USPS seeks innovative, legislative relief for financial woes

The Postal Service is reeling from the decision by the Postal Rate Commission not to increase the price to mail a letter. USPS was hoping to use the rate hike t...

By Max Cacas
Federal News Radio

For almost as long as he can remember, Postmaster General John Potter has been in charge of the U.S. Postal Service that has been caught behind the eight-ball when it comes to its finances.

“I think we all agree on the facts,” Potter said during a press briefing with reporters Friday in Washington. “The fact that we’re down 100,000 people, that’s a fact. Now, when it comes to people’s view of what’s going on, obviously there’s a loss of $6 billion, and I take the message as, ‘we need you to do more,’ and we’re all about trying to do more. And we’re laying out for people that there’s a balance that needs to occur between service. The law that says we have to deliver six days a week. So, fulfilling that element of the law is somewhat in conflict with a demand that we make ends meet.”

Potter said USPS also must factor in the employee union contracts and the constraints of those collective bargaining agreements.

“Frankly, we’re doing the very best that we can, and we do have a record of accomplishment,” he said.

Potter’s weary frustration was palpable, one day after the Postal Regulatory Commission turned down the USPS request to raise the price of a first class stamp by two cents. USPS sought the rate hike to cover an approximately $6 billion-to-$7 billion loss expected this fiscal year.

Commission chairwoman Ruth Goldway said the Postal Service’s request failed to fully justify the rate increase. She said the requested rate adjustment was not due to the recent recession, as indicated by Postal Service officials, but rather was an attempt to address long-term structural problems.

“The case they needed to make, as far as we understand the law, is to relate the revenue they’re requesting to the losses that were the impact of the recession,” Goldway said after the meeting. “Instead, they explained how terrible the recession was, and then they said we have this liquidity crisis.”

Potter said when it comes to that rate increase, he had no choice but to apply for the relief.

“When it comes to the exigent rate case, that a lot of folks ask me why did we file it, we felt compelled to file it because it was one of the few paths that the law allowed us in terms of change,” he said. “If you think about it, we can’t go from six-to-five day delivery, we can’t touch legacy cost payments, because they’re hard-wired into the law, same with retiree health benefits. And given the fact that we were losing $6-to-$7 billion, we have to explore every option that’s out there to close that gap.”

Potter said USPS tried very hard to do what it can, where it can, to deal with the revenue shortfall that most credit to steadily declining mail volume, and an increasing number of people turning to the Internet.

Among the things USPS has done is:

  • Reduce its workforce by 100,000 employees since 2007;
  • Increased productivity, and made adjustments to how its staff uses its time on the job, particularly at mail sorting facilities.

Still, Potter said that laws keep them from closing thousands of under-performing post offices across the country, leaving USPS unable to cut costs that way. He said the service’s inability to reduce mail delivery from six-to-five days a week also is handcuffing them from making important additional changes to adjust to lower mail volumes.

Potter has said that current projections show the agency won’t have enough cash to make the payment required for for retiree health benefits next Sept. 30.

As for what they’re trying to do to work around the many financial handcuffs that tie them to the status quo, Potter said, among other things, USPS officials will be meeting soon to discuss innovation, and come up with new ways to make money.

He said an opportunity, for example, in following the practice of other postal services abroad, in offering non-traditional digital delivery services, something encouraged in a recent meeting with a mass-mailer industry group.

“The current restriction on us being limited to hard copy is problematic, because businesses are struggling with this transition from hard copy to digital, and they are suggesting that that’s a space where the Postal Service could be helpful to them,” he said.

Also, the Postal Service is preparing for negotiations with its labor unions, where Potter said “everything is on the table.”

Potter added the service still is dependent on legislative relief to give them the tools they need to work through their financial morass.

When Congress returns from the pre-election recess, Potter said the Postal Service also will return to Capitol Hill to continue to press for legislative relief.

Sen. Tom Carper (D-Del.) is one such lawmaker. He introduced the Postal Operations Sustainment and Transformation (POST) Act of 2010, designed to let USPS recoup millions paid into the pension fund to cover retirement and health benefits for retirees. The proposed legislation also includes provisions to eliminate Saturday deliveries, shut down underused offices, open automated kiosks in grocery stores, and add non-postal services such as voter registration and driver’s license renewal.

The measure’s chances for consideration, much less passage, in the upcoming lame duck session of Congress, now slated to begin Nov. 15, are considered slim at best.


The Associated Press contributed to this report.

(Copyright 2010 by All Rights Reserved.)

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