Here's some bad news for both the U.S. Postal Service and postal employees who are eyeing retirement: The federal agency that has caused months of delays in processing retirement applications and issuing benefits checks isn't going to clean up its act any time soon.
The Office of Personnel Management's Retirement and Benefits Office "characterized by lengthy delays in processing claims, might not get much better any time soon," writes Tammy Flanagan of the National Institute of Transition Planning, in a recent Government Executive article. The agency has hired additional employees to work on the backload of claims and eventually hopes to modernize its paper-based processing system.
OPM officials acknowledge that the agency "still processes retirement claims in 2010 much the same way it did in 1920," Flanagan writes.
Downsizing the workforce through attrition, mostly retirements, is a major part of the Postal Service's plan to fix its finances. But the cumbersome process of getting accurate benefits estimates and timely payments deters retirement-eligible employees from calling it quits.
Postal Service retirees report that OPM was overwhelmed by USPS's early-retirement programs last year, with some waiting six months or longer to receive their first payments. (If a private business did that to its retirees, someone would probably end up in jail.)
Such waits have been common since at least the 1980s, Flanagan indicates. Her advice: Employees should save up annual leave in the year they retire so that they will get a lump-sum payment upon quitting that will see them through until the retirement checks start coming.
Related articles:
Sunday, October 31, 2010
Friday, October 29, 2010
Postal Service Files Rate-Case Appeal
A previous version of this article had errors regarding the dates. I apologize for the confusion and errors.
The U.S. Postal Service's appeal of the Postal Regulatory Commission's decision on proposed exigent" (emergency) rate increases reveals little about USPS's arguments.
The filing in "United States Postal Service v. Postal Regulatory Commission" does not reveal any of the Postal Service's arguments in the case. It merely states, "The United States Postal Service hereby petitions this Court for review of Order Number 547 of the Postal Regulatory Commission (PRC), issued on September 30, 2010, which denied the Postal Service's request for exigent rate adjustments."
Yesterday, the U.S. District Court of Appeals for the District of Columbia set deadlines of Nov. 29 for procedural motions and Dec. 13 for dispositive motions (that is, motions for the court to issue a summary judgment or to dismiss the case).
The U.S. Postal Service's appeal of the Postal Regulatory Commission's decision on proposed exigent" (emergency) rate increases reveals little about USPS's arguments.
The filing in "United States Postal Service v. Postal Regulatory Commission" does not reveal any of the Postal Service's arguments in the case. It merely states, "The United States Postal Service hereby petitions this Court for review of Order Number 547 of the Postal Regulatory Commission (PRC), issued on September 30, 2010, which denied the Postal Service's request for exigent rate adjustments."
Yesterday, the U.S. District Court of Appeals for the District of Columbia set deadlines of Nov. 29 for procedural motions and Dec. 13 for dispositive motions (that is, motions for the court to issue a summary judgment or to dismiss the case).
Monday, October 25, 2010
Potter Quitting the Worst CEO Job in America
At the ripe age of 55, Postmaster General Jack Potter announced his retirement today from the worst CEO job in America.
Some will no doubt speculate about the reasons -- a coming change in Congress or perhaps the failure so far to notch any major political victories on such issues as rate increases, five-day delivery or retiree-benefits reform. But I have my own theory.
The job stinks.
By any measure, the U.S. Postal Service is among the top five employers in the country. Chiefs of any similar-sized private organization get at least 10 times as much compensation -- and far fewer complaints about how much they're being paid.
I've had my criticisms of Potter's Postal Service, but most of what's wrong seems to predate Potter. And change doesn't come easily to such a massively bureaucratic and complex organization. Laws, regulations, political forces, union contracts, and the inability to hire talented managers from outside the organization all tie the PMG's hands in a way that no private-sector CEO has to deal with.
Most CEOs have a board of directors consisting of fellow or former CEOs, investment bankers, high-powered lawyers, and others who can provide valuable guidance. But the Postal Service's board of governors is made up mostly of political hacks with little relevant knowledge or experience.
And then there's the Postal Service's other governing body, consisting of 535 politicians who drain billions from the USPS in pension and benefits funds to hide the size of the federal deficit, carp about how much money the Postal Service is losing, then scream "not in my district" whenever attempted Postal Service streamlining hits too close to home.
Want to launch a new venture? If you're the PMG, forget about the usual discussions of return on investment or marketing plans. First you have to figure out who might object and whether they have the political clout to block the path.
A money-losing business with an acknowledged need to downsize moves quickly, with many people working round the clock to implement buyout packages and to consolidate operations. But the Postal Service's downsizing efforts creak along, with each facility consolidation the subject of many months of study, public hearings, protests, and Congressional badgering.
And instead of encouraging people to retire to reduce operating expenses, the bureaucracy discourages them instead by offering incomplete, sometimes inaccurate, benefits information and notoriously slow payments.
To no one's surprise, Potter is being replaced by his right-hand man, Pat Donahoe, the deputy PMG and chief operating officer. My condolences, Pat.
Some will no doubt speculate about the reasons -- a coming change in Congress or perhaps the failure so far to notch any major political victories on such issues as rate increases, five-day delivery or retiree-benefits reform. But I have my own theory.
The job stinks.
By any measure, the U.S. Postal Service is among the top five employers in the country. Chiefs of any similar-sized private organization get at least 10 times as much compensation -- and far fewer complaints about how much they're being paid.
I've had my criticisms of Potter's Postal Service, but most of what's wrong seems to predate Potter. And change doesn't come easily to such a massively bureaucratic and complex organization. Laws, regulations, political forces, union contracts, and the inability to hire talented managers from outside the organization all tie the PMG's hands in a way that no private-sector CEO has to deal with.
Most CEOs have a board of directors consisting of fellow or former CEOs, investment bankers, high-powered lawyers, and others who can provide valuable guidance. But the Postal Service's board of governors is made up mostly of political hacks with little relevant knowledge or experience.
