[House Report 108-49]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 108-49
======================================================================
POSTAL CIVIL SERVICE RETIREMENT SYSTEM FUNDING REFORM ACT OF 2003
_______
March 27, 2003.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Tom Davis of Virginia, from the Committee on Government Reform,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 735]
[Including cost estimate of the Congressional Budget Office]
The Committee on Government Reform, to whom was referred the
bill (H.R. 735) to amend chapter 83 of title 5, United States
Code, to reform the funding of benefits under the Civil Service
Retirement System for employees of the United States Postal
Service, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 5
Background and Need for the Legislation.......................... 5
Hearings......................................................... 6
Committee Consideration.......................................... 6
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 6
New Budget Authority and Tax Expenditures........................ 6
Congressional Budget Office Cost Estimate........................ 7
Constitutional Authority Statement............................... 11
Section-by-Section Analysis and Discussion....................... 11
Agency View...................................................... 14
Unfunded Mandates Reform Act..................................... 15
Federal Advisory Committee Act................................... 15
Changes in Existing Law Made by the Bill, as Reported............ 15
Additional Views................................................. 22
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Postal Civil Service Retirement System
Funding Reform Act of 2003''.
SEC. 2. CIVIL SERVICE RETIREMENT SYSTEM.
(a) Definitions.--Section 8331 of title 5, United States Code, is
amended--
(1) in paragraph (17)--
(A) by striking `` `normal cost' '' and inserting ``
`normal-cost percentage' ''; and
(B) by inserting ``and standards (using dynamic
assumptions)'' after ``practice'';
(2) by amending paragraph (18) to read as follows:
``(18) `Fund balance' means the current net assets of the
Fund available for payment of benefits, as determined by the
Office in accordance with appropriate accounting standards, but
does not include any amount attributable to--
``(A) the Federal Employees' Retirement System; or
``(B) contributions made under the Federal Employees'
Retirement Contribution Temporary Adjustment Act of
1983 by or on behalf of any individual who became
subject to the Federal Employees' Retirement System;'';
and
(3) by striking ``and'' at the end of paragraph (27), by
striking the period at the end of paragraph (28) and inserting
``; and'', and by adding at the end the following:
``(29) `dynamic assumptions' means economic assumptions that
are used in determining actuarial costs and liabilities of a
retirement system and in anticipating the effects of long-term
future--
``(A) investment yields;
``(B) increases in rates of basic pay; and
``(C) rates of price inflation.''.
(b) Deductions and Contributions.--
(1) In general.--Section 8334(a)(1) of title 5, United States
Code, is amended--
(A) by striking ``(a)(1)'' and inserting
``(a)(1)(A)'';
(B) by designating the matter following the first
sentence as subparagraph (B)(i) and aligning the text
accordingly;
(C) in subparagraph (B)(i) (as so designated by
subparagraph (B)), by striking ``An equal'' and
inserting ``Except as provided in clause (ii), an
equal''; and
(D) by adding at the end the following:
``(ii) In the case of an employee of the United States Postal
Service, the amount to be contributed under this subparagraph shall
(instead of the amount described in clause (i)) be equal to the product
derived by multiplying the employee's basic pay by the percentage equal
to--
``(I) the normal-cost percentage for the applicable employee
category listed in subparagraph (A), minus
``(II) the percentage deduction rate that applies with
respect to such employee under subparagraph (A).''.
(2) Conforming amendments.--Section 8334(k) of title 5,
United States Code, is amended--
(A) in paragraph (1)(A), by striking ``the first
sentence of subsection (a)(1) of this section'' and
inserting ``subsection (a)(1)(A)'';
(B) in paragraph (1)(B)--
(i) by striking ``the second sentence of
subsection (a)(1) of this section'' and
inserting ``subparagraph (B) of subsection
(a)(1)''; and
(ii) by striking ``such sentence'' and
inserting ``such subparagraph''; and
(C) in paragraph (2)(C)(iii), by striking ``the first
sentence of subsection (a)(1)'' and inserting
``subsection (a)(1)(A)''.
(c) Postal Supplemental Liability.--Subsection (h) of section 8348 of
title 5, United States Code, is amended to read as follows:
``(h)(1)(A) For purposes of this subsection, `Postal supplemental
liability' means the estimated excess, as determined by the Office,
of--
``(i) the actuarial present value of all future benefits
payable from the Fund under this subchapter attributable to the
service of current or former employees of the United States
Postal Service, over
``(ii) the sum of--
``(I) the actuarial present value of deductions to be
withheld from the future basic pay of employees of the
United States Postal Service currently subject to this
subchapter pursuant to section 8334;
``(II) the actuarial present value of the future
contributions to be made pursuant to section 8334 with
respect to employees of the United States Postal
Service currently subject to this subchapter;
``(III) that portion of the Fund balance, as of the
date the Postal supplemental liability is determined,
attributable to payments to the Fund by the United
States Postal Service and its employees, including
earnings on those payments; and
``(IV) any other appropriate amount, as determined by
the Office in accordance with generally accepted
actuarial practices and principles.
``(B)(i) In computing the actuarial present value of future benefits,
the Office shall include the full value of benefits attributable to
military and volunteer service for United States Postal Service
employees first employed after June 30, 1971, and a prorated share of
the value of benefits attributable to military and volunteer service
for United States Postal Service employees first employed before July
1, 1971.
``(ii) Military service so included shall not be included in the
computation of any amount under subsection (g)(2).
``(2)(A) Not later than June 30, 2004, the Office shall determine the
Postal supplemental liability as of September 30, 2003. The Office
shall establish an amortization schedule, including a series of equal
annual installments commencing September 30, 2004, which provides for
the liquidation of such liability by September 30, 2043.
``(B) The Office shall redetermine the Postal supplemental liability
as of the close of the fiscal year, for each fiscal year beginning
after September 30, 2003, through the fiscal year ending September 30,
2038, and shall establish a new amortization schedule, including a
series of equal annual installments commencing on September 30 of the
subsequent fiscal year, which provides for the liquidation of such
liability by September 30, 2043.
``(C) The Office shall redetermine the Postal supplemental liability
as of the close of the fiscal year for each fiscal year beginning after
September 30, 2038, and shall establish a new amortization schedule,
including a series of equal annual installments commencing on September
30 of the subsequent fiscal year, which provides for the liquidation of
such liability over 5 years.
