[House Report 104-174]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-174
_______________________________________________________________________


 
REPEAL OF THE AUTHORIZATION FOR CERTAIN TRANSITIONAL APPROPRIATIONS FOR 
                    THE UNITED STATES POSTAL SERVICE

                                _______


 July 10, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


  Mr. Clinger, from the Committee on Government Reform and Oversight, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1826]

      [Including cost estimate of the Congressional Budget Office]
    The Committee on Government Reform and Oversight, to whom 
was referred the bill (H.R. 1826) to repeal the authorization 
of transitional appropriations for the United States Postal 
Service, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.
                                CONTENTS

                                                                   Page
  I. Background and need for the legislation..........................2
 II. Legislative hearings and committee actions.......................4
 III.
     Committee hearings and written testimony.........................4
 IV. Explanation of the bill..........................................4
  V. Compliance with rule XI..........................................5
 VI. Budget analysis and projections..................................5
 VII.
     Cost estimate of the Congressional Budget Office.................5
 VIII
   . Inflationary impact statement....................................7
 IX. Changes in existing law..........................................7
  X. Committee recommendation.........................................8
 XI. Congressional Accountability Act; Public Law 104-1;..............9
                      SHORT SUMMARY OF LEGISLATION

    H.R. 1826, ``The Repeal of the Authorization for Certain 
Transitional Appropriations for the United States Postal 
Service,'' repeals the authorization for the appropriation 
provided under 39 U.S.C. 2004 to the Postal Service Fund. This 
appropriation serves as reimbursement for payments to the 
Employee Compensation Fund based on obligations incurred by its 
predecessor, the former Post Office Department.
    H.R. 1826 does not relieve the United States Postal Service 
(``U.S. Postal Service'') from having to reimburse the Employee 
Compensation Fund. The financial obligations of the former Post 
Office Department pertaining to the Employee Compensation Fund, 
under H.R. 1826, become those of the U.S. Postal Service and 
the Postal Service Fund. Enactment of this legislation will not 
affect payments made to individuals receiving benefits from the 
Employee Compensation Fund. Under H.R. 1826, the U.S. Postal 
Service simply would be required to make payments for employees 
of the former Post Office Department to the Department of Labor 
without Federal reimbursement as it now does for its current 
employees.

               I. Background and Need for the Legislation

                         A. Legislative History

    Under House Concurrent Resolution 67, which established the 
congressional budget for the United States Government for 
fiscal years, 1996-2002, the Committee on Government Reform and 
Oversight (``The Committee'') was instructed to generate total 
savings in mandatory spending of $212 million and discretionary 
spending of $4.45 billion by Fiscal Year 2002. To achieve this 
reduction in mandatory spending, the Committee recommends the 
repeal of the Transitional Appropriations for the U.S. Postal 
Service. This action would produce on-budget savings of 
approximately $37 million in each fiscal year from 1996 through 
2002.
    5 U.S.C. 8147 established an account within the U.S. 
Treasury, the Employee Compensation Fund, to pay workers' 
compensation and other benefit claims of Federal Government 
employees. Upon enactment of the Postal Reorganization Act, a 
method was implemented for the U.S. Postal Service to reimburse 
the fund for the claims of its employees.
    The Postal Reorganization Act of 1970, P.L. 91-375, 
however, provided that such liabilities of the former Post 
Office Department were not the liabilities of the U.S. Postal 
Service. Since its inception, the U.S. Postal Service has 
requested an annual appropriation pursuant to 39 U.S.C. 2004 to 
reimburse its contributions to the Employee Compensation Fund 
and offset the accrued annual leave benefits of former Post 
Office Department employees. The intent of Congress was to 
protect the U.S. Postal Service from the financial liabilities 
of the former Post Office Department.
    Prior to 1981, appropriation requests for Transitional 
Appropriations were approved on an annual basis. However, the 
Omnibus Budget Reconciliation Act of 1981, P.L. 97-35 deferred 
funding for most of the 1980's, with the exception of fiscal 
year 1985. For Fiscal Year 1985, appropriations reimbursed the 
U.S. Postal Service for the deferred liabilities of fiscal 
years 1982, 1983 and 1984 (P.L. 98-473). That Act also halted 
the appropriation to the U.S. Postal Service for the accrued 
annual leave liabilities of former Post Office Department 
employees. Since that time, the Transitional Appropriation 
request of the U.S. Postal Service has reflected only 
liabilities to the Employee Compensation Fund. With the 
exception of an appropriation in the amount of $1,000.00 in 
Fiscal year 1988, no Transitional Appropriations were provided 
to the U.S. Postal Service during the period Fiscal Year 1986 
through Fiscal Year 1989.
    From the introduction of the Postal Reorganization Act of 
1970 and throughout its consideration, Congress intended for 
the U.S. Postal Service to be self-financing and self-
sustaining. Indeed, many amendments passed by Congress in 
recent years have moved the U.S. Postal Service towards that 
goal, beginning with the removal of the U.S. Postal Service 
from the Federal budget with the enactment of the Omnibus 
Budget Reconciliation Act of 1989, P.L. 101-239.
    Congress has also substantially varied the amount and 
nature of appropriations provided to the U.S. Postal Service. 
Originally, three appropriations were authorized: Transitional; 
Public Service, which underwrites the operation of certain, 
less cost-efficient, public services such as six-day mail 
delivery and smaller post offices; and Revenue Foregone, 
allowing lower rates for nonprofit mailers.
    In 1985 the U.S. Postal Service voluntarily curtailed its 
request for a Public Service appropriation. In 1993, Congress 
significantly amended the formula for funding the Revenue 
Foregone authorization (P.L. 103-123). With the exception of 
Revenue Foregone, the cessation of the Transitional 
Appropriation will end federal subsidies to the Postal Service. 
Finally, the U.S. Postal Service will have attained its 
longstanding goal of self-sufficiency.

