The U.S. Postal Service’s Financial Condition:
Overview and Issues for Congress
Kevin R. Kosar
Analyst in American National Government
January 27, 2012
Congressional Research Service
7-5700
www.crs.gov
R41024
CRS Report for Congress
Pr
epared for Members and Committees of Congress
The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Summary
This report provides an overview of the U.S. Postal Service’s (USPS’s) financial condition,
legislation enacted to alleviate the USPS’s financial challenges, and possible issues for the 112th
Congress. It also includes a side-by-side comparison of two of the postal reform bills, H.R. 2309
and S. 1789.
Since 1971, the USPS has been a self-supporting government agency that covers its operating
costs with revenues generated through the sales of postage and related products and services.
In recent years, the USPS has experienced significant financial challenges. After running modest
profits from FY2004 through FY2006, the USPS lost $25.4 billion between FY2007 and FY2011.
Were it not for congressional action, the USPS would have lost an additional $9.5 billion.
A number of ideas have been advanced that would attempt to improve the USPS’s financial
condition in the short term so that it might continue as a self-funding government agency. All of
these reforms would require Congress to amend current postal law. The ideas include (1)
increasing the USPS’s revenues by altering postage rates and increasing its offering of nonpostal
rates and services; and (2) reducing the USPS’s expenses by a number of means, such as
recalculating the USPS’s retiree health care and pension obligations and payments, closing postal
facilities, and reducing mail delivery to less than six days per week.
This report will be updated after the USPS releases its quarterly financial results in early February
2012, and in the interim should there be any significant developments.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Contents
Background...................................................................................................................................... 1
The USPS’s Financial Difficulties, FY2006-FY2011...................................................................... 1
Flattening Then Declining Revenues......................................................................................... 1
Growing Expenses..................................................................................................................... 3
Liquidity Concerns .................................................................................................................... 5
Congress Alleviated the USPS’s Immediate Financial Distress in FY2009 and FY2011 ............... 6
Issues for Congress .......................................................................................................................... 6
Increasing Revenues.................................................................................................................. 7
Altering Postage Rates ........................................................................................................ 7
Offering More Nonpostal Products and Services................................................................ 8
Reducing Costs.......................................................................................................................... 8
Reducing the USPS’s RHBF Obligation and Payments...................................................... 8
Reducing the USPS’s FERS Pension Costs ........................................................................ 9
Reducing the USPS’s CSRS Pension Costs ........................................................................ 9
Reducing the USPS’s Contributions Toward Employee Health Premiums and Life
Insurance ........................................................................................................................ 11
Reducing the USPS’s Retail and Nonretail Facilities ....................................................... 12
Reducing Mail Delivery from Six to Five Days Per Week ............................................... 13
Increasing the USPS’s Powers to Control Labor Costs..................................................... 14
Figures
Figure 1. The USPS’s Mail Volume, FY2004-FY2011 ................................................................... 2
Figure 2. The USPS’s Operating Revenues, FY2004-FY2011........................................................ 3
Figure 3. The USPS’s Operating Revenues and Expenses, FY2004-FY2011 ................................. 4
Figure 4. The USPS’s Operating Income Without the Annual PAEA Payments to the
Postal Service Health Benefits Fund, FY2004-FY2011 ............................................................... 5
Figure 5. U.S. Postal Service Retail and Non-Retail Facilities, FY2007-FY2011 ........................ 12
Tables
Table 1. Postal Service Retiree Health Benefits Fund Payments Under PAEA............................... 4
Table A-1. Side-by-Side Digests of Selected Postal Reform Bills ................................................ 17
Appendixes
Appendix........................................................................................................................................ 16
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Contacts
Author Contact Information........................................................................................................... 24
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Background
Since 1971, the U.S. Postal Service (USPS) has been a self-supporting, wholly governmental
entity. Prior to that time, the federal government provided postal services via the U.S. Post Office
Department (USPOD), a government agency that received annual appropriations from Congress.
Members of Congress were involved in many aspects of the USPOD’s operations, including the
selection of managers (e.g., postmasters) and the pricing of postal services. In 1971, Congress
enacted the Postal Reorganization Act (PRA; P.L. 91-375; 84 Stat. 725), which replaced USPOD
with the USPS, an “independent establishment of the executive branch” (39 U.S.C. 201). The
USPS is a marketized government agency that was designed to cover its operating costs with
revenues generated through the sales of postage and related products and services.1
Although the USPS does receive an annual appropriation, the agency does not rely on
appropriations. Its appropriation is about $100 million per year, about 0.1% of the USPS’s $75
billion operating budget.2 Congress provides this appropriation to compensate the USPS for the
revenue it forgoes in providing, at congressional direction, free mailing privileges to blind
persons and overseas voters.
The Postal Service Fund, which the USPS uses for most of its financial transactions, is off-
budget, and therefore not subject to the congressional controls of the Congressional Budget and
Impoundment Control Act of 1974 (P.L. 93-344; 88 Stat. 297; 2 U.S.C. 621).3 However, the
Postal Service Retiree Health Benefits Fund (RHBF), which was established by the Postal
Accountability and Enhancement Act of 2006 (PAEA; P.L. 109-435, §803; 120 Stat. 3251), is on-
budget. (The RHBF is addressed further below.)
The USPS can and does borrow money from the U.S. Treasury via the Federal Financing Bank.
Federal statute limits the USPS’s annual debt increases to $3 billion, and the USPS’s total debt to
$15 billion (39 U.S.C. 2005(a)).
The USPS’s Financial Difficulties, FY2006-FY2011
Flattening Then Declining Revenues
After running modest profits from FY2004 through FY2006, the USPS lost $25.4 billion between
FY2007 and FY2011.4 Were it not for congressional action to reduce a statutorily required
1 The term “marketized” refers to a government agency structured to provide goods and services in the manner of a
private firm. On marketization as an alternative to privatization, see CRS Report RL33777, Privatization and the
Federal Government: An Introduction, by Kevin R. Kosar, pp. 23-29.
2 For further details on the USPS’s appropriations, see CRS Report R41340, Financial Services and General
Government (FSGG): FY2011 Appropriations, coordinated by Garrett Hatch, pp. 64-66.
3 For further background on the USPS’s budget status, see CRS Report RS20350, Off-Budget Status of Federal
Entities: Background and Current Proposals, by Bill Heniff Jr.; and Office of Management and Budget, Budget of the
U.S. Government Fiscal Year 2012: Appendix (Washington: GPO, 2011), pp. 1153-1154 and 1282-1286, at
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/appendix.pdf.
4 U.S. Postal Service, “2011 Report on Form 10-K” (Washington: USPS, 2011), p. 21; and U.S. Postal Service, 2009
Annual Report (Washington: USPS, 2009), p. 2.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
payment to the RHBF, the USPS would have lost an additional $9.5 billion. (On congressional
actions to reduce and delay RHBF payments, see below.)
As the USPS’s finances have deteriorated, its ability to absorb operating losses has been
diminished. Between FY2005 and FY2011, the USPS’s debt rose from $0 to $13 billion.5 (The
agency’s statutory debt limit is $15 billion (39 U.S.C. 2005(a)(2)(C)).) In July 2009, the GAO
added the USPS’s financial condition “to the list of high-risk areas needing attention by the
Congress and the executive branch.”6
Many media headlines have characterized the USPS’s recent deficits as the result of a drop in
mail volume and attendant postage purchase revenue.7 This is not entirely accurate. Mail volumes
slid from a peak of 213.1 billion mail pieces in FY2006 to 212.2 billion in FY2007, and dropped
to 202.7 billion in FY2008. Despite the drop in mail pieces, the USPS’s revenues actually held
steady during those years—$72.7 billion, $74.8 billion, and $74.9 billion—largely due to postage
increases.
However, between FY2009 and FY2011 mail volume declined further. Since FY2008, mail
volume has fallen 17.7%, from 202.7 billion to 167.9 billion mail pieces (Figure 1), and
operating revenues have declined 12.3%, from $74.9 billion to $65.7 billion (Figure 2).
