[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 735 Reported in House (RH)]






                                                  Union Calendar No. 30
108th CONGRESS
  1st Session
                                H. R. 735

                          [Report No. 108-49]

   To amend chapter 83 of title 5, United States Code, to reform the 
   funding of benefits under the Civil Service Retirement System for 
 employees of the United States Postal Service, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 12, 2003

Mr. McHugh (for himself, Mr. Waxman, Mr. Tom Davis of Virginia, and Mr. 
Davis of Illinois) introduced the following bill; which was referred to 
                   the Committee on Government Reform

                             March 27, 2003

 Additional sponsors: Mr. Israel, Mr. Towns, Mrs. Maloney, Mr. Kolbe, 
  Mr. Sullivan, Mr. Latham, Mr. Owens, Mrs. Tauscher, Mr. Quinn, Mr. 
Schrock, Mrs. Miller of Michigan, Mr. Shays, Mr. Walsh, Ms. Kaptur, Mr. 
  Burton of Indiana, Mr. Putnam, Mr. Clay, Mr. Lantos, Mr. Leach, Ms. 
Pryce of Ohio, Mr. Lynch, Mr. Larson of Connecticut, Mr. Houghton, Mr. 
   Blumenauer, Mr. LoBiondo, Mr. Saxton, Mr. Frost, Mr. Holden, Mr. 
  Lincoln Diaz-Balart of Florida, Mr. Sensenbrenner, Mr. Serrano, Mr. 
 Platts, Mr. Holt, Mr. Rahall, Mr. Ferguson, Mr. Wolf, Mr. Evans, Mrs. 
  McCarthy of New York, Ms. Watson, Mr. Price of North Carolina, Mr. 
   Cannon, Ms. Norton, Mr. Visclosky, Mr. Costello, Mr. Pastor, Mr. 
 Bradley of New Hampshire, Mr. Baker, Mr. Kanjorski, Mr. Menendez, Mr. 
  Andrews, Mr. Engel, Mr. Frank of Massachusetts, Ms. Slaughter, Mr. 
 Boehlert, Ms. Millender-McDonald, Mr. McNulty, Mr. Ryan of Wisconsin, 
 Mr. Matsui, Mr. Sessions, Mr. McGovern, Mr. Manzullo, Mr. Renzi, Mr. 
English, Mr. Fletcher, Mr. Bonilla, Mr. Kennedy of Minnesota, Mr. Wamp, 
   Mr. Thompson of California, Mr. Skelton, Mr. Allen, Mr. Davis of 
Tennessee, Mr. Larsen of Washington, Mr. Isakson, Mr. Terry, Mr. Goode, 
                            and Mr. Michaud

                             March 27, 2003

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           February 12, 2003]

_______________________________________________________________________

                                 A BILL


 
   To amend chapter 83 of title 5, United States Code, to reform the 
   funding of benefits under the Civil Service Retirement System for 
 employees of the United States Postal Service, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Postal Civil Service Retirement 
System Funding Reform Act of 2003''.

SEC. 2. CIVIL SERVICE RETIREMENT SYSTEM.

