NAPSLegRegUpdate 093010

We are disappointed to learn that the Postal Regulatory Commission (PRC) has denied our price filing. But we are encouraged by their acknowledgment and understanding of the larger financial risk we face through the mandated prefunding of Retiree Health Benefits.

Clearly, the Postal Service is a viable business. Maintaining that status requires elimination of several legislatively-imposed constraints that hamper our ability to operate efficiently and profitably.

Specifically: 1) enable us to alter frequency of delivery consistent with use of the mail; 2) allow us to close unprofitable post offices; 3) restructure our obligation under a 2006 law to prefund retiree health benefits, an obligation not applicable to any other private or government entity; 4) permit us to create and offer products and services beyond mail; 5) assure that arbitrators consider the financial health of the Postal Service when agreement cannot be reached with our labor unions; and 6) resolve overfunding of our pension systems. Legislation has been introduced in Congress to address these issues.

We will need to take a much closer look at the ruling from the PRC in order to make an informed decision about what options we have and what may be the best course of action for our customers, our employees, our stakeholders and the American public.

The Postal Service ends the current fiscal year with approximately $2 billion cash and available credit, meeting all our end-of-year financial obligations, including a $5.5 billion payment to the Retiree Health Benefit Fund as required by law.

As we have stated repeatedly throughout the year, the Postal Service sought a deferral of this $5.5 billion payment to minimize the risk of defaulting on our financial obligations in Fiscal Year 2011. Unfortunately, no legislative action has been taken at this time.

The financial risk remains. We will carefully manage every dollar we spend in the upcoming fiscal year. Our current forecast shows that we will not have sufficient cash to make the $5.5 billion payment due on Sept. 30, 2011, and any major disruption, whether in volume loss or unforeseen circumstances, could cause us to default on financial obligations earlier in FY11.

In the midst of financial and regulatory challenges, the Postal Service achieved record productivity gains in 2010 and a reduction of over 100,000 career employees and cost savings of over $10 billion during the last three years.

As always, service to our customers remains our number one priority. No financial challenge or uncertainty will change that. We will continue to work with Congress and our stakeholders to implement necessary changes to ensure a viable Postal Service for decades to come.

John E. Potter

Postmaster General of the United States

CEO of the U.S. Postal Service

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

A federal grand jury today returned eight indictments charging U.S. Postal Service employees and others with stealing or otherwise interfering with the U.S. mail, announced U.S. Attorney Joyce White Vance, Sam Montalvo, assistant special agent in charge, Office of Inspector General, U.S. Postal Service, and Frank Dyer, domicile coordinator, U.S. Postal Inspection Service.

In separate indictments filed in U.S. District Court, the grand jury charged five U.S. Postal employees, two employees of postal contract centers, and one individual not affiliated with the Postal Service with either stealing, delaying or destroying mail.

“The United States mail is one of this country’s most respected institutions,” Vance said. “Businesses and citizens, alike, trust and rely on the efficient operation of the mail system. Postal employees and others who abuse this system do the country a great disservice. They will be prosecuted,” she said.

U.S. Postal Service employees indicted today are:

TAMEKA MOORE THOMAS, 36, of Homewood, who worked at the Birmingham Downtown Carrier Facility. MOORE is charged with stealing mail and articles contained therein, from May 2008 to March 26, 2009. Count One charges her with theft of government property; count two charges theft by a Postal Service employee.

ROBIN JOEL BAGLEY, 45, of Birmingham, who worked as a mail handler in the Birmingham Processing and Distribution Center Annex. BAGLEY was charged with delaying mail delivery and theft of mail by a U.S. Postal employee between May 28, 2009, and Oct. 8, 2009.

JANA KAY MUSTGROVE, 31, of Hanceville, who was a mail carrier at the Cullman Post Office. MUSTGROVE was charged with delaying mail delivery and theft by a Postal employee, from December 2008 to June 23, 2009.

JENNIFER SMITH JEFFREYS, 34, of Mount Hope, who worked as a rural carrier associate at the Dansville Post Office. JEFFREYS was charged with delay and destruction of U.S. mail and theft of mail matter by Postal employee from April 10, 2010, to May 29, 2010.

