The National Association of Postmasters of the U.S. (NAPUS) continues to be a leading force in promoting the interests of the postal and federal community on Capitol Hill and at the White House. We are proud of our stewardship on such as Postmaster Fairness, Postal Service financial vitality, retirement security, health protection, and universal postal services. We will continue be strong advocates in support of these and other issues that benefit active and retired postmasters.

In 2001, it will be particularly important to buttress efforts by the Postal Service to respond to the market needs of our customers. This includes support of legislation to grant the Postal Service greater latitude to establish rates for products and services. This is the primary strategy in which the Postal Service can remain competitive with the for-profit sector. In addition, postmasters will continue to defend the Postal Service’s legal right to offer new and innovative products to the American public and businesses. The future of universal postal service may very well depend on the legislative outcome on these issues and the reaction of Capitol Hill to such initiatives.

The year will also be a period of significant changes for the entire postal community. The Postal Service Board of Governors has elected Robert Rider as the new chairman, replacing Einar Dyhrkopp. One of the first responsibilities of the Board will be a hiring new Postmaster General to succeed William Henderson. In addition, the U.S. Senate will confirm a new Chairman of the Postal Rate Commission. And, the House Government Reform Committee has elected to exercise original jurisdiction over postal matters, eliminating the Subcommittee on the Postal Service. In sum, these changes may very well produce significant opportunities and key challenges for postmasters.

Nonetheless, Postmasters must not squander the momentum we produced last year in support of the Postmaster Fairness Act. We will work with our congressional allies to enact this legislation during this Congress. We are indeed gratified that Representative Morella (R-MD) and Senator Akaka (D-HI) have reintroduced the measure early this year.

Our new president will face a closely divided – if not polarized – Congress with the Republicans controlling a razor-thin majority. Also, during this year, state legislatures throughout the country will be sharpening their pencils and redrawing congressional districts, a process called reapportionment. Within this political environment, it will be very difficult to enact any measure that does not command broad, centrist, bipartisan support.

With all this in mind, the postmasters’ legislative agenda for the 107^th Congress must be well thought-out and skillfully executed if it is to be translated from rhetoric to reality. A legislative program that rests exclusively on the alliance with one party or another will be doomed from the start. Fortunately, our legislative priorities have traditionally garnered wide-ranging congressional support. NAPUS’ single, unambiguous priority is to advance the interests of postmasters, active and retired, in the halls of Congress and at the White House. The Government Relations Department, which includes each and every State Legislative and PAC Chair, will advance the cause of postmasters by keeping a keen eye on congressional deliberations and the political environment in the communities from which the Members of Congress are elected.

It is essential to note that what makes an organization great and what keeps it going are not necessarily the same things. No doubt, businesses such as UPS and FedEx adopt this perspective. To continue to be a great organization, you cannot be a follower – you must be a leader. You must be innovative, and the idea that it you don’t pilot in an evolving environment then you will end up a follower and relinquish the image of and benefits that come from being a trailblazer. You can be sure that NAPUS will be a trailblazer in legislative and political affairs.

The NAPUS Government Relations Department strategy is predicated on the fact that political and legislative power emanates from the field. That is, we will only be successful if we are able to energize all postmasters back home in their local post offices, rather than rely an "inside-the-beltway" strategy. (The Capitol Beltway circles Washington, D.C.) Postmasters need to maintain a sense of mission and enthusiasm that helps to further the issues that we bring to our Members of Congress and the White House. In part, we experiment with and develop new ways of delivering our message. Leading businesses and organizations are committed to develop new ways of doing things. The NAPUS Government Relations Department pledges to go "boldly where no one has gone before." We need ideas – your ideas. If they have promise, we will explore them for future use.

Our goal for this year is quite simple. To see to it that postmasters have the tools and incentive to promote our interests in Washington and around the nation.

 For too long the U.S. Postal Service has paid far too little attention to how it interacts with its front-line managers – it’s postmasters. This has resulted in an erosion of its ability to perform its primary mission to deliver universal postal services to the American public. Post office hour reductions and staffing cuts, combined with a serious reticence of having constructive discussions with its postmasters raise serious questions about postal accountability and its aptitude to fulfill its mission. Enactment of the "Postmasters Fairness and Rights Act of 2001" would go a long way to help the Postal Service continue to provide the American public with quality universal postal services.

