Management

Postmaster promises new operating plan will help USPS to ‘break-even’

Leadership at the U.S. Postal Service has yet to release its long anticipated plan to resolve the agency’s financial deficits, but Postmaster General Louis DeJoy promised lawmakers on Wednesday that the finalized measures will get the agency to a “break-even” state when combined with proposed legislation.

That draft legislation would mandate three primary changes to postal operations: requiring all postal employees to enroll in Medicare when they reach 65 years old, eliminating the mandate that USPS prefund retiree benefits and requiring certain service performance standards.

The prefunding mandate, which is required of no other federal agency, has long been a thorn in USPS finances, and the agency has defaulted on payments for that mandate for several years.

“The provision is not a panacea, but it is a critical pillar of the bipartisan, comprehensive reform plan that we are focused on today,” said Rep. Gerry Connolly, D-Va.

“We have a moral obligation to fix the problem that Congress created.”

USPS reported profits for the first quarter of fiscal year 2021, but agency officials and experts warned when such profits were announced that increasing costs and the unusual nature of the pandemic make a continuation of such profits unlikely under the current financial structure.

According to DeJoy, the provisions outlined in the proposed bill are essential to getting the agency to financial solvency.

“Absent this legislation ... there is no path to totally eliminating our loss, but in combination with this and other good strategies for the American people and the Postal Service, we see a path forward to sustainability and good service,” DeJoy said at a hearing of the House Oversight and Reform Committee.

“The plan that we’re talking about now has been eight months of work, with an extensive part of management team, with dedicated long-term employees, with great sensitivity to their historical service to the American people. This is a balanced plan.”

Though DeJoy and USPS Board of Governors Chairman Ron Bloom were sparse on details about the plan prior to its finalization — which is expected by the end of March — they confirmed that it would include asking the Biden administration to calculate obligations to the Civil Service Retirement System pension plan using modern actuarial principles, committing to six and seven day a week service, strengthening and stabilizing the workforce and investing in infrastructure.

DeJoy also confirmed that messing with postal workers’ pay and benefits is “not something that I’m interested in now.”

The plan is also likely to include reductions in the amount of mail that is transported by air, as the pandemic’s steep decline in air travel resulted in fewer transportation resources for USPS deliveries.

“We will put more mail on the ground. And I will tell you that a big, big reason for our service performance failures this peak season had to do that our air carriers performed at 50 to 60 percent,” said DeJoy.

But members of Congress expressed concern that the plan would include significant cuts to the two-day first class mail program, reducing the potential value of postal products and driving customers to other services.

“If the business plan for the post office is to deliver an inferior product — and we’re in competition with FedEx, with UPS and with Amazon — that spells trouble. That leads me to believe that we would be going in a downward spiral,” said Rep. Stephen Lynch, D-Mass.

DeJoy’s past efforts for improving USPS operations have eroded some public and Congressional trust in what the upcoming plan will entail.

Requirements for on-time truck departures that caused vehicles to leave partially empty and employee overtime restrictions caused a system already struggling under pandemic staffing shortages to have even further delays in delivering mail on time.

The fact that such changes, alongside the removal of certain post boxes and mail sorting machines, happened just prior to an election that would rely heavily on mail-in ballots drew widespread criticism and scrutiny down on DeJoy’s leadership.

“For a large period of the last year, the Postal Service was in the news for the wrong reasons: consistently delayed mail delivery. While more than 600,000 employees of the Postal Service have heroically continued to uphold their mission to deliver mail in the midst of a global pandemic, questionable operational changes implemented by Postmaster DeJoy have hindered their work and caused the Postal Service to miss their mark,” said Rep. Brenda Lawrence, D-Mich.

Agency Inspector General Tammy Whitcomb testified that such changes did have a negative impact on timeliness and quality of delivery, while also stating that the push to met service goals did lead to inefficiencies due to a lack of coordination and integration.

DeJoy acknowledged during the hearing that his on-time truck requirements “crashed” and said that “a big part of that consequence is what led me to reorganize the organization.”

Hearing witnesses testified that USPS should also be looking into expanding services that rely on their universal service mandate, such as working with broadband providers, expanding access to federal services and providing non-bank financial services to those Americans that live so remotely as to make traditional banking difficult.

American Postal Workers Union President Mark Dimondstein called for the agency to also look into investing 50 percent of the postal retirement funds in more profitable TSP-like funds to increase the value of existing retirement funds.

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