2006 Postal Reform Law Continues to Drive Up USPS Net Losses For FY 2012

USPS Needs New Math to Explain November 2011 Net Loss of $1.8 Billion

The US Postal Service filed its second month preliminary financial report of the 2012 fiscal year (unaudited) with the Postal Regulatory Commission (PRC) . USPS reported a net operating loss of $1.267 billion for the month of  November 2011. This same period last year saw a $456 million net loss.  USPS reported a drop of volume in all classes of mail except shipping which rose 32.0% during the month of November. Most all non-personnel expenses such as Vehicle Maintenance Service, Information Technology,  Rural Carrier  EMA, supplies and services saw an increase.

USPS expenses for the Postal Service Retiree Health Benefit Fund (PSRHBF) rose $101.8% ($925 million compared to $458 million for the same time last year). The year to date total for the 2006 Postal Reform required law stands at $1.850 Billion.

USPS reported planned operating net losses after the second month of the FY 2012 as $2.014 Billion. But USPS reports planned net income losses as $1.586 –a  $428 million difference.  Just hold on the new math will all come together with this next paragraph.

USPS reported a net loss $139 million for the month of October but the year-to-date losses are $1.836 Billion which is a total discrepancy of $430 million.  USPS explains the $925 million PSRHBF payment as follows:

The $925 million November and $1,850 million Year-to-date Retirement Health Benefit expense represents 1/12 and 2/12 of the $5.6 billion due on or before September 3, 2012 as required by Public Law 109-435 and the $5.5 billion due on or before August 1, 2012 as required by Public Law 109-435 as amended by H.R 2055. The Postal Service is studying the options available on the appropriate Generally Accepted Accounted Principles (GAAP) for recognition and disclosure of this obligation on their December 31, 2011 Financial Statements to be released on February 9, 2012.


Got it?




volrev2011see full report from PRC – USPS Preliminary Financial Information (Unaudited) for November 2011

15 thoughts on “2006 Postal Reform Law Continues to Drive Up USPS Net Losses For FY 2012

  1. Oversee what? This whole country is run on the notion of not overseeing, not regulating, just letting the crooked assholes do what they want. Get back to worshipping at the altar of The Free Market.

  2. say not to pre-funding, start the re-funding of 76 billiond dollars in both (fers and csrs).
    say no to regulations which “intimidate” of “creates a bias” in the minds of “usps members 650,000 – their families , members of mailing industry..8 million and thier families- approx 30 million, just by creating some regulation or the other and “buyout” their freedom. there are so many management jobs, why cant any one oversee this?

  3. Getting rid of Saturday delivery is a bad idea period. The cost in jobs would be enormous. UPS would step right into that spot and the loss to the PO would be huge. I read all these self serving suggestions all the time no Saturday delivery, no door to door delivery, charging for forwarding, gas surcharges ect ect …. We’re suppose to be all about service, not about doing less for our pay checks. I think we should have 7 day delivery, give the public more service than they can handle! We should be looking to expand our services not cutting back. And for all you folks that want a 5 day work week, get a job at UPS.

  4. Congress should give back the 2 overpayments made to retirement .Should also
    have business sense in understandings basic economics that cost effective operations are essential in reducing massive debt. Supply and demand factors must be analyzed. The USPS provides more services that are not in demand. Mail volume is declining and revenue decreasing. Wasted cost must be eliminated. Sat. street mail delivery is a wasted cost. Advertising bulk mail is the primary product delivered on Sat. Parcels are also delivered but not time sensitive as prescriptions have a 7 day delivery frame. The 20th century is history and so should Sat. mail delivery. The business and government slogan is GO PAPERLESS IN THE 21ST CENTURY. Electronic mail diversion in individual and business messaging is instant. Written communication via purchasing a postage stamp and awaiting a 1-2 time frame for delivery to a physical address is history. The 21st century employs the Internet, cell phones, smart phones, texting, I PODS, tablets, and new apps being made available for electronic communicating instantly without the anicent tradition of a written message taking 1-3 days to be received by an outdated process of placing an envelope with a postage stamp in a mailbox.
    Sat. street delivery of notifying people they can get a 15% discount on the enclosed advertisment is a total wasted cost. Petroleumn cost for 192,000+ vehicle
    and manhour cost providing this unnecessary service is a wasted cost.
    The American public is not concerned with Sat. mail delivery and with the economy in a stall mode the Sat. mail delivery is a waste. The decrease in revenue generation will continue and the need for the USPS to operate cost to meet expenses is a must or politicans, and craft -management unions will still be in combat. The top heavy headquarter,areas and district staffs must be reduced.

  5. I think DONOHOE should call a NATIONAL News conference, asking ALL 3 networks for about 30 minutes and tell the PUBLIC that unless CONGRESS can get their collective heads out of the butts the USPS will close ALL offices and plants on the 4th of JULY until they stop the 5.5 billion GUTSHOT and give the USPS back the over payments into the 2 retirement plans. That should shake up the elections in October.

