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On Sept. 17, Sen. Tom Carper (D-DE), ranking member of the Senate Homeland Security and Governmental Affairs Committee, introduced the Improving Postal Operations, Service and Transparency (iPost) Act of 2015 (S. 2051).

Fredric Rolando, president of the National Association of Letter Carriers, released the following statement regarding the bill:

NALC appreciates the tireless efforts of Senator Carper and his staff to craft a bill that will advance the process of achieving much needed postal reform. While Senator Carper’s new bill contains several provisions we cannot support and raises a number of serious concerns for letter carriers and the larger federal employee community, we believe it is a good place to begin the conversation about how to preserve and strengthen the Postal Service for the American people while protecting the legitimate interests of all the key stakeholders.

Over the past few months, NALC has been working with a coalition made up of the four major postal unions, several key mailing industry groups, and the executive leadership of the U.S. Postal Service, to develop consensus postal reform legislation.

In the weeks ahead, our coalition intends to work with the leaders and members of the Senate Homeland Security and Governmental Affairs Committee, and their counterparts on the House Oversight and Government Reform Committee, to pass postal reform legislation that makes sense and that fairly meets the needs of our country, its people and its businesses.

iPost summary and analysis

Carper’s iPost bill is comprehensive, and many of its provisions originate from legislation that was included in the Postal Reform Act of 2013 (S. 1486) in the 113th Congress.

• Medicare integration to reduce the cost of future retiree health benefits costs to the Postal Service:  The iPost bill would create a new Postal Service Health Benefits Program (PSHBP) within the Federal Employee Health Benefits Program (FEHBP). This new version of the FEHBP program, which would be implemented and administered by the Office of Personnel Management (OPM) for all postal employees and annuitants, calls for mandatory enrollment of most eligible postal annuitants in Medicare Parts A (hospital insurance) and B (medical insurance) and provides access to low-cost prescription drugs provided indirectly to postal FEHBP plans by Medicare Part D. (The penalty for late enrollment in Medicare Part B would be waived during a one-time open season.)

OPM would implement the plan by requiring all current FEHP plans with more than 5,000 postal employees and annuitants to separately price their premiums for postal and non-postal federal employees – and applying the new Medicare enrollment rules to postal plan participants. Since Medicare is the primary payer of health benefits for Americans age 65 or older, maximizing enrollment (full integration) in Medicare will reduce the cost of health insurance provided by the Postal Service through FEHBP – slashing the future cost of retiree health benefits dramatically.

• Investment of RHB: Signaling a major change in how to address pre-funding, the legislation includes language that would enable USPS to follow private-sector best practices by giving the agency the option of investing a portion of its contributions to its Retiree Health Benefits Fund in a Thrift Savings Plan (TSP)–style account, rather than in low-interest Treasury bonds, as now required by law. Although NALC welcomes this change, we believe Congress should go further – the USPS should be able to invest all of its contributions in a way that minimizes its pre-funding costs.
• Pre-funding: The legislation would eliminate the existing payment schedule for the pre-funding of future retiree health benefits (RHB) and cancel outstanding payments, instead changing the pre-funding goal to 80 percent of projected obligations and creating new payment schedule over 40 years, requiring both “normal cost” and “amortization” payments. With the Medicare and investment reforms described above, the cost of prefunding would fall by several billions annually.
• FERS/CSRS: A provision contained in the bill would provide a mechanism for allowing the Postal Service to receive a refund of any pension overpayments revealed by new calculations using postal-specific assumptions. Under current law, USPS is required to pay down any unfunded pension obligations it has, but the law does not provide a mechanism for refunding the Postal Service for overpayments. In addition, the bill would extend the payment schedule for this liability from 25 years to 40 years.
• Arbitration: Unfortunately, the bill includes a provision to require interest arbitrators appointed to resolve postal contract disputes to give special attention to the financial condition of the Postal Service.  NALC opposes this provision since arbitrators already consider USPS finances – adding it to the law could bias arbitrators toward the positions of postal management. therefore
• Six-day delivery: On the bright side, the bill is notably silent on six-day mail delivery. This marks a significant departure from previous bills that have called either for outright elimination of six-day mail delivery or language that would trigger a move to a five-day delivery schedule should annual mail volume fall below 140 billion pieces.
• Door delivery: The iPost bill includes language encouraging the conversion of door delivery access points to cluster or curbside delivery points for residential and business customers, on a voluntary basis requiring customer consent. NALC has adamantly opposed inclusion of this language and will fight for its removal. However, the union is pleased that the mandatory conversion of all business door delivery to curb or cluster box delivery that was included in S. 1486 was dropped from this bill.
• Closures and consolidations: iPost contains language that would delay for two years from the date of enactment the closure or consolidation of any mail-processing plant or facility currently in operation, and it identifies a series of procedures USPS must follow to determine whether a plant should be slated for closure.
• Service standards: Although Carper’s bill does not rollback service standards to their 2012 levels as we hoped, it would freeze the current delivery service standards for a period of five years. These standards now range from two to three days nationwide. In addition, iPost would set in place performance goals established by the Postal Regulatory Commission (PRC) that would prevent the Postal Service from making further reductions in service standards if these goals are not met, and it would require USPS to seek advisory opinions and to respond to any concerns or recommendations made by the PRC. However, following a waiting period of 60 days, the Postal Service would be able to proceed with standard changes, even over the objections of the PRC.  The latter provision is not acceptable to the postal unions and many other stakeholders.

On Postal Service innovation and revenue, iPost includes the following:

• Rates: The bill would make permanent the 4.3 percent exigent rate increase, now scheduled to expire in March 2016. It also would institute a rate freeze until Jan. 1, 2018, when the PRC would then implement a new system governing the rates for market-dominant products. However, during that review, the PRC may consider raising rates by the inflation accrued during the rate freeze.
• Non-postal services: Carper’s iPost bill would give USPS authority to offer non-postal products using its existing network, but the bill outlines provisions designed to prohibit unfair competition.
• Shipping of alcohol: Language directly from previous House and Senate postal bills would enable the Postal Service to ship beer, wine and alcohol, in accordance with state laws.
• FECA reforms: Finally, with regard to FECA, iPost includes provisions that would severely reduce or eliminate various FECA benefits for injured workers and their spouses. Despite the inclusion of language making these provisions prospective in nature—meaning they only apply to future injured workers and their families—NALC nevertheless believes these provisions are grossly unfair. They are not germane to a postal bill and would undermine the ability of the Senate to pass postal reform legislation by drawing the legitimate opposition of many other federal employee unions.