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114th Congress  }                                       {  Rept. 114-859
                        HOUSE OF REPRESENTATIVES
 2d Session     }                                       {    Part 1

======================================================================



 
            POSTAL SERVICE FINANCIAL IMPROVEMENT ACT OF 2016

                                _______
                                

December 8, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Chaffetz, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 5707]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 5707) to amend title 5, United 
States Code, to provide for certain index fund investments from 
the Postal Service Retiree Health Benefits Fund, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     2
Section-by-Section...............................................     3
Explanation of Amendments........................................     4
Committee Consideration..........................................     4
Roll Call Votes..................................................     5
Application of Law to the Legislative Branch.....................     5
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     5
Statement of General Performance Goals and Objectives............     5
Duplication of Federal Programs..................................     5
Disclosure of Directed Rule Makings..............................     5
Federal Advisory Committee Act...................................     5
Unfunded Mandate Statement.......................................     5
Earmark Identification...........................................     6
Committee Estimate...............................................     6
Budget Authority and Congressional Budget Office Cost Estimate...     6
Changes in Existing Law Made by the Bill, as Reported............     8

                     Committee Statement and Views


                          PURPOSE AND SUMMARY

    H.R. 5707, the Postal Service Financial Improvement Act of 
2016, would require the Secretary of the U.S. Department of the 
Treasury to invest part of the Postal Service Retiree Health 
Benefits Fund (Fund) in index funds modeled after the asset 
allocation investment fund established by the Federal 
Retirement Thrift Investment Board (FRTIB) with the longest 
investment horizon. H.R. 5707 would limit total investments 
from the Fund into index funds to 25 percent of the total value 
of the Fund for the first five years after enactment of H.R. 
5707 and would limit investments to 30 percent of the Fund 
thereafter. H.R. 5707 would require that all money from the 
Fund invested in index funds be managed by one or more 
qualified professional asset managers.

                  BACKGROUND AND NEED FOR LEGISLATION

    Under current law, the U.S. Postal Service is required to 
prefund its accrued liabilities for retiree health care 
expenses. While the Postal Service will default on its sixth 
straight annual payment into the Postal Service Retiree Health 
Benefits Fund (Fund), the Fund held $50.35 billion as of 
September 30, 2015.\1\ Over the last three fiscal years (2013-
2015), the Postal Service earned an average of 3.43 percent in 
interest on those assets.\2\
---------------------------------------------------------------------------
    \1\U.S. Postal Serv., Annual Report on Form 10-K For the Fiscal 
Year Ended September 30, 2015, at 26 (Form 10-K) (Nov. 13, 2015) 
available at http://about.usps.com/who-we-are/financials/10k-reports/
fy2015.pdf.
    \2\Staff calculation based on U.S. Postal Serv., Annual Report on 
Form 10-K For the Fiscal Year Ended September 30, 2015, at 27 (Form 10-
K) (Nov. 13, 2015) available at http://about.usps.com/who-we-are/
financials/10k-reports/fy2015.pdf; U.S. Postal Serv., Annual Report on 
Form 10-K For the Fiscal Year Ended September 30, 2013, at 39 (Form 10-
K) (Nov. 15, 2013) available at http://about.usps.com/who-we-are/
financials/10k-reports/fy2013.pdf.
---------------------------------------------------------------------------
    The Fund achieved this relatively low rate of return 
because current law requires Fund assets to be invested in 
long-term, special-issue U.S. Treasury securities with 
maturities of up to 15 years.\3\ These securities currently 
have interest rates that vary from 1.38 percent to 5 percent, 
and the average interest rates have been in decline over the 
last several years.\4\ Importantly, while Treasury securities 
have proven to be reliable investments, rates of return on 
these investments have not kept pace with the growth of retiree 
health care liability. In fiscal year 2015, the retiree health 
care liability grew by $7.422 billion, but the Fund earned only 
$1.495 billion from its investments in U.S. Treasury 
securities.\5\
---------------------------------------------------------------------------
    \3\Supra note 1, at 27.
    \4\Id.
    \5\Id.
---------------------------------------------------------------------------
    H.R. 5707 seeks to improve the investment return for Fund 
assets by directing the Secretary of the Treasury to invest 25 
percent of the Fund's assets in index funds modeled after the 
Lifecycle funds (L funds) developed by the FRTIB for the Thrift 
Savings Plan (TSP). L funds are tailored to specific retirement 
time horizons, with individual funds dedicated to specific 
decades, and are designed to invest more conservatively as the 
target time horizon approaches. At every stage, L funds are 
designed to be highly diversified to limit volatility. Under 
this framework, the current longest-term fund, the L2050 fund, 
earned an average return of 9.83 percent over fiscal years 
2013-2015, nearly three times the rate of return received by 
the Postal Service from its current investments.\6\
---------------------------------------------------------------------------
    \6\Staff calculation based on Fed. Retirement Thrift Investment 
Bd., Share Price History, available at https://www.tsp.gov/
InvestmentFunds/FundPerformance/index.html.
---------------------------------------------------------------------------
    Under H.R. 5707, the Secretary will be tasked with 
utilizing one or more qualified professional asset managers to 
invest as soon as practicable 25 percent of the Fund in index 
funds modeled after the latest target date L fund, currently 
the L2050 fund. To ensure proper oversight, the Secretary is 
required to secure an independent qualified public accountant 
to audit the financial statements of the investments and report 
to Congress on the management of the investments annually.
    Additionally, in selecting asset managers and developing 
investment guidelines, the Secretary is directed to consult 
with the Postal Service Retiree Health Benefits Fund Investment 
Committee (Investment Committee). The Investment Committee, 
which would be established by H.R. 5707, would be comprised of 
the Secretary, the Chairman of the Postal Service Board of 
Governors, the Chairman of the FRTIB, and two members appointed 
by the President with backgrounds in the management of 
financial investments to represent the interests of Postal 
Service employees and annuitants. Five years after the date of 
enactment of this legislation, the Investment Committee would 
have the discretion to raise the investment cap from 25 percent 
up to a maximum of 30 percent.
    Allowing the Fund to invest in private securities in this 
manner would make this Fund's investments similar to the 
investments of other large federal sector benefit programs, 
such as the National Railroad Retirement Investment Trust 
(NRRIT), which covers railroad employee retirement costs. While 
NRRIT investment was previously limited to U.S. government 
securities, the Railroad Retirement and Survivor's Improvement 
Act of 2001 authorized the NRRIT to diversify its investment 
strategy.

