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HomeMy WebLinkAboutStaff Report 4.B 11/4/2013 Aq-eAftacti Itwvw#4..3 R dr. P'LU . a ufe\ \q X858 DATE: November 4, 2013 TO: Honorable Mayor and Members of the City Council FROM: John C. Brown, City Manag SUBJECT: Discussion and Possible Approval of Resolution Supporting the Postal Service Projection Act of 2013. RECOMMENDATION It is recommended that the City Council consider the addition of this item to the agenda; and if added, consider adopting the attached Resolution Supporting the Postal Service Protection Act of 2013. BACKGROUND Pursuant to Rule H (A)(3) of the:Council's,Rules, Policies and Procedures, after the draft agenda has been approved by the City Council, and before the posting of said agenda for the City Council meeting in which the items will be addressed, additional items.shall be placed on said agenda when the City Manager receives a request by two Councilmembers, either verbally or in writing, that an item be added to the.agenda.- An item added in this manner will be addressed by the Council if a majority of the Councilmembers present at the meeting votes to address the item. DISCUSSION The attached requestwas received;from Councilmembers Healy and Harris, asking that this item be agendized for your November 4, 2013 meeting. The attached-documents were provided as part of that correspondence and are also included for the Council's information and consideration. ATTACHMENTS 1. Resolution 2. Requesttfrom,Councilmembers Harris and Healy 3. Fact Sheets and Talking Points Agenda Review: City Attorney Finance Director City Managel ATTACHMENT 1 RESOLUTION SUPPORTING THE POSTAL SERVICE PROTECTION ACT OF 2013 WHEREAS, the Postal Service Protection Act of 2013 would sustain the United States Postal Service and avert'unnecessary closures that hurt communities; and WHEREAS, the United States Postal Service's financial issues are due to unnecessary requirements and regulations imposed on it. The Postal Service Protection Act of 2013 would remove burdensome regulations so the United States Postal Service can manage its budget more effectively and be more competitive with other delivery service providers; and WHEREAS, the Postal Service Protection Act of 2013 would prohibit cuts to Saturday delivery, thus protecting rural communities, small businesses, and senior citizens as well as reducing.the need for customers to seek other delivery options; and WHEREAS, the Postal Service Protection Act of 2013 would give serious consideration to the employment status of the second largest civilian workforce in the country made up of over a half a million people living and working in all of our communities, with over 22%veterans, many with disabilities; and WHEREAS, the Postal Service Protection Act of 2013 would reinstate overnight delivery standards to speed mail delivery and prevent shutdowns of mail sorting centers, and protect. voting by mail throughout California which is now commonplace and will remain essential to our democracy. NOW, THEREFORE BE IT RESOLVED that the,Petaluma City Council supports the Postal Service Protection Act of 2013. BE IT FURTHER RESOLVED that the Petaluma City.Council: • 1. Urges U.S. Senator Barbara Boxer and U.S. Senator Dianne Feinstein to pass the Postal Service Protection Act of 2013, Senate Bill 31 6,.sponsored by Senator Bernard Sanders, that would ensure the modernization and preservation of the United States Postal Service; and 2. Urges U.S. Senator Barbara Boxer and U.S. Senator Dianne Feinstein to oppose any postal reform legislation that;does not end the mandate requiring the USPS to pre-fund future retiree health benefits, does not continue the mandate for 6-day delivery service, does not protect door-to=door delivery as it currently exists, and does not provide additional oversightvand.transparency to the Uriited,States Postal Service's plan to close,relocate. dr•sell.3,270 post offices; and • 3. Shall transmit copies:of this resolution to the President of the United States, to the Majority Leader of the Senate, to both U.S. Senator Barbara Boxer and U.S. Senator Dianne Feinstein, and to thesUr ited States,Postmaster General. 3 ATTACHMENT'2 OGT292013 MEMORANDUM CITY CLERK To: John Brown Subject: Agenda,Request Pursuant to RuleII(A)(3) of the Council's Rules, Policies>and,Procedures, the undersigned hereby request that the following item be added to the agenda for the Council's November'4, 2013 meeting: Discussion and-possible adoption of Resolution in.Support of the Postal Protection Act of 2013. Dated: Octobera8, 2013 1•I 4 M � ' rf�S Dated: October95, 2013 O^ _f ATTACHMENTS . 