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The Postal Service, seeing no sustainable path under its current business model, offers Congress and the new Biden administration a chance to work together on a long-term strategy to reform how it operates.
USPS ended fiscal 2020 with a net loss of $ 9.2 billion, its 14th consecutive year in the red, despite a historic volume of election mail and ballots in the mail.
Postmaster General Louis DeJoy warned on Friday that the losses would continue if Congress, the White House and its postal regulators did nothing.
USPS projects a loss of $ 9.7 billion by the end of this fiscal year, and at that point it warned that it will not have enough cash to keep operating.
“Obviously, we have an unsustainable business model,” DeJoy said Friday at a USPS Board of Governors meeting. “Our problems can be solved, but we must continue to do so now. Continue to solve difficult problems now. “
USPS chief financial officer Joe Corbett said the election increased overall mail volume by year-end, but increased operational costs offset a large chunk of the revenue.
“The revenue generated from this increase, while notable, was offset by necessary increased operational expenses associated with our extraordinary measures to advance and expedite the delivery of the nation’s ballots and election mail,” Corbett said.
The USPS delivered 135 million ballots, 600 million pieces of election mail, and 4 billion pieces of election mail. DeJoy said the USPS delivered 99.7% of the ballots within five days, but that on average, the incoming or outgoing ballots were delivered in two days or less.
The USPS saw an almost 19% increase in parcel volume, but USPS officials warned the coronavirus pandemic would be a repeat of the 2008 recession, when the agency’s mail volume declined. fell about 20% and never returned to pre-recession levels after the recovery. .
First class mail volume in fiscal 2020 has fallen by over 4% and marketing mail volume by over 15%.
To meet its long-term challenges, the Postal Service will need help from Congress, the incoming administration and the Postal Regulatory Commission, but in the meantime, DeJoy said the USPS is working on a strategic plan. that it will publish in the coming months.
The strategy, he said, will keep mail delivery within six days, preserve the agency’s universal service obligation, and keep the USPS self-funded.
Separately, the USPS IG recently reported that the agency had identified 57 operational changes that, if implemented, would reduce costs equivalent to 64 million man hours.
More than a dozen federal lawsuits, however, have temporarily blocked these changes ahead of the election, and the IG recommends that the USPS wait until after its peak operations during the holidays.
Despite a controversial start to his tenure as Postmaster General, DeJoy has extended an olive branch to Congress and the new Biden administration over long-term postal reform.
“Believing that we can function as we have done before and continue to fulfill our mission of service to the nation is unrealistic,” said DeJoy. “It’s time to put aside the harsh rhetoric, turn the heat down and collaborate on new solutions.”
USPS Board of Governors Robert Mike Duncan echoed that tone, saying it looks forward to working with lawmakers to define a vision for the Postal Service of the future.
“All of us, the postal leaders, our workforce, unions, policymakers, postal shareholders and the public, must work together,” Duncan said. “We all share a great appreciation for the postal service. I hope now that we can work together to save the postal service. “
Lawmakers have introduced several bills in recent years to put the USPS on a stronger financial footing, but none of them have gained much ground. The latest effort, a bill introduced by Rep. Peter DeFazio (D-Ore.), Was passed by the House in February.
The next session of Congress will have little time to decide what short-term relief the USPS should receive in the next pandemic spending bill. The postal service expects to run out of cash in October 2021.
President-elect Joe Biden, while still on the campaign trail, outlined some of his priorities for postal reform. He told the National Association of Postal Supervisors in a poll that his administration would work with Congress to eliminate the Postal Service’s mandate since 2006 to pre-fund retiree health benefits.
His administration is also reportedly focused on providing emergency funding for the cash-strapped agency to continue operating beyond next summer. Biden said he would also help modernize the agency’s fleet of vehicles and fill the three vacant seats on the USPS board of governors.
Former Deputy Postmaster General Ronald Stroman is leading the Postal Service team for the Biden-Harris transition, alongside former Federal CTOs Aneesh Chopra and Jim Sauber, chief of staff for the National Letter Carriers Association .
NALC president Fredric Rolando said in a statement that USPS finances demonstrate an urgent need for federal assistance with the next round of pandemic spending.
“These numbers, driven by the impact of the economic shutdown on first-class mail, show the need for federal assistance during the pandemic, just as other sectors have received.
“Perhaps in its 245 years, the public post has never been so indispensable in the country,” Rolando said.
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