Summary from the hearing on

Summary from the hearing on "Finding Solutions To The Challenges Facing The U.S. Postal Service"
conducted by the
Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security

Comments by Members of the Senate Panel:

Sen. Thomas Carper:

It's time to address the challenges facing the Postal Service. We may soon no longer be able to depend on the Postal Service for mail service.
It's conceivable that by this time next year the Postal Service may not have sufficient funds to keep its doors open.
$5.5 billion of the Postal Service's $8 billion loss is due to the pre-funding requirement. Only $500 million of the loss is due to operations.
We need to go beyond just addressing the retirement health payments to comprehensively address the Postal Service's needs.
Doing "just enough" to get the USPS by for Christmas 2011 is not good enough.
Carper said his legislative proposal is the only proposal out there so far that addresses the Postal Service's comprehensive needs.
It may not be perfect, but it's a start.
The measure would eliminate the drain from health retiremee pre-payments.
It would allow the USPS to cut costs more over time (reductions of days of delivery, consolidating and closing facilities, transforming its retail outlets).
"I am not an advocate of eliminating Saturday delivery. I am an advocate of giving the Postal Service the ability to manage."
The Postal Service should be allowed to experiment with non-postal services to capitalize on the use of its retail assets.
The bill would require postal arbitrators to take into account the USPS' fiscal vitality when rendering decisions.
It would be a tragedy if the millions of jobs related to mail use would be put in jeopardy because of an inability to act.

Sen. Susan Collins:

"I am a strong supporter of the Postal Service." It is the lynchpin of a considerable mail-related industry.
The Postal Service is facing an abysmal fiscal crisis.
The Postal Service's business model needs to be re-engineered to better meet the needs of the nation.
Those who think we can do nothing are sadly mistaken.
The Postal Service must undertake a structural reinvention. It shouldn't just look to raising prices and driving customers away.
The Postal Service has been slow to take advantage of the flexibility afforded by the Postal Accountability Act.
Collins has introduced a bill of her own to address some of the Postal Service's needs.
Her bill would address the CSRS overpayment and pre-funding needs. It is unfair to the Postal service and its customers not to refund these overpayments.
The bill would help correct the contracting abuses that the OIG already has reported. The IG has found stunning ethical lapses and mismanagement.
A more comprehensive overview of her bill has been posted on this site.

Sen. Thomas Coburn:

The Postal Service needs to run at a profit and not just a positive cash flow.
We need realistic forecasting (rather than desirous forecasting) on the USPS' financials.
"I don't want us to have another postal bill. I want to fix it."
The new postmaster general already has the authority to fix it now. The problem is labor costs. This needs to change. You either need to increase revenues or decrease costs. 80% is still labor.
The authority is there to do smarter things to provide retail services. If we can fix the cash flow but not the profit and loss we'll still be in a fix.
We'll help the USPS with the cash-flow. But after that, it's over.

Witnesses: Panel 1

Patrick Donahoe Deputy Postmaster General and Chief Operating Officer U.S. Postal Service [Testimony]

We now have the smallest career complement since 1970.
We still have a lot of work to do to adjust to a changing marketplace.
Our current rate of loss is unsustainable. Big parts were due to the pre-funding payment and the workers compensation payment.
We need a profitable, nimble Postal Service has has meaning in today's world.
We are adapting and will continue to adapt.
The Postal Service will remain a powerful conduit for business.
We must match resources with changing market needs.
The U.S. Postal Service will not be able to make the pre-funding payment at the end of this fiscal year.

In response to questions:

We have the ability to contract out rural routes if there is no contract agreement. We currently are at an impasse. We're keeping the door open.
We are projecting an operating loss of nine million dollars. That doesn't account the pre-funding requirement.
Labor costs would have to be reduced greatly for the Postal Service to be at break-even. There really isn't any place else to reduce postal costs significantly.
If Congress does not act to relieve some of these financial burdens in the coming months, we won't be making the pre-funding payment. We could stop making retirement contributions. Service would continue.
Over the last ten years, we have doubled productivity.
The Postal Service is still a viable and needed part of the American economy. We put a plan out last March to turn the USPS around. It's a good plan. We're still committed to it.
We need to grow mail -- the business to customer channel. We need to grow small business, package business, scanning and visibility, return package business, improving the customer experience.
We don't really want to move to lesser than six days of delivery. We're facing, however, declining revenue per delivery. This makes it harder to deliver six days to every address in America.
We would like to move to five-day for collecting, processing, and delivering mail. Post office box delivery, Express Mail delivery, and drop-box pick-up would remain unchanged.
Right now about 35% of retail revenues are conducted outside the post office. We're looking at contracting out more services to retail stores.
We have frozen executive pay at 2010 levels.

