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March 14, 2020

The Post Office: Reform is overdue

It’s common knowledge that the Postal Service is losing money each year. The USPS reported a net loss of $8.8 billion for fiscal year 2019, more than double the loss reported last year. But one thing is helping keep it underwater: In 2006, Congress required the USPS to pre-fund its retiree health insurance over a 10-year period ending in 2016. Not being able to meet its commitment, the Postal Service has not made a payment into this fund since 2012, and it continues to default on payments. Is this mandate fair? No other federal agency has been assessed a pre-funding requirement. So in essence, the USPS was told to pay the retirement of workers who had not even gone to work for the post office. What’s the impact? About one half of the net loss in 2019 revenue was due to this mandate.

A recent House of Representatives bill (HR 2382) would rescind the pre-funding requirement. Supporters of the bill state that even though it would not bring the service into financial solvency, it would eliminate significant financial losses, putting the USPS on a firmer financial footing and providing a more realistic view of the agency’s debt structure.

Detractors argue that the removal of the mandate would ultimately be insufficient to allow the agency to become solvent, and Congress needs to address the continuing losses. On Feb 5, The House passed the bill 309-106 with notable bipartisan support. It has since moved on to the Senate.

That’s one facet of the problem. The USPS will still lose money each year unless other steps are taken. Postal Unions and others state that the Service must be relieved of constraints to their business model placed on it by Congress and be allowed the freedom to manage its business similar to other agencies and private concerns. Possible paths toward solvency might include: allowing it to set prices more in line with its business sector rather than the CPI (which, yes, means price increases), allowing it to diversify its services, and perhaps overhauling its retirement program requiring retirees to enroll in Medicare Part B in lieu of the current Federal benefits program.

An alternative is privatization, and unless some common sense reforms are not implemented there will be increased emphasis on it. The Administration has been pushing toward privatization, but such a move would require an act of Congress, and many members of Congress oppose it. Privatization is a drastic step and one fraught with uncertainties with no guarantee of success. The Post Office is America’s favorite Federal Agency; let’s keep it that way!

NARFE is the “National Active and Retired Federal Employees Association” with chapters across the country. The Tehachapi chapter of NARFE keeps up to date on this and all legislative matters effecting Feds. The chapter meets on the third Saturday of each month at the Village Grill, 410 E. Tehachapi Blvd. upstairs at 8 a.m. Join us for breakfast! Or call Steve Smith (661) 305-6217 to learn more about our chapter.

 
 

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