ANGELA DENISE CRUMMIE, 51, of Tuscaloosa, who worked as a Postal carrier at the Eastside Station Post Office in Tuscaloosa. CRUMMIE was charged with delay or destruction of mail and theft of mail by a Postal employee on March 18, 2010.

Two employees of U.S. Postal contract centers, where Postal products are sold inside other retail outlets, were indicted today. They are:

BRENDA ANN POSEY, 48, of Hazelgreen, who worked contract unit in Huntsville. POSEY was charged with theft of Postal Service funds exceeding $1,000, from Jan. 24, 2008, to Sept. 30, 2009.

CAROL POOLE RAMSEY, 51, of Huntsville, who worked at a contract unit in Huntsville. RAMSEY was charged with theft of Postal Service funds exceeding $1,000 between Oct. 28, 2008 to Aug. 26, 2009.

The grand jury also indicted RAYMOND EARL PETTY, 45, of Fairfield, who did not work for the Postal Service or one of its contract centers, on nine counts of possessing personal checks which were stolen from the U.S. mail between Nov. 6, 2008, and April 9, 2009.

Theft of government property is punishable by a maximum 10 years in prison and a $250,000 fine. Theft of mail matter by a Postal employee, delay and destruction of mail, and possession of stolen mail matter are punishable by a maximum five years in prison and a $250,000 fine.

The government will seek forfeiture in cases involving monetary losses, in addition to required restitution orders for victims of these alleged crimes.

The following information was released by the Direct Marketing Association Inc.:

The Direct Marketing Association (DMA) today praised the decision of the Postal Regulatory Commission (PRC) to reject an excessive postal rate hike proposed by the US Postal Service (USPS). DMA led efforts on behalf of its members encouraging the PRC to reject the USPS request for an unlawful and exorbitant rate increase.

The requested rate hike would have increased postal rates by nearly ten times the rate of inflation, requiring customers to pay an additional $3 billion annually for postage, despite the current rate of inflation remaining close to zero. The PRC decision requires the USPS to continue following the current law which limits any postage increase to the rate of inflation.

“Today’s decision is a great victory for businesses and consumers. The US Mail will remain a viable and affordable communications channel. The knowledge that postage rates will not rise faster than inflation is also an important element for the business community already operating in an extremely challenging business environment,” said Lawrence M. Kimmel, DMA’s CEO. “This, however, is only a first step. USPS customers must continue to work together, and with Congress, to help the Postal Service maintain competitiveness in the marketplace.”

USPS must now make critical decisions to cut costs and right-size its network and workforce. As it conducts negotiations with many of its employees, the USPS must not lose sight of the fact that its financial well-being, and that of its customers, depend on immediate and significant cost reductions.

“DMA will work closely with Congress to correct the over-funding of postal pensions so that companies are not taxed to subsidize other government programs,” concluded Kimmel. “We are fighting for reforms that will ensure a viable postal system able to meet the needs of consumers and the business community for generations to come.”

The following information was released by Delaware Senator Tom Carper:

Today, Sen. Tom Carper (D-Del.), Chairman of the Senate subcommittee with jurisdiction over the U.S. Postal Service, released the following statement in response to the Postal Regulatory Commission’s (PRC) decision to reject the latest postal rate hike:

“I’d like to thank the members of the Postal Regulatory Commission and their staff for their work. I know this was a hard-fought and complicated case so I appreciate the thought and the long hours that went into producing this important decision.

“The Postal Service is clearly in a financial crisis. It lost $4 billion last year and will likely lose as much as $7 billion this year once it closes its books for the fiscal year later today. Postmaster General Potter announced this past spring that, if nothing were done, the Postal Service could accumulate as much as $230 billion or more in losses by 2020. This is clearly an unsustainable path. In fact – if these trends continue and no major changes occur – I understand that the Postal Service will actually run out of cash by the end of fiscal year 2011, just a year from today.

“The rate increase that was denied today would not have fixed the Postal Service’s problems. A number of observers argued that it could actually have made them worse. Regardless, I hope that today’s events will focus the Postal Service, its employees, its customers, and my colleagues in Congress on the need to take dramatic action to arrest the slide the Postal Service is on. Even when our economy has fully recovered from this recession, the Postal Service will still need to deal with the fact that more and more people are turning to electronic communication to keep in touch with friends and family and to conduct their daily business. Postal management has done a tremendous job in recent years cutting costs, becoming more efficient, and reducing its workforce. But despite these efforts, more needs to be done to reduce costs and increase revenue, especially during the labor negotiations currently underway. Perhaps more importantly, Congress needs to clear the way for further progress by passing legislation to free the Postal Service to execute its reform plans.

