USPS Has Good News for Prospective Retirees

The U.S. Postal Service recently made a quiet change that will cause retirement to look sweeter for thousands of postal workers.

Pension estimates the USPS provides to employees who are considering retirement now include an amount for the FERS (Federal Employees Retirement System) supplement, reports Don Cheney, an APWU official with a long history of helping fellow union members understand their retirement benefits. The Postal Service has not announced the change.

“According to the responses I’ve received on Facebook, numerous employees are getting the new FERS annuity estimates with the supplement amount listed,” Cheney says. He provided a sample statement from one employee who would receive more than $15,000 annually – nearly equal to her regular annuity.

“This means FERS employees [those hired after 1983] will finally feel comfortable retiring. The USPS may get a huge exodus,” Cheney predicted. 

The supplement is meant to take the place of Social Security until USPS retirees turn 62, when actual Social Security payments kick in. Usually, a postal worker needs to be at least 55 with 30 years of service to qualify for the supplement. About 85,000 postal workers have 30 or more years of service.

As Dead Tree Edition has reported previously, ignorance of and uncertainty about the FERS supplement have hindered response to USPS early-retirement offers. In a VERA (Voluntary Early Retirement) campaign, the minimum years of service to receive a VERA supplement drops to 20.

That could have been a huge incentive for some employees to retire early -- except that they typically were not told how much the supplement would be, or even if they were eligible, until after they submitted their request to retire.

But the era of big VERAs seems to be over. Instead of having too many employees, the downsized Postal Service now struggles to handle the rising tide of package deliveries while keeping deliveries on time and overtime under control. And there don’t seem to be any major productivity improvements on the horizon that would make it easy to eliminate more positions.

In theory, retirements enable the Postal Service to save money by replacing high-paid career workers with part-timers who gets much lower pay and few benefits. But union contracts limit the number of such non-career employees.

And with the recent trends of low unemployment rates and rising part-time wages, the Postal Service has struggled to recruit and retain non-career workers, especially in markets that have a high cost of living.

“The shortage of clerks and carriers has reached a critical point in almost every post office,” Cheney said. “I expect a massive failure of service standards during the Christmas rush.”

Related articles:

• The Hidden Benefit of Postal Service Retirement

• 8 Reasons USPS Productivity Is Declining: The Employees Speak Out

• The Postal Service's Early-Retirement Snafu

 

Tasers on Stun: 9 New Business Ideas for the U.S. Postal Service

Postal officials are taking a close look at the value of the U.S. Postal Service brand and how the agency can capitalize on it. That will inevitably lead to proposals for new products like toy postal delivery trucks and USPS-branded packing supplies.

BOR-ing!

To make some real dough, the folks at L’Enfant Plaza will need to use some creativity and entrepreneurial spirit. Just imagine the following USPS-branded ventures that would build on the unique strengths of a proud organization that can trace its roots back to Benjamin Franklin:

1) Cash Flow Management

How do postal officials do it? USPS loses billions of dollars every year, receives no subsidies, and yet never misses a delivery. If you’re living paycheck to paycheck, turn to the folks who have to dig into the cookie jar a couple of times a month to cover 600,000 paychecks.

With USPS BS (Bankruptcy-Avoidance Services) at your side, you’ll be able to live beyond your means year after year without being able to borrow a dime. Let their creative accountants handle all aspects of your personal or business finances. (Except your retirement plan. Congress has been known to “borrow” retirement funds from the Postal Service.)

Legal Eagle

2) Traffic Court Lawyers

Got a parking ticket? Do what the Postal Service does: Don’t pay it! For a reasonable hourly fee,USPS’s Blue Eagle Legal Services will help you claim immunity, dodge local traffic laws, and double-park wherever you want. (Disclosure: Blue Eagle performs no work on Sundays, unless your name is “Amazon.”)

3)  Let's Play Post Office!

Even little kids know what a post office is, so why not capitalize on that brand identity with a series of postal-themed games, like Find the Mailbox in the Dark or Decipher the Scribbled Address?

Angry Birds? Wait until you see Angry Shop Stewards. And for big laughs at birthday parties, don’t forget Pin the Grievance on the Supervisor.

4) Post Office – The Adult Edition

Let’s not leave out the grown-ups. They can get in on the postal-themed fun with hot games like Lick My Stamp and Fifty Shades of LiteBlue!

5) Fast Shredding System

Ready to shred

Here are the facts: 1) People trust the Postal Service. 2) Shredding documents is a boring, thankless task. 3) USPS has 100 giant Flats Sequencing System (FSS) machines that haven’t succeeded in lowering the agency’s costs but do a great job of ripping covers off of magazines and catalogs.

That’s an opportunity for USPS to enter the field of secure document destruction. Just leave your sensitive papers in a specially marked package to be picked up by your trusty letter carrier. It will make its through the Postal System until it's fed into one of the football-field-sized Fast Shredding System machines, which will chew up the pages faster than you can say “For this the Postal Service spent $1.4 billion?”

6) Management Consulting

Let’s face it folks, American businesses have gotten soft, what with all this employee empowerment, sensitivity training, and Kumbaya singing.

If your employees are on the verge of actually liking their jobs, it’s time to bring in a Tiger Team of Postal Service managers to remind your staff that it’s not supposed to be fun, it's supposed to be work, dammit. They’ll show your managers how to set unrealistic goals and then scream at employees  who won’t comply.

Are your first-line supervisors showing disrespect for upper management? The USPS experts will teach them the proper brown-nosing techniques. Or get them filling out enough meaningless reports to prevent them from doing any harm.

And don’t forget that the U.S. Postal Service has probably subjected more employees than any other organization in the world to the cult of Lean Six Sigma management. USPS has even developed the Six-Sigmoidoscope, which can probe your employees to determine which of them has drunk the Kool-Aid and is a potential Black Belt of BS.

Priority Male

7) Male Strippers

Move over, Chippendales, the Postal Service’s own First-Class Males are in the house. USPS has recently brought in thousands of young City Carrier Assistants and put them through their paces working 60 hours a week on walking routes.

Now they’re buffed up enough to put the UPS guys to shame. And boy do they have some packages! Ladies, be sure to bring plenty of bills to stuff into their satchels.

8) Dog Obedience Training

Who knows more about handling unruly dogs than longtime letter carriers? Get your tickets now for Naughty Dog Night at your local post office, where moonlighting postal workers will show you how to stare down a snarling canine, outrun a vicious pack, and pepper spray a pesky pooch. And get 20% off your purchase of a USPS Old Blue Taser, for those times when Rover needs a little extra reminder to obey.

(Warning: U.S. Postal Service Dog Obedience products should not be used in conjunction with Fifty Shades of LiteBlue.)

IMb

9) We-Deliver Obstetric Centers

Why have your baby at a giant, soul-less hospital when she could enter the world in an historic former post office? Turn to the folks who've been handling America's special deliveries for over 200 years.

