Obama Budget to address "major financial concerns" of USPS

President Obama is set to present a special Valentine’s Day gift to the US Postal Service this year, in the form of assistance in his latest Budget. The struggling USPS needs to address financial problems that saw it posting an $8.5 billion loss last year, with commentators predicting a $6.5 billion loss this year – and possible insolvency.

But this morning, the chairman of the Postal Regulatory Commission revealed that she had been told by White House officials that some assistance will come in the President’s Budget for the 2012 fiscal year, which is due to be announced later this month.

“I did have a meeting with representatives of the OMB in the White House,” Ruth Goldway said at the Commission’s latest open meeting, “who indicated to me… that there will be something in the President’s Budget on February 14 that deals with major financial concerns in the Postal Service.”

Goldway said she had shared the information with the USPS chief, postmaster general Pat Donahoe, but said neither of them were party to specific information on the contents of the forthcoming Budget.

Officials at the OMB (Office of Management and Budget) at the White House had not returned a request for comment on the matter as of this afternoon.

The potential assistance for the USPS comes in a Budget that is expected to see substantial cuts in domestic spending, with Obama stating in his State of the Nation address last week that he will freeze annual domestic spending for the next five years to reduce the federal deficit by more than $400 billion over the next decade.

USPS

The US Postal Service told Post&Parcel today it was “hopeful” that the President’s Budget would take note of the financial pressures it was facing, but that it was not aware of what is to be announced on February 14.

Commenting on the Commission chairman’s comments from this morning, USPS spokesman Gerald McKiernan said that rather than appropriating extra funding for the Postal Service, Congress should change the formula for calculating annual USPS payments into its pension funds.

The payment formula has been blamed – by the Office of the Inspector General and others – for the USPS paying as much as $75 billion too much into its Civil Service Retirement System (CSRS) pension fund.

McKiernan said today: “I don’t know whether or not the President will be asking for Congress to appropriate funds for the Postal Service, but we’re not really looking for money. The thing we need is some remediation from our current circumstances in terms of the formula for paying into the CSRS.”

Commission

The Postal Regulatory Commission, the independent regulator providing oversight for the USPS, is currently drawing up recommendations for Congress on changes needed at the Postal Service. A report is due by December, but the commissioners aim to send it to Capitol Hill this spring.

Today’s meeting confirmed that the overpayments issue was firmly at the top of the agenda for stakeholders feeding comments into the review.

Both mailer and union groups support changes to the USPS pension funding system as the most sensible way to protect both USPS service levels and postal worker jobs. As well as preventing the overpayments, there are calls for the USPS to be given access to the billions it has overpaid.

Unions said yesterday that the Commission’s report to Congress should contain nothing other than the recommendation to adjust the pensions overpayments.

The American Postal Workers Union said repealing the key provision in the 2006 Postal Accountability and Enhancement Act was “so critical to the welfare of the Postal Service” that it should be the exclusive focus of the Commission’s recommendations to the President and Congress.

The APWU, which represents around 220,000 USPS workers, wrote to the Commission yesterday as part of its review, stating that the requirements to pre-fund health benefits costs the USPS more than $5 billion a year, “and has driven the USPS to the brink of insolvency”.

Of “almost equal importance”, the union said, was the need to provide the USPS with access to the “substantial amounts” it had overpaid.

The APWU counsel Darryl Anderson wrote: “We respectfully submit that it is the strongly held consensus view among postal industry stakeholders, the only recommendation the Commission should make at this time is that the Postal Service be provided relief from its current retirement funding obligations.”