The U.S. Postal Service will begin a round of spending cuts totaling $400 million by the end of this fiscal year because of a $1.3 billion estimated revenue shortfall.
USPS controller John Ward outlined the cuts at a meeting of the Mailers Technical Advisory Committee earlier this month.
The spending cuts follow a first round of cuts instituted in FY99 that totaled $1.1 billion. The cuts – which included cutting back on travel and advertising budgets, instituting a hiring freeze, trimming consulting contracts and delaying some capital investments – were part of a program instituted by Postmaster General William J. Henderson in 1998 to help the agency make $800 million in revenues in FY99 so it could meet its $200 million net profit goal that year. The agency reached net profits of $300 million for FY99.
The USPS’ plan also was designed to allow the agency to make $1 billion by the end of FY00 – so it could reach its $100 million net profit goal this year.
The agency, however, is experiencing a revenue shortfall, so more cuts are needed.
The most recent financial reports show the USPS is falling more than $300 million short of its FY00 revenue target. By the end of the year, Ward said, the USPS may be as much as $700 million short of its goal. In addition, he said the postal service will lose $1.7 billion in fiscal 2001 if postage rates are not increased in January.
While Ward was not specific, he said these cuts will affect new programs, payroll and other expenses in FY00.
