Washington, DC (Feb. 13, 2012)—In light of first quarter financial reports that the U.S. Postal Service would have generated $200 million in profits had it not been required to pre-fund its future retiree health benefits, Senator Bernie Sanders and Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, called for the passage of legislation to reform this burdensome requirement, which no other federal agency or private sector company faces.
“At a time when the Postal Service faces enormous financial challenges, we have got to end the absurd requirement that it pay over $5.5 billion every year to pre-fund future retiree health benefits,” Sanders said. “No other entity in the United States of America is burdened with this mandate, and with $44 billion in this future retiree account earning 3.5 to 4 percent interest every year, it can be fully funded in the next 21 years without the need for additional funds. By correcting this inequity, and through other commonsense reforms, the Postal Service will have the money it needs over the short term without resorting to the draconian cuts in service it has proposed. Over the long term, the Postal Service will need to develop a new and aggressive entrepreneurial business model to bring in the revenue it needs in the 21st Century.”
“The latest numbers show that the Postal Service would be in the black but for this extraordinary prefunding requirement,” said Cummings. “Congress should pass comprehensive legislation to eliminate this unfair burden, immediately improve the Postal Service’s cash position, and enable it to develop innovative products that meet changing market needs.”
Financial data released by the Postal Service reveal that it would have made profits of $200 million in the first quarter of this fiscal year had it not been required to account for approximately $3 billion of its pending fiscal years 2011 and 2012 retiree health benefits prefunding payment and non-cash adjustments to its Workers’ Compensation Liabilities.
Under the Postal Accountability and Enhancement Act of 2006, Congress required the Postal Service to pre-fund its future retiree health care benefits at an average cost of $5.5 billion per year for a period of ten years. The Postal Service has paid more than $45 billion to pre-fund future retiree health care benefits. No other federal agency or private sector company faces this burdensome requirement.
Sanders and Cummings have both introduced postal reform legislation in the Senate and House to improve the Postal Service’s long-term financial viability. Both bills would require refunding surplus balances in the Postal Services retirement accounts, encouraging innovation in the development to new products and services, and reforming the current retiree health benefits schedule.
WASHINGTON, D.C. — Congressman Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, will deliver remarks at two community events tomorrow (TUESDAY) to encourage Congress to consider his comprehensive legislation, providing the U.S. Postal Service with the necessary latitude to make innovative structural changes to enable it to continue to deliver for decades to come. Read more
Cummings and Lynch Introduce Innovative Legislation to Return Postal Service to Profitability
The Innovate to Deliver Act” Encourages New Lines of Business, Creates Chief Innovation Officer, and Reforms Benefits Pre-payment Structure
Washington, DC — Today, Ranking Members Elijah E. Cummings and Stephen Lynch introduced comprehensive legislation to address the Postal Service’s current financial challenges and make innovative structural changes to enable it to continue to deliver for decades to come.
“Our legislation will fundamentally change the Postal Service’s business model so it can thrive in a changing marketplace,” Cummings said. “Unlike other proposals that merely slash services, personnel, and facilities, our bill allows the Postal Service to return to profitability while honoring commitments to workers and preserving quality service.”
“We, as Democrats, realize that changes are necessary and we have embraced that in this legislation,” Lynch said. “However, we also insist that there are responsible ways to reform the Postal Service while protecting the interests of postal customers, employees and retirees. This legislation is part of the comprehensive reform that the Postal Service needs in order to improve its long-term financial viability without sacrificing customer service or placing undue burden on our dedicated postal employees.”
H.R. 2967 , the Innovate to Deliver Act of 2011 (I2D), implements reforms in three core areas: profitability, personnel, and performance.
Highlights of the I2D Act include:
· It authorizes the Postal Service to enter into new lines of business that leverage its unique advantages, such as check-cashing, facility leasing, and retail services;
· It creates a new Chief Innovation Officer to drive the development of these innovative products and services, as well as new core mailing services;
· It corrects the overpayments made by the Postal Service to its retirement system, and it allows the right-sizing of its workforce by enabling the Postal Service to provide incentives for voluntary separation and early retirement;
· It streamlines procedures to ensure that the Postal Service’s excellent performance record is preserved and improved; and
· It requires enhanced reporting to Congress and the Postal Regulatory Commission on the Postal Service’s plans for right-sizing its network by closing and suspending retail and mail processing facilities.
