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108th CONGRESS
1st Session
H. R. 735
To amend chapter 83 of title 5, United States Code, to reform the
funding of benefits under the Civil Service Retirement System for
employees of the United States Postal Service, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 12, 2003
Mr. McHugh (for himself, Mr. Waxman, Mr. Tom Davis of Virginia, and Mr.
Davis of Illinois) introduced the following bill; which was referred to
the Committee on Government Reform
_______________________________________________________________________
A BILL
To amend chapter 83 of title 5, United States Code, to reform the
funding of benefits under the Civil Service Retirement System for
employees of the United States Postal Service, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Postal Civil Service Retirement
System Funding Reform Act of 2003''.
SEC. 2. CIVIL SERVICE RETIREMENT SYSTEM.
(a) Definitions.--Section 8331 of title 5, United States Code, is
amended--
(1) in paragraph (17)--
(A) by striking ```normal cost''' and inserting
```normal-cost percentage'''; and
(B) by inserting ``and standards (using dynamic
assumptions)'' after ``practice'';
(2) by amending paragraph (18) to read as follows:
``(18) `Fund balance' means the current net assets of the
Fund available for payment of benefits, as determined by the
Office in accordance with appropriate accounting standards, but
does not include any amount attributable to--
``(A) the Federal Employees' Retirement System; or
``(B) contributions made under the Federal
Employees' Retirement Contribution Temporary Adjustment
Act of 1983 by or on behalf of any individual who
became subject to the Federal Employees' Retirement
System;''; and
(3) by striking ``and'' at the end of paragraph (27), by
striking the period at the end of paragraph (28) and inserting
``; and'', and by adding at the end the following:
``(29) `dynamic assumptions' means economic assumptions
that are used in determining actuarial costs and liabilities of
a retirement system and in anticipating the effects of long-
term future--
``(A) investment yields;
``(B) increases in rates of basic pay; and
``(C) rates of price inflation.''.
(b) Deductions and Contributions.--
(1) In general.--Section 8334(a)(1) of title 5, United
States Code, is amended--
(A) by striking ``(a)(1)'' and inserting
``(a)(1)(A)'';
(B) by designating the matter following the first
sentence as subparagraph (B)(i) and aligning the text
accordingly;
(C) in subparagraph (B)(i) (as so designated by
subparagraph (B)), by striking ``An equal'' and
inserting ``Except as provided in clause (ii), an
equal''; and
(D) by adding at the end the following:
``(ii) In the case of an employee of the United States Postal
Service, the amount to be contributed under this subparagraph shall
(instead of the amount described in clause (i)) be equal to the product
derived by multiplying the employee's basic pay by the percentage equal
to--
``(I) the normal-cost percentage for the applicable
employee category listed in subparagraph (A), minus
``(II) the percentage deduction rate that applies with
respect to such employee under subparagraph (A).''.
(2) Conforming amendments.--Section 8334(k) of title 5,
United States Code, is amended--
(A) in paragraph (1)(A), by striking ``the first
sentence of subsection (a)(1) of this section'' and
inserting ``subsection (a)(1)(A)''
(B) in paragraph (1)(B)--
(i) by striking ``the second sentence of
subsection (a)(1) of this section'' and
inserting ``subparagraph (B) of subsection
(a)(1)''; and
(ii) by striking ``such sentence'' and
inserting ``such subparagraph''; and
(C) in paragraph (2)(C)(iii), by striking ``the
first sentence of subsection (a)(1)'' and inserting
``subsection (a)(1)(A)''.
(c) Postal Supplemental Liability.--Subsection (h) of section 8348
of title 5, United States Code, is amended to read as follows:
``(h)(1)(A) For purposes of this subsection, `Postal supplemental
liability' means the estimated excess, as determined by the Office,
of--
``(i) the actuarial present value of all future benefits
payable from the Fund under this subchapter attributable to the
service of current or former employees of the United States
Postal Service, over
``(ii) the sum of--
``(I) the actuarial present value of deductions to
be withheld from the future basic pay of employees of
the United States Postal Service currently subject to
this subchapter pursuant to section 8334;
``(II) the actuarial present value of the future
contributions to be made pursuant to section 8334 with
respect to employees of the United States Postal
Service currently subject to this subchapter;
``(III) that portion of the Fund balance, as of the
date the Postal supplemental liability is determined,
attributable to payments to the Fund by the United
States Postal Service and its employees, including
earnings on those payments; and
``(IV) any other appropriate amount, as determined
by the Office in accordance with generally accepted
actuarial practices and principles.
``(B)(i) In computing the actuarial present value of future
benefits, the Office shall include the full value of benefits
attributable to military and volunteer service for United States Postal
Service employees first employed after June 30, 1971, and a prorated
share of the value of benefits attributable to military and volunteer
service for United States Postal Service employees first employed
before July 1, 1971.
``(ii) Military service so included shall not be included in
computation of the payment required by subsection (g)(2).
``(2)(A) Not later than June 30, 2004, the Office shall determine
the Postal supplemental liability as of September 30, 2003. The Office
shall establish an amortization schedule, including a series of equal
annual installments commencing September 30, 2004, which provides for
the liquidation of such liability by September 30, 2043.
``(B) The Office shall redetermine the Postal supplemental
liability as of the close of the fiscal year, for each fiscal year
beginning after September 30, 2003, through the fiscal year ending
September 30, 2038, and shall establish a new amortization schedule,
including a series of equal annual installments commencing on September
30 of the subsequent fiscal year, which provides for the liquidation of
such liability by September 30, 2043.
``(C) The Office shall redetermine the Postal supplemental
liability as of the close of the fiscal year for each fiscal year
beginning after September 30, 2038, and shall establish a new
amortization schedule, including a series of equal annual installments
commencing on September 30 of the subsequent fiscal year, which
provides for the liquidation of such liability over 5 years.
