PRC Goldway Wary of Service Cuts

Postal Regulatory Commission Chairman Ruth Y. Goldway has called for a review of the U.S. Postal Service’s liability and payment schedule to fund its Retiree Health Benefit Fund (RHBF), according to testimony before a House Subcommittee.

Goldway testified on Nov. 5 that the Postal Service’s cost-cutting efforts could reduce its viability in the future. “Service cuts made to address near-term financial difficulties may have harmful long-term consequences for universal service,” she said.

What’s the alternative to cutting back on postal services? Goldway cited a PRC study that found a recalculation of the RHBF liability could lead to significantly lower annual payments by the Postal Service – currently averaging $5.5 billion per year – while still meeting the original objectives of the law within the Postal Accountability and Enhancement Act (PAEA).

The stop-gap legislation signed by President Obama on Sept. 30 reduced the U.S. Postal Service’s health-care retiree payment for fiscal 2009 to $1.4 billion. That helps, but the USPS needs permanent change, according to Joseph Corbett its executive vice president and chief financial officer.

Corbett has said that without that legislation, USPS would not have been able to make its RHBF payment, and that longer-term structural changes are in order for the Postal Service.