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SENATOR COLLINS’ STATEMENT ON PLAN TO REDUCE POSTAL DELIVERY SERVICE
 
March 2, 2010
WASHINGTON, D.C. – The U.S. Postal Service today announced that it will propose cutting Saturday mail delivery as a way to trim its large budget shortfalls. It also proposes to reduce overtime and to cut its workforce by about 30,000. Senator Susan Collins, R-Me., Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, which has oversight of the U.S. Postal Service, issued the following statement:
“The Postal Service is the only financially troubled business I know that would focus on cutting service rather than on trying to serve its customers better. The Postal Service needs to increase its volume and attract more customers. It cannot expect to gain more business if it is reducing service.

“The Postal Service is the lynchpin of a $900 billion mailing industry, providing nine million jobs nationwide. Given its critical role in our economy, the Postal Service should do everything it can to develop new revenue streams, to become more competitive and to improve services for both individual and business customers.

“I am concerned that cutting delivery days could force businesses to seek alternatives for their communication needs. Such a migration of customers will only increase the erosion in the Postal Service’s shrinking mail volume, which will prompt greater postage rate hikes and renew calls for even more truncated delivery services. It is a vicious cycle that will only exacerbate the Postal Service’s dire financial problems. We must break this death spiral.

“Despite the relief Congress provided to the Postal Service in 2003, 2006 and 2009, it is seeking to wish away more of its liabilities. It also has been slow to take advantage of the tools provided in the 2006 reform act to improve its financial situation. It also is clear that the USPS must continue to address its workforce-related costs, which account for about 80 percent of its total

WASHINGTON – Sen. Tom Carper (D-Del.), chairman of the Senate subcommittee with oversight authority over the U.S. Postal Service, issued the following statement in support of the Postal Service’s proposals to reduce costs and streamline operations while protecting universal service:

“As Postmaster General Potter pointed out today, the Postal Service will need to make significant, strategic changes to its operations in the coming months and years in order to maintain universal service and to provide the products and services so many Americans depend on.

“In light of the serious financial challenges facing the Postal Service, Postal management must be allowed to make the business decisions they need to stay competitive and viable in the years to come. As we have seen, it is not productive for Congress to act like a 535-member board of directors and constantly second guess these necessary changes.

“The Postmaster General has already shown that by making smart decisions – like last year’s efforts to dramatically cut costs, or the popular flat rate box promotion – the Postal Service can save money and still provide valuable services. These are positive first steps but more work remains to stave off the massive deficits that are projected to bankrupt the Postal Service. Postal management, Postal workers, and consumers will need to work together to implement these common sense measures in order to ensure that the Postal Service remains viable in the 21st Century.

“As the Postal Service embarks on the tough journey ahead, it is imperative that Congress give Postal management the flexibility they need. Too often over the years, Congress has tied the Postal Service’s hands and prevented it from making the smart business decisions needed. For example, we have prevented the Postal Service from realizing the billions in savings projected from the elimination of Saturday delivery – a difficult step, but one that large majorities of postal customers have said they can accept.

“We should also use the current crisis to re-evaluate the commercial and pricing freedoms given to the Postal Service. The law in this area was last updated in 2006, but the days ahead give us another opportunity to make certain that Postal management has all of the tools it needs to respond to the changing needs of the mailing public.

“It is also my hope that today’s sobering news from Postmaster General Potter finally compels my colleagues to act on legislation I’ve introduced to restructure the Postal Service’s unique and aggressive obligation to pre-pay its future retirees health care obligations. These payments are a major reason for the red ink that has covered the Postal Service’s balance sheets.

“Congress can no longer afford to stand in the way of the important – yet difficult – business decisions that the Postal Service must now make. I stand ready to work with my colleagues to help facilitate these important changes.”

The US Postal Service filed its January 2010 (unaudited) preliminary financial report today with the Postal Regulatory Commission. USPS reported a net income/ loss of $592 million. The total Fiscal Year to year loss is $887 million ($255 million for lost for November and $179 Million gain the month of December) .

Mail volume was down across all classes with an overall total decrease of 7.6%

The Postal Service continues to reduce its workhours with Mail Processing and Customer Services/Retail showing the highest reduction of 10.0% and 12.7% respectively.

