Chapter 3 Financial Highlights

D. Federal Government Appropriations

By law, the Postal Service 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 to 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 that arose 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the Balanced Budget Reform Act of 1997, Congress transferred responsibility for those costs to the Postal Service and rescinded the section of Title 39 United States Code that authorized transitional appropriations to the Postal Service.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 $11.0 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% of total POD revenue.

This year the Postal Service recognized a revenue forgone reimbursement of $99 million to fund free mail for the blind and for mailing overseas voting materials. This accounted for 0.1% of total Postal Service revenue in 2006. Because legislation delayed payment until future years, this amount remains in accounts receivable at the end of the year. Additionally, in 2002 and 2005, the Postal Service received four appropriations from the federal government to help fund costs related to homeland security and emergency preparedness. Those appropriations are discussed in the next section.



 



Table 3-7 Historical and FY 2005 Impact of Public Service & Revenue Forgone Appropriations on Operating Revenue 1971, 1976, 1986, 1996, and 2006
Year Total Mail Revenue
($ millions)		 Mail Revenue Without Apporpriations
($ millions)		 Appropriation Category Income From
Appropriation
($ millions)		 Appropriation
as a % of Total Mail Revenue
1971* 8,752 6,665 Deficiency in rates fees, and Public Service 2,087 23.8
1976 blank blank Free and reduced-rate mail 725 blank
blank blank blank Reconciliation for prior years 0 blank
  blank blank Public Service 920 blank
  12,844 11,199 blank 1,645** 12.8
1986 blank blank Free and reduced-rate mail 750 blank
  blank blank Reconciliation for prior years (34) blank
  blank blank Public Service 0 blank
  30,818 30,102 blank 716 2.3
1996 blank blank Free and reduced-rate mail 56 blank
  blank blank Public Service Net Impact of Revenue Forgone Act of 1993 37 blank
  56,402 56,309 blank 93** 0.2
2006 blank blank Free mail for the blind and
overseas voting		 55 blank
  blank blank Reconciliation for prior years 44 blank
  blank blank Public Service 0 blank
  $72,650 $72,551 blank 99 0.1

*The amounts for 1971 are from the Post Office Department in the year prior to the creation of the Postal Service.

**This amount does not include the appropriation for Post Office Department transitional costs.