“If we do nothing, we face a future without the valuable services the Postal Service provides. However, if we act quickly, we can turn things around by passing my recently introduced bill, the Postal Operations Sustainment and Transformation (POST) Act of 2010. This necessary legislation would give the Postal Service the room it needs to manage itself and avoid becoming the latest victim of Congressional gridlock. More specifically, my bill addresses the current budget issues plaguing the Postal Service by proposing a series of provisions including: easing postal employee pension and retiree health costs; addressing postal employee wages and benefits; allowing partnerships with state and local governments; and giving the Postal Service leeway to close post offices, market certain non-postal items, and eliminate Saturday delivery.

“The Postal Service has put forth a plan that shows a commitment to further cost cutting and efforts to make their business relevant during these changing times. Achieving these goals will require a shared sacrifice on the parts of the Postal Service, postal employees, and major postal customers.”

Background: The proposal was a 5.6 percent increase that would have gone into effect in January. The price of a first-class stamp would have increased by two cents from 44 to 46. The Postal Service was anticipating that it would generate $2.3 billion in revenue. It was filed under a process laid out in the 2006 Postal Accountability and Enhancement Act allowing the Postal Service to increase prices above the CPI rate cap during “extraordinary or exceptional” circumstances. The PRC is denying the request.

A summary of the bill follows:

The POST Act (S. 3831)

There are seven provisions in the bill. All of them are based on the legislative proposals the Postal Service made this past spring.

1. Financial Relief – The heart of the bill attempts to permanently address the pension and retiree health issues that have been a drain on postal finances over the years. The Postal Service currently pays into the old Civil Service Retirement System using a formula that the Postal Service Inspector General, the Postal Regulatory Commission, and at least two outside consulting firms have found unfairly allocates costs related to the former Post Office Department to the Postal Service. If true, this has resulted in the Postal Service overpaying its CSRS obligations over the few decades by between $50 billion and $75 billion. In addition, the Postal Service since FY2007 has been required to pay between $5.5 billion and $5.9 billion a year in an effort to prefund its future retiree health obligations. The bill would give the Postal Service more than $5 billion in breathing room each year by making two changes to current law:

- First, it requires OPM to recalculate the Postal Service’s CSRS obligation in a way that makes the Treasury responsible for pension costs related to pay increases Post Office Department employees working for the Postal Service would have gotten had they stayed on the federal payroll. This was the approach recommended by the IG, the PRC, and the consultants who looked at this issue. The recalculation will result in a finding that the Postal Service has paid about $50 billion more into CSRS that it owed.

- Second, it allows the Postal Service to use its $50 billion in overpayments to make the remaining seven retiree health prefunding payments it owes between now and 2016.

2. Saturday Delivery – The bill would remove the Appropriations rider that currently prevents the Postal Service from moving forward with its proposal to eliminate Saturday delivery. Under the 2006 postal reform legislation, the Postal Service was given the authority to reduce delivery frequency when it felt like it was necessary after taking the proposal to the PRC and receiving an advisory opinion. The Appropriators, however, put language in their bill every year negating this authority. Eliminating that rider would allow the Postal Service to achieve the $3 billion or more a year in savings that the Postal Service believes it could achieve if they eliminated Saturday delivery.

3. Post Office Closings – The bill would eliminate several provisions in law that the Postal Service believes forces it to maintain post offices that are no longer necessary. If the Postal Service is able to close some of these facilities, postal management believes they could began the process of rolling out cheaper, more convenient retail options such as automated kiosks or postal stations located in grocery stores or other places where people go every day.

