US Postal Service 2014 Annual Report Download - page 41

2014 Report on Form 10-K United States Postal Service 37
The President’s Budget Proposal reflects reimbursement to the Postal Service in the amount of $70.8 million for free mail for
the blind and overseas voting; however, it contained no provisions related to the Revenue Forgone Reform Act of 1993, which
authorizes the Postal Service to receive $29 million annually through 2035 as reimbursement for services it provided from
Fiscal Year 1991 through Fiscal Year 1998.
Comprehensive Postal Reform Legislation
Two significant postal reform bills were introduced in 2013 during the First Session of the 113th Congress. Both bills remained
under consideration during the Second Session of the 113th Congress, which encompassed 2014.
Postal Reform Act of 2014, S. 1486
On August 2, 2013, the Postal Reform Act of 2014 (“S. 1486”), was introduced in the Senate. The bill proposes to reform the
Postal Service by addressing a number of financial issues, including: assessments of the FERS and the CSRS pension fund
liabilities, requiring that the calculation of pension fund liabilities use Postal Service-specific economic and demographic
assumptions, and returns up to $6 billion of the calculated surplus to the Postal Service within 10 days of a transfer request. The
bill also grants authority for the Postal Service to negotiate retirement benefits for new employees, restructures payments for
retiree health benefits, and authorizes implementation of a Postal Service health benefits plan within FEHBP that would
coordinate retiree benefits with Medicare. The bill also requires arbitrators to consider the financial condition of the Postal
Service when rendering decisions.
S. 1486 addresses Postal Service operations in several ways, including: requiring the Postal Service to maintain for two years
the existing service standards for First-Class Mail and Periodicals, requiring a two-year moratorium on the closure or
consolidation of mail processing facilities, permitting the establishment of a five-day mail delivery schedule if total mail
volume during any four consecutive quarters drops below 140 billion pieces, but not before 2017. S. 1486 also allows for
delivery point modernization, authorizes the Postal Service Governors to establish a system of classes and rates for Market-
Dominant products, work share discounts and negotiated service agreements, gives the Postal Service the authority to introduce
new non-postal and governmental services and permits the Postal Service to ship beer, wine and distilled spirits.
S. 1486 would make changes to the current governance structure, including: modifying the make-up of the Board, establishing
an Advisory Committee to develop and oversee implementation of strategies to ensure the Postal Service’s long-term financial
solvency, appointment of a Chief Innovation Officer and creating a plan to reduce the total number of area and district offices.
The bill also reforms the FECA, which is applicable to the entire Federal Government, and includes provisions related to federal
property management, including co-location with other federal agencies and the disposal of real property.
On February 6, 2014, the Senate Homeland Security and Governmental Affairs Committee passed S. 1486, as amended, by a
bipartisan margin of 9-1. The bill was reported favorably to the full Senate.
Postal Reform Act of 2013, S. 2748
On July 19, 2013, the Postal Reform Act of 2013, (“H.R. 2748”) was introduced in the House. H.R. 2748 would allow the Postal
Service to establish a five-day mail delivery schedule while temporarily mandating six-day package delivery for domestic
competitive products. It would allow the Postal Service to forgo past-due payments to prefund retiree health benefits and would
eliminate the past due 2013 and 2014 payments. Starting in 2015, required payments to prefund retiree health benefits would be
based on an actuarial calculation designed to achieve full funding by 2056, while current retiree health benefits premiums would
be paid out of the PSRHBF. H.R. 2748 would replace the current Board with a panel of five full-time executives. Once the
Postal Service met certain specified financial requirements, the panel would be dissolved and replaced with a smaller Board that
would initially be comprised of the panel members.
H.R. 2748 would begin to phase out door delivery of mail, except in cases where eliminating door delivery is infeasible, where
customers pay for continued door delivery or where customers have a significant hardship requiring that they receive door
delivery. The bill would also require above-CPI price increases for postal products for which costs exceed revenue and would
not permit political committees to use the non-profit Standard mail rate. The bill would require postal workers to pay the same
health and life insurance premiums as paid by other federal workers and seeks to clarify the compensation parity currently
required between Postal Service and private sector workers. H.R. 2748 would allow the Postal Service to offer state and local
government services. The bill creates a mechanism to allow any FERS surplus to be transferred to the PSRHBF to the extent
that it exceeds any unfunded liability in CSRS and would allow the use of Postal Service-specific economic assumptions to
calculate liabilities and annual payments for both the FERS and the CSRS pension systems. It also specifies that, in the future,
postal employees would be subject to the same reduction-in-force authority as the rest of the federal workforce.