B-164786, JUN 28, 1971, 50 COMP GEN 863

B-164786, JUN 28, 1971, 50 COMP GEN 863

POSTAL SERVICE, UNITED STATES - APPROPRIATIONS - TRANSFERRED FROM POST OFFICE DEPARTMENT - STATUS ALTHOUGH THE UTILIZATION BY THE POSTAL SERVICE OF OBLIGATED AND UNOBLIGATED APPROPRIATIONS AVAILABLE TO THE POST OFFICE DEPARTMENT ON JULY 1, 1970, THE EFFECTIVE DATE OF THE TRANSITION OF ITS FUNCTIONS TO THE POSTAL SERVICE IS PERMITTED UNDER 39 U.S.C. 2002(A)(2), UNOBLIGATED BALANCES FOR FISCAL YEAR 1970 AND PRIOR YEARS THAT HAD REVERTED TO THE TREASURY PURSUANT TO 31 U.S.C. 701 WOULD REQUIRE AN ACT OF CONGRESS TO BE MADE AVAILABLE TO THE POSTAL SERVICE FOR THE LIQUIDATION OF VALID OBLIGATIONS. HOWEVER, 1971 APPROPRIATIONS NEED NOT BE INCLUDED IN ANY REAPPROPRIATION OF FUNDS SINCE THEY HAD NOT EXPIRED FOR OBLIGATION OR REVERTED TO THE TREASURY. NOTWITHSTANDING 39 U.S.C. 1005(E) REQUIRES THE POSTAL SERVICE TO ASSUME THE OBLIGATION TO PAY FOR ANNUAL LEAVE THAT ACCRUED TO EMPLOYEES BEFORE AND AFTER THE TRANSITION, SINCE SUCH LEAVE IS NOT CHARGEABLE TO THE UNEXPENDED BALANCES OF PRIOR YEAR APPROPRIATIONS TRANSFERRED TO THE SERVICE, THE FEDERAL GOVERNMENT PURSUANT TO 39 U.S.C. 2002(A)(2) IS LIABLE FOR THE PAYMENTS.

TO THE POSTMASTER GENERAL, JUNE 28, 1971:

REFERENCE IS MADE TO LETTER OF JUNE 2, 1971, FROM ASSISTANT POSTMASTER GENERAL J. W. HARGROVE, REQUESTING OUR CONCURRENCE IN CERTAIN GUIDELINES RELATING TO THE TRANSITION OF THE POST OFFICE DEPARTMENT TO THE POSTAL SERVICE ON JULY 1, 1971, PURSUANT TO THE POSTAL REORGANIZATION ACT, PUBLIC LAW 91-375, APPROVED AUGUST 12, 1970.

WITH RESPECT TO SUCH TRANSITION SECTION 2002(A)(2) OF TITLE 39, U.S.C. AS ENACTED BY THE POSTAL REORGANIZATION ACT, PROVIDES THAT -

(2) ALL LIABILITIES ATTRIBUTABLE TO OPERATIONS OF THE FORMER POST OFFICE DEPARTMENT SHALL REMAIN LIABILITIES OF THE GOVERNMENT OF THE UNITED STATES, EXCEPT THAT UPON COMMENCEMENT OF OPERATIONS OF THE POSTAL SERVICE, THE UNEXPENDED BALANCES OF APPROPRIATIONS MADE TO, HELD OR USED BY, OR AVAILABLE TO THE FORMER POST OFFICE DEPARTMENT AND ALL LIABILITIES CHARGEABLE THERETO SHALL BECOME ASSETS AND LIABILITIES, RESPECTIVELY, OF THE POSTAL SERVICE.

AND SECTION 1005(E) OF SUCH TITLE 39 PROVIDES THAT -

SICK AND ANNUAL LEAVE, AND COMPENSATORY TIME OF OFFICERS AND EMPLOYEES OF THE POSTAL SERVICE, WHETHER ACCRUED PRIOR TO OR AFTER COMMENCEMENT OF OPERATIONS OF THE POSTAL SERVICE, SHALL BE OBLIGATIONS OF THE POSTAL SERVICE UNDER THE PROVISIONS OF THIS CHAPTER.

