Senate Approves U.S. Postal Service Financial Overhaul Bill

The Senate passed a Postal Service overhaul bill intended to save the cash-strapped organization from default.

The measure was passed 62-37. The bill would make it harder for the Postal Service to close facilities, authorize it to provide non-postal products and services, revise payments to two federal funds that provide worker retirement benefits, and install an innovation officer to create new business practices.

Enactment would show that “we can face a tough problem that exists in a public service,” said Connecticut independent Joe Lieberman, the bill’s sponsor. He said the proposal will “ask people to sacrifice but keep a venerable and critically important American institution alive and well.”

The vote on the bill, S. 1789, followed more than five months of negotiations among senators, led by Vermont independent Bernie Sanders, who were concerned about how post- office closings would affect their constituents.

The Postal Service has marked about 3,700 post offices and more than 220 mail processing facilities for potential shutdown. Those numbers are already being reduced in Postal Service estimates to comply with revised minimum-service standards in the Senate bill.

The House hasn’t considered its main Postal Service overhaul bill, H.R. 2309, which would create a commission modeled on the Defense Department’s base-closing commissions to oversee closing postal facilities.

Appeal Process

The Senate legislation includes a new version of an appeal process allowing customers to protest planned closures of individual offices. The Postal Service would conduct surveys on alternatives to offering retail services.

Maryland Democrat Barbara Mikulski, who had placed a hold on the Senate bill to protest the planned closing of a mail processing facility in Easton, Maryland, withdrew an amendment that would have placed new restrictions on the closing process. She cited assurances from the Postal Service that the facility would remain open under standards set by the bill.

“We need postal reform, but we need to be smart about how we do it so that we preserve important mail delivery services in our communities,” Mikulski said in a press release.

Before passing the bill the Senate adopted several amendments, including one restricting agency spending on travel and conferences.

Vote By Mail

Other adopted amendments would prohibit, through the November election, closings of postal facilities in states that use vote-by-mail procedures, and set a one-year moratorium on rural post office closures, with some exceptions.

The Postal Service has estimated it may reach its $15 billion debt ceiling as soon as this year if scheduled payments to its retiree health benefits fund aren’t deferred or if there were a major interruption in service, such as an anthrax scare.

The Senate bill would adjust the health benefits costs, canceling a 10-year payment schedule enacted in 2006 that required the Postal Service to set aside about $5.5 billion a year for future retirees. Instead, the bill would create a 40- year payment schedule with reduced pre-funding levels for the projected liabilities.

The Postal Service, which reported losses of $3.3 billion in the quarter that ended Dec. 31, attributed $3.1 billion of that to required payments into the retiree health-care fund.

The Postal Service has estimated the measure could save it $19 billion a year starting in 2016, Lieberman said.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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Post Offices

A Senate bill could make it more difficult for the U.S. Postal Service to shutter post offices deemed too costly to maintain. Photo: Justin Sullivan/Getty Images

A Senate bill could make it more difficult for the U.S. Postal Service to shutter post offices deemed too costly to maintain. Photo: Justin Sullivan/Getty Images