US Postal Service 2011 Annual Report Download - page 40

2011 Report on Form 10-K United States Postal Service - 38 -
disputes the claims asserted in this class action case and
is vigorously contesting the matter. See Note 6,
Contingent Liabilities, in the Notes to the Financial
Statements for additional information.
FAIR VALUE MEASUREMENTS
In 2011 and 2010, our financial statements contain fair
value disclosures required by GAAP. We did not have any
recognized gains as a result of these valuation
measurements in these years. All recognized losses have
been incorporated into our financial statements, and the
unrecognized gains and losses are not considered to
have a significant impact upon our operations. See Note
10, Fair Value Measurement, in the Notes to the Financial
Statements for additional information.
LEGISLATIVE UPDATE
Appropriations and Continuing Resolutions
On October 5, 2011, the President signed into law P.L
112-36, the Continuing Appropriations Act, 2012, which
funds the government through November 18, 2011. This
law provides for a deferment of the PSRHBF prefunding
payment of $5.5 billion due by October 4, 2011, to not
later than November 18, 2011. This is the second
deferment of the prepayment, which was originally due by
September 30, 2011.
We believe passage of P.L. 112-36, is intended to provide
time for lawmakers to agree on potential postal reform
legislation, although there is no assurance that such
complex legislation will be enacted by November 18,
2011, or at all. The continuing resolution also carries
forward existing provisions that keep in place six-day
delivery requirements, as well as prohibitions on closing
small and rural Post Offices solely for financial reasons.
On September 30, 2011, the President signed into law
P.L. 112-33, the Continuing Appropriations Act, 2012,
which funded the government through October 4, 2011.
This law provided for the initial deferment of the PSRHBF
prefunding payment to be due by October 4, 2011.
On September 15, 2011, the Senate Committee on
Appropriations reported an original measure, S. 1573, the
Financial Services and General Government
Appropriations Act, 2012. This action followed the July 7,
2011, reporting of H.R. 2434, the House Committee on
Appropriations measure H.R. 2434, the Financial Services
and General Government Appropriations Act, 2012. Both
the Senate and House versions recommend a funding
level of $78 million to the Postal Service, for free mail for
the blind and overseas voting. This amount is $8.5 million
less than the amount provided in FY 2011 and is less than
the amount requested by the Postal Service. Additionally,
the bill did not appropriate any funds for the $29 million
revenue forgone debt repayment. Both bills also carry
forward provisions that call for maintaining six-day
delivery, as well as prohibitions against closing small or
rural Post Offices solely for financial reasons.
On March 3, 2011, S. 475, the Enacting President
Obama’s Recommendations for Program Termination Act
was introduced. The measure provides for the repeal of
the authorization and funding for a total of 85 programs;
specifically, programs identified in the President’s Budget
Request for FY 2012. S. 475 includes a provision stating
that no federal funds are to be expended for the revenue
forgone from the reduced rate mail program of the Postal
Service. It directs that any funds appropriated to or
unobligated by the program be rescinded and returned to
the Treasury. The bill was referred to the Senate
Appropriations Committee.
Administration Proposals
Presidential Postal Reform Proposals
On September 19, 2011, the Office of Management and
Budget (OMB) released a report entitled, “Living Within
Our Means and Investing in the Future: The President’s
Plan for Economic Growth and Deficit Reduction.”
Included in the White House plan, which is part of a larger
effort to cut $3 trillion from the federal deficit, are several
proposals focused on improving the financial situation of
the Postal Service. The plan recognizes the importance
and value of the Postal Service to the nation’s overall
economy and presents a reform package that calls for:
restructuring the existing retiree health benefits prefunding
to move payments to an accrual cost basis; providing the
Postal Service with a refund, over two years, of the $6.9
billion surplus in the Federal Employees Retirement
System (FERS) as of September 30, 2009; giving the
Postal Service the authority to move to a five-day per
week delivery, beginning in 2013; allowing the Postal
Service the flexibility to offer non-postal products and
services and to increase partnerships with state and local
governments; and permitting the Postal Service to pursue
a modest one-time increase in prices, while continuing to
operate under the current price cap. The Administration
estimates the proposals would provide the Postal Service
with over $20 billion in cash relief over the next several
years and in total would reduce the federal deficit by $19
billion over 10 years.
Joint Select Committee on Deficit Reduction
The President’s postal reform proposals were submitted
to the Joint Select Committee on Deficit Reduction (also
known as the “Super Committee”); a panel created by the
Budget Control Act of 2011 and charged with issuing
formal recommendations on how to reduce the deficit by
at least $1.5 trillion over the next ten years.