FOR IMMEDIATE RELEASE	
Contact: Media Relations	202-268-2155
December 2, 2003
	Release No. 093
	www.usps.com

POSTAL SERVICE REVISES FY 2003 Q III BALANCE SHEET
REPORTS SUPPLEMENTAL PENSION LIABILITY IN FOOTNOTES

WASHINGTON -- The Postal Service announced it has revised its Quarter Three 
Fiscal Year  2003 balance sheet to remove the amount of its supplemental 
liability to the Civil Service Retirement and Disability Fund (CSRDF) due to 
the possible annual variations in the amount and the timing of estimates of 
the liability.

By this revision, the Postal Service removes from the balance sheet the $5.8 
billion asset and the corresponding liability related to deferred retirement 
costs and now fully discloses and discusses these potential costs in notes 
to the financial statements.

These circumstances result from alterations to the way the Postal Service 
funds the Civil Service Retirement System (CSRS) resulting from P.L. 108-18, 
The Postal Civil Service Retirement System Funding Reform Act of 2003 (the 
Act), signed into law on April 23, 2003.

In announcing the revision, Chief Financial Officer Richard J. Strasser, Jr. 
said:  "The change has no impact on our Income Statement or our Statement of 
Cash Flows and does not alter the Postal Service's accounting policy for 
pension costs.  This change acknowledges the fact that any supplemental 
liability is subject to recalculation by the Office of Personnel Management 
(OPM) on an annual basis, with up to twelve months allowed to complete the 
estimate." 

The Postal Service accounts for retirement benefits as a participant in a 
multiemployer plan arrangement, in accordance with Statement of Financial 
Accounting Standards No. 87- Employers' Accounting for Pensions.  "Our 
accounting policy aligns with the parent-subsidiary relationship that the 
Postal Service has as an independent establishment of the Executive Branch 
of the government.  OPM administers federal government pension funds." 
Strasser said.

Prior to enactment of P. L. 108-18, the Postal Service's normal cost 
contribution to the CSRDF was based on seven percent of employees' basic pay 
plus additional payments for increases in basic pay and annuitants' 
cost-of-living adjustment (COLA) increases authorized by Congress.  Each 
year, OPM determined the estimated increase in the CSRDF deferred liability 
resulting from postal pay increases and billed the Postal Service a 
specific, fixed amount.  The Postal Service recorded the obligation as a 
deferred retirement cost (asset) and as an offsetting amount payable for 
deferred retirement benefits (liability).  The obligations were amortized 
and paid in 30 equal annual installments at 5 percent interest for base pay 
increases and 15 equal annual installments at 5 percent interest for retiree 
COLA increases. 

The Act changed the way the Postal Service funds its contributions to the 
CSRS retirement plan.  It requires the Postal Service to dynamically fund 
the plan by paying a normal cost contribution of 17.4 percent of employees' 
basic pay.  This increased contribution includes projected funding for both 
future basic pay increases and annuitant COLAs.

The Act further requires that the Postal Service pay an additional annual 
amount, if necessary, each September beginning in 2004 as determined by OPM.  
The additional amount is based on a calculation of any potential 
supplemental liability.  Should one exist, it would represent the excess of 
the actuarial present value of future benefits over the actuarial present 
value of future contributions, earnings, and other actuarial factors related 
to Postal Service participants in CSRS. Such additional obligations, if any, 
may result due to the deviation of actual results from valuation assumptions 
used by OPM to determine the CSRS base contributions.  OPM has up to 12 
months after the fiscal year ends to calculate the supplemental liability 
and the resulting amount to be paid by the Postal Service will be billed 
subsequently.  Therefore, the supplemental liability will not be known at 
the time current financial statements are published. 

Explaining today's action, Strasser stated, "We note that the economic 
assumptions used by OPM in calculating the $5.8 billion supplemental 
liability, 3.75 percent inflation, 4.25 percent salary increases and 6.75 
percent interest, do not reflect actual inflation adjustments and are based 
on federal as opposed to Postal Service salary increase levels.  
Specifically, OPM's $5.8 billion estimate does not reflect two years of 
actual inflation adjustments of 1.4 percent in 2003 and 2.1 percent in 
2004," he said.

###

Since 1775, the U.S. Postal Service has connected friends, families, 
neighbors and businesses by mail.  It is an independent federal agency that 
visits 141 million homes and businesses every day and is the only service 
provider to deliver to every address in the nation.  The Postal Service 
receives no taxpayer dollars for routine operations, but derives its 
operating revenues solely from the sale of postage, products and services.  
With annual revenues of more than $68.9 billion, it is the world's leading 
provider of mailing and delivery services, offering some of the most 
affordable postage rates in the world.  The U.S. Postal Service delivers 
more than 46 percent of the world's mail volume-some 202 billion letters, 
advertisements, periodicals and packages a year-and serves seven million 
customers each day at its 40,000 retail locations nationwide.

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