Postal Legislative Update
National Association of Postal Supervisors - June 25, 2007

NAPS Endorses Harkin Bill to Ban Contracting Out of Delivery Services; House Prepares to Avoid Its Obligation to Repay the Postal Service (Again): (NAPS and Others Protest); Triple-Play Postal Hearings Set for July; Legislative Update on Bills Supported by NAPS

Triple-Play Postal Hearings Set for July

July will be a busy month on Capitol Hill for postal advocates. Before Congress adjourns for the August recess, the House and Senate subcommittees that oversee the Postal Service will hold three oversight hearings on postal issues. They'll fall during a one-week period in the second half of July. NAPS will testify at or closely monitor each of these hearings:

Thursday, July 19: Postal contracting out and privatization - House Subcommittee on Federal Workforce, Postal Service, and the District of Columbia

Wednesday, July 25: Postal oversight, featuring the views of postal management groups and the postal employee unions - Senate Subcommittee on Federal Financial Management of Government Information and National Security

Thursday, July 26: Postal delivery standards and infrastructure realignment - House Subcommittee on Federal Workforce, Postal Service and the District of Columbia
 

Legislative Update

Postal Legislative Update
National Association of Postal Supervisors - August 1, 2006


Herseth Introduces Bill to Stop Postal Service Circumvention of Veterans' Preference Laws

Legislation has been introduced in the House of Representatives by Rep. Stephanie Herseth (D-SD) to assure that military veterans employed by the Postal Service and throughout the federal government receive the guarantee of veterans preference job protections during downsizing actions.  Congresswoman Herseth, a member of the House Veterans' Affairs Committee, introduced the Veterans Reassignment Protection Act, HR 5894, on July 26.

The legislation confronts Postal Service downsizing rules that apply to managerial and supervisory employees -- which USPS calls "repositioning rules" -- that avoid the application of veterans preference job protection priorities to military veteran employees.  USPS contends that federal law does not require the application of veterans preference job retention priorities to repositioning actions because veterans preference rules, according to the Postal Service, apply only during a reduction-in-force or RIF, not a "repositioning personnel action." 

The Herseth measure destroys the USPS rationale by requiring that any military veteran employee of the federal government (including the Postal Service), who becomes subject to an involuntary geographic reassignment outside the commuting area during the course of a reorganization or transfer of function, receive the choice of accepting the reassignment or the opportunity to contest the reassignment in the same manner as a RIF. 

The National Association of Postal Supervisors immediately endorsed the Herseth legislation and called upon Congress to pass it.  NAPS President Ted Keating said, "The rights and protections of our nation's veterans, especially in light of their continuing sacrifice in Iraq, Afghanistan and other dangerous lands, should never be abridged or compromised. Rep. Herseth's legislation is significant because it confronts the thinly veiled attempt of the Postal Service to avoid the spirit of veterans preference rules.  The measure treats any RIF of federal and postal employees for what it is.  We New Englanders have always said 'If it looks like a duck and waddles like a duck and quacks like a duck, it is a duck.'  We applaud Stephanie Herseth for her vision in doing the right thing."   

NAPS President Keating urged NAPS members to reach out to their Members of the House of Representatives during the Congressional recess in August to urge them to become cosponsors of the Herseth legislation, HR 5894.


Bruce Moyer
Legislative Counsel to National Association of Postal Supervisors
Congressman Introduces Bill to Stop Postal Service Circumvention of Veterans' Preference Laws
 

Postal Legislative Update
National Association of Postal Supervisors
July 26, 2006


White House, Mailer and UPS Demands Threaten Postal Reform 

    Postal reform’s fragile footing in the Congress edged perilously closer to failure this week, due to White House, mailer and UPS pressures that threaten the viability of a final postal overhaul bill.  Administration and mailer insistence on the inclusion of the Senate-passed ratemaking exigency language, along with UPS threats to oppose any bill that doesn’t open-up competition on single-piece parcels, have dramatically complicated the outlook for postal reform, with relatively little time remaining in the session.    

     These developments cast increasing doubt whether a final postal reform bill can earn the support of the Postal Supervisors and other postal employee groups, should House and Senate leaders bend to the demands of the White House, mailers and UPS.  Assessing the situation, National Association of Postal Supervisors President Ted Keating said, “We always have supported sensible postal reform that assures the long-term viability of the Postal Service, but we will never support reform simply for the sake of reform.  NAPS members should remain on alert to help defeat any short-sighted postal measure that could arise.”            

    Conference talks between House and Senate delegations have still not officially begun, but discussions over past weeks between the Administration and the “Postal Big Four” Congressional leaders – Senator Susan Collins (R-ME), Senator Tom Carper (D-DE), Representative Tom Davis (R-VA) and Representative Henry Waxman (D-CA) -- have attempted largely to shape a final bill.

    Several major differences remain, including the elimination of the CSRS escrow account, restoring the Treasury’s liability for the CSRS military service credit, and controversial labor arbitration changes.  House Speaker Dennis Hastert has insisted on reaching an accord with the White House on the shape of a final bill before appointing House conferees.  The White House has not budged in its demands, and in fact continues to add issues to its list of priorities. 

    One of the most contentious issues involves how the postal rate-setting process will work.  Both the House and Senate postal reform bills envision future postal rates to be set by a streamlined price-indexing system, pegged to inflation.  The controversy lies over how flexible the price cap should become in unforeseen or “exigency” situations. 

    All postal employee groups, including NAPS, favor the approach contained in the House-approved bill, which takes account of a wider set of exceptional circumstances (for example, congressional budget actions, natural disasters, unusual price spikes) that would lift the price cap, if the viability of postal service were endangered.  Mailers insist on adoption of the less flexible Senate approach, which permits the price cap to be lifted only in “unexpected and extraordinary” emergencies, like the 9-11 or anthrax attacks.  The hard cap set by the Senate bill would place considerably greater pressure on the Postal Service to absorb unforeseen external costs, more likely forcing employee layoffs and concessions at the bargaining table, rather than cost-sharing with mailers and other users of the system. 

    All of the employee groups -- NAPS, the postmaster groups and the unions – have repeatedly made it clear to the “Big Four” Congressional leaders their support for the House exigency approach.  A March 16 letter from the three postal management groups and the four unions to the Big Four underscored the critical importance of the exigency issue and continued market-dominant treatment of single-piece parcels. 

    Reports in recent days of a full-court press by the Administration and others on the exigency issue followed mailer rejection of employee group offers to negotiate a compromise.  Sen. Susan Collins had indicated her willingness to consider any compromise that emerged, but the mailers rejected two approaches offered by the postal employee groups, without making a counterproposal.

    A July 12 letter to Rep. Tom Davis, chairman of the House Government Reform Committee, from NAPS and five other employee organizations – the National Association of Postmasters, the National League of Postmasters, the National Association of Letter Carriers, the National Rural Letter Carriers Association and the National Postal Mail Handlers Union – urged Davis to stand by the exigency approach contained in the House-approved postal bill, H.R. 22.  The Postal Service, meanwhile, reportedly has sided with the Administration in its multiple demands, especially on anti-labor provisions.  
   
    House Chairman Tom Davis and Senate Chairman Susan Collins continue to publicly express optimism that differences separating the sides can be bridged and a compromise measure passed before the end of this Congress.  The House begins a four-week long recess at the end of this week, and the Senate will commence its August break a week later.  After that, only the month of September remains for legislative business, with an early October recess looming, and a potential post-election lame-duck session in December to wrap-up the final odds-and-ends.

