Nov. 21, 2011 — NALC President Fredric V. Rolando held a well-attended press conference today at the National Press Club in Washington. He announced a new approach to health benefits that would save the U.S. Postal Service $20 billion over a decade, and he also spoke more broadly about the need to develop a positive business plan for the future of the Postal Service.

Here are his remarks:

Thank you for coming here today.

My name is Fred Rolando. For 20 years, I delivered the-mail in South Florida, and for the last two years, I have had the privilege of leading a union that represents nearly 200,000 men and women who deliver letters and packages all over America.

As a long-time employee of the United States Postal Service, I would like to share with you some thoughts about how my union—the National Association of Letter Carriers—intends to deal with the very real challenges that the Postal Service faces.

There is no doubt that the Postal Service faces big problems. In fact, hearing some of what has been said, one could be forgiven for concluding that the Postal Service—while an important part of America’s past—has no real role in the country’s future.

It is seldom dangerous to steal from Mark Twain, so let me say up front that the reports of the Postal Service’s demise have been greatly exaggerated.

We know the Postal Service faces very serious problems. As letter carriers, we know them better than most. But, we also know that the Postal Service, if properly restructured, can be as relevant for the 21st century as it was for the 18th, 19th and 20th. And we are prepared to work with all interested stakeholders to craft a comprehensive plan to take the Post Office from where it is—to where it needs to be.

Today I want to put forward one very large and very specific idea and point the way toward a number of other ideas that, taken together, will do just that.

Now let me be clear: Nothing that we are suggesting today requires Congress to appropriate one dime of taxpayer money to support the Postal Service. The Postal Service has not received taxpayer support since the early 1980s, and we intend to keep it that way.

But what we do ask of Congress is that—in the words of the famous Hippocratic Oath—it does no harm. We need Congress to understand that reducing and degrading our network or the services that the Postal Service provides to the American people—like going to 150 million addresses six days each week—is not the way to save the Postal Service.

Tens of millions of Americans depend on a strong Postal Service. Half the country’s monthly bills are paid through the-mail. The nation’s letter carriers still carry 170 billion pieces of mail a year. They still deliver trillions (with a “T”) of dollars per year in financial transactions. Rural communities, the elderly, and a huge percentage of Americans who do not use their computers still rely on their letter carriers.

Recklessly reducing service will irreparably damage the Postal Service’s most valuable asset—and that’s the Postal Service’s comprehensive delivery network—thus making it harder and less efficient for customers to use the-mail. Ending Saturday service or eliminating door-to-door delivery will put the Postal Service into a death spiral. It would dismantle—NOT save—America’s Postal Service.

And Congress can certainly help the Postal Service survive by undoing the grievous harm that it caused the Postal Service in 2006 when it required it to do something that no other private or public sector enterprise is required to do. In 2006, Congress insisted that each year the Postal Service use $5 billion of its precious cash flow to cover the cost of future retirees’ health care. This money could have been used to re-invest in new technology and other plans to reduce the cost of delivering the-mail, but instead this money was diverted to a fund, that while laudable, is totally unnecessary, especially under today’s conditions.

Here’s a fact: without that one requirement, the Postal Service would have broken even over four of the past five years—despite the recession and despite the decline in First Class Mail and other changes associated with the rise of the Internet.

Letter carriers are in the midst of contract negotiations with the Postal Service. Our current five-year contract was set to expire last night at midnight. For the past week, every day, every night, up to the wee hours of the morning, negotiators for the NALC and the Postal Service were hard at work. And we will be back at the bargaining table very soon – last night we agreed to extend our talks until at least December 7, 2011.

These negotiations, and our bargaining process under federal law, will produce a contract. Everyone will still get their mail, every day, on time, from their friendly letter carrier. And that new contract will recognize and deal with the new realities of postal volume and finances.

We have put forward serious and innovative proposals designed specifically to produce billions of dollars in cost reductions for the Service. We have already started to do the hard work to reinvent this public service to preserve its core function in an efficient and economically responsible way.

For example, we are negotiating a new approach to health benefits that could save the Postal Service up to $20 billion over the next ten years. These savings would derive from the adoption of best practices on disease management and wellness care, improved purchasing power for drugs and other medical services, and the sensible integration of our members’ health insurance plans with Medicare benefits, among other sources.