``(D) Amortization schedules established under this paragraph shall
be set in accordance with generally accepted actuarial practices and
principles, with interest computed at the rate used in the most recent
dynamic actuarial valuation of the Civil Service Retirement System.
``(E) The United States Postal Service shall pay the amounts so
determined to the Office, with payments due not later than the date
scheduled by the Office.
``(F) An amortization schedule established under subparagraph (B) or
(C) shall supersede any amortization schedule previously established
under this paragraph.
``(3) Notwithstanding any other provision of law, in computing the
amount of any payment under any other subsection of this section that
is based upon the amount of the unfunded liability, such payment shall
be computed disregarding that portion of the unfunded liability that
the Office determines will be liquidated by payments under this
subsection.
``(4) Notwithstanding any other provision of this subsection, any
determination or redetermination made by the Office under this
subsection shall, upon request of the Postal Service, be subject to
reconsideration and review (including adjustment by the Board of
Actuaries of the Civil Service Retirement System) to the same extent
and in the same manner as provided under section 8423(c).''.
(d) Repeals.--
(1) In general.--The following provisions of law are
repealed:
(A) Subsection (m) of section 8348 of title 5, United
States Code.
(B) Subsection (c) of section 7101 of the Omnibus
Budget Reconciliation Act of 1990 (5 U.S.C. 8348 note).
(2) Rule of construction.--Nothing in this subsection shall
be considered to affect any payments made before the date of
the enactment of this Act under either of the provisions of law
repealed by paragraph (1).
SEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE UNITED STATES POSTAL
SERVICE.
(a) In General.--Savings accruing to the United States Postal Service
as a result of the enactment of this Act--
(1) shall, to the extent that such savings are attributable
to fiscal year 2003 or 2004, be used to reduce the postal debt
(in consultation with the Secretary of the Treasury), and the
Postal Service shall not incur additional debt to offset the
use of the savings to reduce the postal debt in fiscal years
2003 and 2004;
(2) shall, to the extent that such savings are attributable
to fiscal year 2005, be used to continue holding postage rates
unchanged and to reduce the postal debt, to such extent and in
such manner as the Postal Service shall specify (in
consultation with the Secretary of the Treasury); and
(3) to the extent that such savings are attributable to any
fiscal year after fiscal year 2005, shall be considered to be
operating expenses of the Postal Service and, until otherwise
provided for by law, shall be held in escrow and may not be
obligated or expended.
(b) Amounts Saved.--
(1) In general.--The amounts representing any savings
accruing to the Postal Service in any fiscal year as a result
of the enactment of this Act shall be computed by the Office of
Personnel Management for each such fiscal year in accordance
with paragraph (2).
(2) Methodology.--Not later than July 31, 2003, the Office of
Personnel Management shall--
(A) formulate a plan specifically enumerating the
actuarial methods and assumptions by which the Office
shall make its computations under paragraph (1); and
(B) submit such plan to the Committee on Government
Reform of the House of Representatives and the
Committee on Governmental Affairs of the Senate.
(3) Requirements.--The plan shall be formulated in
consultation with the Postal Service and shall include the
opportunity for the Postal Service to request reconsideration
of computations under this subsection, and for the Board of
Actuaries of the Civil Service Retirement System to review and
make adjustments to such computations, to the same extent and
in the same manner as provided under section 8423(c) of title
5, United States Code.
(c) Reporting Requirement.--The Postal Service shall include in each
report rendered under section 2402 of title 39, United States Code, the
amount applied toward reducing the postal debt, and the size of the
postal debt before and after the application of subsection (a), during
the period covered by such report.
(d) Sense of Congress.--It is the sense of the Congress that--
(1) the savings accruing to the Postal Service as a result of
the enactment of this Act will be sufficient to allow the
Postal Service to fulfill its commitment to hold postage rates
unchanged until at least 2006;
(2) because the Postal Service still faces substantial
obligations related to postretirement health benefits for its
current and former employees, some portion of the savings
referred to in paragraph (1) should be used to address those
unfunded obligations; and
(3) none of the savings referred to in paragraph (1) should
be used in the computation of any bonuses for Postal Service
executives.
(e) Postal Service Proposal.--
(1) In general.--The United States Postal Service shall, by
September 30, 2003, prepare and submit to the President and the
Congress its proposal detailing how any savings accruing to the
Postal Service as a result of the enactment of this Act, which
are attributable to any fiscal year after fiscal year 2005,
should be expended.
(2) Matters to consider.--In preparing its proposal under
this subsection, the Postal Service shall consider--
(A) whether, and to what extent, those future savings
should be used to address--
(i) debt repayment;
(ii) prefunding of postretirement healthcare
benefits for current and former postal
employees;
(iii) productivity and cost saving capital
investments;
(iv) delaying or moderating increases in
postal rates; and
(v) any other matter; and
(B) the work of the President's Commission on the
United States Postal Service under section 5 of
Executive Order 13278 (67 Fed. Reg. 76672).
(3) GAO review and report.--Not later than 60 days after the
Postal Service submits its proposal pursuant to paragraph (1),
the General Accounting Office shall prepare and submit a
written evaluation of such proposal to the Committee on
Government Reform of the House of Representatives and the
Committee on Governmental Affairs of the Senate.
(4) Legislative action.--Not later than 180 days after it has
received both the proposal of the Postal Service and the
evaluation of such proposal by the General Accounting Office
under this subsection, Congress shall revisit the question of
how the savings accruing to the Postal Service as a result of
the enactment of this Act should be used.
(f) Determination and Disposition of Surplus.--
(1) In general.--If, as of the date under paragraph (2), the
Office of Personnel Management determines (after consultation
with the Postmaster General) that the computation under section
8348(h)(1)(A) of title 5, United States Code, yields a negative
amount (hereinafter referred to as a ``surplus'')--
(A) the Office shall inform the Postmaster General of
its determination, including the size of the surplus so
determined; and
(B) the Postmaster General shall submit to the
Congress a report describing how the Postal Service
proposes that such surplus be used, including a draft
of any legislation that might be necessary.
(2) Determination date.--The date to be used for purposes of
paragraph (1) shall be September 30, 2025, or such earlier date
as, in the judgment of the Office, is the date by which all
postal employees under the Civil Service Retirement System will
have retired.
