USPS mulls delivery, office cuts to save itself

Mailers, US Postal Service officials and legislators have been keeping a close eye on the agency’s attempts to rescue itself from a pending financial crisis at the end of this fiscal year. The USPS reportedly loses $20 million per day. Proposals currently on the table include cutting delivery to five days per week, consolidating branches and receiving relief from the government to fund future retirees’ health benefits.

In an open letter to members of the National League of Postmasters (NLP) on July 20, NLP president Charley Mapa acknowledged that an unpublicized meeting about the financial health of the USPS with postal officials and Postmaster General John Potter took place earlier this month.

“In a year when the nation’s largest financial institutions and our largest automobile manufacturers needed billions and billions of dollars of bailout money from the federal government… the Postal Service would have been profitable [by more than $2 billion] had it not been for this obligation [to fund retirees],” Mapa’s letter said. He added that the USPS is the only government entity required to make such a payment into a fund for its future retiree health benefits.

One proposal to address the cost of employee health care is HR 22, or the US Postal Service Financial Relief Act of 2009, first introduced in January 2009. It would allow the USPS to contribute its share for annuitants’ health benefits out of the Postal Service Retiree Health Benefits Fund, rather than adding to the pre-existing fund.

It’s estimated this measure would provide about $2.5 billion in relief for the next three years — not the full eight for which the bill originally called. If enacted, the USPS would still have a $4 billion deficit in 2009. On July 10, a consideration committee was held by the Subcommittee on Federal Workforce, Post Office, and the District of Columbia, but the bill has yet to face an official House vote. On July 23, the Congressional Budget Office estimated the bill would result in on-budget costs of $5 billion.

Union support for other planned cuts to work hours, delivery weeks and network distribution centers has faced a lot of scrutiny in recent weeks. In early July, a letter was sent to the White House on behalf of the American Postal Workers Union, the National Rural Letter Carriers Association, the National Association of Letter Carriers and the National Postal Mail Handlers Union requesting a bailout beyond the relief from HR 22. Representatives, including Rep. Stephen Lynch (D-Mass.), chairman of the House Oversight and Government Reform subcommittee, were skeptical of the likelihood of a full bailout. “There’s little appetite [in the White House] for another bailout,” Lynch says.

The USPS is on schedule to cut more than $6 billion in expenses during 2009, largely due to a reduction in work hours, Potter says.

The Postal Regulatory Commission will hold a pre-hearing conference on July 30 to hear public views on the USPS’ July 2 proposal to close some of its retail stations and branches. Dallas, Hawaii, Las Vegas and Cleveland are among the areas considering closing or consolidating their post offices.

The USPS also hopes to implement five-day delivery by 2011. Mapa said a majority of postmasters have told him that, operationally, the USPS is capable of going to shorter delivery weeks because mail volumes are down so drastically. The NLP has proposed making PO Boxes available for Saturday delivery or caller service for those who need Saturday mail. The USPS’ five-day delivery study states there would be no collection of rural, contract or city route mail, and remittance mail would be made available through PO Boxes and caller service.

As with all other proposals, Congress must approve this adjustment before it is passed. For now, mailers must await the expected public surveys, including a Gallup poll, on all of these matters before more formal USPS requests are filed. The Federal Register will post scheduled meetings as they are announced.

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