NALC: Rep. Dennis Ross Misfires on the Myths and the Facts

Congressman Dennis Ross (R-FL), who chairs the House Subcommittee on the Federal Workforce, Postal Service and District of Columbia, has posted a floor statement entitled Postal Service “Overpayment” – Myth v. Fact on his website, where he tried to dispel three alleged myths about the Postal Service’s pensions and retiree health pre-funding burden.  Unfortunately, his “facts” are far from factual and will do more to confuse and mislead Members of Congress than to clarify the issues as the current debate on postal reform unfolds.  As a public service, NALC is happy to clear up the confusion.

Alleged Myth 1: “The Postal Service has overpaid by $50-$75 billion into the Civil Service Retirement System and Congress owes this money back.”

The Real Facts: Ironically, this alleged myth is a myth itself — We are emphatically not asking Congress for a taxpayer bailout.  Rather, we are asking the Office of Personnel Management to recognize the true postal surplus in CSRS. And we are asking Congress to let us use these surplus funds to cover the cost of funding future retiree health benefits – a corporate best practice in the private sector under ERISA guidelines.   This is what H.R. 1351, a bill co-sponsored by 159 Members of Congress from both parties, would accomplish.

Alleged Myth 2: “The Postal Service is unfairly saddled with an annual $5.5 billion retiree health care prefunding payment that is required of no other federal agency. If only the prefunding requirement were eliminated the Postal Service would be profitable again.”

The Real Facts: Once again, Rep. Ross twists the alleged myth before addressing it.  Supporters of H.R. 1351 are not saying that its passage will necessarily restore the Postal Service to profitability forever.  What we are saying is that, without this unfair burden, we would have been profitable over the past four years (2007-2010) since pre-funding costs of $21 billion explain 100% of the $20 billion losses recorded over this period.

No other agency pre-funds retiree health benefits – over any length of time.  Nor do the legislative and judicial branches. Nor do most private companies.

Supporters of H.R. 1351 are not trying to stop pre-funding.  We want to transfer the $55 billion surplus in the CSRS postal account (using fair methods endorsed by the Postal Regulatory Commission) into the Postal Service Retiree Health Benefits Fund, which already has $42.7 billion in it. That would be enough to totally prefund the Postal Service’s future retiree health obligations.

NALC does not deny that the Postal Service faces significant challenges in the future; like many private industries, the USPS must adapt to the internet economy.

Alleged Myth 3: “The USPS has a FERS surplus of $6.9 billion that should be immediately returned.”

The Real Facts: Rep. Ross makes a good point: the surplus in the Postal FERS account may be a function of temporarily low interest rates.  However, that does not mean that it would be inappropriate to allow the USPS to use the surplus in its FERS account to address its short term financial challenges.

Rep. Ross compares the USPS to other federal agencies. He says “other federal agencies with temporary surpluses are not being granted refunds for ‘overpayments’ as a result of these fluctuating balances.”  That is true.  But other federal agencies are not choking on a grossly unfair burden to pre-fund 75 years’ worth of retiree health benefits over a 10-year period.

The Postal Service and its employees will continue to do our part to adapt to serve the changing needs of the American economy.  Would it be too much to ask Congress to do the same?


source: NALC Activist Alert

8 thoughts on “NALC: Rep. Dennis Ross Misfires on the Myths and the Facts

  1. Mr. Ross and the NALC need to consult an accountant that understands pension accounting. While interest rates do affect the level of pension funding the affect is the opposite of what is stated in Myth #3.
    Higher interest rates would INCREASE the surplus in FERS not decrease it.
    A detailed explanation of all the pension accounting rules that cause this would be a boring read. The principal behind it though is easy to understand. If interest rates are high a dollar in the fund will be worth a lot more to cover expenses down the road than if interest rates are low.

    Consequently low interest rate environments require more money to be put aside. High interest rate environments require less money to be put aside to cover the same future benefits.

  2. The other federal agencies that may have a surplus in the FERS system do not self fund. The USPS is funded by selling our services, not tax dollars. The EPA, for instance, may have a surplus, but they are not asking for it back, they are just asking for regular appropriations from the US treasury. Something Ross will spin till the day he is out of office.

  3. I will answer the question…….YES! It is too much to ask Congressional Members to do anything, certainly nothing that NEEDS immediate action…they evidently love dragging everything out, if they even get to it at all..

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