In 2000, Representative Connie Morella (R-MD) introduced H.R. 3842 and Senator Daniel Akaka (D-HI) introduced S. 2703. The bills were known as the Postmasters Fairness and Rights Act. A majority of the House of Representatives (238 Members of Congress) and more than one-quarter of the U.S. Senate (27 Senators) cosponsored the legislation.

Outstanding results in customer satisfaction surveys and record on-time delivery numbers aptly document Postmaster success in serving as model postal managers. Postmasters have achieved extraordinary operational efficiencies despite serious Headquarters-mandated budget cuts. Miraculously, Postmasters have successfully guaranteed quality services despite the fact that frozen or reduced operating budgets have precluded our ability to fill personnel vacancies and upgrade postal facilities. Sadly, the Postal Reorganization Act of 1971, and subsequent amendments to it do not provide for a fair and equitable process for determining how Postal Headquarters can reward its Postmasters for the extraordinary service they provide to the Postal Service and the mailing public. NAPUS will be working with Congress to pass the Postmasters Fairness and Rights Act of 2001, which would help to rectify this long-standing deficiency.

Post offices throughout the nation are without career Postmasters to guide them. One of the many by-products of this phenomenon is a substantial reduction in window hours. Also, communities around the country are left without the most aggressive advocate for quality postal services in their community -- their Postmaster. The reason for this situation is simple. The current method for deciding Postmaster compensation has made it very difficult for the Postal Service to recruit and retain highly qualified Postmasters. Compensation issues are compounded by the inability for Postmasters to be taken seriously when discussing operational or budget matters with Postal Headquarters, which would enhance the quality of postal services, provided to postal patrons. It is obvious that Postmaster morale and the quality of Postal Services are adversely affected by the present situation.

Schedule meetings with your Senators and Representatives to urge them to cosponsor and strongly support S. 177 and H.R. 250. In addition, write your Members of Congress to reinforce the message that the most effective way to guarantee postmaster fairness is to vote in favor of the Postmaster Fairness and Rights Act of 2001.

Schedule follow-up or initial meetings with all your Members of Congress – both Representatives and Senators – during the NAPUS FAIRNESS NOW WEEK, April 16 through April 19, 2001. The elected officials will be back in their home districts during this time period for the Congressional Easter Recess. At that time, thank Members who have already indicated their support of their postmasters and redouble efforts to commit others to join our campaign.

Postmaster job security relies upon a financially robust U.S. Postal Service. Ever since 1971, the Postal Service has been self-sufficient. The Postal Service does not rely on the U.S. Congress or American taxpayers to finance its operations. Unfortunately, enemies of the Postal Service continue to proclaim the lie that the Postal Service relies on public funds. In fact, the Postal Service depends solely on postal ratepayers to fund the infrastructure that makes universal six-day mail service possible at affordable uniform rates.

Diversion of mail away from the U.S. Postal Service places at risk approximately $17 billion of revenue over the next two-to-three years. In fact, even with the recent rate increase, the U.S.P.S. projects a $480 million shortfall for this fiscal year. Revenue erosion undermines the Postal Service’s prime mission of providing comprehensive affordable postal services to the American business community and United States households.

The Postal Service has made extraordinary financial and delivery performance gains over the past five years. It has also accrued modest surpluses over that time period. Nonetheless, the General Accounting Office (GAO) study concluded that the Postal Service would face a decline in its core business over the next decade. This decline, attributable to the maturation of the Internet and growth of on-line bill payments, could place as much as $17 billion in postal revenue at risk. For this reason, postal evolution is an absolute necessity. The Postal Service must be able to raise its revenue in order to sustain full-time post offices and universal postal services throughout the nation.

During the 106^th Congress considered legislation to reform the Postal Service. The bill that gained the most attention was H.R. 22, the "Postal Modernization Act." H.R. 22, introduced by the former Postal Subcommittee Chairman John McHugh, was approved by the Postal Subcommittee in 1999, and but died in the House Committee on Government Reform. The bill earned the wrath of UPS, the last major unregulated monopoly in this nation, and its allies since it granted the Postal Service indispensable price flexibility and enables the Postal Service to respond more efficiently to the mailing community. It is important to note that without the existence of the U.S. Postal Service as an affordable alternative to UPS, the mailing public would be held captive to UPS’ predatory pricing practices.

The essential elements of H.R. 22 included the protection of universal service at uniform rates and equipping the Postal Service with the requisite tools to survive. For example, the Postal Service would have been able to offer "negotiated service agreements" with the mailing community, which would enable the Postal Service to offer reduced rates for mailers meetings certain standards. In addition, the measure split the operations of the Postal Service into two components. Postal Services would have continued within the auspices of the U.S. Post Service. Non-postal services and products would be divested and assigned to a new "postal" corporation. In addition, the Postal Rate Commission would have been granted enhanced authority over certain postal products and services. .

