According to a new audit by the USPS Inspector General, last year’s “Summer Sale” may actually have lost money for the service:

The Postal Service reported both volume and revenue increases resulting from the FY 2009 Summer Sale. However, the processes used to calculate the reported increases may result in misleading reported revenue and volume impacts. While the Postal Service used actual, verifiable mailing data in many cases, the additional data essential to calculations supporting the reported increases is less precise. These data included various assumptions related to mail thresholds, negotiated mail volumes based on customer input, and incomplete or unconsidered employee cost data. Postal Service outsiders — including the PRC’s public representatives — have also questioned the Postal Service’s methods for calculating reported revenue and volume increases. The public representatives found that using methods more closely aligned with those initially considered by the PRC in approving the Summer Sale suggests the Postal Service may actually have lost money on the FY 2009 program.

A Postal Service official stated that the benefits gained from conducting incentive programs like the Summer Sale outweigh their potential financial uncertainties. The official said the Summer Sale program should be viewed as an investment in the future of the Postal Service, creating long-term customer satisfaction and building its reputation. While these goals are commendable, a stated objective of the FY 2009 Summer Sale was to increase revenue and volume. It is uncertain whether the Postal Service achieved that objective. We believe the Postal Service needs solid data and complete cost information in order to make well-informed decisions on the programs it initiates or conducts, particularly considering the critical financial predicament it is currently facing.

Revenue and Volume Increases Reported for Summer Sale May be Misleading

Overall, the Postal Service did not always have independent, reliable, and complete data upon which to calculate the $24.1 million in net revenue contribution and increased volume resulting from the FY 2009 Summer Sale. This occurred because the Postal Service relied on certain customer-provided data to determine customer thresholds and this data was a key component in evaluating revenue and volume increases. In addition, the method the Postal Service used to determine customer mail volume without a Summer Sale — commonly referred to as “loyalty growth” — differs from the PRCapproved method. The Postal Service’s calculation of “loyalty growth” considered trends in volume, whereas the PRC’s public representatives applied a measure of price sensitivity to volumes actually mailed during the Summer Sale to calculate “loyalty growth.” As a result, the Postal Service provided $67.8 million in rebates to customers who exceeded the established threshold volumes that may have been inaccurate. We consider the $67.8 million to be assets at risk.

A key component in calculating net revenue and volume increases was determining customers’ mail volume thresholds. To determine thresholds, the Postal Service provided mailing data that established a threshold for all its customers who were eligible to participate in the Summer Sale. While 324 customers agreed with this threshold figure, 129 others did not. Customers who disagreed with the threshold met with a Postal Service analyst from the Business Customer Intelligence (BCI) Department to discuss and negotiate the changes. Postal Service officials stated that BCI analysts researched the requested changes; however, they were not able to provide documentation to support the changes made or the validation process.

Furthermore, Postal Service outsiders have questioned the validity of the calculation of the “loyalty growth.” The PRC’s public representatives found that using the PRC’s method for “loyalty growth,” the Summer Sale lost $39.6 million of revenue. This is in contrast to the Postal Service’s reported $24.1 million net revenue growth. These varying calculations illustrate the difficulty in determining the results and effect of the Summer Sale.

Read the full report

The United States Postal Service in Hawaii has selected the online community of designers at Prova.fm to crowdsource the design of a “Season’s Greetings from Hawaii” logo to be printed on the Hawaii Priority Mail Large Flat Rate Boxes. A new design contest via Prova’s online platform was created to satisfy the Post Office’s marketing, branding, and advertising needs.

Prova has built a community of skilled and emerging design talent to offer just such solutions for the business community. “Crowdsourcing is an expedient, cost effective, and often superior method of completing any kind of project, and especially where print or online designs are concerned;” said Prova Founder David Gash.

The United States Postal Service (USPS) in Honolulu approached Prova to engage the design community there with the project. The USPS needs to “inspire Postal Service customers to choose the Large Flat Rate Box for shipping packages worldwide”. USPS Retail Manager Nancy Wong had this to say about their selection of Prova:

“We liked Prova’s system because we’ll get a wider submission base with Prova, than simply getting ideas from our employees. You just put down what you want and designers from all over are going to be able to submit their designs.”

