WASHINGTON — The U.S. Postal Service Board of Governors has directed management to study cost savings that would result from reducing mail delivery service to five days a week and consolidating postal facilities.
The governors said the decision, announced at the board's monthly meeting yesterday, was prompted by a softening demand for postal products and services, coupled with rapidly rising costs.
However, current postal law forbids the USPS from cutting universal service to five days, and this move can only come from reform legislation. As a result, insiders said the threat is the agency's last-ditch effort to get Congress' attention and to get a reform bill, or a smaller bill that only addresses rising costs, passed soon.
Several board members and postmaster general William J. Henderson are gearing up to meet with Congress today at an oversight committee hearing sponsored by Rep. Dan Burton, R-IN, chairman of the House Committee on Government Reform. The committee plans to focus on the USPS' projected financial shortfalls and will seek an explanation for the dramatic shift in financial outlook.
In September, the USPS projected a surplus of $150 million for fiscal 2001. That projection was based in part on the increase in postal rates that went into effect in January. More recent estimates, however, project a deficit of $2 billion to $3 billion. The panel also will address ways to improve service in the face of increasing economic challenges.
S. David Fineman, the board's vice chairman, said, “The postal service's ability to meet its statutory mandate to bind the nation together needs to be protected. However, the reality of the marketplace is that the 30-year-old statutory model that governs the postal service is in need of change to protect universal service at affordable rates.”
Henderson added that the USPS needs postal reform “because the current model is broken, and if it isn't corrected, there will be serious problems in the future.”
Henderson reiterated that the USPS may file for a 10 percent to 15 percent rate increase this summer and that he asked deputy postmaster general John Nolan to “work with the mailing community to see if there are realistic — and I underline the word `realistic' — alternatives to filing a rate increase.”
The call for the study on cutting costs follows last week's announcement that the agency is committed to reducing spending by $2.5 billion by 2003 and over the next five years plans to cut 75,000 work years, decrease administrative costs by 25 percent and reduce transportation costs by 10 percent. Earlier this month, the board asked postal management to freeze capital construction commitments, affecting more than 800 projects.