The U.S. Postal Service plans to resume payments to the defined-benefit portion of a federal worker retirement fund next month, saying it has enough cash on hand to make the payments.
The decision by USPS in June to suspend the payments had no impact on postal employees because of a roughly $6.9 billion surplus in the Postal Service’s account with the Federal Employee Retirement System. But the move was considered a cost-saving measure to keep enough money on hand through the end of its fiscal year.
Postal officials announced Tuesday that USPS lost about $5.1 billion in the last fiscal year, driven primarily by declining volume and growing costs tied to labor.
Postal Service Chief Financial Officer Joseph Corbett said payments to FERS were resuming on the advice of the Justice Department, which was consulted by USPS and the Office of Personnel Management over whether USPS had the legal right to stop the FERS payments. Though he declined to elaborate on the specifics of the opinion, Corbett suggested to reporters Tuesday that a legal opinion by the Office of Special Counsel ran counter to the Postal Service’s plans.
Elaine Kaplan, OPM’s general counsel, said Wednesday that her agency welcomes the Postal Service’s decision to resume the payments.
“We can assure U.S. Postal Service retirees that they will receive full credit for their service notwithstanding the delay in the U.S. Postal Service’s contributions,” Kaplan said.
Corbett said USPS has “sufficient cash on hand” to make biweekly payments to FERS and once again warned that postal coffers soon run the risk of going dry.
“We will likely nearly run out of money at the end of fiscal 2012,” he told reporters Tuesday. “If the economy turns south, or we’re unable to achieve our plan, we could run out of cash earlier.”
That plan includes cutting $20 billion in operational costs in the next five years — and postal officials are relying on Congress and the White House to help achieve those goals. Among other things, USPS is asking to scale back payments made to prefund future retiree benefits — currently about a $5.5 billion annual charge. It also wants greater flexibility to end Saturday mail deliveries and close post offices.
House and Senate committees have approved different bills that would grant USPS greater managerial flexibility and eventually lead to the end of Saturday mail. But the measures differ on how to overhaul postal finances. A House Republican version would establish a financial control board, while the Senate version would refund about $7 billion in money USPS paid into FERS to help pay for worker buyouts and other costs.
“I think it’s fair to say that in terms of the cost reductions that we need to be solvent long-term, none of the bills gets us to where we need to go,” Deputy Postmaster General Ron Stroman said Tuesday. “We’re hopeful that moving forward we’ll be able to work with the House and Senate to improve the bills.”
Neither the House nor Senate bill is expected to be scheduled for a full vote in the near future, according to congressional aides.
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