WASHINGTON (AP) – Bending to strong public opposition, the nearly bankrupt U.S. Postal Service on Wednesday backed off a plan to close thousands of rural post offices after May 15 and proposed keeping them open, but with shorter operating hours.
Postal buyouts by the numbers
USPS will offer buyouts to 21,000 postmasters
About 13,000 are already eligible for retirement
Buyout payment is $20,000 made in 2 equal installments, 1 year apart
Plan will halt the closing of 3,700 low-revenue post offices
USPS also plans to offer buyouts to all of its full-time career postmasters — about 21,000 positions. Part-time career postmasters are eligible for a prorated incentive payment. However, the buyout offers do not apply to Postal Career Executive Service postmasters.
Postmasters that accept the buyout will receive $20,000, split equally between two payments. Exiting postmasters will receive the first $10,000 payment in December 2012 and the second payment in December 2013.
Splitting the incentive payment in two will allow the agency to “better manage its cash flow,” according to a USPS statement. It could also save some postmasters on their income taxes.
The Postal Service said it didn’t know how many postmasters would accept the buyout offers, citing the personal nature of the decision. However, there are about 13,000 postmasters who are now eligible for retirement.
Postmasters must accept the buyout offer by June 22 and must leave USPS by July 31.
Cost-saving measures designed to stave off closures
The buyouts are part of a cost-saving maneuver to halt the shuttering of 3,700 low-revenue post offices. At a news briefing, Postmaster General Patrick Donahoe said he hoped the latest plan will help allay much of rural America’s concern about postal cutbacks. He prodded Congress to act quickly on legislation that will allow the agency to move ahead with its broader multi-billion dollar cost-cutting effort and return to profitability by 2015.
“We’ve listened to our customers in rural America, and we’ve heard them loud and clear — they want to keep their post office open,” he said. “We believe today’s announcement will serve our customers’ needs and allow us to achieve real savings to help the Postal Service return to long-term financial stability.”
The Senate, last month, approved postal reform legislation that would make the closures more difficult. But legislation in the House remains stalled over disagreements about more aggressive cuts.
While no post office would be closed, more than 13,000 rural mail facilities could see reduced operations of between two hours and six hours a day, but only after a review process that is expected to take several months. An additional 4,000 rural post offices would keep their full-time hours.
The agency also will announce new changes next week involving its proposal to close up to 252 mail processing centers.
After the Postal Service gets regulatory approval and hears public input sometime this fall, the new strategy would go into place over two years and be completed in September 2014, saving $500 million a year by reducing full-time staff.
Ending Saturday delivery still contentious
The latest move comes as the Postal Service is pushing Congress to pass cost-saving postal legislation that includes an end to Saturday mail delivery.
The Senate-passed bill would give the Postal Service an $11 billion cash infusion but also impose a one-year freeze on shuttering rural post offices. It would reduce by half the planned closings of mail processing centers, give affected communities new avenues to appeal closing decisions and bar cuts to Saturday delivery for at least two years.
At the time it was passed, the Postal Service denounced the Senate bill as “totally inappropriate” because it would keep unneeded facilities open.
In the House, hesitancy among rural lawmakers is helping to stall a separate bill that would allow for far more aggressive cuts, including a more immediate end to Saturday delivery.
Rep. Darrell Issa (R-Calif.) a co-sponsor of the House bill, said the plan announced Wednesday doesn’t cut costs enough. He noted, for instance, that additional cuts can be made in more densely populated urban communities, which should also be prodded to consider Village Post Offices or other alternatives that save money.
“The smallest 10,000 post offices collectively cost USPS less than $600 million to operate each year,” he said. “To achieve real savings creating long-term solvency, the Postal Service needs to focus on consolidation in more-populated areas where the greatest opportunities for cost reduction exist.”
Most of the 3,700 post offices that had been under review for possible closing had been in rural areas with low volumes of business, with most having only two hours of business a day even though they are open longer. Currently the post office operates more than 31,000 retail outlets.
The Postal Service has been grappling with losses as first-class mail volume declines and more people switch to the Internet to communicate and pay bills. The agency has forecast a record $14.1 billion loss by the end of this year; without changes, it said, annual losses will exceed $21 billion by 2016.
If the House fails to act soon, postal officials say, they will face a cash crunch in August and September, when the agency must pay more than $11 billion to the Treasury for future retiree health benefits. Already $13 billion in debt, the health payment obligation will force the agency to run up against its $15 billion debt ceiling, causing it to default on the payments.
The agency plans to release its latest quarterly financial results on Thursday.
(Federal News Radio’s Jack Moore contributed to this report)