Highlights of GAO testimony to the Subcommittee on Federal Workforce, Postal Service, and the District of Columbia, Committee on Oversight and Government Reform, House of Representatives on November 5, 2009
Financial Challenges Continue, with Relatively Limited Results from Revenue-Generation Efforts
The U.S. Postal Service’s (USPS) financial condition and outlook deteriorated significantly during fiscal year 2009. USPS was not able to cut costs fast enough to offset declining mail volume and revenues resulting from the economic downturn and changing mail use. Facing an unprecedented cash shortfall, USPS stated that it would have insufficient cash on hand to make its mandated $5.4 billion payment to prefund postal retiree health benefits that was due by the end of the fiscal year.
In July, 2009, GAO added USPS’s financial condition to the list of high-risk areas needing attention by Congress and the executive branch to achieve broad-based transformation. GAO stated that USPS urgently needs to restructure to address its current and long-term financial viability. GAO also stated that USPS needs to use its flexibility to generate revenue through new or enhanced products.
This testimony will (1) update USPS’s financial condition and outlook, (2) describe changes made by the Postal Accountability and Enhancement Act (PAEA) of 2006 that provided USPS with greater flexibility to generate revenues, (3) outline USPS’s revenue-generation actions and results using this flexibility, and (4) discuss options for USPS to generate increased revenues in the future. This testimony is based on GAO’s past and ongoing work.
USPS’s financial condition for fiscal year 2009 and its financial outlook continue to be challenging:
• In fiscal year 2009, mail volume declined about 28 billion pieces, or about 14 percent, from the prior fiscal year, when volume was about 203 billion pieces; revenue declined from about $75 billion to about $68 billion.
• A looming cash shortfall necessitated last-minute congressional action to reduce USPS’s mandated payments to prefund retiree health benefits by $4 billion. In the absence of congressional action, USPS was on track to lose about $7 billion.
• USPS debt increased at the end of fiscal year 2009 by the annual statutory limit of $3 billion, bringing outstanding debt to $10.2 billion. At this rate, USPS will reach its total $15 billion statutory debt limit in fiscal year 2011.
• USPS projects annual deficits over $7 billion in fiscal years 2010 and 2011, and continuing large cash shortfalls.
PAEA and implementing regulations gave USPS more flexibility to set prices, test new postal products, and retain earnings. USPS has broad latitude to set rates that take effect unless the Postal Regulatory Commission finds the rates would violate legal requirements, such as a price cap that generally limits rate increases for most mail to the rate of inflation.
Except for annual rate increases, USPS revenue-generation actions since PAEA was enacted have generally achieved limited results compared to USPS’s deficits. To its credit, USPS has taken actions to use its pricing flexibility to address the pressing need for additional revenue. These actions generated some revenues, although their positive impacts were overwhelmed by the recession—with its cutbacks in consumer spending and corporate advertising—and ongoing diversion of mail to electronic alternatives.
Looking forward, USPS has opportunities to continue pursuing the flexibilities provided by PAEA to help generate additional revenue from postal products and services. However, results will continue to be constrained by the economic climate and by changing use of the mail. Mail volume has typically returned after past recessions, but much of the recent volume decline may not return. Increasing postal rates may provide a short-term revenue boost but would risk depressing mail volume and revenues in the long-term, in part by accelerating diversion of mail to electronic alternatives. USPS has asked Congress to change the restrictions established by PAEA so that it could offer new nonpostal products and services such as banking and insurance. Allowing USPS to compete more broadly with the private sector could lose money, and fair competition issues would need to be considered. Thus, in addition to its revenue-generation initiatives, USPS will need to continue making significant reductions in its workforce and network costs. When we recently added USPS’s financial condition to our high-risk list, we said that restructuring will require USPS to align its costs with revenues, generate sufficient earnings to finance capital investment, and manage its debt. http://www.gao.gov/highlights/d10191thigh.pdf
I have been around for 34yrs., I wanted to take the offer to retire but didnot have enough time to decide, you can’t take just 30 days to decide on the rest of your life.
I think the offer should go on the board again but just for those employees who are 55yrs of age and have 30yrs of service, and also, the amount of money offered should increase to at least $20,000. If this is done the USPS would entice more CSRS employes to retire.
Think about it, older employees are ready to retire but need a little push to leave. The younger employees who are raising their kids need their jobs and should be allowed the same opportunity to work as we did, they don’t need to lose their jobs.
So, put the offer back on the board and give us 90 days to decide and you will sharely get rid of more than 90% of CSRS employees.
I have been around for 34yrs., I wanted to take the offer to retire but didnot have enough time to decide, you can’t take just 30 days to decide on the rest of your life.
I think the offer should go on the board again but just for those employees who are 55yrs of age and have 30yrs of service, and also, the amount of money offered should increase to at least $20,000. If this is done the USPS would entice more CSRS employes to retire.
Think about it, older employees are ready to retire but need a little push to leave. The younger employees who are raising their kids need their jobs and should be allowed the same opportunity to work as we did, they don’t need to lose their jobs.
So, put the offer back on the board and give us 90 days to decide and you will sharely get rid of more than 90% of CSRS employees.
I have been around for 34yrs., I wanted to take the offer to retire but didnot have enough time to decide, you can’t take just 30 days to decide on the rest of your life.
I think the offer should go on the board again but just for those employees who are 55yrs of age and have 30yrs of service, and also, the amount of money offered should increase to at least $20,000. If this is done the USPS would entice more CSRS employes to retire.
Think about it, older employees are ready to retire but need a little push to leave. The younger employees who are raising their kids need their jobs and should be allowed the same opportunity to work as we did, they don’t need to lose their jobs.