See Full Report via Postal Regulatory Commission web site

APWU News

APWU President William Burrus condemned USPS proposals to reduce mail delivery to five days per week, saying, “It would be the beginning of the demise of the Postal Service.” The USPS outlined the five-day delivery plan and other proposals at a conference March 2.

“The assertion that the Postal Service must initiate major changes in its business plan to survive a grave crisis is false,” he said. “It masks the central cause of USPS financial difficulties: the congressionally-imposed requirement to pre-pay retiree healthcare obligations.

“Absent this crippling financial burden, 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,” the union president noted.

“The USPS has achieved unprecedented savings through productivity increases, a series of cost-cutting initiatives, and sacrifices by workers,” he said. More than 100,000 jobs have been eliminated through attrition over the last two-and-a-half years, Burrus pointed out, and workers have begun paying an increased share of health insurance premiums.

“The requirement to pre-fund retiree healthcare payments would shift more than $75 billion from postal rate-payers to the federal budget over a 10-year period, at a rate of more than $5 billion per year,” Burrus said. “This requirement is undermining the Postal Service.” The pre-payment obligation is a provision of the Postal Accountability and Enhancement Act (PAEA), which Congress approved in December 2006. No other federal agency bears this burden.

“Postal management has intensified its financial problems by offering excessive worksharing discounts to major mailers and by subcontracting work at exorbitant costs,” Burrus said. Worksharing discounts are given to mailers that pre-sort and pre-barcode their mail, he said, but the discounts exceed the costs the Postal Service avoids when the work is performed by mailers. “Subcontracting is another important source of waste and inefficiency,” he noted.

“We call for a thorough investigation by the Office of the Inspector General into the expanding role of subcontracting and the inflated costs associated with them,” he said.

“Furthermore, we reject any effort to pollute the collective bargaining process with threats of draconian work-rule changes.” Contract negotiations will begin in August.

PRC Press Release

Washington, DC – The Postal Regulatory Commission yesterday issued a Notice establishing Docket SS2010-1 to conduct a review of the Civil Service Retirement System (CSRS) pension liability of the United States Postal Service.

“This is an important study which will provide information regarding the financial health and viability of the Postal Service, and it will assist the Commission as it analyzes the mounting financial losses the Postal Service is projecting,” said Chairman Ruth Y. Goldway.

The Commission action is called for under section 802(c) of the Postal Accountability and Enhancement Act, which directs the Commission, upon request of the Postal Service, to promptly procure the services of an actuary qualified to evaluate pension obligations to conduct a review in accordance with generally accepted actuarial practices and principles and to provide a report to the Commission containing the results of the review.

Upon the Commission’s receipt and approval of the actuary’s report, together with any comments the Commission may choose to make, the report shall be submitted to the Postal Service, the U.S. Office of Personnel Management (OPM), and Congress.

OPM is responsible for calculating the Postal Service’s CSRS pension liability. The Postal Service filed its request with the Commission on February 23, 2010.

NOTICE OF REQUEST FOR COMMISSION REVIEW PURSUANT TO SECTION 802(c) OF THE POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT
(March 1, 2010)

On February 23, 2010, the United States Postal Service (Postal Service) filed a request with the Postal Regulatory Commission (Commission) pursuant to section 802(c) of
the Postal Accountability and Enhancement Act (PAEA). Pub. L. No. 109-435, 120 Stat. 3250 (2006), not codified; see 5 U.S.C. 8348 note.1 The Postal Service requests that the
Commission initiate a review of determinations made by the Office of Personnel Management (OPM) regarding the Postal Service’s Civil Service Retirement System (CSRS) liabilities and
matters raised in a recent report of the Postal Service’s Office of the Inspector General (OIG), The Postal Service’s Share of CSRS Pension Responsibility, January 20, 2010.2

Section 802(c) directs the Commission, upon request of the Postal Service, to promptly procure the services of an actuary qualified to evaluate pension obligations to conduct a review in accordance with generally accepted actuarial practices and principles and to provide a report to the Commission containing the results of the review. Upon the Commission’s receipt and approval of the report, together with any comments the Commission may choose to make, the report shall be submitted to the Postal Service, OPM, and Congress.

