Let's review USPS profitability:
February 9, 2007
USPS REPORTS FIRST QUARTER LOSS DUE TO FUNDING MANDATED BY NEW POSTAL LAW
New postal law requires funding of retiree health benefits
Quote:WASHINGTON, D.C. - The U.S. Postal Service (USPS) reported a Fiscal Year 2007 first quarter loss of $2.7 billion due to the accelerated funding of retiree health benefits mandated by the Postal Accountability and Enhancement Act signed into law on Dec. 20, 2006. The law requires the Postal Service to substantially fund its share of these benefits by 2017. Operationally, the Postal Service would have otherwise achieved a net income of $1.2 billion, in line with its first quarter financial plan.
First Quarter Highlights
Revenue for the first quarter (ending December 31, 2006) was $19.7 billion, an increase of 6.4 percent over the first quarter last year. This increase was driven by a 2.3 percent increase in mail volume. Standard mail volume grew by 4.9 percent. First-Class Mail volume for the quarter was virtually flat in relation to the first quarter the previous year. Total Factor Productivity (TFP) increased by 1.9 percent over the first quarter of last year-the highest in the last eight quarters. TFP measures the relationship between workload and resource usage. The first quarter gain in productivity was driven by larger than expected growth in revenue and volume.
Finances Under New Postal Law
The new postal law eliminates the escrow previously required under Public Law 108-18 and reduces USPS payments into the Civil Service Retirement System (CSRS). The $3 billion in cash - that the Postal Service placed in a federally mandated escrow account in FY 2006 - is now designated to fund retiree health benefits. Generally Accepted Accounting Principles (GAAP) dictate the $3 billion be reported as an expense in the quarter in which the law was enacted.
For FY 2007, the new law mandates $5.4 billion to be placed in the newly created Postal Service Retiree Health Benefits Fund (PSRHBF). Consequently, the relief from this year's $3.3 billion planned escrow and the reduction of $1.5 billion in CSRS payments must be applied to the fund. The net result is a shortfall of $600 million for FY 2007.
"It's important to put this into perspective," said Chief Financial Officer H. Glen Walker. "Although this will have a multi-billion dollar impact on our reported financial results, the additional cash required is approximately $600 million."
Wow. That's great. The USPS generates enough income to be profitable at the current rates. But for the new legal requirement that the USPS must substantially fund its share retiree health benefits, there would be no operating shortfall at all.
Let's look at more figures comparing the quarter ending on December 31, 2007 and the quarter ending on December 31, 2008:
http://www.usps.com/financials/_pdf/FinalQuarterIFY0910Q.pdf
For the quarter ending December 2007, the USPS had operating revenue in excess of 20 billion and operating expenses in excess of 19 billion for a quarterly net PROFIT of 672 million dollars.
For the quarter ending December 2008, the USPS had operating revnue in excess of 19 billion and operating expenses in excess of 19 billion for a quarterly net LOSS of 384 million dollars.
Sometimes there are quarterly net profits, sometimes there are quarterly net losses--but in the grand scheme of things, the USPS is very cost efficient and provides a valuable service for ALL residents of the entire country. If need be, the Postal Regulatory Commission will increase postal rates. But even in the face of the new law that requires the USPS to substantially fund retiree health benefits, the USPS is doing quite well financially and our postage rates are affordable when considering, for 44 cents, the USPS will deliver a birthday card at the other end of the country for you.
BUT, GOSH DARN, why should those damn postal service employees (and retirees) get union-bargained salaries and a health care plan when so many other workers in this country don't get one???? After all, people like okie and H2Oman don't value the service that postal employees provide to this country. They would rather have private business suck all the profit out of the national mail delivery system and have our mail processed and delivered RELIABLY and LOVINGLY each and every day by an entire new class of unionless, low wage/no health benefit workers. God forbid that the workers who actually provide this service should be paid a respectable wage or have good benefits when excessively paid CEOs of private corporations are waiting in the wings to snatch up all those billions of dollars for themselves.
Anyway, didn't a congressman recently tell an average "joe the plumber" citizen at a town hall meetin' that if he wanted a good health care plan that he should get a job with the government?
