The Postal Service recently reported their 2nd Quarter earnings for Fiscal Year 2014, and it shows that they once again would have made a profit if not for the pre-funding of future retiree health benefits. The Postal Services accounting books show a loss of 1.9 billion for the 2nd quarter. However, if you exclude the mandated pre-funding payment, the USPS actually would be showing a year-to-date profit of more than one billion dollars.
The pre-funding payment, a payment required by the 2006 Postal Accountability Act (Public law 109-435), requires the Postal Service to pre-fund its future retiree health benefits, a 75 year obligation, in only ten years. The Postal Service is the only government agency or corporation that is required by law to pre-fund. While it is true the Department of Defense (DOD) also pre-funds future retiree health benefits, the DOD recieves Congressional-appropriated monies to pre-fund. The Postal Service does not receive a single dollar to pre-fund. The Postal Service operates on rate payer money, money it receives from selling of stamps and services, not taxpayer money.
The Pre-funding payments, which range from $5.5 to $5.8 billion a year through 2016, represent over 80% of the Postal Services losses since 2007. In fact, the pre-funding requirements represented 100% of the losses incurred by the Postal Service in the last fiscal year. If not for the pre-funding payment, the Postal Service would have posted a $623 million profit delivering the mail.
The House and the Senate bills currently in Congress continue to require the Postal Service to pre-fund. Chairman Darrel Issa (R CA) has released a new postal discussion draft (as of press time the bill has not been officially introduced) that would require the Postal Service pay half of the required payments in 2015 and 2016. This would reduce the payments to approximately 2.8 billion and 2.9 billion, respectively. The remaining obligation would be paid under an amortized schedule.
S. 1486 The Postal Reform Act of 2013 introduced by Chair Tom Carper (D-DE) and ranking member Tom Coburn (R-OK) replaces the mandatory pre-funding obligation with a 40-year amortization schedule.
Both the House and Senate proposals continue the pre-funding schedule while cutting services like 6-day mail delivery. The NRLCA will continue to oppose any legislation that allows the Postal Service to eliminate Saturday mail delivery and ending door delivery.
The Postal Service continues to benefit from e-commerce and last-mile delivery. Shipping and package revenue was up 8% over last fiscal year’s results, resulting in a revenue increase of $252 million. The Postal Service’s competitive advantage of “last mile’ delivery saw a 26.4 % increase in revenue over the same period last year.
The NRLCA continues to support S 316 in the Senate introduced by Bernie Sanders (I-VT) and HR 630 in the House introduced by Rep. Peter DeFazio (D-OR). Both of these bills fix the immediate fiscal problems of the Postal Service by ending the pre-funding mandate maintaining 6-day mail delivery and service standards. Currently, S 316 has 28 co-sponsors in the Senate and HR 630 has 180 co-sponsors in the House of Representatives.
Chairman Issa’s postal discussion draft was scheduled to be marked up in the House on May 7th. however, the markup was postponed to a future date. The markup has not been rescheduled.