Last month the Economic Policy Institute, an independent Washington think tank, issued a study (Congressional Mandates Account for Most of Postal Service’s Recent Losses) analyzing the Postal Service’s operating losses over the past three years. It should be noted that while the Institute is nonpartisan, the National Association of Letter Carriers provided support for the research.
While the paper acknowledges the underlying shifts taking place in communications, it cites Congressional mandates, more specifically those requiring prefunding for retiree health benefits, as the principal driver behind the losses. In fact, the study discusses that removing the health benefits mandate would cover the Postal Service’s operational losses for 2007 and 2008 and a good portion for 2009. Furthermore, it points out that the Postal Service’s retiree benefits plan currently is funded at a significantly higher level than a sample of large private-sector employers that offer similar pensions.
The authors recommend a number of steps for Congress:
•Direct the Office of Personnel Management to recalculate Postal Service pension obligations using proper methodologies.
•Transfer any surplus discovered to the retiree health benefits fund.
•Should the surplus be sufficient to fully fund all benefit obligations, permit the Postal Service to pay off debt with the remaining surplus.
The paper concludes that issues involving the overpayments must be resolved before turning to other major actions, such as cutting Saturday delivery.
What do you think of the pension debate? What should Congress do?
This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).