NARFE Urges Congressional Passage of USPS Fairness Act

FOR IMMEDIATE RELEASE
February 4, 2020  

Alexandria, Va. – In advance of a House of Representatives’ vote on the United States Postal Service (USPS) Fairness Act, H.R. 2382, legislation to repeal the unprecedented 2006 mandate that the USPS prefund its future retiree health benefits, NARFE National President Ken Thomas issued the following statement:

“For too many years, the United States Postal Service has been operating under an unprecedented, unnecessary and unfair prefunding mandate that only serves to steer cost-cutting strategies, prohibit investments and limit options for legislative reforms. In fact, rather than protecting health benefits, the prefund requirement for future retirees has led to legislative proposals that threatened the benefits of current retirees.

“H.R. 2382 will not solve all of USPS’ financial problems, but it does provide a common sense first step by rescinding an unreasonable mandate and providing breathing room for future reforms. I urge members of the House to pass the legislation.”

Background

The Postal Accountability and Enhancement Act (PAEA) of 2006 mandated annual prefunding payments by USPS into the Retiree Health Benefits Fund (RHBF) over a 10-year budget window from fiscal years 2007-2016, which ranged from $5.4 to $5.8 billion. Congress designed this scheme to allow USPS a refund for $27 billion in overpayments for its share of former veterans’ retirement benefits without creating a budget cost for the bill.

USPS has not made a prefunding payment to the U.S. Treasury since 2010. At the end of the 10-year payment schedule in 2016, the Office of Personnel Management (OPM) revalued the RHBF unfunded liability to $56.9 billion and assessed an annual amortization payments (estimated to be nearly $1 billion annually) through fiscal year 2056 to cover the unfunded liability.  USPS continues to default on mandatory health and retirement payments even with the 10-year budget window closed.
 
Although USPS has not made these payments, the liability remains current on its balance sheet. This liability and the continued amortization payments are driving cost-cutting strategies at USPS, prohibiting investments that could expand business and save money over the long term and driving the conversation regarding mandatory Medicare coverage.

No other federal agency or private-sector company fully prefunds its retiree health benefits.

NARFE National President Ken Thomas sent a letter to House of Representatives urging passage of the USPS Fairness Act, H.R. 2382. You can access the letter here.

1Financial Analysis of United States Postal Service Financial Results and 10-K Statement FY 2017, p. 11, available at: https://www.prc.gov/sites/default/files/reports/PRC%20FY2017%20FINANCIAL%20REPORT%20FINAL.pdf (accessed April 17, 2018).

                                                         # # #

As the only organization solely dedicated to the general welfare of all federal workers and retirees, NARFE delivers valuable guidance, timely resources and powerful advocacy. For nearly a century, NARFE has been a trusted source of knowledge for the federal community, Capitol Hill, the executive branch and the media.

CONTACT:
Jill Talley
NARFE Director of Public Relations
jtalley@narfe.org
(703)838-7760


National Active and Retired

FEDERAL EMPLOYEES Association

NARFE (National Active and Retired Federal Employees Association) 606 N. Washington St., Alexandria, VA 22314, Phone: (703) 838-7760, Fax: (703) 838-7785.

 

This is the only website that reflects the official opinions and positions of the National Active and Retired Federal Employees Association (NARFE). Opinions and/or positions that appear on any other site bearing NARFE's name or seal are not necessarily those of NARFE. Click here for Privacy Statement.   NARFE has been certified by Dun & Bradstreet.

NARFE Urges Congressional Passage of USPS Fairness Act

FOR IMMEDIATE RELEASE
February 4, 2020  

Alexandria, Va. – In advance of a House of Representatives’ vote on the United States Postal Service (USPS) Fairness Act, H.R. 2382, legislation to repeal the unprecedented 2006 mandate that the USPS prefund its future retiree health benefits, NARFE National President Ken Thomas issued the following statement:

“For too many years, the United States Postal Service has been operating under an unprecedented, unnecessary and unfair prefunding mandate that only serves to steer cost-cutting strategies, prohibit investments and limit options for legislative reforms. In fact, rather than protecting health benefits, the prefund requirement for future retirees has led to legislative proposals that threatened the benefits of current retirees.

“H.R. 2382 will not solve all of USPS’ financial problems, but it does provide a common sense first step by rescinding an unreasonable mandate and providing breathing room for future reforms. I urge members of the House to pass the legislation.”

Background

The Postal Accountability and Enhancement Act (PAEA) of 2006 mandated annual prefunding payments by USPS into the Retiree Health Benefits Fund (RHBF) over a 10-year budget window from fiscal years 2007-2016, which ranged from $5.4 to $5.8 billion. Congress designed this scheme to allow USPS a refund for $27 billion in overpayments for its share of former veterans’ retirement benefits without creating a budget cost for the bill.

USPS has not made a prefunding payment to the U.S. Treasury since 2010. At the end of the 10-year payment schedule in 2016, the Office of Personnel Management (OPM) revalued the RHBF unfunded liability to $56.9 billion and assessed an annual amortization payments (estimated to be nearly $1 billion annually) through fiscal year 2056 to cover the unfunded liability.  USPS continues to default on mandatory health and retirement payments even with the 10-year budget window closed.
 
Although USPS has not made these payments, the liability remains current on its balance sheet. This liability and the continued amortization payments are driving cost-cutting strategies at USPS, prohibiting investments that could expand business and save money over the long term and driving the conversation regarding mandatory Medicare coverage.

No other federal agency or private-sector company fully prefunds its retiree health benefits.

NARFE National President Ken Thomas sent a letter to House of Representatives urging passage of the USPS Fairness Act, H.R. 2382. You can access the letter here.

1Financial Analysis of United States Postal Service Financial Results and 10-K Statement FY 2017, p. 11, available at: https://www.prc.gov/sites/default/files/reports/PRC%20FY2017%20FINANCIAL%20REPORT%20FINAL.pdf (accessed April 17, 2018).

                                                         # # #

As the only organization solely dedicated to the general welfare of all federal workers and retirees, NARFE delivers valuable guidance, timely resources and powerful advocacy. For nearly a century, NARFE has been a trusted source of knowledge for the federal community, Capitol Hill, the executive branch and the media.

CONTACT:
Jill Talley
NARFE Director of Public Relations
jtalley@narfe.org
(703)838-7760




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NARFE (National Active and Retired Federal Employees Association) 606 N. Washington St., Alexandria, VA 22314, Phone: (703) 838-7760, Fax: (703) 838-7785.

 

This is the only website that reflects the official opinions and positions of the National Active and Retired Federal Employees Association (NARFE). Opinions and/or positions that appear on any other site bearing NARFE's name or seal are not necessarily those of NARFE. Click here for Privacy Statement.   NARFE has been certified by Dun & Bradstreet.