The stop-gap legislation signed by President Obama on Sept. 30 reduced the U.S. Postal Service’s $5.4 billion health-care retiree payment for fiscal 2009 to $1.4 billion. That’s a big help, but the USPS needs permanent change, says Joseph Corbett, its executive vice president and chief financial officer.
“The legislation that passed was great and allowed us to meet our financial obligations,” Corbett says. “We weren’t able to make that [payment] before the legislation. We will continue to work with Congress and the administration to get longer-term structural changes.”
Indeed, the stop-gap legislation “really amounts to just kicking the can down the road,” says Hamilton Davison, executive director of the American Catalog Mailers Association. “They didn’t truly solve the problem of [retiree health-care] payments, so the mailing industry and the ACMA, in particular, are gearing up to continue to lobby Congress to make the structural changes they need to make with retiree health-care funding.”
The fact that USPS officials and catalogers via the ACMA have made their presence known in Washington this year “definitely helps a tremendous amount,” Corbett says. “A lot of this process is educating people on Capitol Hill, making sure various senators and people in Congress know that we are doing all we can to stem the losses.”
The USPS reduced expenses by $6 billion in fiscal 2009, and saved 114 million work hours in fiscal 2009, which equates to about 65,000 full-time equivalents. The agency aims to reduce another 93 million work hours in fiscal 2010, Corbett says. “A lot of good work was done last year, which resulted in a short-term solution and laid the groundwork for structural changes this year.”
To spark mail volume, which declined 28 billion pieces in FY09, the USPS held a “Summer Sale” for Standard Mailers, which ran from July 1 through Sept. 30. The program offered a 30% rebate to eligible mailers on Standard Mail letters and flats volumes above a mailer specific threshold.
The sale was open to larger mailers, which had a demonstrable volume of at least 1 million Standard Mail letters and flats between Oct. 1, 2007 and March 31, 2008. A similar fall sale is currently running through the end of the calendar year for first-class mail, and a winter sale is a possibility.
As far as the proposed five-day mail delivery schedule, Corbett says the groundwork has been laid. Hypothetically, he says, if no permanent structural changes are made regarding prepayment of retirees’ health-care benefits, the “spotlight would grow brighter on five-day mail delivery.
Reducing delivery from six days a week to five would save the USPS an estimated $3.5 billion annually. “We plan to drive out all costs we can to be efficient as possible,” Corbett says.