Chapter 3 Financial Highlights

E. Emergency Preparedness Funding

The Postal Service’s viability and its value to the American people depend upon an open and accessible mail system. In October 2001, well-publicized incidents of biological terrorism targeted U. S. Senators and members of the media and also affected other untargeted persons. Following the anthrax attacks, it was critical that the Postal Service enhance the safety of the mail system and reduce risks to both employees and customers. To accomplish those ends, the Postal Service implemented new and enhanced technology applications and process changes.

Shortly after the initial bioterrorist attacks, the President of the United States authorized 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 biohazardous 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.” In August 2002, Congress appropriated an additional $87 million for emergency expenses.



In September 2005, as part of the Consolidated Appropriations Act, 2005 (P.L. 108–447), Congress appropriated $503 million to protect Postal Service employees and customers from exposure to hazardous materials in the mail and to build an irradiation facility. All emergency preparedness funding remains available until expended.

The Postal Service initially recorded this $1,265 million in federal funding as a liability. Of these funds, $138 million remain to be committed or expended. The liability is reduced as qualifying expenses are incurred and offsets depreciation expense over the life of capital equipment acquired. In 2006, the Postal Service recognized revenue of $85 million to offset depreciation charges on this equipment.

Not all emergency preparedness expenditures are covered by appropriations received. Other costs of mail security and employee protection (such as maintenance and consumable supplies) are funded from Postal revenues and charged as operating expenses.



Table 3-8 Application of Emergency Preparedness Appropriations as of September 30
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Congressional Appropriation
Presidential
Authorization
($ millions)
2006
2005
2004
2003
2002
2002
Funding Recieved
0
503
0
0
587
175
Depreciation of Capital Equipment
85
45
92
0
0
16
Non-operating Expenses
0
0
0
177
4
121
Capital Equipment*
0
0
0
0
0
38
Liability Balance at September 30
687***
772**
314
406
583*
0

*In 2003 the comprehensive statement showed 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, 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.

**The liability of $772 million as of 9/30/05 relates to $486 million of capital equipment that has been purchased but not yet depreciated and $286 million for which purchase commitments have been made.

***The liability of $687 million as of 9/30/06 relates to $615 million of capital equipment that has been purchased but not yet depreciated and $72 million for which purchase commitments have been made.