At We-Deliver, every baby boy gets his very own Intelligent Male barcode!. (Yes, the politically correct Postal Service also offers Intelligent Female barcodes and Intelligent Transgender barcodes.)

For further reading:

• USPS Needs a Plan B for Flat Mail, Coalition Says 
• Nine Ways the Postal Service Is Not Like a Real Business
• 17 More Ways USPS Is Not Like a Real Business
• Ten Ways to Celebrate International Print Day

 

The U.S. Parcel -- uh, Postal -- Service Presents Its Wish List to Congress

The U.S. Postal Service presented a long wish list to Congress today, along with a subliminal message.

“Despite challenging marketplace conditions, an inflexible business model imposed by federal law and financial issues caused by legislative constraints, the Postal Service is moving forward with a lot of momentum,” Mickey D. Barnett and Postmaster General Pat Donahoe wrote in a joint letter appearing in the agency’s annual report to Congress.

Even in the report's only photo showing letters,
(Can you spot them?) packages take center stage.

Translation: “Hey, Congress, the Postal Service is scrambling to keep its head above water because you’ve created a helluva mess. Now could you get off your butts and do something more useful than naming post offices?”

Donahoe and Barnett can afford to be forthright. Donahoe is retiring Feb. 1, and Barnett’s term as chair of USPS’s Board of Governors expired earlier this month.

As for the subliminal message: The 84-page report has 14 photos featuring parcels, one that (barely) shows letters, and none depicting flat mail. Guess what postal officials think is the key to the agency’s future? After all, USPS’s parcel business grew 9% during Fiscal Year 2014, while revenue from other sources declined slightly.

Here's how the report spelled out “What’s Needed” from Congress:

The Postal Service is urging Congress to pass comprehensive postal legislation. Among the provisions we seek are those needed to ensure that the Postal Service is self-sustaining and financially strong as well as a reliable, low-cost partner to the American people and the communities it serves. These provisions include:

• Require within the Federal Employees Health Benefit Program a set of specific health care plans that would fully integrate with Medicare and virtually eliminate the retiree health benefits unfunded liability.
• Adjust the FERS [Federal Employee Retirement System] payment amount using Postal Service-specific demographic and salary growth assumptions and refund any existing surplus.
• Adjust delivery frequency (six-day packages/fiveday mail). 
• Streamline governance model and eliminate duplicative oversight.
• Provide authority to expand products and services.
• Require defined contribution retirement system for future Postal Service employees.
• Require arbitrators to consider the financial condition of the Postal Service.
• Reform Workers’ Compensation.
• Allow the Postal Service the right to appeal EEOC class action decisions to Federal Court.

The Postal Service continues to do its part within the bounds of existing law to place the organization in a favorable financial position, and we are proud of the achievements we have made to reduce costs while significantly growing our package business. Despite these efforts, however, we cannot return the Postal Service to profitability, nor can we secure our longterm financial outlook without the passage of comprehensive reform legislation.

The bottom line is that the Postal Service is ready to make the necessary changes to keep delivering for America. We just require the freedom to make it happen.

It's Time for Postal Unions and Mailers To 'KISS' on USPS Reform

The editorial below from “an anonymous PostCom board member” appeared in this week’s issue of PostCom Bulletin, the organization’s newsletter. I thought the insights about how to get postal reform moving and about the U.S. Postal Service's governing body were worth sharing with a wider audience, so I’m republishing it with the permission of PostCom.

A few explanations are in order: “FERS” and “CSRS” are the pension plans for postal employees. “RHBF” is the U.S. Postal Service’s Retiree Health Benefit Fund, which USPS must “prefund” (actually “overfund”) because of manipulative Congressional accounting. Congress Hears the Truth About Postal Service Finances explains how the federal government is milking USPS dry through prepayments and pension overcharges. "PAEA" is the law governing USPS pricing and other financial matters.

Oh, and for those who don’t know, “KISS” stands for “Keep it simple, stupid.” Always good advice, especially when dealing with Congress. 


Postal Reform: Let's KISS - 'Keep It Simple . . .' 

With all the discussion on desired postal reform, where do things stand, and where do we go from here? Please allow me to start with the conclusion and work backwards from there... let's KISS with real intent! Everyone at the table agrees that (1) any FERS and CSRS overpayment should be refunded and (2) the RHBF payment schedule should be restructured. These two reforms provide the most immediate financial relief, the greatest bang for the buck, and avoid changes that would weaken the value of mail and inhibit growth in the mail. So let's KISS now, execute these changes, and move on with the development of fruitful businesses and a healthy postal infrastructure.

Where things stand in Congress. The talk about the need for postal reform has dragged on for a year with the current Congress, after failed attempt by the prior. Although the House passed H.R.2748 through committee last summer and the Senate passed S.1486 through committee this February, neither have sufficient support in their full chambers. So the possibility of a conference to reconcile differences among the two bills is slim.

Presumably this was the impetus for Representative Issa's surprise tack of peeling off individual elements of postal reform and working them into separate legislative activities. On May 21, he worked into the MAP-21 Reauthorization Transportation Bill (set to expire September 30), the directive to move from door delivery to centralized or curb delivery over 10 years, for an estimated savings of over $2B/year. This delivery mode bill, H.R.4670, passed by strict party line. However, that does not mean it will necessarily survive within the larger Transportation Bill.

Then on May 30, a memo circulated around the House GOP recommending the elimination of Saturday delivery as a budget offset to the cost of a short term fix to the Highway Trust Fund. As others in the Senate and union leadership have expressed, this is a deeply flawed proposal that kicks the can down the road yet again on both meaningful postal reform and a long term fix of the Highway Trust Fund. Hopefully sensible minds will prevail and this will be the last we hear of this "offset" lunacy.

Where things stand in USPS Headquarters. So far, USPS HQ has not offered any compromise, explaining that all requests (5-day delivery, health care program changes, governance changes and rate increases) need to be granted in order to meet inflationary pressures and capital expenditure investments (e.g. replacing delivery vehicles that have already surpassed their life expectancy).

Where things stand with the Unions. The unions recognize the harm that would be done to the value of mail (and thus mail volumes and revenues) should Saturday mail delivery be eliminated and/or current door and curb delivery be moved to cluster boxes. Cluster boxes are simply not as convenient and would not be visited as frequently. Either delivery change would result in more “mailbox clutter” which leads to sales cannibalization and lower response rates and sales, deeming mail a less effective advertising tool. A change in both modes would compound the devaluation.

Where things stand with Consumers. When consumers are asked whether they would be agreeable to eliminating Saturday delivery in order to help the Postal Service get out of the red, they say "sure." However, when you tell them that it's not their tax payer dollars that fund the postal service, they admit "oh, I didn't know that."

Where things stand for the Stakeholders -- the business mailers (aka "customers") who actually pay for the lion's share of postal service. The postal customers appreciate the delivery service improvements realized in the last two years. Mail is a choice for commerce and communication. Predictable pricing, and, predictable and consistent service are what makes mail effective.