NALC’s decades of experience in running one of the best rated health plans in the Federal Employees Health Benefits Program have been brought to bear in our negotiations with postal management, and the two sides have engaged broadly on reducing health care costs. We will continue to advance that engagement in the weeks ahead and look forward to successfully negotiating an historic agreement.

We are also looking to deepen the role of letter carriers in the promotion of competitive products with an enhanced commitment to our Customer Connect program that uses letter carriers to find new customers for Priority Mail, Parcel Post and Express Mail. We have also discussed the creation of an innovation task force to directly engage American businesses of all sizes to find new ideas and uses for our networks.

Let me emphasize that we are by no means opposed to creating efficiencies where they make sense for the interests of the Postal Service and its customers. But a responsible strategy under which the Postal Service would adapt to better meet society’s evolving needs is critical—not panic-driven slashing and burning that are akin to killing a patient to save it.

Beyond the bargaining table, the NALC has hired a world-renowned financial advisory firm, Lazard, and Ron Bloom, who has more than 30 years of experience restructuring major industries, and who most recently served as the Obama administration’s lead in restructuring the automobile industry. These experts will help us develop an alternative business model for the Postal Service—one that will build on the Postal Service’s last-mile strengths and grow the organization, instead of following a self-defeating path of endless downsizing.

Meanwhile, there is also now serious congressional attention on cutting the huge burden imposed by Congress in 2006. The numbers are enormous and the actuarial concepts and principles involved are complex and well beyond what we can get into here. But the basic facts are undeniable and easy to grasp.

As I mentioned earlier, the Postal Service is the only company or agency—public or private—that is required to pre-fund its future retiree health benefits. We have to fund retiree health care the way companies fund ordinary pension benefits. The 2006 law, passed at a time when the economy and the Postal Service were strong, mandated $5.5 billion annual prefunding payments for 10 years! This crushing burden, which hit the USPS just as the economy dropped off a cliff, siphoned $21 billion from postal resources, accounting for 100 percent of the Postal Service’s reported losses between 2007 and 2010. Now, as this is literally bankrupting us, we have been trying to convince Congress to reform this burden ever since.

The most practical answer to this pre-funding burden is to let the USPS use the undisputed $11-plus billion surplus in its main pension plan and the $50+ billion surplus in its other pension plan that private sector expert auditors have identified, using methods that even the General Accountability Office have acknowledged are “reasonable.” But if Congress won’t do this, it should at least repeal the pre-funding burden because the Postal Service has already set aside enough money to fund retiree health benefits for decades to come.

As I stand here before you today, this very minute, the nation’s 200,000 letter carriers are doing their daily job of delivering 560 million pieces of mail to 150 million addresses. That’s 170 billion pieces of mail a year. They are driving the Postal Service’s fleet of 200,000 vehicles. They are operating out of 17,000 postal facilities in every village, town and city in America. They are doing it for half the price of the next cheapest postal service in the world.

In other words, we are a crucial part of the nation’s economic infrastructure. The Postal Service and my members lie at the heart of a set of industries — publishing, printing, advertising, commercial distribution and related sectors — that employ 7.5 million workers, generating $1.3 trillion dollars annually. That’s 8 percent of the entire national economy.

Yes, the Internet has changed the world. And yes, e-mail has eaten into postal volume.

But huge areas of American commerce—and American citizens, especially the elderly and rural residents—depend on the last-mile delivery network of letter carriers.

The National Association of Letter Carriers is committed to saving America’s Postal Service. And we will embrace and lead the changes required for the Postal Service to remain a vital institution that will serve our nation for decades to come.

But we need to be given a chance to succeed—Congress must resist poorly thought-out and radical downsizing plans and reform the pre-funding burden.

Let me conclude with three simple messages:

To postal management, we say that the NALC is ready to work with you jointly to develop a plan that both saves on cost and taps the Postal Service’s huge potential for growth. Our proposals our ready and our doors are open.

To our leaders on Capitol Hill: Don’t recklessly eliminate crucial postal services like door-to-door and Saturday mail delivery. It will hurt the American people—especially our elderly and rural citizens, and it will do permanent harm to the Postal Service. Let us use our own funds to cover the cost of retiree health pre-funding, or let us handle these costs as it done in the private sector.

And to the American people, don’t give up on the Postal Service. Give us a chance to reinvent this valuable national treasure. Let us work together with management and the postal industry to restructure the Postal Service for the 21st Century.