                        B. Need for Legislation

    The Committee recognizes the significant progress the U.S. 
Postal Service has made in the twenty-five years following 
enactment of the Postal Reorganization Act. As this 
organization has evolved from a taxpayer-subsidized executive 
branch department to a ratepayer-financed government 
corporation, the U.S. Postal Service has slowly weaned itself 
from an annual appropriation in its effort to reach and sustain 
financial self-sufficiency. In testimony before the 
Subcommittee on the Postal Service on June 28, 1995, Postmaster 
General Marvin Runyon emphasized the current sound financial 
foundation of the Postal Service, providing fiscal data 
evincing a record net income of $1.5 billion for the first nine 
months of Fiscal Year 1995.
    This bright financial outlook and fiscal surplus of the 
U.S. Postal Service contrasts markedly with the budget profile 
of the U.S. Government. The Committee advocates a shared 
sacrifice among all agencies that encompass the broad spectrum 
of the Federal Government. Elimination of the authorization of 
the Transitional Appropriation both assists the Federal 
Government in balancing its budget and is consistent with the 
intent of Congress that the U.S. Postal Service be financially 
self-sufficient when it passed the Postal Reorganization Act of 
1970.
    The Committee believes enactment of H.R. 1826 will have no 
discernable impact on postal finances, delivery and service. A 
review of the legislative history of the Transitional 
Appropriation reveals that Congress routinely denied the U.S. 
Postal Service's request for reimbursement of these expenses 
during the most of the previous decade. In addition, the amount 
of the Transitional Appropriation, estimated to be $36.8 
million for Fiscal Year 1996, is less than one percent of 
estimated operating expenses of the Postal Service. Moreover, 
the U.S. Postal Service already incurs workers compensation 
costs in excess of $500 million annually. The addition of this 
small liability to that amount will in no way affect the 
overall fiscal stability of the U.S. Postal Service or its 
operations and service.
    The Committee recognizes that deficit reduction is never 
painless and that commitments of taxpayer money made by 
previous Congresses must, at times, be modified to reflect 
current fiscal concerns. However, the obligation that H.R. 1826 
places on the U.S. Postal Service is neither unfairly 
burdensome nor inconsistent with past actions. The Committee 
notes that enactment of H.R. 1826 will not alter the level of 
benefits paid to beneficiaries of the fund. In addition, it 
will serve to consolidate and streamline a bifurcated workers 
compensation financing system which will be more responsibly 
funded by rate-payer revenues rather than taxpayer subsidies in 
the future. Consequently, the Committee no longer finds a 
compelling reason to continue to authorize this appropriation 
and feels that enactment of H.R. 1826 will advance the twin 
goals of prudent deficit reduction and financial self-
sufficiency for the U.S. Postal Service.

             II. Legislative Hearings and Committee Actions

    H.R. 1826 was introduced on June 13, 1995 by the Honorable 
John M. McHugh, Chairman, Subcommittee on the Postal Service. 
The bill was referred to the Committee on Government Reform and 
Oversight. The Subcommittee on the Postal Service, during a 
series of general oversight hearings of the Postal Service, 
held a mark-up on the bill on June 20, 1995. No amendments were 
offered and the measure was ordered favorably forwarded to the 
full Committee by a voice vote. On June 21, 1995, the Committee 
on Government Reform and Oversight met to consider H.R. 1826, 
favorably reporting the bill to the full House by voice vote 
and without amendments.

             III. Committee Hearings and Written Testimony

    The Subcommittee on the Postal Service held no formal 
hearings on H.R. 1826. However, the Subcommittee has held and 
will continue to hold a series of general oversight hearings on 
the U.S. Postal Service.

