I 

108TH CONGRESS 

1ST SESSION H. R. 735

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 

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Postal Civil Service 

5 Retirement System Funding Reform Act of 2003’’. 

6 SEC. 2. CIVIL SERVICE RETIREMENT SYSTEM. 

7 (a) DEFINITIONS.—Section 8331 of title 5, United 

8 States Code, is amended—
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1 (1) in paragraph (17)—

2 (A) by striking ‘‘ ‘normal cost’ ’’ and in3 serting ‘‘ ‘normal-cost percentage’ ’’; and 

4 (B) by inserting ‘‘and standards (using dy5 namic assumptions)’’ after ‘‘practice’’; 

6 (2) by amending paragraph (18) to read as fol7 lows: 

8 ‘‘(18) ‘Fund balance’ means the current net as9 sets of the Fund available for payment of benefits, 

10 as determined by the Office in accordance with ap11 propriate accounting standards, but does not include 

12 any amount attributable to—

13 ‘‘(A) the Federal Employees’ Retirement 

14 System; or 

15 ‘‘(B) contributions made under the Federal 

16 Employees’ Retirement Contribution Temporary 

17 Adjustment Act of 1983 by or on behalf of any 

18 individual who became subject to the Federal 

19 Employees’ Retirement System;’’; and 

20 (3) by striking ‘‘and’’ at the end of paragraph 

21 (27), by striking the period at the end of paragraph 

22 (28) and inserting ‘‘; and’’, and by adding at the 

23 end the following: 

24 ‘‘(29) ‘dynamic assumptions’ means economic 

25 assumptions that are used in determining actuarial 
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1 costs and liabilities of a retirement system and in 

2 anticipating the effects of long-term future—

3 ‘‘(A) investment yields; 

4 ‘‘(B) increases in rates of basic pay; and 

5 ‘‘(C) rates of price inflation.’’. 

6 (b) DEDUCTIONS AND CONTRIBUTIONS.—

7 (1) IN GENERAL.—Section 8334(a)(1) of title 

8 5, United States Code, is amended—

9 (A) by striking ‘‘(a)(1)’’ and inserting 

10 ‘‘(a)(1)(A)’’; 

11 (B) by designating the matter following 

12 the first sentence as subparagraph (B)(i) and 

13 aligning the text accordingly; 

14 (C) in subparagraph (B)(i) (as so des15 ignated by subparagraph (B)), by striking ‘‘An 

16 equal’’ and inserting ‘‘Except as provided in 

17 clause (ii), an equal’’; and 

18 (D) by adding at the end the following: 

19 ‘‘(ii) In the case of an employee of the United States 

20 Postal Service, the amount to be contributed under this 

21 subparagraph shall (instead of the amount described in 

22 clause (i)) be equal to the product derived by multiplying 

23 the employee’s basic pay by the percentage equal to—
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1 ‘‘(I) the normal-cost percentage for the applica2 ble employee category listed in subparagraph (A), 

3 minus 

4 ‘‘(II) the percentage deduction rate that applies 

5 with respect to such employee under subparagraph 

6 (A).’’. 

7 (2) CONFORMING AMENDMENTS.—Section 

8 8334(k) of title 5, United States Code, is amend9 ed—

10 (A) in paragraph (1)(A), by striking ‘‘the 

11 first sentence of subsection (a)(1) of this sec12 tion’’ and inserting ‘‘subsection (a)(1)(A)’’

13 (B) in paragraph (1)(B)—

14 (i) by striking ‘‘the second sentence of 

15 subsection (a)(1) of this section’’ and in16 serting ‘‘subparagraph (B) of subsection 

17 (a)(1)’’; and 

18 (ii) by striking ‘‘such sentence’’ and 

19 inserting ‘‘such subparagraph’’; and 

20 (C) in paragraph (2)(C)(iii), by striking 

21 ‘‘the first sentence of subsection (a)(1)’’ and in22 serting ‘‘subsection (a)(1)(A)’’. 