However, commercial postal customers:

• are now paying exigent surcharges for these services. And we are living under the threat of the Postal Service and Congress wanting to permanently bake in the exigent surcharge that the Postal Regulatory Commission ruled as temporary, which is consistent with the intent of the 2006 Postal Accountability and Enhancement Act.

• are also dealing with an added day/degradation in Standard Mail service standards for mail inducted into SCFs on Fridays and Saturdays.

• continue to live with the additional threat from the Postal Service and Congress to end Saturday mail delivery.

What happened to the adage "The customer comes first"? Some additional thoughts to chew on while we KISS:

• Isn't it more typical that when a company is struggling financially, they run sales to attract more business, not increase prices?

• For those who say commercial customers need skin in the game and need to compromise to accept something above CPI price cap increases --- hello, the mailing industry has already gone through numerous company mergers, plant closings, reductions in force, and oh yeah, that exigent increase that has caused us to cut volumes and thus revenues which create a negative ripple effect on “mail multiplier” volume generated by advertising mail. Prospect sources shrink, the most profitable First-Class Mail communications shrink, as does parcel volume -- the golden hair child of the Postal Service.

CPI based price increases are the typical starting point in market place negotiations and are often adjusted down, not up.

The CPI price cap has most definitely and effectively driven postal cost reduction initiatives; the cap needs to be retained to continue to do so.

• For those who speculate the exigent price increase hasn't hurt mail volume, have you spoken to customers? The volume and revenue could have been higher absent the increase.

• How is it acceptable that for several years and during such a critical time, the Postal Service Board of Governors who are to “direct and control its expenditures, review its practices, conduct long-range planning and set policies on all postal matters” has had 5 vacant positions out of 9? Of the four positions appointed ~ 8 years ago, the terms of two expire in December of this year. And among this limited group, there is very little experience overseeing the strategy and expenditures of an organization that is of the size and reach of the Postal Service. Yet, the Senate bill gives the Board of Governors more autonomous rate setting authority, so the monopoly would essentially be unregulated, and the Postal Regulatory Commission would be relegated to an advisory and complaint mediator role, stripping it of its “regulatory” designation.

• Since when is it acceptable to blatantly ignore the checks and balances of our judicial system by suggesting that regardless of the outcome of the appeal on the exigent price increase, Congress can trump the decision and bake the surcharge in to postal prices if they see fit?

• Although finances still wouldn't be great, it is highly doubted that we would even be discussing another attempt at postal reform if it wasn't for the $5 billion/year required payment for the Retiree Health Fund that came about in the 11th hour of PAEA negotiations.

I'm sure every CEO of every commercial mail customer would love to have a crystal ball to see whether similar mistakes in last minute or lame duck negotiations will be made again.

The conclusion is worth repeating... let's KISS with real intent! Everyone at the table agrees that (1) any FERS and CSRS overpayment should be refunded and (2) the RHBF payment schedule should be restructured. These two reforms provide the most immediate financial relief, the greatest bang for the buck, and avoid changes that would weaken the value of mail and inhibit growth in the mail. So can we KISS now, by making these changes in order to move on with the development of fruitful businesses and a healthy postal infrastructure, rather than continuing to go to bed angry and worrying about what the future holds?

17 More Ways USPS Is Not Like a Real Business

Please see the U.S. Postal Service's response to this article, Layers of Redundant Management Have Been Eliminated, USPS Says.

The recent article Nine Ways the Postal Service Is Not Like a Real Business apparently struck a chord, or maybe a nerve, generating numerous insightful comments on this blog, various LinkedIn groups, and private emails.

Though the U.S. Postal Service must live off of the revenue it generates rather than on government appropriations, it differs fundamentally from private enterprises in numerous ways. Those distinctions are more than just an interesting point of discussion. They are a key to understanding the Postal Service and how it might be reformed.

So, with thanks to many Dead Tree Edition readers, here are xxx more ways the USPS is not like a real business:

1. The concept of “investment” is nearly absent from the Postal Service, which must live from one annual budget to the next. It is not able to access private capital markets, such as the bond market, to finance major capital investments. That prevents it from making investments that would probably pay off in the long run, such as replacement of its aging, inefficient delivery fleet and more of the kind of automation that has enabled it to increase labor productivity.
2. Similarly, the Postal Service is hamstrung when it comes to launching new products that are not immediately profitable. 
3. The Postal Service does enjoy low interest rates on its debt because it can borrow from the federal government. But it has reached the legal limit of its ability to borrow. And much of its debt was racked up to cover subsidies to the federal budget that were dressed up as prepaid retiree health benefits and pension-fund payments. 
4. “Real businesses are not required to invest ALL their pension assets in low interest government bonds but instead can choose to invest then in a balanced portfolio,” noted one anonymous commenter. “The difference in average returns on pension assets of the USPS and the average returns of a typical businesses pension assets amount to over $10 billion per year.” 
5. “They are forced to deliver to unprofitable addresses,” notes Mike Seethaler, president of Raintree Graphics in Jacksonville, FL. “If a customer is too far out and too small for us to make a profit, we don’t do business with them.” In contrast, one commenter noted, USPS “is mandated to serve all areas of the country, every address, every day.” 
6. Speaking of unprofitable customers, USPS can’t charge higher prices for customers who are expensive to serve. People who get front-door delivery pay no more than those who receive their mail curbside or in cluster boxes. When USPS has to rely on airplanes, boats, or donkeys to get mail to remote places, it can’t charge a premium for those services. And it costs you 46 cents to send a letter from Maine to Alaska, or to send it across town. 
7. “Real businesses report long term liabilities, like retiree health benefit liability, on their balance sheet, and only report them as an expense when money is set aside to fund the liability,” wrote Liam Skye. “USPS is the only organization that is required by law to report fixed amounts of the liability as expense, whether they put the money aside to fund the liability or not!” 
8. Unlike most postal agencies around the world, the U.S. Postal Service is legally restricted from straying outside of its core business of offering postal services. And even its delivery-related ventures can run into problems if they compete with private businesses. “Consider the fact that USPS came up with the concept of overnight mail first,” says R.E. Perry. “It made so much money for the service that USPS bought a bankrupt airline rather than continue to pay other carriers to provide that service. Complaints that private companies could be making this money led to Congress ordering the service to sell the airline, and return to paying others to move their mail.” 
9. The Postal Service is subject to a regulatory agency, the Postal Regulatory Commission, that has no authority over USPS’s private-sector competitors. 
10. “Another way USPS is not like a business: It is mandated by the Constitution of the United States,” wrote Kofi M. G. W. Opantiri. (Technically speaking, the Constitution authorizes but does not require Congress “to establish Post Offices.”) 
11. It is exempt from income, sales, and real estate taxes. On the other hand, USPS is not eligible for the kind of tax breaks that incent private businesses to expand and to become more energy efficient. 
12. “Real businesses don't have two private police agencies who have to enforce thousands of federal rules and regulation WITHOUT reimbursement,” noted one commenter. 
13. By law, postal workers cannot strike. But impasses in labor-management negotiations at the Postal Service lead to an unusual step – binding arbitration. 
14. Private businesses are not subject to the Freedom of Information Act. But nor do they have the power of eminent domain, exemption from many state and local laws, and some protections from being sued. “USPS considers itself above the law,” wrote “a lady veteran.” “Some of their trucks should never be on the road.” 
15. “Not even Wal-Mart risks electrocuting its employees,” tweeted Dave Berdych, alias Dry Mail Man, referring to OSHA’s four-year investigation of electrical safety hazards in numerous postal plants. 
16. ‏ “No real business would have this many layers of redundant management. (bureaucracy),” responded one reader, echoing a complaint often heard from postal workers. 
17.  “Real business management incompetence is usually dealt with a demotion or termination,” wrote another. “Postal incompetence is rewarded with a promotion.” 

