House Oversight and Government Reform Committee Attention: Jeffrey Post From: Janemarie Mulvey, Specialist in Health Care Financing, x7-6928 Subject: USPS Funding and Accounting Issues for Retiree Health Benefits On December 20, 2006, the Postal Accountability and Enhancement Act (PAEA, P.L. 109-435) was enacted into law and was the first broad revision of the 1970 statute that replaced the U.S. Post Office with the U.S. Postal Service (USPS), a self-supporting, independent agency of the Executive Branch.1 Among other things, PAEA required the USPS to pre-fund their future retiree health benefits (provided through the Federal Employees Health Benefits Program) by establishing the Postal Service Retiree Health Benefits Fund (PSRHBF). The law established set payments to the fund from 2007 to 2016 of between $5.4 billion to $5.7 billion annually. As the USPS faces increased financial challenges, Congress has temporarily reduced the USPS current retiree health payments to the PSRHBF.2 On October 1, 2009, the Legislative Branch Appropriations Act [of] 2010 (P.L. 111-168) was signed into law and provided immediate relief by reducing the USPS payment in 2009 to the PSRHB from the required $5.5 billion to $1.4 billion. More recently, in September 2011, Congress delayed the USPS FY2011 RHBF payment date from September 30, 2011 to November 18, 2011 (P.L.112-36). The Office of Inspector General (OIG) of the USPS has stated in a recent report that the Office of Personnel Management’s (OPM) recent estimates of their future retiree health liabilities are too high and that under the current payment schedule mandated by PAEA, the USPS will have overfunded its retiree health liability in 2016. 3 In response to these concerns, the Postal Regulatory Commission (PRC) has undertaken an analysis of the different approaches employed by the USPS/OIG and the OPM to calculate the present value of the Postal Service’s obligations related to the PSRHBF. 4 The PRC noted in its report
Posted on: Thu, 11 Dec 2014 18:00:05 +0000
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