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Washington, DC (Feb. 13, 2010)—In light of first quarter financial reports that the U.S. Postal Service would have generated $200 million in profits had it not been required to pre-fund its future retiree health benefits, Senator Bernie Sanders and Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, called for the passage of legislation to reform this burdensome requirement, which no other federal agency or private sector company faces.
“At a time when the Postal Service faces enormous financial challenges, we have got to end the absurd requirement that it pay over $5.5 billion every year to pre-fund future retiree health benefits,” Sanders said. “No other entity in the United States of America is burdened with this mandate, and with $44 billion in this future retiree account earning 3.5 to 4 percent interest every year, it can be fully funded in the next 21 years without the need for additional funds. By correcting this inequity, and through other commonsense reforms, the Postal Service will have the money it needs over the short term without resorting to the draconian cuts in service it has proposed. Over the long term, the Postal Service will need to develop a new and aggressive entrepreneurial business model to bring in the revenue it needs in the 21st Century.”
“The latest numbers show that the Postal Service would be in the black but for this extraordinary prefunding requirement,” said Cummings. “Congress should pass comprehensive legislation to eliminate this unfair burden, immediately improve the Postal Service’s cash position, and enable it to develop innovative products that meet changing market needs.”
Financial data released by the Postal Service reveal that it would have made profits of $200 million in the first quarter of this fiscal year had it not been required to account for approximately $3 billion of its pending fiscal years 2011 and 2012 retiree health benefits prefunding payment and non-cash adjustments to its Workers’ Compensation Liabilities.
Under the Postal Accountability and Enhancement Act of 2006, Congress required the Postal Service to pre-fund its future retiree health care benefits at an average cost of $5.5 billion per year for a period of ten years. The Postal Service has paid more than $45 billion to pre-fund future retiree health care benefits. No other federal agency or private sector company faces this burdensome requirement.
Sanders and Cummings have both introduced postal reform legislation in the Senate and House to improve the Postal Service’s long-term financial viability. Both bills would require refunding surplus balances in the Postal Services retirement accounts, encouraging innovation in the development to new products and services, and reforming the current retiree health benefits schedule.