Prova takes advantage of virtually untapped skills and resources via the web. Tens of thousands of talented artists and designers can be engaged using Prova as a platform for assignments – as well as for promoting their work. Prova’s CEO and Founder had this to say about the contest; “Crowdsourcing is beginning to come into its own because of the advent and adaptation of digital technologies. We are obviously thrilled the digital design community has this opportunity to satisfy a tangible need of a global concern such as the USPS.”

NATIONAL ASSOCIATION OF POSTAL SUPERVISORS
LEGISLATIVE AND REGULATORY UPDATE
JULY 22, 2010

POSTAL FINANCIAL REFORM BILL CLEARS FIRST HURDLE

The House postal oversight subcommittee on Wednesday approved legislation to stabilize the finances of the Postal Service by reversing billions of dollars overpaid by USPS into the government’s civil service pension fund and shifting those payments to satisfy future retiree health benefit obligations.

By an 8-1 vote, the subcommittee approved H.R. 5746, the United States Postal Service’s CSRS Obligation Modification Act of 2010, introduced by the panel’s chairman Stephen F. Lynch (D-MA).

The postal financial reform legislation now goes to the full committee — the House Oversight and Government Operations Committee — although the timing of the panel’s action on the bill is uncertain.

A committee vote could get pushed off until early September, with the start of the August Congressional recess looming late next week and the committee still awaiting the “budget score” on the bill from the Congressional Budget Office.

The legislation approved Wednesday is critical to providing a more certain financial footing to the Postal Service, which is on course to post a $7 billion loss this year, much of it due to Congressionally mandated payments for future postal retiree health benefits. The legislation responds to that situation by directing the Office of Personnel Management to more fairly reallocate CSRS retirement benefit liabilities between the Postal Service and the Federal government for employees who worked for both the Post Office Department before 1971 and the Postal Service after that date. The legislation is based upon a consultant’s report to the Postal Regulatory Commission and the USPS Inspector General’s findings that found that antiquated calculation methods were used by OPM in determining the Postal Service’s CSRS payments since 1971, resulting in huge USPS overpayments.

The reallocation of CSRS liabilities — essentially returning to the Postal Service money already paid into the civil service pension fund — could result in the crediting to the Postal Service as much as $75 billion. That recredited amount, under the bill, will be deposited in the Postal Retiree Health Benefits Fund, largely relieving the Postal Service of the immense future retiree health payments required by Congress in the 2006 postal reform law.

Wednesday’s 8-1 vote on a substitute version of the bill fell largely along party lines, with Rep. Brian Bilbray (R-CA) joining the panel’s seven Democrats — Steven Lynch (D-MA), Eleanor Holmes Norton (D-DC), Danny Davis (D-IL), Elijah Cummings (D-MD), Dennis Kucinich (D-OH), William Lacy Clay (D-MO), and Gerry Connolly (D-VA) — to approve the measure. Rep. Jason Chaffetz (R-UT), the top Republican on the subcommittee, cast the lone vote of disapproval, citing concerns over its potential costs.

IMPORTANT: Building greater support among members of the House of Representatives for H.R. 5746 is crucial. Please contact your House Member to support for the bill. CLICK HERE to easily send a message to your House lawmaker to request their cosponsorship.

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Bruce Moyer
NAPS Legislative Counsel

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POSTAL FINANCIAL REFORM BILL CLEARS FIRST HURDLE – Google Docs.

Click here to download this week’s podcast, or click the play button below to listen online. [audio:http://postalnews.com/07.16.10.twip.mp3]
Previous podcasts in the series are at thisweekinpostal.info.

We received the following from the Pittsburgh NDC (formerly BMC). You can also download the announcement in .pdf format.

ATTENTION: USPS CAREER EMPLOYEES:

MAIL HANDLER POSITIONS ARE CURRENTLY AVAILABLE AT THE PITTSBURGH NDC (formerly BMC)

• Are you unsatisfied with your current position?
• Are you interested other Postal opportunities?
• Would working afternoons or nights better fit your lifestyle?
• Is the Pitt NDC closer to your home than your current office or facility?
• Are you interested in relocating to the Pittsburgh area?

If you answered yes to any of these questions, please consider a reassignment to the Pittsburgh Network Distribution Center located just north of Pittsburgh in Warrendale, PA.

