PMG: USPS ‘Cash shortfall’ could extend to operational expenses

Postal Service Faces Financial Shortfall Unless Congress Addresses Mandates

WASHINGTON — The postmaster general told a Senate subcommittee today that despite significant cost cutting and revenue generation, the Postal Service finds itself in dire financial straits. Statutorily mandated payments due to the government at the end of September will not be paid, he said, unless Congress acts to refund overpayments of pension funding or ease the mandate to prefund retiree health benefits.

Testifying before the Federal Financial Management Subcommittee of the Senate Committee on Homeland Security and Governmental Affairs, Postmaster General Patrick R. Donahoe said that the financial condition of the Postal Service is such that in the absence of comprehensive legislation, there are required federal payments that are now in jeopardy. “As things stand, we do not have the cash to make a $5.5 billion prepayment for future retiree health benefits due Sept. 30,” he said

He also alerted subcommittee members that the cash shortfall could extend to operational expenses. “Despite our significant role in the American economy and our aggressive cost cutting and revenue generating efforts, I regret to say we are in a serious financial predicament today,” he said.

For three years, the Postal Service has been asking the Congress to alter the payment schedule of a mandate in a 2006 law that, unlike any other federal agency, requires the Postal Service to prefund retiree health benefits in amounts approximating $5.5 billion. In addition, the Postal Service has asked to gain access to $50 to $75 billion in overpayments it has made to the Civil Service Retirement System (CSRS) and a $6.9 billion it has overpaid to the Federal Employees Retirement System (FERS).

Since inception in 2006, the Postal Service has paid some $20.9 billion into the Retiree Health Benefit Trust Fund. Under current law, the Postal Service is scheduled to continue to make $5.5 to $5.8 billion in payments up to and including 2016.

With the right legislation, however, Donahoe told the subcommittee, the Postal Service can return to profitability and if given flexibility, “the Postal Service can continue to serve the American public very effectively and continue to sustain and propel American commerce.”

The subcommittee chairman, Sen. Tom Carper (D-DE), introduced legislation today that addresses the financial issues confronting the Postal Service and, among other things, allows a transition to a five-day delivery schedule, a move that could effect an annual saving of $3.1 billion.

In asking for urgent consideration of legislative action, Donahoe said that although the agency’s financial condition is dire, the Postal Service is nonetheless a strong and a vital part of the economy but the continued burden of the retiree health benefit prefunding “continues to have a negative impact on our business.” Postmaster Testimony

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.

PMG Testimony To Senate Subcommittee On USPS Finances

5 thoughts on “PMG: USPS ‘Cash shortfall’ could extend to operational expenses

  1. I agree with Carrier. Machines are needed regardless to help save on costs. Carriers are spoiled and think that they should get to case 3 hours and be 5 hours on the street. Wake up, there is not even 2 hours of mail. So the savings from DPS and FSS machines are well worth the money. Carriers just dont want to be on the street that long. We were hired to 8 hour pay for 8 hour day. So deal with it. Look at the entire picture. If you had to pay your home insurance all up front for the length of the mortgage loan, would you be able to do it? Not only would you not be able to do it, but you would question, why should I have to do it. Well that is the same position that the USPS is in. I wont get into the VP’s, because they not only have much responsiblity, but other executives make 4-5 times the amount that they do. We all have good jobs, great benefits, and at the time, job security, so just go to work and stop crying about the things that dont make you happy. Get involved and pray that we can get Congress to allow us to run effectively so we can survive as a organization and one day be able to retire.

  2. Same old crud from the last two. Taliking about billions and all you can mention
    is the hiring of new vp’s, and heaven forbid we update our equipment. Grow up and start using your heads.

    No other Gov’t organization including OPM has to pre-fund retires health benny’s the way the Post Office does.
    Last year, Post Offfice Lost Billions, but without the uneeded 5.5 billion payment to a solvent retirement health fund she would have turned a profit.

  3. Any mention about the billions spent on shiny new machines to process the ever shrinking volume of flat mail? No? Oh, I didn’t think so. Won’t recover the cost of these machines in 200 years in the best case scenario!!

  4. I does have plenty of monies for my 2 new Vice Presidents and the bonus monies I just threw at all my EAS friends!!

  5. Congress controls the the USPS: it will continue to loose millions as congress lacks the vision to take action to curb billions in losses and declining mail volumes. Cost effective means nothing to PRC and Congress; thousands of Post Offices no longer serve a need in the advanced technological age and should be eliminated. Sat. mail delivery in the day of the INTERNET is a total wasted expense as mail customers are not awaiting delivery of bulk standard advertising mail. Postal shipping per quarter 2 report is only venue making a profit; parcel delivery has a market comparable to FED X, UPS, US AIR, ATSG, AIR T, EFFORTS SHOULD BE DIRECTED TO DEMAND FACTOR for a return on cost factor. Route mail delivery on not in demand and is a wasted cost. Congress could support this and American public would thank them for not wasting GAS DELIVERING JUNK MAIL. The term POSTAL SERVICE IN CONNECTING INDIVIDUALS AND BUSINESSES HAS BEEN REPLACED BY INTERNET, TEXTING, SMART PHONES,TABLES AND NEWS APPS BECOMMING AVAILABLE. CONGREES should have concern for eliminating wasted expenses and take action in lieu of playing POLITICS. POLY=MANY

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