By: Melissa Campanelli, Senior Editor, DM News Date Submitted: 4/14/2005

A revised version of the Postal Accountability and Enhancement Act of 2005 was unanimously voted out of the House Committee on Government Reform yesterday, following markup of the bill. The bill provides a structure to help the U.S. Postal Service achieve future solvency, according to the lawmakers.

"In the 10 years that I have been working in Congress to enact postal reform, we have never had a more workable, effective piece of reform legislation on the table," Rep. John McHugh said. "It is my hope that the bill will move quickly to the House floor for a vote."

The House bill still addresses the Civil Service Retirement System issue. It calls for replacing a provision of the Postal Civil Service Retirement System Funding Reform Act of 2003 requiring that money owed to the USPS because of an overpayment into the CSRS fund be held in an escrow account.

On April 8, the USPS filed a request with the Postal Rate Commission for an across-the-board rate increase of 5.4 percent. The USPS said the increase is needed only to meet the escrow requirement of the 2003 act.

The Postal Accountability and Enhancement Act eliminates the escrow requirement, which should mitigate the effect of the rate increase.

The bill also would return responsibility for funding CSRS pension benefits related to the military service of postal retirees -- a $27 billion obligation -- to the Treasury Department. No other federal agency has to make this payment.

Since the bill's introduction in January, Davis and McHugh have led a bipartisan effort to resolve concerns raised by the Bush administration, Senate and other stakeholders. The revised version reflects that input while preserving the bill's major elements. Provisions in the amended legislation include:

• SEC-like reporting: requiring the USPS to file with the PRC the same public financial statements and reports required of private companies by the Securities and Exchange Commission.
• Banking, borrowing and investing: limiting the postal service's Competitive Products Fund (created under the bill) to borrowing, banking and investing from the Treasury Department rather than from the private sector.
• Salary cap flexibility: ensuring a more efficient process for establishing the preapproval required under the existing language regarding USPS authority to offer bonuses to employees that is consistent with similar performance incentive programs in other sectors. It also would authorize the USPS Board of Governors to compensate no more than a dozen senior executives at higher levels of pay than permitted under current law.

Union officials and Waxman preferred the original House bill's handling of work-sharing. But "we are paralleling the approach in the Senate," said Waxman, who spoke at the markup.

Major provisions of the act remain. They include:

Modern rate regulation: changing the basis of the PRC from a costly, complex scheme of rate cases to a modern system designed to ensure that rate increases generally do not exceed the annual change in the Consumer Price Index. This applies only to market-dominant products (letters, periodicals, ad mail) because the USPS is given different pricing freedom for its competitive products (Express Mail, Priority Mail, etc.).

Limitations on postal monopoly and nonpostal products: requiring the USPS to offer only postal services and, for the first time, defining what constitutes "postal services." The bill also revises the postal service's authority to regulate competitors.

Bolstering the Postal Rate Commission: granting it subpoena power and a broader scope for regulation and oversight. The PRC would be renamed the Postal Regulatory Commission.

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