USPS restricts nonessential spending to delay running out of cash

The Postal Service is putting immediate restrictions on nonessential spending to avoid running out of cash sooner than expected.

Postmaster General David Steiner wrote in a memo Tuesday that the restrictions will impact hiring, travel and training as well as other areas of spending. Departments within USPS may be asked to provide a summary of “cost-containment actions taken and expected savings.”

Steiner told members of the House Oversight Committee in March that USPS will run out of cash in early 2027, as long as it continues to pay its bills on time. But USPS is relying on some emergency measures to conserve cash.

“As you are aware, we are currently experiencing a temporary cash-flow shortage that requires us to take decisive steps to manage our available resources responsibly,” Steiner wrote in the memo. “To protect core operations and ensure that we can continue meeting all essential obligations, we are implementing immediate restrictions on non-essential spending across all departments.”

Steiner said these belt-tightening measures will remain in place until the agency’s cash position stabilizes. USPS, he wrote, will reassess the need for these restrictions “as conditions improve.”

“These actions, while challenging, are necessary to ensure we continue operating effectively and safeguarding the long-term health of our organization,” he wrote.

The website 21st Century Postal Worker publicly posted a copy of the letter on Wednesday.

A USPS spokesperson said in a statement that “the actions outlined in the letter represent additional/continued self-help actions we have taken/are taking to address our ongoing financial crisis.”

Brian Renfroe, president of the National Association of Letter Carriers, told Federal News Network he was also aware of the letter.

“The biggest takeaway for me is it just continues to highlight the need for the reforms to give the Postal Service some short and long-term financial relief,” Renfroe said in a phone interview.

A USPS official, who requested anonymity to avoid retaliation, said Steiner is “doing all he can to conserve cash.”

USPS is refining a wish-list of proposals that, if passed by Congress, would put the agency on a firmer financial footing. The agency expects to submit those proposals to lawmakers later this summer.

USPS has also floated the possibility of financial assistance from Congress to keep the largely self-funded agency from running out of cash early next year.

Alternatively, Steiner said Congress could give USPS greater flexibility to close unprofitable post offices, slash days of delivery and reduce service standards. If lawmakers go down this path, Steiner said USPS would also seek greater authority to raise mail prices.

Renfroe said USPS should focus on proposals that will reform its long-term business model, and “not spend their time on things like reducing delivery frequency.”

Steiner wrote that USPS will limit hiring to only backfilling vacant authorized positions. USPS operations looking to hire beyond their authorized headcount must get approval from the Deputy Postmaster General Doug Tulino, who also serves as the USPS chief operating officer and its chief human resources officer.

“Hiring a new employee imposes a substantial and lasting financial obligation on the organization,” Steiner wrote. “Beyond salary, the Postal Service must fund ongoing costs such as benefits, retirement contributions, technology and workforce support, training and annual compensation adjustments.”

The memo’s hiring restrictions are unlikely to affect the agency’s unionized frontline workforce. Collective bargaining agreements between USPS and postal unions require the agency to fill vacant bargaining-unit positions.

USPS has a high rate of turnover among its noncareer workforce and maintains a steady headcount despite ongoing hiring struggles. A USPS inspector general report in April 2023 found that USPS pre-career turnover increased substantially in recent years — from 40% in 2020, to 59% in 2022.

The USPS official said that “external hiring is constant,” and that about 30% of its workforce is less than five years away from becoming retirement eligible.

USPS is also suspending all nonessential travel, unless it is directly tied to “revenue generation or revenue protection,” required to fulfill a contract, regulatory requirement or audit, or if travel is critical to ongoing operations where no virtual alternative is possible

Steiner wrote that attendance at in-person conferences should be postponed unless it is “business-critical.” Team events, celebrations and non-essential employee engagement activities, he added, should be scaled back or paused. Training will also be deferred unless legally or contractually required.

Earlier this month, Steiner and other USPS executives delivered a keynote address in Phoenix at the National Postal Forum, an annual conference for thousands of people working in the mail and shipping industry.

“The Postal Service you rely on is not standing still,” Steiner said at the event. “Because the pace of change in commerce today is faster than ever, we do not get to choose whether the market changes. We only choose whether we are ready and whether we are agile enough to meet it.”

If USPS runs out of cash, Steiner warned that the consequences would be far-reaching beyond its own customers and 640,000-employee workforce.

Companies like Amazon and UPS compete with USPS in package delivery, but also serve as some of its biggest customers, paying the agency to deliver packages to often rural destinations that are unprofitable. If USPS went under, Steiner said it would jeopardize a nearly $2 trillion mailing and shipping industry that supports about 78 million jobs.

USPS is also pausing most discretionary purchases of office supplies —including office furniture, promotional items, electronics that are not required to maintain business continuity and bulk supply orders beyond the agency’s near-term need.

“Routine supplies necessary to maintain daily operations may continue but should be minimized, consolidated and purchased only as needed,” Steiner wrote.

The agency is putting a freeze on all new software subscriptions, system upgrades and license expansions unless they support mission-critical work or are approved by the agency’s chief information officer or chief technology officer.

USPS is also relying on other extraordinary measures to avoid running out of cash. In April, USPS told the Office of Personnel Management last month that it will hold off paying its contributions to the Federal Employees Retirement System (FERS), a move that’s expected to conserve cash in the near term. FERS covers federal and postal employees who started working after January 1987.

USPS previously suspended its employer contributions to FERS in June 2011 to retain as much cash as possible during another acute period of financial stress. That suspension, however, only lasted for several months, and USPS resumed biweekly payments and paid back what it owed OPM.

USPS is planning to raise the price of a first-class forever stamp on July 12, from 78 cents to 82 cents. Since 2020, USPS has raised mail prices nearly every January and July. But its regulatory agency recently limited USPS to a single price hike for mail each year through September 2030. The agency needs approval from the regulator before the price increase goes into effect.

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