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painyJoin us this evening September 14th, 2014, at 7:00 pm CST! More

Pre-Funding Continues to Burden Postal Service Finances

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The Postal Service recently reported their 2nd Quarter earnings for Fiscal Year 2014, and it shows that they once again would have made a profit if not for the pre-funding of future retiree health benefits.  The Postal Services accounting books show a loss of 1.9 billion for the 2nd quarter.  However, if you exclude the mandated pre-funding payment, the USPS actually would be showing a year-to-date profit of more than one billion dollars.

The pre-funding payment, a payment required by the 2006 Postal Accountability Act (Public law 109-435), requires the Postal Service to pre-fund its future retiree health benefits, a 75 year obligation, in only ten years.  The Postal Service is the only government agency or corporation that is required by law to pre-fund.  While it is true the Department of Defense (DOD) also pre-funds future retiree health benefits, the DOD recieves Congressional-appropriated monies to pre-fund.  The Postal Service does not receive a single dollar to pre-fund.  The Postal Service operates on rate payer money, money it receives from selling of stamps and services, not taxpayer money.

The Pre-funding payments, which range from $5.5 to $5.8 billion a year through 2016, represent over 80% of the Postal Services losses since 2007.  In fact, the pre-funding requirements  represented 100% of the losses incurred by the Postal Service in the last fiscal year.  If  not for the pre-funding payment, the Postal Service would have posted a $623 million profit delivering the mail.

The House and the Senate bills currently in Congress continue to require the Postal Service to pre-fund.  Chairman Darrel Issa (R CA) has released a new postal discussion draft  (as of press time the bill has not been officially introduced) that would require the Postal Service pay half of the required payments in 2015 and 2016.  This would reduce the payments to approximately 2.8 billion and 2.9 billion, respectively.  The remaining obligation would be paid under an amortized schedule. More

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