IT IS REPORTED THAT AS OF JUNE 30, 1971, THE POST OFFICE DEPARTMENT WILL HAVE AN UNFUNDED LIABILITY FOR EMPLOYEES' ACCRUED ANNUAL LEAVE IN THE ESTIMATED AMOUNT OF $368 MILLION.

IN A MEMORANDUM DATED MAY 28, 1971, A COPY OF WHICH WAS FURNISHED US, YOUR GENERAL COUNSEL STATES THAT SECTION 2002(A)(2), QUOTED ABOVE, ESTABLISHES THE RULE THAT UNFUNDED LIABILITIES REMAIN WITH THE UNITED STATES, WHILE FUNDED LIABILITIES ARE TRANSFERRED TO THE POSTAL SERVICE. THIS, HE STATES, IS TRUE NOTWITHSTANDING SECTION 1005(E), ALSO QUOTED ABOVE, RELATING TO OBLIGATIONS FOR ACCRUED ANNUAL AND SICK LEAVE, IN THAT SUCH PROVISION WAS PLACED IN THE POSTAL REORGANIZATION ACT IN ORDER TO REASSURE POSTAL EMPLOYEES THAT THEIR ACCUMULATED LEAVE WOULD BE HONORED AND REFLECTS NO JUDGMENT AS TO HOW SUCH LIABILITY WOULD BE FUNDED.

THE GENERAL COUNSEL NOTES, HOWEVER, THAT HIS POSITION IS NOT SHARED BY THE OFFICE OF MANAGEMENT AND BUDGET IN THAT THE FISCAL YEAR 1972 BUDGET APPENDIX, AT PAGE 845, STATES -

AT THE BEGINNING OF 1972 THE POSTAL SERVICE WILL CARRY A LIABILITY OF $368,500 THOUSAND FROM THE FORMER POST OFFICE DEPARTMENT FOR EARNED AND UNUSED ANNUAL LEAVE OF POSTAL EMPLOYEES. IT IS ANTICIPATED THAT THIS LIABILITY WILL BE FUNDED OVER A PERIOD OF YEARS THROUGH THE RATE-MAKING PROCESS.

WITH THIS EXCEPTION, THE 1972 BUDGET PROVIDES FOR FULL FINANCING AND PLACES THE POSTAL SERVICE IN A FINANCIAL POSITION TO MEET ITS OBLIGATIONS AND COMMITMENTS IN A TIMELY MANNER.

IT IS HIS OPINION THAT THE POSITION TAKEN BY THE OFFICE OF MANAGEMENT AND BUDGET IS UNTENABLE IN THAT THERE IS NO JUSTIFICATION FOR ANY "EXCEPTION" TO THE UNFUNDED LIABILITY ROLE CONTAINED IN SECTION 2002(A)(2) AND IT IS QUITE UNREASONABLE FOR FUTURE RATEPAYERS TO HAVE TO PAY FOR PAST ACCUMULATIONS OF ANNUAL LEAVE. HE THEN CONCLUDES THAT UNLESS THE ACCRUED ANNUAL LEAVE CAN BE FUNDED AT THE TIME THE POSTAL SERVICE COMMENCES OPERATIONS, IT CANNOT LAWFULLY BE TRANSFERRED TO OR ASSUMED BY THE POSTAL SERVICE.

SECTION 1(A) OF THE ACT OF JULY 25, 1956, 70 STAT. 647, AS AMENDED, 31 U.S.C. 701(A), PROVIDES AS FOLLOWS:

(A) THE ACCOUNT FOR EACH APPROPRIATION AVAILABLE FOR OBLIGATION FOR A DEFINITE PERIOD OF TIME SHALL BE CLOSED AS FOLLOWS:

(1) ON JUNE 30 OF THE SECOND FULL FISCAL YEAR FOLLOWING THE FISCAL YEAR OR YEARS FOR WHICH THE APPROPRIATION IS AVAILABLE FOR OBLIGATION, THE OBLIGATED BALANCE SHALL BE TRANSFERRED TO AN APPROPRIATION ACCOUNT OF THE AGENCY OR SUBDIVISION THEREOF RESPONSIBLE FOR THE LIQUIDATION OF THE OBLIGATIONS, IN WHICH ACCOUNT SHALL BE MERGED THE AMOUNTS SO TRANSFERRED FROM ALL APPROPRIATION ACCOUNTS FOR THE SAME GENERAL PURPOSES; AND

