USPS has work to do as postal reform returns to US Senate

The Deputy Postmaster General of the United States said yesterday he was “cautiously optimistic” that Congress will act to respond to US Postal Service budget problems. Ron Stroman told the National Postal Forum he was under no illusions about success, and that it was going to be a “tough challenge” to get the required legislation enacted before the USPS runs out of cash in September.

But, he said there was now some momentum in efforts to educate lawmakers about the situation at the Postal Service.

Without changes, the Postal Service is likely be up against a $2bn to $3bn shortfall in its budget by the fall, as it is squeezed by its health benefit prefunding obligations, declining mail and a Congress-imposed $15bn limit on its overall borrowing.

Expectations are that the USPS would be on track to lose $100bn up to 2020 on its present course.

“What we are cautiously optimistic about is that there have been discussions between both sides in this, and I feel the momentum is moving along these lines,” Stroman said.

After a few months of postal issues being discussed in the House of Representatives, the issues are set to move to the Senate with the expected introduction by Democrat Senator Tom Carper of a new postal bill – perhaps within a week.

The bill is likely to propose changes to help restructure the annual $5.5bn payments that the Postal Service currently makes to cover future retiree health benefits, delaying payments through use of money overpaid into USPS pension funds.

The Carper bill is expected to be a little more comprehensive than the proposals Republican Senator Susan Collins introduced in February, including issues like delivery frequency, greater powers for the USPS to get new products to the market more quickly and a provision to allow certain products to be moved out of the protected market dominant portfolio under a separate price cap.

Boasting decades of experience in government and legislative affairs, Stroman was hired in March from a senior role on the staff of the powerful House of Representatives Oversight Committee to help with the USPS efforts on Capitol Hill.

Speaking to Post&Parcel yesterday about his expectations for the Carper bill, the Deputy Postmaster General said he did not believe it would include more flexibility for the Postal Service to close post offices and transfer services to retail partners to help cut losses while improving access for customers.

The issue of postal facility closures is a major sticking point among Congressmen, particularly those representing rural areas. Stroman explained that explaining the concept of alternative access – that people may have better access to services through retail partners – was key to facing down concerns about rural communities going without post offices.

He said the powers for postal services to be transferred to alternative access points could become part of the Carper bill.

Stroman said: “There are some discussions about what might be possible – it could be part of amendments to the bill. People are concerned about this, but we are trying to move aggressively to show that this does not mean reducing access to postal services, and explain the financial underpinning of this.”

Delivery frequency

Regarding the proposed move from six days of delivery per week to five-day, Stroman said “it’s going to be a real challenge” to get Congress on side, despite surveys showing consumer support for changes in access to postal services.

The USPS insists that its staff can draw out $3bn of cost savings by dropping Saturday deliveries, but there have been doubts that certain Congressmen are willing to allow the move.

“We’re under no illusions that it is going to be tough,” Stroman said. “There are people in their districts that don’t want six to five day, but we’ve found that 50 to 75% of American people do support it. We’ve got to get that message out – the trouble is that all politics is local.”

The key to persuading support for five-day delivery among Congressmen representing rural areas was to push the alternative access message, he said.

“There are pretty detailed plans that have been developed concerning alternative access,” said Stroman. “If you’ve got a town with a gas station, a grocery store and a post office, the people are worried they will lose their post office – but if you run the postal services out of that grocery store, people still have access to those services and it could keep that grocery store open.”

Pre-funding

Regarding the Retiree Health Benefits prefunding issue, a major short-term financial concern, Stroman said there was getting to be a “firm consensus” among lawmakers, stemming from the various reports from regulators, regarding the prepayments issue.

Stroman said many on Capitol Hill “take the Postal Service for granted”, seeing the USPS as just another federal agency despite the fact it funds itself through its own sales, rather than taxpayer funding.

Nevertheless, USPS CFO Joe Corbett told the Forum today that nothing could be done without legislative change, since the Office of Personnel Management was standing firm against making changes to USPS prefunding measures.

“Unfortunately OPM does not have a directive in their system that allows them to refund our overpayments – although they do if we’re found to have underpaid,” he said. “OPM states that what they did (in calculating the original pension fund payments) was in accordance with the law that was there in the past, so they are requiring legislation before they make any change in that.”

In the House of Representatives, legislation was put forward earlier in the spring by Congressmen Stephen Lynch and Gerry Connolly, both Democrats.

Marie Therese Dominguez, USPS vice president for government relations and public policy said yesterday that Oversight Committee chairman Darrell Issa is also thought to be in the process of writing postal legislation, but has not yet signaled the nature of his proposals.

Speaking to a gathering of the Association of Priority Mail Users in San Diego yesterday, Dominguez said that with the rocky recovery in the US at the moment, it was a difficult time to be trying to educate Congressmen about the complicated financial situation at the Postal Service, particularly with those new to Capitol Hill this year.

“They are more preoccupied with some of the major deficit issues and the federal debt limit,” she said, urging major USPS customers to help the process of working with Congress. “We have to impress on the members of Congress how important the mail is.”