The Postal Service recently reported a rise in overall revenue but some all-too-familiar net losses. However, in the wake of the recently passed Postal Service Reform Act, both management and unions expect better balance sheets in the future.
Last week, the Postal Service announced a 4.7% increase in revenue for FY 2022’s second quarter, compared with last year. That’s the good news.
But, here’s the bad news: Despite the significant jump in revenue, the delivery giant also reported a $639 million net loss—worse than last year’s, according to USPS.
"While our operating revenue grew compared to the same quarter last year, we have been challenged by rising costs due to inflation, leading to an adjusted loss for the quarter,” USPS Chief Financial Officer Joseph Corbett said, summarizing the still-problematic situation.
However, Corbett added, USPS projections foresee break-even up ahead—within the coming decade, rather than the $160 billion in losses that were predicted absent the recently passed Postal Service Reform Act (PSRA).
Postal labor organizations—though most largely critical of current USPS management—like Corbett are all hopeful that the new postal reform will ease the strain on the bottom line in coming years. All major postal unions applauded the law’s passage, including the American Postal Workers Union, the National Postal Mail Handlers Union and the National Association of Letter Carriers.
More recently, NALC reiterated its support for the new law, noting that USPS’s recent deficit clarifies just how overdue reform is.
“[The] net loss of $639 million shows the importance of the recently signed postal reform law that will address the artificial red ink caused by the 2006 congressional mandate that USPS pre-fund future retiree benefits—a burden faced by no other U.S. company or agency,” Frederic Rolando, president of NALC, said in an email to FederalSoup.
“Any impact of that legislation, which was signed into law after the second quarter ended, will be shown in the next quarterly report,” he noted.
To appreciate Rolando’s comments, it helps to recall just how long it took to get here. In 2006, Congress passed a law saddling the Postal Service with a new $5 billion-per-year burden: an obligation to take that amount out of revenues to pre-fund future retiree health benefits. The move arguably defied common business judgement. At the time of passage, first class mail volume was plummeting, and red ink loomed—so mandating that kind of set-aside from dwindling revenues was at best unrealistic.
In the 16 years since, most USPS management and labor leaders have pressed Congress to have this enormous weight—amounting either to most or all of the organization’s losses, depending which stakeholder is counting—reduced or rescinded.
And, finally this year, relief for USPS—in the form of PSRA—was enacted by both sides of Capitol Hill. As the reform is implemented, employees will get their healthcare by way of Medicare, rather than the Federal Employees Health Benefits Program.
“Congress has finally passed legislation to bring the Postal Service into the 21st century,” Rep. Peter DeFazio (D-Ore.), who long led the effort at reform, said when the bill passed in March. “The agency has been burdened with the idiotic prefunding mandate for far too long.”
DeFazio noted that the bill included his proposed fixes and applauded the move “to repeal this ridiculous mandate and finally bring financial stability to USPS.”
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