(g) Definitions.--For purposes of this section--
(1) the savings accruing to the Postal Service as a result of
the enactment of this Act shall, for any fiscal year, be equal
to the amount (if any) by which--
(A) the contributions that the Postal Service would
otherwise have been required to make to the Civil
Service Retirement and Disability Fund for such fiscal
year if this Act had not been enacted, exceed
(B) the contributions made by the Postal Service to
such Fund for such fiscal year; and
(2) the term ``postal debt'' means the outstanding
obligations of the Postal Service, as determined under chapter
20 of title 39, United States Code.
SEC. 4. EFFECTIVE DATE.
This Act and the amendments made by this Act shall become effective
on the date of the enactment of this Act, except that the amendments
made by section 2(b) shall apply with respect to pay periods beginning
on or after such date.
Purpose and Summary
H.R. 735 reforms the manner by which the United States
Postal Service funds its obligations to the Civil Service
Retirement System (CSRS), by modeling the Postal Service's
funding of its CSRS obligation after its funding of the Federal
Employee Retirement System (FERS). This would result in
considerable savings to the Postal Service. The bill requires
the Postal Service to apply these savings in Fiscal Years 2003,
2004 and 2005 to paying down its debt to the U.S. Treasury and
to delaying the next postage rate increase. The bill also
requires the Postal Service to place savings realized after
2005 in escrow, and present a plan to Congress outlining how
savings after fiscal year 2005 should be applied.
Background and Need for the Legislation
In a December 2001 report, United States Postal Services:
Information on Retirement Plans, the GAO raised the question of
whether the United States Postal Service was paying more or
less than appropriate to cover payments for the Civil Service
Retirement System for which it is responsible. At the behest of
the General Accounting Office, the Office of Personnel
Management reviewed the current funding procedures of the USPS
to the Civil Service Retirement System under law.
The Office of Personnel Management (OPM) determined that
the Postal Service, based on payments required by existing law,
would overpay its obligations to the Civil Service Retirement
System (CSRS, the pre-1984 retirement system) by well over $70
billion dollars. As a result, without this legislative
correction, the Postal Service would unnecessarily raise
postage rates for the American mailing public earlier than
required.
In order to correct this problem, OPM proposed legislation
modeling the Postal Service's payments to CSRS after its
payments to the current Federal Employee Retirement System
(FERS). This would result in a reduction in the Postal
Service's annual obligation to CSRS, allowing the Postal
Service to delay its next rate increase beyond 2004 to at least
fiscal year 2006.
H.R. 735 incorporates much of the language approved by the
Administration. This bipartisan bill also has the support of
the Postal Service as well as postal labor unions, management
groups, and postal consumers.
The bill requires the Postal Service to work with the
Department of the Treasury to apply the funds saved to pay down
its debt to the Treasury in fiscal years 2003 and 2004. In
fiscal year 2005, the bill directs the Postal Service to use
the savings to delay an anticipated rate increase. After 2005,
the bill requires the Postal Service and OPM to calculate the
difference between the cost to fund CSRS under the bill and the
cost under the old law. These funds would be held in escrow
until Congress acts on a Postal Service proposal outlining what
should be done with the funds.
Additional mandates, in the form of a sense of Congress,
would direct that some portion of saved funds be used to hold
postage rates unchanged until at least 2006, to fund retiree
health benefits, and to not pay for executive bonuses.
H.R. 735 as reported differs from the introduced version,
in that it incorporates several changes to the bill as
introduced that were suggested by the General Accounting Office
and the Postal Service.
Hearings
No hearings were held on H.R. 735.
Committee Consideration
On March 6, 2003, the Committee met in open session and
favorably reported the bill, H.R. 735 (with a manager's
amendment), by voice vote, a quorum being present.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Performance Goals and Objectives
H.R. 735 does not authorize funding. Therefore, clause
3(c)(4) of rule XIII of the Rules of the House of
Representatives is inapplicable.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to H.R. 735, the following estimate and comparison
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 14, 2003.
Hon. Tom Davis,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 735, the Postal
Civil Service Retirement System Funding Reform Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark
Grabowicz and Geoffrey Gerhardt.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 735--Postal Civil Service Retirement System Funding Reform Act of
2003
Summary: Enacting H.R. 735 would permanently reduce
payments by the United States Postal Service (USPS) to the
Civil Service Retirement and Disability Fund (CSRDF) starting
in 2003. CBO estimates that enacting the bill would result in
net outlays of $7.1 billion over the 2003-2008 period. (Over
the 2003-2013 period, total costs would be about $7.2 billion.)
That estimate is the total budgetary impact of the proposal,
combining both on-budget and off-budget effects. (USPS cash
flows are considered off-budget.)
Under the bill, the Postal Service would see its required
payments to the CSRDF reduced by $3 billion to $5 billion a
year. The legislation specifies that the Postal Service and the
Department of the Treasury should determine how to apply the
savings that would result over the 2003-2005 period. CBO
expects the Postal Service would use those savings to repay
debt, delay future rate increases, and invest in capital
projects or other activities to increase productivity. For
fiscal years after 2005, the bill would require that savings
resulting from reduced payments to the CSRDF be held in escrow
and remain unavailable for obligation unless authorized by
subsequent legislation.
By reducing USPS payments to the retirement fund, CBO
estimates the bill would reduce the agency's costs (off-budget)
by about $12 billion over the 2003-2008 period. We also
estimate that enacting H.R. 735 would increase on-budget costs
by about $19 billion over the same period. Thus the net effect
of this legislation on the unified federal budget would be a
cost of about $7.1 billion over the 2003-2008 period largely
because on-budget offsetting receipts--representing payments
from the Postal Service to the CSRDF--would be reduced. Over
the 2003-2013 period, enacting H.R. 735 would combine off-
budget savings of about $34 billion with on-budget costs of
around $41 billion to produce a net cost of about $7.2 billion.
H.R. 735 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 735 is shown in the following table.
