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chapter 3
financial highlights

In 2004 the Postal Service recognized a revenue forgone reimbursement of $36 million to fund free mail for the blind and for overseas voting. That reimbursement was paid shortly after the close of the year.

Additionally, in 2002, the Postal Service received three appropriations from the federal government to help fund costs related to homeland security and emergency preparedness. Those appropriations are discussed further in the next section.

E. Emergency Preparedness Funding

In October 2001 well-publicized incidents of biological terrorism targeted United States senators and members of the national media and also affected other untargeted persons. Some individuals died, while others became gravely or seriously ill. Because infectious biological agents were sent by mail in these attacks, the Postal Service was directly and severely impacted. Two Postal Service employees died of anthrax infection. Mail services in some areas were curtailed, two mail processing facilities had to be closed for the long-term because of anthrax contamination, and overall mail volume declined.

The Postal Service's viability and its value to the American people depend upon an open and accessible mail system. Following the anthrax attacks, it was critical that the Postal Service implement new and enhanced technology applications and process changes that could enhance the safety of the mail system and reduce risks to both employees and customers.

Shortly after the initial bio-terrorist attacks, the president of the United States authorized initial funding

of $175 million to assist in paying for these safety measures. In November 2001 Congress appropriated an additional $500 million to "protect postal employees and postal customers from exposure to bio-hazardous material, to sanitize and screen the mail and to replace or repair postal facilities destroyed or damaged in New York City as a result of the September 11, 2001, terrorist attacks." Postal Service use of the funds provided by this appropriation was contingent on the submission of an emergency preparedness plan to combat the threat of biohazards in the mail.

The Postal Service submitted the required Emergency Preparedness Plan to Congress in March 2002. In August 2002 Congress appropriated an additional $87 million for emergency expenses, as detailed in the Postal Service's Emergency Preparedness Plan. All funding remains available until expended.

The Postal Service initially recorded this $762 million in federal funding as a current liability. This liability is reduced as qualifying expenses are incurred and offsets depreciation expense over the life of capital equipment acquired.

F. Semipostal Stamps

In 1997 Congress authorized the issuance of the first semipostal stamp to raise funds to help in finding a cure for breast cancer. The stamp is sold for 45 cents and is valid for the current cost of a one-ounce, single-piece First-Class Mail letter. Congress directed that the difference between the price of the stamp and the First-Class Mail rate, less program costs, be directed to two designated research agencies: the National

Table 3-10 Application of Emergency Preparedness Plan (EPP) Appropriation
Incomeas of September 30
blank Congressional Appropriation
($ millions)
($ millions)
blank 2004 2003 2002 2002
Funding Recieved 0 0 587 175
Operating Expenses 92 0 0 16
Nonoperating Expenses 0 177 4 121
Capital Equipment 0 0 0 38
Balance at September 30 314 406 583* 0

*In 2003 the Comprehensive Statement reflected a balance of $545 million. However, $38 million was spent on irradiation equipment that did not meet the needs of the Postal Service. With the approval of the Office of Management and Budget (OMB), the eight machines valued at $24 million were transferred to other government and public agencies, and the manufacturer provided the Postal Service with a stronger machine at no additional cost. This new machine is valued at $14 million.