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USPS ends fiscal year with $15.9 billion loss

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The United States Postal Service ended Fiscal Year 2012 with a $15.9 billion loss, the agency reported Nov. 15.

The loss includes expenses of $11.1 billion related to two payments to pre-fund retiree health benefits, which the USPS is required by law to do. However, the Postal Service defaulted on those payments. The USPS lost $5.1 billion in Fiscal Year 2011. The USPS' fiscal year runs from Oct. 1-Sept. 30.

Now, USPS officials are calling for an urgent reform in the Congressional lame duck session. They say resolving the pre-funding requirement, which made up 70 percent of the net loss, and providing more commercial flexibility to allow the Postal Service to manage itself are among legislative changes needed for the USPS to fully implement its business plan and return to financial stability.

"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," said Postmaster General and USPS CEO Patrick Donahoe in a news release. "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."

The Postal Service also wants Congress to look at the following issues:

 

  • The possibility of allowing the Postal Service to determine delivery frequency
  • Allowing the Postal Service to offer non-postal products and services
  • Development of a more streamlined governance model for the USPS that would allow for quicker pricing and product decisions
  • Instructing arbitrators that, during labor negotiations, they must take into account the financial condition of the USPS when rendering decisions
  • Resolving the overfunding of the Postal Service's obligation to the Federal Employees' Retirement System

 

The $15.9 billion loss was driven by $13.4 billion in expenses that were outside control of the Postal Service in the short term, the USPS contends. Without the $11.1 billion in pre-funding retiree health benefits, the net loss would have been $2.5 billion. Postal Service officials said the agency has been successful in reducing controllable expenses as mail volume and revenues have declined.

"Our productivity grew to a record level as we captured cost savings and improved productivity for the 13th straight quarter," said Joseph Corbett, chief financial officer for the USPS.

The improvement is largely attributable to the reduction in work hours, which decreased by 27 million, or 2.3 percent, in 2012 from the previous year, Corbett added. Total work hours continue to decrease despite increases in the number of delivery points, which rose by approximately 1.3 million over the last two years.

"These work hour reductions reflect our efforts to improve productivity and to respond to the decline in mail volume," Corbett said. "Since 2000 we have reduced work hours by a cumulative total of 504 million work hours, equivalent to 286,000 employees, or $21 billion in expense savings each year."

The Postal Service's revenue for the first few weeks of fiscal year 2013 comes largely from the holiday mailing season and political and election mail.