NALC: GAO Report Attacks Postal Labor, Stiffs Congress
Statement of NALC President Fred Rolando on the GAO Report
U.S. Postal Service: Strategies and Options
to Facilitate Progress toward Financial Viability
April 13, 2010
The Government Accountability Office was directed by the Congress in 2006 to produce a report by December 2011 “evaluating in-depth various options and strategies for the long-term structural and operational reforms of the United States Postal Service.” GAO was instructed by Congress in the Postal Accountability and Enhancement Act to make recommendations regarding how the “Postal Service’s business model can be maintained or transformed in an orderly manner that will minimize adverse effects on all interested parties and assure continued availability of affordable universal postal service throughout the United States.” The directive in the law also said: “The Government Accountability Office shall not consider any strategy or other course of action that would pose a significant risk to the availability of affordable, universal postal service throughout the United States.”
The Congress outlined, in detail, what it ordered GAO to do, and how to do it.
GAO ignored Congress.
Instead, it delivered an obviously hurried and haphazard audit report. GAO virtually ignored the most critical ingredient in the Postal Service’s current financial squeeze, the $5.5 billion per year payment, imposed by Congress in 2007, to pre-fund retiree health obligations. And its conclusion that the USPS business model was not viable was based on the false premise that the USPS has not been able to cut costs as much as its revenues have declined in recent years. In particular, the report states that “USPS lost $12 billion over this period [2007-2009], despite achieving billions in cost savings, reducing capital investments, and raising rates.” But this assertion is completely misleading. It glosses over the critical fact that if it were not for the excessive pre-funding payments, the USPS would have been profitable over the past three years—USPS prefunding payments totaled $12.4 billion over the past three years, more than accounting for the $11.7 billion in reported losses. In fact, the Postal Service has been able to adjust its costs to a decline in its revenue—a decline resulting from the worst recession in 80 years, which the GAO soft-pedals as a simple “economic downturn.”
Instead of the report requested by Congress, GAO has issued a full-throated attack on collective bargaining, our contractual COLA clause, our contractual limits on contracting out, our contractual protections of full-time career positions.
GAO outlines a series of disastrous future options, including moving part or all of USPS to “a private corporate model;” increasing “the percentage of part-time employees, who could work more flexible schedules” and allow the USPS to flexibly adjust to workload, “which varies greatly depending on the day of the week and the time of the year;” and changing the law’s interest arbitration rules to put a thumb on the scale for the Postal Service.
Rather than conducting the five-year “in depth” detailed review and analysis of this key national institution that Congress directed, GAO “conducted this performance audit from August 2009 to April 2010 in accordance with generally accepted government audit standards.” (p. 3). An “audit,” not an “in-depth” evaluation. But even with that crabbed green eyeshade view of its mission, GAO cut corners: “[W]e did not assess the reasonableness of these projections [retiree health valuations] or OPM’s actuarial assumptions and methodology. We utilized OPM’s valuation results to analyze the financial impacts of selected options for funding USPS’s retiree health benefit obligations. We did not assess the validity of USPS’s financial and mail volume projections due to time and resource constraints.” (p. 2).
The problem with this quick once-over approach is that it is precisely OPM’s “actuarial assumptions and methodology” that are at the heart of a dispute between the USPS Office of Inspector General and OPM over whether the USPS has been over-charged by $75 billion in pension costs—funds that could be returned and transferred to the Postal Service Retiree Health Benefits Fund to relieve the USPS of the need to make crushing pre-funding payments. If the OIG is right (and NALC believes OIG is right), that $75 billion cures USPS’ principal financial problem … and then some.
And it is precisely the validity of USPS’s “financial and mail volume projections” that define the extent of the long-term challenge facing the USPS and establish what the future needs may be. To simply accept USPS projections—notoriously and regularly off-target—due to “time and resource constraints” is simply irresponsible—not what Congress ordered, and not what the public interest requires.
The media’s appetite for news of any threatened disaster being what it is, the GAO report will make an initial big splash.
But it is Congress, not the news media or the GAO, that will decide whether the Postal Service is worth saving, and how.
