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Most of the Republicans supported it; twenty voted against it. As the new GAO report states, “the payments required by PAEA were significantly ‘frontloaded,’ with the fixed payment amounts in the first 10 years exceeding what actuarially determined amounts would have been using a 50-year amortization schedule.”. The existing fund would be left to grow with interest, with no other cash inflow or outflow, until the Postal Service’s liability was fully funded. The GAO does not consider this approach in any detail because it is working on a separate report on the topic. If the payments are smaller in the near term, they will be bigger in the long term. The following three principles should also be considered: USPS mandated post-retirement health care reserves must be based on “actual vested liability,” not on “total projected liability” as they are now. The OIG therefore argues that the $5.5 billion payments mandated by PAEA are completely unnecessary. The GAO report projects massive health care costs for future retirees. In order to remedy the overfunding problem the OPM and GAO had uncovered, Congress needed to pass legislation that would change the way the Postal Service's CSRS retirement liability was calculated and funded. They use a lot of charts and graphs to dramatize how bad the Postal Service’s financial condition is (always “high risk”), and they recommend radical solutions, like downsizing the workforce, cutting services, and closing facilities. The details are extremely complicated, and making projections about how the different proposals would work out is further complicated by several unknowns, like the rate of inflation for health care costs, future interest rates being earned by the money accumulating in the fund, the size of the workforce, and so on. ), The Heritage Foundation, the right-wing think tank that has longed advocated privatization of the Postal Service, similarly argued that returning the burden of the military pensions to the government would “primarily serve to subsidize mass mailers while making it more difficult to bring federal spending under control.”. Plus, the Postal Service gave hiring preference to veterans, so there were a lot of them working at the post office, and it was unfair that the Postal Service should have this obligation on its books. Back in 2006, PAEA seemed like a responsible decision to the officials in charge of analyzing the Postal Service budget, GAO officials said. It cites a 2011 OPM Inspector General report that said postponing prefunding would be “financially risky,” and it says that significantly reducing the payments now will increase the possibility that the Postal Service won't be able to make the larger payments that will come due decades from now. According to the Postal Service, “Having an affordable arrangement, utilizing best practices found in the private sector, will serve Postal Service employees and retirees well.”  The phrase "best practices found in the private sector" probably means that the Postal Service would cut benefits for its retirees and bring them down to a level comparable to what's offered by private corporations. In the last Congressional session, bipartisan bills were introduced in both the House and Senate that required postal retirees with federal employee health benefits (FEHB) to enroll in Medicare parts A and B at age 65. According to budget scoring, that would end up increasing the federal deficit. In May 2002, Comptroller General David Walker testified to the Senate (GAO-02-694T) that the Postal Service had major liabilities and obligations estimated at close to $100 billion, including liabilities for pensions ($32 billion), workers’ compensation benefits ($6 billion), debt to the Treasury ($11 billion), and post-retirement health benefits ($49 billion). While this would have a modest positive effect by spreading payments over a longer period of time, it does little to address the underlying problem caused by USPS being burdened with a mandate that no other federal agency or private corporation faces. An unprecedented congressional mandate threatens the Postal Service's ability to continue to provide good jobs and universal service. Allowing USPS once again to pay the costs of retiree health care costs on a pay-as-you-go basis as the rest of the federal government and two-thirds of private industry currently do, is the biggest step that could be taken to assure long-term financial sustainability. The issue of pensions for veterans has a long, complicated history, but at its heart is a basic question. John L Marcotte. The Postal Accountability and Enhancement Act (PAEA), sponsored by Davis in the House, and by Collins and Carper in the Senate, did a number of things. The PAEA was the first broad revision of the 1970 statute that replaced the U.S. Post Office with the U.S. The legislation’s title certainly sounds pretty great. That probably means Issa requested it, and from the look of things, the GAO has given Issa what he wanted — more ammunition with which to argue that the large retiree health care payments are necessary and inevitable. The big problem is the health care mandate. It's that time of year again. The principle of conservatively investing postal retirement assets is sound, but can be achieved by allowing investment in a broader range of assets like those in the Thrift Savings Plan, the federal employee retirement plan similar to a 401(k). Postal Service. They are not a special team, but they find ways to win.” Before you get up in arms about what Paea said about USC not being special and it being bulletin board material, English is his second language. The following year, Congress again increased the charges to the Postal Service for COLA payments by pushing back the applicable date to 1977. According to a 2009 OIG report, “The Postal Service could pay on average $4.0 billion less each year from FYs 2009 to 2016 to prefund its retiree health benefits and still achieve the same level of funding anticipated under OPM’s assumptions.”  In other words, rather than annual payments of $5.5 billion, the Postal Service could be paying about one billion a year for retiree health care. In order to avoid the $71 billion surplus from accumulating in the CSRS, the OPM proposed legislation to reduce the Postal Service's annual payment from $4.7 billion to $1.8 billion for fiscal 2003 and to make similar adjustments in subsequent years. It would also reduce the pre-funding requirement to 80 percent of the projected liability, as opposed to current law and the House bill, which aim for 100 percent. When a vet takes a job at the post office, his or her prior military service counts as annual credits toward pension eligibility, but who should be responsible for that portion of the vet’s pension costs, the federal government or the Postal Service? One of Williams' main points is that it’s important to understand the historical context of how the prefunding obligation came about in the first place. 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