Republican Senator introduces bill to save US Postal Service

Legislation has been introduced into the US Senate seeking cost savings and financial stability for the US Postal Service. Susan Collins, the Senator from Maine, said her bill would “fix” the overpayment by the USPS into its pension and retirement funds, reform workers’ compensation systems and improve USPS contracting practices.

The bill, dubbed the US Postal Service Improvements Act of 2011, was referred yesterday for consideration by the Senate’s Committee on Homeland Security and Governmental Affairs, on which Senator Collins is the leading Republican. The chairman of the Committee’s Federal Financial Management subcommittee, Senator Tom Carper, is currently preparing his own proposals to address the USPS problems.

With a nod to the changing postal market and challenges from the digital age, Collins said yesterday that her proposals would “spark new life” into the Postal Service as it evolved its role in the economy.

She said the Postal Service had to “re-invent itself”, embracing changes to revitalize its business model and attract customers.

Collins said yesterday: “The Postal Service is at a crossroads. It must choose the correct path, it must take steps toward a bright future. It must reject the path of severe service reductions and huge rate hikes, which will only alienate customers.”

Overpayments

Overpayments into pension and retiree healthcare funds have taken a large amount of the blame for the loss-making status of the USPS, which was $8.5bn in the red last year. The White House promised in Monday’s Budget to work with Congress to address some of the problems.

Collins said her bill would fix the overpayment into the Civil Service Retirement System, estimated to have cost the USPS more than $50bn, and also overpayments into the Federal Employees Retirement System.

The legislation would seek to end a bureaucratic standoff” with the Office of Personnel Management, forcing the OPM to correct the formula used to calculate future USPS payments into the pension funds. The Senator said she had been disappointed that this week’s Budget from the White House had not required OPM to make the changes.

The Collins proposals would also seek to provide the USPS with access to the money it has overpaid to help alleviate other financial pressures.

Collins told Congress yesterday: “It is essential that the Postal Service be permitted to use these funds to address other financial obligations, such as its payments for future retiree health benefits and unfunded workers’ compensation liabilities and for repaying its existing debt.

Other proposals within the Collins Bill would seek to improve the Postal Service’s contracting practices, to reduce the “costly contract mismanagement, ethical lapses, and financial waste” the Senator said was uncovered by audits by the Inspector General, such as the awarding of contracts to former employees.

The USPS would be required to set up a Competition Advocate to oversee contracting processes, and publicly justify any contract awards above $250,000 in value.

In terms of cutting its costs, the Collins Bill would require the Postal Service to establish a strategic plan to steer its consolidation program, and would also require a plan to increase its co-location of post office facilities with retailers.

Collins said: “The Postal Service would be required to solicit community input before making decisions about co-location and to ensure that co-location does not diminish the quality of service.

Workers’ comp

There would also be reforms to the worker’ compensation program, including a provision to switch staff on long-term disability benefits to retirement when they reach retirement age.

Senator Collins introduced a bill earlier this month – the Federal Employment Compensation Act – to reform workers’ compensation systems for all federal workers in a similar way. The bill has not received the support of unions, with the American Postal Workers Union warning that proposals would force some workers to retire if they suffer temporary injuries, and affect the pensions of workers that spend time on disability, since their salaries are frozen while injured.

But, the Senator said that from mid-2009 to mid-2010, postal workers claimed $1.1bn of the total $2.78bn paid out by the Department of Labor in federal disability benefits, and that claimants included more than 2,000 USPS employees aged 70 years or older, nearly 1,000 aged 80 years or older, and 132 aged 90 years or more.

“The federal and postal workers’ compensation program has morphed into a higher-paying alternative to federal and postal retirement,” said Collins yesterday. “This program must be reformed.”

Support

Outlining her bill, the Senator recognized the importance of the Postal Service to a number sectors of the American economy, including the direct mail, printing, catalogue, paper manufacturing and financial services industries.

As well as the National League of Postmasters, the Senator’s reform proposals are being supported by industry groups representing large USPS customers, including the Alliance of Nonprofit Mailers, the American Catalog Mailers Association, the Greeting Card Association, the Magazine Publishers Association, the National Newspaper Association and PostCom, the Association for Postal Commerce.

James R. Cregan of the Affordable Mail Alliance and Magazine Publishers of America, said that if the Collins Bill gets through Congress, it would mean “definitively and equitably” correcting errors and administrative roadblocks he said had burdened the USPS and its customers.

“These provisions, if enacted, would go far toward ensuring the future viability and affordability of the national postal system upon which we all depend,” he said.