Postal Service had $354 million first-quarter loss

[unhappycamper]

http://www.adn.com/2014/02/07/3311953/postal-service-had-354-million.html

Postal Service had $354 million first-quarter loss
By SAM HANANEL
Associated Press
February 7, 2014 Updated 8 minutes ago

WASHINGTON — The Postal Service lost $354 million over the last three months, and officials warned that mounting losses could lead to cash flow problems for the rest of the year, the agency said Friday.

The loss was far less than the $1.3 billion in the comparable quarter the previous fiscal year, but Postmaster General Patrick Donahoe continued to press Congress to give the agency more flexibility to manage its finances.

The report for the financial quarter ending December 31 comes as Congress works toward fixing the agency's troubled finances. On Thursday, the Senate Homeland Security and Governmental Affairs Committee approved a bill that would end Saturday mail delivery and make permanent a temporary hike in the cost of a first-class stamp, which went from 46 to 49 cents on Jan. 26.

The Senate measure also would restructure a congressional requirement that forces the agency to make a $5.6 billion annual payment for future retiree health benefits. The Postal Service has been urging Congress to reform the service's finances as it continues to cope with steep financial losses. The Postal Service lost $5 billion in the last fiscal year, down from $15.9 billion in 2012.


unhappycamper comment: And what, you ask, caused these massive deficits?

http://en.wikipedia.org/wiki/Postal_Accountability_and_Enhancement_Act#Changes_under_the_Postal_Accountability_and_Enhancement_Act_of_2006

The United States Postal Regulatory Commission (or PRC) is an independent regulatory agency created by the Postal Reorganization Act of 1970. Like the Postal Service, it was defined in law as an independent establishment of the executive branch.



President George W. Bush signed the PAEA into law in December of 2006, giving the PRC its current form.

Changes under the Postal Accountability and Enhancement Act of 2006

The Postal Accountability and Enhancement Act of 2006 (PAEA) - H.R. 6407[2][3] enacted on December 20, 2006, made several changes to the PRC. Besides giving the body its current name, the PAEA significantly strengthened the Commission's authority to serve as a counterbalance to new flexibility granted to the Postal Service in setting postal rates.

The Act requires the Commission to develop and maintain regulations for a modern system of rate regulation, consult with the Postal Service on delivery service standards and performance measures, consult with the Department of State on international postal policies, prevent cross-subsidization or other anticompetitive postal practices, promote transparency and accountability, and adjudicate complaints.

The law also assigns new and continuing oversight responsibilities to the PRC, including annual determinations of USPS compliance with applicable laws, development of accounting practices and procedures for the Postal Service, review of the Universal Service requirement, and assurance of transparency through periodic reports. New enforcement tools given to the PRC include subpoena power, authority to direct the Postal Service to adjust rates and to take other remedial actions, and levying fines in cases of deliberate noncompliance with applicable postal laws.

The PAEA stipulates that the USPS is to make payments of $5.4 - $5.8 billion into the Postal Service Retiree Health Benefits Fund, each year, from 2007 to 2016 in order to prefund 50 years of estimated costs. This requirement also explicitly stated that the USPS was to stop using its savings to reduce postal debt, which was stipulated in Postal Civil Service Retirement System Funding Reform Act of 2003.[4] This is in addition to deductions from pay for federal contribution to social services.[5] This pre-funding method is unique to the USPS. In June 2011, the USPS had to suspend its weekly payment of 115 million into the fund because it had reached 8 billion dollars in debt and the retirement plan had a surplus of 6.9 billion dollars.[6] The Postal Service has not made any of the pre-funding payments since that time.

[JDPriestly]

1. Who loses if the Post Office goes under?

Big business.

Why do I say that?

Because the bulk of my mail is ads and bills. That's pretty much it. The companies that send me ads and bills couldn't pay a private company to deliver that junk mail to my door. It would be too expensive.

So if the companies that send the credit card offers and the bills to me want to continue to be able to reach me in print, they had better support the post office.

I love the post office.

[elleng]

2. Postal Service Reports a Decline in Losses.

Aggressive cost cutting and increased revenue from its packing and shipping business helped the Postal Service stem its losses in the first quarter of its fiscal year, which ended Dec. 31.

The Postal Service posted a $354 million net loss in the first quarter, compared with a $1.3 billion loss over the same period in 2012. The first quarter has traditionally been one of its strongest periods because it includes the Christmas holidays, when the agency experiences an increase in the number of packages and letters mailed.

Total mail volume, however, continued to decline. It was 42 billion pieces for the quarter, down from 43.5 billion for the same period a year earlier, according to agency officials.

Revenue from first-class mail, which provides the bulk of the revenue for the Postal Service, declined $209 million, or 2.8 percent, from the same period the previous year, with a decrease in volume of 817 million pieces, or 4.6 percent.

The agency’s shipping and packaging business increased by $479 million, or 14.1 percent, over 2013 first-quarter results, fueled by the growth of online shopping, Sunday deliveries in limited markets and aggressive marketing campaigns to promote the shipping services, postal officials said.

A Senate committee on Thursday passed a bill that would help reform the financially strapped agency. The bill, passed by the Homeland Security and Governmental Affairs Committee, would allow the post office to end Saturday delivery and a recent temporary increase in the cost of stamps would be made permanent. The post office would also be allowed to ship beer and wine, something it is currently prohibited from doing.

The legislation would also make changes to a 2006 law that requires the Postal Service to pay nearly $5.5 billion a year for health benefits to future retirees, a mandate that is not imposed on any other agency. The post office has defaulted on three payments since 2012.

http://www.nytimes.com/2014/02/08/us/postal-service-reports-a-decline-in-losses.html?_r=0

[DontTreadOnMe]

3. So the post office is in its 8th year of pre-funding

It has 2 more to go... and then it will not be saddled with the $5 billion.. end of law.