Bruce Moyer
NAPS Legislative Counsel

White House, Mailer and UPS Demands Threaten Postal Reform (doc)

POSTAL LEGISLATIVE UPDATE - JANUARY 9, 2006
NATIONAL ASSOCIATION OF POSTAL SUPERVISORS

In This Issue:

• Corruption Scandal Touches Postal Rates

• Postal Reform Vote in Senate Could Happen in February

• Postal Service Denied Medicare Drug Subsidy

The focus on Capitol Hill this month will be devoted largely to the Senate’s confirmation of Supreme Court nominee Samuel Alito, Jr., and the ever-widening Abramoff corruption scandal.  No major legislative action is expected in either chamber until early February, although a Senate vote on the Alito nomination is possible before the end of the month.  The House of Representatives will not return for normal business until January 31, the day of the President’s State of the Union Address.

Corruption Scandal Touches Postal Rates

On Saturday, the Abramoff scandal prompted embattled Rep. Tom DeLay (R-TX) to give up his effort to reclaim his House Majority Leader position, setting in play a scramble among several House contenders for the post and possibly creating a shake-up of the entire House Republican leadership team.

Today the Abramoff scandal spilled into the postal arena.  The New York Times and other news sources reported that the Department of Justice is investigating allegations that the lobbyist Jack Abramoff, who last week pled guilty to mail fraud and conspiracy to bribe public officials, attempted to thwart a 2001 postal rate increase with money paid by the Magazine Publishers Association that was then funneled to Abramoff's political allies. 

In court documents filed with the federal district court in Washington last Tuesday, Abramoff admitted to authorities that he and an unidentified Congressional aide worked to prevent an increase in postal rates.   According to today's news reports, the magazine association paid at least $1.4 million from 2000 to 2003 to Preston Gates Ellis & Rouvelas Meeds, the lobbying firm where Mr. Abramoff was the chief lobbyist.  The money was part of a broader campaign by the magazine association to keep postal rates down, explore reform of the postal system and seek alternate means of delivering magazines. Postal rate increases are a major concern to publishers like the magazine industry that rely upon the mail to distribute their product.

The proposed 2001 postal rate increases were deferred while the association was a client of Mr. Abramoff, but it is not clear at this point who on Capitol Hill or at the Postal Service did what for whom in terms of delaying the rate increase.

Today’s reports also allege that the Magazine Publishers Association in 2000 made a $25,000 contribution to a nonprofit group called Toward Tradition, an alliance of Jews and evangelical Christians, based on a directive from Preston Gates.  Abramoff, according to reports, allegedly funneled money through Toward Tradition to the wife of his associate, Tony C. Rudy, a former top aide to Rep. Tom Delay (R-TX), the former House majority leader.

Stay tuned ….

Postal Reform Vote in Senate Could Happen in February

Postal observers believe that the Senate could take up postal legislation next month, clearing the way for floor action on the postal reform measure (the Postal Enhancement and Accountability Act, S. 662) co-authored by Sen. Susan Collins (R-ME) and Sen. Tom Carper (D-DE).  A hold on the legislation placed by Sen. Kit Bond (R-MO), creating a lengthy dispute over the sharing of mail costs between small and large mailers, is expected to be dropped, yielding a vote on the bill and potential amendments.  Sen. Bond, according to Kansas City news reports, predicted a Senate vote on the bill as early as February.

The need for postal reform legislation is based upon the belief that declining postal volume and the migration of mail to the internet require a new legislative framework and postal business model.  The Postal Service shows mixed signs of believing that it can largely transform itself into viability through changes in its operations, rather than in governing law.  Announcing the financial gains achieved by the end of 2005, the Postal Service proudly pointed to the erasure of its multi-million dollar debt and a record sixth consecutive year of growth in productivity.  “These remarkable results reflect the strong efforts throughout the entire organization to remain focused on the transformational strategies we identified in 2002,” Postmaster General John Potter and Board of Governors Chairman James C. Miller III said in a statement.  Potter and Miller’s statement made no mention of postal reform legislation or the need for it.

What Potter and Mill did not acknowledge is that the evaporation of the Postal Service’s debt and other financial gains were largely the result of the 2003 postal retirement law passed by the Congress that permitted the USPS to use its Civil Service Retirement payments ($3.1 billion per year) to stabilize postage rates and pay down its debt.  Those funds are now no longer available to the Postal Service, due to a clampdown in the 2003 law.  Beginning in 2005, Congress required the placement of those civil service overpayments into an escrow fund, blocking further access to them by the Postal Service.  Only postal reform legislation will permit the USPS to terminate the escrow fund and recover those funds, originally paid by ratepayers.   USPS on some days appears to have given up on recovering those escrow fund dollars.

Instead, USPS “transformation” strategies are increasingly being focused on the closure and consolidation of mail processing facilities to generate cost reductions and increased productivity.  These actions, along with service standards, are likely to be the target of increased Congressional scrutiny in the coming months. 

 Postal Service Denied Medicare Drug Subsidy

The Centers for Medicare and Medicaid Services has rejected the Postal Service’s application for a Medicare prescription drug subsidy, projected to save postal customers at least $250 million annually.  The Center denial followed the urging of the Office of Personnel Management, which said the Postal Service should not be allowed to receive the subsidy because it participates in the Federal Employees Health Benefits Program.  NAPS joined with other postal employee organizations in October to encourage USPS to seek the Medicare subsidy payment.

The USPS attempted to capitalize upon a provision in the Medicare Prescription Drug Improvement and Modernization Act that lets employers seek federal rebates if they offer retiree prescription drug benefits that exceed Medicare's offering.  Under the provision, public and private employers providing qualified drug coverage can receive a tax-free payment from Medicare equal to 28 percent of their drug costs.  Congress agreed to provide the subsidy through the 2003 law as a way to keep employers from abandoning or reducing drug coverage for their retirees.  OPM maintained that FEHBP has no intention of reducing its prescription drug benefit, officials emphasized.

The subsidy would have provided a financial shot in the arm to the Postal Service.  The cost of providing health insurance to postal retirees and survivors has doubled over the past five years, according to postal officials.  In 2006, officials estimate, the Postal Service will spend more than $7 billion on health benefits for employees and retirees. 

 Bruce Moyer
Legislative Counsel to the National Association of Postal Supervisors

http://www.naps.org/Legislative_News/LegUpdate_01-09-06.doc

Vincent Palladino Post Office
On Thursday, December 1, 2005 President Bush signed H.R. 2183 designating the Staten Island, NY Post Office as the Vincent Palladino Post Office.

POSTAL LEGISLATIVE UPDATE - NOVEMBER 16, 2005
NATIONAL ASSOCIATION OF POSTAL SUPERVISORS

In This Issue:
 

• Bond Amendment Frustrates Senate Action on Postal Reform

• Postal Network Redesign Could Boost Savings, But Cut Jobs

Bond Amendment Continues to Frustrate Senate Action on Postal Reform 
 

A dispute involving the sharing of mail costs between small and large mailers continues to prevent Sen. Susan Collins (R-ME) from bringing her postal reform bill (the Postal Enhancement and Accountability Act, S. 662) to the Senate floor for approval.  The issue has deeply disturbed NAPS and much of the postal community. 

The stalemate between Collins and Sen. Kit Bond (R-MO) over “fair and equitable” rate language in the Senate postal reform measure has now gone on for more than three months, nearly wiping out the possibility of Senate action on postal reform this fall. 

Here’s what’s happened.  Prompted by greeting card manufacturers, especially Hallmark Cards based in his state, Sen. Bond exercised his prerogative under the Senate’s arcane (read “undemocratic) rules to put a “hold” on Collins’ postal bill in late July, just before Collins sought Senate approval of the postal bill.  Despite talks between Collins and Bond and a recent offer by Senate Majority Leader Bill Frist (R-TN) to Bond to have a floor vote on Bond’s amendment to revise the Senate bill, Bond has resisted and dug in.

