We have audited the accompanying Reclassified Financial Statements of the U.S. Postal Service which comprises the Government-wide Treasury Account Symbol Adjusted Trial Balance System (GTAS) Reconciliation Report – Reclassified Balance Sheet as of September 30, 2020, and the related GTAS Reconciliation Reports – Reclassified Statement of Net Cost and Reclassified Statement of Changes in Net Position, for the year then ended (hereinafter referred to as reclassified financial statements) and accompanying Note 44.
The U.S. Postal Service participates in three retirement plans: the Civil Service Retirement System (CSRS), the Federal Employees Retirement System (FERS), and the Postal Service Retiree Health Benefits (RHB). The first two are pension plans and the third is set up to fund the Postal Service’s share of RHB premiums. The OPM administers these programs, including measurement of liabilities.
The Postal Service is required to contribute to FERS at rates specified by OPM and to make amortization payments for the unfunded liability.5 It is also required to make amortization payments to pay down the unfunded liability of CSRS when OPM determines that such payments are necessary. The Postal Service has not made the required payments to amortize the unfunded liabilities of FERS and CSRS.6
PAEA established the Postal Service Retiree Health Benefit Fund (PSRHBF) and required the Postal Service to prefund retiree health benefits from FY 2007 through FY 2016. Beginning in FY 2012, the Postal Service defaulted on the statutorily mandated prefunding payments. In FY 2017, the PSRHBF began funding the Postal Service share of retirement benefit premiums and the Postal Service was required to begin paying normal costs7 and amortize the unfunded liability; the Postal Service did not make any required retiree health benefits payments from FY 2017 through FY 2020.
As of September 30, 2020, the Postal Service has defaulted on the required payments of $63.2 billion for the pension and health benefits programs. OPM stated in their FY 2020 invoices for CSRS, FERS and PSRHBF that, “starting FY 2020, OPM will report and recognize the uncollected $63.2 billion contributions receivable from the Postal Service as a $0 realizable value as clarified in the new FASAB Technical Bulletin (TB) 2020-1 (Loss Allowance on Intragovernmental Receivables).”
The Postal Service has stated that, since it still has a legal obligation to make these payments, it has not made changes to its accounting policy and continues to report $63.2 billion as current liabilities.