From the Alliance of NonProfit Mailers:
The United States Postal Service has filed paperwork with the Postal Regulatory Commission disclosing that it does not expect to have enough cash to make required payments to the Postal Service Retiree Health Benefit Fund and the Department of Labor for Workers⬠Compensation obligations. Both payments are due by September 30, the end of Fiscal Year 2009.
In the PRC filing, the Postal Service noted that it lost $2.8 billion in Fiscal Year 2008 and already has lost $2.3 billion in the first half of Fiscal Year 2009. To underscore this yearâ¬s financial free-fall, the Service noted that it lost only $35 million during the first half of Fiscal Year 2008. Attributing a â¬Å"significant portion of the loss for the six months ended March 31, 2009â¬â to an â¬Å"unprecedented decline in mail volume,â¬â the Postal Service said mail volume fell by 13 billion pieces.
While the massive decline in mail volume is â¬Å"primarily attributable to the widespread economic crisis,â¬â the Postal Service said â¬Å"the long-term trend of hard copy correspondence and transactions being diverted to electronic media continued.â¬â The filing also said that mail volume decline is expected to continue throughout the rest of the fiscal year, resulting in a net loss â¬Å"over $6 billion.â¬âÂ
Looking further down the road, the Postal Service says the picture gets worse. Mail volume in Fiscal Year 2010, which begins on October 1, 2009, is projected to decrease by â¬Å"another 10 billion piecesâ¬â and the net loss again will be over $6 billion.
Indicating that some of the retiree health benefits and workers⬠compensation obligations due at the end of the year can be covered by borrowing, the annual $3 billion borrowing limit will not provide enough cash to make full payment. With things getting worse next year and the maximum $3 billion borrowing again required, the Postal Service cautions that it will soon reach the total outstanding debt limit of $15 billion.
The Postal Service listed a number of actions it has taken to increase efficiency, reduce costs and generate new revenue. Such actions included â¬Å"freezing executive salaries, reducing workhours and headcount, maximizing operational efficiencies, renegotiating contracts with major suppliers, halting construction of new facilities and initiating revenue generation efforts utilizing the increased flexibility availableâ¬â under the Postal Accountability and Enhancement Act.
The Service went on to say it had requested Congress to â¬Å"restructure its payments for retiree health benefits and for the flexibility to suspend the six-day a week delivery requirement.â¬â Congress is moving along at its typical snailâ¬s pace in addressing the retiree health benefit payment problem, but reaction to the delivery day reduction suggestion has been uniformly negative.
A growing concern in Congress is that the requested retiree health benefit payment restructuring is not sufficient to steady the Postal Serviceâ¬s financial situation. First voiced by Senator Tom Coburn (R-OK), there is now widespread concern that the Postal Serviceâ¬s financial model is broken.
That concern apparently has reached the Obama administration, which is expected to announce proposed reforms in the weeks to come. The first sign of focus on the Postal Service came in March when the Presidentâ¬s preliminary budget included a proposal to require postal workers to pay 27% of their health insurance costs, the same as federal employees. Postal employees currently pay 17% of their health insurance costs. The preliminary budget also included a provision to increase postal workers⬠payments for life insurance premiums to the level of federal employees, which is 67%.
However, those proposals were not included in the final budget that was submitted to Congress. A spokesman for the Office of Management and Budget said the provisions were dropped because the administration did not want to propose changes that would violate current collective bargaining agreements. But the spokesman added that a â¬Å"more comprehensive package of reforms will be coming down the pike.â¬âÂ
With so many domestic and international issues on the front burner in Washington these days, it will take strong interest by the administration to get the postal dilemma addressed. Indications are the administration realizes the severity of the Postal Serviceâ¬s financial woes and help is on the way. That is good news for all that depend on the United States Postal Service.
The United States Postal Service has filed paperwork with the Postal Regulatory Commission disclosing that it does not expect to have enough cash to make required payments to the Postal Service Retiree Health Benefit Fund and the Department of Labor for Workers⬠Compensation obligations. Both payments are due by September 30, the end of Fiscal Year 2009.
In the PRC filing, the Postal Service noted that it lost $2.8 billion in Fiscal Year 2008 and already has lost $2.3 billion in the first half of Fiscal Year 2009. To underscore this yearâ¬s financial free-fall, the Service noted that it lost only $35 million during the first half of Fiscal Year 2008. Attributing a â¬Å"significant portion of the loss for the six months ended March 31, 2009â¬â to an â¬Å"unprecedented decline in mail volume,â¬â the Postal Service said mail volume fell by 13 billion pieces.
While the massive decline in mail volume is â¬Å"primarily attributable to the widespread economic crisis,â¬â the Postal Service said â¬Å"the long-term trend of hard copy correspondence and transactions being diverted to electronic media continued.â¬â The filing also said that mail volume decline is expected to continue throughout the rest of the fiscal year, resulting in a net loss â¬Å"over $6 billion.â¬âÂ
Looking further down the road, the Postal Service says the picture gets worse. Mail volume in Fiscal Year 2010, which begins on October 1, 2009, is projected to decrease by â¬Å"another 10 billion piecesâ¬â and the net loss again will be over $6 billion.
Indicating that some of the retiree health benefits and workers⬠compensation obligations due at the end of the year can be covered by borrowing, the annual $3 billion borrowing limit will not provide enough cash to make full payment. With things getting worse next year and the maximum $3 billion borrowing again required, the Postal Service cautions that it will soon reach the total outstanding debt limit of $15 billion.
The Postal Service listed a number of actions it has taken to increase efficiency, reduce costs and generate new revenue. Such actions included â¬Å"freezing executive salaries, reducing workhours and headcount, maximizing operational efficiencies, renegotiating contracts with major suppliers, halting construction of new facilities and initiating revenue generation efforts utilizing the increased flexibility availableâ¬â under the Postal Accountability and Enhancement Act.
The Service went on to say it had requested Congress to â¬Å"restructure its payments for retiree health benefits and for the flexibility to suspend the six-day a week delivery requirement.â¬â Congress is moving along at its typical snailâ¬s pace in addressing the retiree health benefit payment problem, but reaction to the delivery day reduction suggestion has been uniformly negative.
A growing concern in Congress is that the requested retiree health benefit payment restructuring is not sufficient to steady the Postal Serviceâ¬s financial situation. First voiced by Senator Tom Coburn (R-OK), there is now widespread concern that the Postal Serviceâ¬s financial model is broken.
That concern apparently has reached the Obama administration, which is expected to announce proposed reforms in the weeks to come. The first sign of focus on the Postal Service came in March when the Presidentâ¬s preliminary budget included a proposal to require postal workers to pay 27% of their health insurance costs, the same as federal employees. Postal employees currently pay 17% of their health insurance costs. The preliminary budget also included a provision to increase postal workers⬠payments for life insurance premiums to the level of federal employees, which is 67%.
However, those proposals were not included in the final budget that was submitted to Congress. A spokesman for the Office of Management and Budget said the provisions were dropped because the administration did not want to propose changes that would violate current collective bargaining agreements. But the spokesman added that a â¬Å"more comprehensive package of reforms will be coming down the pike.â¬âÂ
With so many domestic and international issues on the front burner in Washington these days, it will take strong interest by the administration to get the postal dilemma addressed. Indications are the administration realizes the severity of the Postal Serviceâ¬s financial woes and help is on the way. That is good news for all that depend on the United States Postal Service.