And then there's the Postal Service's other governing body, consisting of 535 politicians who drain billions from the USPS in pension and benefits funds to hide the size of the federal deficit, carp about how much money the Postal Service is losing, then scream "not in my district" whenever attempted Postal Service streamlining hits too close to home.
Want to launch a new venture? If you're the PMG, forget about the usual discussions of return on investment or marketing plans. First you have to figure out who might object and whether they have the political clout to block the path.
A money-losing business with an acknowledged need to downsize moves quickly, with many people working round the clock to implement buyout packages and to consolidate operations. But the Postal Service's downsizing efforts creak along, with each facility consolidation the subject of many months of study, public hearings, protests, and Congressional badgering.
And instead of encouraging people to retire to reduce operating expenses, the bureaucracy discourages them instead by offering incomplete, sometimes inaccurate, benefits information and notoriously slow payments.
To no one's surprise, Potter is being replaced by his right-hand man, Pat Donahoe, the deputy PMG and chief operating officer. My condolences, Pat.
Friday, October 22, 2010
Rate-Case Appeal Is a No-Lose Venture for USPS
The U.S. Postal Service’s decision, announced today, to appeal the Postal Regulatory Commission's exigency-rate ruling could backfire, and yet in a way the Postal Service can’t lose.
The appeal could backfire if the appeals court decides that hardship to USPS caused by an economic recession is not grounds for breaching the inflation-based price cap on most postal rates. The PRC said the recent recession did in fact justify emergency rate increases but that postal officials failed to tie their request to the recession.
Regardless of what happens in the Court of Appeals for the District of Columbia, the appeal is likely to be a winner in the court that really matters for the Postal Service – Congress. Win, lose, or draw, there’s not enough money at stake in the exigency case (“only” $2.3 billion) to fix the Postal Service’s finances.
The only potential solutions big enough to stanch the bleeding seem to be reforming retirement-benefits payments that shift money from USPS to the federal government, reducing days of delivery, or some kind of radical downsizing. Congress is the key, or rather the roadblock, to all of those.
To get Congress to remove any of those roadblocks, postal executives need to show Congress that they have done everything possible within current law to balance the books. They can’t afford to be second-guessed regarding why they didn’t appeal the PRC’s Sept. 30 ruling, even if the court’s ruling closes a door (a revised exigency rate request) that the PRC left open.
The Postal Service's announcement did not provide much detail regarding the basis for its appeal, other than that it "disagrees with the PRC’s interpretation of the statutory language and believes that the PRC applied an incorrect standard in evaluating the request for anexigent price increase."
It added, "The Postal Service believes we need clarity regarding the exigent price increase rules under current law should the Postal Service find itself in a similar situation in the future."
The appeal will have no impact on USPS’s ability to seek an inflation-based increase, which could happen any day.
Related articles:
The appeal could backfire if the appeals court decides that hardship to USPS caused by an economic recession is not grounds for breaching the inflation-based price cap on most postal rates. The PRC said the recent recession did in fact justify emergency rate increases but that postal officials failed to tie their request to the recession.
Regardless of what happens in the Court of Appeals for the District of Columbia, the appeal is likely to be a winner in the court that really matters for the Postal Service – Congress. Win, lose, or draw, there’s not enough money at stake in the exigency case (“only” $2.3 billion) to fix the Postal Service’s finances.
The only potential solutions big enough to stanch the bleeding seem to be reforming retirement-benefits payments that shift money from USPS to the federal government, reducing days of delivery, or some kind of radical downsizing. Congress is the key, or rather the roadblock, to all of those.
To get Congress to remove any of those roadblocks, postal executives need to show Congress that they have done everything possible within current law to balance the books. They can’t afford to be second-guessed regarding why they didn’t appeal the PRC’s Sept. 30 ruling, even if the court’s ruling closes a door (a revised exigency rate request) that the PRC left open.
The Postal Service's announcement did not provide much detail regarding the basis for its appeal, other than that it "disagrees with the PRC’s interpretation of the statutory language and believes that the PRC applied an incorrect standard in evaluating the request for anexigent price increase."
It added, "The Postal Service believes we need clarity regarding the exigent price increase rules under current law should the Postal Service find itself in a similar situation in the future."
The appeal will have no impact on USPS’s ability to seek an inflation-based increase, which could happen any day.
Related articles:
Tuesday, October 19, 2010
How Democrats Helped Finance the Tea Party With Black Liquor
 |
| Black Liquor |
The money was paid last year to paper giant Georgia Pacific, which is part of the Koch Industries conglomerate that has been the center of much political controversy and media coverage of late.
The coverage and often-heated discussions – including an environmental group's anti-Koch spot that debuted on a Times Square superscreen last week -- have overlooked the ironies of GP’s black liquor windfall.
Democratic Congressional leaders complained in March 2009 when they learned that pulp manufacturers like GP were exploiting a loophole in a federal biofuel program. But they failed to close the loophole, enabling the companies to rake in billions of dollars in direct subsidies from the IRS for basically doing what they and pulp makers around the world have been doing for decades – burning black liquor, a pulp byproduct, to power their mills.
Environmental groups have attacked Koch’s owners and executives for being, in the words of Greenpeace, “a financial kingpin of climate science denial and clean energy opposition.” Liberals, including Obama himself, also point to the generous support of Koch’s owners and executives for Tea Party organizations and conservative political candidates.
And conservatives are crying foul over the Obama Administration’s alleged persecution of Koch. Six Republican senators recently requested an investigation of whether the Internal Revenue Service leaked confidential tax information about the company to an Obama advisor as part of a campaign to harass conservative political donors.