Figure 1. The USPS’s Mail Volume, FY2004-FY2011
220
210
200
190
ce (Billions)
180
Mail Pie 170
160
2004
2005
2006
2007
2008
2009
2010
2011
Fiscal Year
Source: U.S. Postal Service, Annual Reports 2004-2010; and U.S. Postal Service, “2011 Report on Form 10-K.”
5 U.S. Postal Service, “2011 Report on Form 10-K,” p. 37; and U.S. Postal Service, 2007 Annual Report (Washington:
USPS, 2007), p. 3.
6 Government Accountability Office, Restructuring the U.S. Postal Service to Achieve Sustainable Financial Viability,
GAO-09-937SP (Washington: GAO, July 28, 2009), p. 1, at http://www.gao.gov/press/d09937sp.pdf.
7 For example, see Associated Press, “Less Snail Mail, More Red Ink at the Post Office,” New York Times, August 5,
2009, at http://www.nytimes.com/aponline/2009/08/05/us/politics/AP-US-Postal-Problems.html; and Ben Rooney,
“Postal Service Blames Mail Decline for Loss,” CNNMoney.com, August 5, 2009, at http://money.cnn.com/2009/08/
05/news/companies/US_postal_service/.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Figure 2. The USPS’s Operating Revenues, FY2004-FY2011
$82.5
$77.5
$72.5
(Billions)
Dollars $67.5
$62.5
2004
2005
2006
2007
2008
2009
2010
2011
Fiscal Year
Source: U.S. Postal Service, Annual Reports 2004-2010; and U.S. Postal Service, “2011 Report on Form 10-K.”
Growing Expenses
During this same period, the USPS has significantly increased operating expenses. A great deal of
the rise in costs is attributable in part to the Postal Accountability and Enhancement Act (PAEA).8
The PAEA established the RHBF and requires the USPS to prefund its future retirees’ health
benefits at a cost of approximately $5.6 billion per year (Table 1) for 10 years.9 (Any remaining
obligation is to be amortized over the subsequent 40-year period.) In doing this, the PAEA moved
the USPS from funding its retirees’ health care costs out-of-pocket annually to prefunding these
obligations.10 Using the Office of Personnel Management’s (OPM’s) valuation methodology, the
USPS reported that the unfunded obligation was $46.2 billion as of the end of FY2011.11 (As
noted later in this report, there has been disagreement as to the size of the USPS’s unfunded
obligation.)
8 On the PAEA, see CRS Report R40983, The Postal Accountability and Enhancement Act: Overview and Issues for
Congress, by Kevin R. Kosar.
9 P.L. 109-435, §803; 120 Stat. 3251-3252; 5 U.S.C §8909(d)(3)(A).
10 Put roughly, formerly the USPS calculated the number of retirees annually and then paid its portion of the health
premiums due. (USPS retirees also pay a portion.) The PAEA requires the USPS to do this and also to pay annually a
portion of the present value of future retiree health benefits of current employees. In accountancy terms, the PAEA
moved the USPS from “cash accounting” to “accrual accounting.” On these two approaches and their use for
accounting for post-retirement benefits, see Financial Accounting Standards Board, “Summary of Statement No. 106,”
December 1990, at http://www.fasb.org/st/summary/stsum106.shtml. See also David M. Walker, Comptroller General,
U.S. General Accounting Office, “U.S. Postal Service: Accounting for Postretirement Benefits,” GAO-02-916-R,
September 12, 2002.
11 U.S. Postal Service, “2011 Report on Form 10-K,” p. 28.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Table 1. Postal Service Retiree Health Benefits Fund Payments Under PAEA
Fiscal Year
Payment Due Per PAEA (billions)
Status of Payment
2007
$5.4
Paid in full.
2008
$5.6
Paid in full.
2009 $5.4 $1.4
billion
paid.a
2010
$5.5
Paid in full.
2011 $5.5 No
payment.b
2012
$5.6
Due September 30, 2012.
2013
$5.6
Due September 30, 2013.
2014
$5.7
Due September 30, 2014.
2015
$5.7
Due September 30, 2015.
2016
$5.8
Due September 30, 2016.
Source: Postal Accountability and Enhancement Act (P.L. 109-435, §803; 120 Stat. 3251-3252; 5 U.S.C
§8909(d)(3)(A).)
a. Congress reduced the FY2009 payment amount from $5.4 billion to $1.4 billion (P.L. 111-68).
b. Congress has delayed the FY2011 payment due date to October 4, 2011 (P.L. 112-33, §124), November 18,
2011 (P.L. 112-36, §124), December 16, 2011 (P.L. 112-55, §101), and then August 1, 2012 (H.Rept. 112-
331).
As Figure 3 shows, the USPS’s operating expenses spiked after the USPS began paying into the
RHBF in FY2007.
Figure 3. The USPS’s Operating Revenues and Expenses, FY2004-FY2011
Operating Revenue
Operating Expense
$82.5
$77.5
$72.5
$67.5
Dollars (Billions)
$62.5
2004
2005
2006
2007
2008
2009
2010
2011
Fiscal Year
Source: U.S. Postal Service, Annual Reports 2004-2010; and U.S. Postal Service, “2011 Report on Form 10-K.”
Initially, the effects of the PAEA’s mandatory payments to the Postal Service Health Benefits
Fund on the USPS’s profitability were considerable. This may be illustrated with a hypothetical—
if the USPS did not have to pay into this fund each year, it would have experienced no operating
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
losses until FY2009. Figure 4 reproduces Figure 3 with the annual PAEA payments subtracted
from the annual operating expenses. However, despite Congress’s reduction of the RHBF
payment owed in FY2009 and its delay of the RHBF payment owed in FY2011, the USPS’s
expenses exceeded its revenues these years.
Figure 4. The USPS’s Operating Income Without the Annual PAEA Payments to the
Postal Service Health Benefits Fund, FY2004-FY2011
Operating Revenue
Operating Expense
$82.5
$77.5
illions) $72.5
$67.5
Dollars (B
$62.5
2004
2005
2006
2007
2008
2009
2010
2011
Fiscal Year
Source: U.S. Postal Service, Annual Reports 2004-2010; U.S. Postal Service, “2011 Report on Form 10-K”; and
Postal Accountability and Enhancement Act (P.L. 109-435, §803; 120 Stat. 3251-3252.)
Note: The USPS made its first scheduled retiree health benefits fund payment at the end of FY2007.
The USPS will report its FY2012 first quarter financial results in February 2012.12
Liquidity Concerns
At the conclusion of FY2011, the USPS had $1.5 billion in cash, which is a low level for an
agency with an average weekly operating expense of nearly $1.4 billion.13
To conserve cash, the USPS suspended its biweekly $114 million contribution to the Federal
Employee Retirement System (FERS) on June 24, 2011.14 After seeking an opinion from the
Department of Justice on the legality of this action, the USPS reported on November 15, 2011,
that it “expected” to resume paying the bi-weekly FERS payment, and that it owed $911 million
as of September 30, 2011.15
12 39 U.S.C. 3654(a)(1) requires the USPS to file its quarterly financial reports within 40 days of the end of each
quarter. Quarter one concludes on December 31, 2011.
13 U.S. Postal Service, “2011 Report on Form 10-K,” p. 32. The USPS had an operating expense of $70.6 billion during
the 52 weeks of FY2011, an amount which equals nearly $1.4 billion per week. The USPS’s operating expense would
have been $76.1 billion had Congress not deferred the due date of the agency’s FY2011 RHBF payment.
14 U.S. Postal Service, “Form 10-Q,” p. 9.
15 U.S. Postal Service, “2011 Report on Form 10-K,” p. 34.
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One positive development is that the USPS was able to make its $1.3 billion payment to the
Department of Labor for worker’s compensation in October 2011.16 In its FY2011, third quarter
financial statement, the USPS had expressed concern that it might not be able to do so, a default
that would have had significant negative impact on the worker’s compensation fund.17
The USPS may bolster its weak cash position by borrowing from the Federal Financing Bank
(FFB). By law, the USPS may increase its debt each year by a maximum of $3 billion, and its
total debt may not exceed $15 billion. The USPS ended FY2011 with $13.0 billion in debt; so it
may borrow $2.0 billion more from the FFB in FY2012.
Congress Alleviated the USPS’s Immediate
Financial Distress in FY2009 and FY2011
On September 30, 2009, the last day of FY2009, Congress alleviated the USPS’s cash shortage
when it enacted H.R. 2918, the Legislative Branch Appropriations Act [of] 2010. President
Barack Obama signed the bill into law the next day (P.L. 111-68). Section 164 of the law
provided the USPS with an immediate reduction of $4 billion in operating expenses by reducing
the USPS’s FY2009 payment to the Postal Retiree Health Benefits Fund from $5.4 billion to $1.4
billion. The legislation did not relieve the USPS of this $4 billion obligation; rather, it deferred
the USPS’s payment. Come FY2017, the $4 billion will be added to whatever remaining
outstanding health care obligation may exist, and amortized over a 40-year period.
In autumn 2011, Congress again aided the USPS. Congress delayed the due date of the FY2011
payment ($5.5 billion) to October 4, 2011 (P.L. 112-33, §124), November 18, 2011 (P.L. 112-36,
§124), to December 16, 2011 (P.L. 112-55, §101), and then August 1, 2012 (H.Rept. 112-331).
Issues for Congress
The USPS’s financial challenges raise difficult questions: Did the USPS simply suffer from a
“perfect storm” of high retiree health benefits payments and declining revenue? Or is the USPS,
as currently constituted, incapable of responding to a shifting, and possibly declining, market for
its products and services?18
Answering these questions goes beyond the scope of this report. Nevertheless, a number of ideas
for incremental reforms have been put forth that would improve the USPS’s financial condition so
that it might continue as a self-funding, government agency.
16 Ibid., p. 30.
17 U.S. Postal Service, “Form 10-Q,” p. 8; and Brian V. Kennedy, Assistant Secretary for Congressional and
Intergovernmental Affairs, Department of Labor, letter to Chairman Darrel Issa, August 1, 2011.
18 Some observers have suggested that mail volumes will continue to decline because of the substitution of Internet-
and World Wide Web-based communications. For example, see President’s Commission on the U.S. Postal Service,
Embracing the Future: Making the Tough Choices to Preserve Universal Mail Service (Washington: GPO, July 31,
2003), pp. 6-8. The USPS itself has cited this “electronic diversion” as one of the causes for the decline in mail
volumes. U.S. Postal Service, Ensuring a Viable Postal Service for America (Washington: USPS, March 2010), p. 2.
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Increasing Revenues
Altering Postage Rates
In its annual study of the USPS’s compliance with federal laws, the Postal Regulatory
Commission (PRC) has reported that the USPS carries some types of mail at postage rates that are
below their costs.19 At a May 2010 House of Representatives’ hearing,20 John Waller of the PRC
testified that 14 products fell $1.7 billion short of covering their attributable costs.21
Currently, federal law forbids the USPS from increasing postage rates annually higher than the
Consumer Price Index (39 U.S.C. 3622(d)(1)(A)) absent “exceptional or extraordinary
circumstances.” Congress may wish to further examine these disparities and provide the USPS
with additional pricing flexibilities that would enable it to recover more revenue.22
In a July 6, 2010, filing with the PRC, the USPS stated that a recent sharp decline in mail volume
constituted an exceptional or extraordinary circumstance.23 It asked the PRC to permit it to
increase postage rates 5.6%, an amount much higher than the CPI.
The PRC denied the USPS’s request on September 30, 2010, essentially arguing that the USPS
failed to demonstrate that its professed need to raise rates was produced by “an exceptional or
extraordinary circumstance.” Instead, the PRC stated “Postal Service’s cash flow problem is not a
result of the recession and would have occurred whether or not the recession took place. It is the
result of other, unrelated structural problems and the proposed exigent rate adjustments would
neither solve nor delay those problems.”24
After the USPS filed suit, a federal court of appeals remanded the matter to the PRC in July 2011,
asking the PRC to clarify a technical matter related to the size of permissible exigent rate
increases.25 The USPS has said it will again pursue an exigent rate increase,26 and that it will raise
its prices an amount within the rate cap on January 22, 2012.27
19 Postal Regulatory Commission, Annual Compliance Determination (Washington: PRC, March 30, 2009), pp. 5-6, at
http://www.prc.gov/Docs/62/62784/ACD Report_2008_FINAL.pdf. See also CRS Report R40162, Postage Subsidies
for Periodicals: History and Recent Developments, by Kevin R. Kosar.
20 U.S. Congress, House Committee on Oversight and Government Reform, Subcommittee on Federal Workforce,
Postal Service, and District of Columbia, The Price is Right, Or Is It? An Examination of USPS Workshare Discounts
and Products that Do Not Cover Their Costs, hearing, 111th Congress, 2nd sess., May 12, 2010, Serial 111-76
(Washington: GPO,2010), at http://www.gpo.gov/fdsys/pkg/CHRG-111hhrg58349/pdf/CHRG-111hhrg58349.pdf.
21 Ibid. Testimony of John Waller, Director of Office of Accountability and Compliance, Postal Regulatory
Commission, p. 20.
22 The USPS has asked for increased pricing flexibility. See U.S. Postal Service, Ensuring a Viable Postal Service for
America: An Action Plan for the Future, pp. 13-14.
23 U.S. Postal Service, “Exigent Request of the United States Postal Service,” July 6, 2010, at http://www.prc.gov/
Docs/68/68792/Request.Final.pdf, pp. 1-2.
24 Postal Regulatory Commission, “PRG Denies Postal Service Exigent Rate Request, Decision is Unanimous,” press
release, September 30, 2010, p. 1, at http://prc.gov/prc-docs/home/whatsnew/R2010-4%20Press%20Release_1393.pdf.
25 Postal Regulatory Commission, “PRC Order Gives Guidance to Postal Service on Exigency Rate Case Process,”
press release, September 20, 2011.
26 U.S. Postal Service, “Statement on Proceeding with Exigent Pricing Relief,” press release, November 7, 2011.
27 U.S. Postal Service, “Postal Service Announces Shipping Prices for 2012,” press release, November 22, 2011.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Offering More Nonpostal Products and Services
Federal postal law limits the USPS to selling postage stamps, stamped paper, cards, envelopes,
philatelic services, and ancillary items (39 U.S.C. 102(5); 39 U.S.C. 404(a)(4-5)). The USPS has
said that it would like to increase its revenues by offering a broader range of nonpostal products
and services, although it has not specified which ones.28 Congress may wish to consider whether
the USPS ought to enter into nonpostal business lines, and whether it could be expected to reap
immediate financial gains from doing so.
Reducing Costs
Reducing the USPS’s RHBF Obligation and Payments
The USPS has to make six more PAEA-mandated future retiree health benefits payments from
FY2011 through FY2016. These remaining payments average more than $5.6 billion per year and
amount to $33.9 billion. These payments will make up a significant portion (more than 7%) of the
USPS’s approximately $75 billion annual operating expenses.
The U.S. Postal Service Office Inspector General (USPSOIG) and the PRC have disagreed on the
size of the USPS’s future retiree health benefits obligation. Therefore, they came to different
conclusions as to the amount the USPS should pay to adequately fund this obligation.
The USPSOIG said that the USPS needs to have $90.2 billion in the RHBF by the end of FY2016
for it to be adequately funded. The USPSOIG argued that the current PAEA-mandated payment
schedule was too aggressive, and that the USPS should pay $1.6 billion per year through 2016 to
fund its obligations.29
OPM questioned the assumptions used by the USPSOIG, but it said that it had “no objections to
legislative changes that provide for a solution in a manner that does not jeopardize the funding for
[postal] employee and retiree benefits.”30
The PRC reviewed both the USPSOIG’s and OPM’s assessments, and found merit in both
approaches. The PRC suggested that the USPSOIG understated the USPS’s liability because it
underestimated the inflation rate for health care. The PRC argued that OPM significantly
overstated the USPS’s liability because it overestimated both the inflation rate for health care and
the future USPS workforce size. The PRC estimated that the USPS needs to have $113.2 billion
28 On the PAEA’s limitation on the USPS’s ability to offer nonpostal products, see CRS Report R40983, The Postal
Accountability and Enhancement Act: Overview and Issues for Congress, by Kevin R. Kosar, pp. 10-13.
29 U.S. Postal Service Inspector General, Final Management Advisory Report–Estimates of Postal Service Liability for
Retiree Health Care Benefits (Washington: USPSOIG, July 22, 2009), at http://www.uspsoig.gov/foia_files/ESS-MA-
09-001R.pdf; and Statement of David C. Williams, Inspector General, U.S. Postal Service Office of Inspector General,
in U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal
Financial Management, Government Information, Federal Services, and International Security, The U.S. Postal Service
in Crisis, p. 3.
30 Statement of Nancy H. Kichak, Associate Director for Strategic Resources Policy, U.S. Office of Personnel
Management, in U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on
Federal Financial Management, Government Information, Federal Services, and International Security, The U.S. Postal
Service in Crisis, p. 4.
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in its Retiree Health Benefits Fund by the close of FY2016. It said that the USPS could pay $3.4
billion per year to achieve this goal.31
Congress may wish to reassess the PAEA’s payment schedule and the differing calculations of the
USPS’s obligation. It also may wish to consider reducing the USPS’s annual payment by
extending the payment schedule or by allowing the USPS to amortize more of the obligation after
FY2016.
Reducing the USPS’s FERS Pension Costs
Like other federal employees, most current USPS employees participate in the Federal Employee
Retirement System. The OPM Inspector General (OPMIG) explains:
[The] FERS is designed to be fully funded by employee and agency contributions. Each year,
as required by law, the OPM calculates the Federal Government’s and the USPS’s liabilities
under [the] FERS to see if there is a surplus or a supplemental liability. If there is a
supplemental liability, the OPM establishes an amortization schedule so that the liability is
paid off completely in 30 years. The statute does not contemplate what would happen should
a surplus exist.32
The USPS has contended that it has paid $6.9 billion more into its FERS pensions than is
required. It has asked for the funds to be returned to it. The USPS also has justified its recent
decision to suspend FERS contributions on the basis that it has overpaid and needs to conserve
cash.33
The OPMIG has found merit in the USPS’s contention but noted that a statute would need to be
enacted to authorize the OPM the refund the money.34
Congress could either temporarily reduce the USPS’s current payment schedule, or it could direct
the OPM to refund any overpayment.
Reducing the USPS’s CSRS Pension Costs35
On January 20, 2010, the U.S. Postal Service Office of Inspector General published a report on
the USPS’s funding of pension costs for postal workers who were employed by both the U.S. Post
Office Department (prior to 1971) and its successor, the U.S. Postal Service.36 The report
31 Postal Regulatory Commission, Postal Regulatory Commission Review of Retiree Health Benefit Fund Liability as
Calculated by Office of Personnel Management and U.S. Postal Service Office of Inspector General (Washington:
PRC, July 30, 2009), p. 22, at http://www.prc.gov/Docs/63/63987/Retiree%20Health%20Fund%20Study_109.pdf.
32 Office of Personnel Management Office of Inspector General “A Study of the Risks and Consequences of the USPS
OIG’s Proposals to Change USPS’s Funding of Retiree Benefits,” February 28, 2011, p. 23, at http://www.opm.gov/
oig/OPM_OIG_Study_of_USPS_OIG_Proposals%20Feb%2028%202011.pdf.
33 U.S. Postal Service, “Form 10-Q,” p. 9.
34 Office of Personnel Management Office of Inspector General “A Study of the Risks and Consequences of the USPS
OIG’s Proposals to Change USPS’s Funding of Retiree Benefits,” February 28, 2011, pp. 22-25 , at
http://www.opm.gov/oig/OPM_OIG_Study_of_USPS_OIG_Proposals%20Feb%2028%202011.pdf.
35 Much of this section was written by Patrick Purcell, former Specialist in Income Security, Domestic Social Policy
Division, Congressional Research Service.
36 U.S. Postal Service Office of Inspector General, “The Postal Service’s Share of CSRS Pension Responsibility,”
(continued...)
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
criticized the allocation of the pension costs between the USPS and the federal government for
employees who had service both as employees of the Post Office Department and later as
employees of the Postal Service.
The USPSOIG report noted that the Postal Service is currently responsible for meeting all
pension costs under the Civil Service Retirement System (CSRS) for employees hired after 1971.
For employees with service both before and after 1971, the federal government and the Postal
Service share responsibility for CSRS pensions. The federal government pays for service through
1971, and the USPS pays for service after 1971.
The USPSOIG report contended that the allocation of CSRS costs between the USPS and the
federal government is unfair because the Postal Service is fully responsible for increases in
pension costs that result from pay raises granted after 1971. Because CSRS pensions are based on
both an employee’s years of service and the average of an employee’s highest three consecutive
years of pay, pension costs rise as employee pay rises. As a consequence, the percentage of CSRS
pension costs allocated to the USPS for an employee who worked for both the Post Office
Department and the USPS is greater than the proportion of the worker’s career that he or she
spent as an employee of the USPS. The USPSOIG report notes, for example, that for a person
who worked for the Post Office Department for 20 years prior to 1971 and for the USPS for 10
years thereafter, the USPS is obliged to fund about half of this person’s pension costs. (The other
half is paid for by the U.S. government.)
The USPSOIG report suggested that the USPS’s share of CSRS pension costs should be
proportional to employees’ length of service as USPS employees relative to their total length of
service with the Post Office Department and the USPS. If an employee had spent 15 years as an
employee of the Post Office Department and 15 years as an employee of the USPS, for example,
the federal government and the USPS each would be responsible for half of the cost of that
individual’s CSRS pension. The USPSOIG’s report estimated that under the current method of
allocating the costs of CSRS pensions, the Postal Service has paid $75 billion more into the Civil
Service Retirement and Disability Trust Fund than it would have paid if costs were allocated
between the federal government and the USPS strictly in proportion to length of service.
In 2004, the Postal Service requested that the OPM, which administers the Civil Service
Retirement System, reconsider the method by which it allocates CSRS pension expenses between
the Postal Service and the U.S. Treasury. The OPM denied the request on the ground that the
allocation method it had developed was consistent with federal law. The OPM cited P.L. 93-349
(July 12, 1974), which required the USPS to finance all increases in retirement liabilities that are
attributable to salary increases granted by the USPS. The House committee report accompanying
the bill that was enacted as P.L. 93-349 (H.R. 29, 93rd Congress) states that the “purpose of this
legislation is to clearly establish the responsibility of the U.S. Postal Service to finance increases
in the liability of the Civil Service Retirement and Disability Fund, caused by administrative
action of the Postal Service, as apart from increases in unfunded liabilities which are incurred by
act of Congress.” The committee report further states that with respect to any increase in CSRS
pension expense that results from future pay raises received by USPS employees, “the cost of this
liability should properly and equitably be borne by the Postal Service.”
(...continued)
January 20, 2010, at http://www.uspsoig.gov/foia_files/RARC-WP-10-001.pdf.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
A reduction in the proportion of CSRS pension expenses allocated to the Postal Service would
increase the unfunded liability of the Civil Service Retirement and Disability Fund. Absent a
reduction in the cost of financing CSRS pensions, changing the allocation of CSRS pension
expenses between the Postal Service and general fund of the U.S. Treasury is a zero-sum game. A
reduction in the amount of CSRS pension expenses allocated to the USPS would result in an
equal increase in CSRS pension expenses borne by the U.S. Treasury.
