• on Apr 26th, 2010 in OIG | 195 comments
    The debate about the Postal Service’s future is heating up and Pushing the Envelope is interested in your views. Last week the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security held a hearing on the Future of the Postal Service. The week before there was a hearing in the House on the Postal Service’s financial crisis and future viability, and on April 12, the Government Accountability Office issued a report laying out the strategies and options to maintain the Postal Service’s viability. Some of the strategies under discussion include: • Ending Saturday delivery. • Reducing the size of the workforce. • Making postal employees pay the same share of health and life insurance premiums that other federal employees pay. • Generating revenue through new products. • Allowing the Postal Service more pricing freedom. • Restructuring the Postal Service’s network of mail processing facilities. • Moving retail services from Post Offices to alternative access options. One item that is generating a great deal of discussion is whether the large payments the Postal Service must make for retiree health benefits should be restructured. One option is to give back some of the excess pension funding and allow the Postal Service to use these funds for other purposes. In January, the Office of Inspector General for the Postal Service issued a report that found the Postal Service had been overcharged $75 billion for its pension obligations from 1971 to 2009 because of an inequitable method of calculating the size of those obligations. Adding to this inequity is the fact that the Postal Service is currently required to fund 100 percent of its retiree health and pension obligations. Very few in private industry do this, and the rest of the federal government’s pension funding level is only 41 percent. In addition, the OIG believes that the forecast of the Postal Service’s future retiree health care costs is too high. Fixing these issues could save the Postal Service $7 billion a year. What do you think? Which strategies will be most useful to the Postal Service? Should the mix of strategies include cutting delivery service?
     
    This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
  • on Apr 19th, 2010 in Delivery & Collection | 152 comments
    Public policy debates about solving the Postal Service’s financial crisis have largely focused on reducing costs by cutting service such as Saturday delivery, transitioning from brick and mortar post offices to alternative retail sales channels, or limiting other functions performed by the Postal Service. There has been less talk about the costs of meeting delivery service standards, which were reviewed following the passage of the Postal Accountability and Enhancement Act of 2006. Can the Postal Service relax some of its requirements to save money in transportation or processing costs? Right now, its goals are to deliver First-Class Mail in 1 to 3 days and Standard Mail in 3 to 10 days. A slight adjustment of these standards in particular areas might make it possible to save a great deal of costs. Instead of developing the goal first and trying to reach those levels, no matter how costly it is, maybe the Postal Service should closely analyze its infrastructure and develop goals that allow for reaching the greatest efficiencies. For example, if the service standards for bulk mail from Chicago to Los Angeles were given an additional day the Postal Service could avoid the expense of trucks and instead utilize economical rail transportation. A First-Class Mail package that currently travels by air could be carried by truck if given another day. By relaxing service standards, the Postal Service can move further towards a hub and spoke network, which could result in substantial savings. Currently, plants may have lots of half-empty, smaller trucks fanning out to a multiplicity of plants only once or twice a day. Under this new strategy, many trucks would go to a mail consolidation facility, which consolidates the mail and ships it on larger, fuller trucks to the destination facilities throughout the day. This design has the additional benefits of network stability and is capable of scaling up or down with changing mail volume. The bottom line is that the Postal Service and its stakeholders need to decide what service standards are worth the cost. The Postal Service should have an honest and informed discussion about the cost savings that it can pass on to the public by relaxing some of the present delivery service standards. Do you think the Postal Service should adjust its delivery standards to cut its costs? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
  • on Mar 22nd, 2010 in Post Offices & Retail Network | 16 comments
    As the Postal Service examines its business model and contemplates changes meant to increase its efficiency, Congress’s role in postal operations has captured public attention. A prime example is the Postal Service’s recent efforts to trim its retail operations. As a cost cutting initiative, on July 2, 2009, the Postal Service filed with the Postal Regulatory Commission a list of Post Office stations and branches it was considering closing. After the filing, many entities questioned the Postal Service’s authority to close these facilities. An article published on the U.S. News & World Report website states, “Call your local congressman if you don’t want your local Post Office retail station or branch to be closed.” In addition, the American Postal Workers Union (APWU) announced on its website “the APWU continues to lead community-based drives to keep retail units open.” Clearly, identifying the exact number and location of closings supercharges emotions. Add very real issues like social customs and potential job losses and relocations to the mix, and there are even more negative feelings associated with Post Office closures. It is not clear yet the number of retail stations and branches that will be closed, but what started out as list of 3,200 candidates has now declined to fewer than 170. In the action plan the Postmaster General announced in March, he cited a number of issues that will require legislative approval, including the retail network. The question is whether Congress, given constituent and political pressure, can provide the Postal Service the level of autonomy necessary to address this issue. How do you think Congressional oversight affects Postal Service operations? This topic is hosted by the OIG’s Office of Audit Network Optimization team.

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