(2) UPON THE EXPIRATION OF THE PERIOD OF AVAILABILITY FOR OBLIGATION, THE UNOBLIGATED BALANCE SHALL BE WITHDRAWN AND, IF THE APPROPRIATION WAS DERIVED IN WHOLE OR IN PART FROM THE GENERAL FUND, SHALL REVERT TO SUCH FUND, BUT IF THE APPROPRIATION WAS DERIVED SOLELY FROM A SPECIAL OR TRUST FUND, SHALL REVERT, UNLESS OTHERWISE PROVIDE BY LAW, TO THE FUND FROM WHICH DERIVED: PROVIDED, THAT WHEN IT IS DETERMINED NECESSARY BY THE HEAD OF THE AGENCY CONCERNED THAT A PORTION OF THE UNOBLIGATED BALANCE WITHDRAWN IS REQUIRED TO LIQUIDATE OBLIGATIONS AND EFFECT ADJUSTMENTS, SUCH PORTION OF THE UNOBLIGATED BALANCE MAY BE RESTORED TO THE APPROPRIATE ACCOUNTS.

SINCE THE OBLIGATED BALANCES OF SUCH PRIOR YEAR APPROPRIATIONS CAN BE USED ONLY TO LIQUIDATE SUCH PRIOR YEAR OBLIGATIONS AND SINCE THE UNOBLIGATED BALANCES THEREOF HAVE REVERTED TO THE GENERAL FUND OF THE TREASURY, AND THUS ARE NOT AVAILABLE TO THE POST OFFICE DEPARTMENT EXCEPT AS SUCH AMOUNTS MAY BE NEEDED TO LIQUIDATE SUCH PRIOR YEAR OBLIGATIONS, THE UNOBLIGATED BALANCES MAY NOT BE WITHDRAWN FROM THE TREASURY EXCEPT PURSUANT TO AN APPROPRIATION MADE BY LAW. SEE ARTICLE I, SECTION 9, CLAUSE 7, OF THE CONSTITUTION OF THE UNITED STATES. CONSEQUENTLY, AND SINCE SECTION 2002(A)(2) DOES NOT IN SPECIFIC TERMS APPROPRIATE TO THE POSTAL SERVICE THE UNEXPENDED UNOBLIGATED BALANCES OF FISCAL YEAR 1970 AND PRIOR YEAR APPROPRIATIONS MADE TO THE POST OFFICE DEPARTMENT AND RETURNED TO THE GENERAL FUND OF THE TREASURY AS REQUIRED BY LAW, IT MAY NOT BE CONSTRUED AS HAVING DONE SO IN VIEW OF SECTION 9 OF THE ACT OF JUNE 30, 1906, 34 STAT. 764, 31 U.S.C. 627, WHICH PROVIDES THAT NO ACT OF CONGRESS SHALL BE CONSTRUED TO MAKE AN APPROPRIATION OUT OF THE TREASURY OF THE UNITED STATES "UNLESS SUCH ACT SHALL, IN SPECIFIC TERMS, DECLARE AN APPROPRIATION TO BE MADE." SEE 13 COMP. GEN. 77 (1933). THE POSTAL SERVICE, HOWEVER, MAY EXERCISE THE RIGHT TO HAVE SUCH UNOBLIGATED BALANCES RESTORED TO THE EXTENT PROVIDED IN THE CITED ACT OF JULY 25, 1956, FOR THE LIQUIDATION OF VALID OBLIGATIONS AGAINST PRIOR YEAR APPROPRIATIONS. ANNUAL LEAVE BECOMES A VALID OBLIGATION AGAINST THE APPROPRIATIONS CURRENT AT THE TIME IT IS TAKEN.