    (a) Definitions.--Section 8331 of title 5, United States Code, is 
amended--
            (1) in paragraph (17)--
                    (A) by striking ```normal cost''' and inserting 
                ```normal-cost percentage'''; and
                    (B) by inserting ``and standards (using dynamic 
                assumptions)'' after ``practice'';
            (2) by amending paragraph (18) to read as follows:
            ``(18) `Fund balance' means the current net assets of the 
        Fund available for payment of benefits, as determined by the 
        Office in accordance with appropriate accounting standards, but 
        does not include any amount attributable to--
                    ``(A) the Federal Employees' Retirement System; or
                    ``(B) contributions made under the Federal 
                Employees' Retirement Contribution Temporary Adjustment 
                Act of 1983 by or on behalf of any individual who 
                became subject to the Federal Employees' Retirement 
                System;''; and
            (3) by striking ``and'' at the end of paragraph (27), by 
        striking the period at the end of paragraph (28) and inserting 
        ``; and'', and by adding at the end the following:
            ``(29) `dynamic assumptions' means economic assumptions 
        that are used in determining actuarial costs and liabilities of 
        a retirement system and in anticipating the effects of long-
        term future--
                    ``(A) investment yields;
                    ``(B) increases in rates of basic pay; and
                    ``(C) rates of price inflation.''.
    (b) Deductions and Contributions.--
            (1) In general.--Section 8334(a)(1) of title 5, United 
        States Code, is amended--
                    (A) by striking ``(a)(1)'' and inserting 
                ``(a)(1)(A)'';
                    (B) by designating the matter following the first 
                sentence as subparagraph (B)(i) and aligning the text 
                accordingly;
                    (C) in subparagraph (B)(i) (as so designated by 
                subparagraph (B)), by striking ``An equal'' and 
                inserting ``Except as provided in clause (ii), an 
                equal''; and
                    (D) by adding at the end the following:
    ``(ii) In the case of an employee of the United States Postal 
Service, the amount to be contributed under this subparagraph shall 
(instead of the amount described in clause (i)) be equal to the product 
derived by multiplying the employee's basic pay by the percentage equal 
to--
            ``(I) the normal-cost percentage for the applicable 
        employee category listed in subparagraph (A), minus
            ``(II) the percentage deduction rate that applies with 
        respect to such employee under subparagraph (A).''.
            (2) Conforming amendments.--Section 8334(k) of title 5, 
        United States Code, is amended--
                    (A) in paragraph (1)(A), by striking ``the first 
                sentence of subsection (a)(1) of this section'' and 
                inserting ``subsection (a)(1)(A)'';
                    (B) in paragraph (1)(B)--
                            (i) by striking ``the second sentence of 
                        subsection (a)(1) of this section'' and 
                        inserting ``subparagraph (B) of subsection 
                        (a)(1)''; and
                            (ii) by striking ``such sentence'' and 
                        inserting ``such subparagraph''; and
                    (C) in paragraph (2)(C)(iii), by striking ``the 
                first sentence of subsection (a)(1)'' and inserting 
                ``subsection (a)(1)(A)''.
    (c) Postal Supplemental Liability.--Subsection (h) of section 8348 
of title 5, United States Code, is amended to read as follows:
    ``(h)(1)(A) For purposes of this subsection, `Postal supplemental 
liability' means the estimated excess, as determined by the Office, 
of--
            ``(i) the actuarial present value of all future benefits 
        payable from the Fund under this subchapter attributable to the 
        service of current or former employees of the United States 
        Postal Service, over
            ``(ii) the sum of--
                    ``(I) the actuarial present value of deductions to 
                be withheld from the future basic pay of employees of 
                the United States Postal Service currently subject to 