5--" :`N 671 American Postal Workers Union,AFL-CIO Legislative Fact Sheet: The Postal Service Protection Act,S. 316& H.R. 630 On February 13, 2013, S. 316 was introduced in the US. Senate;by Sen. Bernie Sanders (I-VT), and in the House of Representatives H.R. 630 was introduced,by`Rep. Pete DeFazio (D-OR). The Postal Service Protection Act, as embodied by the bills, is intended to address key issues that adequate postal legislation cannot do without. ,� tf If enacted, the Postal Service Protection Act would grant USPS ., r n; ' ' ; 1 � '!� immediate legislative relief from its current financial crisis by: wr .II ` M '`.• + dilly ''dJ �.. . d—''4,' • Ending the aggressive:and'.unsustainable pre-funding i • "ir i tiiri . mandate that requires the agency to make 75 years of , 1 0 retiree,healthcare benefit payments over a 10 year period—a burden no other government agency or , r, r '�I �t r, 1 Ci, private company is forced to bear. 'L.P. ' F° =?' • Allowing the Postal Service'to recover over-payments made to the Civil Service Retirement System (CSRS) and the Federal Ernployee.Retirement System (FERS). • Re-establishing overnight-delivery standards for first-class mail, which would ensure timely delivery schedules and help keep mail processing facilities open. • Protecting six-day delivery. • Permitting USPS to develop.innovative products and services that would generate new sources of revenue, such as issuing licenses, ending the prohibition.on beer and wine shipments and providing notary services. • Ensuring security for rural post offices by giving the Postal Regulatory Commission (PRC) binding:authority to prevent post offices from being closed based on the effect such closures would have on the community and.employees. Representatives and Senators are urged to support the Postal Service Protection Act which seeks to alleviate USPS from the massive pre-funding mandate which is driving-the agency into insolvency; stop cuts to service'and closures, and restore the Postal Service's ability to remain a viable and competitive institution. February 2013 0 V , ar NUJ [p A.. 4�''4' „� yd °2'�- M •{ �..n �� y� .��� t jd if�tp : ti'l i ���'+��¢ 1S�'' y , A �M1 �4 I a II C yu4'' A,^! L'M "fi �". 1 ... ;: '�`.' '`j C`r �Sp= ae) Department of Legislative and Political Affairs.—National'Association,of Letter Carriers,AFL-CIO a . Gyp, �� 100:Indiana Ave NW — Washington,DC 20001 2144 — 202.393-4695— www.nalc:org ©NALC ' 1bH' <-'}gam February 22,2013 Support S. 316 and ' . H R. 630: The Postal Service Protection Act The Postal Service Protection Act is the solution to the Postal Service's financial crisis 0 ver the past several years,there have beemnumerous Establisfiing'new,revenuetor the Postal Service measures introduced in the House and Senate toaddress the 5.316 and H.R.630 call for an end to prohibiting USPS from providing Postal Se vice's financial condition and to facilitates viable fu- non-postal services.New services could include notary services,the ture for one of,America's most useful and popular institutions.Many of issuanceof licenses; the provision of services for state and local these bills had important components to return;the Postal Service to op- agencies and the shipping of wine and beer.Other countries have had erating as a financially sound company while many others completely success with non-postal services.Post offices in France offer banking miss the mark,favoring efforts to dismantle the Postal Service rather to and insurance services,•in Sweden, post offices physically deliver e- save it.HoweverS:316 and H R.630;both titled The Postal Service mail messages to people who are not online;and post offices in Protection Act"are;the only pieces of legislation that include all the key Switzerland allow users to have their physical mail received, scanned provisions necessary to return the Postal Service'to financial health in and delivered to their esmaif inboxes. both the shod and long terms,while preserving.itsbital networks,high- quality service standards and solid middle-class jobs. These bills also would create an entrepreneurial commission com- Eliminating the future.retiree health benefit pre=funding posed of successful business innovators,representatives of labor and requirement. . small