 18th when it delivered more than 37 million packages, yet it still had a net loss for the quarter.

It also reported a $2.7 billion net loss in 2017, which, surprisingly, was an improvement over the previous year. The Postal Service has also been defaulting on payments that were due to the federal government at the end of the fiscal year to pre-fund pension and health benefits for postal retirees. This amounted to approximately $6.9 billion in 2017.

The agency continues to blame the bulk of its problems on a lack of action and reform legislation from Congress. Postmaster Megan J. Brennan has urged passage of The Postal Service Reform Act, legislation previously introduced in the House that would make a number of changes, including with respect to how the Postal Service’s pension costs are calculated.

Senate Postal Service Reform Bill

Now the House bill has a companion bill in the Senate. Introduced by Senator Tom Carper (D-DE), The Postal Service Reform Act of 2018 (S. 2629) includes a variety of reforms that are designed to improve the finances and service performance of the Postal Service as well as allow for development of new products and services.

Bill Summary

The following is a summary of the key features of the bill as reported by Carper’s office:

Increases Sustainability

The Postal Service Reform Act eliminates the existing statutory payment schedule, cancels any outstanding payments, and amortizes payments over 40 years. The bill would also create a new Postal Service Health Benefits Program (PSHBP) within FEHBP, implemented and administered by OPM, for all postal employees and annuitants and require all Medicare-eligible postal annuitants and employees enrolled in the PSHBP to also enroll in Medicare, including parts A, B and D. This is essential for protecting the American taxpayer from a future bailout and for protecting the employees’ benefits in retirement.

Improves and Stabilizes Postal Service and Operations

The price of postage is decreased pursuant to federal court orders last Congress, eliminating the positive revenue stream from the exigent rate case in 2014. As the result of a compromise among the postal community, the bill restores the half of the temporary rate increase while freezing any further rate increases until a new rate system can be finalized by the Postal Regulatory Commission.

Prioritizes the Postal Customer with Service Improvements & Protections

The bill includes strong service reforms that put the postal customer first by improving mail service performance across the country—especially in rural America—while also requiring transparency and enforcement to ensure the Postal Service’s accountability. Service performance would also be stabilized by preserving current service standards for at least 2-years.

Innovates and Modernizes Existing Postal Business Model and Increases Transparency

The bill also allows the Postal Service to introduce new non-postal products and services, ship beer, wine and distilled spirits, and partner with state and local governments in offering government services.

The Postal Service Reform Act also increases transparency of Postal Service delivery results and would require that all delivery and retail performance results are posted in a transparent and user-friendly way.

Some of the ideas in the bill are not new ones. For example, legislation has been introduced in the past to allow the Postal Service to start shipping alcoholic beverages to compete with private shipping firms, namely UPS and FedEx.

The House version of the bill also shares similar attributes of the Senate bill, namely the requirement for Medicare. The House bill would automatically enroll Medicare eligible Postal Service retirees and family members in Medicare Part A and B.

Concerns about this provision have been raised, however. While the Postal Service supports the bill, FedSmith.com author Michael Wald noted that the National Active and Retired Federal Employees Association (NARFE) is against the provision for current retirees, believing that they should not be required to pay for additional health insurance coverage as a condition of continuing to receive those benefits. NARFE also said, however, that it “has no objection to this requirement for current employees (future retirees).”

NARFE reiterated this concern in a statement on the new bill, with President Richard G. Thissen saying, “This proposal seeks to balance the books of the United States Postal Service (USPS) on the backs of postal retirees. It would tell a 90-year-old postal retiree that he or she must pay another $1,600 or more per year in health insurance premiums to Medicare to keep his or her existing retiree health insurance plan. That’s health insurance the retiree earned in exchange for years of hard work for the Postal Service.”

There is also concern that forcing Postal retirees to participate in Medicare would open the door to doing the same for other retired federal employees. “Forcing postal retirees to participate in Medicare may open the path to making Medicare mandatory for all Federal retirees, although the majority of Federal retirees age 65 and older already voluntarily participate in Medicare,” wrote Wald.

As of the time of this writing, the House version of the bill has not been put to a vote.

© 2018 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

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About the Author

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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