Panel 2

The Honorable Ruth Goldway Chairman, Postal Regulatory Commision [Testimony] See also [PRC Press Release]

PAEA has provided incentives to approve postal services, and it opens the door to more reform.
We have noted the CSRS overpayment and its possible use for the purpose of covering pre-funding requirements
The pre-funding liability needs to be readjusted.
We have some questions about how aspects of your bill would affect access to services.
We have questions about the USPS' proposed ability to engage in non-postal services.
The Commission strongly believes that prior regulatory review has been successful and should be expanded.
The decision on five-day will be issued later this month.
A standardized review process should be required for the closure of all stations and branches.

Jonathan Foley Director, Planning and Policy Analysis U.S. Office of Personnel Management

We don't believe OPM has the authority to re-determine the allocation of retirement-related liabilities.
Congress will need to determine whether OPM should have the authority to do this.
Our primary concern as fiduciary is with adequate funding, not the source of that funding.

Phillip R. Herr Director, Physical Infrastructure Issues Government Accountability Office

The Postal Service must continue to modernize and restructure to control costs: facilities, compensation, benefits.
We agree that Congress should restructure the funding of retiree health benefits.
We agree with the provision to require instructions to any future arbitrator.
Retail services need to be expanded to more convenient locations.
The issue of non-postal products raises questions regarding competitive fairness and liabilities for losses.
Continuing to have regulatory review over non-postal services should be provided.

Panel 3

Mr. Fredric Rolando President National Association of Letter Carriers

The three main causes of the Postal Service's losses are the pre-funding requirement, changes in mail volume, and the recession. The key factor is the pre-funding requirement.
Pre-funding is optional in the private sector, and no one funds at the 100% level.
The POST Act would eliminate the pre-funding problem by using CSRS overpayments.
The proposal will help spur postal well-being through the expanded use of postal retail outlets.
We strongly oppose the provisions on arbitration and the allowance of fewer days of delivery. It would create an imbalance in the arbitration process.
The Postal Service's contention that arbitrators don't have to take fiscal viability into account is false. Sadly, this misinformation seems to have been accepted as fact.
Doing away with Saturday delivery would save little and put business at risk.

Robert Rapoza President National Association of Postmasters of the United States

The Postal Service is being strapped with a pre-funding requirement that is greater than any true accounting requires.
Congress to enact these pension liability reforms immediately, and before there is any effort to deal with other reform-related issues.
NAPUS is concerned with the proposed unfettered ability for the USPS to reduce days of delivery or closing post offices.
The Postal Service has been unfairly subsidizing the federal budget for years.
The Postal Service should be required to reduce its area office structures. Trimming the postal bureaucracy would advance postal efficiency.
The Postal Service is not fully exploiting the fullest capability of its retail network, and this should be done.

Jerry Cerasale Senior Vice President, Government Affairs Direct Marketing Association for the Affordable Mail Alliance and the Coalition for a 21st Century Postal Service

Both your proposal and Sen. Collins' proposal start with the postal retirement benefits issue. The effect of these payment requirements has been a drain on the vitality of postal services.
We endorse the use of CSRS overpayments to pay on the pre-funding obligation.
Sen. Collins recommends an examination of FERS payment overpayments. It should be examined in full.
As for collective bargaining, we don't want to be at the table. But postal costs remain 80% employee related despite investments in automation, productivity gains, and worksharing.
The Postal Service's excess capacity needs to be eliminated.
Co-location of postal services in private retail outlets should be promoted.
The key thing that should control how many days are needed for delivery must be the ability to satisfy the nation's universal postal requirements.