So, put the offer back on the board and give us 90 days to decide and you will sharely get rid of more than 90% of CSRS employees.
I am a limited duty employee. I was injured while
on duty. Light duty employees are injured on their
own time. Congress passed the FECA so that Federal
employees could be compensated & continue to work with
an OJI. I did not ask to be hurt. Even though I am
not working on my bid job, I have been working in the
job the Postal Service gave me. While I will agree that there are some rotten apples out there in the system, there are a lot of us that do what they are asked. I work very hard while I’m there, because that’s what I was hired for. I agree that there must
be cutbacks, but I don’t agree that limited duty employees should be targeted if they are doing a viable job. Most of the jobs that we do, nobody else
wants to do them. The majority of us do our jobs, we
just don’t sit around and do nothing, or better yet,
collect a check while we are sitting @ home. And remember, if you got hurt on the job, you would be
applying for the same thing that I did. If they get
rid of the program, future injured employees would be
out the door too!
Re: Compressed tours: I agree and see the same thing. More overtime. Just got rid of the SDO. Then we got the Union and Management at the Local level making deals about the jobs before allowing excessing. One can only be glad that USPS management doesn’t run a prison because if the choas happens there it would be mayhem.
I couldn’t agree more with Rick. There is $40,000 between the bottom and the top of the salary range for some of the upper management. Give them an incentive and the higher paid CSRS employees will leave, allowing cheaper FERS employees at the bottom of the scale to fill the ranks. That would also be a good time to re-evaluate the different levels of management, supervisors, postmasters and district staff. We don’t need “Areas”. There is nothing they do that can’t be done elsewhere, and they are daily intimidating and abusing the staff below them with a level of micromanagement that is beyond belief.
Its time to make a decent offer so that the CSRS people retire. Rumors about an additional 4 or 5 years accross the board service time would get alot of the old timers to leave. Instead of layoffs of younger people who have families to raise & support, its time to phase out the old timers & light / limited duty people who have played the system for ages & get paid the same as everyone else for working less. Rumors of EAS being offered 4 years additional service across the board should also include Clerk Craft Employees. Hope someone at Headquarters gives this some thought.
hey those gao waste so much time trying to improve usps business by just bla bla bla talk talk talk and never get it done , do your math close saturday delievery will save oh boy cant figure out too much money and those 24/7 postoffice that operator all day night even on weekend cant you figure out how many empolyee works on sunday get 25% sunday premuim even on tour one they get 2 sunday premuim cant you do your math find out how much money save just to close sat and sun only work monday through friday 24/5 instead of 24/7 can you managerment look into this see how much can save insttead of worry about lay off or else headach now you managerment go to work do your math and get things done very quickly save money what are you guys waiting for
An AMP study was made our plant and distribution center which calls for excessing at least 39 clerks and mailhandlers and supervisors. In maintenance, at least 3 EAS positions should have been riffed but nothing has been done about it. In my opinion, management just wants to cut craft positions but they will hide these EAS people who were riffed in new positions that management will create to save their own kind. This has always been the practice of management everytime there is a consolidation of facilities.
So the finger, once again, needs to be pointed at the craft employees….when the fat in management really needs to be cut. Nepotistic practices followed by management have led to jobs for everyone in the clique. A staffing expert, can’t staff a lunch counter yet makes over 100K a year. For the past 5 months, overtime has been offered every day of the week to clerks..this is after a tour compression. After the tour compression the plant manager stated, “I have to many clerks”..if you have too many clerks, why is there overtime out the wazooo?? Why are drops days being brought in to process mail that doesn’t exist??? Tour compression has cost the PO millions of dollars in shift differential and overtime…costly decisions that go unchallenged by everyone…
The last offer the USPS made was handled badly..people were not sure what had to be done by what date and you could never get through on the phone to Shared Services without an extremely long wait. Then the dates kept changeing for the initial $10,000…3 times! Then no one trusted what they were doing or saying. I work with 4 people that are in their 70s! They couldn’t get through on the phone and they didn’t have computers to check things out.
Have a 90 day well thought out offer, and the Postal Service will get the number of high priced Postal employees to retire, which will give them a better bottom line.
You can’t come up with enough new products that would beat buying out the high priced talet. I work with 4 people that are in their 70s! They couldn’t get through on the phone and they didn’t have computers to check things out.
Just to expand on Don’s comment, the good ol boy team that’s currently in place is in such a state that each member of upper management owes one another too much to ever return to a legal/trustworthy entity. Everyone owes everyone!
Managements hands are tied as far as returning to an even playing field! All is corrupt in the current Potter administration.
Congress and the President need to clean house and appoint an interim administration to stop the destruction of the USPS.
The Board of Governors must go because the Bush appointed head of the board is in cahoots with Potter.
It’s a BIG mess!
Look I voted for Obama, but I think the USPS is a devastating cancer of the American way of life as long as Potter and his cronies remain in power!
Obama please do something! The USPS, NALC, APWU are all destroying the USPS.
ANd Don you are correct…the light duty need to go too!
Reducing the work force should include MANY management positions, not just craft. The good ‘ol boys/girls system needs to be done away with. Let’s see some action, not just words. The time for talk is long over. To continue as is, is NOT an option. After a sizable number of management positions are eliminated, the next step should be get rid of the thousands of light duty people. Some of these people stay on light duty for DECADES. It is a drain on finances AND morale for the work force that actually do the work. Just TALKING about it will solve NOTHING. Also eliminate the postmaster positions. A TOTAL WASTE!