1 Request of the United States Postal Service for the Commission to Conduct a Review Pursuant to PAEA Section 802(c) of OPM Determinations Regarding CSRS, February 23, 2010 (Request). Although the Postal Service submitted its filing as Docket No. PI2010-2, the Request is for a “Special Study” and will be docketed as Docket No. SS2010-1, a designation the Commission has used previously.

2 The report is available at http://www.uspsoig.gov/foia_files/RARC-WP-10-001.pdf.

Section 802(c) directs OPM to reconsider its determinations in light of the report and make appropriate adjustments. Thereafter, OPM is to report the results of its reconsideration
to the Commission, the Postal Service, and Congress In support of the Request, the Postal Service states that the OIG report raises serious questions about the appropriate calculation of the Postal Service’s CSRS liabilities and that the magnitude of the amounts is more than sufficient to color debate on the true state of the Postal Service’s present and future financial health. Request at 1-2.

Pursuant to the Postal Service’s Request, the Commission shall acquire the services of an actuary, obtain a report, and take other actions consistent with the provisions of section 802(c) of the PAEA.

Shoshana M. Grove
Secretary

ORLANDO, FL—The president of the 300,000-member National Association of Letter Carriers (NALC) today opposed the proposal by Postmaster General John E. Potter to eliminate Saturday delivery to American homes and businesses, and urged Congress instead to take steps that would provide “financial breathing room” while a better plan can be developed.

NALC President Fredric V. Rolando, in this city for the mid-winter meeting of the AFL-CIO Executive Council, said such a drastic move is both unnecessary and counter-productive and that other steps should be taken to bolster the Postal Service’s financial situation while all stakeholders examine viable long-term changes that will assure continued universal service throughout the country.

“I do not believe that weakening our commitment of six-day service to the public will enhance the long-term position of the Postal Service as a critical element in our nation’s economic infrastructure,” Rolando said. “In view of the January report released by the postal Inspector General that showed that the USPS was overcharged by $75 billion for postal pension costs, Congress instead should take immediate steps to correct the error.”

“If Congress takes such action, the Postal Service will have the financial breathing room needed to develop a more successful plan,” Rolando added. “The NALC stands ready to join in discussions with other principal stakeholders to develop a comprehensive strategy for the long-term viability of the Postal Service and continued high-quality service to the American people.”

Seeks Flexibility on Operations, Delivery; Possible 2011 Price Increase

WASHINGTON –Facing unprecedented volume declines and a projected, cumulative $238 billion shortfall during the next decade, Postmaster General John E. Potter today outlined an aggressive plan of cost cutting, increased productivity, and an array of legislative and regulatory changes necessary to maintain a viable United States Postal Service.
“The crisis we’re facing gives us an historic opportunity to make changes that will lay the foundation for a leaner, more market responsive Postal Service that can thrive far into the future,” Potter said, stressing that there is no one single answer or quick fix to the crisis.

 The Postal Service examined revenue, volume and consumer trends; analyzed revenue and product opportunities employed by foreign posts; and examined more than 50 possible actions to realistically address volume declines that will not return, increasing health care and delivery costs, and dramatic changes to consumer behavior.

 “The future depends on a suite of solutions that takes a balanced and reasonable approach, one that cuts across every aspect of our industry but one that, in the end, does the greatest possible good for our stakeholders and the American public,” Potter said.

 Mail volume is projected to fall from 177 billion in 2009 to 150 billion in 2020. That represents a 37 percent decline in First-Class Mail alone. Revenue contributed by First-Class Mail will plummet from 51 percent today to about 35 percent in 2020.

“Ensuring a Viable Postal Service for America,” the Postal Service business plan, addresses these challenges, and describes a flexible, agile Postal Service that can adapt to America’s changing mailing habits and preferences.

If the Postal Service takes no action, it will face a cumulative shortfall of $238 billion by 2020. But Potter outlined a number of actions that could amount to as much as $123 billion in savings during that same time period. These actions build on the Postal Service’s record of saving more than $1 billion every year since 2001 and include continuing to aggressively control costs and eliminating hundreds of millions of work hours.

