Postal Service financials improve, but big losses continue

August 11, 2013

The U.S. Postal Service will announce its third straight quarter of losses for fiscal 2013 on Monday, but those losses are declining, and that has agency and postal labor officials cautiously optimistic.

The $740 million loss in the agency’s financial report is better than the $1.3 billion and $1.9 billion drops for the first two quarters and means the Postal Service’s troubled finances are trending in the right direction. The development might help push a divided Congress to reach a deal on overhauling the Postal Service, some say.

Losses for the agency this year have reached nearly $4 billion, a dramatic improvement after a loss of nearly $16 billion in 2012.

In a statement Friday, the agency credited the better numbers to increased efficiency, a decrease in workers’ compensation, and growth in shipping and package services.

Labor groups have said the Postal Service could virtually break even if not for a 2006 congressional mandate that requires the agency to pre-fund employee retirement benefits — a common practice in the private sector but unique to the USPS among federal agencies. That obligation eats up about $5.5 billion a year, which is roughly the amount the Postal Service is on track to lose this year. The agency defaulted on its scheduled payment in 2012 and got a reprieve from Congress for 2011.

USPS officials said the agency will not return to financial stability without an overhaul. “We need to make fundamental changes to the way we currently do business,” Chief Financial Officer Joe Corbett said in a statement. “Without comprehensive postal reform legislation signed into law, our hands are tied and we expect multibillion-dollar annual losses to continue.”

National Association of Letter Carriers President Fredric Rolando said in a statement Friday that USPS operating revenue increased 3.6 percent compared with 2012’s third-quarter numbers.

“The Postal Service’s latest quarterly report makes clear that Postal Service finances are rebounding strongly as the U.S. economy improves,” Rolando said. “The path to prosperity is clear: Address the prefunding fiasco and give the Postal Service the freedom to innovate and grow in the digital era.”

Postmaster General Patrick Donahoe urged Congress in May to cancel the pre-funding requirement, saying the proposal represents the “single biggest change that would have the least negative impact” among possible USPS reforms.

Last week, two top senators introduced bipartisan postal legislation that would restructure the pre-funding requirement, allow for a gradual end to Saturday mail delivery, and make curbside delivery or cluster boxes mandatory for businesses and new homes, with limited exceptions.

Those bills align with the Postal Service’s five-year business plan, which calls for five-day mail delivery, a restructuring of the pre-funding requirement, and authority to expand products and services, in addition to other ideas. The agency estimates that it could save $20 billion by 2017 under its proposals overall.

Rep. Darrell Issa (R-Calif.) proposed similar legislation in the House, but the measure passed through committee without support from Democrats, who opposed the service cuts. Congress is expected to take up the issue again when lawmakers return from a five-week recess next month.

The Postal Service reported a 3.4 percent drop in first-class mail volume during the third quarter compared with the corresponding period last year, though shipping and package volume increased by more than 7 percent this time around, adding to the agency’s momentum.

Issa rejected the notion that canceling the pre-funding requirement alone would put the USPS on sound financial footing.

“Even if the Postal Service were allowed to duck its obligations to employees and taxpayers, it would still be losing money,” he said in a statement. “Only balanced, commonsense cost-
cutting and revenue-enhancing reforms like those in the [House GOP’s postal bill] will restore USPS to long-term financial solvency.”

Sen. Thomas R. Carper (D-Del.), who sponsored the Senate measure with Sen. Tom Coburn (R-Okla.), urged lawmakers and the Obama administration on Friday to reach a deal soon on postal legislation. “While last quarter was an improvement compared to what we saw in 2012 — and even earlier this year — these figures certainly make it clear that the only way to alleviate the Postal Service’s financial challenges is by passing comprehensive postal-reform legislation,” he said in a statement.

Among its 2013 cost-cutting moves, the USPS said it consolidated 104 mail-processing centers and more than 1,000 delivery routes, in addition to reducing hours at post offices and increasing its use of temporary workers.

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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