Reform of Postal Service retirement system needed

Tuesday - 4/27/2010, 12:51pm EDT


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By Dorothy Ramienski
Internet Editor
Federal News Radio

This week on Your Turn, Senior Correspondent Mike Causey brings you updates about the United States Postal Service and a recent report regarding the Senior Executive Service.

Five Day Delivery in Your Future?

Federal News Radio has been telling you about the fact that the Postal Service is facing some pretty serious challenges as it looks ahead at operating in the 21st century.

A recent report from the Government Accountability Office says additional cuts are needed, and Postmaster General John Potter testified on Capitol Hill about planned changes, including a movement to five day delivery.

Several other changes have also been proposed in order to keep USPS financially viable.

Fred Rolando is President of the National Association of Letter Carriers said, first and foremost, he wants to make it clear that the Postal Service does not make its money from the taxpayer.

"Their revenue does not come at all from taxpayer money. It's strictly revenue from postage. . . . The Postal Service, like many companies, has been through a lot of changes in the last couple of years due, of course, to the recession and the electronic alternatives to hard copy in general, which has affected a lot of industries. In addition to that, the Postal Service has had to deal with the [retirement system] funding requirement."

He explained that USPS has to adapt in terms of its long term business model, but it also has to rework its retirement system funding with Congressional approval and find a win-win solution with the unions in terms of collective bargaining.

Rolando added that fixing the Postal Service is complicated and could take time, which is something he wants the general public to understand.

"Unfortunately, what the public hears about is [that] $238 billion that the Postal Service will lose in 10 years and the elimination of six day delivery -- and the public is okay with it. That's quick news. It doesn't tell the whole story, but that's what has gotten out in the last few weeks. . . . That $238 billion that you read about -- deficit over the next 10 years that's projected -- assumes that absolutely nothing is done. It's a worst-case scenario, and that was totally disclosed in the House subcommittee hearing two weeks ago."

He also explained that he wants to dispel the myth that the general public is fine with the elimination of six day delivery. In his experience, that's just not the case.

"If you tell the public the real story, I think you get different results. If you ask the public -- 'Would you like to pay more money for postage? Would you like to give up your first born, or would you like to give up Saturday delivery?' I think they're going to have a tendency to go with Saturday delivery. But, if you tell them the truth and you give them the real options, and some of the other things that we can do, I think you get a totally different result."

In addition, Rolando said that getting rid of Saturday delivery would do address the real problems that USPS is facing.

He explained that it will simply make the Postal Service less attractive to those who want to send something during the weekend, and eliminate future revenue generation.

The five day delivery option is just one that has been proposed.

There is also the matter of reforming the funding mechanism for the retirement system. Rolando said, if Congress gives the go-ahead on this, it might not be necessary to eliminate Saturday delivery.

The story as to why the law was passed is complicated:

"There was a law passed in 2006 which required that the Postal Service pre-fund their future retiree health benefits. Everybody is funding their current retiree health benefits, but this requirement was to pre-fund future retiree health benefits for the next 80 years. No other federal agency is required to do that. No other private business is required to do that. . . . In dollars, that means about $5.5 billion a year to pre-fund. The fund was setup with a surplus in the Civil Service Retirement System. It was found years ago that the Postal Service put too much money into [CSRS]. So that surplus, as calculated by OPM at the time, was transferred to this pre-funded retirement fund, and it was calculated what it would take to fund [it] for the next 80 years in addition to that. That's where the $5.5 billion comes from."