2. BOARD OF GOVERNORS
As the governing body of the U.S. Postal Service, the 11-member Board of Governors has responsibilities comparable to a board of directors of a publicly held corporation. The Board is composed of nine Governors appointed by the President of the United States with the advice and consent of the Senate. The other two members of the Board are the Postmaster General and the Deputy Postmaster General. The Governors appoint the Postmaster General, who serves at their pleasure without a specific term of office. The Governors, together with the Postmaster General, appoint the Deputy Postmaster General (39 U.S.C. §202).

The Board meets on a regular basis and, at the annual meeting in January, the chairman is elected by the Governors from among all members of the Board. The vice chairman is elected by the full Board.

The Board directs the exercise of the power of the Postal Service. It establishes policies, basic objectives, and long-range goals for the Postal Service in accordance with Title 39 of the U.S. Code. Except for those powers specifically vested in the Governors, the Board may delegate the authority vested in it by statute to the Postmaster General under such terms, conditions, and limitations, including the power of redelegation, as it deems desirable (39 U.S.C. 402). The Governors are authorized to establish reasonable and equitable classes of mail and reasonable and equitable rates of postage and fees for postal service (39 U.S.C. 3621). A specific power reserved by statute for the Governors alone is to approve, allow under protest, reject or, by unanimous written decision, modify recommended decisions of the Postal Rate Commission on postal rate and mail classification changes (39 U.S.C. 3625).

The Board held regular monthly meetings during 2002 for a total of 24 days. Ten of the regular meetings were held in Washington, DC. The regular meeting in February was held in Phoenix, AZ and the regular meeting in July was held in Anchorage, AK. In addition, the Board held five special meetings. The special meetings were teleconferences that originated from Washington, DC.

The Board had three standing committees: Audit and Finance, Capital Projects and Strategic Planning. The committees held regularly scheduled meetings during the year to consider matters within their areas of responsibility and refer items to the full Board for consideration.

In October 2001, the Board approved funding for the second deployment phase of the Mail Evaluation Readability and Lookup Instrument systems (MERLIN). The Board also approved funding to purchase Wide Field of View Cameras for use with automated mail processing equipment. The Board voted to adopt the FY 2002 Annual Performance Plan and also approved a borrowing resolution.

In November 2001, the Governors withdrew a request for a decision from the Postal Rate Commission on an experimental suspension of the fee for manual Delivery Confirmation service during a planned trial period.

At its December 2001 meeting, the Board approved the audited 2001 financial statements. The Board also approved an 2003 appropriation request to Congress, which included the full remaining amount due the Postal Service from 1991 to 1998, under the Revenue Forgone Reform Act of 1993. The Board deferred requesting further funds for mail sanitization, detection and security, deciding to make a later Supplemental Appropriation Request to cover those costs.

In January 2002, the Governors reelected, to second terms, Robert F. Rider as Chairman of the Board and S. David Fineman as Vice-Chairman. They also set the price for the Heroes of 2001 semi-postal stamp and increased the price of the Breast Cancer Research semipostal stamp. The Board also approved the Postal Service’s 2001 Annual Report.

In February, the Board announced the appointment of William T. Johnstone as the new Secretary of the Board.

At the March meeting, the Board announced that the Postal Service’s comprehensive Transformation Plan would be submitted to Congress in April 2002. The Board also approved funding to extend the lease of the Burlingame, California, Peninsula Delivery Distribution Center, and approved a borrowing resolution.

In April, the Governors accepted the Postal Rate Commission’s recommendation for a three-cent increase in the price of a First-Class stamp, to 37 cents, as part of a 7.7 percent overall rate increase, to take effect June 30, 2002. The Board approved management’s request to file a new classification and flexible pricing proposal with the Postal Rate Commission for Confirm^®. In addition, the Board approved funding for Phase 1 of the Postal Automated Redirection System and approved the 2001 Comprehensive Statement on Postal Operations.

In May, the Board approved the charter of the Audit and Finance Committee and authorized funding for the second phase of PostalOne. At its June meeting, the Board approved the upgrade of a previously purchased building in Teterboro, New Jersey, to serve as the new Northern New Jersey Processing and Distribution Center. The Board also announced its support of a bipartisan proposal for postal reform legislation. In July, the Board announced the award of a five-year contract to Ernst & Young L.L.P. to continue as its independent auditor to perform external auditing services for the Postal Service.

In August, the Board accepted the Postal Rate Commission’s recommended decision regarding the mail classification and flexible pricing proposal for Confirm^®. The Board also approved funding for a new Fairfax, Virginia, Main Post Office. Members postponed a decision on the 2002 borrowing resolution.

In September, the Board approved filings with the Postal Rate Commission for two targeted pricing initiatives: a new classification for periodicals and a negotiated service agreement with Capital One Financial Services, Inc. An Integrated Financial Plan for 2003 was presented to the Board, with projections of net income of $600 million and debt reduction of $800 million. The Board also approved the 2002 Borrowing Resolution. Funding was approved for purchase of 3,234 Mixed Delivery and Collection vehicles, the Automated Package Processing System, replacement of the outdated General Ledger Accounting System and completion of a project approved last year for development of space at the Arlington, Virginia, facility that houses the Office of the Inspector General. The Board also welcomed former Postmaster General Albert V. Casey, who received a recess appointment as a Governor of the Postal Service.