The costs of this legislation fall within budget functions 370
(commerce and housing credit), 900 (net interest), and 950
(undistributed offsetting receipts).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in billions of dollars--
---------------------------------------------------------------------------------------
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
On-Budget Effects--CSRDF:
Estimated Budget Authority.................................. 3.5 2.7 3.0 3.0 3.2 3.6 3.8 4.2 4.6 4.8 5.2
Estimated Outlays........................................... 3.5 2.7 3.0 3.0 3.2 3.6 3.8 4.2 4.6 4.8 5.2
Off-Budget Effects--Postal Service:
Estimated Budget Authority.................................. -2.5 -0.6 0.8 -3.0 -3.2 -3.5 -3.8 -4.1 -4.5 -4.8 -5.2
Estimated Outlays........................................... -2.5 -0.6 0.8 -3.0 -3.2 -3.5 -3.8 -4.1 -4.5 -4.8 -5.2
Total Budget Effects:
Estimated Budget Authority.................................. 1.0 2.1 3.8 0.1 0.1 0.1 0.1 0.1 0.1 * *
Estimated Outlays........................................... 1.0 2.1 3.8 0.1 0.1 0.1 0.1 0.1 0.1 * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--* = less than $50 million. Components may not add to totals because of rounding.
Basis of estimate: For this estimate, CBO assumes that H.R.
735 will be enacted in the spring of 2003. CBO estimates that
reducing the Postal Service's payments to the retirement fund
would reduce the agency's off-budget costs by about $12 billion
over the 2003-2008 period, but enacting H.R. 735 would increase
on-budget costs by about $19 billion over the same period. The
net effect of this legislation on the unified federal budget
would be a cost of about $7.1 billion over those six years.
Over the 2003-2013 period, enacting H.R. 735 would combine off-
budget savings of about $34 billion with on-budget costs of
around $41 billion to produce a net cost of $7.2 billion.
Background
Although the Postal Service is a federal agency, its
financial operations are classified as being off-budget.
Despite this treatment, federal budget documents present the
net income of the agency in the budgetary totals. The Postal
Service is required by law to set postage rates to cover its
full costs. In fiscal year 2002, the Postal Service generated
$68.1 billion in collections, mostly from postage and user
fees, and had $67.4 billion in expenses. The agency has the
authority to borrow up to $15 billion from the Treasury; at the
end of fiscal year 2002, its outstanding debt with the Treasury
stood at $11.9 billion.
Postal employees participate in the federal government's
two main defined benefit pension programs. Those workers first
hired prior to 1984 are covered by the Civil Service Retirement
System (CSRS) while those first hired after 1983, as well as
former CSRS workers who elected to change coverage, participate
in the Federal Employees' Retirement System (FERS). In 2002,
about 30 percent of the USPS workforce was covered by CSRS, and
the rest were under FERS.
The Postal Service and its employees each make payroll
contributions toward both CSRS and FERS. For CSRS workers, both
the standard agency and employee contribution rates are 7
percent. For FERS employees, the agency contribution rate for
most employees is 10.7 percent, while the employee rate is 0.8
percent. Although CSRS provides more generous benefits than
FERS, unlike FERS, CSRS is not a fully funded pension system,
meaning that agency and employee contributions alone are not
enough to finance the program's benefits. In an effort to make
up the shortfall between contributions and benefits for its
current and former employees, the Postal Service makes lump-sum
payments to the retirement system each year. In 2002, those
payments amounted to about $3.9 billion.
The Office of Personal Management projects that, under
current law, the Postal Service will eventually overfund
pension obligations for its workers by as much as $71 billion.
The projected overfunding is due primarily to higher-than-
expected returns on assets held in the CSRDF.
On-Budget Effects
H.R. 735 would change the way the Postal Service finances
retirement benefits for many of its current and former
employees. The proposal would replace two amortization payments
the Postal Service now makes to CSRDF--amounting to a combined
$4 billion in 2003 and expected to grow to nearly $6 billion in
2013--with a new annual payment of $434 million over the next
40 years that would amortize the agency's estimated unfunded
liability of about $5 billion. The net effect is to reduce
Postal Service payments to the CSRDF by $4 billion in 2003,
$19.5 billion over the 2004-2008 period, and $43.5 billion over
the 2004-2013 period.
The legislation also would replace the fixed contribution
rate, which the Postal Service currently makes for its
approximately 225,000 employees covered by the CSRS, with a
rate intended to pay the full normal cost of CSRS benefits
(including military service credits). This change would
effectively increase the Postal Service's contribution rate for
most covered employees from 7 percent to 17.4 percent of
payroll. In 2004, the first full year of contributions at the
higher rate, CBO estimates that this would increase the
agency's retirement contributions by nearly $1 billion, but
that increase would gradually decline as the CSRS covered
workers retire. Employee contribution rates for those in CSRS,
as well as agency and employee contributions for those in the
Federal Employees' Retirement System, would be unaffected by
the legislation.
The Postal Service is an off-budget entity and
contributions and payments that it makes to the retirement
trust fund are considered offsetting receipts. Reducing overall
payments the Postal Service makes to the CSRDF would result in
a reduction of on-budget receipts to the government. To the
extent that the Postal Service uses its savings to reduce its
debt to the Federal Financing Bank, on-budget interest receipts
would also be lower. Assuming the changes made by H.R. 735 are
effective in April 2003, CBO projects the net on-budget effect
of the bill would be a cost of $3.5 billion in 2003 and
approximately $19 billion over the 2003-2008 period.
Off-Budget Effects
CBO estimates that enactment of H.R. 735 would reduce net
expenditures of the USPS by $12 billion over the 2003-2008
period. After 2005, the bill would direct the agency to
continue to charge its ratepayers for the estimated cost of its
current contribution to the CSRDF. However, the legislation
would require that those collections be held in escrow and
unavailable for obligation until a subsequent act of the
Congress specifies how the collections should be used.
Estimated Effects on Postal Outlays for Fiscal Years 2003-
2005. The Postal Service's response to the change in its
pension payments is uncertain, but CBO anticipates that the
agency will use the savings form H.R. 735 to:
Repay $2 billion of its outstanding debt in
fiscal year 2003,
Invest $1 billion in fiscal year 2003 and $2
billion in 2004 in additional capital projects or other
activities aimed at improving productivity, and
Delay the next postal rate increase--
anticipated late in fiscal year 2004, until fiscal year
2006.