4. Arbitration – Under current law, the Postal Service is required to pay its employees wages and benefits that are comparable to those paid in the private sector. Arbitrators in labor disputes have made it clear in the past that they think this is a legally binding requirement that should be taken into consideration when they render a decision. At times, arbitrators have awarded postal employees what they believe are comparable pay and benefits without taking the Postal Service’s financial condition into account. Recognizing that this situation cannot continue in a world where the Postal Service operates under a rate cap and faces stiffer competition from electronic communication, Senator Coburn proposed language in the past that would require arbitrators to take the Postal Service’s financial condition into account. The contains a similar provision requiring arbitrators to take the Postal Service’s financial condition into account along with other factors such as the comparability requirement and the details of the rate system.

5. Non-Postal Products – Under current law, the Postal Service is prohibited with a few exceptions from offering “non-postal” products and services, meaning products or services not related to the mail. The bill would revise this prohibition so that the Postal Service can begin offering non-postal products that are in the public interest and make use of the existing postal network.

6. State and Local Governments – Under current law, the Postal Service may partner with federal agencies to offer government services in postal facilities. The bill would allow them to enter into similar partnerships with state and local governments.

7. Wine and Beer – Under current law, the Postal Service is prohibited from mailing alcoholic beverages. UPS and FedEx can, however. The bill includes language putting the Postal Service on equal footing with UPS and FedEx with respect to shipping beer and wine.

WASHINGTON, D.C. — U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee and author of the 2006 Postal Accountability and Enhancement Act, today applauded the Postal Regulatory Commission’s (PRC) unanimous decision to reject the U.S. Postal Service’s requested rate hikes.

“American consumers and businesses that rely on the Postal Service won a major victory today,” said Senator Collins. “I am pleased with this decision, which I argued was required by the language of the 2006 postal reform law.

“By rejecting these proposed rate hikes, the PRC has given the Postal Service an opportunity to improve its operations and thrive. The Postal Service now needs to redouble its efforts to cut costs, develop new services to increase volume, re-invent its business model and work with the Administration to remedy an overpayment to the federal retirement fund. I will continue to press the Administration and Postal Service on these vital reforms,” Senator Collins said.

The Postal Service is the linchpin of a $1 trillion mailing industry that employs approximately 7.5 million Americans in fields as diverse as direct mail, printing, catalog production, paper manufacturing, and financial services.

The 2006 postal reform law that Senator Collins authored allowed for rate increases above the level of inflation “only if the Postal Service could prove ‘extraordinary or exceptional circumstances,’ such as terrorist attacks or natural disasters, have had a profound effect on its operations, well outside normal business cycles,” said Senator Collins.

In its decision released today, the PRC found that the Postal Service failed to prove that its financial condition met the standard of the narrowly worded law.

Senator Collins believes the PRC’s decision will help prevent further declines in mail volumes because unexpectedly higher postage rates would prompt businesses and customers to seek less expensive, digital alternatives. This would have resulted in customers using the Postal Service less, ever-sinking mail volumes and even higher net losses for the Postal Service.

Senator Collins also cited the findings of three recent investigations into Postal Service operations that she requested the Inspector General (IG) conduct. The three probes found stunning evidence of waste, fraud and abuse, especially in the contracting area. All told, the Postal Service could save more than $800 million in 2011 if it implemented all the IG recommendations. Specifically, the IG investigations found that:

• 359 non-competitive contracts were given to former employees, some of whom were hired back to train their replacements at twice their former pay;

• the Postal Service pays 100 percent of health insurance premiums for 835 of its top employees, an expensive perk that occurs at no other federal agency, at an annual cost of $10 million;

• postal employees participate in many of the same health insurance and life insurance programs as federal employees, yet the Postal Services pays a greater share of the premiums;

• the Postal Service’s contract management did not protect the USPS from waste, fraud, and abuse;

• the Postal Service could not even identify how many contracts were awarded without competition, and the IG found that 35 percent of the no-bid contracts lacked justification; and,

• significant savings could be achieved by consolidating the USPS’s area and district field offices.

On July 6, the Postal Service filed its exigent rate case with the PRC, seeking approval for a wide array of rate increases. Today, the Postal Service expects to post a loss of more than $7 billion for fiscal year 2010.

Its requested increases, averaging 4 to 6 percent, would have far exceeded the rate of inflation. For one class of mail, for example, the proposed increase would have been a whopping 23 percent. For catalog mail, the Postal Service proposed a postage hike of more than 5 percent, which owners warned would prompt many catalog businesses to reduce mail usage and direct customers to websites.

