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Postal Reform Act of 2016: July Update

Posted by Mark Fallon on Jul 19, 2016 5:00:00 AM

Franklin_Stamp-1.jpgIn what must be a speed record for the 114th Congress, the Postal Reform Act of 2016 (H.R.5714) was filed, marked-up and passed by the House Oversight and Government Reform Committee in just two days. And with bipartisan support.

Most of the provisions introduced in the draft version published last month remain, including:

  • Addresses U.S. Postal Service (“USPS”) retiree health benefits funding by automatic enrollment in Medicare Part A and B.
  • Cancels the unpaid obligations for future retiree health benefits as required under the Postal Accountability and Enhancement Act of 2006.
  • Requires recalculation of USPS payments into the federal retirement funds, and reimburses the USPS for any overpayments into the fund (over 30 years).
  • Reduces the Board of Governors from 9 members to 5 members.
  • Requires business to move to centralized (e.g., cluster box) delivery and the “voluntary” conversion of residential addresses to centralized delivery if 40% of residents consent to the plan.
  • Restores half of the Exigent Rate Case increase (2.15%), making it the new base rate for future increases.
  • Directs the Postal Regulatory Commission (“PRC”) to study the rate making system.
  • Authorizes the USPS to provide services (including facilities) to federal, state, local and tribal government agencies.
  • Reduces the PRC review period on post office closings from 120 days to 60 days.

The most significant change from the draft bill is abandoning the idea to change the Postmaster General and Deputy Postmaster General to Presidential appointees (with Senate approval) with 4-year terms. These positions will remain out of the political patronage system and continue to be appointed by the Board of Governors.

Passed alongside the Act was a complementary bill - H.R. 5707, the Postal Service Financial Improvement Act of 2016. Another bipartisan solution, this bill was cosponsored by Reps. Stephen Lynch (D-MA) and David McKinley (R-WV), and would authorize the Secretary of the Treasury to invest a limited amount of the Retiree Health Benefits Fund in market-based index funds. Currently, the USPS health fund only invests in Treasury securities and the proposed change should increase the interest earned. This bill was kept separate, due to concerns about Congressional Budget Office (“CBO”) scoring.

CBO scoring could be the “poison pill” that kills this bill. While the USPS operations funding is off-budget, Medicare and the Federal Employee Retirement System (“FERS”) are significant parts of the federal budget. Any significant changes to the number of people drawing Medicare benefits or the amount the USPS pays into FERS, may have to be offset by cuts elsewhere in order to be passed.

The next step for this bill is to move to the House floor for a vote. However, Congress has just begun a 7-week recess, which includes the national conventions for both political parties. The rancor of the presidential race may stifle the bipartisan effort that has brought the bill to this point. Of course, even if the House does pass a postal reform bill, action is still required by the Senate – a Senate that has yet to approve any of President Obama’s nominees to the current Board of Governors.

There’s still a long way to go before meaningful Postal Reform is passed, but the quick reporting of the current bill out of the House Oversight Committee is a reassuring sign that Congress is headed in the right direction.


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