Postal Service embraces reform legislation

U.S. Postal Service officials and employee groups said Thursday they support a Senate bill that would provide greater flexibility to set alternate delivery schedules and change pension funding requirements, both of which would help stabilize finances at the struggling agency.

Witnesses told the Senate Homeland Security and Governmental Affairs Federal Financial Management Subcommittee they support the 2010 Postal Operations Sustainment and Transformation Act that Sen. Tom Carper, D-Del., introduced in September. Union leaders, however, reiterated their opposition to cutting mail delivery to five days a week, which USPS officials proposed earlier this year.

USPS officials in March outlined a 10-year strategy to cut costs and increase flexibility in the face of significant budget shortfalls. USPS lost $8.5 billion in fiscal 2010 despite significant work hour reductions and could find itself out of cash in 2011, officials reported recently.

Key changes USPS is seeking include a move to five-day delivery, which officials estimate could save $40 billion over 10 years, as well as relief from a 2006 provision requiring the agency to prefund its retiree health benefits. The Postal Service inspector general earlier this year reported USPS overpaid its Civil Service Retirement System account by $75 billion and contributed an additional $6.8 billion in excess of Federal Employees Retirement System obligations.

The 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, close some locations and have arbitrators consider the agency's finances during labor negotiations.

Dropping Saturday delivery would cut revenue and eliminate 80,000 jobs, said National Association of Letter Carriers President Fredric Rolando.

"I'm not an advocate of eliminating Saturday delivery," Carper said. "But I am an advocate of giving the Postal Service the freedom to manage, especially when our interfering in management decisions could prevent the achievement of so much in savings at such a critical time."

Deputy Postmaster General and Chief Operating Officer Patrick Donahoe, who will take over for Postmaster General John Potter on Dec. 3, said USPS is predicting a $900 million loss in fiscal 2011, not including its prefunding obligations, and needs to cut delivery days, consolidate post offices and find additional efficiencies.

"We don't really want to go to anything less than six days, but to a large extent we're forced into that from an economic standpoint," Donahoe said. "What's come back to us is that six day to five day delivery is more appealing than substantial raises in postage rates and closing post offices."

The Postal Service needs to get its labor costs, which account for 80 percent of expenses, under control, said Sen. Tom Coburn, R-Okla., adding that unless revenue increases, workforce costs will have to be reduced through efficiency, attrition or better contracts if the service is to break even.

USPS has cut 200,000 positions during the past 10 years, including 100,000 in the last three, but needs additional workforce flexibilities, Donahoe said. The agency has reached an impasse in negotiations with the National Rural Letter Carriers Association over work rules, flexibility and pay and has again extended talks with the American Postal Workers Union. But the Postal Service still plans to work with labor leaders, he added.

"We have to have the bargaining units recognize where it's going to go," Coburn said.

Sen. Susan Collins, R-Maine, announced plans to introduce the 2010 U.S. Postal Service Improvements Act, legislation to help the agency cut cost and improve financial stability. In addition to directing OPM to change its methodology for calculating USPS' pension obligations and requiring an arbitrator to address finances during labor talks, the bill would shift employees receiving workers' compensation to the retirement system upon reaching retirement age. The legislation does not address delivery day reduction.

"We need to make sure all of us are asking to give up a little bit," Carper told Donahoe. "You'll be looking at the level of [employee] benefits, and I would just ask you keep mind we have to lead by example."

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:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


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