Despite these efforts, an estimated $115 billion shortfall will remain. The business plan identifies actions to close that gap:

Restructure retiree health benefits payments to be consistent with what is used by the rest of the federal government and the majority of the private sector and address overpayments to the Postal Service Civil Service Retirement System pension fund.
 

Adjust delivery days to better reflect current mail volumes and customer habits.
 

Continue to modernize customer access by providing services at locations that are more convenient to customers, such as grocery stores, pharmacies, retail centers, and office supply stores. Increase and enhance customer access through partnerships, self-service kiosks and a world-class Website.
 

Establish a more flexible workforce that is better positioned to respond to changing demand patterns, as more than 300,000 employees become eligible to retire in the coming decade.
 

Ensure that prices of Market Dominant mailing products are based on demand for each individual product and its costs, rather than capping prices for every class at the rate of inflation.
 

A modest  exigent price increase will be proposed, effective in 2011.
 

Permit the Postal Service to evaluate and introduce more new products consistent with its mission, allowing it to better respond to changing customer needs and compete more effectively in the marketplace.
 

“Lifestyles and ways of doing business have changed dramatically in the last 40 years, but some of the laws that govern the Postal Service have not. These laws need to be modernized to reflect today’s economic and business challenges and the dramatic impact the Internet has had on American life,” Potter said.

The business plan is a path to the future, the Postmaster General said, a future where the Postal Service remains a vital driver of the American economy, an integral part of every American community and continues to deliver the greatest value of any comparable post in the world.

“If given the flexibility to respond to an evolving marketplace, the Postal service will continue to be an integral part of the fabric of American life,” Potter said.
# # #

 
For more information please visit www.usps.com/strategicplanning/futurepostalservice.

Hello, thank you for joining me to discuss a very important topic — the future of the United States Postal Service. It’s a conversation that that I’ve been having with our largest customers, with Congress, with the people who talk about the Postal Service on TV, on the radio, on the web and in the papers. I’ve also been talking to the leaders of the organizations that represent you — the unions and the management associations.

Today, I want to talk to you because without you, there is no Postal Service. You brought our performance to incredible levels — during one of the toughest periods we’ve ever faced. I want you to know how much I appreciate that, and how much it means to our customers.

From talking to so many of you directly, I know you have a lot of questions about the future. I want to give you some of those answers and share our plans for the future. You’re going to be hearing quite a bit about the Postal Service over the next few weeks. That’s why I wanted you to hear it straight from me. I’m telling you the same things I’m telling everybody else.

Let’s begin with a little level setting. Our business is in crisis, like so many others are these days. One of the biggest problems is the economy. With jobs disappearing and money tight, families and businesses pulled back on spending. That includes spending on the mail. I’m sure you’ve heard that things have improved a little bit in some parts of the economy. But we haven’t seen that in the mail we’re handling. Volume continues to decline.

Major advancements in technology have given people more communications choices than ever — and they keep expanding, with things like smart phones and new tablet computers. Over the last 10 years, we’ve seen a shift from hard copy communication to electronic. And its not just mail, it’s books, it’s newspapers, and magazines. Even music and movies are moving on-line. The reality is that more and more information is going to move electronically in the future.

In just four years, we’ve seen our volume fall from a record 213 billion pieces to the 168 billion we expect this year.

That means for every five pieces of mail we handled in 2006, we’ll only handle four this year. That’s a drop of 20 percent. We’ve looked at this data from every angle possible going forward and even brought in outside experts to help develop a forecast.

Their conclusions are very sobering. Mail volume is not going to come back.

Over the next ten years, volume is projected to decline gradually by over another 20 billion pieces of mail.

What makes this projection worse is the expected future mix of mail.

We expect First-Class Mail to decline by 30 billion pieces with modest growth in advertising mail.

This means that we will have less revenue per piece as the mix changes.

And after losing $11.7 billion over the last three years, if we don’t address our fundamental challenges, we’re going to see those losses continue to grow. In 2020, just ten years from now, we can lose $33 billion — and that’s just for that one year!