Many of the bill’s provisions have the support of key stakeholders, such as the Postal Service leadership, postal unions, and the Administration.
Last week, Cummings, Lynch, and five other Members of Congress introduced a bill to extend by twelve weeks a Postal Service payment of $5.5 billion to its retiree health fund, thereby avoiding default and creating additional time for bipartisan negotiations. A shorter, six-week extension was included in the continuing resolution unveiled last week to fund the government’s operations into the fall.
THE POSTAL SERVICE INNOVATE TO DELIVER ACT OF 2011
(“THE I2D ACT”)
Ranking Member Elijah E. Cummings
The I2D Act will meet the Postal Service’s financial challenges by implementing reforms in three core areas: profitability, personnel, and performance. Unlike other proposals that seek only to slash services, workforce, or facilities, the I2D Act tackles fundamental challenges with fundamental change to ensure that the Postal Service will continue to deliver for years to come.
- 1. Return to Profitability: The I2D Act gives the Postal Service the flexibility to update its business model and enter into new lines of business. Specifically, the bill:
- Authorizes the Postal Service to enter into new lines of business, such as check cashing, digital communications, facility leasing, and other activities that leverage the Postal Service’s unique business advantages;
- Creates a new Chief Innovation Officer to drive the development of innovative products and services;
- Enhances accountability regarding the success of these new products and services in meeting changing market needs;
- Requires immediate review of the Postal Service rate cap by the Postal Regulatory Commission;
- Requires the Postal Service Board of Governors to adjust rates so total revenues are at least equal to total costs; and
- Grants the Postal Service the flexibility to implement variable rates based on the distance mail travels, ensuring that prices more accurately reflect delivery costs.
- 2. Personnel—Right-Size, Right Now: The I2D Act allows the Postal Service to increase efficiency and profitability by realigning personnel in a responsible way. Specifically, the bill:
- Refunds $6.9 billion the Postal Service is estimated to have overpaid into the Federal Employee Retirement System (FERS);
- Requires the Postal Service to use FERS surplus funds to encourage early retirement and voluntary separation to optimize its workforce and maximize the profitability of new ventures;
- Repeals the current prepayment schedule for Retiree Health Benefits and requires the Office of Personnel Management to establish a more practical and realistic schedule to be amortized over a longer period; and
- Preserves protections for Postal Service workers that were negotiated in good faith with management.
- 3. Preserve Performance and Improve Efficiency: The I2D Act streamlines Postal Service processes and procedures to ensure that its excellent performance record is preserved and improved. Specifically, the bill:
- Allows the Postal Service to develop new classes of mail products, in addition to existing classes, such as first-class, and standard delivery, so consumers can choose services they prefer;
- Increases efficiency by allowing the Postal Service to seek approval of service changes with the Postal Regulatory Commission on an expedited basis;
- Standardizes processes for closing retail facilities and streamlines appeal rights;
- Requires enhanced reporting to Congress and the Postal Regulatory Commission on the Postal Service’s plans for right-sizing its network by closing and suspending retail and mail processing facilities; and
- Allows the Postal Service and its Inspector General to enter into collaborative agreements to enable each to benefit from the other’s assets and expertise.
WASHINGTON, D.C. — Tomorrow, Ranking Member Elijah E. Cummings and Congressman Stephen Lynch, Ranking Member of the Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy, will hold a press conference to announce comprehensive legislation to fundamentally change the Postal Service’s business model to cut costs and increase revenue. Read more
Two U.S. Representatives have denounced Postal Service legislative proposals to abrogate its collective bargaining agreements with postal unions.
In a sharply-worded letter [PDF] to Postmaster General Patrick Donahoe, Rep. Elijah Cummings (D-MD) and Rep. Stephen Lynch (D-MA), condemned management’s proposals to dissolve “no lay-off” provisions in union contracts and to remove postal employees from federal retirement plans and the Federal Employee Health Benefits Program (FEHBP).
On May 23, 2011, the USPS signed a four-year contract [PDF] with the APWU that retained federal retirement and health benefits and maintained protection against layoffs for career employees. But in August, the USPS announced that it would ask Congress to introduce legislation removing postal employees from the federal benefits programs and giving management the authority to lay off 120,000 workers.
“These requests call into question the good faith of the Postal Service,” Cummings and Lynch wrote.
