PMG says “cash shortfall could could extend to operational expenses”

WASHINGTON — The postmaster general told a Senate subcommittee today that despite significant cost cutting and revenue generation, the Postal Service finds itself in dire financial straits. Statutorily mandated payments due to the government at the end of September will not be paid, he said, unless Congress acts to refund overpayments of pension funding or ease the mandate to prefund retiree health benefits.

Testifying before the Federal Financial Management Subcommittee of the Senate Committee on Homeland Security and Governmental Affairs, Postmaster General Patrick R. Donahoe said that the financial condition of the Postal Service is such that in the absence of comprehensive legislation, there are required federal payments that are now in jeopardy. “As things stand, we do not have the cash to make a $5.5 billion prepayment for future retiree health benefits due Sept. 30,” he said

He also alerted subcommittee members that the cash shortfall could extend to operational expenses. “Despite our significant role in the American economy and our aggressive cost cutting and revenue generating efforts, I regret to say we are in a serious financial predicament today,” he said.

For three years, the Postal Service has been asking the Congress to alter the payment schedule of a mandate in a 2006 law that, unlike any other federal agency, requires the Postal Service to prefund retiree health benefits in amounts approximating $5.5 billion. In addition, the Postal Service has asked to gain access to $50 to $75 billion in overpayments it has made to the Civil Service Retirement System (CSRS) and a $6.9 billion it has overpaid to the Federal Employees Retirement System (FERS).

Since inception in 2006, the Postal Service has paid some $20.9 billion into the Retiree Health Benefit Trust Fund. Under current law, the Postal Service is scheduled to continue to make $5.5 to $5.8 billion in payments up to and including 2016.

With the right legislation, however, Donahoe told the subcommittee, the Postal Service can return to profitability and if given flexibility, “the Postal Service can continue to serve the American public very effectively and continue to sustain and propel American commerce.”

The subcommittee chairman, Sen. Tom Carper (D-DE), introduced legislation today that addresses the financial issues confronting the Postal Service and, among other things, allows a transition to a five-day delivery schedule, a move that could effect an annual saving of $3.1 billion.

In asking for urgent consideration of legislative action, Donahoe said that although the agency’s financial condition is dire, the Postal Service is nonetheless a strong and a vital part of the economy but the continued burden of the retiree health benefit prefunding “continues to have a negative impact on our business.”

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.

Donahoe Testimony

via USPS News Release: Postal Service Faces Financial Shortfall Unless Congress Addresses Mandates.

  • jim

    i am a carrier we are the ones that due the work i really don;t want my pay to be cut. the post office has to many managers supervisors and v p s those jobs should be eliminated it would save a considerable amount of money for the post office. those higher ups are overpaid they should take a paycut. leave the craft people alone

  • BigAntG

    Even with the change in Legislation, the Postal Service diffently need to cut there amount of Mangers per employees, especially in the Level 22 and below Offices.
    Daily in my Office there are three Mangers managing four Clerks in the building. I do not want to see anyone fired but in our area there are an awlful lot of Postmasters performing OIC work in lower Level A/O’s.and Supervisors as well collecting higher level pay as OIC’s , plus they collect out of schedule pay and mileage. Probly could pay half the required retirement contribution. (Just Kidding)

  • DMA

    Well, PMG should check what is going on in smaller offices where the expenses could be cut by moving the managers out. After taking clerks out since the volume is low why do we need three managers to manage a small-level 21 office. We see them on the computer most of the time searching on the internet and making personal phone calls. Keep the employees who actually move the mail and do the work.

  • cindy

    Is it really necessary to have as many management levels as there are?
    Since volume is supposedly so low, why not have one postmaster for ever 2-3 offices in a given area. Use PMRs which are way less expensive than PM’s for the offices not housing a PM. It’s a proven fact that places without a lot of management overhead are run better and more efficiently. Let’s even take it higher. How about pay cuts of 25-50% for the top executives. Let them start paying their fair share of health care. Stop the bonuses that are causing so much dissention between management and craft. Do away with the yearly 25% bonuses paid to top executives to get them to stay. If they were worth their pay check, it wouldn’t be necessary. Stop creating jobs for higher ups so they can stay employed, and then saying they cut jobs. Get out of the real estate market. Stop buying machines that are never used. Stop the automation which only had the intention of cutting pay and creating more work. If mail volume is down so much, then perhaps they are just a big waste of money.

    How about paying employees what they are worth and eliminating all those that don’t touch the mail. Let’s face it. the pencil pushers need to go. They also need to STOP coming up with ideas to make the job harder and then having to go back to redo those same jobs. Try asking the crafat people before implementing ideas that affect them when all those ideas do is make the job harder and cut service. Le’s put SERVICE back in the post office name.

  • brian

    “eliminating all those that don’t touch the mail.”
    Brilliant idea! So you’re going to work for free, since there won’t be anyone to do the payroll, or manage the bank accounts? And you’ll figure out how to get the mail moved across the country all by yourself? Bet you won’t be “touching the mail” very long for free! Yup, that should save tons of money, at least for a day or two before FedEx, the airlines, the trucking companies, landlords, utilities, etc., etc. discover they’re not going to be paid either.

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