The Postal Reform Act of 2011

On September 23, 2011, U.S. Senator John McCain (R-Arizona) introduced the Postal Reform Act of 2011 (H.R. 2309), a bill Sen. McCain says represents a last, best chance to save the nearly insolvent U.S. Postal Service.

"According to their own estimates, by 2020 the Postal Service expects to face a shortfall of up to $238 billion," McCain stated in his remarks to the Senate. "Even with dramatic cost savings of $12 billion and workforce reduction of 110,000 postal employees in the past four years, the Postal Service is expected to end this fiscal year with a $10 billion loss."

"First-Class mail, which makes up more than half of Postal Service revenues, continues to fall at alarming rates and shows no signs of ever recovering," said McCain. " This, combined with 80 percent labor costs and labor contracts that contain 'no-layoff' clauses, points to the fact that the Postal Service is broken."

Also See: 7 Ways to Save the Postal Service

Since its introduction, the Postal Reform Act of 2011 has generated opposition from postal workers and a bit of confusion.

The 'Layoff Veterans' TV Ad

On November 9, 2011, the American Postal Workers Union (APWU), aired a TV ad urging Americans to "Tell your Representative to vote 'No' on House Resolution 2309," because its passage would force the Postal Service to lay off workers, including "tens of thousands" of U.S. veterans.

In this ad, the APWU has apparently confused the four types of legislation that can be considered by Congress; bills, simple resolutions, joint resolutions, and concurrent resolutions. Almost certainly, the APWU actually meant to oppose H.R. 2309, Sen. McCain's Postal Reform Act of 2011. The "H.R." indicates a regular bill originating in the House of Representatives. Actual House Resolutions are tagged "H. Res." in the legislative system. Resolutions merely express the feelings and opinions of Congress and have no legal effect.

Rather than a "House Resolution," the APWU clearly intended to oppose the "House of Representatives" bill H.R. 2309 - the Postal Reform Act of 2011. But does the bill actually force the Postal Service to lay off "tens of thousands" of U.S. veterans? In fact, it might.

In August of 2011, the Postal Service announced a plan to reduce its operating costs by cutting 220,000 employees through a combination of early retirement offers and layoffs of as many as 120,000 workers. While the Postal Reform Act of 2011 does not "require" the Postal Service to lay off any employees, it does create a new Postal Service Financial Responsibility and Management Assistance Authority with the power to require and conduct layoffs despite the 'no-layoff' clause in Postal Workers Union contracts. By APWU estimates, a layoff of 120,000 postal workers would affect about 26,000 U.S. veterans. The Postal Service Financial Responsibility and Management Assistance Authority would also have the power to require the Postal Workers Union to participate in a collective bargaining process when dealing with contract issues.

Also See: Does the Postal Service Really Pay Workers to Do Nothing?

In addition, should future labor contract negotiations with the Postal Workers Union become necessary, the arbitrators would be required by the Postal Reform Act of 2011 to consider the financial health of the Postal Service in those negotiations.

"Congress, the Postal Service, labor unions, and the mailing community must be willing to lay everything on the table and make hard choices now to save the Postal Service for the future," said Sen. McCain.

What Else the Bill Would Do

Post Office Closures: The Postal Reform Act of 2011 would also create a Commission on Postal Reorganization assigned to close unneeded or underutilized post offices and mail processing facilities. The Postal Service has acknowledged that its current mail processing facility and post office network has the capacity to handle over 250 billion pieces of mail per year, while the actual current annual mail volume is only 160 billion pieces. While the Postal Service recently released a list of more than 3,700 facilities that could be closed, Congress must take final action on the closures, and Congress, says Sen. McCain "continues to put up political road blocks that prevent these closings and consolidations." The Commission on Postal Reorganization created by the Postal Reform Act of 2011 would remove Congress -- thus politics -- from the process.

5 Day Mail Delivery: The Postal Reform Act of 2011 would allow the Postal Service to reduce mail delivery to only 5 days a week, probably eliminating Saturdays. The Postal Service estimates a 5-day delivery schedule would result in savings of from $1.7 to $3.1 billion annually. In July 2011, Postmaster General Patrick R. Donahoe told USA Today that mail delivery might be reduced to three days a week by 2026.

Also See: USPS No Saturday Mail Plan Snubs Rural America

Higher Postage for Some Mail: The Postal Service routinely loses money delivering certain types or "classes" of mail. For example, handling the Periodicals class of mail, which includes newspapers and magazines, has cost the Postal Service a loss of $4.3 billion over the last 14 years. According to Sen. McCain, the Postal Service lost $1.7 billion in 2010 alone delivering classes of mail that failed to cover their costs. The Postal Reform Act of 2011 would require the vendors who send these classes of mail pay enough postage to at least cover the cost of handling it.

Changes to Employee Insurance Plans: The Postal Reform Act of 2011 would also require Postal Service employees to pay the same premiums for their health and life insurance coverage as other federal workers. This change alone would save the Postal Service $700 million annually, according to Sen. McCain's estimates.

What the Bill Would NOT Do

As the bill's opponents point out, the Postal Reform Act of 2011 would not relieve the Postal Service of the congressionally mandated requirement to pre-fund the healthcare benefits of its future retirees, basically paying for the retirements of employees who may never be hired. This requirement alone, as the American Postal Workers Union points out, costs the Postal Service more than $5 billion annually and is not required of any other government agency or private sector corporation.

Another bill, S. 1789 -- the 21st Century Postal Reform Act - would refund to the Postal Service about $7 billion in these pre-payments to the Federal Employees Retirement System, but none of the pre-payments to the old Civil Service Retirement System, estimated to amount to between $50 billion and $75 billion.

Postal employees who went to work between August 1, 1920 and December 31, 1986, were covered by the Civil Service Retirement System. The current Federal Employees Retirement System replaced the Civil Service Retirement System on January 1, 1987.