USPS sees $8.5 billion loss, warns Congress it'll be broke by 2011
The financially troubled U.S. Postal Service reported an $8.5 billion loss in the fiscal year that ended in September and said it will run out of money in 2011 if economic conditions don't improve and Congress doesn't act.
A drop in first-class mail deliveries contributed to an overall 6 billion-piece decline in mail volume last fiscal year, to 170.6 billion pieces, officials said. Financial losses also came from about $5.4 billion in obligations to pre-fund retiree health benefits and about $2.5 billion paid to the federal government's workers' compensation insurance fund.
All federal agencies and the USPS, a quasi-federal outfit, have workers' compensation obligations to help fund four major disability compensation programs.
The Postal Service also announced Friday that it plans to deplete its $15 billion line of credit with the U.S. Treasury by borrowing the remaining $3.5 billion. Although the Postal Service does not use taxpayer funding, it has tapped the credit line since the early 1990s. Depleting it means the Postal Service probably will go broke at the end of fiscal 2011 unless Congress takes action, members of the Postal Service Board of Governors said Friday.
The historic losses occurred despite more than $9 billion in cost cuts in the past two years, including the elimination of about 105,000 full-time jobs, "more than any other organization, anywhere," USPS Chief Financial Officer Joe Corbett said Friday.
"We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious," Corbett said.
But Rep. Darrell Issa (R-Calif.), the presumptive future chairman of the House committee overseeing postal affairs, said USPS should urgently seek deeper cost cuts. "Congress has an obligation to ensure that effective solutions are implemented and taxpayers don't get stuck paying for a bailout," Issa said in a statement.
In March, the Postal Service proposed a series of changes that would allow top officials to set delivery schedules and routes and close post offices without congressional approval. Postal leaders also want lawmakers to rewrite a 2006 postal reform law that requires USPS to pay about $5 billion each year to pre-fund retiree health benefits.
Frederic V. Rolando, president of the National Association of Letter Carriers, said Congress also could remedy the Postal Service's financial situation by transferring money it has overpaid to the Civil Service Retirement Fund since 1971. The overpayment ranges from $55 billion to $75 billion, according to two government estimates.
"This internal transfer would not involve a dime of taxpayer money, nor - unlike other proposals - would it entail cuts in service to American customers or layoffs of American workers during a recession," Rolando said in a statement.
Friday's Board of Governors meeting was the last for outgoing Postmaster General John E. Potter, who plans to step down Dec. 3, after 91/2 years, to make way for Deputy Postmaster General Patrick R. Donahoe.
"I will always bleed postal blue," Potter told the board.
Donahoe is scheduled to testify at a congressional hearing in early December, officials said.