The Postal Service, seeing no sustainable path under its current business model, is offering Congress and the incoming Biden administration a shot at working together on a long-term strategy to reform the way it operates.
USPS ended fiscal 2020 with a $9.2 billion net loss, its 14th consecutive year in the red, despite a historic volume of election mail and mailed-in ballots.
Postmaster General Louis DeJoy warned Friday that the losses will continue if Congress, the White House and its postal regulators do nothing.
Insight by LookingGlass: Federal technology experts provide insight into how agencies are approaching cybersecurity in the new virtual climate in this exclusive executive briefing.
USPS projects a $9.7 billion loss by the end of this fiscal year, and by that point has warned it won’t have enough cash to keep operating.
“Clearly, we have an unsustainable business model,” DeJoy said Friday in a meeting of the USPS Board of Governors. “Our problems can be solved, but we need to get on with it now. Get on with the business difficult business of solving them now.”
USPS Chief Financial Officer Joe Corbett said the election increased overall mail volume late in the fiscal year, but increased operational costs offset much of the revenue.
“The revenue generated from this increase, while notable, was countered by necessary increased operational expenses associated with our extraordinary measures to advance and expedite the delivery of the nation’s ballots and election mail,” Corbett said.
USPS delivered 135 million ballots and 600 million pieces of election mail. DeJoy said USPS delivered 99.7% of ballots within five days, but on average delivered incoming or outgoing ballots in two days or less.
USPS saw a nearly 19% increase in package volume, but USPS officials have warned that the coronavirus pandemic will be a repeat of the 2008 recession, when the agency mail volume dropped by about 20% and never returned to pre-recession levels following the recovery.
First-class mail volume in FY 2020 fell by more than 4%, and marketing mail volume declined by more than 15%.
To address its long-term challenges, the Postal Service will need help from Congress, the incoming administration and the Postal Regulatory Commission, but in the meantime, DeJoy said USPS is working on a strategic plan it’ll release in the next few months.
The strategy, he said, will keep six-day mail delivery, preserve the agency’s universal service obligation and keep the USPS self-funded.
Separately, the USPS IG recently reported that the agency had identified 57 operational changes that, if implemented, would cut costs equivalent to 64 million work hours.
More than a dozen federal lawsuits, however, temporarily blocked these changes ahead of the election, and the IG recommends USPS wait until after its peak holiday operations
Despite a contentious start to his tenure as postmaster general, DeJoy extended an olive branch to Congress and the incoming Biden administration on long-term postal reform.
“To believe that we can operate as we have before and continue to meet our service mission to the nation is not realistic,” DeJoy said. “It’s time to put away the harsh rhetoric, lower the temperature and collaborate on new solutions.”
USPS Board of Governors Robert Mike Duncan echoed that tone, saying he looks forward to working with lawmakers to lay out a vision for the Postal Service of the future.
“All of us, postal leadership, our workforce, the unions, policymakers, postal shareholders and the public need to work together,” Duncan said. “We all share a great appreciation for the Postal Service. Now I hope we can work together to save the Postal Service.”
Lawmakers have introduced several bills in recent years to put USPS on a firmer financial footing, but none of them has gained much traction. The most recent effort, a bill introduced by Rep. Peter DeFazio (D-Ore.), passed the House in February.
The next session of Congress will have little time to decide on the short-term relief the USPS should receive in the next pandemic spending bill. The Postal Service expects to run out of cash in October 2021.
President-elect Joe Biden, while still on the campaign trail, outlined some of his priorities for postal reform. He told the National Association of Postal Supervisors in a survey that his administration would work with Congress to eliminate the Postal Service’s mandate since 2006 to pre-fund retiree health benefits.
His administration would also focus on giving the cash-strapped agency emergency funding to keeping operating beyond next summer. Biden said he’d also help modernize the agency’s vehicle fleet and fill the three vacant seats on the USPS Board of Governors.
Former deputy Postmaster General Ronald Stroman is leading the Postal Service team for the Biden-Harris transition, along with former federal chief technology officers Aneesh Chopra and Jim Sauber, the chief of staff of the National Association of Letter Carriers.
NALC President Fredric Rolando said in a statement that USPS finances demonstrate an urgent need for federal assistance in the next round of pandemic spending.
“These figures, driven by the economic shutdown’s impact on first-class mail, show the need for federal assistance during the pandemic, just as other sectors have received.
“Perhaps never in its 245 years has the public post office been more indispensable to the country,” Rolando said.