The US Postal Service losing streak continued in February, with the agency reporting a loss of $658 million, bringing the year to date loss for the fiscal year to $1.8 billion. The agency continued to aggressively cut employee work hours, which were down 12% from the prior year. That translated to a 7.3% decrease in wages and benefits. (The savings are inflated by 3-4% because 2008 was a leap year, so there was an extra weekday compared with 2009.) Revenue, meanwhile was down 12.8%. The slide in revenue accelerated from January’s 11.8% decline, but that number is also slightly inflated by the extra day in SPLY.

The sharpest drop was in standard mail, down 22% from February 2008. The decrease meant that there was actually less standard mail than first class in the system for the month, reversing recent trends. First class mail volume was down 12.7% compared with last year. Year to date, the USPS has processed about 11 billion fewer pieces of mail than it had at this point a year ago.

Non-personnel expenses were down 12.2% or $167 million, led by a 15% drop in transportation costs and a 14% decline in supplies and services. Information technology expenses increased by 26%, or about $7 million.

(Monthly financial results are unaudited and subject to change. Volume numbers are derived from permit data and statistical sampling. The sampling portion of the RPW system is designed to be statistically valid on a quarterly and annual basis.)

The following information was released by the United States Attorney’s Office for the Southern District of Texas:

Former rural carrier associate LaNardsha Rose has been sentenced to prison for aggravated identity theft, acting United States Attorney Tim Johnson announced today.

U.S. District Court Judge Gray Miller sentenced Rose to two years imprisonment, the mandatory statutory maximum sentence today. Indicted in April 2008, Rose pleaded guilty on Dec. 8, 2008, admitting she stole mail from three customers residing along an assigned delivery route. Rose stole mail containing several boxes of personal checks addressed to two different postal customers and a MasterCard credit card destined for a third postal customer. The effected customers resided on Route 116 and Route 69 delivered out of the Copperfield Carrier Annex on Highway 6 North in Houston.

Special Agents of the U.S. Postal Service Office of Inspector General (USPS-OIG) initiated an investigation upon receiving customer complaints. As a rural carrier associate Rose was not assigned to one permanent route; however, USPS-OIG agents determined Rose had been assigned to the effected routes when the reported mail losses had occurred. In addition, Rose was captured and identified from video surveillance attempting to pass one of the customer’s stolen checks made payable to “LaNardsha Rose.” In addition, at least two other checks made payable to “LaNardsha Rose” cleared the second victim’s account. Rose’s cell phone number was also captured in connection with an inquiry seeking information about the stolen Mastercard account. Rose was later identified making several purchases using the card. She was also captured on video surveillance using the card and signing the legitimate customer’s name iIn connection with one of the purchases

“Identity theft is one of the fastest growing crimes in the United States and is a serious federal offense,” said Max Eamiguel, Executive Special Agent-in-Charge, Office of Inspector General, USPS, Southwest Field Office. “The American public trusts the Postal Service to deliver its mail intact. When a postal employee betrays that trust and steals mail, then uses stolen financial information to wreak havoc in the lives of our citizens, Special Agents of the Postal Service’s Office of Inspector General investigate. Fortunately, these incidents are not common, and the overwhelming majority of the 700,000 postal employees are honest and hard working. With the prosecutive support of the United States Attorney’s Office, we will aggressively pursue any employee committing a postal crime.”

Rose began her employment with the United States Postal Service as a rural carrier associate in December 2006. Her employment has since been terminated.

Rose will be allowed to self-surrender to the Bureau of Prisons in two weeks. In addition to the mandatory prison term, Judge Miller also imposed a one-year-term of supervised release to begin following her release from prison and further ordered she pay restitution to the victims in the amount of $1304.04.

The investigation leading to Rose’s indictment and arrest was conducted by Special Agents with USPS-OIG. The case was prosecuted by Special Assistant United States Attorney Tammie Y. Moore.

Amidst all the talk of bonuses, sweetheart mortgages and micro-management at Wednesday’s oversight hearing, there was precious little discussion of the facts behind the Postal Service’s obligation to “pre-fund” its retirees’ health benefits by depositing over $5 billion a year with the US Treasury- something no other agency or corporation is required to do.

This obligation didn’t arise out of an actual concern for those retirees- it was political expediency, pure and simple. In 2002 the Office of Personnel Management determined that the USPS had been improperly overcharged for Civil Service retirement benefits.

There wasn’t any dispute about the mistake- everyone freely admitted that the USPS had overpaid. Unfortunately, giving the money back (and not continuing the overcharging in the future) would mean increasing the national debt (on paper), as well as increasing future budget deficits (also strictly on paper).

