The Postal Service Financial Improvement Act of 2019

Overview

The Postal Service Financial Improvement Act of 2019 is a federal law that aims to improve the financial health and stability of the United States Postal Service (USPS). The law was enacted on December 20, 2019, and its provisions are set to take effect in stages.

Key Provisions

• Retirement Funding: The law requires the USPS to prefund retiree health benefits within 10 years, currently valued at $132 billion. This provision is aimed at reducing the Postal Service's financial burden and ensuring its long-term viability.
• Postal Rate Adjustments: The law allows for rate adjustments to be implemented without the need for Congressional approval. This provision aims to give the USPS more flexibility in setting postal rates to stay competitive in the market.
• Postal Service Board of Governors Reform: The law makes changes to the Postal Service Board of Governors, including increasing its size and changing its composition. These reforms aim to improve the board's ability to oversee the USPS and make informed decisions about its operations and finances.

The Postal Service Retiree Health Benefits Fund

Section 102 of the law establishes the Postal Service Retiree Health Benefits Fund, which will be used to pay for retiree health benefits. The fund is expected to be funded by contributions from the USPS, which will replace prefunding with a defined contribution plan.

Investment Management

The law requires the USPS to engage an independent qualified public accountant to audit and provide a report on the financial statements of the investments made pursuant to section 102. The accountants must be certified by the Public Company Accounting Oversight Board (PCAOB) or a state.

Reporting Requirements

The law requires the USPS to submit an annual management report regarding the Fund, which must include:

• A statement of financial position
• A statement of operations
• A statement of cash flows
• A statement on internal accounting and administrative control systems
• The most recent report resulting from an audit of the financial statements of the investments conducted under clause (i)
• Any other comments and information the Secretary determines necessary to inform Congress

Definition of Qualified Professional Asset Manager

The law defines a qualified professional asset manager as an individual or organization that meets certain qualifications, including:

The term 'qualified professional asset manager' has the meaning given that term in section 8438(a).

Implementation Timeline

The provisions of the law are set to take effect in stages. The following timeline outlines key milestones:

• December 20, 2019: Provisions of the law take effect
• October 2020: USPS begins prefunding retiree health benefits
• 2022: USPS completes prefunding and begins using a defined contribution plan
• 2023: Rate adjustments take effect without Congressional approval
• 2025: Postal Service Board of Governors is fully reformed

Conclusion

The Postal Service Financial Improvement Act of 2019 represents a significant shift in the way the USPS approaches its finances and operations. By improving its financial health and stability, the USPS can better serve its customers and continue to provide essential mail services for generations to come.