USPS Responds To Criticism of Its Annuity Estimates

For the first time I can remember, the U.S. Postal Service issued a formal response today to a Dead Tree Edition article, USPS Comes Up With Yet Another Way to Discourage Early Retirement. The response was submitted as a comment on that article, but I think it deserves to be called out as a separate article. I won't comment on the response, except to say that I'm glad USPS is apparently taking seriously the need for accurate FERS annuity estimates.

According to OPM’s audit results, the U.S. Postal Service leads all agencies in retirement application accuracy with a score of 97% for its August 2013 submissions.

Through our partnership with OPM Retirement and the National Personnel Records Center, the Postal Service has worked diligently to provide accurate and timely information, which reduced the backlog at OPM from a 7- to 10-month delay to currently 30 days or less before retirees are placed in interim payment status.

The Postal Service recently sent offers to approximately 16,000 Voluntary Early Retirement (VER) eligible employees; twelve employees reported receiving blank annuity estimates due to a processing issue. These employees were immediately provided a revised annuity estimate.

The Postal Service provides its employees with annuity estimates that display the estimated annuity amount for employees with and without a survivor annuity. It also provides the following information listed below on its annuity estimate:

• Retirement eligibility date 
• Annuity computation date 
• High-3 average salary 
• Total actual service 
• Accrued sick leave credit
• 50% for FERS retirements effective through 12/31/2013 
• 100% for FERS retirements effective on or after 01/01/2014 
• 100% for all CSRS retirements 
• Annual leave earned balance 
• Terminal leave payment 
• Cost of life insurance and FEHB coverage in retirement

The annuity estimate is based on up-to-date individual employee data and a comprehensive, validated service history for each employee, determined according to CSRS and FERS regulations. The service history identifies not only Postal Service service but also periods of military and prior civilian service and whether those periods of service are creditable for retirement eligibility and/or annuity computation.

OPM has validated Postal Service results as highly accurate as compared to actual OPM annuity determinations. The process is continually updated to reflect changes in retirement regulations; for example, estimates reflect the creditability of sick leave for the FERS annuity computation and the ability to make FERS redeposits.

The Postal Service does not provide annuity estimates for the FERS Special Retirement Supplement at this time -- the FERS Special Retirement Supplement is based on an OPM calculation of FERS service as a portion of 40 years of estimated Social Security earnings -- but we are currently working with our Supply Management office to find suppliers capable of leveraging their retirement software applications with our retirement applications to provide an estimated numeric value of the Special Retirement Supplement amount. We anticipate that this project will be completed this fiscal year. In the meantime, the Postal Service does provide a formula on the annuity estimate that shows the employee how to calculate the estimated amount of the Special Retirement Supplement using their own Social Security earnings.

We greatly value the service of all our employees, and we endeavor to do everything we can to contribute to a rewarding retirement.

USPS Comes Up With Yet Another Way to Discourage Early Retirement

Please see the Postal Service's response to this article: USPS Responds To Criticism of Its Annuity Estimates.


Amidst all of the postal reform proposals that went nowhere the past few years, the one tactic that has definitely worked for the U.S. Postal Service is getting employees to retire early.

The tactic would work even better if the Postal Service stopped confusing or misleading potential retirees – by providing them with incomplete or just plain wrong information about what their retirement benefits will be.

Here’s the latest chapter in this sorry saga: In the most recent round of VERA (Voluntary Early Retirement) offers, many among the thousands of affected postmasters have received annuity estimates containing no calculation of what their monthly annuity payments will be, reports Roseanne Jefferson, a retired USPS benefits manager, in her Postal Retirement column.

Drop dead
She notes that the postmasters have to decide by “an irrevocable drop dead date” whether to retire without knowing what their retirement income will be.

“Who does that?!" she asks. "Who retires not knowing how much EVEN the gross annuity is, even before any deductions are made? Seriously….do you apply for a job, get the job, and then go home and tell your spouse, hey honey, I got a job…and the spouse says….GREAT!!!, how much will you be making….and the newly employed spouse says, gee I don't know, I guess I will find out when I get my paycheck.”

“The Postal Service has done NOTHING to improve their FERS [Federal Employee Retirement System] annuity estimates,” says Don Cheney, who has been working on USPS early-retirement issues for a decade, often on behalf of fellow APWU members. “They still don’t include the FERS Annuity Supplement when it is applicable."

Confusion is rampant
"Employees don’t know when they are eligible for the FERS Annuity Supplement or how much it is,” Cheney adds. “The rules in FERS are complex, unlike the old CSRS [Civil Service] Retirement System. Confusion is rampant, because local personnel offices were abolished in 2007” when the work was contracted out.

The Postal Service’s practices violate the Office of Personnel Management (OPM) instructions, Cheney claims.In a list of annuity estimates an employing agency must provide upon request, OPM’s handbook provides this instruction (in Section 40A2.1-3, pp. 20-21): “For FERS employees eligible to receive an annuity supplement, estimate the monthly amount payable to age 62.”

The case of the missing annuity estimates is just another chapter in a story that has been unfolding for years. In 2009, for example, only 3% of the 150,000 employees offered a VERA accepted, partly because many mistakenly thought they would be subject to a penalty.

Those eligible for a VERA frequently receive FERS annuity estimates that understate their annuity payments by more than $1,000 per month. And at times many postal retirees have had to wait seven to nine months to receive their full retirement payments.

No winners
No one wins when such incompetence discourages employees from retiring. Certainly not the Postal Service, which is desperate to reduce expenses in light of declining revenues. And with half of the postal workforce being 50 or older, plenty of employees are eager to leave if they could just be sure what their retirement income will be.

By enabling USPS to replace long-time employees with lower-paid new hires and to eliminate jobs without violating no-layoff clauses, the various early-retirement drives are probably saving the Postal Service billions of dollars annually.

Just think how much greater the savings would be if the Postal Service could just do what is commonplace among large businesses – provide accurate and timely retirement information to its employees.

Related articles:

• Budget Cuts Are Delaying USPS and Federal Retiree Payments 
• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways 
• The Hidden Benefit of Postal Service Retirement

What's Weighing Down the Postal Service?