23 (c) POSTAL SUPPLEMENTAL LIABILITY.—Subsection 

24 (h) of section 8348 of title 5, United States Code, is 

25 amended to read as follows:
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1 ‘‘(h)(1)(A) For purposes of this subsection, ‘Postal 

2 supplemental liability’ means the estimated excess, as de3 termined by the Office, of—

4 ‘‘(i) the actuarial present value of all future 

5 benefits payable from the Fund under this sub6 chapter attributable to the service of current or 

7 former employees of the United States Postal Serv8 ice, over 

9 ‘‘(ii) the sum of—

10 ‘‘(I) the actuarial present value of deduc11 tions to be withheld from the future basic pay 

12 of employees of the United States Postal Serv13 ice currently subject to this subchapter pursu14 ant to section 8334; 

15 ‘‘(II) the actuarial present value of the fu16 ture contributions to be made pursuant to sec17 tion 8334 with respect to employees of the 

18 United States Postal Service currently subject 

19 to this subchapter; 

20 ‘‘(III) that portion of the Fund balance, as 

21 of the date the Postal supplemental liability is 

22 determined, attributable to payments to the 

23 Fund by the United States Postal Service and 

24 its employees, including earnings on those pay25 ments; and 
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1 ‘‘(IV) any other appropriate amount, as 

2 determined by the Office in accordance with 

3 generally accepted actuarial practices and prin4 ciples. 

5 ‘‘(B)(i) In computing the actuarial present value of 

6 future benefits, the Office shall include the full value of 

7 benefits attributable to military and volunteer service for 

8 United States Postal Service employees first employed 

9 after June 30, 1971, and a prorated share of the value 

10 of benefits attributable to military and volunteer service 

11 for United States Postal Service employees first employed 

12 before July 1, 1971. 

13 ‘‘(ii) Military service so included shall not be included 

14 in computation of the payment required by subsection 

15 (g)(2). 

16 ‘‘(2)(A) Not later than June 30, 2004, the Office 

17 shall determine the Postal supplemental liability as of Sep18 tember 30, 2003. The Office shall establish an amortiza19 tion schedule, including a series of equal annual install20 ments commencing September 30, 2004, which provides 

21 for the liquidation of such liability by September 30, 2043. 

22 ‘‘(B) The Office shall redetermine the Postal supple23 mental liability as of the close of the fiscal year, for each 

24 fiscal year beginning after September 30, 2003, through 

25 the fiscal year ending September 30, 2038, and shall es-
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1 tablish a new amortization schedule, including a series of 

2 equal annual installments commencing on September 30 

3 of the subsequent fiscal year, which provides for the liq4 uidation of such liability by September 30, 2043. 

5 ‘‘(C) The Office shall redetermine the Postal supple6 mental liability as of the close of the fiscal year for each 

7 fiscal year beginning after September 30, 2038, and shall 

8 establish a new amortization schedule, including a series 

9 of equal annual installments commencing on September 

10 30 of the subsequent fiscal year, which provides for the 

11 liquidation of such liability over 5 years. 

12 ‘‘(D) Amortization schedules established under this 

13 paragraph shall be set in accordance with generally accept14 ed actuarial practices and principles, with interest com15 puted at the rate used in the most recent valuation of the 

16 Civil Service Retirement System. 

17 ‘‘(E) The United States Postal Service shall pay the 

18 amounts so determined to the Office, with payments due 

19 not later than the date scheduled by the Office. 

20 ‘‘(F) An amortization schedule established under sub21 paragraph (B) or (C) shall supersede any amortization 

22 schedule previously established under this paragraph. 

23 ‘‘(3) Notwithstanding any other provision of law, in 

24 computing the amount of any payment under any other 

25 subsection of this section that is based upon the amount 
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1 of the unfunded liability, such payment shall be computed 

2 disregarding that portion of the unfunded liability that the 

3 Office determines will be liquidated by payments under 

4 this subsection. 