                      IV. Explanation of the Bill

                              a. overview

    The bill eliminates the authorization for appropriation to 
the U.S. Postal Service for reimbursement for workers 
compensation liabilities incurred by the former Post Office 
Department. The elimination of this funding will result in the 
Postal Service assuming the liabilities for these payments to 
the Employee Compensation Fund, within the Department of Labor, 
providing payments made to employees of the former Post Office 
Department.
    Under the existing framework, the Department of Labor 
assesses the U.S. Postal Service for claims to both its 
employees and those of the former Post Office Department. The 
U.S. Postal Service pays for its own employees and requests 
funding from Congress for the amount attributable to former 
Post Office Department employees.
    H.R. 1826 simply removes the Federal Government and 
Congress from the equation, directing that the employees of the 
former Post Office Department be treated the same as the 
current employees of the U.S. Postal Service for purposes of 
the Employee Compensation Fund.

                     B. Section by section analysis

Section 1. Repeal

    Section 1 repeals Section 2004, of title 39 United States 
Code and amends Section 2003 by adding at the end further 
clarification that liabilities formerly paid pursuant to 
Section 2004 remain liabilities payable by the United States 
Postal Service. It also makes the necessary technical 
corrections.

Section 2. Effective date

    Section 2 states that these amendments shall take effect on 
the date of enactment or October 1, 1995, whichever is later.
                       V. Compliance with Rule XI

    Pursuant to rule XI, clause 2(l)(3) of the Rules of the 
House of Representatives, under the authority of rule X, clause 
2(b)(1) and clause 3(f), the results and findings from 
committee oversight activities are incorporated in the bill and 
this report.

                  VI. Budget Analysis and Projections

    This Act provides for no new authorization, budget 
authority or tax expenditures. Consequently, the provisions of 
section 308(a) of the Congressional Budget Act are not 
applicable.

         VII. Cost Estimate of the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 23, 1995.
Hon. William F. Clinger, Jr.,
Chairman, Committee on Government Reform and Oversight, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1826, a bill to 
repeal the authorization of transitional appropriations for the 
United States Postal Service, and for other purposes.
    Enactment of H.R. 1826 would affect direct spending. 
Therefore pay-as-you-go procedures would apply to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                              James L. Blum
                                             (For June E. O'Neill).
    Enclosure.

               congressional budget office cost estimate

    1. Bill number: H.R. 1826.
    2. Bill title: A bill to repeal the authorization of 
transitional appropriations for the United States Postal 
Service, and for other purposes.
    3. Bill status: As ordered reported by the House Committee 
on Government Reform and Oversight on June 21, 1995.
    4. Bill purpose: Under current law, the United States 
Postal Service (USPS) receives a mandatory appropriation for 
compensation to individuals who sustained injuries while 
employed by the former Post Office Department. H.R. 1826 would 
terminate this annual payment, effective October 1, 1995, or 
upon enactment, whichever is later.
    5. Estimated cost to the Federal Government: CBO estimates 
that enacting H.R. 1826, by repealing the mandatory 
appropriation, would reduce on-budget direct spending by about 
$37 million annually, beginning in fiscal year 1996. But the 
USPS would have to continue to pay the costs that have been 
covered by the appropriation out of its own revenues. Thus, 
H.R. 1826 would cost the USPS, an off-budget agency about $37 
million annually. Consistent with CBO's projections, we expect 
that the USPS would recover the additional cost of the 
transitional expenses by raising postal rates, which we assume 
will occur in late 1997. The net budgetary impact, combining 
on-budget and off-budget effects, would be zero for 1996, 
savings of about $9 million in 1997, and savings of about $37 
million annually for fiscal years 1998 through 2000. The 
following table summarizes the estimated budgetary impact of 
H.R. 1826.

------------------------------------------------------------------------
                      1996       1997       1998       1999       2000  
------------------------------------------------------------------------
On-Budget Impact:                                                       
    Estimated                                                           
     budget                                                             
     authority...        -37        -37        -37        -37        -36
    Estimated                                                           
     outlays.....        -37        -37        -37        -37        -36
Off-Budget                                                              
 Impact:                                                                
    Estimated                                                           
     budget                                                             
     authority...         37         28          0          0          0
    Estimated                                                           
     outlays.....         37         28          0          0          0
Net Budgetary                                                           
 Impact:                                                                
    Estimated                                                           
     budget                                                             
     authority...          0         -9        -37        -37        -36
    Estimated                                                           
     outlays.....          0         -9        -37        -37        -36
------------------------------------------------------------------------

    The budgetary effects of this bill fall within budget 
function 370.
    6. Comparison with spending under current law: In fiscal 
year 1995, appropriations for USPS transitional expenses were 
about $38 million. Those appropriations would be eliminated 
under this bill.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. Because this legislation 
would affect direct spending, pay-as-you-go procedures would 
apply to the bill. The pay-as-you-go impact consists of 
estimated savings of about $37 million each year for fiscal 
years 1996-1998. Because the USPS spending is off-budget, its 
increased costs for 1996-1997 are not counted for pay-as-you-go 
purposes. The pay-as-you-go effects are summarized in the 
following table.