The House postal reform bill contains language calling for “fair and equitable” rates, but the Senate bill does not, regarding “fair and equitable” as under its ratemaking framework as one of several factors the Postal Regulatory Commission would consider in setting rates.  Bond contends that the small mailers and consumers, particularly the senders of greeting cards, can only be protected from unfairly high rates (created by discounts for large mailers) if fair and equitable rates are an objective of the rate-making process, not merely a factor.

NAPS recently joined with other postal management and labor groups in a November 8 letter to all United States Senators, opposing Senator Bond’s amendment.  The letter in part said:

"The Bond amendment would allow certain interests to hold the new [rate] system hostage through the threat of expensive litigation.  The amendment is an attempt by a small segment of the mailing community to micromanage rate making for their own purposes and to sabotage a new rate-making system designed to ensure the Postal Service’s future economic viability."

The Postal Service sent a similar letter opposing the Bond amendment to the Senate on November 14.  “While [the Bond] amendment sounds reasonable, it will negate the other pricing provisions contained in the bill.  The Postal Service is strongly opposed to this amendment,” Tom Day, USPS Senior Vice President for Government Relations said.  (Check out the NAPS website under “Legislative News/Postal Reform” to read the NAPS/employee groups and USPS letters protesting the Bond amendment.

Postal Network Redesign Could Boost Savings, But Cut Jobs

For years the Postal Service has kept its plans for the realignment of the postal network under lock and key.   With declines in mail volume and increases in automation looming larger each year, postal network redesign may be the silver bullet that unleashes huge increases in processing and transportation efficiencies, producing billions of dollars in cost savings for the Postal Service.  Those savings could come through the elimination of “excess network capacity”, resulting in the closure or consolidation of potentially large numbers of processing and distribution facilities -- and the elimination of thousands of jobs. 

The labor impact makes postal network redesign especially controversial. That’s why USPS network redesign plans have approached the level of state secrets at Postal Service Headquarters.  A relatively small number of USPS officials have worked on network redesign planning and remain sworn to secrecy.  Meanwhile the Postal Service has largely declined to share its thinking on postal network redesign with members of the postal community, including NAPS and other employee groups, mailers and even Congress.  USPS officials are scared stiff that the slightest hint of a revelation the potential closure or consolidation of a processing and distribution plant could trigger preemptive efforts on Capitol Hill to prevent it from ever happening.  

Only when Congress sent its watchdog agency, the Government Accountability Office to L’Enfant Plaza earlier this year to investigate the USPS network redesign plan, then known as Network Integration and Alignment, did the Postal Service begin to open up.  And even then, the details released were inconsistent or contradictory, prompting GAO in its 89-page report to Congress to say that “the Service’s strategy for realigning its mail processing infrastructure lacks clarity, criteria and accountability.”

Now the Postal Service may be finally preparing to show its hand.  Postal Service officials recently notified NAPS and the postal employee unions of plans to consolidate mail processing operations at nine processing and distribution centers in six states on the east and west coasts.  The announcement may be among the first steps in USPS’ latest redesign effort, now known as Evolutionary Network Development (END), to rationalize and optimize postal facilities, processing systems, transportation and staffing.  The Postal Service Strategic Transformation Plan, released in September, indicates that END will become a critical part of USPS efforts to improve the distribution and transportation of mail.   <>

While the Postal Service in the past relied upon single-product networks, based on their class (for example, Standard Mail parcels in one location and Priority Mail packages in another), multiple-product networks will become the model for the future.  Regional Distribution Centers are envisioned as important network hubs for multiple classes or types of mail, consolidating parcel and bundle distribution to take advantage of shape-based efficiencies. 

The closure of the Marina mail processing plant in southern California and the consolidation of its operations into Los Angeles and Long Beach marks an important example of what’s likely to happen throughout the USPS network – and on a potentially big scale. A recent briefing to Postal Service executives on the END redesign plan reportedly projected the elimination of as many as 250 processing centers by the time the network redesign effort is completed.  

In the meantime, Congress says it expects the Postal Service to keep it and postal stakeholders like NAPS to be kept apprised of the Postal Service’s plans.  The House-passed postal reform legislation will require USPS to submit to Congress, the Postal Regulatory Commission and the Board of Governors a written report on the state of the Service’s postal network realignment effort.  And the Senate bill that awaits final action would require USPS to develop a plan that includes a description of “the long-term vision of the Postal Service for rationalizing its infrastructure and workforce.”

 
Bruce Moyer
Legislative Counsel to the National Association of Postal Supervisors

POSTAL REFORM UPDATE
NATIONAL ASSOCIATION OF POSTAL SUPERVISORS
JULY 27, 2005


HOUSE OVERWHELMINGLY PASSES POSTAL REFORM MEASURE

The House of Representatives last night by a significant margin passed comprehensive postal reform legislation.  The final vote was 410-20.  It marks the first major overhaul of the U.S. Postal Service in 35 years and would provide rate-making flexibility and a framework for financial solvency. 

The House vote capped three hours of debate, including the defeat of four amendments.  

The National Association of Postal Supervisors is a strong supporter of comprehensive postal reform and worked hard to secure passage of H.R. 22, along with many other members of the postal community.  Hundreds of NAPS members telephoned their members of Congress on Tuesday to urge their support for H.R. 22 and the defeat of any amendments.

Credit for House passage goes especially to House Government Reform Committee Chairman Tom Davis (R-VA), Rep. John M. McHugh (R-NY), Committee Ranking Member Henry Waxman (D-CA) and Rep. Danny Davis (D-IL) and their staffs.  Rep. Pete Sessions (R-TX) also was instrumental in guiding the legislation through the House Rules Committee.
 
Earlier yesterday, the Bush White House released a statement of Administration policy, supporting efforts to secure comprehensive postal reform, but threatening veto of legislation that “would have an adverse impact on the Federal budget, either by releasing funds from escrow without devoting them to pre-fund liabilities or by transferring the military service obligation from USPS to taxpayers.”  Because H.R. 22 does not satisfy these White House demands, discussions on these issues between Congressional leaders and the White House will continue.  If a compromise is reached, the new language likely would be added when the Senate considers its version of the measure in September or in conference committee.

Look for further details on the passage of H.R. 22 shortly.

Bruce Moyer
Legislative Counsel to National Association of Postal Supervisors

July 13, 2005

    Update on Postal Reform

  Things are looking relatively positive at the current moment in terms of potential House and Senate floor action in the very near future on postal reform; however, a number of key concerns still remain.  House and Senate floor action could come about, especially in the House, as early as next week.   Senate action could occur before the start of the August recess.

 There has been a fair amount of activity in recent weeks.  Here is a rundown.  PMG Potter is likely to want to review the implications of these developments, and some USPS continuing concerns about postal reform proposals, during his meeting next week with Ted and the postal employee organization presidents.

 1.  As you know, the Senate Governmental Affairs Committee reported out the Collins-Carper postal reform bill (S. 662) on June 22.   The House Government Reform Committee had earlier approved the House version on postal reform on April 28.  HR 22 has 163 cosponsors; S. 662 now has 19.

 2.  Two weeks ago, the Bush Administration, led by the White House Domestic Policy staff, met with Senators Collins and Carper and Reps. Davis and McHugh, along with key staff, to go over the elements of a possible postal reform agreement.  The White House agreed to let the House and Senate go ahead to floor votes, while issues continue to be worked out.  (Going ahead, while issues remain on the table, is problematic.  See further discussion of this below.)  The biggest break point coming out of the White House/Congressional talks was the Administration’s tentative agreement to resolution of the military retirement issue, with some waiver of USPS liability of pension payments “prospectively.”  (Further details on this forthcoming.)  The White House also indicated it still wants escrow overfunding to go 100% to future liabilities.

