It looks like it’s going to be a busy summer for those of us who follow postal affairs. While postal reform legislation and Postal Service finances remain hot topics, changes to USPS processing and retail networks continue, and the possibility of an exigent (above inflation) rate increase is again on the table. Let’s take a quick look at where we stand on two of these issues:
Postal Service Finances
Through the first seven months of FY2013, the Postal Service had a “controllable” year-to-date (YTD) loss of “only” $131 million. When accruals for retiree healthcare prepayments and workers compensation are included, the total loss was $4 billion. The good news is that revenue is running ahead of the same period last year and the budget for this year. Although continued declines in transactional (First-Class) mail volume led to an overall volume decline of 0.5%, advertising (Standard) mail volume is up 2.9% YTD.
Postal Service management has updated its Five-Year Business Plan to reflect its current financial position. Key elements of the plan include:
- Establishing a USPS health benefit plan independent of the Federal government;
- Refunding of overpayment into the Federal Employee Retirement System (FERS) pension system;
- Adjusting delivery frequency to 6-day packages/5-day mail;
- Continued restructuring of processing and retail networks;
- Driving new revenue through expanded products and services.
The Postal Service projects that enacting all elements of this plan will result in small annual net profits and a reduced debt load by 2017. However, it will need the support of Congress to enact many elements of the plan.
Despite optimism that the House Government Reform Committee and the Senate Governmental Affairs Committee could work together to produce bipartisan, bicameral reform legislation, progress toward comprehensive postal legislation has been painfully slow.
In the last week, Rep. Darrell Issa (R-CA), chairman of the House committee released a “discussion draft” of a postal reform bill, encouraging public comment. While the bill does not incorporate all elements of the USPS Business Plan, it would allow the Postal Service to modify its Saturday delivery schedule, re-amortize pre-payments into the retiree health benefits fund and apply FERS pension overpayments to other employee benefit costs. A central part of the bill would replace the current part-time Board of Governors with a temporary panel of five, full-time executives to oversee restructuring of the agency. This control board would be dissolved when the Postal Service is once again profitable.
Although a bill has not yet been presented by the Senate committee, Chairman Sen. Tom Carper (D-DE) responded to the Issa discussion draft by saying, “[I]t is imperative that Congress and the President come together around a set of meaningful reforms soon. I appreciate Chairman Issa’s efforts to move forward with a proposal to address this imminent threat to the Postal Service. While we differ in our approach in some areas, Chairman Issa and I, and the rest of our colleagues, are united in our effort to restore the Postal Service to solvency and give it the tools it needs to thrive in the years to come. It remains my goal to come up with a bipartisan, bicameral postal reform bill in the coming weeks.”
That’s all for Part 1. Make sure to check back tomorrow for the latest on a possible exigent postage rate increase, changes to the USPS network and whether or not the Postal Service will move forward with its proposed “Tech Credit.”
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