``(D) Amortization schedules established under this paragraph shall
be set in accordance with generally accepted actuarial practices and
principles, with interest computed at the rate used in the most recent
valuation of the Civil Service Retirement System.
``(E) The United States Postal Service shall pay the amounts so
determined to the Office, with payments due not later than the date
scheduled by the Office.
``(F) An amortization schedule established under subparagraph (B)
or (C) shall supersede any amortization schedule previously established
under this paragraph.
``(3) Notwithstanding any other provision of law, in computing the
amount of any payment under any other subsection of this section that
is based upon the amount of the unfunded liability, such payment shall
be computed disregarding that portion of the unfunded liability that
the Office determines will be liquidated by payments under this
subsection.
``(4) Notwithstanding any other provision of this subsection, any
determination or redetermination made by the Office under this
subsection shall, upon request of the Postal Service, be subject to
reconsideration and review (including adjustment by the Board of
Actuaries of the Civil Service Retirement System) to the same extent
and in the same manner as provided under section 8423(c) of title 5,
United States Code.''.
(d) Repeals.--
(1) In general.--The following provisions of law are
repealed:
(A) Subsection (m) of section 8348 of title 5,
United States Code.
(B) Subsection (c) of section 7101 of the Omnibus
Budget Reconciliation Act of 1990 (5 U.S.C. 8348 note).
(2) Rule of construction.--Nothing in this subsection shall
be considered to affect any payments made before the date of
the enactment of this Act under either of the provisions of law
repealed by paragraph (1).
SEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE UNITED STATES POSTAL
SERVICE.
(a) In General.--Savings accruing to the United States Postal
Service as a result of the enactment of this Act shall--
(1) to the extent that such savings are attributable to
fiscal year 2003, 2004, or 2005, be used to reduce the postal
debt, to such extent and in such manner as the Secretary of the
Treasury shall specify (in consultation with the Postmaster
General), consistent with succeeding provisions of this
section; and
(2) to the extent that such savings are attributable to any
fiscal year after fiscal year 2005, be held in escrow until
Congress acts pursuant to subsection (e).
(b) Amounts Saved.--
(1) In general.--The amounts representing any savings
accruing to the Postal Service in any fiscal year as a result
of the enactment of this Act shall be computed by the Office of
Personnel Management in accordance with paragraph (2).
(2) Methodology.--Not later than July 31, 2003, for fiscal
year 2003, and October 1 of the fiscal year before each fiscal
year after fiscal year 2003, the Office of Personnel Management
shall--
(A) formulate a plan specifically enumerating the
methods by which the Office shall make its computations
under paragraph (1); and
(B) submit such plan to the Committee on Government
Reform of the House of Representatives and the
Committee on Governmental Affairs of the Senate.
(3) Requirements.--Each such plan shall be formulated in
consultation with the Postal Service and shall include the
opportunity for the Postal Service to request reconsideration
of computations under this subsection, and for the Board of
Actuaries of the Civil Service Retirement System to review and
make adjustments to such computations, to the same extent and
in the same manner as provided under section 8423(c) of title
5, United States Code.
(c) Reporting Requirement.--The Postal Service shall include in
each report rendered under section 2402 of title 39, United States
Code, the amount applied toward reducing the postal debt, and the size
of the postal debt before and after the application of subsection (a),
during the period covered by such report.
(d) Sense of Congress.--It is the sense of the Congress that--
(1) the savings accruing to the Postal Service as a result
of the enactment of this Act will be sufficient to allow the
Postal Service to fulfill its commitment to hold postage rates
unchanged until at least 2006;
(2) because the Postal Service still faces substantial
obligations related to postretirement health benefits for its
current and former employees, some portion of the savings
referred to in paragraph (1) should be used to address those
unfunded obligations; and
(3) none of the savings referred to in paragraph (1) should
be used to pay bonuses to Postal Service executives.
(e) Postal Service Proposal.--
(1) In general.--The United States Postal Service shall, by
September 30, 2003, in consultation with the General Accounting
Office, prepare and submit to the President and the Congress
its proposal detailing how future savings accruing to the
Postal Service as a result of the enactment of this Act should
be expended.
(2) Matters to consider.--In preparing its proposal under
this subsection, the Postal Service shall consider--
(A) whether, and to what extent, those future
savings should be used to address--
(i) debt repayment;
(ii) prefunding of postretirement
healthcare benefits for current and former
postal employees;
(iii) productivity and cost saving capital
investments; and
(iv) any other matter; and
(B) the report of the President's Commission on the
United States Postal Service under section 5 of
Executive Order 13278 (67 Fed. Reg. 76672).
(3) GAO review and report.--Not later than 30 days after
the Postal Service submits its proposal pursuant to paragraph
(1), the General Accounting Office shall prepare and submit a
written evaluation of such proposal to the Committee on
Government Reform of the House of Representatives and the
Committee on Governmental Affairs of the Senate.
(4) Legislative action.--Upon receiving the proposal of the
Postal Service and the evaluation of such proposal by the
General Accounting Office under this subsection, Congress shall
revisit the question of how the savings accruing to the Postal
Service as a result of the enactment of this Act should be
used.
(f) Determination and Disposition of Surplus.--
(1) In general.--If, as of the date under paragraph (2),
the Office of Personnel Management determines (after
consultation with the Postmaster General) that the computation
under section 8348(h)(1)(A) of title 5, United States Code,
yields a negative amount (hereinafter referred to as a
``surplus'')--
(A) the Office shall inform the Postmaster General
of its determination, including the size of the surplus
so determined; and
(B) the Postmaster General shall submit to the
Congress a report describing how the Postal Service
proposes that such surplus be used, including a draft
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