    [United States Statutes at Large, Volume 117, 108th Congress, 1st Session]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    117 STAT. 624

    Public Law 108-18
    108th Congress

    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. [NOTE: Apr. 23, 2003 -  [S. 380]]

    Be it enacted by the Senate and House of Representatives of the
    United States of America in Congress [NOTE: Postal Civil Service
    Retirement System Funding Reform Act of 2003. 5 USC 101
    note.] 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)'';

    [[Page 625]]

    117 STAT. 625

    (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.

    [[Page 626]]

    117 STAT. 626

    ``(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) [NOTE: Deadline.] 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.

    [[Page 627]]

    117 STAT. 627

    (B) Subsection (c) of section 7101 of the Omnibus
    Budget Reconciliation Act of 1990 (5 U.S.C. 8348 note).
    (2)  [NOTE: 5 USC 8348 note.] 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)  [NOTE: Deadlines.] 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 [NOTE: 39 USC note prec. 2001.] 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)  [NOTE: Deadline.] Methodology.--Not later than July
    31, 2003, the Office of Personnel Management shall--

    [[Page 628]]

    117 STAT. 628

    (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)  [NOTE: Deadlines.] 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

    [[Page 629]]

    117 STAT. 629

    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) [NOTE: Reports.] 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.

    [[Page 630]]

    117 STAT. 630

    SEC. 4. [NOTE: Applicability. 5 USC 8334 note.] 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.

    Approved April 23, 2003.

    LEGISLATIVE HISTORY--S. 380 (H.R. 735):
    ---------------------------------------------------------------------------

    HOUSE REPORTS: No. 108-49 accompanying H.R. 735 (Comm. on Government
    Reform).
    CONGRESSIONAL RECORD, Vol. 149 (2003):
    Apr. 2, considered and passed Senate.
    Apr. 8, considered and passed House.
    WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 39 (2003):
    Apr. 23, Presidential statement.