Publishers would have responded in a similar way. One national company, which has relied heavily on direct mail, said the proposed increases would have forced it to reduce mail usage by 15 to 20 percent. The rate hikes, had they taken effect, would have made direct mail less of a financially viable, large-volume advertising medium.

By Michele Ward, the Uniform Girl

(Michele Ward is the General Manager of Postal Uniform Discounters, one of the larger online postal uniform companies. She has been in the postal uniform business for eleven years.)

The USPS has authorized for release by the uniform vendors on October 15th a brand new design of the short sleeve, long sleeve, and jac shirts (the polo shirt will stay the same). The new shirts are a solid light blue and will include the same emblem. There will be no more stripes. The cut of the shirts will stay the same. The fabric remains a 65% polyester / 35% cotton, but will now be a poplin weave as opposed to the current shirts which are a broadcloth. Poplin weaves are a little smoother in appearance and to the touch. The shirts are still machine washable but now have the addition of soil release which provides increased protection and ease of care against stains and soiling.

The reason for the changed shirt is that the last remaining mill that made the fabric for the current shirts has shut down, and there is no U.S. made substitute available. Instead of having the fabric come from offshore, the USPS (along with the unions and those of us involved on the manufacturing and retail end) has decided to switch to a fabric that is “US made” available.
The USPS has indicated that they will allow the current shirt with the red stripes to be worn “in perpetuity”, so don’t throw them out! You can still wear them as long as you have them. Personally, I like the current shirt but the new ones do look clean, crisp, and professional!

We are now accepting orders at Postal Uniform Discounters (www.postaluniformdiscounters.com) for the new shirts, although we cannot ship them until October 15th as per the USPS. So be among the first in line, and the first to wear the first new button down shirt for letter carriers since 1991!

To view these new shirts and all of the newest items please visit our website www.postaluniformdiscounters.com.

Here at Postal Uniform Discounters we sell all of the newest items at very reasonable pricing with great service.

Michele Ward
The Uniform Girl

The Postal Regulatory Commission in a unanimous decision has denied the US Postal Service the emergency rate increase it requested earlier this year.

PRC Chair Ruth Goldway said that while the USPS made its case that the recession was an “extraordinary” circumstance, she found that the rate changes requested were actually related to long term market changes.

PRC member Dan Blair concurs in the decision, but does not believe the USPS proved the recession was an exceptional circumstance.

In answer to questions asked at the news conference, Goldway said “Our decision is final.” She also said, however, that she doesn’t know if any of the parties will appeal to the courts.

Goldway also said that the USPS could implement a 1.6-2% increase under the normal price cap process.

Statement of PRC Chairman Ruth Goldway

Full text of the decision

Text of the PRC’s press release:

Washington, DC – The Postal Regulatory Commission today issued Order No. 547 in Docket R2010-4 denying a Postal Service request for an average 5.6 percent rate increase. The Commission found that the Postal Service failed to justiff rate increases in excess of its statutory CPI price cap.

“The Commission finds that the Postal Service has shown the recent recession to be an exigent circumstance but it has failed both to quantify the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mail volume; therefore, we unanimously deny its exigent rate request,” said Chairman Ruth Y. Goldway.

The law requires the Postal Service to demonstrate that any exigent rate adjustments are due to the identified exceptional circumstances. This prevents a bona fide extraordinary or exceptional circumstance from being used as a general rate increase mechanism that would circumvent the price cap system.

The Postal Service’s recent volume losses and multi-billion dollar shortfalls are recognized. However, Commission analysis confirms that the Postal Service’s cash flow problem is not a result of the recession and would have occurred whether or not the recession took place. lt is the result of other, unrelated structural problems and the proposed exigent rate adjustments would neither solve nor delay those problems.

The Postal Service may be unable to continue to meet a statutory 1O-year payment schedule – averaging roughly $5.5 billion per year – to create a fund to pay future retiree health benefit premiums. lt has been unable to fund this obligation from operations, and has instead used up all of its retained earnings and drawn down from its $15 billion borrowing authority. Even with the requested increase, the Postal Service would be unable to meet this annual obligation either in 2011, or in succeeding years.

