New Chair, Old Problems for USPS
The requirement to prefund future retirees' health benefits helped push the Postal Service to a $15.9 billion record net loss for FY2012 as first class mail revenue continued to fall.
The U.S. Postal Service recorded a record net loss, $15.9 billion, during fiscal year 2012, triple the previous year's net loss of $5.1 billion. But the alarming 2012 total for one of the largest federal employers included $11.1 billion related to two payments to prefund future retirees' health benefits, a congressionally mandated action that USPS leadership has long warned threatens its survival. The agency's Nov. 15 announcement put it this way: "The Postal Service, which is uniquely required by law to prefund these obligations, was forced to default on these payments."
The announcement said productivity reached a record level as work hours were reduced by 27 million hours in FY2012 from the year before, representing a 2.3 percent decline. USPS would not have been profitable without the prefunding, but it would have posted a loss of only $2.5 billion. It package business continues to grow, but the drop in first class mail revenue outpaced it during FY2012.
"It's critical that Congress do its part and pass comprehensive legislation before they adjourn this year to move the Postal Service further down the path toward financial health," Postmaster General and CEO Patrick Donahoe said. "We continue to do our part to grow revenue and reduce expenses by making our operations more efficient and by providing our customers with new and expanded services to meet their mailing and shipping needs. Additionally, through the expanded use of technology, including better use of digital tools, and mobile technology, we are providing business mailers with new opportunities to connect with customers in a more individualized way." USPS has proposed a plan to sponsor its own health care program, shed itself of the prefunding problem, offer non-postal products and services, have authority to determine delivery frequency, and take other steps to solve its financial problems.
The American Postal Workers Union, one of the two largest USPS unions, announced Nov. 1 that postal employees it represents will get their first raise in three years effective Nov. 17, with the 1 percent raise for career employees being reflected in Dec. 7 paychecks. APWU President Cliff Guffey pointed out the raise is significant because the same law that requires USPS to prefund health benefits for future retirees, the Postal Accountability and Enhancement Act of 2006, bars USPS from raising postage rates above the rate of inflation.
A new chairman was elected Nov. 15 for the USPS Board of Governors, Mickey D. Barnett, and James H. Bilbray was elected vice chairman. Barnett, the board's current vice chairman, is an attorney and former New Mexico state senator who was appointed by President George W. Bush on Aug. 17, 2006 for a term that expires Dec. 8, 2013. Bilbray is an attorney and former member of the U.S. House of Representatives from Nevada, appointed by the same president in August 2006.