CSRS LEGISLATION PUBLIC LAW CSRS LEGISLATION PUBLIC LAW

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 PUBLIC LAW

Reports Required by Law  USPS Use of “Savings” Beyond FY 2005  Funding CSRS Cost of Military Service – USPS or U.S. Treasury to Pay? PUBLIC LAW

Responsibility Should Revert to U.S. Treasury $17B Relates to Treasury Payments Made Between 1971 and % Relates to Military Service Prior To 1971 Establishment of USPS USPS Position on Military Service Costs USPS Only Agency Charged This Cost President’s Commission: “Taxpayers, Not Ratepayers, Should Finance Military Pensions” PUBLIC LAW

Use of “Savings” 2003/04 -- Liquidation of Debt Fund Expense Growth or Liquidate Debt PUBLIC LAW & Beyond – Hold in Escrow Pending Legislative Change

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 President’s Commission PUBLIC LAW Use of “Savings” After 2005

“…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” PUBLIC LAW Sense of Congress Stated in Act

 Escrow Requirement Creates New Over-Funding  $3.2B Required to Fund FY 2006 Escrow  USPS Opposes Escrow Requirement PUBLIC LAW USPS Position on Escrow Requirement

With Obligation for Military Service Costs Returned to U. S. Treasury, Pre-Fund Postretirement Health Benefit Costs of Employees and Retirees. PUBLIC LAW USPS Preferred Proposal  Responds to “Sense of Congress” and GAO Concerns re Recognizing and Funding Costs when Earned.

Should USPS Be Required to Fund Military Service Costs:  Pre-Fund Retiree Health Benefit Cost for New Hires Since FY 2002  Liquidate Debt  Fund Cost Saving Capital Investments  Pay Annual Retiree Health Benefit Premium Costs PUBLIC LAW USPS Alternate Proposal

 $3.2B Escrow Requirement: Increases Rates 5.4% Increase  USPS Preferred Proposal: Increases Rates 1.5% to 2.0% PUBLIC LAW FY 2006 Rate Impact of Proposals  USPS Alternate Proposal: Increases Rates 0.3%

 Military Service Costs: GAO Evaluation of USPS, OPM and Treasury Proposals Due November 29, PUBLIC LAW Next Steps  Disposition of Savings: - GAO Evaluation of USPS Proposal Due November 29, Congress to Revisit Savings Issue Within 180 Days of Receiving GAO Report.