In March 2010, the PRC said that it would examine the USPS’s pension liability in response to
the USPS’s request.37 The agency hired a private auditor, the Segal Group Inc., to produce a
report, which the PRC released publicly on June 30, 2010.38 The report largely agreed with the
conclusion of USPSOIG’s January 2010 report; and the PRC has stated that “an adjustment of
$50-$55 billion in favor of the Postal Service would be equitable.”39
The OPMIG has contested the USPSOIG’s claims.40 It has said that the current apportionment of
the CSRS pension costs is in line with both congressional intent and federal law. Additionally, the
OPMIG warned that allowing the USPS to draw back any CSRS pension funds would “create a
dangerous precedent” by permitting pension funds to be used for purposes other than the payment
of benefits owed.41 Similarly, the GAO has stated the USPS has not “overpaid” its CSRS
obligation, finding, “The current methodology used by OPM for allocating responsibility for
CSRS benefits between USPS and the federal government is consistent with applicable law.”42
Reducing the USPS’s Contributions Toward Employee Health Premiums and
Life Insurance
In his initial FY2010 budget, President Barack Obama proposed requiring USPS employees to
pay the same percentage towards their health premiums and life insurance as other federal
workers.43 (USPS employees pay approximately 21% of their health care premium costs and 0%
of their life insurance premiums, while other federal employees pay 28% and 67%,
respectively.)44 The Administration estimated this new policy would save the USPS $752 million
in FY2010 and $9.5 billion in the period of FY2010 to FY2019.45
37 Postal Regulatory Commission, “PRC Initiates Review of USPS Pension Liability,” press release, March 2, 2010, at
http://prc.gov/prc-docs/home/whatsnew/PRC%20Review%20of%20USPS%20CSRS%20liability_604.pdf. Federal law
directs the PRC to conduct a review upon request from the USPS (5 U.S.C. 8348 note).
38 The Segal Group, Inc., Report to the Postal Regulatory Commission: Civil Service Retirement System Cost and
Benefit Allocation System, June 29, 2010, at http://www.prc.gov/prc-docs/home/whatsnew/
Report%20on%20CSRS%20Cost%20and%20Benefit%20Allocation%20Principles_1122.pdf.
39 Postal Regulatory Commission, “PRC Report Finds $50 Billion Discrepancy,” press release, June 30, 2010, at
http://www.prc.gov/prc-docs/home/whatsnew/
PRC%20issues%20study%20of%20USPS%20CSRS%20liability%20draft%20(2)_1119.pdf.
40 Office of Personnel Management Office of Inspector General “A Study of the Risks and Consequences of the USPS
OIG’s Proposals to Change USPS’s Funding of Retiree Benefits.”
41 Ibid., p. ii.
42 Government Accountability Office, U.S. Postal Service: Allocation of Responsibility for Pension Benefits between
the Postal Service and the Federal Government, GAO-112-146, October 2011, p. 1, at http://www.gao.gov/new.items/
d12146.pdf.
43 Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 2010: Summary Tables, March
2009, Table S-6, p. 126, at http://www.whitehouse.gov/omb/assets/documents/S-6.pdf.
44 “Union Negotiations Are Critical for USPS Future,” Postcom Bulletin: The Journal of Postal Commerce, September
3, 2010, p. 4. See also Government Accountability Office, Restructuring the U.S. Postal Service to Achieve Sustainable
(continued...)
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
A study released by the USPSOIG in September 2010 suggested the USPS could save $700
million per year were its employees required to contribute at the same rate as other federal
employees.46
Reducing the USPS’s Retail and Nonretail Facilities
GAO has testified repeatedly that the USPS has not reduced its number of retail postal facilities
and mail processing plants sufficiently:
Excess capacity has grown with unprecedented declines of mail volume, which are projected
to continue through fiscal year 2010.... [A]s its mail volumes decline, [the] USPS does not
have sufficient revenues to cover the growing costs of providing service to new residences
and businesses while also maintaining its large network of retail and processing facilities.47
The PAEA was enacted in the first quarter of FY2007. The USPS has reduced its facility
footprint48 3.1%, from 34,318 to 33,260 (Figure 5).
Figure 5. U.S. Postal Service Retail and Non-Retail Facilities, FY2007-FY2011
40,000
30,000
s
ilitie 20,000
c
a
F 10,000
0
FY2007
FY2008
FY2009
FY2010
FY2011
Year
Leased Facilities
Owned Facilities
GSA/Other Government Facilities
Source: U.S. Postal Service, Annual Report 2007, p. 19 and “2011 Report on Form 10-K,” p. 11.
(...continued)
Financial Viability, GAO-09-958 (Washington: GAO, August 6, 2009), p. 5, at http://www.gao.gov/new.items/
d09958t.pdf.
45 Reportedly, the proposal was dropped because of concerns that it would violate collective bargaining. Darrell A.
Hughes, “Obama Admin Halts Plans To Alter US Postal Workers’ Benefits,” Wall Street Journal (online), May 11,
2009, at http://online.wsj.com/article/BT-CO-20090511-719565.html.
46 U.S. Postal Service Office of Inspector General, “Management Advisory–Follow-Up Review of the Postal Service’s
Employee Benefit Programs,” HR-MA-10-001, September 3, 2010, at http://www.uspsoig.gov/FOIA_files/HR-MA-10-
001.pdf.
47 Government Accountability Office, Restructuring the U.S. Postal Service to Achieve Sustainable Financial Viability,
pp. 3-4.
48 Here, facility footprint refers to the number of USPS leased and owned facilities. The facility footprint does not
include contract postal units and community post offices, which are owned and operated by private individuals.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Notes: The GSA/Other Government Facilities category refers to facilities owned by government agencies other
than the USPS.
In late July 2011, the USPS announced it was considering the closure of 3,652 retail postal
facilities. These are not the only USPS facilities that might discontinue operations. An additional
728 retail postal facilities are being considered for closure under a 2009 USPS initiative, for a
total of 4,380 USPS retail facilities.49
Congress may wish to consider providing the USPS with additional authority to reduce its
facilities.
As a related matter, both houses of Congress also may wish to consider enacting rules to prevent
congressional intervention in proposed mail facility closures.50 Alternatively, Congress might
enact a law to authorize appropriations to reimburse the USPS for cost-savings lost because of
congressionally imposed delays in facilities closures.
Reducing Mail Delivery from Six to Five Days Per Week
GAO has suggested that Congress consider permitting the USPS to reduce its delivery schedule
from six to five days, a policy with which the USPS concurs.51
Nothing in Title 39 of the U.S. Code (which holds most federal postal law) requires the USPS to
deliver mail six days per week. However, since 1984 Congress has included a provision in its
annual appropriation to the USPS stating that “6-day delivery and rural delivery of mail shall
continue at not less than the 1983 level” (e.g., P.L. 111-117; 123 Stat. 3200). The PRC has
observed that the precise meaning of this mandate “could be subject to a number of
interpretations, including requiring 6-day delivery in all areas which had it in 1983, or requiring
the same percentage of recipients of 6-day delivery as in 1983.”52 To date, the USPS has treated
the language to mean that it lacks the authority to move to five-day mail until Congress ceases
including the six-day mail provision in annual appropriations.
Since 2008, four studies (two by the USPS and two by the PRC) have examined the possible
financial effects of a switch from six-day to five-day delivery.53 The studies all estimate that the
49 CRS Report R41950, The U.S. Postal Service: Common Questions About Post Office Closures, by Kevin R. Kosar,
pp. 3-4.
50 For example, see S.Rept. 111-43, Financial Services and General Government Appropriations Bill, FY2010, p. 131.
“The Committee is aware that the Quincy, Illinois AMP [Area Mail Processing plant] is among the facilities for which
a possible realignment feasibility study has been announced. The Committee is concerned about the impact on the
community and postal customers of eliminating jobs or transferring functions. The Committee directs the Postal
Service to provide the Committee with a detailed explanation of the criteria used to select the Quincy AMP for a study
no later than 30 days after enactment. The Committee further directs the Postal Service to not proceed with the Quincy
AMP study or any other related actions to implement that study during fiscal year 2010.”
51 Statement of Phillip Herr, Director, Physical Infrastructure, Government Accountability Office, U.S. Postal Service:
Deteriorating Postal Finances Require Aggressive Actions to Reduce Costs, p. 11; U.S. Postal Service, Ensuring a
Viable Postal Service for America, p. 11, and U.S. Postal Service, “Five-Day Delivery” web page, at
http://www.usps.com/communications/five-daydelivery/.
52 Postal Regulatory Commission, Report on Universal Postal Service and the Postal Monopoly (Washington: PRC,
2008), p. 196, at http://www.prc.gov/prc-docs/home/whatsnew/USO%20Report.pdf.
