Obama Blueprint Proposes Postal Employee Benefit Cuts

Update: Statement of NALC President William H. Young in response to provisions in the administration’s budget affecting the U.S. Postal Service
WASHINGTON – NALC President William H. Young issued the following statement:

“We are aware of the problem in the budget. We are working with a friendly administration to resolve it.”

eNAPUS Legislative& Political Bulletin

February 27, 2009

Yesterday, President Obama released the outline of his Fiscal Year 2010 Budget. On page 126 of the 134-page document is a reference to the Postal Service that reads, “Realign USPS employee/employer benefit contributions.” The proposal projects a 5-year cost savings to the Federal government of approximately $4.2 billion, and a 10-year savings of about $9.5 billion. A detailed explanation of the Blueprint is not currently available, and may not be on hand until early April. So, we are pushing for President Obama to revisit the Postal proposal in the interim. NAPUS and other postal employee groups have already communicated our displeasure to the White House and to Capitol Hill. Nevertheless, as it stands now, the proposal calls for USPS benefit contributions, on behalf of its employees, to be less than called for in existing union contracts and managerial consultative agreements.

The Blueprint, drafted by the White House Office of Management and Budget, reflects past attempts by the USPS to ratchet down employee compensation. For example, in September 2007, the Postal Service Office of Inspector General (OIG) suggested that the Postal Service reduce Postal employee benefits to the level afforded to non-postal federal employees. (Non-postal employees do not collectively-bargain over pay and benefits.) In addition, there were attempts to go after employee benefits in the Postal Reform Act; Congress rejected the requests then. NAPUS will aggressively argue for White House reconsideration of the proposal, or push for Congressional rejection once again.

Based upon discussions with knowledgeable Capitol Hill budget staff, the Budget Blueprint assumes that the USPS would cut its share of the Federal Employee Health Benefits Program (FEHBP) premium from 82% to 72% of the “weighted average premium” and would reduce its contribution of the Federal Employee Groups Life Insurance (FEGLI) contribution from 100% to 33%. Currently, the USPS Professional Career Executive Service (PCES) and OIG directors receive 100% FEHBP and FEGLI benefits. To get at these assumed savings, Congress would have to strip the right to collective bargaining over benefits from current law. This process is known as “Budget Reconciliation.” However, it is questionable how the Federal budget would profit from this proposal, because the benefits are NOT funded by taxpayers. In addition, the total premium remitted to the Office of Personal Management (government revenue) would not change. It would still add up to the same revenue number: the sum of the employee and the employer contributions.

It is a long way from Blueprint to Reconciliation – the protracted 2010 Budget process is just beginning. Consequently, NAPUS may recalibrate our legislative agenda for our 21-day-away Leadership Conference to deal with the Budget Blueprint, if it’s still an issue.