The U.S. Postal Service finished its 2003 fiscal year, which ended in September, with a $3.9 billion surplus, postal officials said at the agency's Board of Governors meeting in Washington yesterday.
Net income from operations was $900 million instead of the $600 million that was planned, USPS chief financial officer Richard Strasser said.
In addition, the Postal Civil Service Retirement System Funding Reform Act of 2003, signed into law April 23, altered the way the USPS funds the CSRS and let the agency stop overpaying into retirement accounts. This increased the postal service's net income by $3 billion.
Combined, the net for the year was $3.9 billion, and $3.8 billion of that was used to reduce the agency's debt from $11.1 billion to $7.3 billion, Strasser said.
“These financial results are important to the American economy and American business,” he said, “for they reinforce our confidence that we can hold current stamp prices unchanged until 2006.”
Strasser said the results were achieved despite a decline in First-Class mail and noted that the agency had made savings through a reduction in staff and other cost cutting. For example, Strasser said, the agency reduced its work force by 24,000 without layoffs.
Overall, the USPS had revenue of $68.5 billion for the year, he said.
The USPS also had an unprecedented fourth straight year of productivity gains, and productivity was twice that anticipated by the financial plan.
“Recognizing early in the fiscal year the delayed economic recovery and its negative impact on mail volume, our managers adjusted resources, cutting another $2 billion in costs,” Strasser said.
He credited the year's success to the postal service's focus on implementing its transformation plan. Last month, the USPS released a progress report focusing on accomplishments made to transform and modernize the USPS since April 2002. The report highlights these accomplishments:
· Service performance and customer satisfaction scores achieved record high levels.
· Cost reductions and avoidance measures kept the USPS on track to take $5 billion out of costs by 2006.
· More than 45,000 career positions have been eliminated through attrition since the start of FY 2002.
At the meeting, Strasser also said total mail volume in 2003 dropped by less than 1 percent (600 million pieces). It was the second straight year that volume fell. Most of the loss came from First Class. However, ad mail and packages grew to nearly offset the 3.3 billion-piece loss in First-Class mail.
Strasser cautioned that the USPS continues to face long-term structural challenges.
“In the near term, postal finances look excellent,” he said. “However, continued declines in First-Class mail volume, continued growth in delivery addresses, the 30-year-old postal rate-setting process and continuing marketplace changes threaten the ability to finance universal service as we define it today.”
In other activity, chief operating officer Pat Donahoe outlined initiatives to handle 20 billion pieces of mail between Thanksgiving and Christmas. Donahoe said that Dec. 15 would be the year's busiest mailing day with more than 850 million pieces of mail entering the mail stream versus 670 million on any given day through the year.
At the meeting, the board also said goodbye to governor Ned McWherter. Appointed in 1995 by President Clinton, McWherter served as a member of the Audit and Finance Committee. Jim Miller replaces McWherter.