Postal Service ends another quarter in the red

Flickr user rachaelvoorhees

The U.S. Postal Service ended the second quarter of fiscal 2012 on March 31 with a net loss of $3.2 billion, following similar losses in the first quarter, the agency announced Thursday.

USPS officials attributed the dismal results primarily to the agency's congressional mandate to prefund retiree health benefits, followed by a continued decline in first-class mail volume and a new drop in standard mail volume due to decreasing direct mail advertising. Total mail volume fell by 1.7 billion pieces over the same quarter in fiscal 2011, and operating expenses went up by $928 million -- or 5.1 percent. That increase was driven by expenses related to the retiree health benefits prefunding installment slated to be paid in the last quarter of fiscal 2012.

The $3.2 billion in net second quarter losses are $1 billion more than USPS’ losses for the same quarter last year. The agency has lost $6.5 billion in fiscal 2012 to date.

USPS on Thursday continued to plug its own plans to shore up its finances. Those include moving to a five-day delivery schedule, having the flexibility to structure its own retiree health care program independent of other federal health care programs, and recovering close to $11 billion from its overfunding of the Federal Employees’ Retirement System.

“We expect to retain the ability to continue high-quality delivery services to all of our customers, and continue to take all actions necessary to make sure that our employees and suppliers will be paid,” USPS Chief Financial Officer Joseph Corbett said in the announcement on the quarterly results. “Without legislative change, we will not have sufficient cash to pay the $11.1 billion required for retiree health prefunding and may be forced to default on other payments due to the federal government.”

Labor unions and architects of postal reform bills in Congress used the news to continue their own narratives for the Postal Service’s financial woes. Proponents of the Senate postal reform bill used Thursday’s news as an opportunity to push the House to act.

“Today’s announcement that the U.S. Postal Service lost $3.2 billion in the second quarter of fiscal 2012 shouldn’t come as a surprise to anyone,” Sen. Tom Carper, D-Del., co-author of the Senate bill, said in a statement Thursday. “Now the House must do its part and pass its own version of postal reform legislation. Every day that the House delays, the Postal Service loses $25 million.”

Sources on the House side have been unable to say when their bill (H.R. 2309), which passed the House Oversight and Government Reform Committee headed by Rep. Darrell Issa, R-Calif., earlier this year, will move forward. Issa pledged Thursday to advance the House bill.

“Today’s announcement underscores the urgency and seriousness of the situation,” Issa said. The House bill advocates deeper cuts and takes a hard-line stance on post office closures and consolidations, the centerpiece of the agency’s new strategy. Advocates of the House’s version of postal reform do not believe the prefunding requirement is as central to returning the Postal Service to solvency as reining in labor and operating losses.

The National Association of Letter Carriers continued its argument Thursday that USPS would have an easier time improving its finances without the prefunding requirement, mandated by a 2006 law. USPS data released Thursday revealed that $3.05 billion of the $3.2 billion in second quarter losses came from the prefunding mandate.

“The Postal Service’s own data shows that the first thing Congress needs to do is address this artificial political burden that is driving almost all the red ink,” said Fredric Rolando, president of NALC. “It would be absurd to start to dismantle the universal network and degrade service to the American people and America’s businesses, when almost all of the red ink has nothing to do with the costs of those services but stems directly from a burden that Congress imposed and Congress could fix overnight.”

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


When you download a report, your information may be shared with the underwriters of that document.