So our representatives in Congress took the only course they thought reasonable: they scrambled to come up with an excuse to not only keep the money the Treasury already had, but to keep the gravy flowing! It took time to craft a rationale, so for a while we had an undefined escrow account into which the overcharge flowed. Then someone came up with the brilliant idea of using the continuing overcharge to “pre-fund” future postal retiree health benefits. How much should the USPS should set aside for the pre-funding? Amazingly enough, the amount turned out to be just about what the CSRS overcharge would have been.

So the Treasury would still get an extra $5 billion from the USPS’s customers, decreasing (on paper) the federal deficit by that amount!

So what’s wrong with this picture? The first problem is the voodoo accounting that allows the Treasury to count the USPS contribution as revenue. The funds the USPS contributes, regardless of whether they are overcharges for CSRS retirements, or “pre-funding” of retiree health benefits, are already totally committed to paying those charges. Counting those dollars as revenue to decrease the deficit is nothing but a shell game.

Secondly, and more importantly, the USPS no longer has $5 billion in spare change to contribute to the Treasury every year- consider what will actually happen if the USPS has to contribute the required $5 billion to the “trust fund”:

- The USPS will be required to pay the Treasury $5 billion.
- The USPS doesn’t have $5 billion, so it will have to borrow the funds.
- When the USPS needs to borrow money, it borrows it from the Treasury. So it will borrow $5 billion from the Treasury that it will then loan back to the Treasury for the “trust fund”!
- But wait- there’s more! As you may have heard, the Treasury has no money either!. The US Government is operating at a deficit, and will be for the foreseeable future. So if it needs another $5 billion to loan to the postal service, so that the postal service can loan it back to the Treasury, guess what? The Treasury will have to borrow another $5 billion from China!

Which shell is your (borrowed) $5 billion under?!

If the USPS makes the RHBTF payment, it will simply be converting $5 billion in presumed future USPS obligations to an immediate $5 billion debt to the Treasury. It will also take $5 billion of the total US debt off of the federal government’s books and charge it to the USPS. It will have done nothing to insure that future retiree health benefits are actually funded.

Charles Ponzi would have been proud of this scheme!

(Fun fact- when the GAO’s Phillip Herr was asked during Wednesday’s hearing whether he could think of any other companies that were required to pre-fund employee health benefits, he proudly pointed out that the GAO does it! He didn’t mention the fact that when the GAO needs funds to do something like that, it doesn’t actually have to come up with the cash- it just asks Congress to appropriate it…)

Update:

Almost a year has passed, and the “Ponzi Scheme” is still alive and well. As we pointed out today, the USPS would be in the black for FY 2010 by almost a billion dollars without the “pre-funding” requirement. Unfortunately, the politicians still ignore that “inconvenient truth”, and cling to the far more satisfying bogey man of a bloated, inefficient government agency floundering. It is far easier for Susan Collins to lecture the USPS on efficiency (as long as that doesn’t mean closing offices in Maine!), than for her to admit that she and her colleagues helped create the crisis.

WASHINGTON, D.C. – On Wednesday, March 25, 2009, at 10:00 a.m. in room 2154 of the Rayburn House Office Building, the Subcommittee on Federal Workforce, Postal Service and the District of Columbia will hold a hearing entitled, “Restoring the Financial Stability of the U.S. Postal Service: What Needs to be Done?”

The Subcommittee will examine how the nationwide economic downturn, coupled with technological trends, has produced declining volumes and revenues for the United States Postal Service.

“With the Postal Service facing budget shortfalls the Subcommittee will consider a number of options to restore financial stability, and examine ways for the Postal Service to continue to operate without cutting services,” Chairman Stephen F. Lynch said.

The Postal Service’s recent decision to close six of its 80 district offices, eliminate positions across the country and offer another early retirement opportunity makes the Subcommittee’s hearing very timely.

The hearing aims to generate effective short and long term strategies to reduce costs and improve efficiency at the Postal Service. In addition, the Subcommittee will question the Board of Governors on Postal executives’ compensation packages.

“Given the ongoing financial losses at the Postal Service, there has been a considerable backlash among postal customers and current and former employees regarding the Postal executives’ compensation packages, including that of Postmaster General Potter. Members of Congress have been hearing from our constituents and we intend to look into this matter at the hearing and ascertain how those pay levels were determined and how to bring them in line with the current reality,” added Chairman Lynch.

Witnesses’ testimonies, the Chairman’s opening statement and a 10 a.m. live broadcast of the hearing can be found on the Subcommittee’s website, federalworkforce.oversight.house.gov

Press release:

U.S. Senator Olympia J. Snowe (R-Maine), Ranking Member of the Senate Committee on Small Business and Entrepreneurship, today sent a letter to John E. Potter, the Postmaster General of the United States, urging him to consider the impact on small businesses of reducing the United States Postal Service’s (USPS) delivery week from six days to five. Snowe cited the potential negative consequences such an action could have on America’s roughly 27.2 million small businesses.

