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.
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 
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 in-
serting ‘‘ ‘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 ap-
propriate 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)’’; 
(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 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 
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 applica-
ble 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 amend-
ed—
(A) in paragraph (1)(A), by striking ‘‘the 
first sentence of subsection (a)(1) of this sec-
tion’’ 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 in-
serting ‘‘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 
amended to read as follows:
‘‘(h)(1)(A) For purposes of this subsection, ‘Postal 
supplemental liability’ means the estimated excess, as de-
termined by the Office, of—
‘‘(i) the actuarial present value of all future 
benefits payable from the Fund under this sub-
chapter attributable to the service of current or 
former employees of the United States Postal Serv-
ice, 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 Serv-
ice currently subject to this subchapter pursu-
ant 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 
determined by the Office in accordance with 
generally 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 
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 computation of the payment required by subsection 
(g)(2). 
‘‘(2)(A) Not later than June 30, 2004, the Office 
shall determine the Postal supplemental liability as of Sep-
tember 30, 2003. The Office shall establish an amortiza-
tion schedule, including a series of equal annual install-
ments commencing September 30, 2004, which provides 
for the liquidation 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 es-
tablish a new amortization schedule, including a series of 
equal annual installments commencing on September 30 
of the subsequent fiscal year, which provides for the liq-
uidation 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 
liquidation 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 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) of 
title 5, United States Code.’’. 
(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 pay-
ments 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 shall—
(1) to the extent that such savings are attrib-
utable to fiscal year 2003, 2004, or 2005, be used 
to reduce the postal debt, to such extent and in such 
manner as the Secretary of the Treasury shall speci-
fy (in consultation with the Postmaster General), 
consistent with succeeding provisions of this section; 
and 
(2) to the extent that such savings are attrib-
utable to any fiscal year after fiscal year 2005, be 
held in escrow until Congress acts pursuant to sub-
section (e). 
(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 Man-
agement in accordance with paragraph (2). 
(2) METHODOLOGY.—Not later than July 31, 
2003, for fiscal year 2003, and October 1 of the fis-
cal year before each fiscal year after fiscal year 
2003, the Office of Personnel Management shall—
(A) formulate a plan specifically enumer-
ating the methods 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 Represent-
atives and the Committee on Governmental Af-
fairs of the Senate. 
(3) REQUIREMENTS.—Each such 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 Actu-
aries of the Civil Service Retirement System to re-
view 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 suffi-
cient to allow the Postal Service to fulfill its commit-
ment to hold postage rates unchanged until at least 
2006; 
(2) because the Postal Service still faces sub-
stantial 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 obliga-
tions; and 
(3) none of the savings referred to in paragraph 
(1) should be used to pay bonuses to Postal Service 
executives. 
(e) POSTAL SERVICE PROPOSAL.—
(1) IN
GENERAL.—The United States Postal 
Service shall, by September 30, 2003, in consulta-
tion with the General Accounting Office, prepare 
and submit to the President and the Congress its 
proposal detailing how future savings accruing to the 
Postal Service as a result of the enactment of this 
Act 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 fu-
ture 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 cap-
ital investments; and 
(iv) any other matter; and 
(B) the report of the President’s Commis-
sion 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 
30 days after the Postal Service submits its proposal 
pursuant to paragraph (1), the General Accounting 
Office shall prepare and 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.—Upon receiving 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