National Association of Postmasters of the United States

Office of the National President

Postmasters-Proudly Serving America

January 12,2011

President Barack Obama

The White House

1600 Pennsylvania Avenue, NW

Washington, DC 20500

Dear Mr. President:

As President of the 39,000-member National Association of Postmasters of the United States

(NAPUS), I respectfully request your aid to sustain a universal postal system and stabilize the
financial condition of one of America'smost important public institutions, the U.S. Postal Service
(USPS). Hundreds ofthousands of American jobs rely on a vibrant national postal system.

The Postal Service has been buffeted by a deep and protracted recession, w~ich was exacerbated
by a 2006 legislative mandate that the agency pre-fund nearly 80% of its future retiree health care
obligations. The cost for this annual obligation is $5.5 billion, through 2016. This mandate was
included in Public Law 109-435, the Postal Accountability and Enhancement Act (PAEA). No
other agency or company in America is required to pre-fund retiree health obligations, nor make
contributions to retiree health benefits at such a rate.

In the absence ofthese payments into the Postal Service Retiree Health Benefit Fund (PSRHBF),
the Postal Service would have earned an aggregate profit over the past four years, instead of
recording losses of $20 billion. The $21 billion in pre-funding payments over the past four years
would have been extremely challenging during times of economic growth; however, in the face of
the national recession, they are reckless. The Postal Service has had to dip into its limited
borrowing authority to make these payments, cancelled necessary capital projects, and
.understaffed many postal operations. Without you assistance, the USPS is projected to reach its
$15 billion debt limit this year.

NAPUS supports a fair and equitable approach that can help to sustain the Postal Service and
relieve the pre-funding burden. The Postal Service should be permitted to use the surplus in its
two pension funds to cover the cost of the future retiree health· obtigations. Independent
evaluations provided by the Hay Group and the Segal Company confirmed that the Postal Service
has a surplus between $50 and $75 billion in its CSRS pension account and $6-7 billion in its
FERS pension account, within the Civil Service Retirement and Disability Fund (CSRDF).

The Office of Personnel Management posits a view that was firSt offered during the Bush
Administration; it is that Congress must enact the actuarial methods proposed by the studies. The
agency claims that laws passed in 1974 and 2003 prescribe the unfair methods that are currently
used, even though those statutes were repealed by PL 109-435 .. As Senators Tom Carper and

8 Herbert St., Alexandria, Virginia 22305-2600 703.683.9027 703.683.6820 (fax) www.napus.org

President Barack Obama
January 12, 20 II
Page 2

Susan Collins (the Senate authors ofthe 2006 postal reform law) have argued, the OPM has the
authority to adopt fair and accurate actuarial methods for allocating postal pension costs under
Section 802 (c) of the PAEA. Since OPM refuses to acknowledge and exercise this authority, we
urge you to use your authority as President to direct the agency to do so.

Under current law, any CSRS "postal surplus" in the CSRDF must be transferred to the PSRHBF
in 20 IS. NAPUS believes that the surplus should be calculated accurately now and transfer of
funds in the current fiscal year. This would permit Congress to repeal the annual $5.5 billion pre­
funding payments scheduled over the next five years.

Consequently, NAPUS requests that you direct the OPM to immediately recalculate the postal
pension balances in the CSRDF using the methods endorsed by the USPSOIG and PRC through
the Hay and Segal studies. Moreover, NAPUS urges that you include provisions in your 2012
budget that would: (a) accelerate the date of the pension surplus transfer from 2015 to 201 I;. and
(b) repeal the pre-funding payment schedule included in the PAEA.

The Postal Service, unlike other federal agencies, state and local governments, and even many
major private employers has responsibly funded its future pension obligations for more than 40
years. It has two pension plans (FERS and CSRS) that are more than fully funded and has
already set aside more money ($42 billion) than any other company in America for future retiree
health benefits. Your actions would permit the USPS to become the first major employer in the
country to completely pre-fund its future retiree health obligations - at a time when two-thirds of
America's Fortune 1000 companies have failed to contribute any funds on behalf of future retiree
health benefits.

The USPS is a critical part ofthe nation's economic infrastructure with direct and indirect ties to
a $1 trillion mailing industry, employing about 8 million individuals. Averting a postal financial
crisis will help strengthen the economic recovery. NAPUS looks forward to working with your
administration to make sure that the Postal Service is treated fairly. Thank you for your
immediate attention to these issues.

Sincerely,

~~
ROb;;-~~-)
National President

Cc: Honorable Jacob Lew

Director ofthe Office of Management and Budget