USPS lost $592 million in January, most of it due to Congress’s “pre-funding” mandate
TweetWith attention focused this week on the unveiling of the US Postal Service’s ten year plan, and its proposal to eliminate Saturday delivery, not much attention was paid to the service’s January financial results, which were also released on Tuesday.
The news continues to be bad- the service lost another $592 million in January, bringing the fiscal year to date loss to $890 million. It should be pointed out, however, that the vast majority of the January loss was due to the Congressional mandate to “pre-fund” future retiree health benefits. The monthly charge comes to about $458 million. So what if the postal service was run “like a business”, as critics like to suggest, and wasn’t required to pre-fund future retiree health benefits? Running “like a business”, the loss would have been just $134 million. And year to date, the USPS would actually be running a profit of $942 million! For more on why the USPS is the only entity, public or private, required to make these payments, see our post from almost a year ago, “Postal Ponzi Scheme”.
While eliminating the pre-funding requirement would drastically improve the postal service’s financial condition, it is not the only problem the agency faces. January volumes continued the slide that began over a year ago, with first class letters down 10% from the same period last year. Standard mail wasn’t down as much, at -4.3%, but standard still brings in less than half the revenue first class mail does.
The effect on revenue was mitigated by last year’s price increase, resulting in an overall revenue decline of -3.8% for the month.
On the expense side, the USPS continued to aggressively cut employee work hours, by far its biggest cost. Total hours worked dropped by almost 10% compared with January 2009. The biggest percentage reductions came in customer service hours, down -14.4%; mail processing hours dropped by -12.6%, rural delivery by -7.1%, city delivery by -8.4%, and “other” hours by -7.8%.
The reduction in workhours, along with decreases in supplies, services and other non-personnel costs, resulted in a 6.0% reduction in total expenses for the month compared with a year ago.
March 4th, 2010 17:18
I agree that the USPS should NOT have to pre-fund the retiree health fund. Also the check book should be taken away from Potter. Too much fraud it purchasing these monster “sorting” machines that don’t work properly, and Potter keeps right on buying. Someones palms are getting greased, and have been for a very long time!
March 4th, 2010 18:53
If you read the article it shows nothing but a decrease in work hours, the amount of employees increased with all the new Vice Presidents and 204b’s and Managers and supervisors. You cant save money on work hours if the employees increase and they pay them for not working during the normal work day. It is a contradiction of terms, if volume, sales, and demand are down why is he buying equipment to process mail that no longer exists or will not exist by the time they are delivered. Look at the logistics of the travel, the amount of personnel that dont even put a finger on mail except when they go home early and take it out of their mail boxes. Their financial statments must be made public including the titles of these bogus positions and deputy administrative assistant to the acting vice president, soundsl just like a congressional staff, The issue at hand is very simple . Potter answers to NOBODY and NOBODY really cares as long as they get their postal welfare checks, and they get paid the same for staying home as they do for showing up for work that Potter said he eliminated. What is wrong with this picture.
March 4th, 2010 19:07
No, there wasn’t increase in employees- far from it! As of PP3 the USPS had 52,384 fewer employees than the year before- and the decrease was across the board, including managers, supervisors, and craft employees. I’m not saying there isn’t plenty of fat left to cut, but the idea that the USPS has increased employees on the rolls is totally false.
March 4th, 2010 21:51
to many chiefs not enough indians. dont give me that crap about cutting across the board. why is it that a supervisor can stay in a hotel for months at the postal services expense and use govt. tagged vehicle using gas and eating up that per diem plus collecting a check sign me up. does every office lack the ability to find and hire supervisors off the workroom floor who dont need per diem cause they live in that city or what about the traveling postmasters how bout hire within the office save some $ and some jobs.or better yet lets cut the jobs and keep giving bonuses to those who get paid for doing the job they were hired for. when do the clerks ,carriers, ect. who make the post office go round get a bonus. sounds like the corporate greed .whats congress going to do about this. where is the postal service bailout. when does the govt. step in and hand potter his walking papers and take hold of the bull by the horns and cut out bonuses, excessive spending in the mangt. dept. hire postmasters locally, stop transfers of mangt. who live in resort hotels and townhomes all on the postal service. enough is enough . this country was founded on a third grade education and ruined by a bunch of phd’s.
March 4th, 2010 21:57
My statement about “cutting across the board” referred to reductions in employee staffing, and the fact that all employee categories saw reductions over the last 12 months, contrary to what the previous commenter had suggested. Those are facts. As I said in my comment, that doesn’t mean that there isn’t more fat to be cut.
March 5th, 2010 06:29
How about when a postmaster takes a voluntary transfer, puts his house up for sale, but cant sell it. The postal service buys it from him/her and tries to sell it paying the taxes on it(probably?) but definately losing money on it if it does sell!!!! There are many houses out there like this!! Oh, the key word here was (voluntary) transfer not (forced) transfer.
March 5th, 2010 12:44
The postal service will buy and resell your house if you request and are granted relocation pay. All EAS jobs posted in the last go around specifically stated “No relocation pay authorized.”
March 5th, 2010 20:03
and yet…
Year to Date Expenses
Relocation:
PM $1.9 million, SUPV $2.4 million, HQ $1.6 million, AREA $703,727, IS/IG $644,749, PAT $344,247, ADM $316,406, CLK $362,198, MH $166,436 CARRIER $54,788… over $8.5 million YTD
March 5th, 2010 20:29
NOT BAD FOR A MANAGEMENT MIRED IN IGNORANCE!
MOST POSTAL MANAGEMENT COULDN’T RUN A LEMONADE STAND!
March 6th, 2010 19:29
I’ve been there 25 yrs. and this is the most disfunctional business I have ever seen. Management will spend thousands to save a dollar. Management makes decisions based on there bonuses, not by a better more efficient way to deliver the mail.
March 7th, 2010 01:39
Hey Al.. you have made it 25 years ? Good for you .. I survived 20 and could not take the BS anymore !