 3.  The White House is seeking additional reforms to be added to the legislation.  These include:

 Negotiated Service Agreements – This is surprising, since the newspaper associations vigorously oppose NSA’s.  This is why Collins/Carper agreed to let current law/practice stand and didn’t address NSA’s in the Senate bill.  The White House apparently was moved to reinsert the NSA provisions at the encouragement of the Postal Service.  The newspaper groups are likely to oppose postal reform if an NSA provision is reinserted.  This will remain a fluid issue, and the White House may back off on this.

 Worksharing – The White House wants to return to the earlier, more worksharing-friendly language (more favorable to mailers) promoted by Sen. Collins in last year’s legislation.  If that occurs, it would rescind the worksharing language agreement that was worked out by APWU with Lieberman, Carper and Collins.

 Pay Contract Arbitration – The White House also favors language that would require labor-management arbitrators to take into account the financial health of the Postal Service in resolving pay negotiations with the craft.  I’m told that arbitrators already do this in practice; the White House (and the Postal Service) nonetheless would prefer that this become a legal requirement. 

 The White House staff is aware of the political challenges of re-opening these issues; however, their position is consistent with the “more reform” message they have been signaling for months.  It’s also privately supported by some of the mailers.

 4.  The White House also apparently maintains the following views:

• Any postal reform legislation must be revenue neutral to get Administration support

• The Administration will support increased borrowing authority (up to $2B a year) for the Postal Service as a mechanism to encourage them to hold down rate increases until the rate caps are in place.

• Generally, the Administration prefers the Senate bill. 

 5.  White House support for the legislative process to move forward to a vote in the House and Senate, while details are being negotiated, is problematic and could raise real concerns.  This means there likely will be floor amendments, as well reinforce the view that the real crunch will come in the conference between House and Senate negotiators on the final version, when anything could happen, and employee groups will have the least influence. 

 6.  A recent “Dear Colleague” letter by Rep. Pete Sessions (R-TX), urging a vote in the House on postal reform, had 52 signatures, including many from conservative Republican House members, including the Republican Study Committee.  This was a positive development for postal reform, and is viewed as counteracting a reform-negative talking points letter from Reps. Pence/Hensling/Flake. 

 7.  Reps. Pence/Hensling/Flake are still likely to promote a “hard cap” amendment during House floor action.  This would raise real concerns for the Postal Service.  It would prevent the possibility of USPS rate relief in extraordinary circumstances – potentially causing USPS layoffs and severe cutbacks in service.  The employee groups are likely to strongly oppose this as well. 

 8.  Bottom line:  While we may not be at the goal line yet, the recent movement is the clearest sign yet that postal reform could see floor action in both chambers the next several weeks, particularly in view of White House support for moving forward.

NATIONAL ASSOCIATION OF POSTAL SUPERVISORS
POSTAL LEGISLATIVE UPDATE
MAY 11, 2005


In This Issue:

• NAPS Vice President Louis Atkins Undergoes Emergency Heart Surgery

• GAO Calls for Postal Service Improvement in Network Realignment Planning

• House Measure Would Name Post Office In Honor of Vincent Palladino

NAPS VICE PRESIDENT LOUIS ATKINS UNDERGOES EMERGENCY HEART SURGERY

NAPS Executive Vice President Louis Atkins underwent successful quadruple heart bypass surgery on Tuesday evening, May 10, following diagnostic tests that revealed significant blockage of his heart arteries.  The NAPS Resident Officer entered the hospital on Sunday night, May 8, 2005, with breathing difficulty.  His responsibilities include the management of NAPS' legislative advocacy activities.

Louis is expected to remain hospitalized for about a week, followed by further recovery at home.  Cards and well wishes may be sent to Louis in care of NAPS Headquarters, 1727 King Street, Suite 400, Alexandria, Virginia 22314-2753.  

Update: Executive Vice President Louis Atkins was released from the hospital on May 15. He is recuperating at home in Alexandria, VA, following heart surgery and is doing well. Cards and well wishes may be sent in care of NAPS Headquarters at the above address and we will deliver them to him.


GAO CALLS FOR POSTAL SERVICE IMPROVEMENT IN PLANT REALIGNMENT PLANNING

The Postal Service is not doing enough to provide information to Congress and its stakeholders about its plans to modernize the network of 450 postal plants that process and distribute mail, the Government Accountability Office said in a report released May 9. 

The GAO's criticism echoes long-standing concerns by the National Association of Postal Supervisors over the lack of Postal Service transparency of the Service's efforts to standardize operations and reduce excess capacity in its mail processing infrastructure.  Many NAPS members are management and supervisory officials at mail processing and distribution facilities throughout the country.

 The report, "U.S. Postal Service: The Service's Strategy for Realigning Its Mail Processing Infrastructure Lacks Clarity, Criteria and Accountability" can be downloaded at: http://www.gao.gov/new.items/d05261.pdf

"While the Service has announced various plans and strategies, including a modeling effort and an attempt to get more uniformity in its infrastructure, it recently announced that it is pursuing an evolutionary strategy--that will respond to opportunities as they arise--and has provided little information about any of these efforts,"  the GAO said."  "The Service's limited communication makes it difficult for customers to work with the Service to achieve a least-cost network for the entire mailing industry, for Service employees to understand how they may be affected, for communities to understand how they will be affected, and for Members of Congress to explain to their constituents what the Service is planning to do."

The GAO report, requested by Reps. John McHugh (R-NY) and Danny Davis (D-IL), co-chairmen of the Special Panel on Postal Reform and Oversight during the 108th Congress, underscores the need for postal reform measures (H.R. 22 and S. 662) that, in part, would require the Postal Service to develop a strategy for "rationalizing" the postal facilities network and communicate that plan to Congress and postal stakeholders.   Washington lawmakers, mailers, unions and management organizations have become increasingly frustrated over Postal Service attempts to cloak in secrecy its plans to consolidate its plant structure and reduce expenses. 

Under both H.R. 22 and S. 662, the USPS would be required to develop a network realignment plan and: establish estimated timeframes, criteria, and processes for making changes to the facilities network; identify what impact any facility changes may have on the postal workforce and whether the Postal Service has sufficient flexibility to make needed workforce changes; and identify the anticipated costs, cost savings, and other benefits associated with the infrastructure rationalization alternatives discussed in the plan.

"GAO has provided a thorough analysis with solid recommendations that will help improve services," McHugh said in a statement. "As Congress works to enact critical postal reform legislation, USPS must at the same time move forward with these recommendations, which will help improve efficiency and ensure that it is capturing cost savings wherever possible."

The GAO report comes at a time when NAPS and employee unions, the mailing industry and the Postal Service are together working to convince Congress to support postal reform legislation, despite differences with the White House over pension provisions in the legislation.  The Administration's objections turn largely on whether the Postal Service should have its military pensions shifted back to the Treasury Department and whether the Postal Service should be given access to money slated for an escrow account. Administration reservations about those same provisions kept the House bill and a similar Senate measure from clearing either chamber last year.  Senate Homeland Security and Governmental Affairs Committee Chairwoman Susan Collins (R-ME) and House Government Reform Committee Chairman Tom Davis (R-VA) are continuing discussions with the administration on those sticking points. 

The Senate Homeland Security and Governmental Affairs Committee reportedly is aiming to resolve those differences and move the measure to a markup by the last week of May.

