Statement of NALC President Fred Rolando on the GAO Report
U.S. Postal Service: Strategies and Options
to Facilitate Progress toward Financial Viability
April 13, 2010

The Government Accountability Office was directed by the Congress in 2006 to produce a report by December 2011 “evaluating in-depth various options and strategies for the long-term structural and operational reforms of the United States Postal Service.” GAO was instructed by Congress in the Postal Accountability and Enhancement Act to make recommendations regarding how the “Postal Service’s business model can be maintained or transformed in an orderly manner that will minimize adverse effects on all interested parties and assure continued availability of affordable universal postal service throughout the United States.” The directive in the law also said: “The Government Accountability Office shall not consider any strategy or other course of action that would pose a significant risk to the availability of affordable, universal postal service throughout the United States.”

The Congress outlined, in detail, what it ordered GAO to do, and how to do it.

GAO ignored Congress.

Instead, it delivered an obviously hurried and haphazard audit report. GAO virtually ignored the most critical ingredient in the Postal Service’s current financial squeeze, the $5.5 billion per year payment, imposed by Congress in 2007, to pre-fund retiree health obligations. And its conclusion that the USPS business model was not viable was based on the false premise that the USPS has not been able to cut costs as much as its revenues have declined in recent years. In particular, the report states that “USPS lost $12 billion over this period [2007-2009], despite achieving billions in cost savings, reducing capital investments, and raising rates.” But this assertion is completely misleading. It glosses over the critical fact that if it were not for the excessive pre-funding payments, the USPS would have been profitable over the past three years—USPS prefunding payments totaled $12.4 billion over the past three years, more than accounting for the $11.7 billion in reported losses. In fact, the Postal Service has been able to adjust its costs to a decline in its revenue—a decline resulting from the worst recession in 80 years, which the GAO soft-pedals as a simple “economic downturn.”

Instead of the report requested by Congress, GAO has issued a full-throated attack on collective bargaining, our contractual COLA clause, our contractual limits on contracting out, our contractual protections of full-time career positions.

GAO outlines a series of disastrous future options, including moving part or all of USPS to “a private corporate model;” increasing “the percentage of part-time employees, who could work more flexible schedules” and allow the USPS to flexibly adjust to workload, “which varies greatly depending on the day of the week and the time of the year;” and changing the law’s interest arbitration rules to put a thumb on the scale for the Postal Service.

Rather than conducting the five-year “in depth” detailed review and analysis of this key national institution that Congress directed, GAO “conducted this performance audit from August 2009 to April 2010 in accordance with generally accepted government audit standards.” (p. 3). An “audit,” not an “in-depth” evaluation. But even with that crabbed green eyeshade view of its mission, GAO cut corners: “[W]e did not assess the reasonableness of these projections [retiree health valuations] or OPM’s actuarial assumptions and methodology. We utilized OPM’s valuation results to analyze the financial impacts of selected options for funding USPS’s retiree health benefit obligations. We did not assess the validity of USPS’s financial and mail volume projections due to time and resource constraints.” (p. 2).

The problem with this quick once-over approach is that it is precisely OPM’s “actuarial assumptions and methodology” that are at the heart of a dispute between the USPS Office of Inspector General and OPM over whether the USPS has been over-charged by $75 billion in pension costs—funds that could be returned and transferred to the Postal Service Retiree Health Benefits Fund to relieve the USPS of the need to make crushing pre-funding payments. If the OIG is right (and NALC believes OIG is right), that $75 billion cures USPS’ principal financial problem … and then some.

And it is precisely the validity of USPS’s “financial and mail volume projections” that define the extent of the long-term challenge facing the USPS and establish what the future needs may be. To simply accept USPS projections—notoriously and regularly off-target—due to “time and resource constraints” is simply irresponsible—not what Congress ordered, and not what the public interest requires.

The media’s appetite for news of any threatened disaster being what it is, the GAO report will make an initial big splash.

But it is Congress, not the news media or the GAO, that will decide whether the Postal Service is worth saving, and how.

And it is the NALC that will spare no effort in bringing the truth—and the real data—to the Congress for its deliberation. And it is NALC’s membership that will rise to the challenge to make sure that the real public, their patrons, and the mailers, know the facts and act on them. The country deserves nothing less.

source: National Association of Letter Carriers