What’s Included — and Not Included — in the Postal Service Reform Act
After passing the House Feb. 8 in a bipartisan vote, 342-92, the Postal Service Reform Act passed the Senate yesterday with another bipartisan vote of 79-19. It now will move to President Joe Biden’s desk where it is expected to be signed.
“With the legislative financial reforms achieved today, combined with our own self-led operational reforms, we will be able to self-fund our operations and continue to deliver to 161 million addresses six days per-week for many decades to come,” Postmaster General and CEO Louis DeJoy said in a statement. “I thank the Senate and our committee leadership that broke the 10-year logjam, which has long constrained the finances of the Postal Service.”
USPS was dependent on some aspects of the legislation in its Delivering for America 10-Year Strategic Plan that was released in March 2021. U.S. Reps. Carolyn B. Maloney and James Comer, both of the Committee on Oversight and Reform, introduced the bill.
“With today’s Senate vote, postal reform has been signed, sealed and delivered to the American people,” Comer said in a statement. “All Americans, whether they live in rural communities or big cities, rely on the Postal Service, so it’s in everyone’s interest to see it succeed in this mission. The bipartisan Postal Service Reform Act, coupled with Postmaster General DeJoy’s reform plan, modernizes USPS to ensure it operates like a 21st century business that provides reliable service to the American people.
Here’s an overview of what’s in the final bill — and what’s not.
What’s in the Postal Service Reform Act
1. Medicare Integration
Future retirees will be required to enroll in Medicare upon retirement. Currently, a quarter of eligible retirees do not, resulting in USPS paying higher premiums, according to the House's Committee on Oversight and Reform. USPS expects this move to save the agency $26.6 billion over the next decade.
2. Repeal of Pre-funding Requirement for Retiree Benefits
The Postal Service has defaulted on the requirement to pre-fund its retirees health care payments since 2012, according to the House's Committee on Oversight and Reform. The Postal Accountability and Enhancement Act of 2006 requires USPS to fund these benefits for all current and retired employees for 75 years into the future. This repeal will allow USPS to reduce its prefund requirements and save approximately $27 billion over 10 years.
3. Increased Service Transparency
USPS will develop a public online dashboard with national and local service performance data updated weekly for transparency and compliance with mail delivery times. USPS will also be required to report to Congress its operations and financial performance as a means of greater accountability of the agency.
“The agency now reports on finances monthly and national service quarterly. The USPS Office of Inspector General has set up a service dashboard, and the PRC announced plans for its dashboard. Dashboards are all the rage. Most larger mailers already measure their mail service, usually with a contractor analyzing their barcodes to see when mail is out for delivery.”
4. Six-Day Integrated Delivery
USPS will be required to deliver both mail and packages at least six days a week across an integrated network. The alliance attributed its inclusion as a way to protect package shippers, like Amazon. The organization cited a 2013 attempt by then-Postmaster General Pat Donahoe to reduce mail delivery to five days a week, which Congress overruled with a six-day requirement in its annual appropriation bills.
”Just what an ‘integrated network’ is would be left to USPS and its regulator to interpret with lots of input from postal unions,” according to the alliance’s report. “We know that usually doesn’t go well for mailers.”
5. Addition of Non-Postal Services
USPS will now be allowed to enter into agreements with state, local and tribal governments to provide additional services to fund its operations whereas the 2006 law limited USPS to only postal products.
6. Oversight Improvements
The Postal Regulatory Commission will review USPS pricing to ensure accuracy and improve accounting. PRC will also gain additional control, including increased budgetary resources, to regulate USPS.
“The PRC must conduct a study to identify the causes and effects of postal inefficiencies relating to flats (large envelopes, newsletters, journals, magazines, etc.),” according to the alliance’s report. “Heretofore, the regulator mostly has accepted USPS’s word that it is as efficient as possible, and tried to improve cost coverage with excessive rate increases.”
PRC’s Inspector General Office also will be consolidated into USPS’ Office of Inspector General.
What’s Not in the Postal Service Reform Act
The Alliance of Nonprofit Mailers also pointed out a few areas that it wished would have been included in the bill, particularly how to fix the broken business model of USPS. Problems it cited include delivering to every address and maintaining 30,000 post offices — services that no “private, profit-seeking business" would continue to provide if trying to stabilize the business.
“The hope is that relieving USPS of $50 billion in retirement expenses over 10 years — half of which don’t use cash — would enable it to succeed as a business that is saddled with about $5 billion in annual public service costs that competing businesses don’t have to worry about,” according to the alliance report. “It would prosper amid a secular decline in the main product — mail — in the hope of continued profitable growth in the hyper-competitive package delivery market.”
Due to overlooking those issues, the alliance does not expect immediate relief for nonprofit mailers and is skeptical about moderation in rate increases over the long term. After all, the projected savings do not account for all of the predicted losses in USPS’ 10-year plan. The alliance also does not expect any additional relief to come from Congress any time soon.
“Leading Congressional advocates have described the PSRA as completely overhauling and saving USPS,” according to the alliance’s report. “Congress hates working on postal legislation because of the lack of consensus. A major concern with this inadequate bill is that we will wait years for another chance at real postal reform.”