[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 380 Enrolled Bill (ENR)]

        S.380

                       One Hundred Eighth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

          Begun and held at the City of Washington on Tuesday,
           the seventh day of January, two thousand and three


                                 An Act


 
   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).
    (e) Military Service Proposals.--
        (1) Proposals.--The United States Postal Service, the 
    Department of the Treasury, and the Office of Personnel Management 
    shall, by September 30, 2003, each prepare and submit to the 
    President, the Congress, and the General Accounting Office 
    proposals detailing whether and to what extent the Department of 
    the Treasury or the Postal Service should be responsible for the 
    funding of benefits attributable to the military service of current 
    and former employees of the Postal Service that, prior to the date 
    of the enactment of this Act, were provided for under section 
    8348(g)(2) of title 5, United States Code.
        (2) GAO review and report.--Not later than 60 days after the 
    Postal Service, the Department of the Treasury, and the Office of 
    Personnel Management have submitted their proposals under paragraph 
    (1), the General Accounting Office shall prepare and submit a 
    written evaluation of each such proposal to the Committee on 
    Government Reform of the House of Representatives and the Committee 
    on Governmental Affairs of the Senate.
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, the 
    Congress, and the General Accounting Office 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.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.