IB 

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
2

•HR 735 RH 

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.

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 Re5 tirement 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—

9 (1) in paragraph (17)—

10 (A) by striking ‘‘ ‘normal cost’ ’’ and insert11 ing ‘‘ ‘normal-cost percentage’ ’’; and 

12 (B) by inserting ‘‘and standards (using dy13 namic assumptions)’’ after ‘‘practice’’; 

14 (2) by amending paragraph (18) to read as fol15 lows: 
3

•HR 735 RH 

1 ‘‘(18) ‘Fund balance’ means the current net as2 sets of the Fund available for payment of benefits, as 

3 determined by the Office in accordance with appro4 priate accounting standards, but does not include any 

5 amount attributable to—

6 ‘‘(A) the Federal Employees’ Retirement 

7 System; or 

8 ‘‘(B) contributions made under the Federal 

9 Employees’ Retirement Contribution Temporary 

10 Adjustment Act of 1983 by or on behalf of any 

11 individual who became subject to the Federal 

12 Employees’ Retirement System;’’; and 

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

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

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

16 the following: 

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

18 assumptions that are used in determining actuarial 

19 costs and liabilities of a retirement system and in an20 ticipating the effects of long-term future—

21 ‘‘(A) investment yields; 

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

23 ‘‘(C) rates of price inflation.’’. 

24 (b) DEDUCTIONS AND CONTRIBUTIONS.—
4

•HR 735 RH 

1 (1) IN GENERAL.—Section 8334(a)(1) of title 5, 

2 United States Code, is amended—

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

4 ‘‘(a)(1)(A)’’; 

5 (B) by designating the matter following the 

6 first sentence as subparagraph (B)(i) and align7 ing the text accordingly; 

8 (C) in subparagraph (B)(i) (as so des9 ignated by subparagraph (B)), by striking ‘‘An 

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

11 clause (ii), an equal’’; and 

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

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

14 Postal Service, the amount to be contributed under this sub15 paragraph shall (instead of the amount described in clause 

16 (i)) be equal to the product derived by multiplying the em17 ployee’s basic pay by the percentage equal to—

18 ‘‘(I) the normal-cost percentage for the applicable 

19 employee category listed in subparagraph (A), minus 

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

21 with respect to such employee under subparagraph 

22 (A).’’. 

23 (2) CONFORMING AMENDMENTS.—Section 

24 8334(k) of title 5, United States Code, is amended—
5

•HR 735 RH 

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

2 first sentence of subsection (a)(1) of this section’’ 

3 and inserting ‘‘subsection (a)(1)(A)’’; 

4 (B) in paragraph (1)(B)—

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

6 subsection (a)(1) of this section’’ and insert7 ing ‘‘subparagraph (B) of subsection 

8 (a)(1)’’; and 

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

10 inserting ‘‘such subparagraph’’; and 

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

12 ‘‘the first sentence of subsection (a)(1)’’ and in13 serting ‘‘subsection (a)(1)(A)’’. 

14 (c) POSTAL SUPPLEMENTAL LIABILITY.—Subsection 

15 (h) of section 8348 of title 5, United States Code, is amend16 ed to read as follows: 

17 ‘‘(h)(1)(A) For purposes of this subsection, ‘Postal sup18 plemental liability’ means the estimated excess, as deter19 mined by the Office, of—

20 ‘‘(i) the actuarial present value of all future ben21 efits payable from the Fund under this subchapter at22 tributable to the service of current or former employ23 ees of the United States Postal Service, over 

24 ‘‘(ii) the sum of—
6

•HR 735 RH 

1 ‘‘(I) the actuarial present value of deduc2 tions to be withheld from the future basic pay of 

3 employees of the United States Postal Service 

4 currently subject to this subchapter pursuant to 

5 section 8334; 

6 ‘‘(II) the actuarial present value of the fu7 ture contributions to be made pursuant to sec8 tion 8334 with respect to employees of the United 

9 States Postal Service currently subject to this 

10 subchapter; 

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

12 of the date the Postal supplemental liability is 

13 determined, attributable to payments to the 

14 Fund by the United States Postal Service and its 

15 employees, including earnings on those pay16 ments; and 

17 ‘‘(IV) any other appropriate amount, as de18 termined by the Office in accordance with gen19 erally accepted actuarial practices and prin20 ciples. 

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

22 future benefits, the Office shall include the full value of bene23 fits attributable to military and volunteer service for United 

24 States Postal Service employees first employed after June 

25 30, 1971, and a prorated share of the value of benefits at-
7

•HR 735 RH 

1 tributable to military and volunteer service for United 

2 States Postal Service employees first employed before July 

3 1, 1971. 