While NAPUS has traditionally focused on the committees with direct jurisdiction over the Postal Service, the Appropriations Committee and the Commerce Committee have emerged as new battlegrounds for legislation affecting the Postal Service. Anti-postal members of the Appropriations Committee have attempted to cripple the Postal Service’s foreign mail operations. Most recently, anti-postal forces have used the Commerce Committee in an attempt to restrict the Postal Service’s communications and law enforcement capabilities by restricting its use of the government airwaves. Since our enemies have had little success with their cause before the committees that have expertise on postal matters, they have tried to shift the venue on postal issues to committees that have little or no knowledge of postal issues.

Postmasters should contact their Members of Congress and urge them to oppose any attempt to cripple the Postal Service or hinder its ability to modernize. Furthermore, Postmasters should educate their Members of Congress of the public service provided by the Postal Service and this service relies on the revenue needs of the Postal Service.

 Federal Retirement and the Fiscal Year 2002 Budget

Postmaster retirement security is based upon the soundness of the two major federal retirement systems -- the Civil Service Retirement System (CSRS), and the Federal Employees Retirement System (FERS). Tampering with our retirement cannot be tolerated. Nonetheless, over the past two decades Congress and successive Administrations have looked to our retirement program as a "cash-cow" to help reduce the federal deficit, expands the federal surplus, finance increased government spending, or pays for tax cuts. Fortunately, Postmasters and our allies have succeeded in fighting off most of the attacks against our annuities.

Over the past few years, the Congressional Budget Office (CBO) has suggested that the federal retirement system could be cut to help improve the federal government’s financial position. CBO recommendations could be adopted as part of a broad budget agreement.

Defer retiree cost-of-living-adjustments (COLAs) until a retiree reaches 62 years of age. This would slash federal retiree benefits by $9 billion over the next 10 years.

Penalize CSRS annuitants with a diet-COLA, reducing the adjustment by 1 percent. This proposal would cost each CSRS annuitant approximately $1,600 over a five-year period.

Limit COLAs to the first $680 of the monthly pension and grant one-half of the COLA for the remaining annuity. This proposal would cut federal pensions by $19.4 billion over the next decade.

Change the annuity formula from using the high-3 to using the high-5. This modification would cost the average CSRS annuitant $450 per year and the average FERS annuitant $140 per year.

Reduce the Thrift Savings Plan (TSP) government match from a dollar-for-dollar match on the first 5 percent of salary to a 50-cent to the dollar match. This proposal would cost federal beneficiaries $10.6 billion over the next 10 years.

Clearly, such changes would violate the "contract" between Postmasters and the federal government. Furthermore, the General Accounting Office calculated that COLA delays and reductions that were implemented between the years 1985 and 1994 have already had the effect of reducing COLAs to about 80 percent of inflation. This means that federal and postal retirement benefits have already lost ground to inflation.

Postmasters should contact their Members of Congress to protect the federal retirement system from unfair attacks.

Past Administrations and particular Members of Congress have sought to restrict health coverage or enact legislation to increase the enrollee’s share of the FEHBP premium. Members of Congress have hailed the FEHBP as a model to be emulated by the entire nation. Nevertheless, FEHBP premiums have increased, impacting beneficiaries, the federal government, and the Postal Service. For all these reasons, Postmasters must be legislatively alert. We must be aware of legislative attempts that may purposely or inadvertently harm the FEHBP or increase Postmasters’ health care costs.

A recurring proposal floated that has been suggested by a number of Members of Congress would limit the government contribution to a "fixed-dollar amount" (i.e., a voucher) and indexed to the general inflation rate. Presently, the employer-share is based upon the "weighted-average" increase of all FEHBP plans. This method accounts for medical inflation, while the proposal does not. The Congressional Budget Office projects that FEHBP premiums will increase at twice the rate of inflation, which means that the adoption of the voucher proposal would increase the average FEHBP participant’s share of the premium to 40 percent by 2004. The added cost to enrollees could top $700 in 2005. The premium shift would continue to increase over time. This proposal would hit particularly hard postmaster annuitants who currently pay approximately 28 percent of the total premium and would increase their share of the premium per year in 2004. (Active Postmaster’s share of the premium is decided as part of the "consultation process," but adoption of this proposal would undoubtedly affect the premium.)