                          LEGISLATIVE HISTORY

    H.R. 5707, the Postal Service Financial Improvement Act of 
2016, was introduced by Rep. Stephen Lynch (D-MA) on July 11, 
2016, and referred to the Committee on Oversight and Government 
Reform. On July 12, 2016, the Committee ordered the bill 
favorably reported without amendment by voice vote.

                           Section-by-Section


Section 1. Short title

    Designates the short title of the bill as the ``Postal 
Service Financial Improvement Act of 2016.''

Section 2. Investment of the Postal Service Retiree Health Benefits 
        Fund

    Amends section 8909a(c) of title 5, United States Code, by 
making the current 8909a(c) paragraph one and adding a second 
paragraph.
    Subparagraph (A) of paragraph (2) requires the Secretary of 
the Treasury (Secretary) to invest 25 percent of the Postal 
Service Retiree Health Benefits Fund into index funds modeled 
after the Thrift Savings Plan lifecycle funds, which are 
established under the parameters of subparagraphs (B), (C), 
(D), and (E) of section 8438(b)(1) of title 5, United States 
Code. In doing so, the Secretary is required to consult with 
one or more qualified professional asset managers.
    Subparagraph (B) of paragraph (2) requires the Secretary to 
consult with the ``Postal Service Retiree Health Benefits Fund 
Investment Committee'' when taking all actions described in 
subparagraph (A).
    Subparagraph (C) of paragraph (2) establishes the ``Postal 
Service Retiree Health Benefits Fund Investment Committee'' 
(``Committee''), which will consist of: (1) the Secretary; (2) 
the Chairman of the Board of Governors of the Postal Service; 
(3) the Chairman of the Federal Retirement Thrift Investment 
Board; and (4) two presidentially-appointed members to 
represent the interests of the Postal Service employees and 
annuitants. The two presidentially appointed members will serve 
three-year terms. This subparagraph requires that these members 
have experience and expertise in managing financial investments 
and Postal Service employee benefits. This subparagraph also 
requires the Committee to uphold the same fiduciary duty 
required with respect to the Thrift Savings Fund.
    Subparagraph (D) of paragraph (2) requires an annual audit 
of the financial statements pertaining to the investments made 
under subparagraph (A). The Secretary must ensure that the 
audit is performed by a qualified public accountant. The 
Secretary shall also submit an annual management report to 
Congress, including a report of the aforementioned audit. The 
Secretary's annual management report shall also include the 
audit report, a statement of financial position, a statement of 
operations, a statement of cash flows, a statement on internal 
accounting and administrative control systems, and any other 
comments necessary to inform Congress about the operations and 
financial condition of the investments.
    Subparagraph (E) of paragraph (2) defines specific terms 
used throughout paragraph 2. ``Specified percentage'' means 25 
percent of the current available portions--portions not 
immediately required to pay for retiree health care--of the 
Postal Service Retiree Health Benefits Fund. After five years, 
the Committee can specify a higher percentage of the Fund, but 
that percentage cannot exceed 30 percent. The subparagraph also 
defines a ``qualified professional asset manager'' with the 
meaning given to that term in section 8438(a) of title 5, 
United States Code.