businesses to provide recommendations on how the Postal Serv- The•mosti mmediate problem facing the Postal Service'is,the require- Serv- ice can_generate new revenue to succeed in the 21st century. . ment to pre-fund future retiree health benefits.The Postal.Service is Preventing:the closure of rural post offices the only organization,public or private,that is required by to pre- Currently,the Postal Service is directed to consider the effects of • fund such`benefits.This unfair burden costs USPS between$5A bil- closures on the community and postal employees before closing a lion and$5:8 billion every year,Without the pre-funding requirement, post office.Up to thispoint, USPS has done a poor job reviewing the Postal Service wouldhave had an operational profit between 2007 these impacts. If passed, S7 316 and HR..630 would give the Postal and 2010.If passed,S.316 and H R::630 would•eliminate the USPS's Regulatory Commission binding authority to prevent post unique and unfairlyburdensome pre-funding requirement. office closures that Would adversely affect coma unities;and employ- Returning CSRS and'FERS overpayments to the Postal Service ees:USPS also would be prohibited from considering whether a According.to studies,by the Office of,the.Inspector General and the post office is turning a profit when makingiclosure decisions And Postal Regulatory Commission the Postal Service has overpaid be USPS would be required to inform communities though'newspaper tween$50 billion and$75 billion into its"CSRS'Oension fund.S.316 and magazine announcements when their post offices were being and H.R.630 call for allowing the Postal,Service to recover the over studied for closure:Those announcements would'need to outline the payments by transferring CSRS'assets;paid for by ratepayer and em- reasons for such studies. ployee contributions,(not taxpayer funds),to the Postal Service Retiree Health Benefits Fund.In addition,the bill includesa•proposal•by Presi- Protecting mail-processing facilities dent Obama to return any surplus in tne:postal porno of the FERS S.316 and H.R.630 call for creating strict standards for delivering First pension fund as well These measures would have no effect on any Class Mail on time.This would make it more difficult to close area mail- current or future federal retiree's annuity benefits. processing facilities. Protecting six-day mail delivery S.316 and H.R.630 provide reasonable,fair and responsible ways to Since 1983,Congress has had to annually renew USPS'requirement address the Postal Service and its immediate and long-term health and to maintain six-day mail delivery service in,an appropriations bill:If viability.The NALC urges members of Congress to stand up for pre- passed. S.316 and H.R.630 would establish permanent legislation serving this vital government service by co-sponsoring S.316 and that requires USPS to deliver mail six days a week. H.R.630 today. ' ^ `ONyw��,J c.i,0FA,y f i "r, i�` '4 u �?p '�. °ti r 3 40 I r l , ' VSP av Department of'Legislati'e and Political Affairs—NationalAssociation of Letter Carriers,AFL-CIO 6yg1,, yl �,`S��`� 100Indiana Ave.NW — Washington,DC20001=2144— 202-393-4695 — nAugusgt 21,2013 NALC Urges Opposition to the Postal Reform Act .of' 2013 S. 1486 is Not the Answer' The proposed Postal Reform Act of 2013(S.,1486),a bill intro- do so voluntarily.Even those that do prefund.have set aside much duced by Senators Tom Carper(D DE)and Tom Coburn ess than the Postal Se vice..(See the Towers Watson annual survey (R-OK)in the Senate sets thePostal Se vice;on a direct path to on post-retirement accounting practices and the chart on page 2.) failure.It falls far short of what is needed and is much worse than.the Most companies don'tprefund at all,and no company would sacrifice deeply flawed bill that passed the Senate during the 112th Congress. needed investments and new product development to pre-fund future S 1486 would slowly dismantle the Postal Service's invaluable retail, retiree health benefits.The USPS should be no different. mail processing and last-miledelivery.networks,which are crucial for the booming e-commerce sector,while maintaining a misguided mandate to Press reports have wrongly'suggested that S.1486 eliminates the pre- pre-fund retiree health benefit costs decades in advance.This is the last funding mandate.It does not Instead it replaces a fixed schedule of pay- tf ing Congress should do. ments($5.5-$5.8 billion