WASHINGTON, Feb. 9, 2012 – Despite the headline on its press release, the U.S. Postal Service announced today a net operating profit of $200 million delivering the mail in the first quarter of FY 2012 – an impressive achievement given the current economy. (Postal Service Chief Financial Officer Joe Corbett announced this profit on a conference call with reporters today.)
As the USPS notes, its performance was boosted by record employee productivity and by “stronger-than expected holiday shopping activity, driven by strong growth in online merchandise sales” – up 7 percent over the first quarter of the previous year. That shows the potential for growth offered by the Internet.
The record productivity and the strong growth in the shipping business show that the Postal Service can be a successful organization if freed from the unwarranted and uniquely onerous pre-funding burden placed on it by Congress.
The operational profit turns into red ink only when an external factor unrelated to mail delivery is considered – the 2006 congressional mandate that requires the Postal Service to pre-fund its future retiree health benefits over the next 75 years within a decade. That, along with a non-cash actuarial adjustment to the Postal Service’s workers’ compensation costs, is entirely responsible for the $3.3 billion “loss.” The pre-funding alone accounts for $3.1 billion of the quarter’s “loss.”
These results reveal the need for Congress to remove the crushing burden of the pre-funding payments, which the USPS is compelled to make, as its press release notes, “at rates not assessed any other entity in the United States.”