USPS FERS suspension raises legal questions

Thursday - 6/30/2011, 1:18pm EDT

Bill Bransford, partner, Shaw, Bransford and Roth

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By Courtney Thompson
Federal News Radio

The Postal Service's decision to stop the advanced payment to the Federal Employee Retirement System (FERS) has recently come under legal questioning by Rep. Darrell Issa (R-Calif.).

Issa is asking whether USPS, as an example to other financially struggling agencies, can lawfully pause its contributions to the retirement plan.

As the chairman of the Oversight and Government Reform Committee, Issa recently introduced a bill to restructure the Postal Service, reduce the number of delivery days to five per week and aid with USPS's $8.3billion deficit.

Bill Bransford, a partner with the law firm Shaw, Bransford and Roth and the host of FedTalk on Federal News Radio, said Issa's concern might not be just a matter of legality, but may be an issue of whether or not the financially struggling service should be subsidized with tax money.

Bransford said the real problem is that the USPS is losing money. Among the reasons for its struggles, the agency is facing an overall decrease in use of postal services and limits on raising the costs for postage. But maybe the biggest issue is the payment into FERS. Postal Service officials say they have overpaid by billions into the fund.

He said that out of an act of desperation the Postal Service has finally stood up to the Office of Personnel Management about the requirement for USPS to pay for retirement benefits in advance.

"I think eventually the money is going to have to be paid," Bransford said. Eventually Congress will probably resolve the issue, he said, but he did not say how he thinks Congress will do that.

As for the legal issue on the table, Bransford added, "It isn't an easy thing to answer."

He said disputes such as this one are all too familiar for the Department of Justice's Office of Legal Counsel, which the USPS consulted along with OPM on the decision to stop paying into the system. DoJ eventually will decide whether the Postal Service's decision to temporarily stop payment into FERS is allowed.

Bransford said that Issa's inquiry is a "complicated accounting question" that involves finding out what, when, how and even if Congress is requiring them to make payments to FERS.

He said that the Postal Service's payment to FERS is a "very significant" contribution compared to other agencies taking about 10.7 percent of the employee payroll.

As for other agencies that may face similar issues such as health insurance payments, Bransford said that he doesn't know if they will encounter this exact problem in the future considering the rules for payment of benefits differ by agency.

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Courtney Thompson is an intern with Federal News Radio.

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