53 U.S. Postal Service, Report on the Universal Postal Service and the Postal Monopoly (Washington: USPS, October
2008); Postal Regulatory Commission, Report on the Universal Postal Service and the Postal Monopoly; U.S. Postal
Service, Delivering the Future: Five-Day Delivery is Part of the Solution; and Postal Regulatory Commission,
(continued...)
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
USPS would save money by reducing the days of delivery from six to five, as the cost savings
(largely due to reduced labor expenses) will exceed any decline in revenues due to lower demand
for mail prompted by a reduced delivery schedule. The studies suggest an annual improvement to
the USPS’s financial condition that would be between $1.7 billion to $3.5 billion.54 (No studies
have argued the contrary—that moving to five-day delivery would increase costs.) The USPS’s
five-day delivery plan does not say how long it would take to implement five-day delivery and
begin reaping any savings.55 The USPS did note that it would provide at least six months’ notice
prior to switching to five-day delivery.56
On March 30, 2010, the USPS asked the PRC for an advisory opinion on reducing delivery to
five days. By law, the USPS must ask the PRC for an opinion when the USPS “determines that
there should be a change in the nature of postal services which will generally affect service on a
nationwide or substantially nationwide basis ... within a reasonable time prior to the effective date
of such proposal” (39 U.S.C. 3661). Under PRC rules, a “reasonable time” is defined at “not less
than 90 days” (39 CFR 3001.72). PRC Chairman Ruth Goldway suggested in a March 2010
hearing that the PRC may require six to nine months to issue its opinion.57 The PRC issued its
advisory opinion in March 2011, which suggested cutting Saturday delivery would reduce the
USPS’s annual operating costs $1.7 billion.
Increasing the USPS’s Powers to Control Labor Costs
Critics have long argued that the USPS is required to be self-supporting but that federal law
provides it with very few authorities to control its employment costs—which make up
approximately 80% of its total operating costs.58 For example, in 2003 the President’s
Commission on the United States Postal Service noted that “postal workers enjoy special status
within the federal workforce. They are granted the right to negotiate wages, hours, and workplace
conditions through collective bargaining.”59 By law, the USPS is required to “maintain
compensation and benefits for all officers and employees on a standard of comparability to the
compensation and benefits paid for comparable levels of work in the private sector” (39 U.S.C.
1003(a)). The commission further argued that the current statutory process for resolving disputes
between management and labor frequently results in arbitrators being empowered to make
(...continued)
Advisory Opinion On the Elimination of Saturday Delivery (Washington, PRC: March 24, 2011), Docket No. N2010-1.
54 CRS Report R40626, The U.S. Postal Service and Six-Day Delivery: Issues for Congress, by Wendy Ginsberg.
55 U.S. Postal Service, Delivering the Future: Five-Day Delivery Is Part of the Solution (Washington: USPS, March
2010), pp. 22-23.
56 Ibid., p. 2 of executive summary.
57 Statement of Ruth Goldway, Chairman of the Postal Regulatory Commission, in U.S. Congress, Senate Committee
on Appropriations, Subcommittee on Financial Services and General Government, An Act Making Appropriations for
Financial Services and General Government for the Fiscal Year Ending September 20, 2011, and for Other Purposes,
111th Congress, 2nd sess., March 18, 2010, S. Hrg. 111-817 (Washington, GPO: 2010), p. 41, at http://www.gpo.gov/
fdsys/pkg/CHRG-111shrg54968/pdf/CHRG-111shrg54968.pdf.
58 Government Accountability Office, Restructuring the U.S. Postal Service to Achieve Sustainable Financial Viability,
p. 2.
59 For example, see President’s Commission on the United States Postal Service, Embracing the Future: Making the
Tough Choices to Preserve Universal Mail Service: Report of the President’s Commission on the United States Postal
Service (Washington: GPO, July 31, 2003), p. 108, at http://www.ustreas.gov/offices/domestic-finance/usps/pdf/
freport.pdf.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
binding decisions that favor employees (e.g., postal workers pay lower premiums for their health
insurance and are protected from layoffs.)60
The USPS has relied upon attrition to reduce its workforce from 696,138 to 557,251 between
FY2006 and FY2011.61 The USPS also has used early retirement incentives and buy-outs to lower
its employment cohort. In FY2009, 20,100 of its unionized employees accepted early retirement
offers, and in FY2010 approximately 1,850 of its administrative employees accepted buy-outs.62
In August 2011, the USPS asked Congress to enact a statute to authorize it to override collective
bargaining prohibitions on layoffs so as to enable the USPS to eliminate an additional 120,000
positions by FY2015.63
Congress may wish to consider measures that would provide the USPS with increased means to
control its long-term labor costs.64
60 For example, see Collective Bargaining Agreement Between American Postal Workers Union, AFL-CIO and U.S.
Postal Service, November 21, 2006-November 20, 2010 (Washington: APWU, 2006), pp. 9-18, at
http://www.apwu.org/dept/ind-rel/sc/APWU%20Contract%202006-2010.pdf.
61 U.S. Postal Service, Annual Report 2010, p. 83; and “2011 Report on Form 10-K,” p. 81.
62 U.S. Postal Service, Annual Report 2009, p. 54; and U.S. Postal Service, 10-Q, p. 25.
63 U.S. Postal Service, “Workforce Optimization,” white paper, August 2011, at http://about.usps.com/news/national-
releases/2011/pr11_wp_workforce_0812.pdf. The USPS also has asked Congress to permit it to move its workforce off
the federal government’s health insurance and retirement programs. U.S. Postal Service, “Health Benefits and
Retirement Programs,” white paper, August 2011, at http://about.usps.com/news/national-releases/2011/
pr11_wp_hbretirees_0812.pdf.
64 The 2003 presidential commission on the USPS advocated this goal. President’s Commission on the United States
Postal Service, Embracing the Future, pp. 138-140.
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The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Appendix.
Table A-1 provides digests of the major provisions of two of the postal reform bills introduced
into the 112th Congress, H.R. 2309 (sponsor Representative Darrell Issa);65 and S. 1789 (sponsor
Senator Joseph Lieberman).66 The leftmost column identifies the “topic” of the legislative
provision, and the remaining three columns identify the corresponding provisions in the two bills
and provide concise digests thereof. In the instances where particular topics are not addressed by
bills, the table cells read “n/a” for “not addressed.”
Table A-1 employs these acronyms:
• BRAC (base realignment and closure commission)
• CSRS (Civil Service Retirement System)
• FECF/FECA (Federal Employees Compensation Fund/Federal Employees
Compensation Act)
• FEGLI (Federal Employee Group Life Insurance)
• FEHB (Federal Employees Health Benefits program)
• FERS (Federal Employee Retirement System)
• OPM (Office of Personnel Management)
• PMG (Postmaster General)
• PRC (Postal Regulatory Commission)
• PSF (Postal Service Fund)
• RIF (Reduction-in-Force)
• RHBF (Retiree Health Benefits Fund)
• USPS (U.S. Postal Service)
• USPSOIG (U.S. Postal Service Office of Inspector General)
65 The bill used in this analysis is H.R. 2309 as reported by the House Oversight and Governmental Affairs Committee
on January 17, 2012 (H.Rept. 112-363, Part 1).
66 The bill used in this analysis is a draft copy of S. 1789 as ordered to be reported by the Senate Committee on
Homeland Security and Governmental Affairs on November 9, 2011.
Congressional Research Service
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Table A-1. Side-by-Side Digests of Selected Postal Reform Bills
H.R. 2309
S. 1789
Topic
(Issa)
(Lieberman)
Title
Sec. 1. Would short title the bill the Postal Reform Act of 2011.
Sec. 1. Would short title the bill the 21st Century Postal Service
Act of 2011.
Postal organization
Sec. 201-232. Would amend 39 U.S.C. to establish a USPS
n/a
Financial Responsibility and Management Assistance Authority
(herein “Authority”) that would come into existence in the event
of a USPS default upon an obligation owed to the U.S. Treasury.
