Lawmaker proposes fixes to ease USPS fiscal crisis

A Senate Democrat on Tuesday reintroduced a bill that would ease the U.S. Postal Service's financial burden and help bring the agency back into the black.

During a Homeland Security and Governmental Affairs Subcommittee hearing, Sen. Tom Carper, D-Del., detailed legislation that would give the Postal Service flexibility to address its financial challenges. The bill, similar to a proposal introduced last fall, would grant USPS the authority to change its delivery schedule -- to drop a mail day, for instance -- and to reduce pension funding requirements, both of which could help stabilize finances. The agency lost $2.6 billion in the first half of fiscal 2011 and expects to be down $8 billion by the end of the year.

"The crisis the Postal Service faces is more urgent now than it ever has been," Carper said. "Absent prompt and dramatic action on the part of Congress, our next postal hearing may well be about how we pick up the pieces from a shutdown in operations."

At the hearing, Postmaster General Patrick Donahoe reinforced the Postal Service's position that significant legislative changes are necessary to bring the agency back to financial health. For example, USPS is required to contribute $5.5 billion annually to its retiree health benefits and has overpaid both the Civil Service Retirement System and Federal Employees Retirement System funds by $75 billion and $7 billion, respectively. The agency also is seeking authority to reduce delivery from six to five days and create a more flexible workforce.

"We're trying to keep as much of an open mind on these things, but from a financial perspective we have to put everything on the table to take cost out of the system," said Donahoe.

Carper's bill would require the Office of Personnel Management, which also contributes to CSRS, to recalculate the Postal Service's obligations to the account, and USPS would receive more than $5 billion annually from the overpaid amount. In addition, the legislation would grant the Postal Service flexibility to adjust mail delivery frequency, increase the number of nonpostal products and services offered at its locations, and require arbitrators consider the agency's finances during labor negotiations.

To slash costs, USPS already has cut more than 113,000 jobs since 2007 and currently is undergoing a massive workforce restructuring. Officials say the agency will slash 7,500 jobs, including 20 percent of the administrative workforce and 10 percent of the postmaster jobs. USPS in March announced its voluntary early retirement plan and $20,000 financial incentives to career nonbargaining employees and late last month sent reduction-in-force notices to administrative employees to prepare them for future downsizing.

The Postal Service also faces significant costs in maintaining its delivery vehicle fleet, according to a Government Accountability Office report released at the hearing. Unscheduled maintenance costs account for 31 percent of total maintenance expenses, and a $5.8 billion replacement and refurbishment effort is limited by the agency's financial crisis. A return to profitability would allow USPS to invest in new vehicles, GAO found.