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 Con-
necticut, Mr. HOUGHTON, Mr. BLUMENAUER, Mr. LOBIONDO, Mr. 
SAXTON, Mr. FROST, Mr. HOLDEN, Mr. LINCOLN DIAZ-BALART of Flor-
ida, 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. BRAD-
LEY of New Hampshire, Mr. BAKER, Mr. KANJORSKI, Mr. MENENDEZ, 
Mr. ANDREWS, Mr. ENGEL, Mr. FRANK of Massachusetts, Ms. SLAUGH-
TER, 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
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Postal Civil Service Re-
tirement 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 insert-
ing ‘‘ ‘normal-cost percentage’ ’’; and 
(B) by inserting ‘‘and standards (using dy-
namic assumptions)’’ after ‘‘practice’’; 
(2) by amending paragraph (18) to read as fol-
lows:
‘‘(18) ‘Fund balance’ means the current net as-
sets of the Fund available for payment of benefits, as 
determined by the Office in accordance with appro-
priate 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 an-
ticipating 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 align-
ing the text accordingly; 
(C) in subparagraph (B)(i) (as so des-
ignated 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 sub-
paragraph shall (instead of the amount described in clause 
(i)) be equal to the product derived by multiplying the em-
ployee’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 insert-
ing 
‘‘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 in-
serting ‘‘subsection (a)(1)(A)’’. 
(c) POSTAL SUPPLEMENTAL LIABILITY.—Subsection 
(h) of section 8348 of title 5, United States Code, is amend-
ed to read as follows: 
‘‘(h)(1)(A) For purposes of this subsection, ‘Postal sup-
plemental liability’ means the estimated excess, as deter-
mined by the Office, of—
‘‘(i) the actuarial present value of all future ben-
efits payable from the Fund under this subchapter at-
tributable to the service of current or former employ-
ees of the United States Postal Service, over 
‘‘(ii) the sum of—
‘‘(I) the actuarial present value of deduc-
tions 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 fu-
ture contributions to be made pursuant to sec-
tion 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 pay-
ments; and 
‘‘(IV) any other appropriate amount, as de-
termined by the Office in accordance with gen-
erally accepted actuarial practices and prin-
ciples. 
‘‘(B)(i) In computing the actuarial present value of 
future benefits, the Office shall include the full value of bene-
fits 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 at-
tributable 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 sched-
ule, including a series of equal annual installments com-
mencing September 30, 2004, which provides for the liq-
uidation of such liability by September 30, 2043. 
‘‘(B) The Office shall redetermine the Postal supple-
mental 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 an-
nual installments commencing on September 30 of the sub-
sequent fiscal year, which provides for the liquidation of 
such liability by September 30, 2043. 
‘‘(C) The Office shall redetermine the Postal supple-
mental 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 liquida-
tion of such liability over 5 years. 
‘‘(D) Amortization schedules established under this 
paragraph shall be set in accordance with generally accept-
ed actuarial practices and principles, with interest com-
puted 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 sub-
paragraph (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 sub-
section, 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).
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 at-
tributable to fiscal year 2003 or 2004, be used to re-
duce the postal debt (in consultation with the Sec-
retary of the Treasury), and the Postal Service shall 
not incur additional debt to offset the use of the sav-
ings to reduce the postal debt in fiscal years 2003 and 
2004; 
(2) shall, to the extent that such savings are at-
tributable 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 attrib-
utable 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 ex-
pended. 
(b) AMOUNTS SAVED.—
(1) IN
GENERAL.—The amounts representing 
any savings accruing to the Postal Service in any fis-
cal 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 para-
graph (2). 
(2) METHODOLOGY.—Not later than July 31, 
2003, the Office of Personnel Management shall—
(A) formulate a plan specifically enumer-
ating the actuarial methods and assumptions by