per year)with a mandate to make both normal cost and amortization cost pre-funding payments starting in 2016. Cutting Saturday delivery,eliminating door delivery for all American busi- nesses;and promoting,the end of door delivery to most American While the bill defers any pre-funding payments until 2016 and grants the households,would send the Postal Service into a death spiral.Slower, Postal Service early access to the Postal Se vice Retiree Health owe:-quality,service.will lead to more lost business from mailers and Benefits Fund'(or PSRHBF; now restricted until 2017 under current therefore to even deeper cuts and an even greater,crisis. law),the newpre-funding payments that begin in 2016 may be larger than the payments under current law.Those payments will remain The pre-funding mandate adopted in 2006 accounts for 80 percent of the unaffordable and will drive the Postal Service into a death spiral.. Postal Services losses since thepayments began in 2007 and 100 per- cent of USPS losses so tar this year:Without the mandate the Postal The scheduled payments under current law are not forgiven;they are Service would have reported a$660 million profit in the third quarter of added to the unfunded liability that must be amortized over the next 2013 on the strength of surging e-commerce package deliveries and a few of decades:While the NALC supports 5.1486 s provisions to pro- 2013 letter mail volume. vide early access to the PSRHBF to pay the,cost of current retiree health premiums and to lower the overall funding target to 80 percent The Postal Service needs real relief from the cnppling and unfair pre- of the unfunded liability,the bill fails to provide measures that would funding mandate and intelligent reforms to help generate new revenue actually reduce the cost of future retiree health benefits.(See NALC as it adapts to the evolving needs of the country.This cannot be President Fredric Rolando'stestimony before the House Oversight accomplished by slashing services and cutting as many as 100,000 and Government Reform Committee in Apnl:)Simply deferring the quality postal iobs;asproposed by S. 1486 The Senate reform debate unaffordable payments a few years down the road sets the,Postal should'instead-start with5i316,.a bill,drafted bySen.BernieSanders Service up for failure. that now has 30 co-sponsors.The Sanders bill would strengthen the Postal Service,not dismantle it. S. 1486'Would`AIIow,USPS to go to 4-day or even 3-day Delivery S. 14861Missesthe:Mark on the+Key Issue In Order to Continue the Pre-funding Mandate —Pre-funding Reform Allowing the Postal Service to eliminate one or more days of delivery The Postal Service has already put aside nearly$50 billion future after just one year makes no business sense.The Postal Service's fi- retiree health benefits,which is enough to pay premiums for decades nances have improved over the past year,proving that these cuts are to come.No private company or public agency in America isrequired not necessary.Eliminating days of delivery would hurt the business, to pre-fund at all,and only about a third of Fortune 1000 companies not improve it. 1 Compared to, private;sector C PER; Funding; the.USES Has Sigri ficahtly"OGerfunded its ,Retiree Healthcare Qbligatioris USPS Retiree:Healthcare Funding vs OPEB Funding for Large S&P 500.Companies US PS RHB USPS l ! 51% Fund':$49.1 a AT&T i+."+'a:;:x7��SfikS*le!+?";�2" 'P�°!RS4 25% billion Deere'&Co -ti Kittim,cs, 1iimc 18% Pfizer ''&1+'1'"tw1:_"-rtaa 15% Caterpillar c, 1t 14% United:Parcel Service(UPS) to.iirAWMILAWIr 10% Verizon 10% Note:.According to a Towers,Watson survey of Fortune 1000 companies,83%of large IBM aza3*^.at:n 9% f firms provide.retireeihealth:benefits. General Electric M0�rvatl?5 8°h A large majority(63%)"donot pre-fund such benefits at all. Exxon Mobil w 6% -) Source:Towers Watson report:Accounting for Pensions and Other Johnson&Johnson 1233°% Postletlrement Bene fits,2012,Reporting Under U.S.GAAP Among the Fortune 1000 Companies Boeing 13 1% -10% 0% 10% 20% 30% 40% 50% 60% "'OPEB"stands for Other Post Employment Benefits Sources:LISPS Financial Statements,Database of OPEB Liabilities for S&P 500 Index companies for year-end 2012,Milliman 2013 Pension Funding Study A third of all mailers say they need Saturday service including ebay would sever the growth;promoting tie between letter carriers and busi- merchants;prescription!drug'managers and weekly newspapers. ness customers:The