Now for the ironies:
Irony #1, Alternative fuel mixture (AFM) tax credits: This federal program was supposed to subsidize new eco-friendly fuels, but manufacturers of kraft pulp spotted a loophole that enabled them to get the credits for using black liquor as a fuel, which they were doing anyway. A United Steelworkers publication claims GP, the country’s #2 maker of kraft pulp, raked in $5 billion in black liquor tax credits. But, based on the company’s pulp-making capacity, the number was more likely in the $1 billion to $1.5 billion range.
In any case, a program that was intended to subsidize green alternatives to petroleum-based fuels paid out huge sums to a conglomerate that is mostly an oil and chemicals company and that generously funds attacks on renewable-energy programs and claims of human-caused climate change.
Irony#2, ObamaCare: Why, after fuming about the black liquor loophole in the spring of 2009, did Congress and the Obama Administration not try to close it? The best theory is that they did a deal with Sen. Olympia Snowe, R-Maine and a champion of the pulp and paper industry, so that they would have at least one GOP yes vote in the Senate Finance Committee for the Administration’s sweeping healthcare legislation.
Democrats' use of black liquor money to grease the skids for healthcare legislation could backfire: Americans for Prosperity, a Tea Party-affiliated group that was started and largely funded by Koch's owners, has spun off an organization called Hands Off My Healthcare, which is campaigning against pro-ObamaCare Congress members who are seeking re-election.
Irony #3, Internal Revenue Service: The IRS came under suspicion when a senior Administration official told reporters in August, "So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know, Koch Industries is a multibillion dollar business."
The Republican senators seeking an investigation of a possible IRS leak responded, "The statement that Koch is a pass-through entity implies direct knowledge of Koch's legal and tax status, which would appear to be a violation." Koch Industries has issued a statement saying that it’s a corporation and pays corporate taxes.
The suspicion of the IRS is a strange turn of events considering how helpful, perhaps unwittingly, the agency has been to Koch’s Georgia Pacific.
IRS rulings on black liquor have been favorable to all kraft-pulp manufacturers, enabling them to claim alternative fuel-mixture credits even on the portion of black liquor that has no energy value, such as water. The result was about $6.6 billion paid out to publicly traded pulp makers, plus probably at least $2 billion more to privately held companies like GP.
But the agency’s strangest ruling on the tar-like pulp byproduct appears to be of special benefit to GP. The “Son of Black Liquor” ruling made black liquor eligible for another green-energy program, Cellulosic Biofuel Producer Credits (CBPC), despite a law saying that only EPA-approved motor fuels were eligible.
These tax credits are twice as generous as the original black liquor credits, but they can only be used to offset income taxes, making them virtually worthless to the many unprofitable and marginally profitable pulp and paper companies. The country’s #1 pulp maker, International Paper, has said it isn’t sure whether it will have enough tax liability to justify paying back any of its $2.1 billion in AFMs to get the new tax credits.
Not so with Koch. With an estimated $100 billion in annual revenue, much of it from its presumably profitable oil sector, the big conglomerate should have no problem making immediate use of the approximately $2 to $3 billion in tax credits it would receive if it returned all of its original black liquor subsidies.
Dead Tree Edition has published more than 40 articles on the strange saga of black liquor tax credits. Here are a few that provide more background on these eco-credits that did nothing for the environment (including links to original documents so that you know I’m not making this stuff up):
- U.S. Taxpayers' Black Liquor Tab Surpasses $30 Billion: For the next several years, taxpayers will be footing the huge bill for Congressional shenanigans regarding pulp byproducts, with most of the money going to hide increases in the federal deficit rather than to pulp manufacturers.
- Congress and Paper Companies Covet 'Son of Black Liquor' Funds: Plans to use, or not use, Son of Black Liquor tax credits vary widely from company to company.
- What, Exactly, Is Black Liquor? Just Ask the Tax Man: If you want to understand that once-obscure, now infamous pulp byproduct known as black liquor, you can turn to an unlikely source – the lawyers at the Internal Revenue Service.
- Meet Koch Industries: The green group that produced the Times Square provides chapter and verse on environmentalists’ and liberals’ complaints about Koch and the Koch brothers.
- Shutting Up Business: A lengthy Wall Street Journal opinion piece presents the Obama Administration’s attacks on Koch Industries as part of a broader campaign to stifle business support for conservative candidates.
- Tea Party movement: Billionaire Koch brothers who helped it grow: An interesting profile of the Koch brothers and how they inherited their libertarian leanings from their John Bircher father.
- A Consistent, Principled Effort: Koch Industries describes its commitment to "liberty and free-market principles" as well as its charitable and advocacy giving.
Saturday, October 16, 2010
Congressman Issa: Where Are All Those Postal Supervisors?
The response to an article two weeks ago that quoted Rep. Darrell Issa as saying one in seven U.S. Postal Service employees has stirred up an unprecedented amount of reaction.
So far, 57 comments have been made to USPS Has Too Many Supervisors And Too Many Employees, Congressman Says -- a Dead Tree Edition record -- and the response was even greater on other sites that linked to the article. Postalreporter.com, for example, has 204 comments. The head of the postal supervisors union also objected to the California Republican's "trash talk" and challenged his statistics.
"Without doubt, the supervisory ratio within the Postal Service is far, far higher than 1:7," said Louis M. Atkins, president of the National Association of Postal Supervisors. Many comments, though acknowledging that the Postal Service has too many layers of management, also questioned Issa's numbers.
I agree with these folks. After looking at USPS employment statistics (see chart at right from the last annual report), I can't find that many supervisory or managerial employees.
Of the approximately 712,000 employees at the end of last year, more than 90% are in categories like carrier and mail handler that seem clearly to be non-supervisory. Adding the "Postmasters/Installation Heads", "Supervisors/Managers", and all headquarters and area-office employees (even though some are non-supervisory) yields abou t 65,000 -- only 1 in 11 USPS employees.
Perhaps Issa excluded non-career employees from his count. But, assuming he recognizes that part-timers and temps are an efficient way to handle fluctuating workloads, that wouldn't make sense. And, besides, that would only change the ratio to about 1 in 10.