CBO expects that the Postal Service would repay $2 billion
of its outstanding debt to the Treasury in 2003. That action
would reduce the agency's interest expenses by about $60
million annually, beginning in fiscal year 2004. Although the
bill would require that all of the USPS's savings be used for
debt redemption over the 2003-2004 period, the legislation
would not effectively constrain the agency's ability to use its
line of credit with the Treasury to ensure that net outstanding
debt is reduced in those years. Because the USPS pays an
average interest rate on that debt of only 3 percent, CBO
expects the agency would seek to make capital investments with
much of the savings that could more effectively contribute to
lowering its operating costs and thus contribute to a
postponement of its next rate increase. By fiscal year 2005,
CBO estimates such investments would lead to operational
savings of about $300 million per year.
In July 2002, the Postal Service raised the price of a
first-class stamp from $0.34 to $0.37 and raised rates for
other classes of mail. Based on information from the Postal
Service and on postal revenues to date in 2003, CBO estimates
that this rate increase will raise over $3 billion in
additional revenue a year. The CBO baseline assumes a similar
rate increase late in fiscal year 2004, including a price of
$0.40 for a first-class stamp.
We estimate that delaying the next rate increase would
result in a small loss of revenue in fiscal year 2004 and a
loss of roughly $3.5 billion in fiscal year 2005. A delay in
the rate increase also would increase operating expenses
because the Postal Service would have to deliver higher volumes
of mail than otherwise expected. (When rates go up, mail volume
goes down.) Based on information from the Postal Service about
the relationship between price increases, mail volumes, and
operating costs, we expect that this increase in expenses would
be just over half a billion dollars in 2005.
CBO estimates that those changes in postal revenues and
expenses would result in lower net outlays of $2.5 billion in
fiscal year 2003 and $600 million in 2004, with a net increase
in outlays of $800 million in 2005.
Estimated Effects on Postal Outlays for Fiscal Years 2006-
2008. For fiscal years after 2005, savings resulting from
enactment of the bill would not be available for spending
unless authorized by subsequent legislation. In addition, H.R.
735 would direct any savings to be considered operating
expenses of the Postal Service. Thus, the agency's gross costs
for rate-setting purposes would remain nearly identical to what
those costs would be under current law even though the agency's
actual expenditures would decline by the amounts that the bill
would require to be placed in escrow. As a result, net off-
budget outlays of the Postal Service would decline by the same
amount as the savings from lower pension payments, beginning in
fiscal year 2006.
Intergovernmental and private-sector impact: H.R. 735
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal Costs--Postal Service: Mark
Grabowicz; CSRDF: Geoffrey Gerhardt. Impact on State, Local,
and Tribal Governments: Victoria Heid Hall. Impact on the
Private Sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Constitutional Authority Statement
Pursuant to rule XIII, clause 3(d)(1), the Committee finds
that clauses 1 and 18 of Article I, Section 8 of the United
States Constitution grant Congress the power to enact this law
Section-by-Section Analysis and Discussion
Section 1. Short title
This section provides that the bill may be cited as the
``Postal Civil Service Retirement System Funding Reform Act of
2003''.
Section 2. Civil Service Retirement System
This section amends provisions of subchapter III of chapter
83 of title 5, United States Code, to reform the provisions for
funding retirement benefits for employees of the United States
Postal Service under the Civil Service Retirement System.
Subsection (a)(1) amends section 8331 of title 5, U.S.C.,
by changing the term defined in paragraph (17) of that section
from ``normal cost'' to ``normal cost percentage.'' The
insertion of the phrase ``and standards (using dynamic
assumptions)'' after ``actuarial practice'' changes the method
of computing normal cost from a static basis to a dynamic one.
While the term ``normal cost'' was defined in section 8331, it
had not actually been used in chapter 83 since the last
reference to it was repealed some years ago.
Subsection (a)(2) redefines ``Fund balance'' to provide a
more accurate and functionally useful definition.
Subsection (a)(3) add the definitions of the term ``dynamic
assumptions,'' which is virtually identical to the definition
in paragraphs (9) of section 8401, which is used in the
administration of the Federal Employees Retirement System.
Subsection (b) amends the provisions of section 8334(a)(1)
to change the provisions applicable to employer retirement
contributions made by the Postal Service.
Subsections (b)(1)(A) and (b)(1)(B) divide and redesignate
the existing provisions of section 8334(a)(1).
Subsection (b)(1)(C) excludes the Postal Service from the
requirement of agency contributions that match employee
deductions.
Subsection (b)(1)(D) provides that the Postal Service
employer contribution will be a percentage of basic pay equal
to the normal cost percentage for the type of employee (i.e.,
regular employee, law enforcement officer, etc.), less the
percentage of basic pay deducted from the employee's basic pay.
Subsection (b)(2) provides conforming amendments reflecting
the above changes.
Subsection (c) rewrites section 8348(h) of title 5, United
States Code. It repeals the existing provisions requiring
Postal Service payments for costs ``attributable to any
benefits payable from the Fund to active and retired Postal
Service officers and employees, and to their survivors, when
the increase results from an employee-management agreement
under title 39 of the United States Code, or any administrative
action by the Postal Service taken pursuant to law, which
authorizes increases in pay on which benefits are computed.''
As amended, section 8348(h)(1)(A) establishes a new
concept, the ``Postal supplemental liability,'' which is
essentially the difference between the actuarial present value
of retirement obligations for Postal Service employees, less
the present value of prior and future employer and employee
payments to the Retirement Fund, taking into account the
earnings on those payments.
Section 8348(h)(1)(B) sets the basis for inclusion of the
value of benefits based upon military and volunteer service
(i.e., Peace Corps, VISTA, etc.), providing for proration in
the case of pre-Postal reform employees. It also excludes the
military service so-included from inclusion in computation of
amount of the annual Treasury payment required to pay for costs
attributable to military service.
Section 8348(h)(2) provides for OPM to determine an
appropriate amortization schedule, including a series of equal
annual installments commencing September 30, 2004, providing
for the liquidation of the Postal supplemental liability by
September 30, 2043. Then, for each fiscal year beginning after
September 30, 2003, through the fiscal year ending September
30, 2038, OPM is required to redetermine the Postal
supplemental liability at the close of the fiscal year and
establish a new amortization schedule, including a series of
equal installments commencing on September 30 of the subsequent
fiscal year, providing for the liquidation of that redetermined
Postal supplemental liability by September 30, 2043. For each
fiscal year beginning after September 30, 2038, OPM is required
to redetermine the Postal supplemental liability at the close
of the fiscal year and establish a new amortization schedule,
including a series of annual installments commencing on
September 30 of the subsequent fiscal year, providing for the
liquidation of that redetermined Postal supplemental liability
over five years. All amortization schedules established under
this section must be set in accordance with generally accepted
actuarial practices and principles, with interest computed at
most recent dynamic valuation of the Civil Service Retirement
System.