Obviously, we can’t go on this way. That means we have to change the way we do business now and keep changing with the times. Our health as an organization isn’t based on mail volume alone — it’s based on our ability to adapt to the changes in how our customers use the mail.

That’s going to take some focused planning and some very hard work. But I think we’re ready. I know we can do it. Here’s the plan.

We’re going to start with costs.

We’re asking Congress to restructure our payments for retiree health benefits. Right now, they cost us more than five-and-a-half billion dollars a year. That’s a payment we just can’t afford.

And we can make this change without taking a penny away from your benefits.

We’re asking Congress to change the law so we can change delivery frequency to five days. That’ll save us more than $3 billion a year. Many of our customers — from the biggest businesses to the family next door — have told us they support this change. In fact, they’d prefer it to raising prices or going back to a taxpayer subsidy for the Postal Service.

We’re going to bring new flexibility to managing our traditional retail network — focusing on expanding access and helping customers do more business with us through new and existing channels and retail partners. We can’t live with a retail network built for the 20th century. We have to construct a network that suits the 21st Century. It’s all about making it easier than ever for customers to choose the Postal Service.

We’re working to bring new pricing flexibility to all our products. Smarter pricing — pricing that makes our products more attractive — will help us grow some categories and help us manage our mail volume challenges. And we do intend to use exigent pricing as a tool to help close a portion of the gap.

We want to make sure we’ve got the right people in the right place at the right time — and have the flexibility to deal with the changes in demand in the coming years. That’ll make us more efficient, by making sure we’re serving our customers when they need us and where they need us. We’ll be focusing on this during the upcoming rounds of collective bargaining.

And finally, we want to assure that the legal and regulatory processes enable these changes — changes which are vital to the future health of the Postal Service. The law and regulation must enable us to fulfill our mission of affordable universal service to the American public.

Given the magnitude of the challenge facing the Postal Service, no single element of this plan can close the gap we are facing. The plan works because it is balanced and reasonable. Everyone must be part of the solution.

It’s a simple plan. But it makes sense and it can and will work.

Here’s what I’m asking you to do to help.

First, stay focused on the basics. You know what they are:

Keep service strong.

Help us find ways to pull costs out of the system.

Treat customers the same way you like to be treated as a customer — that’ll keep them with us.

Look for new ways to grow the business — no matter where you work or what you do. No one knows our customers better than you do. We all have a role in this. The more we do, the more stability we can bring to mail volume, and the more we can influence our bottom line.

And most important of all, don’t get discouraged. We have a lot to offer. And 168 billion pieces is still a lot of mail. Customers trust us. They appreciate our value. With a positive attitude, with the determination I know you have, we can get ahead of this. And we will succeed.

From PostalReporter reader:

The Postal Service will add a new feature (eRetire) to LiteBlue which will provide employees the option of using self-service to begin the retirement process. It is anticipated that this option will become available in late March or early April 2010.

eRetire is a web-based system which allows employees to:
View an annuity estimate if they are within (5) years of retirement; Download a retirement packet or order a retirement packet to be mailed; Begin the retirement process by selecting the desired retirement date

eRetire does not replace the option of contacting HRSSC to begin the retirement process or discussing individual questions with a specialist before or during the process.

Halline Overby, an annuitant in a retirement trust fund operated by National Association of Letter Carriers (NALC), and his wife Paulette Overby brought suit in district court seeking a declaration that a purported amendment to the trust plan which would have rendered Paulette Overby ineligible to receive benefits under the plan as a surviving spouse was not properly adopted and is therefore inoperative. The district court found that the trustees of the plan had not submitted the amendment to the fund’s actuaries for an evaluation and estimate of its cost, as required by the governing provisions of the plan, and therefore held that the amendment was not properly adopted. NALC appeals, arguing that the district court erred both in its findings of fact and in its conclusions of law. Upon review, for the reasons more fully set forth below, we hold that the district court committed no reversible error in either its factual determinations or in its conclusions of law. We therefore affirm the judgment of the district court.

U. S. Court of Appeals for the D.C. Circuit
February 26, 2010
Halline Overby v. Natl Assn of Letter Carriers