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Bill gives USPS 90-day extension to make FERS payment
Monday - 9/12/2011, 4:27pm EDT
This story has been updated from its original version.
By Jolie Lee
Federal News Radio
A bill introduced in the House would give the Postal Service a 90-day extension to a Sept. 30 deadline to make a $5.5 billion pre-payment to its retiree health benefit fund.
"This short-term measure would give Congress an additional three months to consider ways to ensure that the Postal Service is profitable and competitive in the 21st century economy," said Rep. Elijah Cummings (D-Md.), ranking member of the House Committee on Oversight and Government Reform, in a statement today.
Under the 2006 Postal Accountability Enhancement Act, USPS must make these pre-payments. To date, the Postal Service has paid $42 billion into its employees' future health care costs.
This prepayment obligation is unique to the Postal Service and requires 10 years of outlays at about $5.5 billion per year, a USPS spokesperson said in an email.
"The truth is that the Postal Service is facing its financial challenges today in part because Congress changed the law in 2006, in a way that places extremely burdensome pre-funded health care requirements on the USPS that no other agency or organization must meet," said Rep. Stephen Lynch (D-Mass.), one of the bill's co-sponsors.
The Government Accountability Office has recommended that Congress consider restructuring the pre-payments so that USPS pays smaller amounts in the short-term and larger amounts later on.
USPS has also suspended payments to its defined benefits portion of FERS to have cash on hand to keep the organization in operations. The FERS account has a surplus of $6.9 billion.
The Postal Service is anticipating $6 billion in losses this year. In the past five years, USPS has lost $20 billion.