Mandate pushed Postal Service into the red for first quarter

February 8, 2013
(David Goldman/AP)
(David Goldman/AP)

The U.S. Postal Service lost $1.3 billion during the first quarter, but it could have turned a $100 million profit if not for a congressional mandate that officials have long blamed for stifling post office finances, according to the agency’s first-quarter financial statement.

The report, released Friday, shows that the Postal Service paid $1.4 billion toward health benefits for future retirees, an expense that pushed the organization into the red.

Congress passed a statute in 2006 requiring the early payment of 75 years worth of retiree benefits within 10 years. No other federal agency is forced to make such an investment.

“The $1.4 billion in pre-funding charges this quarter accounts for all — and then some — of the overall red ink of $1.3 billion,” National Association of Letter Carriers President Fredric Rolando said in a statement Friday. “Since pre-funding went into effect, it accounts for more than 80 percent of the agency’s red ink.”

The Postal Service, which has repeatedly urged Congress to end or revise the 2006 mandate, defaulted on two of its pre-funding obligations last year.

The Postal Service’s first quarter loss amounted to less than half of the $3.1 billion loss the agency reported for the same period last year.

Shipping-and-packaging revenue increased by $154 million, or 4.7 percent, over the 2012 first-quarter numbers, due, in large part, to growth in Internet shopping and marketing campaigns to promote the agency’s shipping services.

Revenue from advertising mail also increased during the first quarter, climbing $141 million, or 3.1 percent, compared to the same period in 2012. Campaign mailers from last year’s election are thought to have provided a boost.

Despite those gains, revenue from first-class mail, which makes up the lion’s share of the agency’s income, dropped by $237 million, or 3.1 percent, as volume declined by 4.5 percent.

The Postal Service said it suffered a $15.9 billion net loss for fiscal 2012, which ended Sept. 30.

Postmaster General Patrick R. Donahoe announced Wednesday that the agency would end Saturday mail delivery beginning in August to save $2 billion per year.

The director’s unilateral action amounts to a gamble that Congress will not reach a consensus to thwart his plan. He appears to be taking advantage of lawmakers’ dysfunction over budget matters in recent years.

Congress’s last temporary spending plan, which expires on March 27, includes language requiring the Postal Service to deliver mail six days a week. But legislators so far have not said whether they will insist on such a provision in the next appropriations bill.

Donahoe on Friday called for legislators to give the Postal Service greater flexibility in managing its finances.

“We urgently need Congress to do its part and pass legislation that allows us to better manage our costs and gives us the commercial flexibility needed to operate more like a business does,” he said. “This will help ensure the future success of the Postal Service and the mailing industry it supports.”

Sen. Tom Carper (D-Del.), who chairs the Senate committee that oversees the Postal Service, vowed in a statement Friday to push for comprehensive legislation that “reforms, right-sizes and modernizes” the agency.

Carper also criticized Donahoe’s five-day-delivery plan as inadequate for solving the organization’s financial woes.

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Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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