OIG Review of USPS Fiscal Years 2012 and 2013 Liquidity Projections

From the USPS Office Of Inspector General:

July 25, 2012

David C. Williams – Inspector General

This memorandum provides the U.S. Postal Service Office of Inspector General’s (OIG) review of U.S. Postal Service liquidity projections as of June 2012 (Project Number 12BD016FI000). Without legislation to eliminate or defer prefunding payments into the Retiree Health Benefits Fund, the U.S. Postal Service will likely default on the $11.1 billion in payments due in fiscal year (FY) 20121 and the $5.6 billion payment due in FY 2013. In addition to these defaults, the Postal Service projects an estimated $100 million cash shortfall on October 15, 2012, with a slow increase in liquidity from October through December 2012. Liquidity risks and shortfalls are projected to return in spring 2013 through October 2013, with the Postal Service projecting an estimated $1.2 billion cash shortfall in mid-October 2013.

These liquidity concerns exist even with the expected Postal Service default on the Retiree Health Benefits prefunding payments. To preserve its liquidity, the Postal Service presented the following additional measures for consideration: withhold employer contributions to the overfunded Federal Employees Retirement System (FERS) pension fund, and consider three different options for reimbursement of the U.S. Department of Labor (DOL) workers’ compensation claims and administration costs.

As a result of our review, we believe the projected cash flow and liquidity figures, based on projected revenues and expenses, appear reasonable. Based on that analysis, we concur with the Postal Service’s projections that it might not have sufficient cash to fund its operations in October 2012 and at other times during FY 2013.

In addition, we noted the following regarding areas the Postal Service is considering for preserving cash in order to continue delivering mail:

 The Postal Service is unable to make required payments to the Retiree Health Benefits Fund and is considering suspending payments to the FERS pension fund. Although the FERS pension fund payments are legally required, the U.S. Department of Justice has determined that suspending the FERS payments would have no impact on Postal Service employees. The Postal Service has overfunded FERS by $11.4 billion, and it has funded its health benefit fund at a level much greater than the private sector and federal government.

 The Postal Service described three potential options for reimbursing the DOL for workers’ compensation expenses. The Postal Service is legally required to make an annual lump sum payment due in mid-October 2012 (and 2013). Not paying the amount due or paying installments for several months would assist the Postal Service in retaining cash for operational needs; however, this method could potentially put the DOL in a position in which it could not fulfill its operational needs. We suggest the Postal Service work closely with the DOL to identify a mutual solution.

Read Entire OIG Report  (PDF)

4 thoughts on “OIG Review of USPS Fiscal Years 2012 and 2013 Liquidity Projections

  1. GONE POSTAL your statementas to OIG PIGS is totaly accurate as their mission is comparable to KGB in Stalin era in Soviet Union. They execute their actions by any means. Lower than whale excreation in human form. These low lifes exist to deceive, lie, whatever action it takes to elimminate craft employees.

  2. Just a note, if OIG pigs come for you, make sure they read Garrity Rights, and if you sign waiver, get copy they read your rights, ask for a Union Rep and or lawyer, fill out any Compensation forms and report all income , keep a ledger, keep notes , these pigs are after all craft, and they are Gestapo like the IRS, some craft were told they were read Garrity Rights but no paper existed saying so, these pigs lie and lie some more, to justify their jobs, setting uo craft is now their top priority!

  3. USPS cannot maintain existence as present operations are set on debt destruction mode with no concern to eliminate cost factors that are not revealant to postal service in the 21st century and competing with electronic mail which is continually eliminating paper mail as businesses reward customer to go paperless. Delivery days must be reduced unless market share in profitable postal products can increase market share and debt reduced to break even. Small post officies that are within a 4-5 mile radius of each other located in a county seat town with a high level office that provides deliver in areas surrounding these small once need offices in the agri/age in 1950 but have no reason to exist in the 21st century as advance communication technology has left the USPS in the 20th century with a totally different market that USPS cannot operate providing same services as in past times as electronic mail has created decrease in revenue resulting in massive dollar losses as 100 million is projected loss in 2012. Eployees per workhours must be reduced in craft and management. Craft and management unions must realize operations cannot remain as they now exist unless subsidized and made tax payor keep USPS in business with decreasing demand for postal services. The USPS is a fossil in the evolutionary process as electronic mail has decreased the need to purchase a postage stamp and wait for a 1-3 delivery to a physical address when in the 21st century instant messaging via online business and individual communication. Social media such as Facebook is a growing means of personal and group communication. VERA a must .


    if donahoe was smart and had any backbone he would order the shutdown
    of the usps the second he sees a $1 cash shortfall. that’s right, that would be the best thing for the post office. the u s economy simply cannot afford no u s mail being picked up or delivered. lock all the doors and turn out the lights donahoe, the second you see the checkbook is showing no money. tell employees to stay home donahoe and no mail gets picked up or delivered. i can’t see that donahoe would be breaking any laws, as the post office was just plain broke with no money to continue operations. of course, the president and congress would immediately
    find an answer to keep the usps moving the mail in some sort of emergency postal legislation. i figure two or three days would be the longest time frame that no mail would move before emergency actions and legislation is passed. congress would be forced to answer for their incompetence on not addressing the postal issue as the u s economy teeters on the edge as no u s mail is getting delivered or picked up. order a complete and total shutdown donahoe, and at least you will have made one right decision as postmaster general.

Comments are closed.