Cover Story
The Postal Service’s
Prefunding
A Creature of Its Own Success By Susan Milligan
Editor’s Note: Over the past few years, postal reform legislation has come up repeatedly in Congress. In the 112th Congress (2011-2012), the Senate passed a bill, and negotiations with the House nearly resulted in an agreement – but time ran out without final action. In the current 113th Congress (2013-2014), the committees with jurisdiction over postal issues in both the House and the Senate have approved comprehensive postal reform bills, but neither chamber has taken up the bills. NARFE opposes the bills drafted by the committees and is particularly concerned with provisions of the Senate bill that would make substantial changes to federal workers’ compensation benefits, postal retiree health benefits and future postal workers’ retirement benefits. Though there has not been consensus on the details of a bill, there is broad agreement within Congress that reform is needed. But why? The simple answer is that the U.S. Postal Service has been incurring significant financial losses. But what exactly is driving those losses is a matter of debate. While declines in first-class mail attributable to the recession and competing electronic technologies are certainly contributing factors, many argue that burdensome requirements imposed by Congress, notably to “prefund” retiree health benefits, are the primary cause of the red ink. Where someone stands in this debate goes a long way toward determining what reforms he or she thinks the Postal Service needs. Given how central the prefunding requirement issue is to the postal reform debate, which could have broader implications for federal and postal employee and retiree benefits, we asked writer Susan Milligan to take a look back at the origins of the prefunding requirement.
Perhaps you’ve heard the rhetoric about the U.S. Postal Service. It’s bleeding money. It’s anachronistic. Everyone’s sending emails now instead of sending letters, and they’re paying their bills online. Unless it’s privatized or drastically reformed, the Postal Service is just going to go further into the red, eventually costing taxpayers 22
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