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Postal Service, unions and lawmakers at odds over need for legislation

Aug. 12, 2014 - 06:00AM   |  
By ANDY MEDICI   |   Comments
US Postal Service Expected To Have Busiest Day Of
A United States Postal Office employee puts a bundle of mail onto a machine at the Processing and Distribution Center in San Francisco, California. (Stephen Lam / Getty Images)

The Postal Service, lawmakers and postal unions are still butting heads over whether the improving financial situation at the agency undermines the argument for expansive postal legislation.

The Postal Service saw its operating revenue increase by more than $327 million over the same time last year led by an increase in packages, according to a financial report released Aug. 11. The decline in first-class mail and letters was down, but a price increase resulted in a 3.2 percent revenue increase.

PREVIOUSLY: Improving Postal Service finances fuel debate over legislation

“We’re seeing momentum in our package business and continued use of direct mail as an advertising medium,” said Postmaster General Patrick Donahoe. “We’ve been effective in developing and marketing our products, and we’re improving how we leverage data and technology—all providing a higher return on mail for many customers and causing them to take a fresh look at the Postal Service.”

However, whether the service is beginning to enjoy better fiscal health depends on whether operating or net income is the better measure. The service has made more than $1 billion in operating income profit since the beginning of fiscal 2014. However, net income factors in the Postal Service’s obligation to prepay for retiree health benefits and fund its worker compensation fund, and there the service shows a net loss of $3.7 billion.

In the third quarter of fiscal 2014 the Postal Service made $10 million in operating profit before having to prefund retiree health benefits and its workers compensation fund — and nearly $2 billion in losses after.

The Postal Service is lobbying lawmakers for a major overhaul, including: removing the requirement that the Postal Service prefund 75 years of retiree health benefits in only about 10 years — to the tune of $5.6 billion a year. Opponents and supporters of reform alike confirm that no other federal organization has that requirement.

USPS would also like the ability to end Saturday letter delivery, while expanding package delivery to the entire week and flexibility to change prices and add new products in the future while closing underused post offices.

Finally, the service wants authorization to further reduce its workforce. The agency has already shrunk by about 320,000 employees since fiscal 2000, but Donahoe has said legislation would allow the Postal Service to move from 485,000 career employees to 400,000 over the next few years.

Fredric Roland, the president of the National Association of Letter Carriers, said the financial reports show the only issue that hurts the Postal Service is the need to prefund retiree health benefits, and there is no need for additional legislation.

“Given the positive mail trends, it would be irresponsible to degrade services to Americans and their businesses, which would drive away mail — and revenue — and stop the postal turnaround in its tracks. Lawmakers need to preserve and strengthen the profitable postal networks — which are the future of the USPS as it increasingly delivers not just six but seven days a week — while fixing the prefunding fiasco,” he said in a statement.

Mark Dimondstein, the president of the American Postal Workers Union, said in a statement that the Postal Service is rebounding from the 2008 economic collapse and can thrive on its own.

“Despite the good news, Postmaster General Donahoe continues to paint a desperate picture of postal finances to justify his push to privatize the U.S. Postal Service,” he said.

But the Postal Service cannot make needed investments in its infrastructure — including $10 billion to replace its aging delivery truck fleet — without expansive reform, according to Chief Financial Officer Joseph Corbett.

“Due to continued losses and low levels of liquidity, we’ve been extremely conservative with our capital, spending only what is deemed essential to maintain existing infrastructure,” he said.

Sen. Tom Carper, D-Del., said the financial results show the Postal Service is locked in a “downward financial spiral” and needs legislation to fix its problems.

He said Congress should pass the Postal Reform Act of 2014, which would help the agency invest in its future and preserve postal operations.

Rep. Darrell Issa, R-Calif., said some members of Congress have decided to oppose postal reform legislation and that the Postal Service is in a bad financial situation.

“The Postal Service’s latest reported loss illustrates the urgent need for postal reform to prevent a taxpayer funded bailout of the Postal Service,” he said.

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