S. 1486, Postal Reform Act of 2014

Cost Estimate
July 14, 2014

As ordered reported by the Senate Committee on Homeland Security and Governmental Affairs on February 6, 2014

S. 1486 would change the laws that govern the operation of the United States Postal Service (USPS). Major provisions of the bill would:

  • Extend a rate increase that would expire under current law;
  • Permit the Postal Service to reduce mail delivery from six days per week to five;
  • Authorize the Postal Service to phase out delivery of mail directly to customers’ doors (for business addresses only);
  • Change the payments that the Postal Service is required to make relating to the Postal Service Retiree Health Benefits Fund (PSRHBF);
  • Direct the Postal Service to make payments to liquidate its liability for workers’ compensation obligations;
  • Transfer $2.4 billion in surplus retirement contributions from the Civil Service Retirement and Disability Fund (CSRDF) to the Postal Service Fund;
  • Prohibit the Postal Service from closing mail processing facilities for two years;
  • Require the use of demographic data specific to Postal Service employees for the calculation of certain retirement benefits;
  • Establish a new health benefits program for Postal Service employees, annuitants, and their dependents; and
  • Reduce payments to most federal workers receiving benefits under the Federal Employees’ Compensation Act (FECA) and modify the administration of that act.

In addition, other provisions of S. 1486 would aim to help the Postal Service reduce its operating costs and increase its revenues.

Effect on the Federal Budget

CBO estimates that enacting the bill would result in off-budget savings of about $36 billion over the 2015-2024 period and on-budget costs of about $19 billion over the same period. (USPS cash flows are recorded in the federal budget in the Postal Service Fund and are classified as off-budget, while the cash flows of the PSRHBF and the CSRDF are on-budget.)

Combining those effects, CBO estimates that the net budgetary savings from enacting S. 1486 would be about $17 billion over the 2015-2024 period. All of those effects reflect changes in direct spending. Enacting S. 1486 would not affect revenues. Pay-as-you-go procedures apply because enacting the legislation would increase on-budget direct spending.

Finally, CBO estimates that implementing S. 1486 would have a discretionary cost of $3.3 billion over the next 10 years, subject to appropriation of the necessary amounts.

Effects on State, Local, and Tribal Governments, and on the Private Sector

By making a temporary rate increase for mail services permanent and repealing a discount on postal rates for political committees, S. 1486 would impose intergovernmental and private sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on entities that send certain mail through the USPS. The bill also would impose a private-sector mandate by requiring postal annuitants who receive health insurance through USPS and are eligible for Medicare to enroll in that program. CBO estimates that the aggregate annual costs of complying with the mandates would exceed both the intergovernmental and private-sector thresholds established in UMRA ($76 million and $152 million, respectively, in 2014, adjusted annually for inflation).