OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS
Report No: NA
Date: 06/05/2003
1. LAW NUMBER: P.L. 108-18 (S. 380)
2. BILL TITLE: Postal Civil Service Retirement System Funding Reform Act
3. BILL PURPOSE: Establishes a new formula for determining United States Postal Service
(USPS) contributions to the Civil Service Retirement System (CSRS).
4. OMB ESTIMATE: P.L. 108-18 corrects an anticipated USPS over-funding of CSRS
retirement benefits. OMB estimates that the law would result in reduced USPS annual
contributions to the CSRS by $18 billion over the FY 2003-2008 period. This would
result in a $3 billion unified-budget cost, because the majority of USPS savings over this
time period would not be outlayed to the public and remain as off-budget savings, largely
offsetting the on-budget costs to the CSRS. Only the amounts saved by USPS in FY
2005 would have a negative effect on the unified budget, because the law requires these
savings be used to continue holding postage rates unchanged instead of used exclusively
to repay outstanding debt to the Treasury.
|
(Fiscal years; in billions of dollars)
|
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
On-Budget.......................
|
3.6
|
2.7
|
2.9
|
2.9
|
3.1
|
3.5
|
Off-Budget.....................
|
-3.6
|
-2.7
|
0
|
-2.9
|
-3.1
|
-3.5
|
Unified-Budget Costs....
|
0
|
0
|
2.9
|
0
|
0
|
0
|
Memorandum:
|
|
|
|
|
|
|
Estimates using updated technical assumptions:
|
On-Budget...................
|
3.4
|
2.7
|
3.1
|
3.2
|
3.5
|
3.9
|
Off-Budget..................
|
-3.4
|
-2.7
|
0
|
-3.2
|
-3.5
|
-3.9
|
Unified-Budget Costs..
|
0
|
0
|
3.1
|
0
|
0
|
0
|
5. CBO ESTIMATE:
|
(Fiscal years; in billions of dollars)
|
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
On-Budget.......................
|
3.5
|
2.7
|
3.0
|
3.0
|
3.2
|
3.6
|
Off-Budget.....................
|
-2.5
|
-0.6
|
0.8
|
-3.0
|
-3.2
|
-3.5
|
Unified-Budget Costs....
|
1.0
|
2.1
|
3.8
|
0.1
|
0.1
|
0.1
|
6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:
Over the period 2003 through 2008, OMB estimates that the unified-budget cost of the
Act is $2.9 billion, while CBO estimates $7.1 billion. OMB’s cost estimate is lower than
CBO primarily due to different baseline assumptions about future rate increases. CBO's
baseline assumes a sizeable rate increase in late 2004, while OMB's baseline instead
reflects future revenue that is driven solely by higher costs and therefore results in a
break-even position. As a result, because this legislation would delay the need for
postage rate increases and reduce future revenues to the Postal Service Fund, CBO's cost
estimate reflects a greater loss of Postal revenues than OMB.