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National
Association of Postal Supervisors
Legislative
and Regulatory Update
January
26, 2009
PMG
Potter to Address Worsening USPS Finances Wednesday
Rumors have been
swirling throughout the Postal Service in recent weeks about big
changes coming: significant plant consolidations, area and
district staffing reductions, craft work-hour cutbacks, the list
goes on. The Postal Service has remained mum about these
rumors. One union
president
has been particularly candid about the prospects for significant
change. Mailers are concerned about the possibility of USPS
filing for an emergency
rate increase
in 2009, to supplement the annual rate hike available in May.
Greater clarity should come about on Wednesday afternoon when
Postmaster General Jack Potter appears before a Senate postal
oversight panel to testify on the deteriorating financial health
of the Postal Service and what can be done to stabilize the
ship.
Sen.
Tom Carper (D-DE),
chairman of the Senate
Federal Services Subcommittee,
has called the hearing
to learn how badly the flagging economy is hurting the Postal
Service and whether the Postal Service should receive any kind of
relief, and if so, what kind and how much.
The
Postal Service is Hurting
There's no doubt about it. The worsening economy has thrown
the Postal Service into a financial
tailspin.
Mail volume is declining at a pace not seen since the early
1930’s. The business sectors that have provided the
greatest amount of mail to the Postal Service – financial
services, retail and housing – are among the industries
hardest hit by the worsening recession. Direct mail campaigns are
being cut
back
or coming to a screeching halt. In 2008, the Postal Service
lost $2.8 billion, and volume declined by 9 billion pieces.
Current trends indicate that USPS this year could lose $4 billion
or more.
No one knows whether the lost
mail volume will return when the economy revives, or how long
that will take. Significant structural changes to the
Postal Service, even to its business and products model, are
inevitable, but those take time and are several years down the
road.
The
USPS can only do so much in shedding costs, while preserving
service quality and its universal service obligation. Given
the way the Postal Service is a barometer of the economy, it's no
wonder that the Postal Service's finances have tanked.
The
House version of the economic stimulus package, set for a vote in
the House on Wednesday, does not include relief for the Postal
Service. The Senate stimulus measure is still being
crafted, but questions remain whether an appropriation for the
Postal Service is necessarily the right move.
Reducing
the Strangle Hold of Prefunding Postal Service Retiree Health
Care
One of the best ways to
provide financial relief for the Postal Service is through
the reduction of one of the Postal Service’s largest costs
– its payments toward the future health insurance
premiums of its retirees. This prefunding obligation was created
by the 2006
postal reform law,
with a payment schedule far too ambitious, especially now.
No federal department or agency has this kind prefunding
obligation, nor are USPS or FedEx required to do the same, nor do
they.
In
response, Rep.
John McHugh (R-NY)
and Rep.
Danny Davis (D-IL)
have introduced legislation, H.R.
22,
that will address the USPS prefunding requirement and make a
simple but significant change in the law. HR 22 will permit
the Postal Service to satisfy its payment for the premiums of
current retirees out of the $32 billion that USPS has
already set aside (including the infamous "escrow"
lockbox) for future retiree health insurance premiums.
NAPS President Ted Keating and the presidents of the six other
postal management associations and postal employee unions urged
the Congressional leadership last month to include prefunding
relief for USPS in the economic stimulus package.
The
change would not affect the health insurance benefits of any
retiree. Nor it is a bailout; it simply would revise the
payment schedule under which the Postal Service makes down
payments for the health insurance premiums of its future
retirees.
In these difficult
economic times, the question becomes: Should the Postal Service
be forced to annually prefund $5.4 billion for future retirees,
in addition to paying the $2.3 billion for current employees,
when it cannot afford these payments right now and is going
deeper and deeper into debt?”
Wednesday's Senate hearing will take a closer look at this issue
and others.
Bruce
Moyer
NAPS Legislative Counsel
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