Some commenters wondered whether Issa was including 204Bs (substitute supervisors), but they can hardly be called true supervisors.
And one commenter had an insightful response to Issa: "In fairness, the '1 of 7' that Representative Issa refers to also includes low-level Postmasters at thousands of small post offices in small communities throughout the nation. Many of these Postmasters are the only employee in their office, or have just a few clerks or rural carriers. Their salary is less than that of a city letter carrier. Incidentally, many of these same small offices are ones that Congress prevents USPS from closing!"
Other highlights from the comments:
So far, 57 comments have been made to USPS Has Too Many Supervisors And Too Many Employees, Congressman Says -- a Dead Tree Edition record -- and the response was even greater on other sites that linked to the article. Postalreporter.com, for example, has 204 comments. The head of the postal supervisors union also objected to the California Republican's "trash talk" and challenged his statistics.
"Without doubt, the supervisory ratio within the Postal Service is far, far higher than 1:7," said Louis M. Atkins, president of the National Association of Postal Supervisors. Many comments, though acknowledging that the Postal Service has too many layers of management, also questioned Issa's numbers.I agree with these folks. After looking at USPS employment statistics (see chart at right from the last annual report), I can't find that many supervisory or managerial employees.
Of the approximately 712,000 employees at the end of last year, more than 90% are in categories like carrier and mail handler that seem clearly to be non-supervisory. Adding the "Postmasters/Installation Heads", "Supervisors/Managers", and all headquarters and area-office employees (even though some are non-supervisory) yields abou t 65,000 -- only 1 in 11 USPS employees.
Perhaps Issa excluded non-career employees from his count. But, assuming he recognizes that part-timers and temps are an efficient way to handle fluctuating workloads, that wouldn't make sense. And, besides, that would only change the ratio to about 1 in 10.
Some commenters wondered whether Issa was including 204Bs (substitute supervisors), but they can hardly be called true supervisors.
And one commenter had an insightful response to Issa: "In fairness, the '1 of 7' that Representative Issa refers to also includes low-level Postmasters at thousands of small post offices in small communities throughout the nation. Many of these Postmasters are the only employee in their office, or have just a few clerks or rural carriers. Their salary is less than that of a city letter carrier. Incidentally, many of these same small offices are ones that Congress prevents USPS from closing!"
Other highlights from the comments:
- "There are far too many managers. I am a manager and I've seen it from both sides. But it is not so much local management as it is people that don't even see the mail, touch the mail or have been inside a post office WORKING for decades and have no clue what is going on. Some district jobs are an all day cake party,"
- "I've been in offices where I was the only one supervising 50+ employees."
- "If the USPS restricted access to Facebook and personal email accounts, our office could eliminate two supervisors."
- "There are 35 routes and 6 clerks in my office yet we have 5 custodians [not techs] to pick up empty trays and trash and mow the lawn. Ridiculous."
- "You all can come work at a REC where the ration is 1:200...and you will never see one of your employees if you don't want to."
Friday, October 15, 2010
Readers Cry Foul Over Mailing Mag's Cover
Business-to-business magazines have a notoriously difficult time finding interesting and relevant cover images. Mailing Systems Technology rose to the challenge this month, but don’t be surprised if the November cover features a postage meter or some other “safe” subject.I’ll let Amanda Armendariz, MST’s editor, tell the story, from an email she sent to subscribers this week:
“We were trying to go for something a bit different than the usual charts and graphs that normally grace the cover of survey issues, something that would grab your attention. We appear to have succeeded, although not always in the best way. We've gotten several comments from people who are concerned that the image is glorifying the abuse and battering of women.”
“The woman on our cover is a boxer, not an abused woman. When we selected the photo, we felt that the fact that her hands are wrapped as are any boxer's hands makes it clear that she's engaging in this competitive sport of her own free will."
“Perhaps the same image of a man would have been perceived as a boxer and been more acceptable, but we chose the image because it portrayed a strong woman who demonstrates several things: first, that she can take a punch and keep on fighting (in the ring) just like mail managers have to do in these changing times. Furthermore, we strongly support women who are pioneers in fields that are generally male-dominated, as is the case with women in boxing."
“Our entire staff hopes that everyone is able to take another look at the cover through a different perspective.”
The subject is clearly a boxer, not an abused woman, but it might have been less confusing if she were wearing boxing gloves, headgear, or a mouthguard.
Wednesday, October 13, 2010
Mailers Alliance Fights 'Nonsensical' Price-Cap Ruling
In an attempt to hold down next year’s increase in postage rates, an alliance of mailers today challenged as “nonsensical” an informal ruling issued by a Postal Regulatory Commission lawyer.
Periods of deflation should not be ignored when calculating the price cap for postal rates, the Affordable Mail Alliance argued in its filing with the PRC.
The alliance's interpretation of the PRC’s regulations would set the U.S. Postal Service’s rate authority today at 0.873%, versus 1.447% in the method endorsed yesterday by the PRC’s general counsel, Stephen L. Sharfman. (See Informal Ruling Makes Postage Increase of 1.7% Likely in January.)
If the Postal Service filed for rate increases after September’s Consumer Price Index is released this Friday, the allowed rate increase would be about 1.1% with the alliance's method versus about 1.7% (Oct. 15 update: 1.685%) with the Sharfman method.
“Maintaining the integrity of this [inflation-index price] structure requires that the price cap reflect periods of deflation as well as inflation,” wrote the broad-based industry alliance, which was formed this year in response to USPS’s unsuccessful request for exigent (emergency) rate increases.
Ignoring years when the Consumer Price Index is lower than in the previous year, as happened in 2009, “would allow the Postal Service to ratchet up its prices over time faster than inflation by refraining from rate adjustments following intervals of deflation,” the filing said. “No reviewing court is likely to find this nonsensical outcome consistent with the plain language” of the law or PRC regulations.