successful lead generation program known as What company could survive by ignoring athird of its customers?The Customer Corinect is responsible for more than 51.75 billion in new Postal Service must take into account the needs of all of its customers, annual revenue for the.Postal.Service since it was started a decade as well as the service it provides to the American people,Saturday ago This program relies on this tie letter carriers have with their business service is crucial to,the booming e-commerce market Without it,suc- customers. cess for USPS in fastest growing segment of the postal industry will be jeopardized. Business owners rely on the delivery of,important documents and packages every day they expect deliveries to come directly to their Eliminating 80,000"quality full-:and part-time jobs by ceasing Saturday places of business Moving these deliveries to a centralized cluster service is irresponsible,especially if it is done to fulfill the pre-funding box will ensure that USPS competitors will take the business away mandate that no other public or private companyis forced to meet. from the!USPS:Additionally,many business customers are accustomed Cutting even more delivery days would.puttens of thousands of adds- to letter carriers picking up their outgoing mail from inside their tional jobs at risk.At a'timewhenunemploymentremains high and the businesses daily.Conversion of delivery to a centralized cluster box budget sequester has unnecessarily slowed the economic recovery, will take away this convenience and likely result in an even further loss adopting S. 1486 would make matters:worse. in business for the Postal Service. S. 1486iSeeks'fo End Door Delivery The bill also allows the Postal Service,at its own discretion,to unilater- in Favor of.Curb and Cluster;Boxes ally convert tens of millions of home deliveries to neighborhood cluster Undermining the Value of Mail to Mailers,Inconveniencing Busi- boxes and curb delivery.Making mail less convenient will lead mailers nesses and the Elderly,and Putting Affordable Universal Service to send less mail.driving the Postal Service into a deeper crisis Modern- at Risk—in Order to Continue the Pre-funding'Mandate izing the Postal Service requires making the products and services S. 1486 would eliminate door delivery for all American businesses imme- offered by the USPS more convenient for customers,not less so. diately,"in effect mandating an irrational business decision that 2 USPS has anbtiligation to provide affordable'universalservice to all 'funds.However,the bill fails to require the accurate calculation of Americans^S.1486 would undermine the Postal Service's ability to the total postal surplus in the CSRS fund.The Sanders(S.316)bill meet that obligation: does so by implementing the recommendations of a 2010 audit of the. postal CSRS fund conducted for the Postal Regulatory.Commission by S. 1486 Promotes Two-Tiered Workforce the Segal Company,an independent,private sector actuarial services Unfairly Interfering with Colleetive Bargaining to Maintain the firm.(httpa/www.prc.gov/prc-docshome/whatsnew/Report on CSRS Pre:funding Mandate Cost and Benefit Allocation Principles_1122.pdf) 5.,1486 would make eligibility for.the Federal Employees Retirement Systm(FERS)and matching Thhft Savings Plan( SR)dohthbutidns USPS Net Losses In Fiscal'Years 2007-2012 —:now set by law for all federal and postafemployees--subject to collec- tive bargaining for all new USPS employees. • Singling out new postal employees and denying them the same retire- ment °r benefits as all other federal employees is grossly unfair;Postal employees are federal employees,regardless of when they are hired, 3e and they should be offered the same retirement benefits is all other ` _workers comp federal employees. i Adjustments, 20% In addition,the bill gives the Postal Service the right to force unions into immediate negotiations over health benefits in the middle of existing `Operoung contracts;with mandatory arbitration'after 180 days.Blatant Losses,2% interference with the collective bargaining process to advance the position of one side of that process(in this case;management which wants to force postal employees out of FEHBP).is totally unwarranted. The PRC Segal audit found hat the postal portion of the CSRS fund The Postal Service and its unions have successfully negotiated has been charged some$50 billion for benefits that should have been and/or