As a Tier 3 facility, the Pitt NDC has expanded its operations and is currently accepting voluntary reassignments to the Mail Handler craft. If you are accepted for reassignment you will be assigned as a level 4 PTF Mail Handler. As a PTF employee your workhours will be based on operational needs and your schedule may vary. Requests are considered on a first come-first serve basis and may be withdrawn by the employee at any time prior to the reassignment effective date.

This is a limited time opportunity, so don’t delay; put your request in today.

TO APPLY:

Submit your request online via eReassign. eReassign is a web-based tool created to facilitate the process of career requests for reassignment. You can access eReassign at www.usps.com/employement/ereassign.htm. You will need your 8 digit employee ID number and your USPS PIN.

For additional information, please contact Tori Nyman at (724) 776-6227.

NEW ORLEANS, July 16 — The U.S. Department of Justice’s U.S. Attorney’s office for Eastern District of Louisiana issued the following press release:

CHRISTOPHER ISAAC, age 20, of Marrero, Louisiana, pled guilty in federal court yesterday before U. S. District Judge Helen G. Berrigan to assault on a federal officer, announced U. S. Attorney Jim Letten.

According to court documents, ISAAC admitted that on February 12, 2010, he used a semi-automatic pistol to forcibly assault and rob a U. S. Postal Service letter carrier while the letter carrier was delivering mail at the Ridgefield Apartments in Marrero, Louisiana.

ISAAC faces a maximum term of imprisonment of twenty (20) years, a fine of $250,000 and three (3) years of supervised release following any term of imprisonment. Sentencing is set for October 27, 2010.

The case was investigated by the U. S. Postal Inspection Service and prosecuted by Assistant United States Attorney Loan "Mimi" Nguyen.

SOMERVILLE — A postal worker in Somerville suspected of pilfering gift cards, checks and cash from mail is on emergency suspension pending the outcome of an investigation.

At 10:05 a.m. July 6, U.S. Postal Service agents with the assistance of borough police arrested Bridgewater resident Michael J. Carrete, 37, on a postal delivery route, police said.

Full story: Somerville postal worker charged with stealing mail | mycentraljersey.com | MyCentralJersey.com.

HON. STEPHEN F. LYNCH of Massachusetts in the house of representatives

Thursday, July 15, 2010

Mr. LYNCH. Madam Speaker, the United States Postal Service’s CSRS Obligation Modification Act of 2010, is intended to remedy a unfair and inequitable methodology for allocating the Postal Service’s share of Civil Service Retirement System, CSRS, retirement benefit liabilities for employees that provided service to this country under both the Post Office Department and the independent United States Postal Service.

According to a January 2010 report by the United States Postal Service’s Office of Inspector General, USPS-OIG, the Postal Service paid more into the Civil Service Retirement and Disability Trust Fund that it would have paid if a more equitable methodology were used to allocate CSRS retirement benefit liabilities between the Federal government and the United States Postal Service.

As a result of the USPS-OIG report’s findings, the Postmaster General of the United [E1341] States Postal Service submitted a request, in accordance with section 802(c) of the Postal Accountability and Enhancement Act, to the Postal Regulatory Commission, PRC, calling for an independent and objective review of the methods used to allocate benefit liabilities between the Postal Service and the Federal government under generally accepted actuarial practices and principles.

The independent actuarial firm hired by the PRC, The Segal Company, determined that the current methodology used by the Office of Personnel Management, OPM, for allocating such retirement benefits between the United States Postal Service and the Federal government follows an antiquated methodology that fails to incorporate current actuarial best practices and accounting standards as recognized and codified by the Financial Accounting Standard Board.

Accordingly, to remedy this unjust treatment, this legislation I am introducing today directs OPM to update and modernize the actuarial methodology to be used in allocating CSRS retirement benefit liabilities between the United States Postal Service and the Federal government in accordance with The Segal Company’s recommendation. Under this approach, the Federal government’s portion of an individual’s CSRS annuity will be based on the CSRS benefit accrual formula and the conventional individual’s "high-3" average salary. By utilizing this methodology, this legislation will ensure that OPM is using modern actuarial practices and accounting standards to apportion the benefit liabilities that are codified by the independent Financial Accounting Standard Board under FASB ASC 715.