                       Explanation of Amendments

    No amendments to H.R. 5707 were offered or adopted during 
Full Committee consideration of the bill.

                        Committee Consideration

    On July 12, 2016 the Committee met in open session and 
ordered reported favorably the bill, H.R. 5707, by voice vote, 
a quorum being present.

                            Roll Call Votes

    No roll call votes were requested or conducted during Full 
Committee consideration of H.R. 5707.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill provides for certain index fund investments from the 
Postal Service Retiree Health Benefits Fund. As such this bill 
does not relate to employment or access to public services and 
accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goal and objective of the bill is to provide for certain index 
fund investments from the Postal Service Retiree Health 
Benefits Fund.

                    Duplication of Federal Programs

    No provision of this bill establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting this bill does not 
direct the completion of any specific rule makings within the 
meaning of 5 U.S.C. 551.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    This bill does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                           Committee Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
this bill. However, clause 3(d)(2)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for this bill from the Director of 
Congressional Budget Office:

                                                  October 20, 2016.
Hon. Jason Chaffetz,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5707, the Postal 
Service Financial Improvement Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5707--Postal Service Financial Improvement Act of 2016

    Summary: CBO estimates that enacting H.R. 5707 would cost 
about $4.4 billion over the 2017-2026 period because funds from 
a government account would be transferred to a privately 
operated investment fund. Pay-as-you-go procedures apply 
because that transfer would increase direct spending. Enacting 
the bill would not affect revenues.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits by more than 
$5 billion in any of the four consecutive 10-year periods 
beginning in 2027.
    H.R. 5707 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 5707 is shown in the following table. 
The costs of this legislation fall within budget function 550 
(health).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 By fiscal year, in millions of dollars--
                                                --------------------------------------------------------------------------------------------------------
                                                   2017    2018    2019    2020    2021    2022    2023    2024    2025     2026    2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      INCREASES OR DECREASES (-) IN DIRECT SPENDING
 
Estimated Budget Authority.....................   11,940       0       0       0       0       0       0       0       0    -7,533     11,940      4,407
Estimated Outlays..............................   11,940       0       0       0       0       0       0       0       0    -7,533     11,940      4,407
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of cstimate: The Postal Accountability and 
Enhancement Act (Public Law 109-435) established the Postal 
Service Retiree Health Benefits Fund (PSRHBF); the fund is 
administered by the Office of Personnel Management (OPM) and 
currently has a balance of $51 billion. Beginning in fiscal 
year 2017, the PSRHBF will be used to pay the government's 
share of health insurance premiums for retirees of the Postal 
Service (USPS), which CBO projects will total about $4 billion 
in 2017. PSRHBF assets currently consist solely of U.S. 
government securities. H.R. 5707 would direct the Department of 
the Treasury to use professional asset managers to invest about 
25 percent of the available balances of the fund in equity or 
bond index funds.
    CBO expects that the Department of the Treasury would 
contract with a private entity to invest the PSRHBF balances in 
one or more privately operated investment funds. The current 
budgetary treatment of the investment of federal funds in non-
Treasury financial instruments is specified in Circular A-11, 
published by the Office of Management and Budget, which states 
that the purchase of private securities should be recorded as 
an outlay at the time of the purchase. Thus, investments under 
H.R. 5707 would be classified as an outlay in 2017, increasing 
direct spending. Based on the current balance in the PSRHBF, 
CBO estimates that the Treasury would invest about $12 billion.
    In subsequent years the balance of the PSRHBF would decline 
as it is used to pay premiums for USPS retirees. Under the 
bill, CBO estimates that the PSRHBF would exhaust the balances 
held with the Treasury by 2026 and about $7.5 billion would 
need to be transferred back into the Treasury that year from 
the privately operated investment funds to sufficiently 
replenish the fund balance. The A-11 specifies that such 
transfers should be treated as offsetting receipts, which would 
lower outlays.
    In addition, assuming enactment of the bill by the end of 
calendar year 2016, and based on information from the 
Department of the Treasury about the anticipated fees that 
would have to be paid to private investors, CBO estimates that 
it would cost about $4 million in fiscal year 2017 and $74 
million over the 2017-2026 period. We expect those amounts 
would be paid from investment earnings on the initial $12 
billion expenditure and the cost of those fees is not reflected 
in this estimate.
    With the potential for greater rates of return, government 
investments in private securities would increase the expected 
value of budgetary resources, but such investments also would 
expose the government, future taxpayers, and beneficiaries of 
federal programs to greater risk. When that risk is taken into 
account, the returns on private securities would be no greater 
than the returns on government securities, CBO estimates, so 
enacting H.R. 5707 would have no significant effect on 
investment returns for the PSRHBF.
    H.R. 5707 would direct that the PSRHBF funds invested with 
private asset managers be considered a means of financing the 
federal deficit and not an expenditure. For this cost estimate, 
CBO did not follow this scoring directive because current 
budget laws and administrative procedures require that 
investments be accounted for as expenditures.
    H.R. 5707 also would require the Department of the Treasury 
to hire an independent public accountant each year to audit the 
financial statements of the investments required by the bill 
and to prepare a report for the Congress on the performance of 
the new investments. Based on the costs of similar activities, 
CBO estimates that the audits and reports, as well as increased 
administrative costs for OPM, would cost less than $500,000 
annually, subject to the availability of appropriated funds.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

   CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5707, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM ON JULY 12, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 By fiscal year, in millions of dollars--
                                                --------------------------------------------------------------------------------------------------------
                                                   2017    2018    2019    2020    2021    2022    2023    2024    2025     2026    2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact.................   11,940       0       0       0       0       0       0       0       0    -7,533     11,940      4,407
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits by more than $5 billion 
in any of the four consecutive 10-year periods beginning in 
2027.
    Intergovernmental and private-sector impact: H.R. 5707 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Mark Grabowicz; Impact 
on State, Local, and Tribal Governments: Zachary Byrum; Impact 
on the Private Sector: Paige Piper/Bach.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *


PART III--EMPLOYEES

           *       *       *       *       *       *       *


SUBPART G--INSURANCE AND ANNUITIES

           *       *       *       *       *       *       *


CHAPTER 89--HEALTH INSURANCE

           *       *       *       *       *       *       *


Sec. 8909a. Postal Service Retiree Health Benefit Fund

  (a) There is in the Treasury of the United States a Postal 
Service Retiree Health Benefits Fund which is administered by 
the Office of Personnel Management.
  (b) The Fund is available without fiscal year limitation for 
payments required under section 8906(g)(2)(A).
  [(c) The Secretary] (c) (1) Subject to paragraph (2), the 
Secretary of the Treasury shall immediately invest, in 
interest-bearing securities of the United States such currently 
available portions of the Fund as are not immediately required 
for payments from the Fund. Such investments shall be made in 
the same manner as investments for the Civil Service Retirement 
and Disability Fund under section 8348.
  (2)(A) The Secretary of the Treasury shall immediately invest 
a specified percentage of the Fund, using one or more qualified 
professional asset managers, in index funds modeled after those 
established under subparagraphs (B), (C), (D) and (E) of 
section 8438(b)(1). The Secretary shall ensure, to the maximum 
extent practicable, that the investment replicates the 
performance of the longest-term target date asset allocation 
investment fund established by the Federal Retirement Thrift 
Investment Board. Funds invested pursuant to this paragraph 
shall be considered a means of financing.
  (B) In exercising authority under subparagraph (A), including 
in the selection of specific qualified professional asset 
managers and in the development of specific investment 
guidelines to meet the requirement of such subparagraph, the 
Secretary shall consult with the Postal Service Retiree Health 
Benefits Fund Investment Committee.
  (C)(i) There is established a Postal Service Retiree Health 
Benefits Fund Investment Committee that shall consist of--
                  (I) the Secretary;
                  (II) the Chairman of the Board of Governors 
                of the United States Postal Service;
                  (III) the Chairman of the Federal Retirement 
                Thrift Investment Board; and
                  (IV) 2 members to represent the interests of 
                Postal Service employees and annuitants who--
                          (aa) are appointed by the President;
                          (bb) have experience and expertise in 
                        the management of financial investments 
                        and Postal Service employee benefits; 
                        and
                          (cc) shall serve for a term of 3 
                        years.
  (ii) The Postal Service Retiree Health Benefits Fund 
Investment Committee and each member of such Committee shall be 
subject to the requirements of subsections (b)(1) and (c)(2) of 
section 8477, in the same manner as applied to a fiduciary with 
respect to the Thrift Savings Fund under such subsections.
  (D)(i) The Secretary shall annually engage an independent 
qualified public accountant to audit the financial statements 
of the investments made pursuant to subparagraph (A).
  (ii) The Secretary shall submit an annual management report 
to the Congress not later than 180 days after the end of the 
each fiscal year that includes--
          (I) a statement of financial position;
          (II) a statement of operations;
          (III) a statement of cash flows;
          (IV) a statement on internal accounting and 
        administrative control systems;
          (V) the report resulting from an audit of the 
        financial statements of the investments conducted under 
        clause (i); and
          (VI) any other comments and information necessary to 
