Leadership

Postal Service pushes for reforms as finances improve

The Postal Service's finances continued to improve in the second quarter of fiscal 2015, fueled by record numbers of package deliveries and increased postage rates, according to financial information released by the agency May 8.

The Postal Service saw a controllable income – revenues minus controlled expenses – of about $313 million in the second quarter of fiscal 2015. But after factoring in the Postal Service's obligation to prepay for 75 years of retiree health benefits and fund its worker compensation fund, the service shows a net loss of $1.5 billion.

Postmaster General Megan Brennan said the Postal Service was encouraged by the improvement in its finances and that its efforts to cut costs have paid dividends.

"While this doesn't fully reflect our financial condition it does offer the purest measure of our progress," she said. "It's also validation that we are making progress with cost containment and revenue strategies."

Overall revenue grew by $223 million – or about 1.3 percent over the same period in fiscal 2014. Operating expenses fell by $160 million, contributing to the overall increase in income. So far this fiscal year the Postal Service has seen $1.4 billion in controllable income.

But part of the growth in revenue comes from a temporary increase in the postage rate for certain types of mail, and that rate increase ends once the Postal Service makes $3.2 billion in revenue from it, according to the Postal Service. The increased postage rate drives about $2 billion in revenue, offsetting the overall decline in first-class mail.

While the Postal Service is seeing an improved financial landscape, Brennan said the agency still needs legislation to overhaul the agency and provide for a greater investment in future priorities. She said removing the Postal Service's prefunding of retiree health benefits would give it some time to make improvements, but it also requires greater workforce flexibility and wants Medicare to become the primary insurance of eligible postal retirees.

She said it would take decades of sustained growth for the Postal Service to get onto solid financial footing and make the billions of dollars of investments it needs in its technology and facilities.

But Fredric Rolando, president of the National Association of Letter Carriers, said the results show a continued and impressive financial turnaround at the Postal Service and negate the need for service cuts or consolidations that could harm service.

"This three-year trend in operating profitability makes clear the need to strengthen – not degrade – the now-profitable networks. We hope to work with lawmakers on both sides of the aisle, the administration and the new postmaster general to build on the progress achieved in the last Congress, within the mailing industry and among major stakeholders on consensus postal reform that promotes a strong and vibrant Postal Service," Rolando said.

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