The Postal Service achieved over $6 billion in cost reductions in 2009. While volume declines outstripped cost reductions during the actual recession, Postal Service cost containment programs are producing results and work hours have declined faster than volumes in 2010.

From the National Association of Letter Carriers:

September 29, 2010 — On Tuesday, Senate Republicans unanimously blocked a proposal from Senate Majority Leader Harry Reid to provide a $4 billion reduction in the $5.5 billion retiree health payment due September 30 under the grossly unfair prefunding provision mandated by Congress in 2006. Reid’s proposal would have deferred the $4 billion payment to allow Congress time to reform the flawed prefunding provisions of the law and stabilized the Postal Service’s recession-battered finances. A similar deferral was adopted in 2009.

The USPS now projects a $7 billion loss in 2010—nearly 80 percent of which is caused by a massive prefunding payment for future retiree health benefits that no other company or agency in America is required to make. USPS will needlessly waste its limited borrowing authority to make a prefunding payment that is unnecessary—the USPS already has already set aside more than $35 billion in its future retiree health fund, enough to fund retiree benefits for decades.

"Sadly, postal management must share the blame for this financial fiasco," NALC President Fredric V. Rolando said. "The Postmaster General and his top executives wasted the entire year seeking unpopular measures to eliminate Saturday delivery and stack the deck against employees in collective bargaining rather than focusing on the prefunding reform backed by mailers and the entire postal community." Indeed, the Postal Service waited until mid-September to prepare a request for a deferral. Senate staffers told the NALC that postal management informed Senate leaders that the USPS could make the prefunding payment if relief was not provided. But making the full payment will leave the USPS with a dangerously low cash position.

The $4 billion deferral was stripped out of a continuing resolution (CR) that funds the government through early December, which Congress was expected to adopt today. Not a single Republican senator would agree to a vote on the CR unless a group of provisions, including the prefunding deferral, was dropped from consideration. Under Senate rules, it takes 60 votes to bring a spending bill to the floor for debate. The GOP’s leadership in the House of Representatives took a similar position—adding the postal prefunding issue to a list of items they opposed in any CR passed by the Senate.

The Postal Service has maintained all year that making the full $5.5 billion prefunding payment for retiree health would jeopardize its financial position. But its efforts to eliminate Saturday delivery and tilt the interest arbitration process in management’s favor were given priority over financial reforms.

"Letter carriers should know that we are in the fight of our lives—fixing the Postal Service must begin with the passage of the Lynch bill (H.R. 5746) and a fair allocation of pension costs," Rolando said. "The next Congress should allow the USPS to use its massive $50-$75 billion pension surplus to prefund future retiree health benefits and then let postal employees and postal management do the hard work of creating a 21st century Postal Service."

"Few workers have more riding on the mid-term elections than we do," he said.

The media seem to have a problem getting their facts straight when it comes to the US Postal Service. Several news outlets this morning carry an Associated Press story on today’s expected PRC decision in the exigent rate case, that tells readers “The last time postal rates went up was in July.” Of course, most readers will know that the last rate increase was actually over a year earlier, in May 2009. The USPS didn’t raise rates this year, and has no plans to. Apparently no one at the AP actually verifies stories before they’re sent out on the wire?

Even worse, two news outlets that specialize in covering the federal government, Federal Times and Government Executive, both use the word “bailout” to describe the postal service’s requested relief from Congress’s retiree health benefit prefunding requirement. Both publications appear to have accepted that description, popular among Republicans like Darrell Issa, even though there is no taxpayer money involved, and the relief would simply have allowed the USPS to operate like every other federal agency. The pre-funding requirement only began in 2006, and only after it was discovered that the USPS was overpaying the Treasury by about $5 billion a year to finance Civil Service pensions. By requiring the “pre-funding” of future retiree health benefits, Congress avoided losing, on paper, $5 billion in “revenue”.

Granted, explaining where the prefunding requirement came from, and the fact that it is the single largest factor in the USPS’s current financial problems, is not as easy as reporting “another bailout”, but isn’t reporting facts the job of a “professional” journalist? Apparently not.

Congress declines to bail out Postal Service (9/29/10) — GovExec.com.

No bailout for Postal Service in draft CR – FederalTimes.com.

Waiting for Obama to sign stop gap…stamps could cost more…ADHD… | KXNet.com North Dakota News.