In a notice informing employees of its proposals — with the headline “Financial crisis calls for significant actions” — the Postal Service said, “We will be insolvent next month due to significant declines in mail volume and retiree health benefit pre-funding costs imposed by Congress.”
During the past four years, the service lost $20 billion, including $8.5 billion in fiscal 2010. Over that period, mail volume dropped by 20 percent.
The USPS plan is described in two draft documents obtained by The Washington Post. A “Workforce Optimization” paper acknowledges its “extraordinary request” to break its labor contracts.
“However, exceptional circumstances require exceptional remedies,” the document says.
“The Postal Service is facing dire economic challenges that threaten its very existence. . . . If the Postal Service was a private sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality,” the document continues.
In a white paper on health and retirement benefits, the USPS said it was imperative to rein in health benefit and pension costs, which are a third of its labor expenses.
For health insurance plans, the paper said, the Postal Service wanted to withdraw its 480,000 pensioners and 600,000 active employees from the Federal Employees Health Benefits Program “and place them in a new, Postal Service administered” program.
Almost identical language is used for the Civil Service Retirement System and the Federal Employees Retirement System.
The USPS said the programs do not meet “the private sector comparability standard,” a statement that could be translated as meaning that government plans are too generous and too costly.
“FEHB may exceed what the private sector does in certain areas,” said Anthony J. Vegliante, USPS chief human resources officer and executive vice president. “It may not meet what the private sector does in other areas. So cost may be above the private sector, while value may be below the private sector.”
Bills that would rein in employee benefits or have workers pay more for the benefits have been introduced in Congress and met with vigorous opposition from federal employee organizations. Intentionally or not, the Postal Service’s proposal provides support for such legislative initiatives.
The proposals are the USPS’s latest money-saving effort in a series of moves, some as recent as a few weeks ago and others stretching over a decade.