By Jolie Lee
Federal News Radio

In a letter to the Office of Personnel Management, the head of the government’s watchdog committee said the U.S. Postal Service’s decision to halt contributions to employees’ retirement fund sets a “dangerous precedent” for other cash-strapped agencies.

The USPS would save $800 million through the end of the fiscal year, less than 10 percent of the projected deficit of $8.3 billion, wrote Rep. Darrell Issa (R-Calif.), the chairman of the House Oversight and Government Reform committee.

“The Postal Service needs fundamental structural and financial reforms to cut costs and protect taxpayers from an expensive bailout,” Issa wrote.

Issa questioned the legal authority of USPS to halt its retirement contributions.

However, USPS has warned that it could run out of money in October.

A USPS spokesman said by e-mail that the Postal Service had consulted with both OPM and the Office of Legal Counsel on its decision to stop contributions to the Federal Employees Retirements System (FERS).

The spokesman also wrote that the Postal Service had overpaid FERS by $6.9 billion and Congress had not modified payments to reflect the overfunding.

“Our action will have no impact on current retirees and we don’t believe it will have any impact on current employees,” the spokesman wrote. “We’ll continue to transmit to OPM employees’ contributions to FERS and also will continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan. Our decision was based on a sound business judgment that prioritizes our competing obligations in a rational manner to conserve as much cash as possible so we can keep delivering the mail.”

Last month, Issa introduced a bill that would change the agency’s internal structure, as well as cut mail delivery from six to five days a week.

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