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USPS Projects $1.5B Deficit, Calls Rate-Making Summit

The U.S. Postal Service faces a projected net loss of about $1.5 billion in fiscal year 2002, with mail volume for the year expected to drop 6 billion pieces below last year's total, postmaster general John E. Potter said yesterday.

Potter, speaking at the agency's monthly Board of Governors meeting in Washington, said that despite the magnitude of the decline, actions by the USPS reduced this estimated loss well below earlier projections that ranged up to $4.5 billion.

Measures taken to minimize the loss, he said, include reducing the number of career employees by 20,000 this year through attrition. Additional program expenditures have been postponed, saving more than $2 billion. The USPS also said implementing the next rate increase June 30, instead of the original date of Sept. 30, will help control costs.

The Direct Marketing Association called the projected $1.5 billion deficit for fiscal 2002 a clear indication that the USPS needs legislative reform.

“The postal service's projected loss is just the latest indicator of the severity of its financial crisis,” said H. Robert Wientzen, president/CEO at the DMA. “Continuous postal rate hikes, coupled with announcements of worsening budget deficits, signal that the postal service's economic deterioration is accelerating rapidly. Congress no longer needs to wait for any other catalyst for legislative action.

“While we are not denigrating the postal service's cost-cutting measures to date, it's going to be more difficult for the service to continue to try and bring things into balance.”

Potter also announced a rate-making summit to be held May 28. Sponsored by the USPS and the Postal Rate Commission, the summit will focus on how the process and approach for establishing and changing postal rates in major “omnibus” cases can be improved. This will be the first time the USPS and PRC have held such a summit.

The summit, which is open to all interested people, will be at the Bolger Academy's Center for Leadership Development in Potomac, MD. Pre-registration is required and is available at the Postal Rate Commission Web site, www.prc.gov. Registration deadline is 5 p.m. May 10.

In other action, the board approved funding or phase two of the agency's PostalOne! implementation. PostalOne!, a major initiative to modernize the business mail acceptance process, simplifies the verification and payment process for bulk business mail.

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