GAO Adds Postal Service’s Financial Condition to “High-Risk” List

GAO Press Release

Reporting that broad restructuring is urgently needed, the U.S. Government Accountability Office (GAO) today added the financial condition of the U.S. Postal Service (USPS) to its High-Risk List of federal areas in need of transformation.

“There are serious and significant structural financial challenges currently facing the Postal Service. New technology is profoundly affecting services in both the private and public sectors, including traditional mail delivery. Compounded by the current recession, the volume of mail being sent is dropping substantially, leading to a sizeable decline in revenue. At the same time, the Postal Service faces significant infrastructure and personnel costs,” said Gene L. Dodaro, Acting Comptroller General of the United States and head of the GAO.

“The Postal Service urgently needs to work with Congress and other key stakeholders to develop and implement a restructuring plan to help put it on a more sustainable financial path. By adding the U.S. Postal Service’s financial condition to the High-Risk List, we hope to bring attention to the agency’s financial viability and its ability to provide sustainable, affordable, high-quality mail service,” Dodaro added.

Mail volume fell by 9.5 billion pieces in fiscal year 2008 to a total of 203 billion pieces and is projected to fall by 28 billion pieces in fiscal year 2009 to a total of 175 billion pieces. USPS expects mail volume and revenue to continue declining next year, and flat or continued volume decline over the next 5 years. USPS projects a net loss of $7 billion this fiscal year, with outstanding debt increasing to over $10 billion, and a cash shortfall of about $1 billion. USPS also expects that its projected losses will continue in fiscal year 2010.

USPS has relied on growth in mail volume to help sustain its operations, a strategy that has enabled it to remain self-supporting. During the past decade, however, businesses and consumers have increasingly turned from traditional mail delivery to electronic communication alternatives. Mail volume has bounced back after past recessions, but USPS’s forecast suggests that may not be the case this time as more and more postal customers embrace electronic options.

To remove its financial condition from the High-Risk List the Postal Service needs to undertake a number of major structural changes, Dodaro said. In the short term, a key challenge is to cut expenses quickly enough to offset mail volume and revenue declines to avoid running out of cash to pay its expenses. In the long term, USPS should consider consolidating operations, closing unneeded facilities, and reducing its workforce to reflect new trends in mail use. It has been slow to cut overhead costs to offset volume declines and continues to maintain an infrastructure of about 38,000 facilities nationwide. The Postal Service should also explore opportunities to increase revenue. Congressional support for these actions will be crucial, Dodaro added.

A more detailed description of GAO’s action can be found here ( For more information, contact Chuck Young, Managing Director of Public Affairs, at (202) 512-4800.

Look at what GAO is recommending in part:

Key actions USPS could take include the following:

1.Reduce compensation and benefit costs through retirements: About 162,000 USPS employees are eligible to retire this year, which will increase to almost 300,000 within the next 4 years.
• early retirements: About 150,000 USPS employees were recently offered voluntary early retirement, but less than 3 percent accepted.
• lower benefit costs: USPS pays a higher percentage of employee health benefit premiums than other federal agencies (80 percent versus 72 percent, respectively). In addition, USPS pays 100 percent of employee life insurance premiums, while other federal agencies pay about 33 percent.
2.Consolidate retail and processing networks
• Remove excess capacity in the 400 mail processing facilities nationwide, where processing capacity for First-Class Mail exceeds processing needs by 50 percent.
• Maximize use of lower-cost retail alternatives: A growing amount of USPS retail revenue comes through alternate channels, such as stamps bought by mail, on the Internet, and at grocery stores.
• Reduce the network of 37,000 retail facilities, where maintenance has been underfunded for years, resulting in deteriorating facilities and a maintenance backlog.

3. Consolidate field structure: Review need for 74 district offices and 9 area offices.
4.Generate revenue through new or enhanced products: Use its pricing and product flexibility to maximize profitable mail volume.
Other actions that USPS has proposed that would require congressional approval include the following:
1.Change funding requirements for retiree health benefits: USPS has asked Congress to revise the funding requirements for its retiree health benefit obligation as it does not expect to make the full amount of its $5.4 billion retiree health benefit payment at the end of this fiscal year due to a cash shortage.
2.Realign delivery services with changing use of mail: USPS has asked Congress to allow it to reduce delivery from 6 to 5 days per week as its revenue per delivery has declined 20 percent from fiscal year 2000 to fiscal year 2009, as have pieces of mail delivered per address

18 thoughts on “GAO Adds Postal Service’s Financial Condition to “High-Risk” List

  1. GAO:
    Tell USPS to give it’s employees a good amount of $$$ as an incentive to leave and reduction in work force will be there fast.
    Post Office employees are educated people and we work very hard compared to any other federal worker.

  2. Management continues to sink money in developing machines and computer technology while it is still swimming in red ink. This is stupid, fool hardy, and exactly like the US Government…

    It is as bad as a car company making more than they can sell. The thing to learn is sustainability, not expansion.

  3. You will not get rid of the 400 vice presidents I’ve hired since taking over as Postmaster of Disaster, they are helping me sink the ship…

  4. As too the little pissed off fella. I haven’t seen or heard of any carrier taking a 2 hour break in many years. As for those others it saw hiding; we’re all allowed to take 2 ten minute and 1 half hour breaks. I eat my lunch on a quiet road under a shade tree in my truck every day. As for uneducated, more carriers have college degrees than you may think. And if the little pissed off fella is a supervisor, most of the ones I know don’t have any college, plus, they were lousey carriers. Most of the Postal connect accounts come from carrier leads. We’re all concerned about our jobs, and appreciate what we have. We don’t need little pissed off things attacking us.