And it is the NALC that will spare no effort in bringing the truth—and the real data—to the Congress for its deliberation. And it is NALC’s membership that will rise to the challenge to make sure that the real public, their patrons, and the mailers, know the facts and act on them. The country deserves nothing less.
source: National Association of Letter Carriers
Postal Service Seeks To Change Classification of Some PO Boxes
Post Office Boxes Face Competition
Postal Service Seeks Change in Service Classification
WASHINGTON — The U.S. Postal Service today is filing a request with the Postal Regulatory Commission (PRC) to change the designation of some Post Office Boxes from monopoly to competitive designation – a move to allow greater flexibility to meet the needs of customers.
The Postal Accountability and Enhancement Act of 2006 split Postal Service products and services into two categories, market dominant (monopoly) and competitive. Those products and services for which other providers compete with the Postal Service were categorized as competitive. P.O. Boxes currently are listed as market dominant and are subject to a price cap based on the rate of inflation.
“Success in the marketplace demands speed and flexibility. Moving some P.O. Boxes into the competitive product category will give the Postal Service greater flexibility to meet the emerging needs of customers and to respond more quickly to changing market dynamics,” said Robert F. Bernstock, president, Mailing and Shipping Services.
Earlier this month, Postmaster General John E. Potter outlined an aggressive plan of action that included cost cutting, increased productivity, and an array of legislative and regulatory changes necessary to maintain a viable Postal Service for decades to come. Potter also indicated the Postal Service will avail itself of the opportunities under current law to increase revenue and enhance customer service. Today’s filing with the Postal Regulatory Commission is a part of that strategy.
The filing seeks to move about 32,000 P.O. Boxes in 49 Post Offices from the current market dominant classification into the competitive class of products. This will allow the Postal Service to test consumer interest in enhancements to the current P.O. Box offering and will help shape future Postal Service P.O. Box service and access strategies. Each of the affected sites is within a half mile of a competing box service provider and all provide door delivery to all addresses within their ZIP Code area.
Less than one half of 1 percent of all Post Office Box service would be affected. There are more than 13 million P.O. Boxes in more than 30,000 Post Offices across the country.
There is no time limit for the PRC to review the filing. The PRC can approve or deny the request to change the classification or request that additional research be conducted by the Postal Service.
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.
Author of Postal Reform Bill Attempts to Refute That Law Created USPS Financial Plight
Bill’s Author Can’t Change the Facts: Postal ‘Reform’ Created the USPS’ Financial Plight
In a continuing effort to rewrite history, the author of the Postal Accountability and Enhancement Act (PAEA) has attempted to refute the Postal Service’s contention that the 2006 law is responsible for the Postal Service’s current financial difficulties. The law requires the USPS to place in escrow more than $5 billion per year for 10 years to pre-fund future retiree healthcare benefits.
The attempt to dismiss this burden as the cause of the USPS’ misfortune would be laughable, except that the words are those of a United States senator. Because of the power she wields, her assertions must be addressed:
The 2006 law that the senator defends has forced the Postal Service virtually into insolvency. It imposed on the Postal Service a $75 billion liability that is not borne by any other federal agency. This single requirement has created a USPS deficit of alarming size.
I am disappointed that postal management has failed to release financial records showing USPS liabilities minus this obligation. Such documents would clearly demonstrate the disastrous effect the legislation has had. Absent this obligation, the Postal Service would have experienced a cumulative surplus of $3.7 billion over the last three fiscal years, despite declining mail volume, an economy in chaos, and electronic diversion.
Furthermore, I am compelled to ask: If funding future healthcare liabilities meets sound accounting standards, why isn’t this requirement applied to all federal and private enterprises? Why doesn’t every branch of government, including Congress, pre-fund future healthcare liabilities? What is unique about the Postal Service that it should be singled out?
The PAEA was a mistake, a gross miscalculation, which provided no new revenue stream for the Postal Service, while imposing massive, artificial new costs.
It is easy to suggest that the Postal Service should offer new services in order to remain financially sound, while ignoring free-market obstacles. I challenge the law’s defenders to name one new service or product the USPS could offer that would be accepted without challenge by private-sector competitors and that would result in short-term profit for the Postal Service.
And how can the USPS be expected to fund new enterprises that would require significant start-up costs while it is saddled with a $75 billion debt? The reality is that requiring the payment of $5.6 billion annually for 10 years would bankrupt any American corporation.
It is apparent that ostriches are not alone in their ability to bury their heads in the sand.
William Burrus
President