GAO on USPS’s financial position: “The status quo is not sustainable”
Lori Rectanus, a director in the US Government Accountability Office’s (GAO) Physical Infrastructure team, has warned: “US Postal Service (USPS) management, unions, the public, community leaders, and Members of Congress need to take a hard look at what level of postal services residents and businesses need and can afford. The status quo is not sustainable.” Rectanus was giving testimony at yesterday’s (11 May) US House of Representatives Oversight & Government Reform Committee hearing on postal reform.
The testimony drew upon the many reports that GAO has issued about USPS over the past five years. The GAO director outlined how USPS has been hit by a drop in revenues (as a result of declining mail volumes and the shift to electronic communication) and an increase in costs. Taken together, they have meant that the postal service has lost a total of $56.8bn since fiscal year 2007.
“USPS’s financial situation leaves Congress with difficult choices and trade-offs to achieve the broad-based restructuring that will be necessary for USPS to become financially sustainable,” commented Rectanus. “USPS’s ability to make its required retiree health and pension payments requires a decrease in expenses or increase in revenues, or both.”
Rectanus said that in making those “difficult choices” Congress should consider the following factors: the level of postal services and the affordability of those services; the cost of employee compensation and benefits in an environment of revenue pressures; and USPS’s dual role of providing affordable universal service while remaining self-financing.
The GAO director also argued that “a fully functioning USPS Board of Governors is needed to support
USPS’s ability to carry out its critical responsibilities”.
“USPS’s 11-seat Board of Governors is required by law to have a quorum of six members in order to take certain actions,” explained Rectanus. “Because two Governors left the Board in December 2015 due to term limits, the Board currently consists of only one Governor (who will not be able to serve past December 2016), the Postmaster General, and the Deputy Postmaster General. Certain powers are reserved to the Governors. USPS has reported that although the inability of the Board to constitute a quorum does not inhibit or affect the authority of the Governors in office from exercising those powers, it is not apparent how those powers could be exercised if there were no Governors.”
Click here to access a PDF of the full GAO testimony.