5 ‘‘(4) Notwithstanding any other provision of this sub6 section, any determination or redetermination made by the 

7 Office under this subsection shall, upon request of the 

8 Postal Service, be subject to reconsideration and review 

9 (including adjustment by the Board of Actuaries of the 

10 Civil Service Retirement System) to the same extent and 

11 in the same manner as provided under section 8423(c) of 

12 title 5, United States Code.’’. 

13 (d) REPEALS.—

14 (1) IN GENERAL.—The following provisions of 

15 law are repealed: 

16 (A) Subsection (m) of section 8348 of title 

17 5, United States Code. 

18 (B) Subsection (c) of section 7101 of the 

19 Omnibus Budget Reconciliation Act of 1990 (5 

20 U.S.C. 8348 note). 

21 (2) RULE OF CONSTRUCTION.—Nothing in this 

22 subsection shall be considered to affect any pay23 ments made before the date of the enactment of this 

24 Act under either of the provisions of law repealed by 

25 paragraph (1).
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1 SEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE 

2 UNITED STATES POSTAL SERVICE. 

3 (a) IN GENERAL.—Savings accruing to the United 

4 States Postal Service as a result of the enactment of this 

5 Act shall—

6 (1) to the extent that such savings are attrib7 utable to fiscal year 2003, 2004, or 2005, be used 

8 to reduce the postal debt, to such extent and in such 

9 manner as the Secretary of the Treasury shall speci10 fy (in consultation with the Postmaster General), 

11 consistent with succeeding provisions of this section; 

12 and 

13 (2) to the extent that such savings are attrib14 utable to any fiscal year after fiscal year 2005, be 

15 held in escrow until Congress acts pursuant to sub16 section (e). 

17 (b) AMOUNTS SAVED.—

18 (1) IN GENERAL.—The amounts representing 

19 any savings accruing to the Postal Service in any 

20 fiscal year as a result of the enactment of this Act 

21 shall be computed by the Office of Personnel Man22 agement in accordance with paragraph (2). 

23 (2) METHODOLOGY.—Not later than July 31, 

24 2003, for fiscal year 2003, and October 1 of the fis25 cal year before each fiscal year after fiscal year 

26 2003, the Office of Personnel Management shall—
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1 (A) formulate a plan specifically enumer2 ating the methods by which the Office shall 

3 make its computations under paragraph (1); 

4 and 

5 (B) submit such plan to the Committee on 

6 Government Reform of the House of Represent7 atives and the Committee on Governmental Af8 fairs of the Senate. 

9 (3) REQUIREMENTS.—Each such plan shall be 

10 formulated in consultation with the Postal Service 

11 and shall include the opportunity for the Postal 

12 Service to request reconsideration of computations 

13 under this subsection, and for the Board of Actu14 aries of the Civil Service Retirement System to re15 view and make adjustments to such computations, to 

16 the same extent and in the same manner as provided 

17 under section 8423(c) of title 5, United States Code. 

18 (c) REPORTING REQUIREMENT.—The Postal Service 

19 shall include in each report rendered under section 2402 

20 of title 39, United States Code, the amount applied toward 

21 reducing the postal debt, and the size of the postal debt 

22 before and after the application of subsection (a), during 

23 the period covered by such report. 

24 (d) SENSE OF CONGRESS.—It is the sense of the 

25 Congress that—
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1 (1) the savings accruing to the Postal Service 

2 as a result of the enactment of this Act will be suffi3 cient to allow the Postal Service to fulfill its commit4 ment to hold postage rates unchanged until at least 

5 2006; 

6 (2) because the Postal Service still faces sub7 stantial obligations related to postretirement health 

8 benefits for its current and former employees, some 

9 portion of the savings referred to in paragraph (1) 

10 should be used to address those unfunded obliga11 tions; and 

12 (3) none of the savings referred to in paragraph 

13 (1) should be used to pay bonuses to Postal Service 

14 executives. 