The Authority would have the purposes of eliminating the USPS’s
budget deficits and ensuring the USPS’s “long-term financial,
fiscal, and economic vitality and operational efficiency.” At the
onset of a control period, the USPS would receive $10 billion in
additional borrowing authority. During the first two years of this
“control period,” the Authority would serve in an advisory
capacity to the USPS. If after the second fiscal year the USPS has
run a deficit of $2 billion or more, the Authority would assume
the powers and responsibilities of the USPS’s Board of
Governors. It would approve the budget of the USPS (as
proposed by the PMG). If the Authority and PMG ultimately
cannot agree upon a budget, the Authority may devise the USPS’s
budget. A control period would end after two consecutive fiscal
years of USPS’s operation without deficits. The Authority would
be required to annual y report to Congress on its activities and
the progress of the USPS.
FERS
Sec. 306. Would amend 5 U.S.C. 8423(b) to transfer any excess
Sec. 101. Would amend 5 U.S.C. 8423(b), 8332, and 8411 to:
FERS payment as of September 30, 2010 to the USPS within two
require the OPM annual y to calculate and transfer back any
weeks of H.R. 2309’s enactment, but subtracting therefrom any
excess USPS FERS payments; and to require “a portion” of any
funds owed to CSRS by the USPS as of September 30, 2010 and
FERS payments refunded for FY2011-FY2013 to be used to pay
any USPS nonpayments to FERS during FY2011 and FY2012.
the cost for $25,000 voluntary separation incentive payments.
Sec. 102. Would provide up to one additional year of service
credit to USPS employees covered by the CSRS who voluntarily
separate from service before October 1, 2014 and do not
otherwise receive a voluntary separation incentive payment. Also
would provide up to two years of additional service credit for
USPS employees covered by the FERS who voluntarily separate
from service before October 1, 2014 and do not otherwise
receive a voluntary separation incentive payment.
CRS-17
H.R. 2309
S. 1789
Topic
(Issa)
(Lieberman)
RHBF
Sec. 410. Would amend 5 U.S.C. 8909a to change the USPS's
Sec. 103. Would amend 5 U.S.C. 8909a to strike the required
RHBF payments thus:
USPS RHBF payments in the years FY2011to FY2016; and would
require the OPM to calculate the USPS’s annual payments
FY2011 from $5.5 billion to $1.0 billion,
required to retire 80% of the outstanding obligation for current
FY2015 from $5.7 billion to $7.95 billion; and
employees’ future retirement health benefits.
FY2016 from $5.8 billion to $8.05 billion.
USPS facilities BRAC
Sec. 101-114. Would amend 39 U.S.C. to create a BRAC-like
n/a
Commission on Postal Reorganization (CPR) 90 days after
enactment of H.R. 2309. With the aid of the USPS and USPSOIG,
the CPR must recommend the closure of post offices and non-
retail facilities so as to save $3 billion within two years. Congress
would be able to stop the closures by passing a joint resolution
of disapproval.
USPS non-retail facilities closures
See BRAC provision above.
Sec. 201-202. Would amend 39 U.S.C. 404 and 39 U.S.C. 3691 to
expand the current statutory process for the closure of mail
processing facilities. Would require the USPS—during the area
mail processing closure process—to include in its closure study a
plan to reduce the capacity of a facility rather than to close it.
Also would set public comment period, public notification
requirements, and obligate the USPS to take actions to “mitigate
any negative effects” on an affected community.
Sec. 203. Would amend 39 U.S.C. to require the USPS to submit
a plan to Congress that sets forth a comprehensive strategy for
consolidating USPS area and district offices. Also would require
such consolidations to begin not more than one year after
enactment of S. 1789.
CRS-18
H.R. 2309
S. 1789
Topic
(Issa)
(Lieberman)
USPS’s authority to close post
Section 112. Would amend 39 U.S.C. 101(b) thus: “The Postal
Sec. 204. Would amend 39 U.S.C. 404 to require the USPS to
offices
Service shall provide a maximum degree of effective and regular
consider a range of options other than closing a post office (e.g.,
postal services to rural areas, communities, and small towns
reducing its operational hours) and survey the community on its
where post offices are not self-sustaining”; and “No small post
preference. Also would make the closure process applicable to
office shall be closed solely for operating at a deficit, it being the
post office branches and stations, and require the USPS to
specific intent of the Congress that effective postal services be
develop within six months retail service standards in order to
insured to residents of both urban and rural communities.”;
guarantee rural and small-town USPS customers “regular and
effective access to retail postal services.” Also would forbid the
Would amend 39 U.S.C. 404(d) to: (1) expand the definition of
closure of any post office until the retail service standards were
the term “post office” to include post office branches, stations,
established.
and other USPS-operated retail facilities; (2) shorten the PRC’s
deadline for reviewing a post office closure appeal from 120 to
60 days; (3) disal ow a public appeal of a post office closure if a
contract post office is located within two miles of said post
office; and (4) conform to 39 U.S.C. 101(b) as amended by Sec.
112.
Mail delivery
Sec. 111. Would authorize the USPS to move to five-day
Sec. 205. Would amend 39 U.S.C. 36 to authorize the USPS to
delivery. Also would amend 39 U.S.C. 101 to permit the USPS to
shift mail delivery from receptacles at persons’ doors to curb-
reduce delivery by declaring up to 12 non-mail delivery days each
side, sidewalk, or centralized delivery receptacles. Also would
during any year when six-day delivery is required by statute.
require the USPS annual y through FY2015 to report to the
Congress and the USPSOIG on its progress toward such
conversions, and provide estimates of any resultant cost savings,
Sec. 214. Would empower the Authority during a control period
revenue loss, or decline in the value of the mail.
to achieve $3.5 billion in USPS operational savings by shifting
Sec. 206. Would forbid the USPS from shifting to five-day per
deliveries made to mail receptacles at persons’ doors to
week mail delivery for two years. Also would require the USPS
centralized or curb-side mail receptacles. The USPSOIG would
to meet “preconditions” before doing so, including the need to
be required to audit the USPS’s compliance with this
show that the necessity of moving to five-day delivery in order to
requirement.
become profitable by FY2015 and to achieve “long-term financial
solvency.” Both the GAO and PRC must conduct studies
affirming the USPS has met the necessary preconditions.
Mailing and service changes
Sec. 112. Would amend 39 U.S.C. 3661 to require 90-day PRC
Sec. 207. Would amend 39 U.S.C. 3661 to require 90-day PRC
reviews when: (1) the USPS proposes facility closures that would
reviews when the USPS proposes a change in the nature of postal
constitute a change in the nature of postal services which will
services that will affect service nationwide.
affect service nationwide; and (2) on any matter that is “identical
or substantially identical” to a matter on which the PRC has
Sec. 208. Would establish notice and opportunity to comment
issued an opinion within the previous five years.
periods for mailers when the USPS proposes “significant” changes
to mailing specifications. Also would require the USPS to publish
an analysis that considers the financial effects the proposed
changes would have on mailers.
CRS-19
H.R. 2309
S. 1789
Topic
(Issa)
(Lieberman)
Employee compensation,
Sec. 301. Would amend 39 U.S.C. 101(c) and 1003(a) to redefine
Sec. 104. Would authorize the USPS and its unions to col ectively
retirement, and collective
“compensation” to include a wider range of benefits already
bargain to establish a health benefits program in lieu of the FEHB.
bargaining
provided by the USPS to its employees. (39 U.S.C. 101 and
Would require the OPM Director to be consulted during said
1003(a) require the USPS to have compensation and benefits for
collective bargaining.
its employees comparable to the private sector.)
Sec. 105. Would replace text in 39 U.S.C. 1207(c)(2) reading
Sec. 302. Would amend 39 U.S.C. 1003 to require USPS
“The arbitration board shall render its decision within 45 days
employees to pay premiums for their FEGLI and FEHB benefits
after its appointment” with “The arbitration board shall render a
equal to the percentage paid by other federal employees. Would
decision not later than 45 days after the date of its appointment.”
phase in this policy after col ective bargaining agreements expire.
Also would require the arbitration board to consider the USPS’s
financial condition and the “requirements relating to pay and
Sec. 303. Would repeal 39 U.S.C. 1005(f) requiring USPS
compensation comparability” at 39 U.S.C. 1003(a).
employees to receive fringe benefits not less than those received
when the USPS was established in 1970.
