Note 11 — Revenue Forgone

Revenue forgone is an appropriation that compensates the Postal Service for the cost of services that it is required to perform at no cost or reduced cost to certain groups. Congress appropriates funds to reimburse the Postal Service for the revenue that has been forgone in providing these services.

The lost revenue associated with the services that will be provided during a given year is estimated and forwarded to Congress with a funding request. At the end of the year, the actual value of services provided is reconciled with this funding request. If the actual services provided differs from that underlying the initial funding request, the Postal Service will request additional funding or return any excess funding through a reduction to the next revenue forgone funding request.

During 2010, the Postal Service recognized $113 million in revenue, including $24 million of imputed interest, from the appropriations, compared to $71 million, including $24 million of imputed interest in 2009. In 2008, $128 million was recognized in revenue, which included $25 million of imputed interest. The revenue forgone receivable is included in the Balance Sheets as “Receivables: U.S. Government.”

The Revenue Forgone Reform Act of 1993 authorized Congress to make 42 annual payments of $29 million each, beginning in 1994 and continuing through 2035, to reimburse the Postal Service for certain services performed or revenue forgone from 1991 through 1998. The payments authorized by the Revenue Forgone Reform Act of 1993 totaled $1,218 million, which had a present value calculated at a 7% discount rate of approximately $390 million. The $390 million was recognized as revenue during fiscal years 1991 through 1998. The discounted present value of the remaining future payment for the years ended September 30 was $339 million in 2010 and $344 million in 2009.

The total receivable for revenue forgone was $449 million in 2010 of which $89 million was classified as current assets. In 2009, the total receivable was $448 million and the current portion was $88 million.