------------------------------------------------------------------------
                                 1995       1996       1997       1998  
------------------------------------------------------------------------
Change in outlays...........          0        -37        -37        -37
Change in receipts..........      (\1\)      (\1\)      (\1\)      (\1\)
------------------------------------------------------------------------
\1\ Not applicable.                                                     

    8. Estimated cost to State and local governments: None.
    9. Estimated comparison: None.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Mark Grabowicz.
    12. Estimate approved by: Robert A. Sunshine for Paul N. 
Van de Water, Assistant Director for Budget Analysis.

                   VIII. Inflationary Impact Statement

    In accordance with rule XI, clause 2(l)(4) of the Rules of 
the House of Representatives, this legislation is assessed to 
have no inflationary effect on prices and costs in the 
operation of the national economy.
        IX. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                      TITLE 39, UNITED STATES CODE

          * * * * * * *

           PART III--MODERNIZATION AND FISCAL ADMINISTRATION

          * * * * * * *

                          CHAPTER 20--FINANCE
Sec.
2001. Definitions.
     * * * * * * *
[2004. Transitional appropriations.]
     * * * * * * *
Sec. 2003. The Postal Service Fund

  (a) * * *
          * * * * * * *
  (e)(1) * * *
  (2) Funds appropriated to the Postal Service under [sections 
2401 and 2004] section 2401 of this title shall be apportioned 
as provided in this paragraph. From the total amounts 
appropriated to the Postal Service for any fiscal year under 
the authorizations contained in [sections 2401 and 2004] 
section 2401 of this title, the Secretary of the Treasury shall 
make available to the Postal Service 25 percent of such amount 
at the beginning of each quarter of such fiscal year.
          * * * * * * *
  (h) Liabilities of the former Post Office Department to the 
Employees' Compensation Fund (appropriations for which were 
authorized by former section 2004, as in effect before the 
effective date of this subsection) shall be liabilities of the 
Postal Service payable out of the Fund.
[Sec. 2004. Transitional appropriations

  [Such sums as are necessary to insure a sound financial 
transition for the Postal Service and a rate policy consistent 
with chapter 36 of this title are hereby authorized to be 
appropriated to the Fund without regard to fiscal-year 
limitation.]
          * * * * * * *
                      X. Committee Recommendation

    On June 21, 1995, a quorum being present, the Committee 
ordered the bill favorably reported.

 Committee on Government Reform and Oversight--104th Congress Rollcall

    Date: June 21, 1995.
    Final Passage of H.R. 1826.
    Offered by: Mr. McHugh.
    Voice Vote: Ayes.
    Vote by Members: Mr. Clinger--Aye; Mr. Gilman--Aye; Mr. 
Burton--Aye; Mr. Hastert--Aye; Mrs. Morella--Aye; Mr. Shays--
Aye; Mr. Schiff--Aye; Ms. Ros-Lehtinen--Aye; Mr. Zeliff--Aye; 
Mr. McHugh--Aye; Mr. Horn--Aye; Mr. Mica--Aye; Mr. Blute--Aye; 
Mr. Davis--Aye; Mr. McIntosh--Aye; Mr. Fox--Aye; Mr. Tate--Aye; 
Mr. Chrysler--Aye; Mr. Gutknecht--Aye; Mr. Souder--Aye; Mr. 
Martini--Aye; Mr. Scarborough--Aye; Mr. Shadegg--Aye; Mr. 
Flanagan--Aye; Mr. Bass--Aye; Mr. LaTourette--Aye; Mr. 
Sanford--Aye; Mr. Ehrlich--Aye; Mrs. Collins (IL)--Aye; Mr. 
Waxman--Aye; Mr. Lantos--Aye; Mr. Wise--Aye; Mr. Owens--Aye; 
Mr. Towns--Aye; Mr. Spratt--Aye; Mrs. Slaughter--Aye; Mr. 
Kanjorski--Aye; Mr. Condit--Aye; Mr. Peterson--Aye; Mr. 
Sanders--Aye; Mrs. Thurman--Aye; Mrs. Maloney--Aye; Mr. 
Barrett--Aye; Mr. Taylor--Aye; Ms. Collins (MI)--Aye; Ms. 
Norton--Aye; Mr. Moran--Aye; Mr. Green--Aye; Mrs. Meek--Aye; 
Mr. Mascara--Aye; Mr. Fattah--Aye; Mr. Brewster--Aye.

    XI. Congressional Accountability Act; Public Law 104-1; Section 
                               102(B)(3)

    This provision is inapplicable to the legislative branch 
because it does not relate to any terms or conditions of 
employment or access to public services or accommodations.