After a rollercoaster ride of late winter warmth and early spring snow, spring seems to have finally arrived in earnest in Minnesota. One of the best parts of spring is the opening of the Major League Baseball season. It’s a time when everyone is an optimist, and every team is a contender (OK, so maybe not the Minnesota Twins). But the Cleveland Indians, my second favorite team (sorry Mom), is sure to be in the thick of it, after coming oh-so-close in last year’s World Series.
The last time we looked at postal issues, we talked a little “inside baseball,” considering the impact the Postal Regulatory Commission’s (PRC) 10-year rate and regulatory review could have on the mailing industry. Another topic of crucial importance to the mailing industry is long overdue postal reform legislation.
In January, the U.S. Congress started their new season with the opening of the 115th Congress. With any new Congress comes new possibilities and the same sense of “anything can happen” that comes with the opening of baseball season. Just like baseball fans, those of us who follow postal politics are optimistic this could be the year postal reform legislation is finally enacted.
Postal Reform is Already Moving in Congress
Two bipartisan bills have passed out of the House Oversight and Government Reform Committee, thanks to the cooperative efforts of Chairman Jason Chaffetz (R-UT) and Ranking Member Elijah Cummings (D-MD). The primary bill is H.R. 756, the Postal Service Reform Act of 2017. It is accompanied by H.R. 760, the Postal Service Financial Improvement Act of 2017. Both bills are supported by a wide range of postal stakeholders including postal management, postal unions, and the mailing industry.
The principal measures in H.R. 756 include:
- Medicare Integration: The Postal Service and its workers have paid more than $30 billion in Medicare taxes since 1983. This bill would require USPS retirees to use Medicare as their primary health insurance. (Twenty-seven percent of USPS retirees are not enrolled in the program.)
- Retiree Health Benefit Funding: The Postal Service currently has more than $50 billion in reserve for its retirees’ healthcare. With Medicare integration, these assets would cover about 96% of accrued liabilities. This bill replaces the overly aggressive retiree healthcare funding schedule the Postal Service was unable to meet, with a more reasonable amortization plan over 40 years.
- Pensions for USPS Retirees: USPS pension liabilities are currently calculated using demographics applicable to all federal workers. This bill would require the use of more favorable USPS-specific demographics. If using the updated demographics and the USPS is found to have overpaid into any of its pension funds, the overage would be amortized over 30 years and returned to the Postal Service.
- Postage Rates: This bill would allow a one-time postage rate increase of 2.15%. Although the mailing industry is concerned about the effect of higher rates on mail volume, it has agreed to this one-time increase to enhance Postal Service financial stability, provided Medicare integration occurs and the rate increase remains no higher than 2.15%.
Other topics covered by this bill include allowing the Postal Service to offer certain non-postal services for state, local, and tribal governments; encouraging the Postal Service to expand use of centralized delivery (cluster boxes); requiring the PRC to review cost allocation guidelines across various types of mail; and reducing the membership of the USPS Board of Governors from 11 to seven.
The less complex H.R. 760 addresses how the Postal Service Retiree Health Benefit Fund can be invested. Current law requires all funds to be invested in Treasury instruments. This bill allows 25–30% of the funds to be invested in conservative index funds modeled after Thrift Savings Fund investments offered by other federal agencies.
The Medicare portion of H.R. 756 still needs to be approved by committees responsible for that program. Rep. Chaffetz is pushing hard to move this bill through the House, and postal stakeholders are cautiously optimistic that he will be successful.
What Happens in the Senate?
Once the bill is passed by the House, it will move to the Senate. A group of Senators from rural states is asking for language to be added to the bill ensuring the Postal Service will continue to meet and maintain its service standards in rural areas. It is reported that Rep. Chaffetz is open to the addition, and may even add such a provision to the bill before it leaves the House.
In the Senate, the bill will come before the Homeland Security and Governmental Affairs Committee. Although Chairman Ron Johnson (R-WI) has not been a strong supporter of postal reform, he is not expected to oppose the bill. Ranking Member Claire McCaskill (D-MO) is expected to support the bill as long as provisions to protect service standards in rural areas are added.
Please join us in encouraging your representatives to support these measures as they move through the legislative process. It’s spring, and it looks like Congress is ready to “play ball” with postal reform!
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