CSRS LEGISLATION PUBLIC LAW 108-18
PUBLIC LAW 108-18 Overview • Changes Postal Service CSRS Funding to Prevent $105 Billion Over Payment Under Existing Legislation • Transfers $27 Billion CSRS Cost of Military Service to USPS • Places “Savings” (Difference Between New and Old CSRS Payments) in Escrow Beginning in FY 2006
PUBLIC LAW 108-18 Reports Required by Law • Funding CSRS Cost of Military Service – USPS or U.S. Treasury to Pay? • USPS Use of “Savings” Beyond FY 2005
PUBLIC LAW 108-18 USPS Position on Military Service Costs Responsibility Should Revert to U.S. Treasury • 90% Relates to Military Service Prior To 1971 Establishment of USPS • $17B Relates to Treasury Payments Made • Between 1971 and 2002 • USPS Only Agency Charged This Cost • President’s Commission: “Taxpayers, Not Ratepayers, Should Finance Military Pensions”
PUBLIC LAW 108-18 Use of “Savings” • 2003/04 -- Liquidation of Debt • 2005 -- Fund Expense Growth or Liquidate Debt • 2006 & Beyond – Hold in Escrow Pending • Legislative Change
PUBLIC LAW 108-18 Use of “Savings” After 2005 Law Requires Consideration of: • Debt Repayment; • Pre-funding Post Retirement Health Benefits; • Cost Saving Capital Investments; • Delaying/Moderating Increases in Postal Rates; • Any other Matter; and • Work of President’s Commission
PUBLIC LAW 108-18 Sense of Congress Stated in Act “…because the Postal Service still faces substantial obligations related to post- retirement health benefits for its current and former employees, some portion of the savings …should be used to address those unfunded obligations”
PUBLIC LAW 108-18 USPS Position on Escrow Requirement • Escrow Requirement Creates New Over-Funding • $3.2B Required to Fund FY 2006 Escrow • USPS Opposes Escrow Requirement
PUBLIC LAW 108-18 USPS Preferred Proposal With Obligation for Military Service Costs Returned to U. S. Treasury, Pre-Fund Postretirement Health Benefit Costs of Employees and Retirees. • Responds to “Sense of Congress” and GAO Concerns re Recognizing and Funding Costs when Earned.
PUBLIC LAW 108-18 USPS Alternate Proposal Should USPS Be Required to Fund Military Service Costs: • Pay Annual Retiree Health Benefit Premium Costs • Pre-Fund Retiree Health Benefit Cost for New Hires Since FY 2002 • Liquidate Debt • Fund Cost Saving Capital Investments
PUBLIC LAW 108-18 FY 2006 Rate Impact of Proposals • $3.2B Escrow Requirement: Increases Rates 5.4% Increase • USPS Preferred Proposal: Increases Rates 1.5% to 2.0% • USPS Alternate Proposal: Increases Rates 0.3%
PUBLIC LAW 108-18 Next Steps • Military Service Costs: GAO Evaluation of USPS, OPM and Treasury Proposals Due November 29, 2003. • Disposition of Savings: - GAO Evaluation of USPS Proposal Due November 29, 2003. - Congress to Revisit Savings Issue Within 180 Days of Receiving GAO Report.