TESTIMONY OF NATIONAL ASSOCIATION OF LETTER CARRIERS, AFL-CIO BEFORE THE SUBCOMMITTEE ON COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE ON POST OFFICE AND CIVIL SERVICE U.S. HOUSE OF REPRESENTATIVES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M01152R000100050024-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: January 4, 2010
• Sequence Number: 24
• Publication Date: February 26, 1985
• Content Type: MISC

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VINCENT R. SOMBROTTO
PRESIDENT
TESTIMONY OF
NATIONAL ASSOCIATION OF LETTER CARRIERS, AFL-CIO
BEFORE THE %
SUBCOMMITTEE ON COMPENSATION AND EMPLOYEE BENEFITS
COMMITTEE ON POST OFFICE AND CIVIL SERVICE
U. S. HOUSE OF REPRESENTATIVES
WASHINGTON, D.C.
FEBRUARY 26; 1985
100 INDIANA AVENUE, N.W.
WASHINGTON, D.C. 20001
202/393-4695
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rlac1am Chair, my name is George Gould, Legislative and
Political Assistant to President Vincent Sombrotto of the
national Association of Letter Carriers, a labor
organization of over 261,000 members who are either
presently employed as city delivery carriers by the U. S.
Postal Service or who are retired from such employment.
President Sombrotto could not appear today due to-.a long
term commitment to attend the 17ALC Council of Presidents'
annual meeting.
I do not need to detail to you today the fact that
postal/federal employee and retiree benefits have been
singled out consistently during periods of budget crisis and
?
cutbacks in spending. Although we are not the cause of the
budget deficit that exists today, letter carriers have
helped to reduce that deficit, while those causing the
deficit are unwilling to make a serious effort. The issue
is fairness.
As you look at the laundry list o proposed cuts in bene its
and programs affecting postal/federal employees, it's easy
to recite the money savings to the budget each of these cuts
re?oresents.
But the'real issue in the '86 budget proposal is people--
individual letter carriers and fanily members directly
affected by each of these proposed cuts. The impact is most
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dramatic when one looks at the out-of-pocket dollar loss or
lifetime annuity loss to a government employee. When you
look at individuals, the rhetoric of the Grace Commission
and those constantly attacking our benefits as "excessive
and overgenerous" disappears.
Consider for example the cuts targeted at those already
retired. A letter carrier with 30 years of service retiring
in Larch, 1985, will receive an annual annuity of $12,547.
If the retiree provides a purvivor annuity, the basic
annuity is reduced by $994.70; the retiree's share of the
health benefit premium reduces that basic annuity by another
$863.88. This brings the retiree's annuity to $899.04 per.
month or $10,788.48 per year. As you are aware, a federal
employee's annuity is subject to income taxes, thus reducing
the amount further.
The current budget proposal would deny this retiree a
cost-of-living adjustment in. 1986; the retiree would lose
approximately $520 in inflation adjustment. Then in 1987
the loss would be further compounded by paying the COLA on
the lower of CPI or federal wage increase--an additional
loss of approximately $165, and capping the COLA on
annuities over $10,000 at 55% of the revised COLA, thus
causing an additional loss of $200 in inflation adjustment.
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Without a change in the current law, by January, 1987, this
retiree would receive $ 1,084 in COLAs based on the
Administration's inflation projections; if enacted into law
this year these budget proposals would reduce that COLA
amount by $ 740. This retiree's modest annuity will be
further eroded because full inflation protection has been
eliminated.
If that isn't enough, the Administration's proposal to
change the health benefit formula would further reduce the
monthly annuity by increasing the retiree-paid portion of
the health premium. Additionally, the Administration's
voucher plan would force retirees as well as active
employees to look for a low cost, low option health plan,
bear the additional costs out of pocket, or worse yet foreco
necessary medical treatment. These proposals changing the
federal employee health benefit plan system directly
threaten the health of our 10 million federal workers and
retirees and their family members covered by the plans.
While the previous proposals affect employees already
retired, there are numerous recommendations that would
directly impact those currently working. For the active
letter carrier, the Administration (management) rrorosals to
change the retirement plan under which this employee was
hired should be illegal. In fact, in the private sector,
this is a violation of the law. As President Reagan
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recently said, the government made a contract with the
people who serve in our armed forces and the government
cannot break that contract. Our people have that same
contract. Increasing the retirement age to 65 means a
letter carrier would have to work 10 years longer, perhaps
as long as 46 years--the maximum retirement benefit of 80
percent is reached at 41 years and 11 months--and contribute
well over $15,000 more into the retirement fund while
receiving reduced benefits.
Of course, a letter carrier could retire at age 55 with 30
years service, but the basic annuity would be reduced by 5%
for each year of early retirement. Therefore, for the
letter carrier retiring in (larch, 1905 that I cited earlier
in the testimony, the basic annuity would be reduced from
$12,647 per year to $6,323.50, less survivor annuity and
health premium, bringing the annual annuity down to
$5,097.27 per year, with the poverty level for an elderly
family of two being $6,023.. Further, remember this is a
letter carrier's retirement income, not a supplement to
other retirement incomes!
Other proposed changes would further reduce this basic
annuity; for example, calculating the annuity on high-5
instead of high-3 and eliminating retirement credit for
unused sick leave. On the latter, let me say this Was a
sound management decision to encourace employees to work and
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not feel they have to use their unused sick leave before
retirement. The proposal is still sound.
The Administration's budget could also affect postal rates,
by eliminating the revenue foregone appropriation for
reduced mail rates for non-profit mailers such as churches,
schools, charities and veterans' Groups. If this
appropriation is. eliminated, the result would double
non-profit mail rates, with devastating effects.
Madam Chair, one additional proposal contained in the
President's FY'35 budget directly affects the Postal
Service. That proposal would require the Postal Service to
dramatically increase its contribution to the Civil Service
Retirement fund. if enacted, the cost in 1986 alone would
be between $218 and $300 million, increasing at a greater
rate for the later years.
Currently, the USPS transmits to OPI' the 14 percent
employer/employee contribution as well as an annual unfunced
liability payment. In 1984, these amounts were:
$1,825,284,000 for the 14% employer/employee contribution;
and $917,204,000 for the annual unfunded liability payment.
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No other federal agency makes a direct contribution to the
unfunded liability!
Madam Chair, as I stated earlier, these budget proposals
affect real people. It is a retired letter carrier with 34
years of service like Joe Eucciero of St. Petersburg,
Florida, whose COLA would be cut. It is the future of
active letter carrier Chris Slocum, a mother of three small
children, of Yakima, Washington, that is endangered if the
retirement contract is broken. And it is the health care
benefits of active letter carrier and father of five, Dan
Rupp of Cleveland, Ohio, whose benefits would be drastically
reduced.
Madam Chair, the examples go on. But the point is the same.
The budget cuts proposed in the FY'86 federal budget are
cuts against real people who serve and have served as
dedicated employees of their government.
I hope this Congress will not allow unconscionable proposals
to be enacted this year or any year.
madam Chair, I will be more than happy to answer any
questions you or the other Members of the Subcommittee micht
wish to ask.
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