‘Long-overdue’ USPS reform bill set to save agency $50B over decade passes House

A long-awaited reform bill that would save the Postal Service about $50 billion over the next decade took a major step forward in Congress.

The House on Tuesday, in a 342-92 vote, passed the Postal Service Reform Act.

The bill, if approved by the Senate, would be the first major piece of postal reform legislation to make it through Congress in more than 15 years, and would address issues that stem from the last reform effort lawmakers passed in 2006.

House Oversight and Reform Committee Chairwoman Carolyn Maloney (D-N.Y.), who introduced the bill, said the legislation has more than 100 co-sponsors, almost evenly split between House Democrats and Republicans.

“This bill is an agreement to fix some of the serious problems that have been looming over the post office for years and threatening its financial stability,” Maloney said.

The bill has support from more than 200 organizations, including postal unions.

Committee Ranking Member James Comer (R-Ky.), a co-sponsor of the bill, said the legislation “bolsters Postal Service-led operational reforms that are already showing success with better revenue and delivery performance.”

“This targeted bill addresses the immediate needs of the Postal Service to help it succeed into the 21st century,” Comer said.

The legislation, like many other similar bills introduced in previous sessions of Congress, would eliminate a 2006 mandate for USPS to pre-fund retiree health benefits well into the future.

USPS expects eliminating this mandate would save the agency roughly $27 billion over 10 years.

Senate Homeland Security and Governmental Affairs Committee Chairman Gary Peters (D-Mich.), who introduced companion legislation, said the reform bill now has 14 Democratic and 14 Republican cosponsors in the Senate.

“Given the significant, bipartisan support for the same bill in the Senate, I expect to move quickly to vote on these critical reforms that will help ensure the Postal Service’s long-term success,” Peters said.

USPS has defaulted on scheduled payments to the retiree health fund since 2012, but still includes those payments in its annual financials.

The agency, in its fiscal 2021 financial report, said it is liable for $57 billion in payments to the retiree health benefits fund.  The legislation, if passed, would cancel the agency’s obligation to make up those payments.

USPS, under the legislation, would instead return to an annual pay-as-you-go system for retiree health benefits.

The legislation would require future postal retirees to enroll in Medicare, a provision that would save USPS about $22.6 billion over the next decade.

About a quarter of postal retirees don’t enroll in Medicare even though they are eligible, which results in USPS paying higher premiums than other public or private-sector employers.

Next to the rest of the federal government, USPS is the largest contributor to the Medicare trust fund in the country.

Comer said the Postal Service Reform Act would help USPS save money by having Medicare, not the agency, serve as the primary payer for retiree health benefits.

“Congress has told the Postal Service it has to act like a business, and this is not something businesses do,” Comer said.

House Majority Leader Steny Hoyer (D-Md.) said Tuesday’s vote reflects postal reform efforts in Congress that have been “decades in the making.”

“The Postal Service will be better. Postal workers will be better, and the American community that utilizes and relies on the Postal Service will have greater security and greater service,” Hoyer said.

House and Senate lawmakers have introduced similar postal reform bills in previous sessions of Congress, but few have made it this far.

USPS welcomes ‘long-overdue’ reform bill

Postmaster General Louis DeJoy applauded the House for making “this long-overdue legislation a reality,” during a meeting of the USPS Board of Governors, and urged the Senate to quickly advance the legislation.

“If passed by the Senate, this legislation will have the same operational and financial impacts as the self-help steps we are taking at the Postal Service to provide the American people with the delivery service they expect and deserve,” DeJoy said in a statement following the House vote.

USPS board member Ron Stroman, a former deputy postmaster general, said the postal reform legislation would save the agency a significant amount of money, and would allow USPS to commit to capital investment projects.

USPS has one of the largest digital networks in the country, which is the backbone of the Biden administration’s ongoing effort to send free COVID-19 rapid tests to households through the mail.

However, Stroman said that IT infrastructure is “badly under-capitalized and in desperate need of reform.”

“That is why it is so vital for the Congress to quickly pass the Postal Service Reform Act. This bill will free the Postal Service from the unfair and unprecedented health benefit mandates that have handcuffed the Postal Service for well over a decade,” Stroman said

USPS ended the first quarter of fiscal 2022 with a $1.5 billion loss. The agency typically shows its best financial performance in the first-quarter results, since they include revenue and expenses from its peak holiday operations.

By comparison, USPS reported $318 million in net income for the same period last year.

USPS generated $21.3 billion in revenue for the quarter, a nearly 1% decrease from FY 2021. The agency also saw total mail volume decrease by 1.5 billion pieces, a more than 4% decrease compared to the same period last year.

USPS saw revenue for first-class mail, its most profitable product, increase by $160 million compared to the same period last year, despite a volume decline of 529 million pieces compared to FY 2021 — a nearly 4% decrease.

USPS implemented an increase in mail rates last August. Among the cost changes, USPS raised the price of a first-class stamp from 55 cents to 58 cents.

USPS said rising inflation contributed to higher operating costs, “including rising prices associated with energy and fuel expenses.”

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