The US Postal Service’s Inspector General has released a report confirming the postal service’s contention that it could run short of operating cash as soon as this October. The shortfall is possible even without considering the PAEA pre-funding payments the agency will default on.
The USPS does have a relatively simple workaround, one which would probably give our dysfunctional legislators an easy way to squirm their way out of actually doing anything substantial about postal reform before the new Congress takes over in January. The October shortfall is about $100 million, while a $1.2 billion shortfall is forecast for next October. Both are dwarfed by the USPS’s $11 billion FERS overfunding. Returning just a small part of that overpayment would eliminate any operating cash shortages, without even touching the $44 billion the USPS has already socked away in the PAEA trust fund.
Here’s the OIG’s summary:
Without legislation to eliminate or defer prefunding payments into the Retiree Health Benefits Fund, the U.S. Postal Service will likely default on the $11.1 billion in payments due in fiscal year (FY) 20121 and the $5.6 billion payment due in FY 2013. In addition to these defaults, the Postal Service projects an estimated $100 million cash shortfall on October 15, 2012, with a slow increase in liquidity from October through December 2012. Liquidity risks and shortfalls are projected to return in spring 2013 through October 2013, with the Postal Service projecting an estimated $1.2 billion cash shortfall in mid-October 2013.