LIEBERMAN REQUEST LEADS TO GOOD
NEWS:
USPS NEARLY PAID UP ON EMPLOYEE RETIREMENT OBLIGATION
POSTAL SERVICE PREDICTING NO RATE
INCREASES FOR FOUR YEARS
November 5, 2002
WASHINGTON - At the urging of Governmental Affairs
Committee Chairman Joe Lieberman, D-Conn., the Office of
Personnel Management has discovered a potentially vast
overpayment that could keep postal rates stable for years to
come.
Postmaster General John Potter announced Tuesday that the
Postal Service's obligation to fund retirement benefits for its
employees is close to being met, freeing up billions of dollars
that otherwise would have been directed to future retirement
obligations.
"This is a stunning turnaround in USPS finances, if
accurate," Lieberman said.
"I have asked the General Accounting Office to look
into the figures presented by OPM to confirm their
accuracy."
In March 2001, a bipartisan group of senators requested
that GAO study the cause of the Postal Service's financial
disarray and offer options the Service might take to improve its
situation. Lieberman
specifically asked GAO to look at USPS's multi-billion dollar
legal obligation to fund its share of the Civil Service
Retirement System, and GAO agreed to ask OPM to examine its
books in this area.
As a result, OPM reported to the Postal Service that its
FY 2003 obligation would be reduced by $2.9 billion and its FYI
2004 obligation would be reduced by $2.4 billion.
These figures have not yet been audited and, therefore,
are tentative. But
the Postal Service estimates that current postal rates could
remain in effect until 2006.
Previously, another rate increase had been expected in
2004.
Specific legislation will be necessary in order for the
Postal Service to reduce its Civil Service Retirement System
payments.
"This legislation will not be easy to
accomplish," Lieberman said, "but the support of the
Administration will be critical to its chances for
passage."
However, even if such legislation is approved, the Postal
Service will not be in the black.
The Service has projected a $1.2 billion loss for 2002,
with an outstanding debt of $12 billion.
That projection was made before the
anthrax-through-the-mail scare last fall, which imposed
additional enormous expenses on the Service.
The USPS still needs to cut costs, and to make sure it
uses the funds saved from the retirement payment to pay down the
$12 billion debt, Lieberman said.
In addition, the USPS has a substantial unfunded
liability for retiree health care costs that it has not yet
included on its financial statement, a first step toward
addressing the financial impact of those costs.
Lieberman warned, "we must proceed cautiously, to be
sure that USPS meets its full obligations under the law and to
ensure that a costly retreat doesn't become necessary down the
road."
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