Postal Civil Service Retirement System Funding Reform Act of 2003
PL 108-18 (S.380), enacted 04/23/2003

117 STAT. 624
PUBLIC LAW 108–18—APR. 23, 2003
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.
Be it enacted by the Senate and House of Representatives 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 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)’’;
Postal Civil
Service
Retirement
System Funding
Reform Act of
2003.
5 USC 101 note.
Apr. 23, 2003
[S. 380]
VerDate 11-MAY-2000
13:45 Aug 26, 2004
Jkt 019194
PO 00000
Frm 00650
Fmt 6580
Sfmt 6581
D:\STATUTES\2003\19194PT1.001
APPS10
PsN: 19194PT1
117 STAT. 625
PUBLIC LAW 108–18—APR. 23, 2003
(B) by designating the matter following the first sen-
tence as subparagraph (B)(i) and aligning the text accord-
ingly;
(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 sen-
tence 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 sub-
chapter pursuant to section 8334;
‘‘(II) the actuarial present value of the future contribu-
tions 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, attrib-
utable 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 actu-
arial practices and principles.
VerDate 11-MAY-2000
13:45 Aug 26, 2004
Jkt 019194
PO 00000
Frm 00651
Fmt 6580
Sfmt 6581
D:\STATUTES\2003\19194PT1.001
APPS10
PsN: 19194PT1
117 STAT. 626
PUBLIC LAW 108–18—APR. 23, 2003
‘‘(B)(i) In computing the actuarial present value of future bene-
fits, 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) 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 com-
mencing 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 begin-
ning after September 30, 2038, and shall establish a new amortiza-
tion schedule, including a series of equal annual installments com-
mencing 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 prac-
tices 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.
Deadline.
VerDate 11-MAY-2000
13:45 Aug 26, 2004
Jkt 019194
PO 00000
Frm 00652
Fmt 6580
Sfmt 6581
D:\STATUTES\2003\19194PT1.001
APPS10
PsN: 19194PT1
117 STAT. 627
PUBLIC LAW 108–18—APR. 23, 2003
(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).
(e) 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 pro-
posals 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 Rep-
resentatives and the Committee on Governmental Affairs of
the Senate.
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 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 consulta-
tion 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 accord-
ance with paragraph (2).
(2) METHODOLOGY.—Not later than July 31, 2003, the
Office of Personnel Management shall—
Deadline.
39 USC note
prec. 2001.
Deadlines.
5 USC 8348 note.
VerDate 11-MAY-2000
13:45 Aug 26, 2004
Jkt 019194
PO 00000
Frm 00653
Fmt 6580
Sfmt 6581
D:\STATUTES\2003\19194PT1.001
APPS10
PsN: 19194PT1
117 STAT. 628
PUBLIC LAW 108–18—APR. 23, 2003
(A) formulate a plan specifically enumerating the actu-
arial 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 con-
sultation with the Postal Service and shall include the oppor-
tunity for the Postal Service to request reconsideration of com-
putations 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 obliga-
tions 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) 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 bene-
fits for current and former postal employees;
(iii) productivity and cost saving capital invest-
ments;
(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 para-
graph (1), the General Accounting Office shall prepare and
Deadlines.
VerDate 11-MAY-2000
13:45 Aug 26, 2004
Jkt 019194
PO 00000
Frm 00654
Fmt 6580
Sfmt 6581
D:\STATUTES\2003\19194PT1.001
APPS10
PsN: 19194PT1
117 STAT. 629
PUBLIC LAW 108–18—APR. 23, 2003
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 consulta-
tion 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) the Postmaster General shall submit to the Con-
gress a report describing how the Postal Service proposes
that such surplus be used, including a draft of any legisla-
tion 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 obliga-
tions of the Postal Service, as determined under chapter 20
of title 39, United States Code.
Reports.
VerDate 11-MAY-2000
13:45 Aug 26, 2004
Jkt 019194
PO 00000
Frm 00655
Fmt 6580
Sfmt 6581
D:\STATUTES\2003\19194PT1.001
APPS10
PsN: 19194PT1
117 STAT. 630
PUBLIC LAW 108–18—APR. 23, 2003
LEGISLATIVE HISTORY—S. 380 (H.R. 735):
HOUSE REPORTS: No. 108–49 accompanying H.R. 735 (Comm. on Government Re-
form).
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.
SEC. 4. 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.
Applicability.
5 USC 8334 note.
VerDate 11-MAY-2000
13:45 Aug 26, 2004
Jkt 019194
PO 00000
Frm 00656
Fmt 6580
Sfmt 6580
D:\STATUTES\2003\19194PT1.001
APPS10
PsN: 19194PT1