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

5 in the computation of any amount under subsection (g)(2). 

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

7 determine the Postal supplemental liability as of September 

8 30, 2003. The Office shall establish an amortization sched9 ule, including a series of equal annual installments com10 mencing September 30, 2004, which provides for the liq11 uidation of such liability by September 30, 2043. 

12 ‘‘(B) The Office shall redetermine the Postal supple13 mental liability as of the close of the fiscal year, for each 

14 fiscal year beginning after September 30, 2003, through the 

15 fiscal year ending September 30, 2038, and shall establish 

16 a new amortization schedule, including a series of equal an17 nual installments commencing on September 30 of the sub18 sequent fiscal year, which provides for the liquidation of 

19 such liability by September 30, 2043. 

20 ‘‘(C) The Office shall redetermine the Postal supple21 mental liability as of the close of the fiscal year for each 

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

23 establish a new amortization schedule, including a series 

24 of equal annual installments commencing on September 30 
8

•HR 735 RH 

1 of the subsequent fiscal year, which provides for the liquida2 tion of such liability over 5 years. 

3 ‘‘(D) Amortization schedules established under this 

4 paragraph shall be set in accordance with generally accept5 ed actuarial practices and principles, with interest com6 puted at the rate used in the most recent dynamic actuarial 

7 valuation of the Civil Service Retirement System. 

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

9 amounts so determined to the Office, with payments due 

10 not later than the date scheduled by the Office. 

11 ‘‘(F) An amortization schedule established under sub12 paragraph (B) or (C) shall supersede any amortization 

13 schedule previously established under this paragraph. 

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

15 computing the amount of any payment under any other 

16 subsection of this section that is based upon the amount 

17 of the unfunded liability, such payment shall be computed 

18 disregarding that portion of the unfunded liability that the 

19 Office determines will be liquidated by payments under this 

20 subsection. 

21 ‘‘(4) Notwithstanding any other provision of this sub22 section, any determination or redetermination made by the 

23 Office under this subsection shall, upon request of the Postal 

24 Service, be subject to reconsideration and review (including 

25 adjustment by the Board of Actuaries of the Civil Service 
9

•HR 735 RH 

1 Retirement System) to the same extent and in the same 

2 manner as provided under section 8423(c).’’. 

3 (d) REPEALS.—

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

5 law are repealed: 

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

7 5, United States Code. 

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

9 Omnibus Budget Reconciliation Act of 1990 (5 

10 U.S.C. 8348 note). 

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

12 subsection shall be considered to affect any payments 

13 made before the date of the enactment of this Act 

14 under either of the provisions of law repealed by 

15 paragraph (1).

16 SEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE 

17 UNITED STATES POSTAL SERVICE. 

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

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

20 Act—

21 (1) shall, to the extent that such savings are at22 tributable to fiscal year 2003 or 2004, be used to re23 duce the postal debt (in consultation with the Sec24 retary of the Treasury), and the Postal Service shall 

25 not incur additional debt to offset the use of the sav-
10

•HR 735 RH 

1 ings to reduce the postal debt in fiscal years 2003 and 

2 2004; 

3 (2) shall, to the extent that such savings are at4 tributable to fiscal year 2005, be used to continue 

5 holding postage rates unchanged and to reduce the 

6 postal debt, to such extent and in such manner as the 

7 Postal Service shall specify (in consultation with the 

8 Secretary of the Treasury); and 

9 (3) to the extent that such savings are attrib10 utable to any fiscal year after fiscal year 2005, shall 

11 be considered to be operating expenses of the Postal 

12 Service and, until otherwise provided for by law, shall 

13 be held in escrow and may not be obligated or ex14 pended. 

15 (b) AMOUNTS SAVED.—

16 (1) IN GENERAL.—The amounts representing 

17 any savings accruing to the Postal Service in any fis18 cal year as a result of the enactment of this Act shall 

19 be computed by the Office of Personnel Management 

20 for each such fiscal year in accordance with para21 graph (2). 

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

23 2003, the Office of Personnel Management shall—

24 (A) formulate a plan specifically enumer25 ating the actuarial methods and assumptions by 
11

•HR 735 RH 

1 which the Office shall make its computations 

2 under paragraph (1); and 

3 (B) submit such plan to the Committee on 

4 Government Reform of the House of Representa5 tives and the Committee on Governmental Af6 fairs of the Senate. 

7 (3) REQUIREMENTS.—The plan shall be formu8 lated in consultation with the Postal Service and 

9 shall include the opportunity for the Postal Service to 

10 request reconsideration of computations under this 

11 subsection, and for the Board of Actuaries of the Civil 

12 Service Retirement System to review and make ad13 justments to such computations, to the same extent 

14 and in the same manner as provided under section 

15 8423(c) of title 5, United States Code. 

