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Untangling financial knots at Postal Service won’t be easy

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The horde of photographers crowded around the postmaster general as if he were a celebrity suspect. The Dirksen Senate Office Building hearing room was jammed with a standing-room-only crowd. The number of senators attending the hearing on U.S. Postal Service finances demonstrated they understood the severity of the situation.

And, finally, the administration indicated it is preparing a plan to help the USPS from going broke.

At last, the Postal Service is getting the kind of attention that is needed to keep a critically ill patient from the morgue.

But attention does not yet equal a comprehensive plan, as Sen. Susan Collins (Maine), the top Republican on the Homeland Security and Governmental Affairs Committee, pointed out in her questioning of John Berry.

Berry, director of the Office of Personnel Management, said the White House will offer a financial plan for the Postal Service when the administration submits a general deficit reduction program. But at the moment, Collins said, when it comes to the Postal Service, it’s easier to know what the administration is against than what it is for.

“You really have not come forth with a plan,” she complained to Berry. He was in the unfortunate position of representing the entire administration, when in his role as the government’s chief people person he has nothing to do with much of what ails USPS.

The Office of Management and Budget, which has a much broader mandate, declined to testify, Sen. Thomas R. Carper (D-Del.) informed the gathering.

Committee Chairman Joseph I. Lieberman (I-Conn.) said he was encouraged that President Obama will soon unveil a proposal, but that’s not enough for Collins. “I just don’t understand why the administration does not have a concrete plan to put forward today,” she said.

Of course, Congress, which has heard USPS’s desperate pleas for a long time, also hasn’t developed a comprehensive plan with broad bipartisan support.

Berry did not come empty-handed, but he was not in a position to offer a plan. He did say the administration’s proposal will be designed to “ensure a sustainable future for the Postal Service.” In the meantime, the White House supports a 90-day delay in a $5.5 billion prefunding of retiree health benefits that Postmaster General Patrick R. Donahoe says USPS can’t pay anyway.

Berry also said “we propose returning to the USPS its surplus in the FERS [Federal Employees Retirement Service] retirement fund, estimated at $6.9 billion.”

But a related issue showed just how complicated the financial issues with the postal service can be. Berry said his lawyers told him that OPM does not have the authority to refund another USPS overpayment, this one to the Civil Service Retirement System. That overpayment is estimated at $50 billion to $75 billion.

Collins insisted OPM does have that authority, citing chapter and verse of the law she wrote that provides OPM that power.

And “that $6.9 billion pales” in comparison to the Postal Service’s overall needs, Collins said. Those needs were detailed with dismal figures in Donahoe’s testimony.

The USPS fiscal year 2011 third quarter loss was $3.1 billion. The net loss for the nine months ended June 30 was $5.7 billion, he said, “and we are currently projecting a net loss of up to $10 billion by the end of this fiscal year, depending on interest rates.”

The administration had nothing to say on the USPS proposal to abrogate, with congressional approval, the no-layoff provisions in its union contracts. Surprisingly, this issue received comparatively little attention.

Sen. Daniel K. Akaka (D-Hawaii) said he is “concerned about the negative consequences to the collective bargaining process.”

The administration, through Berry, also did not take a position on the Postal Service plan to withdraw from existing health and retirement programs so it can establish its own.

But Berry offered some reassurance to the millions of non-postal federal employees and their families covered by employer-sponsored health insurance, saying “a withdrawal of the postal population would not have a significant impact on the Federal Employees Health Benefits Program (FEHBP) as a whole.”

Berry, however, did offer a relevant lesson about agencies seeking to pull out of the health plans. The Federal Deposit Insurance Corporation once sponsored insurance outside of FEHBP for its employees but found that wasn’t such a good idea.

The FDIC “found the savings they projected were not to be had,” Berry told the committee.

Saying the plan needs more study, Berry said, “I think we need to move very, very carefully” before allowing USPS to pull its employees from the health program.

That’s about as close to opposing a plan as he could get without taking a position.

Follow the Federal Diary on Twitter: @Joe DavidsonWP.

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