IN VIEW OF THE FACT THAT UNDER THE PROVISIONS OF SECTION 15(A) OF THE POSTAL REORGANIZATION ACT, 39 U.S.C. PREC. 101 NOTE, THE BOARD OF GOVERNORS COULD HAVE PROVIDED THAT THE POSTAL SERVICE BEGIN OPERATIONS DURING THE COURSE OF A FISCAL YEAR AS WELL AS AT THE BEGINNING OF A FISCAL YEAR, IT SEEMS EVIDENT THAT THE LAGUAGE CONTAINED IN SECTION 2002(A)(2) WAS PRIMARILY INTENDED TO PERMIT THE POSTAL SERVICE TO UTILIZE THE OBLIGATED AND UNOBLIGATED PORTION OF APPROPRIATIONS THAT ON THE DATE OF TRANSITION WERE OTHERWISE AVAILABLE TO THE POST OFFICE DEPARTMENT IN ORDER THAT THE POSTAL SERVICE MIGHT LIQUIDATE THE OBLIGATIONS INCURRED AGAINST SUCH APPROPRIATIONS AND THAT IT MIGHT FINANCE ITS OPERATIONS TO THE END OF THE FISCAL YEAR FROM THE UNOBLIGATED PORTION.

IT IS OUR VIEW THAT THE EXPRESS PROVISIONS OF SECTION 1005(E) REQUIRE THAT THE POSTAL SERVICE ASSUME THE OBLIGATION TO PAY FOR ANNUAL LEAVE ACCRUING BOTH BEFORE AND AFTER COMMENCEMENT OF OPERATIONS OF THE POSTAL SERVICE NOTWITHSTANDING THAT SUCH SECTION DOES NOT PROVIDE ANY FUNDING THEREFOR. SINCE THE LIABILITY FOR ACCRUED ANNUAL LEAVE IS NOT CHARGEABLE TO UNEXPENDED BALANCES OF PRIOR YEAR APPROPRIATIONS TRANSFERRED TO THE POSTAL SERVICE, SUCH LIABILITY REMAINS A LIABILITY OF THE FEDERAL GOVERNMENT AS SPECIFICALLY PROVIDED IN SECTION 2002(A)(2), QUOTED ABOVE.

WHAT IS SAID ABOVE IS APPLICABLE TO THE UNOBLIGATED BALANCES OF FISCAL YEAR 1970 AND PRIOR APPROPRIATIONS. THE ANNUAL APPROPRIATIONS FOR FISCAL YEAR 1971, HOWEVER, HAD NOT EXPIRED FOR OBLIGATION NOR BEEN RETURNED TO THE TREASURY AT THE TIME THE POSTAL REORGANIZATION ACT WAS ENACTED AND IT IS NOT NECESSARY THAT A CURRENT APPROPRIATION BE REAPPROPRIATED IN ORDER TO BE MADE AVAILABLE, UNDER AUTHORITY OF A LATER LAW, FOR PURPOSES OTHER THAN THOSE SPECIFIED WHEN THE APPROPRIATION ACT WAS PASSED. SEE 23 COMP. DEC. 167, 171 (1916). IT IS OUR VIEW, THEREFORE, THAT BOTH THE OBLIGATED AND UNOBLIGATED BALANCES OF THE ANNUAL APPROPRIATIONS FOR THE FISCAL YEAR 1971 WILL BE AVAILABLE TO THE POSTAL SERVICE.

IF, AS INDICATED BY YOUR GENERAL COUNSEL, IT IS FELT THAT IT WOULD BE QUITE UNREASONABLE FOR FUTURE RATEPAYERS TO HAVE TO PAY FOR PAST ACCUMULATIONS OF ANNUAL LEAVE AS INDICATED IN THE 1972 BUDGET APPENDIX, AN ALTERNATIVE WOULD BE TO REQUEST APPROPRIATIONS THEREFOR PURSUANT TO SECTION 2004 OF THE REVISED TITLE 39 WHICH READS AS FOLLOWS:

SUCH SUMS AS ARE NECESSARY TO INSURE A SOUND FINANCIAL TRANSITION FOR THE POSTAL SERVICE AND A RATE POLICY CONSISTENT WITH CHAPTER 36 OF THIS TITLE ARE HEREBY AUTHORIZED TO BE APPROPRIATED TO THE FUND WITHOUT REGARD TO FISCAL YEAR LIMITATION.

WE EXPRESS NO OPINION AS TO WHETHER THERE IS A REAL NEED TO FUND THE ACCRUED LIABILITY FOR ANNUAL LEAVE NOR, IF A NEED THEREFOR EXISTS, THE MANNER IN WHICH IT SHOULD BE FUNDED.