House floor action on the postal reform measure (H.R. 22), which cleared the Government Reform Committee on April 13, is expected by the end of May.  The House Government Reform Committee's report on H.R. 22 can be downloaded from the NAPS website at:  http://www.naps.org/Legislative_News/04-26-05-HR-22-House-Rpt-109-66.pdf

A side-by-side comparison of the provisions of both bills also is available on the NAPS website at:  http://www.naps.org/Legislative_News/05-05-05-CRS-SidebySide-Reform-Bill-Comparison.pdf


HOUSE MEASURE WOULD NAME POST OFFICE IN HONOR OF VINCE PALLADINO

Legislation has been introduced in the House of Representatives to rename the Rosebank Post Office in Staten Island, New York, in honor of Vincent Palladino, the former president of the National Association of Postal Supervisors, who died suddenly on December 20, 2004.   

The post office naming measure, H.R. 2183, was introduced on May 5 by Rep. Vito Fossella (R-NY), in whose Congressional district the post office, at 567 Tompkins Avenue, Staten Island, is located.  Under the legislation, the facility would be renamed the "Vincent Palladino Post Office."

Vince Palladino began his postal career in 1960 as a letter carrier working out of the Rosebank Post Office.  In 1968 he was promoted to Supervisor and joined the National Association of Postal Supervisors.  Vince served as Station Manager of the Rosebank facility until he was elected NAPS National Executive Vice President and relocated to Washington in 1986.  Thomas Roma, NAPS Area Vice President for the New York Area, a tireless advocate for the post office naming measure, commented that "Vince was the finest supervisor the Rosebank Post Office ever produced.  Because of his legacy, it's only fitting that the Post Office be dedicated in Vince's honor."

All 29 members of the New York delegation to the House of Representatives are original co-sponsors of the legislation.  All NAPS branches are urged to contact their House members to encourage them to become co-sponsors of H.R. 2183.  The House Committee on Government Reform is expected to act on the measure shortly.


Bruce Moyer
Legislative Counsel to National Association of Postal Supervisors

source: http://www.naps.org/Legislative_News/LegUpdate_05-11-05.doc

H.R. 2183

National Association of Postal Supervisors

Postal Legislative Update - May 3, 2005

In this Issue:

* Postal Reform Cosponsor Count Doubles, With a Little Help from NAPS

* Stalemate over Pension Money Stalls Postal Reform in Senate

* Potter to Congress: Send Money

POSTAL REFORM COSPONSOR COUNT DOUBLES, WITH A LITTLE HELP FROM NAPS

The impact of NAPS' full-court press for Congressional support of postal reform is clearly paying off.  The number of House cosponsors for H.R. 22 the Postal Accountability and Enhancement Act, has doubled since April 2-3,when nearly 700 NAPS members descended on Capitol Hill to meet with Congressional lawmakers to make the case for postal reform.  The visits occurred in conjunction with NAPS' annual Legislative Training Seminar and clearly had a pronounced impact.

While other fine organizations throughout the postal community have contributed considerable support for postal reform, few groups have swept the Hill with as many members and energy to educate and prod Congress to support postal reform the way NAPS members did last month.  And the results clearly demonstrate NAPS' effectiveness.   

Just before NAPS delegates undertook over 400 Congressional visits on April 2-3, there were 52 cosponsors of HR 22, the House postal reform measure.  As of May 2, there were 121 cosponsors.  In the immediate aftermath between April 2 and April 13, the day the House Government Reform Committee approved HR 22, thirty-seven House members joined as cosponsors.      

In the Senate as of April 2, there were 2 cosponsors for S. 662, the Senate postal reform measure.   During the following two weeks, the number tripled, as six Senators signed-on to cosponsor S. 662.  That number of cosponsors remained the same as of May 2.   To find out whether your House member or Senator has become a cosponsor of postal reform legislation, go to http://www.naps.org/Legislative_News/05-02-05-POSTAL-REFORM-HR-22-Cosponsors.pdf for House members , and go to http://www.naps.org/Legislative_News/05-02-05-POSTAL-REFORM-S-662-Cosponsors.pdf  for Senators, or go to the NAPS website at www.naps.org, then click Legislative News and then Postal Reform.   

STALEMATE OVER PENSION MONEY STALLS POSTAL REFORM IN SENATE

The dispute between the White House and Congressional leaders over whether postal ratepayers or taxpayers should bear responsibility for military pension payments for postal employees, along with the future of the escrow fund containing Postal Service pension overpayments, continues to hold up Senate action on postal reform.  No end to the impasse is yet in sight, despite earlier reports that a compromise was in the works.   

The Bush administration remains insistent on requiring the Postal Service to pay $27 billion for past and future military pension costs, while Senator Susan M. Collins (R-ME) and Senator Tom Carper (D-DE), the chief Senate architects of postal reform, contend that return of the military pension payment obligation to the Treasury Department and repeal of the $78 billion CSRS escrow fund are the missing links necessary for postal reform.    

NAPS - along with USPS, other postal employee organizations and mailers - strongly support the Collins-Carper view, which is also reflected in House postal reform legislation (H.R. 22) unanimously approved on April 13 by the House Government Reform Committee.  A portion of the escrow money, under both the Senate and House bills, would pre-fund future retiree health benefits.  The Administration, on the other hand wants all the escrow to go toward the pre-funding of retiree benefits.  

Supporters of postal reform in the House of Representatives are optimistic that a floor vote in the House may still occur on H.R. 22 before the Memorial Day recess begins. 

 "The postal service has reached a critical juncture," Senator Collins and Senator Carper said in a recent statement. "If we are to save and strengthen this vital service upon which so many Americans rely for communication and their livelihoods, the time to act is now ... The administration's position that the USPS should pay retroactive retirement costs for the military service of its employees is in direct contradiction to the recommendation of the president's own commission, which noted that this provision asks those who use the nation's postal system to subsidize the military every time they use the mail."   

In 2003, Congress passed the Postal Civil Service Retirement System Funding Reform Act, which reduced the Postal Service's pension payment obligations by $78 billion, upon the discovery that the USPS had been overpaying its employer payments into the Civil Service Retirement System for years.  The law also required the Postal Service to begin to pay $27 billion for military service-related CSRS benefits.   

Based on those changes in the law, the Administration contends that the framework governing responsibility for USPS pension payments should remain in place.  That stance was reaffirmed by Treasury Assistant Secretary Timothy Bitsberger and Officer of Personnel Management Acting Director Dan G. Blair at a recent hearing of the Senate Homeland Security and Government Affairs Committee on April 14.   

Blair contended that insistence on Postal Service payment of the retiree pension liabilities remains justified.   "This obligation is fair and equitable because the Postal CSRS Funding Reform Act effectively converted the postal service's CSRS to the funding system utilized for the Federal Employee Retirement System, which requires each agency -- rather than the Treasury -- to cover the military service retirement costs of its retirees." "The Postal CSRS Funding Reform reduced the postal service's pension obligations by $78 billion. In our view, the postal service should not benefit from the dynamic valuation of its pension fund without assuming responsibilities that come with dynamic funding."  

NAPS believes that returning military pension payment responsibility to the Treasury and repealing the CSRS overpayment escrow fund will strengthen the financial footing of the Postal Service and help to ward off near-term rate increases.     

POTTER TO CONGRESS:  SEND MONEY

  Postmaster General Jack Potter told a House Appropriations subcommittee on April 26 that the Postal Service needs more money to do its job than was sought by the White House in its official budget request earlier this year.  