16 (c) REPORTING REQUIREMENT.—The Postal Service 

17 shall include in each report rendered under section 2402 

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

19 reducing the postal debt, and the size of the postal debt be20 fore and after the application of subsection (a), during the 

21 period covered by such report. 

22 (d) SENSE OF CONGRESS.—It is the sense of the Con23 gress that—

24 (1) the savings accruing to the Postal Service as 

25 a result of the enactment of this Act will be sufficient 
12

•HR 735 RH 

1 to allow the Postal Service to fulfill its commitment 

2 to hold postage rates unchanged until at least 2006; 

3 (2) because the Postal Service still faces substan4 tial obligations related to postretirement health bene5 fits for its current and former employees, some por6 tion of the savings referred to in paragraph (1) 

7 should be used to address those unfunded obligations; 

8 and 

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

10 (1) should be used in the computation of any bonuses 

11 for Postal Service executives. 

12 (e) POSTAL SERVICE PROPOSAL.—

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

14 Service shall, by September 30, 2003, prepare and 

15 submit to the President and the Congress its proposal 

16 detailing how any savings accruing to the Postal 

17 Service as a result of the enactment of this Act, which 

18 are attributable to any fiscal year after fiscal year 

19 2005, should be expended. 

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

21 proposal under this subsection, the Postal Service 

22 shall consider—

23 (A) whether, and to what extent, those fu24 ture savings should be used to address—

25 (i) debt repayment; 
13

•HR 735 RH 

1 (ii) prefunding of postretirement 

2 healthcare benefits for current and former 

3 postal employees; 

4 (iii) productivity and cost saving cap5 ital investments; 

6 (iv) delaying or moderating increases 

7 in postal rates; and 

8 (v) any other matter; and 

9 (B) the work of the President’s Commission 

10 on the United States Postal Service under sec11 tion 5 of Executive Order 13278 (67 Fed. Reg. 

12 76672). 

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

14 60 days after the Postal Service submits its proposal 

15 pursuant to paragraph (1), the General Accounting

16 Office shall prepare and submit a written evaluation 

17 of such proposal to the Committee on Government Re18 form of the House of Representatives and the Com19 mittee on Governmental Affairs of the Senate. 

20 (4) LEGISLATIVE ACTION.—Not later than 180 

21 days after it has received both the proposal of the 

22 Postal Service and the evaluation of such proposal by 

23 the General Accounting Office under this subsection, 

24 Congress shall revisit the question of how the savings 
14

•HR 735 RH 

1 accruing to the Postal Service as a result of the enact2 ment of this Act should be used. 

3 (f) DETERMINATION AND DISPOSITION OF SURPLUS.—

4 (1) IN GENERAL.—If, as of the date under para5 graph (2), the Office of Personnel Management deter6 mines (after consultation with the Postmaster Gen7 eral) that the computation under section 

8 8348(h)(1)(A) of title 5, United States Code, yields a 

9 negative amount (hereinafter referred to as a ‘‘sur10 plus’’)—

11 (A) the Office shall inform the Postmaster 

12 General of its determination, including the size 

13 of the surplus so determined; and 

14 (B) the Postmaster General shall submit to 

15 the Congress a report describing how the Postal 

16 Service proposes that such surplus be used, in17 cluding a draft of any legislation that might be 

18 necessary. 

19 (2) DETERMINATION DATE.—The date to be used 

20 for purposes of paragraph (1) shall be September 30, 

21 2025, or such earlier date as, in the judgment of the 

22 Office, is the date by which all postal employees under 

23 the Civil Service Retirement System will have retired. 

24 (g) DEFINITIONS.—For purposes of this section—
15

•HR 735 RH 

1 (1) the savings accruing to the Postal Service as 

2 a result of the enactment of this Act shall, for any fis3 cal year, be equal to the amount (if any) by which—

4 (A) the contributions that the Postal Service 

5 would otherwise have been required to make to 

6 the Civil Service Retirement and Disability 

7 Fund for such fiscal year if this Act had not 

8 been enacted, exceed 

9 (B) the contributions made by the Postal 

10 Service to such Fund for such fiscal year; and 

11 (2) the term ‘‘postal debt’’ means the outstanding 

12 obligations of the Postal Service, as determined under 

13 chapter 20 of title 39, United States Code. 

14 SEC. 4. EFFECTIVE DATE. 

15 This Act and the amendments made by this Act shall 

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

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

18 apply with respect to pay periods beginning on or after 

19 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