USPS OIG: OPM’s Long History Of Miscalculations Involving USPS Benefit Funds

Today, the USPS Office Of Inspector General responded to the OPM Office Of Inspector General’s “A Study of the Risks and Consequences of the USPS OIG’s Proposals to Change USPS’s Funding of Retiree Benefits”

OPM’s study concluded:

While we understand that the USPS is having financial difficulties, the OPM’s administration of the law has not caused this situation. The OPM has complied with the law as written on all accounts. To say otherwise is both inaccurate and obscures the true causes of USPS’s current crisis.

We believe that these proposals would have a lasting negative impact upon the retirement programs and trust funds but have little, if any, positive impact upon the USPS’s ultimate long-term profitability. Instead, the result of these proposals would be to shift costs from USPS ratepayers to the American taxpayers.

But  the USPS OIG tells a different story:

Our reports focused on the latest of OPM’s long history of miscalculations involving Postal Service benefit funds:

• In 2002, the Postal Service’s pension fund was found to be overfunded by $78 billion. Congress corrected this in 2003.

• In 2003, OPM attempted to make the Postal Service responsible for $27 billion in military service pension obligations for Postal Service employees. Congress refused to accept this attempt.

• In 2009, we found that the OPM used an exaggerated 7 percent health care inflation forecast instead of the 5 percent industry standard, resulting in an overpayment of $13.2 billion by 2016. Congress ordered OPM to review it and they changed it.

• The Postal Service has been overcharged $75 billion for its share of the CSRS pension payments. In essence, for 40 years the Postal Service paid its own and the federal government’s inflationary costs.

OPM typically responded to these findings with initial denial followed by major corrections. In such a history of errors, one would expect to see some balance.

• Errors are normally random, but without exception these have disadvantaged the Postal Service.

• Self discovery by OPM of such substantial miscalculations should have occurred.

• Self correction by OPM, charged with fund administration, would also have been expected.

This is not about the financial condition of the Postal Service, but that the Postal Service was overcharged and subsequently overpaid into benefit funds. In the Unites States there is the rule of law and the accounts must be settled. This issue is fundamentally about righting an inequity.

Read USPS OIG’s full response

U.S. Postal Services OIG’s Response‐‐‐ OPM OIG Issues Study on USPS OIG’s Proposals Regarding the Funding of USPS Retiree Benefits.

Thank you for the opportunity to respond to the OPM Inspector General’s study reviewing our recent reports about the mischarges and overfunding of the Postal Service’s benefit obligations. Both the postal pension and health funds are administered by OPM and are accounted for separately from the federal government’s benefit funds.

Our reports focused on the latest of OPM’s long history of miscalculations involving Postal Service benefit funds:

  •  In 2002, the Postal Service’s pension fund was found to be overfunded by $78 billion. Congress corrected this in 2003.
  • In 2003, OPM attempted to make the Postal Service responsible for $27 billion in military service pension obligations for Postal Service employees. Congress refused to accept this attempt.
  • In 2009, we found that the OPM used an exaggerated 7 percent health care inflation forecast instead of the 5 percent industry standard, resulting in an overpayment of $13.2 billion by 2016. Congress ordered OPM to review it and they changed it.
  • The Postal Service has been overcharged $75 billion for its share of the CSRS pension payments. In essence, for 40 years the Postal Service paid its own and the federal government’s inflationary costs.

OPM typically responded to these findings with initial denial followed by major corrections. In such a history of errors, one would expect to see some balance.

  • Errors are normally random, but without exception these have disadvantaged the Postal Service.
  • Self discovery by OPM of such substantial miscalculations should have occurred.
  • Self correction by OPM, charged with fund administration, would also have been expected.

Regarding the matter that was reviewed in the OPM report, the Postal Service Office of Inspector General has the following observations:

Our reports concerning the mischarges and overfunding of Postal Service benefits relied on the work of an actuarial firm that was under contract to the OIG. That firm had previously done work for OPM in the benefits fund area. Our work was independently reviewed by a second actuary employed by the Postal Regulatory Commission (PRC). In contrast the OPM characterizes their study as an analysis based on the work of others, but without independent actuarial assistance.

The OPM study makes the following points in their review:

1. The taxpayers will sustain losses if the funds are restored to the Postal Service.
2. The Postal Service would use the returned funds to subsidize operations and not for benefit funds.
3. OPM is unable to correct the overcharges because of their limited authority.
4. The study endorses 100 percent prefunding requirement for Postal Service benefit funds.

In response to the OPM, we have some observations on each of their points:

1. The Postal Service benefit funds are funded entirely by postal employees and postage from American citizens and businesses. Postal Service contributions should not supplement federal employee contributions and federal employee contributions should not supplement Postal Service contributions.

2. If benefit fund overpayments were returned, the money would not be used for Postal Service operations. The proposal is to use the surplus to make annual benefit payments. Using
employee money for postal operations would be as wrong as putting it in the federal employee benefit fund; both are improper.

3. The Postal Inspector General and Senator Collins believe that OPM could correct this funding issue using their own authority. OPM has responsibility for accurately and fairly administering these funds.

4. OPM recommended 100 percent funding levels for both the Postal Service’s retirement and healthcare funds. However, the report is silent on the adequacy of OPM’s government
prefunding level of 40 percent for retirement and 0 percent for healthcare.

This is not about the financial condition of the Postal Service, but that the Postal Service was overcharged and subsequently overpaid into benefit funds. In the Unites States there is the rule of law and the accounts must be settled. This issue is fundamentally about righting an inequity.

source: National League Of Postmasters Of  US

2 thoughts on “USPS OIG: OPM’s Long History Of Miscalculations Involving USPS Benefit Funds

  1. That the O.I.G. of the U.S.P.S. has finally discovered the reason for the dismal performance of the Postal Service for the last ten or more years is not surprising.It is somebody else’s fault! Remember the O.I.G. of the U.S.P.S. are post office employees and they do the bidding of their bosses. The U.S.P.S. will never be content until they receive a massive infusion of cash from the government to make up the shortcomings of a failed business model,over-compensation of managers and a lack of fiscal discipline. God only knows they are not to blame, others are!.This constant shifting of blame away from it’s source only prolongs the problem.When you find that you’ve dug yourself into a hole ,stop digging!

  2. We just don’t care. Like in Wis. where the Repuke Gov. game more than a hundred million in tax cuts to people that need it least. And now wants to eliminate the voice of regular people.

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