  5. Thanks For The Memories,the post office is gonna go the way of the wagon wheel & the horse & buggy whip,times change!

  6. You better all wake up where will any of you go and make the money your making to put mail in a mailbox and your complaining? What a joke you people are so out of touch it’s a disgrace. This economy is in a critical state and all I read is stupid uneducated nonsense. It is about time for you all to take the blame there are many mail people I see on the street who are hiding and some park their postal vehicles at their private homes and hide for 2 hours. How sick and rediculous what the postal service needs is a restructuring and routes that have a set salary a year. Instead of paying you the rediculous money you get your a bunch of greedy people all at fault. What will you do when you wake up one morning and you don’t have that paycheck your use to? prbably make a stupid comment because but you better wake up this economy is hurting and everything comes to an end at some point you just better hope your job is not one of them. If I had one piece of advice for postal people you better start working together and wake up and do what you have to to save your jobs. How many of you pay your bills by internet? SHAME ON YOU ALL get a life and maybe watch the news and wake up this is not a joke your jobs are in jeapordy not just this year but for years to come this is not the end. Instead of pointing fingers start creating business and ideas SAVE YOU JOBS the postal service has been good to thousands of families providing them a great life it’s about time you gave back. But you won’t see it that way just ignorance and stupid comments from people who have no life.

  7. Anon, you are correct in your assesment but that’s not the only problems facing the po. No doubt certain layers of mgnt can and should be cut but you have employees still (not as much) standing around doing nothing or complaining how hard they have it. As far as the carrier we continue to give, add ons are nearing a end though because we’re only required to work 8 hrs a day and most of us are already on the road for 6 1/2 to 7 hrs. Solutions people, not postings on some blog. We all have a stake in the future of the po, like it or not. Hold yourself accountable!

  8. Once again, we hear the same old story…cut craft positions and increase EAS positions. No wonder people working for the USPS are DISGUSTED and FED UP. UPPER MANAGEMENT HAS PLACED US IN A TERRIBLE SITUATION AND NOW CRAFT EMPLOYEES HAVE TO PAY. EAS personnel are falling over each other, that is…when they aren’t on the computers…THEY DON’T TOUCH THE MAIL OR GENERATE REVENUE…Time to ELIMINATE THEM.
    I am fortunate to be able to leave BUT I WILL NOT. ONLY AN INCENTIVE OR SEVERANCE!

  9. As liar states, we do in fact pay a share of the life insurance premiums. I hate to say it because it sounds discriminatory but I know of postal employees in their 70’s still working. Mandatory retirement age for all employees and allow carriers to leave without penalties at 50 with min. ten years. Be honest, you don’t get the same bang for the buck as we get older. Vera should come with zero penalties, read zero. It’s foolish to believe the po will offer a monetary under current conditions. Leave collection boxes alone, think the face of the po and doesn’t require much time for carrier to collect but change collection times to avoid backtracking. Max window clerks, sounds ridiculous but again face of the po. Too many complaints about long lines and only one window clerk (foolish). And finally, yes we must, get rid of Saturday delivery. Charge extra for Sat. service and perhaps maintain package delivery to compete. Middle mgnt must be looked at along with inside craft employees. How can people be standing around doing nothing and nobody see a problem with that. As far as certain layers of mgnt, eliminate the waste and keep the capable. Lastly, eliminate foolish grievances from becoming monetary settlements in the millions, (foolish). Don’t brake the contract, from the employee standpoint, stop whining about mgnt expecting you to work 8 hrs. A union rep once told me the mail will always be here and it’s just a scare tactic, really, I’d be willing to sell you a piece of the lincoln memorial if after seeing the way things are you believe that line. Each employee, hold yourself accountable.

  10. I was really considering to retire the new year
    coming up, (but let me tell you) I figured I would get 3,003 $ a month here’s the break down
    I have to pay $277.00 for spouse survivor benefits,$356.00 for health benefits that’s $633.00 already taken off the top, now another
    aprox. $20.00 for 75% life ins. (reduction). This
    doesn ‘t include fed & state taxes to be taken out, and that’s right now’s figures,survivor benefits do increase as your retirement pay increases (ex. cost of living increase)and you
    can count on health plan costs to rise. I guess
    aprox. I’m talking $2,000 take home and they want
    you to take an early out with penalties. I just
    wanted to give some insight. (NOTE: these figures are based on a married person and also
    what health plan you have chosen and what % of
    survivor benefits you chosen (highest % is 55%).

    Santa Klause

  11. It doesnt make any sense to realign mail routes and shift people around, you still have the same amount of people. Offer the max incentive OPM allows and reduce penaltys for leaveing early, you get the highest paid people off the books, and you move lower paid people into the open jobs. Its done in the REAL business world all the time. Wake up.



  13. The early retirement offered was without incentives, only penalties.
    If the USPS was really serious about reducing staffing they would put some money on the table.

  14. If they pay 100% of my life insurance… what is that money their taking every paycheck. Unless your saying 10,000 is sufficient life insurance for my family if I croak.
    I had a union job in 1978 and got 25,000 payed 100% for life insurance.
    Another thing the federal pay scale for my job versus the post office… they make more for the same job!
    Spin the story we know the truth.

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