Postal Service: More red ink, missed payments as mail slumps

WASHINGTON (AP) — The U.S. Postal Service warned Thursday that it will likely default on up to $6.9 billion in payments for future retiree health and pension benefits for the fifth straight year, citing a coming cash crunch that could disrupt day-to-day mail delivery.

The service said it expected cash balances to run low by October and to avoid bankruptcy would likely not make all of its payments as required under federal law. Postmaster General Megan Brennan stressed an urgent need for federal regulators to grant the Postal Service wide freedom to increase stamp prices to help cover costs, citing continuing red ink due to declining first-class mail volume and the expensive mandates for retiree benefits.

The Postal Service has already defaulted on $33.9 billion in health benefit pre-payments. Left unresolved, the rapidly growing debt means that American taxpayers eventually could be forced to cover the massive costs when future postal retirees seek to cash in on the benefits to which they are legally entitled.

The Postal Regulatory Commission is making a decision on stamp pricing next month.

“Our financial situation is serious, but solvable,” Brennan said, citing an unreasonable rate cap that restricts stamp price increases to the rate of inflation. “We’re clearly looking for the PRC to establish a new pricing system for us.”

The Postal Service on Thursday reported a quarterly loss of $2.1 billion, compared to a $1.6 billion loss in the same period ending June 30 last year. That came after double-digit growth in package delivery was unable to offset drop-offs in letter mail, which makes up more than 70 percent of total postal revenue.

Quarterly revenue came to $16.7 billion, a decline of $1 billion from the same period last year.

After a 10-year review, the regulatory commission appears likely to give the Postal Service more flexibility to raise rates, marking the biggest change in its pricing system in nearly a half-century. The commission might limit how high prices could go, but the cost of a first-class stamp, now 49 cents, could jump. It’s not known how much.

The Postal Service, an independent agency, is trying to stay financially afloat as it seeks to invest billions in new delivery trucks to get packages more nimbly to American homes.

Mail volume is dropping and demand for package shipping is surging due to the growth of online retailers such as e-commerce giant Amazon. With the holiday season approaching, Brennan said the Postal Service planned additional temporary hiring and was looking to expand its package deliveries in the mornings, evenings and on Sundays.

“The competition is most intense,” she said.

The Postal Service is also urging Congress to provide relief from the mandate to pre-fund retiree health benefits. Legislation in 2006 required the Postal Service to fund 75 years’ worth of retiree health benefits, something that neither the government nor private companies are required to do.

“Today’s financial report shows the underlying business strength of the U.S. Postal Service while also indicating the need to address external matters beyond USPS control,” said Fredric Rolando, president of the National Association of Letter Carriers. “Congress should address the pre-funding burden it imposed in 2006.”

To avoid bankruptcy, the post office has defaulted on the multibillion dollar health prepayments each year since 2012.

69 total views, no views today

Put The Postal Deficit Problem Where It Belongs!

The postal deficit is in the news again.  We are losing money left and right.  The USPS can’t pay their 2006 retirement bill of billions of dollars every year.  The internet is still killing us.  First class mail volume is way down, we will have to excess and close mail processing plants again.  We will only deliver mail 5 days a week.  BLAH, BLAH, BLAH!  As postal workers, we have been hearing this CRAP for at least 10 years now!

When I was a union official in Youngstown, Ohio we did a study on what it costs for all of the supervisors and postmasters who had grievances and EEOs in and around our location of Youngstown, Ohio.  Guess what, in our little town of Youngstown and surrounding areas;  it added up to hundreds of thousand of dollars a year.  I’m talking hundreds of thousand of dollars in a small town compared to the much larger cities like Cleveland, Cincinnati, Columbus, Dayton, Toledo etc.

We are talking astronomical amounts of money that the USPS had to pay out to employees because of grievances and EEOs.  WHY?  Because supervisors and postmasters that are promoted because they do nothing more than kiss the bosses butt!  That’s it!  It’s not because they have gone to school and graduated with a degree in business management.  Not because they were good workers and wanted to make a difference and change things for the better.

Basically, clerks, carriers, etc. that don’t want to do anything have decided to move up the ranks in management, so they become 204b’s or OICs and start kissing butt.  Before they know it, they are promoted, and the next thing they are getting in trouble and have grievances and EEOs filed against them because they don’t know the first thing about running a post office or the contract.  There’s the deficit!

In conclusion, I would just like to say that if the Post Office wants to blame something about the postal deficit, maybe they should educate or get rid of, not just move around the trouble in management.  I guarantee the deficit will be a lot less!

In solidarity,

Frank Antinone

Retired Postal Worker

75 total views, 3 views today