Postal Service’s closure review process was flawed, panel says
By Lisa Rein,
In many cases the selection process ignored whether an alternate post office was nearby and which closures would reduce costs the most and lacked sufficient data and analysis to make the best decisions, the Postal Regulatory Commission said.
“We certainly challenge their methodology,” the commission’s chairman, Ruth Goldway, said Wednesday.
“They had a simple screening process,” she said. “But it did not optimize the choices. They don’t have really good data that tells them which post offices will continue to grow or be on a downhill path.”
As it fights plummeting mail volume, the Postal Service announced plans in July to close about 3,600 of its 32,000 post offices. Another wave of 600 to 700 closures was planned last year. Hundreds of stations and branches also could be jettisoned to stem operating losses expected to hit $14.1 billion in 2012.
About 2,500 of the 3,654 sites targeted for possible closure will be replaced by a clerk in a local store, gas station, library or town hall in a new business model the Postal Service describes as a “village post office.”
But the 133-page report the commission issued on Dec. 23 says these are too limited to be viable alternatives.
Postal Service spokesman David A. Partenheimer said the agency is “reviewing the commission’s opinion.” He declined to comment further.
Postal officials were required by law to ask regulators for a formal opinion on the closure plan. The opinion is not binding, but it carries weight with Congress, which has questioned whether so many closures are necessary. Lawmakers are worried about leaving too many constituents without mail service, especially in rural areas.
Under pressure from Congress, the Postal Service earlier this month agreed to delay the proposed closures and consolidations until the spring in hopes that pending legislation to shore up the agency’s finances will pass.
Postal officials said their best candidates for closure were rural post offices that take in less than $27,000 in revenue each year and suburban and urban ones with less than $500,000. Some do just two hours of business a day.
But the oversight commission consulted economists and other experts who concluded that other factors should come into play: How many miles away is the nearest post office? Would closing deny service to large groups of customers, such as seniors, who would have trouble finding alternatives?
The Postal Service also has a poor idea of how much money the closures will save, the commission said. Postal officials combine revenue from retail sales with day-to-day costs of operation. Balance sheets for several stations and branches are lumped together, making it hard to know which facility loses the most money.
“So when you’re deciding, I want to close this station as opposed to that one, it’s not clear which should go, except for the gut feeling of the postmaster,” Goldway said.
The commission recommends a more rigorous approach, although it is not clear that would result in fewer candidates for closure.
“We think the Postal Service can be right-sized,” Goldway said. “But not with the methodology they’re presenting.”
Although the Postal Service predicts the closings would save about $200 million annually, it could not provide revenue and expense information to back up that assertion, the commission said.
At the urging of lawmakers, postal officials have taken about 100 post offices off the list of 3,600. Almost all of those on the chopping block in Alaska, for example, were thrown out because the network of roads between them is so poor.
Sen. Susan Collins (Maine), ranking Republican on the Senate Homeland Security and Governmental Affairs Committee, said the report supports “my and many of my colleagues’ skepticism about the wisdom of mass postal closures without a more thoughtful, transparent and data-driven process.”