The internet and the economic downturn have not been kind to the nation's postal system, but it's also been burdened by problems that were, and are, completely avoidable.

I, and other postal commentators, have spilled a lot of ink (and pixels) explaining how billions of dollars have been needlessly taken from the U.S. Postal Service to overfund its pension and retiree health benefits. The chart above from Rafe Morrissey of the Greeting Card Association shows clearly that USPS's payments are way out of line with what's typical for government agencies.

"Both funding levels are substantial financial strains . . . and do not allow for fair competition in the marketplace," says the slide, which is taken from a free webinar that Morrissey is presenting tomorrow (Oct. 9, 2013, 2 p.m. Eastern, 8 a.m. Hawaiian) called "A commonsense solution to the postal service's budget crisis."

Morrissey, the GCA's Vice President of Postal Affairs, will present the association's plan for reviving the Postal Service, which advocates nationwide implementation of cluster boxes and adopting a host of other changes while preserving Saturday delivery and avoiding above-inflation rate increases.

For more information on the Postal Service's pension overpayments and "prefunding" of retiree health benefits, see Congress Hears the Truth About Postal Service Finances, which describes the USPS Inspector General's rather forthright Congressional testimony on the subject.

Nine Ways the Postal Service Is Not Like a Real Business

The hand wringing about the U.S. Postal Service’s broken “business model” doesn’t fool us. The “dot com” at the end of “usps.com” doesn’t fool us. The nagging of politicians and pundits who say USPS should operate more like a business doesn’t fool us.

Despite all the talk about the Postal Service being a business, regular people understand it has the soul of a government agency and in fact is not allowed to act in a businesslike manner. Here are nine examples of how USPS is not like a real business:

1. Real businesses underfund their pensions. The Postal Service overfunded its pension plan (to the benefit of the federal government, not postal employees).


2. When a too-big-to-fail business gets into financial trouble, the federal government often props it up with interest-free loans in the name of economic stimulus. When the Postal Service ran into financial trouble, Congress insisted that it continue lending interest-free money to the federal government in the guise of prepaid retiree health benefits. 


3. A real business with thousands of employees might pay its CEO $50 million a year, and no one bats an eyelash. But if the Postmaster General, who oversees 600,000-plus workers, earns 1% of that amount ($500,000), watch the politicians fall all over themselves lambasting the Postal Service’s lavish spending.


4. Real businesses are governed by a board of directors, generally consisting of about a dozen leaders who are or soon become intimately familiar with the enterprise. But the supposedly independent Postal Service in reality is governed by a 535-member board known as Congress, whose members generally know nothing about the USPS’s operations except how to get a post office named and how to prevent it from closing.


5. Board members of a real business have powerful incentives, like stock options, to make the company run more efficiently. But a member of the Postal Service’s real board (that is, a Congressman) only has incentives to preserve inefficiencies that maximize the number of postal employees and facilities in his district.


6. When the board of a real business fails to act, board members get punished with a lower stock price and the prospect of not being re-elected. When the Postal Service’s real board of directors fails to act, postal customers get punished with higher prices.


7. Real businesses make money on monopolies – at least until the trust busters come along. The Postal Service has a government-protected monopoly on the mailbox, but it comes with such onerous conditions that the monopoly is unprofitable.


8. Real businesses make campaign contributions and use lobbyists to curry favor with members of Congress. The only “campaign donation” USPS makes is the franking privilege, which enables Congress members to send free mail to constituents (usually just before election time). USPS's lobbying efforts are limited severely by law.


9. A real business that is billions in debt, has too many locations and employees, and is subject to strong union contracts would have declared Chapter 11 by now. The law would be on its side as it tried to walk away from most of its debts, scale back its operations, and even slip out of its union contracts. The Postal Service, however, apparently cannot turn to the bankruptcy courts – one more example of how the law treats it as just another government agency even though it’s supposed to operate like a business.

Do you know of other ways in which USPS is not like a business? Add a comment to this blog post or email them to me at dead.tree.edition@gmail.com. I can keep your comments anonymous if you'd like. And please see the follow-up article, 17 More Ways USPS Is Not Like a Real Business, which is based on insights from Dead Tree Edition readers.

For background information on some of the items listed above, please see:

• Overfunded pensions: Pensions: Another Government Rip-off of the Postal Service
• Prepaid retiree health benefits as interest-free loans to the federal government:Postal Relief? How About No More Congressional Thievery?
• Punishing the customers: Why the Exigent Postal Rate Increase Will Backfire
• USPS bankruptcy: Could Forever Stamps Become Worthless? What Bankruptcy Might Mean for USPS

Why the Exigent Postal Rate Increase Will Backfire

Let’s be honest: Given the U.S. Postal Service’s dire financial condition, the 4.3% emergency rate increases it announced yesterday are hardly exorbitant. That won’t prevent the move from being a disaster for the nation’s mail system.

I have little doubt that some Congressman will blast the USPS Board of Governors for putting forth relatively small “exigent” (greater-than-inflation) price increases. But the micro-managers on Capitol Hill, who should be focused on getting their own house in order, need to understand why the governors aren’t pushing for more.

I think the Board of Governors is trying to make the best of a bad situation, attempting to satisfy the political pressure for higher prices without scaring away customers. I suspect they understand the dangers of any exigent increase in the context of recent Congressional inaction and downright buffoonery on postal issues.

Being part of an industry (magazine publishing) that opposes any exigent increases, I’m not supposed to say this but I will: Mail-dependent companies could probably stomach a one-time extra price increase of less than 5% if – and this is a big “if” – it were part of a larger move to put the Postal Service onto a sustainable path.

We wouldn’t like it, and we might grumble loudly. But most of us would happily pay a few more percentage points in return for ensuring the long-term health of the postal system. And we would stop putting so much energy into figuring out how to reduce our mail volumes and once again include creative use of the mail in our long-term marketing plans.

That, however, is not what happened yesterday. What we got instead was an exasperated Postal Service whose attempts to right the ship have been scuttled at almost every turn by a do-nothing Congress. Accompanying the announcement are:

• No refund of the billions of dollars the Postal Service overpaid into the federal pension system because of funky accounting.
• No payback of the billions of dollars in interest-free loans USPS has given the federal government under the euphemistic name of prepaid retiree health benefits.
• No real progress on consolidating the Postal Service’s bloated network of post offices.
• A recent reversal of progress on correcting the shamefully slow process of getting postal retirees their full annuity payments, which makes employees afraid to retire and stymies the Postal Service’s move to a smaller, more flexible workforce. (The much-maligned federal bureaucracy was making real headway until – you guessed it – Congress derailed the train of progress by failing to pass a budget, as explained in Budget Cuts Are Delaying USPS and Federal Retiree Payments.
• No action on allowing the Postal Service to start potentially lucrative ventures – even ones that wouldn’t really compete with private enterprise, such as delivering wine and beer.

