Postal Service reform bill looking for final stamp of approval

A Delaware senator has introduced a Postal Service reform bill to address the embattled agency’s financial woes, service standards and workforce issues.

The Improving Postal Operations, Service, and Transparency Act of 2015 is sponsored by Sen. Tom Carper (D-Del.), the ranking member of the Homeland Security and Governmental Affairs Committee. It tackles postal issues ranging from independent assessments to shipments of spirits. But perhaps most notable, it proposes a new option for handling its retiree pre-funding.

“My legislation offers a comprehensive solution to the problems facing the Postal Service,” Carper said in a statement released Thursday. “It would put the agency on solid financial footing, improve service, and allow it to better adapt to a digital age. This legislation reflects the views of a broad range of stakeholders and I believe it can help pave the way to a thoughtful compromise on a set of difficult issues that Congress and the Postal Service have struggled with for years, giving the Postal Service, its employees, and its customers some badly-needed stability and certainty.”

Defaulting on debt

Included within the more than 200-page legislation is a provision that allows the Postal Service “the option to invest its amortization payments for up to 10 years in a more lucrative TSP-like account rather than treasury bonds.”

A Carper aide speaking on background explained that currently retiree health benefits are handled in regular treasury bonds.

“Those are very safe and secure, but they’re very, very low interest yielding,” the aide said.

Sen. Tom Carper (D-Del.)
Sen. Tom Carper (D-Del.)

TSP-style accounts have been “one of the highest performing retirement plans for a number of years. In fact, even in the market downturn that we’ve seen in previous economic situations, it has been the fastest to rebound and restore the plan participants’ funding,” the aide said. “We wanted to try and take a longer-term approach and more aggressive approach to helping the Postal Service address its liabilities. What we did was try and structure an investment scenario by allowing to invest future investment costs in protecting the current money set aside, in a more aggressive plan that they can continue to use to address their long term needs. Eventually, this money once debt’s paid off, can be used to invest and pay off capital investments in their plants or even buy a new vehicle fleet when we have to do future replacements.”

The Postal Service has reported $54.5 billion in losses since 2007. It attributed much of its financial situation to a legal requirement to prepay retirees’ health care. It will likely default again on the next payment, of $5.7 billion, due at the end of September, according to Joe Corbett, the Postal Service’s chief financial officer. The agency has refused to pay that debt since 2012. It currently owes $22.4 billion.

New Postal Service provisions

Despite interest in helping the beleaguered agency, Congress has failed to pass legislation to address the Postal Service’s woes.

Carper previously introduced postal reform legislation, and portions of the 2015 bill do share similarities with last year’s proposal.

Some of those provisions include:

  • Pausing the Postal Service’s ability to close or consolidate any mail processing facility that is currently open for a period of two years from the date of enactment.
  • Authorizing the Postal Service to ship wine, beer, and distilled spirits.
  • Creating a new Postal Service Health Benefits Program (PSHBP) within the Federal Employees Health Benefits Program, implemented and administered by OPM, for all postal employees and annuitants. Requiring all Medicare-eligible postal annuitants and employees enrolled in the PSHBP to also enroll in Medicare, including parts A, B and D.
  • The Carper source said discussion on this year’s legislation started in the early spring with a series of roundtables that focused on key postal matters.

“We really tried to listen hard to the concerns that were raised,” the aide said.

Steps to include stakeholders

In late July, draft proposals were sent out for feedback, and open stakeholder forums were held to take comments.

“One of the factors Sen. Carper feels very strongly about is that there are different types of stakeholder: The large mailers, there are the unions and there’s the postal service, but in addition to those stakeholders, there is also Congress and the constituents. We wanted to make sure those voices were being heard and really incorporate what constituents needed to protect the services that they’ve grown to expect,” the source said.

Other parts of the legislation include conducting a third party study of the Postal Service’s finances, making the position of Inspector General of the Postal Service subject to Senate confirmation, and holding the 2-to-3 day delivery service time for a period of five years, after which if the Postal Service wants to change those standards, it must “seek an advisory opinion from the (Postal Regulatory Commission) and provide a response addressing any concerns or recommendations from the Commission. Following the response, the Postal Service may proceed with any change to the service standards after a 60 day waiting period.”

In a statement from the Postal Service, the agency said that it appreciated Carper’s support and was “particularly gratified that the bill he introduced … will ensure that our retiree health benefits program will adopt the best practices of the private sector and fully integrate with Medicare. However, we cannot support those elements of his recently introduced proposal which expand regulatory bureaucracy and hinder our ability to control costs and respond to a rapidly changing marketplace. “

Fredric Rolando, president of the National Association of Letter Carriers, in a statement called the bill a “good place to begin the conversation” on how to both strengthen the Postal Service and protect stakeholder interests.

He also stated the bill “contains several provisions we cannot support and raises a number of serious concerns for letter carriers and the larger federal employee community.”

But Carper’s office understands there is much more work to be done.

“We expect there to be more changes to this bill as we move forward,” the aide said. “We’re going to continue to work with a lot of the stakeholders. This is only Step 1. We have steps 2, 3, 4, to get there, but at the end of the day we all have the same goal — that’s to have a solvent postal service that can really continue to perform.”