“America’s small businesses depend on reliable and consistent service from the USPS, and they could suffer significant setbacks by a shortened mail delivery week, such as lost sales, order backlogs, and job cuts,” said Senator Snowe. “While I understand the Postmaster General’s desire to reduce costs, it is imperative that his actions not have a detrimental effect on consumer spending or the small businesses that make up the backbone of our economy.”

Postmaster General Potter announced the possibility of shortening the USPS’s delivery week in late January, citing his agency’s potential $6 billion deficit this fiscal year and the difficult economic climate. The United States Postal Service, which is the nation’s second-largest employer, is the only mailing service that delivers to every address in the country.

The text of the letter is below:

Mr. John E. Potter
Postmaster General and Chief Executive Officer
United States Postal Service

Dear Mr. Potter:

In light of your recent announcement that you are considering cutting postal delivery by one day per week, I am writing to request that you consider the potential harmful impact this action could have on America’s 27.2 million small businesses.

A six-day delivery week is essential to ensuring that our nation’s small businesses are able to reach their customers in an appropriate and well-timed manner. According to the United States Postal Service’s (USPS) website, on average the USPS delivers to 9 million businesses each day your trucks are operating. As Ranking Member of the U.S. Senate Committee on Small Business and Entrepreneurship, I am concerned that reducing your delivery week by one day may have devastating consequences for mail-order and internet-based businesses, newspapers, and the millions of small companies that utilize the USPS for timely mail delivery.

In my home state of Maine, thousands of businesses – large and small – depend on reliable and consistent service from the USPS. From retail clothing and outdoor specialist L.L. Bean to the dozens of Maine fishermen and lobstermen who ship fresh seafood across the world – and companies in between – Maine businesses simply must have access to a postal service that can deliver on a regular basis. These firms could all suffer significant setbacks by a shortened mail delivery week, from lost sales, to order backlogs, to job cuts.

While I understand your desire to slash costs and your overall concern given the tremendous economic crisis our country is facing, it is imperative that your actions not have a detrimental effect on consumer spending or the small businesses that make up the backbone of our economy. I hope that you will keep me informed of your findings as you weigh the consequences a shortened mail week would have on our country’s small firms.

Figures released by the US Postal Service show that the organization spent $78.4 million on relocating employees in the fiscal year that ended September 30, 2008. Of that, almost half, or $37.9 million went to “Residence Purchase and/or Sale/Lease”. The USPS home purchase program for relocated employees has been a subject of controversy since it was revealed that the USPS had spent $1.2 million to purchase the home of a South Carolina postmaster who had taken a voluntary lateral transfer to a position in Texas.

Just under $15 million of the home purchase funds money went to Headquarters and Area staff, which account for less than four thousand of the postal service’s 632,000 career employees. A similar amount went to postmasters and supervisors, who make up a much larger share, about 54,000 employees, of the workforce. Employees of the Inspection Service and the Office of the Inspector General, about 3,900 total staff. got $3.4 million in home purchase benefits, down from almost $7 million the prior year. Home purchase benefits for clerks, carriers and mail handlers came to just over three hundred thousand dollars.

With no signs of economic recovery in sight, the U.S. Postal Service is taking bold actions in response to its ongoing financial crisis. Today the Postal Service announced it would be closing six of its 80 district offices, eliminating positions across the country and offering another early retirement opportunity. These actions are expected to save the Postal Service more than $100 million annually.

The six offices closing — located in Lake Mary, FL; North Reading, MA; Manchester, NH; Edison, NJ; Erie, PA, and Spokane, WA — house only administrative functions and will not adversely affect customer service, mail delivery, Post Office operations or ZIP codes. The functions of these six offices will be assumed by 10 district offices within close proximity.

Additionally, administrative staff positions at the district level nationwide are being reduced by 15 percent. More than 1,400 mail processing supervisor and management positions at nearly 400 facilities around the country also are being eliminated and nearly 150,000 employees nationwide are being given the opportunity to take an early retirement.

In the past year the Postal Service has taken very aggressive cost-cutting actions, including:

* Cutting 50 million workhours;
* Halting construction of new postal facilities;
* Negotiating an agreement with the National Association of Letter Carriers that adjusts letter carrier routes to reflect diminished volume;
* Freezing salaries of all Postal Service officers and executives;
* Instituting a nationwide hiring freeze;
* Reducing authorized staffing levels at postal headquarters and area offices by at least 15 percent;
* Selling unused and under-utilized postal facilities;
* Adjusting Post Office hours to better reflect customer use; and,
* Consolidating mail processing operations.

