White House Budget ‘Recognizes Seriousness’ of USPS Crisis

President Obama’s proposed budget for Fiscal Year 2012, which was released Feb. 14, “recognizes the seriousness of the Postal Service’s financial condition and proposes beginning steps to address it,” APWU President Cliff Guffey said.

The White House budget proposal would return to the Postal Service $6.9 billion the agency overpaid to the Federal Employees Retirement System (FERS). The refund would be made over a 30-year period, resulting in payments of approximately $500 million annually, beginning this year.

In addition, the president’s budget would reduce the USPS obligation to pre-fund retiree healthcare benefits by $4 billion for Fiscal Year 2011. Under current law, a payment of $5.5 billion is due by Sept. 30, and the USPS has said it may have to default.

The administration is also proposing to restructure future pre-funding payments, which have been the primary cause of the Postal Service’s financial crisis. The requirement to pre-fund the healthcare benefits of future retirees was mandated by the Postal Accountability and Enhancement Act of 2006, and is unique to the Postal Service.

A Long Road Ahead

“Unfortunately, the White House budget is simply a proposal,” Guffey noted. “The Republican majority in the House of Representatives will offer its own budget, which is expected to be very different. So, addressing the causes of the Postal Service’s financial crisis must continue to top our legislative agenda.

“We look forward to working with the administration and Congress to strengthen the USPS so that it can continue to serve the American people,” he said.

The budget also endorses giving the Postal Service flexibility to adapt to changes in communication technology and customer expectations for better service. The proposal says,

“The administration’s discussions with the Congress and others will be guided by the goals of allowing the Postal Service to: 1) Realign its infrastructure, facilities, processing and delivery systems to continuously improve efficiency; 2) Promote an adaptive, 21 st Century workforce; and 3) Accelerate value creation and enhance service to the public while respecting fair competition in the marketplace.”

“We will monitor specific proposals on realignment and the workforce as they take shape and respond appropriately,” Guffey said.

The budget proposal includes provisions requiring the USPS to continue six-day mail delivery, and to maintain rural delivery “at not less than the 1983 level.”

It omits any reference to USPS overpayments to the Civil Service Retirement System (CSRS), which independent actuaries have estimated to be between $55 billion and $75 billion.

The budget also recommends changes to Office of Workers Compensation Program benefits. The APWU is continuing to analyze these proposals, which would apply to all federal employees. In addition, the budget would terminate annual appropriations that reimburse the USPS for lost revenue from legislatively-mandated reduced postage rates for non-profit mailers, such as free matter for the blind.

Click here to view excerpts of the president’s proposed 2012 budget that affect the Postal Service. Click here to view or download the full FY 2012 proposal.