WASHINGTON, Nov. 21, 2011

In a speech delivered today at the National Press Club in Washington, D.C., Postmaster General Patrick Donahoe encouraged Congress to step back and take a second look at postal reform legislation as currently drafted in the House and Senate.

Providing his first public commentary on postal reform packages, Donahoe argued for providing the Postal Service with a more flexible business model that would enable the Postal Service to quickly implement cost cutting measures. “Unfortunately, both bills have elements that delay tough decisions and impose greater constraints on our business model. Taken as they are, they do not come close to enabling cost reductions of $20 billion by 2015 – which they must do for the Postal Service to return to profitability.”

“If passed today, either bill would provide at best one year of profitability, and at least a decade of steep losses,” said Donahoe. “However, by taking the best of both the House and Senate approaches, Congress can provide the Postal Service with the legal framework and the business model it needs.”

The Postmaster General expressed his gratitude for the strong leadership and engagement of the Congress and the Administration in advancing reform legislation, and expressed confidence that an effective solution would be enacted. Both HR 2309 and S 1789 were introduced earlier this year to respond to an urgent liquidity crisis and to address long-term structural constraints in the Postal Service business model.

Throughout its recent fiscal crisis the Postal Service has advanced proposals that would allow it to operate more as a business would, with greater flexibility to quickly reduce costs and respond to a dynamic marketplace for mailing and shipping services.

The Postal Service is seeking changes in the law that would provide it with the authority to: determine delivery frequency; develop and price products quickly; control healthcare and retirement costs; rapidly realign mail processing, delivery and retail networks; operate under a streamlined governance model; and leverage its workforce with greater flexibility.

Within the constraints of its current business model, the Postal Service has aggressively cut costs, reducing the size of its workforce by 128,000 career employees and annual operating expenses by $12.5 billion over the past four years.

“America needs a Postal Service that can operate more like a business,” said Donahoe. “I have no doubt the Postal Service will endure as a great American institution. But to do so, we need to operate with a great business model.”

From the American Postal Workers Union:

Sen. Bernie Sanders (I-VT) recently introduced the Postal Service Protection Act (S. 1853 [PDF]), a bill that would go a long way toward resolving the USPS financial crisis, Legislative and Political Director Myke Reid reports.

“Sen. Sanders’ bill gets at the underlying causes of the Postal Service’s dire financial situation, and outlines methods for resolving the crisis,” he said. “It offers solutions that would strengthen service and protect the network of post offices and mail processing centers.

“The network is one of the Postal Service’s greatest assets,” Reid noted. “Unfortunately, several other bills currently pending in Congress would destroy this essential component of the Postal Service and American life.”

The Postal Service Protection Act would:

Fix the Postal Service’s immediate financial crisis by allowing the USPS to recover the overpayments it made to its retiree pension funds — both the $7 billion overpayment to the Federal Employees Retirement System (FERS) and the $50 billion to $75 billion overpayment to the Civil Service Retirement System. In addition, the bill would eliminate the unique requirement that the USPS pre-fund 75 years worth of future retiree health benefits in just 10 years. No other agency or company in America is required to pre-fund these benefits.

Establish new ways to generate revenue by ending the prohibition on USPS providing non-postal services, such as providing notary services, new media services and issuance of licenses; contracting with state and local agencies to provide services; shipping wine and beer, and allowing the USPS to provide services that mail systems in many other countries provide, including digital services.

Create a blue-ribbon commission composed of entrepreneurs, representatives of labor and small businesses to provide recommendations on how the Postal Service can generate new revenue to succeed in the 21st century.

Prevent the closing of rural post offices by giving the Postal Regulatory Commission (PRC) binding authority to prevent closures based on the effect on the community and employees. The bill would also prohibit USPS from considering whether a post office is turning a profit when making the decision to conduct a feasibility study for closure.

Protect six-day delivery.

Protect mail-processing facilities by requiring strict standards for delivering first-class mail.

Joining Sanders as original co-sponsors of the bill were Sens. Kirsten Gillibrand (D-NY), Patrick Leahy (D-VT), Tom Udall (D-NM), and Ron Wyden (D-OR).

Click here for a more detailed summary [PDF] of the bill.

via Sen. Sanders’ Bill Addresses USPS Crisis.

