New legislation to reform the inner workings of the financially-unstable U.S. Postal Service (USPS) would save at least $6 billion per year, according to the House Committee on Oversight and Government Reform.
The bill, introduced by Rep. Darrell Issa (R-Calif.), would create a “solvency authority” to restructure USPS and cut costs.
USPS lost $2.2 billion in the second quarter of fiscal 2011. And it has projected at least $8.3 billion in losses by Sept. 30, when the fiscal year ends, Issa’s office said.
The Postal Service said in a statement that although it agrees with several of the bill’s provisions, the legislation misses the mark.
“The bill appears to be based on the assumption that the Postal Service’s challenges result from too little regulation. The opposite is true. Our financial instability is the result of dramatic loss in volumes, coupled with restrictions imposed by Congress that have prevented the Postal Service from adequately responding to those losses in a business-like fashion,” the USPS said in its statement.
Issa’s bill would establish the Postal Service Financial Responsibility and Management Assistance Authority to cut costs and change USPS’ structure, when the agency defaults on any of its obligations to the federal government for more than 30 days. The authority, modeled on the District of Columbia Financial Responsibility and Management Assistance Authority, could force renegotiation of existing collective bargaining agreements, according to Issa’s office, and unilaterally modify the agreements if negotiations fail.
The bill would also allow USPS to shorten the frequency of mail delivery from six days to five, something the agency has been pressing for in its efforts to reduce costs.
But the Postal Service, which has warned that it could run out out cash by October, said the legislation doesn’t go far enough to restore financial stability. Specifically, USPS is calling on Congress to:
“Eliminate the current mandates requiring retiree health benefit pre-payments, which costs the Postal Service $5.5 billion annually.”
“Allow the Postal Service to access Civil Service Retirement System and Federal Employees Retirement System (FERS) overpayments. The FERS overpayment is estimated to be $6.9 billion.”
Sen. Tom Carper (D-Del.), who introduced his own bill in May to address USPS’ money problems, also expressed concern.
“Instead of preventing a catastrophic collapse from happening,” he said, “this bill would abdicate responsibility for cleaning up what would be a colossal financial disaster both for the Postal Service and the broader economy to a newly-created government entity.”
Issa’s bill would also address postal facilities, pay and benefits and USPS contracting.
Postal BRAC A new Commission on Postal Reorganization (CPR) would target “excess capacity and facilities,” according a committee statement. “Over its first year the CPR will recommend closures worth $1 billion/year for post offices. Over the second, it will recommend $1 billion/year closures for mail processing and a 30% reduction in management facilities.”
Pay and benefits Postal employees could see changes to their pay and benefits, if the reform bill becomes law. The legislation would change existing law “to include wages and benefits in determining total compensation comparability with the entire private sector.” Employees would also “pay the same health and life insurance premium percentage as other federal workers. This provision is phased in to apply to union employees after their current bargaining agreements expire.”
The Postal Service recently announced that it intends to suspend employer contributions to the Federal Employees Retirement System (FERS) because of a surplus in its FERS account.
USPS Contracting The bill would require Postal Service officials to set up regulations aimed at stopping conflicts of interest in contracting. Another provision would require disclosure of most noncompetitive purchase requests exceeding $250,000.
“Congress needs to stop acting like a 535-member Board of Directors – each protecting their individual parochial prerogatives,” Carper said, “and finally give the Postal Service the freedom and flexibility we always say they should have to make the tough, but necessary, businesses decisions needed to survive and even thrive in the long term.”