The Postal Service is streamlining operations and improving efficiencies across the board in order to protect its ability to provide affordable, universal mail service. By modifying networks, consolidating functions and restructuring administrative and processing operations, the Postal Service is adapting to meet the evolving needs, demands and activities of its customers.

An independent federal agency, the U.S. Postal Service is the only delivery service that reaches every address in the nation, 149 million residences, businesses and Post Office Boxes, six days a week. It has 34,000 retail locations and relies on the sale of postage, products and services, not tax dollars, to pay for operating expenses. Named the Most Trusted Government Agency five consecutive years by the Ponemon Institute, the Postal Service has annual revenue of $75 billion and delivers nearly half the world’s mail.

The USPS Board of Governors’ next monthly meeting is set for Monday March 30. The meeting will take place over three days at the USPS Bolger Center in Potomac MD. The entire meeting will be closed to the public.

Here is the agenda posted in today’s Federal Register:

Times and Dates: 6 p.m., Monday, March 30, 2009; 10 a.m., Tuesday, March 31, 2009; and 9:45 a.m., Wednesday, April 1, 2009.

Place:Potomac, Maryland, at the Bolger Center for Leadership Development.

Status:Closed.

Matters to be Considered:

Monday, March 30 at 6 p.m. (Closed)

1. Financial Matters.

2. Strategic Issues.

3. Pricing.

4. Personnel Matters and Compensation Issues.

5. Governors’ Executive Session–Discussion of prior agenda items and Board Governance.

Tuesday, March 31 at 10 a.m. (Closed)

Continuation of Monday’s agenda.

Wednesday, April 1 at 9:45 a.m. (Closed)

Continuation of Monday’s agenda.

Contact Person for More Information:Julie S. Moore, Secretary of the Board, U.S. Postal Service, 475 L’Enfant Plaza, SW., Washington, DC 20260-1000. Telephone (202) 268-4800.

Julie S. Moore,

Secretary.

Organizational Changes – March 20, 2009

The Postal Service is closing 6 of the 80 district offices, eliminating 521 positions across the country and offering early retirement to nearly 150,000 employees nationwide (excluding Electronic Technicians, MPE Maintenance Mechanics, Part-time Postmasters)

For the remaining 74 districts across the country, there will be a 15% reduction in administrative staffing.

More than 1400 mail processing management positions are also being eliminated in nearly 400 facilities around the country.

District Closings

Massachusetts District – 116 impacted employees (105 are eligible to retire) Boston District and the Connecticut District (Hartford CT) will assume the operations.

New Hampshire/Vermont District – 75 impacted employees (68 eligible to retire) Northern New England District (Portland ME) will assume operations.

Erie District – 63 impacted employees (44 eligible to retire) Western Pennsylvania District (Pittsburgh PA) will assume operations.

Central Florida District – 104 impacted employees (79 eligible to retire) South Florida District (Miami FL) and Suncoast District (Tampa FL) will assume operations.

Spokane District – 71 impacted employees (52 eligible to retire) Seattle District and the Salt Lake City District will assume operations.

Central New Jersey District – 92 impacted employees (63 eligible to retire) Northern New Jersey District (Newark NJ) and the South Jersey District (Bellmawr NJ) will assume operations.

It will take approximately 5 months to close down the functions performed at the impacted districts. We expect this to be finalized by the end of August 2009.

Impacted employees will be given 5 months notice to look for a placement within the Postal Service. If unable to do so, the employee will be given a RIF notice on June 24, 2009. Once the RIF notice is received, the employee then has 60 days before their employment status with the Postal Service will end on August 28, 2009.

Function 1 – EAS positions

In excess of 1400 EAS positions in more than 400 facilities will be eliminated in mail processing operations.

These positions are being eliminated based on a mathematical computation designed to readjust our management-to-craft employee ratio to factor in the thousands of craft employees who have left the Postal Service in the last several years.

An employee who is impacted by this decision will be given 4 month’s notice to look for placement within the Postal Service. If they are unable to do so, the employee will be given a Specific RIF notice on May 27, 2009. Once the RIF notice is received, the employee has 60 days before their employment status with the Postal Service will end on July 31, 2009.

Additional information on the elimination of these positions will be provided.

From the National Association of Postal Supervisors web site:

NAPS Headquarters was advised today that the announcements that we have been anticipating for some time on District changes will be made formally at 12:00 noon on Friday (tomorrow).

This morning NAPS Headquarters participated in two meetings with the USPS at L’Enfant Plaza. The first meeting dealt with tomorrow’s announcement of changes in EAS staffing in Plant operations. The full details of Function One changes will be provided tomorrow in a USPS Newsbreak.

The second meeting was with the Postmaster General and all of the unions and management associations. The discussion centered on current legislation which would modify the pre-funding of retiree health benefits. All of the unions and management associations are supporting this legislation. 03-19-09