USPS Releases Bleak Financial Results

Today, the United States Postal Service (USPS) released its financial results for the 2015 fiscal year, highlighting the agency’s bleak overall fiscal health. National Taxpayers Union (NTU) President Pete Sepp offered the following statement in reaction to USPS’s report:

“Concerns from everyday Americans about USPS’s future ability to deliver letters are justified by the Service’s latest numbers.

By finishing $5.1 billion in the red for the just-concluded fiscal year, USPS has totaled $36.6 billion in losses since 2011.

Furthermore, from most reasonable perspectives of the Postal Service’s accounting, the agency has spent years racking up higher costs compared to the revenues it has been able to generate. Even within the balance of “controllable” revenues and expenses, which excludes its legal requirement to prefund retiree health benefits, USPS has lost $3 billion over the same five-year period.

Here’s another chilling perspective: the loss figures are actually worse than they appear because of the $4.6 billion “exigent surcharge” USPS has been allowed to take until next April. Once that runs out, something will have to give: another form of price hikes, bigger shortfalls, service adjustments, or most troubling of all, pleas for assistance from the federal government.

Finally, the reliability of the USPS for timely delivery continues to falter. In the first half of the year, late mail increased by 48 percent, putting into question the quality of service for people and businesses across the country.

Most customers as well as financial analysts would agree: continuing to pursue price hikes amid declining service is a bad business model that would likely end in bankruptcy. But in the case of USPS, and its historical ties to government, taxpayers need to be worried that they will be left holding the bag instead.

To repair its declining fiscal situation, USPS must institute and act upon accounting practices that are more honest and transparent. This means analyzing each product on a standalone basis and focusing primarily on its core products that are their most financially stable. Over the long term, to avoid a taxpayer bailout of USPS and allow the service to continue performing essential functions, Congress needs to clarify its mission, remove unfair regulatory advantages over private industry, stop bad business practices like underwriting foreign shipping, and permit more flexibility in personnel and facilities management.

Defenders of the status quo claim that reforms like these are not necessary; lawmakers just need to relax requirements that USPS prefund retiree health benefits. But based on all of the cold hard facts in the service’s financial statements and delivery performance reports, doing away with prefunding is not some panacea. In fact, prefunding is a vital taxpayer protection that provides an early warning of major future liabilities. The entire federal government should be doing it, as well as entities like USPS that enjoy preferential treatment from Washington. For instance, even though it is a federal agency that gets appropriations, the Department of Defense faces a partial prefunding requirement of its own. 

Pick any phrase – reality check, wake-up call, or moment of clarity – if the latest USPS financial report prompts policymakers to act, so much the better.”