Prefunding care is real postal cost

By Fredric Rolando

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The U.S. Postal Service supports 7.5 million private-sector jobs in the mailing industry. The Postal Service is essential to the fast-growing Internet sales industry. And the USPS is navigating this struggling economy relatively well, even making an operating profit in the most recent quarter.

Yes, a profit. When you count how much money the Postal Service earned on postage, and subtract how much it spent delivering the mail and paying related bills, the Postal Service earned a $100 million profit in the last three months of 2012. And remember, the USPS uses no tax money.

So why all this talk about the Postal Service losing money? And why is Postmaster General Patrick Donahoe planning to end Saturday mail delivery?

There's no question the Postal Service faces big challenges. Email and a struggling economy are dragging down mail volume. But the Postal Service's financial problem is actually driven by Congress' decision to “pre-fund” retiree health care costs. Beginning in 2007, the USPS has been required to pay 75 years of those costs in advance, and do so within just 10 years.

This pre-funding accounts for about 80 percent of the “losses” sustained by the Postal Service over the last six years. Indeed, that last quarterly profit was wiped out by a $1.4 billion pre-funding payment.

No other government agency or private company is required to pre-fund retiree health care. Most businesses just pay retiree health care bills when they're due, but the pre-funding law forces the USPS to pay these bills all at once, far in advance.

The Postal Service should be taking advantage of the enormous growth in package delivery driven by Internet sales. Instead, because it must put every spare penny into pre-funding retiree health care, it's stuck in crisis mode.

What's more, a study by the Postal Regulatory Commission found that ending Saturday delivery would hurt the public and save significantly less than previous claims suggest. Saturday delivery is particularly vital for the elderly, disabled, people in rural areas, and those who need medicine or equipment delivered to their doors.

No other company provides universal delivery service to every address in the country, six days a week. Even private shippers such as FedEx and UPS use the U.S. Mail for up to a third of their final deliveries to customers' doors because they can't match the efficiency of the postal network.

Donahoe should urge lawmakers to fix the pre-funding problem and give the Postal Service room to adapt for the future.

l Fredric Rolando is president of the National Association of Letter Carriers, www.NALC.org. Comments: nalcinf@nalc.org (Distributed by OtherWords.org)