arbitrated labor contracts for more than-40 years without charged to the federal account in CSRS.S.316 would allow the such interference--aprobess that has kept postage rates low, USPSto use the accurately calculated CSRS postal surplus to cover phasedout anytaxpayer subsidies and eliminated any costly strikes the unfunded liability for retiree health and to reduce its outstanding or lock-outs Having Congressitilt the scales in favor of management debt among other options. and against the employees on this or any other contractual area is inap- Any legislation that is truly aimed at giving the Postal service the tools propriate. it needs to modernize and innovate cannot ignore these surplus funds. f Congress makes changes in the law on health benefits or As mentioned,the bill does address the FERS surplus but,it caps the pensions,it should not discriminate against postal employees and it amount the Postal Service may be refunded to$6 billion.The Postal should ensure that both postal labor and postal management support Service should be.refunded the entire amount,as any private sector he changes:Indeed,Congress should embrace the pension company.would:The potential benefit of sensible health care reforms to and health benefit reforms that the entire mailing industry can support alleviate the pre-funding burden is recognized by nearly all postal stake- (management,labor,mailers,etc.),as outlined in the next section. holders.Unfo unatey,S:1486 does very little to address this.Offenng a special one-time,^voluntary enrollment window for Medicare parts A and B,while ignoring Medicare Part D will not produce the kind of savings The real picture of USPS finaiites: needed to significantly reduce the unfunded liability for future retiree Remove pre funding. measurer! health benefits..ln addition,the bill directs OPM to offer new Medigap billions .and the USPS reports a- $330 rmwon,prorit policies,an approach that will not achieve full Medicare'integration and fdcme Mica(yen, will not help resolve the pre-funding-problem. X1$9.87:` s, „r The NALC would support mandatory enrollment in Medicare Parts A -5-2 and B fonpostal employees;and mandateryMedicare Part D coverage Jjune lTDw ;reported by FEHBP plans that cover postal employees so long as the law in- s' "�`rw°'�y eluded a waiver of late enrollment penalties for Medicare Part B and di- -sn source O5P5po°aer "Fr°°"°"` 1,0m rected the OPM to require FEHBP plans to calculate separate postal premiums.These changes would result in a meaningful reduction to S. 1486:Fails'to Adequately AddressPostal'Pensions the unfunded liability for future retiree health benefits and therefore ad- and Healtheare Reforms dress the main cause of the Postal Service's recent financial losses. The NALC has long fought for pension fairness in both the CSRS(Civil S. 1486 Unfairly Treats all Injured Federal Workers Service Retirement System)and FERS pension funds S 1486 does S. 1486 imposes Unfairly Treats discriminatory reforms to the Federal Em- call for OPM to use demographic factors that are unique to postal em- , ployee Compensation Act(FECA)that would leave injured federal ploye ployees in its valuation of the Postal Service's FERS nd CSRS pension 3 R workers with the worst long-term injuries vulnerable to,impovenshment mandate.Cutting services,eliminatingjobs,shrinking the network, when they reach their Social Security retirement age.Injured workers treating new employees unfairly.andpunishing injured workers all who reach,retirement age would see their benefits cut to 50 percent of for the sake of,continued pre-funding is an unacceptable solution their salary at the time of iniury.Injured federal workers"cannot be left be that will destroy the Postal Service.Fixing the pre-funding mandate hind in the midst of a postal reform bill:The NALC welcomes the oppor- and liberating the Postal Service to innovate and to exploit its exist- tunity to be part of a larger and separate discussion to responsibly reform ing networks to.provide new services are the crucial components of the FECA program. true postal reform. Conclusion NALC opposes S.1486 because it fails to achieve these requirements. In order for Congress to successfully,reform the U.S. Postal Service, The nation's letter carriers are ready to work with Congress to pass it must first look to the main cause of,the problems-the pre-funding real reform that will strengthen the Postal Service,not dismantle it. 4 I0