15 (e) POSTAL SERVICE PROPOSAL.—

16 (1) IN GENERAL.—The United States Postal 

17 Service shall, by September 30, 2003, in consulta18 tion with the General Accounting Office, prepare 

19 and submit to the President and the Congress its 

20 proposal detailing how future savings accruing to the 

21 Postal Service as a result of the enactment of this 

22 Act should be expended. 

23 (2) MATTERS TO CONSIDER.—In preparing its 

24 proposal under this subsection, the Postal Service 

25 shall consider—
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1 (A) whether, and to what extent, those fu2 ture savings should be used to address—

3 (i) debt repayment; 

4 (ii) prefunding of postretirement 

5 healthcare benefits for current and former 

6 postal employees; 

7 (iii) productivity and cost saving cap8 ital investments; and 

9 (iv) any other matter; and 

10 (B) the report of the President’s Commis11 sion on the United States Postal Service under 

12 section 5 of Executive Order 13278 (67 Fed. 

13 Reg. 76672). 

14 (3) GAO REVIEW AND REPORT.—Not later than 

15 30 days after the Postal Service submits its proposal 

16 pursuant to paragraph (1), the General Accounting 

17 Office shall prepare and submit a written evaluation 

18 of such proposal to the Committee on Government 

19 Reform of the House of Representatives and the 

20 Committee on Governmental Affairs of the Senate. 

21 (4) LEGISLATIVE ACTION.—Upon receiving the 

22 proposal of the Postal Service and the evaluation of 

23 such proposal by the General Accounting Office 

24 under this subsection, Congress shall revisit the 

25 question of how the savings accruing to the Postal 
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1 Service as a result of the enactment of this Act 

2 should be used. 

3 (f) DETERMINATION AND DISPOSITION OF SUR4 PLUS.—

5 (1) IN GENERAL.—If, as of the date under 

6 paragraph (2), the Office of Personnel Management 

7 determines (after consultation with the Postmaster 

8 General) that the computation under section 

9 8348(h)(1)(A) of title 5, United States Code, yields 

10 a negative amount (hereinafter referred to as a 

11 ‘‘surplus’’)—

12 (A) the Office shall inform the Postmaster 

13 General of its determination, including the size 

14 of the surplus so determined; and 

15 (B) the Postmaster General shall submit to 

16 the Congress a report describing how the Postal 

17 Service proposes that such surplus be used, in18 cluding a draft of any legislation that might be 

19 necessary. 

20 (2) DETERMINATION DATE.—The date to be 

21 used for purposes of paragraph (1) shall be Sep22 tember 30, 2025, or such earlier date as, in the 

23 judgment of the Office, is the date by which all post24 al employees under the Civil Service Retirement Sys25 tem will have retired. 
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1 (g) DEFINITIONS.—For purposes of this section—

2 (1) the savings accruing to the Postal Service 

3 as a result of the enactment of this Act shall, for 

4 any fiscal year, be equal to the amount (if any) by 

5 which—

6 (A) the contributions that the Postal Serv7 ice would otherwise have been required to make 

8 to the Civil Service Retirement and Disability 

9 Fund for such fiscal year if this Act had not 

10 been enacted, exceed 

11 (B) the contributions made by the Postal 

12 Service to such Fund for such fiscal year; and 

13 (2) the term ‘‘postal debt’’ means the out14 standing obligations of the Postal Service, as deter15 mined under chapter 20 of title 39, United States 

16 Code. 

17 SEC. 4. EFFECTIVE DATE. 

18 This Act and the amendments made by this Act shall 

19 become effective on the date of the enactment of this Act, 

20 except that the amendments made by section 2(b) shall 

21 apply with respect to pay periods beginning on or after 

22 such date.

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