Congress addressing Postal Service losses

Joe Davidson
Columnist July 20, 2011

At some point Congress will pull itself from the muck of debt and deficit, and then it can step into the mire of Postal Service destitution.

Faced with losing $8.3 billion this year, Postmaster General Patrick Donahoe says he won’t be able to pay all his bills by the end of September. This bleak scenario has been repeated for years, with temporary relief arriving just in time. That could happen again this year, but there also are several pieces of legislation that indicate Congress may be getting serious about doing something more than sticking a small patch on a big problem.

Joe Davidson writes the Federal Diary, a column about the federal workplace that celebrated its 80th birthday in November 2012. View Archive

“We are a business. You work in a business,” Donahoe tells employees in a video message sent to postal workers Wednesday. The video is one of a series designed to keep employees informed. Given the dire situation, Donahoe’s message isn’t exactly a pep talk.

“We are no different than any other business out there,” he says in the video. “You have to have revenue. If you don’t have revenue, you got to get the cost down. It’s that simple. There’s nobody that’s going to come in here with a bucket load of money to make up that difference.”

Whatever fix finally emerges, it’s going to mean additional job cuts.

Because of declining mail volume, Donahoe said he expects the USPS workforce will fall to 425,000 full-timers by 2015. That’s a huge drop from the 804,000 it had at the end of 1999 and significantly less than the 553,000 on the payroll today.

“I think our employees have done a tremendous job,” Donahoe said during an interview. But USPS, which does not rely on tax dollars for its operating expenses, can’t afford to have as many of them as it once did.

“Almost 80 percent of our costs are tied in labor,” he said. “We’re a very people- intensive organization. The majority of our people are either at the counter serving a customer or out on the street delivering mail.”

There’s no need for postal employees to stress over going broke and customers don’t have to worry about missing mail if all USPS bills aren’t paid on time.

“I will make sure the mail gets delivered, and I will make sure we pay our employees and we pay our contractors,” Donahoe said.

He doesn’t expect to make the retiree health benefit pre-payment this year, but that will have no impact on retirees. The required pre-funding scheme forces the Postal Service to pay for benefits now that won’t be paid out until sometime in the future, unlike the pay-as-you-go practice of other federal agencies and private companies.

Without the pre-funding scheme, the Postal Service says it would have made about $1 billion from 2007 to 2010 instead of losing money. Fixing that system is a top item on Donahoe’s legislative agenda.

Right up there with it is the mail delivery schedule. Postal officials say moving from six-day delivery to five-day delivery is critical to the long-term health of the agency. Doing so would allow USPS to drop 40,000 full-time-equivalent positions. In real life, however, that would equal about 20,000 bodies, because much of the difference could be accomplished by reducing overtime, according to Donahoe. USPS has more than 20,000 part-timers, including some who work 40 hours a week.

Five-day delivery “will have an affect on employees because we won’t need as many people on the rolls,” he said.

On the facilities front, the Postal Service plans to study the future of 3,600 post offices that aren’t used much. It may decide that many of them are not needed. Some post offices could close. Others may move their services to retail establishments.

Currently, USPS is not allowed to close post offices solely for financial reasons. That provision would be eliminated under legislation strongly supported by the Postal Service and sponsored by Sen. Thomas R. Carper (D-Del.). The bill also would allow five-day delivery, which could save $3.1 billion annually, according to USPS estimates. The Postal Regulatory Commission, however, says five-day delivery would save only $1.7 billion.

Another Carper provision would allow USPS overpayments to retirement accounts to fund the pre-payment of the retiree health benefit.

Other bills have been introduced by Sen. Susan Collins (R-Maine), and Reps. Darrell Issa (R-Calif.) and Stephen F. Lynch (D-Mass.).

They don’t excite Donahoe like the Carper legislation does. But speaking like a man who needs the good will of Congress, Donahoe said in “each piece of legislation there are some good things.”

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