Lawmakers Act to ease fiscal burden of retiree benefits on USPS

U.S. Rep. Bill Pascrell (D-9th) said “USPS Fairness Act” could help secure the future health of the agency. (Corey Ryan Hanson/Pixabay)

U.S. Rep. Bill Pascrell (D-9th) said “USPS Fairness Act” could help secure the future health of the agency. (Corey Ryan Hanson/Pixabay)

This article originally appeared on NJ Spotlight


With full support from the New Jersey delegation, a bipartisan bill that aims to shore up the fiscal health of the United States Postal Service by changing how retiree health-care costs are funded easily cleared the U.S. House of Representatives earlier this week.

The key goal of the long-sought policy change — which still has to be approved in the U.S. Senate — is to ease fiscal pressure on the USPS by removing a requirement Congress imposed over a decade ago forcing the agency to prefund retiree health-care costs.

  • WHYY thanks our sponsors — become a WHYY sponsor

The legislative reform doesn’t erase the agency’s long-term obligations to its retired employees, but like state government in New Jersey and many other federal agencies, it allows those costs to be funded on a “pay-as-you-go” basis instead of by making regular significant contributions to a separate fund.

Among the loudest proponents has been U.S. Rep. Bill Pascrell (D-9th), who suggested Wednesday’s approval of what’s being called the “USPS Fairness Act” could be a major turning point toward securing the future health of the agency, which handles nearly half of the world’s mail.

“We took perhaps the most important step to realizing that future,” said Pascrell, who was one of the 12 members of the New Jersey delegation to sign on as co-sponsors.

The legislation’s advancement in the House was also praised by members of the bipartisan “Problem Solvers Caucus,” including U.S. Rep. Josh Gottheimer (D-5th), as well as the leaders of unions that represent many USPS employees.

The USPS maintains more than 31,000 different retail locations and has more than 500,000 employees, making it one of the nation’s largest employers. But unlike a private business, many aspects of its operations are tightly controlled by Congress, including postage rates.

In 2006, Congress required the USPS to begin setting money aside to cover the projected future health-care costs of all of its employees. By contrast, most other government agencies and businesses fund such obligations on a pay-as-you-go basis. (In recent years, the growing size of New Jersey’s net health-benefit liability to state and local government workers have helped generate calls for cost-saving reforms, by Senate President Steve Sweeney and others.)

Pressure on revenues

The prefunding policy, has forced the USPS to sock away substantial sums to cover actuarial estimates of future retiree health-care costs, or see any missed contributions show up as a deficit, which has often been the case. At the same time, revenues have been reduced as email and social media have become more popular communication forms than snail mail.

A recent analysis from the Congressional Budget Office noted the USPS has not been able to set aside enough money to fund its future retiree costs since 2010, and is unlikely to be able to do so through 2030.

Sponsors of the measure say eliminating the requirement — with an estimated cost for last year projected by the CBO at $4.6 billion — will allow the USPS to focus on its core mission of delivering mail and other packages. And while the broader fiscal challenges wouldn’t be solved overnight, it could also make it easier for the agency to adopt new and innovative services, they add.

“I am convinced it will remain a keystone part of our daily life for generations to come, by sustaining its vibrant workforce and expanding its services to the nation, such as postal banking,” Pascrell said.

Gottheimer praised the bipartisan support for the bill, which came only weeks after the Democratic-controlled House went through a grueling impeachment of Republican President Donald Trump.

“Passage of United States Postal Service Fairness Act, a bipartisan bill with more than 290 co-sponsors, will allow the Postal Service to better focus on investing in the essential services postal workers provide for customers every day,” Gottheimer said.

Unions turn sights on Senate

Meanwhile, Judy Beard, legislative and political director of the American Postal Workers Union, also praised union members for their lobbying efforts in support of the health-care funding reform.

“Passing this legislation in the House is a positive step toward relieving the Postal Service of the manufactured financial crisis caused by the prefunding mandate,” Beard said.

Fred Rolando, president of the National Association of Letter Carriers union, suggested in his own response that the focus now turns to getting the bill through the Republican-controlled Senate.

“House passage is a major victory in the battle to end this disastrous mandate, but our work is not done,” Rolando said.

Want a digest of WHYY’s programs, events & stories? Sign up for our weekly newsletter.

Together we can reach 100% of WHYY’s fiscal year goal