USPS Compromise May Chop One Delivery Day
Amidst continued U.S. Postal Service claims that it will be insolvent in September as a result of declines in mail volume, increases in costs, and managing a Congressional mandate, part of resolving the financial strain may result in only five days of weekly USPS mail delivery instead of six.
Earlier this month the USPS reported that it ended its third quarter of fiscal year 2011 (April 1 to June 30) with a net loss of $3.1 billion, compared to a net loss of $3.5 billion for the same period last year. USPS operating revenue was $15.8 billion, compared to $16 billion in the same period a year earlier, a decrease of 1.7 percent.
Even with significant cost reductions and revenue growth initiatives, current financial projections indicate that the USPS will have a cash shortfall and will have reached its statutory borrowing limit by the end of the fiscal year. Absent substantial legislative change, the USPS will be forced to default on payments to the federal government, the service says.
The USPS says it has put $12 billion in cost reductions in place over the past four years. Now, the postal service is turning to the U.S. legislature to alter laws to make it more likely for the service to be solvent.
These changes include allowing the USPS to establish its own health benefits program, allowing the USPS to administer its own retirement system, allowing the USPS to reduce the size of its workforce, eliminating Congressionally-mandated retiree health benefit pre-payments, allowing the USPS to access retirement system overpayments, and giving the USPS the authority to determine the frequency of mail delivery.
In a white paper regarding the USPS proposals, the postal service says it “has urged Congress to allow five-day delivery, an essential step in right-sizing the delivery network to reflect the fact that the Postal Service is now delivering a decreasing amount of mail to an ever-expanding number of delivery points.”
Another white paper states that the USPS should have its own health benefits program as “fringe
benefit costs constitute roughly 33 percent of total labor costs.” In addition, the postal service says that “approximately 80 percent of USPS total costs are labor costs. The Postal Service cannot address its current economic challenges without gaining control of its legacy costs, defining their breadth and scope, and setting up a reasonable program to fund them.”
Last month, the USPS announced that it may be downsizing the number of its post offices by more than 10 percent – with some of these closures occurring in northern Wisconsin, depending on the results of USPS studies related to fiscal health.
7th District Rep. Sean Duffy (R-Ashland) told Wisconsin Public Radio that he “considers himself a fiscal conservative who favors deep budget cuts,” but he also says that making budget cuts to the USPS may not be the best idea – and that he's not alone in Congress as some of his fellow representatives are supporting bills that would eliminate the USPS closures.