The U.S. Postal Service (USPS) has repeatedly told Congress that the key to its financial salvation is legislation releasing the quasi-agency from its $11 billion-a-year requirement to prefund its retiree health benefits. The Government Accountability Office (GAO) does not agree at all.
In fact, in its report to Congress, the GAO said the "USPS should prefund its retiree health benefit liabilities to the maximum extent that its finances permit." So there.
Allowing the USPS to put off funding its retiree health benefits "could increase costs for future ratepayers and increase the possibility that USPS may not be able to pay for some or all of its liability," stated the GAO. Those "future ratepayers," are by the way, us -- the postal customers.
Of course, the USPS which lost a record $15.9 billion last year and continues to lose about $25 million a day, says the extent to which its finances will allow it to prefund those retiree health benefits is exactly zero dollars.
The GAO agreed, saying that at the rate it is losing money, it is doubtful the Postal Service will be able "to fully fund the remaining $48 billion unfunded liability over the remaining 44 years of the schedule" as required by the Postal Accountability and Enhancement Act of 2006.
Of the $15.9 billion loss suffered by the USPS in 2012, nearly 70% of it -- $11.1 billion - was because of the retiree health benefit prefunding requirement.
The Postal Service has asked Congress to allow it to pull out of the Federal Employees Health Benefits Plan and sponsor its own health care plan. Lawmakers have been less than enthusiastic about the idea, and the GAO did not address the proposal in its report.
Also See: 7 Ways to Save the Postal Service
In letters included in the GAO report, the USPS strongly criticized the GAO for releasing its report without considering its proposal. "We believe that releasing this report is inappropriate given the solution to this situation is to allow the Postal Service to sponsor its own medical plan," wrote Postal Service CFO Joseph Corbett.
The GAO is scheduled to address the Postal Service's proposal for a self-funded health plan later this spring.