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80% of post offices losing money

Oct. 10, 2010 - 06:00AM   |  
By SEAN REILLY   |   Comments
As mail volume plummeted 12 percent from 1999 to 2009, the number of post offices, stations, branches and carrier annexes shrank only 3 percent.
As mail volume plummeted 12 percent from 1999 to 2009, the number of post offices, stations, branches and carrier annexes shrank only 3 percent. (Justin Sullivan / Getty Images)

One reason the U.S. Postal Service is teetering on financial ruin: four in five post offices lose money. And shutting any of the 32,662 outlets down is nearly impossible.

As mail volume plummeted 12 percent from 1999 to 2009, the number of post offices, stations, branches and carrier annexes shrank only 3 percent.

More than half of those outlets generate less revenue than the average self-service mail kiosk, Postmaster General John Potter said at a news conference this month.

"We need to rationalize our postal-owned locations," Potter said.

It may need to, but it can't. The agency has been stymied by procedural hurdles, opposition from lawmakers and unions, and the public's emotional bond to an institution that it uses less and less.

"I've heard postal officials say that it's almost more work to get [a post office] closed than it costs to keep it open," said Michael Murphy, past chairman of the Mailing & Fulfillment Service Association, a mailing industry trade group that supports more consolidation.

In July 2009, for example, the Postal Service began studying almost 3,200 stations and branches which sell stamps and mailing services, but don't have a postmaster for possible closing. Since then, the list has dwindled to 162. Only two of those facilities have actually closed, although another 25 closings are in the works and more could follow, USPS spokesman Greg Frey said last week.

"There was just a lot of push-back," said Don Soifer, a postal expert at the Lexington Institute think tank, when asked why so many facilities were dropped from the list.

Frey disputed that characterization, but acknowledged that "different groups have different perspectives."

The Postal Service anticipates a $6 billion loss for fiscal 2010, Potter said. Mail volume fell to about 170 billion pieces, a 20 percent drop in four years as Americans increasingly turn to the Internet for bill-paying and other transactions that once needed a stamp. The Postal Service, which already owes about $12 billion to the federal Treasury, expects to burn through its final $3 billion in borrowing authority this fiscal year.

As mail volumes fall, the Postal Service "does not have sufficient revenues to cover the growing costs of providing service to new residences and businesses while also maintaining its large network of retail and processing facilities," Phillip Herr, director of physical infrastructure issues for the Government Accountability Office, told a congressional subcommittee last year. An added concern is that the Postal Service can't afford to maintain its deteriorating buildings; an earlier GAO report includes photos of deteriorating facilities, including one Pennsylvania station that suffered a partial roof collapse.

But while USPS is supposed to be self-supporting, it's also bound by federal law to provide "prompt, reliable and efficient" services nationwide. In its official "discontinuance guide," the legal and administrative requirements for closing a post office take up more than 50 pages.

One important rule in that guide: The agency is barred from closing post offices solely to save money.

Before closing a post office, officials must consider the impact on the community, on employees, and whether the proposed closing is consistent with government policy. If the Postal Service proceeds, it must provide 60 days' public notice; any customer can appeal the decision to the Postal Regulatory Commission, a five-member oversight panel.

The Postal Service's purpose "is to bind the nation together," William Burrus, president of the American Postal Workers Union, said in an interview. "I don't think you meet that obligation if you render entire communities without postal service."

Under its contract with the American Postal Workers Union, the Postal Service has committed to keeping all existing retail operations where they are. Although the precise interpretation of that language is in dispute, Burrus says it limits the Postal Service from closing postal outlets. He intends to keep it in the new contract now being negotiated.

The agency's problems are illustrated by its efforts to close a dilapidated post office in the east Oklahoma town of Rentiesville, home to roughly 100 residents. When open, the office provided part-time window service to an average of two customers a day, according to records included in an appeal recently filed by the mayor.

The Postal Service first sought to close the facility in 1998 when the postmaster retired, then suspended operations in 2004 because the building's wiring system was not up to code. In its last full year of operation, 2003, receipts totaled only $2,252, roughly one-tenth of operating costs.

And although the post office is no longer in use, it is still not officially closed. The Postal Service is trying to change that. "For whatever reason, they're saying we need to do our paperwork and actually close it," Postal Regulatory Commission spokesman Norman Scherstrom said.

Despite the lack of business, Rentiesville residents are dismayed at the prospect of losing what some describe as a community center.

"We are at a pivotal time, perched on the edge of growth," some wrote in identical 1998 letters included in more than 200 pages of documents in the appeal file. "Without a ZIP code of our own, we are no longer included on state maps."

Angered by the abrupt closure of a postal station in his district, Rep. Albio Sires, D-N.J., last year introduced legislation aimed at making the Postal Service follow the same procedures for closing branches and stations as it does for shutting down main post offices.

"The discontinuation or relocation of postal services creates a hardship for residents and creates outrage when they have no say in the process," Sires said in testimony last year. "This dual system is confusing and frustrating and leaves communities without a proper voice."

Although the bill has yet to advance beyond a House committee, it has 102 co-sponsors.

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