Another proposal, which has support among a significant number of Members of Congress, is a plan to burden the FEHBP with Medical Savings Accounts (MSAs). An MSA is a financial tool that would permit a limited number of FEHBP participants to shield health care expenses from taxes. Only non-retired participants who enroll in a high-deductible, low-benefit health plan would be able to set up an FEHBP MSA. It is important to note that postal employees are entitled to contribute to a Flexible Spending Account that permits health care expenditures to be made on a pretax basis. Unlike the MSAs being considered by Congress, the Postal FSA is not contingent upon enrollment in a high-deductible health plan.

Two years ago, the Senate passed "the Patients’ Bill of Rights," which authorized the FEHBP to create an MSA option. Enactment of this provision would have increased Postmaster health costs since young and healthy FEHBP participants would be attracted to the high-deductible MSA option, leaving behind Postmasters and retirees in the comprehensive health plans that adequately provide for our health care needs. This phenomenon, adverse selection, will result in higher premiums for NAPUS members. In addition, the CBO estimated that adoption of MSAs would cost the government money, which must be offset by a reduction in another health care or retirement benefit.

Postmasters should urge their Members of Congress to oppose an FEHBP voucher plan or fixed-dollar contribution plan, should it be proposed.

Postmasters should contact their Members of Congress to oppose FEHBP medical savings accounts.

Over the past twenty years, Postmasters have been unfairly penalized for participating in the federal employee retirement systems. The Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) unfairly reduce the benefits that are entitled to certain federal and postal annuitants. Generally, a federal annuity is fully taxable, while only a limited number of Social Security beneficiaries have their Social Security benefit partially taxed. Furthermore, the 1997 Budget Agreement imposed a discriminatory retirement tax all federal and postal employees.

Retired Postmasters are also burdened with ever-increasing health care premiums. In part, this is the result of annuitants being enrolled in comprehensive Federal Employee Health Benefit Program (FEHBP) plans.

Postmasters support legislation to eliminate the unfair federal and postal employee tax, and request that Members of Congress cosponsor the bills.

Postmasters support legislation to provide retired postmasters with same opportunity to pay for health benefits with pre-tax dollars as active federal and postal employees.

The GPO was enacted as part of the 1977 Social Security Act Amendments and treated government pensions as if they were Social Security benefits. The provision reduces or eliminates the Social Security survivor benefits to which a federal retiree would have been entitled had the individual not been eligible for a civil service annuity. An amount equal to two-thirds of the annuitant’s CSRS benefit reduces the Social Security benefit. During the 106^th Congress, Representative William Jefferson of Louisiana introduced H.R. 1217 and Senator Barbara Mikulski of Maryland submitted S. 717, bills that would have helped to alleviate the impact of the GPO. The bills would have eliminated the offset for annuitants whose combined pension and Social Security benefit is $1,200 per month or less. The two-thirds offset would have applied to the amount more than $1,200. Although House Ways and Means Social Security Subcommittee Chairman Clay Shaw (R-FL) conducted one day of hearings on the GPO, H.R. 1217 died in Committee.

The WEP dates back to the Social Security Act reforms adopted in 1983. The provision altered the formula for calculating Social Security benefits for CSRS annuitants who also worked in a job covered under Social Security. The change affected CSRS retirees who became eligible for their annuity after 1985. The impact of the WEP could reduce Social Security benefits by more than 50 percent. During the 106^th Congress, Representative Barney Frank of Massachusetts introduced H.R. 860 which would have exempted CSRS annuitants whose combined Social Security and CSRS annuities are less than $2,000 per month. The bill would have phased-out the annuity protection as the combined income approaches $3,000 per month.

Except for a very small tax-free portion, federal retirement benefits are fully taxable. Social Security benefits are taxed differently. For example, Social Security benefits are not taxed unless the "modified adjusted gross income" plus one-half of the Social Security benefit exceeds $32,000 for a couple or $25,000 for an individual. If these amounts are exceeded, then up to 50 percent of the Social Security benefit is taxed. Nevertheless, even the wealthiest retirees can be confident that at least 15 percent of their Social Security will be tax-free. Late Representative Bruce Vento of Minnesota introduced H.R. 372 which would have provide federal retirees a tax exemption equal to the maximum Social Security benefit. This exemption would have been subjected to certain income limits.

Postmasters should contact their Representatives to cosponsor legislation to alleviate impact of GPO and WEP, and authorize the pre-tax contribution of FEHBP premiums.