6/1/17 – H.R. 756 would change the laws that govern the operation of the Postal Service (USPS), restructure how the federal government pays for health benefits for federal employees and annuitants, and alter how the federal government calculates the contributions that agencies make for retirement benefits. Major provisions of the bill would:
- Permit the Postal Service to raise rates on certain mail categories (direct spending savings of $8.6 billion);
- Authorize the Postal Service to phase out delivery of mail directly to business customers’ doors (direct spending savings of $2.0 billion);
- Establish a new health benefits program for Postal Service employees, annuitants, and their dependents (net direct spending costs of $4.5 billion and discretionary savings of $1.9 billion); and
- Require the use of demographic data specific to Postal Service employees for the calculation of certain retirement benefits, (net direct spending costs of $0.1 billion, and discretionary costs of $1.5 billion).(1)
Effects on the Federal Budget
CBO estimates that enacting H.R. 756 would reduce direct spending by about $6 billion over the 2017-2027 period; therefore, pay-as-you-go procedures apply. Enacting H.R. 756 would not affect revenues.
The total changes in direct spending over the 2017-2027 period are split between net off-budget savings of about $6.2 billion and net on-budget costs of about $0.2 billion. (USPS cash flows are recorded in the federal budget in the Postal Service Fund and are classified as off-budget, while the cash flows of the other accounts affected by H.R. 756 are classified as on-budget.)
In addition, CBO estimates that implementing H.R. 756 would lead to discretionary savings of $0.3 billion over the next 10 years, subject to appropriation actions consistent with that estimate.
CBO estimates that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2028.
Effects on State, Local, and Tribal Governments, and on the Private Sector
By increasing postal rates for public and private entities, H.R. 756 would impose intergovernmental and private sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on public and private entities that send certain mail through the Postal Service. Additionally, the bill would impose a private-sector mandate on some postal annuitants by requiring them to enroll in Medicare, if eligible. CBO estimates that the annual cost to public entities of increasing the postal rates would exceed the threshold established in UMRA for intergovernmental mandates ($78 million in 2017, adjusted annually for inflation) in each of the first five years after the rates become effective. CBO also estimates the aggregate annual cost to private entities of complying with the mandates would exceed the threshold established in UMRA for private-sector mandates ($156 million in 2017, adjusted annually for inflation) in each of the first five years the mandates were effective.
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- This estimate reflects a notice of proposed rulemaking published by the office of Personnel Management in December 2016 to use demographic data specific to Postal Service employees to calculate certain retirement benefits. If that rule is finalized before enactment, this provision would have no cost.
STATEMENT OF APWU
Postal Reform Scored by Congressional Budget Office
Reports a Positive Financial Impact of H.R. 756 on Federal Budget
APWU – 06/02/2017 – Yesterday, the Congressional Budget Office (CBO) published its report on Postal Service Reform Act of 2017 (H.R. 756). It is standard practice for the CBO to “score” pending legislation introduced into Congress in order to report its impact on the federal budget. They estimate that H.R. 756 would result in a savings of $6.2 billion over the next ten years.
These savings are technically “off-budget” because the USPS’ cash flow is recorded in the federal budget (in the Postal Service Fund) is classified as “off-budget.” The cash flow for the Postal Service Retirement Health Benefit Fund (PSRHBF) is classified as “on-budget.” The net “on-budget” cost of the legislation is only $0.2 billion.
“The score for H.R.756 has improved since the last version of the bill in the 114th Congress,” said Legislative and Political Director Judy Beard. “We are encouraged by the positive changes that have been made in the legislation and will seek continued improvements as the bill moves forward.”
The bill is now off to two House of Representatives’ committees: Ways & Means, chaired by Kevin Brady (R–TX-8) with ranking member Richard Neal (D-MA-1) and Energy & Commerce, chaired by Fred Upton (R-MI-6) with ranking member Bobby Rush (D-IL-2).
In both committees the bill must be approved in order to be voted on by the full House of Representatives. Then the legislation will move to the Senate for a similar process.
The APWU continues to support H.R. 756 in its present form and is working with legislators to make improvements. This legislation is crucial to ensuring a robust future for America’s public Postal Service.
STATEMENT OF UNITED POSTMASTERS and MANAGERS of AMERICA
Congressional Budget Office Projects HR 756 Saves $6 Billion
Posted by Bob Levi on 06/02/17
Yesterday, the Congressional Budget Office (CBO) finally released the projected cost associated with enactment of HR 756, the Postal Reform Act of 2017. The CBO determined that the bill would reduce federal spending by $6 billion over the next decade.
On March 16, the House Committee on Oversight and Government Reform approved HR 756 by voice vote. The CBO estimate is a prerequisite for a vote by the House of Representatives, and is an essential step for consideration by the House Ways and Means Committee and the House Energy and Commerce Committee. The legislation was referred to these two committees, since a provision in the bill impacts the Medicare program and the panels have jurisdiction over the program.
The major budget effects of HR 756 are as follows: The partial restoration of the exigent postage rate would increase postal revenue by $8.6 billion; the phase-out of door delivery for business mail would save $2 billion; and the creation of a postal health plan within the FEHBP, combined with Medicare integration, would increase spending by $4.5 billion. Consequently, there is a net 10-year savings of $6 billion.
Additional revenue could accrue to the Postal Service as the result of providing services on behalf of state, local and tribal governments, and from changes in the manner that the USPS contracts with private entities. Moreover, modest USPS savings would result from using postal-specific data for calculating certain retirement liabilities.
Medicare integration, a consequential element of HR 756, would result in USPS savings of $4.7 billion. However, since Medicare will become the primary insurer for all Medicare-eligible annuitants, Medicare costs would grow by $10.7 billion — this includes Medicare Part B coverage and providing the USPS with a prescription drug subsidy. Interestingly, USPS Medicare integration would reduce non-postal FEHBP premiums by $3.3 billion.
Finally, CBO projects that the financial relief provided by the bill would enable the agency to resume modest investment in infrastructure and operations.