Regulators on USPS reforms: "It's not going to be easy"

Postal regulators in the United States held their first public forum yesterday on potential reforms to the country’s postal legislation as enacted in 2006. An informal hearing by the Postal Regulatory Commission in Washington DC heard views from representatives of postal unions, mailers’ groups and individuals on potential reforms to the US Postal Service.

Part of the first five-yearly review of the Postal Accountability and Enhancement Act, it will lead to the Commission delivering a report to Congress later this spring, to inform Congressional legislation proposals.

Key issues raised at the meeting included the USPS pension and healthcare fund overpayments, the USPS price cap on annual price increases, and the need for cost-benefit analysis to be carried out on changes to USPS requirements for mailers.

The Commission Chairman, Ruth Goldway, said that under the new session of Congress, lawmakers were already working on reintroducing postal reform legislation similar to measures introduced last fall by Senators Tom Carper and Susan Collins.

“In both the Senate and the House, on both sides of the aisle, there is a strong and growing sense that there are issues that need to be addressed,” Goldway said, adding nevertheless: “It’s not going to be easy.”

Overpayments

Yesterday’s meeting saw broad consensus among different sides of the postal sector that the “immediate priority” in postal reforms should be correcting USPS pensions and retiree healthcare contributions.

The “overpayment” compared to equivalent federal agencies, said by the Inspector General to have cost USPS $75bn so far, is seen as a key factor in the organization’s $8.5bn annual losses, and could mean insolvency for the USPS if not addressed, the meeting heard.

Yet with some members of Congress believing that fixing the system would be equivalent to a federal “bailout” of the Postal Service, Commissioner Dan Blair warned yesterday that something may need to be offered in return, in order to win support for reforming the system.

“These reforms can face obstacles if they are not accompanied by offsets,” he said.

Costs and benefits

The financial state of the USPS flavoured much of yesterday’s meeting, with an acknowledgement on all sides that reforms were needed to improve the USPS profitability.

However, how to do that without affecting service quality and while protecting jobs remained the unanswered question.

Mailers warned that changing the price cap on annual rate rises to allow the Postal Service to make bigger increases in rates each year could see businesses look to other options for their communications.

Art Sackler, of the Coalition for a 21st Century Postal Service and the executive director of the National Postal Policy Council, said: “The price cap has been very effective in encouraging mail to stay in the system. If the price cap gets disrupted so that higher increases will become the norm, we will see a speedy exit of a lot of additional mail.”

Making significant changes to compliance procedures for mailers could also lead to costs that would prompt mailers to reduce their use of the mail, mailer groups warned.

As a result, a rise in postal rates could mean a reduction in postal service quality, it was suggested, leading to a “death spiral” for the USPS.

Groups including the Direct Marketing Association and the Greeting Card Association called for the USPS to consider the burdens on mailers as well as the cost-savings to the Postal Service when changing requirements for mailers.

David Stover, counsel for the Greeting Card Association, said: “When the Postal Service puts together new requirements for presenting the mail, the service should do a real cost-benefit type analysis to show what kind of savings comes to the Postal Service, but also what types of costs are going to be going to the mailers.”

The Postal Regulatory Commission will be continuing to accept written comments in its current PAEA review until February 1, according to Commissioner Nanci Langley, who is leading the process.

1 Comment

  1. marie ransom

    Every Congressperson should personally visit their own district postal general mail facility . They need to stop believing the cooked books and falsified reports of this entire fiasco. Start with the lowly craft employees and work their way up to see for themselves the waste, unsafe conditions, and enployee abuse that goes on every day. To truely reform this service, they need to see this first hand. The elimination of wasteful spending would eliminate the need for rate hikes and five day delivery. The PO is not supposed to make millions for the top execs. We are supposed to deliver the mail.

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