USPS: We can't pay retiree prepayment even if delayed

The U.S. Postal Service would see a required prepayment for retiree health care pushed back until August under the government spending measure that could soon be considered by Congress.

But a spokesman for the struggling agency reiterated on Thursday that USPS will not be able to pay its $5.5 billion health care bill, even if it is pushed back to Aug. 1.

David Partenheimer, the spokesman, also said that USPS would be unable to make another $5.6 billion retiree payment that is due on Sept. 30.

“At this point we don't have the money to pay either one,” Partenheimer told The Hill in an e-mail.

Under 2006 legislation, the Postal Service is required to make prepayments for retiree health costs over a decade, or through 2016. The $5.5 billion payment that would become due in August under the omnibus appropriations bill is for fiscal 2011, while the fiscal 2012 payment is due at the end of September.

With mail volume steadily dropping as electronic communication increases, the Postal Service lost $5.1 billion in fiscal 2011, even after not making the health care prepayment. The agency projects 2012 losses to be roughly $14 billion.

On Thursday, with government funding set to run out in less than two days, lawmakers in both chambers and parties were beginning final negotiations on the broad spending package. The omnibus has been delayed, at least in part, because it has been linked to a separate back-and-forth over the extension of the payroll tax cut.

Earlier this week, USPS announced, after discussions with senators, that it would not close any post offices or processing centers until May 15.

The agency was considering closing thousands of facilities to help cut costs. But lawmakers and USPS both believe that pushing back final decisions on that front essentially gives Congress a deadline to hash out a fundamental overhaul of postal operations.

Postal legislation in both the House and the Senate have cleared the committee level, but await floor consideration. USPS has said both those bills have good aspects, but neither would give the agency all the flexibility it needs.

In his email, Partenheimer cited the USPS proposal to leave the federal health care system, and run its own health care like a private business. 

“We would competitively bid and enter into a contract with a company that would still provide employees with a wide range of health care options to meet their needs,” Partenheimer said.

The Senate postal legislation would spread out the health care prepayments over 40 years, while the House has proposed pushing back large portions of the payments as well.

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