Postal Service on tap for $11B break in 2012 budget
President Obama's proposed 2012 budget doesn't say anything about raising stamp prices, ending Saturday mail deliveries or closing post offices, but it does attempt to remedy the perilous financial condition of the U.S. Postal Service by recommending about $11 billion in relief.
With mail volume and revenues plummeting, the Postal Service is on course to lose about $7 billion in the fiscal year that ends in September. The losses are due in part to hefty personnel costs not borne by other federal agencies. One is a requirement, imposed by a 2006 law, that it set aside money each year to cover the costs of future health insurance benefits for its retired workers.
In the Obama administration's first substantive attempt to address the mail agency's woes, the budget would allow it to pay $4 billion less in those costs in 2011 than what is required by the law. If enacted, the mail agency would have to pay about $1.5 billion of those costs in fiscal 2012 and make up the difference in future years.
The budget proposal also adjusts the size of those annual payments by taking into account the size of the current workforce, which has shrunk to about 583,000 full-time employees since the law passed in 2006.
The Postal Service also pays into the federal retirement fund to pay the future annuity costs for its retirees. Estimates by the Office of Personnel Management suggest USPS has overpaid the fund by about $6.9 billion. Obama's budget would refund that amount over 30 years, beginning with a $550 million payment in fiscal 2012.
Combined, the steps outlined would "provide USPS with the breathing room necessary to continue restructuring its operations without severe disruptions" as it faces pressures including decreased volume and customer demands for better service, according to the budget.
Cliff Guffey, president of the American Postal Workers Union, said the unique costs imposed by the 2006 law have brought USPS "to the brink of insolvency."
"We're pleased that the Obama administration seems to recognize the seriousness of the Postal Service's financial condition and is proposing beginning steps to address it," Guffey said.
The administration's budget proposals also called on the Postal Service to curtail infrastructure costs and to make its workforce more "adaptive," statements that amount to an endorsement of plans introduced by Postmaster General Patrick R. Donahoe that would eventually shutter thousands of post offices and dozens of regional offices and distribution centers and cut thousands of more jobs. Postal officials, who thanked Obama Monday for his budget proposals, are also seeking legislation giving them the flexibility to end Saturday mail deliveries and raise postage rates as necessary.
The budget would also end $29 million in annual payments to the Postal Service that reimburse it for legislatively mandated reduced postage rates for non-profit mailers. The payments amount to a mere fraction of total postal revenues.
Sen. Thomas R. Carper (D-Del.), who chairs a Senate subcommittee on the Postal Service, said the administration also needs to work with Congress to address the Postal Service's overpayments to the Civil Service Retirement System, which some estimates suggest could top $50 billion over the last three decades.
Carper's Republican counterpart, Sen. Susan Collins (Maine), called on the president to endorse "top-to-bottom reform" that she said was lacking in his budget proposals. Collins plans to re-introduce a new postal reform bill as early as today.
Staff writer Eric Yoder contributed to this report.
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| February 15, 2011; 6:00 AM ET
Categories: Budget, Eye Opener, Postal Service
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