All of that inaction makes yesterday’s announcement scary for the business mailers that provide the bulk of the Postal Service’s revenue. We can see what’s coming: Congress members will continue nagging the Postal Service to be more businesslike while forcing it to do something very un-businesslike – raising prices in the face of increased competition and declining demand.

What we mailers see is not a one-time price hike but rather the first of many “emergency” increases that will increasingly thrust USPS into a death spiral. Congress will keep blocking meaningful action on the Postal Service. But USPS customers (and employees) will be the ones who are punished.

As the mythical pirate captain told his crew, “The beatings will continue until morale improves.”

Except that, starting yesterday, mail-dependent companies began redoubling their efforts to get off the ship.

Don’t be surprised if more alternative-delivery ventures sprout up to deliver coupons, magazines, product samples, and even catalogs. Or if publications start providing real incentives to switch their subscribers to digital editions.

Don’t be surprised to see more “Go Green, Go Paperless” campaigns as banks and utilities desperately try to slash their mail volumes. (The “Go Green” part of the slogan is, at best, unsubstantiated, unless it refers to the bank’s cash flow and not to the environment.) Getting a large portion of its customers to switch to paper-less billing will look like a growing source of competitive advantage for companies that send a lot of bills.

Even without knowing whether yesterday’s proposal will stand up to litigation, business mailers all over the country are already asking the same questions: How can we reduce our mail volumes enough next year to counteract the price increase? And, longer term, how can we get out of the mail altogether before these price increases get totally out of hand?

Related articles:

• Why Potter Is Freezing Postal Rates, And What It Means For 2010  
• Mailers Rallying Against Rumored 10% Postage Hike
• Is the Postal Service Really Broke? 
• Congress Hears the Truth About Postal Service Finances

 

Response to Buyout Offer Better Than USPS Expected

Unless a lot of postal workers get cold feet in the next couple of weeks, more employees will accept a $15,000 incentive to quit than postal executives had expected.

About 20,000 APWU-represented employees have already signed up for the buyout, Federal Times quoted Postmaster General Patrick Donahoe as saying today. That's at the top end of the 15,000-to-20,000 expected range the U.S. Postal Service provided last month and then reiterated last week.

Those who have signed up can back out before the Dec. 3 decision deadline, Federal Times' Sean Reilly noted. But it seems unlikely that many who signed up so far in advance would have a change of heart. Among the early sign-ups are some who had decided months or even years ago to leave as soon as a buyout was offered.

Thousands of the approximately 115,000 eligible employees are probably still digging through the complexities of postal pensions, annuities, Thrift Savings Plan payouts, tax implications, payments for unused leave, etc. to decide whether to take the money and run. Thanks to the incomplete information and lack of guidance USPS provides to potential retirees, the more postal workers learn about their various retirement benefits the better retirement usually looks.

So expect the number of employees who take the buyout to exceed 20,000. By Dead Tree Edition's rough calculations, that means the buyout could end up reducing USPS costs by more than $1 billion annually.

A slight majority of voters in a Dead Tree Edition poll so far believe the USPS estimate is too low. As the number of votes reached passed 1,000 this evening, 52% predicted that more than 20,000 would take the buyout. And 20% predicted the number would be above 30,000. Current results, and the chance to cast your own vote, are near the top of the right-hand column.
  
For more information on the buyout offer, see:

• Confusion, Misinformation Could Hinder USPS's Early-Retirement Push  
• Take the Money and Run, Burrus Tells Postal Workers  
• New Poll: How Many Postal Workers Will Take the USPS/APWU Buyout Incentive?

New Poll: How Many Postal Workers Will Take the USPS/APWU Buyout Incentive?

Offering 115,000 APWU-represented employees $15,000 to quit will clearly be one of the best investments the U.S. Postal Service has ever made.

What's not clear is how big the investment and payback will be. In other words, how many eligible employees will take the buyout? Dead Tree Edition is asking its readers to make their own prediction (the poll is near the top of the right-hand column) on the early-out incentives that could yield $1 billion or more in annual savings.

When it announced the program a month ago, USPS said it expected 15,000 to 20,000 employees to participate.

Former APWU President William Burrus soon countered with his a much higher estimate -- "in the range of 35,000" -- and advised postal workers not to hold out for something better. (See Take the Money and Run, Burrus Tells Postal Workers.) But the Postal Service's chief human resources officer indicated recently that his estimate had hardly changed; it's now 16,000 to 20,000.

Eliminating a position held by a full-time career postal worker probably saves USPS at least $60,000 annually. And a new employee is likely to cost USPS only half of what a veteran career worker does, according to Burrus.

That means that if half of the early retirees are replaced, a total of 15,000 buyouts would save USPS nearly $700 million annually. But if 35,000 take the package, the savings could be nearly $1.6 billion.

7 More Reasons the GOP Might Be Starving USPS of Cash

Exactly why House Republican leaders chose not to act on any postal reform legislation before autumn is still a bit of a mystery. But last week’s Dead Tree Edition article on the subject (See 7 Reasons the GOP Might Be Starving USPS of Cash) stirred up plenty of theories and heated comments from all parts of the political spectrum.

Liberals seemed to think I was overly naïve in failing to see the obvious Republican plot to destroy the U.S. Postal Service and let the GOP's cronies loot what’s left. Several conservatives objected to Dead Tree Edition’s supposed liberal bias and questioned why links to this "partisan" article showed up in industry newsletters and LinkedIn groups.

I have a confession to make: Yes, I lean Democratic – whenever I hear Republican politicians yammering. And I start thinking Republican when the Dems start blowing their own hot air. As long as the two parties focus on name calling and sound bites rather than actual solutions, I have no qualms about ridiculing both sides of the aisle.

Anyway, amidst all the vitriol and conspiracy theories, seven additional interesting and sometimes insightful theories emerged to explain the GOP's inaction on the growing postal crisis:

1. Why bail out Obama?: If a real USPS crisis – like mail not getting delivered or people not getting paid – occurs before the election, who will get blamed? Sure, the thinking goes, House Republicans might take some heat for not bringing any bills to a vote. But the big issue would be the Obama Administration’s failure to provide leadership on a crisis that should have caught no one by surprise.


2. All pain, no gain: A vote for USPS cost cutting three months before re-election time? Forget about it. Many Congressmen probably had nightmares about their opponents holding media events at closed post offices or being cheered at rallies of laid-off postal workers. They know that those of us who to preserve the Postal Service by enabling it to balance its budget are poorly organized and will have little impact on this fall’s elections.

Is the Postal Service Really Broke?

The U.S. Postal Service would be in Chapter 11 if it were a business, the Postmaster General points out, but others claim he and some political conservatives are manufacturing a crisis.

There has been much debate and confusion regarding USPS’s financial status. It helps to break the issue down into three questions:

Question #1: Is the Postal Service broke?

This is a debatable point, though the Postal Service’s financial reports show that it is indeed broke and about to exhaust its ability to borrow.

