CSRS LEGISLATION

1
CSRS LEGISLATION PUBLIC LAW 108-18
2
PUBLIC LAW 108-18
Overview

• Changes Postal Service CSRS Funding
• to Prevent 105 Billion Over Payment
• Under Existing Legislation

• Transfers 27 Billion CSRS Cost of
• Military Service to USPS

• Places Savings (Difference Between
• New and Old CSRS Payments) in
• Escrow Beginning in FY 2006

3
PUBLIC LAW 108-18
Reports Required by Law

• Funding CSRS Cost of Military Service USPS
  or U.S. Treasury to Pay?

• USPS Use of Savings Beyond FY 2005

4
PUBLIC LAW 108-18
USPS Position on Military Service Costs
Responsibility Should Revert to U.S. Treasury

• 90 Relates to Military Service Prior To

1971 Establishment of USPS

• 17B Relates to Treasury Payments Made
• Between 1971 and 2002

• USPS Only Agency Charged This Cost

• Presidents Commission Taxpayers, Not

Ratepayers, Should Finance Military Pensions
5
PUBLIC LAW 108-18
Use of Savings

• 2003/04 -- Liquidation of Debt

• 2005 -- Fund Expense Growth or Liquidate Debt

• 2006 Beyond Hold in Escrow Pending
• Legislative Change

6
PUBLIC LAW 108-18
Use of Savings After 2005
Law Requires Consideration of

• Debt Repayment
• Pre-funding Post Retirement Health Benefits
• Cost Saving Capital Investments
• Delaying/Moderating Increases in Postal Rates
• Any other Matter and
• Work of Presidents Commission

7
PUBLIC LAW 108-18
Sense of Congress Stated in Act
because the Postal Service still faces
substantial obligations related to post-
retirement health benefits for its current and
former employees, some portion of the savings
should be used to address those unfunded
obligations
8
PUBLIC LAW 108-18
USPS Position on Escrow Requirement

• Escrow Requirement Creates New Over-Funding

• 3.2B Required to Fund FY 2006 Escrow

• USPS Opposes Escrow Requirement

9
PUBLIC LAW 108-18
USPS Preferred Proposal
With Obligation for Military Service
Costs Returned to U. S. Treasury, Pre-Fund
Postretirement Health Benefit Costs of Employees
and Retirees.

• Responds to Sense of Congress and
• GAO Concerns re Recognizing and Funding
• Costs when Earned.

10
PUBLIC LAW 108-18
USPS Alternate Proposal
Should USPS Be Required to Fund Military Service
Costs

• Pay Annual Retiree Health Benefit
• Premium Costs

• Pre-Fund Retiree Health Benefit Cost for

New Hires Since FY 2002

• Liquidate Debt

• Fund Cost Saving Capital Investments

11
PUBLIC LAW 108-18
FY 2006 Rate Impact of Proposals

• 3.2B Escrow Requirement
• Increases Rates 5.4 Increase

• USPS Preferred Proposal
• Increases Rates 1.5 to 2.0

• USPS Alternate Proposal
• Increases Rates 0.3

12
PUBLIC LAW 108-18
Next Steps

• Military Service Costs
• GAO Evaluation of USPS, OPM and Treasury
  Proposals Due November 29, 2003.

• Disposition of Savings
• - GAO Evaluation of USPS Proposal Due
  November 29, 2003.
• - Congress to Revisit Savings Issue Within 180
  Days of Receiving GAO Report.