Potter requested $51 million for homeland security costs in upgrading postal facilities with biodetection and other equipment, $29 million in reimbursements for allowing nonprofits free mailings, and $109 million for fulfilling federally mandated obligations, including providing special materials for the blind and absentee ballots for overseas voters. He said USPS' fragile financial situation could worsen if the Postal Service doesn't get the money - $101.2 million more than the White House sought.   

"You might not get everything you ask for" in a tight budget year, Transportation-Treasury-HUD Appropriations Subcommittee Chairman Joseph Knollenberg (R-MI) told Potter. The panel approved a similar request last year when the same costs were dropped from the White House's proposed budget.  

During his testimony to the appropriations subcommittee, Potter noted that:  

* A string of record accomplishments in Postal Service performance and productivity over the past several years hide the long-term structural problems that impede the viability of the Postal Service's outdated business model, underscoring the need for legislative reform.    

* Last year, First-Class Mail was less than half of total mail volume and this year, for the first time in Postal Service history, Standard Mail is expected to overtake First-Class Mail as the largest-volume product. "The shift in the mail mix from First-Class Mail to lower revenue-per-piece mail has significant implications for our long-term bottom line," Potter said.   

* In 2004, the Postal Service expanded its delivery network to accommodate an additional 1.8 million new addresses. That base grew by 1.9 million the year before.  "Structural changes in societal and business communications have altered the economics of our business model," Potter noted. "We are squeezing the margins within that model's narrow parameters."  

* The Postal Service's recent rate increase request is not a function of revenue failing to meet operational costs. "We expect to end this year in the black, with positive net income of more than $1billion," Potter noted. "There would be no need to raise rates before fiscal year 2007 were it not for the $3.1 billion escrow funding ... requirements of Public Law 108-18, the Postal Civil Service Retirement System Funding Reform Act of 2003. The Act adjusted Postal Service payments to the Civil Service Retirement System so that we would avoid over funding our obligations to the program.  

* The Postal Service is finalizing plans for construction of an irradiation facility in Washington, D.C. to minimize the delays involved with the current arrangement for irradiating mail.  The Postal Service is currently spending approximately $800,000 of its own funds each month to irradiate mail destined for Congress, the White House and federal government agencies in Washington, D.C. The mail is trucked to a leased sanitization facility in New Jersey.  Construction of the new mail sanitization facility in the nation's capital will reduce Postal Service costs and improve mail service to Congress and the federal government.  

 To read the Postmaster General's testimony, go to <http://www.naps.org/Legislative_News/04-26-05-PMG-Hous-Approps-FINAL.pdf> or go to the NAPS website at www.naps.org, and click on Legislative News, then Postal Funding.  

Bruce Moyer

Legislative Counsel to National Association of Postal Supervisors

source: http://www.naps.org/Legislative_News/LegUpdate_05-03-05.doc

POSTAL LEGISLATIVE UPDATE - MARCH 23, 2005
NATIONAL ASSOCIATION OF POSTAL SUPERVISORS

In This Issue:
 

• NAPS Endorses Senate Postal Reform Measure

• Feinstein Introduces Legislation to Achieve Social Security Fairness

NAPS Endorses Senate Postal Reform Measure

The National Association of Postal Supervisors has endorsed postal reform legislation introduced on March 17 by Senator Susan Collins (R-ME), chair of the Senate Committee on Homeland Security and Governmental Affairs.  NAPS President Ted Keating welcomed the Senator’s bill, the Postal Accountability and Enhancement Act of 2005 (S. 662), as a constructive step toward achieving comprehensive postal reform, a long-standing goal of NAPS. 

The Collins bill, initially co-sponsored by Sen. Tom Carper (D-DE) and Sen. George Voinovich (R-OH), resembles the legislation supported by NAPS and adopted by the Governmental Affairs Committee last year (S. 2468).  It also is similar to H.R. 22, the postal reform measure introduced in the House of Representatives earlier this year.  Last year, Senate and House post reform bills were unanimously approved by their respective postal oversight committees, but then stalled.

A Senate Homeland Security and Governmental Affairs Committee hearing on postal reform and S. 662 is expected to be held on Thursday, April 7.   Witnesses likely to be called include Postmaster General Jack Potter, GAO Comptroller General David Walker, and Timothy Bitsberger, Treasury Department Deputy Assistant Secretary for Federal Finance. 

A markup of S. 662 by the Senate Homeland Security and Governmental Affairs Committee is expected soon thereafter, possibly the following week.  In the House, the Government Reform Committee is expected to mark-up H.R. 22, the House postal reform measure, also by mid-April. 

In the meantime, discussions continue between Collins and Davis with Administration officials over the resolution of differences on the CSRS escrow provision and USPS military pensions, the “big money” issues that divide the Administration and Collins/Davis because of their costs and budget impact.   The Senate budget resolution adopted last week did not contain a reserve account for postal reform, requested by Collins, to offset the budget impact caused by the proposed repeal of the escrow provision.  Collins’ reform bill would repeal the escrow provision, established by the Civil Service Retirement System Funding Reform Act of 2003, and propose to use the escrow funds to pre-fund post-retirement health benefit obligations; to pay down any outstanding debt to the Treasury; and to hold down operating expenses, holding down rate increases as well.  Last year, the Congressional Budget Office scored postal reform at $9.6 billion from 2006-2010, with a first year score of approximately $5.4 billion.  This year’s bill, S. 662, is expected to cost less by several billion dollars, due to payments of escrow funds into a new Postal Service Retiree Health Benefits Fund beginning in 2006, rather than in 2007.

The Administration resists repeal of the escrow provision and the transfer back to the Treasury of the military pension payment responsibility largely because of budget arithmetic, despite the fact that the billions of dollars in escrow funds, now lodged in the budget as a government asset, are ratepayer funds paid to the Postal Service to assure its financial stability as a self-sustaining entity.

NAPS will continue to promote the interests of a strong, viable Postal Service and its members as the legislative process on postal reform unfolds in the Senate and House.  The upcoming NAPS Legislative Training Seminar in Washington, April 3-5, will provide an excellent opportunity for nearly 800 NAPS members to educate members of Congress on the priority of postal reform and the need for prompt Congressional action.


Feinstein Introduces Legislation to Achieve Social Security Fairness

Legislation to repeal the Social Security windfall elimination provision and the government pension offset was introduced in the Senate last week.  Sen. Dianne Feinstein (D-CA) introduced the “Social Security Fairness Act” (S. 619) on March 14.  Senators Susan Collins (R-ME), Mark Dayton (D-MN), Christopher Dodd (D-CT), John Kerry (D-MA), Frank Lautenberg (D-NJ), Blanche Lincoln (D-AR), Bill Nelson (D-FL), and Arlen Specter (R-PA) joined Senator Feinstein as original cosponsors of the bill.

The Feinstein legislation is similar to H.R. 147, a House bill that also repeals the windfall elimination provision and the government pension offset, introduced by Rep. Buck McKeon (R-CA).  McKeon’s measure has attracted 220 House cosponsors to date.

The windfall elimination provision reduces the Social Security benefits for retirees who paid into Social Security and who also receive a government pension from work not covered under Social Security.  The government pension offset reduces Social Security spousal benefits by an amount equal to two-thirds of the spouse’s public employment pension.  In some cases, this means the elimination of a spouse’s entire Social Security benefit. 

Nearly one million government retirees nationwide – including hundreds of thousands of federal civil servants, teachers, police officers and firefighters – are unfairly penalized by the windfall elimination and government pension offset provisions.  Millions more stand to be affected in the future. 

NAPS supports both S. 619 and H.R. 147, believing that the federal government should not penalize people who have devoted their lives to public service by reducing the pensions they have earned.  NAPS members will promote both measures and seek additional cosponsors for them during NAPS meetings with Washington lawmakers during the upcoming NAPS Legislative Training Seminar, April 3-5.


