The U.S. Government Accountability Office has put its stamp of disapproval on the U.S. Postal Service’s operations.
In a report to Congress at the end of July, the GAO added the Postal Service to its High-Risk List, which is a roster of federal government programs and agencies costing the taxpayers billions in losses.
The Postal Service is projecting a net loss of $7 billion this fiscal year and a cash shortfall of $1 billion, despite cutting $6 billion in costs and borrowing up to $3 billion to bankroll continuing operations.
Worse, the USPS recently told Congress it wouldn’t be able to make its $5.4 billion in mandated payments to fund future retirement benefits for its own employees. That bill is due at the end of September, and the USPS won’t be able to pay it, even if it gets another $2 billion in relief dough packaged in a bill before the House, according to the GAO.
Part of the Postal Service’s problem has been a well-documented trend: declining mail volume and revenue. In fiscal ’09 alone, the USPS will see mail volume drop by nearly 14 percent, down about 28 billion pieces to 175 billion. The losses sustained in the past two years were over $8 billion; next year, the Postal Service is projected to lose another $7 billion.
Clearly, more extensive restructuring is essential if the Postal Service is to get off the GAO’s High-Risk List. Some recommendations worth consideration:
l Accelerate efforts to consolidate postal processing operations. There are 400 of these major centers nationwide; the USPS has closed only one so far during its cost-cutting efforts.
l Slash the payroll and the workforce. The GAO notes that 80 percent of the Postal Service’s costs are wrapped up in labor.
Achieving savings to offset declines in mail volume and revenues will not be easy for a creature of government that confronts a host of politically charged issues, from closing rural postal retail stations to eliminating Saturday deliveries.
The support and collaboration of Congress, the Postal Regulatory Commission, businesses and other large postal customers are essential if the USPS is to deliver successfully on a mandate to break even.
The USPS needs to start afresh on a plan for restructuring, one which it probably should hand-carry — rather than mail — to Congress and the GAO.
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