Senate Finance Committee Chairman Max Baucus, D-Mont., introduced legislation that would let the U.S. Postal Service use some of the $6.9 billion in pension overpayments it has already made to ease its pressing cash crisis.
The measure, introduced Tuesday, is a “life preserver” to help USPS stay above water while longer-term solutions are found, Mr. Baucus said in a statement announcing the bill.
Along with operational challenges, the USPS is required by law to make a $5.5 billion retiree health prefunding payment, which it doesn’t have. What it does have are pension overpayments of $6.9 billion in the current Federal Employees’ Retirement System, Washington.
The Postal Service is barred from transferring or recouping overpayments already made. Unlike other federal agencies, the USPS is required by law to prefund 10 years’ worth of pension benefits.
The Baucus bill would require the federal Office of Personnel Management, which oversees federal pension and benefit programs, to calculate the exact pension overpayment amount, and use it to offset the health benefit bill, but it doesn’t repeal the overpayment requirement; that would require different legislation.
Mr. Baucus, who also is vice chairman of the Joint Committee on Taxation, is on the supercommittee working on cutting the federal deficit. The latest bill is one of several in the Senate and House aimed at Postal Service reforms. Bill backers are hoping for markup on some of the proposals later this month, and are expecting a Government Accountability Office report on the pension overpayment issue due Oct. 13 to help further the debate over how USPS can use its pension surplus to alleviate its budget problems, congressional staffers say.
David C. Williams, USPS inspector general, said in May 2011 testimony before a Senate governmental affairs subcommittee that nearly 90% of the Postal Service’s $20 billion loss over the past four years was caused by pension overpayments based on what he describes as “wrongful overcharges” by the OPM.