        inform the Congress about the operations and financial 
        condition of the investments.
  (E) In this paragraph--
          (i) ``specified percentage'' means 25 percent of the 
        currently available portions of the Fund as are not 
        immediately required for payments from the Fund, except 
        that the Postal Service Retiree Health Benefits Fund 
        Investment Committee may specify a higher percentage, 
        not to exceed 30 percent, not earlier than 5 years 
        after the date of enactment of the Postal Service 
        Financial Improvement Act of 2016, and as appropriate 
        thereafter; and
          (ii) ``qualified professional asset manager'' has the 
        meaning given that term in section 8438(a).
  (d)(1) Not later than June 30, 2007, and by June 30 of each 
succeeding year, the Office shall compute the net present value 
of the future payments required under section 8906(g)(2)(A) and 
attributable to the service of Postal Service employees during 
the most recently ended fiscal year.
  (2)(A) Not later than June 30, 2007, the Office shall 
compute, and by June 30 of each succeeding year, the Office 
shall recompute the difference between--
          (i) the net present value of the excess of future 
        payments required under section 8906(g)(2)(A) for 
        current and future United States Postal Service 
        annuitants as of the end of the fiscal year ending on 
        September 30 of that year; and
          (ii)(I) the value of the assets of the Postal Retiree 
        Health Benefits Fund as of the end of the fiscal year 
        ending on September 30 of that year; and
          (II) the net present value computed under paragraph 
        (1).
  (B) Not later than June 30, 2017, the Office shall compute, 
and by June 30 of each succeeding year shall recompute, a 
schedule including a series of annual installments which 
provide for the liquidation of any liability or surplus by 
September 30, 2056, or within 15 years, whichever is later, of 
the net present value determined under subparagraph (A), 
including interest at the rate used in that computation.
  (3)(A) The United States Postal Service shall pay into such 
Fund--
          (i) $5,400,000,000, not later than September 30, 
        2007;
          (ii) $5,600,000,000, not later than September 30, 
        2008;
          (iii) $1,400,000,000, not later than September 30, 
        2009;
          (iv) $5,500,000,000, not later than September 30, 
        2010;
          (v) $5,500,000,000, not later than August 1, 2012;
          (vi) $5,600,000,000, not later than September 30, 
        2012;
          (vii) $5,600,000,000, not later than September 30, 
        2013;
          (viii) $5,700,000,000, not later than September 30, 
        2014;
          (ix) $5,700,000,000, not later than September 30, 
        2015; and
          (x) $5,800,000,000, not later than September 30, 
        2016.
  (B) Not later than September 30, 2017, and by September 30 of 
each succeeding year, the United States Postal Service shall 
pay into such Fund the sum of--
          (i) the net present value computed under paragraph 
        (1); and
          (ii) any annual installment computed under paragraph 
        (2)(B).
  (4) Computations under this subsection shall be made 
consistent with the assumptions and methodology used by the 
Office for financial reporting under subchapter II of chapter 
35 of title 31.
  (5)(A)(i) Any computation or other determination of the 
Office under this subsection shall, upon request of the United 
States Postal Service, be subject to a review by the Postal 
Regulatory Commission under this paragraph.
  (ii) Upon receiving a request under clause (i), the 
Commission shall promptly procure the services of an actuary, 
who shall hold membership in the American Academy of Actuaries 
and shall be qualified in the evaluation of healthcare 
insurance obligations, to conduct a review in accordance with 
generally accepted actuarial practices and principles and to 
provide a report to the Commission containing the results of 
the review. The Commission, upon determining that the report 
satisfies the requirements of this subparagraph, shall approve 
the report, with any comments it may choose to make, and submit 
it with any such comments to the Postal Service, the Office of 
Personnel Management, and Congress.
  (B) Upon receiving the report under subparagraph (A), the 
Office of Personnel Management shall reconsider its 
determination or redetermination in light of such report, and 
shall make any appropriate adjustments. The Office shall submit 
a report containing the results of its reconsideration to the 
Commission, the Postal Service, and Congress.
  (6) After consultation with the United States Postal Service, 
the Office shall promulgate any regulations the Office 
determines necessary under this subsection.

           *       *       *       *       *       *       *