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USPS Liabilities are a Colossal Sham :
OIG Says USPS Could Recover $142.4 Billion
Burrus Update #17-2010, Oct. 8, 2010
In a summary of four reports on postal finances, the USPS Office of the Inspector General (OIG) announced a stunning conclusion:
The Postal Service could recover $142.4 billion to:
Meet its financial obligations;
Extinguish its debt;
Have significant levels of cash for operations;
Optimize its infrastructure at a more reasonable pace, and
Minimize the impact on current employees –
If recommendations of the OIG are enacted.
In the summary issued on Sept. 30 [PDF], the OIG concluded that the USPS is entitled to refunds for past overpayments, as well as relief from future liabilities in the astounding amount of $142.4 billion.
Included in the total are:
Recovery of $75 billion for overfunding the Civil Service Retirement System (CSRS);
Recovery of $5.5 billion for overfunding of the Federal Employees Retirement System (FERS);
A recommendation that the USPS pre-funding levels for pensions be reduced from 100 percent to 80 percent, and that healthcare pre-funding levels be reduced to 30 percent. These are “benchmark standards,” the OIG says, and if the reductions were made, the Postal Service would save $45.9 billion for pension payments and $9.2 billion for retiree healthcare payments;
A recommendation to reduce the projected healthcare inflation rate set by the Office of Personnel Management (OPM) from 7 percent to the industry standard of 5 percent. This would result in savings of $6.8 billion.
The OIG has reported that these charges have been improperly imposed on the Postal Service. Two well-known auditing firms, the Hay Group and the Segal Company, independently concluded that the Postal Service has overfunded the CSRS pension fund in the amount of $75 billion and $50-$55 billion, respectively.
The report by the Office of Inspector General concludes that the serious financial condition of the Postal Service has been caused by the erroneous interpretation of funding requirements that were imposed on the Postal Service during the period of a severe recession and conversion to electronic communications.
Despite these burdens placed on the USPS over the past four years, in accordance with the Postal Accountability and Enhancement Act (PAEA), the agency has paid more than $20.8 billion to pre-fund future retiree healthcare liabilities.
A Colossal Sham
The media dutifully repeats the claim that the Postal Service is teetering on the edge of bankruptcy, but neglects to point out that these questionable obligations have nothing to do with USPS “operating expenses,” which include employee wages and benefits. The liabilities are a colossal sham, seized upon by postal management and by anti-worker congressmen who wish to erode the gains made by postal employees over 40 years of collective bargaining.
In fact, the USPS should be cited as “Business of the Year.” The Postal Service has survived the worst recession in 70 years, along with societal shifts in communication, and congressionally-imposed funding mandates that are not applied to any other commercial or governmental entity in the country. The USPS has endured, while providing the best mail service in the world at the lowest cost.
The Inspector General reports that despite all these obstacles, if accounting rules were applied uniformly, USPS deficits would disappear and the Postal Service would experience unprecedented surpluses.
Unfortunately, the Office of Personnel Management (OPM) has ruled that resolution of these issues will require legislative action by Congress.
The Lynch Bill (H.R. 5746), which would alter the methodology for computing USPS pension costs, is a step in the right direction.
William Burrus
President
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Home News & Events Burrus Updates OIG Says USPS Could Recover $142.4 Billion Latest News
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