Senator Collins Introduces USPS Bill

S. 380. A bill to amend chapter 83 of title 5, United States Code, to reform the funding of benefits under the Civil Service Retirement System for employees of the United States Postal Service, and for other purposes; to the Committee on Governmental Affairs.

Ms. COLLINS. Mr. President, today, I rise to offer to the Senate some good news for our mailers and, indeed, anyone who uses the United States Postal Service. The USPS, which has been losing significant amounts of money in recent years despite repeated increases in postage rates, has determined that its finances are in better order than previously thought. If Congress acts expeditiously on legislation that I am introducing today along with my colleague, Senator Carper, the Postal Service will avoid an imminent rate hike.

In recent years, the United States Postal Service has been raising postal rates at a rapid pace. When the USPS last raised rates in 2002, it was the third such rate increase during an 18-month period. Such steep, irregular rate increases make it very difficult for businesses to plan for their postal costs. This is a particular problem for catalog companies and magazine publishers, which set their prices in advance based on assumptions about postal rates. Mailing costs for some smaller catalog businesses, I am told, now can exceed production costs.

In so many ways, postage rate increases have a significant economic impact. As rates increase, so do the costs Americans bear to send letters, mail packages, and pay their bills. Rate increases also raise the cost of goods, which, of course, reflect not only the cost to ship but also the cost to advertise by mail.

But rate increases reflect the price of maintaining an ever-expanding postal network and the infrastructure to sustain it. Each year, the Postal Service adds 1.7 million new addresses. This equates to 4,800 new letter carriers making deliveries to over 513 million new delivery stops each year, all while maintaining one of the lowest first-class letter rates in the world.

In addition to providing a critical service to individual postal patrons, the Postal Service is a powerful economic engine. The USPS is the eleventh largest enterprise in the Nation with $66 billion in annual revenue, more than Microsoft, McDonald's and Coca Cola combined. While the Postal Service itself employs more than 700,000 career employees, it is also the linchpin of a $900 billion mailing industry that employs nine million Americans in fields as diverse as direct mailing, printing and paper production.

That is why the deteriorating state of the United States Postal Service's finances has been a source of great concern to many of us. After several years of large losses, the USPS has been slowly approaching its statutory borrowing limit of $15 billion.
A few months ago, however, the Office of Personnel Management discovered that the USPS will dramatically over-fund its contributions to the Civil Service Retirement Fund unless the law is changed. After having based the Postal Service's annual contributions on the assumption that it had an actuarial deficit of $32 billion, OPM discovered instead that the USPS's CSRS deficit was actually only $5 billion. The difference is primarily due to higher than expected yields on pension investments by the Department of the Treasury. If the USPS continues to fund the CSRS at its current pace, it will over-fund its CSRS liability by $78 billion.

If Congress approves the changes to the payment schedule as my bill provides, the Postal Service's CSRS retirement expense would be reduced by $2.9 billion in fiscal year 2003 and another $2.8 billion in fiscal year 2004. The USPS would be able to reduce its debt by more than $3 billion in fiscal year 2003, and anticipated rate increases would be delayed until at least 2006, ushering in an era of stable and predictable postal rates.

My initial response upon hearing this good news was one of pleasant surprise but mixed, I admit, with a healthy dose of skepticism. As the old saying goes, "if it sounds too good to be true, it probably is." However, the Office of Management and Budget, as well as the U.S. Treasury Department, have confirmed OPM's analysis. Further, having spoken with experts outside the government as well, I have become satisfied that this situation represents a rare exception to the rule.

That is why Senator Carper and I today introduce the Postal Civil Service Retirement System Funding Act of 2003. Our bill will correct the statutory funding mechanism for the Civil Service Retirement System, CSRS. This legislation is necessary to prevent the overpayment of retirement contributions by the U.S. Postal Service. Most important, this bill directs OPM to determine a new amortization schedule that will pay off the Postal Service's existing unfunded CSRS liability of $5 billion.

In addition, the legislation requires that the savings resulting from this Act be used to reduce the postal debt in a manner that the Secretary of Treasury shall specify. It also expresses the sense of Congress that the Postal Service should use these savings to fulfill its commitment to hold postal rates unchanged until at least 2006, to begin to pay a portion of their massive unfunded health care liabilities, and that the savings not be used to pay bonuses to Postal Service executives.

The USPS needs other changes as well, something acknowledged by everyone inside and outside the Postal Service. I was pleased that President Bush appointed a Commission on the U.S. Postal Service that is modeled along the principles outlined in legislation I introduced last year. I am hopeful that when the Commission reports this summer, it will provide us with a blueprint to ensure that our postal system is ready to serve twenty-first century America as ably as it has served us in the past. I look forward to receiving the Commission's report and any recommendations for legislation it may include.

I ask unanimous consent that the text of the bill be printed in the RECORD.