NALC Statement on Postal Service’s 2019 Q3 Financial Report

The Postal Service’s third quarter financial report shows the need for policymakers to address two public policy issues beyond USPS control—the stamp price rollback and the congressional mandate that USPS pre-fund future retiree health benefits decades into the future.

First, Congress should address the pre-funding burden it imposed in 2006, which requires USPS—alone among all public and private entities in the country—to pre-fund future retiree healthcare benefits at an annual cost of about $5 billion. It’s important to note that this goes on the books as red ink whether or not it’s actually paid in a given year.

Second, in April 2016, the price of a stamp was rolled back by two cents, reducing postal revenue by $2 billion a year. That was the first rollback since 1919 and it makes little financial sense because USPS already has the industrial world’s lowest rates.

Without the prefunding burden and the price roll-back, the Postal Service would likely have reported an operating profit through the first nine months of the fiscal year.

 Fortunately, the Postal Regulatory Commission is in the midst of a legally mandated review of the postage rate-setting system. At present, USPS is constricted in its ability to adjust rates by no more than the Consumer Price Index, but the CPI is an economy-wide measurement of consumer goods and services that doesn’t fit a transportation and delivery provider. The PRC has the ability to correct this mismatch and relieve the resulting financial pressure.

Fixing the external financial burdens posed by the price rollback and pre-funding, which we hope the PRC and Congress will do soon, will put postal finances on a stable footing and allow USPS–which is based in the Constitution; funds itself through earned revenue, not taxpayer money; and enjoys broad public and political support–to continue providing Americans and their businesses with the industrial world’s most-affordable delivery network.

  • feduptwice

    This is the same info Rolando puts out every quarter. Just the publication date changes. What a bunch of crap.

  • allyn4u

    Repeating factual information is not a bunch of crap. Not our fault Congress does not have the will to change (their own legislation) the ridiculous pre-funding retirement healthcare mandate that was 100% pre-funding and covered Employees 75 yrs into the future! Get out of your information bubble!

  • feduptwice

    After working for the postal service for 32 years and being retired for the past 15 years from them it is not me who is in a information bubble. It does not take much research to see that the postal service and all the unions were all for the prefund legislation when it passed in 2006. Now the postal service and unions want to change the rules. I do not disagree that it needs to be changed, but the postal service continues to do what it has always done and that is we are broke and everybody else is responsible for it. I see that all the unions and management associations are negotiating new contracts and all want a pay raise. Maybe the postal service should not give raises and save money that way.

  • DR DWIGHT Sanders Se

    The PO will lose every time

  • LetherNick

    Three of the four labor unions were vehemently (and publicly) opposed to the pre-funding mandate of 2006. You need to do a little better research before you start assigning blame. Congress failed to address the pre-funding burden they imposed on the Postal Service … 13 years ago. And until they do, you may see Rolando (and others) bring that up from time to time. It’s not the workers’ fault. Enjoy your postal retirement.

  • feduptwice

    I did as you suggested and did more research. I went to govexec.com and reviewed their article dated December 20, 2006, titled “Bush signs postal reform measure”. The article states:

    Postal labor unions were less enthusiastic about the measure. William Burrus, president of the American Postal Workers Union, said linking future postal rate increases to the rate of inflation, regardless of the Postal Service’s costs, “will result in an artificial cap on postal workers’ wages.”

    William H. Young, head of the National Association of Letter Carriers, called the enactment of the law “bittersweet.” The measure, he said in a message to union members, “preserves our collective bargaining rights–rights that many workers at Homeland Security and the Department of Defense lost earlier in the Bush years.”

    But Young said one of the law’s provisions, requiring that workers wait three days after filing claims for injuries on the job before they can receive benefits, “really sticks in my craw. No mention of the prefund measure included in their statements.

    I am fine with reading the same posts over and over from Rolando. In the future I hope you will be fine with my posts.

  • postalnews

    I think you have that backwards- the only union I recall being opposed to passage of PAEA was the APWU. NALC President Young objected only to the change in workers comp rules, requiring employees to use their own leave to cover the first three days of a job related injury.

    As far as what came to be known as “pre-funding”, the NALC was fine with it at the time. The NALC Bulletin for Dec. 20 2006 credited the law with “significantly improving the Service’s long-term financial stability by resolving the military pension and escrow account issues in a favorable manner”

    The “escrow account” was the money the USPS overpaid into the CSRS retirement account, and which became the “pre-funding” account.

  • LetherNick

    I have no problem with your posts mate. That’s the whole point of discussion. Thanks for sharing.

  • postalnews

    Kinda hard to prove a negative, but after looking through news archives, the only opposition to the law I found was from Burrus. What is your source for claiming that three unions “vociferously” opposed it? More importantly, you say that they opposed the “pre-funding” specifically. Based on what evidence? Even Burrus’s opposition wasn’t based on the pre-funding requirement, but rather on the price cap.

    If you’ve got evidence that proves otherwise, I’d be interested in seeing it. I think you’ll find that no one had much of a problem with the pre-funding until the recession hit, and the bottom fell out of the USPS finances.

  • LetherNick

    i should have said “three out of four unions opposed the PAEA legislation” – instead of the pre-funding.mandate. But thanks for looking into it. I still don’t see anything wrong with anyone bringing up the pre-funding burden in light of the financial condition of the Postal Service. Keep up the good work Brian.

  • postalnews

    No- like I said at the outset of this discussion, there’s only evidence to show that one union, the APWU, opposed PAEA. NALC “embraced” it, NRLCA didn’t see any problem with the pre-funding, and I haven’t seen any evidence that NPMHU opposed it.

    APWU opposed the legislation based on the price cap, not the pre-funding. No one saw a problem with the pre-funding until the recession hit. (Well, no one but the mailers, who pointed out (correctly) that they were the ones who’d been financing the $5 billion overpayments to CSRS!).

    Pre-funding accounts for the lion’s share of USPS losses since 2007- but no one saw it as an issue when PAEA was originally passed.

  • Archie Daneker

    I guess the managers in Washington closing facilities, slowing the mail down and only saving 5% of their projection doesn’t count for anything. Also the Flat Sequencing Sorters cost 6 Billion and are the worst failure in the history of the post office. I think by now somebody would realize they also need management that has some idea what they are doing.