Two Sides Of The Story

A friend at the post office told me today that the U. S. Post Office was actually doing ok, but that they are being crippled by a requirement of the Postal Accountability and Enhancement Act of 2006 which states

Title VIII: Postal Service Retirement and Health Benefits Funding – Postal Civil Service Retirement and Health Benefits Funding Amendments of 2006 – (Sec. 802) Relieves the Postal Service of an obligation to contribute matching amounts to its employees’ civil service retirement. Provides for a mechanism and an amortization schedule regarding the handling of any surplus or supplemental liability of the Postal Service regarding the Civil Service Retirement and Disability Fund. Transfers from the Postal Service to the Treasury certain retirement obligations related to military service of former Postal Service employees. Makes Office of Personnel Management (OPM) determinations on surplus or supplemental liability subject to PRC review if the Postal Service so requests.

(Sec. 803) Transfers responsibility for paying the government’s contribution of the health benefits of postal annuitants, effective in FY2017, from the Postal Service to the Postal Service Retiree Health Benefits Fund (established by this section) up to the amount contained in the Fund, with any remaining amount to be paid by the United States Postal Service.

Establishes in the Treasury the Postal Service Retiree Health Benefits Fund, to be administered by OPM. Requires the Postal Service, beginning in 2007, to compute the net present value of the future payments required and attributable to the service of Postal Service employees during the most recently ended fiscal year, along with a schedule if annual installments which provides for the liquidation of any liability or surplus by 2056. Directs the Postal Service, for each year, to pay into the above Fund such net present value and the annual installment due under the amortization schedule. Makes OPM actuarial computations subject to PRC review.

(Sec. 804) Repeals a provision of the Postal Civil Service Retirement System Funding Reform Act of 2003 related to the disposition of savings accruing to the Postal Service.

In English this states that the Post Office is forced to pay $5 billion a year of its revenue into federal accounts in order to cover future healthcare expenses for retirees.

In September 2011, PolitiFact posted a response to a union ad which repeated the charge that the $5 billion payment to the government was bankrupting the Post Office.

The article at PolitiFact points out:

In recent years, as Internet communication has increased, the number of pieces mailed has been in decline. For a few years, postal revenues were nevertheless stable, but then they too started to decline. Patrick Donahoe, the U.S. Postmaster, said recently that first-class mail is dropping at a rate of 7.5 percent a year. While the post office has made up for some losses through productivity increases, it hasn’t been able to make up enough.

PolitiFact concludes:

The postal unions’ ad blames financial problems on “a 2006 law that drains $5 billion a year from post office revenue, while the Postal Service is forced to overpay billions more into federal accounts.” The ad is right that the law did require payments of approximately that amount and that those payments have had a significant effect on the post office’s bottom line. The additional overpayments are subject to debate. Even so, the law is hardly the only challenge the post office faces; it’s also facing continuing declines in first-class mail. So we rate the ad’s claim Half True.

Meanwhile, back at the ranch… On November 16, the Courier Express and Postal Observer posted a story saying that Senator Joseph Lieberman and Representative Darrell Issa are negotiating a postal reform bill. That bill would include the re-amortization of the remaining payment schedule for health care benefits. There are some other things included in the bill that would help the Post Office’s bottom line.

Again, funding healthcare expenses for retirees ahead of time is a good idea. Not funding them results in unfunded liabilities, which have become the downfall of many cities and towns in America. However, such funding needs to be done in a way that does not put the people doing the funding out of business. Hopefully a compromise will be reached that will keep the Post Office going.

I realize that email and other electronic gadgetry have had a negative impact on the Post Office, but some of us are still old-fashioned enough to enjoy a short walk to the mailbox to see what has arrived. I am also partial to real Christmas cards–not electronic ones!

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