Goldway: USPS May Be Closing Post Offices Without Notifying PRC As Law Requires
Filed under: politics, post office closings, post offices, postal, postal news, PRC, usps
Postal Regulatory Commission Chairman Ruth Goldway in a letter to Postmaster General Patrick Donahoe wrote:
During service performance consultations earlier this year, you discussed the internal Postal Service schedule for improving the process of reviewing retail facilities to evaluate whether closing them was appropriate. You explained that new procedures would be developed and then applied to a substantial number of facilities nationwide. You also assured the Commission that should the process indicate that closing a significant number of existing retail outlets appeared justified, the Postal Service would file a request with the Commission for an advisory opinion under 39 U.S.C. 3661 prior to closing those facilities.
Consistent with that schedule the Postal Service published proposed rules in the Federal Register on March 31, 2011 (76 FR 17794), and as you may know, the Commission submitted timely comments. During this period, numerous articles have appeared in the press identifying facilities in a number of states that have been closed, or that have been evaluated for potential closing, or shortly will be evaluated for potential closing. The Commission has received an increased number of post office closing appeals, hundreds of inquiries from citizens, and has had communications with concerned members of Congress. Thus, it appears that the Postal Service may already be engaged in a nationwide change in service without prior notification to the Commission as title 39 requires. A prompt request for an advisory opinion on the impacts of closing retail facilities appears to be the best way to address these concerns . .
PRC Chairman’s Letter to Postmaster General On PO Closures
PRC Chairman Goldway comments To Senate on USPS financial crisis
Chairman Carper and Ranking Member Brown, thank you for the opportunity to submit my comments as Chairman of the Postal Regulatory Commission for inclusion in today’s hearing record. I regret being unable to testify in person.
We all know that in four months, the United States Postal Service will conclude its fiscal year and it will not have sufficient cash or borrowing authority to pay all of its bills.
Commission analysis has found that the Postal Service’s financial crisis derives from an overly ambitious requirement for the Postal Service to prefund its future retiree health benefit premiums. Over the past four years, the Postal Service has paid $21.9 billion to prefund these benefits. All other things being equal, the Postal Service would have achieved a small net profit over that time, except for the prefunding requirement – rather than losses exceeding $20 billion. The Commission’s objective analysis shows that the Postal Service has essentially overpaid as much as $55 billion into the Civil Service Retirement System, and those funds could be used to help address the current crisis.
I reiterate the Commission’s continuing support for the fundamental approach outlined in your bill to address the financial crisis and long‐standing issues related to Postal Service funding of its employee pensions, as well as its future retiree health benefit fund. The Commission wishes to be of assistance to the Committee so that legislative reform in this area proceeds quickly and successfully.
Your bill also provides for regulatory oversight of non‐postal products and services that may be proposed to the Commission under new flexibilities to be provided to the Postal Service. The Commission believes this will promote postal growth and innovation while protecting the public interest, as is currently the case with postal products and services.
The Commission supports modernization of the Advisory Opinion process. Your proposal requiring the Postal Service to respond specifically to the issues and recommendations in the Advisory Opinion is an important improvement, which would be further strengthened by requiring its response prior to implementation of the proposed changes.
The Commission has not yet agreed upon whether a fixed time frame for the Advisory Opinion process would be beneficial. It is not clear whether 90 days would be sufficient in all cases for the facts to be fully set forth or for adequate public input. We hope an accommodation can be found.
The Postal Service has said that it plans to request an Advisory Opinion within months related to the closing of a large number of post offices nationwide. It is apparent, however, from the volume of news reports and customer inquiries received by the Commission from around the country that the Postal Service is already taking substantial action to close post offices or evaluate them for closure. The Postal Service has not provided details of this activity to the Commission.
I am concerned that the Postal Service should not be undertaking nationwide service changes without first requesting an Advisory Opinion. Their suggested timing of such a request may obfuscate the purpose and intent of Congress in requiring such Advisory Opinions.
The Commission has provided comments to the Postal Service’s Federal Register filing regarding changes to the closings process, as well as in an Advisory Opinion on Station and Branch Closings. I am concerned the public’s rights to notification and participation in the closing process are now ignored. The Postal Service is a government monopoly with obligations to all its citizens, not only a delivery service for business mailers — as important as that may be to our nation’s economy.
Effective regulatory oversight is especially vital when the entire mail system faces major changes. The Commission ensures transparency, accountability and adequate service levels and supports positive changes needed to keep the Postal Service vital and relevant.
In closing, I was heartened by Senator Carper’s recent editorial promoting the “triple happiness” of wiser energy policies that protect our environment, reduce costs, and create jobs. In my view, moving to electric vehicles could result in environmental and financial dividends if the Postal Service’s financial difficulties can be resolved.
source: PRC Chairman Ruth Y Goldway
PRC Chair: No Five-Day Postal Delivery Anytime Soon
“Five-day mail delivery, if it ever happens, is a few years down the road, according to the chairman of the Postal Regulatory Commission.
PRC Chairman Ruth Goldway commented on five-day delivery as a guest on an April 11 podcast with Gene Del Polito, the president of the Association for Postal Commerce.
“It’s not likely Congress would act to remove the six-day requirement in 2011 or 2012,” Goldway told Del Polito. “It’s possible farther down the road.”
Admitting that she is no expert when it comes to Congress, Goldway said it appears that outside of Sen. Thomas Carper (D-DE), there isn’t strong support for five-day delivery on the Senate side. The House side also seems to favor six-day delivery, she said.”
Full story via MultiChannel Merchant
PRC Chairman Tells Postmasters It’s Too Soon To Review USPS PO Closings
PRC Chairman Ruth Goldway is responding to letter from NAPUS requesting a review of USPS post office closings:
Last month, “NAPUS Post Office Preservation Committee Co-Chair, Retired Postmaster Keva Richardson (Thurman, IA) filed a letter with the Postal Regulatory Commission (PRC), which asks the Commission to review USPS plans to close more than 2,000 Post Offices around the country. Specifically, Committee Chair Richardson is asking the PRC to determine if the Postal Service is violating §101(b) of Title 39 of the United States Code, which ensures nondiscriminatory postal services throughout the nation, and helps safeguard small town and rural Post Offices.
The PRC is reviewing Postal practices relating to Post Office suspensions. The PRC is expected to hand down its report on suspensions in the near future.”
March 1, 2011
Keva Richardson
Co-Chair, Post Office Preservation Committee
National Association of Postmasters of the United States
2372 Waubonsie Avenue
Thurman, IA 51654
Dear Ms. Richardson:
This responds to your letter dated February 11, 2011, in which you express concerns of the National Association of the United States’ (NAPUS) Committee on Post Office
Preservation that the Postal Service has not followed appropriate procedures regarding its closing and consolidation processes for post offices, specifically that its efforts to close post offices to cut costs may violate §101(b) of title 39, United States Code. You request that the Postal Regulatory Commission (Commission) review Postal Service plans and open a docket on this issue.
I appreciate you sharing the views of the NAPUS Committee regarding the Postal Service’s plans for possible large-scale closings of small and rural post offices. As you
may know, the law requires the Postal Service to submit plans for proposals involving nationwide changes in service to the Commission for an Advisory Opinion. It is our
responsibility to guard against the possibility that the Postal Service may implement ill-considered cuts that adversely affect postal customers. Please be assured the
Commission is aware that the Postal Service has spoken in the media about an initiative to close 2,000 unprofitable post offices; however, since the Service has not formally submitted their plans to us for review, it would be premature to open a docket at this time for this matter.
It may be helpful for you to know that the Commission has been working in this area, i.e. making recommendations to the Postal Service about improvements to the
closure/consolidation process. Early last year the Commission issued its Advisory Opinion on a Postal Service proposal to consider 3,200 station and branch retail facilities
for possible closure. The list of potential outlet closings decreased during our review to just 162 offices at the time we issued the Opinion. We affirmed the Postal Service’s authority to adjust its retail network but recommended several improvements. The Commission recommended that standardized review procedures should be developed and consistently applied nationwide to all post offices, stations and branches in order to ensure adequate and efficient service levels and comply with statutory guidelines.
We understand the Postal Service is now in the process of updating their entire closure process, and placing needed focus on community notification. While the Postal Service has not submitted a request for us to review any plans nor have we seen the updated process, we have had some initial conversations with the Postal Service and believe the Service is making changes in its procedures to accommodate the Commission’s recommendations that were raised in the Hacker Valley case and the station and branch consolidation initiative.
Your Committee’s concerns about rural and small town post offices are valuable and assist us in fulfilling our obligations. Section 701 of the Postal Accountability and
Enhancement Act (PAEA) requires the Commission to issue a report on the effectiveness of the PAEA and other recommendations for legislation or other measures
to improve the effectiveness or efficiency of the postal laws of the United States. I fully expect the Commission to discuss issues related to the Commission’s appropriate role in post office closings.
I look forward to working with you, the Congress and the Postal Service and all who depend on the mail to chart a course that keeps the mail affordable, efficient and
relevant. If you have any questions or I may be of further assistance, please do not hesitate to contact me.
Sincerely,
Ruth Y. Goldway
Chairman
see letter in PDF format
PRC Chairman Goldway: USPS $238 Billion Loss Proclamation Is an Unsubstantiated Figure With No Connection to Reality
From Postcom.org:
PRC Chair Ruth Goldway today told attendees of the IDEAlliance Print Distribution conference that the Postal Service’s proclamation that it will lose $238 billion over the next 10 years if nothing changes is an “unsubstantiated figure with no connection to reality.” Goldway said the USPS is presenting dire forecasts to scare Congress into allowing the USPS to do the things it has wanted to do for years, such as moving to 5-day delivery, closing retail services and consolidating its network. She urged the IDEAlliance crowd to focus on more positive things like new product development ideas and going back to basics on initiatives such as IMb and FSS. “Panic is not the way to go,” she said of the USPS’ 10-year plan.
Goldway said that she thinks there is widespread traction in Congress for some fix on the USPS retiree health benefits fund issue. She said if Congress and the mailing community can continue to focus on working that out, it would take the immediate pressure off the Postal Service “and give us time to consider what is needed going forward.”
The PRC Chair also discussed the likelihood of the USPS filing an exigent rate case to take effect January 2, 2011. She said the PRC expects the USPS to file something as soon as July 2, which would meet the 90-day advance notice the USPS had committed to giving its customers before a price change, or later if the USPS decides to either shorten that time frame or push the implementation date beyond Jan 2. Goldway confirmed that in an exigent case, the PRC can make changes to the USPS’ proposal without the limitations that exist in a price cap case, and noted that in an exigent case the PRC has the final decision — not the USPS Governors.
Goldway acknowledged, however, that she thinks some kind of exigent case will go forward, but said that dependent on the outcome, someone could sue and “let the courts decide” whether the case meets the intent of an exigent case under the PAEA. She said it is essential that mailers and their associations get involved and determine now the necessary resources to participate in the exigent rate case because “there will be serious, immediate issues on the table” to which industry will need to respond quickly.
Testimony of PRC Chairman Ruth Y. Goldway
Testimony of Chairman Ruth Y. Goldway, Postal Regulatory Commission
Before the U.S. House of Representatives Committee on Oversight and Government Reform and the Subcommittee on Federal Workforce, Postal Service and the District of Columbia
April 15, 2010
Chairman Towns, Chairman Lynch, Ranking Members Issa and Chaffetz and members of the Committee and Subcommittee, thank you for the opportunity to testify to this joint hearing.
Before addressing the questions you put to the Commission, I must reiterate to the public that no decision has yet been made to reduce service to five days. I am afraid the public has been confused by the Postal Service’s recent announcements. We need to reassure them that this important matter requires the consideration of both the Commission and the Congress.
POSTAL SERVICE PLAN FOR THE FUTURE
On March 2 of this year, the Postal Service presented to the Nation its vision for the future of our mail system that I find very troubling. In a litany of problems and worst case scenarios, it estimates that there will be cumulative financial losses of $238 billion by the year 2020 if no changes are made.
What is the Postal Service’s response to these potential losses? In two words, it is: reduce service. Its plan promises fewer employees to serve the public, fewer processing plants and postal operated retail facilities, and reduced mail collections and fewer collection boxes – more than 24 thousand collection boxes were removed from American neighborhoods just in the past year. In addition, the Postal Service plan eliminates Saturday mail delivery service, which heretofore has been considered a competitive advantage for the Postal Service.
The basic outcome of all these ideas is that there may well be less mail and less Postal Service and that those who rely exclusively on the mail, the elderly, the poor, rural America and those who cannot or will not connect to the internet may suffer the most.
Even more troubling, its plan stops at the year 2020. There is nothing in the plan to indicate how forecasted mail declines will be arrested in the following decade. On the contrary, the plan’s proposals seem likely to spur further declines, a downward trajectory that suggests further shrinkage of the system, with mail and this fundamental communication infrastructure disappearing in tandem.
POWER OF THE MAIL
I do not believe that this vision is the inevitable future of the Postal Service. I believe in the Constitution of the United States and Title 39’s mandate to provide a postal system that binds the Nation together. Even in the Internet Age, mail has a unique power to touch readers and deliver results for senders. It can drive sales, touch emotions, deliver votes, and shape important personal decisions that affect life and country.
I also believe that able managers and visionary leaders can navigate the current troubled waters to create growth and find new revenue while also controlling costs. I believe that America’s mail system can be reinvented, reengineered and reenergized for a new century of customers. In the Postal Service plan regrettably, there is no growth, no rejuvenation and little innovation.
If the last few years have taught us anything, they have shown how unpredictable the future can be. In my 12 years on the Commission, I can recall times when the Postal Service predicted billion dollar losses and ended the year with billion dollar gains.
Even this year, it looks like the Postal Service might significantly exceed its own expectations. The latest financial report received by the Commission reveals that through the end of February it is nearly $1.2 billion dollars ahead of its forecast. Although mail volume is down by 8 percent, Standard Mail volume grew slightly for the month and Shipping Services are up 1.3 percent for the year. Both of these products are sensitive to changes in economic conditions. It may be that the economy is starting to have a tonic effect on the mail.
Seeing this kind of variability in only six months, suggests that it may be prudent to view projections that lie six years or more down the road with some caution.
A BETTER APPROACH TO THE FUTURE
The Commission commends the Postal Service for its sustained effort over many years to increase productivity, improve processes and lower its costs. We appreciate that this effort must continue and evolve for the future. Today’s discussions, however, must not simply focus on costs and deficits. The Postal Service should reposition its goals to meet the needs of an evolving society.
Rather than beginning with the premise that the Postal Service needs to be cut in size and scope to solve the deficit projections, these fundamental questions must first be addressed. What does the Constitution and the law require? What is best for the Nation? How can the Postal Service maintain and improve its universal service obligation and deliver that to citizens and the business community who rely on the mail? These are questions that the Postal Accountability and Enhancement Act requires the Commission to ask.
Both GAO and the Postal Service offer recommendations without this context. An axiom in the business community is that a company cannot cut its way to success. It has to have a real plan. The consensus among the mailers I have spoken with is that there is very little that is new in these two reports.
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The consultants hired by the Postal Service, and GAO analysts, should have begun by looking at what it will take to keep open as many post offices, and station and branches as possible; what new products the public needs that the Postal Service is uniquely positioned to provide; how to keep delivery at 6 days, the level required by Congress; and how to determine the service levels that are the most advantageous to its future success.
The consultants and analysts should have reviewed the Postal Service’s recent attempts at innovation. In this decade, the Postal Service embarked on two projects that it described as transformative: the Intelligent Mail Barcode (IMb) and the Flat Sequencing System (FSS).
The Postal Service promised that the IMb would revolutionize the transparency and efficiency of letter mail for the Postal Service and its customers, creating new value in the mail and opportunities for growth. The Commission believed the Postal Service and agreed to use the IMb as the basis for a measurement system to track service quality. Yet, we and the mailing community continue to wait for that promise to be realized.
Similarly, FSS promised to transform the processing of flats and catalogs so that they could be sorted automatically into walk sequence, at lower costs and with higher quality. Both the IMb and the FSS are well‐behind scheduled implementation. Does the Postal Service think these projects are not as promising as originally envisioned? What can be done to speed up their introduction and acceptance system‐wide? Perhaps, the regulator has been too lax. Answers to these questions would better inform future plans.
Why hasn’t a detailed, innovative new retail strategy been explored that will, at a minimum, improve the revenues of post offices to the point that their continuance is economically as well as socially justified. I agree that Postal Service efforts to build its website and expand customer access through internet use and sales of stamps at supermarkets are commendable. But ask the small towns of America if they think government business should be conducted in Walmarts. Why would any rational person compare the functions of a Post Office to Walmart as the Postal Service consultants did? Envisioning the future calls for a transformative process not a capitulation to big box retailing.
IDEAS FOR POSITIVE CHANGE
If I had been tasked with developing the 10‐year plan, here are some of the ideas I would have proposed for the Postal Service to accomplish by 2020:
1.Develop mail products based on value to the customer not necessarily on volume. This is the fundamental tenet needed to fix the Postal Service’s broken business model.
2.Convert the bulk of its vehicle fleet to run on electricity reducing annual fuel and maintenance expenses by more than $400 million per year and increasing America’s independence from foreign oil.
3.Have a range of products that are fully trackable and traceable and comparable with those of private package companies.
4.Provide a one‐stop shop for government services. Not just passports but national park passes, regional EZ passes, identity cards, etc.
5.Participate as a full partner in the nation’s 2020 census, thereby saving the country hundreds of millions.
6.Building on the money order services now offered, introduce and implement a system to provide assistance to the unbanked, replacing usurious “pay day” operations with reliable fair service.
7.Commit to having a network of post offices in key locations that are open more hours than in 2010 and even on Sundays and guarantee at least one 24‐7 post office in every big city.
8.Implement a comprehensive Vote‐by‐Mail system that suits the needs of all the states in the union for federal, state and local elections held at any and all times of the year.
9.Reinvent the letter carrier: Empower him/her to measure real‐time service: to be accessible to the community by email; to be the eyes and ears of the community; and to be the sales and service point for small businesses.
10.Reorganize the workforce ‐ not to make them part time employees ‐ but to enhance their skills thereby adding flexibility in the processing centers, new energy conservation technology to logistics and motivated outgoing sales people at retail counters.
11.Commit to having ten other ideas in place and operating within the decade.
Commission staff is also up for the challenge. They are exploring ideas such as auctioning potential discounts for postage rates to get a real measure of market demand; adjusting pricing in First‐Class and Standard Mail to improve Postal Service margins and encourage mailer efficiencies; and offering postal vehicles as platforms for sensors that generate revenue from other government agencies or businesses to automatically measure pollution, collect weather data, identify chemical spills, identify cell phone/wireless dead spots, spot natural gas leaks and map potholes.
Just as limiting access and declines in service create a self‐fulfilling prophecy, improvements which may seem small can create the incremental reinvigoration that begets real growth.
CURRENT CRISIS
Nevertheless, I am not a Pollyanna. What seems beyond dispute at the moment is that the Postal Service is facing serious financial difficulties this year and next year.
The Postal Service ends its fiscal year on September 30. At that time, they must pay $5.5 billion into a fund for future retiree health benefits. Shortly after that, it will need to make sizeable payments for workers compensation obligations and to meet payroll. These large obligations, falling so close together, could cause the Postal Service to run out of cash. This is similar to the situation it faced last year when Congress provided $4 billion in relief.
My colleagues and I believe that the scheduled payments to fund future retiree health benefits should be readjusted, which would provide the Postal Service with further time to recover from the recession. However I think that the relief should be part of a larger strategy that is both financially and operationally transformative.
