BOG approves USPS 2008 financial plan

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The Integrated Financial Plan (IFP), an aggressive 2008 financial plan for the US Postal Service was approved by its Board of Governors. It includes $1 billion in cost savings and puts its expense growth lower than inflation.

"We will be issuing a revision to our Strategic Transformation Plan that will update our strategies," especially as they relate to provisions of the 2006 Postal Accountability and Enhancement Act (PAEA), said David Partenheimer, a media relations representative for USPS. "These new strategies include revenue strategies, which are incorporated in the FY 2008 [IFP] approved by the Board."

The projections do not include any price modifications for postal products and services over the next year, which for USPS begins October 1. The Board of Governors has not made a decision on future prices but applauded the Postal Regulatory Commission for being well ahead of schedule with its recommendations on the new rate regulations.

"The Board of Governors approved continuing to reduce costs by building on our automation effort and by expanding standardization in all functions, [which includes improving the] use of data to target service improvements and cost reduction opportunities, and to better align our workforce to a changing workload; beginning to take full advantage of the flexibility afforded in [PAEA], including pricing incentives to generating volume; and, implementing new standards and measurements to continuously improve service," Partenheimer said.

He also said the Board of Governors approved building new value in the mail, especially by incorporating Intelligent Mail technology.

The IFP predicts revenue of $78.2 billion and expenses of $78.8 billion in 2008, for a net loss of $600 million.

The PAEA affects the financial plan significantly, as it has also affected finances in the current fiscal year.

For fiscal 2007, the USPS projects revenues of $75.0 billion and expenses of $80.4 billion for a projected net loss of $5.4 billion. The net loss of $5.4 billion includes operating income of $1.5 billion and a $6.9 billion negative financial impact from the PAEA, which includes a $3 billion one-time escrow expense, which was required under the previous law, an additional $5.4 billion payment into the Retiree Health Benefit Fund for 2007 and $1.5 billion in savings from CSRS relief.

Total expenses for fiscal 2008 are planned at $78.8 billion, or 2 percent below projected fiscal 2007 expenses. Even after excluding the $3 billion in one-time escrow expenses from 2007, expense growth in fiscal 2008 is projected at 1.8 percent, below the assumed growth in the CPI.

The 2008 plan predicts a record ninth consecutive year of Total Factor Productivity growth, which measures the relationship between workload and resource usage. TFP is planned to grow by 1 percent in 2008.

The board also authorized funding of $107.2 million for the site lease, design and construction of a new 478,800 square-foot mail processing facility in Miami, FL, to consolidate bundle and parcel processing for South Florida. That facility will house five flat sequencing sorters in support of the new Flats Sequencing System program being implemented nationwide; each machine requires 25,000 square feet. South Florida is currently served by three processing and distribution centers, along with other leased processing space to reduce congestion at existing plants.


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