The Postal Act requires the Postal Service to prepay retiree health benefits by paying an average of $5.6 billion per year for 10 years into the newly created Retiree Health Benefits Fund. These payments are in addition to payments of over $2 billion per year paying for current retirees’ health benefits premiums. That translates into nearly $8 billion in retiree health benefits payments per year. To put these payments in perspective, the Postal Service’s revenues in 2009 were $68 billion.
The Postal Service worked with Congress to seek relief from this burdensome prepayment schedule, and strongly encouraged the prompt enactment of legislation to adjust the prefunding method. On October 1, 2009, the 2010 Legislative Branch Appropriations Bill was signed into law. It included a provision deferring $4 billion in Postal Service contributions to pre-fund retiree health premiums.
The legislation provided the Postal Service with much needed 2009 financial assistance. However, a long-term solution is needed to address the same problem in 2010 and beyond. The Postal Service is committed to work with Congress to address this important issue.
The Postal Service has been studying the possibility of changing to 5-day per week mail delivery. An internal workgroup is developing a framework for how it might work, and reaching out to stakeholders for input. Congressional approval would be required for such a change. The 5-day proposal faced almost universal opposition on Capitol Hill when it was introduced in January 2009. But at a hearing in May 2009 of the House Oversight and Government Reform Committee, some legislators appeared open to the idea.
As the Postal Service explained at the hearing in May, less mail is being delivered to more addresses. Carriers delivered an average of 5.9 pieces of mail per address in 2000, and today that has fallen to 4.7 pieces per address, while 11 million new addresses have been added. At the same time, the ratio of higher contribution First-Class Mail to lower contribution Standard Mail has declined, further eroding revenue per delivery. Reducing the frequency of delivery would be an important step in helping close the gap between revenue and expenses.
The 5-day proposal is popular with the American public. A Gallup poll released in June 2009 found 66 percent of Americans in favor of 5-day delivery “as a way to help the Postal Service solve its financial problems.” It was by far the most popular cost-cutting measure compared to alternatives such as raising stamp prices, laying off postal employees, and closing local Post Offices.
