COLLINS AND CARPER INTRODUCE BIPARTISAN BILL TO FIX POSTAL SERVICE'S
OVERPAYMENT TO RETIREE FUND, STAVE OFF RATE INCREASES

Higher than expected yields on pension investments due to cause massive
overpayments to system; bill encourages USPS to delay postal rate increases
until at least 2006 with savings from Collins's bill


WASHINGTON, D.C. - Governmental Affairs Committee Chairman Susan Collins
(R-ME) and Senator Tom Carper (D-DE) today introduced bipartisan
legislation that would correct a funding mechanism problem that could cause
the U.S. Postal Service to over-fund its contributions to the Civil Service
Retirement Fund by $78 billion. The legislation encourages the Postal
Service to use the savings to avoid postal rate increases until at least
2006 and to begin paying off its debt to the U.S. Treasury.

"Although I was initially skeptical of the claim that the U.S. Postal
Service's finances are in better order than previously thought, multiple
government agencies and independent experts have confirmed the good news,"
said Senator Susan Collins. "Congress ought to approve this legislation
swiftly, and the Postal Service ought to use the savings to avoid an
imminent postal rate hike."

"This bill is of vital interest to the future of the Postal Service and
enjoys the strong support of postal management, postal employees and postal
customers," Senator Tom Carper said. "With this bill the Postal Service
should be able to hold the price of postage steady until at least 2006.
This is important because, while what the Postal Service charges for its
services is still a bargain when compared to the prices charged by most
foreign posts, postal customers have absorbed multiple rate increases in
recent months that have raised the price of postage by more than the rate
of inflation. At a time when the economy is weak and modes of communication
like e-mail and electronic bill pay are more popular than ever, another
rate increase this year could be a disaster for the Postal Service. The
legislation Senator Collins and I introduced today will keep mail in the
system and give mailers the opportunity to increase the amount of business
they do with the Postal Service."

Recently, the Office of Personnel Management discovered that higher than
expected yields on pension investments by the Department of Treasury were
causing the Postal Service to dramatically over-fund its contributions to
the Civil Service Retirement System (CSRS). If Congress acts on the
Collins- Carper legislation, the Postal Service's CSRS retirement expenses
would be reduced by $2.9 billion in FY 2003, and another $2.8 billion in FY
2004.

The Collins-Carper legislation would allow the Postal Service to realize
these reductions by correcting the statutory funding mechanism for the
Civil Service Retirement System. The bill also directs the Office of
Personnel Management (OPM) to determine a new amortization schedule that
will pay off the Postal Service's existing unfunded CSRS liability of $5
billion. In addition, the legislation encourages the Postal Service to use
the savings resulting from this legislation to fulfill the its commitment
to hold postal rates unchanged until at least 2006, and to pay a portion of
their massive unfunded health care liabilities. It also stipulates that the
savings not be used to pay bonuses to Postal Service executives.

"Congress has an additional obligation to enact postal reform legislation
this year that will help the Postal Service and General Potter continue the
transformation necessary to make the Postal Service viable in the
electronic age, " Senator Tom Carper said. "President Bush's Commission on
the United States Postal Service will release a set of postal reform
proposals this summer that I hope will offer some fair, balanced
recommendations that we can use to begin drafting legislation. I plan to
put forward a proposal of my own this year that maintains universal service
and current delivery standards while giving the Postal Service the kind of
flexibility its private sector competitors have to set prices and cut
costs. I look forward to working with Chairman Collins and all of my
colleagues on the Governmental Affairs Committee in getting a postal reform
bill signed into law during the 108th Congress."

Rep. Tom Davis (R-VA), Chair of the House Government Reform Committee, and
Rep. John McHugh (R-NY), head of the House Postal Reform Commission,
introduced a similar bill for consideration by the House of Representatives
today along with Government Reform Committee Ranking Member Rep. Henry
Waxman (D- CA) and Rep. Danny Davis (D-IL). The Committee on Governmental
Affairs, which Sen. Collins's chairs, oversees the United States Postal
Service.

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