“The difference between the two competing interpretations of the Commission’s rules amounts to approximately $360 million in postage and fees per year,” the mailers alliance wrote. “Moreover, postal price levels inflated by the use of an excessive rate adjustment factor would become the base rates for future price cap adjustments; hence, the original overcharge would recur in perpetuity.”
“Recurring periods of deflation are not unlikely in the current economies of the United States and the world. If the economy alternates between periods of inflation and deflation that leave the CPI roughly flat, selective timing of CPI-based price adjustments could result in postal price increases substantially outpacing inflation over time,” the alliance response said.
The alliance also objected to Sharfman’s “informal advice” because it came only six days after the Postal Service requested guidance on how to interpret the rate-cap regulations. The PRC’s rules require interested parties to have seven days to respond in such cases, and Sharfman’s letter was issued even though PRC staff knew the alliance was preparing a response to USPS's request, the alliance claimed.
Periods of deflation should not be ignored when calculating the price cap for postal rates, the Affordable Mail Alliance argued in its filing with the PRC.
The alliance's interpretation of the PRC’s regulations would set the U.S. Postal Service’s rate authority today at 0.873%, versus 1.447% in the method endorsed yesterday by the PRC’s general counsel, Stephen L. Sharfman. (See Informal Ruling Makes Postage Increase of 1.7% Likely in January.)
If the Postal Service filed for rate increases after September’s Consumer Price Index is released this Friday, the allowed rate increase would be about 1.1% with the alliance's method versus about 1.7% (Oct. 15 update: 1.685%) with the Sharfman method.
“Maintaining the integrity of this [inflation-index price] structure requires that the price cap reflect periods of deflation as well as inflation,” wrote the broad-based industry alliance, which was formed this year in response to USPS’s unsuccessful request for exigent (emergency) rate increases.
Ignoring years when the Consumer Price Index is lower than in the previous year, as happened in 2009, “would allow the Postal Service to ratchet up its prices over time faster than inflation by refraining from rate adjustments following intervals of deflation,” the filing said. “No reviewing court is likely to find this nonsensical outcome consistent with the plain language” of the law or PRC regulations.
“The difference between the two competing interpretations of the Commission’s rules amounts to approximately $360 million in postage and fees per year,” the mailers alliance wrote. “Moreover, postal price levels inflated by the use of an excessive rate adjustment factor would become the base rates for future price cap adjustments; hence, the original overcharge would recur in perpetuity.”
“Recurring periods of deflation are not unlikely in the current economies of the United States and the world. If the economy alternates between periods of inflation and deflation that leave the CPI roughly flat, selective timing of CPI-based price adjustments could result in postal price increases substantially outpacing inflation over time,” the alliance response said.
The alliance also objected to Sharfman’s “informal advice” because it came only six days after the Postal Service requested guidance on how to interpret the rate-cap regulations. The PRC’s rules require interested parties to have seven days to respond in such cases, and Sharfman’s letter was issued even though PRC staff knew the alliance was preparing a response to USPS's request, the alliance claimed.
Tuesday, October 12, 2010
Informal Ruling Makes Postage Increase of 1.7% Likely in January
Please see the follow-up article, Mailers Alliance Fights 'Nonsensical' Price-Cap Ruling, about a challenge to the Sharfman ruling that was filed on Oct. 13.
Postage rates are likely to increase about 1.7% in January as a result of a letter that the Postal Regulatory Commission's chief lawyer issued today.
When the PRC established its rate-making rules, "little attention was given to the possibility that during periods of deflation, the Postal Service might accrue negative rate authority," PRC General Counsel Stephen L. Sharfman acknowledged in a letter to his counterpart at the U.S. Postal Service. That's why the Postal Service sought Sharfman's advice in how to interpret the law and regulations that limit increases in most postal rates to changes in the Consumer Price Index. (See USPS Seeks Guidance On Its Rate Cap.)
Sharfman's "informal advice," which presumably reflects the commissioners' thinking, basically said that the period of declining prices in late 2008 could be ignored in determining the price cap. The cap is to be based on the difference in the average CPI for the most recent 12 months versus the previous 12 months, he wrote.
The CPI has only increased 0.86% since calendar year 2008, which was the basis for the last round of rate increases. But with Sharfman's method, the rate cap would be 1.477% if USPS requested increases before the September CPI is released on Friday. Then, it seems likely to inch up to about 1.7% and to stay at about that level for at least a couple of months. (Oct. 15 update: With the September CPI, the number is 1.685%.)
Postmaster General Jack Potter promised not to increase postage rates during 2010, but postal officials seem eager to bump up rates once the calendar changes over to 2011. The Postal Service only has to give 45 days' notice before announcing price increases that comply with the rate cap. So it seems likely that USPS will announce increases by mid-November, and perhaps as early as Friday, that take effect in early January.
The price cap applies to the "market-dominant" classes, such as First-Class, Standard, and Periodicals. Individual rates can rise far more than the cap as long as the average for the class doesn't violate the cap.
Increasing rates based on the CPI would not prevent the Postal Service from also filing for another "exigent" (emergency) increase to ease the impact of the recession on its finances. But it would take much longer to get PRC approval for such an increase and then to fight off a likely legal challenge from mailers.
Related articles:
Postage rates are likely to increase about 1.7% in January as a result of a letter that the Postal Regulatory Commission's chief lawyer issued today.
When the PRC established its rate-making rules, "little attention was given to the possibility that during periods of deflation, the Postal Service might accrue negative rate authority," PRC General Counsel Stephen L. Sharfman acknowledged in a letter to his counterpart at the U.S. Postal Service. That's why the Postal Service sought Sharfman's advice in how to interpret the law and regulations that limit increases in most postal rates to changes in the Consumer Price Index. (See USPS Seeks Guidance On Its Rate Cap.)