Bruce Moyer
Legislative Counsel
National Association of Postal Supervisors

NAPS Endorses Senate Postal Reform Measure; Feinstein Introduces Legislation to Achieve Social Security Fairness – March 23, 2005  (doc)

NAPS Legislative Update - March 7, 2005

In This Issue:

• Compromise on Escrow, Military Retirement Near

• Postal Board of Governors Ignites Controversy over Collective Bargaining Expansion

• Premium Conversion Measures Introduced

Compromise on Escrow, Military Retirement Near

The Bush Administration and key lawmakers may be close to a breakthrough in the contentious debate over the postal escrow requirement and the payment of military retirement benefits to postal employees – two key issues that have blocked agreement over the shape of postal reform legislation. 

House Government Reform Chairman Tom Davis (R-VA) told NAPS and other postal groups at a March 3 meeting on Capitol Hill that the White House has shown a willingness to give up its insistence on denying the Postal Service access to billions of dollars in overpaid retirement fund payments, held in escrow for the past two years, for normal postal operations.  The Administration, Davis also said, has expressed a readiness to drop its demand that the Postal Service continue to pay the CSRS-related military retirement benefits of its workers.  Compromise on the escrow and military retirement issues would come in return for Congressional acceptance of White House measures seeking to assure greater postal financial transparency and financial stability, according to Davis.

The escrow fund contains approximately $78 billion dollars inadvertently overpaid by the Postal Service over the course of decades into the civil service retirement trust fund.  A 2003 law reduced the size of Postal Service retirement payments and corralled the billions of previously overpaid dollars into the escrow savings fund.  Relief of the responsibility for payment of military retirement costs would return the responsibility for payment to the Treasury Department, which had held that duty prior to the 2003 law.

For the past year the White House has sought Congressional support to require the Postal Service to use the entirety of the escrow fund to pay the future costs of health insurance benefits for postal retirees.  Congress, the Postal Service, mailers and employee groups all have resisted the White House plan, pointing to the fact that no other federal entity is required to pre-fund its retiree health care costs. 

Repealing the escrow requirement will permit the Postal Service to use those monies to satisfy its operational costs – significantly reducing the need to raise postal rates, at least for the short term.  Mailers have been increasingly anxious about an anticipated 5.4% rate increase, triggered by the current statutory obligation that the USPS continue to pay approximately $3.1 billion into the escrow fund in 2005.

Disagreement between Administration negotiators and Congressional lawmakers over the escrow and military retirement issues has been the biggest obstacle to crafting a postal reform bill, largely because of the huge amount of dollars that are at stake.  Two reform packages were approved by House and Senate committees last year, but failed to move to floor votes due to White House opposition.

Davis told NAPS at the recent Capitol Hill meeting that he was optimistic that a compromise postal reform measure would be written and approved by the House Government Reform Committee before the House of Representatives begins its spring recess on March 21.  Discussions over the terms of the new postal reform package have included staff representatives from the House and the Senate, as well as officials from the Treasury Department, Office of Management and Budget, Office of Personnel Management, and the Postal Service. 

A spokesman for the Senate Homeland Security and Governmental Affairs Committee, chaired by Sen. Susan Collins (R-ME), indicated that Collins intends to introduce her own postal reform bill before the start of the spring recess, with a markup potentially occurring sometime in April.  
 

Postal Board of Governors Ignites Controversy over Collective Bargaining Expansion

Attempting to dispel criticism that the Postal Service Board of Governors has hugged the sidelines while Congress has proceeded to write postal reform legislation, the Board of Governors recently stepped up to the plate and identified the key elements that it believes postal reform should embody. 

The BOG’s views, set out in a February 24 letter to Senate Homeland Security and Governmental Affairs Committee Chairman Susan Collins (R-ME) and House Government Reform Committee Chairman Tom Davis (R-VA), were sent as the two lawmakers pushed to complete drafting of their respective reform bills.   To read the BOG letter, click here.

The BOG’s letter reiterated the Postal Service’s call for repeal of the escrow requirement, as well as the return of the responsibility for payment of CSRS benefits attributable to military service to the Treasury.  The BOG also indicated its support for greater rate-setting flexibility, while acknowledging that the Consumer Price Index (as opposed to the Employment Cost Index, which the Postal Service has favored) represented an "acceptable, albeit very challenging, price cap on rates."

The most contentious BOG position, however, involves the BOG’s renewed call for making all health, leave and retirement benefits for active and retired postal employees subject to collective bargaining between postal management and the unions, with any impasse resolved by mandatory arbitration.  In the event of a labor-management impasse, the BOG said, an arbitrator should consider broad economic factors, including the economic history of the Postal Service, its present financial health and ability to pay, as well as anticipated future growth, productivity and total labor costs. 

Under current law, collective bargaining covers: the wages of postal union or craft employees; the percentage of health insurance premiums the Postal Service contributes toward all active employees (including non-bargaining unit employees); and to work rules.  Changes to the scope of issues subject to collective bargaining require Congressional approval of a change in the law. 

The Postal Service has previously urged Congress to broaden the scope of the law to require labor negotiations to include larger compensation issues.  However, those requests to Congress have gone unanswered.  In testimony before the President’s Commission on the Postal Service in 2003, Postmaster General John Potter  [note: link added by PR] said, “… [W]e recommend creating a negotiation process that includes not only wages and work rules, but also puts all benefits – health, leave and retirement, just to name a few – on the table.”  The President’s commission declined to recommend any change in the scope of collective bargaining.  The Postal Service, nonetheless, has continued to emphasize that nearly 80 percent of its total costs are driven by labor, and that rising health care costs, particularly those associated with retirees, are a major contributor to postage increases.

Collective bargaining between postal management and the unions does not directly determine the pay of postal supervisors and postmasters; however, the wage levels set for the craft through collective bargaining become important markers used in the follow-on consultation talks over pay between the Postal Service and NAPS, along with the postmaster groups.  Any negotiation of health, leave and retirement benefits in collective bargaining talks, moreover, would likely determine the shape of benefits made available to non-bargaining employees.  
 
Postal reform proposals in Congress have largely avoided confronting sensitive workforce issues, like major realignments in the terms of collective bargaining, in order to preserve union support for postal reform.   The conventional wisdom is that without union support, no postal reform measure can succeed in Congress.  The Board of Governors therefore has either made a major political miscalculation, or has merely sent up another flare to call attention to its labor costs, particularly if final legislation saddles the Postal Service with a rate cap resting on top of labor costs it believes it has insufficient ability to control. 


Premium Conversion Measures Introduced

Legislation to permit federal and military retirees to pay their health insurance premiums on a pre-tax basis has again been introduced in the Congress.  Using pre-tax dollars to pay for health insurance – a practice called “premium conversion” -- would yield an estimated $434 in savings to each retiree.

Sen. John Warner (R-VA) and Rep. Tom Davis (R-VA) on March 1 introduced identical bills (S. 484 and H.R. 994) that would give retired postal supervisors the tax-advantaged opportunity to pay their portion of their FEHBP premium with pre-tax dollars, just as civil service and military service members already enjoy. 

Postal supervisors and retirees attending the upcoming NAPS Legislative Training Seminar in Arlington, Virginia, April 3-5, will help rebuild the list of cosponsors in support of the legislation.  During the last Congress, the House bill attracted 342 co-sponsors and the Senate bill 57 cosponsors.  Currently, only twelve House lawmakers (Coble, Danny Davis, Jo Ann Davis, Hoyer, Kolbe, Moran, Norton, Porter, Van Hollen, Waxman, Wolf and Wynn) and one Senator (Collins) have renewed their support.


