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Another Attempt Being Made to End USPS Pre-Funding Mandate

Another effort is being made in Congress to end the pre-funding mandate for USPS retiree health benefits.

Some lawmakers are making another attempt to end the requirement that the Postal Service has to pre-fund the health benefits of its retirees.

Senator Steve Daines (R-MT) has introduced the USPS Fairness Act (S. 145) to repeal what he calls the “unfair” mandate on the agency. Companion legislation has also been introduced in the House (H.R. 695) by Congressman Peter DeFazio (D-OR).

According to a press release from Daines on the bill, it would “eliminate billions in defaulted prefunding payments from USPS’s financials. It would not alter the USPS’s future retiree health liabilities payments from the Retiree Health Benefit Fund (RHBF). If enacted, USPS could continue to pay its contributions for retiree health benefit premiums from the RHBF until it is depleted.”

The bill has one co-sponsor as of the time of this writing: Senator Brian Schatz (D-HI).

Past Legislative Efforts

This is not the first time this bill has been introduced. In 2019, similar legislation was introduced by Congressman Peter DeFazio (D-OR). He said at the time that the pre-funding requirement is the largest contributing factor to the Postal Service’s continued losses.

Other bills have been introduced at various times in the past to try different things to prop up the Postal Service such as allowing it to ship alcohol, requiring Postal retirees to enroll in Medicare, or even a more direct financial bailout. None have gained any serious traction to date.

A Long Tale of Financial Woes

The Postal Service is struggling financially (to put it mildly) and has been for over a decade, during which time it has continually reported net financial losses. In fiscal year 2020 alone, it lost over $9.2 billion during a time in which e-commerce surged with people shopping online more during the COVID-19 pandemic. While the Postal Service did see a sizable increase in its shipping business as a result of the pandemic, it wasn’t enough to make up for its other losses.

Its not just some Members of Congress who blame the pre-funding mandate for the continued losses. The Postal Service itself has done so and regularly makes pleas to Congress for legislative assistance when it issues its quarterly financial results. In 2018, for instance, former Postmaster General Megan J. Brennan said the root of the Postal Service’s ongoing financial problems were the fault of the government itself. “The root cause of our financial instability is a flawed business model that is imposed by law. We encourage the Congress to engage in a broad public policy discussion and pass postal reform legislation,” said Brennan.

Chief Financial Officer Joseph Corbett also added in a statement made at the same time, “…absent changes to our business model, net losses are expected to continue.”

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.