USPS still breaking even year to date- until trust fund charges kick in

Here we go again- the USPS has file its February financial results, and the headlines will read “USPS loses $1 billion in one month!”, and once again congressional tongues will cluck about a “failed business model” and “bloated bureaucracy”. The true story, of course, is very different. When you measure costs that the US Postal Service actually controls, including current payments for retiree pensions and health benefits, the USPS lost far less- $230 million. For the fiscal year to date, the USPS is actually still in the black by $18 million. What makes the financial picture look so bad is, as usual, the $5.5 billion annual charge Congress slapped on to the USPS budget in the 2006 PAEA law. For February, that adds $458 million to the postal service’s expenses. Another mandate, the “non-cash” adjustment for the future value of workers comp charges, adds another $406 million, pushing the month’s “loss” to over a billion. And just to show how bizarre postal accounting has become, the year to date workers comp non-cash adjustment actually has a positive impact on the budget of almost half a billion dollars.

Confused? You should be.

Looking past the phony charges and “non-cash” adjustments presents a more positive picture, but there are still troubling numbers in the report. Total mail volume declined 1.5% from the same period last year (SPLY). At the same time, total employee workhours dropped by 3%- so the USPS did a good job adjusting hours to match volume. Unfortunately that didn’t translate into dollars and cents. Total revenue, like total volume, dropped by 1.5%. But postal workers’ salaries and benefits dropped by just 0.6% for the month, and non-personnel costs- fuel, supplies and services, etc., actually increased by 2.4%. As a result, while revenue was down by 1.5%, expenses actually went up by just under one percent.

Standard mail continued to account for the majority of mail volume, and even showed some slight growth, up by 0.4% over SPLY, but First Class mail was down by 3%. And the fact remains that standard mail produces roughly half the revenue per piece as First Class.

So even without “trust funds” and “non-cash adjustments”, the USPS has serious concerns. It’s unfortunate that the politicians responsible for much of the service’s problems seem less interested in addressing those real concerns than in finding opportunities to use the word “BAILOUT” as often as possible.

USPS February Financials