Those who say USPS’s finances are OK point out correctly that it has prepaid billions of dollars to the federal government to cover future retirees’ health benefits and overpaid billions more into a joint federal/USPS pension fund. A Congressional accounting game designed to mask the size of the government’s budget deficit basically has the Postal Service borrowing billions of dollars each year so that it can turn around and lend billions back to the government in the form of prepaying into the retiree-benefits fund.

Business-style accounting would treat that $21 billion loan to the federal government as an asset, giving USPS about $2 billion in net capital at the end of Fiscal Year 2011 rather than the -$19 billion net value it reported.

Bill Would Address Federal and Postal Retirement Snafus

The longstanding problems of inaccurate pension estimates and slow pension payments for Postal Service and federal employees may finally be addressed by Congress.

Sen. Mark Warner

Sen. Mark Warner (D-VA) has proposed an amendment to the postal-reform bill in the Senate that would require monthly reports on the accuracy and timeliness of pension estimates, the backlog of retirement applications, and the status of the retirement systems modernization project.

He would also set Jan. 31, 2013 as the date “by which all Federal payroll processing entities will electronically transmit all personnel data to the Office of Personnel Management.”

Warner’s proposal is one of 39 amendments to S.1789, the 21st Century Postal Service Act, on which the Senate is scheduled to vote Tuesday (April 24). Update: Warner's amendment was included in the version of S.1789 the Senate approved on April 25 and sent to the House.

It’s no coincidence that Warner wants to make his proposal part of a law intended to improve the U.S. Postal Service’s finances. Dead Tree Edition and others have long contended that low-ball pension estimates and the months-long waits for retirees to receive benefits are major hindrances to USPS’s cost-cutting efforts. (See, for example, How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways.)

Donahoe's Downsizing Plan for USPS Yields Huge PR Coup

The past week capped off an astounding publicity coup for the U.S. Postal Service, which is not usually known for its adroit public relations.

Years of conferences, letter writing, study reports, and publicity campaigns by mailers, postal unions, and postal management had largely failed to draw much attention to USPS’s financial plight – or to Congress’ role in causing that plight.

Suddenly last week, it seemed, news of the Postal Service’s dire straits was everywhere – on front pages, leading off network newscasts, featured in one of David Letterman’s famous Top 10 lists, and the subject of a hilarious “The Daily Show with Jon Stewart” bit.

What turned the tide wasn’t highly paid lobbyists, high-powered PR consultants, ot clever slogans. (Remember efforts to brand so-called prepaid retiree health benefits as a “Stamp Tax”?)

The key was a bit of Reality Therapy, in the form of postal executives spelling out what they would have to do to keep the Postal Service solvent in light of Congressional policies.

It started with a small dose of reality in late July when USPS announced a list of 3,700 underperforming post offices being considered for closure. The small post offices represent less than 1% of USPS’s budget, and their closure would not be as momentous as recent consolidations of processing and distribution centers.

The news media and general public, however, know little of P&DCs, but everyone knows what a post office is. Post office closings, along with the Postal Service's financial problems, became a hot topic-- with some articles even mentioning that Congress’ failure to yield on USPS’ pension and benefit overfunding as a major culprit. The timing was perfect: After the debt-ceiling debacle, the public didn’t have a hard time believing that Congress was to blame for much of USPS’s trouble.

Then the big dose came last month when Postmaster General Pat Donahoe announced his radical transformation plan, which called for laying off an estimated 120,000 postal workers and closing more than 300 P&DCs over the next four years. The prospect of having to rescind no-layoff clauses in union contracts and putting so many postal employees out of work got Congress' attention.

The news-media pack started smelling a juicy story. It couldn’t resist the opportunity for multiple sound bites from a Congressional hearing this past Tuesday.

“We have NEVER seen this many cameras for a #Postal hearing,” Washington Post reporter Ed O’Keefe tweeted a few minutes before the hearing began.

Despite the praise from mailer groups, Donahoe’s plan is deeply flawed. For example, smoothly transition from more than 500 P&DCs to fewer than 200 in only a year? Not likely.

But the proposal has succeeded in drawing attention to what Not-In-My-District politics, Congressional accounting games, and White House inaction are doing to an organization that touches every American without spending taxpayer money. Perhaps from all this notoriety and discussion, real solutions can emerge.

Related articles:

• Pensions: Another Government Rip-off of the Postal Service 
• Congress Hears the Truth About Postal Service Finances  
• 6 Points Donahoe Left Out of His Bailout Rebuttal
• A New Slogan for the Postal Service: "Just Say No"

Is USPS Underestimating the Number of Layoffs Its Downsizing Plan Would Require?

Note: An earlier version of this article contained an erroneous interpretation of federal severance benefits; they only apply to employees not yet eligible for retirement.

The U.S. Postal Service's estimate that its "workforce optimization" plan will require 120,000 layoffs in the next four years may be substantially understating the number of postal workers who would be forced out.

The recently released plan calls for shedding 220,000 career employees over the next four years. It estimates that attrition will take care of 100,000 employees, meaning the rest of the cuts would have to come from layoffs.

The estimate accurately reflects recent trends, when the number of career employees declined by just over 25,000 in a 12-month period. (See The Downsizing of the Postal Workforce Slows.)

But there's a big reason not to project recent trends into the future: the generous severance policy for USPS and federal employees. An employee with 20 years of service, for example, would get at least 30 weeks of severance pay and be eligible for unemployment insurance, according to Courier, Express, and Postal Observer.

Being laid off seems to be a much better deal for postal employees than just quitting or retiring. Those who think they are likely to be laid off in a year or two will be inclined to stay with the Postal Service, so they can collect severance and unemployment, rather than quitting. And even those able to retire, who are ineligible for severance benefits, may find the possibility of collecting unemployment benefits a sufficient incentive to stay with USPS.

Postal workers have a history of responding to retirement incentives. The Postal Service's attrition rate was about 40,000 annually a couple of years ago when many employees were offered early-retirement packages. And many employees have indicated they are ready to retire if another VERA (Voluntary Early Retirement) deal is offered.

So it's only logical to assume that postal workers would also respond to an incentive not to quit.

Related articles:

• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways: VERA programs would have worked better if the Postal Service had given employees accurate and timely estimates of their retirement benefits.
• Does the Postal Service Really Want Early Retirements?: Don Cheney, an expert on USPS retirement benefits, charged this week in an editorial for PostalReporter News that the Postal Service laid the groundwork for weakening no-layoff clauses by bungling employee communications related to VERA offers.
• Postal Service Can No Longer Afford Money-Saving Tactics, Study Says: VERA offers that lead to positions being eliminated are a good deal for the Postal Service, but it no longer has enough cash to offer them. (Here's an opportunity for Congress to ride to the rescue: Provide funds for early-retirement incentives as a way of minimizing USPS layoffs.)

USPS Retirement Mess: A Major Barrier To Downsizing

Here's one way labor unions are hindering staff reductions at the U.S. Postal Service -- telling their members the truth about the challenges of retiring from USPS.

