It’s no secret that the United States Postal Service has faced years of hardship. FY 2016 was no exception. While the USPS posted an increase in revenue for the year, they reported a loss of $5.6 billion. One possible cause of the huge loss is the decreased price in postage stamps. In April of this year, the postage stamp rate fell from 49 cents to 47 cents. While the USPS saw a revenue of $70.4 billion in 2016, the decrease in postage price creates an estimated loss of $2 billion annually.
Since 2006, Congress has required the USPS to pre-fund retiree health benefits. Senator Tom Carper (D-Del) is a ranking member of the Homeland Security and Governmental Affairs Committee. He introduced postal reform legislation last year that would eliminate pre-funding. He had this to say about the FY2016 loss:
“The news that, despite rises in revenue, the US Postal Service is reporting significant losses in 2016 should not come as a surprise to anyone. Quarter after quarter, year after year, these reports reaffirm the obvious; that without Congressional action, the Postal Service will remain unable to raise enough revenue to cover its costs and will continue to suffer losses that threaten its long-term viability. It is long past time that Congress comes together to finally address the Postal Services dire situation and chart a new course for this critical institution once and for all.”
The USPS reported $610 million in controllable income, down considerably from $1.18 billion in FY2015. Controllable income is the impact of operational expenses such as salaries and benefits. It does not include pre-funding retiree health benefits, which totaled $5.8 billion this year. Without the pre-funding, the USPS would’ve reported a net income of about $200 million.
In July 2016, the House Oversight and Government Reform Committee passed two postal reform bills. These would merge the USPS Health Benefits Program with Medicare. This would remove the weight of pre-funding those benefits.
The President of the National Association of Letter Carriers, a postal worker union, supported this reform and said:
“The pre-funding issue can be readily addressed if Congress acts on practical, targeted postal reform. There is a strong consensus within a coalition consisting of the Postal Service, postal unions, businesses, mailers and industry groups, as well as key legislators, for a reform package that all stakeholders can buy into, including addressing pre-funding, allowing USPS to use its invaluable networks for some new products and services and adopting best private-sector practices in investing the USPS retiree health benefits fund.”
