Budget Issues

Pursuant to a congressional request, GAO reviewed the Department of Labor's treatment of Postal Service (USPS) workers compensation costs, focusing on: (1) the advisability of transferring revenues from the Postal Service's revolving fund to a dedicated trust fund; and (2) whether such a fund should be treated on-budget.

GAO found that: (1) USPS routinely includes the accrued costs of workers compensation benefits in its rate structure; (2) such costs have exceeded benefit payments by about $4 billion since 1982; (3) rather than using the accrued costs as reimbursement funds for Labor, USPS has used them for other operating costs and investments; (4) establishing a trust fund to reserve these and future revenues for workers' compensation would not affect USPS ability to reimburse Labor or postal rates; (5) USPS noted that denying it the use of funds generated as a result of cost accrual by dedicating a trust fund would decrease management flexibility, increase costs, and constitute differential treatment; and (6) creating a trust fund would be a policy decision to either curtail or continue USPS authority to use those accrued balances for other purposes. GAO believes that: (1) USPS should set aside funds for other expenses if accrued costs generate cash in excess of current needs; and (2) all federal activities, including USPS, should be on-budget and counted in annual budget deficit or surplus totals.