Bruce Moyer
NAPS Legislative Counsel

source: National Association of Postal Supervisors March 7, 2005 (doc)

National Association of Postal Supervisors
Legislative Update
December 16, 2004


The Road Map to Postal Reform: An Analysis

The new Congress arrives in Washington on January 4 for a day of swearing-in ceremonies in the House and Senate.  Until then, as the holidays approach, House Members and Senators -- and their staff -- are taking the opportunity to catch their breath and enjoy some Christmas cheer.

For the postal community, optimism and apprehension are beginning to grow that that 2005 may be the year for postal reform.  While seasoned cynics may grouse that postal reform is akin to visions of sugarplums, things may truly turn out differently in 2005.  The proverbial political planets may be swinging into the proper alignment.  So what's different this time?

In the last NAPS Legislative update (http://www.naps.org/Legislative_News/LegUpdate_11-15-04.doc), I identified five questions integral to the road map on postal reform.  This time, here's my best shot at the answers to those questions:


1.    Will President Bush devote some of his newly-won political capital to work with Congress in securing postal reform?

Over the past two years, the Bush Administration has expressed ambivalence about overhauling the nation’s postal system.  In 2003 the President established a select commission that recommended close to three dozen changes in the governance and management of the Postal Service.  But the White House shelved the commission’s final report and largely watched Congressional reform efforts falter from the sidelines. 

Early signs now point to a change in the White House attitude about the future of the Postal Service.  Soon after the November elections, the Bush Administration showed early signs of engagement on the issue.  In mid-November, a White House list of key postal reform provisions emerged.  (The White House postal reform agenda is on the NAPS web site at: http://www.naps.org/Legislative_News/11-04-White-House-Terms.pdf). 

A team of White House, Treasury Department and OPM officials began to participate in discussions with key Capitol Hill lawmakers about the key terms that were critical to White House support for reform.  White House officials have expressed a desire to expedite action on postal overhaul legislation before the Postal Service initiates a rate increase request in April, an increase whose size could be large, perhaps as much as 22 percent in first-class rates, depending on how postal reform efforts turn out.


2.  What terms for reform will the Administration insist on?

The White House says that the bills considered by the House and Senate during the last Congress failed to provide “meaningful reform” and must be strengthened in several ways.  The Administration is especially focused on two money issues that have underlying ties to the size of the federal deficit. 

The first involves who (the Postal Service or the Treasury) bears responsibility for $27 billion in pension costs connected to military service credit for postal employees under the Civil Service Retirement System (CSRS).  The Administration insists that the Postal Service must continue to retain responsibility, consistent with the 2003 law that shifted the burden to the Postal Service.  The Postal Service and the postal community contend that those liabilities are the governments, not the Postal Service.

The second issue concerns how to make funds available to the Postal Service, in abolishing the existing escrow fund of overpaid postal CSRS payments, without adversely affecting the deficit.  The Administration says that it supports the abolishment of the escrow, but insists on the entire use of the $78 billion in escrow funds to fully pay in advance the projected costs of retiree health benefits.  Mailers and others in the postal community want some of the escrow to pay for current Postal Service operational costs.  They argue that the upcoming postal rate increase will be extraordinarily punitive unless relief is provided.

In addition, the White House has identified a list of provisions it says are essential to imposing stronger financial accountability upon and wider management flexibility to the Postal Service.   
 

3.  What does this mean for postal facility and labor issues, particularly employee pay, health and retirement benefits and plant closings?

The overall White House postal reform agenda, notwithstanding the military retirement and escrow issues, is surprisingly light on workforce issues.  The White House recognizes that the support of the postal employee organizations is key to the ultimate success of postal legislation on the Hill.  The White House favors modest changes in the process and substance of workers compensation benefits and would lift the cap on executive pay through performance gains, but does not endorse the far-reaching changes in collective bargaining that the President’s commission had earlier recommended.  Pay increases presumably would have room to grow as the Postal Service raises rates within a rate range capped by the Consumer Price Index under existing legislative proposals, backed by the White House.
   
Pre-funding of postal retiree health benefit costs, using the CSRS escrow as the Administration proposes, is attractive in principle.  But no other federal department or entity is required to assume the obligation to entirely pre-fund its retiree health costs.  And pre-payment of these “unfunded liabilities” now by the Postal Service is no assurance later too retirees of actual receipt of health insurance coverage, since coverage terms are subject to collective bargaining, as well as to some degree OPM regulation.       

The White House also insists on the establishment of a “facility closing commission” that would make recommendations for facility consolidation.  The commission, called the “Postal Network Optimization Commission” (P-NOC) would come about if and when the Postal Service failed to meet annual targets in reducing the costs of its mail processing and distribution facilities.    The President’s postal commission had proposed the establishment of a P-NOC.  NAPS has opposed the creation of the any facility closing commission, contending that the Postal Service has sufficient authority and the best judgment on when and how to consolidate its processing and distribution plants.  


4.  Can a comprehensive postal reform package be crafted that satisfies the White House, Congress and postal stakeholders, especially on the CSRS escrow account and military retirement? 

Maybe Donald Trump should be called in to mastermind postal reform efforts because mastery of ‘the art of the deal” will ultimately be the recipe for comprehensive postal reform.  But Trump can remain in New York firing apprentices.  Congressional leadership on postal reform remains in the very capable, tenacious hands of Senator Susan Collins (R-ME) and Rep. Tom Davis (R-VA), who shepherded reform bills the farthest during the last Congress.  Both are moderates who believe in the virtue of bipartisan cooperation.  Collins is coming off successful leadership of intelligence reform efforts.  Davis insists 2005 is the year for postal reform, recently telling House colleagues in a floor speech that “It would be irresponsible and reckless for us to sit back and do nothing.”  Look for compromise from all parties, including the White House, even on the escrow and military retirement issues.
  

5.  Will the expected Postal Service filing of a postal rate increase next spring be enough of a “crisis” to prompt Congressional action?

Congress is a huge, lumbering institution.  That’s why it’s easier to defeat bills than to pass them.  Congress is also more likely to react to a threatening situation than to act early to prevent the conditions that gave rise to the threat itself.  But now we’re looking at the convergence of several ominous developments affecting Postal Service finances and rates – and the health of business interests that rely on the mail – that will prompt Congress to wake up and smell the coffee.

The Postal Service will be required for the first time in 2006 to make a payment – a huge, $3 billion payment -- into the escrow account with the “savings” it accrues in CSRS payments under the CSRS postal reform law Congress passed in 2003.  That $3 billion payment will be included in the rate base the Postal Service uses to formulate its upcoming rate increase request, expected to filed this spring. 

The Postal Service rate request, mailers and others in the postal community fear, could be a large one, possibly as high as 22%, or eight cents on first-class rates.  A rate hike of that size would be costly to business interests that use the mail, so costly that it would have the potential to divert more mail away from the postal system, contributing to further USPS volume loss. 

What does all this mean?  The enactment of comprehensive postal legislation that includes repeal of the escrow account apparatus, before the rate hike process gathers steam, is likely to be the biggest driver of reform efforts in the months ahead. 

This also means that the upcoming NAPS Legislative Training Seminar in Washington, April 3-5, will likely come at an extremely pivotal time in the path toward postal reform.  If you haven’t registered yet, be sure to do that soon!

And finally, on a personal note, I'd like to extend the warmest holiday wishes to every person and friend reading these words, praying that God may bestow on you and your family a spirit of peace and joy that endures throughout the year to come.

Bruce Moyer
Legislative Counsel
National Association of Postal Supervisors

The Road Map to Postal Reform: An Analysis