The Washington Post

Regulator says USPS could use taxpayer subsidy


The chairman of the commission that regulates the U.S. Postal Service said Tuesday she supports a taxpayer subsidy for the financially strapped agency to survive.

“Whatever it would be would be small and manageable over time,” Ruth Y. Goldway Told the editorial board of The Washington Post.

The largely advisory Postal Regulatory Commission oversees the performance and accountability of the Postal Service, which is on track to lose $8.3 billion in fiscal 2011.

Goldway also said she believes the agency can do more to boost revenue even as mail volume continues to decline because of the Internet. Congress gives the Postal Service about $96 million a year in compensation for postage-free mailing for the blind and disabled and for absentee ballots sent from US citizens living overseas. But beyond that it is self-supporting.

Her comments are echoed by the Postal Service inspector general, which has issued a series of reports in recent weeks suggesting ways the agency could find savings by closing facilities and cutting back on door-to-door delivery of mail.

The inspector general acknowledges that similar ideas to transform the agency at a time of declining mail volume have been raised before. However, the current dire financial situation may improve chances of such steps being taken.

Several bills are circulating in Congress to allow USPS to take aggressive cost-cutting measures, including abandoning six-day delivery and closing facilities.

One inspector general’s report said USPS operates 260 major processing and distribution centers, many of which were built before advances in mail processing and before incentives for customers to pre-sort mail. The report said that starting with a “blank slate” and projecting mail volumes for 2020, the Postal Service would have more than enough capacity with just 135 such centers.

That would cost about $2 billion less per year than the current structure, it said. Such a cutback would cost jobs but the report noted that with about half of the postal workforce eligible to retire over the next 10 years, a restructuring could be accomplished with “minimal relocations and layoffs.”

A second report said that even larger savings — $4.5 billion a year -- could be achieved by switching from door-to-door delivery, the most costly, to curbside delivery, which allows the carrier to remain in the vehicle and deliver mail from the street to a mailbox or group of mailboxes.

Further, switching to centralized delivery, where carriers deliver mail to a large number of customers at one delivery point, could save an additional $5.1 billion a year. USPS should “aggressively” convert to curbside delivery where possible and should use centralized delivery for new delivery points, the report said. But customer resistance and policy restrictions could hamper those efforts, it added.

Similarly, a third report focused on the difficulty in closing retail facilities such as post offices. Laws impose “onerous notice, consultation, and appeal procedures,” and plans must undergo “time-consuming and expensive review” by regulators, the report said. There is also a “common impulse of members of Congress to oppose changes in public facilities within their constituencies,” and the Postal Service itself doesn’t support consolidation efforts strongly enough for them to succeed, it said.

The most recent attempt to consolidate retail facilities initially targeted nearly 700 of them, but the scope has since been reduced to 162, some of which have been closed. Opponents of such actions, including unions representing postal employees, are “highly motivated and well organized,”the report said.

The report said that about 45,000 retail facilities were closed in the 70 years before 1971, the year USPS switched from being a regular federal agency funded by Congress to a self-funding government corporation. In the 40 years since, only 4,000 facilities have been closed, with some 36,000 now in operation.


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