Section 8348(h)(3) provides that in computing the amount of
any payment under any other subsection of section 8348 that is
based upon the amount of the Retirement Fund's unfunded
liability, such payment shall be computed disregarding any
portion of the unfunded liability that OPM determines will be
liquidated by the Postal Service amortization payments.
Section 8348(h)(4) allows the Postal Service to appeal
determinations made by the Office of Personnel Management to
the Board of Actuaries of the Civil Service Retirement System.
Subsection (d)(1)(A) of the bill repeals the existing
provisions of section 8348(m), requiring Postal Service
payments based upon retirement costs attributable to retirement
cost-of-living increases.
Subsection (d)(1)(B) of the bill prospectively repeals non-
codified provisions requiring additional Postal Service
payments to the Retirement Fund.
Section 3. Disposition of savings accruing to the United States Postal
Service
Section 3(a)(1) of the bill requires the Postal Service to
use any savings accrued as a result of the bill in fiscal years
2003 and 2004 to pay down the Postal Service's debt to the U.S.
Treasury, in consultation with the Secretary of the Treasury.
The section prohibits the Postal Service from accumulating
additional offsetting debt.
Section 3(a)(2) of the bill requires the Postal Service to
apply any saving accruing in fiscal year 2005 to hold postage
rates unchanged, and to pay down debt.
Section 3(a)(3) of the bill requires the Postal Service in
fiscal years after 2005, to include savings accruing in the
revenue requirement, and to place them in an escrow account
until Congress acts on a Postal Service proposal for the funds.
Section 3(b) of the bill directs the Office of Personnel
Management to calculate the accrued savings as defined under
Section 3(g) of the bill. The Postal Service would have the
opportunity to appeal the Office of Personnel Management's
calculations to the Board of Actuaries of the Civil Service
Retirement System.
Section 3(c) of the bill directs the Postal Service to
account for its debt repayments under Section 3(a) in its
annual report.
Section 3(d) of the bill expresses the sense of Congress
that enactment will allow the Postal Service to fulfill its
public commitment to hold postage rates steady until at least
fiscal year 2006. It also expresses the sense of Congress that
some portion of the savings should be used to prefund the
Postal Service's retiree health care liabilities, and that none
of the savings should be used in the computation of executive
bonuses.
Section 3(e) of the bill requires the Postal Service to
present a plan to the President and Congress by September 30,
2003 outlining how the savings that would be held in escrow
under Section 3(a)(3) should be treated. The General Accounting
Office would be required to submit its evaluation of the Postal
Service's plan to Congress within 60 days. The bill directs
Congress to act on this proposal within 180 days of receiving
GAO's evaluation, in order to prevent the escrow account from
going into effect.
Section 3(f) of the bill requires the Office of Personnel
Management to determine on September 30, 2025, whether a
surplus exists in the Postal Service's Civil Service Retirement
System fund, and if so, directs the Postal Service to propose
to Congress how the surplus should be disbursed.
Section 3(g) of the bill defines ``savings accrued'' as the
difference between the amount the Postal Service would have
paid to the Civil Service Retirement System absent this
legislation and the amount the Postal Service actually pays.
Section 3(g) also defines ``postal debt'' as the outstanding
obligations of the Postal Service under Chapter 20 of Title 39,
United States Code.
Section 4. Effective date
Section 4 of the bill provides that it will be effective on
enactment, except that the increases in Postal Service
contributions based upon the basic pay of employees will apply
only to pay periods beginning on or after the date of
enactment.
Agency View
United States Postal Service,
Washington, DC, March 21, 2003.
Hon. Tom Davis,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The U.S. Postal Service is extremely
pleased that both the House and Senate have moved quickly to
introduce The Postal Civil Service Retirement System Funding
Reform Act of 2003, H.R. 735 and S. 380 respectively. We
support this critically needed legislation, which would reform
the method of funding benefits under the Civil Service
Retirement System for employees of the Postal Service. We
appreciate the recognition and understanding of the potential
benefits of this reform for the Postal Service, its employees,
our customers, and the nation's $900 billion mailing industry.
The Postal Service continues to face long-term challenges.
However, quick approval and enactment of this legislation will
allow the Postal Service to provide stable postage rates until
2006, and significantly reduce our $11 billion debt over the
next few years.
We do have concerns with those provisions of Section 3 of
H.R. 735 that provide for the establishment of an escrow
account for accrued savings attributable to any fiscal year
after fiscal year 2005. Under these provisions, beginning in
2006, the Postal Service would be required to pay into an
escrow account the amount of ``savings'' calculated by OPM. The
Postal Service would then be unable to use those funds until a
report prepared by the Postal Service had been evaluated by
GAO, approved by Congress, and subsequent enabling legislation
enacted. This compounds the complexity of planning future
Postal Service revenue requirements and rate offerings.
I want to emphasize that the Postal Service supports both
the House and Senate versions of this legislation. We are
committed to working with your committee to review and refine
Section 3 of H.R. 735. We look forward to expeditious passage
of this legislation.
Sincerely,
John E. Potter,
Postmaster General, CEO.
Unfunded Mandates
The Committee finds that the legislation does not impose
any Federal mandates within the meaning of section 423 of the
Unfunded Mandates Reform Act (Public Law 104-4).
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize establishment of an advisory committee within the
definition of 5 U.S.C. App., section 5(b).
