$53bn USPS pre-funding reforms gain bipartisan support

Republican senator Susan Collins has put forward a bill seeking reforms of the US Postal Service, including correction of a $53 billion “error” in its pension arrangements. Susan Collins, the Senator from Maine who is ranking member of the Senate Homeland Security and Governmental Affairs Committee, introduced her US Postal Service Improvements Act of 2010 yesterday, claiming it would help stabilise USPS finances without undermining customer service.

Key to the bill is the proposal to fix USPS overpayments to the Civil Service Retirement System and Federal Employees Retirement System.

It would seek to reverse the situation in which the USPS makes higher contributions into pre-funding its employees’ retirement and healthcare costs than equivalent federal agencies.

“The Postal Service is at a crossroads,” said Senator Collins yesterday. “It must embrace changes to revitalise its business model, enabling it to attract and keep customers.”

Pension calculations

The USPS Improvements Act would direct the Office of Personnel Management to correct the methodology for calculating Postal Service obligations to its pension funds, which could provide $53 billion to help alleviate USPS financial woes, the Senator claims.

The proposal goes against the views of some of Sen. Collins’ Republican colleagues, who have denounced such a move as a federal “bailout” in recent weeks.

Reform of the USPS healthcare and retirement systems have been demanded by the US Postal Service and the unions, and was a key proposal within the Senate Bill introduced by Democrat Senator Tom Carper in September, which has been subject to Senate committee hearings this week.

The reform of the USPS pension arrangements is also supported by USPS customers as a way to cut the organization’s $8.5 billion annual losses without affecting service standards.

James R. Cregan of the Affordable Mail Alliance said that Sen. Collins’ bill would “definitively and equitably” correct errors in the system that he said had burdened the Postal Service and its customers with “unfairly high” pension-related costs.

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

As well as the Affordable Mail Alliance, the Collins bill has the support of other mailers’ organizations including the Direct Marketing Association, Alliance of Nonprofit Mailers and the American Catalog Mailers Association, as well as the Association of Postal Commerce.

Cost-cutting

Other proposals within the Collins bill would seek to improve the USPS contracting practices and prevent mismanagement, ethical lapses and financial waste, she said.

Cost-cutting measures within the bill include proposals to require employees on workers’ compensation to retire at the retirement age, which Senator Collins said was a “common sense” change to “significantly reduce expenses”.

Mark Strong, President of the National League of Postmasters, said he believed Senator Collins’ bill would not reduce rural delivery standards, as he stated would be affected under Senator Carper’s bill.

Mr Strong, who submitted evidence this week to the Senate Subcommittee looking into the Carper bill, said yesterday: “The Collins approach is a much better approach and we are very supportive of almost all the provisions in the bill.

“Although a few glitches with some of the language encouraging increased co-location of postal and retail facilities and language concerning arbitration do need to be worked out,” he added.