Earlier this week APWU President Bill Burruss launched another of his tirades against big mailers entitled “More Hypocrisy as Big Mailers Decry Rate Hike“. Burruss repeats charges he has made in the past that big mailers have too close a relationship with the USPS, at the expense of “the average citizen, who pays 44 cents postage per letter”. As an average American and former postal worker, I’ve never felt particularly aggrieved about the way the USPS treats me as a customer, and I certainly have more important things to worry about than another two cents to mail a letter! While there may be something to Burruss’s complaints about the way discounts are determined, his strident rhetoric gets in the way of rational discussion.

Where Bill really goes off the deep end on this one is with his charge that the mailers brought this all on themselves because of their supposed insistence on annual rate increases in the 2006 postal reform act, which they have now forgotten about. That, of course, is completely untrue. What the mailers backed was a provision allowing the USPS to make annual adjustments to its rates tied to the Consumer Price Index. The reason mailers are protesting now is that the USPS is seeking to raise rates in a year when the CPI is virtually flat. That is certainly not hypocrisy- it’s a reaction to be expected from your customers, especially when you’re a government owned, regulated monopoly. When the exigency provision was talked about before the bill passed, it was in terms of things like natural and man-made disasters like Katrina and 9/11, not Congress-made disasters like the health benefits trust fund.

Postcom’s Gene Del Polito responded on the Postcom web site the next day, with an editor’s note that said, among other things

Well, the last I checked, it wasn’t mailers who were sitting idle in holding rooms refusing to do work because contract agreements said they didn’t have to. Talk about “immeasurable” damage. And, the last I checked, those who pushed for PAEA ultimately included the USPS and postal employee groups.

Two obvious problems here- postal employees in “holding rooms” aren’t there by choice. The USPS has had a policy of placing employees on standby when they supposedly don’t have work to perform- but that is a management decision- the employee has no choice in the matter. And there have been cases reported where managers apparently went out of there way to make standby time unpleasant for the employees. (To its credit, Postcom has published a rebuttal from a postal worker) Secondly, while some employee groups did back PAEA, the APWU was most definitely not one of them. Regardless of whether or not you agree with Burruss, he hasn’t changed his position- here’s what he said when the law passed:

In a flurry of activity on the last day of the 109th Congress, the House and Senate passed postal “reform” legislation and sent the bill to the president for his signature. If this were a football game, the score would be recorded as “Large Mailers 42 – Postal Employees zero.” In sports terms, that is a rout. Unfortunately, some postal employee organizations played for the other team.

Seems like there’s a bit of revisionism going on in both camps. That’s unfortunate, because the unions and the mailers agree for the most part on the one issue that could really make a difference to the future of the USPS, and the mailing industry as we know it: returning the Civil Service Retirement System (CSRS) overpayments that are now going into a so called “trust fund”. USPS management has admitted that getting that money back would eliminate the need for a rate increase and cutting back on delivery days.

You would think that the combined lobbying muscle of the mailers and the unions could get the CSRS issue resolved in fairly short order. (How about a direct mail campaign informing Americans about the way Congress is sitting on billions of dollars in postal revenue while it lectures the USPS on efficiency and responsibility?) That would go a long way towards ensuring the continued survival of the USPS and the mailing industry. Why neither side seems to be able to figure that out is beyond me.

Postcom.org published the following response to its accusation that postal workers were “sitting idle in holding rooms refusing to do work because contract agreements said they didn’t have to.”

The following is from a postal employee who responded to the Editor’s comment on postal worker idle time:

We sit idle on the clock because management orders us to do so. There are employees asking to leave without pay and they are not allowed to go. There is work for us to perform. I know, I have documented the amount of mail sitting and waiting for management to put the clerks back on the floor. The Union has filed grievances to stop this behavior and they are all held pending a national decision from POSTAL MANAGEMENT. The reason they will not let the employees that want to leave the building go home is because there is work that needs to be done and if they let those employees go home the mail won’t be moved. It’s not the Unions causing the problem. It’s the beancounters in headquarters who have no idea of how the mail actually gets from one place to another. They look at reports and make stupid decisions. If you want your postal rates to go down trim USPS Headquarters. While there are fewer craft employees the number of people employeed at headquarters has increased. Go to your local post office and talk to a window clerk if you want the real scoop on the USPS. Stop beating up the people that do move your mailings and that actually care that it gets moved properly.

Sounds like something the Postal Service’s Inspector General should explore.

via PostCom: Postal News and Information from Around the World.