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Chapter 3
Financial Highlights

Table 3-7 Productivity Since 1990
blank Total Factor Productivity Output per Workhour* Multifactor Productivity**
blank Annual*** Cumulative From
Annual Cumulative From
Annual Cumulative From
1990 2.9 8.6 3.4 13.9 0.4 11.9
1991 (1.8) 6.8 (0.1) 13.7 (0.5) 11.4
1992 0.4 7.2 1.0 14.8 2.4 13.8
1993 3.8 11.0 4.6 19.3 0.4 14.2
1994 (0.2) 10.9 0.8 20.2 1.0 15.2
1995 (1.9) 8.9 (1.3) 18.9 0.1 15.3
1996 (1.3) 7.6 (0.1) 18.8 1.5 16.7
1997 1.3 8.9 1.7 20.5 0.6 17.4
1998 (1.0) 7.9 1.2 21.7 1.1 18.5
1999 (0.1) 7.7 0.9 22.6 1.1 19.6
2000 2.2 9.9 2.0 24.6 1.2 20.8
2001 1.7 11.6 1.7 26.3 0.0 20.8
2002 1.0 12.6 2.2 28.5 2.0 22.8
2003 1.8 14.4 2.3 30.7 2.4 25.2
2004 2.4 16.7 2.5 33.2 2.6 27.8
2005 1.1 17.8 1.4 34.6 1.3 29.1

*Output per Workhour measures the changes in the relationship between workload (mail volume and deliveries) and the labor resources used to do the work. The main output is delivering mail and services to an expanding network.

**BLS revised the MFP index and rebased it to 2000–2001. The MFP data for 2003–2005 are estimates of Global Insights, Inc. BLS data for these years have not yet been released.

***Historical data is subject to revision as certain data used in calculating productivity are periodically revised. Price indexes released by the BLS and the Bureau of Economic Analysis that are used to calculate resource usage are subject to historical revisions by these agencies. When historical revisions are released, they are incorporated into the TFP calculation, which can result in historical TFP revisions. TFP for the reporting year is also subject to revision when final Postal Service cost data for the reporting year are available. Generally, this revision occurs in April of the following year.

C. Postal Civil Service Retirement System Funding Reform Act of 2003 (Public Law 108–18)

Previously Docket No. R2005-1 presented the first instance in which the Postal Service’s proposals to raise rates and fees in an omnibus rate case were based on a single, statutory financial obligation. That obligation is mandated by P.L. 108–18, the Postal Civil Service Retirement System Funding Reform Act of 2003, which amended the Postal Service’s responsibilities under the federal Civil Service Retirement System (CSRS) but created new financial obligations that must be paid for with newly generated revenue beginning in 2006.

Congress had concluded that, under previously-applied mechanisms for determining the Postal Service’s liability, future payments to the Civil Service Retirement and Disability Fund would result in substantial over-funding of Postal Service obligations to the system. P.L. 108–18 reduced the Postal Service’s future obligations and determined that the difference between the Postal Service’s liability under the previous approach, and the liability under P.L. 108–18 (the "savings"), would be applied to reduce debt and maintain rate stability in 2003, 2004, and 2005. The law directed the Postal Service to place the "savings" in escrow, beginning in 2006. Although the escrow funds were to be classified as operating expenses, the Postal Service was not authorized to apply them to any financial or operational use in maintaining the national postal system. The January 8, 2006, rate increase will be effected for the sole purpose of generating the revenue required to fund the 2006 escrow obligation of $3.1 billion as required by P.L. 108–18.

D. Federal Government Appropriations

By law, the Postal Service currently is authorized to receive two types of appropriations from the federal government as reimbursement for its costs of performing certain services. These are for the public service costs incurred in providing a maximum effective degree of universal mail service and for revenue forgone which is reimbursement for providing free mailings to the blind and overseas voters. In the early years of the Postal Service, a third type of appropriation, "transitional appropriations," provided a means for the federal government to fund costs related to its obligations to the former Post Office Department (POD) and thereby shelter ratepayers from such costs. Workers’ compensation costs related to claims arising prior to July 1, 1971, were the last known POD costs to have been reimbursed. In the Balanced Budget Reform Act of 1997, Congress transferred responsibility for those costs to the Postal Service and rescinded the section of title 39 of the United States Code that authorized transitional appropriations to the Postal Service.

The Postal Service remains authorized to request up to $460 million for public service costs. This is the amount authorized by the Postal Reorganization Act of 1970 and is not intended to represent the present cost of providing universal service. The Postal Service has neither requested nor received reimbursement of its public service costs since 1982, which may be viewed as a "savings" of $10.5 billion to the U. S. government and taxpayers. In 1971, the final year of the POD prior to creation of the Postal Service, appropriations totaled almost 25 percent of total POD revenue.

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