  6. this shows the double standards of congress, if USPS CANNOT pay 5.5 billion in 2011, how can they expect USPS which works with restrictions ( not to optimise the business with out say by th congress!) to earn 11 billion dollars extra for this questionable pre-funding ( I call it usps-doom-funding)?!..even a kindergarden student will not do this mistake (or prediction)… this is negligence. but the GOP/ dems, says it wants to save usps.. this is not true. if their effort to save usps is true… prefunding has to become refunded( in the same pace, not to be repaid in another 50 years!)..

    we can say our legislations have grown so big and complicated that it cannot make simple decisions….. ( we have to understand that once this “fund’ was taken in by “treasury”, it is bound to be lost in the huge “trillion dollar deficit?.)… now the congress has to deliver justice.. to relieve usps of this huge burden.

    … I cannot imagine a world where I have to be dependent on online bill pay, online monopolised communication system.( I say one day they will charge me leg and arms! ……once they dismantel usps.. we are bound to loose $ all of us..just a matter of time.)

    …people the fist step is the most important step.. either we stop the first dismantling step…. or it will become too late. stop the prefunding..and start the refunding….the first step!

  7. Oh and one more thing.Maybe Rep Issa could check out the Constitution, in it there’s a little something about people having the right of recieving mail, and there being a PO. Next stop the Supreme Court.

  8. Issa’s an ass, that all there is to it. If you follow his puny career you’ll see a guy who’s never wrong and will never believe that there is any other way than his. We all meet during our lives people like the congressman but few have as much as an impact on us as this guy possibly could. Since you’ll never be able to sway him from his own thoughts about the Post Office maybe the people of California will help all of us in the Post Office by voting out this stubborn one way of looking at a problem turd head.

  9. It’s a monopoly , always was , still is . If Congress doesn’t want to operate it PUT IT UP FOR AUCTION , then prepare for no mail service , just true junk service !

  10. A little somethem something from the postalnews…ENJOY 🙂

    By FREDRIC ROLANDO / President, National Association of Letter Carriers

    The commentary piece on the U.S. Postal Service by Rep. Darrell Issa [“Post office should adapt, not get bailed out,” ocregister.com, Dec. 20] blames management, workers and e-commerce for the financial crisis; warns of a taxpayer bailout; proposes degrading the agency and turning it over to federal bureaucrats to save it; and says the problem can be summed up by one word: procrastination.

    It’s as hard to follow his reasoning as it is to understand how his congressional postal “reform” bill would do anything other than destroy the Postal Service.

    Let me provide some facts about a venerable agency rooted in the U.S. Constitution. First, let’s dispose of the taxpayer myth. For 30 years the Postal Service has been funded by revenue earned selling stamps and services. It gets no tax money from folks in Orange County or anywhere else.

    It provides America’s residents and businesses with the industrial world’s most affordable delivery service. Customer satisfaction and on-time delivery are at record highs, and for six consecutive years the public has named it the most-trusted federal agency.

    Now to the financial crisis you hear so much about, and which some ideological foes of government and public service hope to exploit to deprive you of services you rely on.

    Despite the worst recession in 80 years, the Postal Service has done well. In fiscal years 2007-10, it had a net operational profit delivering the mail of $611 million, with labor-management cooperation helping worker productivity double in recent years.

    So why is there talk of red ink? Much of the blame goes to Congress. Since 2007, the Postal Service has paid $21 billion to satisfy a congressional mandate requiring that it – alone among all public agencies or private firms – prefund future retiree health benefits for the next 75 years and do so within a decade. The mandate didn’t correct a problem; the agency’s future liabilities already were in good shape.

    This has accounted for 84 percent of Postal Service losses. Issa’s piece somehow neglected this manufactured crisis, probably a smart move because then the rest of his narrative – as well as his congressional actions – would fall apart.

    Rather than address this onerous burden, Issa wants to degrade service to residents and businesses in Orange County and elsewhere, task bureaucrats in Washington with managing the Postal Service instead of the professionals, and abrogate contracts with the dedicated letter carriers who deliver in your communities.

    To actually help, here’s what should be done. First, Congress needs to fix the pre-funding fiasco it created. A bill to do so, H.R.1351, already has 227 co-sponsors – a bipartisan House majority – but Issa won’t allow a vote. Again, from his perspective, it’s probably a smart maneuver, since H.R.1351 has far more support than his measure.

    With this financial drain alleviated, the postal community can focus on adapting to an evolving society, as it has for 200 years, whether to the telephone, telegraph or fax machine. That can be done through efficiencies and by growing the business. Indeed, delivering the increasing number of goods being ordered online already constitutes a profit-maker for the Postal Service. The best day to deliver packages: Saturday, when people are home.

    By contrast, degrading services would drive customers away and reduce revenues. Destroying something to save it never has been good public policy.

    It’s ironic that Issa, who purports to support business, would raise costs to small businesses by ending Saturday delivery, compelling them to hire private carriers to send financial documents on weekends. Moreover, eviscerating the Postal Service would jeopardize the $1.3 trillion mailing industry, centered on the USPS and employing 7.5 million Americans in the private sector, including about one million Californians.

    Perhaps Issa’s problem is that this is a popular government entity that works. But when it comes to a national treasure first led by Benjamin Franklin, the congressman should follow the facts, not his ideology.

  11. Last year’s #’s count as an expense for Nov 1/12th of an annual expense for the year that was never paid in that year but was deferred to the next year. This year 1/12th of that amount also counts as an expense.
    I know GAAP has never before had to try to conform to congressional rules but any third grader can tell you that the same expense doesn’t double if someone gives you an extra year to pay for it.

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