Sec. 301-315. Would amend 5 U.S.C. to make many changes to
FECA for all civilian federal employees, including postal workers.
Sec. 304. Would amend 39 U.S.C. 1206 to forbid col ective
bargaining agreements to contain provisions restricting the RIF
Sec. 302-308 would: (1) reduce compensation for total disability
provisions in 5 U.S.C. Would permit said agreements to contain
from 66 2/3% of an employee’s monthly pay (at the time of
RIF provisions in lieu of those found in 5 U.S.C. Also would
disability) to 50% when the employee reaches the Social Security
require existing col ective bargaining agreements that restrict the
retirement age. Compensation for partial disability would be
aforementioned RIF provision to be renegotiated within nine
based on this new rate of 50% when the employee reaches
months of enactment of this legislation.
retirement age. This change would not affect employees who
have reached retirement age before enactment of the legislation
Sec. 305. Would amend 39 U.S.C. 1207(c) to alter the col ective
or who, at enactment, are receiving FECA compensation for
bargaining process to encourage USPS unions and management
permanent total disabilities. This provision would take effect for
to reach agreements without going to arbitration. Would amend
current FECA beneficiaries when they reach Social Security
the arbitration process to require any final col ective bargaining
retirement age or three years after enactment, whichever is
package to: (1) comply with the definition of pay comparability as
later; (2) eliminate the augmented FECA compensation which
defined by H.R. 2309, Section 301; and (2) consider the current
raises compensation for total disability to 75% of salary if the
and long-term financial condition of the USPS.
employee has a spouse or dependent. Would make all FECA
Sec. 311. Would authorize the Authority to direct the USPS to
compensation based on a rate of two-thirds of the monthly wage
design a workers’ compensation program that would transition
before retirement age and 50% of the monthly wage after
any USPS employee receiving workers’ compensation to
retirement age. This provision would not apply to current
retirement benefits when the employee reached retirement age.
beneficiaries with permanent total disabilities, and would apply
after three years for current FECA beneficiaries with total (but
not permanent) disabilities;
(Continued on the next page.)
CRS-20
H.R. 2309
S. 1789
Topic
(Issa)
(Lieberman)
Employee compensation,
(3) change the benefit formula for permanent partial disabilities
retirement, and collective
under the FECA benefit schedule such that scheduled benefits for
bargaining (continued)
al employees would now be paid as a lump sum based on two-
thirds of the “annual salary” calculated by the Department of
Labor, rather than on 66 2/3% or 75% (in the case of augmented
compensation) of each employee’s monthly wage at the time of
disability. The annual salary will be such that the aggregate of all
scheduled benefits paid under this new provision is equal to the
aggregate of all scheduled benefits that would have been paid
under the old provision and the annual salary will be adjusted
annual y to reflect growth in the cost-of-living; and (4) move the
three-day waiting period for compensation to prior to the
continuation of pay period—a provision already in effect for
USPS employees.
Sec. 309-315 would: (1) increase the vocational rehabilitation
requirements under FECA, and permit the Department of Labor
to use FECA funds to reimburse, for up to three years, public
and private employers who hire FECA beneficiaries; (2) increase
from $3,500 to $50,000 the maximum payment for facial
disfigurement and increase from $800 to $6,000 the maximum
reimbursement for funeral expenses for covered deaths; (3)
permit the federal government to recover costs associated with
continuation of pay from responsible third parties; (4) strengthen
the work reporting requirements for beneficiaries; (5) establish a
disability management review process with scheduled physical
examinations of beneficiaries; and (6) establish a FECA Integrity
and Compliance Program to prevent, detect, and recover
fraudulent and improper FECA payments.
CRS-21
H.R. 2309
S. 1789
Topic
(Issa)
(Lieberman)
Revenues, postage, and
Sec. 401-403. Would amend 39 U.S.C. 3622(d) and 39 U.S.C.
Sec. 401. Would amend 39 U.S.C. to require the USPS annual y
ratemaking
3626(a)(5) to require postage for each market-dominant mail
through FY2015 to provide Congress with a “profitability plan”
class to cover not less than 90% of its processing and delivery
describing what steps need be taken for the USPS to become
costs. Would progressively decrease the postage discounts that
profitable by FY2015 and to “achieve long-term financial
nonprofit advertising mailers receive from 40% off the
solvency.”
comparable for-profit postage cost to 20% off. (Said increase
would begin three years after enactment of H.R. 2309 and occur
Sec. 402. Would amend 39 U.S.C. to require the PRC to annual y
at a rate of 2% per year.) Also would repeal 39 U.S.C. 3626(c),
report on market-dominant products that do not bear their
which provides reduced postage for political committee mailings. direct and indirect attributable costs, and the impact of any
excess mail processing, transportation, or delivery capacity have
Sec. 404-406. Would amend 39 U.S.C. 3633 and 3632(b) to
upon these costs. Also would require the USPS to annually
require the PRC to: (1) make regulations allowing streamlined
attempt to increase gradual y the postage for any market-
review of service agreements for competitive products; and (2)
dominant products that fail to cover their costs.
determine whether each group of functional y equivalent service
agreements covered its cost and improved the net financial
position of the USPS.
USPS’s provision of postal and
Sec. 407. Would amend 39 U.S.C. to include a chapter that
Sec. 209. Would amend 39 U.S.C. 404(a) to permit the USPS to
nonpostal products and services
would expand the USPS’s authority to offer nonpostal services.
provide “other services that are not postal services” after the
Would authorize the USPS to: (1) accept private firm
PRC determines that doing so would utilize the USPS’s
advertisements on USPS vehicles and in USPS facilities; (2)
“processing, transportation, delivery, retail network, or
contract with state governments and federal agencies to provide
technology” and would be “consistent with the public interest.”
services. Also would require the USPS to report to the PRC on
Also would permit the USPS to contract with federal and state
its provision of these products. The USPSOIG would audit this
agencies to provide services.
report, and submit its findings to the PRC, which then would
include an examination of the USPS’s nonpostal services
Sec. 404. Would amend 18 U.S.C. 1154(a), 18 U.S.C. 1716(f), and
provision in its Annual Compliance Review of the USPS.
39 U.S.C. 3001 to permit the USPS to deliver beer and wine
from breweries and wineries to customers.
Sec. 408. Would require the State of Alaska annual y to
reimburse the USPS for the costs of providing bypass mail
Sec. 403. Would amend 39 U.S.C. 411 to permit the USPS to
service.
enter intra-service agreements with other federal agencies and
state agencies to provide each other with property and services.
CRS-22
H.R. 2309
S. 1789
Topic
(Issa)
(Lieberman)
USPS and PRC contracting
Sec. 501. Would amend 39 U.S.C. to create a Chapter 7 to
Sec. 407. Nearly identical to H.R. 2309, Sec. 501. Would forbid
require: (1) the USPS and PRC to establish competition
the USPS from entering “into any contract that restricts the
advocates to review their procurement activities and promote
ability of Congress to exercise oversight authority.’’
competition; (2) contracting authorities to be responsible for
contracting done by delegates, and to disclose covered
relationships as defined under 5 CFR 2635.50; (3) publication of
noncompetitive contracts on PRC.gov; (4) publication of the
USPS’s rationale for the award of noncompetitive contracts; (5)
yearly reports by the competition advocates on their activities,
barriers to competition for contracts, and noncompetitive
contracts waivers; and (6) the voidance of contracts issued
unlawfully and penalties therefore.
USPS productivity reporting
Sec. 114. Would amend 39 U.S.C. 3652(a) to require the USPS’s
n/a
annual report to the PRC to include metrics of productivity and
the effects of productivity changes on costs.
Mailing industry report
n/a
Sec. 405. Would require the PRC to report annual y on the fiscal
stability of the U.S. mailing industry to Congress.
Appropriations
Sec. 409. Would amend 39 U.S.C 2041(b)-(d) to strike the
n/a
provisions authorizing appropriations to the USPS for fulfilling the
public service obligation and revenue forgone.
CRS-23
The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress
Author Contact Information
Kevin R. Kosar
Analyst in American National Government
kkosar@crs.loc.gov, 7-3968
Congressional Research Service
24