Catalogs Big Part of Mail: USPS Inspector General

Catalogs are a “hugely important part of the mail.” That was the message from David C. Williams, U.S. Postal Service Inspector General, to attendees at the National Catalog Forum. The show was held in Washington June 21-22 by the American Catalog Mailers Association.

During his session, “Ideas and Concepts in Defining the USPS in the 21st Century,” Williams said that Standard Mail flats — the category affecting most catalogers — saw volume increases for the past five quarters.

As far as helping the USPS cut expenses, which may or may not help catalogers in the future, Williams said the Postal Service network is “oversized.” Due to the 2006 Postal Accountability and Enhancement Act, the USPS is required to annually prepay $5.5 billion toward retiree health benefits. Williams called these payments “crippling” and “wrongful.”

“The USPS has set aside $300 billion for pension and healthcare liabilities — just $55 billion short of 100% prefunding level for plans,” he said. “This doesn’t factor in the overfunding of $75 billion by the Civil Service Retirement System” as validated by at least two nationally known actuarial firms, ACMA executive director Hamilton Davison added.

“This is an unauthorized tax, according to our findings,” Williams said. For example, he said, it’s like paying a monthly mortgage payment after the house was paid in full. “We find it an outrage. USPS would have been profitable every year if not for the prefunding of mandated retiree health benefits.”

The USPS is on the verge of insolvency as of September, when it will be unable to make the $5.5 billion payment. Total mail volume declined 41 billion pieces since 2007.

“At the end of the day, you need a plan, and you need to have time to evaluate the way costs are attributed,” Williams said. “We need a better cost pricing structure.”