Hearing of the Senate Homeland Security and Governmental Affairs Committee - Business Meeting

Statement

The Postal Service supports over a trillion dollars worth of economic activity in our country and 8.7 million jobs, yet is on the brink of insolvency.

We are not crying "wolf." The Postal Service will not be able to make payroll starting sometime around the
summer of next year.

I'd like to take a moment and mention some of the more important reforms in this bill that I believe will provide the right tools to the Postal Service, with the right checks and balances.

The first and most important area where we have targeted reforms is in workforce-related costs. These costs
account for 80 percent of all Postal Service costs, so avoiding this issue isn't an option. We would transfer to the Postal Service the nearly $7 billion it has overpaid into the Federal Employee Retirement System, and direct the PMG to use a portion of this money for retirement and separation incentives. Our goal is to compassionately encourage 100,000 postal workers to accept the package. The Postmaster General says that the package we've provided in this bill is the right package to meet this goals.

Healthcare costs for postal workers and retirees have a major impact on the solvency of the Postal Service. Our bill does three things to help. First, the bill ends the practice of paying for more health coverage for retirees than they use. Right now, the Postal Service pays for full Federal Employee Health Benefits coverage, but also pays for Medicare. Our bill would preserve benefit levels, but only pay for the healthcare that is actually used by retirees. The PMG has estimated that doing something along these lines could reduce his retiree health liability by $15 billion. We also provide another way to reduce that liability. Our bill allows the PMG to work with his unions in a voluntary and cooperative way to develop a healthcare plan outside the government that significantly reduces long-term healthcare liability.

If he is able to do this then he won't need the third provision in our bill relating to healthcare costs, which is to spread out the retiree health payments over 40 years.

This bill also reforms the Federal Workers' Compensation program, which has not been updated significantly in over 35 years. This program, intended as short-term assistance for injured workers to help them recover and return to work, currently has more than 2,000 employees age 70 or older who are receiving higher payments on workers' comp than they would under the standard retirement program. Two people in the program are 99 years old. These employees are clearly not coming back to work.

Our bill would eliminate the incentive for beneficiaries to stay on workers' compensation long after the age when they will never return to work. It would also eliminate the disparity between how we treat people who have dependents and those who do not, and normalize benefit levels to what the majority of states offer their workers.

The important reforms in this bill apply to all beneficiaries in the program, not just postal employees. That's
appropriate, because the Postal Service makes up nearly half of the Federal Workers' Compensation claims. The Postal Service pays almost a billion dollars a year in workers' compensation benefits.

We also add important program integrity protections, because according to the Labor IG, if you catch one case of fraud, you can save up to half a million dollars. I understand that Senator Carper will be offering an amendment to add even more responsible program integrity provisions, and I strongly support that effort.
In addition to some of these critical labor reforms, our bill makes changes to postal operations. As I have said
repeatedly, I believe that abandoning Saturday delivery would drive mail out of the system and would do more harm than good. Our bill prohibits eliminating Saturday delivery except as a very last resort, and only after a series of important conditions is met.

First, we insist that every other possible cost-saving measure be implemented before such a change, by
prohibiting five-day delivery from being implemented for at least two years.

If, at the end of those two years, savings are still insufficient, and the Comptroller General finds -- and the PRC certifies that he has found -- after careful financial and operational analysis, that eliminating Saturday delivery is still necessary to keep the Postal Service solvent, the change can proceed.

Our hope is that the tools we provide the Postal Service in this bill will allow this painful decision to be avoided. The bill also addresses the sensitive subject of post office closures. After the PMG announced the study of almost 4,000 post offices for closure, it became obvious that common sense wasn't always governing these decisions. In my state of Maine, post offices were proposed for closure on islands that are difficult to travel to and from in winter, and one which requires a two-hour ferry ride to get to the mainland. I know my colleagues in other states have similar examples that just make no sense.

Our bill contains a remedy for this problem. We require the Postal Service to work with the Postal Regulatory
Commission to establish--for the first time--hard and fast standards for what constitutes reasonable access to postal services for customers and local communities. These standards will have to address factors such as
distance, travel time, access to transportation, and other constraints like weather and geography.

If a closure proposal violates these standards, customers will now be able to appeal to the PRC.

I also commend some of my colleagues who worked with us to prepare an amendment that will even further
strengthen this provision and apply it to the round of post offices already proposed for closure.

We also include in this bill a solution to address the closing of processing facilities. In Maine, as elsewhere, the Postal Service's plans to close a processing facility will lead to longer delivery times and force some mail
customers to travel long distance to receive the same service that they receive today.

The provision in our bill requires the Postal Service to complete a logistics study prior to moving forward with a consolidation, and as a part of that study, requires consideration of downsizing rather than closure--an option that currently is not necessarily considered.

Our provision also adds important requirements for public comment, response by the Postal Service to those
comments, and documented consideration by the Postal Service of how such a closure will affect service.
By adding transparency and requiring a more considered approach, the bill will greatly improve the current
facility closure process that has left so many of us baffled.

Today is just the first step on a long road ahead. After we get through the Floor, we'll enter conference
negotiations with our House counterparts, which will likely involve even more compromise on both sides. We're really just beginning, and we're on an urgent deadline. So I thank my colleagues for their collegiality during this process and I look forward to what I hope will be final passage in time to preserve this vital institution that we all hope will be around delivering mail to future generations of Americans.

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