February 2022 Update
There has been a dramatic decrease in the number of COVID-19 cases throughout the Postal installations within the MN-ND District. In the last couple of months, we have seen the daily report of infections drop from triple digits to a handful. There is no guarantee that the pandemic will come to an end or that there isn’t another variant lurking around the corner; but for now, everyone is breathing a sigh of relief.
The biggest story in the Postal world recently has been the passage of Postal reform (H.R. 3076) by the US House of Representatives. That legislation was advanced to the Senate (S. 1720), where due to a procedural error, it remains pending. It’s currently unknown on what timeline the Senate will act on this legislation.
Postal reform is supported by the Union and is being driven primarily by financial circumstances created by the 2006 Postal Accountability and Enhancement Act (PAEA). It was this Act which required the Postal Service to fund retiree health benefits 75 years into the future and limited the ability to increase rates. Since the passage of the PAEA the financial condition of the Postal Service has continued to deteriorate.
The Government Accountability Office (GAO) provided a Report to Congressional Committees concerning Postal reform in September of 2021 (GAO-21-479SP). The Postal Service’s financial viability has been on the GAO High-Risk List since 2009. The GAO has reported that, starting in fiscal year 2007, the Postal Service’s expenses began exceeding its revenue. This has led to total net losses of $87 billion from fiscal years 2007 through 2020, and $188 billion in total unfunded liabilities and debt as of the end of fiscal year 2020.
The GAO reports that Postal Service did not make $63.25 billion in required payments to fund postal retiree health and pension benefits through the end of fiscal year 2020. The Postal Service reported that it did not make these payments so that it could cover current and anticipated operating costs, deal with contingencies, and make needed capital investments. The Postal Service has also stated that under its current business model, it anticipates that it will run out of cash on hand even if it continues to not make all of these required funding payments. However, defaulting on these funding payments could have a significant effect on postal retirees and their surviving dependents, add to the Postal Service’s already large unfunded liabilities, and affect the Postal Service’s ability to become more financially viable in the long-term. It is projected that the Postal Service Retiree Health Benefits Fund will run out of money in 2030.
The Postal Service Reform Act of 2021 as passed by the House of Representatives is far from comprehensive Postal reform. It is a narrow Act aimed at addressing some of the financial and operational changes needed to place the Postal Service on a sustainable path. The Act makes four primary changes.
First, it will repeal the mandate that the Postal Service prefund retiree health benefits through 2056. The Postal Service hasn’t been making these payments. This change would change the prefunding requitement to a “pay-as-you-go” system comparable to the private sector and the rest of the Federal government.
Second, the Act would require future retirees to enroll in Medicare upon reaching the age of 65. Postal retirees are currently eligible to enroll in Medicare at the age of 65. The Postal Service has stated that approximately 92 percent of retirees voluntarily enroll in Part A and approximately 76 percent of retirees voluntarily enroll in Part B (these retirees pay Medicare’s Part B premium). The Postal Service claims to have conducted numerous “life event” scenario calculations and found that those who did not voluntarily enroll “may” be left with significant coverage gaps.
Third, the Act would require the Postal Service to create a public “dashboard” on their website on which performance data would be published weekly. This performance data would allow the public to view service failures, locate mail slowdowns, and identify specific zip codes with delivery problems.
And fourth, the Act would require the Postal Service to deliver the mail six days a week. There is currently nothing in the law which guarantees six-day delivery.
In addition, there is a provision in the Act to allow the Postal Service to offer some additional products and services. Lastly, there is one provision that I find concerning. It’s contained in Section 2903 and rather than attempting an explanation, I’ll let the language speak for itself:
2903. Use of funds from sale of property
‘‘In the event that the Postal Service permanently ceases operations, any funds derived from the sale of any real property owned by the Postal Service shall be used to pay any outstanding liability with respect to the salaries and expenses of any Postal Service employee. The balance of any remaining funds shall be deposited into the Postal Service Retiree Health Benefits Fund established under section 8909a of title 5.’’.
The Postal Service Reform Act of 2021 is a narrow and limited approach to Postal Reform. It does not attempt to fix everything; but it’s a step in the right direction. Significantly, there are no changes to the collective bargaining process. We must pay particular attention to Postal Reform now that it has advanced to the Senate. There are those in the Senate who would like to see Postal collective bargaining and binding arbitration abolished. While I won’t name names (for now), some in the Senate believe that eliminating collective bargaining, and relegating Postal employees to a non-career, low wage, no benefit workforce, would result in the American People being more free.
Whether it’s on the work floor, in the conference room, or on Capitol Hill, your Union must consider what represents the least risk to Mail Handlers, their wages, their working conditions, their benefits, and their continued employment. This is true even when Mail Handlers succumb to work floor rumors and lose sight of their best interests.