Sharfman's "informal advice," which presumably reflects the commissioners' thinking, basically said that the period of declining prices in late 2008 could be ignored in determining the price cap. The cap is to be based on the difference in the average CPI for the most recent 12 months versus the previous 12 months, he wrote.
The CPI has only increased 0.86% since calendar year 2008, which was the basis for the last round of rate increases. But with Sharfman's method, the rate cap would be 1.477% if USPS requested increases before the September CPI is released on Friday. Then, it seems likely to inch up to about 1.7% and to stay at about that level for at least a couple of months. (Oct. 15 update: With the September CPI, the number is 1.685%.)
Postmaster General Jack Potter promised not to increase postage rates during 2010, but postal officials seem eager to bump up rates once the calendar changes over to 2011. The Postal Service only has to give 45 days' notice before announcing price increases that comply with the rate cap. So it seems likely that USPS will announce increases by mid-November, and perhaps as early as Friday, that take effect in early January.
The price cap applies to the "market-dominant" classes, such as First-Class, Standard, and Periodicals. Individual rates can rise far more than the cap as long as the average for the class doesn't violate the cap.
Increasing rates based on the CPI would not prevent the Postal Service from also filing for another "exigent" (emergency) increase to ease the impact of the recession on its finances. But it would take much longer to get PRC approval for such an increase and then to fight off a likely legal challenge from mailers.
Related articles:
- PRC Decision Only a Partial Win for Mailers: The PRC ruled against USPS's request for exigent price increases but left the door open for a revised proposal.
- Postal Rate Cap Finishes Year in the Red: Back in January, Dead Tree Edition pointed out that the PRC's regulations did not anticipate a decline in the CPI.
Friday, October 8, 2010
USPS Getting Its Retirement Act Together? Nope
I was too quick yesterday to praise the U.S. Postal Service’s new eRetire system, which seems to be just a faster and more convenient way for potential retirees to get inaccurate information.
“eRetire isn’t better. The only improvement I see is you can download some documents as PDFs rather than waiting for hard copies in the mail,” responded Don Cheney, an APWU leader from Auburn, WA and an expert on USPS retirement issues, in reaction to my article Postal Service Steps Up Communications With Potential Retirees.
The new website “provides only two annuity estimates: optional and disability retirement,” he said. “There are no annuity estimates available online for Voluntary Early Retirements. They still don’t include the FERS annuity supplement in annuity estimates for eligible employees in FERS.”
Software bug
He has also learned of at least one bug in eRetire: “When a city carrier downloaded his disability retirement packet yesterday, it had the job description for an Information Systems Specialist, EAS-21, rather than a city carrier.”
Cheney has been trying for seven years to educate postal employees about all of their retirement benefits and to get USPS to issue accurate and complete retirement estimates to employees. He recently wrote an article that asked, “Does the Postal Service Really Want Early Retirements?" And he has two grievances pending on the Postal Service’s failure to obey the Office of Personnel Management’s rules regarding annuity estimates.
Sign a blank check?
“USPS refuses to provide retirement counseling in a VER until AFTER the employee has signed an ‘Acknowledgement of Irrevocability.’ This form is not required for other types of retirements. Would you sign a blank check that is irrevocable?”
“The demise of Personnel Services in the districts has meant union reps like me have had to step in to assist employees with their retirement applications,” Cheney said
“Lack of retirement counseling is especially bad for veterans, who make up about half of the workforce. Their paperwork takes about four to six months to process. Veterans are forced to sign an 'Acknowledgement of Irrevocability' without knowing how much money they will owe for their military service or how much annuity they will get. I’ve seen the USPS demand as much as $10,000 from a veteran at the last minute. This is a major reason for complaints and long delays in a non-pay status.”
Think about any of the recent scandals involving the Postal Service: Bernstock. Payment of health premiums for top executives. Using retired executives as consultants.
I contend that the amount of money wasted in those incidents is a drop in the bucket compared with what the Postal Service is paying excess employees who would retire if they only knew what their retirement benefits would be.
Not at all business-like
I keep hearing USPS executives talk about how they’re running the Postal Service in a more business-like manner. But I know of no business – even ones that aren’t trying to downsize -- that puts its employees through such a runaround to get retirement projections.
Postal officials keep pointing out how much cost they have taken out of the system the past few years. But it’s hard for me (or, more importantly, Congress) to get excited about those efforts when I see how much money could be saved simply by providing employees accurate information.
I still haven’t heard an answer to the question I asked two months ago as the Postal Service was trying unsuccessfully to impose emergency price increases: “Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees?
“eRetire isn’t better. The only improvement I see is you can download some documents as PDFs rather than waiting for hard copies in the mail,” responded Don Cheney, an APWU leader from Auburn, WA and an expert on USPS retirement issues, in reaction to my article Postal Service Steps Up Communications With Potential Retirees.
The new website “provides only two annuity estimates: optional and disability retirement,” he said. “There are no annuity estimates available online for Voluntary Early Retirements. They still don’t include the FERS annuity supplement in annuity estimates for eligible employees in FERS.”
Software bug
He has also learned of at least one bug in eRetire: “When a city carrier downloaded his disability retirement packet yesterday, it had the job description for an Information Systems Specialist, EAS-21, rather than a city carrier.”
Cheney has been trying for seven years to educate postal employees about all of their retirement benefits and to get USPS to issue accurate and complete retirement estimates to employees. He recently wrote an article that asked, “Does the Postal Service Really Want Early Retirements?" And he has two grievances pending on the Postal Service’s failure to obey the Office of Personnel Management’s rules regarding annuity estimates.
Sign a blank check?
“USPS refuses to provide retirement counseling in a VER until AFTER the employee has signed an ‘Acknowledgement of Irrevocability.’ This form is not required for other types of retirements. Would you sign a blank check that is irrevocable?”