Dead Tree Edition and Courier Express and Postal Observer have recently discussed the idea of a USPS bankruptcy. While both make interesting points, I have a problem regarding the USPS’s current situation as similar to the case of a failing corporation.

In the first place, the USPS is not nearing insolvency due to operational or market conditions. The reason it might not have enough cash to pay any of its creditors next year is the PAEA trust fund obligation- plain and simple. The Treasury is sitting on $42.5 billion in USPS profits- that’s an undeniable fact. Congress created that problem, and only Congress can fix it.

The other issue I have with viewing the situation as a bankruptcy is the fact that creditor and debtor are one and the same- the US Government. The USPS has plenty of money to pay its suppliers and employees. The debt it can’t cover is owed to the US Government. The US Postal Service, contrary to what a lot of folks seem to think, is not a “quasi-governmental” entity, nor is it a company “owned” by the US Government. It is an integral part of the US Government. The trust fund “debt”, then, is owed by one agency of the US Government to another agency of the US Government. Both agencies are, in the end, owned by the American people. The concept that one agency can force another agency to “liquidate” assets that belong to the American people to satisfy a debt owed to the American people is bizarre.

The bottom line is that the US Postal Service financial “crisis” is a political construct, not a financial one. Politicians got us where we are today, and they need to come up with a way out.

Don’t Worry About Forever Stamps in Bankruptcy | Courier Express and Postal Observer.

Dead Tree Edition: Could Forever Stamps Become Worthless? What Bankruptcy Might Mean for USPS.

US Postal Service press release:

WASHINGTON, Nov. 21, 2011 /PRNewswire-USNewswire/ –Although the contracts with the National Association of Letter Carriers, AFL-CIO (NALC) and the National Postal Mail Handlers Union, AFL-CIO (NPMHU) expired at midnight Sunday, Nov. 20, the Postal Service and the two unions agreed to extend the negotiations deadline until midnight, Wednesday, Dec. 7, 2011.

The NALC represents more than 195,000 employees who work as letter carriers delivering mail primarily in urban areas. The NPMHU represents more than 45,000 employees who work in mail processing plants and Post Offices. Respectively, wages and benefits for NALC- and NPMHU-represented employees exceeded $15.7 billion and $3.5 billion last year. Should negotiations fail, a process begins which could result in a third party determining contract terms and work rules for approximately 240,000 employees.

Unlike the private sector, when negotiations come to an impasse, postal employees are not permitted to strike as Congress has designated the Postal Service as an essential service to the nation. An arbitrator determines the final outcome and is not legally required to consider the Postal Service’s financial obligations when rendering a decision.

Mail volume peaked in 2006 at 213 billion pieces. The effects of the shift to digital communications coupled with the impact of the recession resulted in mail volume plummeting more than 20 percent to 167.9 billion pieces last year. Over the last four fiscal years, the Postal Service reduced its size by 110,000 career positions and saved $12 billion in costs. Expenses, however, continue to exceed revenues in part due to an overstaffed workforce.

The Postal Service ended Fiscal Year 2011 with a net loss of $5.1 billion, compared to an $8.5 billion net loss the year before. The 2011 loss would have been approximately $10.6 billion had it not been for passage of legislation that postponed a congressionally mandated payment of $5.5 billion to pre-fund retiree health benefits.

To become financially stable, the Postal Service needs to cut approximately $20 billion in costs by 2015. Some of these cost savings can be achieved by adjusting the size of its workforce and infrastructure to align with America’s changing mailing trends.

While actions under Postal Service control are making a difference, passage of comprehensive legislation is needed to give the Postal Service more flexibility in making business decisions and the ability to react quickly to changing market conditions.

The Postal Service successfully negotiated a contract with the American Postal Workers Union (APWU) AFL-CIO that expires May 20, 2015. The APWU contract achieves short-term cost relief, long-term structural changes and enhanced workforce flexibility. Employees represented by the APWU work as clerks, mechanics, vehicle drivers, custodians and in some administrative positions.

Negotiations with the National Rural Letter Carriers’ Association (NRLCA), which expired Nov. 20, 2010, came to an impasse and will follow the current agreement until a third party determines the outcome of a new contract. Employees represented by the NRLCA deliver mail in primarily rural and suburban areas. The NRLCA represents more than 65,000 career employees and nearly 42,000 non-career employees who substitute for career employees on their days off.

via Postal Service, Two Unions, Continue Negotiations Past… — iv>   Outcome Critical to Postal Service, Employees, Future   WASHINGTON, Nov. 21, 2011 /PRNewswire-USNewswire/ –.