Consider this statement from a recent article for members of the National Association of Letter Carriers:

"The Office of Personnel Management continues to struggle with timely completion of new retirees’ annuities," writes Ernest Kirkland, NALC Director of Retired Members. "Again, each member who is considering retirement should try to have a five-month reserve of his or her anticipated retirement income available prior to retiring. Saving 440 hours of annual leave for payment at retirement will be a great start toward that goal."

Kirkland also told Federal Times a few days ago week that the union is getting an increasing number of calls from recently retired members who are getting lower pension payments than they should while the Office of Personnel Management calculates their correct payments. The interim payments are sometimes half of what the retirees are supposed to be paid, according to the Federal Times' Stephen Losey.

The cash-strapped Postal Service hopes to reduce employment by 30,000 people this year, mostly through retirement, helped in some cases by early-retirement incentives. But how many more would retire if the process were smoother -- for example, as straightforward as it usually is for large private employers? (After all, influential Congressman Darrell Issa, R-CA, says USPS could stand to lose 200,000 employees.)

NALC has filed a grievance against the Postal Service for failing to provide retirement counseling to employees as required by law. And officials of the American Postal Workers Union have warned about USPS providing pension estimates to employees that were too low or just plain wrong.

The irony here is that union officials have a vested interest in discouraging retirements to prevent reductions in the number of active, dues-paying members, and yet they are trying to smooth the retirement process for employees. Meanwhile, the politicians and postal executives who are so eager to cut the Postal Service's workforce seem to have been silent on these hurdles in the retirement process.

Fortunately, the OPM is battling the backlog of retirement applications from federal and USPS employees by hiring new claims processors and having them work overtime. Let's hope it can clean up the process before the Postal Service runs out of money.

Update: This article wasn't as clear as it could have been, which caused some people to misinterpret my view and think that I am blaming the unions. I was being sarcastic; I certainly don't blame the postal unions for telling the truth. I was trying to point out that the unions are addressing a problem that management should be eager to solve.

Other articles on the Postal Service's problems with retirement benefits include:

• For Postal Service Retirements, Slow Going Ahead
• USPS Getting Its Retirement Act Together? Nope   
• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways 
• Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees?

Congress Hears the Truth About Postal Service Finances

A Congressional panel heard the blunt truth today about how Congress' budget games have put the U.S. Postal Service on track to run out of money in September.

"Burdensome and flawed benefit payments have contributed to almost 90 percent of the $20 billion loss in the past 4 years," David C. Williams, Inspector General of the Postal Service, told the House Subcommittee on Financial Services and General Government. "This has raised the cost of the infrastructure, postage rates, and forced the Postal Service to incur debt."

Williams' get-to-the-heart-of-the-matter testimony was a refreshing change from the bone-headed pundits complaining about the Postal Service wasting taxpayers' money. It's worth quoting extensively:

"My office has produced a series of reports highlighting the exaggerated estimates, enormous overcharges, and excessive prefunding levels that plague the retiree pension and health care systems. To continue contributing to funds that now appear to exceed the 100 percent funding levels is even more egregious when compared against benchmarks in the public and private sector and OPM [Office of Personnel Management]’s levels.

"I agree with Senator Susan Collins’ call in September 2010 for the OPM to change, under current law, its calculation of Postal Service CSRS pension fund payments."

"In the near term, the Postal Service and Congress should consider halting further payments to benefit funds until the surplus is used, funds restructured, and mistakes corrected. The Postal Service can use this time to learn how to live below or within the Consumer Price Index, shed its debt, and find its role in the digital age.

"The Postal Accountability and Enhancement Act incentivizes the Postal Service to adopt a leaner volume driven infrastructure to assure readiness for the 21st century. This will require:

• Optimization of the network of post offices and plants;
• Conversion to evaluated letter carrier routes to allow effective management; 
• Flexible work rules to match the ebb and flow of mail; 
• A comprehensive delivery point strategy that maximizes curb side delivery and cluster boxes; 
• Simplification of mail acceptance and pricing; and 
• Evaluating the need for 74 districts, 7 Areas, and two law enforcement agencies.

"Federal financial raids on the Postal Service have to be halted; and the Postal Service should be taken back off-budget as originally designed, and the benefit funds restructured. We will need strong collaborative efforts to enable the Postal Service to serve Americans in the 21st Century."

Williams' office has a habit of cutting through the Beltway BS to reveal the truth about postal finances.

The Capitol Hill crowd politely argues about prepaid or overfunded health benefits for Postal Service retirees. But in a 2009 report, the OIG correctly characterized the accounting scam as using “Postal Service funds to make the president’s budget seem smaller” to the tune of $5 billion-plus each year.

Four months later, another OIG report charged that the federal government had overcharged USPS $75 billion for pensions.

5-Day Delivery: Maybe the PRC's Decision Is In the Mail

Wondering what happened to the idea of five-day mail delivery? You're not alone.

The Association for Postal Commerce, commonly called Postcom, posted this little item on its Web site this week:

"Oh I heard it -- Heard It -- Yes, I heard it through the grapevine. . . ." ♫♪

Hey PRC, have you got your ears on? Key sectors on Capitol Hill are very unhappy with the fact the the Commission's long-awaited report on 5-Day Delivery has yet to be delivered. People are questioning the wisdom of providing the Commission with any further regulatory discretion. You got to move it move it.

The message is directed to the Postal Regulatory Commission, which is still weighing the U.S. Postal Service's request last March for an advisory opinion on ending Saturday delivery. Such a change would require Congressional approval, but Congressional leaders have indicated the proposal will go nowhere without (and perhaps even with) the PRC's blessing.

The PRC held months of hearings, received thousands of comments and then heard final arguments from lawyers in October. The PRC received elaborate projections regarding the billions of dollars that dropping Saturday delivery would save, but it seemed troubled by uncertainty regarding how much revenue would be lost.

The PRC originally indicated it wanted to issue an opinion by the end of November, but it got swamped by other issues, including the USPS appeal of the PRC's rejection of exigent rate increases and a need to interpret how to calculate the price cap for most postage rates in light of deflation.

There's also a question of relevance, given PRC Chairman Ruth Goldway's recent comment that the budget proposal President Obama will unveil next week addresses "major financial concerns in the Postal Service."

The Postal Service would not need to end Saturday delivery if the budget lifts the two anchors weighing down USPS's finances -- what are euphemistically referred to as prepaid retiree benefits and overpayments for pensions. If those two Postal Service subsidies of the federal government (that's right, the Postal Service has been bailing out the federal government, not vice-versa) were corrected, the Postal Service would be profitable.

Related articles:

• USPS Said No To White House on 5-Day Test
• How USPS Could Bypass Congress on Saturday Delivery   
• Postal Relief? How About No More Congressional Thievery? 
• Here's How the Postal Service Can Get Back Its Pension and Benefits Overpayments