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart G--Insurance and Annuities
* * * * * * *
CHAPTER 83--RETIREMENT
* * * * * * *
SUBCHAPTER III--CIVIL SERVICE RETIREMENT
Sec. 8331. Definitions
For the purpose of this subchapter--
(1) * * *
* * * * * * *
(17) ``[normal cost] normal-cost percentage'' means
the entry-age normal cost computed by the Office of
Personnel Management in accordance with generally
accepted actuarial practice and standards (using
dynamic assumptions) and expressed as a level
percentage of aggregate basic pay;
[(18) ``Fund balance'' means the sum of--
[(A) the investments of the Fund calculated
at par value; and
[(B) the cash balance of the Fund on the
books of the Treasury;
but does not include any amount attributable to--
[(i) the Federal Employees' Retirement
System; or
[(ii) contributions made under the Federal
Employees' Retirement Contribution Temporary
Adjustment Act of 1983 by or on behalf of any
individual who became subject to the Federal
Employees' Retirement System;]
(18) ``Fund balance'' means the current net assets of
the Fund available for payment of benefits, as
determined by the Office in accordance with appropriate
accounting standards, but does not include any amount
attributable to--
(A) the Federal Employees' Retirement System;
or
(B) contributions made under the Federal
Employees' Retirement Contribution Temporary
Adjustment Act of 1983 by or on behalf of any
individual who became subject to the Federal
Employees' Retirement System;
* * * * * * *
(27) ``Nuclear materials courier''--
(A) * * *
(B) includes an employee who is transferred
directly to a supervisory or administrative
position within the same Department of Energy
organization, after performing duties referred
to in subparagraph (A) for at least 3 years;
[and]
(28) ``Government physician'' has the meaning given
that term under section 5948[.]; and
(29) ``dynamic assumptions'' means economic
assumptions that are used in determining actuarial
costs and liabilities of a retirement system and in
anticipating the effects of long-term future--
(A) investment yields;
(B) increases in rates of basic pay; and
(C) rates of price inflation.
* * * * * * *
Sec. 8334. Deductions, contributions, and deposits
(a)(1)(A) The employing agency shall deduct and withhold from
the basic pay of an employee, Member, Congressional employee,
law enforcement officer, firefighter, bankruptcy judge, judge
of the United States Court of Appeals for the Armed Forces,
United States magistrate, Court of Federal Claims judge, member
of the Capitol Police, member of the Supreme Court Police, or
nuclear materials courier, as the case may be, the percentage
of basic pay applicable under subsection (c).
[An equal] (B)(i) Except as provided in clause (ii), an equal
amount shall be contributed from the appropriation or fund used
to pay the employee or, in the case of an elected official,
from an appropriation or fund available for payment of other
salaries of the same office or establishment. When an employee
in the legislative branch is paid by the Chief Administrative
Officer of the House of Representatives, the Chief
Administrative Officer may pay from the applicable accounts of
the House of Representatives the contribution that otherwise
would be contributed from the appropriation or fund used to pay
the employee.
(ii) In the case of an employee of the United States Postal
Service, the amount to be contributed under this subparagraph
shall (instead of the amount described in clause (i)) be equal
to the product derived by multiplying the employee's basic pay
by the percentage equal to--
(I) the normal-cost percentage for the applicable
employee category listed in subparagraph (A), minus
(II) the percentage deduction rate that applies with
respect to such employee under subparagraph (A).
* * * * * * *
(k)(1) Effective with respect to pay periods beginning after
December 31, 1986, in administering this section in the case of
an individual described in section 8402(b)(2) of this title--
(A) the amount to be deducted and withheld by the
employing agency shall be determined in accordance with
paragraph (2) of this subsection instead of [the first
sentence of subsection (a)(1) of this section]
subsection (a)(1)(A); and
(B) the amount of the contribution under [the second
sentence of subsection (a)(1) of this section]
subparagraph (B) of subsection (a)(1) shall be the
amount which would have been contributed under [such
sentence] such subparagraph if this subsection had not
been enacted.
(2)(A) * * *
* * * * * * *
(C) For purposes of this paragraph--
(i) * * *
* * * * * * *
(iii) the term ``total deduction'', as used with
respect to any Federal wages (or portion thereof),
means an amount equal to the amount of those wages (or
of that portion), multiplied by the percentage which
(but for this subsection) would apply under [the first
sentence of subsection (a)(1)] subsection (a)(1)(A)
with respect to the individual involved; and
* * * * * * *
Sec. 8348. Civil Service Retirement and Disability Fund
(a) * * *
* * * * * * *
[(h)(1) Notwithstanding any other statute, the United States
Postal Service shall be liable for that portion of any
estimated increase in the unfunded liability of the Fund which
is attributable to any benefits payable from the Fund to active
and retired Postal Service officers and employees, and to their
survivors, when the increase results from an employee-
management agreement under title 39, or any administrative
action by the Postal Service taken pursuant to law, which
authorizes increases in pay on which benefits are computed.
[(2) The estimated increase in the unfunded liability,
referred to in paragraph (1) of this subsection, shall be
determined by the Office of Personnel Management. The United
States Postal Service shall pay the amount so determined to the
Office in 30 equal annual installments with interest computed
at the rate used in the most recent valuation of the Civil
Service Retirement System, with the first payment thereof due
at the end of the fiscal year in which an increase in pay
becomes effective.]
(h)(1)(A) For purposes of this subsection, ``Postal
supplemental liability'' means the estimated excess, as
determined by the Office, of--
(i) the actuarial present value of all future
benefits payable from the Fund under this subchapter
attributable to the service of current or former
employees of the United States Postal Service, over
(ii) the sum of--
(I) the actuarial present value of deductions
to be withheld from the future basic pay of
employees of the United States Postal Service
currently subject to this subchapter pursuant
to section 8334;
(II) the actuarial present value of the
future contributions to be made pursuant to
section 8334 with respect to employees of the
United States Postal Service currently subject
to this subchapter;
(III) that portion of the Fund balance, as of
the date the Postal supplemental liability is
determined, attributable to payments to the
Fund by the United States Postal Service and
its employees, including earnings on those
payments; and
(IV) any other appropriate amount, as
determined by the Office in accordance with
generally accepted actuarial practices and
principles.
(B)(i) In computing the actuarial present value of future
benefits, the Office shall include the full value of benefits
attributable to military and volunteer service for United
States Postal Service employees first employed after June 30,
1971, and a prorated share of the value of benefits
attributable to military and volunteer service for United
States Postal Service employees first employed before July 1,
1971.
(ii) Military service so included shall not be included in
the computation of any amount under subsection (g)(2).
(2)(A) Not later than June 30, 2004, the Office shall
determine the Postal supplemental liability as of September 30,
2003. The Office shall establish an amortization schedule,
including a series of equal annual installments commencing
September 30, 2004, which provides for the liquidation of such
liability by September 30, 2043.