                this subchapter pursuant to section 8334;
                    ``(II) the actuarial present value of the future 
                contributions to be made pursuant to section 8334 with 
                respect to employees of the United States Postal 
                Service currently subject to this subchapter;
                    ``(III) that portion of the Fund balance, as of the 
                date the Postal supplemental liability is determined, 
                attributable to payments to the Fund by the United 
                States Postal Service and its employees, including 
                earnings on those payments; and
                    ``(IV) any other appropriate amount, as determined 
                by the Office in accordance with generally accepted 
                actuarial practices and principles.
    ``(B)(i) In computing the actuarial present value of future 
benefits, the Office shall include the full value of benefits 
attributable to military and volunteer service for United States Postal 
Service employees first employed after June 30, 1971, and a prorated 
share of the value of benefits attributable to military and volunteer 
service for United States Postal Service employees first employed 
before July 1, 1971.
    ``(ii) Military service so included shall not be included in the 
computation of any amount under subsection (g)(2).
    ``(2)(A) Not later than June 30, 2004, the Office shall determine 
the Postal supplemental liability as of September 30, 2003. The Office 
shall establish an amortization schedule, including a series of equal 
annual installments commencing September 30, 2004, which provides for 
the liquidation of such liability by September 30, 2043.
    ``(B) The Office shall redetermine the Postal supplemental 
liability as of the close of the fiscal year, for each fiscal year 
beginning after September 30, 2003, through the fiscal year ending 
September 30, 2038, and shall establish a new amortization schedule, 
including a series of equal annual installments commencing on September 
30 of the subsequent fiscal year, which provides for the liquidation of 
such liability by September 30, 2043.
    ``(C) The Office shall redetermine the Postal supplemental 
liability as of the close of the fiscal year for each fiscal year 
beginning after September 30, 2038, and shall establish a new 
amortization schedule, including a series of equal annual installments 
commencing on September 30 of the subsequent fiscal year, which 
provides for the liquidation of such liability over 5 years.
    ``(D) Amortization schedules established under this paragraph shall 
be set in accordance with generally accepted actuarial practices and 
principles, with interest computed at the rate used in the most recent 
dynamic actuarial valuation of the Civil Service Retirement System.
    ``(E) The United States Postal Service shall pay the amounts so 
determined to the Office, with payments due not later than the date 
scheduled by the Office.
    ``(F) An amortization schedule established under subparagraph (B) 
or (C) shall supersede any amortization schedule previously established 
under this paragraph.
    ``(3) Notwithstanding any other provision of law, in computing the 
amount of any payment under any other subsection of this section that 
is based upon the amount of the unfunded liability, such payment shall 
be computed disregarding that portion of the unfunded liability that 
the Office determines will be liquidated by payments under this 
subsection.
    ``(4) Notwithstanding any other provision of this subsection, any 
determination or redetermination made by the Office under this 
subsection shall, upon request of the Postal Service, be subject to 
reconsideration and review (including adjustment by the Board of 
Actuaries of the Civil Service Retirement System) to the same extent 
and in the same manner as provided under section 8423(c).''.
    (d) Repeals.--
            (1) In general.--The following provisions of law are 
        repealed:
                    (A) Subsection (m) of section 8348 of title 5, 
                United States Code.
                    (B) Subsection (c) of section 7101 of the Omnibus 
                Budget Reconciliation Act of 1990 (5 U.S.C. 8348 note).
            (2) Rule of construction.--Nothing in this subsection shall 
        be considered to affect any payments made before the date of 
        the enactment of this Act under either of the provisions of law 
        repealed by paragraph (1).

SEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE UNITED STATES POSTAL 
              SERVICE.

    (a) In General.--Savings accruing to the United States Postal 
Service as a result of the enactment of this Act--
            (1) shall, to the extent that such savings are attributable 
        to fiscal year 2003 or 2004, be used to reduce the postal debt 
        (in consultation with the Secretary of the Treasury), and the 
        Postal Service shall not incur additional debt to offset the 
        use of the savings to reduce the postal debt in fiscal years 
        2003 and 2004;
            (2) shall, to the extent that such savings are attributable 
        to fiscal year 2005, be used to continue holding postage rates 
        unchanged and to reduce the postal debt, to such extent and in 
        such manner as the Postal Service shall specify (in 
        consultation with the Secretary of the Treasury); and
            (3) to the extent that such savings are attributable to any 
        fiscal year after fiscal year 2005, shall be considered to be 
        operating expenses of the Postal Service and, until otherwise 
        provided for by law, shall be held in escrow and may not be 
        obligated or expended.
    (b) Amounts Saved.--
            (1) In general.--The amounts representing any savings 
        accruing to the Postal Service in any fiscal year as a result 
        of the enactment of this Act shall be computed by the Office of 
        Personnel Management for each such fiscal year in accordance 
        with paragraph (2).
            (2) Methodology.--Not later than July 31, 2003, the Office 
        of Personnel Management shall--
                    (A) formulate a plan specifically enumerating the 
                actuarial methods and assumptions by which the Office 
                shall make its computations under paragraph (1); and
                    (B) submit such plan to the Committee on Government 
                Reform of the House of Representatives and the 
                Committee on Governmental Affairs of the Senate.
            (3) Requirements.--The plan shall be formulated in 
        consultation with the Postal Service and shall include the 
        opportunity for the Postal Service to request reconsideration 
        of computations under this subsection, and for the Board of 
        Actuaries of the Civil Service Retirement System to review and 
        make adjustments to such computations, to the same extent and 
        in the same manner as provided under section 8423(c) of title 
        5, United States Code.
    (c) Reporting Requirement.--The Postal Service shall include in 
each report rendered under section 2402 of title 39, United States 
Code, the amount applied toward reducing the postal debt, and the size 
of the postal debt before and after the application of subsection (a), 
during the period covered by such report.
    (d) Sense of Congress.--It is the sense of the Congress that--
            (1) the savings accruing to the Postal Service as a result 
        of the enactment of this Act will be sufficient to allow the 
        Postal Service to fulfill its commitment to hold postage rates 
        unchanged until at least 2006;
            (2) because the Postal Service still faces substantial 
        obligations related to postretirement health benefits for its 
        current and former employees, some portion of the savings 
        referred to in paragraph (1) should be used to address those 
        unfunded obligations; and
            (3) none of the savings referred to in paragraph (1) should 
        be used in the computation of any bonuses for Postal Service 
        executives.
    (e) Postal Service Proposal.--
            (1) In general.--The United States Postal Service shall, by 
        September 30, 2003, prepare and submit to the President and the 
        Congress its proposal detailing how any savings accruing to the 
        Postal Service as a result of the enactment of this Act, which 
        are attributable to any fiscal year after fiscal year 2005, 
        should be expended.
            (2) Matters to consider.--In preparing its proposal under 
        this subsection, the Postal Service shall consider--
                    (A) whether, and to what extent, those future 
                savings should be used to address--
                            (i) debt repayment;
                            (ii) prefunding of postretirement 
                        healthcare benefits for current and former 
                        postal employees;
                            (iii) productivity and cost saving capital 
                        investments;
                            (iv) delaying or moderating increases in 
                        postal rates; and
                            (v) any other matter; and
                    (B) the work of the President's Commission on the 
                United States Postal Service under section 5 of 
                Executive Order 13278 (67 Fed. Reg. 76672).
            (3) GAO review and report.--Not later than 60 days after 
        the Postal Service submits its proposal pursuant to paragraph 
        (1), the General Accounting Office shall prepare and submit a 
written evaluation of such proposal to the Committee on Government 
Reform of the House of Representatives and the Committee on 
Governmental Affairs of the Senate.
            (4) Legislative action.--Not later than 180 days after it 
        has received both the proposal of the Postal Service and the 
        evaluation of such proposal by the General Accounting Office 
        under this subsection, Congress shall revisit the question of 
        how the savings accruing to the Postal Service as a result of 
        the enactment of this Act should be used.
    (f) Determination and Disposition of Surplus.--
            (1) In general.--If, as of the date under paragraph (2), 
        the Office of Personnel Management determines (after 
        consultation with the Postmaster General) that the computation 
        under section 8348(h)(1)(A) of title 5, United States Code, 
        yields a negative amount (hereinafter referred to as a 
        ``surplus'')--
                    (A) the Office shall inform the Postmaster General 
                of its determination, including the size of the surplus 
                so determined; and
                    (B) the Postmaster General shall submit to the 
                Congress a report describing how the Postal Service 
                proposes that such surplus be used, including a draft 
                of any legislation that might be necessary.
            (2) Determination date.--The date to be used for purposes 
        of paragraph (1) shall be September 30, 2025, or such earlier 
        date as, in the judgment of the Office, is the date by which 
        all postal employees under the Civil Service Retirement System 
        will have retired.
    (g) Definitions.--For purposes of this section--
            (1) the savings accruing to the Postal Service as a result 
        of the enactment of this Act shall, for any fiscal year, be 
        equal to the amount (if any) by which--
                    (A) the contributions that the Postal Service would 
                otherwise have been required to make to the Civil 
                Service Retirement and Disability Fund for such fiscal 
                year if this Act had not been enacted, exceed
                    (B) the contributions made by the Postal Service to 
                such Fund for such fiscal year; and
            (2) the term ``postal debt'' means the outstanding 
        obligations of the Postal Service, as determined under chapter 
        20 of title 39, United States Code.

SEC. 4. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall become effective 
on the date of the enactment of this Act, except that the amendments 
made by section 2(b) shall apply with respect to pay periods beginning 
on or after such date.




                                                  Union Calendar No. 30

108th CONGRESS

  1st Session

                               H. R. 735

                          [Report No. 108-49]

_______________________________________________________________________

                                 A BILL

   To amend chapter 83 of title 5, United States Code, to reform the 
   funding of benefits under the Civil Service Retirement System for 
 employees of the United States Postal Service, and for other purposes.

_______________________________________________________________________

                             March 27, 2003

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed