USPS May Be Undercharging House Of Representatives For Official Mail
USPS Office Of Inspector General Audit Report – Revenue for Official Mail from the House of Representatives Mailroom
Title 39, U.S.C Chapter 32, establishes the franked mail privilege for the vice president and members of Congress. The Postal Service accepts, processes, and delivers
franked mail sent under an authorized individual’s signature, or facsimile signature, without prepayment of postage. The Southern Maryland BMEU accepts and processes
mail from the House of Representatives, and the Eagan Accounting Service Center (ASC) bills the House Finance Office monthly for all House mailings processed
Conclusion
The Postal Service’s process for verifying and accepting franked mail at the Southern Maryland BMEU did not fully comply with Postal Service mail acceptance policy.
Further, the Eagan ASC could improve the controls over transferring bulk mailing transactions between computer systems to ensure invoices provided to the House are
complete and accurate.
The Southern Maryland BMEU did not count and report individually franked mailpieces presented by the House mailroom operator as required by Postal Service policy.2
Instead, the Postal Service relied solely on reports from the House Finance Office to prepare monthly invoices. BMEU management questioned whether all postage for
House mail was collected and why they did not have an opportunity to verify the piece counts. However, they continued to accept the mail with little or no verification because they did not have alternative verification processes, such as those available under an alternate mailing system agreement, approved for use. As a result, the Postal Service billed the House $3.2 million for mail from January 3, 2009, through January 2, 2010, without verifying the charges were accurate.
The House of Representatives makes payment for franked mail by appropriation to cover the postage and fees. The Postal Service records charges in FMRS based on actual usage. Unlike some commercial mailers who prepay their postage, House members do not prepay postage. The ASC prepares reports by individual House member each month, based on postage statements and the self-reported data provided by the House Finance Office. They send consolidated invoices to the House Finance Office. The House Finance Office reviews and reconciles invoices and then transmits payment to the Postal Service. Once the Postal Service finalizes a billing period, representatives can view their individual bills in FMRS.
BMEU Acceptance and Verification
The House mailroom usually presents three types of mailings to the Southern Maryland BMEU: automation and presorted letters; single-piece letters; and flats and parcels.
Postage statements accompany each of the letter mailings. There is no documentation presented with the flats and parcels mail. All of the mailings consist of nonidentical weight pieces. As a result, the BMEU cannot weight-verify the mail. Further, there are no SPPS agreements establishing alternative verification procedures. Because the unit cannot verify the number of pieces in the mail, they cannot verify postage.
Congressman Stephen Lynch Introduces Legislation To Correct USPS CSRS Retirement Overpayments
Congressman Stephen Lynch introduced legislation yesterday to correct methodology which overcharges USPS for its CSRS retirement obligations. The legislation amends the provisions of title 5, United States Code, relating to the methodology for calculating the amount of any Postal surplus or supplemental liability under the Civil Service Retirement System.
This is a bill in the U.S. Congress originating in the House of Representatives . A bill must be passed by both the House and Senate and then be signed by the President before it becomes law.
SPEECH OF HON. STEPHEN F. LYNCH
OF MASSACHUSETTS
IN THE HOUSE OF REPRESENTATIVES
THURSDAY, JULY 15, 2010
Mr. LYNCH. Madam Speaker, the United States Postal Service’s CSRS Obligation Modification Act of 2010, is intended to remedy a unfair and inequitable methodology for allocating the Postal Service’s share of Civil Service Retirement System, CSRS, retirement benefit liabilities for employees that provided service to this country under both the Post Office Department and the independent United States Postal Service.
According to a January 2010 report by the United States Postal Service’s Office of Inspector General, USPS-OIG, the Postal Service paid more into the Civil Service Retirement and Disability Trust Fund that it would have paid if a more equitable methodology were used to allocate CSRS retirement benefit liabilities between the Federal government and the United States Postal Service.
As a result of the USPS-OIG report’s findings, the Postmaster General of the United States Postal Service submitted a request, in accordance with section 802(c) of the Postal Accountability and Enhancement Act, to the Postal Regulatory Commission, PRC, calling for an independent and objective review of the methods used to allocate benefit liabilities between the Postal Service and the Federal government under generally accepted actuarial practices and principles.
The independent actuarial firm hired by the PRC, The Segal Company, determined that the current methodology used by the Office of Personnel Management, OPM, for allocating such retirement benefits between the United States Postal Service and the Federal government follows an antiquated methodology that fails to incorporate current actuarial best practices and accounting standards as recognized and codified by the Financial Accounting Standard Board.
Accordingly, to remedy this unjust treatment, this legislation I am introducing today directs OPM to update and modernize the actuarial methodology to be used in allocating CSRS retirement benefit liabilities between the United States Postal Service and the Federal government in accordance with The Segal Company’s recommendation. Under this approach, the Federal government’s portion of an individual’s CSRS annuity will be based on the CSRS benefit accrual formula and the conventional individual’s “high-3” average salary. By utilizing this methodology, this legislation will ensure that OPM is using modern actuarial practices and accounting standards to apportion the benefit liabilities that are codified by the independent Financial Accounting Standard Board under FASB ASC 715.
Updated: Postal Service’s History of Seeking Five-Day Delivery to Cure Financial Woes
Documents submitted by PostalReporter reader shows the Postal Service’s History of requesting 5-day delivery to relieve its financial woes.
The 94th and 95th Congresses
Representative Tom Corcoran stated at a congressional hearing that the Postal Service took its first formal step toward eliminating one delivery day per week in 1976 when it conducted a study to examine the possible effects of such delivery reduction.That study, according to Corcoran, was completed, but a formal proposal stemming from the study was not drafted. Instead, in 1977, the congressionally created Commission on Postal Service (created in 1975) submitted to Congress and the President a report that discussed the possibility of transitioning to five-day delivery. The members of the congressional commission were divided on whether to recommend eliminating a day of Postal Service delivery. The commission’s final report said that five of the seven commissioners reluctantly recommended the reduction in delivery, but did not say which day of the week would be the optimal day off.
A series of congressional hearings were held on six-day delivery from November 1977 through March 1978. According to Representative Patricia Schroeder, who opened the hearings, the Postal Service prompted the hearings by proposing a cut back in delivery service.36 Although the Postal Service had made no formal indication that it supported the elimination of one service day, one Member of Congress said that “statements made by postal officials indicate[d] they [were] leaning toward making such a recommendation.”In all, Congress held 12 hearings in as many cities with more than 500 testimonies offered between November and March. Those who testified included Members of Congress, union representatives, editors and publishers, the general public, and representatives of the aging. Most of those who testified did not support a reduction in Postal Service deliveries, finding such cuts a “disservice”38 that could result in “possible delay in the receipt of welfare, social security, pension checks, and so forth—the kind of mail that people receive … on weekends and through Saturday mail.”
In addition to concerns about mail delivery in general, much of the testimony framed the debate over six-day delivery as a tension innately embedded in the mission of the Postal Service: is it a profit-driven organization, or a public service? Representative Timothy E. Wirth stated at one hearing that the six-day service was a “social value,” and that cutting a day of service at a time when people were “losing some of their faith in what government can do for them” would exacerbate their disillusionment.
1977 House Report on Saturday Mail Delivery
Early this year, the Commission on Postal Service, a special study commission created by Public Law 94-421 to study the public service aspects of the Postal Service and other subjects, issued a report recommending that Saturday mal delivery be discontinuance of Saturday delivery service would reduce postal costs by $412 million annually. Through attrition, approximately 18,000 full-time positions would be eliminated. The Commission attempted to support its recommendation in part on the basis of a small survey of public opinion which showed that 79 percent of the individuals surveyed would be willing to give up Saturday mail delivery if such a reduction in service helped hold down postal costs.
Immediately following the Commission’s report on April, the Postmaster General summoned the leaders of major postal union to discuss the discontinuance of Saturday mail delivery.
The 96th and 97th Congresses
In 1980, the House Committee on the Budget was expected to propose an $836 million reduction in Postal Service appropriations for FY1981.42 According to Representative James M. Hanley, the chairman of the House Committee on Post Office and Civil Service, the reduction in appropriations would have eliminated “all of the public service appropriations” and other subsidies for the Postal Service.43 At a March 26, 1980, hearing before the House Committee on Post Office and Civil Service, then-Postmaster General William F. Bolger stated that eliminating Saturday delivery was one option the Postal Service was considering to ensure its economic stability in the face of the budget cuts. Bolger estimated the service reduction could result in the elimination of 15,000 to 20,000 Postal Service jobs, but would save the Service about $588 million.
The 1980 Task Force
On March 25, 1980, Postmaster General William F. Bolger established a task force to analyze the possible effects of moving from a six- to a five-day delivery schedule. The task force conducted a study, which consisted of telephone interviews of 320 major mailers and 13 selected industries and government agencies. It found that moving to five-day delivery could save $588 million in the first full year of implementation.85 The savings were estimated to “exceed $1 billion annually in future years.”With the cost savings, however, were predicted increases in other stresses for the Postal Service, like loss of patrons to private mailing services or adverse effects on “the levels of service provided to mail on the remaining delivery days.”87 In spite of the projected cost and fuel savings, the task force stopped short of endorsing a reduction in delivery service, saying “[t]he potential cost reduction is extremely attractive; but it is clear that the risks to service and future postal revenues are high.”
The task force recommended a 12- to 18-month planning period if any action to move to five-day delivery was to be made. No such planning period occurred. In addition, the task force suggested that if five-day delivery were to occur, Saturday should be the eliminated day because it “will not greatly affect the majority of … business mailers.”89
April-May 1980 Senate Hearing
There are, of course, a number of factors which have contributed to the operating deficit; however, inflation has undoubtedly been the great factor. The sharp rise could not have been foreseen when the 1970 law was enacted, and it has has a major impact not only on labor costs, which comprise 86 percent of the USPS budget, but on construction, materials and equipment, and operations in general. Also unforeseen was the relentless rise in the cost of energy. The USPS estimates that for every 1-cent increase in the cost of a gallon of gasoline, the transportation costs increase by $3 million.
Mr. Chairman, these hearings are taking place in concert with the Senate’s consideration of the fiscal year 1981 budget. There has been a great deal of discussion about reducing mail delivery delivery from 6 to 5 days in order to meet the anticipated cut in the postal budget. I am concerned that such a decision could exacerbate the current trend of mailers seeking alternate delivery systems and thus decrease further the revenues of the Postal Service.
The President’s Commission on the Postal Service
In 2003, the President’s Commission on the United States Postal Service, created by President George W. Bush, anticipated an “unstable financial outlook” for USPS.90 The commission, however, adamantly rejected any action that would reduce delivery days to five. The Commission firmly recommends continuing the Postal Service’s current Monday
through Saturday delivery regimen. While the Postal Service could save as much as $1.9 billion (less than 3% of its annual budget) by reducing its delivery schedule by one day a
week, its value to the nation’s economy would suffer. Beyond the universal reach of the nation’s postal network, the regularity of pick-up and delivery is an essential element of its
worth in the current climate. Elimination of Saturday delivery, for example, could make the mail less attractive to business mailers and advertisers who depend upon reaching their target audience on that day. In addition, given the volume of mail the nation sends each day, scaling back to a five-day delivery regimen could create difficult logistics, mail flow, and
storage problems.
While the report advised continuing six-day service, the commission noted that increasing use of electronic mail was leading to “a reduction in the demand for mail services” that could lead to a “relaxation of the six-day delivery requirement” in the future.
Documents
May1976HouseHearingsMailCutback
1977HouseReportSatMailDelivery
Nov1977-Mar1978House6DayHearings
Apr-May1980SenateHearings (PDF)
My Five-Day Experience, by Postal Pete
On the day I was born June 12, 1957:
“Postmaster General Summerfield today outlined for Congress a series of cuts in postal service which he plans to put into effect July 1 if his department is not given more money … The list, submitted at a closed meeting, was reported to include: Elimination of Saturday mail deliveries … (and) closing of 2,000 small fourth-class post offices.”
When I was almost five years old :
Feb 19 1962
The Kennedy administration has studied the discontinuance of Saturday mail delivery but fears any publicity might adversely affect its proposals for raising mail raise, Postmaster General J. Edward Day has told Congress …
(Day) said the (post office) department estimated it could save $100 million a year by ending Saturday mail delivery.
When I was eighteen:
Nov 24 1975
With the United States Postal Service losing more that $250,000 an hour, Postmaster General Benjamin F. Bailar is considering further economic moves such as discontinuing Saturday mail deliveries …. The Postal Service … ran up a $1.5 billion debt as of last July.
The year I took the postal exam:
March 29 1977
“The Commission on Postal Service … voted 5 to 2 to recommend elimination of Saturday delivery, a step that would save $400 million a year … Elimination of Saturday delivery is likely to be unpopular on Capitol Hill. Numerous legislators denounced the idea when the service said it was being considered a year ago.”
and so it continued throughout my postal career:
Feb 7 1981
Saturday mail deliveries, Amtrak train service and urban programs, survivors of last year’s spending cuts, face a new threat from President Reagan’s budget ax, according to internal administration documents obtained Friday … (The documents say), “The possible reduction of service to five-day delivery is a symbol of the seriousness of the fiscal austerity being imposed by reductions throughout the federal government.
December 15, 1987:
The Postal Service lost $223 million in the fiscal year that ended Sept. 30 … Possible major effects … include … Seeking congressional permission to eliminate delivery on Saturdays … closing 10,000 to 12,000 small post offices, primarily in rural areas.
October 16, 1992:
Postmaster General Marvin Runyon said Thursday that he backs continuing Saturday deliveries but wonders whether home delivery could be cut from six to four days a week…
His suggestion was to eliminate Tuesday and Thursday mail for home deliveries, keeping deliveries on Monday, Wednesday, Friday and Saturday. Business deliveries would remain six days a week.
April 9, 2001:
The U.S. Postal Service is thinking about ending Saturday deliveries — and shutting down post offices in rural and remote areas, and raising the price of stamps even more … because it finds itself in almost exactly the position the railroads were in after commercial jet travel became commonplace…
Something quicker came along: regularly scheduled jets. We said we loved the railroads — but we headed to the airports. We gave the railroads our hearts, but not our money… This country will feel different — diminished — without Saturday mail.
But the country already feels different. Fax machines, privately owned overnight delivery services, and — most significantly — the huge growth in e-mail have transformed the way that we write to each other.
December 31 , 2008:
After thirty years of service I take the early out and talk of five day delivery resurfaces.
Postal Pete
Pete Countryman
Sectional Center Facility
Elizabethtown, Kentucky 42701
30 yrs USPS / APWU
House Oversight Committee Will Hold Hearing To Examine Financial Viability of the Postal Service
The following is a press release from the U.S. House of Representatives Committee on Oversight and Government Reform:
GAO to release report at hearing on Postal Service business model
WASHINGTON – Chairman Edolphus “Ed” Towns (D-NY) today announced that the House Committee on Oversight and Government Reform will hold a hearing on Thursday, April 15, 2010, to examine the status of the Postal Service and recent reports on short and long-term strategies for the financial viability and stability of the United States Postal Service (USPS). The hearing titled: “Continuing to Deliver: An Examination of the Postal Service’s Current Financial Crisis and its Future Viability”. At the hearing, the Committee will examine three recent reports on the future of the Postal Service.
A report released recently by the USPS that studied possible scenarios for the Postal Service in 2020 will be examined. According to the report, under the most likely scenario and without changes to the current system, the Postal Service would continue to experience significant declines in mail volume from its peak in 2006 resulting in a $238 Billion shortfall over ten years. The report called for legislative action to address the shortfall, including allowing a five day delivery.
The Committee will also examine a January 2010 report by the Postal Service Inspector General which concluded that in the past 30 years the Postal Service has made $75 Billion in overpayments related to its Civil Service Retirement System (CSRS). The study pointed to possible shortcomings in the formulas OPM used in calculating the Postal Service’s CSRS obligations for postal employees who worked before and after July 1, 1971.
The Government Accountability Office (GAO) will release a report on the Postal Service’s business model at the hearing. GAO will be asked to explain the reasoning behind the report and the impact of its recommendations in reducing the Postal Service’s projected shortfall.
The witnesses invited to testify include:
The Hon. John E. Potter
Postmaster General and CEO
United States Postal Service
Mr. David Williams
Inspector General
United States Postal Service Office of Inspector General
Mr. John Berry
Director
Office of Personnel Management
Mr. Phillip Herr
Director, Physical Infrastructure Issues
United States Government Accountability Office
Ms. Ruth Goldway
Chairman
Postal Rate Commission
Mr. Daniel P. Mulhollan
Director
Congressional Research Service