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US Postal Unions Urge Obama To Fix USPS Pension Overfunding

The APWU and other postal unions and management associations have asked President Barack Obama to take “immediate action to save almost 100,000 good, middle-class jobs and stabilize the financial condition” of the Postal Service.

“A healthy postal system is critical for a healthy U.S. economy,” the organizations wrote [PDF] on Jan. 12.

“The financial problems facing the Postal Service were made significantly worse by a Bush-era mandate that the agency pre-fund nearly 80 percent of its future retiree health care obligations by 2016 at a crushing cost of $5.5 billion per year… No other agency or company in America is required to pre-fund such obligations at all, much less on such an accelerated schedule,” the organizations wrote.

Had it not been for these payments, the Postal Service would have experienced a $611 million profit over the past four years — despite the recent recession and competition from the Internet, the letter notes. The USPS experienced a deficit of $8.505 billion in Fiscal Year 2010, and anticipates a deficit of $6.4 billion in Fiscal Year 2011.

A Sound Solution

“Fortunately, there is a sound policy solution to this pre-funding burden,” the letter says. “The Postal Service should be permitted to use the surplus in its two pension funds — the Civil Service Retirement System and the Federal Employees Retirement System — to cover the cost of its future retiree health obligations.” Three independent actuarial studies have confirmed the USPS has a surplus of between $50 billion and $75 billion in its CSRS pension account, and $6 billion to $7 billion in its FERS account.

As the letter notes, however, the Office of Personnel Management (OPM) maintains the position it first adopted during the Bush administration: That Congress must authorize the actuarial methods proposed by the studies. OPM claims that laws passed in 1974 and 2003 require the unfair methods that are currently used, even though those laws were repealed by the Postal Accountability and Enhancement Act of 2006.

The chief authors of the 2006 law, Sen. Susan Collins (R-ME) and Sen. Tom Carper (D-DE), have argued that OPM has the authority to adopt fair and accurate actuarial methods for allocating postal pension costs.

“Since OPM refuses to exercise this authority,” the letter says, “we urge you to use your authority as President to direct it to do so.”

“The financial crisis facing the Postal Service in 2011 is a daunting one, but unlike so many challenges facing the nation today, there is a feasible and responsible answer to this short-term crisis,” the letter says. “The Postal Service can avoid short-sighted and self-defeating cuts in service to the American people without a penny in taxpayer support if you take the actions we request.”

The letter was signed by APWU President Cliff Guffey; Frederic V. Rolando, president of the National Association of Letter Carriers; Don Cantriel, president of the National Rural Letter Carriers Association; John F. Hegarty, president of the National Postal Mail Handlers Union; Louis M. Atkins, president of the National Association of Postal Supervisors; and Mark W. Strong, president of the National League of Postmasters of the United States.