“The demise of Personnel Services in the districts has meant union reps like me have had to step in to assist employees with their retirement applications,” Cheney said
“Lack of retirement counseling is especially bad for veterans, who make up about half of the workforce. Their paperwork takes about four to six months to process. Veterans are forced to sign an 'Acknowledgement of Irrevocability' without knowing how much money they will owe for their military service or how much annuity they will get. I’ve seen the USPS demand as much as $10,000 from a veteran at the last minute. This is a major reason for complaints and long delays in a non-pay status.”
Think about any of the recent scandals involving the Postal Service: Bernstock. Payment of health premiums for top executives. Using retired executives as consultants.
I contend that the amount of money wasted in those incidents is a drop in the bucket compared with what the Postal Service is paying excess employees who would retire if they only knew what their retirement benefits would be.
Not at all business-like
I keep hearing USPS executives talk about how they’re running the Postal Service in a more business-like manner. But I know of no business – even ones that aren’t trying to downsize -- that puts its employees through such a runaround to get retirement projections.
Postal officials keep pointing out how much cost they have taken out of the system the past few years. But it’s hard for me (or, more importantly, Congress) to get excited about those efforts when I see how much money could be saved simply by providing employees accurate information.
I still haven’t heard an answer to the question I asked two months ago as the Postal Service was trying unsuccessfully to impose emergency price increases: “Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees?
Thursday, October 7, 2010
Postal Service Steps Up Communications With Potential Retirees
I have repeatedly criticized the U.S. Postal Service for providing slow and inaccurate estimates of retiree benefits (see below), so it’s only fair that I point out the “eRetire” program it announced today.
“eRetire is the new employee self-service application that allows employees to plan for and initiate retirement activities online via LiteBlue [the Postal Service intranet],” says the announcement in today’s edition of the USPS Postal Bulletin. Employees can access the service by logging into LiteBlue, going to Employee Apps, and choosing “eRetire”.
See the follow-up article, USPS Getting Its Retirement Act Together? Nope, which shows that eRetire is not all it's cracked up to be.
Employees (except part-timers and postal inspectors) who are eligible to retire or within six months of eligibility can use the new online service to get an annuity estimate, order a Retirement Application Package, or schedule a Retirement Counseling Session. Those within five years of retirement eligibility can get estimates of what their retirement annuity will be.
This certainly sounds like a step in the right direction for an organization that needs to downsize (and that seems to have so many employees ready to retire if given relatively minimal incentives).
Now we’ll have to see how accurate the estimates are and how quickly the annuities are paid out once employees retire.
Some Dead Tree Edition critiques of the Postal Service's communications to potential retirees include:
“eRetire is the new employee self-service application that allows employees to plan for and initiate retirement activities online via LiteBlue [the Postal Service intranet],” says the announcement in today’s edition of the USPS Postal Bulletin. Employees can access the service by logging into LiteBlue, going to Employee Apps, and choosing “eRetire”.
See the follow-up article, USPS Getting Its Retirement Act Together? Nope, which shows that eRetire is not all it's cracked up to be.
Employees (except part-timers and postal inspectors) who are eligible to retire or within six months of eligibility can use the new online service to get an annuity estimate, order a Retirement Application Package, or schedule a Retirement Counseling Session. Those within five years of retirement eligibility can get estimates of what their retirement annuity will be.
This certainly sounds like a step in the right direction for an organization that needs to downsize (and that seems to have so many employees ready to retire if given relatively minimal incentives).
Now we’ll have to see how accurate the estimates are and how quickly the annuities are paid out once employees retire.
Some Dead Tree Edition critiques of the Postal Service's communications to potential retirees include:
Wednesday, October 6, 2010
USPS Seeks Guidance On Its Rate Cap
The U.S. Postal Service is asking for a ruling on something that was supposed to be clear -- how much it can increase rates without getting special permission.
A Postal Service lawyer asked the Postal Regulatory Commission today for guidance regarding how to interpret the price cap on most mail products (including First-Class, Standard, and Periodicals), which is based on changes in the Consumer Price Index (CPI-U).
When the PRC announced its decision last week in the exigent rate case, "some uncertainty was expressed regarding the exact amount of authority that is currently available to the Postal Service to adjust rates under the CPI-U price cap," wrote R. Andrew German, managing counsel for USPS Pricing & Product Development in a letter to the PRC.
The PRC's Web site has a chart suggesting that the current price cap is 1.477%, which is based on the average CPI for the most recent 12 months versus the previous 12 months (that is, September 2009 to August 2010 versus September 2008 to August 2009).
But German noted that "it has been more than 12 months since the Postal Service adjusted rates pursuant to the price cap," which seems to mean that a different calculation method should be used.
German referred to a section of the PRC's regulations regarding rate increases that are more than 12 months apart. My interpretation of that section is that the current rate cap would be based on comparing the average CPI for the most recent 12 months to the average CPI for calendar year 2008, yielding a cap of only 0.864%. But I'm no lawyer, and the wording is far from clear in this case.
"For purposes of developing its own financial plans, the Postal Service needs an interpretation of that rule (or any other applicable rules) upon which the Postal Service can rely if it were to begin preparation of the requisite documentation for CPI-U rate adjustment," German wrote.
The postal-reform law and the PRCs regulations interpreting that law are clear when things go as envisioned, with the USPS seeking rate increases once a year based on increases in the CPI-U. But no one seemed to anticipate the Consumer Price Index decreasing, which is what it did in 2009 primarily as a result of rapidly declining fuel prices. There was no provision in the law requiring the Postal Service to decrease rates as a result of that deflation and no guidance regarding the baseline period for future rate-cap calculations.
A Postal Service lawyer asked the Postal Regulatory Commission today for guidance regarding how to interpret the price cap on most mail products (including First-Class, Standard, and Periodicals), which is based on changes in the Consumer Price Index (CPI-U).
