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[[Page 623]]

    POSTAL CIVIL SERVICE RETIREMENT SYSTEM FUNDING REFORM ACT OF 2003

[[Page 117 STAT. 624]]

Public Law 108-18
108th Congress

                                 An Act


 
   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. <<NOTE: Apr. 23, 2003 -  [S. 380]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Postal Civil Service 
Retirement System Funding Reform Act of 2003. 5 USC 101 
note.>> 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)'';

[[Page 117 STAT. 625]]

                    (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.

[[Page 117 STAT. 626]]

    ``(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 the 
computation of any amount under subsection (g)(2).
    ``(2)(A) <<NOTE: Deadline.>> 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 
dynamic actuarial 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).''.
    (d) Repeals.--
            (1) In general.--The following provisions of law are 
        repealed:
                    (A) Subsection (m) of section 8348 of title 5, 
                United States Code.

[[Page 117 STAT. 627]]

                    (B) Subsection (c) of section 7101 of the Omnibus 
                Budget Reconciliation Act of 1990 (5 U.S.C. 8348 note).
            (2)  <<NOTE: 5 USC 8348 note.>> 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).

    (e)  <<NOTE: Deadlines.>> Military Service Proposals.--
            (1) Proposals.--The United States Postal Service, the 
        Department of the Treasury, and the Office of Personnel 
        Management shall, by September 30, 2003, each prepare and submit 
        to the President, the Congress, and the General Accounting 
        Office proposals detailing whether and to what extent the 
        Department of the Treasury or the Postal Service should be 
        responsible for the funding of benefits attributable to the 
        military service of current and former employees of the Postal 
        Service that, prior to the date of the enactment of this Act, 
        were provided for under section 8348(g)(2) of title 5, United 
        States Code.
            (2) GAO review and report.--Not later than 60 days after the 
        Postal Service, the Department of the Treasury, and the Office 
        of Personnel Management have submitted their proposals under 
        paragraph (1), the General Accounting Office shall prepare and 
        submit a written evaluation of each such proposal to the 
        Committee on Government Reform of the House of Representatives 
        and the Committee on Governmental Affairs of the Senate.
SEC. 3. DISPOSITION <<NOTE: 39 USC note prec. 2001.>> 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--
            (1) shall, to the extent that such savings are attributable 
        to fiscal year 2003 or 2004, be used to reduce the postal debt 
        (in consultation with the Secretary of the Treasury), and the 
        Postal Service shall not incur additional debt to offset the use 
        of the savings to reduce the postal debt in fiscal years 2003 
        and 2004;
            (2) shall, to the extent that such savings are attributable 
        to fiscal year 2005, be used to continue holding postage rates 
        unchanged and to reduce the postal debt, to such extent and in 
        such manner as the Postal Service shall specify (in consultation 
        with the Secretary of the Treasury); and
            (3) to the extent that such savings are attributable to any 
        fiscal year after fiscal year 2005, shall be considered to be 
        operating expenses of the Postal Service and, until otherwise 
        provided for by law, shall be held in escrow and may not be 
        obligated or expended.

    (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 for each such fiscal year in accordance 
        with paragraph (2).
            (2)  <<NOTE: Deadline.>> Methodology.--Not later than July 
        31, 2003, the Office of Personnel Management shall--

[[Page 117 STAT. 628]]

                    (A) formulate a plan specifically enumerating the 
                actuarial methods and assumptions 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.--The 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 in the computation of any bonuses for Postal Service 
        executives.

    (e)  <<NOTE: Deadlines.>> Postal Service Proposal.--
            (1) In general.--The United States Postal Service shall, by 
        September 30, 2003, prepare and submit to the President, the 
        Congress, and the General Accounting Office its proposal 
        detailing how any savings accruing to the Postal Service as a 
        result of the enactment of this Act, which are attributable to 
        any fiscal year after fiscal year 2005, 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;
                          (iv) delaying or moderating increases in 
                      postal rates; and
                          (v) any other matter; and

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