RETIREE HEALTH BENEFIT FUNDING
Last May, Chairman Lynch asked the Commission to look at OPM’s computation of the Retiree Health Benefits Fund (RHBF) liability. Based on changes in how to calculate long‐term medical inflation rates and the declining postal workforce, we found that a recalculation could greatly reduce the Postal Service’s liability and lower the required annual payments while meeting the original funding goals of the law.
The current payment schedule has proven to be too ambitious and should be adjusted in some fashion.
Over the past three years, the Postal Service has paid $15.4 billion to Treasury to prefund future retiree health benefits. During that same time, the Postal Service borrowed more than $8 billion from Treasury so that it could make those payments. This arrangement does not protect the Federal government in the event of a Postal Service default. And it burdens the Postal Service with increasing debt service costs, which could exceed $150 million this year. Borrowing by the Postal Service to make the payments does not make sense. On the other hand, borrowing for investment in operational innovations is absolutely necessary.
The RHBF payment schedule must to be revised so the Postal Service can make smaller payments over a longer period of time and/or so that yearly payments are tied to the Postal Service’s ability to pay in a given year.
PENSION LIABILITY
Currently, the Civil Service Retirement System pensions are considered fully funded, but a review by the Postal Service Inspector General determined that the Postal Service has been overcharged by $75 billion, related to the service of Post Office Department employees who continued to be employed by the Postal Service after Postal Reorganization in 1971.
Under provisions of the Postal Accountability and Enhancement Act, the Commission is in the process of hiring an actuary, at the Postal Service’s request, to review OPM’s calculation of the Postal Service pension liability. If any pension surplus is identified through this process, it could be used to lower Postal Service liability and payments for future retiree health benefits. We expect to issue our report this summer.
FIVE‐DAY DELIVERY DECISION
Until these overriding retiree funding issues are resolved by Congress, the advisability of enacting major reductions in mail service is questionable. The PAEA requires the Commission to monitor service levels to prevent deterioration in service and assure that the Postal Service meets its Universal Service Obligation (USO). Five‐day service may meet the USO. It does in other nations. However, is six‐day service a strategic marketing advantage for the Postal Service even if it is not part of the USO? Perhaps a pilot project in a limited geographic area or for one month of the year would be instructive. The implications of reducing service are unknown and must be carefully considered.
Last month, the Commission began a proceeding to evaluate the Postal Service plan for eliminating Saturday mail delivery service. In addition to on‐the‐record hearings at the Commission, we will hold a half‐dozen regional hearings across the Nation and we are soliciting the input of the American people in other ways as well. Already we have received more than 1,500 comments via our web site and through the mail. This is a vital issue for all who depend on the universal mail system.
We will build a comprehensive record on the proposal that fully and accurately reflects the viewpoints of all stakeholders and citizens and carefully evaluates potential cost savings, volume declines and alternatives. We hope to issue our Advisory Opinion in six to nine months.
The Commission’s findings and the public record we develop will be readily available to members and your staffs as you consider whether to alter current legislation requiring six day delivery.
TIMING CHANGES
I understand the pressures that the Postal Service is under. And I appreciate the hard work and dedication both management and employees have shown in making changes that reduce costs without too much sacrifice in service ‐ so far. However, I am disappointed that the 10‐year plan and the newly issued GAO report are not effective plans for the future. Rather, by concentrating on cuts at the expense of service and innovation, they offer the path to obsolescence.
Now is not the time for sweeping changes to the Postal Service. Before the Congress agrees to major cuts in service, it should resolve the pension and retiree health benefit issues to determine manageable payment schedules for the Postal Service, and the Commission should be allowed to complete its analysis of the five‐day delivery proposal and present it to you.
Time will also provide breathing room for hard‐pressed Postal customers and the economy. If history is a guide, as the economy rises it will carry the mail with it. I believe it is possible to create a positive plan that really does envision the future, a future with a vibrant communications network providing universal service and meeting changing citizen and customer needs and demands.
Thank you, that concludes my testimony.