When the PRC announced its decision last week in the exigent rate case, "some uncertainty was expressed regarding the exact amount of authority that is currently available to the Postal Service to adjust rates under the CPI-U price cap," wrote R. Andrew German, managing counsel for USPS Pricing & Product Development in a letter to the PRC.
The PRC's Web site has a chart suggesting that the current price cap is 1.477%, which is based on the average CPI for the most recent 12 months versus the previous 12 months (that is, September 2009 to August 2010 versus September 2008 to August 2009).
But German noted that "it has been more than 12 months since the Postal Service adjusted rates pursuant to the price cap," which seems to mean that a different calculation method should be used.
German referred to a section of the PRC's regulations regarding rate increases that are more than 12 months apart. My interpretation of that section is that the current rate cap would be based on comparing the average CPI for the most recent 12 months to the average CPI for calendar year 2008, yielding a cap of only 0.864%. But I'm no lawyer, and the wording is far from clear in this case.
"For purposes of developing its own financial plans, the Postal Service needs an interpretation of that rule (or any other applicable rules) upon which the Postal Service can rely if it were to begin preparation of the requisite documentation for CPI-U rate adjustment," German wrote.
The postal-reform law and the PRCs regulations interpreting that law are clear when things go as envisioned, with the USPS seeking rate increases once a year based on increases in the CPI-U. But no one seemed to anticipate the Consumer Price Index decreasing, which is what it did in 2009 primarily as a result of rapidly declining fuel prices. There was no provision in the law requiring the Postal Service to decrease rates as a result of that deflation and no guidance regarding the baseline period for future rate-cap calculations.
An Environmentalist's Defense of Clearcut Logging
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| Steven E. Kallick |
“Frankly, in the boreal forest, selective harvest is impractical because of the nature of the trees. You don’t have the big kind of coastal old growth forest,” Steven E. Kallick, director of the International Boreal Conservation Campaign for the Pew Charitable Trusts, told Yale Environment 360.
“What you have is extensive forest of smaller trees. And in order to be profitable, you need to be able to go in there and take out a significant part of the volume. And ecologically it’s not like clearcutting in a coastal forest. It doesn’t have the same impact because the boreal forest is a vast, fire-dominated ecosystem where large-scale disturbance is not uncommon.”
The logging companies that signed the agreement have agreed to “meet or beat the Forest Stewardship Council standards,” which Kallick calls “the green seal of approval for logging.”
“The reason the Forest Stewardship Council does not prohibit clearcutting in the boreal forest is because it’s not ecologically required.”
Canada’s boreal (subarctic) forest – along with undisturbed portions of the Amazon and Russia’s Taiga – is “one of the three great tracts of forest on the globe,” Kallick says. Pew decided to focus on the Canadian boreal, he told The Seattle Times, because, of the three, “it's the only one in a country with a tradition of conservation, so the most likely to be protected on a scale to preserve the ecosystem and yet allow people to benefit from the natural resources.”
Kallick told The Times he got interested in environmental work when a newspaper for which he wrote refused to publish his story about a hazardous waste dump.
“I thought, ‘I'm in the wrong business. I'm going to law school and figure out how to bust people like this.’”
Related articles:
Saturday, October 2, 2010
USPS Has Too Many Supervisors And Too Many Employees, Congressman Says
The U.S. Postal Service could cut its workforce by one-third and its supervisory ranks even more, a leading Republican Congressman indicated this week.
"The Post Office has 200,000 people who should be retiring," Rep. Darrell Issa said in a speech Wednesday to The Heritage Foundation. USPS had 568,301 employees at the end of August. "When I say retiring I mean we don’t need them. But let’s bear in mind it’s just not the guy at the post office; it’s the thousands of people who are doing maintenance at post offices that we don’t need to have so many of."
"And more importantly there’s a 1 to 7 ratio," the California Republican said. "For every person that delivers your mail, or packs your mail, or touches your mail -- for every 7 of them -- there’s one of them that is just, quote, a 'supervisor'. That’s a ratio that’s so unacceptable in the private sector."
As ranking Republican on the House Oversight & Government Reform Committee, the California Republican would probably chair the key Congressional panel overseeing the USPS if the GOP wins a majority in the November elections. His comments about the Postal Service start just after the 29-minute mark in this video of the speech.
"I’m going to take on postal reform if I’m lucky enough to be the chairman next year," Issa said.
Efforts to shrink the Postal Service's workforce through attrition and early-retirement incentives "simply have not resulted in the kind of change and transformation USPS needs to cover its costs," Issa wrote recently in an editorial for The Washington Times. He would like the USPS to be able to lay off unionized employees if they could be retrained for and fill other jobs in the federal government.
Related article: How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways
"The Post Office has 200,000 people who should be retiring," Rep. Darrell Issa said in a speech Wednesday to The Heritage Foundation. USPS had 568,301 employees at the end of August. "When I say retiring I mean we don’t need them. But let’s bear in mind it’s just not the guy at the post office; it’s the thousands of people who are doing maintenance at post offices that we don’t need to have so many of."
"And more importantly there’s a 1 to 7 ratio," the California Republican said. "For every person that delivers your mail, or packs your mail, or touches your mail -- for every 7 of them -- there’s one of them that is just, quote, a 'supervisor'. That’s a ratio that’s so unacceptable in the private sector."
As ranking Republican on the House Oversight & Government Reform Committee, the California Republican would probably chair the key Congressional panel overseeing the USPS if the GOP wins a majority in the November elections. His comments about the Postal Service start just after the 29-minute mark in this video of the speech.
"I’m going to take on postal reform if I’m lucky enough to be the chairman next year," Issa said.
Efforts to shrink the Postal Service's workforce through attrition and early-retirement incentives "simply have not resulted in the kind of change and transformation USPS needs to cover its costs," Issa wrote recently in an editorial for The Washington Times. He would like the USPS to be able to lay off unionized employees if they could be retrained for and fill other jobs in the federal government.
Related article: How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways
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