Postmaster General Tells Senate Committee USPS is on the Brink of Default
“We do not currently have the flexibility in our business model to achieve all of these cost reductions. To do so, the Postal Service requires the enactment of comprehensive, long-term legislation to provide it with needed flexibility,” Donahoe added.
Specifically, legislation is needed that would do the following:
- Resolve a unique law requiring the Postal Service to make $5.5 billion annual payments to prefund retirement health benefits.
- Return $6.9 billion in Federal Employees Retirement System overpayments.
- Grant the Postal Service the authority to determine delivery frequency.
- Allow the Postal Service to restructure its healthcare system to make it independent of federal programs.
- Grant the Postal Service the authority to provide a defined contribution retirement plan for new hires, rather than today’s defined benefit plan.
- Streamline the process for product development and pricing.
Donahoe also said the size of the Postal Service workforce needs to be addressed. In order to return to profitability, the Postal Service needs to reduce its career workforce by approximately 220,000 by 2015, but cannot do so under the terms of existing collective bargain agreements. To accelerate workforce reductions, the Postal Service is asking Congress to allow it to utilize the Reduction-in-Force (RIF) provisions currently applicable to federal competitive service employees for positions held by bargaining unit employees.