WASHINGTON – At the urging of Governmental Affairs Committee Chairman Joe Lieberman, D-Conn., the Office of Personnel Management has discovered a potentially vast overpayment that could keep postal rates stable for years to come.
Postmaster General John Potter announced Tuesday that the Postal Service’s obligation to fund retirement benefits for its employees is close to being met, freeing up billions of dollars that otherwise would have been directed to future retirement obligations.
“This is a stunning turnaround in USPS finances, if accurate,” Lieberman said. “I have asked the General Accounting Office to look into the figures presented by OPM to confirm their accuracy.”
In March 2001, a bipartisan group of senators requested that GAO study the cause of the Postal Service’s financial disarray and offer options the Service might take to improve its situation. Lieberman specifically asked GAO to look at USPS’s multi-billion dollar legal obligation to fund its share of the Civil Service Retirement System, and GAO agreed to ask OPM to examine its books in this area.
As a result, OPM reported to the Postal Service that its FY 2003 obligation would be reduced by $2.9 billion and its FYI 2004 obligation would be reduced by $2.4 billion. These figures have not yet been audited and, therefore, are tentative. But the Postal Service estimates that current postal rates could remain in effect until 2006. Previously, another rate increase had been expected in 2004.
Specific legislation will be necessary in order for the Postal Service to reduce its Civil Service Retirement System payments.
“This legislation will not be easy to accomplish,” Lieberman said, “but the support of the Administration will be critical to its chances for passage.”
However, even if such legislation is approved, the Postal Service will not be in the black. The Service has projected a $1.2 billion loss for 2002, with an outstanding debt of $12 billion. That projection was made before the anthrax-through-the-mail scare last fall, which imposed additional enormous expenses on the Service.
The USPS still needs to cut costs, and to make sure it uses the funds saved from the retirement payment to pay down the $12 billion debt, Lieberman said. In addition, the USPS has a substantial unfunded liability for retiree health care costs that it has not yet included on its financial statement, a first step toward addressing the financial impact of those costs.
Lieberman warned, “we must proceed cautiously, to be sure that USPS meets its full obligations under the law and to ensure that a costly retreat doesn’t become necessary down the road.”