Summary of the Postal Operations Sustainment and Transformation (POST) Act of 2011

There are seven provisions in the bill. All of them are based on the legislative proposals the Postal Service made this past spring. 1. Financial Relief The heart of the bill would permanently address the pension and retiree health issues that have been a drain on postal finances over the years. The Postal Service currently pays into the old Civil Service Retirement System (CSRS) using a formula that the Postal Service Inspector General, the Postal Regulatory Commission, and at least two outside consulting firms have found unfairly allocates costs related to the former Post Office Department to the Postal Service. If true, this has resulted in the Postal Service overpaying its CSRS obligations over the few decades by between $50 billion and $75 billion. In addition, the Postal Service since FY2007 has been required to pay between $5.5 billion and $5.9 billion a year in an effort to prefund its future retiree health obligations. The draft bill would give the Postal Service more than $5 billion in breathing room each year by making three changes to current law: First, it would requires OPM to recalculate the Postal Services CSRS obligation in a way that makes the Treasury responsible for pension costs related to pay increases Post Office Department employees working for the Postal Service would have gotten had they stayed on the federal payroll. This was the approach recommended by the IG, the PRC, and the consultants who looked at this issue. The recalculation will result in a finding that the Postal Service has paid about $50 billion more into CSRS that it owed. Second, it establishes a mechanism by which the Postal Service could be reimbursed for overpayments its made into the Federal Employees Retirement System (FERS). Those overpayments are currently estimated to be about $6.9 billion.
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 Finally, it would allows the Postal Service to use its CSRS and FERS overpayments to make the remaining seven retiree health prefunding payments it owes between now and 2016. Remaining funds could also be used to fund the Postal Services workers compensation obligations or to pay down its debt to the Treasury. 2. Saturday Delivery The bill would remove the Appropriations rider that currently prevents the Postal Service from moving forward with its proposal to eliminate Saturday delivery. Under the 2006 postal reform legislation, the Postal Service was given the authority to reduce delivery frequency when necessary after taking the proposal to the Postal Regulatory Commission and receiving an advisory opinion. The Appropriators, however, put language in their bill every year negating this authority. Eliminating that rider would allow the Postal Service to achieve the $3 billion or more a year in savings that the Postal Service believes it could achieve if it eliminated Saturday delivery. The bill would also speed the process by which the Commission considers service changes like the potential elimination of Saturday delivery, giving customers and the Postal Service additional certainty. The Commissions consideration of the Postal Services Saturday delivery proposal took nine months, three times longer than envisioned in even the Commissions regulations. 3. Post Office Closings The bill would eliminate several provisions in law that the Postal Service believes forces it to maintain post offices that are no longer necessary. If the Postal Service is able to close some of these facilities, postal management believes they could began the process of rolling out cheaper, more convenient retail options such as automated kiosks or postal stations located in grocery stores or other places where people go every day. At the same time, it requires the Postal Service to develop a plan for the expansion of alternate retail options and requires that the Postal Service develop a service standard that would guarantee all postal customers especially rural customers a minimum level of postal retail access. 4. Arbitration Under current law, the Postal Service is required to pay its employees wages and benefits that are comparable to those paid in the private sector. Arbitrators in labor disputes have made it clear in the past that they think this is a legally binding requirement that should

be taken into consideration when they render a decision. At times, arbitrators have awarded postal employees what they believe are comparable pay and benefits without taking the Postal Services financial condition into account. Recognizing that this situation cannot continue in a world in which the Postal Service operates under a rate cap and faces stiffer competition from electronic communication, the bill would require arbitrators to take the Postal Services financial condition into account along with other factors such as the comparability requirement and the details of the rate system. 5. Non-Postal Products Under current law, the Postal Service is prohibited with a few exceptions from offering non-postal products and services, meaning products or services not related to the mail. The bill would revise this prohibition so that the Postal Service can begin offering non-postal products that are in the public interest and make use of the existing postal network. Non-postal products would be approved and regulated by the Postal Regulatory Commission. 6. State and Local Governments Under current law, the Postal Service may partner with federal agencies to offer government services in postal facilities. The bill would allow them to enter into similar partnerships with state and local governments. 7. Negotiated Service Agreements Under current law, the Postal Service may negotiate agreements with individual mailers aimed at bringing in additional mail volume and revenue. At a time when mail volume is falling and many postal customers are turning to electronic forms of communication, the bill would give the Postal Service additional freedom to negotiate deals with mailers aimed at preserving its existing business. It would also place a time limit on the Postal Regulatory Commissions consideration of Negotiated Service Agreements to provide customers and the Postal Service with certainty. 8. Wine and Beer Under current law, the Postal Service is prohibited from mailing alcoholic beverages. UPS and FedEx can, however. The bill includes language putting the Postal Service on equal footing with UPS and FedEx with respect to shipping beer and wine.