“To now ask Congress to nullify part of this same contract less than five months after it was concluded is neither fair to Postal Service employees nor helpful to the Postal Service’s credibility in future negotiations… [Postal] employees deserve to have their commitments honored,” they wrote.
“The Postal Service enjoys broad support among the American people, and we are proud of the excellent service it continues to provide. We believe the Postal Service can continue this tradition without abandoning the collective bargaining process and dismantling employee rights,” they said.
The letter from the two Congressmen was written on the same day that APWU President Cliff Guffey told a Senate committee that the USPS legislative proposals were “outrageous, illegal, and despicable.”
“We are outraged by the Postal Service’s attempt to abrogate the agreement on the subject of layoff protections for APWU bargaining unit members we signed only a few months ago,” he said.
Rep. Cummings and Rep. Stephen Lynch are the ranking Democrats of the House Committee on Government Oversight and Reform, and its Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy, respectively, which have jurisdiction over the Postal Service. Read more
Washington, DC – Ranking Member Elijah E. Cummings, joined by Representatives Norm Dicks, Ranking Member on the Appropriations Committee, Stephen F. Lynch, José Serrano, Gerald Connolly, Eleanor Holmes Norton and Danny K. Davis introduced legislation today to provide the U.S. Postal Service a 90-day extension on its pre-payment to the retired employee health benefit fund. Read more
Washington, DC – Ranking Member Elijah E. Cummings and Stephen F. Lynch, Ranking Member of the Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy, issued the following statement on the U.S. Postal Service’s decision to suspend its employer’s contributions for the defined benefit portion of the Federal Employees Retirement System (FERS).
“Today, the Postal Service announced its intention of suspending its payments to the Federal Employees Retirement System (FERS) to address its budgetary shortfalls. This emergency measure only underscores the immediacy of the agency’s financial situation and the need for legislative action. Given the seriousness of this matter, we urge the Department of Justice to take a swift but thorough examination of this proposed move and, additionally, we ask that the Postal Service ensure that any decision will not adversely impact its current retirees or active employees. While a suspension of FERS payments may help now, the Postal Service will be unlikely to regain financial stability absent legislative action. H.R. 1351 would correct the Postal Service’s overpayment to the federal government of both its Civil Service Retirement System and Federal Employee Retirement System obligations, which is collectively in the range of $60 to $80 billion, providing the Postal Service with an opportunity to find long-term solutions. In light of today’s announcement, we call on our Republican colleagues on the Oversight Committee to give this legislation prompt consideration.”
The following is a bill introduced by Congressmen Stephen Lynch (D-MA) and Elijah Cummings (D-MD) on April 4, 2011 Currently the bill has 8 sponsors:
Rep Clay, Wm. Lacy [MO-1] – 4/5/2011
Rep Connolly, Gerald E. “Gerry” [VA-11] – 4/5/2011
Rep Cummings, Elijah E. [MD-7] – 4/4/2011
Rep Davis, Danny K. [IL-7] – 4/5/2011
Rep Kucinich, Dennis J. [OH-10] – 4/5/2011
Rep Norton, Eleanor Holmes [DC] – 4/5/2011
Rep Tierney, John F. [MA-6] – 4/5/2011
Rep Towns, Edolphus [NY-10] – 4/5/2011
To amend the provisions of title 5, United States Code,relating to the methodology for calculating the amount of any Postal surplus or supplemental liability under the Civil Service Retirement System, and for other purposes.
(A)to the Postal Service Retiree Health Benefits Fund to pay any liability to the Postal Service Retiree Health Benefits Fund for fiscal year 2011;
‘‘(B) if all liability to the Postal Service Retiree 5 Health Benefits Fund for fiscal year 2011 has been
paid, to the Employees’ Compensation Fund (as established under section 8147); and
‘‘(C) if all liability of the United States Postal Service to the Employees’ Compensation Fund (as
so established) has been paid, to the United States Postal Service for the repayment of any obligation
issued under section 2005 of title 39.’’.
SEC. 5. EFFECTIVE DATE.
(a) IN GENERAL.—This Act and the amendments 15 made by this Act shall take effect on the date of enactment 16 of this Act.
(b) INTENT OF CONGRESS.—It is the intent of Congress that this Act apply with respect to the allocation
of past, present, and future benefit liabilities between the 20 United States Postal Service and the Treasury of the 21 United States. Read more