• on Sep 13th, 2010 in Strategy & Public Policy | 9 comments
    Last month the Economic Policy Institute, an independent Washington think tank, issued a study (Congressional Mandates Account for Most of Postal Service’s Recent Losses) analyzing the Postal Service’s operating losses over the past three years. It should be noted that while the Institute is nonpartisan, the National Association of Letter Carriers provided support for the research. While the paper acknowledges the underlying shifts taking place in communications, it cites Congressional mandates, more specifically those requiring prefunding for retiree health benefits, as the principal driver behind the losses. In fact, the study discusses that removing the health benefits mandate would cover the Postal Service’s operational losses for 2007 and 2008 and a good portion for 2009. Furthermore, it points out that the Postal Service’s retiree benefits plan currently is funded at a significantly higher level than a sample of large private-sector employers that offer similar pensions. The authors recommend a number of steps for Congress: •Direct the Office of Personnel Management to recalculate Postal Service pension obligations using proper methodologies. •Transfer any surplus discovered to the retiree health benefits fund. •Should the surplus be sufficient to fully fund all benefit obligations, permit the Postal Service to pay off debt with the remaining surplus. The paper concludes that issues involving the overpayments must be resolved before turning to other major actions, such as cutting Saturday delivery. What do you think of the pension debate? What should Congress do? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
  • on Aug 16th, 2010 in Strategy & Public Policy | 8 comments
    There is no question that a country’s postal service is a valuable national asset. On one hand, it is a functional asset that supports commerce and binds the nation together. On the other, postal operations are capital assets, with distribution networks, vehicles, machinery, and labor resources that have some sort of value. While the value of binding the nation together is difficult to put into monetary terms, the value of capital assets is easier to assess. In fact, some cash-strapped governments around the world are trying to raise money by selling parts of their postal operations. The most prominent example is Greece, who announced in June that it plans to sell 39 percent of the national postal service, Hellenic Post. Greece’s troubled financial condition sent shockwaves through world markets in February. Greece plans to sell off part of Hellenic Post as a condition of the financial rescue package provided by other European Union (EU) members and the International Monetary Fund totaling €110 billion ($142 billion). The plan calls for Greece to raise at least €1 billion ($1.29 billion) per year for the next three years by selling off state-owned services including the national rail line and various utilities. Despite this partial privatization, the Greek government will still control 51 percent of Hellenic Post. Hellenic Postbank holds the remaining 10 percent. It will also remain the dominant company in the Greek postal market as EU regulators put off fully opening Greece to postal competition until 2013. This special regulation is because Hellenic Post must serve a large number of Greek islands in the Aegean Sea, making its universal service obligation far more expensive than most other areas of Europe. This also makes the Greek situation unique. As the financial crisis that began in 2007 drags on into its third year, governments are trying to find ways to finance or pay off mounting deficits. One solution embraced by some, currently including Greece, UK, and Russia, is to leverage the value of national assets, particularly postal services. The question that remains is whether accepting money in the short term will harm the long-term value of national posts when it comes to promoting commerce and national unity. This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
  • on Jun 1st, 2010 in Strategy & Public Policy | 5 comments
    In a time when everyone is examining the dollars and cents of the postal business, people have a tendency to overlook the bigger picture: the greater role of the Postal Service in modern society. With that in mind, the Postal Regulatory Commission requested the Urban Institute to study the Postal Service. The focus was not a traditional look at the business but a study of the benefits of the Postal Service and its infrastructure to the American population. The abstract and the final report, both of which were released last week, cites “…the postal system has had a civic as well as an economic mandate that legislators and regulators interpret with changing times and circumstances in mind. An independent agency of the executive branch, the USPS opens access to information for preserving democracy, fostering commerce, and promoting the general welfare. It’s a public good and a great equalizer insofar as it serves rich and poor, urban and rural, young and old, unhealthy and hale.” The report’s author, Nancy Pindus, found eight types of benefits: •Consumer benefits – Provides price competition for other delivery services and access to goods for the underserved. •Business benefits - Provides a logistical component for smaller businesses, an advertising channel serving a spectrum of businesses, and as a center of commerce in communities (through post offices). •Safety and security - Offers mail carriers’ role within the neighborhood and places the Postal Service in a position to assist in emergencies or in cases of natural disaster. •Environmental benefits – Acts as a test site in exploring environmental products and services; provides last-mile service to other delivery companies and utilizes post offices as centers for recycling efforts in many communities. •Aid in the delivery of other government services – Functions as an intermediary for government services on local, state, and Federal levels. •Information exchange – Holds a traditional role of democratically disseminating information, whether through periodicals, community groups or other channels. Post offices also serve as center for posting of community notices. •Social links – Delivers personal communications, carriers provide a regular link to the community for a number or people, post offices are a center for local contact and identity. •Civic pride – Serves as the only representative of Federal government in many areas, often tied into an area’s community identity. In your opinion, have any roles been overlooked? Should any of these roles be eliminated and if so, why? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).

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