(B) The Office shall redetermine the Postal supplemental
liability as of the close of the fiscal year, for each fiscal
year beginning after September 30, 2003, through the fiscal
year ending September 30, 2038, and shall establish a new
amortization schedule, including a series of equal annual
installments commencing on September 30 of the subsequent
fiscal year, which provides for the liquidation of such
liability by September 30, 2043.
(C) The Office shall redetermine the Postal supplemental
liability as of the close of the fiscal year for each fiscal
year beginning after September 30, 2038, and shall establish a
new amortization schedule, including a series of equal annual
installments commencing on September 30 of the subsequent
fiscal year, which provides for the liquidation of such
liability over 5 years.
(D) Amortization schedules established under this paragraph
shall be set in accordance with generally accepted actuarial
practices and principles, with interest computed at the rate
used in the most recent dynamic actuarial valuation of the
Civil Service Retirement System.
(E) The United States Postal Service shall pay the amounts so
determined to the Office, with payments due not later than the
date scheduled by the Office.
(F) An amortization schedule established under subparagraph
(B) or (C) shall supersede any amortization schedule previously
established under this paragraph.
(3) Notwithstanding any other provision of law, in computing
the amount of any payment under any other subsection of this
section that is based upon the amount of the unfunded
liability, such payment shall be computed disregarding that
portion of the unfunded liability that the Office determines
will be liquidated by payments under this subsection.
(4) Notwithstanding any other provision of this subsection,
any determination or redetermination made by the Office under
this subsection shall, upon request of the Postal Service, be
subject to reconsideration and review (including adjustment by
the Board of Actuaries of the Civil Service Retirement System)
to the same extent and in the same manner as provided under
section 8423(c).
* * * * * * *
[(m)(1) Notwithstanding any other provision of law, the
United States Postal Service shall be liable for that portion
of any estimated increase in the unfunded liability of the Fund
which is attributable to any benefits payable from the Fund to
former employees of the Postal Service who first become
annuitants by reason of separation from the Postal Service on
or after July 1, 1971, or to their survivors, or to the
survivors of individuals who die on or after July 1, 1971,
while employed by the Postal Service, when the increase results
from a cost-of-living adjustment under section 8340 of this
title.
[(2) The estimated increase in the unfunded liability
referred to in paragraph (1) of this subsection shall be
determined by the Office after consultation with the Postal
Service. The Postal Service shall pay the amount so determined
to the Office in 15 equal annual installments with interest
computed at the rate used in the most recent valuation of the
Civil Service Retirement System, and with the first payment
thereof due at the end of the fiscal year in which the cost-of-
living adjustment with respect to which the payment relates
becomes effective.
[(3) In determining any amount for which the Postal Service
is liable under this subsection, the amount of the liability
shall be prorated to reflect only that portion of total service
(used in computing the benefits involved) which is attributable
to civilian service performed after June 30, 1971, as estimated
by the Office.]
* * * * * * *
----------
SECTION 7101 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1990
(a) * * *
* * * * * * *
[(c) Provision Relating to Pre-1991 COLAs.--(1) For the
purpose of this subsection--
[(A) the term ``pre-1991 COLA'' means a cost-of-
living adjustment which took effect in any of the
fiscal years specified in subparagraphs (A)-(N) of
paragraph (3);
[(B) the term ``post-1990 fiscal year'' means a
fiscal year after fiscal year 1990; and
[(C) the term ``pre-1991 fiscal year'' means a fiscal
year before fiscal year 1991.
[(2) Notwithstanding any other provision of law, an
installment (equal to an amount determined by reference to
paragraph (3)) shall be payable by the United States Postal
Service in a post-1990 fiscal year, with respect to a pre-1991
COLA, if such fiscal year occurs within the 15-fiscal year
period which begins with the first fiscal year in which that
COLA took effect.
[(3) Notwithstanding any provision of section 8348(m) of
title 5, United States Code, or any determination thereunder
(including any made under such provision, as in effect before
October 1, 1990), the estimated increase in the unfunded
liability referred to in paragraph (1) of such section 8348(m)
shall be payable, in accordance with this subsection, based on
annual installments equal to--
[(A) $6,500,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1977;
[(B) $7,000,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1978;
[(C) $10,400,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1979;
[(D) $20,500,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1980;
[(E) $26,100,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1981;
[(F) $28,100,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1982;
[(G) $30,600,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1983;
[(H) $5,700,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1984;
[(I) $19,400,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1985;
[(J) $7,400,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1986;
[(K) $8,500,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1987;
[(L) $36,800,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1988;
[(M) $51,600,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1989; and
[(N) $63,500,000 each, with respect to the cost-of-
living adjustment which took effect in fiscal year
1990;
[(4) Any installment payable under this subsection shall be
paid by the Postal Service at the same time as when it pays any
installments for which the Postal Service might otherwise be
liable in such fiscal year, with respect to such COLA, under
section 8348(m) of title 5, United States Code.]
* * * * * * *
ADDITIONAL VIEWS
H.R. 735 has many good features. It strengthens the Postal
Service, lowers the Postal Service' debt, and protects postal
consumers. H.R. 735 has also been endorsed by a coalition of
postal unions and the mailing industry.
The legislation, however, is not perfect. In particular, we
do not believe that requiring the Postal Service to pay the
pension costs associated with military service is a good idea.
Under current law, Treasury pays the retirement costs
related to the military service of employees in CSRS. H.R. 735
shifts the burden of costs related to the military service of
postal employees covered by CSRS to the Postal Service. In
fact, the bill not only requires the Postal Service to pay
military pensions for current and future retirees, but it also
makes the Postal Service reimburse Treasury for costs that have
already been paid. This shift will require the Postal Service
to pay $27.2 billion more than it otherwise would have to pay.
This is unfair to the Postal Service.
During the markup of H.R. 735, Mr. Waxman offered and
withdrew an amendment that would have maintained the status
quo, leaving the responsibility for paying for military costs
with the federal treasury, where they have always been and
where they belong. We hope this issue will be addressed before
the bill goes to the floor.
Henry A. Waxman.
Tom Lantos.
Elijah E. Cummings.
Danny K. Davis.
Wm. Lacy Clay.
Stephen F. Lynch.
Chris Van Hollen.
Jim Cooper.