From the National Postal Mail Handlers Union:

Following marathon bargaining sessions in the days leading up to the contract expiration, both sides now have agreed to continue talks in an attempt to reach agreement over the terms of the 2011 National Agreement. The deadline for negotiations – initially set at midnight on Sunday, November 20, 2011 – has been mutually extended by the NPMHU and the Postal Service in order to make every possible effort to reach a negotiated settlement. With bargaining sessions continuing well into the evening on the 20th, the parties have agreed to extend that deadline through Wednesday, December 7, 2011, and perhaps longer.

The parties continue to discuss a host of important and complicated issues. The negotiations are at a very delicate stage, and as of this writing it still is impossible to tell whether an overall deal is likely.

National President John Hegarty and National Secretary-Treasurer Mark Gardner have vowed to continue the negotiations for whatever period is necessary, as long as there is a realistic possibility that the negotiations will have a successful conclusion. Following this intense bargaining period, President Hegarty wanted to send his personal assurances that “the NPMHU bargaining team will continue to discuss and debate the countless proposals and counter-proposals that have been exchanged, and will continue to seek mutually beneficial solutions on the many issues that are important to the NPMHU membership, and to help ensure a viable Postal Service into the future,” adding that “in these extremely difficult economic times, we will continue our quest not only to preserve and improve the important work rules that govern our day-to-day operations, but also to retain a fair compensation package going forward.”

As previously publicized, if a settlement does occur, the tentative agreement would be sent to all eligible members for a ratification vote using a mail in ballot; every member will have the opportunity to vote – yes or no – on the terms of the proposed settlement. While it remains the strong preference of the NPMHU to reach a negotiated settlement, the NPMHU leadership will continue to keep its options open. If the NPMHU leadership ultimately decides that a fair deal cannot be reached, the NPMHU will be prepared to present its case on these important matters before a neutral interest arbitrator.

Next week, a pre-scheduled meeting of the Local Union Presidents will occur in Washington, DC on Thursday, December 1, 2011. During that meeting, President Hegarty and the National Negotiations Team will report on whatever progress has been made in negotiations, and will discuss the prospects for reaching a tentative agreement.

Please watch for additional Contract Updates, as you will be kept apprised of further developments as soon as they occur. Information about contract negotiations, and other important topics, can be accessed on the NPMHU website at www.npmhu.org.

The NPMHU bargaining team sends its thanks to the entire membership for its continued support as the Union endeavors to achieve a fair contract for all Mail Handlers.

via CONTRACT UPDATE #10 — Parties Continue Discussions Beyond Deadline – National Postal Mail Handlers Union.

Nov. 21. 2011 — NALC President Fred Rolando and USPS Postmaster General Pat Donahoe announced on Sunday, Nov. 20, that the parties’ 2006-2011 National Agreement has been extended to Dec. 7, 2011, to give the parties additional time to negotiate the provisions of a new contract. The 2006 agreement had been set to expire at midnight Sunday.

“We have been working in good faith to hammer out a new contract and we hope that this extension will lead to an agreement that our members can enthusiastically ratify,” President Rolando said.

The entire NALC Executive Council and the USPS negotiating team have been sequestered at a hotel in Washington since Nov. 13 in order to work around the clock on the terms of a new National Agreement. Council committees chaired by the union’s resident national officers have engaged management counterparts in intensive discussions on the full range of contract issues affecting working conditions and workplace rights during daily negotiations that often stretched late into the night.

President Rolando has coordinated the work of all the committees and has taken the lead on the key economic provisions of the contract, including pay, health benefits and other matters such as the structure of the city carrier workforce. As the expiration date approached, the focus shifted to finding innovative ways to reduce the cost of employee health care while preserving and protecting the benefits of NALC’s members.

The 2011 round of bargaining kicked off in August at a time of extreme challenges for the Postal Service, as the congressional mandate to pre-fund future retiree health benefits has crippled the agency’s finances. Over time, the talks have gathered momentum. In the end, the parties agreed that more time could help the talks succeed.

“We remain committed to negotiating a fair contract that will advance the best interests of the nation’s city letter carriers,” Rolando said.

via National Bargaining – Bargaining Home.