The U.S. Postal Service Is Supposed To Be Self-Supporting, By Law
The U.S. Postal Service Is Supposed To Be Self-Supporting, By Law
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It has been a great year for the U.S. Postal Service (USPS). But it is now pushing the Biden Administration hard for another $14 billion on top of $120 billion in taxpayer funds it has received since December 2020. By law, USPS is supposed to be self-supporting.

At issue is a large but arcane request from USPS to have its Civil Service Retirement System (CSRS) pension obligations readjusted so it receives a $14 billion credit from the Office of Personnel Management (OPM). This pertains to benefits for postal employees before 1971.

This matter has already been extensively examined by Congress, the U.S. Government Accountability Office (GAO), and OPM. It was vetted in conjunction with the development of and passage of the Postal Accountability and Enhancement Act of 2006, the last major postal legislation before this year’s Postal Service Reform Act.

In an October 2011 report for Congressional Committees overseeing USPS, the GAO stepped in on the USPS-OPM dispute, siding with OPM. 

GAO said, “The current methodology used by OPM for allocating responsibility for CSRS benefits between USPS and the federal government is consistent with applicable law.”

It stated its verdict in plain English, saying, “Some have referred to ‘overpayments’ that USPS has made to the CSRS fund, which can imply an error of some type – mathematical, actuarial, or accounting. We have not found evidence of error of these types.”

In its March 2021 10-year strategic plan, Delivering for America, USPS said that one of its major requested legislative actions was to receive $14 billion from a CSRS adjustment. This is to “correct the longstanding, unfair allocation of CSRS benefits.”

At the November 10 public meeting of its Board of Governors the need for this change was emphasized by several speakers from USPS. Its Fiscal Year 2023 Integrated Financial Plan also puts the issue front and center. USPS projects a $4.5 billion loss without the CSRS change, but a reduced loss of $1.4 billion with the reform.

The push for reform has been happening behind the scenes in discussions that USPS is apparently having with OPM and the White House. Congress should demand to know the basis for this request, what the view are of OPM’s professional staff, and who is involved in making this decision within the Administration.

This follows USPS getting more than $120 billion including:

  • $10 billion from the December 2020 COVID relief legislation
  • $107 billion as part of the 2022 Postal Service Reform Act
  • $3 billion as part of the recent Inflation Reduction Act, for electric vehicles.

There is a better and bolder way forward for USPS than relitigating this decades-long matter.

USPS should urge Congress to permit it to invest its pension and retiree health care obligations in a diversified mix of stocks and bonds, as states invest retirement money for government workers and teachers.

By law, USPS can only invest these assets in low yielding bonds. This handcuffs USPS financially and puts added burdens on U.S. taxpayers to ultimately cover the cost of these benefits. With inflation high and benefits indexed to inflation, the underlying costs are rising dramatically for USPS.

USPS Board of Governors chair Roman Martinez spoke about this at the November 10 meeting when he said, “We have about $294 billion in assets in retiree funds and pension funds. Those by law can only be invested in short-term Treasuries. When inflation is higher than interest rates, that means that mathematically we are going in the hole every year, more and more.”

It is time for USPS and policymakers to focus on this issue. USPS should have the same investment alternatives for its workers as state government workers and teachers have. This is far more important and worthwhile than re-litigating prior pension actuarial issues, where USPS’s case, at best, seems weak.

Expanding USPS’s investment options is the most important action that policy makers can take to enable USPS to truly be self-supporting, as required by law.

Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia. 


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