With 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.

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.

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.”

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. Read the rest of this entry »