Postal Service reform making significant progress in House

In the past few weeks, competing draft proposals have been circulating on Capitol Hill. But at a House Oversight and Government Reform Committee hearing Wednesd...

House Republicans and Democrats are inching closer toward an agreement on how to save the financially struggling Postal Service.

Over the past few weeks, competing draft proposals have circulated on Capitol Hill.

But at a House Oversight and Government Reform Committee hearing Wednesday, Chairman Darrell Issa (R-Calif.) took a step toward compromise. Issa agreed to make changes to his draft plan, including the adoption of several measures proposed by Ranking Member Elijah Cummings (D-Md.) in postal reform legislation he separately introduced Wednesday.

Issa agreed to drop a provision from his bill that would have required USPS to renegotiate all existing union contracts to allow the agency greater authority to use reductions-in-force. Instead, the bill would “harmonize” the Postal Service’s RIF authority with that of other federal agencies — and would only apply to future contracts.

The revised bill would also direct the Office of Personnel Management to use USPS-specific demographic characteristics to calculate the amount the agency has made in overpayments to the Federal Employees Retirement System. Doing so would significantly increase the overpaid amount that could be refunded to USPS to help pay down its debts.

View the full hearing

“We want to get as close to that 100 percent [agreement] as we can before it comes to the committee,” Issa said of the changes to his proposed bill.

Donahoe says health-care changes key to reform

The Postal Service continues to face a dire financial situation. The agency posted a loss of $15.9 billion last year and, so far this year, has lost more than $3 billion.

In the absence of comprehensive legislation, Postmaster General Pat Donahoe has undertaken his own round of cost-savings. Through buyouts and early retirements, the Postal Service has reduced its workforce by 200,000, consolidated 350 mail-processing centers and cut hours at thousands of post offices nationwide, he told the committee.

Chief among the Postal Service’s cost-savings proposals are changes to health care benefits, which account for 20 cents of every dollar the agency collects in revenue.

That includes massive fixed payments the agency is required to make to prefund the cost of future retirees’ health benefits. USPS defaulted on two required payments last year — totaling more than $11 billion — and will do so again when the next payment comes due in September.

In both their respective postal reform plans, Cummings and Issa agreed to modify the prefunding requirement, moving from fixed payments to actuarial-based payments.

But Donahoe has set his sights on even more dramatic changes — having the agency sponsor its own health-care plan for employees and retirees and fully integrating the plan with Medicare for retirees over age 65.

“We can completely eliminate the need for prefunding retiree health benefits if we can move to our proposed solution,” he said. “Our goal should be the elimination — not just reamortization — of any prefunding, and this is achievable. Our employees and retirees will also benefit from lower premiums and get the same or better health benefits.”

Congressman wants more specifics on plan

This change, alone, would reduce costs by $8 billion, Donahoe said.

But Congressman Gerry Connolly (D-Va.) said he wants more details about the USPS health-care plan before he signs on.

“The so-called health-care proposal — it’s two pages, and it’s utterly lacking in detail,” Connolly said. “If you’re an employee wanting to know: Is this a better deal than I’m getting currently right now if I’m an annuitant over 65? If I want to know how it folds into Medicare? If I want to know what my annual out-of-pocket deductions might be? What about prescription drugs? There is no specificity.”

Donahoe maintained the Postal Service isn’t getting a good deal through the FEHBP and said he would provide Connolly with more specific information on the agency’s proposal.

An Oversight Committee spokesman said Issa plans to formally introduce his modified postal reform bill soon. But the bill will still have to go through a lengthy mark-up process.

Last year, the Senate approved comprehensive postal reform legislation that includes many of the provisions the House committee debated Wednesday. However, there were significant differences between the two chambers on closing and consolidating postal facilities — and the House version languished in committee.


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