Drumbeat Mounts for Postal Reform

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Momentum for postal reform continued to grow last week with a Senate hearing on workforce issues and comment from the General Accounting Office that "comprehensive postal reform is urgently needed."


At the hearing, leaders of four postal unions expressed concerns regarding the workforce-related recommendations of the President's Commission on the U.S. Postal Service. The hearing, the fourth in a series by the Senate Governmental Affairs Committee, had been postponed because of the ricin incident that closed three Senate buildings last month.


William Burrus, president of the American Postal Workers Union, called the commission's workforce recommendations unacceptable, noting that the report repeatedly states that the commission supports the right of postal workers to engage in collective bargaining, yet contains an apparent contradiction.


"Nevertheless, it recommends the establishment of a regulatory board, appointed by the president, which would have the authority to set compensation of postal employees," he said. "It is completely inconsistent and totally unacceptable for the commission to espouse commitment to collective bargaining while simultaneously recommending the postal compensation [be] dictated by an appointed board, separate and apart from the collective bargaining process."


Burrus also addressed rate setting, saying the APWU opposes work-sharing discounts that benefit large mailers. USPS data showed that work-sharing discounts provided to major mailers exceed the costs avoided by the postal service, he said. Burrus also discussed mail volume. At present, he said, it takes about three pieces of Standard mail to make up for one piece of First-Class mail.


"This distribution of cost is a rate-setting decision that will be unresolved by postal reform," he said.


In contrast, John Hegarty, president of the National Postal Mail Handlers Union, said certain discounting for large mailers could benefit the USPS. He cited the U.S. Mint, saying it uses United Parcel Service or FedEx to mail millions of coins each year.


"They don't use the U.S. Postal Service," he said. "The reason they don't is because they can get a better rate because of the volume discounts [those companies offer]. If a company such as Amazon.com or the United States Mint approached the postal service and said, 'I will give you 3 million pieces per month, what can you give me for a discount?' right now, the postal service says, 'I can't give you any discount.' I think that should be corrected."


Other union leaders offering comment at the hearing were William Young, president of the National Association of Letter Carriers, and Dale Holton, national president of the National Rural Letter Carriers of America. All agreed that reform legislation must resolve two issues created by last year's Civil Service Retirement System legislation.


One involves the shift last year of military service retirement liability costs of USPS employees before they became postal employees from the Treasury Department to the postal service. The USPS has said this adds more than $27 billion to USPS obligations.


The other issue involves a part of last year's legislation that requires the postal service to put CSRS savings into escrow pending congressional review beginning in fiscal year 2006. Dan Blair, deputy director of the Office of Personnel Management, reiterated the Bush administration's position that the liability for postal workers' military service time should rest with the USPS and not the Treasury Department.


Committee chairwoman Sen. Susan Collins, R-ME, disagreed and questioned whether different treatment applied to the USPS on assuming these costs compared with other federal agencies.


"We were very impressed with the response from Collins," said Neal Denton, executive director of the Alliance of Nonprofit Mailers, Washington.


The cry for reform also came from GAO comptroller general David Walker.


"The ability of the service to remain financially viable is at risk because its current business model, which relies on mail volume growth to cover the costs of its expanding delivery network, is not well-aligned with 21st-century realities," he said in a letter to Collins.


Incremental reform will not work, Walker said. He recommended reform of the postal service's overall statutory framework, plus resolution of pension and retiree health benefits issues and whether a continued need exists for the escrow account.


Also last week, the Coalition for a 21st Century Postal Service, a new lobbying group composed of large users of the postal service, urged Congress to pass postal reform legislation in a letter. The letter, sent to each member of the House and Senate individually, is the first step in a legislative action campaign by the coalition to get a postal reform bill passed this year.


"The U.S. Postal Service is the linchpin of a $900 billion industry that employs more than nine million people," the letter said. "Failure to enact postal reform this year will inevitably expose a large part of the U.S. economy to serious harm."


Members include America Online, American Cancer Society, the Direct Marketing Association, the Envelope Manufacturers Association, Magazine Publishers of America, Alliance of Nonprofit Mailers, Pitney Bowes, R.R. Donnelley and Time Warner.


Meanwhile, postmaster general John E. Potter urged a House subcommittee to include funding for postal appropriations not in the president's 2005 fiscal year budget.


"The failure to receive these funds may require the postal service to treat these remaining payments, which amount to nearly $900 million, as a bad debt, significantly increasing our costs," Potter said in testimony before the House Committee on Appropriations subcommittee on Transportation, Treasury and independent agencies.


The largest expense is $779 million for emergency preparedness. The money would help the USPS buy and install systems to detect biological agents and poisons, and new ventilation and filtration systems, in 282 mail-handling centers nationwide.


The USPS has developed the new detection and filtration systems, and test installations are under way in Baltimore and Cleveland. The current systems are designed to test for anthrax, but improvements are being made to test for other potential materials, Potter said. The postal service already has signed contracts for more than $300 million of the requested money. If funding is not approved, Potter said, it would affect planning for future postal rate increases.


The last scheduled hearing on reform is set for March 23, and many mailers expect a bill to be introduced next month.


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